By: Ken Holston, TJ Bright, Pablo Man, Matthew Mangan, Chris Phillips-Hart, Annabelle North
On August 23, 2023, the SEC adopted sweeping new rules that will impose substantial regulation on the management and operation of private funds by investment advisers. The rules appear to be somewhat less burdensome than the rules originally proposed in February 2022.
Read MoreBy Kane Barnett and Bernard Sia
The Australian Government has released the long awaited consultation paper on the review of the regulatory framework for managed investment schemes. The consultation paper comes on the back of the Government’s announcement of the review earlier in March this year (see our previous update). The current regulatory regime for managed investment schemes commenced in 1998.
Read MoreBy: Neil Smith , Hayley Trahan Liptak and Peter Shanley
For over twenty months, the U.S. Securities and Exchange Commission (SEC) has steadily announced settled orders against broker-dealers and investment advisers for failure to retain business-related communication. On 8 August 2023, the SEC released another round of settled orders with 11 firms for violation of Exchange Act Rule 17a-4 for failing to retain off-channel business-related communication. One dually registered broker-dealer and investment adviser was also charged with violating recordkeeping provisions of the Investment Advisers Act of 1940. The content of the orders, and the firms involved, show the SEC’s attention may be shifting from wide-spread violations at large institutions to more limited compliance failures at firms of differing sizes. The assessed penalties, although still considerable, are consistent with this shift.
Read MoreBy: Shane Geraghty and Áine Ní Riain
On 6 July, the European Securities and Markets Authority (ESMA) announced it had launched a Common Supervisory Action (CSA) with National Competent Authorities (NCAs) on the integration of sustainability risks and on sustainability-related disclosures in the investment fund sector.
Read MoreBy: Shane Geraghty and Áine Ní Riain
On 20 July, the European Commission announced political agreement between the European Parliament and the European Council on proposed amendments to the EU’s Alternative Investment Fund Managers Directive (AIFMD). This follows the Commission’s proposal in the form of a draft directive amending AIFMD (AIFMD 2) issued in November 2021, protracted negotiations between the Commission, the Council and the European Parliament since 8 March of this year, and the issuance in June of a compromise text by the Council.
Read MoreBy: Richard Kerr and Matthew Rogers
On July 26, 2023, the Securities and Exchange Commission (“SEC”) proposed new rules (“Proposal”) intended to address certain conflicts of interests associated with the use of “Covered Technology” (defined below) by broker-dealers and investment advisers (“firms”) in investor interactions. If adopted as proposed, firms will be required to (i) identify conflicts of interests when using Covered Technology in interactions with investors, and (ii) adopt policies and procedures to eliminate or neutralize those conflicts of interests.
Read MoreBy Keri Riemer and Matthew Rogers
On 26 July 2023, the U.S. Securities and Exchange Commission (SEC) proposed amendments (Proposal) to the “internet adviser exemption” set forth in Rule 203A-2(e) under the Investment Advisers Act of 1940, which permits registration with the SEC of certain investment advisers that would not otherwise be eligible for such registration. The proposed reforms would impose new limitations on advisers seeking to rely on the exemption by precluding them from providing advice through a means other than an “operational interactive website” (i.e., a website or mobile application through which the adviser provides “digital investment advisory services” (as defined in the Proposal) on an ongoing basis to more than one client (except during temporary technological outages)).
Read MoreBy: Max Black, Michael Davalla and Cal Gilmartin
On July 12, 2023 the SEC adopted rules applicable to money market funds (“MMFs”). The new rules change: (i) liquidity thresholds; (ii) liquidity fees and redemption gates; (iii) options for responding to negative interest rate environments; and (iv) reporting obligations. Importantly, the SEC declined to impose swing pricing mechanisms on MMFs depending on their net redemptions. The new rules institute mandatory liquidity fees for institutional prime funds and institutional tax exempt funds.
Read MoreBy: Jim Bulling and Kai Luck
On 27 June 2023, the Australian Treasury released a further consultation paper (consultation period open until 21 July 2023) on the introduction of a mandatory climate disclosure framework in Australia.
Under a phased-in approach, by 2027-28, all entities required to lodge financial reports will be subject to the disclosure framework. Larger entities fulfilling two of three criteria (consolidated revenue of AUD$500 million or more, consolidated gross assets of AUD$1 billion or more and 500 or more employees) will be required to lodge reports first, from 2024-25 with smaller entities which satisfy two of three criteria (consolidated revenue of AUD$50 million or more, consolidated gross assets of AUD$25 million or more, and 100 or more employees) having an extra two years to comply.
Read MoreBy Jim Bulling and Grace Hall
The Chair of the Australian Securities and Investments Commission (ASIC), Joe Longo, commented on three key ESG focus areas of the regulator in recent speeches.
In addition to governance, greenwashing and growth in sustainable financing, the Chair discussed the phenomenon of “greenhushing”, where companies decline to make any voluntary climate-related disclosures.
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