Earlier this year, the staff of the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) published its annual list of examination priorities, which included firms’ preparation for the transition away from LIBOR as a widely used reference rate for various financial instruments. On June 18, OCIE followed-up with a risk alert that provides additional details about how it evaluates firms’ LIBOR transition preparedness.
Continue Reading OCIE Issues Risk Alert on LIBOR Transition Preparedness

On April 14, 2020, the staff of the SEC’s Division of Investment Management (the “Division”) published a Statement on the Importance of Delivering Timely and Material Information to Investment Company Investors (the “Statement”). The Statement gives notice that the Division has a keen eye on prospectus risk disclosure as it continues to monitor the ongoing impacts of the COVID‑19 pandemic on investment companies. “In light of the current uncertainties and market disruptions,” the Division explains, “investors need high-quality financial information more than ever.”

The Statement comes amid other guidance and temporary regulatory relief from the SEC, including public statements by Chairman Jay Clayton and Chief Accountant Sagar Teotia emphasizing the need to assist “Main Street investors” in navigating turbulent markets. Uniquely, the Statement focuses explicitly on how fund complexes might modify existing disclosures.
Continue Reading SEC Staff Speaks to COVID-19 and Fund Prospectus Disclosure

The SEC’s Division of Investment Management has posted Coronavirus (COVID-19) Response FAQs (the “FAQs”), which have been updated through April 14, 2020. The FAQs summarize and provide links to various forms of relief granted by the SEC and the Division to registered investment companies and investment advisers. A list of the questions addressed is provided below.
Continue Reading SEC Provides a Consolidated Reference for COVID-19 Relief for Investment Companies and Advisers

On March 12, 2020, the U.S. Securities and Exchange Commission announced a settlement with an exempt reporting adviser and its two founders for failure to disclose several conflicts of interest and failure to take measures required by the private fund’s offering documents.

The SEC is examining exempt reporting advisers, and although not subject to all

On April 7, 2020, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (“OCIE”) published two risk alerts intended to provide market participants with advance information regarding (1) upcoming inspections for broker-dealer compliance with Regulation Best Interest (“Regulation BI”) and (2) upcoming inspections for broker-dealer and investment adviser compliance with Form CRS. The compliance date for both Regulation BI and Form CRS is June 30, 2020.

You can find more details in our client alert.
Continue Reading SEC Staff Publishes Risk Alerts Regarding Reg BI and Form CRS Inspections and Possible COVID-19 Impact

On March 25, 2020, the Securities and Exchange Commission (“SEC”) published new relief that supersedes its March 13, 2020 order for investment advisers filing and delivery obligations of Form ADV and Form PF. We have updated our original post to reflect the relief provided in the SEC’s new March 25 order. This new order extends

On March 25, 2020, the Securities and Exchange Commission (“SEC”) issued an order granting temporary relief for filing and delivery obligations of Form ADV and Form PF for investment advisers whose operations may be affected by the coronavirus. This relief supersedes the SEC’s previous order from March 13. The March 25 order extends the time of the relief to June 30, 2020, and eliminates the requirement for the adviser to provide the SEC and clients with a description of the reasons why the adviser is relying on the order and an estimated date by which the required filing will occur.

The relief applies to both registered investment advisers and exempt reporting advisers. In providing the relief, the SEC explained that it is necessary “[i]n light of our current understanding of the nationwide scope of COVID-19’s disruptions to businesses and everyday activities, and the uncertainty as to the duration of these disruptions.”


Continue Reading SEC Provides Relief For Form ADV and Form PF Filing and Delivery Obligations in Response to COVID-19 (Updated 4/2)

In our previous posts, we reviewed the new Rule 6c-11 (the “ETF Rule”) from the U.S. Securities and Exchange Commission (“SEC”), which provides relief to exchange traded funds (“ETFs”). The SEC also issued a complementary exemptive order (the “ETF Exemptive Order”) primarily providing relief to broker-dealers that distribute ETFs. ETFs distribute their shares by issuing a block of shares (known as a “creation unit”) to certain broker-dealers (referred to as “Authorized Participants”) in exchange for a basket of the ETF’s underlying securities. Authorized Participants then sell these ETF shares on exchanges. Only Authorized Participants may redeem the ETF’s shares for the basket of underlying securities (or the cash equivalent) and only in amounts corresponding to a creation unit. This process could cause Authorized Participants and ETFs to run afoul of the provisions of the Securities Exchange Act of 1934 (the “Exchange Act”) discussed below.
Continue Reading The SEC Issues its Long-Awaited ETF Rule (Part 3) – The ETF Exemptive Order

In a previous post, we outlined the scope of new Rule 6c-11 (the “ETF Rule”) which the U.S. Securities and Exchange Commission (“SEC”) approved on September 26, 2019. In this post, we identify some conditions currently required in ETF exemptive orders that were not included in the ETF Rule.
Continue Reading The SEC Issues its Long-Awaited ETF Rule (Part 2) – What was Omitted

On September 26, 2019, the U.S. Securities and Exchange Commission (“SEC”) unanimously approved a long-awaited rule regulating exchange-traded funds (“ETFs”). Previously, ETFs were required to obtain exemptive orders from the SEC, a time consuming and expensive process. New Rule 6c-11 under the Investment Company Act of 1940 (the “ETF Rule”) streamlines the process for launching some ETFs and standardizes the compliance requirements for existing ETFs.

The ETF Rule goes into effect sixty days after it appears in the Federal Register, which has yet to occur as of this post. One year following its effective date, the SEC will rescind the exemptive orders for any existing ETF that falls within the scope of the ETF Rule.
Continue Reading The SEC Issues its Long-Awaited ETF Rule (Part 1) – What Made the Cut