August 9, 2017
SEC shares “Observations from Cybersecurity Examinations”
As cybersecurity remains one of the top compliance risks for financial firms, the SEC has released a Risk Alert on observations from OCIE’s Cybersecurity 2 Initiative. Following the initial initiative in 2014 that undertook to assess associated industry practices and legal and compliance issues, the more recent focus was on more validation and testing of procedures and controls surrounding cybersecurity preparedness.
August 3, 2017
Director of the Division of Investment Management to leave the SEC
The SEC announced today that David W. Grim, Director of the Division of Investment Management, will leave the agency next month after more than 20 years of public service. The SEC announced today that David W. Grim, Director of the Division of Investment Management, will leave the agency next month after more than 20 years of public service.
July 26, 2017
Division of Investment Management Responds to Questions Regarding New Fund Reporting Rules
The Division of Investment Management (the "Division") recently issued a set of interpretive answers ("Guidance") to questions relating to the investment company reporting reforms adopted by the Securities and Exchange Commission in October 2016. The Guidance, which focuses on various aspects of new Forms N-PORT and N-CEN and the amendments to Regulation S-X, includes the following information:
June 22, 2017
Seward & Kissel Participates in Washington, DC Compliance Roundtable
Click here for notes from June 15, 2017 members meeting with Mark J. Dowdell, Assistant Regional Director of Securities and Exchange Commission (Philadelphia Regional Office).
June 22, 2017
Q&As — Now That the DOL’s Fiduciary Rule Is Applicable
Q 1: What representations should a private investment fund get from new "benefit plan investors"? A: Assuming that an investment manager or "you" are not intending to rely on the "best interest contract" ("BIC") prohibited transaction exemption and except as discussed in Q 2 below, a private investment fund can only be offered to an ERISA plan or IRA which employs an "independent fiduciary with financial expertise" ("IFFE") in connection with the investment into the fund. Under the Department of Labor fiduciary rule (the "Rule"), you can rely on representations from investors as to their qualifications as an IFFE. We recommend that any new investment from a "benefit plan investor" only be accepted if the investor can and does make representations and warranties as to IFFE involvement (Exhibit A provides a sample representation form). While the Rule also requires that an IFFE meet several other requirements, we do not believe that during the "transition period" (i.e., through December 31, 2017), additional representations are required in order for a private investment fund to rely on the IFFE exception to the Rule. The representations from "benefit plan investors" in Seward & Kissel's typical subscription agreements contain several provisions that address these other requirements, which, we believe, when used in conjunction with the additional representations set forth on Exhibit A, should suffice during the "transition period".
May 31, 2017
New Rules to Modernize Reporting Obligations of Registered Investment Companies
In October 2016, the Securities and Exchange Commission ("SEC") adopted new rules and forms, as well as amendments to existing rules and forms, to enhance transparency and modernize reporting requirements for registered investment companies. The SEC adopted new Form N-PORT (and rescinded Form N-Q), which requires registered investment companies and exchange-traded funds organized as unit investment trusts, but not money market funds and small business investment companies, to report information about their monthly portfolio holdings to the SEC in a structured data format. The SEC also adopted new Form N-CEN (and rescinded Form N-SAR), which requires registered investment companies, other than face-amount certificate companies, to annually report certain census-type information to the SEC in a structured data format. In addition, the SEC adopted amendments to Regulation S-X, which require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. This memorandum provides a brief summary of the new requirements and the respective compliance dates, certain of which begin in June and August 2017, as indicated below. A summary of compliance dates is also presented in a table at the end of this memorandum.
May 26, 2017
The DOL Fiduciary Rule – Action Steps for Investment Managers
The new Department of Labor fiduciary rule (the "Fiduciary Rule") will be applicable on June 9, 2017. If you have not already done so, you need to address these rule changes as they relate to ERISA plans and individual retirement accounts (IRAs) regarding: Post June 9th subscriptions for private fund investments; Separately Managed Accounts that use brokers/dealers affiliated with the investment manager, or invest in mutual funds affiliated with the investment manager; and Holistic advice that advises on ERISA plan rollovers to an IRA.
April 14, 2017
The Department of Labor Delays the New Fiduciary Rule
On Friday April 7th, the Department of Labor published in the Federal Register amendments to its fiduciary regulation (the "New Fiduciary Rule") and related prohibited transaction exemptions (the "Exemptions"). The amendments delay until June 9, 2017 the "Applicability Date" of the New Fiduciary Rule and the Exemptions.
April 12, 2017
SEC Issues Guidance Update on Robo-Advisers
The staff (the "Staff") of the SEC's Division of Investment Management recently issued a Guidance Update regarding automated advisers, which are often colloquially referred to as "robo-advisers."1 Robo-advisers typically are registered investment advisers that use innovative technologies to provide discretionary asset management services to their clients through online algorithmic-based programs. The Staff has been monitoring and engaging with robo-advisers in order to determine how robo-advisers meet their obligations under the Investment Advisers Act of 1940 (the "Advisers Act").
March 31, 2017
Investment Adviser Sanctioned for Failure to Disclose Conflicted Revenue Arrangements
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.