On Feb. 8, 2024, the Securities and Exchange Commission and the Commodity Futures Trading
Commission (CFTC) jointly adopted amendments to Form PF, the confidential reporting form for
certain SEC-registered investment advisers to private funds.
Benjamin Schiffrin, Director of Securities Policy at Better Markets, a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, said that the amendments “fill key information gaps that have become apparent with respect to private funds”.
Form PF provides the Commissions and the Financial Stability Oversight Council (FSOC) with important, confidential information about the basic operations and strategies of private funds and their advisers and has helped to establish a baseline picture of the private fund industry for use in assessing systemic risk.
“The SEC and CFTC recognized appropriately that the evolution of private funds in the last decade required that they update the information that is reported pursuant to that statutory authority. The amendments that they adopted will better enable FSOC to assess systemic risk and better enable the Commissions to protect investors,” he stated.
In addition to the adoption of these final rules, the Commission has also entered into a memorandum of understanding with the CFTC to facilitate data sharing.
“I believe such data sharing will help our Commissions coordinate in overseeing this important area of the capital markets,” Chair Gary Gensler said.
Meanwhile, SEC Commissioner Mark T. Uyeda and CFTC Commissioner Caroline D. Pham have jointly issued a statement, saying that both agencies recognize that “Form PF elicits non-public information about private funds and their trading strategies, the public disclosure of which could adversely affect the funds and their investors.”
Both agencies recognize that “Form PF elicits non-public information about private funds and their trading strategies, the public disclosure of which could adversely affect the funds and their investors.”
A Form PF filing contains highly sensitive proprietary information about a specific advisory firm, inadvertent public disclosure of which could create significant harm to that firm and its clients, they said.
Both Commissioners objected to the MOU for three reasons: (1) it is not necessary for the CFTC to be provided Form PF data for non-CFTC registrants; (2) broader distribution of all Form PF data increases its vulnerability to cybersecurity threats; and (3) the MOU’s provisions for handling of confidential Form PF data are inadequate given the sensitivity of that information.
“Form PF contains sensitive information that the SEC committed to protecting when the form was first adopted, as required by law. The SEC and CFTC embark on an information-sharing arrangement that lacks limitations on scope. Compounding the problem is a lack of appropriate security protocols. For that reason, we are unable to support this MOU,” they said.
