![]() The final rule also requires large firms with at least $2 billion in assets under management to provide more data about their strategies, use of leverage, and a general partner’s performance compensation. Under the changes, private equity firms will also have to make faster disclosures for some trigger events, including the removal of a general partner and certain fund terminations. “The SEC has handled confidential market information since its founding,” Gensler told reporters after the commission’s vote, adding that the SEC’s leadership is focused on cybersecurity. The forms contain some of the private fund industry’s most closely guarded secrets and are handled by a very small number of agency staff. Hedge funds and private equity firms have consistently pushed back against any efforts by the SEC to expand the type of data they must confidentially disclose, arguing that it’s proprietary information that could fall into the hands of unauthorized users through a data breach or other slip-ups. But the push to speed up the now quarterly filings, known as Form PF, really picked up in the wake of the trading turmoil after the onset of Covid-19 and when retail investors plowed money into stocks such as GameStop Corp. Private funds “are investing in more diverse types of assets, with more interconnections to the financial markets,” he said.Įxpanded oversight over private fund managers has been a long-time policy goal of Democratic lawmakers, including Massachusetts Senator Elizabeth Warren. “The importance of this reform is clear,” Stephen Hall, legal director and securities specialist at Better Markets, a Washington-based group that advocates for tougher regulation, said in a statement. “Some triggering events will be difficult to pinpoint to a specific time from which the 72 hours will begin tolling and the lack of a deadline on a business day increases the likelihood of filing deadlines occurring out of regular business hours or over weekends,” Jennifer Wood, global head of asset management regulation at the Alternative Investment Management Association, said in a statement. Losses exceeding 20% in a short period would qualify, the regulator said. The agency has dubbed these “trigger events” and, in addition to big losses, they can include things like significant changes to prime-brokerage relationships, available cash or counterparty defaults. The SEC proposed in January 2022 allowing just one business day for hedge funds to disclose major events. “Private funds today are ever more interconnected with our broader capital market.” “Private funds have evolved significantly in their business practices, complexity and investment strategies,” Gensler said. The SEC says the stepped-up reporting by hedge funds that oversee at least $1.5 billion in assets will let Wall Street’s main regulator, as well as the Treasury Department and other agencies in Washington, get a handle on swift-moving events that may pose systemic risks. The rule is part of a campaign by SEC Chair Gary Gensler to scrutinize private investments funds, whose wagers - both winning and losing - can reverberate through financial markets. Large hedge funds will have no more than 72 hours, or “as soon as practicable,” to tell the agency about extraordinary investment losses and major margin events. Just how that’s going to work remains to be seen. Only the SEC will be notified, privately, when significant losses occur. The investing public, in theory, won’t be any wiser. Until now, funds have generally had to report positions in quarterly public filings. It also promises to add to businesses’ administrative headaches. The rule, approved Wednesday, marks a significant shift for an industry that tends to prize its secrecy. In a first, the SEC is going to require big hedge funds to share with regulators major investment losses in near real-time. Nigeria Targeted a UK Mansion Its Next Leader’s Son Now Owns It US Looks Past India’s Rights Record as China Worries Deepen PacWest Is Weighing Strategic Options, Including Possible Saleīanker Pay Surges For Those Willing to Work in Saudi Arabia Zelenskiy Denies Ukraine Sent Drones to Hit Putin, Kremlin (Bloomberg) - The US Securities and Exchange Commission wants to be let in on some of Wall Street’s most confidential information - and quickly.
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