U.S. Securities and Exchange Commission

Annual Staff Report Relating to the Use of Data 

Collected from Private Fund Systemic Risk Reports

This is a report of the Staff of the Division of Investment Management 

of the U.S. Securities and Exchange Commission.

The Commission has expressed no view regarding 

the analysis, findings, or conclusions contained herein.

August 15, 2014
1

Executive Summary

The Dodd-Frank Act directed the Commission to require registered investment advisers to 

maintain records and file reports regarding the hedge funds, private equity funds and other 

private funds they advise. The Commission implemented this aspect of the Dodd-Frank Act in 

2011 when it adopted a form (Form PF) that requires certain registered investment advisers that 

advise private funds to report information to the Commission. 

While the primary aim of this Dodd-Frank provision was to create a source of data for the 

Financial Stability Oversight Council (FSOC) to use in assessing systemic risk, the Commission, 

as provided by the Dodd-Frank Act, is using the information to support its own regulatory 

programs, including examinations, investigations and investor protection efforts relating to 

private fund advisers. The Dodd-Frank Act also required that the Commission report annually to 

Congress on how it has used the data to protect investors and the integrity of the markets. This is 

the second annual report submitted to Congress to satisfy this obligation.

During the past year, the Commission’s staff has focused its efforts on: (i) utilizing Form PF data 

in examinations and investigations of private fund advisers; (ii) using Form PF data in the 

Commission’s risk monitoring activities; (iii) providing additional guidance to filers; and (iv) 

working with other federal regulators and international organizations regarding issues relating to 

private fund advisers. 

Appendix A, attached, contains certain aggregated, non-proprietary census Form PF data.
2

I. Introduction

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)1Section 

404 directed the U.S. Securities and Exchange Commission (Commission) to establish reporting 

requirements for investment advisers to private funds as necessary and appropriate in the public 

interest and for the protection of investors or for the assessment of systemic risk by the Financial 

Stability Oversight Council (FSOC).2 The Dodd-Frank Act specifies that such reporting must 

include certain information about private funds, including but not limited to the amount of assets 

under management, use of leverage, counterparty credit risk exposure and trading practices for 

each private fund managed by the adviser.3 In 2011, the Commission adopted Form PF and 

Advisers Act rule 204(b)–1 that established filing requirements for private fund advisers 

regarding information for the assessment of systemic risk.4

The Commission is required to submit an annual report to Congress regarding how the 

Commission has used the data collected regarding private funds under the Dodd-Frank Act to 

protect investors and the integrity of the markets.5 This report is being submitted to Congress in 

satisfaction of that requirement. This is a report of the Staff of the Division of Investment 

Management and the Commission has expressed no view regarding the analysis, findings, or 

conclusions contained herein.

II. Background

The Commission adopted Form PF to obtain, on behalf of FSOC, data that FSOC can use to 

monitor systemic risk in U.S. financial markets. Form PF was designed in consultation with 

FSOC members and their staffs and provides FSOC and the Commission with important 

information about the operations and strategies of private funds.6 Investment advisers registered 

 

1

Public Law 111-203, 124 Stat. 1376 (2010). 

2

Section 404 of the Dodd-Frank Act (codified at Section 204(b) of the Investment Advisers Act of 1940, as 

amended (“Advisers Act”)). FSOC was created pursuant to the Dodd-Frank Act to monitor risks to the 

U.S. financial system. See Dodd-Frank Act sections 111 and 112. 

3

Section 404 of the Dodd-Frank Act.

4

See Reporting by Investment Advisers to Private Funds and Certain Commodity Pool Operators and 

Commodity Trading Advisors on Form PF, Investment Advisers Act Release No. 3308 (October 31, 2011), 

76 FR 71128 (November 16, 2011) (“Adopting Release”). In 2012, the CFTC adopted rule 4.27 under the 

Commodity Exchange Act to implement systemic risk reporting requirements for registered commodity 

pool operators (“CPOs”) and commodity trading advisors (“CTAs”); the rule also permits CPOs and CTAs 

registered with the CFTC that are registered with the Commission as investment advisers to file Form PF 

with the Commission in lieu of filing certain systemic risk reports with the CFTC. See Commodity Pool 

Operators and Commodity Trading Advisors: Amendments to Compliance Obligations, 77 FR 11252 

(February 24, 2012).

5

Section 404 of the Dodd-Frank Act.

