By John McCrank
(Reuters) – The U.S. Securities and Exchange Commission will decide on Wednesday whether to adopt new rules for advisers to hedge funds and private equity funds aimed at increasing transparency, competition and efficiency in the stock market. $25 billion.
The SEC will vote on a proposal to update the so-called Form PF, which was put in place after the 2008-2009 financial crisis to monitor risk in the private fund sector, to improve the quality of large fund disclosures about their investment strategies. investment. and leverage.
“Since the SEC implemented Form PF 12 years ago, a lot has changed,” SEC Chairman Gary Gensler said Tuesday at a conference held by the Association of Managed Funds.
“The new transparency in the proposal would relate to fees, expenses, performance and side letters,” he said.
The rule changes would require private fund advisers such as private equity firms and hedge funds to disclose quarterly details about their fees and expenses, in a bid to shed light on the rapidly growing market sector.
Advisers to large hedge funds would also need to report to financial regulators certain events that may indicate significant stress or otherwise signal systemic risk and harm to investors, which could include significant margin calls from defaults on counterparty, within 72 hours after the events.
Advisers to large private equity funds would need to include information about investor elections to remove a general partner, certain fund termination events, and the occurrence of adviser-led side deals in their current reports.
In their annual reports, advisers would be required to include information related to their strategies, use of leverage, and recoveries of performance compensation from a general partner.
The SEC is also working with the Commodity Futures Trading Commission on another proposal that, among other things, would expand the reporting requirements for large hedge fund advisers.
(Reporting by John McCrank; Editing by Chizu Nomiyama)