Investment Advisers Act rule 204(b)(1) requires SEC-registered advisers with at least $150 million in private fund assets under management to submit periodic reports on Form PF (private fund). The rule took effect March 31, 2012 and the first Form PF filings were made in July 2012.
You must file an updated Form PF:
The treasure trove of data is used by the SEC for pre-examination due diligence and in risk identification. Examiners’ are looking for trends and possible emerging risks.in the private fund industry. They are also further developing analytics to monitor the risk-taking activities of investment advisers to hedge funds and other private funds.
SEC examiners will read an adviser’s Form PF filing before showing up for an exam onsite. They will look for inconsistencies with other information obtained from an adviser during an examination, such as due diligence reports, pitch books, offering documents, operating agreements and books and records. Examiners also will look for discrepancies between an adviser’s Form PF filing and its Form ADV.
Investment strategies highlighted in the data that don’t match disclosures also will catch an examiner’s eye. Form PF data also may wave red flags that trigger an exam based on exposures, valuation, high-frequency trading and aberrational returns.
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