The U.S. Securities and Exchange Commission (SEC) and its staff have been busy since the end of the recent partial government shutdown. While there is certainly much work behind the scenes we do not get to see, there is plenty of public work that registered investment companies should note. For instance, the following matters occurred during the last two weeks of February:
- On February 13, the Office of Compliance Inspections and Examinations (OCIE) released a Risk Alert highlighting the risks and issues with transfer agents that also serve as paying agents. While the focus of the alert was not on mutual fund transfer agents, fund boards and chief compliance officers may find this information useful during oversight due diligence meetings with fund transfer agents, including sub-transfer agents.
- On February 27, the SEC adopted an interim final rule amending the timing of when Form N-PORT must be filed with the SEC. Registered investment companies, other than money market funds and small business investment companies, and unit investment trusts that operate as exchange-traded funds may now file Form N-PORT for each month in a fiscal quarter with the SEC not later than 60 days after the end of that fiscal quarter. This marks a change from the prior requirement to file 30 days after the end of each month. The SEC also added a voluntary explanatory notes section to Form N-LIQUID.
- On February 28, the SEC staff issued a no-action letter that allows fund directors to give certain “Required Approvals” (as defined in the incoming letter) under Sections 12(b), 15(c), and 32(a) under the Investment Company Act of 1940 and rules thereunder telephonically, by video conference, or by other means by which all participating directors may participate and communicate with each other simultaneously during a meeting “where in-person voting requirements may create a significant or unnecessary burden for funds and their boards that outweigh any benefits to fund shareholders.” The scope of the no-action relief is narrow, but it does provide boards the ability to address the statutes’ requirements in the rare instances in-person meetings cannot be held.
The above examples remind us that the SEC and its staff can move swiftly when announcing risk alerts, guidance, and rule amendments, proposals, and adoptions. Staying current with such information can be a challenge. Most compliance professionals do so via industry publications and alerts from trade organizations, service providers, and even the SEC itself (the agency issues content updates by email). We suggest making reviews of full SEC releases or a summary from one of these sources part of a regular routine. Keeping up with “need to know” information can be challenging; but these types of resources can push relevant information to you and help keep you up to speed.
For More Information
If you have questions about these SEC actions, please contact Maureen Colligan at email@example.com.
About the Author
Erik Olsen is a Managing Director at ACA Compliance Group. He provides ongoing and customized regulatory compliance consulting and compliance program review services to registered investment companies, their investment advisers and sub-advisers, and other service providers. Erik joined ACA in 2012 as a Senior Principal Consultant.
Prior to joining ACA, Erik served as a Securities Compliance Examiner in the U.S. Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (Investment Adviser/Investment Company) where he conducted regulatory examinations of registered investment advisers and registered investment companies. He also held positions as a Compliance Director at an investment management company and worked in the Mutual Funds Legal and Accounting Departments at an asset management company.
Erik is a Certified Fraud Examiner. He earned his Bachelor of Business Administration degree in Finance from Loyola College (now Loyola University Maryland).