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New York (HedgeCo.net) – Due to the new shift in regulatory oversight, Northern Trust’s hedge fund administration unit, Northern Trust Hedge Fund Services LLC, has started actively working with its private fund clients to provide the data necessary for Form PF reporting.
“While Form PF presents a new requirement to our private fund clients, the data aggregation and regulatory expertise necessary to file Form PF are core strengths of Northern Trust,” said Peter Sanchez, Chief Executive Officer of Northern Trust Hedge Fund Services. “Our hedge fund administration platform has a unique ability to capture trade level detail for equity, fixed income and derivative transactions in a single system that makes it easier for our clients to complete the requirements of Form PF. Moreover, our flexible solution gives clients the ability to choose their risk data provider.”
Form PF is a new rule adopted by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) requiring private fund advisors to file disclosure data on holdings and risk exposures within their funds. The effective date for the new rules is March 31, 2012. The SEC requires private funds with more than $5 billion in regulatory assets under management on this date to submit their initial filings after the second quarter of 2012. Firms with regulatory assets under management greater than $150 million will be required to file in early 2013.
“We are working closely with a number of clients who must file Form PF this year,” says Jeff Boyd, Chief Operating Officer of Northern Trust Hedge Fund Services. “The reporting process is made easier because our trade data capture capabilities let us source the majority of the required detail from within our core books and records – avoiding manual reconciliation between systems.”
Private fund clients also must synthesize the holdings data required for Form PF with risk calculations, which are often generated by third parties other than the fund administrator. The SEC will evaluate how risk data provided in Form PF matches risk data supplied to investors, to make sure that risk reporting is consistent across functions.
“For us, it was important that we give our clients flexibility and choice around the sourcing of risk data,” said Sanchez. “In many cases our clients are already deeply engaged with a risk data provider. Our approach will help clients complete Form PF with better accuracy and a minimum amount of disruption. Data aggregation and management is one of our great strengths, and our clients appreciate our flexibility in working with them and their other third party providers to develop a solution that works best for them.”
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New York (HedgeCo.net) – - The attorneys and securities compliance consultants with hedge fund law firm of Warner Norcross & Judd LLP have launched a blog for broker-dealers, investment advisers and private investment funds.
The new blog, Compliance Corner, alerts clients and friends to current developments in federal, state and Financial Industry Regulation Authority, or FINRA, securities regulation, litigation and enforcement developments. Compliance Corner also provides compliance tips, legal summaries and information about best practices.
“Compliance Corner provides important updates from the Securities and Exchange Commission, FINRA, state securities regulators and other government agencies affecting our clients, often warranting prompt action,” said Shane B. Hansen, co-chair of the practice group. “Our goal is to anticipate our clients’ compliance questions and help ease the headaches that regulatory changes can cause. Our experienced attorneys and senior securities compliance consultants provide services to a wide range of clients subject to broker-dealer, investment adviser and private fund regulations. The blog serves as an additional resource to communicate important changes.”
Warner’s Broker-Dealer and Investment Adviser Practice Group is the largest in the state and among the largest in the Midwest. Warner’s securities attorneys have extensive experience representing broker-dealers, investment advisers and private investment fund advisers of all sizes through the complete spectrum of securities regulation, litigation and enforcement issues. The group’s experience includes formations, policies and procedures, contracts, compliance testing, mock audits, employment-related issues, acquisitions, sales and wind-ups. The law firm provides legal and compliance services to clients throughout the United States.
By Donald A. Steinbrugge, CFA, Managing Member at Agecroft Partners, LLC. – There have been a number of recent articles that have been written about the JOBS ACT and it’s implication on the hedge fund industry. I think this could potentially be the biggest story of the year relative to hedge funds and will receive ongoing coverage as developments unfold.
As a hedge fund consulting and marketing firm we have obviously given a lot of thought to this subject and over the past week our firm has spoken with both hedge fund investors and hedge fund managers about how they think the new legislation will affect the hedge fund industry.
