News

August 30, 2023

Last May, the Commission announced charges against Pinnacle Advisors LLC for “aiding and abetting Liquidity Rule violations by a mutual fund it advised and whose Liquidity Risk Management Program it administered.” In July, Pinnacle Advisors filed a motion to dismiss claiming the Commission’s accusation was “an exercise of government overreach.” The Commission responded to Pinnacle’s motion to dismiss countering that the firm received fair notice regarding the application of the seven-year-old liquidity rule and that the rule is not “impermissibly vague.”

August 29, 2023

This week, the Forum News Feed will highlight popular posts over the last few months. We will return with new content beginning on Tuesday, September 5. In April, Securities and Exchange Commission Chair Gary Gensler testified before members of the House Financial Services Committee as part of the Committee’s oversight process. Many members of the Committee noted the pace of rulemaking and the short comment periods are making it difficult for market participants to keep up. Additionally, a few Members of Congress pushed back against the Commission’s open-end fund proposal which would mandate swing pricing, impose a hard close, and change liquidity management provisions for funds.

August 24, 2023

ACA Foreside discusses the process of launching and distributing an exchange traded fund (ETF) in a paper titled, “Building and Distributing an Exchange-Traded Fund from Start to Finish.” The white paper notes potential benefits of using the ETF wrapper including trading flexibility, lower costs, and tax benefits.

August 23, 2023

The S&P Global Ratings' press release maintained that while the numerical score would be removed, the analytical explanations “will remain integral to our reports.” According to the statement, the change does not impact “ESG principles criteria or our research and commentary on ESG-related topics, including the influence that ESG factors can have on creditworthiness.”

August 22, 2023

FDIC Chairman Martin Gruenberg noted that “while regional banks may not be as large, complex, and internationally active as the Global Systemically Important Banks – or G-SIBS as they are called – they would pose distinct and significant challenges in resolution that could raise serious financial stability risks.” Gruenberg stated that in response to the common findings, the FDIC and other banking regulators were looking at the capital treatment of unrealized losses, long-term debt requirements, and resolution plans for large regional banks.

August 17, 2023

The report delves into the nuances between traditional passive ETFs as well as newer semi-transparent ETF offerings and details different ways in which semi-transparent ETFs disclose their holdings on a limited basis.

August 16, 2023

The proposal, entitled “Amendments to PCAOB Auditing Standards related to a Company’s Noncompliance with Laws and Regulations” would require, in part, that auditors identify potential areas of the law where noncompliance would impact financial statements, assess risk of material misstatement on financial statements due to noncompliance, and identifying instances where noncompliance may have occurred, among other changes.

August 15, 2023

President Joseph Biden issued the “Executive Order on Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern” which represents the first step by the Biden administration to curb certain categories of U.S. investment into China. Concurrently with the Executive Order, the U.S. Department of the Treasury released an advance notice of proposed rulemaking which includes 80 specific questions and considerations in defining key aspects of the Order.

August 14, 2023

The Securities and Exchange Commission (SEC) Division of Enforcement announced charges against 11 firms, 10 broker-dealers and one dual registered broker-dealer and investment adviser for failures by the firm and employees to maintain and preserve electronic communications. Gurbir Grewal, Director of the SEC’s Division of Enforcement, stated, “Compliance with the books and records requirements of the federal securities laws is essential to investor protection and well-functioning markets.”

August 10, 2023

At a recent meeting of the Financial Stability Oversight Council (FSOC), Securities and Exchange Commission (SEC) Chair Gary Gensler delivered remarks on the progress the Commission has made towards increasing climate-risk disclosure and the cessation of LIBOR. Additionally, the FSOC’s Climate-related Financial Risk Committee (CFRC) issued a staff progress report on a range of actions underway to support disclosure, address data gaps, and assess climate-related financial risks among FSOC-member agencies.

August 9, 2023

At the end of July, the House Financial Services Committee held a two-day mark-up of several ESG and digital assets related bills. On the first day, the Committee advanced bills on blockchain, fintech, and the “Financial Innovation and Technology (FIT) for the 21st Century Act” (H.R. 4763) a bipartisan, comprehensive package that establishes a digital asset framework to provide regulatory certainty to the crypto market. During the second day of the mark-up, the House Financial Services Committee advanced ESG bills as well as a measure on stablecoins.

August 8, 2023

ACA Group hosts a podcast series “Compliance in Context” which recently highlighted the importance of valuation and having the proper policies and procedures in place. The episode, entitled, “What do you mean Valuation?” takes a comprehensive look at why valuation is a key topic for regulators and the role that compliance plays in the process.

August 7, 2023

House Oversight Committee Chairman James Comer sent a letter to Securities and Exchange Commission (SEC) Chair Gary Gensler requesting information on the SEC’s use of the Intergovernmental Personnel Act (IPA), a program intended to allow agencies to retain skilled individuals temporarily. The letter specifically names four SEC Division Directors, and requests information on their outside employment, building entrance logs, compensation, travel reimbursement, among other information.

August 3, 2023

Dimensional Fund Advisors filed an application with the Commission to permit the Advisor’s mutual funds to offer an ETF share class. In a client alert from Ropes & Gray, the authors highlight that Dimensional’s application would “rely on a fund’s board of directors to assess, both initially and periodically, whether the multi-class structure is in the best interests of each mutual fund class and ETF class individually and of the fund as a whole, as well as whether the multi-class structure is operating effectively.”

August 2, 2023

The Nasdaq Center for Board Excellence recently released a white paper entitled, “Revolutionary Technology: How Boards Can Learn from Emerging Innovation.” The paper notes “directors will want to ask questions of their CEO and senior leadership teams about AI usage, product integrations, competitor intelligence, and how it is influencing the evolving business strategy.”

August 1, 2023

The Senate Appropriations Subcommittee on Financial Services and General Government held a hearing entitled, “A Review of the Fiscal Year 2024 Budget for the U.S. Securities and Exchange Commission.” In his written testimony, Chair Gensler stated the agency’s work has increased substantially, noting that the Division of Enforcement “brought more than 750 enforcement actions in FY 2022, a 9 percent increase over the prior year,” which resulted in orders for $6.4 billion in penalties and disgorgement.

July 31, 2023

The EY Center for Board Matters plans to host a webinar entitled, “Why now is historic for the evolution of board governance.” The program will cover the impact emerging technologies are having in the board room, and how directors are proactively approaching these changes.

July 27, 2023

In July, two House Financial Services Subcommittees heard testimony on issues related to the proxy voting process and the oversight of proxy advisory firms. In her opening statement at one hearing, Subcommittee Chair Ann Wagner (R-MO) noted “For our public markets to remain focused on long-term shareholder value, it is crucial to reform the proxy process to reduce the financial burdens on small and mid-sized companies and minimize distractions for management.”

July 26, 2023

SEC Chair Gary Gensler delivered remarks at a National Press Club event covering Artificial Intelligence and its application to the financial markets, noting innovation in this space opens up “tremendous opportunities for humanity,” including benefits in the area of financial inclusion, user experience, and efficiency. Gensler stated the development and use of AI in financial markets will require new macro-prudential policy considerations.

July 25, 2023

The Securities and Exchange Commission (SEC) allowed an almost 6-year old MiFID II temporary no-action relief letter to expire relating to the bundling of investment research. Under the now-expired relief, the SEC committed that Commission staff would not recommend enforcement action under Section 202(a)(11) of the Advisers Act against a broker-dealer providing “investment advice” to an investment manager that was required by MiFID II to pay for research with its own funds or with “hard dollars” passed through a separate research payment account.