SEC’s Proposed Amendments to Form PF and Advisers Act Introduce Uncertainty, Increase Burden on Compliance Staff (Part One of Two)

After foreboding words at the end of 2021 about changes he would like to see to the private funds industry, SEC Chair Gary Gensler has followed up with a veritable avalanche of proposed amendments and regulations. Most prominently, the SEC proposed changes to Form PF along with new and amended rules for private fund advisers under the Investment Advisers Act of 1940 (Advisers Act). As drafted, the proposed amendments impose new – and, some have argued, unnecessarily onerous – reporting requirements, burdens and restrictions on fund managers. Morgan Lewis attorneys detailed the features and flaws of the SEC’s proposed amendments in a recent webinar featuring partners Christine M. Lombardo, Courtney C. Nowell, Jedd H. Wider and Joseph D. Zargari. This first article in a two-part series details key features of the proposed amendments to Form PF that are relevant to hedge fund managers, as well as those in the amendments to the Advisers Act relating to audits and annual compliance reviews. The second article will outline proposed changes to the Advisers Act to introduce new quarterly reporting requirements, as well as prohibit certain activities and types of preferential treatment of investors. See “Practical Impact of the Proposed Amendments to Form PF on Fund Managers and Reasons for Industry Backlash (Part Two of Two)” (Mar. 10, 2022).

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