SEC Extends Compliance Date for Some Requirements of the Liquidity Risk Management Rule and Related Disclosure Requirements – Additional Guidance and FAQs

by Ropes & Gray LLP
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On February 22, 2018, the SEC adopted an interim final rule (the “IFR”) that extends, for six months, the compliance date for some of the requirements of Rule 22e-4 under the 1940 Act (the “Liquidity Rule”) and related disclosure requirements (collectively, the “Liquidity Rule Requirements”). Most notably, the IFR provides a six-month extension for compliance with these Liquidity Rule Requirements:

  • Classification of a fund’s portfolio investments into one of four liquidity categories (“bucketing”)
  • Determination of a fund’s highly liquid investment minimum (“HLIM”)
  • Board approval of a liquidity risk management (“LRM”) program

The IFR does not extend the compliance date for establishing an LRM program. The IFR also does not extend the compliance date for the Liquidity Rule’s 15% illiquid investments limit.

The Liquidity Rule Requirements for which the IFR provides an extended compliance date, as well as the Liquidity Rule Requirements for which the compliance date remains unchanged, are summarized below in section B.1

In addition, because the IFR does not extend the compliance date for the Liquidity Rule’s 15% illiquid investments limit, the IFR provides guidance to (i) In-Kind ETFs, which are not required to classify their portfolio investments under the Liquidity Rule, and (ii) funds not engaging in portfolio classification during the six-month period, regarding compliance with the 15% limit. This guidance is summarized below in section C.

Finally, concurrent with the adoption of the IFR, the staff of the SEC’s Division of Investment Management expanded its posted FAQs that respond to questions about the Liquidity Rule Requirements. The new FAQs are also summarized below in section D.

A. Rationale for the Extended Compliance Date and Request for Comments

In the IFR, the SEC stated that its decision to defer the compliance date for some Liquidity Rule Requirements was based upon its findings that (i) the absence of available market data for certain classes of assets will require funds to rely heavily on service providers for tools and systems for liquidity classification and reporting, but these tools and systems were unlikely to be fully developed and tested by the original December 1, 2018 compliance date, (ii) implementation of service provider and fund systems requires additional time for funds to refine and test systems, classification models and liquidity data and (iii) funds face compliance challenges due to remaining interpretive questions about the Liquidity Rule Requirements, which may require additional guidance. The IFR suggests that the SEC underestimated the extent to which fund groups would rely on service providers to satisfy the Liquidity Rule Requirements.2 The IFR stated that these “are matters that were not anticipated in the Adopting Release” and that, collectively, these matters “justify a six-month delay limited to the classification and related requirements.”

Separately, the IFR seeks public comment on the extended compliance date it provides. Comments must be received by the SEC no later than April 27, 2018.

B. Extended and Non-Extended Liquidity Rule Requirements

The following chart identifies the Liquidity Rule Requirements for which the IFR extends the compliance date by six months. For funds that, together with other funds in the same “group of related investment companies,” hold net assets of at least $1 billion (“larger fund complexes”), the extended compliance date is June 1, 2019. For smaller fund complexes, the extended compliance date is December 1, 2019.

Extended Liquidity Rule Requirements 
 1. Classification of the fund’s portfolio investments into one of four liquidity categories
 2. Determination a fund’s HLIM
 3. Board approval of the LRM program of a fund or In-Kind ETF
 4. Annual report to the board regarding the LRM program
 5. Recordkeeping requirements related to items 1 – 4, above
 6. Form N-LIQUID Part D (non-public notification to the SEC if a fund’s highly liquid investments decline below its HLIM for more than seven consecutive calendar days)
 7. Form N-PORT Items B.7, B.8, and C.7 (information about a fund’s HLIM and the classification of its portfolio investments)3

The following chart identifies the Liquidity Rule Requirements for which the compliance date is not extended by the IFR. The compliance date for these requirements remains December 1, 2018 for larger fund complexes and June 1, 2019 for smaller fund complexes.

