By Jim Bulling and Anabelle Weinberg
Australian Minister for Financial Services, Stephen Jones, has urged superannuation trustees to ‘step up to the mark’ on member engagement and satisfaction following a recent report from the Australian Securities and Investments Commission (ASIC).
Read MoreBy: C. Todd Gibson, Amjad Hussain, and Zaid Abu-Shattal
The Securities and Commodities Authority (“SCA”), the federal financial regulatory agency in the United Arab Emirates (“UAE”) issued on 16 January 2023 a suite of new decisions and regulations, which introduced sweeping changes to the public distribution of foreign funds in the UAE.
Pursuant to SCA Chairman of the Board of Directors Decision No. 4/RM of 2023 Concerning the Procedures of Adjustment of Situation to Promote Units of Foreign Funds in the UAE (“Foreign Funds Regulations”), which came into effect on 17 January 2023, promotion of foreign funds in the UAE is now limited to private distribution to professional investors and/or market counterparties, as defined in the SCA Rulebook. As of today, the updated regulations are only available in Arabic.
Amongst other obligations set out in the Foreign Funds Regulations, promoters of foreign funds in the UAE must amend their arrangements with managers of foreign funds to comply with the provisions of the Foreign Funds Regulations.
The Foreign Funds Regulations state that promoters may continue performing their obligations pursuant to contracts that are still in force for a period not exceeding six months from 1 January 2023 or until the expiration of such contracts (whichever comes first), provided that the registration of the concerned foreign funds are renewed within the transitional period and payment of the prescribed fees are made to the SCA.
The SCA seems to want to encourage global asset managers to set up an onshore presence and establish onshore domestic public or private funds to target investors in the UAE in accordance with the new requirements and processes that were also issued on 16 January 2023 under the SCA Chairman of the Board of Directors Decision No. 1/RM of 2023 on the Regulation of Investment Funds. The SCA also issued decisions with respect to regulations governing the registration of securities for listing purposes, amending certain provisions of the SCA Rulebook, clearing activities in local commodity markets, and SCA services fees.
By: Yuki Sako and Michael G. Lee
On 15 December 2022, the Public Company Accounting Oversight Board (PCAOB) announced that it was able to secure complete access to inspect and investigate audit firms in China. From September to November 2022, PCAOB staff members “conducted on-site inspections and investigations in Hong Kong…thoroughly testing all aspects of the agreement necessary to assess whether [Chinese] Authorities would allow complete access.” The PCAOB’s inspections and investigations were pursuant to a written agreement, called the Statement of Protocol, which the PCAOB entered into with Chinese authorities on August 26, 2022. The PCAOB concluded that Chinese authorities “did not obstruct the PCAOB’s ability to inspect and investigate completely, consistent with U.S. law.” Consequently, the PCAOB decided to vacate its previous December 16, 2021 determination, made pursuant to the Holding Foreign Companies Accountable Act (HFCAA), that positions taken by China prevented the PCAOB from inspecting and investigating firms headquartered in mainland China and Hong Kong completely.
Read MoreBy Jim Bulling and Anabelle Weinberg
1. New requirements for Australian Superannuation Funds in relation to unlisted assets
The Australian Prudential Regulation Authority (APRA) has revoked Prudential Standard SPS 530 Investment Governance and issued a new version which will commence on 1 January 2023.
Read MoreBy Jim Bulling and Anabelle Weinberg
Earlier this year, ASIC put social media “finfluencers” on notice after warning that they could face imprisonment and hefty fines if they do not obtain an AFSL or do not stop promoting financial products online.
Read MoreBy Kane Barnett and Bernard Sia
Since 1 October 2021, when the design and distribution obligations (DDO) commenced, ASIC has issued 13 DDO‒related stop orders.
What has non-compliance looked like so far?
ASIC’s first DDO stop order was issued in July 2022 when ASIC identified a target market determination (TMD) that included retail investors for whom the investment would not be appropriate. The other initial interim stop orders related to the failure to prepare a TMD.
Read MoreBy: Lynn A. Schweinfurth, Kathy Kresch Ingber, and Crystal Liu
On November 2, by a vote of 3 to 2, the Securities and Exchange Commission adopted, largely as proposed, amendments to Form N-PX under the Investment Company Act of 1940 and new Rule 14Ad-1 under the Securities Exchange Act of 1934 (Amendments). The Amendments expand the proxy voting information that registered investment companies (Funds) report on Form N-PX, and require, for the first time, Form 13F filers (Managers) to report annually on Form N-PX how they voted proxies concerning certain shareholder advisory votes on executive compensation (“say-on-pay” votes).
Read MoreBy: Franklin H. Na and Cole E. Wilhelmi
On November 2, 2022, the Securities and Exchange Commission proposed amendments to Rule 22e-4 and Rule 22c-1 of the Investment Company Act of 1940 that would require open-end funds to adjust their approach to liquidity risk management. In particular, the proposed amendments would mandate swing pricing and a “hard close” on most open-end funds, and would amend certain components of open-end funds’ liquidity risk management programs.
Read MoreBy Jim Bulling and Hugo Chow
In ASIC’s first annual report regarding the reportable situations regime, it noted that there were over 8000 reports made to ASIC by financial services and credit licensees under the regime from 1 October 2021 to 30 June 2022.
Read MoreBy: Trayne S. Wheeler and Brian Doyle-Wenger
On October 7, 2022, the Securities and Exchange Commission (the “SEC”) announced that, due to a technological error, it was reopening the public comment periods for 11 pending rulemaking releases (“Rulemaking Releases”) and one request for comment. The comment periods will be reopened as of October 7th and will end 14 days after the publication of the release in Federal Register (if, for example, this release were to be published on October 15, then the comment periods would close on October 29, 2022). The SEC encouraged commenters that submitted a public comment through the internet comment process to check the SEC’s website, SEC.gov, to determine whether their comment was received and posted.
The SEC’s release did not elaborate on nature of the technological error but stated that a number of public comments submitted through the SEC’s internet comment form were not received. The SEC noted the majority of the affected comments were submitted in August 2022, but that the technological error is known to have occurred as early as June 2021.
The impact of the reopening of the public comment periods is not yet known, but will likely result in delaying the release of a number of highly anticipated SEC rules[1]. The Rulemaking Releases include the following proposals and request for comment:
• Reporting of Securities Loans
• Prohibition Against Fraud, Manipulation, or Deception in Connection with Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance Officers; Position Reporting of Large Security-Based Swap Positions
• Money Market Fund Reforms
• Share Repurchase Disclosure Modernization
• Short Position and Short Activity Reporting by Institutional Investment Managers; see also Notice of the Text of the Proposed Amendments to the National Market System Plan Governing the Consolidated Audit Trail for Purposes of Short Sale-Related Data Collection,
• Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure
• Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews
• The Enhancement and Standardization of Climate-Related Disclosures for Investors
• Special Purpose Acquisition Companies, Shell Companies, and Projections
• Investment Company Names
• Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices
• Request for Comment on Certain Information Providers Acting as Investment Advisers
(Certain SRO rules, not covered here, also have comment periods that have been reopened.)
[1] SEC Release, Resubmission of Comments and Reopening of Comment Periods for Several Rulemaking Releases Due to a Technological Error in Receiving Certain Comments, October 7, 2022 (https://www.sec.gov/rules/proposed/2022/33-11117.pdf)
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