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Category Archives: Fund Regulation

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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

Uncertain Seas: European Financial and Regulatory Developments into 2017

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

“There are greater storms in politics than you will ever find at sea. Piracy, broadsides, blood on the decks. You will find them all in politics.”  —David Lloyd George, British Prime Minister, 1916-1922 “The greater the difficulty the more glory in surmounting it. Skillful pilots gain their reputation from storms and tempests” —Epictetus Lloyd George… Read More

A Case of Appendicitis: SEC Staff Guidance on Sales Load Variation Disclosures Sends Funds Scrambling

Posted in Fund Regulation

A recent Guidance Update published by the SEC’s Division of Investment Management has sent funds scrambling to beef up prospectus disclosures to accommodate changes to fees charged by financial intermediaries before the Department of Labor’s “conflicts of interest” rule kicks in on April 10, 2017. Read our client alert.

Staff Guidance on Rule 144A Related Issues

Posted in Fund Regulation

On December 8, 2016, the staff of the Division of Corporation Finance provided additional guidance in the form of Compliance and Disclosure Interpretations (“C&DIs”) related to the types of securities that may be counted toward the Rule 144A $100 million threshold.  For example, the C&DIs confirm that securities purchased and held on margin may be… Read More

Big Regulatory Changes in Store for Funds and Advisers? No One Knows for Certain, but Here’s Our Best Guess

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

While no one knows for sure what the future holds for investment management regulation, the tea leaves indicate that we may expect a slowdown on new regulations, some pullback on parts of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), and an abundance of uncertainty. Here, we provide some observations for investment companies,… Read More

CFTC Approves Final Rule Amendments to CPO Financial Report Regulations

Posted in Fund Regulation, Investment Adviser Regulation

On November 21, 2016, the U.S. Commodity Futures Trading Commission (CFTC) approved final rule amendments to its regulations that allow commodity pool operators (CPOs) to use certain additional alternative generally accepted accounting principles, practices or standards in preparing financial statements for non-U.S. commodity pools and that exempt commodity pools from the audit requirement for Annual… Read More

U.S. District Court: Fund Trustees Cannot Rely on Attorney-Client Privilege in Section 36(b) Case

Posted in Fund Regulation, Investment Adviser Regulation

A federal district court has ordered mutual fund trustees to produce privileged documents to a plaintiff who sued an investment adviser accused of charging excessive investment advisory fees. The November 21, 2016 order may pave the way for plaintiffs in “excessive fee” cases to brush aside the attorney-client privilege and learn what independent trustees discussed… Read More

Morrison & Foerster Sponsorship: Structured Products Europe Conference 2016

Posted in Events, Fund Regulation

Thursday, November 17, 2016 8:30 a.m.  – 6:00 p.m. The May Fair Hotel Stratton Street London, United Kingdom W1J 8LT The 12th annual Structured Products Europe conference will bring together top UK and European senior executives from investment banks, regulators, private bankers, issuers, index providers, asset managers, IFAs, pension funds and insurance companies. The conference… Read More

The Future of Financial Regulation

Posted in Events, Fund Regulation, Investment Adviser Regulation

Wednesday, November 16, 2016 10:00 a.m. – 3:00 p.m. EST The Smith Suite at the Ronald Reagan Building 1300 Pennsylvania Avenue NW Washington, D.C. 20004 Join the CFP, CFA Institute and Morrison & Foerster for this half-day conference that will examine the potential post-election changes to the financial regulatory system, including changes to the Dodd-Frank… Read More

Canadian Derivatives and Financial Services Regulatory Developments

Posted in Events, Fund Regulation

Thursday, November 10, 2016 8:30 a.m. – 10:00 a.m. Morrison & Foerster LLP 250 West 55th Street New York, NY 10019 Join a panel of experts from Stikeman Elliott LLP for a presentation and an engaged discussion of Canadian regulatory and legal developments affecting trading in derivatives with financial institutions, public mutual funds and other Canadian… Read More

Alphabet Soup?

