The Securities and Exchange Commission recently issued an interpretive release designed to reaffirm, and in some cases clarify, the standard of conduct that investment advisers owe to their clients. While the interpretive release includes no new regulation, it clarifies the type of disclosure, policies and procedures that advisers should adopt to ensure that they continue to operate in a manner that is consistent with their fiduciary obligations.
The Securities and Exchange Commission (SEC) recently proposed amendments to the 'accelerated filer' and 'large accelerated filer' definitions adopted under the Securities Exchange Act 1934. The SEC believes that it can promote capital formation for smaller reporting issuers by more appropriately tailoring the types of issuer that are included and revising the transition thresholds for accelerated and large accelerated filers.
The Securities and Exchange Commission (SEC) recently adopted rule amendments to modernise and simplify certain disclosure requirements in Regulation S-K and related rules and forms. These amendments were adopted pursuant to a 2015 Fixing America's Surface Transportation Act (FAST Act) directive and are based in part on the SEC's report to congress under the FAST Act. The amendments will require issuers' immediate attention as they prepare for upcoming filings.
The Securities and Exchange Commission (SEC) recently announced settlements with 79 investment advisers who self-reported violations of the Investment Advisers Act in connection with the SEC Division of Enforcement Share Class Selection Disclosure Initiative. The advisers collectively agreed to return more than $125 million in fees and prejudgment interest to clients.
The Securities and Exchange Commission recently proposed a rule and related amendments under the Securities Act that would permit issuers to engage in oral or written communications with potential investors that are, or are reasonably believed to be, qualified institutional buyers or institutional accredited investors, either prior to or following the filing of a registration statement, to determine whether such investors have an interest in a contemplated securities offering registered under the Securities Act.
In a recent interpretative letter, the Financial Industry Regulatory Authority (FINRA) provided guidance to a registered broker-dealer as to the use of pre-inception index performance data relating to a proprietary index. The letter restates and updates FINRA's prior guidance as to the use of back-tested index information, including its historic position that the use of this type of information is inappropriate in communications provided to retail investors.
The Financial Industry Regulatory Authority (FINRA) recently issued its 2019 Risk Monitoring and Examination Priorities Letter. The letter addresses a variety of issues that all broker-dealers must address, whether they offer structured products or not. The letter clarifies that sales of complex products, including structured products, must be reviewed to see whether they comply with FINRA's suitability rules.
The Securities and Exchange Commission recently amended the Securities Exchange Act to implement Section 955 of the Dodd-Frank Act. Among other requirements, companies that are not foreign private issuers, listed closed-end investment companies, smaller reporting companies or emerging growth companies must now comply with the new hedging disclosure requirement in proxy or information statements with respect to the election of directors during fiscal years beginning on or after 1 July 2019.
The end of 2018 was notable for two Securities and Exchange Commission (SEC) enforcement actions against private equity fund managers for violations of the Investment Advisers Act. The actions demonstrate the SEC's continued focus on private equity fund managers' use of operating partners or consultants and the particular issue of how the expenses of such operating partners or consultants are allocated.
The Securities and Exchange Commission (SEC) Division of Corporation Finance recently provided guidance for issuers regarding the approach that the division will take in processing filings, submissions and other requests for action by its staff. Issuers should carefully consider their plans with respect to registration statements, particularly given that it is possible that another government shutdown could commence if an appropriations bill funding the SEC's operations is not enacted prior to the current deadline.
The Financial Industry Regulatory Authority (FINRA) recently published its 2019 Risk Monitoring and Examination Priorities Letter. Unlike previous letters, the 2019 letter focuses primarily on priorities that FINRA considers to be materially new. The first highlighted priority, online distribution platforms, will be of particular interest to the growing number of companies providing financial services through online platforms.
President Trump recently signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act. While much of the act was designed to provide smaller financial institutions and community banks with relief from regulations implemented under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, Title V includes provisions designed to encourage capital formation. Among other things, the act expands the scope of the blue sky registration exemption.
According to the Securities and Exchange Commission, its recent release proposing an interpretation of the standard of conduct for investment advisers is intended to "reaffirm – and in some cases clarify – certain aspects of the fiduciary duty that an investment adviser owes to its clients under section 206" of the Investment Advisers Act 1940. However, the proposed interpretation, if adopted, appears to expand the parameters of the fiduciary duty standard and could require advisers to take on additional regulatory obligations.
The Financial Industry Regulatory Authority (FINRA) recently issued proposed amendments to Rule 2111's quantitative suitability provisions. According to FINRA, the proposal is designed to more effectively counter the problem of 'churning' or excessive trading in customer accounts. The proposal arrives shortly after the Securities and Exchange Commission's proposal of Regulation Best Interest and illustrates how these two regulators must coordinate in order to avoid inconsistent sets of rules.
The Financial Industry Regulatory Authority (FINRA) has updated its guidance on its recent amendments to Rule 2232. The new requirements apply to transactions with retail customers in corporate and agency debt securities. Beginning on the effective date, FINRA will require confirmation disclosure of additional transaction-related information, including mark-ups and mark-downs. The goal of these new rules is to help retail customers to better understand and compare the costs of these transactions.
The Securities and Exchange Commission (SEC) recently issued a public statement regarding exchanges and other secondary trading platforms that list or facilitate the trading of coins and tokens online. The statement emphasises that platforms offering the trading of digital assets that are securities must register with the SEC as a national securities exchange or operate under an exemption from such registration.
In an unusual step that appears to indicate renewed, if not intensified, scrutiny of public companies' cybersecurity practices by the Securities and Exchange Commission, its five commissioners have unanimously issued guidance covering a range of cybersecurity topics, including disclosure obligations, board oversight and risk management controls. Among other things, companies are advised to make cybersecurity training and compliance a priority company-wide.
In a recent principles-based grant of relief, the Securities and Exchange Commission (SEC) focused on the business activities of the particular issuer, instead of whether a particular asset is a qualifying asset, in determining the availability of the Section 3(c)(5)(C) exemption. Mortgage real estate investment trusts should consider obtaining confirmation from the SEC regarding their own particular business activities in order to avoid any potential future uncertainty.
In the recently released Congressional Budget Justification, the Securities and Exchange Commission (SEC) highlighted a number of priorities. The request notes that the Division of Corporation Finance remains focused on measures designed to promote capital formation. It also references the SEC's intent to "propose amendments to further facilitate capital formation through exempt and registered offerings" and refers to proposed amendments to modernise disclosures applicable to real estate companies.
The Securities and Exchange Commission recently issued a final rule which provides that certain communications relating to security-based swaps (SBS) will not constitute 'offers' for the purposes of Section 5 of the Securities Act 1933. The final rule makes clear that the publication or distribution of certain price quotes relating to SBS, and of certain research reports discussing SBS, will not constitute offers of the related SBS for purposes of Section 5 and thus should not require registration.