SEC

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

 

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

 

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

 

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.

SEC Proposes to Modernize Disclosures of Business, Legal Proceedings and Risk Factors Under Regulation S-K

 

On August 8, the SEC announced that it has voted to propose rule amendments to modernize and simplify certain disclosures required pursuant to Regulation S-K since the regulation was first adopted over 30 years ago. The proposal addresses Items 101(a) (description of the general development of the business), 101(c) (the narrative description of the business) and 105 (risk factors). The proposal has a 60-day public comment period following the proposal’s publication in the Federal Register. Release. Proposal.

FDIC Annual Publication Examines Potential Credit and Market Risks

 

The Federal Deposit Insurance Corporation (FDIC) published its annual review of the primary risk factors facing the banking system, focusing on the categories of credit risk and market risk. The key credit risk identified by the FDIC is increased competition among lenders as loan growth has slowed, posing risk management challenges given market demand for higher-yielding leveraged loan and corporate bond products, resulting in looser underwriting standards. The main market risk recognized in the report is the current interest rate environment. Release. Report.

SEC Adopts Rules and Interpretations to Enhance Protections and Preserve Choice for Retail Investors in Their Relationships with Financial Professionals

 

The U.S. Securities and Exchange Commission (SEC) adopted and clarified a number of rules intended to improve the relationships between retail investors, investor advisers and broker-investors, while also maintaining retail investors’ access to investment services and products. Under Regulation Best Interest, broker-dealers must act in the best interest of a retail customer when recommending any securities transaction or investment strategy. The Form CRS Relationship Summary requires registered investment advisers and broker-dealers to provide retail investors with easily comprehensible information about their relationship with their financial professional. Lastly, the SEC clarified investment advisers’ fiduciary duties and the activities that trigger a broker-dealer to be considered an investor adviser under the Advisers Act. Press Release. For further detail on the subject, read an analysis from Orrick’s Securities Litigation team here.

SEC Obtains Emergency Order Halting Alleged Diamond-Related ICO Scheme Targeting Hundreds of Investors

 

On May 21, the Securities and Exchange Commission (SEC) announced that it obtained a court order halting an ongoing $30 million Ponzi Scheme. The SEC complaint charged a cryptocurrency business and its principal with using investor funds to run a Ponzi Scheme. Release.

SEC Extends Compliance Deadline for Certain Aspects of Liquidity Risk Management Programs Under the Investment Company Act

On February 22, 2018, the Securities and Exchange Commission (“SEC“) announced that it is adopting an interim final rule that provides a six-month extension for compliance with certain requirements of Rule 22e-4 regarding a fund’s liquidity risk management program, including the portfolio classification, highly liquid investment minimum, and board approval requirements, as well as related reporting requirements under Part D of Form N-LIQUID and liquidity disclosures on Form N-PORT under the Investment Company Act of 1940.  The interim final rule extends the compliance deadline for small entities from June 1, 2019 to December 1, 2019 and for larger entities from December 1, 2018, to June 1, 2019.  The SEC also issued guidance to assist (i) funds that will not classify their full portfolio prior to the revised compliance date and (ii) In-Kind ETFs in identifying illiquid investments for purposes of complying with the 15% illiquid investment limit under Rule 22e-4. Release.

Looking Out for Main Street: SEC Focuses on Retail, Cybersecurity and Cryptocurrency

 

The Commissioners and senior officials of the Securities and Exchange Commission (“SEC” or “Commission“) addressed the public on February 23-24 at the annual “SEC Speaks” conference in Washington, D.C. Throughout the conference, many speakers referred to the new energy that SEC Chairman Jay Clayton had brought to the Commission since his confirmation in May 2017. The speakers also seemed relieved that the SEC was finally operating with a full set of commissioners since the recent additions of Robert J. Jackson, Jr. and Hester M. Peirce. Clayton’s address introduced the main refrain of the conference: that the SEC under his leadership is focused on the long-term interests of Main Street investors. Other oft-repeated themes included the challenges presented by cybersecurity and the fast-paced developments in cryptocurrency and blockchain. To address these shifts in focus, the Enforcement division plans to add more resources to the retail, cybersecurity and cryptocurrency spaces. To view the article, click here.