Some of the information has been included in other articles; however we have also included a number of original thoughts on how this new legislation will affect the hedge fund industry including:
* We expect the hedge fund of funds industry to be a major beneficiary of this new legislation and it could be the catalyst it needs to fully recover from the approximately 25% decline in assets it has experienced since the 2008 market correction.
* The hedge fund industry will benefit because greater clarity of what and how information can be provided to the general public which will level the playing in terms of marketing strategy among hedge funds.
* Organizations that are bold enough to lead the charge in being the first to advertise will have a large advantage in building their brand through not only the advertisements, but also the publicity generated from these ads.
The new JOBS Act, recently passed by Congress and signed by President Obama, is designed to make it easier for small businesses to raise capital and create new jobs in the current economy. An indirect beneficiary of this legislation is the hedge fund industry, as it will revolutionize how alternative investment managers can market their funds to the public. Until now, hedge funds have been banned from making general solicitations and advertising to the general public.
This new legislation directs the Securities and Exchange Commission to eliminate the ban on general solicitation and advertising within 90 days; however, hedge funds will still only be able to accept investments from accredited investors. We may soon see newspaper, magazine and television advertisements from hedge fund organizations, which will have both positive and negative consequences for the hedge fund industry, institutional investors and the general public.
Benefits
The hedge fund industry will benefit from this new legislation as the SEC provides greater clarity regarding how information can be provided to the public and what type of information hedge fund managers are allowed to disseminate. To date there has been conflicting legislation regarding what information hedge funds can provide, along with wide differences in the interpretation of these regulations within the hedge fund industry.
The conservative interpretation of Regulation D of the Securities Act of 1933 pertaining to the ban on general solicitation has included 1) no communication on any subject to the media, 2) no participation in databases, and 3) no contact information on a firm’s website. Yet many of these same firms are registered with the SEC and must also comply with the conflicting legislation of the Investment Advisors Act of 1940, which requires these firms to submit a Form ADV to the SEC and state securities authorities. Form ADV contains detailed information about their organization, which is available to the general public on the SEC website, and makes it impossible to be in compliance with both legislations simultaneously. Other hedge funds have been more liberal in interpreting these rules and believe it is appropriate to speak to the media regarding industry information excluding their firm and fund, participate in databases that are published in the media and provide some information on their website regarding their firm and investment process. The new legislation should help bring clarity and a more level playing field to marketing strategies among hedge funds.
SEC rules stemming from the JOBS Act should also benefit the hedge fund industry in reaching out to a wider audience, particularly with respect to high net worth individuals. Until now, a vast majority of direct hedge fund investments have come from institutional investors or ultra high net worth individuals. High quality small and mid-sized hedge funds should benefit from the opportunity to build stronger brands in the marketplace in order to effectively compete with their larger rivals. Over the past 3 years, most net asset flows within the hedge fund industry have gone to hedge fund organizations with the strongest brands and not necessarily the highest quality fund offering. This is especially true for the hedge fund of funds industry, where many small and mid-sized funds have had a difficult time raising assets. For many high net worth individuals looking to diversify into hedge funds, a hedge fund of funds may be a more appropriate alternative due to the diversification benefits of investing in multiple managers. We expect the hedge fund of funds industry to be a major beneficiary of this new legislation.
Institutional investors will benefit from greater transparency throughout the hedge fund industry. Currently it is cumbersome to identify top quality hedge funds, compare them to top competitors in the strategy, and perform appropriate due diligence. This is because of the difference in transparency between the mutual fund and hedge fund industries. In the mutual fund industry, a vast majority of firms provide information about their funds on their company websites and to leading industry databases. This allows investors to quickly compare mutual funds based on style and rankings in a database, and then access more detailed information about individual funds on their websites. In the hedge fund industry, many hedge funds elect not to participate in databases. In addition, US based hedge funds have password protected websites. As a result, analyzing hedge funds has been an arduous task that includes starting with hedge fund data bases and then leveraging trade publications, industry conferences, prime brokers, third party marketers and friends to help identify top hedge funds. This is followed by contacting the hedge fund directly to obtain information about the manager, which makes it a very inefficient process.
