October 23, 2019

SEC Staff Issues Frequently Asked Questions Regarding Disclosure of Certain Financial Conflicts Related to Investment Adviser Compensation

On October 18, 2019, the SEC staff issued frequently asked questions (FAQ) about required disclosures of conflicts related to compensation advisers receive, such as 12b-1 fees and revenue sharing, for recommending certain investment products. In the FAQ, the staff of the Division of Investment Management discusses…

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October 23, 2019

SEC Proposes Amendments to Exemptive Applications Procedures

On October 18, 2019, the SEC proposed rule amendments to establish an expedited review procedure for exemptive applications under the Investment Company Act of 1940 that are substantially identical to recent precedent, as well as a new informal internal procedure for applications that would not qualify for the new expedited…

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October 21, 2019

SEC Staff Publishes Responses to Inquiries Regarding Business Development Companies and Section 61(a) of the Investment Company Act of 1940

On October 18, 2019, the SEC staff (the “Staff”) published responses to interpretive questions received related to Section 61(a) of the Investment Company Act of 1940 (the “1940 Act”), which applies the leverage limitations under Section 18 of the 1940 Act to business development companies (“BDCs”). Section 61(a) of the…

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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…

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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…

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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…

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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…

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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…

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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…

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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…

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