October 5, 2021

SEC Charges Former Executives of Registered Investment Adviser with Fraud

On September 30, 2021, the SEC charged the former CEO of an advisory firm (Firm), and the Firm’s former chief portfolio manager (PM), for their roles in the Firm’s scheme to artificially inflate the net asset values (NAV) and performance results of several of its funds.

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September 30, 2021

SEC Approves NYSE Arca Rule Change That Allows Semi-Transparent Active ETFs to Use Custom Baskets

On September 24, 2021, the NYSE Arca, Inc. (Exchange) obtained approval from the SEC to implement a rule change that allows semi-transparent active exchange-traded funds (ST ETFs)1 to use custom baskets of securities, consistent with an ST ETF’s exemptive relief under the Investment Company Act of…

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June 3, 2021

SEC and CFTC File Civil Complaints Against Fund Sponsor and its Portfolio Managers and Enter into Settlement Agreement with Chief Risk Officer on Related Allegations

On May 27, 2021, the SEC and CFTC filed civil complaints against LJM Funds Management Ltd. and LJM Partners Ltd. (each of which is a registered investment adviser and commodity pool operator; collectively, LJM), and two LJM portfolio managers, Anthony Caine and Anish Parvataneni relating to an options…

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May 26, 2021

NYSE Arca Receives Approval for Proposed Rule Change to Exempt Funds from Shareholder Approval Requirements in Connection with Certain Acquisitions

On May 14, 2021, the NYSE Arca, Inc. (NYSE Arca) received approval from the SEC to implement a proposed rule change to exclude certain listed funds, including ETFs, from a requirement in NYSE Arca’s corporate governance rules (Rule 5.3-E(d)(9)) to obtain shareholder approvals for the issuance of securities…

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May 20, 2021

SEC Issues Statement on Funds Investing in Bitcoin Futures

In a statement issued on May 11, 2021 (Statement), the staff of the SEC’s Division of Investment Management (IM) addressed their concerns arising under the 1940 Act and the rules thereunder with funds investing in Bitcoin futures.  The IM staff noted its understanding that certain mutual funds are…

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April 28, 2021

SEC Publishes New FAQ on Form N-CEN

The staff of the SEC’s Division of Investment Management (Staff) maintains FAQs regarding the SEC’s fund reporting modernization reforms adopted in October 2016 and revised in December 2017 and January 2019. The FAQs address compliance dates and general filing obligations, Regulation S-X and Forms N-PORT and N-CEN.

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April 6, 2021

SEC Withdraws and Modifies Certain Staff Letters in Light of Rule 18f-4

On November 2, 2020, the SEC adopted rule 18f-4 under the 1940 Act which will permit a registered investment company or business development company (fund) to enter into derivatives and certain other transactions notwithstanding the restrictions under Sections 18 and 61 of the 1940 Act, provided that the…

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March 24, 2021

SEC Publishes New FAQ on Valuation Rule

As discussed in a recent S&K ’40 Act Blog Post, the staff of the SEC’s Division of Investment Management (staff) published a FAQ regarding the newly adopted Rule 2-a5 (Valuation Rule). The staff recently added a new response to the FAQ that confirms that…

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March 15, 2021

SEC Issues Statement on Investment Company Cross Trading Practices Potentially Impacted by the Valuation Rule

Under Rule 17a-7 under the 1940 Act, a fund may effect transactions with certain affiliates (cross trades), so long as the cross trades satisfy the conditions of the rule. Generally, among other things, the rule requires that cross trades (i) involve a security for which “market quotations are readily available”…

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March 15, 2021

Additional Semi-Transparent ETF Sponsor Receives Amended Exemptive Relief to Use “Custom Baskets”

The SEC recently granted amended exemptive relief for Blue Tractor, a sponsor of semi-transparent ETFs (ST ETFs), to permit ST ETFs that rely on Blue Tractor’s relief to create and redeem creation units with authorized participants (APs) in exchange for “custom baskets” (Amended Relief). This relief is similar to amended…

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