All posts by Clifford E. Kirsch, Editor

Eversheds Sutherland With more than 25 years of experience, Cliff regularly counsels clients on the design and distribution of investment products including wrap-fee programs and other advisory products, mutual funds, bank collective investment funds and insurance products. He also focuses on issues related to the design and implementation of compliance programs at financial services firms.

The Last Dance (But not the Last Enforcement Action): SEC and FINRA Enforcement Actions in April 2020

In April 2020, one of the most-watched television shows was the beginning episodes of ESPN’s “The Last Dance,” a 10-part documentary chronicling Michael Jordan and the 1997-98 Chicago Bulls.  The documentary explores the ups and downs of the Bulls during Jordan’s last year as a Bull, and their successful attempt at a second three-peat.  While the show doesn’t address securities enforcement cases directly (or, frankly, at all), it does provide a lot of lessons that compliance officers and others can think about as they are sitting at home during the age of coronavirus assessing enforcement actions and how they may impact their firms.  Like so much in life, if you watch this series in just the right way, you’ll learn more than you would have expected.

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Tiger King: Murder, Mayhem, and March 2020 Enforcement Matters

During March 2020, one of the most streamed shows was Tiger King, a documentary about “Joe Exotic” a/k/a Joseph Allen Schreibvogel a/k/a Joseph Allen Maldonado-Passage, a “zoo owner [who] spirals out of control amid a cast of eccentric characters in this true murder-for-hire story from the underworld of big cat breeding:’1 Thus, Tiger King has much in common with the securities enforcement matters from March:  fraud, broken rules, sanctions, and (arguably) eccentric characters.  One big difference, of course, is that last month’s enforcement matters did not involve cat breeding, big or small. (We can’t make any promises about April’s enforcement actions.) Thus, the March enforcement matters present important lessons for broker-dealers and investment advisers (as well as important lessons for zoo owners, assuming that the zoo is an outside business activity).

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SEC extends flexibility due to COVID-19

On March 25, 2020 the SEC issued several exemptive orders to extend temporary COVID-19 relief.

·         The relief further extends the filing periods covered by its previously enacted conditional reporting relief for certain public company filing obligations.

·         The relief further extends regulatory relief previously provided to funds and investment advisers whose operations may be affected by COVID-19.

·         The SEC and its staff also provided public company disclosure guidance.

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SEC Staff Proposes Rules on Streamlining Private Exemptions

On March 4, 2020, the Securities and Exchange Commission (the SEC) issued a proposed rule on ways to simplify, harmonize and improve certain aspects of the exempt offering framework to promote capital formation while preserving important investor protections.

  • The Proposed Rule is substantially informed by public input that was provided in response to the SEC’s June 2019 concept release on the harmonization of securities offering exemptions.
  • The goal of the Proposed Rule is to reduce the unnecessary complexity within the offering framework and to allow market participants to navigate through the exempt offering framework more easily.
  • The changes outlined in the Proposed Rule could bring a wider variety of investors and distribution channels back into the market for issuers, including for BDCs, and such expansion would increase the availability of capital and allow more flexibility for BDC fundraising activities.

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