(Bloomberg News) The U.S. Securities and Exchange Commission proposed requiring investment advisors to private funds to maintain and report information on those funds that will be used in broader efforts to monitor systemic risk.

SEC commissioners voted 5-0 at a meeting in Washington yesterday to seek public comment on the measure mandated by the Dodd-Frank Act. The proposal, which would require quarterly reporting by firms managing more than $1 billion in assets, would call on advisers to maintain information on fund assets, leverage, investment positions, valuation and trading practices.

Information gathered by the SEC would be shared with the Financial Stability Oversight Council, the panel of regulators created by Dodd-Frank to monitor systemic threats. The proposal reflects lessons learned from the 2008 credit crisis about the importance of reducing the risk of a sudden shock, SEC Chairman Mary Schapiro said in comments prepared for the meeting.

"The information required would be 'tiered' so that we would receive more detailed information from larger private fund advisors, rather than imposing the same reporting requirements on all private funds," Schapiro said in her statement. "While the group of large private fund advisors is relatively small in number, it represents a large majority of private funds' assets."

About 200 U.S.-based hedge fund advisors, who oversee more than 80% of assets under management would be subject to the heightened reporting threshold, Schapiro said.


The proposal includes Dodd-Frank provisions designed to protect the confidentiality of proprietary information gathered from registered advisors, the SEC said.

The agency will gather and review comments on the proposal for 60 days before considering a final version of the rule. The measure is to be approved jointly with the Commodity Futures Trading Commission, which is scheduled to consider a proposal at a meeting today.

The SEC rule would split advisors into two groups based on whether they manage at least $1 billion in assets, which would dictate the frequency and depth of information reported on a new Form PF.

The International Organization of Securities Commissions' technical committee--led by SEC Commissioner Kathleen Casey--approved a template last year for collecting information from hedge funds worldwide.

The effort was about developing "a comparable and consistent set of data to be collected from local hedge fund managers and advisors to monitor systemic risks and prevent gaps in regulatory reporting," Casey said in a Feb. 25 statement.

The U.K.'s Financial Services Authority started a hedge fund survey in October of 2009. The Securities and Futures Commission in Hong Kong started a survey in 2006 and conducted it again in 2009.

If approved, this proposed rule would join a previous SEC proposal calling for SEC registration for managers of hedge funds and private-equity funds with more than $150 million in assets, which would include public disclosures revealing some information about the size and personnel of the funds.