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By: Lev Breydo, Peter Campitiello, Thomas Gironda from US law firm McCarter & English, LLP

On May 3, the Securities and Exchange Commission approved a new rule that will require hedge fund advisers and private equity advisers to disclose more information to regulators on Form PF about their stability risks and investment strategies, including litigation finance, and to report that information on a more frequent basis. The SEC and the Financial Stability Oversight Council use the data provided by hedge fund advisers and private equity advisers on Form PF to assess the US's systemic risk to the private fund industry. The new information required to be reported on Form PF will enhance the SEC's ability to monitor systemic risk. The new disclosures will also strengthen regulatory surveillance of private fund advisers and enhance investor protection, including by identifying examination and enforcement concerns and priorities. Recent market events, including COVID-19 effects and broader market volatility, have showcased the importance of the SEC possessing current and robust information from market participants.

The new rule and the increased disclosures arising thereunder will give the government better visibility into a portion of the financial market that has grown substantially since the SEC initially passed private fund disclosure rules in 2011.

"Private funds today are ever more interconnected with broader capital markets. They also nearly have t......................

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