SEC Moves to Revise Reporting Rules on Private Equity

The Securities and Exchange Commission unveiled its regulatory agenda late last week, in which the agency noted its intention to revise the reporting requirements of private equity firms.

While the SEC gave no specific details after releasing its annual agenda on Friday, the investment regulator says it intends to make changes to the Form PF, a regulatory filing that investment advisers with hedge funds and private equity firms must submit in order for the agency to monitor risks to the U.S. financial system.

“To meet our mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation, the SEC has a lot of regulatory work ahead of us,” SEC Chair Gary Gensler said in a statement.

Information in the Form PF includes details on the assets that investors oversee. It applies to funds with over $150 million in assets under management. Funds with less are typically exempt from reporting requirements.

Exemptions on private fund reporting were narrowed with the passage of the Dodd-Frank Act in the wake of the 2008 financial crisis, but softened during the Trump administration.

The rulemaking list released by the SEC, now under Biden-appointee Gensler, called Dodd-Frank “unfinished work,” indicating the law will be strengthened in the near future, and could once again narrow the list of private equity funds exempt from reporting requirements.

While it’s not yet certain whether the SEC will use the Dodd-Frank Act to expand the number PE firms that are required to report investment information, it’s more likely firms subject to Form PF will face expanded requirements.

In March, Gensler said he was open to using “all” of the SEC’s authorities to increase transparency on PE firms during his nomination hearing.

Regulators are also seeking public comment on ways to further update the SEC’s rules on exempt offerings, including updating the financial thresholds in the accredited investor definition and information requirements around Regulation D, according to the agency.

The SEC also included updating regulations around specialty acquisition companies—better known as SPACs—as part of the annual regulatory agenda. SPACs have become a popular vehicle for private equity firms to raise additional capital through public markets and create a new exit path for portfolio companies, despite a slump in activity in recent weeks.

Changes to the SEC’s rules on SPACs will likely increase oversight on the investment vehicles.

Most of the SEC’s agenda is still under review. You can view the entire list of agenda items here.