Form PF Requirements Unclear Among Mid-Sized Funds

Although the Securities and Exchange Commission's (SEC) deadline is fast approaching for complying with Form PF requirements early next year, some medium-sized private funds may not yet be aware of the data work needed for compliance.

That is the view of GlobeOp president and chief operating officer, Vernon Barback, whose company recently announced a new service aimed at helping its administered funds of all sizes with the new regulatory requirement. "Here we are in August, and I think that the majority of what the SEC defines as large, private fund management companies are fully aware of the issue," says Barback. "But the mid-sized ones, some of them are not. I think that the industry is still getting comfortable with understanding the requirement, and of course every day that passes is closer to the actual deadline," he says.

This isn't down to a lack of preparation on the part of funds, Barback explains, but due to the weight of regulation and requirements already on them. "Whenever funds are going to be required to register ─ and have not yet registered ─ and then have another new rule put on top, I think it's quite understandable that not everyone may learn of the requirement as soon as may be optimal from their point of view," he says.

Form PF (private fund), which has grown out of the Dodd-Frank Act, is designed to aid the SEC in monitoring systemic risk among entities such as hedge funds and private equity funds. Funds with assets over $1 billion under management are required to post their first filing with the SEC by 15 January 2012, while those with under $1 billion have until 31 March 2012. The rule was developed in conjunction with the Commodity Futures Trading Commission (CFTC), and involved consultation with the Financial Services Authority in the UK, as well as the Securities and Futures Commission in Hong Kong. Together, according to the SEC-CTFC proposed rule, these bodies have jurisdiction over advisers for some 92 percent of global hedge fund assets.

"I think there's a little bit of concern and push-back among the investment management community because the reporting requirements are quite extensive," says Barback. "I think that people are quite concerned about their ability to be prepared to do the required reporting within the timelines."
GlobeOp's service, in essence, aims to do the heavy lifting for its clients and increase awareness of the regulatory requirements of Form PF.

As most of the data required for the forms already exists within its systems, the administrator has the ability to compile and aggregate it, although the ultimate responsibility for accurate and timely filing with the SEC still lies with the funds themselves. "We're going to make that process as pain-free, streamlined, automated and cost-efficient as possible for our clients," Barback continues. "We're putting in place processes to routinely gather and compile the data, prepare the draft reports, and submit those to our clients for their final approval and submission," he says.