Mark T. Uyeda is a Commissioner at the U.S. Securities and Exchange Commission. This post is based on his recent public statement. The views expressed in the post are those of Commissioner Uyeda, and do not necessarily reflect those of the Securities and Exchange Commission or the Staff.
Thank you, Chair Gensler. Who benefits from investments in private funds and alternative investments? In many cases, they are the pensioners in a retirement plan or a university student who benefits from an endowment. In other words, Americans of all types benefit from a robust market for private funds that is diverse and provides sophisticated institutional investors and their advisers with choices to address different risk tolerances, investment strategies, and time horizons.
Since the enactment of the Dodd-Frank Act, advisers to private funds have been required to file Form PF, [1] which was adopted in 2011 and amended in 2014. As the title of Section 404 of that Act indicates, the requirement was to facilitate the “Collection of Systemic Risk Data.” [2] Yet today’s proposed amendments to Form PF, which come on the heels of an existing proposal to amend Form PF issued earlier this year [3] — would impose additional and more granular disclosures, with effects that could potentially reshape an industry that is already dominated by large fund advisers [4]
Form PF is intended to assist the Financial Stability Oversight Council (FSOC) in assessing systemic risk in the U.S. financial system. [5] When we consider a rulemaking proposal, one of the key steps is to identify the need for the rulemaking and explain how the proposed rule will meet that need. [6] Although the 303 page draft release, encompassing 103,223 words, sent to the Commissioners on Monday evening references “systemic risk” a total of 118 times, plus two additional references to “system risk,” the release largely does not describe or define what is meant by that term. [7] Merely stating over and over that the proposed amendments will help to monitor and assess systemic risk and provide additional information does not make it so. This shortcoming makes it difficult to evaluate the appropriateness of the proposed disclosures.
