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").
March 23, 2017
Division of Investment Management Provides Information Update on Tax Claims in Foreign Jurisdictions
The Division of Investment Management (the “Division”) recently issued an Information Update dated March 2017 (the “Update”) to provide U.S.-registered funds with guidance for requesting assistance from the Division when seeking to obtain refunds of any foreign taxes that were inappropriately withheld. The Update relates to a 2014 determination by…
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.
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 &…
February 10, 2017
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.