Non-Extended Liquidity Rule Requirements
1. Establishing an LRM program for assessing, managing and periodically reviewing a fund’s liquidity risk
2. Limiting a fund’s or In-Kind ETF’s investments in illiquid “investments that are assets” to no more than 15% its net assets4
3. Adopting policies and procedures for in-kind redemptions, if the fund engages in, or reserves the right to engage in, redemptions in kind
4. Board designation of the person(s) to administer the LRM program (the “program administrator”)
5. Recordkeeping requirements related to items 1 – 4, above
6. Form N-LIQUID Parts A, B and C (general information about the fund, non-public SEC notice that a fund exceeded the 15% limit, and non-public SEC notice from a fund that exceeded the 15% limit and filed a Form N-LIQUID that the fund no longer exceeds the 15% limit)
7. Form N-CEN, including Item C.20 (use of lines of credit, interfund lending/borrowing), Item E.5 (an ETF’s status as an In-Kind ETF may be noted as “N/A” until funds are required to comply with the extended Liquidity Rule Requirements)

Note: The staggered compliance dates for the Liquidity Rule Requirements may raise some additional implementations questions or challenges. For example, some fund boards may want to be comfortable with the LRM programs implemented in December, notwithstanding the fact that board approval is not required until six months later. Funds that take advantage of the staggered dates will undergo two operational transitions and need to implement an interim program.

C. 15% Illiquid Investments Limit

The IFR does not affect the compliance date of the Liquidity Rule’s 15% illiquid investments limit. The IFR notes that funds have experience following the SEC’s longstanding guidance to limit an open-end fund’s aggregate holdings of illiquid assets to no more than 15% of the fund’s net assets.  The IFR describes the following “reasonable method” to assist In-Kind ETFs, which are not required to classify their portfolio investments under the Liquidity Rule, and funds not engaging in full portfolio classification during the six-month compliance extension, to identify illiquid investments for purposes of complying with the Liquidity Rule’s 15% illiquid investments limit without engaging in full portfolio classification during the interim period. According to the SEC:

  • Based on prior experience, a fund could preliminarily identify certain asset classes or investments that the fund reasonably believes are likely to be illiquid (“preliminary evaluation”). Investments in asset classes that the fund does not reasonably believe are likely to be illiquid would not have to be classified when performing the preliminary evaluation. A fund could determine that certain investments identified in these asset classes that it acquires are illiquid based solely on the preliminary evaluation, and not engage in any subsequent analysis.
  • Alternatively, if a preliminary evaluation indicates that there is a reasonable basis for believing that an investment is likely to be illiquid, and the fund wishes to further revisit this conclusion, as a second step, the fund may determine whether that investment is illiquid through the full classification process set forth in the Liquidity Rule.
  • In a preliminary evaluation, it would not be reasonable to assume that a fund is only selling a single trading lot when looking at the market depth of the investment or asset class. However, a fund would not be required to evaluate the actual size of its holdings, or engage in the full process of evaluating its reasonably anticipated trading size. Instead, in the preliminary evaluation, a fund could use any reasonable method to evaluate the market depth of the investment or asset class as likely being illiquid.
  • While an investment’s illiquid status is generally evaluated upon acquisition (and, thereafter, at least monthly), subsequent events may justify a re-evaluation of an investment’s liquidity. A reasonable approach for event-driven re-evaluations could be to identify in the fund’s policies and procedures certain objective events that the fund reasonably expects would materially affect the investment’s classification.
  • Finally, while the foregoing guidance is a reasonable approach for a fund or an In-Kind ETF to help monitor compliance with the 15% illiquid investments limit, other reasonable approaches may be employed.

D. Liquidity Rule Additional FAQs

As noted above, concurrent with the adoption of the IFR, the SEC staff expanded its posted FAQs that respond to questions about the Liquidity Rule Requirements (a prior Ropes & Gray Alert describes the staff’s first set of FAQs concerning the Liquidity Rule posted in January). The SEC staff’s views expressed in the new FAQs are summarized below.

1. Liquidity Classifications Based on Asset Class

The Liquidity Rule permits a fund to classify and review portfolio investments, including derivatives, according to their asset classes, provided that, if the fund or its adviser has information that is reasonably expected to significantly affect the liquidity characteristics of an investment compared to the fund’s other portfolio holdings within the same class, the fund must separately classify and review the “flagged” investment.

A fund that classifies its investments by asset class may identify liquidity characteristics it reasonably expects would signify an investment’s significant departure from the range of liquidity characteristics present within its asset class. Thus, different investments within an asset class may be expected to exhibit a range of varying liquidity profiles. Not every deviation in an investment’s liquidity characteristics from those of the range of other liquidity characteristics within its asset class should trigger separate review and classification. Instead, only deviations that are reasonably expected to significantly affect the liquidity characteristics of an investment should be flagged for a reclassification review.

