Tag:Americas

1
Fifth Circuit Court of Appeals Hears Oral Arguments in Industry Groups’ Ongoing Petition to Vacate Private Fund Adviser Rules
2
SEC Expands Definition of Dealers and Government Securities Dealers
3
Industry Groups File First Reply to SEC in Ongoing Petition Against New Private Fund Adviser Rules
4
SEC Staff Publishes FAQs on Tailored Shareholder Reports
5
New Year, New CPO/CTA Exemption Affirmations and CPO FinCEN Requirements
6
SEC Publishes Its 2024 Exam Priorities—Early
7
SEC Adopts Amendments to Beneficial Ownership Reporting
8
U.S. Congressional Hearing on Oversight of SEC’s Division of Investment Management
9
Brokers Beware – The Massachusetts Fiduciary Rule is Here to Stay
10
The SEC’s New Rules for Private Fund Advisers: A Dose of Transparency for the Private Markets

Fifth Circuit Court of Appeals Hears Oral Arguments in Industry Groups’ Ongoing Petition to Vacate Private Fund Adviser Rules

By: TJ Bright, Annabelle H. North, and Bradley D. Bostwick

On 5 February 2024, the US Fifth Circuit Court of Appeals heard oral arguments from the Securities and Exchange Commission (SEC) and industry groups representing private investment fund sponsors, in the industry groups’ ongoing petition to vacate the new private fund adviser rules (PFAR) adopted by the SEC on 23 August 2023.

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SEC Expands Definition of Dealers and Government Securities Dealers

By: Richard F. Kerr, Eden L. Rohrer, Jessica D. Cohn, and Raymond F. Jensen

On 6 February 2024, the US Securities and Exchange Commission (SEC) adopted two new rules – Rules 3a5-4 and 3a44-2 of the Securities Exchange Act of 1934 (the Act) – that significantly expand the definitions of a “dealer” and “government securities dealer.” The new rules define the phrase “as a part of a regular business” in Sections 3(a)(5) and 3(a)(44) of the Act to determine if a person is engaged in a “regular pattern of buying and selling securities that has the effect of providing liquidity to other market participants.” Such persons would be required to register as “dealers” or “government securities dealers” under Sections 15 and 15C of the Act, respectively.

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Industry Groups File First Reply to SEC in Ongoing Petition Against New Private Fund Adviser Rules

BY: TJ Bright and Annabelle North

On 22 January 2024, industry groups representing private investment fund sponsors, including the Alternative Investment Management Association (AIMA), National Association of Private Fund Managers, and Managed Funds Association, filed their first reply to the Securities and Exchange Commission’s (SEC) response in the groups’ ongoing petition against the new private fund adviser rules (PFAR) adopted by the SEC on 23 August 2023.

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SEC Staff Publishes FAQs on Tailored Shareholder Reports

By: Cal Gilmartin, Abigail Hemnes, Michael Davalla and Benjamin Skillin

This past Friday, the SEC staff issued a set of responses to FAQs on the Tailored Shareholder Reports (TSRs) Rule. While these responses only represent the views of the staff of the Division of Investment Management and have no legal force or effect, they provide welcome clarity and guidance on certain elements of the Rule that had been the subject of discussion across the industry.

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New Year, New CPO/CTA Exemption Affirmations and CPO FinCEN Requirements

By: Clifford C. Histed, Kenneth Holston, Cheryl L. Isaac, and Matthew J. Rogers

Happy New Year! As we kick off 2024, we note that the National Futures Association (NFA) published its annual Notice to Members with guidance on the annual affirmation requirement for certain exempt commodity pool operators (CPOs) and commodity trading advisors (CTAs). If you rely on an exemption or exclusion from CPO registration under CFTC Regulation 4.13(a)(1), 4.13(a)(2), 4.13(a)(3), 4.13(a)(5) or 4.5, or an exemption from CTA registration under 4.14(a)(8), you must file an annual affirmation in the NFA’s Exemptions System by 29 February 2024, and a multi-factor authentication is now required for access. Failure to make this affirmation will result in your registration exemption being withdrawn on 1 March 2024.

In addition, the NFA also issued a Notice to Members regarding the Financial Crimes Enforcement Network (FinCEN) final rule implementing the Corporate Transparency Act beneficial ownership information (BOI) reporting requirements. Although CFTC-registered entities (including CPOs and CTAs) are exempt from these requirements (see 31 U.S.C. §5336(a)(11)(B)(xiv)), certain pooled investment vehicles will be required to comply. Commodity pools that are operated or advised by an SEC-registered broker-dealer or investment adviser are generally exempt, but a limited number of other commodity pools will be subject to the new rule.

Accordingly, CPOs with non-exempt commodity pools will need to file BOI reports with FinCEN, including identifying information about individuals who directly or indirectly own or control the commodity pool. FinCEN recently extended the BOI reporting deadline for certain reporting companies, with the relevant compliance dates as follows:

  • Commodity pools created or registered before 1 January 2024: file BOI reports by 1 January 2025.
  • Commodity pools created or registered in 2024: file BOI reports within 90 calendar days after registration is effective.
  • Commodity pools created or registered on or after 1 January 2025: file BOI reports within 30 calendar days after registration is effective.

For commodity pools created or registered after 1 January 2024, a CPO will also need to report information about the “company applicants,” meaning the individual or individuals who directly file the document that creates or registers the commodity pool.

Please feel free to contact the authors of this blog post with any questions.

SEC Publishes Its 2024 Exam Priorities—Early

By: Jennifer Klass and Wiley Cole

On 16 October 2023, the Division of Examinations (the Division) of the US Securities and Exchange Commission (SEC) released its examination priorities for the 2024 fiscal year. In an interesting twist, the SEC released the examination priorities early, changing the timing to correspond to the beginning of its new fiscal year.

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SEC Adopts Amendments to Beneficial Ownership Reporting

By: Jennifer Gonzalez, Trayne Wheeler, and Megan Clement

On 10 October 2023, the SEC adopted amendments to beneficial ownership reporting requirements under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934. The amendments shorten deadlines for Schedule 13D and 13G filers, clarify Schedule 13D disclosure requirements for derivatives, and require filers to use machine readable data language.

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U.S. Congressional Hearing on Oversight of SEC’s Division of Investment Management

By: Megan Clement

On 19 September, U.S. Congress’ Sub-Committee on Capital Markets held a hearing on oversight of the SEC’s Division of Investment Management during which Director William Birdthistle testified on various SEC proposed rules affecting investment funds and advisers.

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Brokers Beware – The Massachusetts Fiduciary Rule is Here to Stay

On 25 August 2023, the Massachusetts Supreme Judicial Court reversed a Massachusetts Superior Court ruling and denied Robinhood Financial LLC’s attempt to block the implementation of Massachusetts’s unique fiduciary duty rule, adopted in February 2020 within weeks of the final adoption of the SEC’s Regulation Best Interest, which imposes the duties of care and loyalty on broker-dealers (Fiduciary Rule). A summary of the Fiduciary Rule is available here. Robinhood’s action to overturn the Rule was brought after the Commonwealth of Massachusetts brought an administrative action accusing Robinhood of violating Fiduciary Rule with its video game-like design and marketing tactics.

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The SEC’s New Rules for Private Fund Advisers: A Dose of Transparency for the Private Markets

By: Ken Holston, TJ Bright, Pablo Man, Matthew Mangan, Chris Phillips-Hart, Annabelle North

On August 23, 2023, the SEC adopted sweeping new rules that will impose substantial regulation on the management and operation of private funds by investment advisers.  The rules appear to be somewhat less burdensome than the rules originally proposed in February 2022.  

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