The Financial Regulatory Authority (“FINRA”) recently issued a comprehensive report on compliance issues noted in its examination program (the “Report”). The Report is intended to assist broker-dealers in identifying and addressing potential weaknesses in their compliance procedures, and discusses 19
IM Insights
Providing securities and derivatives regulatory updates for investment management industry participants
IM Insights, published by Morrison & Foerster LLP, focuses on regulatory and compliance issues affecting financial services and investment management sectors. The blog covers topics such as SEC regulations, FINRA guidance, fund of funds rules, valuation practices for registered investment companies, and implementation of regulations like Regulation Best Interest and Form CRS. It provides updates on enforcement trends, compliance best practices, and legal developments relevant to broker-dealers, investment advisers, and fund managers. The content aims to assist industry participants in navigating complex regulatory frameworks and addressing operational risks associated with securities laws and investment company regulations.
SEC Seeks to Level the Playing Field with New Fund of Funds Rule
On October 7, 2020, the Securities and Exchange Commission (SEC) adopted a new fund of funds rule. New Rule 12d1-4 is designed to streamline and enhance the existing regulatory framework under which registered funds of funds have been offered.…
Newly Released SEC Statement Permits Closed-End Funds’ Reliance on Control Share Acquisition Statutes as Defensive Measure
The staff of the SEC’s Division of Investment Management (the “Division”) issued a new statement (the “Staff Statement”) on May 27, 2020, addressing the intersection between state control share acquisition statutes and the voting requirements contained in section 18(i) of…
SEC Proposes New Valuation Rule for Registered Investment Companies
On April 21, 2020, the U.S. Securities and Exchange Commission (“SEC”) proposed new Rule 2a-5 under the Investment Company Act of 1940 to address valuation practices of registered investment companies. According to the SEC, the Proposed Rule is necessary due…
SEC Maintains Focus on Implementing Regulations BI and Form CRS
Despite the disruptive effect of COVID-19, the SEC does not intend to extend the effective dates for compliance with Reg. BI and Form CRS. In addition, the SEC’s Office of Compliance Inspections and Examinations recently announced its intention to begin…
SEC Provides No-Action Relief for Broker-Dealer Sweep Programs
On March 30, 2020, the Securities and Exchange Commission (SEC) issued a no-action letter stating that the staff of the SEC’s Division of Trading and Markets would not recommend enforcement actions against broker-dealers that treat unsecured receivables related to bank sweep accounts…
SEC Extends Prior Relief Granted to Investment Advisers and Registered Funds
On March 25, 2020, the SEC issued exemptive orders replacing prior orders granting temporary relief from certain provisions of the Investment Advisers Act of 1940 (the “Advisers Act”) and the Investment Company Act of 1940 (the “1940 Act”). The SEC…
SEC Provides Interfund Lending Relief to Registered Investment Companies Affected by COVID-19
On March 23, 2020, in response to business disruptions caused by the spread of the coronavirus (“COVID-19”), the Securities and Exchange Commission (“SEC”) issued an exemptive order (the “Order”) under the Investment Company Act of 1940 (“1940 Act”) granting registered investment companies…
CFTC Issues Final “Actual Delivery” Interpretation for Virtual Currencies
On March 24, 2020, the Commodity Futures Trading Commission (“CFTC”) issued its final interpretive guidance (the “Interpretation”) concerning the meaning of “actual delivery” in the context of retail commodity transactions involving “virtual currencies.” The Interpretation provides that, in the CFTC’s…
OCIE and Enforcement Staff Continue to Operate in Remote Environment
On March 23, 2020, the SEC’s Office of Compliance Inspections and Examinations (OCIE) announced that it will conduct its examinations of SEC registrants through correspondence, unless it is absolutely necessary to be on-site. On the same day, the co-directors of…