A fund relying on an asset class method of classification should include in its policies and procedures a reasonable framework to flag exceptions. The framework may include processes that are automated. A fund employing a reasonable framework may generally rely on the results of automated processes, thereby avoiding the need to subsequently justify every classification on a CUSIP-by-CUSIP basis. In all cases, a fund relying on a reasonable framework should conduct periodic testing of the framework and processes as part of the required review of the adequacy and effectiveness of the LRM program’s implementation.

There is no presumption that a fund that identifies a potential exception must necessarily reclassify a flagged investment. Upon further review, a fund could conclude that classification of the flagged investment with other investments in the same asset class remains appropriate – even if the liquidity characteristics of the flagged investment have changed – based on the fact that the flagged investment’s liquidity is consistent with the liquidity classification used for the asset class as a whole.

2. Reasonably Anticipated Trading Size Issues

A fund that classifies the liquidity of its investments based on asset classes is required by the Liquidity Rule to determine whether trading varying portions of a position in a particular asset class, in sizes that the fund would reasonably anticipate trading, is reasonably expected to significantly affect its liquidity, and if so, the fund must take this determination into account when classifying the liquidity of that asset class. If a fund determines that a particular asset class is appropriate, a fund could arrive at reasonably anticipated trading sizes for all of its investments within that asset class, and use those reasonably anticipated trading sizes in classifying all of its investments in that asset class.

If, within an asset class, there are investments of widely different position sizes (as a portion of the fund’s portfolio), the fund should consider whether using fixed-dollar amounts to measure anticipated trading sizes is a reasonable approach (instead of using percentages represented by full positions) because using fixed-dollar amounts of investments of widely different position sizes may not represent reasonably anticipated trading sizes.

Separately, determining the trading sizes that the fund reasonably anticipates trading does not require a fund to predict which specific investments are to be sold in advance or to consider actual trades executed for reasons other than meeting redemptions. This reflects the fact that a fund may sell portfolio positions for reasons that are unrelated to meeting investor redemptions or liquidity risk management. A fund may make reasonable assumptions about the sizes that it will reasonably anticipate trading and use that assumed size in its classification process. Thus, a fund could continue to use an assumed reasonably anticipated trading size even if a fund plans, in the near future, to fully liquidate a position for investment reasons.

In determining a reasonably anticipated trading size (for each portfolio investment or asset class, as the case may be) a fund should not attempt to predict its future portfolio management decisions related to meeting redemptions. Instead, a fund should estimate a portion of an investment that it reasonably believes it could choose to sell to meet redemptions. It may be appropriate for a fund to make simplifying assumptions in making these estimates to arrive at reasonably anticipated trading size assumptions. For example, a fund could conclude that selling a pro rata portion of all of its portfolio investments in response to a redemption is a reasonable base assumption to determine reasonably anticipated trading sizes. A fund also could incorporate other assumptions into the analysis. While the Liquidity Rule requires a fund to make assumptions about the sizes that the fund would anticipate trading in a reasonable manner, the Liquidity Rule does not mandate any particular method for making these assumptions. Nonetheless, a zero or near-zero reasonably anticipated trade size would not be a reasonable assumption because it sidesteps the requirement that a fund determine whether trading a position in sizes that the fund would reasonably anticipate trading is reasonably expected to significantly affect the position’s liquidity (and if so, the fund must take this determination into account when classifying the liquidity of that investment or asset class).

3. Price Impact Standard

To classify the liquidity of its portfolio investments, a fund must consider the period it would take to convert to cash, or sell or dispose of the investment without causing a “significant change in market value.” A fund has flexibility to define what constitutes a significant change in market value in its policies and procedures. These price impact assumptions are understood to be subjective. What constitutes a significant change in market value may vary by fund, asset class or investment. A fund is not required to rely on a fixed-dollar amount or percentage to derive its price impact assumption.

4. Classifying Investments in Pooled Investment Vehicles

For purposes of classifying the liquidity of a fund’s investments in other pooled investment vehicles (“pools”), a fund may focus on the liquidity of the pool’s shares or interests. For investments in pool shares that trade on exchanges, it may be appropriate for a fund to evaluate liquidity (i) in a manner similar to how the fund would evaluate the liquidity of other exchange-traded investments and (ii) to “look through” to the pool’s portfolio investments only when the fund has reason to believe that the look-through could materially affect its view of the liquidity of the pool’s shares or interests.

