October 8, 2019
Division of Investment Management Issues ADI on Performance and Fee Issues
On October 2, 2019, the Disclosure Review and Accounting Office (“DRAO”) of the SEC’s Division of Investment Management (the “Division”) issued Accounting and Disclosure Information (“ADI”) 2019-09 on “Performance and Fee Issues.” The ADI provides the DRAO staff’s observations from reviewing fund disclosure filings with the…
October 1, 2019
SEC Adopts New Rule for Exchange-Traded Funds
On September 25, 2019, the SEC adopted Rule 6c-11 (Rule) under the Investment Company Act of 1940, as amended (1940 Act), to modernize the regulatory framework for most exchange-traded funds (ETFs). The Rule eliminates the need for ETFs that can operate under its conditions to obtain an exemptive order from…
October 1, 2019
SEC Orders an Additional 16 Self-Reporting Advisory Firms to Pay Nearly $10 Million to Investors
On September 30, 2019, the SEC announced it settled charges against 17 investment advisers for disclosure failures regarding their mutual fund share class selection practices. The firms include 16 advisers that self-reported as part of the Division of Enforcement’s Share Class Selection Disclosure Initiative (Initiative) and one adviser that did…
September 23, 2019
Advisers Fined $5 Million for Disclosure and Compliance Violations Related to Securities Lending and Unreimbursed Tax Expenses for Mutual Fund Clients
On September 16, 2019, the SEC issued a settled order describing violations of the Investment Advisers Act of 1940 (“Advisers Act”) and rules thereunder by two registered advisers for undisclosed conflicts of interest and misleading disclosures relating to certain securities lending practices, and misleading disclosures and deficient policies and procedures…
September 16, 2019
SEC Charges BDC Adviser with Affiliated Transaction Violations and Noncompliance with Co-Investment Exemptive Order
On September 13, 2019, the SEC issued a consent order that named Garrison Investment Group LP (“GIG”) and Garrison Capital Advisers LLC (“GCA”) and found violations of the affiliated transaction prohibitions of the Investment Company Act of 1940 (“1940 Act”) and the custody rule under the Investment Advisers Act of…
September 11, 2019
Division of Investment Management Issues ADI on Principal Risks Disclosure
On September 9, 2019, the SEC’s Division of Investment Management (the “Division”) issued Accounting and Disclosure Information (“ADI”) 2019-08 on “Improving Principal Risks Disclosure.” The ADI provides the staff’s views on best practices for risk disclosures for registered investment companies (“funds”), including ordering risks by importance…
September 5, 2019
SEC Continues to Pursue Share Class Selection Cases
Two separate complaints filed last month against Cetera Advisors, LLC (“Cetera”) and Commonwealth Financial Network (“Commonwealth”) show that the SEC is still pursuing intermediaries for conflicts of interest and related violations related to fund share class selection. The complaints against Cetera and…
August 30, 2019
SEC Provides Guidance on Proxy Voting By Registered Investment Advisers
On August 21, 2019, the Securities and Exchange Commission issued guidance (Guidance) on the proxy voting and disclosure responsibilities of registered investment advisers under the Investment Advisers Act of 1940, as amended. The Guidance discusses, among other matters, the ability of investment advisers to establish a variety of different voting…
July 23, 2019
SEC Staff Issues No-Action Letter Providing Relief for Multi-Manager Funds with Respect to Shareholder Approval Requirement for Affiliated Sub-Advisers
On July 9, 2019, the SEC staff granted no-action relief under Section 15(a) of the Investment Company Act of 1940 and certain disclosure requirements, which relief provides additional flexibility to multi-manager funds and investment advisers operating under an existing multi-manager exemptive order, without having to seek amendments to their current…
July 23, 2019
SEC Adopts Amendments to Auditor Independence Rules Regarding Loans
On June 18, 2019, the SEC adopted amendments to its auditor independence rules that change the analysis used to determine whether an auditor is independent when it has a lending relationship with certain shareholders of an audit client during an audit or professional engagement period. The amendments help to address…