Sara Crovitz quoted in Ignites regarding the SEC’s recent risk alert on compliance concerns in light of the pandemic
The full article can be found here.
The full article can be found here.
OCIE issued a risk alert to share observations with broker-dealers and investment advisers (firms) based on OCIE’s ongoing COVID-19 outreach to registrants relating to the following six areas:
Stradley’s Coronavirus Task Force will be updating this high-level overview of coronavirus disease 2019 (COVID-19) related issues for registered investment companies and fund managers as developments warrant.
UPDATED ISSUES:
ISSUES:
Please do not hesitate to reach out to your Stradley Ronon contact, or to any member of Stradley’s Coronavirus Task Force, with any questions and concerns you may have during this period. You can reach Sara Crovitz at 202.507.6414 or scrovitz@stradley.com, or John Baker at 202.419.8413 or jbaker@stradley.com.
1 For the 1940 Act Orders, see Release No. IC-33824 (Mar. 25, 2020), https://www.sec.gov/rules/other/2020/ic-33824.pdf; Release No. IC-33817 (Mar. 13, 2020), https://www.sec.gov/rules/other/2020/ic-33817.pdf. The various forms of relief provided in the 1940 Act Orders, which are further discussed below, are subject to conditions that are set out in the orders, such as subsequent ratification of votes, notice to the SEC of filing delays, and website disclosure of issues with the delivery of shareholder reports and prospectuses.
2 Release No. IC-33897 (June 19, 2020), https://www.sec.gov/rules/exorders/2020/ic-33897.pdf.
3 For the Advisers Act Orders, see IA-5469 (Mar. 25, 2020), https://www.sec.gov/rules/other/2020/ia-5469.pdf; Release No. IA-5463 (Mar. 13, 2020), https://www.sec.gov/rules/other/2020/ia-5463.pdf.
4 Using IARD, Form ADV: Item 1.F, https://www.sec.gov/divisions/investment/iard/iardfaq.shtml#item1f.
5 Release No. 34-88465(Mar. 25, 2020), https://www.sec.gov/rules/exorders/2020/34-88465.pdf; Release No. 34-88318 (Mar. 4, 2020), https://www.sec.gov/rules/other/2020/34-88318.pdf.
6 Press Release 2020-73, SEC Extends Conditional Exemptions from Reporting and Proxy Delivery Requirements for Public Companies, Funds, and Investment Advisers Affected by Coronavirus Disease 2019 (COVID-19) (Mar. 25, 2020), https://www.sec.gov/news/press-release/2020-73; Press Release 2020-63, SEC Takes Targeted Action to Assist Funds and Advisers, Permits Virtual Board Meetings and Provides Conditional Relief from Certain Filing Procedures (Mar. 13, 2020), https://www.sec.gov/news/press-release/2020-63.
7 Policy Tools: Term Asset-Backed Securities Loan Facility, https://www.federalreserve.gov/monetarypolicy/talf.htm.
8 FAQs: Term Asset-Backed Securities Loan Facility (June 15, 2020), https://www.newyorkfed.org/markets/term-asset-backed-securities-loan-facility/term-asset-backed-securities-loan-facility-faq.
9 Franklin Templeton Investments, SEC No-Action Letter (June 19, 2009), https://www.sec.gov/divisions/investment/noaction/2009/franklintempleton061909.htm. Stradley Ronon acted as counsel for this no-action request.
10 Investment Company Institute, SEC No-Action Letter (May 27, 2020), https://www.sec.gov/investment/ici-sifma-052720. The guidance on participating through a special purpose vehicle makes generally available to funds and BDCs a 2009 no-action position that originally was available only to the requesting party. See T. Rowe Price Associates, SEC No-Action Letter (Oct. 8, 2009), https://www.sec.gov/divisions/investment/noaction/2009/troweprice100809.htm.
11 Term Asset-Backed Securities Loan Facility Rates, https://www.newyorkfed.org/markets/term-asset-backed-securities-loan-facility/term-asset-backed-securities-loan-facility-rates.
12 Press Release, Federal Reserve Board broadens program of support for the flow of credit to households and businesses by establishing a Money Market Mutual Fund Liquidity Facility (MMLF) (Mar. 18, 2020), https://www.federalreserve.gov/newsevents/pressreleases/monetary20200318a.htm.
13 Press Release, Federal Reserve Board expands its program of support for flow of credit to the economy by taking steps to enhance liquidity and functioning of crucial state and municipal money markets (Mar. 20, 2020) https://www.federalreserve.gov/newsevents/pressreleases/monetary20200320b.htm.
14 Policy Tools: Money Market Mutual Fund Liquidity Facility, https://www.federalreserve.gov/monetarypolicy/mmlf.htm.
15 Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board under Section 13(3) of the Federal Reserve Act (June 9, 2020), https://www.federalreserve.gov/publications/files/pdcf-cpff-mmlf-pplf-6-10-2020.pdf; see also Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board under Section 13(3) of the Federal Reserve Act (May 23, 2020), https://www.federalreserve.gov/monetarypolicy/files/pdcf-cpff-mmlf-5-24-20.pdf; Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board under Section 13(3) of the Federal Reserve Act (Apr. 23, 2020), https://www.federalreserve.gov/publications/files/pdcf-mmlf-and-cpff-4-24-20.pdf.
16 Money Market Mutual Funds Template Letter (Mar. 17, 2020), https://www.federalreserve.gov/supervisionreg/legalinterpretations/fedreserseactint20200317.pdf.
17 Investment Company Institute, SEC No-Action Letter (Mar. 19, 2020), https://www.sec.gov/investment/investment-company-institute-031920-17a.
18 H.R. 748, § 4015, 116th Cong. (2020), https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf.
19 Release No. 34-88448 (Mar. 20, 2020), https://www.sec.gov/rules/exorders/2020/34-88448.pdf.
20 Release No. 34-88960 (May 27, 2020), https://www.sec.gov/rules/exorders/2020/34-88960.pdf.
21 Policy Tools: Secondary Market Corporate Credit Facility, https://www.federalreserve.gov/monetarypolicy/smccf.htm.
22 Secondary Market Corporate Credit Facility, https://www.newyorkfed.org/markets/secondary-market-corporate-credit-facility.
