On 18 January 2017, the SEC published new FAQs on Form PF. While much of the guidance will not be new to Advise clients, some FAQs provide new instructions for filers. A short summary of each new FAQ is provided below.
We recently hosted a call to discuss the impact of these changes and a Form PF refresher on other questions frequently asked of our Best Practices team. In addition to reviewing the new FAQs, we also covered unofficial guidance that Advise has received from the SEC in the past year, as well as input from the Advise Best Practices team on how your peers are handling questions.
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A.10 (Instruction 1)
Confirming that if you are disregarding a foreign fund in accordance with Instruction 1, you may also disregard foreign managed accounts that run parallel to those funds.
A.11 (Instruction 16)
Confirming that if you do not yet have audited financial statements, you should report using estimates--rather than a previous reporting period's audited financials--and confirming that you are not required to amend the filing once audited financial statements are complete.
A.12 (Instruction 10)
Confirming that if you launch and liquidate a fund within the reporting period, you still must report it on Form ADV, obtain a PFID for the fund, and report it on Form PF.
3.1 (Q3, RAUM)
Confirming that all RAUM is accounted for in Q3, including RAUM of registered investment companies.
20.1 (Q20, Strategy)
Confirming that "% of NAV" for investment strategy might add up to more than 100%.
32.1 (Q32, Portfolio Liquidity)
Confirming that if a fund only holds cash/cash equivalents, you should report that 100% of the portfolio can be liquidated in one day or less. You should also include an assumption to explain your answer.
32.2 (Q32, Portfolio Liquidity)
Instructing that for this question, "value" means NAV, (i.e., not "value" as set forth in Instruction 15).
32.3 (Q32, Portfolio Liquidity)
Clarifying that cash/cash equivalents should be excluded from both the numerator and the denominator.
35.2 (Q35, Open Positions)
Clarifying that cash/cash equivalents should not be considered a "position" for purposes of reporting open positions.
47.1 (Q47, Borrowings)
Confirming that where a creditor is not itself listed in the drop-down menu, but is affiliated with an entity that is listed, you should select the affiliated creditor from the menu, and you should identify the creditor in an assumption rather than entering it in the space for "other".
49.1 / 61 (Q49, Restrictions on Withdrawals)
Confirming that the question asks for discretionary restrictions that the adviser may impose on the fund, not baseline liquidity restrictions such as lock-up periods.
49.2 / 61 (Q49, Restrictions on Withdrawals)
Confirming that you should not include side-pockets when reporting on restrictions on withdrawals/redemptions.
50.1 / 62 (Q50, Investor Liquidity)
Confirming that the answer should be provided based on specific liquidity terms applicable to each investment.
63.1 (Q63, Portfolio Information)
Clarifying that where the fund holds derivatives, the securities should be reported as "other" in 63(f).
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