Skip to content
AbleStock.com Image #3670956

Business Continuity Plans (“BCPs”) continue to be a key component of an investment adviser’s risk management and compliance program, but have traditionally focused on emergency planning for certain external and internal disruptions (such as natural disasters, blackouts and occasional short-term market disruptions to normal operations).  The recent impact of COVID-19 however, has reminded the industry of the need for implementing BCPs and other related risk policies that address not only short-term disruptions but also longer-term disruptions.  The following is a link to a recent Mayer Brown Legal Update that endeavors to provide investment advisers with a high-level outline of considerations as part of a broader risk assessment of their businesses as they address the potentially longer-term market, business, portfolio and personnel disruptions caused by COVID-19.

Investment Management Survival Tips in the COVID-19 Environment (authored by Matthew Rossi, John Noell, Tram Nguyen, Stephanie Monaco, Adam Kanter, Leslie Cruz, Peter McCamman and Wendy Gallegos).

Additional information and insight can be found on Mayer Brown’s dedicated website on the impact of COVID-19.  If you have any questions about the issues raised in the above alerts, please contact any of the above Legal Update authors.

As COVID-19 continues to impact global markets, the U.S. Securities and Exchange Commission (“SEC”) have recently provided certain guidance and targeted relief in recognition of the potential disruption that COVID-19 may have on market participants regulated by the Commission.  The following Mayer Brown client alerts describe and take a closer look at certain COVID-19 related SEC guidance and targeted relief that primarily impacts investment advisers and funds.

Additional information and insight can be found on Mayer Brown’s dedicated website on the impact of COVID-19.  If you have any questions about the issues raised in the above alerts, please contact the above authors or any member of our Investment Management practice.

On January 7, 2020, the US Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (“OCIE”) released its 2020 examination priorities.  While a number of the 2020 priorities are continuations from the prior year, OCIE made certain enhancements and/or additions to these exam priorities that are similar to themes highlighted in its risk alerts and regulatory initiatives during 2019.

A closer look at issues raised in the 2020 OCIE priorities, along with some key takeaways, can be found in the following Mayer Brown Legal Update.

Legal Update on OCIE’s 2020 Examination Priorities (authored by Stephanie Monaco and Leslie Cruz):

https://www.mayerbrown.com/en/perspectives-events/publications/2020/01/ocies-2020-examination-priorities-variations-on-recurring-themes

If you have any questions about the issues raised in this Legal Update or would like assistance with SEC regulatory or other related matters, please contact the above Legal Update authors or any member of our Investment Management practice.

On August 21, 2019, the Securities and Exchange Commission published two separate releases related to proxy voting issues.  One release provided guidance regarding proxy voting responsibilities of investment advisers under the Investment Advisers Act of 1940 and Rule 206(4)-6 thereunder (the “Investment Adviser Proxy Guidance”), while the other provided an interpretation and related guidance regarding the applicability of certain rules under Section 14 of the Securities Exchange Act of 1934 to proxy voting advice (the “Exchange Act Proxy Guidance”).

A closer look at issues raised in these releases, along with some key takeaways, can be found in the following Mayer Brown Legal Updates:

Legal Update on Investment Adviser Proxy Guidance (authored by Leslie Cruz, Adam Kanter and Stephanie Monaco):

https://www.mayerbrown.com/en/perspectives-events/publications/2019/09/sec-publishes-guidance-on-the-proxy-voting-responsibilities-of-investment-advisers

Legal Update on Exchange Act Proxy Guidance (authored by Robert Grey, Michael Hermsen and Laura Richman):

https://www.mayerbrown.com/en/perspectives-events/publications/2019/08/sec-issues-guidance-on-the-application-of-the-proxy-rules-to-voting-advice

If you have any questions about the issues raised in these Legal Updates or would like assistance with SEC regulatory or other matters related to proxy voting, please contact any of the aforementioned Legal Update authors above or any member of our Investment Management practice.

Concept_Data Security_Padlock thru Chip_7169225Large

Privacy and the safeguarding of customer information continues to be an important compliance topic from the SEC’s perspective, including its examination staff.  The SEC’s Office of Compliance Inspections and Examinations (OCIE) recently released a Risk Alert highlighting common examination deficiencies from registered advisers and broker-dealers related to Regulation S-P, a rule requiring that such registrants provide privacy notices to clients and implement customer information safeguarding policies.   A closer look at this Risk Alert along with some key takeaways for advisers and broker-dealers to consider can be found in the following Mayer Brown Legal Update.

Legal Update on OCIE Risk Alert for Investment Adviser and Broker-Dealer Compliance Issues Related to Regulation S-P (authored by Peter McCamman, Matthew Bisanz, Jeffrey Taft and Adam Kanter):

https://www.mayerbrown.com/en/perspectives-events/publications/2019/04/secs-ocie-issues-risk-alert-for-investment-adviser-and-brokerdealer-compliance-issues-related-to-regulation-sp

If you have any questions about the issues raised in this Legal Update or would like assistance with SEC regulatory matters related to privacy, safeguarding or otherwise, please contact any of the aforementioned Legal Update authors or any member of our Investment Management or Financial Services Regulatory & Enforcement practice groups.

