On November 4, 2019, the Division of Investment Management (IM) of the Securities and Exchange Commission (SEC) issued a no-action letter (2019 Letter) to the Securities Industry and Financial Markets Association (SIFMA)1 extending by three years the term of a previous no-action letter that IM issued to SIFMA (2017 Letter).2 The 2017 Letter enabled broker-dealers to accept hard dollar payments … Read More
SEC Issues New ETF Rule and Adopts Form Amendments
On September 25, 2019, the Securities and Exchange Commission (SEC) adopted a new rule under the Investment Company Act of 1940 (1940 Act) as well as amendments to registration forms and data collection forms.1 New rule 6c-11 under the 1940 Act is intended to enable most transparent exchange-traded funds (ETFs), whether passive or actively managed, to operate without the need … Read More
IM Issues ADI Highlighting Fee and Performance Issues
On October 2, 2019, the Division of Investment Management (IM) of the Securities and Exchange Commission (SEC) issued disclosure guidance (so-called accounting and disclosure information) addressing the accuracy of performance, fee and expense figures presented in prospectuses.1 The guidance encourages registrants to verify the accuracy of performance and fee disclosures before those disclosures are filed with the SEC and provided … Read More
FINRA Notice Addresses Disclosure Innovations in Advertising and Other Public Communications
On September 19, 2019, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 19-31 – Disclosure Innovations in Advertising and Other Communications with the Public (RN 19-31). RN 19-31 supplements past FINRA guidance on the application of the communications rules to social media and electronic communications. It responds to questions that FINRA has received from members about how they can … Read More
Read Ethan Corey’s article in the September edition of The Investment Lawyer
“The Dog That Didn’t Bark: Investment Research, Hard Dollars and Special Compensation under the Investment Adviser Act of 1940” On October 26, 2017, the SEC staff issued three no-action letters intended to facilitate the ability of registered investment advisers and broker-dealers to comply both with the requirements of the Investment Advisers Act of 1940 (Advisers Act) and with the requirements … Read More
SEC Staff Suggests Steps for Mutual Funds to Improve Principal Risks Disclosure
“Any fool can make things bigger, more complex, and more violent. It takes a touch of genius – and a lot of courage – to move in the opposite direction.” – Albert Einstein On September 9, 2019, the Division of Investment Management (IM) of the Securities and Exchange Commission (SEC) issued disclosure guidance (so-called accounting and disclosure information) addressing mutual … Read More
OCIE Issues Risk Alert Regarding Investment Adviser Principal and Agency Cross Trading Compliance Issues
“It’s easier to ask forgiveness than it is to get permission” – quote generally attributed to U.S. Navy Rear Admiral Grace Hopper On September 4, 2019, the Office of Compliance Inspections and Examinations (OCIE) of the Securities and Exchange Commission (SEC) issued a risk alert addressing investment adviser principal and agency cross-trading compliance issues (Risk Alert). The Risk Alert provides an overview of the … Read More
Broker-Dealer Exemptive Relief May Affect Advisers’ Allocation Practices
On August 28, 2019, the staff of the Division of Trading and Markets (T&M) of the Securities and Exchange Commission (SEC) issued an exemption letter to Citigroup Global Markets Inc. (CGMI) to enable CGMI to deliver to institutional customers a single confirmation reflecting aggregated execution information for one or more same-side orders executed in each security during that trading day.1 … Read More
SEC Issues Guidance Regarding Proxy Voting Responsibilities of Investment Advisers
On August 21, 2019, the Securities and Exchange Commission (SEC) issued guidance regarding the proxy voting responsibilities of investment advisers (Proxy Guidance) pursuant to Rule 206(4)-6 under the Investment Advisers Act of 1940 (Advisers Act), and their disclosure obligations under Form N-1A, Form N-2, Form N-3, and Form N-CSR under the Investment Company Act of 1940 (1940 Act). 1 The … Read More
Mother, May I? The SEC Declares War on the Use of “May”
Lloyd Christmas:What are the chances of a guy like me and a girl like you… ending up together? Mary Swanson:Not good. Lloyd Christmas:Not good like one in a hundred? Mary Swanson:I’d say more like one in a million. Lloyd Christmas:So you’re telling me there’s a chance? If Lloyd Christmas had been an investment adviser and had disclosed on his ADV … Read More
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