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SEC strengthens reporting requirements for hedge funds, private advisors

On Behalf of | May 11, 2023 | Financial News

The Securities and Exchange Commission has approved rules expanding reporting requirements for private investment advisors and hedge funds, according to InvestmentNews.

By a 3-2 vote, the SEC adopted amendments to the disclosure requirements in Form PF which is filed by hedge funds and private equity funds.

Under the regulation, hedge funds with at least $1.5 billion in assets will have to report significant investment losses, withdrawals and redemptions to the SEC within 72 hours. This reporting requirement would be activated by certain events that the SEC believes could indicate significant stress or signal potential systemic risk implications.

Private equity funds with at least $150 million in assets would have 60 days after the end of a quarter to report secondary market transactions and general partner removals and investor elections to terminate a fund or its investment period. Funds of over $2 billion will also have additional annual reporting requirements in a number of areas including investment strategies.

SEC Chair Gary Gensler, one of three commissioners who voted in favor of the amendments, cited the need for more visibility of changes at private funds that could harm investors. He noted that private funds managed by registered investment advisors have $21 trillion in assets and have tripled over the past decade.

“I think this final rule — through the greater visibility into private funds it will provide to regulators — will help protect investors and promote financial stability,” said Gensler.

The new current reporting and quarterly event reporting requirements will take effect six months following publication of the final rule in the Federal Register. The other amendments take effect one year following publication of the final rule in the Federal Register.

The attorneys at Lewitas Hyman include former senior attorneys at the SEC whose legal experience and industry knowledge make them uniquely qualified to provide counsel on securities regulatory, compliance and enforcement matters. Additionally, we regularly monitor SEC, FINRA and other SRO rule-making activities to help ensure that our clients are aware of any new policies while assisting them in implementing any recommended changes. If your firm is facing an investigation from a regulatory agency, please contact Lewitas Hyman at (888) 655-6002 or through our online contact form.