The hedge fund industry represents a significant number of the leading investment minds in the financial industry. This new legislation will benefit the general public because hedge funds should be more inclined to share their investment views on television and in print media. As a result, retail and high net worth investors will gain valuable insights into a variety of hedge fund strategies and investment ideas.
Negatives
The negative aspect of this legislation is the potential for unscrupulous marketing activity by shady hedge fund mangers who may be able to take advantage of high net worth individuals with a lower level of investment knowledge. The historical investor base of hedge funds have been Institutional investors and ultra high net worth individuals who typically have a high degree of investment knowledge and use multiple evaluation factors when selecting a hedge fund. Unfortunately, some retail investors may be persuaded to invest in a fund based solely on high historical returns. The highest returning managers often are not the highest quality managers. Their historical performance might have been based on 1) a very small asset base, 2) taking significant risk, or 3) even luck. If these investors end up having an experience significantly below their expectations, it could create negative publicity for the hedge fund industry.
Hedge fund marketing strategy
This new legislation should prompt all hedge funds to re-evaluate their marketing strategy and determine the impact it will have on their firm. Most hedge funds will initially take a ‘wait and see’ approach to observe what strategies are being utilized by other hedge funds. Some of the questions that need to be addressed include:
* What other information should be made available on the company website, including appropriate disclosures?
* Should there be different password protected areas based on what country an investor resides in?
* Should the firm develop a public relations strategy?
* Should the firm develop an advertising strategy? If so, to what target market?
* Should there be a conference strategy?
* Should the firm contact a broader universe of investors? If so, who is the target market and what is the most effective way of reaching this audience?
Not all hedge funds will modify their marketing strategy for some of the following reasons:
* Their fund is closed to new investors.
* They view their process and firm information to be proprietary and do not want competitors to have access to their information.
* They are concerned about the risk that institutional investors will perceive a reduction in brand value for hedge funds that advertise to the general public. This should be less of an issue for hedge fund of funds.
* They will not want to be distracted by retail investors, which is why many hedge funds have high minimum investments to begin with.
* They need to avoid violation of securities laws in other countries where some of their clients are based.
Where does this leave hedge fund salespeople?
Institutional-quality hedge fund salespeople will become more valuable because the majority of assets will continue to be derived from institutional investors whose decision making process is little impacted by advertising. These investors will see a significant increase in solicitations by hedge funds due to the new legislation, making them more difficult to get meetings with. Nevertheless, like the institutional long-only world, in order to increase the probability of receiving a mandate it will continue to be very important to meet with these investors face to face and clearly articulate the differential advantage a firm offers across all of the evaluation factors institutional investors use to select hedge funds.
Over the next 90 days the SEC has been directed to develop new regulations for the hedge fund industry, and once these regulations are finalized, we will begin to see many hedge funds start the process of broadening their marketing strategies. For those organizations that are bold enough to lead the charge in being the first to advertise, we expect them to enjoy a material advantage in building their brand not only through advertisements, but also the publicity generated by these ads. In order to be a first mover, these organizations need to start planning now.
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New York (HedgeCo.net) – In light of the new hedge fund regulatory changes, London-based Stewarts Law LLP, a Top 100 law firm and the UK’s largest litigation-only firm, has today announced the launch of Stewarts Law US LLP with offices in New York and Delaware.
Stewarts Law confirmed the appointment of litigators David Straite and Ralph Sianni as US Partners and Executive Committee Members of the US LLP.
The US practice will initially focus on investor protection litigation, including securities litigation, corporate governance and alternative entity litigation, as well as antitrust and commercial litigation. Other practice areas are likely to follow.
David and Ralph have represented some of the largest institutional investors in the United States and Europe in all aspects of investor protection litigation including hedge fund disputes, shareholder derivative actions and securities class actions.
