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Category Archives: Fund Regulation

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OCIE Announces Its 2018 Examination Priorities

Posted in Broker-Dealer Regulation, Fund Regulation, Investment Adviser Regulation

The SEC’s Office of Compliance Inspections and Examinations (OCIE) has published its 2018 examination priorities. Not surprisingly, it will continue to focus on the protection of retail investors and ensuring that registrants are appropriately disclosing or resolving conflicts of interest. In addition, OCIE will pay particular attention to developments in cryptocurrencies and initial coin offerings (ICOs). OCIE… Read More

2018: Business As (Un)usual – European Financial & Regulatory Developments into 2018

Posted in Broker-Dealer Regulation, Fund Regulation, Investment Adviser Regulation, Research

2017 in the UK and the rest of Europe seems to have been primarily a year devoted to implementation – both of political decisions already made and of legislation that had already been enacted.  On the political front, Brexit continued to dominate many conversations around EU financial services.  Theories circulated that EU decisions on various… Read More

SEC Staff Raises Concerns Related to Cryptocurrency ETFs and Mutual Funds

Posted in Cybersecurity/Privacy, Fund Regulation

On January 18, 2018, the Securities and Exchange Commission’s (SEC) Division of Investment Management broke its relative silence regarding the recent growth of cryptocurrencies and cryptocurrency-related products. While signaling that registration of funds intending to invest substantially in cryptocurrency and related products is not on the immediate horizon, the guidance arguably provided the beginnings of… Read More

SEC Releases Liquidity Rule FAQs

Posted in Fund Regulation, Investment Adviser Regulation, SEC Enforcement

The staff of the SEC’s Division of Investment Management released this week a series of frequently asked questions (FAQs) regarding new Rule 22e-4 (the “Liquidity Rule”). The Liquidity Rule requires non-money market mutual funds and certain exchange-traded funds (ETFs) to adopt and implement a liquidity risk management (LRM) program designed to reduce the risk that… Read More

SEC’s Regulatory Agenda Revealed

Posted in Fund Regulation

The Securities and Exchange Commission (SEC) published an update to its regulatory agenda for the year on December 14, 2017, as part of a broad rulemaking agenda published by the Office of Management and Budget, which lists the rules that agencies and departments intend to propose or finalize within a year. The SEC’s list contains… Read More

SEC Postpones Date for Filing Form N-PORT

Posted in Fund Regulation

On December 8, 2017, citing the “importance of sound data security practices and protocols for sensitive, nonpublic information,” the Securities and Exchange Commission (SEC) adopted a temporary final rule postponing the filing of Form N-PORT on EDGAR until April 30, 2019 (originally July 30, 2018) for larger fund groups (those with net assets of $1… Read More

Open-End Fund Converts to Closed-End Fund

Posted in Fund Regulation

In what has been reported as a market first, the independent directors and shareholders of an open-end fund (mutual fund) agreed to convert an approximately $1 billion open-end fund to an exchange-listed, closed-end fund. While open-end funds issue shares continuously, closed-end funds typically raise money through issuing a fixed amount of shares in an initial… Read More

Treasury Urges Principles-Based Regulation of Money Managers

Posted in Fund Regulation, Investment Adviser Regulation

The U.S. Department of the Treasury’s report on asset management and insurance recommends, among other things, a delay in implementation of the SEC’s liquidity risk management rule and the Department of Labor’s fiduciary rule. The October 2017 report is the third of four that address the president’s Core Principles to regulate the U.S. financial system,… Read More

Treasury Report, Part II: Regulation of the Capital Markets

Posted in Fund Regulation

The U.S. Department of the Treasury (“Treasury Department” or “Treasury”) issued its second report (of four reports), titled “A Financial System that Creates Economic Opportunities, Capital Markets” (the “Report”). The Report was issued in response to Presidential Order 137772 setting forth the Core Principles that should guide regulation of the U.S. financial system. The Report… Read More

California Court Applies “Tracing” Requirement to ETF Shareholders Who Sue under Section 11

Posted in Fund Independent Directors, Fund Regulation

A California state court held that shareholders of exchange-traded funds (ETFs) have standing to sue under Section 11 of the Securities Act of 1933 (“1933 Act”) for an alleged prospectus misstatement only if they can trace their ETF shares back to shares that were originally sold pursuant to a materially false or misleading registration statement. … Read More

Auditor Independence No-Action Relief Extended

Posted in Fund Regulation

In a letter dated September 22, 2017, the SEC staff agreed to extend previous relief that enables registered fund groups to fulfill regulatory requirements under Regulation S-X if the accounting firm auditing the funds’ financial statements is not in compliance with Rule 2-01(c)(1)(ii)(A) of Regulation S-X (the “Loan Provision”). Rule 3520 adopted by the Public… Read More

PLI Webinar – Shadow-Boxing in 2017: An Update on Shadow Banking Reform

Posted in Events, Fund Regulation

Tuesday, September 26, 2017 12:00 p.m. – 1:00 p.m. EDT 5:00 p.m. – 6:00 p.m. BST The Financial Stability Board has been spearheading a review of “shadow banking” entities and activities since the onset of the financial crisis.  Pursuant to the FSB’s work, many regulatory reforms have been introduced at both national and international level… Read More

