What happens on the web stays on the web

Back in the good old days, Form D – the form that private funds file with the Securities and Exchange Commission to claim an exemption from registering a securities offering – used to be a paper-only submission. The only way an inquisitive journalist could find it was by flipping through a pile of paper in a small room at the SEC headquarters in Washington, DC, or by subscribing to a specialised data service from Thomson Financial, the only company to which the SEC would send Form D copies.

Now that Form D is a digital-only submission, private equity, real estate and hedge funds should be advised that it is quite a simple matter for the general public to view the documents. One need only navigate to the SEC website, search for company filings, enter ‘D’ into the field for Form Type, and voilà, all sorts of information is suddenly at the fingertips: the fund’s total offering amount, the total amount sold, minimum investment size, any finder’s fees associated with the fund, whether any of the LPs are non-accredited investors. One can even set up an RSS feed, if they so desire.

One repercussion of this sudden transparency is that firms who are lagging in their fundraising efforts will have nowhere to hide – and in this fundraising market, that will be a large percentage of the funds in the market.

NOWHERE TO HIDE
A handful of the private funds whose Form D flings have appeared on the SEC website in recent weeks