23 Press Release, Federal Reserve takes additional actions to provide up to $2.3 trillion in loans to support the economy (Apr. 8, 2020), https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm.
24 Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board under Section 13(3) of the Federal Reserve Act (May 28, 2020), https://www.federalreserve.gov/publications/files/pmccf-smccf-talf-5-29-20.pdf. The Federal Reserve Board is making publicly available detailed information on its transactions and holdings under the facility. See SMCCF Transaction-specific Disclosures (May 29, 2020), https://www.federalreserve.gov/monetarypolicy/files/smccf-transition-specific-disclosures-5-29-20.xlsx.
25 Release Nos. 33-10695, IC-33646 (Sept. 25, 2019), 84 Fed. Reg. 57162, 57178 (Oct. 24, 2019), https://www.federalregister.gov/d/2019-21250.
26 Paycheck Protection Program, https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.
27 Business Loan Program Temporary Changes; Paycheck Protection Program—Requirements—Promissory Notes, Authorizations, Affiliation, and Eligibility, 85 Fed. Reg. 23450, 23451 (Apr. 28, 2020), https://www.federalregister.gov/d/2020-09098.
28 Division of Investment Management Coronavirus (COVID-19) Response FAQs, Q&A II.4, https://www.sec.gov/investment/covid-19-response-faq.
29 SEC Division of Investment Management, Importance of Delivering Timely and Material Information to Investment Company Investors (Apr. 14, 2020), https://www.sec.gov/investment/delivering-timely-material-information.
30 As discussed above, the SEC has provided limited conditional relief from the obligation to timely deliver prospectuses to existing shareholders. See supra Delivery of Prospectuses and Shareholder Reports.
31 Division of Investment Management Coronavirus (COVID-19) Response FAQs, Q&A III.5, https://www.sec.gov/investment/covid-19-response-faq.
32 Staff Guidance for Conducting Annual Meetings in Light of COVID-19 Concerns (Apr. 7, 2020), https://www.sec.gov/ocr/staff-guidance-conducting-annual-meetings-light-covid-19-concerns.
33 Release No. IC-33837 (Apr. 8, 2020), https://www.sec.gov/rules/exorders/2020/ic-33837.pdf.
34 SEC Chairman Jay Clayton, Investors Remain Front of Mind at the SEC: Approach to Allocation of Resources, Oversight and Rulemaking; Implementation of Regulation Best Interest and Form CRS (Apr. 2, 2020), https://www.sec.gov/news/public-statement/statement-clayton-investors-rbi-form-crs.
35 OCIE, Risk Alert: Examinations that Focus on Compliance with Regulation Best Interest (Apr. 7, 2020),
https://www.sec.gov/files/Risk%20Alert-%20Regulation%20Best%20Interest%20Exams.pdf; OCIE, Risk Alert: Examinations that Focus on Compliance with Form CRS (Apr. 7, 2020), https://www.sec.gov/files/Risk%20Alert%20-%20Form%20CRS%20Exams.pdf.
36 FINRA Highlights Firm Practices from Regulation Best Interest Preparedness Reviews (Apr. 8, 2020), https://www.finra.org/rules-guidance/key-topics/regulation-best-interest/preparedness.
37 Frequently Asked Questions on Form CRS, https://www.sec.gov/investment/form-crs-faq#filing.
38 Division of Trading and Markets Staff Statement Regarding Requirements for Certain Paper Submissions in Light of COVID-19 Concerns (Apr. 2, 2020), https://www.sec.gov/tm/paper-submission-requirements-covid-19.
39 SEC Division of Corporation Finance, Statement Regarding Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns (Apr. 10, 2020), https://www.sec.gov/corpfin/announcement/form-144-paper-filings-email-option.
40 IM Information Update IM-INFO-2020-03 (Apr. 8, 2020), https://www.sec.gov/files/im-info-2020-03.pdf.
41 SEC Chief Accountant Sagar Teotia, Statement on the Importance of High-Quality Financial Reporting in Light of the Significant Impacts of COVID-19 (Apr. 3, 2020), https://www.sec.gov/news/public-statement/statement-teotia-financial-reporting-covid-19-2020-04-03.
42 Investment Company Institute, SEC No-Action Letter (Mar. 26, 2020), https://www.sec.gov/investment/investment-company-institute-032620-17a.
43 Release No. IC-33821 (Mar. 23, 2020), https://www.sec.gov/rules/other/2020/ic-33821.pdf.
44 Recent interfund lending orders are available at https://www.sec.gov/rules/icreleases.shtml#interfundlending.
45 OCIE Statement on Operations and Exams – Health, Safety, Investor Protection and Continued Operations are our Priorities (Mar. 20, 2020), https://www.sec.gov/ocie/announcement/ocie-statement-operations-health-safety-investor-protection-and-continued.
46 Staff Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns (Mar. 24, 2020), https://www.sec.gov/corpfin/announcement/staff-statement-regarding-rule-302b-regulation-s-t-light-covid-19-concerns.
47 Frequently Asked Questions Related to Regulatory Relief Due to the Coronavirus Pandemic (Mar. 24, 2020), https://www.finra.org/rules-guidance/guidance/faqs/coronavirus. FINRA guidance, updates, and other information on COVID-19 are available at https://www.finra.org/rules-guidance/key-topics/covid-19. Other self-regulatory organizations are also providing relief and guidance. See, e.g., Cboe Regulatory Circular 20-021 (Mar. 25, 2020), http://cdn.cboe.com/resources/regulation/circulars/regulatory/RC20-021-Filing-Extensions-for-Annual-Reports-and-FOCUS-Reports.pdf; Cboe Regulatory Circular 20-022 (Mar. 25, 2020), http://cdn.cboe.com/resources/regulation/circulars/regulatory/RC20-022-Extension-of-Time-for-Certain-Filings-Currently-Due-April-1-2020.pdf.
