SEC Proposes Enhancements to Private Equity Reporting

Designed to increase oversight of private fund advisors, protect investors

The U.S. Securities and Exchange Commission (SEC) voted on Jan. 26, 2022, to propose amendments to Form PF, the confidential reporting form for certain SEC-registered investment advisors to private funds. The proposed amendments are designed to enhance the ability of the Financial Stability Oversight Council (FSOC) to assess systemic risk and to enhance the SEC's regulatory oversight of private fund advisers in order to increase investor protection, given growth in the private fund industry. 

"Since the adoption of Form PF in 2011, a lot has changed," SEC Chair Gary Gensler stated in a press release. "The private fund industry has grown in size to $11 trillion and evolved in terms of business practices, complexity of fund structures, and investment strategies and exposures," he added.

Key Takeaways

  • The SEC has voted to enhance reporting requirements for investment advisors to private funds.
  • SEC Chair Gary Gensler cites rapid growth in the industry as a reason.
  • The proposal lowers the reporting threshold and requires disclosure of significant risks within one business day after they emerge.

Statement From SEC Chair Gary Gensler

Gensler also had this to say in his press release: "The Commission and Financial Stability Oversight Council now have almost a decade of experience analyzing the information collected on Form PF. We have identified significant information gaps and situations where we would benefit from additional information. Among other things, today's proposal would require certain advisors to hedge funds and private equity funds to provide current reporting of events that could be relevant to financial stability and investor protection, such as extraordinary investment losses or significant margin and counterparty default events. I am pleased to support it."

Details of the Proposed Amendments

The proposed amendments would require current reporting for large hedge fund advisors and advisors to private equity funds. These advisors would file reports within one business day of events that indicate significant stress at a fund that could harm investors or signal risk in the broader financial system. The proposed amendments would provide the SEC and FSOC with more timely information to analyze and assess risks to investors and the markets more broadly.

The proposal also would decrease the reporting threshold for large private equity advisors from $2 billion to $1.5 billion in private equity fund assets under management (AUM). Lowering the threshold would result in reporting on Form PF that continues to provide robust data on a sizable portion of the private equity industry. Finally, the proposal would require more information regarding large private equity funds and large liquidity funds to enhance the information used for risk assessment and the SEC's regulatory programs. 

The proposal will be published on SEC.gov and in the Federal Register. The public comment period will remain open for 30 days after publication in the Federal Register.

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  1. U.S. Securities and Exchange Commission. "SEC Proposes Amendments to Enhance Private Fund Reporting." Accessed Jan. 26, 2022.

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