The Financial Industry Regulatory Authority is once again taking a close look at member firm mutual fund sales practices and sales charge waivers (Mutual Fund Waiver Sweep) in the U.S. FINRA’s target exam letter seeks information about mutual fund sales to retirement plans and charitable accounts, as well as the sales charge waivers that mutual funds make available to eligible purchasers. FINRA’s Mutual Fund Waiver Sweep covers the period from January 1, 2011 through December 31, 2015 and, as drafted, seeks responses from FINRA member firms by June 10, 2016.
Troubled financial institutions, some with substantial broker-dealer operations, played a prominent role in the 2008 financial crisis. In an effort to protect the financial system from serious threats posed by significant nonbank financial companies in financial distress, Congress enacted Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to provide for an orderly liquidation of such entities under the supervision of federal authorities. Federal regulators have proposed rules that would implement the provisions of Title II in regard to the resolution of a large broker-dealer. Most notably, the proposed rules address how a “bridge broker or dealer” could be used in connection with the liquidation of a “covered broker or dealer.”
Read more here: SEC and FDIC Propose Dodd-Frank Broker-Dealer Resolution Rules
The Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) on January 11, 2016 announced its examination priorities for this year, which “address issues across a variety of financial institutions, including investment advisers, investment companies, broker-dealers, transfer agents, [and] clearing agencies.” The priorities, as in 2015, focus on the following: protecting retail investors and investors saving for retirement; assessing market-wide risks; and using data analytics to identify elevated risk profiles and signal potential illegal activity.
In a separate letter, OCIE identified its priorities for the national securities exchanges.
On Dec. 11, 2015, the Securities and Exchange Commission (the “SEC”) issued a release proposing the adoption of new Rule 18f-4 under the Investment Company Act of 1940 (the “1940 Act”). The proposed rule, if adopted as proposed, will establish new limitations on the use of derivatives by registered investment companies and business development companies (collectively, “regulated funds”). It will also regulate other trading practices of such funds (including short sales of securities) that are deemed to involve the issuance of “senior securities.” Hedge funds and other private investment funds will not be subject to the rule.
Kenneth Berman, a member of the Investment Management Group, focuses his practice on providing regulatory and compliance advice to financial services firms, particularly investment advisers and sponsors of mutual funds, private equity funds and other pooled investment vehicles. Mr. Berman also counsels mutual fund independent directors and advises operating companies concerning status issues they may face under the Investment Company Act of 1940. He is recognized as a leading lawyer by Chambers USA (2009-2016), where clients note that he is an “impressive” and “great” lawyer who offers “invaluable support throughout the decision-making process.” Mr. Berman is also recommended by The Legal 500 US (2012-2016).
Prior to joining Debevoise, Mr. Berman was Associate Director of the Securities and Exchange Commission’s Division of Investment Management, where he oversaw the division offices responsible for processing applications for exemptive relief under the Investment Company Act and administering the Public Utility Holding Company Act of 1935. He joined the SEC staff in 1988 after several years of private practice. Before becoming Associate Director in 1997, Mr. Berman was Assistant Director of the Division’s Office of Regulatory Policy.
Mr Berman is the co-author of numerous articles, including “What Will The “Eyes And Ears” Of The SEC Choose To See And Hear This Year? OCIE Announces Examination Priorities For 2015,” Vol. 16 No.2, Journal of Investment Compliance, (July, 2015); “Expense Allocation: The SEC Brings Down The Hammer,” Vol. 16 No. 1, Journal of Investment Compliance(May, 2015); “SEC Settles First “Pay-To-Play” Enforcement Action,” Financial Fraud Law Report (October, 2014); “Debevoise & Plimpton Discusses JOBS Act General Solicitations,” The CLS Blue Sky Blog (September, 2014); “Debevoise & Plimpton Discusses Treatment of Special Purposes Vehicles under the Advisers Act,” The CLS Blue Sky Blog (August, 2014); “Good News on ‘Bad Actors’,” PE Manager (March, 2014); “A Touch of Solace for Broker-Dealer Compliance Personnel,” Law360 (November, 2013); “Debevoise & Plimpton Discusses SEC’s Guidance on Supervisory Liability for a Broker-Dealer’s Compliance and Legal Personnel,” The CLS Blue Sky Blog (November, 2013); “Time For Private Equity To Focus On Form PF,” The Deal (June, 2012); “International Survey of Investment Adviser Regulation,” Wolters Kluwer(June, 2012) and “SEC Risk Alert Discusses When Social Media Interactions May Constitute Prohibited Hedge Fund Client Testimonials,” The Hedge Fund Law Report (April, 2012).
Mr. Berman is a frequent speaker at conferences relating to investment company and investment adviser issues. He is a member of the Committee on Investment Management Regulation of the Association of the Bar of the City of New York and served as Chair of that Committee from 2009 to 2012. Mr. Berman is also a member of the American Bar Association (Subcommittee on Investment Companies and Investment Advisers, Subcommittee on Private Investment Entities) and the District of Columbia Bar. Mr. Berman is also an adjunct professor of law in Georgetown University’s LLM program.
Mr. Berman received his J.D. from the University of Chicago Law School, where he was a member of the Law Review, and his B.A. from Dickinson College, where he was elected to Phi Beta Kappa.
-University of Chicago Law School, 1979, J.D.
-Dickinson College, 1976, B.A.
-District of Columbia