Tag Archives: Form PF

First Quarter 2013 Business & Regulatory Update

Below is the first quarter update we have sent out to our mailing list.  If you would like to be added to the mailing list, please contact us here.


Cole-Frieman & Mallon First Quarter Update

Clients and Friends:

The early months of 2013 have been a busy time in the world of investment management regulatory compliance.  As we head into the second quarter, we take this opportunity to provide you with a brief overview of some items that we hope will help you stay on top of the business and regulatory landscape in the coming months.


Form ADV Annual Updating Amendment was due on March 31.  All registered investment advisers or managers filing as exempt reporting advisers with the SEC or a state securities authority must file an annual amendment to Form ADV within 90 days of the end of their fiscal year. For most advisers, this deadline passed on March 31, 2013. Registered investment advisers or exempt reporting advisers who have not filed their annual update should attend to the filing as soon as possible.

Foreign Account Tax Compliance Act (“FATCA”) Regulations Issued. The long-awaited FATCA regulations have been issued, and the timelines for fund compliance have been set. The regulations require certain financial institutions to either (i) identify and disclose direct and indirect U.S. investors and withhold U.S. income tax on nonresident aliens and foreign corporations, or (ii) be subject to a 30% FATCA tax.  Foreign financial institutions (“FFIs”), which include hedge funds, funds of funds, commodity pools and other offshore investment vehicles, will be required to enter into agreements with the IRS by January 1, 2014 to avoid being subject to the FATCA tax. The IRS’s online registration portal will be available by July 15, 2013, and offshore funds and other FFIs must be registered by October 25, 2013 to be included on the IRS’s first list of FATCA compliant FFIs, which will be published on December 2, 2013. Managers should also consider updating their fund documents to include FATCA disclosures and representations.

Electronic Schedule K-1s. The IRS has authorized partnerships and limited liability companies taxed as partnerships to use exclusively electronic means to distribute Schedule K-1s to investors, as long as the partnership first obtains the investor’s affirmative consent. Partnerships must obtain consent in a manner that demonstrates that investors can access the electronic format in which the K-1 is furnished. States may have different rules regarding electronic K-1s, so funds should check with their counsel or service providers whether they may still be required to send state K-1s on paper. Partnerships must also provide each investor with specific disclosures that include a description of the hardware and software necessary to access the electronic K-1s, how long the consent is effective and the procedures for withdrawing the consent.

SEC Update.  The SEC has been extremely busy over the last quarter. The biggest news is the Obama administration’s nomination of Mary Jo White as the SEC’s new chairman. White, a former U.S. attorney in Manhattan, will be the first prosecutor to head the SEC, and her nomination signals the administration’s resolve to hold Wall Street accountable for any wrongdoings.  Other SEC related items include:

  • JOBS Act.  One purpose of the Jumpstart Our Business Startups Act (the “JOBS Act”) was to reduce the regulatory restrictions around the general solicitation and advertising of private securities offerings.  However, a year has passed since the bill was signed into law, and the SEC still has not promulgated rules to implement the JOBS Act. Absent guidance from the SEC, we caution fund managers against relying on the JOBS Act to engage in general solicitation and advertising of interests in their funds.
  • SEC Presence Exams.  The SEC’s two-year “Presence Exam” initiative is currently underway.  The initiative, which aims to examine the conduct of most newly registered investment advisers, gives the SEC the ability to reach a large percentage of new registrants by focusing on a limited number of higher risk issues, including: (i) marketing, (ii) portfolio management, (iii) conflicts of interest, (iv) safety of client assets and (v) valuation.  Most newly registered managers should expect to be examined within the next two years.  Information about Presence Exams can be found here.
  • Common Adviser Custody Rule Deficiencies.  The SEC recently released a risk alert that addresses the common deficiencies related to Rule 206(4)-2 under the Investment Advisers Act of 1940, known as the “Custody Rule”. The risk alert identifies four primary categories of deficiencies: (i) failure by an adviser to recognize situations in which it has custody under the Custody Rule; (ii) failure to meet the Custody Rule’s surprise examination requirements; (iii) failure to satisfy certain “qualified custodian” requirements under the Custody Rule; and (iv) failure to properly engage independent auditors or otherwise comply with the requirements for audits of pooled investment vehicles under the Custody Rule.  Managers should carefully review the requirements of the Custody Rule and make sure that the deficiencies highlighted by the risk alert do not apply to their firms.  The risk alert can be found here.
  • Form PF. While advisers with at least $1.5 billion assets under management were required to file their initial Form PFs by March 1, 2013, most other advisers are required to file an initial Form PF by April 30, 2013. Compiling the information necessary to prepare the Form PF is burdensome and may take substantial time and effort.  If you are looking for last-minute assistance with any aspects of the filing, please do not hesitate to contact us or your service providers.

