{"id":9134,"date":"2023-05-16T12:31:01","date_gmt":"2023-05-16T12:31:01","guid":{"rendered":"https:\/\/iqeq.com\/?p=9134"},"modified":"2023-08-16T15:11:28","modified_gmt":"2023-08-16T15:11:28","slug":"amendments-to-enhance-private-fund-reporting-in-the-u-s","status":"publish","type":"post","link":"https:\/\/iqeq.com\/insights\/amendments-to-enhance-private-fund-reporting-in-the-u-s\/","title":{"rendered":"Amendments to enhance private fund reporting in the U.S."},"content":{"rendered":"<section class=\"text-block standard-spacing  \">\n    <div class=\"container fade-in\">\n        <p><em>By Lindsay Burckett-St Laurent, Managing Director, U.S.<\/em><\/p>\n<p><strong>On May 3 2023, the SEC adopted amendments to Form PF that will enhance the Financial Stability Oversight Council (FSOC)\u2019s ability to assess systemic risk and improve the SEC\u2019s oversight of private fund advisers.<\/strong><\/p>\n<p>The finalized amendments will apply to:<\/p>\n<ul>\n<li><strong>Large hedge fund advisers<\/strong> (hedge fund advisers with at least $1.5 billion in hedge fund assets under management)<\/li>\n<li><strong>Private equity fund advisers<\/strong> (investment advisers with at least $150 million in private equity fund AUM)<\/li>\n<li><strong>Large private equity fund advisers<\/strong> (private equity fund advisers with at least $2 billion in private equity AUM)<\/li>\n<\/ul>\n<p>Some of the most important aspects of the ruling are outlined below.<\/p>\n<h2>Large hedge fund advisers<\/h2>\n<p>Under the new amendments, large hedge fund advisers that experience one or more \u201ctrigger events\u201d will be required to file a current report as soon as practicable, but no more than 72 hours after the event(s).<\/p>\n<p>These trigger events include:<\/p>\n<ul>\n<li><strong>Extraordinary investment losses <\/strong>\u2013 This includes suffering a loss equal or greater than 20% of a fund\u2019s reporting fund aggregate calculated value (RFACV) over a rolling 10-business-day period<\/li>\n<li><strong>Significant margin and default events <\/strong>\u2013 This includes experiencing significant increases in the reporting fund\u2019s requirements for margin, collateral or an equivalent based on a 20% threshold based on average daily RFACV; or experiencing a margin default or inability to meet a call for margin, collateral or an equivalent<\/li>\n<li><strong>Termination or material restriction of the reporting fund\u2019s relationship with a prime broker<\/strong><\/li>\n<li><strong>Operations events<\/strong><\/li>\n<li><strong>Large withdrawal and redemption requests, inability to satisfy redemptions or suspensions of redemptions <\/strong>\u2013 This includes cumulative requests for withdrawals or redemptions exceeding 50% of the most recent net asset value; the inability to pay redemption requests; or the suspension of redemptions for more than five consecutive business days<\/li>\n<\/ul>\n<h2>All private equity advisers<\/h2>\n<p>Under the new amendments, all private equity fund advisers must, upon certain trigger events, file event reports within 60 days of each quarter end. These trigger events include:<\/p>\n<ul>\n<li><strong>Adviser-led secondary transactions<\/strong><\/li>\n<li><strong>Removal of a general partner (GP)<\/strong><\/li>\n<li><strong>Investor elections to terminate a fund or its investment period<\/strong><\/li>\n<\/ul>\n<p>If these trigger events did not occur during a particular quarter, then a quarterly filing is not required.<\/p>\n<h2>Large private equity fund advisers<\/h2>\n<p>On an annual basis, large private equity fund advisers will be required to report any GP clawback or limited partner (LP) clawback, as applicable.<\/p>\n<p>The <strong>GP clawback<\/strong> refers to any obligation of the GP or related person to return performance-based compensation to the fund.<\/p>\n<p>The <strong>LP clawback<\/strong> refers to an obligation of a fund\u2019s investors to return distributions to satisfy a liability, obligation or expense of the fund. Filings are required when the aggregate LP clawbacks over the course of the fund\u2019s life exceed 10% of the aggregate capital commitments at such time. Once the 10% threshold is met, reporting will be required for the remainder of the fund\u2019s life.<\/p>\n<p>Large private equity fund advisers also will be required to provide the following information:<\/p>\n<ul>\n<li><strong>Investment strategies<\/strong> \u2013 Private credit, private equity, real estate, annuity and life insurance policies, litigation finance, digital assets, general partner stakes investment and others<\/li>\n<li><strong>Fund-level borrowings<\/strong> \u2013 Reporting includes (i) information on each borrowing or other cash financing available to the fund, (ii) the total dollar amount available, and (iii) the average amount borrowed over the reporting period<\/li>\n<li><strong>Events of default<\/strong> \u2013 Detailed information about the nature of reported events will be required<\/li>\n<li><strong>Bridge financing to controlled portfolio companies<\/strong> \u2013 Reporting the identity of institutions providing bridge financing and the amount of such financing<\/li>\n<li><strong>Geographic breakdown of investments<\/strong> \u2013 Reporting a fund\u2019s greatest country exposures based on net asset value<\/li>\n<\/ul>\n<h2>Implementation timeline<\/h2>\n<p>The final amendments will become effective six months after publication of the adopting release in the Federal Register for current and quarterly event reporting, and one year after publication in the Federal Register for the remainder of the amendments.<\/p>\n<h4><strong>To discuss these enhanced private fund reporting requirements, what they mean for your firm and how IQ-EQ can help, please don\u2019t hesitate to <a href=\"https:\/\/iqeq.com\/make-an-enquiry\/\">get in touch<\/a>.<\/strong><\/h4>\n            <\/div>\n<\/section>","protected":false},"excerpt":{"rendered":"","protected":false},"author":6,"featured_media":9152,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[1],"tags":[],"expertise":[444,17],"service_category":[29],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.8 - 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