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SEC Implements New Disclosure Rules for Private Funds and Share Buybacks

The U.S. Securities and Exchange Commission (SEC) has adopted new disclosure rules for hedge and private equity fund advisors. These rules increase transparency, competition, and efficiency in the $ 25 trillion marketplace.

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Form PF Updated for Improved Regulatory Disclosures

The SEC has updated Form PF, established after the 2008-2009 financial crisis, to monitor risks in the growing private fund sector. The update aims to improve the quality of confidential regulatory disclosures by significant funds regarding their investment strategies and leverage.

SEC Chair Gensler Believes Rules Promote Financial Stability

SEC Chair Gary Gensler stated that the new rules would provide greater visibility into funds for regulators, helping to protect investors and promote financial stability.

Large Hedge Funds Must Report Significant Stress Events

Under the new rules, large hedge fund advisors must inform financial regulators of certain events that may indicate significant stress or potential systemic risks and investor harm, such as significant margin calls or counterparty defaults, within 72 hours of the event.

Enhanced Disclosures for Share Buybacks Adopted

The SEC has also adopted a final rule to improve companies' disclosures around share buybacks. This requires quantitative disclosure of daily repurchases on a quarterly or semi-annual basis, depending on the type of issuer.

Increased Information on Share Repurchases Benefits Investors

The new rule aims to provide investors with more information to assess the purposes and effects of share repurchases, which amounted to nearly $950 billion last year. According to Gensler, the disclosures will help reduce information asymmetries between issuers and investors in buybacks, benefiting investors, issuers, and the markets.