Futures and Derivatives. Like the SEC, futures and derivatives regulators and self-regulatory organizations have been very busy over the last quarter.  Important developments include:

  • ISDA August 2012 Dodd-Frank Protocol. The International Swaps and Derivatives Association’s Dodd-Frank Documentation Initiative aims to facilitate compliance with the Dodd-Frank Act. The Documentation Initiative minimizes the need for bilateral negotiations and reduces disruptions to trading by providing a standard set of amendments, referred to as protocols, to update existing swap documentation. The D-F Protocol is the first of such protocols, and it facilitates industry compliance with seven final rulemakings.  Because certain final rules have an effective compliance date of May 1, 2013, managers whose portfolios include swaps and who have existing relationships with swap dealers should adhere to the D-F Protocol as soon as possible to give swap dealers ample time to integrate information provided through the protocol.  To indicate their participation in the protocol arrangement, market participants must submit an adherence letter and pay an adherence fee of $500.00 through the online ISDA Amend system.  Detailed instructions on the submission of the Adherence Letter through ISDA Amend can be found here.
  • Swap Data Reporting and Recordkeeping. Swap dealers registered with the CFTC are obligated to report all swaps to which they are a party.  Under new CFTC rules, investment funds that are U.S. persons may need to report swaps when trading with (i) other financial entities that are not swap dealers, (ii) non-financial entities or (iii) non-U.S. swap dealers.  The new rules require that all swap counterparties keep detailed records of their swaps for the life of the swap and for five years following its termination. All investment funds who intend to transact in swaps must obtain a CFTC Interim Compliant Identifier (“CICI”) by April 10, 2013.  Investment funds may obtain CICIs here.
  • ERISA Relief for Cleared Swap Transactions.   The U.S. Department of Labor recently issued an advisory opinion addressing the application of the Employee Retirement Income Security Act of 1974 (“ERISA”) to certain “cleared swap” transactions conducted pursuant to provisions of the Dodd-Frank Act.  The advisory opinion clarifies the ERISA fiduciary status of futures commission merchants and clearing organizations that perform swap transactions on behalf of ERISA plans.  It alleviates the concern that fiduciary obstacles could keep ERISA plans out of the swap market.  The full text of the opinion is available here.
  • CFTC CTA and CPO Reporting Deadlines.  All CTAs that were required to be registered on or before December 31, 2012, had to file a Form CTA-PR annual report with the NFA by February 14, 2013.  Each CPO that was required to be registered on or before December 31, 2012, was required to complete and file applicable schedules of CFTC Form CPO-PQR by March 31, 2013.  NFA Rule 2-46 requires each CPO member to file Form CPO-PQR on a quarterly basis.  If you are a CPO or CTA and have not met these obligations and would like our assistance with the filings, please do not hesitate to contact us.

Other Notes.

  • European Union’s Alternative Investment Fund Managers Directive (“AIFMD”).  Starting July 22, 2013, in order to continue marketing to EU investors, non-EU managers will be required to comply with reporting and disclosure obligations under the AIFMD for each fund that is marketed in one or more EU jurisdictions. These obligations consist of providing pre-investment and ongoing disclosures to investors, and annual and regular reports to an EU national regulator.  If you are marketing to EU investors, you should carefully review the directive’s provisions to make sure you comply with its requirements.
  • California LLC Penalties for Unregistered Companies.  The California Franchise Tax Board recently announced that it will assess a $2,000 penalty on unregistered limited liability companies that are conducting business in California. Advisers doing business in California should make sure that they have filed the necessary registration paperwork, and should remain current with all their tax payments. Advisers registered outside of California that do business within the state must make sure to file the required California Statement of Information, which must be renewed every two years. Many taxpayers are unaware that they are “doing business” in California. If you are unsure whether or not you are doing business in California you should consult your legal adviser or service provider. The Tax Board’s release can be found here.

Compliance Calendar.  As you plan your regulatory compliance timeline for the coming months, please keep the following dates in mind:

Deadline Filing
March 31, 2013 Form ADV annual updating amendment deadline
April 10, 2013 CFTC Interim Compliant Identifier deadline for all funds who intend to transact in swaps
April 30, 2013 Form PF deadline for smaller SEC registered private fund advisers
May 1, 2013 D-F Protocol adherence deadline
Variable Distribute annual audited financial statements and copies of Schedule K-1 to fund investors
Periodic Filings Form D and Blue Sky filings should be current

Please contact us with any questions or for assistance with any compliance, registration or planning issues on any of the above topics,


Karl Cole-Frieman & Bart Mallon


Cole-Frieman & Mallon LLP is a premier boutique investment management law firm, providing top-tier, responsive and cost-effective legal solutions for financial services matters.

