Global Investment Law Watch – Page 17 – Exploring the legal and regulatory issues affecting the worldwide investment community.

United States: Updating – and Limiting – the Internet Advisers Exemption

Jul 27 2023

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)).

Australia: “Greenwashing” – Are the ACCC and ASIC Aligned?

Jul 26 2023

By Jim Bulling and Ben Kneebush

‘Greenwashing’ has been a priority for both the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) for some time now.

ASIC’s approach to ‘greenwashing’ first emerged over a year ago with the publication of Information Sheet 271 (considered previously in our post), and was expanded with the release of Report 763 (considered previously in our post).

On 14 July 2023, the ACCC released its long-awaited draft guidance titled Environmental and Sustainability Claims – Draft Guidance for Business. The aim of this was to aid businesses in avoiding ‘greenwashing’ when making environmental or sustainability claims.

United States: CFTC Seeks to Refresh Swap Dealer and FCM Risk Management Program Requirements

Jul 18 2023

By: Clifford C. Histed, Cheryl L. Isaac and Christine Mikhael

On July 18, 2023, the Commodity Futures Trading Commission (“CFTC”) published in the Federal Register an advanced notice of proposed rulemaking (“ANPRM”) on Risk Management Program (“RMP”) requirements for swap dealers (“SDs”), major swap participants (“MSPs”) and futures commission merchants (“FCMs”). After initially adopting its RMP requirements for SDs and MSPs (CFTC Regulation 23.600) and FCMs (CFTC Regulation 1.11) in 2012, the CFTC now seeks to refresh certain aspects in light of feedback it has received on market participants’ confusion and lack of uniformity on their RMP obligations and filings. In particular, the CFTC identified the impetus for issuing the ANPRM as being:

Australia: Regulation for ESG Ratings Agencies Gathers Pace

Jul 18 2023

By Jim Bulling and Kai Luck

With increased demand for “ESG friendly” investments (in an ESG investment market on track to exceed US $53 trillion globally by 2025), asset managers, funds management companies, superannuation funds and other investors are actively turning to ESG ratings agencies to guide their decisions.

As it currently stands, there is significant potential for discrepancy in the ratings being produced. This is confusing and potentially misleading for investors and may also divert capital away from its intended direction.

SEC Passes New Money Market Fund Rules: Swing Pricing is Out and Mandatory Liquidity Fees are In

Jul 12 2023

By: 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.

United States: Tag, You (Maryland Closed-End Funds) Are It!

Jun 30 2023

By Jennifer R. Gonzalez and Nicholas O. Ersoy

In May 2020, the Division of Investment Management Staff of the U.S. Securities and Exchange Commission published a Statement withdrawing a November 2010 letter issued to Boulder Total Return Fund, relating to the Maryland Control Share Acquisition Act (MCSAA), which had long been an impediment to closed-end funds opting in to state statutes that permit corporations to restrict certain stockholders’ ability to vote “control shares” (shares of a corporation which, when aggregated with all shares of such corporation owned by an acquiring person, exceed certain ownership thresholds). Following the May 2020 Staff Statement, a number of closed-end funds opted in to state control share statutes or adopted by-law provisions with similar impact. Further developments since then include:

People’s Republic of China: CSRC Promulgated New Bond Issuance Guidelines

Jun 30 2023

By Chloe Duan and Grace Ye

The China Securities Regulatory Commission (CSRC) promulgated two sets of guidelines in relation to bond issuance on 20 June 2023, namely “Guiding Opinions on Deepening the Reform of Bond Registration System” and “Guiding Opinions on Raising the Quality of Bond Business Practice by Intermediaries under the Registration System” (collectively, the Guidelines).

Australia: Mandatory Climate Disclosures Framework Takes Shape With Release of New Consultation Paper and ISSB Standards

Jun 30 2023

By: 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.

Australia: ASIC Chair Addresses “Greenhushing” Amongst ESG Focus Areas

Jun 28 2023

By 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.

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.