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Hedge fund startups continue to grow at a rapid pace and the SEC is taking notice. In June, the regulator brought an enforcement action against several investment advisers that weren't filing Form PF. While the action was an obvious response to broken rules, it was also a warning shot to funds that were filing late, according to compliance consultant Optima Partners.

"What we're seeing is that the SEC is looking very closely at what I'd call the blocking and tackling of compliance," Alan Halfenger, a partner at Optima Partners tells New Managers. "They want to see that there is a compliance infrastructure in place, whether it's with a third party or in-house. What that enforcement action you saw them target a lot of guys who were failing gym and now, they're in summer school. But it was also a clear statement to late filers that they are coming for them next."

The SEC uses Form PF data to monitor industry trends, inform rulemaking, identify compliance risks, and target examinations and enforcement investigations. It also provides Form PF data to the Financial Stability Oversight Council to help it evaluate systemic risks posed by hedge funds and other private funds.

According to Halfenger, despite rules governing regular reporting on the part of investment managers, many startup firms are still falling behind. He says the industry is still on a spectrum of maturity with ......................

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