Explaining Dodd-Frank

We have sweepingly referred to the Dodd-Frank Act a few times in the past, but we haven’t yet taken the time to explain exactly how this legislation could affect your business. Dodd-Frank is large and complex, and includes a few proposed rules that could severely alter your compliance and reporting methods. At its most basic, Dodd-Frank requires the registration of several market areas that were not previously monitored, including: Large Traders, Private Equity Funds and their advisers, and Swap or Derivative participants. In this week’s blog, we’ll explain a few of these concepts in more detail.

Swap Registration

Swap registration would require security-based swap dealers and major security-based swap participants, such as clearing houses, to register with the SEC and provide certain basic information. Currently, the swap-based security market, also known as derivatives, is not monitored or regulated. Though this rule has not yet taken effect, the Dodd-Frank Act requires registration and potential oversight of the securities swap market. The specific date for potential final rule is unknown. The SEC has already released proposed forms as an indication of what filers may be required to file when mandated by the SEC.

Form PF

You may be required to file a Form PF, if you are registered or required to register with the SEC as an investment adviser; or you are registered or required to register with the CFTC as a CPO or CTA and you are also registered or required to register with the SEC as an investment adviser. You must also manage one or more private funds, and you and your related persons collectively had at least $150 million in private fund assets under management as of the last day of your most recently completed fiscal year.

As usual, the world of financial compliance is a complex and ever-changing animal. To stay on top of the most recent changes, check our Compliance Service News page, and the official SEC Anouncements.

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