On October 26, 2011, the Securities and Exchange Commission (SEC) unanimously approved a final rule requiring registered advisers to private funds to report detailed information on new Form PF. The information will be used by the Financial Stability Oversight Council to gain insight into the activities of advisers, enhance its risk monitoring of the financial markets, and assess systemic risk.
The final rule differs from the proposed rule in several respects -- the largest private fund advisers will be required to submit detailed information, though smaller advisers and private equity fund advisers will be required to submit less information less frequently.
Key aspects of the final rule are set forth below.
Revised threshold limits
The final rule retains a scaled approach. Smaller advisers will only need to complete Section 1 of Form PF. Larger advisers meeting the thresholds described below will be required to report more detailed information on Sections 2-4 of Form PF.
Internal calculation methodologies permitted.
Advisers are allowed to use their own methodologies, where appropriate, when completing the form in order to reduce the reporting burden.
Calculating assets under management
The final rule also incorporates changes in how advisers calculate private funds' AUM. Private fund assets must only be aggregated with private fund assets of affiliates that are not separately operated. In contrast to the Proposal, advisers will not be required to aggregate other separate accounts. However, advisers will be required to aggregate separate accounts managed alongside private funds.
Removal of certification. In contrast to the proposed rule, the final rule does not require advisers to certify the contents of Form PF under penalty of perjury.
Confidentiality. Chairman Schapiro emphasized that Dodd-Frank contains strong protections for the sensitive information to be reported on Form PF, and that SEC is committed to building controls necessary to provide confidentiality and limit the availability of such information to those on a "regulatory need to know basis."
Timing and frequency of reporting
The final rule extends the filing deadlines from those originally proposed:
The final rule also extends the period in which advisers must compile their initial Form PF filings.
A more detailed analysis describing the final rule and its impact on private fund advisers will be published soon through our A Closer Look series.
For more information on PwC's Financial Services Regulatory Practice, visit www.pwcregulatory.com