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The weekly news source for investment management legal and compliance professionals

Topic: Rules and Rulemaking

Future Rulemaking: What the SEC’s Standards of Conduct Adoption Tells Us

August 23, 2019
The past, as they say, is prologue. The SEC, having earlier this year adopted its Standards of Conduct package, is now turning its attention to other rules, amendments and interpretations. With Regulation Best Interest, the advisory form interpretation and Form CRS in the rear view mirror, what can we learn from how Chairman Jay Clayton’s agency does rulemaking to inform our expectations for rules yet to come?

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Clayton Rebuts Critics of SEC Standards of Conduct Package

July 12, 2019
The SEC is standing its ground on Regulation Best Interest, the investment adviser fiduciary interpretation, Form CRS and the agency’s interpretation of the "solely incidental" prong under the Advisers Act. Much of the criticism, agency Chairman Jay Clayton said in a strongly-worded July 8 Boston speech, is "false, misleading, and, unfortunately, in some cases, is simply policy preferences disguised as legal critiques."

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House Amendment Prohibits SEC from Acting on Standards of Conduct

June 28, 2019
Every day is different. Less than a month ago, the SEC adopted the components of its Standards of Conduct Package – Regulation Best Interest, Form CRS, an interpretation of an adviser’s fiduciary duty, and an interpretation of what constitutes "solely incidental" advice provided by broker-dealers. On June 26, the U.S. House of Representatives passed an amendment to an appropriations bill that would prevent the SEC from using its funds to "implement, administer, enforce or publicize" those same rules and interpretations.

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Form CRS Challenge: Prescriptive Instructions Leave Room for Flexibility

June 28, 2019
Sometimes completing a two-page or four-page form may be just as challenging as completing a much longer one. The SEC’s new Form CRS, while not overly daunting in what it requires of advisers and broker-dealers, will require a certain degree of attention to the information the agency wants shared and perhaps some imagination in just how registrants choose to share it.

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SEC Adviser Fiduciary Interpretation: Review Disclosures, Contracts and More

June 21, 2019
Now that the dust is settling following the SEC’s adoption of its Standards of Care Package, advisers and broker-dealers are looking over the parts that affect them the most. For advisers, the Commission’s interpretation and clarification of their fiduciary duty may be the first thing they look at. While the interpretation does not appear to contain any earthshaking changes, it does make some, while clarifying what it sees as important. Advisers would be wise to review the interpretation to get a better handle on what the agency wants to see.

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SEC Moves Custody Rule Reform to the Fast Track

June 14, 2019
The SEC plans to propose amendments that will reform the Custody Rule within the next 12 months. The rule’s reform will join agency plans to take other actions within that same time period, including changes to the Advertising Rule, long identified within the asset management community as needing reform, the Cash Solicitation Rule, the use of derivatives by investment companies, and fund of funds arrangements.

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Survey Finds Advisers and Funds Making Liquidity Risk Management Choices

June 7, 2019
Investment advisers and fund complexes have begun to move past the stage of contemplating how they will comply with the SEC’s Liquidity Risk Management Rule and are making key choices on issues such as classification risk responsibilities, administration of their liquidity risk management program, and more.

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SEC Adopts Form CRS, Regulation Best Interest, Adviser Fiduciary and ‘Solely Incidental’ Interpretations

June 7, 2019
The SEC on June 5, with one commissioner dissenting, adopted the much-discussed Standards of Care package, including Form CRS, Regulation Best Interest, a new Commission interpretation of adviser fiduciary duty, and an interpretation relating to when a broker-dealer may give advice to a client without being considered an adviser.

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SEC Expected to Vote on Standards of Conduct Package Wednesday

May 31, 2019
The long wait may finally be over. The SEC on June 5 will conduct an open public meeting to consider whether it will adopt new and amended rules and interpretations that have been a source of contention within the asset management community for years: the standards of conduct package.