FINRA Announces PFRD System for Form PF

Form PF Filing System Active

As we have discussed in previous posts, many hedge fund managers are going to be required to complete Form PF on either a quarterly or annual basis. The filing will be made through a new filing system administered by FINRA called the PFRD (Private Fund Reporting Depository). Many funds will have outside groups who will be accessing the system on their behalf. Smaller funds may be able to complete the form themselves.

If you have questions on the form or accessing the PFRD, please contact us.

The PFRD announcement from FINRA is reprinted below.


To: Super Account Administrators of Investment Advisers

From: FINRA Entitlement Group

Date: June 4, 2012

Re: New Electronic Private Fund Reporting Depository (PFRD) System Entitlement

The new electronic Private Fund Reporting Depository (PFRD) System facilitates investment adviser reporting of private fund information via Form PF. Beginning today, if you are an investment adviser that is required to report private fund information, you have the ability to entitle yourself as a user to this new application; update existing accounts; and/or create new accounts with this new application. Your current user ID and password remain valid. To determine if you are required to file Form PF, refer to the criteria below.

Complete and file Form PF if:

• You are registered or required to register with the SEC as an investment adviser, or you are registered or required to register with the Commodity Futures Trading Commission (CFTC) as a commodity pool operator or commodity trading advisor and you are also registered or required to register with the SEC as an investment adviser; and

• You manage one or more private funds; and

• You and your related persons, collectively, had at least $150 million in private fund assets under management as of the last day of your most recently completed fiscal year.

For more information on the PFRD System, refer to the information on the IARD web page: http://www.iard.com/pfrd/default.asp.

For questions concerning:

• Form PF filing requirements or policy issues, contact the SEC at (202) 551-6999 or [email protected]

• Technical questions regarding the PFRD System, contact the FINRA Gateway Call Center at (240) 386-4848.

• FINRA Entitlement, contact the FINRA Entitlement Group at (240) 386-4185.


Bart Mallon is a partner with Cole-Frieman Mallon & Hunt LLP, an investment management law firm. Bart can be reached directly at 415-868-5345.

Form PF Filings to be Submitted via FINRA

SEC Mandates FINRA to Receive Form PF Filings

SEC has chosen FINRA to accept Form PF filings on its behalf when and if Form PF is adopted.  As background, on January 26, 2011 the SEC issued a proposed Rule 204(b)-1 under the Investment Advisers Act of 1940 which would require SEC registered investment advisers to file a new Form PF with the SEC on either a quarterly or annual basis.  Although the rest of the proposed rule is still under consideration, the SEC has determined that if Form PF is adopted, investment advisers would file Form PF electronically through FINRA.  FINRA currently is the operator of IARD, the system through which investment advisers electronically file their Form ADV and make necessary notice filings to states.  If the rule is passed, FINRA will develop and maintain the filing system for Form PF as well.

The SEC initially anticipated that the proposed rule implementing Form PF would have an initial compliance date of December 15, 2011 – this appears less likely as we get closer to that date and plan to provide updates as appropriate.

Form PF Filing Process and Filing Fees

Because the filing system for Form PF will likely be an extension of the current IARD filing system, we expect the process will be substantially similar to the current process of filing Form ADV.  Investment advisers filing Form PF will likely have to go through the entitlement process and then fund their accounts with the fees necessary to submit the filing through the system.  Managers will have to make quarterly annual filing based on their assets under management. Regardless of assets under management, the filing fees shall be as the same for each filing:

  • $150 for each Form PF annual update
  • $150 for each Form PF quarterly update


FINRA is the logical choice to accept and manage the filing of Form PF because, as the current operator of the IARD system, they are uniquely situated to develop and deploy the Form PF filing system in a timely manner.  The SEC believes that having FINRA expand its existing platform to accommodate this additional filing would be result in greater efficiency for both the advisers and the SEC.  However, managers should be wary of the continued consolidation of filing platforms as FINRA continues to move towards becoming the SRO for hedge fund managers and other investment advisers.

The text of FINRA’s letter regarding Form PF can be found here: FINRA Form PF Letter

The text of SEC’s notice of intent to have Form PF filed through FINRA can be found here: SEC Form PF Announcement – IA-3297


Cole-Frieman & Mallon LLP provides comprehensive registration and compliance services to hedge fund managers, including help with filing Form PF.  Bart Mallon can be contacted directly at 415-868-5345.