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

Several years have now passed since the financial crisis and the onslaught of regulations intended to prevent a future crisis. Regulatory reform has assuredly resulted in significant changes to our financial services sector. Regulatory reform also brought with it an alphabet soup of acronyms and terms with which we all have had to become familiar…. Read More

SEC Approves New Liquidity Risk Management Rules; Swing Pricing Rules

Posted in Fund Regulation

The SEC today unanimously approved “transformational” new rules requiring liquidity risk management programs. The SEC also approved a swing pricing rule by a vote of 2-1, with Commissioner Piwowar voting against it. The SEC made several significant changes to the proposal rules to address concerns that the rules would improperly hamstring funds in meeting their… Read More

SEC Adopts New Reporting Rules for Mutual Funds

Posted in Fund Regulation

A split SEC today approved new rules addressing mutual fund disclosures and liquidity.  Chair White and Commissioner Stein voted yes; Commissioner Piwowar voted no. Here are the highlights of the new reporting modernization rules: A new monthly portfolio form, Form N-PORT, will require registered funds other than money market funds to provide portfolio-wide and position-level… Read More

Randy “Tandy” Dandy No More

Posted in Fund Regulation

On October 5, 2016, the SEC unceremoniously dropped a long-standing requirement that issuers affirmatively state that they will not raise the SEC review process and acceleration of effectiveness as a defense to legal proceedings. The so-called Tandy representations (named in honor of the first issuer that the SEC required to make them) required each issuer, in… Read More

House Bill Would Ease Regulatory Restrictions to Private Fund Advisers

Posted in Fund Regulation, Investment Adviser Regulation

On September 9, 2016, the U.S. House of Representatives approved a bill that would amend the Investment Advisers Act of 1940 to modernize certain disclosure requirements and lessen regulatory burdens on private fund advisers.  The proposed amendments would not apply to advisory services provided to registered investment companies. H.R. 5424, the Investment Advisers Modernization Act… Read More

The SEC Adopts Amendments to Form ADV and Recordkeeping Rule: Advisers Now Required to Disclose Information About Separately Managed Accounts

Posted in Fund Regulation, Investment Adviser Regulation

The Securities and Exchange Commission (SEC) recently amended Form ADV to require investment advisers to disclose more information about their separately managed account business, aggregate data related to the use of borrowings and derivatives, and disclose information about other aspects of their advisory business, including branch office operations and the use of social media. The… Read More

Investment Management Legal + Regulatory Update – August 2016

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

This issue of Investment Management Legal + Regulatory Update discusses several current developments, including: Next on the SEC’s Regulatory Agenda: A Chief Valuation Officer? FinCEN Finalizes Customer Due Diligence Rule for Legal Entity Customers SEC Proposes Business Continuity and Transition Rules for Advisers While Staff Publishes Similar Guidance for Funds The Metaphysics of Systemic Risk… Read More

Section 12(d)(1) and Business Development Companies

Posted in Fund Regulation

Business development companies (BDCs) face challenges raising money due to a quirk in the federal securities laws that limits how much mutual funds can invest in them.  But if BDCs, mutual funds, (including exchange-traded funds (ETFs)), and other participants in the capital markets raise their voices, there is some hope that the SEC can ease… Read More

SEC Eases Regulatory Burden for Listing Actively Managed ETFs

Posted in Fund Regulation

The Securities and Exchange Commission took a step toward streamlining the approval process for actively managed ETFs last week by approving rule proposals from two securities exchanges. The order issued to BATS Exchange, Inc. (BATS) allows BATS to adopt “generic listing standards” for actively managed ETFs.  Up until now, generic listing standards applied only to… Read More

Proposed Financial Disclosure Changes Could Impact Funds and BDCs

Posted in Fund Regulation

At an open meeting this week, the SEC voted to propose changes to certain disclosure rules affecting public issuers including, among others, investment companies and business development companies (BDCs). The proposed rules would require disclosure changes when requirements in SEC rules or forms are substantially similar to or closely related to disclosure required by U.S…. Read More