The SEC appears to be taking a hands-on approach as the coronavirus pandemic spreads. In the past week, it has, among other things, widened the window for which advisers and funds may take advantage of extended regulatory exemption deadlines that were established only the week before; adopted temporary exemptions allowing funds to borrow from affiliates and through other arrangements; and provided new exemptions for EDGAR filings, compliance with Regulation A and crowdfunding.
When is a name not a name? When it is a misnomer, of course, that is, when the name does not accurately reflect the identity of that which it purportedly identifies. For the SEC, that means requiring that funds have names that do not mislead investors, a requirement that it believes may need to be tweaked to stay current with the times.
The financial industry’s shift away from the key benchmark rate it has historically used is picking up steam, with most of those affected likely to be using another benchmark by the end of next year. That said, the switch from the older rate, the London Interbank Offered Rate (LIBOR) is likely to be somewhat complex. A key government committee recently issued a checklist to help asset management firms and others manage their move.
In a move likely to be at least partially welcomed by advocates of private funds and those that advise them, the SEC on September 18 proposed to widen the definition of who qualifies as an “accredited investor.” Under the proposed new definition, while wealth would continue as a factor, professional knowledge, experience or certifications would also count.
The SEC’s recently proposed changes to the exemptive application process under the Investment Company Act have been generally well-received by investment companies, the advisers that manage them, and the associations that represent them. While that support for the overall thrust of the changes continues, concerns have been raised about several of their provisions.
If at first you don’t succeed, try again. That appears to be what the SEC has done with the Commission’s unanimous November 25 vote to propose a new Derivatives Rule, designed to “modernize” or “standardize” the use of these financial instruments by mutual funds, exchange-traded funds and other registered funds, as well as business development companies. Now the ball is with the asset management community to decide whether they like this proposed Rule better than the last one.
Independent directors now comprise more than 75 percent of boards in most fund complexes, according to a new report. The report also shows that approximately two-thirds of fund complexes now have an independent chair.
Advisory firms seeking to comply with the Liquidity Risk Management Rule have seen several deadlines already pass, with two more coming up in the next few months. With that in mind, it seems a good time to take stock and review lessons learned.
If the SECs recent string of settlements involving share class selection and other compensatory arrangements is not enough, the agencys Division of Investment Management is leaving no stone unturned. In a new set of answers to frequently asked questions, Division staff make it clear just what disclosure they expect from advisers when there is a compensation conflict of interest.