regulations – Page 2 – Global Investment Law Watch

Australia: ASIC Gears Up Enforcement Activity

Dec 08 2022

By Jim Bulling and Anabelle Weinberg

1. ASIC takes further action on greenwashing

ASIC has issued three infringement notices to investment manager Vanguard Investments Australia Ltd (Vanguard) in further action against alleged greenwashing.

ASIC was concerned that Product Disclosure Statements for the Vanguard International Shares Select Exclusions Index Funds may have misled the public by overstating an investment screen which claimed to prevent investment in companies involved in significant tobacco sales.

United States: SEC Throws a Flag on Red Flags Programs

Dec 06 2022

By: Jessica D. Cohn and Keri E. Riemer

On 5 December 2022, the staff of the Division of Examinations (Staff) of the Securities and Exchange Commission (SEC) issued a risk alert identifying practices that are inconsistent with Regulation S-ID, thereby exposing retail customers to potential identity theft.

Regulation S-ID, which applies to SEC-regulated entities that are financial institutions or creditors under the Fair Credit Reporting Act (including most registered broker-dealers, registered investment companies and registered investment advisers), requires the establishment of programs designed to detect, prevent, and mitigate identity theft in connection with covered accounts (each, a Program). Programs must include reasonable policies and procedures to identify, detect, and respond to red flags relevant to identity theft.

Australian Regulatory Update – 21 November 2022

Nov 23 2022

By Jim Bulling and Anabelle Weinberg

1. “Finfluencers” pivot following warnings from ASIC and become authorised to provide general financial product advice

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.

United States: A Record Year: SEC FY 2022 Enforcement Actions Bring Big Penalties

Nov 16 2022

By: Keri E. Riemer, Michael W. McGrath, Neil T. Smith, Hayley Trahan-Liptak, and Christopher F. Warner

On 15 November 2022, the U.S. Securities and Exchange Commission (SEC) announced its enforcement statistics for its 2022 fiscal year (FY 2022), noting that it filed 760 total enforcement actions — a 9% increase over fiscal year 2021. This total was comprised of 462 new actions, 169 “follow-on” actions, and 129 actions for delinquent filings. Money obtained in SEC actions, comprising civil penalties, disgorgement, and pre-judgment interest, totaled a record-breaking $6.439 billion (compared to $3.852 billion in fiscal year 2021). Civil penalties, totaling $4.194 billion, were also the highest on record.

United States: SEC Adopts Expanded Proxy Voting Reporting by Registered Funds and New Reporting of Executive Compensation Votes by Form 13F Filers

Nov 07 2022

By: 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).

United States: SEC Proposes Changes to Open-End Fund Liquidity Framework

Nov 07 2022

By: 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.

Australia: ASIC releases its first insights from the reportable situations regime

Oct 28 2022

By 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.

Australia: Regulatory update – 24 October 2022

Oct 24 2022

By Jim Bulling and Hugo Chow

ASIC’s crackdown on product disclosures continues

To date, ASIC has issued 11 design and distribution obligations stop orders, with the first stop orders being issued in July this year.

The latest interim stop order prevent a fund management firm (the Firm) from offering or distributing three funds (the Funds) to retail investors due to the Firm not having compliant target market determinations (TMDs).

United States: SEC Reopens Comment Period for Eleven Significant Rulemaking Releases

Oct 14 2022

By: 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 7^th 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)

United States: As the WORM Turns: SEC Provides Alternative Recordkeeping Requirements for Brokers

Oct 12 2022

By: Eden L. Rohrer, Chloe Vargas, and Raymond F. Jensen

On October 12, 2022, the SEC voted to adopt new electronic recordkeeping requirements for broker-dealers in an effort to modernize recordkeeping requirements and to allow broker-dealers to use new technologies to satisfy their obligations. The new recordkeeping requirements will amend the Securities Exchange Act of 1934 (“Exchange Act”) Rule 17a-4 (“Rule 17a-4”) for broker-dealers and Exchange Act Rule 18a-6 (“Rule 18a-6”) for Security-Based Swap Dealers, and Major Security-Based Swap Participants.

Significant to broker-dealers is that they will no longer be required to preserve electronic records in a non-rewritable, non-erasable or read once, write many (“WORM”) format. The new rule is technology neutral, allowing broker-dealers to adopt new technologies. The amended rule will eliminate references to outdated technology such as “micrographic media,” “microfilm or microfiche,” and “optical disk technology (including CD-ROM),” in their heyday when the rule was adopted in 1997.

Tag:regulations

1. “Finfluencers” pivot following warnings from ASIC and become authorised to provide general financial product advice