Policy Issues

SEC Proposed Rules: Private Fund Advisers, Form PF


In 2022, the Securities and Exchange Commission (SEC) proposed two rules that would significantly overhaul the regulation of the private fund industry—a key capital source for income-producing real estate. The first proposed rulemaking would amend the Form PF reporting requirements for certain private fund managers and the second proposed rule would impose new investor reporting requirements on certain Private Fund Advisers under the Investment Advisers Act of 1940.

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While we support efforts taken by Commission to protect investors and monitor risk, our April 25, 2022 comment letter raises concerns that, if finalized, the private fund proposal could hinder real estate capital formation, the development and improvement of real properties, essential economic activity, and jobs. 


  • The SEC approved the two proposals despite strong dissents issued by Commissioner Hester Peirce, who voted no on each proposal and raised concerns that the rules would take away the SEC’s resources for protecting retail investors. Chairman Gary Gensler, however, indicated that he views the rules as protecting retail investors whose retirement plans invest in private funds.
  • With the stated goal of enhancing the Financial Stability Oversight Council’s (FSOC’s) monitoring and assessment of systemic risk and protecting investors, the SEC proposal would transform Form PF into a current reporting form for large hedge fund advisers and advisers to private equity funds, while maintaining the existing quarterly or annual reporting obligations applicable to private fund advisers regardless of size. The SEC’s proposal also (1) expands Section 4 of Form PF by reducing the reporting threshold applicable to large private equity advisers from $2 billion to $1.5 billion in private equity fund assets under management, and (2) introduces a new large liquidity fund adviser reporting requirement that essentially requires such advisers to report the same information that money market funds report on Form N-MFP (as proposed to be amended in December 2021).
  • As stated in our March 21, 2022, Form PF comment letter, the proposed addition of new reporting requirements presents significant compliance and operational challenges for private real estate fund sponsors with no added benefit to investors and no relation to the intent of Form PF in monitoring systemic risk. As a result, the proposed amendments are not required and should not be adopted. At the very least, the SEC must provide adequate evidence that the proposed amendments bear some reasonable resemblance to systemic risk and provide meaningful cost-benefit analyses to support the increased burdens inherent in adopting the compliance infrastructure necessary for such reporting.

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  • The “Private Fund NPRM” would add new and amended rules under the Investment Advisers Act that the SEC believes would increase transparency and avoid adviser conflicts of interest. If adopted as proposed, a private fund adviser would need to adopt policies and procedures to comply with these requirements and evaluate whether its governing documents, offering memoranda, and side letters should be updated to reflect the new regulatory requirements and prohibitions. The proposed rules apply to exempt reporting advisers in some instances, but the SEC has posed questions for comment asking whether other parts of the proposed rules should apply to such advisers. The proposed rules have the potential to significantly increase regulatory burdens across registered and exempt private fund advisers. 

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