Compliance Solutions for Investment Advisers

FAQs — Form PF


What is Form PF?

It refers to a regulatory reporting obligation of SEC registered hedge fund managers who advise one or more private funds relying upon the 3(c)(1) or 3(c)(7) exemptions and have at least $150 million under management in hedge funds.  Hedge fund managers meeting the criteria are required to complete and periodically file the Form PF.   The filing obligations and the portion of the Form PF that an SEC registered hedge fund manager is obligated to complete depends upon their assets under management.

What is the purpose of the Form PF?

The purpose of Form PF is to allow the collection of risk exposure information.

What is the meaning of “regulatory assets under management” and “hedge fund”?

The regulatory assets under management for each hedge fund is gross assets under management, without subtracting any borrowings, short sales or other forms of leverage.  The regulatory assets under management calculation is the basis hedge fund managers must use for calculating the assets of hedge funds managed.  For the purposes of Form PF, “hedge fund” has also been defined.  According to the regulations “a hedge fund is defined generally to be any private fund that has the ability to pay a performance fee to its adviser, borrow in excess of a certain amount, or sell assets short.”

What are “Large Private Advisers” and “Smaller Private Advisers”?

For the purposes of completing the Form PF, the SEC has classified registered investment advisers as “Smaller Private Advisers” and “Larger Private Advisers”.

Large Private Advisers are:

  • Large hedge fund advisers with at least $1.5 billion in assets under management attributable to hedge funds;
  • Liquidity fund advisers with at least $1 billion in combined assets under management attributable to liquidity funds and registered money market funds; and
  • Advisers with at least $2 billion in assets under management attributable to private equity funds.

 Any registered investment advisers who do not meet the criteria of Large Private Advisers are deemed Smaller Private Advisers.

What are the obligations of Large Private Advisers and Smaller Private Advisers?

Most hedge fund managers are deemed to be “Smaller Private Advisers”, by virtue of their assets under management being less than $1.5 billion.  Smaller Private Advisers are only required to complete Part 1 of the Form PF.  Large Private Advisers (e.g., those with at least $1.5 billion in assets under management attributable to hedge funds) must complete Parts 1 and 2 of Form PF.  Large Private Advisers completing Part 2 of Form PF are required to include detailed descriptions of the geographic location, market, credit and liquidity risks of the hedge funds.

When is Form PF filed?

Smaller Private Advisers are required to file the Form PF annually within 120 days after the end of their fiscal year.

Large Private Advisers must file depending on which classification of the following they meet:

  • Large hedge fund advisers are required to file the Form PF within 60 days of the end of each fiscal quarter.
  • Large liquidity fund advisers must file Form PF to update information regarding the liquidity funds they manage within 15 days of the end of each fiscal quarter.
  • Large private equity fund advisers must file Form PF annually within 120 days of the end of the fiscal year.

What liability is involved with signing off and filing a Form PF?

It was originally proposed that the Form PF had to be signed off under penalty of perjury.  This obligation has been removed.  However, there may still be significant legal consequences for completing and filing an intentionally or negligently misleading Form PF.   It is noted that the SEC may use the Form PF for the purpose of examining SEC registered investment advisers.  Therefore, if during an examination or other enquiry there is a discrepancy between the hedge fund manager’s books and records and Form PF this may lead to further investigations.  The Form PF information could form the basis for an enforcement action.

Is Form PF information confidential?

Unlike the Form ADV, which is publicly available, the Form PF is not made public and the information will be treated by the SEC as confidential.  The information on the Form PF is generally accepted as sensitive and proprietary to the hedge fund manager and their operations.

Is a hedge fund adviser required to provides the Form PF to potential and/or current investors?

There is no rule or requirement that the Form PF must be provided to potential and/or current investors. Because this is not a regulatory issue, each many manager will need to balance disclosure versus confidentiality issues.

Are foreign hedge fund managers required to comply with the Form PF regulations?

In order to reduce duplication, if the hedge fund manager’s principal office and place of business is outside of the U.S then the hedge fund manager may exclude non-U.S funds that were not offered in the U.S and are not beneficially owned by any U.S person.


Important Information

The information contained in this Frequently Asked Questions is only a summary and is not intended to be a comprehensive analysis of the rules and regulations applicable to registered investment advisers. It is not intended to constitute legal or compliance consulting advice or apply to any one investment adviser’s particular situation. For more information, please see our Terms of Use.