Investment Manager Regulation – Page 10 – Global Investment Law Watch

Europe: At Last, the UK and EU are Due to Begin Active Post-Brexit Cooperation on Financial Services Matters

Jun 27 2023

By Robert Lloyd and Philip Morgan

On 27 June 2023, the UK and the EU Commission entered into a memorandum of understanding (MoU) on regulatory cooperation in financial services triggered, it seems, by the agreement of revised arrangements on Northern Ireland. You could be forgiven for thinking that the MoU was agreed a long time ago – accordingly to a nonbinding joint declaration between the EU and the UK, the targeted date was 31 March 2021. At the end of the Brexit transition period on 31 December 2020 few people would have expected that it would take the best part of two and a half years to reach this modest objective.

Australia: Regulating AI – Emerging Issues

Jun 16 2023

By Daniel Knight, Cameron Abbott, Rob Pulham, Dadar Ahmadi-Pirshahid

Amid global calls for tailored regulation of artificial intelligence tools, the Australia Federal Government has released a discussion paper on the safe and responsible use of AI. The Government is consulting on what safeguards are needed to ensure Australia has an appropriate regulatory and governance framework.

United States: SEC Charges Investment Adviser for Inadequate Policies and Procedures Regarding Valuation of Private Fund Assets

Jun 12 2023

By Todd Gibson, Annabelle North, and Aster Cheng

On 24 May 2023, the US Securities and Exchange Commission (SEC) announced the settlement of charges against Sciens Investment Management, LLC and Sciens Diversified Managers, LLC (collectively, Sciens) related to the valuation of certain private fund portfolio investments (Order). The SEC cited the often-used violations of Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7, finding that Sciens failed to implement adequate policies and procedures to properly value certain private fund investments.

United States: SEC’s Stunning Enforcement Actions Against Binance and Coinbase

Jun 08 2023

By Rich Kerr, Eden Rohrer, and Max Black

In a stunning move, over the last two days, the Securities and Exchange Commission (SEC) has filed back-to-back enforcement actions against major crypto exchanges Binance (See here) and Coinbase (See here). This clearly indicates that the SEC is flexing its enforcement power over both international exchanges as well as those exchanges with a focus on the United States. Please visit the K&L Gates Fintech and Blockchain Law Watch to see commentary about these developments from our Digital Assets team.

People’s Republic of China: MOU of ETF Products Between China and Singapore Exchanges

Jun 01 2023

By Chloe Duan and Grace Ye

Shanghai Stock Exchange (SHSE) announced that it has entered into a memorandum of understanding (MOU) with Singapore Exchange (SGX) to establish a link for exchange-traded funds (ETFs) between two exchanges. SHSE and SGX are also aiming to jointly develop more ETF products available to investors on both markets via the link.

Australia: Proposed Reforms to the Anti-Money Laundering and Counter-Terrorism Financing Regime

May 29 2023

By Daniel Knight and Grace Hall

The Australian Government has committed to reforming Australia’s AML/CTF regime, with proposed reforms aimed to strengthen and modernise the framework.

In April 2023, the Attorney-General released the first of two consultation papers outlining the proposed reforms to the regime. Subsequently, as part of the 2023-24 Federal Budget, the Government announced that it will provide $14.3 million in funding over the next four years to support policy and legislative reforms to the AML/CTF regime.

Europe: ESMA Advocates More Specific Restrictions on the Costs Fund Managers May Pass on to Investors

By Áine Ní Riain and Gayle Bowen

The European Securities and Markets Authority (ESMA) has suggested that the European Commission should clarify the costs that UCITS management companies and AIFMs may pass on to investors under existing rules that prohibit “undue costs”. Costs for this purpose include fees payable to the manager and other fund service providers and all other one-off, recurring or transaction-related costs. The purpose of the proposed clarification would be to provide for better convergence between the approaches of different EU member states, and a better basis for national regulators to take supervisory and enforcement actions in this area.

Australia: ASIC Releases Report on Recent Greenwashing Actions

May 16 2023

By Matthew Watts and Rebecca Mangos

The Australia Securities and Investment Commission (ASIC) has published a report on its regulatory interventions made between 1 July 2022 and 31 March 2023 in relation to greenwashing concerns (which can be accessed here). The report covers ASIC’s issuance of greenwashing infringement notices during the period and its observed increase in representations made by listed companies, managed funds and superannuation funds on environmental, social and governance credentials.

Australia: ASIC Reports on DDO Compliance by Investment Product Issuers

May 08 2023

By Kane Barnett and Bernard Sia

On 3 May 2023 the Australian Securities and Investments Commission (ASIC) released its review on compliance by investment product issuers of the Design and Distribution Obligations (DDOs). In ASIC’s view, there is still considerable room for improvement by product issuers.

United States: SEC Adopts Amendments to Form PF and Significantly Expands Reporting Requirements

May 04 2023

By: Pablo J. Man, Ruth E. Delaney, Matthew F. Phillips, and Gustavo De La Cruz Reynozo

On May 3, 2023, the Securities and Exchange Commission (“SEC”) approved amendments to Form PF, the confidential reporting form required to be filed by private fund advisers. The amendments expand the scope of Form PF’s disclosure obligations to require large hedge fund advisers to file new “current” reports and all private equity fund advisers to file new quarterly reports upon the occurrence of certain events. Large private equity advisers will also be required to provide new information in their annual updates.

The amended Form PF will require:

Current Reporting Requirements for Large Hedge Fund Advisers. In addition to their existing quarterly filing obligations, advisers with at least $1.5 billion in assets under management (“AUM”) attributable to hedge funds will be newly required to report certain events—such as extraordinary investment losses, significant margin and default events, and large withdrawal and redemption requests—as soon as practicable, but no later than 72 hours, after they occur.

Quarterly Reporting for Private Equity Fund Advisers. Within 60 days of the end of each fiscal quarter, each private equity fund adviser will be required to report any completion of an advisor-led secondary transaction or investor elections to remove a fund’s general partner or to terminate a fund’s investment period during the preceding quarter.

Additional Reporting for Large Private Equity Fund Advisers. Advisers with $2 billion or more of private equity fund AUM will be required to disclose a range of new information in their annual updates to Form PF, including: (a) information about the implementation of general partner and limited partner clawbacks; (b) details about a fund’s investment strategies; (c) additional information about fund-level borrowings; (d) more granular information about the nature of reported events of default; (e) additional identifying information about institutions providing bridge financing; and (f) information about a fund’s greatest country exposures.

The new “current” reporting and quarterly event reporting requirements take effect six months following publication of the final rule in the Federal Register. The other amendments take effect one year following publication of the final rule in the Federal Register.

Category:Investment Manager Regulation