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 8, 2021

SEC Releases FAQs on New Rules Establishing Updated Regulatory Framework for Fund Valuation Practices

The staff of the SEC’s Division of Investment Management (Staff) has released responses to frequently asked questions (FAQs) related to the adoption of rules 2a-5 and 31a-4 under the 1940 Act (Rules).   Rule 2a-5 establishes requirements for satisfying a fund board’s obligation to determine fair value in good faith for…

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February 8, 2021

Independent Directors Council Submits Comment Letter on Federal Trade Commission’s Proposed Amendments to Premerger Notification Requirements

The Independent Directors Council (IDC) recently submitted a comment letter on the Federal Trade Commission’s (FTC) notice of proposed amendments to the premerger notification rules (Proposed Amendments).  These rules govern premerger notification filings that the FTC uses to determine in advance whether transactions are likely to be anticompetitive under the…

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January 25, 2021

SEC Staff Grants No-Action Relief from Section 17(f) of the 1940 Act and Rule 17f-2 Thereunder with Respect to Self-Custody of Loan Interests

On January 13, 2021, the SEC staff (Staff) granted no-action relief pursuant to Section 17(f) of the 1940 Act and Rule 17f-2 thereunder with respect to certain funds (Funds) or their directors or officers if the Funds, each acting as self-custodian of its assets, maintain custody of loan interests pursuant…

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December 18, 2020

Pricing Service to Pay $8 Million to Settle SEC Charges

The SEC recently settled charges against a global securities pricing service and registered investment adviser (Pricing Service), for compliance deficiencies relating to its delivery to clients of prices for certain categories of fixed-income securities based on quotes it received from a single market participant (single broker quotes).  According to the…

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December 18, 2020

SEC’s Investment Management Division Issues Guidance on Funds’ Risk Disclosure Regarding Investments in Emerging Markets

The SEC Division of Investment Management’s Disclosure Review and Accounting Office (Staff) has issued guidance (Guidance) based on current findings from the Staff’s ongoing review of risk disclosures for both actively managed and index funds with significant exposure to emerging markets. The Guidance notes that in many emerging markets there…

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December 17, 2020

SEC Adopts Rule to Modernize Fund Valuation Practices

On December 3, 2020, the SEC adopted new Rule 2a-5 (Rule) under the 1940 Act addressing valuation practices and the role of the board of directors/trustees (board) with respect to determining the fair value of the investments of a registered investment company or business development company (fund). Section 2(a)(41) of…

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November 24, 2020

SEC Settles Charges Against Investment Advisory Firms and Dually-Registered Broker-Dealer and Investment Adviser Firms Related to Sales of Complex Exchange-Traded Products

The SEC recently announced that it has entered into settlement agreements with three investment advisory firms and two dually-registered broker-dealer and advisory firms (the firms) related to the firms’ recommendations to retail investors of certain complex exchange-traded products (ETPs) linked to volatility benchmarks, including exchange-traded notes (ETNs) and exchange-traded funds…

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