You slave over Form PF trying to get the information demanded by the Securities and Exchange Commission. What happens to that data?
The Dodd-Frank Wall Street Reform and Consumer Protection Act Section 404 directed the SEC to establish reporting requirements for investment advisers to private funds as necessary and appropriate in the public interest and for the protection of investors or for the assessment of systemic risk by the Financial Stability Oversight Council. Form PF was the result of Section 404. That section of Dodd-Frank also requires the SEC to submit an annual report to Congress on how the SEC is using the data.
According to the latest annual report, the SEC uses Form PF data in its examination and enforcement programs.
Prior to an examination of a private fund adviser that files Form PF, OCIE staff generally reviews the adviser’s Form PF filing as a part of a routine pre-examination evaluation. This review, in conjunction with other data sources, provides OCIE staff with an understanding of the nature of an adviser’s business and investment strategy.
I did not find this to be the case. The Form PF data is locked away from OCIE and examiners need permission to access the data. At least that was the case in the Boston office six months ago.
It’s good that potentially sensitive data is hard to access. That was supposed to be the case with Form PF data. Examiners are already deep into a fund manager’s business operations do the Form PF data would not likely contain any secrets that the examiners are not already looking at.
The examiners will compare the Form PF data to what shows up in due diligence reports, pitch books, offering documents, operating agreements and books and records. Exam staff will look for discrepancies between an adviser’s Form PF filing and any publicly-available documents related to the adviser, including Form ADV.
According to the report, the SEC is collecting Form PF data on 21,542 funds. Of those, 2,888 are large private equity fund advisers (over $2 billion in RAUM) of a pool of 7,004 private equity funds. There are 1,397 real estate funds reporting with $354 billion in RAUM.
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