SEC FORM 4

SEC Form 4

FORM 4

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

1. Name and Address of Reporting Person^*

NUTTALL SCOTT C

(Last)

(First)

(Middle)

C/O KKR FINANCIAL CORP.

555 CALIFORNIA STREET, 50TH FLOOR

(Street)

SAN FRANCISCO

94104

(City)

(State)

(Zip)

2. Issuer Name and Ticker or Trading Symbol
KKR Financial Corp [ KFN ]

5. Relationship of Reporting Person(s) to Issuer
(Check all applicable)

X	Director	10% Owner
	Officer (give title below)	Other (specify below)

3. Date of Earliest Transaction (Month/Day/Year)
09/15/2006

4. If Amendment, Date of Original Filed (Month/Day/Year)

6. Individual or Joint/Group Filing (Check Applicable Line)

X	Form filed by One Reporting Person
	Form filed by More than One Reporting Person

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	3. Transaction Code (Instr. 8)		4. Securities Acquired (A) or Disposed Of (D) (Instr. 3, 4 and 5)			5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4)	6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Security (Instr. 3)	2. Transaction Date (Month/Day/Year)	2A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	Amount	(A) or (D)	Price		6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	7. Nature of Indirect Beneficial Ownership (Instr. 4)

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	4. Transaction Code (Instr. 8)		5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5)		6. Date Exercisable and Expiration Date (Month/Day/Year)		7. Title and Amount of Securities Underlying Derivative Security (Instr. 3 and 4)		8. Price of Derivative Security (Instr. 5)	9. Number of derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)	10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
1. Title of Derivative Security (Instr. 3)	2. Conversion or Exercise Price of Derivative Security	3. Transaction Date (Month/Day/Year)	3A. Deemed Execution Date, if any (Month/Day/Year)	Code	V	(A)	(D)	Date Exercisable	Expiration Date	Title	Amount or Number of Shares	8. Price of Derivative Security (Instr. 5)		10. Ownership Form: Direct (D) or Indirect (I) (Instr. 4)	11. Nature of Indirect Beneficial Ownership (Instr. 4)
Option (Right to Buy)	$20	09/15/2006		D ^{( 1 )}			57,500	^{( 2 )}	08/12/2014	Common Stock	57,500	$20	1,892,500	I	See Footnote ^{( 3 )} ^{( 4 )}

Explanation of Responses:

1. The options to acquire common stock of the Issuer were transferred to Saturnino S. Fanlo and David A. Netjes by KKR Financial Advisors LLC (the "Manager").

2. The options vest in one-third increments on August 12, 2005, August 12, 2006 and August 12, 2007.

3. The interests in stock of Issuer are held by the Manager. KKR Financial LLC ("KFL") is the sole member of the Manager. Kohlberg Kravis Roberts & Co. L.P. may be deemed to be the beneficial owner of such interests in stock of Issuer held by KFL. As the general partner of Kohlberg Kravis Roberts& Co. L.P., KKR & Co. L.L.C. may be deemed to be the beneficial owner of such interests in stock of Issuer held by KKR Financial Advisors LLC. The members of KKR & Co. L.L.C. are Messrs. Henry R. Kravis, George R. Roberts, Joseph Y. Bae, Michael M. Calbert, Brian F. Carroll, Adam H. Clammer, Todd A. Fisher, Jacques Garaialde, Perry Golkin, Frederick M. Goltz, Reinhard Gorenflos, James H. Greene, Jr., Oliver Haarmann, Clive R. Hollick, Johannes P. Huth, Marc S. Lipschultz, Michael Marks, Michael W. Michelson, Dominic P. Murphy, Alexander Navab, John L. Pfeffer, Paul E. Raether, John K. Saer, Jr. and the Reporting Person.

4. Each of these individuals may be deemed to share beneficial ownership of any of the interests in stock of Issuer that KKR & Co. L.L.C. may be deemed to beneficially own. However, the Reporting Person disclaims that he is the beneficial owner of such interests in stock of Issuer, except to the extent of his pecuniary interest in such interests in stock of Issuer. The filing of this statement shall not be deemed an admission that, for purposes of Section 16 of the Securities Exchange Act of 1934 or otherwise, the Reporting Person is the beneficial owner of all such interests in stock of Issuer covered by this statement.

	William J. Janetschek, as Attorney in Fact	09/15/2006
	** Signature of Reporting Person	Date
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* If the form is filed by more than one reporting person, see Instruction 4 (b)(v).
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