By: Pablo J. Man and Lance C. Dial
On 26 August 2024, the SEC settled charges against an SEC-registered adviser for policies and procedures failures related to the misuse of material nonpublic information (MNPI) concerning its trading of collateralized loan obligations (CLOs). The adviser paid a US$1.8 million penalty.
Read MoreBy: Pablo J. Man and Lance C. Dial
Following a number of eyebrow-raising settlements with broker-dealers and dual registrants and a standalone investment adviser, on 14 August 2024 the SEC settled charges against 26 broker-dealers, investment advisers, and dual registrants for recordkeeping failures related to off-channel communications. The combined monetary penalties totaled nearly US$393 million, with individual penalties ranging from US$400,000 to US$50 million. The SEC noted that three of the firms (which paid US$5.5 million, US$4.5 million, and US$1.6 million penalties) self-reported their violations and consequently paid “significantly less” than they otherwise would have.
Read MoreBy: Clifford Histed and Cheryl Isaac
If you or your company trades on CME, CBOT, NYMEX or COMEX (CME Group exchanges, collectively referred to herein as “CME”), you will need to take note of CME’s new Market Regulation Advisory Notice (MRAN), which became effective on 16 July. The new MRAN is called “Supervisory Responsibilities for Employees and Agents” and should be reviewed closely to understand CME’s expectations related to diligent supervision, including policies, trainings, monitoring, remediation and sanctions.
Read MoreBy: Kane Barnett
What the ASIC chair said
At a recent industry event, the chair of the Australian Securities and Investment Commission (ASIC), indicated that ASIC would be increasing its scrutiny of private market funds.
Read MoreBy: Áine Ní Riain and Michelle Lloyd
The European Securities and Markets Authority (ESMA) has today closed its Call for Evidence (CfE) on the review of the UCITS Eligible Assets Directive (EAD).
Read MoreBy: Ed Dartley and Jamie M. Robinson
The clock ran out Monday, 22 July 2024 for the SEC and its timeline to appeal the unanimous decision of the US Court of Appeals for the Fifth Circuit to vacate the Private Fund Adviser Rules (PFAR). The 2023 August adoption of PFAR and the Fifth Circuit’s 2024 June subsequent decision to vacate, has caused both controversy and compliance confusion across the private fund sector over the last few years. Even in the absence of an appeal, open questions remain surrounding the implications of future rulemaking under Section 206(4) of the Advisers Act and the SEC’s stated goal to enhance transparency in the private funds space.
While the next steps for the SEC remain to be seen, managers and investors alike will still need to gauge market reaction to the core principles of PFAR and how they may drive industry initiatives separate and apart from any future regulatory efforts. For example, Institutional Limited Partners Association (ILPA) continues to adjust the parameters of the “Quarterly Reporting Standards Initiative” which was launched in early 2024 and proposes model reporting forms that are substantively similar to what was proposed in the Quarterly Statements provision of PFAR. Now that the “wait and see” attitude on PFAR is past us, it can be expected that private fund industry participants will continue to explore the parameters of the goals that PFAR tried to achieve.
By: Gayle Bowen and Shane Geraghty
The European Commission (EC) has adopted the long awaited ELTIF 2.0 Delegated Regulation (RTS). Its version rejects a number of key proposals previously introduced by ESMA. In particular, the EC has returned to its original versions of Annex I and Annex II, with minor amendments.
Read MoreBy: Jim Bulling and Emre Cakmakcioglu
In May 2024, the NSW Anti-slavery Commissioner (Commissioner) published a Discussion Paper introducing a draft Code of Practice (Code) to reduce modern slavery in the financial services sector. The Commissioner sought feedback on both the Discussion Paper and Code by 15 July 2024.
Read MoreBy: Daniel Knight and Simon Kiburg
On 3 July the Senate Economics References Committee handed down its report on ASIC. The Senate referred an inquiry into ASIC in October of 2022 to examine the capacity and capability of ASIC to undertake proportionate investigation and enforcement action arising from reports of alleged misconduct. The report is generally critical of ASIC’s performance as a corporate regulator. The report identifies several key issues. Chief among these is the broad remit of ASIC, ASICs approach to investigation and enforcement, and ASICs wider culture.
Read MoreBy: Kenneth Holston, Cheryl L. Isaac, Matthew J. Rogers, Jordan A. Knight, and Bradley D. Bostwick
On 27 June 2024, ISDA published the ISDA Close-out Framework, an interactive decision tree that market participants can use to help prepare for potential terminations of collateralized derivatives contracts that are documented under an ISDA Master Agreement. The ISDA Close-out Framework was launched in response to the March 2023 failures of Signature Bank and Silicon Valley Bank, which shed light on the complexities of terminating swaps and other over-the-counter derivatives in the multifaceted post-financial crisis swap regulatory regimes. ISDA designed this framework in response to feedback from the derivatives industry that factors such as segregated margin and stays on the exercise of termination rights and remedies makes terminating and closing out derivatives contracts increasingly complex.
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