Investment Company Act of 1940

News & Analysis as of

SEC Adopts Money Market Fund Reforms

At a meeting held on July 23, 2014, the SEC voted 3-2 to adopt amendments (the “Amendments”) to various regulatory requirements affecting money market funds (“MMFs”). The Amendments, which are set forth in SEC Release No....more

SEC Proposes Removing Credit Rating References and Amending Issuer Diversification Requirement

On July 23, the SEC re-proposed amendments, initially proposed in March 2011, related to the removal of credit rating references in rule 2a-7 and Form N-MFP of the Investment Company Act. The re-proposed amendments would...more

SEC Adopts Floating NAV and Liquidity Fees/Redemption Gates Rules for Money Funds

On July 23, 2014, the Securities and Exchange Commission (the SEC) adopted final rules governing the structure and operation of money market funds. These rules are discussed in a release adopting amendments to Rule 2a-7 under...more

SEC Adopts Amendments to Money Market Fund Rules

The Securities and Exchange Commission (SEC) today adopted long-awaited and highly anticipated amendments to rules under the Investment Company Act of 1940 (the 1940 Act) governing money market funds. ...more

Director of SEC’s Division of Investment Management Provides Insights into Agency’s View of Alternative Mutual Funds and Focus of...

On June 30, 2014, in remarks to the Practising Law Institute’s Private Equity Forum, Norm Champ, Director of the SEC’s Division of Investment Management, addressed the increase in the number of mutual funds that use...more

SEC to Revise “Accredited Investor” Definition — for Better or Worse?

In connection with the duties imposed on it by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC is set to come out with further revisions to the definition of “accredited investor” in July 2014. Under...more

SEC Releases Guidance on Affiliated Transactions of Series Investment Companies

On June 6, the Securities and Exchange Commission’s Division of Investment Management released a Guidance Update clarifying that separate series of a series investment company are each considered an individual company for the...more

Fair Valuation and Mutual Fund Directors: Alternative Approaches to Valuation

Directors’ legal responsibilities for valuing portfolio securities is a logical place to start an examination of why misvalued securities pose a risk to independent directors. This Client Alert therefore considers the...more

SEC Staff Provides Guidance on Affiliated Person Determinations for Series Investment Companies

The staff of the SEC’s Division of Investment Management issued IM Guidance Update No. 2014-6 in which it advises registered funds organized as series of a “series company” that compliance with the affiliated transactions...more

The "Inadvertent" Investment Company Trap: Identifying Operating Companies Subject to the Investment Company Act

The Investment Company Act of 1940 (the "Act") was enacted by Congress to protect members of the U.S. public from potential abuses resulting from pooled investments in companies that are primarily engaged in the business of...more

"Parallel Fund Structures Under the Volcker Rule"

Skadden was one of 15 law firms that participated in the development of a recently released consensus interpretation letter regarding the ability of non-U.S. banking entities to invest in certain parallel funds organized by...more

SEC Staff Provides Guidance on Fund Deregistration Applications

The staff of the SEC’s Division of Investment Management (the “Staff”) issued IM Guidance Update No. 2014-5, which provides guidance on responding to selected items in Form N-8F, the from used to apply for deregistration...more

SEC Requests Comment on FINRA Rules

The Securities and Exchange Commission is requesting comments from the public on two proposals from the Financial Industry Regulatory Authority, Inc. First, FINRA proposed to amend FINRA Rule 2210 (Communications with the...more

A Compilation of Actions - April 01, 2014

In a recent SEC no-action letter (RS Global Natural Res. Fund, SEC no-action letter, available 3/6/14), the SEC stated that it would take a non-enforcement position if a SEC registered investment adviser to a fund registered...more

U.S. Fund Litigation Update: Where We are Now and Where We Could be Headed

Five years removed from the credit crisis and “great recession” of 2008, the U.S. fund industry still faces substantial litigation risk, both in terms of ongoing cases that challenge the core of the advisory/sub-advisory...more

SEC Staff Grants No-Action Relief to Permit Fund to Implement Subadvisory Arrangement Prior to Shareholder Approval

The staff of the SEC’s Division of Investment Management granted no-action relief from Section 15(a) of the Investment Company Act of 1940, as amended (the “1940 Act”), that will permit a registered fund (the “Fund”) to enter...more

SEC Issues No-Action Letter on the Definition of Knowledgeable Employee

On February 7, 2014 the staff of the Division of Investment Management of the Securities and Exchange Commission (the “SEC”) issued a no-action letter to the Managed Funds Association (the “No-Action Letter”), providing...more

A Compilation of Non-Enforcement Actions - 03/03/14

SEC Reminds Funds That Shareholders Should Be Allowed to Vote on Each Material Amendment to Charter Documents - The Staff of the Division of Investment Management has issued guidance to funds reminding them that when...more

Financial Services Bulletin: Action At The SEC And FRB

SEC releases Guidance Expanding Knowledgeable Employee Categories - On Thursday, February 6, 2014, the Securities and Exchange Commission (the “SEC”) released guidance regarding who qualifies as a “knowledgeable...more

SEC Staff Grants No-Action Relief to Affiliated Securities Lending Agent

The staff of the SEC’s Division of Investment Management granted no-action relief from Section 17(e)(1) of the Investment Company Act of 1940 (the “1940 Act”) to permit an affiliated securities lending agent to negotiate...more

SEC Staff Provides Additional Guidance for Private Fund Advisers on “Knowledgeable Employees”

The staff of the SEC’s Division of Investment Management (the “Staff”) provided additional guidance (the “Guidance”) on the scope of the “knowledgeable employee” category of investors who may be disregarded in determining...more

"SEC Provides Updated Guidance on ‘Knowledgeable Employee’ Status Under the Investment Company Act of 1940"

On February 6, 2014, the Division of Investment Management of the Securities and Exchange Commission (the “SEC”) issued a no-action letter to the Managed Funds Association (the “MFA No-Action Letter”) providing updated...more

SEC Proposes Rules To Amend Regulation A

On December 18, 2013, the Securities and Exchange Commission (the “SEC”) released proposed rules to amend Regulation A to provide for the offering of up to $50 million in securities. Regulation A is a quasi-public offering...more

California’s New Rule for Private Fund Advisers Will Result in Significant New Requirements and Restrictions for Many Real Estate...

On August 27, 2012, the California Department of Corporations adopted a new Rule 206.204.9, which was intended to encourage capital investment in private investment funds by providing an exemption from investment adviser...more

Legal Alert: The Volcker Rule: The Rising Appeal of Registered Investment Companies and BDCs

On December 10, 2013, the U.S. Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission, and the Securities and Exchange Commission...more

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