Hedge Fund Law Report Quotes Brian Daly on the SEC’s Form PF Rules
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For its article “Final Form PF Amendments: Compliance Challenges and Implications,” Hedge Fund Law Report quoted Akin investment management partner Brian Daly. The article looks at the short and long-term implications of the new requirements for the U.S. Securities and Exchange Commission’s (SEC) Form PF rules.
According to the publication, the final amendments to Form PF require large hedge fund advisers to file their reports no later than 72 hours after designated events occur, representing a significant shift from the previous regulations.
On the short-term implications of this amendment, Brian noted that smaller hedge fund advisors (with less with $20 billion under management) likely do not have robust systems in place to comply with the new regulation. He said, “They are managing things in their own way. They have different systems from different providers, but they don’t have these reports. For example, smaller managers are running on end-of-day reports, perhaps even from an administrator’s systems.”
In the long-term, Brian posited that the amendment may pave the way for the Treasury Department’s Financial Stability Oversight Council (FSOC) to become a prudential regulator of the private funds industry. “The Commission gets information now because, in some sense, it’s the only game in town. But, if FSOC comes online the way people expect and decrees a significant portion of the hedge fund and PE industry to be systemically important and under its jurisdiction, then it could start showing up in managers’ offices to look at how much exposure they have to certain asset classes or markets and telling them to reduce risks or otherwise change their risk management.”
“That is all years away but not decades. It could happen soon if President Biden has a second term,” Brian concluded. “If that really happens, Form PF will be the bridge to get FSOC data so it can hit the ground running and not have to engage in new rulemakings to get data. That’s by far the most impactful long-term result of the [amendment].”
To read the full article, click here.
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