Sponsors and managers of these funds are now required to register with the SEC, and they are requesting that steps be taken by the regulator to protect the confidentiality of the information that is provided. The generous “private adviser” exemption, which permitted many fund managers to remain outside the SEC’s reach regardless of the size of their funds, has now been repealed.
The clear trend is towards more disclosure from fund sponsors and managers on the products that they create and market to investors. The form used by all investment advisers to register with the SEC – Form ADV – is also being revised and expanded. More information on fee arrangements and conflicts of interests is being mandated. The information on these registration forms is publicly available at the SEC’s website.
In addition to registration with the SEC, a new “Form PF” has been promulgated that many large hedge fund managers and private equity general partners will soon have to submit, detailing sensitive and proprietary facts about the funds they manage. The SEC comment period on the new reporting rules is open until April 11.
The Form PF would contain even more sensitive information than Form ADV. Such data, in the hands of competitors or customers, could undermine a fund’s investment strategy and subject investors to significant losses. SEC officials point to powerful exemptions to the Freedom of Information Act, which should provide fund managers with comfort.
However, many remain unconvinced and uncertain.