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.
Read MoreBy: 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.
Read MoreBy: 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.
Read MoreOn 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.
Read MoreBy: 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.
Read MoreBy: Cheryl Isaac and Christine Mikhael
In case you missed it: late last month, the Integrity Council for the Voluntary Carbon Market (“ICVCM”) launched its Core Carbon Principles (CCPs) and Program-level Assessment Framework (Framework). With the publication of these new standards (developed with the input of hundreds of stakeholders in the voluntary carbon markets), we now have a set of fundamental principles for high-quality credits that create a verifiable climate impact, and a framework for determining whether carbon credit programs are eligible to label themselves as being in compliance with the CCPs.
Read MoreBy: Neil Smith , Hayley Trahan Liptak and Peter Shanley
For over twenty months, the U.S. Securities and Exchange Commission (SEC) has steadily announced settled orders against broker-dealers and investment advisers for failure to retain business-related communication. On 8 August 2023, the SEC released another round of settled orders with 11 firms for violation of Exchange Act Rule 17a-4 for failing to retain off-channel business-related communication. One dually registered broker-dealer and investment adviser was also charged with violating recordkeeping provisions of the Investment Advisers Act of 1940. The content of the orders, and the firms involved, show the SEC’s attention may be shifting from wide-spread violations at large institutions to more limited compliance failures at firms of differing sizes. The assessed penalties, although still considerable, are consistent with this shift.
Read MoreBy Keri Riemer and Matthew Rogers
On 26 July 2023, the U.S. Securities and Exchange Commission (SEC) proposed amendments (Proposal) to the “internet adviser exemption” set forth in Rule 203A-2(e) under the Investment Advisers Act of 1940, which permits registration with the SEC of certain investment advisers that would not otherwise be eligible for such registration. The proposed reforms would impose new limitations on advisers seeking to rely on the exemption by precluding them from providing advice through a means other than an “operational interactive website” (i.e., a website or mobile application through which the adviser provides “digital investment advisory services” (as defined in the Proposal) on an ongoing basis to more than one client (except during temporary technological outages)).
Read MoreBy Jennifer R. Gonzalez and Nicholas O. Ersoy
In May 2020, the Division of Investment Management Staff of the U.S. Securities and Exchange Commission published a Statement withdrawing a November 2010 letter issued to Boulder Total Return Fund, relating to the Maryland Control Share Acquisition Act (MCSAA), which had long been an impediment to closed-end funds opting in to state statutes that permit corporations to restrict certain stockholders’ ability to vote “control shares” (shares of a corporation which, when aggregated with all shares of such corporation owned by an acquiring person, exceed certain ownership thresholds). Following the May 2020 Staff Statement, a number of closed-end funds opted in to state control share statutes or adopted by-law provisions with similar impact. Further developments since then include:
Read MoreBy Todd Gibson, Annabelle North, and Aster Cheng
On 24 May 2023, the US Securities and Exchange Commission (SEC) announced the settlement of charges against Sciens Investment Management, LLC and Sciens Diversified Managers, LLC (collectively, Sciens) related to the valuation of certain private fund portfolio investments (Order). The SEC cited the often-used violations of Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7, finding that Sciens failed to implement adequate policies and procedures to properly value certain private fund investments.
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