RIA Compliance Blog
In June of this year, the Securities and Exchange Commission settled charges with 13 firms that serve as registered investment advisers to private funds for failing to file Form PF. The settling companies were: Bachrach Asset Management Inc., Bilgari Capital LLC, Brahma Management Ltd., Bristol Group Inc., CAI Managers & Co. L.P., Cherokee Investment Partners LLC, Ecosystem Investment Partners LLC, Elm Partners Management LLC, HEP Management Corp., Prescott General Partners LLC, RLJ Equity Partners LLC, Rose Park Advisors LLC, and Veteri Place Corp. According to the settlement orders, “the advisers failed to file annual reports on Form PF informing the agency about the funds they advise, including the amount of assets under management, fund strategy, performance, and use of borrowed money and derivatives.”
Private fund advisers who manage at least $150 million in assets are required to file reports on Form PF on an annual basis pursuant to Rule 204(b)-1 under the Investment Advisers Act of 1940, first implemented in 2012. The information compiled on Form PF is crucial to financial regulators for a number of reasons. For example, one of Form PF’s purposes is to provide the Financial Stability Oversight Council with statistical and other data that assists it in monitoring systemic risk in the private fund industry. The SEC also utilizes facts obtained in Form PF to assist in its regulatory programs, such as examinations, investigations, and consumer protection endeavors pertaining to private fund advisers. Finally, the SEC summarizes information and statistics collected in Form PF filings in order to publish that information to educate the public about private fund advisers.
The SEC’s Orders provide that each of the above private fund advisers were subject to the Form PF reporting requirements for a number of fiscal years because, in each of those fiscal years, the private fund advisers managed assets worth at least $150 million. However, in each of those fiscal years, the private fund advisers failed to do so.
Each order compels the private fund advisers to cease and desist from future violations of Rule 204(b)-1 and to pay civil money penalties of $75,000. The SEC took into account remedial efforts made by each of the private fund advisers.
Parker MacIntyre provides legal and compliance services to investment advisers, broker-dealers, registered representatives, hedge funds, and issuers of securities, among others. Our regulatory practice group assists financial service providers with complex issues that arise in the course of their business, including compliance with federal and state laws and rules. Please visit our website for more information.