September 29, 2016
On September 27, the Internal Revenue Service (the "IRS") issued Proposed Regulations that would require "commodity subsidiaries" of regulated investment companies ("RICs") to currently distribute their income in order for such income to be treated as qualifying income for purposes of Subchapter M of the Internal Revenue Code.
September 26, 2016
The Securities and Exchange Commission ("SEC") recently announced that it settled charges with two investment advisory firms related to compliance failures within their wrap fee programs. For violations of Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder, the firms agreed to pay penalties of $600,000 and $250,000, respectively.
September 15, 2016
OCIE Undertakes Initiative to Examine Registered Investment Advisers that Employ Individuals with a History of Disciplinary Events
In a recent risk alert, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) stated that it intends to examine compliance oversight and controls of registered investment advisers that employ individuals with disciplinary histories in the financial services sector. A recent study found that such individuals pose an increased risk of future misconduct that may harm clients. Thus, advisers may want to consider heightened supervision of such individuals. OCIE’s examinations will focus on the effectiveness of the adviser’s compliance programs, supervisory oversight practices, particularly of those persons that may pose increased risks to clients, and disclosures to clients and prospective clients relating to the potential risk associated with financial arrangements initiated by individuals with a disciplinary history.
September 7, 2016
In a recent no-action letter, the staff of the Division of Investment Management of the Securities and Exchange Commission (the “Staff”) indicated that it would not recommend enforcement under Section 12(d)(3) of the Investment Company Act of 1940 (the “1940 Act”) against the AFL-CIO Housing Investment Trust (“HIT”), an open-end management investment company registered under the 1940 Act, if HIT organizes and acquires securities issued by a wholly owned and controlled subsidiary, organized as a limited liability company, that will operate as an investment adviser (the “Adviser Sub”), and will be registered under the Investment Advisers Act of 1940 (the “Advisers Act”).
September 7, 2016
On August 25, 2016, the Securities and Exchange Commission (the “SEC”) adopted amendments to Form ADV and the Books and Records Rule to enhance investment adviser information reporting and disclosure. The amendments are designed to improve the depth and quality of information that the SEC collects on investment advisers, facilitating…