Hedge Fund Regulatory Changes Panel Event

100 Women in Hedge Funds September 2011 Event

There are a number of events throughout the country this month for hedge fund managers.  In addition to the end of summer, the industry is preparing for a number of significant changes which will begin affecting managers this year and next year.  As we've discussed previously, we think that some of the major issues for managers going forward will be:

While we will be exploring these topics in greater depth over the coming months, the 100 Women in Hedge Funds San Francisco event will be a great opportunity to hear industry leaders discuss how these issues are likely to affect managers.   For more information, please see the notice below.

If you are interested in registering for the event, you can sign up here.


Strategically Anticipating & Managing the Impact of Regulatory Reform

September 20, 2011 at 6 PM

San Francisco CA

With the expansion of the SEC’s jurisdiction and mission through regulatory reform, a hedge fund adviser’s efficiency in anticipating and managing the impact of the onslaught of new regulation is critical to its investment and business success. Please join senior hedge fund legal and compliance practitioners for an interactive discussion that will highlight how advisers can better tailor their regulatory risk mitigation practice to specific areas of recent SEC focus.

The discussion will include:

  • An assessment of the SEC’s new focus on investment advisers in examinations and enforcement, including best practice for managing compliance with disclosed investment strategies and risks, redemption and liquidity terms, trading practices, and enforcement actions against CCOs.
  • The cumulative effect of new disclosure requirements: Form ADV, Form PF, FATCA
  • How firms should manage issues created by the regulation of political contributions, including the SEC’s pay-to-play rule and California’s lobbying rules for placement agents


Helane Morrison, Moderator, Hall Capital Partners LLC

Mark Perlow, K & L Gates LLP

Danell Doty, Passport Capital LLC

Event Details

Date: September 20, 2011

Time: 5 PM Registration.

We will begin promptly at 6 PM; please arrive early. Since it is disruptive to everyone when latecomers enter the session, those arriving after an education session has begun will only be admitted at the discretion of 100WHF and the host. Please note the start time on this invite and plan to arrive early.

Networking and cocktails prior to session.

Host: K & L Gates LLP

Location: K&L Gates LLP

Four Embarcadero Center, Suite 1200, San Francisco, CA 94111 – Directions

RSVP: http://www.100womeninhedgefunds.org/pages/event_registration.php


Admission is free, but there is a $25 charge if you register and do not attend, even if you cancel in advance. No-show proceeds will be donated to the Clinton Global Initiative's US Childhood Obesity Prevention Program, the 2011 beneficiary of 100WHF's US philanthropic initiatives.

If you have no-show fees in arrears, the system cannot register you for an event. You can view and pay for any outstanding no-show fees online from your member profile at: http://www.100womeninhedgefunds.org/pages/my_profile.php

Space is limited. No walk-ins will be permitted.


Helane Morrison, General Counsel & CCO, Hall Capital Partners LLC

Helane L. Morrison is a Managing Director, General Counsel, and Chief Compliance Officer of Hall Capital Partners LLC. She is also a member of the firm's Executive Committee.

Prior to joining the firm in 2007, Ms. Morrison headed the San Francisco Office of the U.S. Securities and Exchange Commission (“SEC”) from 1999 to 2007. In her capacity as Regional Director and earlier as District Administrator, Ms. Morrison was responsible for securities enforcement, litigation, and regulatory matters in Northern California and five Northwest States. From 1996 to 1999, Ms. Morrison was head of enforcement for the San Francisco SEC office. She represented the SEC in legal, business, and financial communities, as well as with other government agencies and news media.

Previously, Ms. Morrison practiced law at the San Francisco law firm Howard, Rice , Nemerovski, Canady, Falk & Rabkin from 1986 to 1996 where she was elevated to partner in 1991. Her practice focused on business litigation and defense of private securities actions and SEC matters. She also conducted internal corporate investigations. Before entering private practice, Ms. Morrison served as a law clerk for Supreme Court Justice Harry A. Blackmun (1985-1986) and Hon. Richard A. Posner of tile U.S. Court of Appeals for the Seventh Circuit (1984-1985).

Ms. Morrison has served as a Director of the Bar Association of San Francisco (“BASF”) and a member of the BASF Judiciary Committee. Ms. Morrison served as a Lawyer Representative (Northern District of California) to the Ninth Circuit Judicial Conference, and was Co-Chair. She was a member of the Northern District of California, Civil Justice Reform Act Advisory group. She served on the Board of Directors of the University of California, Berkeley, School of Law Alumni Association and was Secretary of the Board. She was a member of the Federal Courts Committee of the California Bar Association and served on the Contra Costa County Human Relations Commission.

Ms. Morrison received a B.S. in Journalism from Northwestern University and earned a J.D. from the University of California at Berkeley, School of Law, where she was Editor-In-Chief of the California Law Review.

