Comment Deadline Set for Proposed Expansion of Form PF

Comments are due by March 21, 2022 on an SEC proposal to amend Form PF. The Form is used for reporting by certain SEC-registered investment advisers to private funds. The SEC proposal was published in the Federal Register.

As previously covered, the SEC is proposing these amendments to enhance the ability of the Financial Stability Oversight Council (or "FSOC") to assess systemic risk in light of the growing private fund industry.

"Form PF provides little, if any, useful information. Rather than expand it, the SEC should explain what it believes it has learned from Form PF filings," said Steven Loftchie.

SEC Proposes Toughening Insider Trading Rules

The SEC is proposing to amend its insider trading rules, particularly SEA Rule 10b5-1, which allows corporate insiders to establish "plans" that may set in motion a fixed program of buying or selling the corporation's securities, even at a time when the insider may have managerial nonpublic information. The proposed amendment would impose additional conditions on the use of Rule 10b5-1 plans. Among other things, the proposal would:

• Require a Rule 10b5-1 trading planto include a 120-day mandatory “cooling-off period” for executives and directors and a 30-day cooling-off period after its adoption for issuers before trading can commence under the plan;

• Require an officer or directors to personally certify the individual is nott aware of any material nonpublic information at the time the arrangement is adopted;

• Require a quarterly report as to such plans;

• Modify the affirmative defense so that it does not apply to multiple overlapping arrangements for trades in the same securities class – limiting the availability of the defense to single-trade arrangements entered into over any 12 month period;

• Require a orm 10-K or 20-F filed by an issuer to disclose whether it has adopted insider trading policies and procedures to govern the any such plan, and if so, disclosure those policies and procedures;

• Require disclosure to be published within two business days of adoption as to any grants of equity compensation awards that occur close in time to the release of material nonpublic information.

The SEC is seeking comment on the proposed amendment by April 1, 2022.

Primary Sources

1. Federal Register: Proposed Changes to Form PF

2. Federal Register Release No. 33–11013: Securities Exchange Act Rule 10b5–1 and Insider Trading