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    Apr. 24, 2025

Challenges of the Amended Form PF June 12, 2025, Compliance Deadline

The amendments to Form PF that the SEC and CFTC jointly issued on February 8, 2024, mandated significantly more granular reporting from hedge fund managers with respect to a number of key operational features, such as the risk exposures and positions of large funds; disaggregated fund data; trading vehicles; withdrawal rights; and digital assets, among other areas. These amended requirements were originally set to take effect as of March 12, 2025, but in January 2025, the SEC and CFTC extended the compliance deadline three months to June 12, 2025. This article examines why an extension of the original compliance deadline was needed; delves into those aspects of the amended form that have proven especially complex or problematic for fund managers and why; looks at the role of third-party administrators in compliance efforts; and considers the possibility that regulators might repeal some or all of the new filing requirements under a more pro-business presidential administration. For more information on the Form PF amendments, see our two-part series: “Third Round of Form PF Amendments Focuses on Granular Hedge Fund Data” (Jun. 6, 2024); and “Key Takeaways From the Latest Round of Form PF Amendments” (Jun. 20, 2024).

SEC Examinations Division: Its Present State and Possible Future (Part Two of Two)

When the SEC Division of Examinations (Division) was created 30 years ago, its mission was to serve as a compliance-type function within the regulator. The fallout from the Madoff and Stanford scandals – including criticism of the SEC’s perceived oversight failures – and the passing of the Dodd-Frank Act empowered the agency to further embrace technology and data analytics; migrate to a more specialized staff with expertise in particular types of investment advisers and funds; launch the Private Funds Unit; and be more transparent by releasing risk alerts and the Division’s annual exam priorities. This second article in our two-part series, which is based on interviews with former Division staff members, looks at the present state of the Division and speculates on what the future might hold for it. The first article discussed the Division’s creation and examined its evolution over the years. See “Present and Former SEC Officials Discuss Commission Oversight of Private Funds” (Apr. 29, 2021).

SEC, CFTC and FINRA Division Heads Discuss Enforcement Outlook

The Trump Administration is engaged in aggressive efforts to cut the size of the government and reduce regulatory burdens. It is unclear what impact those efforts – and the new leadership at the SEC and CFTC – will have on regulatory agencies’ enforcement priorities and efforts. A panel at the 2025 Compliance & Legal Annual Seminar presented by the Securities Industry and Financial Markets Association offered insights from the current enforcement heads at the SEC, CFTC and FINRA. The speakers discussed their agencies’ anticipated enforcement priorities; outlook for financial penalties; approaches to digital assets and artificial intelligence; and whistleblower programs. Mary Jo White, partner at Debevoise & Plimpton and former Chair of the SEC, moderated the discussion, which featured Bill St. Louis, Executive Vice President and Head of Enforcement at FINRA; Samuel Waldon, Acting Director of the SEC Division of Enforcement; and Brian Young, Director of the CFTC Division of Enforcement. As is customary, Waldon and Young noted that the views they expressed were their personal views, not those of their respective agency or its commissioners. This article synthesizes the key takeaways from the discussion. See “What Hedge Fund Managers May Expect From the SEC in 2025” (Jan. 16, 2025).

Impact of the SEC’s No‑Action Letter on Verification of Accredited Investor Status

On March 12, 2025, the SEC’s Division of Corporation Finance issued a no‑action letter (Letter), along with interpretive guidance in the form of Compliance and Disclosure Interpretations (C&DIs), indicating its agreement with the use of a minimum investment amount as a method of verifying accredited investor status pursuant to Rule 506(c) of Regulation D under the Securities Act of 1933. The Letter was a response to a March 6, 2025, request from attorneys at Latham & Watkins, seeking to establish a clear, user-friendly path for satisfying the SEC’s longstanding requirements for verification of an investor’s accredited status under Rule 506(c)’s exempt offering safe harbor. The Hedge Fund Law Report spoke to Joel H. Trotter and Nadia Sager, partners at Latham & Watkins, about their successful effort to change regulators’ minds with regard to accredited investor certification and what the new guidance, as set forth in the Letter and the C&DIs, means for hedge fund managers. This article presents key takeaways from that discussion. See our two-part series on the proposed changes to the accredited investor definition: “Proposed Changes and SEC Commissioner Perspectives” (Feb. 13, 2020); and “Key Takeaways for Private Fund Managers” (Feb. 20, 2020).

SEC FAQs Clarify Marketing Rule Treatment of Extracted Performance and Portfolio Characteristics

On March 19, 2025, the SEC Division of Investment Management issued two new FAQs relating to Rule 206(4)‑1 under the Investment Advisers Act of 1940. The FAQs set forth the conditions under which an adviser may show yield and certain other portfolio characteristics or gross performance of an extract from a portfolio in an advertisement without also including a net performance figure for such characteristic or extract. The obligation to present net performance in those circumstances has vexed certain advisers since the Rule’s adoption. The new FAQs provide “welcome guidance that will make the lives of all of our advertising investment advisers easier and, frankly, make for some better advertisements,” said K&L Gates partner Lance C. Dial, who parsed the FAQs in a presentation with partners Pamela A. Grossetti and Jennifer L. Klass. This article distills their insights and the key provisions of the FAQs. See “Navigating Substantiation of Facts, Testimonials and Performance Claims Under the Marketing Rule” (Nov. 21, 2024).

Tax Lawyer Eli Shalam Joins Kleinberg Kaplan

Kleinberg Kaplan announced the addition of Eli Shalam as a partner in its tax practice. Based in the New York office, Shalam has considerable experience advising clients on tax aspects of private investment fund formation and operation, as well as on M&A, joint ventures and financings. For insights from other Kleinberg Kaplan partners, see “U.S. Treasury Initiates Survey of Foreign Securities Holdings” (Feb. 24, 2022); and “Key Tax Issues Fund Managers Must Consider” (Jun. 10, 2021).

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Women to Watch: Contributions, Achievements and Observations of Outstanding Female Professionals

To mark International Women’s Day, women editors and reporters at ION Analytics interviewed outstanding women in the industries and jurisdictions we cover. In this part, Law Report Group editors Jill Abitbol, Robin L. Barton and Megan Zwiebel profile notable women in data privacy, cybersecurity, private funds and anti-corruption law, including Anne-Gabrielle Haie, Jessica Lee, Micaela McMurrough, Laura Perkins, Amanda Raad, Madelyn Calabrese, Ranah Esmaili and Genna Garver. Enjoy reading their inspiring remarks here.