48 Novel Coronavirus COVID-19 Updates, https://www.nasaa.org/industry-resources/covid-19-updates/.
49 State “Shelter-in-Place” and “Stay-at-Home” Orders, https://www.finra.org/rules-guidance/key-topics/covid-19/shelter-in-place.
50 Press Release No. 8136-20, CFTC Issues Third Wave of Relief to Market Participants in Response to COVID-19 (Mar. 20, 2020), https://www.cftc.gov/PressRoom/PressReleases/8136-20.
51 Notice to Members I-20-15 (Mar. 23, 2020), https://www.nfa.futures.org/news/newsNotice.asp?ArticleID=5218.
52 European Commission Delegated Regulation art. 62, https://ec.europa.eu/transparency/regdoc/rep/3/2016/EN/3-2016-2398-EN-F1-1.PDF.
Stradley’s Coronavirus Task Force will be updating this high-level overview of coronavirus disease 2019 (COVID-19) related issues for registered investment companies and fund managers as developments warrant.
UPDATED ISSUES:
ISSUES:
Please do not hesitate to reach out to your Stradley Ronon contact, or to any member of Stradley’s Coronavirus Task Force, with any questions and concerns you may have during this period. You can reach Sara Crovitz at 202.507.6414 or scrovitz@stradley.com, or John Baker at 202.419.8413 or jbaker@stradley.com.
1 Policy Tools: Term Asset-Backed Securities Loan Facility, https://www.federalreserve.gov/monetarypolicy/talf.htm.
2 FAQs: Term Asset-Backed Securities Loan Facility (May 12, 2020), https://www.newyorkfed.org/markets/term-asset-backed-securities-loan-facility/term-asset-backed-securities-loan-facility-faq.
3 Franklin Templeton Investments, SEC No-Action Letter (June 19, 2009), https://www.sec.gov/divisions/investment/noaction/2009/franklintempleton061909.htm. Stradley Ronon acted as counsel for this no-action request.
4 Investment Company Institute, SEC No-Action Letter (May 27, 2020), https://www.sec.gov/investment/ici-sifma-052720. The guidance on participating through a special purpose vehicle makes generally available to funds and BDCs a 2009 no-action position that originally was available only to the requesting party. See T. Rowe Price Associates, SEC No-Action Letter (Oct. 8, 2009), https://www.sec.gov/divisions/investment/noaction/2009/troweprice100809.htm.
5 Release No. 34-88448 (Mar. 20, 2020), https://www.sec.gov/rules/exorders/2020/34-88448.pdf.
6 Release No. 34-88960 (May 27, 2020), https://www.sec.gov/rules/exorders/2020/34-88960.pdf.
7 Policy Tools: Secondary Market Corporate Credit Facility, https://www.federalreserve.gov/monetarypolicy/smccf.htm.
8 Secondary Market Corporate Credit Facility, https://www.newyorkfed.org/markets/secondary-market-corporate-credit-facility.
9 Press Release, Federal Reserve takes additional actions to provide up to $2.3 trillion in loans to support the economy (Apr. 8, 2020), https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm.
10 Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board under Section 13(3) of the Federal Reserve Act (May 28, 2020), https://www.federalreserve.gov/publications/files/pmccf-smccf-talf-5-29-20.pdf. The Federal Reserve Board is making publicly available detailed information on its transactions and holdings under the facility. See SMCCF Transaction-specific Disclosures (May 29, 2020), https://www.federalreserve.gov/monetarypolicy/files/smccf-transition-specific-disclosures-5-29-20.xlsx.
11 Release Nos. 33-10695, IC-33646 (Sept. 25, 2019), 84 Fed. Reg. 57162, 57178 (Oct. 24, 2019), https://www.federalregister.gov/d/2019-21250.
12 Press Release, Federal Reserve Board broadens program of support for the flow of credit to households and businesses by establishing a Money Market Mutual Fund Liquidity Facility (MMLF) (Mar. 18, 2020), https://www.federalreserve.gov/newsevents/pressreleases/monetary20200318a.htm.
13 Press Release, Federal Reserve Board expands its program of support for flow of credit to the economy by taking steps to enhance liquidity and functioning of crucial state and municipal money markets (Mar. 20, 2020) https://www.federalreserve.gov/newsevents/pressreleases/monetary20200320b.htm.
14 Policy Tools: Money Market Mutual Fund Liquidity Facility, https://www.federalreserve.gov/monetarypolicy/mmlf.htm.
15 Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board under Section 13(3) of the Federal Reserve Act (May 23, 2020), https://www.federalreserve.gov/monetarypolicy/files/pdcf-cpff-mmlf-5-24-20.pdf; see also Periodic Report: Update on Outstanding Lending Facilities Authorized by the Board under Section 13(3) of the Federal Reserve Act (Apr. 23, 2020), https://www.federalreserve.gov/publications/files/pdcf-mmlf-and-cpff-4-24-20.pdf.
16 Money Market Mutual Funds Template Letter (Mar. 17, 2020), https://www.federalreserve.gov/supervisionreg/legalinterpretations/fedreserseactint20200317.pdf.
17 Investment Company Institute, SEC No-Action Letter (Mar. 19, 2020), https://www.sec.gov/investment/investment-company-institute-031920-17a.
18 H.R. 748, § 4015, 116th Cong. (2020), https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf.
19 Paycheck Protection Program, https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.
20 Business Loan Program Temporary Changes; Paycheck Protection Program—Requirements—Promissory Notes, Authorizations, Affiliation, and Eligibility, 85 Fed. Reg. 23450, 23451 (Apr. 28, 2020), https://www.federalregister.gov/d/2020-09098.
21 Division of Investment Management Coronavirus (COVID-19) Response FAQs, Q&A II.4, https://www.sec.gov/investment/covid-19-response-faq.
