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The
SEC will vote on a proposal to update so-called Form PF, which
was put in place following the financial crisis of 2008-2009 to
monitor risks in the private fund sector, to boost the quality
of disclosures by large funds about their investment strategies
and leverage.
"Since the SEC put in place Form PF 12 years ago, a lot has
changed," SEC Chair Gary Gensler said at a conference held by
the Managed Funds Association on Tuesday.
"The proposal's new transparency would relate to fees, expenses,
performance, and side letters," he said.
The rule changes would require private fund advisers, such as
private equity firms and hedge funds, to disclose quarterly
details about their fees and expenses, in a bid to shed light on
the rapidly growing market sector.
Large hedge fund advisors would also have to inform financial
regulators on certain events that may indicate significant
stress or otherwise signal for systemic risk and investor harm,
which could include significant margin calls of counterparty
defaults, based on a 2022 SEC proposal.
An SEC-registered fund adviser, under the proposal, would also
have to obtain annual audits for each private fund under
management, as well as disclose so-called "fairness opinions"
that summarize certain business relationships.
In their annual reports, the advisors would be required to
include information relating to their strategies, use of
leverage, and clawbacks of a general partner's performance
compensation.
The SEC is also working with the Commodity Futures Trading
Commission on another proposal that would, among other things,
expand the reporting requirements for large hedge fund advisers.
(Reporting by John McCrank; Editing by Chizu Nomiyama)
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