SEC

SEC Proposes Amendment to Rule 144

 

On December 22, the SEC proposed to amend Rule 144. Among other things, the amendment would revise the holding period determination to the date of acquisition upon the conversion or exchange for market-adjustable securities acquired on the conversion or exchange of certain securities of issuers that do not have securities listed on a national securities exchange. The amendment would also require electronic filing of Form 144 and would eliminate the requirement to file Form 144 for resales of securities of issuers that are not subject to Exchange Act reporting. The public comment period will be open for 60 days following the publication of the proposed rule in the Federal Register. Release.

SEC Adopts Rule on Fair Valuation Practices Under Investment Company Act

 

On December 3, the SEC adopted Rule 2a-5 establishing an updated regulatory framework for fund valuation practices. The rule requires fund boards of directors (or their designee) to perform certain functions in order to determine in good faith the fair value of a fund’s investments, as required under the Investment Company Act of 1940, including periodically assessing and managing material risks associated with fair value determinations, selecting, applying and testing fair value methodologies, and overseeing and evaluating any pricing services used. Release. Final Rule.

SEC Amends Rules Governing Exempt Offerings

 

On November 2, the Securities and Exchange Commission (SEC) amended its rules governing exempt offerings. The amendments intend to harmonize the “patchwork” framework currently in place that governs exempt offerings. Among other things, the amendments increase the offering limits for Regulation A, Regulation Crowdfunding and Rule 504 offerings, revise certain individual investment limits, and set clear and consistent rules regarding certain offering communications. Release.

SEC Adopts New Rules Governing Funds’ Use of Derivatives

 

On November 2, the SEC adopted final rule 18f-4 under the Investment Company Act. The new rule intends to update the regulation of funds’ use of derivatives. Under the new framework, funds using derivatives will generally have to adopt a derivatives risk-management program administered by a derivatives risk manager and comply with an outer limit on fund leverage risk based on certain calculations. Final Rule.

SEC Adopted a New Rule Allowing Registered Funds to Enter Into Derivative Transactions

 

On October 28, the Securities and Exchange Commission (SEC) adopted a new rule 18f-4 under the Investment Company Act of 1940 allowing registered funds to enter into derivative transactions, provided they comply with certain conditions intended to protect investors. The rule will become effective 60 days after publication with an 18-month transition period for compliance with the provisions and related reporting requirements. Release.

SEC Adopts Amendments to Modernize Shareholder Proposal Rule

 

On September 23, the Securities and Exchange Commission (SEC) adopted amendments to modernize the process for a shareholder to have its proposal included in a company’s proxy statement for consideration by all of the company’s shareholders. The amendments aim to ensure that shareholder-proponents demonstrate a sufficient economic stake or investment interest in a company before they are able to submit proposals to be included in a company proxy’s statement, paid for by all shareholders. Release.

SEC Updates and Expands Disclosures for Banking Registrants

 

On September 11, the U.S. Securities and Exchange Commission (SEC) announced that it has adopted rules to update and expand the statistical disclosures that bank and savings and loan registrants provide to investors. The rules also eliminate certain disclosure items that are duplicative of other Commission rules and requirements of U.S. GAPP or IFRS. Release.

SEC Modernizes the Accredited Investor Definition

 

The Securities and Exchange Commission (SEC) amended the definition of “accredited investor” to more effectively identify institutional and individual investors that have the knowledge and expertise to participate in private capital markets. The amendments allow individuals to qualify as accredited investors based on measures of financial sophistication, including professional knowledge, experience or certification, as well as existing tests for income or net worth. The updates to the definition also expand the entities that may qualify as accredited investors. Release.

Regulatory Agencies Finalize Changes to Covered Fund Provisions of the Volcker Rule

 

On July 31, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (FRB), the U.S. CFTC, the Federal Deposit Insurance Corporation (FDIC), and the U.S. Securities and Exchange Commission (SEC) published a final rule amending the regulations that implement Section 13 of the Bank Holding Company Act (the “BHC Act”), commonly known as the Volcker Rule. The final rule, which goes into effect on October 1, is intended to improve and streamline the covered fund provisions of Section 13 of the BHC Act. The final rule aims to accomplish this by, among other things, permitting the following activities: qualifying foreign excluded funds; revising the exclusions from the definition of “covered fund” for foreign public funds, loan securitizations, public welfare investments, and small business investment companies; creating new exclusions from the definition of covered fund for credit funds, qualifying venture capital funds, family wealth management vehicles, and customer facilitation vehicles; modifying the definition of “ownership interest”; and providing that certain investments made in parallel with a covered fund, as well as certain restricted profit interests held by an employee or director, need not be included in a banking entity’s calculation of its ownership interest in the covered fund. OCC Bulletin. Federal Register Final Rule.

SEC Adopts Rule Amendments to Applications for Exemption Under the Investment Company Act

 

On July 6, the Securities and Exchange Commission (SEC) announced that it had voted to adopt rule amendments to establish an expedited review process for applications for exemption for funds under the Investment Company Act. The new process is intended to make the process of applying for more routine exemptions quicker and less expensive for applicants. Release.