Funds

FYI: FAQs Issued Addressing New Fund Reporting Requirements

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FYI: The Division of Investment Management has posted 40 FAQs in response to questions about the new fund reporting requirements, such as Form N-PORT, Form N-CEN, liquidity program reporting, derivatives reporting, securities lending disclosures and Reg S-X financial statement changes. Every fund would be wise to review the FAQs now and as updated in the future, for guidance pertinent to their filing situation given that these changes can be complex, technical and potentially confusing, especially as to the compliance dates and filing deadlines, which in some cases have already phased in and in other cases have been delayed by amendment. […]

Advisers

FYI: OCIE Risk-Based Exam Initiatives for Investment Companies

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FYI: OCIE has issued a Risk Alert announcing a series of exam initiatives focused on certain mutual funds and ETFs, their advisers and their boards, targeting circumstances in which retail investors could be disadvantaged and reviewing whether registrants have met their regulatory and other legal obligations. Funds in one or more of the following categories will be the focus of the initiatives: — Index funds that track custom-built indexes; — Smaller ETFs and/or ETFs with little secondary market trading volume; — Mutual funds with higher allocations to certain securitized assets (e.g., securitized auto loans, student loans, credit card receivables or […]

Advisers

FYI: Enforcement Based on IA’s Lack of Compliance Resources

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FYI: The CEO of an investment advisory firm settled an enforcement action with the SEC based on the CEO’s role in failing to adequately resource the firm’s compliance program. According to the SEC’s order, the CEO was aware that the firm’s compliance program lacked sufficient resources but failed timely to address this deficiency, which contributed to the firm’s compliance rule violations. Facts indicated that the firm’s CCO informed management on numerous occasions that the firm’s compliance resources were inadequate, but the CEO continuously decided not to add resources. Sanctions imposed against the CEO personally included a censure, cease and desist […]

Advisers

FYI: SEC Enforcement Annual Report for FY18

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FYI: Enforcement’s 2018 Annual Report (for FY ending September 30, 2018) reflects the Division’s current guiding principles: Principle 1: Focus on the Main Street Investor (rolling out, for example, the Share Class Selection Disclosure Initiative, under which the report indicates “scores” of IAs participated, which “will result in charges against them”). Principle 2: Focus on Individual Accountability (for example, continuing to bring cases against CEOs and CFOs, as well as accountants, auditors and other gatekeepers). Principle 3: Keep Pace with Technological Change (for example, enforcing against fraudulent ICOs and blockchain offerings, as well as continuing to use proprietary data analytics […]