Mark Perlow, Partner, K & L Gates LLP

Mr. Perlow is a partner in the San Francisco office of K&L Gates LLP. His practice focuses on investment management and securities law, and he regularly represents hedge fund managers, mutual funds, investment advisers, fund boards of directors, and broker-dealers on a broad range of regulatory and transactional matters. Before K&L Gates, Mr. Perlow served as senior counsel in the Office of the General Counsel of the Securities and Exchange Commission, focusing on investment management, fund and corporate governance, and enforcement, and he also served in the SEC’s Division of Enforcement. Mr. Perlow is a frequent speaker and author on topics relating to investment management and the law, and he teaches a class at the UC Berkeley School of Law on the structure and regulation of capital markets and financial institutions.

Danell Doty, Senior Compliance Officer, Passport Capital LLC

Ms. Doty is a Senior Compliance Officer at Passport Capital, LLC, a global investment firm managing approximately $4.7 billion in assets. Her responsibilities include a broad range of activities including maintaining the firm’s compliance program. Before joining Passport, Ms. Doty served as Director of Fund Administration at Genworth Financial Wealth Management and Treasurer to its mutual fund companies. Ms. Doty was hired at Barclays Global Investors in 1999, where, as Head of Mutual Fund Administration, she was involved in the creation of the iShares products. She then served as Fund Chief Compliance Officer from 2004 to 2006. Prior to BGI, Ms. Doty served in several capacities for London Pacific Group, including Vice President of Operations. She was also instrumental in creating the Govett Funds and the Berkeley Funds.

About 100 Women in Hedge Funds (www.100womeninhedgefunds.org)

100 Women in Hedge Funds is a global, practitioner-driven non-profit organization serving over 10,000 alternative investment management investors and professionals through educational, professional leverage and philanthropic initiatives. Formed in 2001, 100 Women in Hedge Funds has hosted more than 250 events globally, connected more than 250 senior women through Peer Advisory Groups and raised globally over $21.5 million gross for philanthropic causes in the areas of women's and family health, education and mentoring. For more information about 100 Women in Hedge Funds, please visit www.100womeninhedgefunds.org.


Cole-Frieman & Mallon LLP runs the Hedge Fund Law Blog.  About Cole-Frieman & Mallon LLP:

Informed by significant in-house and private practice experience at some of the most prestigious Wall Street firms, hedge funds, and law firms Cole-Frieman & Mallon LLP has the business acumen and market knowledge to provide legal solutions for a wide range of financial services matters. With offices in San Francisco and New York, Cole-Frieman & Mallon LLP has a nationwide practice that services both start-up managers as well as multi-billion dollar firms. Cole-Frieman & Mallon LLP provides a variety of services including: hedge fund formation, advisor registration and counterparty documentation, CFTC and NFA matters, seed deals, internal investigations, operational compliance, regulatory risk management, hedge fund due diligence, marketing and investor relations, employment and compensation matters, and routine business matters. For more information please visit us at: http://www.colefrieman.com/.

Karl Cole-Frieman can be reached at 415-352-2300.

Bart Mallon can be reached directly at 415-868-5345.


Bart Mallon Speaking at Financial Services Conference

Moss Adams Event on September 26, 2011

On September 26, 2011 Bart Mallon, co-managing partner of Cole-Frieman & Mallon LLP, is scheduled to speak on a panel with respect to recent regulatory issues affecting asset managers. The panel is entitled “Dodd-Frank and the Impact on the Asset Management Business” and also features David E. Tang, a partner at Sidley Austin LLP, and will be moderated by Bryan Cartwright of Moss Adams.

While we do not yet know the exact topics for the panel, there has been a number big picture issues which will affect fund managers over the next several months. Some of these issues include:

After the event we will

provide a review of the major items discussed during the panel.  An overview of the conference is reprinted below and more information can be found here.


9:00 a.m. – 5:00 p.m. PT
Hilton Hotel
San Francisco, CA

What’s happening in the investment community now, and where are asset management companies headed?

Join Moss Adams LLP, Arizona State University emeritus professor Dr. Stephen Happel, and US Bancorp former chief economist John Mitchell for an economic update. We’ll also discuss a range of issues and developments affecting broker-dealers, RIAs, hedge funds, and asset managers. Topics will include:

  • Impact of the Dodd-Frank Act
  • Retention and succession
  • Producing superior AUM growth
  • Transaction and advisory activity
  • Accounting and auditing roundup

Alongside our annual Community Banking Conference, this event will provide you an opportunity to network with banking professionals during lunch and at our joint reception.


Cole-Frieman & Mallon LLP is a hedge fund law firm which provides comprehensive formation and SEC/CFTC regulatory support to start-up and established hedge fund managers.  Please contact us if you have any questions.

