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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November 20, 2020

Compliance and Effective Dates Set for Final Rule and Related Amendments for Fund-of-Funds Arrangements

On November 19, 2020, the release reflecting the SEC’s adoption of Rule 12d1-4 (FoF Rule) under the 1940 Act and related amendments designed to implement a regulatory framework for investments by registered investment companies and business development companies (BDCs) (collectively, funds) in underlying funds was published in the Federal Register,…

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November 18, 2020

SEC Adopts Modernized Regulatory Framework for Derivatives Use by Registered Investment Companies and Business Development Companies

The SEC recently adopted Rule 18f-4 (Rule), and rule and form amendments under the Investment Company Act of 1940, as amended (1940 Act), designed to provide a modernized and comprehensive approach to the regulation of the use of derivatives and other financial instruments by registered investment companies and business development…

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October 22, 2020

SEC Adopts Final Rule and Related Amendments for Fund-of-Funds Arrangements

The SEC recently adopted a new rule, Rule 12d1-4 (FoF Rule), and related amendments designed to implement a regulatory framework for investments by registered investment companies and business development companies (BDCs) (collectively, funds) in underlying funds. The release adopting the amendments (Adopting Release) also rescinds Rule 12d1-2 (which applies to…

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September 23, 2020

NYSE Arca, Inc. Files Proposed Rule Change to Adopt a Generic Listing Rule for Certain Semi-Transparent ETFs

On September 15, 2020, the SEC issued a notice (Notice) regarding the NYSE Arca, Inc.’s (Exchange) filing of a proposed generic listing rule for certain semi-transparent ETFs (ST ETFs). An ST ETF is an exchange-traded fund that discloses alternative forms of information about its underlying portfolio each day, such as…

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July 8, 2020

Registered Fund Adviser and Affiliate Censured and Fined for Violations of Section 12(d)(1)(A) (Fund of Funds Limitations) and Compliance Rules

On July 2, 2020, the SEC entered into a settlement order with an adviser and its foreign affiliate (Order) involving violations of the fund-of-funds ownership restrictions in Section 12(d)(1)(A) of the 1940 Act and the compliance rules contained in Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Advisers…

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June 26, 2020

Department of Labor Proposes Rule Affecting ESG Plan Investments

On June 23, 2020, the U.S. Department of Labor (DOL) proposed a rule intended to clarify ERISA plan fiduciaries’ responsibilities with respect to environmental, social and governance (ESG) investing. The proposal is designed in part to make clear that ERISA plan fiduciaries may not invest in ESG vehicles when they…

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June 16, 2020

Federal Reserve Announces Updates to Secondary Market Corporate Credit Facility

Federal Reserve Announces Updates to Secondary Market Corporate Credit Facility On June 15, 2020, the Federal Reserve (Fed) announced updates and released an updated term sheet relating to the Secondary Market Corporate Credit Facility (SMCCF). The Federal Reserve Bank of New York will begin buying eligible corporate bonds issued…

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June 2, 2020

CFTC Issues Customer Advisory Regarding Commodity ETPs and Funds

Recently, the CFTC issued a customer advisory (Advisory) in response to increased investor interest in exchange-traded products (ETPs) and funds that invest in futures or other types of commodity interests (collectively, Pools). The Advisory highlights the distinctions between ETPs and funds that invest in securities and Pools, which include the…

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May 22, 2020

FINRA Issues Notice Reminding Firms of Sales Practice Obligations for Certain Exchange-Traded Products

On May 15, 2020, FINRA issued Regulatory Notice 20-14 (Notice) in response to recent “extraordinary conditions” that have caused significant volatility in complex oil-linked exchange-traded products (ETPs). The Notice reminds broker-dealers that are members of FINRA (firms) of their sales practice obligations in connection with these ETPs and, similar to…

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