For pools that offer redeemable securities or withdrawal rights, a fund generally would focus on the pool’s ordinary redemption rights or practices, and look through to the pool’s portfolio investments only when the fund has reason to believe that the pool may be unable to meet redemptions or honor withdrawal rights following its customary practice.

5. Provisional Investment Classification Activity and Related Compliance Monitoring

A fund is required to monitor compliance with its HLIM and the 15% illiquid investments limit. Several factors may affect a fund’s compliance with these requirements, including a change in the value or size of an existing investment, the acquisition of a new investment and the reclassification of an existing investment. A fund should calculate the value of existing investments in conjunction with its daily computation of its NAV. A fund should classify newly acquired investments and reclassify existing investments under the circumstances described below under “Timing and Frequency of Classification of Investments.” Monitoring for compliance does not require a fund to reclassify its existing investments each day because the fund may use the classifications that it last verified and determined as part of this monitoring process (generally the last-reported classification on Form N-PORT).

A “provisional classification” is any liquidity classification other than a final classification determination reported to the SEC on Form N-PORT or verified reclassification made pursuant to intra-month compliance monitoring. Use of provisional classifications is not mandatory. A provisional classification could include any form of liquidity classification that a fund chooses to use as part of its LRM program. A fund may conclude that a voluntary provisional classification may assist it in assessing and managing its liquidity risk. It also may be helpful in a fund’s efforts to enhance its LRM program. A fund may employ other means of assessing and managing liquidity risk that are not required by the Liquidity Rule (especially in connection with assessing the liquidity of portfolio investments), and the Liquidity Rule is not intended to dissuade a fund from employing LRM program practices, which a fund finds helpful, that go beyond the Liquidity Rule’s express requirements.

A fund should review provisional classifications (if used) and compliance monitoring results that indicate the fund may have fallen below its HLIM (if applicable) or exceeded the 15% illiquid investments limit in a manner consistent with the fund’s reasonably designed policies and procedures. If the fund concludes that the fund has in fact fallen below its HLIM or exceeded the 15% limit, based on compliance monitoring or finalizing a provisional classification according to its policies and procedures, the fund would be subject to the applicable reporting requirements.

6. Timing and Frequency of Classification of Investments

The Liquidity Rule does not specify when a fund must initially classify a newly acquired portfolio investment, but does require a review, at least monthly, of the classification status of the fund’s portfolio investments. The staff would not object if a fund classifies a newly acquired portfolio investment, or considers for reclassification an investment in which the fund has increased or decreased its position, during its next regularly scheduled monthly classification, except as noted below with respect to intra-month re-evaluations and illiquid investments.

As discussed in section III.C.5 of the Liquidity Rule’s adopting release, a fund generally is not required to reassess its portfolio investments’ liquidity classifications on an intra-month basis. The Liquidity Rule instead requires an intra-month re-evaluation of a liquidity classification if a fund becomes aware of “changes in relevant market, trading and investment-specific considerations” that “are reasonably expected to materially affect one or more of its investments classifications.” This intra-month review requirement does not create a de facto ongoing review requirement for classification. The staff would not object if (i) a fund complies with the intra-month review obligation by specifying in its policies and procedures events that it reasonably expects would materially affect an investment’s classification and (ii) policies and procedures limit such events to those that are objectively observable. In addition, following the occurrence of such an event, a fund must review and determine whether to reclassify only those investments that the fund reasonably expects to be materially affected by the event.

7. Pre-Trade Activity and the 15% Limitation on Illiquid Investments

A fund is not required to classify an investment that it is purchasing (or considering purchasing) on a pre-trade basis. The Liquidity Rule requires a fund to “classify each of the fund’s portfolio investments” and review those classifications at least monthly.

A fund should implement reasonably designed policies and procedures to limit illiquid investments so that the fund will not acquire any illiquid investment that would cause it to exceed the 15% limit. However, as noted above, a fund is not required to engage in pre-trade classification. A reasonable method for a fund to comply with the 15% illiquid investments limit with respect to intra-month acquisitions is to preliminarily identify certain asset classes or investments that the fund reasonably believes are likely to be illiquid (“preliminary evaluation”). The fund could base this reasonable belief on its prior trading experience, understanding of the general characteristics of the asset classes it is preliminarily evaluating, or through other means. A fund could choose to determine that certain investments identified in such asset classes that it purchases are illiquid based solely on this preliminary evaluation, and not engage in any further analysis at the time of purchase.