22 SEC Division of Investment Management, Importance of Delivering Timely and Material Information to Investment Company Investors (Apr. 14, 2020), https://www.sec.gov/investment/delivering-timely-material-information.
23 As discussed below, the SEC has provided limited conditional relief from the obligation to timely deliver prospectuses to existing shareholders. See infra Delivery of Prospectuses and Shareholder Reports.
24 Division of Investment Management Coronavirus (COVID-19) Response FAQs, Q&A III.5, https://www.sec.gov/investment/covid-19-response-faq.
25 Staff Guidance for Conducting Annual Meetings in Light of COVID-19 Concerns (Apr. 7, 2020), https://www.sec.gov/ocr/staff-guidance-conducting-annual-meetings-light-covid-19-concerns.
26 Release No. IC-33837 (Apr. 8, 2020), https://www.sec.gov/rules/exorders/2020/ic-33837.pdf.
27 SEC Chairman Jay Clayton, Investors Remain Front of Mind at the SEC: Approach to Allocation of Resources, Oversight and Rulemaking; Implementation of Regulation Best Interest and Form CRS (Apr. 2, 2020), https://www.sec.gov/news/public-statement/statement-clayton-investors-rbi-form-crs.
28 OCIE, Risk Alert: Examinations that Focus on Compliance with Regulation Best Interest (Apr. 7, 2020), https://www.sec.gov/files/Risk%20Alert%20Regulation%20Best%20Interest%20Exams.pdf; OCIE, Risk Alert: Examinations that Focus on Compliance with Form CRS (Apr. 7, 2020), https://www.sec.gov/files/Risk%20Alert%20-%20Form%20CRS%20Exams.pdf.
29 FINRA Highlights Firm Practices from Regulation Best Interest Preparedness Reviews (Apr. 8, 2020), https://www.finra.org/rules-guidance/key-topics/regulation-best-interest/preparedness.
30 Frequently Asked Questions on Form CRS, https://www.sec.gov/investment/form-crs-faq#filing.
31 Division of Trading and Markets Staff Statement Regarding Requirements for Certain Paper Submissions in Light of COVID-19 Concerns (Apr. 2, 2020), https://www.sec.gov/tm/paper-submission-requirements-covid-19.
32 SEC Division of Corporation Finance, Statement Regarding Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns (Apr. 10, 2020), https://www.sec.gov/corpfin/announcement/form-144-paper-filings-email-option.
33 IM Information Update IM-INFO-2020-03 (Apr. 8, 2020), https://www.sec.gov/files/im-info-2020-03.pdf.
34 SEC Chief Accountant Sagar Teotia, Statement on the Importance of High-Quality Financial Reporting in Light of the Significant Impacts of COVID-19 (Apr. 3, 2020), https://www.sec.gov/news/public-statement/statement-teotia-financial-reporting-covid-19-2020-04-03.
35 Investment Company Institute, SEC No-Action Letter (Mar. 26, 2020), https://www.sec.gov/investment/investment-company-institute-032620-17a.
36 Release No. IC-33821 (Mar. 23, 2020), https://www.sec.gov/rules/other/2020/ic-33821.pdf.
37 Recent interfund lending orders are available at https://www.sec.gov/rules/icreleases.shtml#interfundlending.
38 OCIE Statement on Operations and Exams – Health, Safety, Investor Protection and Continued Operations are our Priorities (Mar. 20, 2020), https://www.sec.gov/ocie/announcement/ocie-statement-operations-health-safety-investor-protection-and-continued.
39 Staff Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns (Mar. 24, 2020), https://www.sec.gov/corpfin/announcement/staff-statement-regarding-rule-302b-regulation-s-t-light-covid-19-concerns.
40 Frequently Asked Questions Related to Regulatory Relief Due to the Coronavirus Pandemic (Mar. 24, 2020), https://www.finra.org/rules-guidance/guidance/faqs/coronavirus. FINRA guidance, updates, and other information on COVID-19 are available at https://www.finra.org/rules-guidance/key-topics/covid-19. Other self-regulatory organizations are also providing relief and guidance. See, e.g., Cboe Regulatory Circular 20-021 (Mar. 25, 2020), http://cdn.cboe.com/resources/regulation/circulars/regulatory/RC20-021-Filing-Extensions-for-Annual-Reports-and-FOCUS-Reports.pdf; Cboe Regulatory Circular 20-022 (Mar. 25, 2020), http://cdn.cboe.com/resources/regulation/circulars/regulatory/RC20-022-Extension-of-Time-for-Certain-Filings-Currently-Due-April-1-2020.pdf.
41 Novel Coronavirus COVID-19 Updates, https://www.nasaa.org/industry-resources/covid-19-updates/.
42 For the 1940 Act Orders, see Release No. IC-33824 (Mar. 25, 2020), https://www.sec.gov/rules/other/2020/ic-33824.pdf; Release No. IC-33817 (Mar. 13, 2020), https://www.sec.gov/rules/other/2020/ic-33817.pdf. For the Advisers Act Orders, see IA-5469 (Mar. 25, 2020), https://www.sec.gov/rules/other/2020/ia-5469.pdf; Release No. IA-5463 (Mar. 13, 2020), https://www.sec.gov/rules/other/2020/ia-5463.pdf. The various forms of relief provided by the SEC are subject to conditions that are set out in the respective orders, such as subsequent ratification of votes, notice to the SEC of filing delays, and website disclosure of issues with the delivery of shareholder reports, prospectuses, and Form ADV client brochures.
43 Using IARD, Form ADV: Item 1.F, https://www.sec.gov/divisions/investment/iard/iardfaq.shtml#item1f.
44 Release No. 34-88465(Mar. 25, 2020), https://www.sec.gov/rules/exorders/2020/34-88465.pdf; Release No. 34-88318 (Mar. 4, 2020), https://www.sec.gov/rules/other/2020/34-88318.pdf.
