In early May, the SEC adopted a final rule amending Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds. Form PF is designed to facilitate both the Financial Stability Oversight Council's ability to monitor systemic risk, as well as the SEC's regulatory oversight of private fund advisers and investor protection efforts.

The final rule amendments apply to large hedge fund advisers (having at least $1.5 billion in hedge fund AUM), private equity fund advisers (having at least $150 million in private equity fund AUM), and large private equity fund advisers (having at least $2 billion in private equity fund AUM).

Advisers who file Form PF should note the following practical considerations:

1. Large Hedge Fund Advisers must file current event reports “as soon as practicable,” no later than 72 hours following occurrence. As a result, reporting thresholds must be monitored in real time. It is not yet clear under what types of circumstances the SEC might expect reporting in fewer than 72 hours. In addition, the use of a hours-based (rather than business day) reporting timeline will require monitoring over weekends and holidays and may result in filing obligations arising during non-business hours (depending on the timing of the triggering event).
2. Certain new reporting obligations (e.g., counterparty defaults and operations events) will require Advisers to increase their oversight of third parties and relatedly impact Advisers’ terms and conditions in existing agreements with third parties.
3. Several reporting obligations require subjective determinations (e.g., what is a “material restriction” with regard to a prime brokerage relationship and what qualifies as a “significant disruption or degradation” of a fund’s “critical operations”). To make such determinations, Advisers will need to update their compliance policies and procedures, as well as make necessary systems modifications to both monitor and report the new Form PF data requirements.
4. The triggering and reporting of a current event (and even a quarterly reporting event) may result in increased interest and scrutiny by the SEC and its staff.