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A Regulatory Enterprise Risk Management Exercise CCS – Our Take Live, Maggiano’s November 1, 20122
A Regulatory Enterprise Risk Management Exercise CCS – Our Take Live, Maggiano’s November 1, 20122
Welcome to today's discussion presented by professionals:
Gary S. Kaminsky [email protected]
Principal, Rothstein Kass
Roger Braunfeld [email protected]
General Counsel, ConceptONE
Gary S. Kaminsky
Gary S. Kaminsky is a principal with the Business Advisory Services Group at Rothstein Kass. He has over 25 years of experience in the securities industry,
particularly with issues relating to the legal/compliance and operational infrastructure of alternative investment companies. Gary works with investment
management clients, including hedge funds, private equity funds and broker-dealers, to advise on regulatory/compliance issues and conduct independent
reviews of operations and optimize reporting processes. He also assists in the development and maintenance of effective enterprise risk management systems
that facilitate compliance with existing and new regulatory guidelines.
Gary began his career in the financial services sector as senior counsel in the Enforcement Division of the U.S. Securities and Exchange Commission (SEC).
Subsequently, Gary was founder and CEO of GSK Consulting, LLC, where he provided expertise in the establishment, maintenance and ongoing oversight of
fund management infrastructure and systems. He has also served as co-founder, principal, COO, CCO and general counsel for two hedge fund management
companies, Rose Glen Capital Group, Inc. and Rock Hill Partners, LLC. Prior to launching those funds, Gary was Director of Compliance and Counsel for
Susquehanna Investment Group, after having served as a white collar defense and regulatory attorney at Dechert, Price & Rhoads.
Gary received a Bachelor of Arts degree from the University of North Carolina at
Chapel Hill, and his Juris Doctor from the State University of New York at Buffalo.
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
Roger J. Braunfeld
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
Roger starting working with ConceptONE in 2008. As
General Counsel, Roger combines business and
corporate law experience to assist in company
initiatives. Roger graduated Villanova University School
of Law and was a corporate attorney at Blank Rome
LLP. Roger was recognized by the Philadelphia Business
Journal as one of the “40 Under 40”, voted in the MS
Leadership Class, and designated a Pennsylvania
Rising Star Attorney. Roger left Blank Rome to serve as
both the General Counsel and Managing Director of
XShares Group LLC, where he assisted in the launch of
thirty-one Exchange-Traded Funds on the New York
Stock Exchange. After that, he served as the Chief
Operating Officer and the Chief Compliance Officer of
Clear Asset Management, acquired by Beacon Trust in
the fourth quarter of 2008.
About Form PF: An Enterprise Risk Management Exercise
Form PF implements provisions of the Dodd-Frank
Wall Street Reform and Consumer Protection Act
(Dodd-Frank), enacted July 21, 2010.
Form PF is a 2000 data point, 63 page transparency
document containing 4 sections and 79 questions.
Compliance requires the commitment of the front,
middle and back office, and third-party service
providers.
Firm’s need to formulate a plan that entails enterprise
risk management system and processes.
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
About Form PF: An Enterprise Risk Management Exercise
Statutory and regulatory authority.
More than merely a regulatory reporting obligation.
Multi-discipline/multi-expertise required across:
Legal/regulatory
Operations
Hedge Fund management
Government prognosticator
Deliberative approach required:
Systematic solution
Resulting in an accurate, repeatable and auditable filing
Alignment of third-party reporting.
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
About Form PF: An Enterprise Risk Management Exercise
In order to comply with Form PF’s reporting requirements,
registered investment advisers (“RIAs”) must aggregate a
wide range of data.
Data is sourced from internal books and records,
administrator files, and other service providers
(e.g., prime broker, futures commission merchant, etc.)
Filers must map information from all data sources to
the specific data requirements and classifications
unique to Form PF.
Filers must then submit the completed Form via FINRA’s
Private Fund Registration Depository (PFRD) system.
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
About Form PF: Timeline
Large hedge fund advisers (greater than $1.5 bn RAUM attributable to hedge funds)
Quarterly filings
Due 60 days after each fiscal quarter-end
Small private fund advisers (greater than $150 mm RAUM) and large private equity advisers
(greater than $2 bn RAUM attributable to private equity funds)
Annual filings
Due 120 days after fiscal year-end
Large liquidity funds (greater than $1 bn RAUM attributable to liquidity funds)
Quarterly filings
Due 15 days after each fiscal quarter-end
*Section 2b is required for each “qualifying hedge fund”.
Hedge Fund RAUM Frequency Form PF Sections Initial Filing Due Date
>150 mm Annual 1a, 1b, 1c 04/30/13
>1.5 bn Quarterly 1a, 1b, 1c, 2a, 2b* 03/01/13
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
The Starting Point: Resource Allocation
Which part of your organization is taking the lead on Form PF?
Operations/Accounting (COO, CFO)
Legal and compliance (General Counsel, CCO)
Risk Management (CRO)
Technology (CTO)
Middle Office / Financial Reporting
Which third-party service providers will you need?
Consultants
Technology Providers
Law firms
Administrators
Auditors
Prime Brokers
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
CPFO
The Starting Point: Calculating RAUM and Defining Scope
What is RAUM and what impact does it have?
Calculation method
Frequency requirements
GAAP considerations
Counting assets of your Related Persons, separately
managed accounts, and other accounts (e.g.,
proprietary)
Monthly testing and the need for GAAP balance sheets
Consistency with Form ADV and other third-party
reporting
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
Centralized, Data Driven Approach: Aggregation and Enrichment
Aggregation, Enrichment and Tagging Data
Mapping files to a data model
Aggregating data from disparate sources
Creating a data warehouse
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
Centralized, Data Driven Approach: Data Gathering Process
The data gathering process should be centralized around
a core data model that covers all necessary elements
needed to answer multiple sections and questions
(information can be sourced and classified once, and
used consistently multiple times).
The data sets should functionally line up with a typical
advisor's middle / back office and consist of data related to:
Advisor level
Fund level
Investor information
Security level detail
Borrowings / Collateral / Counter parties
Fund assets and performance
Risk and derivative information
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
Reviews, Approvals and Audit Trails: Form PF Project Completion
Other factors to consider:
Providing assumptions to the SEC via Q4 response
Revisit certain questions subject to a high degree of
interpretation for consistency with industry best practices
“round pegs in square holes”
“middle of the pile”
Know the appropriate timing and scope of reviews by
outside legal counsel.
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
Confidentiality, Fees & Expenses:
Handling investor requests to view Form PF
Maintain security and integrity of filing and
data sources
Determining how to treat Form PF expenses
and avoiding conflicts of interest
About Form PF Starting Point PF Road Map Centralized Data Driven Approach Reviews, Approvals & Audit Trails Confidentiality, Fees & Expenses
Thank You for Attending
