Is your hedge fund registered with the SEC? Do you manage one or more private funds with assets of at least $150 million?
If you said yes to these questions, then you have some homework to do. Under SEC regulations, your firm is required to file Form PF.
During a recent webinar, we asked ACA Compliance Group to talk us through the requirements and recommendations for filing Form PF as well as some additional compliance program recommendations. Below is a short recap of ACA’s presentation. To listen to the full replay of our event, click here.
Form PF: Requirements & Recommendations
Depending on your firm’s fund type and assets under management (AUM), the deadline for your Form PF filing may be sooner rather than later. Larger funds - including hedge fund managers, liquidity managers and private equity managers - will need to file sooner, while the majority of registered investment advisers won’t need to file until early next year [see chart]. All filers are required to complete Section 1 of Form PF, and additional sections may be required for those larger funds with assets upwards of $1.5 billion. Looking ahead, the large hedge fund and liquidity managers will be required to file their reports quarterly; all others will file on an annual basis.
The challenge with Form PF lies in the fact that firms must aggregate a wide array of data to complete the filing properly. So in addition to being able to successfully interpret the form, these investment firms must also work to meet the inherent information technology challenges – particularly for firms required to file Sections 2, 3 and 4.
Preparing a test filing is a great way to properly ready your firm for the time when the deadline approaches. For Section 1 only filers – whose deadline is not until April 2013 – there is plenty of time to test their internal systems and processes and determine the best method for collecting data and completing Form PF. This is going to give your firm the best indication of how prepared it is to meet these SEC demands and how long the process is going to take.
Instead of relying on strictly internal personnel to complete Form PF, you should also reach out to your service providers to determine if they can help you in any way. Many prime brokers and fund administrators are working with their clients to assist them with the filing process.
It’s important to point out that the SEC will likely use Form PF as a first step in visits with registered investment advisers. Submissions will undoubtedly drive the examination process down the road.
Maintaining an Effective Compliance Program
While Form PF encompasses an essential set of requirements for SEC registered investment firms, your firm should also look to maintain an internal compliance program to effectively and efficiently maintain your business and reputation.
Consider reviewing emails sent and received by internal parties for suspicious correspondence with competitors, government agents, or other conflicts of interest. Keep an eye out for emails sent with attachments to personal email accounts and other outbound messages of a suspicious nature.
Document your firm’s email reviews and decide in advance how to respond to findings that appear serious. Hopefully, as words spreads throughout your firm that you’re investigating, changes in appropriate email behavior will take place.
Finally, be mindful of your firm’s requirements from a record retention perspective. Under a variety of regulations, many firms are required to retain and archive email and other electronic communications for up to seven years.
Record retention is an important topic all on its own, so we’re going to take a closer look at message archiving and other technology compliance requirements in Part 2 of our webinar recap coming up on Thursday. Be sure to check it out!
In the meantime, here are some other helpful resources:
Photo Credits: Eze Castle Integration