Investment Manager Regulation – Page 3 – Global Investment Law Watch

United States: End of Summer Pool Party: CFTC Approves Final Rule Amending 4.7 Regulatory Relief for CPOs and CTAs

Sep 17 2024

By: Cheryl L. Isaac, Matthew J. Rogers, and Benjamin C. Skillin

On 12 September 2024, the Commodity Futures Trading Commission (CFTC) published a Final Rule impacting registered commodity pool operators (CPOs) and commodity trading advisors (CTAs) relying on the regulatory relief provided under CFTC Regulation 4.7. “Registration light,” as Regulation 4.7 is sometimes known, provides reduced disclosure, reporting and recordkeeping obligations for CPOs and CTAs that limit sales activities to “qualified eligible persons” (QEPs).

United States: Gee, Have You Thought About Your 13G? (New Reporting Compliance Deadlines Start at Month-End)

Sep 10 2024

By: Pablo J. Man, C. Todd Gibson, and Lisa N. Ju

Updated on 26 September 2024

Starting 30 September 2024, the amendments to the Section 13 beneficial ownership rules under the Securities Exchange Act of 1934 (Amendments), as they relate to initial and amended Schedule 13G filings come into effect. The new accelerated deadlines for initial and amendment filings vary by investor type, as follows:

United States: More Marketing Missteps

Sep 10 2024

By: Pablo Man, Pamela Grossetti, Lance Dial and Jennifer Klass

On 9 September 2024, the Securities and Exchange Commission (SEC) announced settled charges against nine registered investment advisers for violations of Rule 206(4)-1 (the Marketing Rule). Unlike the prior settlements (which focused primarily on the use of hypothetical performance), these settlements focused on other elements of the Marketing Rule: (i) the prohibitions on statements of material fact that are untrue or that the adviser cannot substantiate; (ii) disclosures relating to testimonials and endorsements; and (iii) required disclosures for third-party ratings. Many of these violations were based on website disclosures. In total, nine advisers agreed to pay US$1,240,000 in combined civil penalties, ranging from US$60,000 to US$325,000.

United States: SEC Enforcement Takes Broad View of Anti-Whistleblower Rule in Latest Action Targeting Investment Advisers and Broker-Dealer

Sep 06 2024

By: Hayley Trahan-Liptak and Taylor A. Listau

On 4 September 2024, the US Securities and Exchange Commission (SEC) announced that it settled charges against affiliated investment-advisers and a broker-dealer over the use of restrictive language in confidentiality agreements, in violation of Rule 21F-17(a) of the Securities Exchange Act of 1934. The firms agreed to pay a combined $240,000 in civil penalties to settle the charges. The enforcement action is the latest in the SEC’s ongoing focus on confidentiality provisions in release agreements; an emphasis that has increasingly focused on investment advisers and broker-dealers.

Australia: ASIC Seeks to Clarify the Scope of the “Authorised Representative” Exemption

Sep 03 2024

By: Kane Barnett and Daniel Nastasi

The Australian Securities and Investments Commission (ASIC) has appealed certain findings in the recent decision in Australian Securities and Investments Commission v BPS Financial Pty Ltd [2024] FCA 457 (BPS Financial Decision) in relation to the scope of the authorised representative exemption. The authorised representative exemption is commonly relied upon and allows a person or entity to provide a financial service under the Corporations Act on behalf of the holder of an AFS licence without having to hold an AFS licence itself.

United States: FinCEN Narrows the Final AML Requirements for Investment Advisers

Aug 30 2024

By: Richard F. Kerr and Jennifer L. Klass

On 28 August 2024, the Financial Crimes Enforcement Network (FinCEN) finalized regulations that add certain investment advisers (Covered Advisers) to the definition of a “financial institution” under the Bank Secrecy Act thereby requiring Covered Advisers to, among other things, establish anti-money laundering (AML) and counter-terrorist financing (CFT) programs and file Suspicious Activity Reports with FinCEN. The effective date of the new rules is January 1, 2026.

United States: Form N-PORT and Form N-CEN Reporting; Guidance on Open-End Fund Liquidity Risk

Aug 29 2024

By: Jon-Luc Dupuy, Nicholas O. Ersoy, and Jordan A. Knight

On 28 August 2024, the United States Securities and Exchange Commission (SEC) adopted amendments to Rule 30b1-9 under the Investment Company Act of 1940, as amended, and Forms N-PORT and N-CEN (Final Rule). More specifically, the SEC adopted rule and form amendments that will: (1) require certain registered investment companies, including registered open-end funds, registered closed-end funds, and exchange traded funds organized as unit investment trusts but excluding money market funds, that report on Form N-PORT to file such reports on a monthly basis within thirty (30) days after the end of that month (rather than filing no later than sixty (60) days after the end of the fiscal quarter for the three (3) months in such quarter as currently required); and (2) amend Form N-CEN to require open-end funds to report certain information about service providers used to comply with liquidity risk management program requirements, among other technical amendments to the relevant rule and forms.

United States: The MNPI Is Coming From Inside the House

Aug 28 2024

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.

United States: The SEC Is Not Done Bringing Enforcement Actions for Off-Channel Communications

Aug 15 2024

By: 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.

United States: CME Group Clarifies and Emphasizes the Duty to Supervise Trading on its Markets

Aug 09 2024

By: 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.

Category:Investment Manager Regulation