On May 3, the SEC re-opened the comment period for proposed amendments to net capital, customer protection, books and records, and notification rules for broker-dealers. The SEC issued the proposed amendments on March 9, 2007. Comments may be submitted for 30 days from publication in the Federal Register. SEC Release.
Asset Management
SEC Approves Amendments to FINRA Arbitration Rule
On April 20, pursuant to the Dodd-Frank Act, the SEC approved amendments to FINRA Rule 13201 of the Code of Arbitration Procedure for Industry Disputes (Industry Code). The amendments provide that a dispute arising under a whistleblower statute that prohibits the use of pre-dispute arbitration agreements is not required to be arbitrated under the Industry Code. The amendments to the rule will be effective on Mary 21, 2012. FINRA Regulatory Notice.
OCIE Issues National Exam Program Overview
On March 13, the Office of Compliance Inspections and Examinations (OCIE) of the SEC issued a National Exam Program Overview setting forth OCIE’s examination results for 2011 as well as detailing the strategic areas upon which the OCIE will focus its 2012 examination efforts for investment companies, investment advisers, broker-dealers, self-regulatory organizations, credit rating agencies, clearance and settlement programs, and coordination with other regulators. National Exam Program Overview.
FINRA Revised Proposed Amendments to NASD Rule 2340
On March 7, FINRA issued a revised proposal to amend NASD Rule 2340 to address the per share estimated values at which unlisted Direct Participation Programs and unlisted Real Estate Investment Trusts are reported on customer account statements. Among the changes made to the previous proposed amendments to the rule, the revised proposal no longer requires general securities members to provide a per share estimated value, unless and until the issuer provides an estimate based upon an appraisal of assets and liabilities in a periodic or current report filed under Securities Exchange Act of 1934. In addition, the revised proposal provides members firms with the option of using a modified net offering price or designating the securities as “not priced” during the initial offering period. Comments to the revised proposal must be submitted by April 11. FINRA Regulatory Notice.
SEC Draft Form PF XML Filing Guide
On March 8, the SEC released a draft Form PF XML Filing Guide to assist investment advisers in filing Form PF through the XML submission process. The Private Fund Reporting Depository (PRFD) system through which advisers will be able to submit XML versions of Form PF, as well as online versions, is scheduled to “go-live” by July 2012. Advisers may register to participate in the testing phase of the PRFD system beginning on March 21, 2012. Form PF XML Filing Guide. PRFD User Testing.
’40 Act Threshold Adjustment for Qualified Clients
On February 15, the SEC adopted amendments to the rule under the Investment Company Act of 1940 that permits investment advisers to charge performance based compensation to “qualified clients”. The amendments (i) revise for inflation the dollar amount thresholds that are used to determine whether an individual or company is a qualified client and (ii) exclude the value of a person’s primary residence and certain associated debt from the net worth calculation. The amendments will be effective 90 days after publication in the Federal Register. Final Rule.
CFTC Proposed Amendments to Investment Company Reporting Requirements
On February 9, the CFTC proposed to amend reporting requirements for investment companies registered under the Investment Company Act of 1940, the advisers of which would be required to register with the CFTC as commodity pool operators pursuant to amendments adopted by the CFTC to Section 4.5. Comments must be submitted within 60 days after publication in the Federal Register. CFTC Release. CFTC Proposed Rules.
CFTC Amendments to Registration and Compliance Obligations
On February 9, pursuant to Title IV and Title VII of the Dodd-Frank Act, the CFTC adopted final amendments to Part 4 of the CFTC’s regulations that: (i) rescind the exemption from registration provided in Section 4.13(a)(4); (ii) rescind relief from the certification requirement for annual reports provided to operators of certain pools offered only to qualified eligible persons under Section 4.7(b)(3); (iii) modify the criteria for claiming relief under Section 4.5; and (iv) require annual filing of notices claiming exemptive relief under a number of sections of the CFTC’s regulations. In addition, the final rules includes new risk disclosure requirements for commodity pool operators and commodity trading advisors. The final rules will become effective 60 days from publication in the Federal Register, except for amendments to Section 4.27, which will become effective on July 2. CFTC Release. CFTC Final Rules.
FINRA Proposed Amendments To Reporting of Mixed Capacity OTC Trades
On February 8, FINRA requested comment on a proposal to amend FINRA trade reporting rules relating over-the-counter trades in equity securities that are executed by a member firm in a mixed trading capacity (e.g., a single trade execution by a firm as principal and agent). Comments must be submitted by March 26. FINRA Notice.
SEC Authorizes FINRA to Collect SARs from Member Firms
On January 26, pursuant to the Financial Crimes Enforcement Network regulations, the SEC issued a letter to FINRA authorizing FINRA staff to ask for suspicious activity reports (SARs) and SAR information from member firms in certain circumstances. The SEC also issued a letter to chief executive officers of all SEC-registered FINRA member firms requesting that they make SARs and supporting documentation available to FINRA. FINRA Notice.