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Courts May Call “Lane Violation” on Recent SEC Actions

With increasing frequency, petitioners representing the securities industry are asking courts to decide that rules adopted by the SEC exceed the agency’s authority, even when the rules have barely left the starting blocks....more

Proxy Advisers Win by a Nose, Eclipse Conflict Disclosure Requirement

In February, a federal district judge in the District of Columbia awarded proxy advisers a victory by vacating an SEC rule provision that they opposed....more

Funds Not Caged by SEC Names Rule Amendments: Roaming Room Remains

The SEC recently adopted amendments to its investment company “names” rule that apply to most SEC-registered funds, including underlying funds in which registered insurance company separate accounts invest....more

Expect Focus - Volume I, January 2024

Funds Not Caged by SEC Names Rule Amendments: Roaming Room Remains - The SEC recently adopted amendments to its investment company “names” rule that apply to most SEC-registered funds, including underlying funds in which...more

Tippee Liability If the Tipper Is Not Guilty? The Fluid Boundaries of Insider Trading

Though “insider trading” has long been recognized as an illegal and abusive way to cheat in the securities trading game, new potential forms of this activity have recently emerged. ...more

Fifth Circuit Breaks From No-Action Pack: Becomes Better Bet for Letter Recipients?

On July 21, 2023, a three-judge panel of the Fifth Circuit Court of Appeals issued an opinion asserting that the Commodity Futures Trading Commission’s Division of Market Oversight likely acted arbitrarily and capriciously,...more

Mass. High Court Plays Wild Card: Upholds Broad Fiduciary Duty for Broker-Dealers

On August 25, 2023, the Massachusetts Supreme Judicial Court upheld the validity of a rule promulgated in 2020 by the secretary of the commonwealth that imposes a broad fiduciary duty upon securities broker-dealers and their...more

SEC Places Short Order for T+1: But Insurance Products Mostly Off the Menu

In February 2023, the SEC adopted rule amendments that require most securities transactions effected by broker-dealers to be settled within one business day (T+1), rather than the currently required two business days. The SEC...more

ETF Share Transactions Based on Nonpublic Information: An Illegal Secret Ingredient?

Those with nonpublic information about a merger or acquisition involving a company appear to be profiting by trading in shares of exchange-traded funds based on indexes that include such companies’ shares, according to a...more

Expect Focus - Volume II, May 2023

For broker-dealers distributing and selling variable annuities, examinations will test for compliance with Reg BI and FINRA Rule 2330 because both standards apply to variable annuity sales. Firms distributing and selling...more

SEC Would Mandate Swing Pricing: Badly Upending Most Funds’ Procedures

In November 2022, the SEC published a proposal that would mandate “swing pricing” procedures for the purchase and redemption of shares of most open-end investment companies. The proposal, however, does not apply to...more

Expect Focus - Volume I, January 2023

More than 25 years have elapsed since the SEC adopted Exchange Act Rule 17a-4(f) governing electronic recordkeeping by broker-dealers. In an effort to update the rule to reflect “technology neutral” concepts, the SEC adopted...more

SEC Casts Wider Investment Adviser Net: May Ensnare Index and Other Providers

A June 15 release published by the SEC has requested public comment relevant to, primarily, the circumstances under which any of the following types of “information providers” should be deemed “investment advisers” for...more

SEC Proposes Fund ESG Disclosure Channels: Different ESG Strategies Must Row in Their Lanes

The SEC has proposed to require that mutual funds — including funds supporting variable insurance products — provide “consistent, comparable, and reliable” disclosure that is meaningful to investors about the role of...more

A Hailstorm for Private Fund Advisers? SEC Clouds the Horizon

On January 26, 2022, the SEC proposed amendments to Form PF including: • Requiring investment advisers to private equity funds and large investment advisers to certain hedge funds to provide current reporting of certain...more

Shortened Settlement Cycle Sprouts at SEC (T+1 for T+2)

Rule changes recently proposed by the SEC would shorten the time within which most securities transactions effected by a broker-dealer must be settled. Specifically, most settlements would be required to occur by the first...more

SEC Plants New Cybersecurity Regulations; Time Will Tell What Will Bloom

It’s planting season for the SEC, and among the seedlings is File Number S7-04-22, a proposed cybersecurity rule intended to increase regulation of advisers’ and investment companies’ cybersecurity preparedness. As currently...more

Big Changes Ahead for Private Funds? SEC Chair’s Transparent Intent

SEC Chair Gary Gensler closed out 2021 with remarks at a recent Institutional Limited Partners Association Summit, focusing on a number of issues facing private equity and hedge funds....more

SEC Deep-Sixes Offering Integration Test: New Rules Replace the Old Five Factors

SEC rule changes effective in March of this year have replaced the patchwork of guidance and rules developed over many decades to determine when securities offerings should be “integrated” with one another when deciding...more

New “Buffered” VA and VLI Investment Options: Will Compete With Index-Linked Options

At least two insurance companies are adding “buffered” investment portfolios to the lineup of underlying funds that are available to support their variable annuity and variable life insurance policies....more

New Era for Variable Product Fund Substitutions: SEC Removes Obstacles

About 20 years ago, the SEC began scrutinizing variable product fund “substitution” applications in ways that increased both the time required to obtain SEC approval and the conditions necessary to obtain such approval. The...more

Collective Investment Trust Muddle

SEC Divided on Securities Law Exemptions - SEC Commissioner Hester Peirce in October published an explanation of her dissent from an SEC enforcement action concerning certain collective investment vehicles established by a...more

A New Beginning for Fund Derivative Regulation

SEC Replaces Rather than Revises - In late October, the SEC approved a wholesale replacement for the patchwork of interpretive and no-action positions it had developed over more than 40 years to regulate fund use of...more

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