With their varying portfolios, hedge funds are not obligated to complete some of the registration and reporting requirements that apply to other types of securities investments. But that doesn’t mean that hedge funds are exempt from any reporting. Instead, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) promulgated joint reporting requirements specifically for advisers of hedge funds and other private funds.
Under the Advisers Act, hedge fund advisers who are registered with the SEC or CFTC and have a fund of at least $150 million must file Form PF filings on an annual basis.
Smaller advisers must identify:
- the assets under their management,
- the use of leverage,
- fund performance,
- counterparty credit risk exposure, and
- trading and clearing mechanisms.
Large private fund advisers—those with $1 billion or more in combined assets or $1.5 billion or more in hedge fund assets—must file Form PF on a quarterly basis, and these large funds must also provide more specific information.
Small businesses—those with assets of less than $25 million or those with total assets of less than $5 million on the last day of the most recent fiscal year—are exempt from filing Form PF.
According to the agencies, the intent of collecting this data is to understand the systemic risks that could arise from private funds’ mismanagement. Therefore, the SEC and CFTC treat Form PF information as confidential. It isn’t released in a way that identifies any particular adviser or fund.
However, the SEC can use Form PF data in an enforcement action.
And the SEC has done so, bringing enforcement actions against advisers for failing to provide the requisite information.
If you are aware that a hedge fund is failing to submit its required Form PF, or if it’s providing inaccurate information, consider becoming an SEC whistleblower. If you bring the SEC a tip that leads to a successful resolution, you may be eligible for an award.
We have years of experience representing SEC whistleblowers, coupled with an SEC Enforcement lawyer on our team and an in-depth understanding of how the SEC Whistleblower Program operates. We are here to assist whistleblowers attempt to maximize their opportunity to receive a financial bounty. For a free, confidential consultation, email us or call us today at (800) 975-4345.