David has worked in both the New York office of Skadden, Arps, Slate, Meagher & Flom LLP and the Delaware office of Grant & Eisenhofer P.A., and is a graduate of Tulane and Villanova. Ralph is a graduate of Yale, Penn and Boston University, and also worked in G&E’s Delaware office. David will be resident in the New York office and head the new Investor Protection Litigation department. Ralph will manage the US offices and will be based in Delaware.
The US team is expected to be immediately involved in a number of heavyweight cases including: In re: Facebook Internet Tracking Litigation (N.D. Cal.); Peters v. JinkoSolar Holding Co., Ltd., et al. (S.D.N.Y.); Schad v. Harbinger Capital Partners LLC, et al. (S.D.N.Y.); and In re: Advance America Shareholders Litigation (Del. Chancery).
John Cahill, UK Managing Partner of Stewarts Law and Chairman of the US Executive Committee said, “I am delighted that David Straite and Ralph Sianni have agreed to lead the US practice. The opening of a US practice is an important strategic step for us. Expansion to the US will increase our global reach and international litigation capability.”
He added, “Our US practice will bridge a cultural gap for UK and European clients litigating in the US Courts. We will continue to work closely with those US firms who have a proven track record in our chosen specialisations. We plan to remain litigation-only, highly specialist, and conflict-free.”
David Straite commented, “Stewarts Law is an excellent fit and will enable Ralph and me to deliver outstanding litigation capability in the US for both UK and European institutional investor and corporate clients. We hope to provide a new voice for UK and European investors in the US courts.”
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New York (HedgeCo.net) – As the first SEC deadline for private fund reporting approaches for hedge funds, Paladyne Systems has teamed up with Advise Technologies LLC to specifically support the new requirements.
The new team plans to provide an interactive web-based Form PF interface for clients to enrich data, approve calculated data and electronically file with the SEC.
“For funds and their service providers to meet this reporting deadline, capturing the necessary data is unprecedented. This is an entirely new process,” said Doug Schwenk, President & CEO, Advise Technologies.
“The complex reporting requires aggregating, normalizing and tagging data from multiple sources, including portfolio, risk, collateral, and performance data. By integrating our software with the Paladyne data warehouse and security master, we can address the complex data aggregation needs of these funds and allow service providers to complete the reporting requirements.” Schwenk said.
“Our clients have been laser-focused on addressing Form PF reporting requirements and have reached out to Paladyne for help,” said Sameer Shalaby, President, Paladyne Systems. “Our partnership with Advise creates a comprehensive and innovative enterprise technology platform for Form PF and for future regulatory requirements, capable of compiling and handling the necessary data in a timely and cost effective manner. We are delighted to work with Advise to support our clients in addressing the burden of regulatory reporting and compliance.”
New York (HedgeCo.net) – According to an arbitration claim filed by Florida law firms, Vernon Healy and Dovin Malkin & Ficke, GenSpring Family Offices failed to adequately diversify the $57 million portfolio of an ultra high net worth individuals and misrepresenting itself by saying that the hedge funds it recommended would perform like bonds.
The legal claim filed on behalf of a retired Florida entrepreneur seeks more than $11 million, including rescission of more than $6 million in hedge funds that are now illiquid that GenSpring represented would be “as safe as bonds with upside.” GenSpring also represented that the multi-strategy hedge funds would be far more liquid than they have turned out to be, according to the claim.
The Dovin Malkin & Ficken and Vernon Healy team are representing ultra high net worth individuals in an aggressive nationwide investigation of GenSpring Family Offices. The team previously filed an additional claim charging that GenSpring failed to diversify the $30 million portfolio of an ultra high net worth investor.
“These funds had a severe lack of transparency and control attributable to the fact that their multiple managers in the various sub funds could employ essentially any strategy they chose at any particular point in time. Thus, GenSpring could not adequately determine what strategies these managers were following, and whether these strategies provided ‘bond-like’ risk,” according to the claim filed today by the team led by securities fraud attorneys Chris Vernon and Ed Dovin.
