Overview
Title
Submission for OMB Review; Comment Request
Agencies
ELI5 AI
The SEC wants to keep checking on big money managers to make sure they're not causing problems. They're asking for permission to keep collecting forms from these managers, and you can tell them what you think about it for the next 30 days.
Summary AI
The Securities and Exchange Commission (SEC) has requested an extension for the collection of information related to Form PF from the Office of Management and Budget, as required by the Paperwork Reduction Act. Form PF is used by private fund advisers with significant assets under management to report certain information to facilitate the monitoring of systemic risk in the private fund industry. The SEC divides these advisers into two groups: Large Private Fund Advisers and smaller private fund advisers, and estimates varying annual burden hours for each group based on their size and filing history. Public comments on the information collection can be submitted within 30 days of the notice's publication.
Keywords AI
Sources
AnalysisAI
The document titled "Submission for OMB Review; Comment Request" from the Securities and Exchange Commission (SEC) announces a request for an extension regarding the collection of information through Form PF. This request is submitted to the Office of Management and Budget (OMB) and adheres to the Paperwork Reduction Act. Form PF is a critical tool enabling the SEC and the Financial Stability Oversight Council (FSOC) to oversee private fund advisers who manage significant assets. The document outlines the division of these advisers into two categories, namely Large Private Fund Advisers and smaller ones, and estimates the different reporting burdens for each group based on previous filing history.
Summary of Document
The document serves as a formal notice of the SEC's intention to continue collecting data through Form PF, which is key to monitoring risks within the private fund sector. Form PF allows the SEC to gather information that might be used to mitigate potential financial system threats. The document underscores the mandatory nature of this compliance for advisers and the confidentiality surrounding the data unless it's used for enforcement actions.
Significant Issues and Concerns
One major issue in the document is the technical jargon used throughout, which might be challenging for individuals unfamiliar with legal or financial terminology. It references several laws, including the Dodd-Frank Act and the Investment Advisers Act of 1940, which might further complicate understanding for a lay audience.
Another concern is the presentation of the estimated burden hours required for past filers versus new filers. While these estimates vary significantly, the document lacks an explanation of how these differences are calculated or justified, leaving readers without a clear understanding of the underlying reasons.
Impact on the Public
For the general public, this document outlines a regulatory process beyond everyday concerns but nonetheless important for financial market stability. It indirectly affects investors by ensuring that advisory services are subject to systematic risk checks, potentially safeguarding their investments over time.
Impact on Specific Stakeholders
The primary stakeholders affected by this document are private fund advisers, particularly those managing substantial assets. These advisers face differing time commitments based on their size and filing history. First-time filers, especially large ones, will encounter the highest burden in compliance hours. This division might result in strategic adjustments as fund advisers weigh the costs and benefits of growing assets beyond specified thresholds.
In summary, the document is critical for maintaining oversight in the financial industry, ensuring systematic risks are monitored and mitigated. Although technical in nature, it remains a crucial part of regulatory compliance affecting the broader financial landscape and stakeholders within the private fund advisory sector. Public comments are invited within 30 days, allowing stakeholders to potentially influence the regulation's continuance and terms.
Financial Assessment
The document discusses an extension request by the Securities and Exchange Commission (SEC) to the Office of Management and Budget (OMB) for the continuation of Form PF, which pertains to the reporting requirements for private fund advisers. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, private fund advisers with at least $150 million in assets under management are mandated to report specific information using Form PF.
Financial References and Allocations
The document highlights that private fund advisers and large fund advisers have specific financial thresholds which determine their reporting requirements:
Private fund advisers need at least $150 million in private fund assets under management to be subjected to Form PF reporting.
Large Private Fund Advisers include those with at least $1.5 billion in hedge fund assets, $1 billion in liquidity funds and registered money market funds, and $2 billion in private equity fund assets.
These thresholds are crucial in classifying advisers into various categories for regulatory reporting purposes, impacting how these entities comply with the report submissions.
Estimated Costs and Burdens
The financial burden related to compliance is another focus of the document. The SEC outlines the estimated annual reporting and recordkeeping burdens for different categories of fund advisers, which demonstrate a substantial workload for some:
Smaller private fund advisers making their first filing face an estimated burden of 23 hours annually for the first three years. In contrast, advisers who have already filed experience a reduced burden of 15 hours per year for the subsequent three years.
Large hedge fund advisers making their first filing have an estimated 658 hours annually, while those who have already filed require 600 hours yearly for the next three years.
The financial impact also varies based on whether the advisers are making their first submissions or are seasoned filers.
In terms of external costs, the SEC estimates advisers could face a financial burden ranging from $0 to $50,000. This range is broad, suggesting variability depending on individual circumstances, but the document does not provide further detail on what might contribute to these costs.
Context and Concerns
While the document lays out these figures, it does not offer a comprehensive explanation of how these estimates are calculated, leaving a gap for readers who might question the validity or derivation of such numbers. This lack of detailed breakdown could pose challenges for stakeholders attempting to evaluate their potential financial commitment or prepare for compliance. Additionally, the significant differences in estimated burden hours between first-time filers and those with previous filing experience are noted, but not explained, adding another layer of ambiguity. Such discrepancies highlight the underlying complexity and varying compliance needs among different entities subject to these reporting requirements.
Issues
• The document primarily discusses the extension of Form PF under the Paperwork Reduction Act, and as such, does not state any specific spending details related to this extension. Therefore, it is not possible to identify wasteful spending based on the provided text.
• The document does not mention any specific organizations or individuals that are favored, thus no spending favoritism can be detected from the available information.
• The language in the document is highly technical, focusing on regulations and legal references (e.g., Dodd-Frank Act, Investment Advisers Act of 1940). This could be complex for someone not familiar with financial or legal terminology.
• The estimated burden hours and costs are stated, but no comprehensive explanation or breakdown of how these estimates are derived is provided, potentially making it difficult for the reader to fully understand or assess the validity of these estimates.
• The document mentions significant differences in estimated burden hours between first-time filers and those who have filed before, but it does not provide context or explanation for these significant differences, which could lead to ambiguity for the reader.