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 14, 2017
On March 10, 2017, the U.S. Department of Labor (DOL) issued a field assistance bulletin announcing a temporary enforcement policy for the new Fiduciary Rule and the related prohibited transaction exemptions (collectively PTEs), which were originally scheduled to take effect on April 10. The bulletin comes in the wake of a proposed rule to delay the effective date of the Fiduciary Rule and PTEs by 60 days, and aims to address investor confusion and marketplace disruptions relating to the possible delay.
March 1, 2017
The DOL proposes to extend for 60 days the applicability date of the new Fiduciary Rule, defining who is a "fiduciary" under the Employee Retirement Income Security Act (ERISA), and the related prohibited transaction exemptions (collectively PTEs) to address questions of law and policy.
February 22, 2017
The staff of the Securities and Exchange Commission recently posted responses to frequently asked questions (“FAQs”) relating to its December 2016 IM Guidance Update 2016-06 (“Guidance Update”) and its January 11, 2017 no-action letter to the Capital Group (“Staff Letter”). The FAQs cover questions on disclosure and filing requirements that fund companies may have following the issuance of the Guidance Update and Staff Letter.
January 18, 2017
On January 12, 2017, the SEC's Office of Compliance Inspections and Examinations ("OCIE") released its 2017 Examination Priorities. In addition to the areas of focus provided below, OCIE expects to allocate resources to the examination of private fund advisers, municipal advisers and transfer agents.
January 13, 2017
In an interpretive letter dated January 11, 2017 (the “Staff Letter”), the Office of Chief Counsel of the Division of Investment Management stated its view that, under certain circumstances the restrictions of Section 22(d) of the Investment Company Act of 1940, as amended (the “1940 Act”), do not apply to a broker when the broker acts as agent on behalf of its customers and charges its customers commissions for effecting transactions in “Clean Shares” (i.e., a class of fund shares without any front-end load, deferred sales charge, or other asset-based fee for sales or distribution).
January 13, 2017
SEC Issues No-Action Relief in Connection with the Reallocation of a Unitary Fee without Shareholder Approval
In a recent no-action letter, the staff of the Division of Investment Management (the “Staff”) indicated that it would not recommend enforcement under Section 15(a) of the 1940 Act against American Century Funds or the investment adviser, American Century Investment Management, Inc. (“ACI” or the “Adviser”), if the Adviser reallocates (“brings up”) the unitary fee that it collects from the underlying funds to the target-date investing funds (“Investing Funds”) without shareholder approval.
December 20, 2016
In a recent no-action letter, the SEC provided assurances that it would not recommend enforcement action under Section 17(e) of the 1940 Act if certain registered open-end management investment companies utilize a broker that is an “affiliated person” of the Funds’ investment adviser to effect foreign currency transactions as agent for the Funds in return for the receipt of remuneration (within the parameters of Section 17(e)(2) of the Act). Section 17(e) was designed to eliminate the potential for self-dealing that exists when a person affiliated with a RIC receives compensation in connection with transactions involving the RIC.
December 20, 2016
Two recent settlements between investment advisers and the Securities and Exchange Commission (“SEC”) demonstrate the importance of correctly valuing bonds within a fund’s portfolio and ensuring that the valuation methods used take into account all factors that affect a bond’s value. Failure to do so can result in an inflated NAV, which can lead to disgorgement, heavy penalties and shareholder reimbursements.
October 13, 2016
The Securities and Exchange Commission (“SEC”) recently proposed an amendment to Rule 15c6-1(a) under the Securities Exchange Act of 1934 (“Exchange Act”) to shorten the standard settlement cycle for most broker-dealer securities transactions from three business days after the trade date (“T+3”) to two business days after the trade date (“T+2”). The proposed amendment would prohibit a broker-dealer from entering into a contract for the purchase or sale of a security (other than an exempted security, government security, municipal security, commercial paper, bankers’ acceptances, or commercial bills) that provides for payment of funds and delivery of securities later than two business days after the trade date, unless otherwise expressly agreed to by the parties at the time of the transaction.