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Associations Challenge Redemption Limit in Proposed Fund of Funds Rule

May 10, 2019
The Investment Company Institute, the Investment Advisers Association, the ecurities Industry and Financial Markets Association’s Asset Management Group and others in the asset management industry are not happy with a key element in the SEC’s proposed Fund of Funds Arrangements Rule. They want the agency to remove the 3 percent cap on acquired fund redemptions.

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Clayton Pledges to Complete Standards of Conduct Package for Advisers and Brokers

April 26, 2019
Without getting into the specifics of what they will contain, SEC Chairman Jay Clayton this month pledged to complete what has become a somewhat controversial set of proposals: the agency’s standards of conduct for advisers and broker-dealers.

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SEC Modifies Form N-PORT Reporting to Address Cybersecurity Concerns

March 1, 2019
The SEC last week eased up a bit on its portfolio reporting requirements for investment companies. In an interim final Rule, it changed the frequency with which funds must file Form N-PORT with the agency from monthly to quarterly. Doing so, it said, will address both data and cybersecurity concerns.

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‘Comprehensive Overhaul’ of Custody Rule Urged by IAA

January 11, 2019
The Investment Adviser Association wants the SEC to consider a “comprehensive overhaul” of Advisers Act Rule 206(4)-2, the Custody Rule, which would, among other things, limit the Rule to risks presented by “actual physical custody.” Other proposed changes included considering circumstances when surprise examinations might not be required, and excepting certain clients or services from the Rule’s requirements.

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Clayton Addresses Past and Future in Senate Testimony

January 4, 2019
SEC Chairman Jay Clayton, in testimony before a Senate committee, spoke of the agency’s achievements during 2018, as well as what it hoped to do in the coming year. Throughout the hearing, he stressed his ongoing themes, among them looking out for retail investors and staying on top of technological changes, including digital currencies and cybersecurity.

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The Year Ahead: New and Revised Rules, Cryptocurrency and Cybersecurity Enforcement

January 4, 2019
Advisory firms, investment companies and broker-dealers should get ready for some changes as 2019 takes off. Among other things, they will be likely to deal with new rules, revisions to existing rules, and enforcement efforts targeted at reining in cryptocurrencies and strengthening cybersecurity.

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Form CRS: Investor Survey Finds Overall Satisfaction, but Improvements Needed

November 16, 2018
Form CRS, like a number of the SEC’s standards of care proposals, has run into significant industry criticism, but the Commission may take some satisfaction from a recent investor survey finding that nearly 90 percent of respondents said that the form would help them make more informed decisions about investment accounts and services.

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OCIE Reveals Most Common Cash Solicitation Rule Deficiencies

November 9, 2018
SEC’s Office of Compliance Inspections and Examinations wants advisers to know the violations its examiners are finding when they visit advisory firms. In recent months, it has issued Risk Alerts highlighting the most common deficiencies cited involving best execution, fees and expenses, and more. Its latest Risk Alert focuses on adviser compliance issues related to Advisers Act Rule 206(4)-3, the Cash Solicitation Rule.

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SEC Plans Final Standards of Conduct Action by September 2019

November 9, 2018
The SEC’s Fall 2018 Regulatory Agenda makes clear that Chairman Jay Clayton is moving forward on one of his top priorities: adopting final standards of conduct rules and amendments by September 2019.

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Fund Association Wants SEC to Propose Rule for Summary Shareholder Reports

November 2, 2018
The Investment Company Institute (ICI) has made a proposal to the SEC as part of its answer to the agency’s request for comment on ways to enhance fund disclosure for investors. The association, which represents regulated funds worldwide, suggested in a comment letter that the Commission propose a rule creating a new, optional summary shareholder report that would ostensibly make the full shareholder report easier for investors to understand while also helping them compare funds.

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Blass Wants Readable Fund Disclosures, Opens Door to New Derivatives Rule

November 2, 2018
SEC Director of Investment Management Dalia Blass donned the mantle of a writing coach in a recent speech to investment company professionals, urging those who write fund disclosures to “tell a clear story,” “write clearly and consistently,” and watch for individual sentences that contain more than 70 words.

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