On October 13, 2016, the Securities and Exchange Commission adopted rules to implement modern reporting and disclosure requirements for registered investment companies and open‑end funds. Press Release.
Disclosure
EBA Consults on Fee Terminology and Disclosure Documents under Payment Accounts Directive
Pursuant to the Payment Accounts Directive (2014/92/EU) (PAD), on September 22, 2016, the European Banking Authority (EBA) published a consultation paper on draft technical standards on fee terminology and disclosure documents under the directive.
The EBA will be holding a public hearing at its premises on 21 November 2016 and the consultation process closes on December 22, 2016.
Following the consultation the EBA set out the following three draft technical standards:
- Draft regulatory technical standards (RTS) setting out the standardized terminology for services that are common to at least a majority of member states (required under Article 3(4) of the PAD).
- Draft implementing technical standards (ITS) relating to the standardization of presentation format on the fee information document (FID) and its common symbol (required under Article 4(6) of the PAD).
- Draft ITS relating to a standardized presentation format of the statement of fees (SoF) and its common symbol (required under Article 5(4) of the PAD).
The draft technical standards aim to standardize eight terms for services that are to be used by payment service providers (PSPs), as well as providing consumer-friendly definitions of these terms in all EU official languages. The EBA identified the terminology based on the national provisional lists that member states have developed in line with the EBA’s March 2015 guidelines on standardized fee terminology (see Legal update, EBA final report and guidelines on national provisional lists of the most representative services linked to a payment account and subject to a fee).
PSPs will have to use the proposed standardized terminology in the pre-contractual FID and the post-contractual SoF disclosure documents.
California Enacts Legislation Requiring Public Investment Funds to Make Disclosures Concerning Fees and Expenses Paid to Private Fund Managers
On September 14, 2016, Governor Jerry Brown approved an amendment to the California Government Code, effective January 1, 2017, that requires a “public investment fund,” defined to mean “any fund of any public pension or retirement system, including that of the University of California,” to make certain disclosures at least annually concerning investments in each “alternative investment” vehicle in which it invests. An “alternative investment vehicle” is defined to mean “the limited partnership, limited liability company, or similar legal structure through which a public investment fund invests in an alternative investment.” An “alternative investment,” in turn, means an investment in a private equity fund, venture fund, hedge fund, or absolute return fund.”
Such disclosures include: (i) the fees and expenses that the public investment fund pays directly to the alternative investment vehicle, the fund manager or related parties; (ii) the public investment fund’s pro rata share of fees and expenses not included in (i) that are paid by the alternative investment vehicle; (iii) the public investment fund’s pro rata share of carried interest distributed to the fund manager or related parties; and (iv) the public investment fund’s pro rata share of aggregate fees and expenses paid by all of the portfolio companies held within the alternative investment vehicle to the fund manager or related parties.
These disclosure requirements are in alignment with: (i) enforcement actions brought by the Securities and Exchange Commission over the past several years against private fund managers for failure to adequately disclose conflicts of interest and the fees and expenses borne by investors in their funds; (ii) similar legislative initiatives in other states; and (iii) the publication by the Institutional Limited Partners Association of a proposed reporting template that captures greater detail on fees, expenses and carried interest paid to private fund managers and their affiliates.
SEC Adopts Rules to Enhance Information Reported by Investment Advisers
On August 25, 2016, the Securities and Exchange Commission adopted amendments to rules and forms designed to improve disclosures provided by investment advisers to investors and the Securities and Exchange Commission. Press release.
SEC Seeks Public Comment on Disclosure Requirements Relating to Management, Security Holders and Corporate Governance Matters
On August 25, 2016, the Securities and Exchange Commission requested “public comment on disclosure requirements in Subpart 400 of Regulation S-K, including those relating to management, certain security holders, and corporate governance matters.” Press release.
CFPB Final Rule on Written Appraisals
On January 18, the CFPB issued a final rule, effective January 18, 2014, which amends the Equal Credit Opportunity Act to require mortgage loan creditors to: (i) automatically provide applicants with a copy of appraisal reports and other written valuations prepared in connection with first lien loans secured by a dwelling and (ii) provide applicants with a disclosure at the beginning of the application process. CFPB Release. CFPB Final Rule. CFPB Summary.
MSRB Request for Comment on Disclosure Rules
On August 10, the MSRB requested comment on: (i) extending its rule on advertisements to cover municipal advisors and (ii) requiring municipal advisors to evidence their engagements in writing and make certain required disclosures. Comments must be submitted by September 14. MSRB Release.
MSRB Issuer Voluntary Disclosure
On March 23, the MSRB announced that, beginning May 23, it will accept from municipal issuers voluntary submissions of preliminary official statements and other related pre-sale documents, official statements and advance refunding documents, information relating to the preparation and submission of audited financial statements and hyperlinks to other disclosure information available from the issuer. Disclosures submitted to the MSRB will be made available on the EMMA web portal. MSRB Release.