Risk & Compliance
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Dodd-Frank/Consumer Finance

One of the many outcomes of the Dodd-Frank Wall Street Reform and Consumer Protection Act is Form PF, a sixty-three-page document that the SEC finalized in October 2011 along with a number of rules governing its application and implementation. The SEC created Form PF in order to understand and measure the risk in the financial system more accurately and more timely so that future crises to the system could be averted. In an effort to shed light on the sometimes cavernous world of private funds, including private hedge funds1, private equity funds2, and private liquidity funds3, regulators now require private fund advisers with assets under management that exceed specific thresholds to report an abundance of information, such as:

  • A breakdown of assets by fund type,
  • The fund’s borrowings and creditors,
  • The fair value of Level 1, 2, and 3 assets and liabilities,
  • Counterparty exposure, and
  • The duration and fair value of all fixed income holdings, among other items.

Regulators believe that the strategic and operational information reported on Form PF will aid the SEC and the Financial Stability Oversight Council (FSOC) in assessing systemic risk. Important to note is that all information reported will remain confidential and available only to regulators.

Navigant’s risk management professionals bring deep expertise in credit risk, market risk, and operations risk. Years of experience in working on regulatory challenges going back to SOX compliance make us an effective partner in addressing Form PF compliance.

Solutions


  • Data Quality and Integrity
  • Credit, Market, and Operations Risk Management
  • Pricing and Valuation (all asset classes)
  • Model Risk Management
  • Reporting Automation
  • Regulatory Compliance
  • Finance Process Re-engineering
  • Internal Audit Support

1/ As defined by Form PF, "hedge funds" are any private funds other than securitized asset funds that pay performance fees to the advisers based on unrealized gains (i.e. market value), may borrow an amount in excess of one-half of its NAV or may have gross notional exposure in excess of twice its NAV, or may sell securities or other assets short or enter into similar transactions other than for the purpose of hedging currency exposure or managing duration.

2/ As defined by Form PF, "private equity funds" are private funds that are not hedge funds, liquidity funds, real estate funds, securitized asset funds, or venture capital funds and do not provide investors with redemption rights in the ordinary course.

3/ As defined by Form PF, "liquidity funds" are any private funds that seek to generate income by investing in a portfolio of short-term obligations in order to maintain a stable NAV per unit or to minimize principal volatility for investors.

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