Thursday, 5 May 2016
Last updated 7 hours ago
Mar 26 2012 | 9:27am ET
With the first Securities and Exchange Commission filing deadlines for hedge funds looming, hedge fund administrator GlobeOp says it has learned a number of lessons from its private fund (Form PF) test filings on behalf of clients.
“Four broadly applicable lessons emerged as we coordinated practice filings with clients wanting to be well-prepared and confident when their reporting becomes mandatory at the end of June,” said Vernon Barback, GlobeOp president and chief operating officer.
Barback found that regulatory assets under management calculations confused some fund management companies, which thought the filing was driven by the fund’s net asset value whereas RAUM is a measure of gross assets on a firm’s balance sheet, including derivatives. As a result, says GlobeOp, firms with even modest leverage can have significantly higher RAUM than their normal NAV or AUM measures. This can affect a fund’s specific category of filing deadlines, frequency and content.
In addition, GlobeOp says the XML filing format requirements released by FINRA earlier this month have “technology development implications” for funds or service providers planning to prepare Form PF reports.
The hedge fund administrator found “considerable room for interpretation in the way a fund management company completes Form PF.” For many questions, it says, there is no single answer.
“Managers should consider when developing their responses that Form PF, or parts of it, could potentially become a future element of investor due diligence. Data reporting choices made now could significantly affect how funds may be viewed in future by investors.”
Lastly the firm advocates early preparation: “Sourcing and processing such a wide range of data is a challenge in itself—organized, controlled and sustainable procedures are essential.”
Under the SEC rules approved last year, funds with more than $5 billion in regulatory assets under management must file their initial Form PF, representing a view of their portfolios during April, May and June, by August 29, 2012.
Advisors with $1.5 billion to $5 billion in regulatory assets under management will begin filing by February 28, 2013, and advisors with between $150 million and $1.5 billion will begin filing by April 30, 2013.