SEC

SEC Proposes Amendment to Rule 144

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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

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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

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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

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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 Adopts Amendments to Modernize Shareholder Proposal Rule

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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 Modernizes the Accredited Investor Definition

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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.

SEC Announces Relief for Public Company Disclosure Report Filing Deadlines and Filing and Meeting Requirements under Investment Advisers Act

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On March 25, the SEC announced a 45-day filing extension for certain public company disclosure reports due between March 1 and July 1. The SEC also announced certain filing and delivery requirement exemptions under the Investment Advisers Act of 1940 as well as additional time to hold in-person board meetings. Release.

Securities and Exchange Commission Proposes to Modernize Key Market Infrastructure Responsible for Collecting, Consolidating, and Disseminating Securities Market Data

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On February 14, the SEC proposed to modernize the infrastructure for the collection, consolidation, and dissemination of market data for exchange-listed national market system (NMS) stocks. Comments on the proposed SEC Rule are due 60 days after publication in the Federal Register. Release.

SEC Proposes Rule to Enhance Regulation of Use of Derivatives

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On November 25, the Securities and Exchange Commission (SEC) voted to propose new rules and rule amendments to update the existing regulations on the use of derivatives by registered investment companies and business development companies. The proposed rule change would regulate the ability of certain funds to enter into derivatives transactions creating future payment obligations in order to obtain leverage, subject to certain risk limitations. The SEC also proposed new sales practice rules: Rule 15a-2 under the ’34 Act and Rule 211(h)-1 under the Investment Advisers Act of 1940. There will be an open comment period on the proposed rules for period of 60 days. Release. Proposed Rule.