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When does an RIA Firm Managing a Private Fund need to file a Form PF?

Posted by RIA in a Box

Apr 16, 2019 9:08:24 AM

RIA Form PF filing assistanceThe primary regulatory filing requirement for a registered investment adviser ("RIA") firm is the Form ADV. The Form ADV Part 1 and Part 2 is filed via the online Investment Adviser Registration Depository ("IARD") system. However, some RIA firms that advise private funds may also be required to file a Form PF via the IARD system as well. According to the latest publicly available data from the Securities and Exchange Commission ("SEC") Analytics Office, as of the second quarter of 2018, there are presently over 3,000 private fund advisers advising over 30,000 private funds that currently file a Form PF. In this post, we highlight when an RIA firm managing a private fund may be required to submit a Form PF.

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Which RIA firms need to file a Form PF?

According to the SEC's Form PF general instructions, an RIA firm is required to compile and file a Form PF when all three of the following characteristics are met:

  1. The firm is registered or required to federally register with the SEC as investment adviser AND
  2. the firm manages one or more private funds AND
  3. the firm (and its related persons) collectively manage at least $150 million in private fund assets under management ("AUM") as of the last day of the most recently completed fiscal year.

Private fund assets under management are defined as "the portion of such adviser’s regulatory assets under management that are attributable to private funds it advises." In other words, just because an RIA firm manages more than $150 million in regulatory assets under management does not mean it needs to file a Form PF. Rather, the firm must manage one or more private funds with at least $150 million directly attributable to those private funds. 

Here are a few examples to further illustrate when a firm may or may not be required to file a Form PF:

  • Scenario A
    • An SEC-registered RIA firm with $550 million in regulatory AUM manages three hedge funds which together total $125 million in aggregate private fund AUM.
      • No, this firm would generally not be required to file a Form PF since it manages less than $150 million in private fund AUM.
  • Scenario B
    • An SEC-registered RIA firm with $155 million in regulatory AUM exclusively manages a single private equity fund with $155 million in private fund AUM.
      • Yes, this firm firm would generally be required to file a Form PF since it is SEC-registered and manages more than $150 million in private fund AUM.
  • Scenario C
    • A state-registered RIA firm with $90 million in regulatory AUM exclusively manages a single hedge fund with $90 million in private fund AUM
      • No, this firm would generally not be required to file a Form PF since it is state-registered and manages less than $150 million in private fund AUM.

Also, it's important to note that a private fund is defined as:

Any issuer that would be an investment company as defined in section 3 of the Investment Company Act of 1940 but for section 3(c)(1) or 3(c)(7) of that Act. If any private fund has issued two or more series (or classes) of equity interests whose values are determined with respect to separate portfolios of securities and other assets, then each such series (or class) should be regarded as a separate private fund. This only applies with respect to series (or classes) that you manage as if they were separate funds and not a fund’s side pockets or similar arrangements.

Which sections does a private fund need to complete on the Form PF?

Form PF private fund section 1

All Form PF filers, regardless of private fund AUM, are required to complete Section 1a and Section 1b. All private fund advisers required to file a Form PF that advise one or more hedge funds, regardless of total hedge fund AUM, are required to complete section 1c. Some larger private fund advisers may also be required to complete additional section(s) of the Form PF:

  • "Large hedge fund advisers" which are designated as firms and related persons that collectively manage at least $1.5 billion in hedge fund AUM are required to complete Section 2.
  • "Large liquidity fund advisers" which are designated as firms and related persons that collectively manage at least $1.0 billion in liquidity fund AUM are required to complete Section 3 for each liquidity fund.
  • "Large private equity advisers" which are designated as firms and related persons that collectively manage at least $2.0 billion in private equity fund AUM are required to complete Section 4 for each private equity fund.
All Form PF filings are submitted via the private fund reporting depository ("PFRD") which is part of the IARD online filing system. The IARD system assesses a $150 fee on all Form PF filings.

Does a state-registered or exempt reporting adviser ("ERA") need to file a Form PF?

Given the criteria outlined above, SEC-registered RIA firms with less than $150 million in private fund AUM, exempt reporting advisers, and state-registered RIA firms are generally not required to file a Form PF. However, it's important to note that those firms are still generally required to file a Form ADV which will disclose general information about the private funds those firms manage.

Note: Our overview of exempt reporting adviser registration requirements can be found here.

When must an RIA firm managing a private fund file a Form PF?

While large hedge fund advisers and large liquidity fund advisers are required to submit quarterly Form PF filings, all other private fund advisers are generally required to file an annual Form PF update within 120 calendar days after the end of the fund's fiscal year. 

RIA firms filing a Form PF for the first time will disclose it is the firm's initial Form PF filing. Going forward, the firm will then disclose it is submitting a quarterly or annual update.

We strongly suggest that the Chief Compliance Officer of all RIA firms that advise private funds further review the SEC's Form PF general instructions and frequently asked questions.

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Note: The information contained herein is an overview regarding certain private fund regulatory compliance considerations. It is not intended to be a comprehensive analysis or apply to any one private fund's particular situation.

Topics: RIA Compliance

RIA in a Box LLC is not a law firm, investment advisory firm, or CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities or legal counsel if applicable.

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