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Key Provisions of the SEC’s Form PF Reporting Rule Amendments

The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have recently adopted significant amendments to Form PF, a confidential reporting form required for certain SEC-registered investment advisers to private funds. These amendments, which become effective in March 2025, aim to enhance systemic risk monitoring and improve data quality, particularly for large hedge fund advisers and private equity fund advisers. Below, we will explore the key provisions of these amendments and their implications

United Atlantic Legal Services on Private Funds

1. Enhanced Reporting for Master-Feeder and Parallel Fund Structures

One of the major changes introduced by the amendments is the requirement for advisers to report on each component fund of a master-feeder arrangement or parallel fund structure separately, rather than allowing aggregate reporting. This means that private fund advisers must now disaggregate their reporting, which will improve the SEC’s and the Financial Stability Oversight Council’s (FSOC) ability to assess risks associated with these complex fund structures.

This change is particularly crucial as it helps regulators gain a clearer understanding of a fund’s risk profile, counterparty exposure, and investor liquidity. Despite some concerns about increased burdens on advisers, the regulators argue that the benefits of transparency and systemic risk monitoring outweigh the costs.

2. Changes to Reporting Private Funds Investing in Other Funds

The amendments also clarify how advisers should report private funds that invest in other private funds, commonly known as “fund of funds.” The new rules mandate that advisers include the value of investments in other private funds when determining reporting thresholds for Form PF. This is a shift from the previous flexibility, which allowed advisers to either include or exclude such investments.

This enhanced reporting ensures more consistent and comparable data, aiding in systemic risk assessments. The rule amendments also address concerns around potential data distortions that could arise from inconsistent reporting practices across the industry.

3. Reporting Timelines: Shift to Calendar Quarter Reporting

To improve the timeliness and comparability of the data collected, the SEC now requires large hedge fund advisers and large liquidity fund advisers to report on a calendar quarter basis rather than a fiscal quarter basis. This change will help regulators obtain a more complete data set within a shorter timeframe, thus enhancing the effectiveness of systemic risk monitoring and regulatory oversight.

4. Reporting on Trading Vehicles

The amendments require advisers to identify any trading vehicles associated with the private funds they manage. A trading vehicle is defined as a separate legal entity that may hold assets, incur leverage, or conduct trading on behalf of the reporting fund. Advisers are now required to report on these vehicles in an aggregated manner, providing insight into their activities while avoiding the burden of separate reporting.

This change is critical as trading vehicles are often used by funds to structure investments for regulatory or tax purposes. By mandating more detailed reporting on these entities, regulators can better assess the full scope of a private fund’s risk profile.

5. New Focus on Hedge Funds Using Digital Assets

In line with the growing prevalence of digital assets in financial markets, the amendments introduce new reporting requirements for hedge funds that use digital assets as part of their investment strategy. This aims to provide regulators with more insight into how digital assets are being used within the hedge fund industry and assess any potential risks these assets may pose.

6. Strengthened Data Quality and Accuracy

To ensure data consistency and reliability, the amendments include several provisions designed to improve the quality of the information collected on Form PF. These provisions include enhanced reporting requirements for large hedge funds regarding their investment exposure, borrowing, counterparty exposure, and more.

Conclusion: A Major Step Towards Greater Transparency

The amendments to Form PF represent a significant step toward increasing transparency within the private fund industry and enhancing the ability of regulators to monitor systemic risk. By improving the granularity and timeliness of the data provided, the SEC and CFTC will be better equipped to assess the potential risks posed by hedge funds, private equity funds, and other private investment vehicles. While these changes may increase the reporting burden on some advisers, the broader benefits to market stability and investor protection are clear.

As private funds continue to grow in size and complexity, these amendments are a critical update to ensure that regulatory frameworks keep pace with industry developments.

About Michael Rasmussen

Michael Rasmussen is the founder of United Atlantic Legal Services. He is a licensed attorney in Florida and registered solicitor in the United Kingdom. Michael has acted as General Counsel and Chief Compliance Officer to several investment advisers, including private fund managers, responsible for the management of billions of dollars in client assets.  

Michael is also the founder of FinProLaw, an online learning platform where Michael has created courses designed for investment adviser compliance professionals. These courses include: 

  • Investment Adviser Compliance Essential for Chief Compliance Officers 
  • Foundations of Investment Adviser Compliance 
  • What is a “Security”? 
  • Investment Adviser Marketing Rule 
  • Regulation A – Exemption from Registration 
  • Regulation Crowdfunding – Exemption from Registration 
  • Regulation D – Exemption from Registration 

Michael can also be found on LinkedIn.

Investment adviser firms who are also clients of United Atlantic Legal Services can receive many of these courses at a significantly reduced fee or, in some cases, at no expense. Contact us today or visit the FinProLaw to learn more.