SEC expands the Names Rule

On September 20, 2023, the US Securities and Exchange Commission (SEC) voted by a 4-1 margin to adopt amendments to the fund “Names Rule” (Rule 35d-1) under the Investment Company Act of 1940. The amendments greatly expand the scope of the rule, but relax some of the compliance requirements that were originally proposed.

  • Consistent with the proposal, the final amendments expand the scope of the rule to require funds with names that suggest a focus in investments that have, or issuers that have, “particular characteristics” to adopt an 80% investment policy.
  • The final amendments retain the rule’s original language requiring funds to comply with their 80% policies “under normal circumstances” and “at the time of investment,” but add a requirement that funds must review compliance with their 80% policies no less frequently than quarterly, in lieu of the continuous monitoring that was proposed.

In a departure from the proposal, the final amendments do not require unlisted closed-end funds and BDCs to adopt their 80% policies as fundamental policies, rather, the amended rule states that such funds may not change their policies without a majority shareholder vote, unless the fund conducts a tender offer prior to the change, provides notice of the change prior to the tender offer, shares are repurchased at net asset value, and the tender offer is not oversubscribed.

Read more here.

Emoji Enforcement: Surely you can’t be serious

From Brian Rubin in NSCP Currents: 

During this year’s annual FINRA conference, a panel of officials announced that in connection with retaining and supervising electronic messages, firms might have to begin reviewing emojis to determine whether they constitute reportable customer complaints.

FINRA’s proclamation appears to be problematic for firms. First, FINRA didn’t announce whether technology exists to find, let alone, translate emojis.  Second, emojis are constantly being added.  Finally, the meaning of emojis depends on context and the “space-time continuum,” including the generation bracket of the sender and recipient.  For example, the thumbs up emoji 👍used to mean, “good job,” but for Gen Z-ers, it’s more of an insult about something you botched, rather than a positive sign, and sometimes it means, “sure, whatever” in response to something you’ve said.  Without industry consultation about these issues, it’s easy to predict what will happen next: 😡.

Read more here.

Costly 13F Filing Violations, ChatGPT Policy Considerations, Insight Into New Fiduciary Rule Proposal: Lessons Learned & Worth Reading for March 2023

ACA Group’s Lessons Learned and thought leadership:

Additional thought leadership and Insights can be found here.

Shortened Settlement Cycles, Form ADV Amendments and Hackers Impact Derivatives Market: Regulatory Update for March 2023

March Regulatory Updates from Cari Hopfensperger at ACA Group:

Plus, To Do Checklists for March and April 2023, and more here.

SEC’s amendments to Rule 10b5-1 and new state privacy laws — ACA Regulatory Updates

February Regulatory Updates from Cari Hopfensperger at ACA Group:

Topics include:

  • News for All Firms
    • SEC Amends Rule 10b5-1 Restricting Insider Trading
    • State Privacy “Class of 2023” – Several New Privacy Laws Taking Effect
  • News for Investment Advisers
    • 10 States Now Require IARs to Complete Annual Continuing Education
    • Form 13F Amendments to Make Data More Usable Take Effect
  • News for CPOs/CTAs
    • NFA Reminds Members to Confirm Exemption Status of Entities They Do Business With
  •  Lessons Learned
    • SEC Fines Service Provider $5 Million for Securities Fraud: Service Providers Beware!
    • I’m Ready for My Close-Up: Former PM Leverages Investment to Get His Daughter in the Movies
    • Adviser Keeps Revenue Sharing on the Down Low – and Gets SEC Smackdown

Read more here.