On April 9, 2021, the SEC’s Division of Examinations (the “Division”) published its first risk alert detailing deficient and effective practices among investment advisers and registered and private funds (“Firms”) offering ESG strategies. The SEC is not alone in its focus on ESG matters as the CFTC and its Climate Risk Unit (“CRU”) continue to assess the risks to U.S. financial stability posed by climate change.
Continue Reading The SEC’s ESG Risk Alert and the CFTC’s New Climate Risk Unit

Last week the SEC adopted rule amendments to the definition of “accredited investor” under Regulation D (“Reg D”) of the Securities Act of 1933. The rule amendments, the SEC says, are intended to modernize a term that has not changed in nearly 40 years and to “more effectively identify institutional and individual investors that have the knowledge and expertise to participate in” today’s “multifaceted and vast private markets.”
Continue Reading Updated SEC Definition Opens Private Markets to (a Handful of) New Investors

On March 23, 2020, the Securities and Exchange Commission (“SEC”) issued a relief order (the “Order”) granting temporary short-term lending and borrowing flexibility to open-end funds and insurance company separate accounts (each, a “fund”) to assist such funds in dealing with market disruptions caused by the COVID-19 pandemic. The Order temporarily permits a fund to borrow from its affiliated persons. It also expands such fund’s flexibility for lending or borrowing under an existing interfund lending exemptive order (“IFL Order”); a fund without an IFL Order will be permitted to participate in an interfund lending arrangement under similar conditions. Lastly, a fund may temporarily engage in borrowing or lending arrangements that may deviate from its fundamental investment policies. The Order covers transactions involving second-tier affiliated persons as well (first and second tier affiliated persons are referred to as “fund affiliates”).

This temporary relief is in effect until at least June 30, 2020. After the effective period, funds will have two weeks to cease activities carried out in reliance on the Order, once the SEC issues a public notice terminating the Order. Before relying on this temporary relief, a fund will need to comply with the various conditions in the Order.
Continue Reading SEC Grants Mutual Funds Short-Term Borrowing/Lending Relief in Response to COVID-19

In response to the ongoing COVID-19 pandemic and resulting market liquidity issues impacting regulated investment companies, the Securities and Exchange Commission’s Division of Investment Management (the “Division”) recently issued a no-action letter (the “No-Action Letter”) providing temporary relief from the prohibitions of Section 17(a) of the Investment Company Act of 1940 (the “1940 Act”) to open-end funds that are not exchange-traded funds or money market funds (“mutual funds”). The Division issued the No-Action Letter to address concerns of short term “market dislocation” involving debt securities and mutual funds’ need to increase liquidity to satisfy shareholder redemption requests. This post summarizes the conditions to this relief.
Continue Reading SEC Provides No-Action Relief Extending Rule 17a-9 to Non-Money Market Funds