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.

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.

Read more here

SEC relief for advisers impacted by COVID-19

On March 13, 2020, the Securities and Exchange Commission (SEC) issued a temporary order (the Order) providing conditional exemptive relief to investment advisers registered with the SEC (RIAs) and exempt reporting advisers (ERAs) with respect to certain filing, delivery and reporting requirements under the Investment Advisers Act of 1940, as amended (the Advisers Act) due to disruptions and limitations caused by coronavirus disease 2019 (COVID-19). The Order provides impacted firms with conditional exemptive relief from these filing, delivery and reporting requirements in the form of an extension of up to 45 days from the originally required due date. RIAs or ERAs with filing, delivery or reporting obligations between March 13, 2020, and April 30, 2020 (the Period) may rely on the Order. The SEC noted it may extend the Order past April 30 and may issue other relief if warranted in the future.

To rely on the Order, RIAs and ERAs must satisfy the Order’s specified conditions.  Detailed here.

The OCC’s 2019 annual report addresses anti-money laundering risks for financial institutions

The Annual Report summarizes the OCC developments against its 2019 strategic priorities, including its priority to reduce the burden of Bank Secrecy Act (BSA) and Anti Money Laundering (AML) compliance while protecting the financial system.

In 2019, the OCC, along with the other federal financial regulatory agencies, issued interpretive guidance statements on using collaborative arrangements to share resources to manage BSA/AML obligations, considering innovative technologies to meet BSA/AML compliance obligations, clarifying existing risk-focused approaches to examinations of financial institutions’ BSA/AML compliance programs, and clarifying suspicious activity report (SAR) filing requirements for banks providing financial services to hemp-related businesses.

The OCC appears very focused on encouraging banks to adopt innovative technologies to manage their BSA/AML compliance risks, and this trend should continue in 2020 as technological solutions evolve even further.

Read more here.

Additional contributor to this post:


Congress delivers SECURE and more in year-end benefits bonanza

On December 20, 2019, President Trump signed into law a comprehensive government funding bill (the Appropriations Act, including the SECURE Act) that includes substantial employee benefits-related provisions. The legislation affects both retirement and health plans, has some immediate and January 1, 2020 effective dates, and will have a significant impact on the way that many plans are operated. Many of the SECURE Act provisions are intended to encourage the use of lifetime income products (such as annuities) in 401(k) plans and other defined contribution plans, while others are designed to encourage small-to-midsized employers that do not currently offer retirement plans to employees to adopt a plan. Other provisions are intended to increase retirement savings in existing plans, and some are simply intended to increase revenue.

Read more here.

Additional contributor to this post:

Carol T.

SEC Regulation Best Interest: Five concrete steps for compliance

On June 5, the U.S. Securities and Exchange Commission (SEC) approved its highly anticipated package of rulemakings and interpretive guidance relating to the standards of care applicable to financial professionals when making recommendations and providing investment advice to retail investors.

Included in this package was the SEC’s new Regulation Best Interest, which will likely require transformative changes for much of the retail brokerage industry.

With an effective date of June 30, 2020, what concrete steps should broker-dealers consider taking as they work toward compliance by the deadline?

Read more here.