Replacing Familiar Benchmarks: Preparations to Phase Out the IBORs

Posted in Fund Regulation

Long a mainstay of the financial world, the floating “IBOR” rates, based on the rates of actual or purported interbank offered loans, are now being swept slowly into the dustbin of history. The quantity, in both number and size, of existing financial products based on these floating rates is enormous, with the outstanding principal amount… Read More

OCIE Provides Insight into Issues Identified in Recent Cybersecurity Sweep

Posted in Broker-Dealer Regulation, Cybersecurity/Privacy, Fund Regulation, Investment Adviser Regulation

The National Exam Program of the SEC’s Office of Compliance Inspections and Examinations (OCIE) recently published its observations from the second generation of its Cybersecurity Initiative. It reported overall improvement in firms’ cybersecurity awareness and preparedness, but said there is plenty of room for improvement. The staff noted that many firms have failed to adopt procedures reasonably… Read More

Howey Got Here: SEC Issues Guidance on Token Offerings

Posted in Fund Regulation

The Howey test lives on—now in a lesson in what not to do when it comes to token offerings. Token offerings, also known as “initial token offerings,” “token launches,” “token sales,” “initial coin offerings,” or “ICOs,” represent a new capital-raising method being explored by many emerging companies; venture, hedge, and private equity funds; large and well-established corporations;… Read More

2017 Independent Counsel Roundtable

Posted in Events, Fund Independent Directors, Fund Regulation

Monday, July 24, 2017 Investment Company Institute 1401 H St. NW David Silver Conference Room Suite 1200 Washington, DC 20005 IDC and ICI will host the annual Independent Counsel Roundtable, an informal discussion on the issues most important to the independent director community. The following topics will be on the agenda—litigation, governance, data security, business… Read More

FINRA Permits Related Performance Information in Institutional Communications for Registered Closed-End Funds

Posted in Fund Regulation

Introduction In an interpretive guidance letter issued to a registered closed-end fund on June 9, 2017, FINRA permitted the use of “related performance information” in communications that are distributed solely to institutional investors. For purposes of the interpretive letter, “related performance information” is the actual performance of separate or private accounts or funds: that have… Read More

Is it Time to Streamline Financial Regulation?

Posted in Broker-Dealer Regulation, Fund Regulation, Investment Adviser Regulation

A March 13, 2017 presidential order requiring a comprehensive plan to reorganize the executive branch could be the first step toward streamlining the financial regulatory structure. The Executive Order requires the Director of the Office of Management and Budget to propose a plan within a year to reorganize government functions and eliminate unnecessary agencies, agency… Read More

SEC Staff Discusses Investment Company Reporting Modernization and Asset Management Industry Trends at SEC Speaks in 2017 Conference

Posted in Fund Regulation, Investment Adviser Regulation

On February 24, 2017, the U.S. Securities and Exchange Commission’s Division of Investment Management (the “Staff”) participated in a panel at the Practising Law Institute’s SEC Speaks in 2017 conference.  As part of the discussion, the Staff provided an update on the current initiatives relating to investment companies, as well as the Staff’s priorities for… Read More

One Step Forward, Two Steps Back?

Posted in Broker-Dealer Regulation, Fund Regulation, Investment Adviser Regulation

Market participants who are not enamored by the current state of federal securities regulation may have been heartened by the new administration’s January 30, 2017 “two for one” order.  The order contemplated that, for each new rule issued by an executive department or agency, two regulations would need to be identified for elimination. The order… Read More

The Future of Investment Management Regulation: What to Expect in 2017

Posted in Broker-Dealer Regulation, Fund Regulation, Investment Adviser Regulation

In this fast-changing regulatory environment, the long-term consequences – both intended and unintended – of the recent White House remain uncertain, but looking into our crystal ball, we certain trends emerging.  These trends may lead to long-term shifts in how the Securities and Exchange Commission approaches regulation and enforcement, but, at least in the short-term,… Read More

7th Annual Financial Services, Regulatory and Compliance Conference

Posted in Broker-Dealer Regulation, Cybersecurity/Privacy, Events, Fund Regulation

Wednesday, March 8, 2017 Morning Sessions: 8:45 a.m. – 12:30 p.m. EST Afternoon Sessions: 1:30 p.m. – 5:15 p.m. EST The Ritz-Carlton Charlotte 201 East Trade Street Charlotte, NC 28202 Please join Morrison & Foerster attorneys as we offer our insights regarding the future of financial services regulation. The morning sessions will focus on consumer… Read More

Mutual Funds Come Clean: Brokers Can Set Fund Share Sales Charges

Posted in Broker-Dealer Regulation, Fund Regulation

The staff of the SEC’s Division of Investment Management effectively allowed brokers to determine the commissions they will charge their customers who buy “Clean Shares” of mutual funds. In a “no-action” letter dated January 11, 2017, the staff said that it concurs with the view that the restrictions of Section 22(d) of the Investment Company… Read More