News & Analysis as of

Investment Company Act of 1940

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

Efficiency at What Cost? Advantages of a Separate Board for ETFs

by WilmerHale on

Exchange-traded fund (ETF) products and sales have proliferated dramatically in the past five years and the trend promises to continue. It is no surprise then that established mutual fund companies have been eager to enter...more

SEC Staff Clarifies Application of 1940 Act Section 22(d) to Brokers Selling Clean Shares of Mutual Funds

by Dechert LLP on

In response to a request for interpretative guidance, the U.S. Securities and Exchange Commission staff (staff) advised on January 11, 2017 that Section 22(d) of the Investment Company Act of 1940 does not prevent a broker...more

Debt Dialogue: January 2017

This month’s issue of Debt Dialogue address handover of records to a substitute collateral manager (in the Tilton litigation), the EU bail-in rules, the interplay of Section 3(c)(7) of the Investment Company Act and rights of...more

Effects of the DOL Fiduciary Rule Reach Mutual Fund Industry

The Department of Labor finalized the so-called “Fiduciary Rule” in April 2016 and announced it would go into effect in April 2017. Since the finalization of the Fiduciary Rule, the annuities, brokerage, and advisory...more

Mutual Funds Come Clean: Brokers Can Set Fund Share Sales Charges

by Morrison & Foerster LLP on

The staff of the SEC’s Division of Investment Management effectively allowed brokers to determine the commissions they will charge their customers who buy “Clean Shares” of mutual funds. In a “no-action” letter...more

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

by Perkins Coie on

The SEC’s Division of Investment Management issued a no-action letter on January 11, 2017 explicitly permitting brokers to set their own commission rates for sales of so-called “clean shares” of mutual funds. Previously, as...more

New Year, Similar Priorities: SEC Announces 2017 OCIE Areas of Focus

On January 12, 2017 the SEC announced its Office of Compliance Inspections and Examinations (OCIE) priorities for the year, including areas of focus for Retail Investors, Senior Investors and Retirement Investments,...more

Regulatory Update and Recent SEC Enforcement Actions

by Blank Rome LLP on

FINRA Bar Results from Assertion of Fifth Amendment Right against Self-Incrimination in Criminal Action - On October 5, 2016, the Financial Industry Regulatory Authority (“FINRA”) barred an indicted investment adviser,...more

My 2017 Crowdfunding Wish List

by Freeborn & Peters LLP on

2016 brought with it many developments in the crowdfunding industry, most notably the introduction of the long-awaited Title III crowdfunding rules. While admittedly not all crowdfunding legislation passed this year was as...more

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