Harmony Or Dissonance: A Comparison Of Form PF And The Template Reporting Form Proposed In ESMA's Level II Advice

On 26 October 2011, the Securities and Exchange Commission ("SEC") adopted Form PF, the form to be used by SEC-registered investment advisers to provide the new Financial Stability Oversight Council, the systemic risk oversight body created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, with information necessary to help it monitor the systemic risk created by private funds, among other things. For further information, see Form PF: Private Fund Systemic Risk Reporting in the United States in this Quarterly Report.

Just days later, on 11 November 2011, the European Securities and Markets Authority ("ESMA") published its final report containing ESMA's technical advice to the European Commission (the "ESMA Advice") on possible implementing measures of the Alternative Investment Fund Managers Directive (the "Directive"). This final report contains a pro-forma "template" for reporting by alternative investment fund managers ("AIFMs") to competent authorities in compliance with Article 24 of the Directive in respect of the alternative investment funds ("AIFs") that they manage (referred to in this article as the "ESMA Form").

Both the SEC and ESMA, in accordance with their respective mandates, have taken into account the systemic risk reporting initiatives of various regulators around the world, including each other's initiatives. Both the SEC and ESMA mention the desirability of globally harmonised reporting requirements. However, despite (or perhaps because of) the common goal of harmonisation, and having advance knowledge of the requirements the other was considering, the SEC and ESMA have developed tantalisingly similar yet frustratingly different reporting forms and filing requirements.1 For ease of reference, persons providing investment advice or investment management services (discretionary and non-discretionary) to clients are referred to in this article as "investment advisers".

Who Has to File and Which Funds Have to be Reported on?

Form PF

Form PF must be filed by an investment adviser that:

is registered with the SEC as an investment adviser (each a "Registered Adviser"); advises one or more "private funds" (as defined in the sidebar); and has reportable assets under management attributable to private funds of at least $150 million (about €111 million at current exchange rates). Accordingly, investment advisers relying on the "foreign private adviser" exemption, the "private fund adviser" exemption (the exemption most likely to be used by non-US investment advisers to private funds) or the "venture capital fund adviser" exemption (each an "Exempt Adviser"), as well as Registered Advisers who do not manage any private funds and Registered Advisers with less than $150 million of reportable

Private Funds vs. AIFs

Both private funds...