The retired entrepreneur’s colleague, trained as a CPA, began raising concerns about the hedge funds in the investor’s portfolio in late 2007 and 2008, according to the claim. GenSpring repeatedly dismissed the concerns and sought to dissuade liquidation of the hedge funds by the investor, the claim asserts.
Prior to the financial crisis, the hedge funds with purportedly bond-like risk recommended by GenSpring were actually moving in lock step with equities and GenSpring was aware of that fact, according to the Vernon Healy and Dovin Malkin & Ficken claim.
“In truth, and contrary to its representations, GenSpring did not have a reasonable basis to believe that multi-strategy hedge funds would perform like bonds, provide diversification from equities or remain liquid in the event of a need to reallocate,” the claim states.
GenSpring Family Offices is owned, in part, by a wholly-owned subsidiary of SunTrust. GenSpring has stated it has more than $17 billion under management and its clients are among the wealthiest families in the world.
In addition, the Dovin legal team has already received a $1.3 million arbitration award — representing a win — against GenSpring in which the arbitrator found that GenSpring breached its fiduciary duty when it used hedge funds instead of bonds for much of the bond risk portion of that investor’s portfolio.
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New York (HedgeCo.net) - A new act passed by the Senate and House of Representatives is expected to be signed into law by President Obama within days. The Jumpstart Our Business Startups, known as The Jobs Act, will eliminate a longstanding ban on general solicitation and advertising by hedge funds.
Hedge Fund Review Magazine reports that US hedge funds will, for the first time, be able to solicit investors freely and advertise their funds through mass media channels, from television adverts to newspapers articles and websites.
“This is obviously a monumental development in the industry, lifting the general solicitation ban for hedge funds.” Evan Rapoport, founder of industry portal HedgeCo.net, said. ”It’s easy to imagine a world where the largest hedge funds are purchasing spots on CNBC. The industry has operated since the days of Alfred Winslow Jones under the basis of no general advertising, but I think we are moving closer to a point where hedge funds themselves will resemble the mutual fund industry. We already see transparency mandates causing funds to report holdings, the proliferation of UCITS funds with daily liquidity, and now general solicitations move us one step closer to the inevitable.”
The act is important to hedge funds as it tells the SEC to remove the prohibition on “general solicitation of general advertising” on offerings or sales of private funds and securities made under Regulation D of the Securities Act of 1933.
The Managed Funds Association (MFA), says the new rules will “modernise existing securities laws in a manner that will enhance financial market transparency and investor protection”.
However, regulators have started to raise concerns about the rule change, commissioner Luis Aguilar said the legislation would be “a boon for boiler-room operators, Ponzi schemers, bucket shops and garden-variety fraudsters by enabling them to cast a wider net and making securities law enforcement much more difficult”.
New York (HedgeCo.net) – Hedge fund gian Man Group plc announced today that it has signed the United Nations-backed Principles for Responsible Investment (PRI).
“This step is a signal of Man’s continued commitment to responsible investing.” Peter Clarke, Chief Executive of Man, said. As a leading alternative asset manager, we hope that by signing up to the UN PRI we will encourage others in the hedge fund industry to follow our lead.”
The PRI is a framework designed to encourage sustainable investing by incorporating environmental, social and governance issues into investment decision-making and ownership practices. Globally, there are 988 signatories, with 126 of these in the UK. Man is the largest UK-based manager of alternative assets to become a signatory.
“Investing sustainably enhances long-term value and reduces risk which is clearly good for all concerned: investment managers, their clients, society and the environment.” Pierre Lagrange, Executive Committee member of Man and Senior Managing Director of GLG, said. “GLG’s efforts predate today’s formal partnership with UN PRI: addressing the UN General Assembly in 2008 on sustainable investing, implementing technology to enable portfolio managers to make more informed investment decisions using ESG and launching a specific Global Sustainability Equity Fund, aimed at reconciling sustainability and economic returns. We are pleased to be able to commit to widening these efforts by signing up to the PRI.”
