Private Fund Disclosures Under the Dodd-Frank Act

Abstract

Title IV of the Dodd-Frank Act requires the Securities and Exchange Commission (SEC) to collect sensitive proprietary information from private fund advisers. Prior studies suggest that the SEC’s mandated collection of private fund data in Form PF created several core challenges for the private fund industry and for the SEC. This article presents the results of a survey of SEC-registered investment advisers to private funds after the SEC’s first mandatory collection of private fund data. The key findings of this study indicate that the majority of private fund advisers responding to the survey incurred less than $10,000.00 to prepare their initial data reporting to the SEC, with the cost of subsequent annual Form PF filings at about half the initial cost. Larger private fund advisers, required to file quarterly, are faced with substantially higher compliance cost, both for their initial data reporting and for subsequent quarterly filings. The data analysis in this study affirms SEC cost estimates for smaller private fund advisers’ Form PF compliance costs. The SEC appears to have overestimated the costs of Form PF compliance for larger private fund advisers. While the data analysis in this study suggests that the overall effect of private fund disclosure requirements on the private fund industry is moderate, the data analysis also indicates that the data reporting requirements for private funds and the corresponding SEC forms can be further improved. The majority of SEC-registered private fund advisers identified the ambiguity of Form PF data reporting requirements as the most pressing issue. However, the majority of respondents also considered their existing reporting systems adequate for capturing the information required by the SEC and agreed with the SEC’s definitions and instructions for Form PF. Respondents predominantly assessed the best level of guidance available from the SEC staff to assist in private fund advisers’ data reporting efforts as sufficient or good.