SEC and CFTC Propose Significant New Reporting by Private Equity, Hedge Fund and Commodity Pool Managers

Overview

On January 25, 2011, the Securities and Exchange Commission (the "SEC") proposed Rule 204(b)-1 under the Investment Advisers Act of 1940 (the "Advisers Act") and on January 26, 2011, the Commodity Futures Trading Commission (the "CFTC") proposed Rule 4.27(d) under the Commodity Exchange Act. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") required the SEC and CFTC to implement these rules in order to provide the Financial Stability Oversight Council (the "FSOC") with information necessary and appropriate to assess systemic risks.

As proposed, Rule 204(b)-1 will require advisers to hedge funds, private equity funds and "liquidity funds" (i.e., private money market funds) to periodically file new Form PF with the SEC. Form PF is lengthy (the entire form is 44 pages long) and requires detailed responses. The content and frequency of an adviser's reporting obligations on Form PF depend on the types of private funds advised