Some PRI objective that Man has taken on:
• Investing in technology and training to enable investment managers to take ESG factors into account and encourage listed companies to improve on ESG criteria
• Running the GLG Global Sustainability Equity Fund and managing a climate change strategy on behalf of Virgin Money Unit Trust Managers, both UCITS long-only strategies
• Running an effective Corporate Responsibility programme, as judged by inclusion in the Dow Jones Sustainability Index
• By being a signatory to the Carbon Disclosure Project and a member of the FTSE4Good
• By support for independent academic teaching and research at the Oxford Man Institute 2
• By supporting charities and local communities through the Man Charitable Trust, as well as sponsorship of the Man Booker literary prizes
Principles for Responsible Investment
1. We will incorporate ESG issues into investment analysis and decision-making processes.
2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
4. We will promote acceptance and implementation of the Principles within the investment industry.
5. We will work together to enhance our effectiveness in implementing the Principles.
6. We will each report on our activities and progress towards implementing the Principles.
“Man’s support recognises our commitment to help advance the UN PRI agenda, and attests to the positive effects that normative, international frameworks like the PRI bring to the investment community.” Jason Mitchell, Portfolio Manager, GLG Global Sustainability Equity Fund said. “It also marks the next step in a process that began with our legacy in environmental funds, expanded into broader global sustainability themes and is driving our current work developing the application of sustainability across alternative strategies.”
New York (HedgeCo.net) – Hartline Investment Corp is under fire for recommending a $550 million Florida hedge fund that is now subject to lawsuit filed by the SEC. Five investors followed the advisers advice and put $11.6 million into the failing hedge fund.
Lead plaintiff Marsha Serlin claims that William Hart advised her to invest in an LP called Founding Partners Stable Value Fund I and II, Courthouse News reports.
Serlin claims Hart told her and the co-plaintiffs that the hedge fund was a great investment and very difficult to get into, but that he was a good friend of William L. Gunlicks (president, founder, CEO and sole shareholder), and would be able to get the plaintiffs in as well.”
Serlin calls it a case of crony capitalism, “Defendant Hart admits to having a 30-year friendship and professional relationship with William Gunlicks. This relationship has been highly profitable for Hart and was incentive for him to breach his fiduciary duty and other duties complained of herein.”
The plaintiffs seek $11.6 million in damages for breach of fiduciary duty, negligent misrepresentation and fraud, according to Courthouse News Services.
New York (HedgeCo.Net) – With tax season just around the corner, ensure that your fund has the right skills in place for the best possible tax plan. Financial Research Associates (FRA) and the Hedge Fund Business Operations Association (HFBOA) are proud to announce two highly informative tax conferences, Hedge Fund Tax 101 and The K-1 Boot Camp in New York City at the Princeton Club of NYC on Thursday, January 19, 2012 and will continue through Friday, January 20, 2012.
The hedge fund tax course will cover a variety of topics, including: Basic Tax Considerations Affecting Hedge Funds, Hedge Fund Tax Allocations, Tax Consequences of Hedge Fund Structures, Taxation of Investment Transactions and Financial Instruments Parts 1 & 2, Unrelated Business Taxable Income – What Every Fund Should Know. The K-1 tax course will cover a variety of topics, including: Dissecting the K-1, Preparation of Hedge Fund Returns and Disclosures, Allocation Methodologies, Contributed Stock and Stock Distributions, State Income and State Tax Withholdings, Impact of Foreign Income on a K-1.
Notable speakers include representatives from Decosimo Certified Public Accountants, Walsh, Jastrem & Browne LLP, Anchin, Block & Anchin LLP, Kaufman, Rossin & Co., Rothstein Kass, Deloitte, Marcum LLP, Chilton Investment Company, Alston & Bird LLP, RSM McGladrey, Inc., Arthur Bell CPAs, Cowen Group, Grant Thornton LLP, and PricewaterhouseCoopers LLP.