Hello dear readers.  If you are reading this today, on April 1, and you have a December 31 fiscal year end, then you have survived your annual Form ADV amendment.  Congratulations!  And while many of you are doubtless gearing up for an annual Form PF filing due at the end of this month, you might also pause and take a few moments to dwell on everyone’s favorite rule under the Investment Advisers Act of 1940; I refer, of course, to Rule 206(4)-2, the “Custody Rule.”

In the course of the past few months, we have seen two potentially significant developments concerning the rule.  First, on December 20, 2018, the SEC staff granted no action relief to Madison Capital Funding LLC concerning Custody Rule issues related to loan syndications where the adviser acted as agent for the syndicate, which included non-clients (check out Mayer Brown’s Legal Update for more information), and more recently, on March 12, 2019, SEC staff released a letter seeking comment on issues arising under the Custody Rule related to assets traded on a non-“Delivery versus Payment” basis (such as the loans at issue in the Madison Capital no-action letter) as well as digital assets (check out Mayer Brown’s Legal Update on this one too).  We know from SEC staff statements in the March 12 letter, and from the SEC’s long-term unified agenda, that potential changes to the Custody Rule are in the works, and market participants are being given the rare opportunity to comment and potentially shape the future direction of the rule before any changes are even issued in proposed form.  For advisers that are active in the loan market (and other non-DVP asset classes) or invest in digital assets, we suggest that you consider taking ownership (custody, even!) of how the Custody Rule impacts your business, and weigh whether to provide input to the staff, either alone, or together with similarly situated advisers or associated trade groups.

On March 11, 2019, the SEC announced that it settled charges against 79 investment advisers who self-reported violations in connection with the SEC’s Share Class Selection Disclosure Initiative (the “Initiative”).  Please see the link below for a Legal Update on this enforcement action, which discusses the Initiative in greater detail as well as the eligibility requirements for advisers, reviews the regulatory activity in this area prior to the announcement of the Initiative and summarizes the settled enforcement actions against these self-reporting advisers.

Legal Update on SEC’s Share Class Selection Disclosure Initiative (authored by Stephanie Monaco, Matthew Rossi and Leslie Cruz):

https://www.mayerbrown.com/en/perspectives-events/publications/2019/03/sec-settles-charges-with-79-self-reporting-advisers-in-share-class-selection-disclosure-initiative

If you have any questions about the topics raised in this Legal Update or would like assistance with SEC enforcement or regulatory matters related to share class selection or otherwise, please contact any of the aforementioned Legal Update authors above or any member of our Investment Management or Securities Litigation and Enforcement practice groups.

On February 28, 2019, the staff of the SEC’s Division of Investment Management granted no-action relief in connection with the 1940 Act’s in-person meeting requirements under Section 15 of the Investment Company Act of 1940 (the “1940 Act”).[1]  This relief would apply to the boards of directors of a registered investment companies (each a “fund”) and would permit them to, under certain delineated circumstances, approve certain investment advisory and principal underwriting contracts of a fund, the 12b-1 plan of a fund and the selection of a fund’s independent public accountant telephonically, either by video conference or by other means by which all participating directors may participate and communicate with each other simultaneously during a meeting. Continue Reading SEC Staff Grants Limited No-Action Relief Regarding the In-Person Board Meeting Requirement under the Investment Company Act

In late 2018, the SEC’s Office of Compliance Inspections and Examinations (OCIE) released its 2019 examination priorities, which cover not only investment advisers and registered funds, but also broker-dealers and transfer agents.  To help you digest and better understand these 2019 exam priorities, our Washington, DC-based Investment Management practice has prepared a legal update (see link below) giving an overview of the exam priorities specific to investments advisers, a brief description of certain key SEC 2018 enforcement actions involving investment advisers as well as certain suggested practice points that advisers may want to consider in response to these priorities and enforcement actions.

Legal Update on OCIE’s 2019 Exam Priorities (authored by Stephanie Monaco, Leslie Cruz, Adam Kanter and Peter McCamman):

https://www.mayerbrown.com/ocies-2019-examination-priorities-and-2018-enforcement-actions-practice-points-for-advisers-to-consider-02-19-2019/

If you have any questions about the issues raised in this Legal Update or would like assistance with SEC regulatory or other related matters, please contact any member of our Investment Management practice.

It’s time for another periodic round-up of noteworthy SEC enforcement actions. Topics in this update: hypothetical and back-tested performance, cybersecurity/privacy, and private fund conflicts, and then a lightning round of other odds and ends.

Continue Reading SEC Enforcement Round-Up II: Electric Boogaloo