Bart Mallon



Proposed Form CPO-PQR Released

For your review, we have published the proposed Form CPO-PQR which can be found here: Form CPO-PQR

As recently proposed by the CFTC, registered commodity pool operators will be required to file proposed From CPO-PQR on either a quarterly or annual basis depending on assets under management and scope of business activities.  There are special rules for those managers who are also registered as an investment adviser with the SEC and who file Form PF.

This post will provide an overview of the major aspects of the Form COP-PQR as it is currently proposed.


Who is required to file Form CPO-PQR?

All CPOs are required to file at least parts of Form CPO-PQR.

When do managers need to file Form CPO-PQR?

Most managers will need to file some parts of Form CPO-PQR on a quarterly basis.  Some managers, depending on assets under management, will need to file additional sections of the form on either an annual or quarterly basis.

The sections of the form will need to be filed within 15 days of the end of the quarter; however, for some managers, some sections will not need to be completed until 90 days after

the end of the quarter.

What are the sections of Form CPO-PQR?

Form CPO-PQR has 3 major sections.  F

  • Schedule A – must be filed by all CPOs which operate at least one pool during the quarter within 15 days of the end of the quarter.
  • Schedule B – must be filed by Mid-Sized CPOs annually within 90 days of the end of the year and Large CPOs quarterly within 15 days of the end of the quarter.
  • Schedule C – must be filed by Large CPOs quarterly within 15 days of the end of the quarter.

A Mid-Sized CPO is a CPO that had at least $150 million in pool AUM as of the close of business on any day during a quarter.

A Large CPO is a CPO that had at least $1 billion in pool AUM as of the close of business on any day during a quarter.

Note: Schedule B and Schedule C may not have to be filed with the CFTC if the CPO has completed certain sections of Form PF and meet other certain requirements.

Details of the Schedules

Schedule A

Part 1 – includes information with respect to the firm such as name, NFA ID #, contact person, chief compliance officer, # of employees, # of owners, # of pools

Part 2 – includes information on each pool which was operated during the quarter.  For each commodity pool this information includes:

  • Identifying information: mame of pool, NFA ID#, jurisdiction of organization, fiscal year end, structure
  • Outside Administrator: name, contact info, NFA ID#, start of relationship, services provided, % of pool assets valued by outside administrator
  • Broker – name, NFA ID #, contact info
  • Other service providers – carrying broker, trading manager, custodian, auditor, marketer
  • Information regarding assets over quarte
    • Beginning AUM & NAV
    • Ending AUM & NAV
    • Income over quarter
    • Additions, withdrawals and redemptions over quarter
  • Monthly ROR calculated in accordance with CFTC regulations
  • Schedule of investments – there is a drill down on cash, equities, alternatives, fixed income, derivatives, options, investment funds, longs/shorts, positive/negative OTE, long/short option value, pool positions exceeding 5% of NAV
  • Subscriptions & redemption information

Schedule B

Schedule B applies to both Mid-Sized and Large CPOs.  The information is essentially the same information as required in Sections 1.b and 1.c of Form PF.  The following information is required for each pool which is managed by the CPO:

  • Pool Information – name, NFA ID#, strategy,  % of assets traded using algorythim, investor information
  • Borrowings & types of creditors – total borrowings, listing of creditors
  • Counterparty credit exposure – aggregate counterparty exposure, listing of counterparties
  • Trading & clearing – for derivatives, securities and repos
  • Value of aggregate derivative positions

Schedule C

Schedule C is only completed by Large CPOs.  Schedule C will not need to be completed if the Large CPO has completed certain parts of Form PF.

Part 1 – the following information is required for each CPO:

  • Geographical breakdown of pools investments
  • Turnover rate of aggregate portfolio of pools
  • Duration of pools’ fixed income investments

Part 2 – the following information is required for each Large Pool:

  • Basic information – name, NFA ID#, unencumbered cash at end of month, monthly open positions
  • Liquidity of portfolio
  • Pool counterparty credit exposure
  • Pool risk metrics
  • Pool borrowing information
  • Pool derivative positions and posted collateral
  • Pool financing liquidity
  • Information on pool investors
  • Duration of fixed income assets


Cole-Frieman & Mallon LLP provides comprehensive legal services for CPOs including completing Form CPO-PQR.  Bart Mallon can be reached directly at 415-868-5345.

Form PF

Proposed Form PF Released

For your review, we have published the proposed Form PF which can be found here: Form PF.

According to an SEC proposal announcement last week, SEC registered managers will be required to file proposed Form PF with the SEC on either a quarterly or annual basis in the future.  Form PF is a multi-purpose form to be used by all types of SEC registered investment advisers – hedge fund managers, private equity fund managers, and liquidty fund managers. While the level of specificity changes with AUM (high AUM managers must disclose more information), Form PF requests much more information from fund managers than have previously been required to be provided to regulators.

