On February 8, 2024, the SEC and the Commodity Futures Trading Commission (CFTC) jointly adopted amendments to Form PF, a form that requires registered investment advisers to private funds to confidentially report certain information about the funds’ operations and investment strategies. An adviser is required to file Form PF if the adviser is registered with the SEC, manages one or more private funds and has at least $150 million in private fund assets under management. The amendments are designed to enhance the Financial Stability Oversight Council’s risk monitoring capabilities as well as the SEC’s and CFTC’s regulatory oversight and investor protection efforts in the private fund industry.

The amendments to Form PF are the third set of amendments to the Form adopted in the past year, with amendments adopted in May 2023[1] and July 2023.[2] The February 2024 amendments to Form PF include the following:

Reporting Complex Structures

• Form PF currently allows an adviser to report master-feeder arrangements and parallel fund structures in the aggregate or separately, as long as the reporting is done consistently throughout the Form. The amendments will require advisers to report each component of a master-feeder arrangement and parallel fund structure separately in most situations.
• In addition, advisers will no longer be able to separately report parallel managed accounts (distinguished from a “parallel fund structure”). Parallel managed accounts are accounts or other pool of assets managed by the adviser that have substantially the same investment objective and strategy and invest side by side in substantially the same positions as the private fund. Instead, advisers must aggregate these parallel managed accounts with the largest private fund to which it relates.

  Reporting Funds of Funds

• To improve the consistency of reporting on fund of funds arrangements, the amendments will require an adviser to include the value of investments in other private funds in determining (1) whether the adviser is required to file Form PF, (2) whether it meets thresholds for reporting as a large hedge fund adviser, large liquidity fund adviser or large private equity fund adviser and (3) whether a hedge fund is a qualifying hedge fund. An adviser will also be required to include the value of such investments for purposes of responding to questions on the Form. Currently, Form PF generally permits an adviser to exclude the value of such investments for purposes of the Form’s reporting thresholds and in responding to questions on the Form, as long as the reporting is done consistently throughout the Form.

  Reporting Trading Vehicles

• Currently, Form PF does not require advisers to identify separate legal entities wholly or partially owned by private funds and used for various purposes, such as for jurisdictional, tax, or other regulatory purposes or to “ring-fence” certain assets for liability reasons (each, a “trading vehicle”). The amendments will require advisers to identify trading vehicles of a reporting fund and report on an aggregated basis for the reporting fund and such trading vehicles, as well as provide information related to a trading vehicle’s use, position size and risk exposure.

  Reporting Timelines

• As proposed, the amendments will require all quarterly filers to file Form PF on a calendar quarter basis, rather than on the current fiscal quarter basis.

  Enhanced Information About Advisers and Private Funds

• Form PF requires advisers to report identifying information about themselves and the funds they manage. The amendments, adopted largely as proposed, will expand the information an adviser provides to include legal entity identifiers, assets under management, explanations of assumptions made in Form PF reporting, fund type, withdrawal and redemption rights, gross asset value and net asset value, inflows and outflows, base currency, borrowings and types of creditors, fair value hierarchy, beneficial ownership and fund performance.

  Enhanced Information About Hedge Funds

• The amendments will require advisers to report more detailed information on hedge fund investment strategies, counterparty exposures and trading and clearing mechanisms and will remove certain duplicative questions.

  Reporting on Qualifying Hedge Funds Advised by Large Hedge Fund Advisers

• The amendments will remove the requirement for large hedge fund advisers that advise qualifying hedge funds (i.e., those with a net asset value of at least $500 million) to report certain aggregated information about the hedge funds they manage. In addition, the amendments will enhance the information an adviser must provide with respect to the reporting fund’s investment exposure, open and large position reporting, borrowing and counterparty exposure and market factor effects.

The amendments will become effective one year after their publication in the Federal Register. The compliance date for the amendments is the same as the effective date.

The adopting release is available here, a related fact sheet is available here and a related press release is available here.

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