6 To implement the reporting requirements, the Commission developed an electronic filing system, the 

Private Fund Reporting Depository (PFRD) through which advisers submit the information required by 

Form PF to the Commission. PFRD is operated under contract with the Financial Industry Regulatory 

Authority (FINRA) as an extension of the existing Investment Adviser Registration Depository (IARD) 
3

with the Commission that have at least $150 million in private fund regulatory assets under 

management (RAUM)7are required to periodically file Form PF with the Commission. The

amount of information required to be reported and the frequency with which Form PF must be 

filed depend on the amount of the adviser’s RAUM and the types of private funds managed. 

Most advisers are required to file Form PF once a year, and report only basic information 

regarding the private funds they advise. This annual filing requirement includes general data 

such as the types of private funds that an adviser advises (e.g., private equity or hedge funds) and 

information relating to such funds’ size, leverage, types of investors, liquidity and performance. 

Advisers managing hedge funds also must report information about fund strategy, counterparty 

credit risk and the use of trading and clearing mechanisms.

Large private fund advisers, however, must provide more detailed information. The content and 

frequency of this more detailed reporting is different depending on the type of private funds the 

large adviser manages. For example, advisers with at least $1.5 billion in hedge fund RAUM 

must file Form PF quarterly and provide aggregate information on their hedge funds’ exposures, 

geographical concentration and turnover by asset class (but not position-level information). In 

addition, for each Qualifying Hedge Fund (i.e., $500 million or more in net assets), advisers 

provide additional information. Advisers with at least $1 billion in combined liquidity fund and 

registered money market fund RAUM must file Form PF quarterly and provide information

regarding their liquidity funds’ exposures, geographical concentration and turnover by asset class 

and direct and indirect forms of leverage and liquidity.8 Advisers with at least $2 billion in 

private equity fund RAUM must file Form PF annually and provide additional information 

relating to their private equity funds’ use of direct and indirect leverage and investments in 

financial institutions.

The Dodd-Frank Act provides specific confidentiality protections for proprietary information of 

private fund investment advisers collected by the Commission on Form PF. Consistent with the 

enhanced confidentiality provisions established under the Dodd-Frank Act, Commission staff has 

designed and implemented controls and systems for the handling of Form PF data across the 

agency. Senior staff members from various Divisions and Offices within the Commission are 

members of a Steering Committee that is tasked with developing and overseeing a consistent and 

agency-wide approach to accessing, and the using, sharing, and security of, Form PF data. 

 

system (the online reporting platform advisers use to register on Form ADV with the Commission). See

Adopting Release at Section II.E. 

7 RAUM is defined, for a private fund, as the private fund’s gross assets plus any uncalled capital 

commitments. See Form PF: Glossary of Terms; See also Instruction 5.b for Form ADV: Instructions for 

Part 1A.

8 The Commission recently adopted amendments to Form PF to obtain additional information regarding 

private liquidity funds in conjunction with amendments to rules for registered money market funds. See 

Money Market Fund Reform; Amendments to Form PF, Release No. 33-9616 (July 23, 2014).
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III. How the Commission Uses PF Data

The information collected on Form PF primarily is intended to assist FSOC in its systemic risk 

monitoring obligations under the Dodd-Frank Act. To that end, the Form PF database was made 

available to FSOC through the Office of Financial Research (OFR) in 2013, subject to agreement 

regarding appropriate use and confidentiality protections of Form PF data by OFR.

9

 

In addition, the Commission is using information obtained from Form PF in its regulatory 

programs and investor protection efforts relating to private fund advisers.10 As more fully 

discussed below, within the Commission, Form PF data principally is used by the Office of 

Compliance Inspections and Examinations (OCIE), the Division of Economic and Risk Analysis 

(DERA), the Division of Enforcement (Enforcement) and the Division of Investment 

Management (IM). Because of the staggered filing dates tailored to the size of an investment 

adviser dictating when an adviser must file its Form PF, the Commission has only received two 

full sets data from its filing population. As the data continues to be filed, Commission staff 

anticipates enhancing its usage of Form PF data. Census data describing the Form PF filing 

population can be found in the attached Appendix A.

During the past year, the Commission primarily used Form PF data in examinations of registered 

investment advisers to private funds. In addition, the Commission utilized Form PF data in its 

enforcement program regarding private fund advisers. Commission staff also focused its efforts 

on incorporating Form PF data into the Commission’s risk monitoring activities, issuing 

additional guidance to filers and working with other federal regulators and international 

organizations regarding issues relating to private fund advisers. 

