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Deadlines Approach for Certain SEC and CFTC-Regulated Entities that Manage Private Funds or Commodity Pools

February 5, 2013

 

Deadlines are approaching for certain private fund advisers, commodity pool operators (“CPOs”), and commodity trading advisers (“CTAs”) to comply with reporting requirements imposed by the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”). These obligations are summarized below. Advisers should closely review applicable filing deadlines for the various SEC and CFTC forms and reports because the deadlines are not coordinated between the agencies.

SEC Reporting on Form PF

SEC-registered investment advisers that advise private funds and have at least $150 million in assets under management attributable to private funds must report to the SEC on Form PF. The reporting deadline and the amount and types of information that must be reported vary depending upon the category of private funds the adviser manages and the amount of assets under management attributable to each category. “Large hedge fund advisers”[1] and “large liquidity fund advisers” must report quarterly, within 60 days and 15 days, respectively, of the end of each quarter (by March 1, 2013, and January 15, 2013). “Large private equity fund advisers”[2] and all other private fund advisers must report annually within 120 days of the end of the fiscal year (by April 30, 2013 for adviser’s whose fiscal year ended December 31, 2012). Form PF solicits detailed information about each private fund, and advisers required to report should begin the process of gathering relevant data to ensure compliance with the reporting deadline.

As previously discussed in a January 18, 2012 Client Alert, SEC-registered investment advisers and Exempt Reporting Advisers whose fiscal year ended December 31, 2012, should be preparing their annual updating amendments to Form ADV for filing by March 31, 2012.[3] The full alert is available here.

CFTC Reporting on Form CPO-PQR or CTA-PR

CFTC-registered CPOs and CTAs must report to the CFTC on Form CPO-PQR and Form CTA-PR, respectively, for the directed assets of each pool they advise. Forms CPO-PQR and CTA-PR are filed electronically through the National Futures Association’s (“NFA’s”) online reporting system. For registered CPOs, the submission deadline and the amount of information that must be reported on Form CPO-PQR depend upon the amount of assets under management. All CPOs required to file Form CPO-PQR must submit Schedule A of the Form. In addition to Schedule A, “Mid-sized CPOs” must complete and file Schedule B and “Large CPOs” must complete and file Schedule B and Schedule C.[4] Large CPOs must complete Part 2 of Schedule C with respect to each “large pool,” defined as any pool that has a net asset value of at least $500 million as of the close of business on any day during the reporting period.[5] Mid-sized CPOs must report annually within 90 days of the end of the calendar year (by March 31, 2013 for those whose fiscal year ended December 31, 2012) and Large CPOs must report on a quarterly basis within 60 days of the end of the quarter (by March 1, 2013).

Registered CTAs must complete and file Form CTA-PR, which is two pages and solicits general information about the CTA, pool assets directed by the CTA, and the identity of such pools. A CTA must report annually within 45 days of the end of its fiscal year (by February 14, 2013 for those whose fiscal year ended December 31, 2012).

In addition, registered CPOs and CTAs who are dually registered with the SEC as investment advisers (“dual registrants”) may have SEC reporting requirements. If CPOs and CTAs who are dual registrants manage commodity pools (or other pools) that qualify as private funds and have at least $150 million in assets under management attributable to such private funds, they must report to the SEC on Form PF. For CPOs that are dual registrants, reporting on sections 1 and 2 of Form PF is treated as reporting jointly to the SEC and CFTC. Dual registrant CPOs must report on Form PF with respect to each commodity pool that qualifies as a private fund and may report on Form PF with respect to commodity pools that are not private funds. The CFTC deems such reporting to substitute for CFTC reporting obligations with respect to Schedules B and/or C of Form CPO-PQR. Such CPOs still, however, must report on Schedule A of Form CPO-PQR.

In contrast to CPOs, the CFTC does not permit CTAs to satisfy their CFTC reporting obligations by filing Form PF. As such, CTAs that are dual registrants must separately comply with CFTC and SEC reporting requirements by submitting Form PF with respect to private funds and CTA-PR with respect to all commodity pools, including those that qualify as private funds.

CFTC Exemptions or Exclusions for CPOs and CTAs

The deadline is approaching for CTAs and CPOs relying on an exemption from registration under, respectively, CFTC Regulation 4.14(a)(8) or 4.13 (including the de minimis exemption under CFTC Regulation 4.13(a)(3)), or an exclusion from the definition of CPO under CFTC Regulation 4.5 to affirm their claim of exemption or exclusion. CPOs and CTAs that want to continue to rely on the claimed exemption or exclusion must file with the NFA a notice reaffirming the exemption within 60 days after the calendar year-end (by March 1, 2013). Any CPO or CTA that fails to file the annual reaffirmation notice will be deemed to have requested a withdrawal of the applicable exemption or exclusion. If the exemption or exclusion is deemed withdrawn, the CPO or CTA would be required to comply with the applicable Part 4 disclosure, reporting and recordkeeping regulatory requirements, among others, with respect to that commodity pool.[6]

Other Annual CFTC Obligations

Registered CPOs and CTAs also have annual and quarterly reporting and other regulatory requirements pursuant to CFTC regulations and NFA rules, including pool annual reports, pool account statements, and certain disclosures. For example, registered CPOs whose pools’ fiscal year ended December 31, 2012 must distribute an annual report, certified by an independent public accountant, to each participant in each pool it operates by March 31, 2013 (within 90 days after the end of each fiscal year).[7] They must concurrently file a copy of the annual report electronically with the NFA through its EasyFile system. CPOs and CTAs that qualify for a limited exemption from the full Part 4 regulatory requirements pursuant to CFTC Regulation 4.7 still have certain pool reporting obligations that must be fulfilled in accordance with the Regulation.

O’Melveny & Myers is available to advise private fund advisers, CPOs, and CTAs on their regulatory reporting obligations. For questions or additional information regarding regulatory obligations, please contact Heather Traeger at (202) 383-5232, Kris Easter at (202) 383-5364, or Matthew Cohen at (202) 383-5179.

[1] Large hedge fund advisers are advisers who have at least $1.5 billion in hedge fund assets under management. Large liquidity fund advisers are advisers with at least $1 billion in combined liquidity fund and registered money market fund assets under management. While liquidity fund advisers must include registered money market fund assets in calculating the $1 billion threshold, they do not have to report information about money market funds on Form PF.
[2] Large private equity fund advisers are advisers with at least $2 billion in private equity fund assets under management.
[3] These filings may be made on April 1, 2013 because the IARD system used to make such submissions will be closed on March 29 and March 31 is a Sunday.
[4] “Mid-sized” CPOs and “Large CPOs” are those that, respectively, have at least $150 million or $1.5 billion in aggregated gross pool assets under management as of the close of business on any day during the reporting period.
[5] CPOs must combine pool assets with the assets of any parallel pool structure for purposes of determining if the pool meets the $500 million threshold.
[6] Part 4 of the CFTC regulations governs the operation and activities of CPOs and CTAs, including the information that must be included in disclosure documents, account statements, and annual reports, the time frames within which they must be provided, and the specific records that a CPO must maintain.
[7] Alternate due dates exist for pools that are operated as a “fund of funds.”

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This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Heather Traeger, an O'Melveny partner licensed to practice law in the District of Columbia and Texas, Kris Easter, an O'Melveny counsel licensed to practice law in Texas, and Matthew Cohen, an O'Melveny associate licensed to practice law in the District of Columbia and California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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