45 Press Release 2020-73, SEC Extends Conditional Exemptions from Reporting and Proxy Delivery Requirements for Public Companies, Funds, and Investment Advisers Affected by Coronavirus Disease 2019 (COVID-19) (Mar. 25, 2020), https://www.sec.gov/news/press-release/2020-73; Press Release 2020-63, SEC Takes Targeted Action to Assist Funds and Advisers, Permits Virtual Board Meetings and Provides Conditional Relief from Certain Filing Procedures (Mar. 13, 2020), https://www.sec.gov/news/press-release/2020-63.
46 SEC Division of Investment Management, Staff Statement on Fund Board Meetings and Unforeseen or Emergency Circumstances Related to Coronavirus Disease 2019 (COVID-19) (Mar. 4, 2020), https://www.sec.gov/investment/staff-statement-im-covid-19.
47 State “Shelter-in-Place” and “Stay-at-Home” Orders, https://www.finra.org/rules-guidance/key-topics/covid-19/shelter-in-place.
48 Press Release No. 8136-20, CFTC Issues Third Wave of Relief to Market Participants in Response to COVID-19 (Mar. 20, 2020), https://www.cftc.gov/PressRoom/PressReleases/8136-20.
49 Notice to Members I-20-15 (Mar. 23, 2020), https://www.nfa.futures.org/news/newsNotice.asp?ArticleID=5218.
50 European Commission Delegated Regulation art. 62, https://ec.europa.eu/transparency/regdoc/rep/3/2016/EN/3-2016-2398-EN-F1-1.PDF.
Stradley’s Coronavirus Task Force will be updating this high-level overview of coronavirus disease 2019 (COVID-19) related issues for registered investment companies and fund managers as developments warrant.
NEW ISSUES:
UPDATED ISSUES:
ISSUES:
Please do not hesitate to reach out to your Stradley Ronon contact, or to any member of Stradley’s Coronavirus Task Force, with any questions and concerns you may have during this period. You can reach Sara Crovitz at 202.507.6414 or scrovitz@stradley.com, or John Baker at 202.419.8413 or jbaker@stradley.com.
_________________
1 Policy Tools: Term Asset-Backed Securities Loan Facility, https://www.federalreserve.gov/monetarypolicy/talf.htm.
2 FAQs: Term Asset-Backed Securities Loan Facility (May 12, 2020), https://www.newyorkfed.org/markets/term-asset-backed-securities-loan-facility/term-asset-backed-securities-loan-facility-faq.
3 Franklin Templeton Investments, SEC No-Action Letter (June 19, 2009), https://www.sec.gov/divisions/investment/noaction/2009/franklintempleton061909.htm. Stradley Ronon acted as counsel for this no-action request. See also T. Rowe Price Associates, Inc., SEC No-Action Letter (Oct. 8, 2009), https://www.sec.gov/divisions/investment/noaction/2009/troweprice100809.htm (relief under 1940 Act § 17(d) and Rule 17d-1 for registered funds and certain other accounts to participate in TALF through a special purpose vehicle).
4 Paycheck Protection Program, https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.
5 Paycheck Protection Program Loans: Frequently Asked Questions (FAQs) #46, 47 (May 13, 2020), https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf.
6 Business Loan Program Temporary Changes; Paycheck Protection Program—Requirements—Promissory Notes, Authorizations, Affiliation, and Eligibility, 85 Fed. Reg. 23450, 23451 (Apr. 28, 2020), https://www.federalregister.gov/d/2020-09098.
7 Division of Investment Management Coronavirus (COVID-19) Response FAQs, Q&A II.4, https://www.sec.gov/investment/covid-19-response-faq.
8 Policy Tools: Secondary Market Corporate Credit Facility, https://www.federalreserve.gov/monetarypolicy/smccf.htm.
9 Secondary Market Corporate Credit Facility, https://www.newyorkfed.org/markets/secondary-market-corporate-credit-facility.
10 Press Release, Federal Reserve takes additional actions to provide up to $2.3 trillion in loans to support the economy (Apr. 8, 2020), https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm.
11 Release Nos. 33-10695, IC-33646 (Sept. 25, 2019), 84 Fed. Reg. 57162, 57178 (Oct. 24, 2019), https://www.federalregister.gov/d/2019-21250.
12 Press Release, Federal Reserve Board broadens program of support for the flow of credit to households and businesses by establishing a Money Market Mutual Fund Liquidity Facility (MMLF) (Mar. 18, 2020), https://www.federalreserve.gov/newsevents/pressreleases/monetary20200318a.htm.
13 Press Release, Federal Reserve Board expands its program of support for the flow of credit to the economy by taking steps to enhance liquidity and functioning of crucial state and municipal money markets (Mar. 20, 2020) https://www.federalreserve.gov/newsevents/pressreleases/monetary20200320b.htm.
14 Policy Tools: Money Market Mutual Fund Liquidity Facility, https://www.federalreserve.gov/monetarypolicy/mmlf.htm.
15 Money Market Mutual Funds Template Letter (Mar. 17, 2020), https://www.federalreserve.gov/supervisionreg/legalinterpretations/fedreserseactint20200317.pdf.
16 Investment Company Institute, SEC No-Action Letter (Mar. 19, 2020), https://www.sec.gov/investment/investment-company-institute-031920-17a.
17 H.R. 748, § 4015, 116th Cong. (2020), https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf.
18 SEC Division of Investment Management, Importance of Delivering Timely and Material Information to Investment Company Investors (Apr. 14, 2020), https://www.sec.gov/investment/delivering-timely-material-information.
19 As discussed below, the SEC has provided limited conditional relief from the obligation to timely deliver prospectuses to existing shareholders. See infra Delivery of Prospectuses and Shareholder Reports.
20 Division of Investment Management Coronavirus (COVID-19) Response FAQs, Q&A III.5, https://www.sec.gov/investment/covid-19-response-faq.
21 Staff Guidance for Conducting Annual Meetings in Light of COVID-19 Concerns (Apr. 7, 2020), https://www.sec.gov/ocr/staff-guidance-conducting-annual-meetings-light-covid-19-concerns.
