Archive for Private Equity

SEC Amendments to Form PF for Private Equity Advisers (Abstract)

One July 23, 2014, the SEC issued final amendments impacting money market funds and money market type funds.  This is Part IV of a Four-Part Blog on the 869-page final rules delineated in the following compliance areas: (i.a) changes the net asset value per share (“NAV”) from fixed-rate to floating-rate for institutional prime money market funds; (i.b) authorizes money market funds to suspend redemptions or impose liquidity fees during heavy redemption periods, with the exception of government money market funds.  These rule changes are “designed to address money market funds’ susceptibility to heavy redemptions, improve their ability to manage and mitigate potential contagion from such redemptions, and increase the transparency of their risks, while preserving, as much as possible, the benefits of money market funds.”  Also under these final rules, the SEC adopted;” (ii) additional disclosures, including new Form  N-CR and Form N-MFP; (iii) portfolio diversification and stress testing of money market funds holdings; (iv) additional disclosure on Form PF of money market type funds held by private equity firms.

The SEC amended Form PF section where private equity advisers report information regarding the private funds.  Specifically, “liquidity funds,” which are private funds that seek to maintain a stable NAV (or minimize fluctuations in their NAVs) and thus can resemble money market funds.  For purposes of Form PF, a “liquidity fund” is any private fund that seeks to generate income by investing in a portfolio of short term obligations in order to maintain a stable net asset value per unit or minimize principal volatility for investors.

Large liquidity fund advisers, which are registered advisers with $1 billion or more in combined money market fund and liquidity fund assets, should file substantially the same information with respect to their liquidity funds’ portfolio holdings on Form PF as money market funds are required to file on Form N-MFP.

 

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SEC Amendments to Form PF for Private Equity Advisers

One July 23, 2014, the SEC issued final amendments impacting money market funds and money market type funds.  This is Part IV of a Four-Part Blog on the 869-page final rules delineated…

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SEC Amendments to Money Market Fund Rules: Portfolio Diversification and Stress Testing (Abstract)

One July 23, 2014, the SEC issued final amendments impacting money market funds and money market type funds.  This is Part III of a Four-Part Blog on the 869-page final rules delineated in the following compliance areas: (i.a) changes the net asset value per share (“NAV”) from fixed-rate to floating-rate for institutional prime money market funds; (i.b) authorizes money market funds to suspend redemptions or impose liquidity fees during heavy redemption periods, with the exception of government money market funds.  These rule changes are “designed to address money market funds’ susceptibility to heavy redemptions, improve their ability to manage and mitigate potential contagion from such redemptions, and increase the transparency of their risks, while preserving, as much as possible, the benefits of money market funds.”  Also under these final rules, the SEC adopted;” (ii) additional disclosures, including new Form  N-CR and Form N-MFP; (iii) portfolio diversification and stress testing of money market funds holdings; (iv) additional disclosure on Form PF of money market type funds held by private equity firms.

The current rule 2a-7 requires a money market fund’s portfolio to be diversified, both as to the issuers of the securities it acquires and providers of guarantees and demand features related to those securities.  Money market funds must limit their investments in the securities of any one issuer of a first tier security (other than government securities) to no more than 5% of fund assets.  They must also limit their investments in securities subject to a demand feature or a guarantee to no more than 10% of fund assets from any one provider, except that the rule provides a so-called “twenty-five percent basket,” under which as much as 25% of the value of securities held in a fund’s portfolio may be subject to guarantees or demand features from a single institution.  However, the SEC’s concern that the diversification requirements in rule 2a-7 today may not appropriately limit money market fund risk exposures has resulted in the following amendments to rule 2a-7:

 

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