Investment Company Act of 1940

News & Analysis as of

Sutherland Submits Comment Letters on Two SEC Rulemaking Projects Pertinent to Business Development Companies

In response to requests for comment from the U.S. Securities and Exchange Commission (SEC), Sutherland Asbill & Brennan LLP recently submitted comment letters on two SEC rulemaking projects pertinent to business development...more

The Grisly Death of Determination Letters for Individually Designed Plans

The Internal Revenue Service (IRS) announced last year that it would end its staggered five-year remedial amendment cycle system for individually designed retirement plans under the determination letter program due to...more

SEC Staff Issues No-Action Letter on Index Fund Investments in Insurance Companies and Securities Related Businesses

SEC staff expands upon prior no-action positions to permit funds that track a third-party index to invest in insurance companies and securities related businesses beyond the limitations set forth in Sections 12(d)(2) and...more

Life and Annuity Series: Significant Litigation Risks

WilmerHale Partner Charles Platt, a leading commercial litigator who is recognized nationally for his work defending financial services and insurance companies, periodically drafts legal news alerts for clients about the life...more

Three Bills Introduced in the U.S. House of Representatives Concerning Access to Capital Markets

On March 23, 2016, three bills affecting access to capital markets were introduced in the U.S. House of Representatives. H.R. 4850: Micro Offering Safe Harbor - Representative Tom Emmer of Minnesota introduced this...more

U.S. Money Market Fund Reform: Diversification, Stress Testing and Disclosure Compliance Deadline Quickly Approaching; SEC Staff...

The April 14, 2016 compliance date for certain new money market fund (money funds) requirements adopted by the U.S. Securities and Exchange Commission (SEC) is quickly approaching. In particular, money funds will be required...more

Credit Risk Transfer: Making a Successful Program Even Better

On February 10, Howard Altarescu participated in the Urban Institute / CoreLogic Sunset Seminar, “Credit Risk Transfer: Making a Successful Program Even Better.” The presentation outlined the importance of credit risk...more

SEC Staff Publishes its Views on Oversight of Certain Payments to Financial Intermediaries

The staff of the U.S. Securities and Exchange Commission (SEC) Division of Investment Management (Staff) published a Guidance Update on January 6, 2016 related to mutual fund distribution and sub-accounting fees. In the...more

The Investment Company Act And Roy M. Cohn

Last week, UFCW Local 1500 Pension Fund filed a class action and derivative lawsuit against Yahoo! Inc., its board of directors and some of its current and former officers.  (N.D. Cal. Case No. 3:16-cv-00478-RS).  According...more

SEC Staff Issues Guidance on Mutual Fund Distribution Arrangements

Recently issued SEC staff guidance reminds mutual fund directors of their obligations to evaluate fund payments to financial intermediaries and emphasizes investment advisers’ and other service providers’ obligation to...more

SEC Provides Long-Awaited Guidance on Fund Distribution and Sub-Accounting Fees

Guidance Update No. 2016-01, published this month by the SEC’s Division of Investment Management, provides extensive guidance concerning the possibility that payments from mutual funds are being used to promote sales of the...more

SEC Proposes Rule Related to Use of Derivatives and Financial Commitment Transactions by Regulated Funds

In December 2015, the Securities and Exchange Commission (the SEC) proposed a new Rule 18f-4 under the Investment Company Act of 1940 (the 1940 Act) that would, if adopted, affect the ability of mutual funds, exchange-traded...more

SEC 2016 Examination Priorities Focus on ETFs, Cybersecurity and Liquidity Controls for Fixed-Income Funds

On January 11, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) released its 2016 examination priorities for investment companies, investment advisers, broker-dealers and...more

California’s Bizarre Voting Record Disclosure Requirements

Section 711 of the California Corporations Code is so poorly drafted that it almost defies explanation. According to the legislature’s findings, the ostensible purpose of the statute is to facilitate the informed and active...more

SEC Proposes New Limits on Funds’ Use of Derivatives

On December 11, 2015, the Securities and Exchange Commission (“SEC”) proposed new Rule 18f-4 under the Investment Company Act of 1940, as amended (“1940 Act”) to reduce leverage risks associated with derivatives and to...more

SEC Proposes New Framework for Regulating Funds’ Use of Derivatives and Leverage

On December 11, 2015, the Securities and Exchange Commission (Commission) proposed a rule that, if adopted, would rescind nearly 30 years of Commission and staff guidance that is currently relied upon by most mutual funds,...more

SEC Proposes Derivatives Regulation Affecting Liquid Alternative Mutual Funds

On December 11, 2015, the Securities and Exchange Commission (the “SEC”) proposed a new rule that would regulate the use of derivatives by investment companies registered under the Investment Company Act of 1940, as amended...more

SEC Proposes New Rule Governing Funds' Use of Derivatives

The proposed rule would establish the exclusive means through which funds could enter into certain leveraged transactions, including swaps, futures, reverse repurchase agreements and short sales. At an open meeting of...more

SEC Proposes Limits on Fund Use of Derivatives and Leverage

The Securities and Exchange Commission (the “Commission”) today voted, by a three-to-one margin, to propose rules that would limit the amount of leverage that mutual funds may obtain through derivatives. The proposals also...more

SEC Issues Report on Increasing Use of Outsourced Chief Compliance Officers

In November 2015, the Securities and Exchange Commission (SEC) released its Outsourced CCO Initiative Report. The report addressed the increased trend of outsourcing compliance activities to third-party consultants within the...more

SEC Amends Rule 2a-7 to Eliminate References to NRSRO Ratings and to Revise Issuer Diversification Requirements

The U.S. Securities and Exchange Commission (SEC) recently adopted amendments (Amendments) to remove references to credit ratings in Rule 2a-7 under the Investment Company Act of 1940, as amended (1940 Act), the primary rule...more

SEC Finalizes Regulation Crowdfunding

The United States Securities and Exchange Commission has issued final rules on Regulation Crowdfunding. Our summary is set forth below. The final rules and forms are effective 180 days after publication in the Federal...more

Following the Wisdom of the Crowd? A Look at the SEC’s Final Crowdfunding Rules

In this alert, we provide a detailed overview of the final rules, Regulation Crowdfunding, which will be applicable to crowdfunding offerings conducted in reliance on Section 4(a)(6) of the Securities Act of 1933 as amended...more

A Compilation of Enforcement and Non-Enforcement Actions

Non-Enforcement - SEC Decides Against Mounting an Appeal in Koch Ruling - The July 2015 ruling by the D.C. Circuit Court in Koch v. SEC will apparently not be challenged by the SEC. The Court ruled in that...more

U.S. SEC Proposes Liquidity Risk Management Programs, Optional “Swing Pricing,” and Liquidity Reporting for Mutual Funds and...

On September 22, 2015, the Securities and Exchange Commission (“SEC”) proposed a new rule and amendments to rules and reporting forms under the Investment Company Act of 1940 (the “1940 Act”), designed to standardize...more

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