One of the most important aspects of running an advisory business is ensuring that your firm complies with state and federal regulations. That includes knowing which documents you’re required to submit to the Securities and Exchange Commission. SEC Form PF is a requirement for investment advisors who manage private funds. It’s important to understand when filing this form is necessary and what type of information you’ll need to provide to the SEC.
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Understanding SEC Form PF
SEC Form PF was introduced in 2011 following the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. A key provision of the Dodd-Frank Act required the SEC to establish reporting and recordkeeping rules and requirements for investment advisors to private funds. Form PF is the official reporting form that’s used to provide information about private funds to the SEC and the Financial Stability Oversight Committee.
The purpose of SEC Form PF is to help both the SEC and the FSOC monitor risk within the private funds industry. The form provides information about private fund assets and operations, allowing greater oversight of the industry to both entities. That information is then used to identify potential systemic risks that may cause harm to investors.
Who Is Required to File Form PF?
The SEC requires advisors to file Form PF when certain conditions are met. Specifically, you must file Form PF if:
- You’re registered or required to register with the SEC as an investment advisor OR you’re registered or required to register with the Commodity Futures Trading Commission as a Community Pool Operator (CPO) or Community Trading Advisor (CTA), AND
- You manage one or more private funds, AND
- You and your related persons collectively hold at least $150 million in private fund assets under management
A related person is any advisory affiliate or person who you or your firm controls. The SEC stipulates that many private fund advisors will only need to complete Section 1 of Form PF and file it annually. Large private fund advisors and large hedge fund advisors, however, are subject to different requirements.
Beginning in June 2024, new amendments to Form PF will take effect that expand the scope of registration and reporting. The amendments apply to three categories of advisors:
- Hedge fund advisors with at least $1.5 billion in hedge fund AUM
- Investment advisors with at least $150 million in private fund AUM
- Investment advisors with at least $2 billion in private equity fund AUM
The amendments require private equity advisors to file Form PF within 60 days following the end of any fiscal quarter when certain events occur. For example, the removal of a general partner or the termination of a fund are considered trigger events. Large hedge fund advisors, meanwhile, will be required to make filings no later than 72 hours following specified events that may result in losses to investors. That would include something like a fund defaulting on a margin call.
What Information Is Included in SEC Form PF?
A paper version of Form PF is available on the SEC website, along with instructions on how to complete it. The form is broken down into sections as follows.
Section 1a. Section 1a collects personal information about yourself and related persons connected to your firm. You’ll need to provide the legal name that you use on Form ADV, along with your SEC 801-Number. The same information is also required for any related persons that will be included on your form.
Section 1b. Section 1b is where you’ll need to tell the SEC about assets of private funds that you advise. You’ll need to list regulatory assets and net assets under management for any of the following, if applicable:
- Hedge funds
- Liquidity funds
- Private equity funds
- Real estate funds
- Securitized asset funds
- Venture capital funds
- Other private funds
- Funds and accounts other than private funds that constitute the remainder of your assets under management
You’ll also need to provide more detailed information about each fund you manage, including its name, private fund identification number, National Futures Association identification number if applicable, and its Legal Entity Identifier (LEI) if applicable. This information goes under Item A in Section 1b, and you must provide details separately for each fund you manage.
Item B of the same section is where you’ll offer information about each fund’s value, assets and liabilities. This section also requires you to list the percentage of the fund assets held by different types of investors, including individual and institutional investors.
Under Item C of Section 1b, you’ll report the fund’s gross and net performance, as it’s reported to current and prospective investors. You’ll need to list performance details monthly, quarterly and annually.
Sections 1c, 2a and 2b. Sections 1c, 2a and 2b are specifically for hedge funds. If you don’t manage any hedge funds, then you may not need to provide any information here. If you do manage hedge funds, you’ll need to go into detail about the fund’s operations and investment strategy, along with a complete breakdown of the assets managed within the fund.
Sections 3 and 4. Section 3 and 4 collect information about liquidity funds and private equity funds, respectively. Similar to the sections spanning hedge funds, you’ll need to share details about each fund you manage, including its holdings and performance.
Section 5. If you’re a private fund advisor and like to file a request for a temporary hardship exemption to filing Form PF, you can do so in Section 5. You’ll need to tell the SEC what kind of situation you’re experiencing that prevents you from filing Form PF in a timely manner.
Where to Submit Form PF
Form PF can be filed online through the Private Fund Reporting Depository. PFRD is a subsystem of the Investment Adviser Registration Depository (IARD).
There is a fee to file. The current fee is $150 for each annual report and $150 for each quarterly report. Fees must be paid before a Form PF can be submitted.
Bottom Line
SEC Form PF may be a requirement for your firm and if so, it’s important to make sure you’re filing in a timely manner. It’s also helpful to understand what’s required for reporting if you plan to start a hedge fund in order to grow your practice.
Tips for Growing Your Advisory Business
- Having an online presence has become more important than ever as investors increasingly rely on the internet to help them find financial information and connect with advisors. Building out a website and social media presence can help you to grow your digital footprint, but it may take time to see results. Using an online lead generation tool can help boost your visibility faster. With SmartAdvisor, you can get leads in your inbox, leaving you free to focus on other tasks to scale your business.
- The importance of meeting compliance standards cannot be understated, as failing to meet regulatory standards could disrupt your business. Regularly reviewing RIA compliance guidelines can make it easier to stay up to date on the latest requirements. You may also consider hiring a compliance officer to manage things like reporting and recordkeeping if you don’t have one on staff already.
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