August 3, 2017
The SEC announced today that David W. Grim, Director of the Division of Investment Management, will leave the agency next month after more than 20 years of public service. The SEC announced today that David W. Grim, Director of the Division of Investment Management, will leave the agency next month after more than 20 years of public service.
June 22, 2017
Click here for notes from June 15, 2017 members meeting with Mark J. Dowdell, Assistant Regional Director of Securities and Exchange Commission (Philadelphia Regional Office).
June 22, 2017
Q 1: What representations should a private investment fund get from new "benefit plan investors"? A: Assuming that an investment manager or "you" are not intending to rely on the "best interest contract" ("BIC") prohibited transaction exemption and except as discussed in Q 2 below, a private investment fund can only be offered to an ERISA plan or IRA which employs an "independent fiduciary with financial expertise" ("IFFE") in connection with the investment into the fund. Under the Department of Labor fiduciary rule (the "Rule"), you can rely on representations from investors as to their qualifications as an IFFE. We recommend that any new investment from a "benefit plan investor" only be accepted if the investor can and does make representations and warranties as to IFFE involvement (Exhibit A provides a sample representation form). While the Rule also requires that an IFFE meet several other requirements, we do not believe that during the "transition period" (i.e., through December 31, 2017), additional representations are required in order for a private investment fund to rely on the IFFE exception to the Rule. The representations from "benefit plan investors" in Seward & Kissel's typical subscription agreements contain several provisions that address these other requirements, which, we believe, when used in conjunction with the additional representations set forth on Exhibit A, should suffice during the "transition period".
May 26, 2017
The new Department of Labor fiduciary rule (the "Fiduciary Rule") will be applicable on June 9, 2017. If you have not already done so, you need to address these rule changes as they relate to ERISA plans and individual retirement accounts (IRAs) regarding: Post June 9th subscriptions for private fund investments; Separately Managed Accounts that use brokers/dealers affiliated with the investment manager, or invest in mutual funds affiliated with the investment manager; and Holistic advice that advises on ERISA plan rollovers to an IRA.
April 14, 2017
On Friday April 7th, the Department of Labor published in the Federal Register amendments to its fiduciary regulation (the "New Fiduciary Rule") and related prohibited transaction exemptions (the "Exemptions"). The amendments delay until June 9, 2017 the "Applicability Date" of the New Fiduciary Rule and the Exemptions.
April 12, 2017
The staff (the "Staff") of the SEC's Division of Investment Management recently issued a Guidance Update regarding automated advisers, which are often colloquially referred to as "robo-advisers."1 Robo-advisers typically are registered investment advisers that use innovative technologies to provide discretionary asset management services to their clients through online algorithmic-based programs. The Staff has been monitoring and engaging with robo-advisers in order to determine how robo-advisers meet their obligations under the Investment Advisers Act of 1940 (the "Advisers Act").
March 31, 2017
The SEC recently settled charges against an investment adviser (the "Adviser") for failing to disclose to its clients compensation it received through arrangements with a third-party broker-dealer (the "Broker") and the resulting conflicts of interest.
March 28, 2017
On March 22, 2017, the Securities and Exchange Commission (“SEC”) adopted an amendment to Rule 15c6-1(a) under the Securities Exchange Act of 1934 (“Exchange Act”), shortening the standard settlement cycle (i.e., the length of time between trade execution and delivery of cash and securities to the seller and buyer) for most securities transactions effected through broker-dealers from three business days (“T+3”) to two business days (“T+2”). The change means that when an investor buys a security, the brokerage firm must receive payment from the investor no later than two business days after the trade is executed; and, when an investor sells a security, the investor must deliver the security no later than two business days after the sale.
March 28, 2017
Recently, the staff (the "Staff") of the SEC's Division of Investment Management issued guidance on three scenarios in which a registered investment adviser is deemed to have custody of clients assets under Rule 206(4)-2 (the "Custody Rule") of the Investment Advisers Act of 1940 (the "Advisers Act") and therefore is required to comply with the provisions of the Custody Rule, including the requirement to undergo an annual surprise examination by an independent public accountant to verify client assets.1 Specifically, the Staff clarified that an investment adviser is deemed to have custody of client assets by virtue of: (1) Standing letters of instruction established by a client with a qualified custodian that grant the investment adviser the authority to disburse client assets to one or more third parties specifically designated by the client ("SLOAs"); (2) Arrangements that grant the investment adviser the authority to transfer a client's assets between the client's accounts maintained at one or more qualified custodians (unless the client has authorized the investment adviser in writing to make such transfers and a copy of that authorization is provided to the qualified custodians, specifying the client accounts maintained with qualified custodians) ("First-Person Transfers"); or (3) Provisions in a custodial agreement between a client and a qualified custodian that grant the investment adviser access to client assets even though the investment adviser did not otherwise intend to have such access ("Inadvertent Custody").
February 21, 2017
On February 7, 2017, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued a risk alert (the “Risk Alert”) providing a list of the five compliance topics that are most frequently identified in deficiency letters sent to registered investment advisers. Outlined in this Seward &…