22 Release No. IC-33837 (Apr. 8, 2020), https://www.sec.gov/rules/exorders/2020/ic-33837.pdf.
23 SEC Chairman Jay Clayton, Investors Remain Front of Mind at the SEC: Approach to Allocation of Resources, Oversight and Rulemaking; Implementation of Regulation Best Interest and Form CRS (Apr. 2, 2020), https://www.sec.gov/news/public-statement/statement-clayton-investors-rbi-form-crs.
24 OCIE, Risk Alert: Examinations that Focus on Compliance with Regulation Best Interest (Apr. 7, 2020), https://www.sec.gov/files/Risk%20Alert-%20Regulation%20Best%20Interest%20Exams.pdf; OCIE, Risk Alert: Examinations that Focus on Compliance with Form CRS (Apr. 7, 2020), https://www.sec.gov/files/Risk%20Alert%20-%20Form%20CRS%20Exams.pdf.
25 FINRA Highlights Firm Practices from Regulation Best Interest Preparedness Reviews (Apr. 8, 2020), https://www.finra.org/rules-guidance/key-topics/regulation-best-interest/preparedness.
26 Frequently Asked Questions on Form CRS, https://www.sec.gov/investment/form-crs-faq#filing.
27 Division of Trading and Markets Staff Statement Regarding Requirements for Certain Paper Submissions in Light of COVID-19 Concerns (Apr. 2, 2020), https://www.sec.gov/tm/paper-submission-requirements-covid-19.
28 SEC Division of Corporation Finance, Statement Regarding Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns (Apr. 10, 2020), https://www.sec.gov/corpfin/announcement/form-144-paper-filings-email-option.
29 IM Information Update IM-INFO-2020-03 (Apr. 8, 2020), https://www.sec.gov/files/im-info-2020-03.pdf.
30 SEC Chief Accountant Sagar Teotia, Statement on the Importance of High-Quality Financial Reporting in Light of the Significant Impacts of COVID-19 (Apr. 3, 2020), https://www.sec.gov/news/public-statement/statement-teotia-financial-reporting-covid-19-2020-04-03.
31 Investment Company Institute, SEC No-Action Letter (Mar. 26, 2020), https://www.sec.gov/investment/investment-company-institute-032620-17a.
32 Release No. IC-33821 (Mar. 23, 2020), https://www.sec.gov/rules/other/2020/ic-33821.pdf.
33 Recent interfund lending orders are available at https://www.sec.gov/rules/icreleases.shtml#interfundlending.
34 OCIE Statement on Operations and Exams – Health, Safety, Investor Protection and Continued Operations are our Priorities (Mar. 20, 2020), https://www.sec.gov/ocie/announcement/ocie-statement-operations-health-safety-investor-protection-and-continued.
35 Staff Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns (Mar. 24, 2020), https://www.sec.gov/corpfin/announcement/staff-statement-regarding-rule-302b-regulation-s-t-light-covid-19-concerns.
36 Frequently Asked Questions Related to Regulatory Relief Due to the Coronavirus Pandemic (Mar. 24, 2020), https://www.finra.org/rules-guidance/guidance/faqs/coronavirus. FINRA guidance, updates, and other information on COVID-19 are available at https://www.finra.org/rules-guidance/key-topics/covid-19. Other self-regulatory organizations are also providing relief and guidance. See, e.g., Cboe Regulatory Circular 20-021 (Mar. 25, 2020), http://cdn.cboe.com/resources/regulation/circulars/regulatory/RC20-021-Filing-Extensions-for-Annual-Reports-and-FOCUS-Reports.pdf; Cboe Regulatory Circular 20-022 (Mar. 25, 2020), http://cdn.cboe.com/resources/regulation/circulars/regulatory/RC20-022-Extension-of-Time-for-Certain-Filings-Currently-Due-April-1-2020.pdf.
37 Novel Coronavirus COVID-19 Updates, https://www.nasaa.org/industry-resources/covid-19-updates/.
38 For the 1940 Act Orders, see Release No. IC-33824 (Mar. 25, 2020), https://www.sec.gov/rules/other/2020/ic-33824.pdf; Release No. IC-33817 (Mar. 13, 2020), https://www.sec.gov/rules/other/2020/ic-33817.pdf. For the Advisers Act Orders, see IA-5469 (Mar. 25, 2020), https://www.sec.gov/rules/other/2020/ia-5469.pdf; Release No. IA-5463 (Mar. 13, 2020), https://www.sec.gov/rules/other/2020/ia-5463.pdf. The various forms of relief provided by the SEC are subject to conditions that are set out in the respective orders, such as subsequent ratification of votes, notice to the SEC of filing delays, and website disclosure of issues with the delivery of shareholder reports, prospectuses, and Form ADV client brochures.
39 Using IARD, Form ADV: Item 1.F, https://www.sec.gov/divisions/investment/iard/iardfaq.shtml#item1f.
40 Release No. 34-88465(Mar. 25, 2020), https://www.sec.gov/rules/exorders/2020/34-88465.pdf; Release No. 34-88318 (Mar. 4, 2020), https://www.sec.gov/rules/other/2020/34-88318.pdf.
41 Press Release 2020-73, SEC Extends Conditional Exemptions from Reporting and Proxy Delivery Requirements for Public Companies, Funds, and Investment Advisers Affected by Coronavirus Disease 2019 (COVID-19) (Mar. 25, 2020), https://www.sec.gov/news/press-release/2020-73; Press Release 2020-63, SEC Takes Targeted Action to Assist Funds and Advisers, Permits Virtual Board Meetings and Provides Conditional Relief from Certain Filing Procedures (Mar. 13, 2020), https://www.sec.gov/news/press-release/2020-63.
42 SEC Division of Investment Management, Staff Statement on Fund Board Meetings and Unforeseen or Emergency Circumstances Related to Coronavirus Disease 2019 (COVID-19) (Mar. 4, 2020), https://www.sec.gov/investment/staff-statement-im-covid-19.