This post will provide an overview of the major aspects of the Form PF as it is currently proposed.

[Please note that the form is highly dependant on precise definitions. The discussion below is general and I have not discussed some of the nuances. For example, when I discuss AUM, the discussion is necessarily general.]


Who is required to file Form PF?

Mangers must file Form PF if they meet the following two tests:

  1. Registered or required to be registered with the SEC and
  2. Provide advice to a private fund (generally a 3(c)(1) or 3(c)(7) fund) *

* the term private fund is defined in Form PF.

When do managers need to file Form PF?

Managers will need to file Form PF either (i) on an annual basis if they have less than $1 billion of AUMor (ii) on a quarterly basis if they have more than $1 billion of AUM.

If the manager files on an annual basis, the filing will need to be completed within 90 days of the end of the manager’s fiscal year.

If the manager files on a quarterly basis, the filing will need to be completed within 15 days of the end of the calendar quarter.

What are the sections of Form PF?

Form PF has 5 major sections. For managers filing on an annual basis, generally only Section 1 will need to be completed. For managers filing on a quarterly basis, Sections 2, 3 or 4 will need to be completed depending on the types of investment vehicles for which the manager provides investment advice.  The sections are:

  • Section 1 – All Filers
  • Section 2 – Hedge Fund Managers with at least $1B AUM
  • Section 3 – Liquidity Fund Managers with at least $1 B AUM
  • Section 4 – Private Equity Fund Managers with at least $1 B AUM
  • Section 5 – Managers Applying for Hardship Exemption

More Detail on Section 1 and Section 2

Section 1

Section 1 applies to all managers who are registered with the SEC.

Section 1a

Contains more general information on the manager and its business.

Section 1b

Managers must provide the following information on the “private funds” which they manage:

  • gross and net asset value
  • borrowing/creditor information
  • derivative positions
  • investor concentration
  • detailed performance information, including performance after performance fees

Section 1c

Managers must provide the following information on the “hedge funds” which they manage:

  • strategy
  • % of assets traded using algorithm
  • counterparties/exposure
  • % of equity, debt, ABS traded on and off exchange
  • % of equity, debt, ABS cleared by a central clearing counterparty (CCP) and not cleared by a CCP
  • % of derivatives traded on and off exchange
  • % of derivatives cleared by a CCP and not cleared by a CCP
  • % of repos and clearing information

Section 2

Section 2 of Form PF requires managers to provide the SEC with a surprising amount of detail with respect to the fund, the fund’s investment strategy, counterparties and investors. Below we have provided an overview of some of the different requirements.

Section 2a

Generally the following information for the manager as a whole:

  • drill down of positions – equity, corporate bonds, convertible bonds, sovereign and muni bonds, loans, repos, ABS/structured products, credit derivatvies, commodities, cash
  • turnover rate
  • geographic breakdown of instruments

Section 2b

For each fund, the following information for such fund:

  • drill down of investments
  • liquidity
  • positions representing 5% or more of fund’s NAV
  • counterparty information
  • CCP information
  • reporting VaR
  • how market factors effect fund’s portfolio
  • secured/unsecured borrowing
  • investor information – side pockets, whether manager has right to suspend withdrawals, whether there are gates, whether there is currently a suspension of withdrawals, whether the gate provision is currently enacted

Section 3 and Section 4

These sections include questions which are applicable to liqidty funds and private equity funds. They are structured similar to section 2 (a & b), but overall there is less information requested.


Items to Note

Form PF instructions are very specific with respect to the information that should be completed in the certain sections. In addition, there are unique items that may not apply to all firms which need to be considered. Some of these items to note with respect to the form:

  • there will be issues with respect to related persons
  • there will be sub-adviser issues
  • managers must understand the difference between reporting for individual funds v. reporting for fund structures (i.e. master-feeder, mini-master, parallel)
  • there are many new definitions (135 defined terms in the glossary – 11 pages worth!)
  • special rules for managers making transitions (quarterly to annually) and final filings
  • private fund identification numbers are required and can only be obtained by filing Form ADV (original or amended filing)
  • filing Form PF is done electronically, signed by a managing member of the firm
  • there are likely to be confusions with definitions (likely to be worked out during and after the comment period)

Initial Thoughts

I am still fully developing my thoughts on the form and should have more detailed thoughts in later posts – in the meantime, my bullet point thoughts are as follows:

  • The form seems to be thoughtfully laid out.
  • The amount and detail of the questions is surprising.
  • Managers with many funds are going to face a large reporting burden.