Examinations and Investigations

The Commission staff uses Form PF data in its examination and enforcement programs 

regarding registered investment advisers that manage private funds. Because examination and 

enforcement matters are generally non-public,

11 the following summarizes how Form PF data 

has been integrated generally into examination and enforcement matters.

Prior to an examination of a private fund adviser that files Form PF, OCIE staff generally 

reviews the adviser’s Form PF filing as a part of a routine pre-examination evaluation. This 

review, in conjunction with other data sources, provides OCIE staff with an understanding of the 

nature of an adviser’s business and investment strategy. OCIE staff also generally reviews

information contained in the Form PF filing for inconsistencies with other information obtained

from an adviser during an examination, such as due diligence reports, pitch books, offering 

documents, operating agreements and books and records. In addition, OCIE staff typically looks 

for discrepancies between an adviser’s Form PF filing and any publicly-available documents 

related to the adviser, including the adviser’s Form ADV and brochure. In addition to reviewing 

 

9 OFR was established under the Dodd-Frank Act to support FSOC in fulfilling FSOC’s purpose and duties. 

See section 152 of the Dodd-Frank Act.

10 See Adopting Release at Section V.A.

11 See, e.g., Advisers Act Section 210(b).
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Form PF filings for background and to identify inconsistencies with other documents, OCIE staff 

also often reviews an adviser’s Form PF filing in order to confirm that the investment strategies 

disclosed to investors match the information contained in the adviser’s Form PF filing, 

particularly with respect to holdings, leverage, liquidity, derivatives and counterparties. After 

completing this analysis, OCIE staff requests additional documentation from registrants to 

substantiate or explain any inconsistency or red flag. In some cases, this process may lead to an 

examination deficiency letter.

Enforcement staff also obtains and reviews the Form PF filings of certain advisers in connection 

with ongoing investigations. Among other Enforcement staff, the Asset Management Unit 

(AMU) utilizes Form PF data in investigations of private fund advisers.

Risk Monitoring

The Commission has continued to develop the use of Form PF data in its ongoing risk 

monitoring activities. SEC staff in Washington, DC and in the regional offices access reports

generated by DERA that use Form PF data and also access Form PF filings directly to assist in 

risk monitoring activities.

Last year, DERA continued to develop its suite of proprietary analytical tools (DERA Database)

including the incorporation of certain data from Form PF to assist staff in risk monitoring 

activities. For example, OCIE staff in its Risk Analysis and Surveillance (RAS) group queries

the DERA Database to identify advisers engaging in activities implicating particular areas of 

examination focus (exposures, valuation, high-frequency trading, etc.) and to identify possible 

red flags at firms that may trigger examinations. OCIE and DERA staff are also developing

periodic reports that analyze data across a wide spectrum of filers to help identify trends and 

possible emerging risks in the private fund industry, while IM’s Risk and Examinations Office 

(REO) is developing internal periodic reports regarding the private fund industry generally and 

certain market segments. Enforcement’s AMU, in partnership with OCIE, IM, DERA and 

Enforcement’s Center for Risk and Quantitative Analytics, has accessed Form PF data to conduct 

its ongoing Aberrational Performance Inquiry (API). API seeks to identify hedge fund advisers 

that report aberrational returns relative to certain benchmarks for further investigation, which has 

resulted in the identification of fraudulent or improper conduct. Staff in OCIE and IM’s REO 

began using Form PF data in engagement meetings with private fund advisers that the staff 

determines to be strategically important and to inform the Commission staff’s general knowledge 

of the private fund industry. IM, DERA, Enforcement and OCIE staff continue to work to

develop additional analytical tools and reports focusing on different types of Form PF data as 

their familiarity and experience with Form PF data grows.

Guidance

IM staff uses Form PF data to inform policy and rulemaking initiatives with regard to private 

funds. During the past year, IM staff issued additional guidance to Form PF filers regarding a 
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variety of Form PF issues.12 This guidance resulted from regular, ongoing meetings with OFR

staff to assess data submitted in Form PF filings and engagement with private fund advisers to 

identify areas in which additional guidance for interpreting the form’s instructions would be 

useful. In an effort to improve data quality, IM staff continues to respond to filer inquiries and

contact filers to inform them of anomalous data that may require the submission of curative 

amendments to their Form PF filings.