Alternatively, if the preliminary evaluation establishes a reasonable basis for believing that an investment is likely to be illiquid, but the fund wishes to evaluate its status, the fund may then, as a secondary step, determine whether it is an illiquid investment using the classification process within the Liquidity Rule. Investments in asset classes the fund acquires that it does not reasonably believe are likely to be illiquid would not need to be classified when performing this preliminary analysis. As part of its monthly classification review, a fund would review the liquidity of all of its holdings, including all new acquisitions.

As discussed in the IFR, In-Kind ETFs should also review the illiquid status of their investments at least monthly, or more frequently in certain circumstances.

A fund could automate the preliminary evaluations of asset classes or investments, and the fund could base the evaluation on the general characteristics of the investments the fund purchases. In establishing the list of asset classes or investments that the fund believes have a reasonable likelihood of being illiquid, the fund could take into account the trading characteristics of the investment and use such characteristics to form the reasonable belief of illiquidity.

In evaluating the likelihood of an asset class or investment being illiquid, it would not be reasonable to assume that a fund is only selling a single trading lot when looking at the market depth of the asset or class. However, a fund would not be required to evaluate the actual size of its portfolio holdings in the asset class or engage in the full process of evaluating its reasonably anticipated trading size for the asset class. Instead, in the preliminary evaluation, a fund could use any reasonable method to evaluate the market depth of the asset classes or investments it identifies as likely to be illiquid.

As noted above (in #1), a fund making use of a preliminary evaluation, or using automated processes, should conduct periodic testing of its evaluation framework and processes as part of the required review of the adequacy and effectiveness of the LRM programs’ implementation.

Funds may use other reasonable approaches, as well. For example, a fund often will not be at risk of violating the 15% limit when it acquires illiquid investments if a fund’s current percentage of illiquid investments is well below 15% and, therefore, an acquisition of an illiquid investment generally may not cause the fund to exceed the 15% limit (unless the investment’s size in relation to the fund’s net assets were quite large). Accordingly, a reasonable approach may be for the fund’s policies and procedures to require additional monitoring in reviewing acquisitions as the fund’s percentage of illiquid investments increases. For example, if an acquisition could cause a fund to exceed the 15% limit, the fund’s procedures could prohibit the acquisition of (i) investments within certain asset classes that the fund deems to be presumptively illiquid, regardless of position size (e.g., investments that have restrictions on transferability), (ii) additions to investments that the fund has classified as illiquid investments as of the most recent finalized classification for each investment and/or (iii) investments the fund has provisionally classified as illiquid investments.

8. Related Reporting Requirements

As a general matter, the Liquidity Rule provides that a reportable event (to the board and/or using Form N-LIQUID) occurs when a fund exceeds the 15% limit on illiquid investments or has fallen below its HLIM (if applicable). A fund may potentially exceed a limit if, for example, the fund’s policies and procedures require a fund to determine whether to reclassify an investment when a third-party service provider’s system or a sub-adviser reclassifies one or more of a fund’s investments. Similarly, a provisional classification may indicate a liquidity issue, but the fund has not yet verified and made a final determination. In these circumstances, a fund may need a reasonable amount of time to determine and verify for itself the impact and validity of the reclassification on the fund’s compliance with its limits. In general, this verification and final determination process should be completed within three business days or less, including the day that the triggering event was observed. In those limited circumstances, a fund’s reporting obligation would arise not by the triggering event itself but, instead, when the fund has determined and verified (within three business days of the event) that the fund, in fact, has exceeded the 15% illiquid investments limit or fallen below its HLIM (if applicable).

