SEC Adopts Proposals to Enhance Share Repurchase Disclosures and Private Fund Reporting

On May 3, 2023, the Commission announced that it adopted amendments to two rules enhancing disclosure requirements for share repurchases and private fund reporting.

Share Repurchase Disclosures

First, the Commission adopted amendments to the rules on share repurchase disclosures requiring issuers to:

• Aggregate repurchase activity on a daily basis and disclose activity quarterly or semiannually;
• Report if certain directors or officers traded in the relevant securities within four business days before or after the public announcement of an issuer's repurchase plan or program;
• Provide a narrative disclosure about the issuer's repurchase programs and practices in its periodic reports; and
• Provide quarterly disclosures in an issuer's periodic reports on Forms 10-K and 10-Q related to an issuer's adoption and termination of 10b5-1 trading arrangements.

Foreign private issuers are required to comply with new Form F-SR beginning the first full fiscal quarter that begins on or after April 1, 2024. Form 20-F narrative disclosures are required in the first Form 20-F filed after the foreign private issuer's first Form F-SR has been filed.

Listed Closed-End Funds are required to comply with the amendments beginning with the Form N-CSR that covers the first six-month period that begins on or after January 1, 2024. All other issuers are required to comply with the amendments on Forms 10-Q and 10-K (for their fourth fiscal quarter) beginning with the first filing that covers the first full fiscal quarter that begins on or after October 1, 2023.

Private Fund Reporting

Second, the Commission adopted amendments to Form PF to enhance disclosures by requiring:

• Current reporting by large hedge fund advisers of certain trigger events that may indicate significant stress at a fund that could harm investors or signal risk in the broader financial system;
• Quarterly event reporting for all private equity fund advisers regarding certain events that could raise investor protection issues; and
• Enhanced reporting by large private equity fund advisers to improve the ability of the Financial Stability Oversight Council (FSOC) to monitor systemic risk and improve the ability of both FSOC and the Commission to identify and assess changes in market trends at reporting funds.

The amendments require large hedge fund advisers to file current reports as soon as practicable, but no later than 72 hours from the occurrence of one or more trigger events. For large fund advisers, trigger events include certain extraordinary investment losses, significant margin and default events, terminations or material restrictions of prime broker relationships, operations events, and events associated with withdrawals and redemptions.

The amendments require all private equity fund advisers to file an event report upon the occurrence of one or more trigger events within 60 days of each fiscal quarter end. Trigger events include the removal of a general partner, certain fund termination events, and the occurrence of an adviser-led secondary transaction.

The amendments become effective six months after publication of the adopting release in the Federal Register for current and quarterly event reporting and one year after publication in the Federal Register for the remainder of the amendments.