Bart Mallon provides investment adviser registration services through Cole-Frieman & Mallon LLP, a law firm focused on the investment management industry.  He can be reached directly at 415-868-5345.

CFTC Proposes Increased Registration and Reporting for CPOs and CTAs

Proposal to Rescind 4.13(a)(3) & 4.13(a)(4) CPO Exemptions

Pursuant to rulemaking required under the Dodd-Frank Act, the CFTC is jointly proposing with the SEC that CPOs and CTAs which are dually registered (that is with the CFTC and as an investment adviser with the SEC) file certain information on a new Form PF.   In addition, the CFTC is proposing to eliminate two widely used exemptions from CPO registration – the 4.13(a)(3) exemption (de minimis futures trading) and the 4.13(a)(4) exemption (the only investors are QEPs).  Another exemption applicable to mutual funds – the 4.5 exemption – may also potentially be rescinded under the proposed rulemaking.  The CFTC is proposing minor changes to regulations in addition to the more onerous registration and reporting requirements.

Rescinding CPO Registration Exemptions

We have discussed the requirements for these and other CFTC registration exemptions in a post on CPO registration.  The CFTC is proposing to rescind the following exemptions:

Regulation 4.13(a)(3) – this exemption is normally utilized by managers who use just a small amount of futures.  In the event that this exemption isrescinded, a large number of managers would be required to register.  This also means that managers could not trade any futures contracts in a fund structure without being registered as a CPO.  Obviously this will increase the regulatory burden for managers and will likely lead some managers to simply cease using futures.

Regulation 4.13(a)(4) – this exemption is normally utilized by those managers who only have investors who are qualified eligible persons.

Note: Rescinding both the (a)(3) and (a)(4) exemptions will likely mean the fund-of-fund managers will also be required to register as CPOs.  Form more information please see our post on fund-of-fund CPO exemptions.

Regulation 4.5 – this exemption applies to mutual funds that have funds which invest in futures.  In general, mutual fund managers who invest in futures do so indirectly and are able to escape registration as a commodity pool operator.  This means that mutual funds, while they must be approved by the SEC, receive no regulatory scrutiny from the CFTC.  Late last year, the NFA submitted a petition to the CFTC asking the CFTC to amend Regulation 4.5 to require those managers that indirectly invest in futures products to register as a CPO.

New Reporting Requirements

The CFTC is proposing that CPOs and CTAs face increased reporting requirements on new forms Form PF, Form CPO-PQR and Form CTA-PRQ.  The increased reporting requirements will apply to two groups of CFTC registrants: (i) dual registrants and (ii) CFTC-only registered firms.

New Forms

Form PF – Form PF was designed to provide government agencies with information about the basic operations and structure of private funds.  The creation of Form PF was required by Section 404 of the Dodd-Frank Act.  The SEC and CFTC are working together to develop Form PF Sections 1 and 2 as those sections are relevant to firms registered with both agencies.

Form CPO-PQR and Form CTA-PQR – these forms will require firms to provide similar information as will be required in Form PF, with appropriate modifications made so that the information is relevant with respect to commodity futures managers.

In general, all forms will allow some information to be treated as confidential.

Dual registrant reporting

Dual registrants are firms which are registered with the SEC (as an IA) and with the CFTC (as a CPO or CTA).  The following are the proposed filing requirements:

Dual registrants with less than $1 billion of AUM:

  • Annual filing of Form PF
  • Complete only Section 1 of Form PF

Dual registrations with less than $1 billion of AUM:

  • Quarterly filing of Form PF
  • Complete Sections 1 and 2 of Form PF

CFTC-Only Registrants

CFTC-only registrants are firms registered with only the CFTC

(as a CPO or CTA).  The amount of information to be required on the new CFTC only forms, and the timing of filing, will depend on the registered firm’s size and AUM.

Forms CPO-PQR and CTA-PQR will be filed directly with the NFA.

Other Proposed Changes

The CFTC is also proposing some other changes:

  • Managers using the Regulation 4.7 exemption will be required to have certified financial statements for any 4.7 exempt pool which they advise.  [Note: currently there is no certification requirement.]
  • Managers using any of the 4.5, 4.13 or 4.14 exemptions will need to annually certify the notice of exemption.  [Note: currently there is no requirement to certify the exemption on an annual basis.]
  • Risk disclosure language to be updated to include discussion of swaps, if appropriate for the manager.
  • Certain changes to make the regulations internally consistent.

The CFTC overview can be found here: CFTC Rescinding Exemption Overview

The CFTC Q&A sheet can be found here: CFTC Rescinding Exemption Q&A


Cole-Frieman & Mallon LLP  provides comprehensive CFTC and NFA compliance and regulatory support for investment managers.  Bart Mallon, Esq. can be reached directly at 415-868-5345.