43 State “Shelter-in-Place” and “Stay-at-Home” Orders, https://www.finra.org/rules-guidance/key-topics/covid-19/shelter-in-place.
44 Release No. 34-8844 (Mar. 20, 2020), https://www.sec.gov/rules/exorders/2020/34-88448.pdf.
45 Press Release No. 8136-20, CFTC Issues Third Wave of Relief to Market Participants in Response to COVID-19 (Mar. 20, 2020), https://www.cftc.gov/PressRoom/PressReleases/8136-20.
46 Notice to Members I-20-15 (Mar. 23, 2020), https://www.nfa.futures.org/news/newsNotice.asp?ArticleID=5218.
47 European Commission Delegated Regulation art. 62, https://ec.europa.eu/transparency/regdoc/rep/3/2016/EN/3-2016-2398-EN-F1-1.PDF.
The Department of Labor (DOL) released guidance for sponsors and administrators of employee benefit plans subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended (ERISA) in response to the COVID-19 outbreak in the United States. EBSA Disaster Relief Notice 2020-01 provides important relief in a various areas over which the DOL has jurisdiction, including, but not limited to, those described below. The guidance reflects the DOL recognition that COVID-19, and the ensuing government response, is likely impairing most, if not all, plan sponsors’ and administrators’ ability to comply with certain requirements and deadlines under ERISA. Here are some of the high-level takeaways, particularly as they relate to retirement plans:
Stradley’s Coronavirus Task Force will be updating this high-level overview of coronavirus disease 2019 (COVID-19) related issues for registered investment companies and fund managers as developments warrant.
NEW ISSUES:
UPDATED ISSUES:
ISSUES:
Please do not hesitate to reach out to your Stradley Ronon contact, or to any member of Stradley’s Coronavirus Task Force, with any questions and concerns you may have during this period. You can reach Crovitz Sara at 202.507.6414 or scrovitz@stradley.com, or John Baker at 202.419.8413 or jbaker@stradley.com.
__________________
1 SEC Division of Investment Management, Importance of Delivering Timely and Material Information to Investment Company Investors (Apr. 14, 2020), https://www.sec.gov/investment/delivering-timely-material-information.
2 As discussed below, the SEC has provided limited conditional relief from the obligation to timely deliver prospectuses to existing shareholders. See infra Delivery of Prospectuses and Shareholder Reports.
3 Division of Investment Management Coronavirus (COVID-19) Response FAQs, Q&A III.5, https://www.sec.gov/investment/covid-19-response-faq.
4 Staff Guidance for Conducting Annual Meetings in Light of COVID-19 Concerns (Apr. 7, 2020), https://www.sec.gov/ocr/staff-guidance-conducting-annual-meetings-light-covid-19-concerns.
5 Release No. IC-33837 (Apr. 8, 2020), https://www.sec.gov/rules/exorders/2020/ic-33837.pdf.
6 Release Nos. 33-10695, IC-33646 (Sept. 25, 2019), 84 Fed. Reg. 57162, 57178 (Oct. 24, 2019), https://www.federalregister.gov/d/2019-21250.
7 Policy Tools: Secondary Market Corporate Credit Facility, https://www.federalreserve.gov/monetarypolicy/smccf.htm.
8 Secondary Market Corporate Credit Facility, https://www.newyorkfed.org/markets/secondary-market-corporate-credit-facility.
9 Press Release, Federal Reserve takes additional actions to provide up to $2.3 trillion in loans to support the economy (Apr. 8, 2020), https://www.federalreserve.gov/newsevents/pressreleases/monetary20200409a.htm.
10 SEC Chairman Jay Clayton, Investors Remain Front of Mind at the SEC: Approach to Allocation of Resources, Oversight and Rulemaking; Implementation of Regulation Best Interest and Form CRS (Apr. 2, 2020), https://www.sec.gov/news/public-statement/statement-clayton-investors-rbi-form-crs.
11 OCIE, Risk Alert: Examinations that Focus on Compliance with Regulation Best Interest (Apr. 7, 2020), https://www.sec.gov/files/Risk%20Alert-%20Regulation%20Best%20Interest%20Exams.pdf; OCIE, Risk Alert: Examinations that Focus on Compliance with Form CRS (Apr. 7, 2020), https://www.sec.gov/files/Risk%20Alert%20-%20Form%20CRS%20Exams.pdf.
12 FINRA Highlights Firm Practices from Regulation Best Interest Preparedness Reviews (Apr. 8, 2020), https://www.finra.org/rules-guidance/key-topics/regulation-best-interest/preparedness.
13 Frequently Asked Questions on Form CRS, https://www.sec.gov/investment/form-crs-faq#filing.
14 Division of Trading and Markets Staff Statement Regarding Requirements for Certain Paper Submissions in Light of COVID-19 Concerns (Apr. 2, 2020), https://www.sec.gov/tm/paper-submission-requirements-covid-19.
15 SEC Division of Corporation Finance, Statement Regarding Requirements for Form 144 Paper Filings in Light of COVID-19 Concerns (Apr. 10, 2020), https://www.sec.gov/corpfin/announcement/form-144-paper-filings-email-option.
16 IM Information Update IM-INFO-2020-03 (Apr. 8, 2020), https://www.sec.gov/files/im-info-2020-03.pdf.
17 SEC Chief Accountant Sagar Teotia, Statement on the Importance of High-Quality Financial Reporting in Light of the Significant Impacts of COVID-19 (Apr. 3, 2020), https://www.sec.gov/news/public-statement/statement-teotia-financial-reporting-covid-19-2020-04-03.
18 Comment Periods for Certain Pending Actions, https://www.sec.gov/rules/proposed.shtml.
19 Press Release 2020-79, Agencies Will Consider Comments on Volcker Rule Modifications Following Expiration of Comment Period (Apr. 2, 2020), https://www.sec.gov/news/press-release/2020-79.
