News & Analysis as of

Investment Company Act of 1940

Investment Adviser Compliance with SEC’s Amended Form ADV

by Winstead PC on

Beginning October 1, 2017, investment advisers filing Form ADV with the Securities and Exchange Commission (the “SEC”) must file using the amended form adopted by the SEC on August 25, 2016 (the “Amended Form ADV”). According...more

Capital Formation Bills Advance in the Senate

Last week, the Senate passed three bipartisan bills that promote access to capital for small businesses and startups. The Senate bills, the House corollaries of which originally passed on March 9, 2017, include the...more

Mutual Funds Should Consider Accelerating Filings in Advance of Increase in SEC Registration Fee Rate - August 2017

by Goodwin on

As a result of upcoming increases in securities registration fee rates applicable to mutual funds, funds with fiscal year ends of July or August and net sales should consider accelerating their annual Rule 24f-2 filings....more

ICI Requests Delay and Re-Examination of Liquidity Risk Management and Reporting Modernization Rules

by Dechert LLP on

In a letter to U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton, the Investment Company Institute (ICI) formally requested a delay and re-examination of certain elements of Rule 22e-4 under the Investment...more

SEC Issues Guidance on Initial Coin Offerings and Digital Assets

by Holland & Knight LLP on

The U.S. Securities and Exchange Commission (SEC) on July 25, 2017, issued a "Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO," weighing in on what are known as Initial Coin...more

Choice 2.0 and Its Impact on Business Development Companies

In April 2017, the full text of an updated version of the CHOICE Act (CHOICE 2.0) was released followed by a hearing on its contents. On June 8, 2017, the House Financial Services Committee released the draft of CHOICE 2.0, a...more

More Fund Companies Sanctioned for Misusing Fund Assets for Distribution

by Carlton Fields on

The SEC recently settled enforcement actions against William Blair and two Calvert companies for using mutual fund assets to pay distribution-related expenses in violation of Investment Company Act Rule 12b-1 and for certain...more

Eighth Circuit Says No Standing for Fund of Funds’ Shareholders Under Section 36(b)

On July 24, 2017, the U.S. Court of Appeals for the Eighth Circuit affirmed a district court ruling that a shareholder of a fund of funds lacks standing under Section 36(b) of the Investment Company Act of 1940, as amended...more

Blockchain and Digital Token Update: SEC Releases Investigative Report and Investor Bulletin

by Perkins Coie on

On July 25, 2017, the Securities and Exchange Commission (“SEC”) released groundbreaking materials relating to blockchain tokens. These materials provide significant and welcome insight to the SEC’s and its staff’s thinking...more

Investment Companies And Intrastate Offerings

by Allen Matkins on

SEC Rel. No. 33-4434, at 4 (Dec. 6, 1961) [26 FR 11896 (Dec. 13, 1961)Recently, my eye caught the following statement in the SEC’s Intrastate Offering Exemptions: A Small Entity Compliance Guide for Issuers...more

ETF Operational and Regulatory Environment Drives ETF Overisght Issues

by K&L Gates LLP on

Exchange-traded funds share many governance oversight characteristics with traditional mutual funds. While some ETFs have been structured as unit investment trusts that lack a board structure, most ETFs are classi¬ ed as...more

Fund Liquidity Risk Management Task Force

by Dechert LLP on

Implementing the U.S. Securities and Exchange Commission’s (SEC) fund liquidity risk management rules presents distinct challenges for open-end mutual funds and exchange-traded funds (ETFs), and compliance with the rules will...more

Real Estate Fund Advisers And Penumbra Registration

by Allen Matkins on

Last August, the Securities and Exchange Commission adopted amendments to Form ADV, the form used by investment advisers to register with the SEC and with the states. Included in these amendments were changes to allow...more

SEC Staff Relaxes Limitations under 1940 Act to Permit Certain Global “Master-Feeder” Arrangements, Although Obstacles Remain

by Dechert LLP on

The Staff of the U.S. Securities and Exchange Commission (SEC) on March 8, 2017 issued a no-action letter (Staff Letter) in response to a request from Dechert LLP for assurance under Section 12(d)(1) of the Investment Company...more

Court Applies “Fiduciary Exception” to Mutual Fund Trustees’ Attorney-Client Privilege

by Carlton Fields on

In Kenny v. Pacific Inv. Mgm’t Co. LLC (W.D. Wash.), a federal judge recently ruled that a mutual fund’s independent trustees must produce certain documents that the trustees had redacted or withheld based on attorney-client...more

SEC Staff Allows Brokers to Set Commissions for Mutual Fund “Clean Shares”

by Carlton Fields on

On January 11, the SEC staff issued an interpretive letter to the Capital Group (CG Letter) stating that Section 22(d) of the Investment Company Act does not prevent brokers from charging commissions for effecting...more

Cross Border Master-Feeder Arrangements: SEC Staff Slightly Expands Utility of Offshore Feeders for Global Investment Management...

by K&L Gates LLP on

On March 8, 2017, the staff of the Securities and Exchange Commission (“SEC”) granted no-action relief that potentially will permit global investment management firms to offer U.S. registered open-end management investment...more

Orrick's Financial Industry Week In Review

Financial Industry Developments - CFPB Proposes to Provide Flexibility in Collecting Information - On March 24, 2017, the Consumer Financial Protection Bureau ("CFPB") released a proposal to amend Equal Credit...more

SEC Division of Investment Management Issues Guidance on Holding Companies and the Transient Investment Company Rule Under the...

Earlier this month, the SEC Division of Investment Management issued guidance with respect to situations in which an operating company may find that, upon the occurrence of an extraordinary event, it meets the definition of...more

Financial Services Weekly News - March 2017 #5

by Goodwin on

Editor's Note - In This Issue. The Securities and Exchange Commission (SEC) was active this week, moving to shorten the settlement cycle for broker-dealer transactions from T+3 to T+2 and issuing updated guidance...more

"Another Mutual Fund Adviser Prevails at Trial in Excessive Fee Litigation"

Following a four-day bench trial, Judge Renee Marie Bumb of the U.S. District Court for the District of New Jersey ruled in favor of an adviser on claims brought under Section 36(b) of the Investment Company Act by investors...more

Capital Formation Bills Approved by House and Senate Committees

On March 9, 2017, a number of bipartisan bills designed to promote capital raising for companies were approved by the House Financial Services Committee and the Senate Committee on Banking, Housing and Urban Affairs. ...more

Federal Court Issues Trial Ruling in Section 36(b) “Manager of Managers” Lawsuit: Second Consecutive Opinion Finding Plaintiffs...

by Dechert LLP on

The U.S. District Court for the District of New Jersey recently issued its post-trial ruling in Kasilag et al. v. Hartford Investment Financial Services, LLC et al. The Hartford ruling is the second post-trial Section 36(b)...more

SEC Issues Guidance to Ease Fund Implementation of “Clean Shares”

In January, we authored a post discussing an SEC no-action letter, dated January 11, 2017, to Capital Group (the “Capital Group Letter”), the parent company of American Funds. In the Capital Group Letter, the SEC agreed that...more

Personal Advice for Robo-Advisers: Beef Up Disclosure and Compliance

by Morrison & Foerster LLP on

Robo-advisers, those automated bots that offer up personalized investment advice with little, if any, human contact, face increased regulatory scrutiny as they grow more popular. After monitoring and engaging them for...more

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