The Securities and Exchange Commission today announced settlements with 13 registered investment advisers who repeatedly failed to provide required information that the agency uses to monitor risk.
According to the SEC’s orders, the advisers failed to file annual reports on Form PF informing the agency about the private funds they advise, including the amount of assets under management, fund strategy, performance, and use of borrowed money and derivatives. Private fund advisers managing $150 million or more of assets have been required to make annual filings on Form PF since 2012. The orders found that the 13 advisers were delinquent in their filings over multi-year periods.
“These advisers’ repeated reporting failures deprived the SEC of important information they were required by law to provide,” said Anthony S. Kelly, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. “We encourage investment advisers to take a fresh look at whether they are meeting their reporting obligations and adjust their compliance programs accordingly.”
The SEC uses Form PF data to monitor industry trends, inform rulemaking, identify compliance risks, and target examinations and enforcement investigations. The SEC publishes quarterly reports with aggregated information and statistics derived from Form PF data to inform the public about the private fund industry. It also provides Form PF data to the Financial Stability Oversight Council to help it evaluate systemic risks posed by hedge funds and other private funds.
The SEC’s orders find that the advisers violated the reporting requirements of the Investment Advisers Act of 1940. Without admitting or denying the findings, the advisers agreed to be censured, to cease and desist, and to each pay a $75,000 civil penalty. During the course of the SEC’s investigation, the advisers also remediated their failures by making the necessary filings.
The SEC’s investigation was conducted by Oreste P. McClung and Lisa M. Candera of the Enforcement Division’s Asset Management Unit with assistance from the Private Funds Unit in the Office of Compliance Inspections and Examinations and the Analytics Office in the Division of Investment Management. Brendan P. McGlynn supervised the investigation.
The SEC’s orders are: