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October 12, 2022

Regulators’ Proposed Sunshine for the $12 Trillion Private Fund Industry Will Protect Investors, Markets and Financial Stability

WASHINGTON, D.C.—  Stephen Hall, Legal Director and Securities Specialist, issued the following statement in connection with a comment letter filed in response to the Securities and Exchange Commission’s (SEC) and Commodity Futures and Trading Commission’s (CFTC) joint proposal to require greater disclosure from the private fund industry.

“Private funds, which include hedge funds and private equity, play a very large role in our financial system and economy and they are growing substantially every year.  For example, assets held by private funds have more than doubled from $5 trillion to $12 trillion in just the last eight years and the number of private funds has grown by 55 percent as well.  They are also engaging in more high risk, highly speculative activities, often involving complex derivatives and leverage.  However, regulators and policy makers have too little data on what those funds do, and that information gap limits their ability to protect investors, markets and financial stability.

“The SEC and CFTC are proposing to shine light into the darkness by requiring more funds to disclose more information, which will enable much more effective oversight and regulation.  Specifically, the amendments are proposed to Form PF and will provide key information identified by the Commissions and the Financial Stability Oversight Council (FSOC). Recent periods of market stress, like the COVID-19 pandemic and the trading frenzy surrounding meme stocks, have again highlighted the importance of having more granular information on significant market participants who operate largely in the shadows, including private funds with substantial interconnectedness with the broader financial system.

“Form PF was an important incremental reform included in the Dodd-Frank Act passed by Congress in the wake of the 2008 financial crash, which was a painful reminder that lack of information handcuffs policymakers and harms the American people.  That’s why Form PF required large private funds, primarily hedge funds, to periodically report certain information to regulators. During the past ten years, Form PF has provided the SEC, CFTC, and FSOC with important insight into the basic operations and strategies used by large private funds for use in assessing systemic risk and protecting investors. However, after nearly a decade, and given the growth in the private funds industry and its activities, it is necessary and appropriate for regulators to recalibrate both the quantity and quality of data being reported in Form PF so it better serves its underlying purpose.

“In our comment letter, we explain our support for the joint rule proposal as it rightfully focuses on enhancing the quantity and quality of the data being reported to enable the SEC, CFTC, and FSOC to carry out their statutory duties to protect investors and assess systemic risk.”

You can find our full public comment letter here.


Better Markets is a non-profit, non-partisan, and independent organization founded to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements

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