Private Equity Funds

Private Equity Funds


I advise a private fund that would be categorized as a private equity fund, except for the fact that the fund documents allow the fund to either employ large amounts of leverage or sell assets short. The fund does not in fact, nor does it intend to, incur leverage or short any assets. May I treat this private fund as a private equity fund instead of as a hedge fund for reporting purposes?  

No. In adopting the Form, the Commission considered, but did not accept, commenters’ arguments that the leverage and shorting characteristics in the definition of “hedge fund” should focus on actual or contemplated use, rather than potential use. See Investment Advisers Release 3308, text accompanying footnote 78.