20 Money Market Mutual Funds Template Letter (Mar. 17, 2020), https://www.federalreserve.gov/supervisionreg/legalinterpretations/fedreserseactint20200317.pdf.
21 Investment Company Institute, SEC No-Action Letter (Mar. 19, 2020), https://www.sec.gov/investment/investment-company-institute-031920-17a.
22 Press Release, Federal Reserve Board broadens program of support for the flow of credit to households and businesses by establishing a Money Market Mutual Fund Liquidity Facility (MMLF) (Mar. 18, 2020), https://www.federalreserve.gov/newsevents/pressreleases/monetary20200318a.htm.
23 Press Release, Federal Reserve Board expands its program of support for flow of credit to the economy by taking steps to enhance liquidity and functioning of crucial state and municipal money markets (Mar. 20, 2020) https://www.federalreserve.gov/newsevents/pressreleases/monetary20200320b.htm.
24 Policy Tools: Money Market Mutual Fund Liquidity Facility, https://www.federalreserve.gov/monetarypolicy/mmlf.htm.
25 H.R. 748, § 4015, 116th Cong. (2020), https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf.
26 Investment Company Institute, SEC No-Action Letter (Mar. 26, 2020), https://www.sec.gov/investment/investment-company-institute-032620-17a.
27 Release No. IC-33821 (Mar. 23, 2020), https://www.sec.gov/rules/other/2020/ic-33821.pdf.
28 Recent interfund lending orders are available at https://www.sec.gov/rules/icreleases.shtml#interfundlending.
29 OCIE Statement on Operations and Exams – Health, Safety, Investor Protection and Continued Operations are our Priorities (Mar. 20, 2020), https://www.sec.gov/ocie/announcement/ocie-statement-operations-health-safety-investor-protection-and-continued.
30 Staff Statement Regarding Rule 302(b) of Regulation S-T in Light of COVID-19 Concerns (Mar. 24, 2020), https://www.sec.gov/corpfin/announcement/staff-statement-regarding-rule-302b-regulation-s-t-light-covid-19-concerns.
31 Frequently Asked Questions Related to Regulatory Relief Due to the Coronavirus Pandemic (Mar. 24, 2020), https://www.finra.org/rules-guidance/guidance/faqs/coronavirus. FINRA guidance, updates, and other information on COVID-19 are available at https://www.finra.org/rules-guidance/key-topics/covid-19. Other self-regulatory organizations are also providing relief and guidance. See, e.g., Cboe Regulatory Circular 20-021 (Mar. 25, 2020), http://cdn.cboe.com/resources/regulation/circulars/regulatory/RC20-021-Filing-Extensions-for-Annual-Reports-and-FOCUS-Reports.pdf; Cboe Regulatory Circular 20-022 (Mar. 25, 2020), http://cdn.cboe.com/resources/regulation/circulars/regulatory/RC20-022-Extension-of-Time-for-Certain-Filings-Currently-Due-April-1-2020.pdf.
32 Novel Coronavirus COVID-19 Updates, https://www.nasaa.org/industry-resources/covid-19-updates/.
33 For the 1940 Act Orders, see Release No. IC-33824 (Mar. 25, 2020), https://www.sec.gov/rules/other/2020/ic-33824.pdf; Release No. IC-33817 (Mar. 13, 2020), https://www.sec.gov/rules/other/2020/ic-33817.pdf. For the Advisers Act Orders, see IA-5469 (Mar. 25, 2020), https://www.sec.gov/rules/other/2020/ia-5469.pdf; Release No. IA-5463 (Mar. 13, 2020), https://www.sec.gov/rules/other/2020/ia-5463.pdf. The various forms of relief provided by the SEC are subject to conditions that are set out in the respective orders, such as subsequent ratification of votes, notice to the SEC of filing delays, and website disclosure of issues with the delivery of shareholder reports, prospectuses, and Form ADV client brochures.
34 Using IARD, Form ADV: Item 1.F, https://www.sec.gov/divisions/investment/iard/iardfaq.shtml#item1f.
35 Release No. 34-88465(Mar. 25, 2020), https://www.sec.gov/rules/exorders/2020/34-88465.pdf; Release No. 34-88318 (Mar. 4, 2020), https://www.sec.gov/rules/other/2020/34-88318.pdf.
36 Press Release 2020-73, SEC Extends Conditional Exemptions from Reporting and Proxy Delivery Requirements for Public Companies, Funds, and Investment Advisers Affected by Coronavirus Disease 2019 (COVID-19) (Mar. 25, 2020), https://www.sec.gov/news/press-release/2020-73; Press Release 2020-63, SEC Takes Targeted Action to Assist Funds and Advisers, Permits Virtual Board Meetings and Provides Conditional Relief from Certain Filing Procedures (Mar. 13, 2020), https://www.sec.gov/news/press-release/2020-63.
37 SEC Division of Investment Management, Staff Statement on Fund Board Meetings and Unforeseen or Emergency Circumstances Related to Coronavirus Disease 2019 (COVID-19) (Mar. 4, 2020), https://www.sec.gov/investment/staff-statement-im-covid-19.
38 State “Shelter-in-Place” and “Stay-at-Home” Orders, https://www.finra.org/rules-guidance/key-topics/covid-19/shelter-in-place.
39 Release No. 34-8844 (Mar. 20, 2020), https://www.sec.gov/rules/exorders/2020/34-88448.pdf.
40 Press Release No. 8136-20, CFTC Issues Third Wave of Relief to Market Participants in Response to COVID-19 (Mar. 20, 2020), https://www.cftc.gov/PressRoom/PressReleases/8136-20.
41 Notice to Members I-20-15 (Mar. 23, 2020), https://www.nfa.futures.org/news/newsNotice.asp?ArticleID=5218.
42 European Commission Delegated Regulation art. 62, https://ec.europa.eu/transparency/regdoc/rep/3/2016/EN/3-2016-2398-EN-F1-1.PDF.
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