Financial Research Associates is registered with the National Associates of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors and this conference allows participants to earn up to 14 continuing professional education credits. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit.
About Financial Research Associates:
Financial Research Associates (FRA) provides the financial community with access to businesss information and networking opportunities. Offering highly targeted conferences, FRA is a preferred resource for executives and managers seeking cutting-edge information on the next wave of business opportunities. For additional information on Financial Research Associates (FRA), please visit their website at: www.frallc.com.
About The Hedge Fund Business Operations Association:
The Hedge Fund Business Operations Association (HFBOA) is an industry-run association. Our mission is to support hedge fund CFOs, COOS and CCOs and their need for networking opportunities, provide an unbiased platform to exchange new ideas, and develop a forum/clearinghouse of pertinent information about hedge fund business operations. To achieve this goal, the association focuses on provided hedge fund operations personnel with reliable and practical information through industry updates, articles, educational summits and useful web links. For additional information on the Hedge Fund Business Operations Association and to join, please visit their website at: www.frallc.com.
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New York (HedgeCo.net) – On October 31, 2011, the Securities and Exchange Commission (“SEC”) adopted new rules under the Commodity Exchange Act and the Investment Advisers Act of 1940 to implement provisions of Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The new rules requires investment advisers that advise one or more private funds and have at least $150 million in regulatory assets under management (“RAUM”)[1] attributable to private funds at the end of its most recent fiscal year to file Form PF periodically with the SEC.
The following are the new requirements for filing frequency and first filing deadlines for advisers:
RAUM Attributable to Hedge Funds
Filing Frequency
First Filing Deadline
Less than $150 million
No filing required
No filing required
$150 million – $1.5 billion
Annually, within 120 days after end of fiscal year.
April 30, 2013
$1.5 billion – $5 billion
Quarterly, within 60 days after end of fiscal quarter.
February 28, 2013
$5 billion or more
Quarterly, within 60 days after end of fiscal quarter.
August 31, 2012
For advisers with RAUM that is attributable to private equity funds, liquidity funds and registered money market funds, the threshold RAUM varies. Additionally, the specific sections of the Form PF that an adviser must complete depend on the amount of RAUM.
The Form PF is legally complex, time-consuming and requires voluminous data collection and preparation. As such, we recommend that those advisers who are required to file Form PF plan ahead and begin to develop an internal process for obtaining the required information.
[1] Form PF instructs advisers to calculate RAUM in accordance with Part 1A, Instruction 5.b of Form ADV. Advisers are not permitted to subtract any outstanding indebtedness or other accrued fees or expenses that remain in the account. Moreover, all of the assets of a private fund should be treated as a “securities portfolio” regardless of the nature of such assets.
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New York (HedgeCo.net) – Title IV of the Dodd-Frank Act is also known as the “Private Fund Investment Advisers Registration Act of 2010″ (the “PF Act”). The PF Act amends the Investment Advisers Act of 1940 (the “Advisers Act”) and eliminates an exemption from investment adviser registration that is often claimed by hedge funds and other private fund managers. This common “Small Investment Adviser” exemption was for advisers with less than $25 million under management and fewer than 15 clients. Even though the PF Act provides some new exemptions that are detailed below many additional managers will be required to register as investment advisers with the Securities and Exchange Commission (the “SEC”) when the PF Act becomes effective.
The PF Act also imposes new record keeping and reporting requirements on private fund managers, transfers regulatory responsibility for certain mid-sized investment advisers from the SEC to the states and amends certain other sections of the Advisers Act.
New York (HedgeCo.net) – Due to the new shift in regulatory oversight, Northern Trust’s hedge fund administration unit, Northern Trust Hedge Fund Services LLC, has started actively working with its private fund clients to provide the data necessary for Form PF reporting.