Consultation

Commission staff uses Form PF data in conjunction with other federal regulators in areas of 

mutual interest, and in international collaborative efforts regarding private funds and their 

investment advisers. For example, Form PF reports have been used by Commission staff in 

connection with its participation in FSOC’s systemic risk efforts in the private fund space, 

including in discussions with other federal regulators. Also, in 2013, as disclosed in last year’s 

annual report, Commission staff provided certain aggregated, non-proprietary Form PF data to 

the International Organization of Securities Commissions (IOSCO) regarding large hedge funds 

so IOSCO has a more complete overview of the global hedge fund market for a report that was 

shared with the Financial Stability Board. In 2014, IM staff updated the same set of Form PF 

data points and again provided it to IOSCO. 

Conclusion

During the past year, the Commission’s staff has focused its efforts on: (i) utilizing Form PF data 

in examinations and investigations of private fund advisers; (ii) using Form PF data in the 

Commission’s risk monitoring activities; (iii) providing additional guidance to filers; and (iv)

working with other federal regulators and international organizations in areas of mutual interest

relating to private fund advisers. 

 

12 See Updates to Form PF Frequently Asked Questions (February 2014), at 

http://www.sec.gov/divisions/investment/imannouncements/im-info-2014-1.pdf. 
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Appendix A

Census PF Data as of May 7, 2014.

Number of Advisers1

Number of Funds2

 

1 Because of the definition of the categories, an adviser could be classified in two of these categories. For 

example, a large liquidity fund adviser could also be a large hedge fund adviser. The “total” number of 

advisers identified here does not double-count advisers that are classified in multiple categories. Therefore, 

the sum of the four categories results in a larger total than the total shown. 

2 The “total” number of private funds includes 2,561 additional private funds that are not included in this 

chart because, although they are private funds advised by a large adviser, they are not advised by the 

identified category of adviser. For example, the “total” does not include a hedge fund that is advised by a 

large private equity fund adviser.

2,661

1,935

544

200

25

0 500 1,000 1,500 2,000 2,500 3,000

Total

Smaller Advisers ($150 million private fund RAUM)

Large Hedge Fund Advisers ($1.5 billion hedge fund RAUM)

Large Private Equity Fund Advisers ($2 billion private equity

RAUM)

Large Liquidity Fund Advisers ($1 billion combined liquidity fund

and money market fund RAUM)

21,542

12,206

3,835

2,888

52

0 5,000 10,000 15,000 20,000 25,000

Total

Smaller Advisers ($150 million private fund RAUM)

Large Hedge Fund Advisers ($1.5 billion hedge fund RAUM)

Large Private Equity Fund Advisers ($2 billion private equity

RAUM)

Large Liquidity Fund Advisers ($1 billion combined liquidity fund

and money market fund RAUM)
2

Types of Funds

RAUM ($ billions) by Types of Funds

Hedge Funds, 7,790

Private Equity Funds, 

7,004

Other Private Fund 

Type, 3,680

Real Estate Funds, 

1,397

Securitized Asset 

Funds, 1,209

Venture Capital 

Funds, 393

Liquidity Funds, 69

Hedge Funds, $5,006

Private Equity Funds, 

$1,863

Other Private Fund 

Type, $975

Real Estate Funds, 

$354

Securitized Asset 

Funds, $386

Venture Capital 

Funds, $30

Liquidity Funds, $257
3

Private Fund Regulatory Assets Under Management Reported by all Filers

$8.871 trillion

Parallel Managed Accounts3Reported by all Filers

$2.46 trillion

Qualifying Hedge Fund Population4Reported by all Filers

1,326 Qualifying Hedge Funds reported by 460 filers.

Qualifying Hedge Fund Regulatory Assets Under Management Reported by all Filers 

$4.046 trillion 

Liquidity Funds Following 2a-7 as Reported by Large Liquidity Fund Advisers

27 (52%) liquidity funds advised by Large Liquidity Fund Advisers reported that 

they are managed in compliance with all of the risk limiting conditions of Rule 

2a-7 of the Investment Company Act. 

Aggregate Gross Value of Controlled Portfolio Companies5as Reported by Large Private Equity 

Advisers

$7.441 trillion

 

3 A Parallel Managed Account is any managed account advised by a filer that pursues substantially the same 

investment objective and strategy and invests side by side with a filer’s private fund.

4 A Qualifying Hedge Fund is a hedge fund with a net asset value of at least $500 million.

5 A Controlled Portfolio Company is a portfolio company that is controlled by the private equity fund, either 

alone or together with the private equity fund’s affiliates or other persons that are part of a club or 

consortium including the private equity fund.