Once a fund determines and verifies that a reportable event has occurred, the grace period for reporting (e.g., one business day) to the SEC or board begins to run. However, after the triggering event takes place, the periods of time reported on Form N-LIQUID or to the board as a result of a triggering event should also include any additional days during which the fund engaged in determining and verifying that it was not in compliance. For example, a fund might purchase an asset that made it exceed the 15% illiquid asset limit on a Monday (the triggering event), verify and determine that the asset was illiquid and that the fund was out of compliance on a Wednesday, and report the event to the SEC on a Thursday. The report should indicate that the fund was out of compliance beginning on Monday, the date of the triggering event that led to the fund being out of compliance, and not as of the Wednesday when non-compliance was determined and verified. Form N-LIQUID is a text form that requires a fund to report the date(s) that the fund was out of compliance with the 15% illiquid investments limit or its HLIM. To avoid any ambiguity, a fund may indicate on the form both the date of the triggering event and the date non-compliance was determined and verified.

9. ETFs and Investment Classification

The Liquidity Rule’s classification requirement is predicated on how long it would take a fund to convert an investment to cash, or sell or dispose of the investment (depending on the liquidity category). An ETF does not convert to cash (or sell or dispose of) investments that it distributes in-kind to meet redemptions. An ETF that is not an In-Kind ETF that redeems shares in-kind to a material extent may have a different liquidity profile, and face different liquidity risks, than a similar ETF that does not. Therefore, it may be appropriate for an ETF that redeems shares in-kind to a material extent to reflect these differences in its classification procedures and in designating its HLIM. An ETF that redeems shares in-kind to a material extent may increasingly rely on less liquid assets that are more difficult or costly for an ETF to transfer in-kind. As noted above (“Reasonably Anticipated Trading Size Issues”), a zero or near-zero reasonably anticipated trade size would not be a reasonable assumption because it sidesteps the requirement that a fund determine whether trading a position in sizes that the fund would reasonably anticipate trading is reasonably expected to significantly affect the position’s liquidity. Moreover, the reasonably anticipated trading size requirement presupposes a size greater than a single trading lot.

Balancing these considerations, an ETF could take reasonably anticipated in-kind redemption activity into account when determining appropriate reasonably anticipated trading size or market depth assumptions in classifying its investments. When using in-kind redemptions, an ETF should set an appropriate minimum trade size that takes into account the liquidity considerations discussed above.

This guidance would apply to any mutual fund that redeems in-kind to a material extent. This is consistent with the policy repeated often in the Liquidity Rule’s adopting release, that each fund (including an ETF) should design its LRM program, including its investment classification methodology and its HLIM, based on the fund’s particular liquidity considerations and risks.

10. In-Kind ETF Addendum

As described in this prior Ropes & Gray Alert, in January, the staff posted its first set of FAQs concerning the Liquidity Rule. Item 13 of the January FAQs focused on the requirement that an ETF is an In-Kind ETF only if, among other things, the ETF meets redemptions using assets other than a de minimis amount of cash. The staff offered its views on how an ETF should measure whether it satisfies the de minimis requirement, focusing on testing its redemption transactions in their totality over some reasonable period of time to ensure that, on average, its aggregate redemption transactions have no more than a de minimis cash amount.

The recently posted FAQs amended Item 13 by noting that an ETF may choose to use either its daily net or total redemptions for each day of the period of time it selects when determining whether its cash use is de minimis. (Emphasis added).


1 This Alert follows the IFR’s terminology. The term “funds” includes open-end management companies, including ETFs that do not qualify as In-Kind ETFs, and excludes money market funds.

2 See IFR Section II (“the extent of fund reliance on external service providers to provide liquidity classification solutions” among “matters that were not anticipated in the Adopting Release”).

3 Because the compliance date for the liquidity disclosures on Form N-PORT is deferred until June 1, 2019 (for larger fund complexes), the filing date of the first Form N-PORT to be filed via EDGAR for a fund within a larger fund complex containing the liquidity disclosure is deferred until July 30, 2019.

4 The Liquidity Rule refers to “investments” to capture liabilities (e.g., certain out-of-the-money derivatives transactions), as well as assets. This leads to the term “investments that are assets.”

5 The IFR recognizes that the Liquidity Rule’s definition of “illiquid investment” departs somewhat from the SEC’s longstanding guidance. Specifically, the Liquidity Rule’s definition of “illiquid investment” is based on the number of days in which a fund reasonably expects the investment would be sold or disposed of “in current market conditions without significantly changing the market value of the investment.” This definition departs somewhat from the SEC’s longstanding guidance that a fund asset should be considered illiquid if it cannot be sold or disposed of in the ordinary course of business within seven days at approximately the value ascribed to it by the fund.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.