March 28, 2017

SEC Clarifies Application of the Custody Rule

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").

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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…

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March 14, 2017

DOL Issues Temporary Enforcement Policy on Fiduciary Rule

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.  

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March 1, 2017

DOL Adopts Proposal to Delay the Fiduciary Rule

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.

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February 22, 2017

Division of Investment Management Provides FAQs on Mutual Fund Fee Structures

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.

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February 21, 2017

OCIE Issues List of Most Frequently Identified Exam Topics

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 &…

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February 10, 2017

February 2017 Compliance Flash

Please click here to read the February 2017 edition of the Compliance Flash.  If you have any questions or comments, please contact your primary Investment Management attorney at Seward & Kissel LLP.    …

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January 18, 2017

OCIE Releases its 2017 Examination Priorities

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.

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January 18, 2017

OCIE Multi-Branch Adviser Initiative Risk Alert

The SEC's Office of Compliance Inspections and Examinations ("OCIE") has issued a Risk Alert regarding the launch of its Multi-Branch Adviser Initiative (the "Initiative").  In recent years, the OCIE staff (the "Staff") has observed an apparent increase in investment advisers with multiple branch offices and operations located outside of the adviser's principal or main office.  The Initiative will examine whether such advisers are in compliance with the federal securities laws given the additional and unique risks of a multi-office operating structure.

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January 13, 2017

Division of Investment Management Provides Interpretive Guidance on Section 22(d) Restrictions

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).

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