Reality Check: Best Execution and Selection of Mutual Fund Share Classes for Clients

Sep 24, 2020 1:15:00 PM

By Charles Black Reality Check is an occasional blog post series we do where we analyze actual SEC enforcement actions or examination experiences and give you a summary of what to expect in the “real world.” In 2019, the SEC closed its mutual funds share class selection disclosure initiative. This initiative allowed investment advisers to self-report to the SEC instances where they failed to discl...

SEC Provides Conditional Relief to Investment Advisers and Investment Companies Impacted By Coronavirus – But Should You Use It?

Mar 18, 2020 12:15:00 PM

On March 13, 2020, the SEC announced regulatory relief for investment advisers and investment companies who may be affected by the coronavirus.  The SEC is recognizing that limits on travel, reduced personnel and other business disruptions as a result of the coronavirus may cause delays in meeting regulatory filing deadlines and other regulatory obligations. While this is welcome news given the ex...

SEC Exam Priorities 2020

Jan 17, 2020 11:15:00 AM

The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) announced its 2020 examination priorities on January 7, 2020. OCIE releases this list on an annual basis in order to provide the industry with insights into areas it may focus on thorough the examination process. All the priorities listed on the 2020 list were also on the 2019 list, with some new additions. Which makes us wonder ...

SEC: Regulation Best Interest

Aug 29, 2019 11:15:00 AM

As many of you know, on June 5, 2019, the SEC passed Regulation Best Interest (Regulation BI) and related rules and interpretations that were intended to enhance investor protection and clarify the difference between broker-dealers (BDs) and registered investment advisers (RIAs). The rule and two final interpretations were over 1,300 pages long, ugh. When I think about reading that many pages of b...

More Summer Reading

Jun 20, 2019 9:28:20 AM

Last week we published an article about the SEC’s most recent cyber examinations and risk alerts. The week before we noted in our curated articles that the SEC is focused on oversight of technology vendors (like us).  If you still doubt the SEC’s focus on cybersecurity, it’s time for a reality check. SEC News Chairman Clayton just hired badass (because anyone who spends 30 years in the CIA has to ...

Curated Articles for June, 2019 (Your Summer Reading)

Jun 6, 2019 9:10:00 AM

Ah, welcome to the hot days of summer, which technically doesn’t start until June 20. But that didn’t stop temperatures around the U.S. from topping 95 degrees last week. Whew! And with that warm, beach weather comes the start of vacation season. So in case you forgot to pack that massive stack of reading material that you’ve been collecting since January, below are some articles for your reading ...

The Liquidity Rule Finally Takes Shape!

Jul 13, 2018 8:54:29 AM

In May, we discussed eight things that you needed to know about the liquidity rule in this article. At that time, we noted that part of the rule was due to take effect in December 2018 for large fund families or June 2019 for smaller fund families. The parts that were delayed until 2019 included the liquidity classifications (i.e., the buckets) and the highly liquid minimum requirement.  More impo...

IM Director's Recent Remarks on Standards of Conduct & Liquidity Risk Management

May 25, 2018 8:30:21 AM

IM Director's Recent Remarks on Standards of Conduct & Liquidity Risk Management by Peter Michael Allen   Recently, Dalia Blass, Director of the SEC’s Division of Investment Management (IM) commented about the standards of conduct for investment professionals and liquidity risk management for open-end funds, including mutual funds and exchange-traded funds (ETFs). Given that the SEC recently submi...

8 Things You Need to Know about the Liquidity Rule

May 11, 2018 4:30:33 AM

1. Its name. Most people simply refer to the rule as the “liquidity rule”, but its technical name is Rule 22e-4: Investment Company Liquidity Risk Management Programs. If the rule survives in any meaningful form, we should start a contest on whether the industry keeps calling it the liquidity rule or refers to it as Rule 22e-4. Think of Rule 38a-1 under the Investment Company Act. Some people may ...

SEC Decides it's Time to Help Investors Understand the Difference between Brokers and Advisers

Apr 21, 2018 8:31:27 AM

The SEC has finally proposed a rule that will help clarify the distinction between brokers that refer to themselves as "financial advisors" and investment advisers. (We won't get into why it took so long or how this is a response to the Department of Labor's fiduciary rule, which was recently vacated by federal courts.) Most investors are unaware of the difference and the legal standards that appl...

Artificial Intelligence at the SEC

Apr 16, 2018 2:00:12 AM

For years now, the concept of “Big Data” has been wildly popular in the business world. It seemed that everyone who was anyone was using big data to improve performance, boost revenue, and break into new markets. For true technology innovators, big data was the first step to something bigger: artificial intelligence. Machines need enormous amounts of data to develop artificial intelligence. AI dev...

Liquidity is Out, ETFs are In

Apr 7, 2018 4:43:26 PM

The SEC’s stance on its not-yet-effective liquidity rule appears fluid, as commissioners push to abandon part of the rule and certain division heads move on to other topics. At the 2018 ICI Mutual Funds and Investment Management conference, Commissioner Hester Peirce and division director Dalia Blass signaled the possible end of the liquidity rule as an emphasis of the SEC. Commissioner Hester not...

The SEC is Nervous About Options

Mar 19, 2018 10:52:54 PM

Why is the SEC nervous? On February 23, 2018, Commissioner Kara M. Stein gave a speech at SEC Speaks in Washington, DC. During the speech, Commissioner Stein raised broad ethical and economic considerations regarding the rapid advances in financial product innovation, which appears to be accelerating as financial firms increasingly use technology to expand their product line and deepen their reach...