New Final Rules
Implementing the Freedom of Information Act. The SEC published new final rules revising how it implements the Freedom of Information Act (FOIA). The new rules permit the agency to collect fees that reflect its actual costs when responding to FOIA requests, add an appeals time frame and clarify other issues. The new rules are effective August 14, 2015. (7/8/2015) SEC Release No. 34-75388.
Staff Interpretations and Exemptive Actions
Relief from risk retention rules granted. The Division of Corporation Finance granted no-action relief to Crescent Capital Group LP if Crescent Capital does not retain an eligible risk retention interest under Section 15G of the Securities and Exchange Act in connection with a refinancing of collateralized loan obligations that were issued in a transaction priced prior to the December 24, 2014 publication of the Credit Risk Retention Final Rules. (7/17/2015) No-action letter.
Updated Volcker Rule guidance. New guidance on the application of the Section 13 of the Bank Holding Company Act, better known as the Volcker Rule, has been issued by federal financial regulators. The updated guidance states that during its seeding period, a registered investment company or foreign public fund generally will not be subject to the Volcker Rule’s requirements. (7/16/2016) Guidance.
Master-feeder BDC receives no-action relief. The Division of Investment Management granted the no-action request submitted by Carey Credit Income Fund and Carey Credit Income Fund 2015 T. The application sought relief for feeder funds which elect to be regulated as business development companies if each feeder fund looks to its proportionate ownership interest in the assets of the master fund, and for the master fund if the master fund repurchases master fund shares in a planned liquidation of a feeder fund. (7/15/2015) No-action relief.
Pay-to-play exemption requested. Crescent Capital Group, L.P. has requested an exemptive order under Section 206A of the Advisers Act and Rule 206(4)-5(e) to be allowed to receive compensation from a government entity client for investment advisory services provided to the government entity within the two-year period following a contribution by a covered associate of Crescent to an official of the government entity. (7/14/2015) SEC Release No. IA-4140.
Distributions by closed-end fund. The Division of Investment Management issued an exemptive order allowing certain registered closed-end investment companies to make periodic distributions of long-term capital gains with respect to their outstanding common stock as frequently as twelve times in any one taxable year. (7/7/2015) Order.
Selected Enforcement Actions
US$3 million whistleblower award announced. The SEC announced a whistleblower award of more than US$3 million, the third highest award to date under the SEC’s whistleblower program. The whistleblower’s specific and detailed information comprehensively disclosed a fraudulent scheme which otherwise would have been very difficult for investigators to detect. The whistleblower’s initial tip also led to related actions that increased the whistleblower’s award. (7/17/2015) SEC press release.
Speeches and Statements
Chair White recognizes Dodd-Frank anniversary. On the five-year anniversary of the Dodd-Frank Act, Chair Mary Jo White issued a statement noting the SEC’s efforts to implement the Act. (7/16/2015) White statement. Attached to the statement is an SEC graphic showing the status of the SEC’s Dodd-Frank Act rulemaking. (7/16/2015) Graphic.
Shortening the securities settlement cycle. Commissioner Luis A. Aguilar released a statement describing the benefits of a shortened securities settlement cycle and praising efforts to develop a plan that would implement a two-day settlement cycle. (7/16/2015) Aguilar statement.
Compliance outreach program for broker-dealers. In her opening remarks before the SEC’s Compliance Outreach Program for Broker-Dealers, SEC Chair Mary Jo White stressed that the agency does not bring cases against compliance personnel for their good faith judgments. However, the agency will institute enforcement proceedings when a compliance officer’s action, or inaction, crosses a clear line that deserves sanction. The Chair also discussed the SEC’s examination priorities. (7/14/2015)White statement.
Mutual fund fees and referrals. According to The Wall Street Journal, SEC staff are beginning to make enforcement referrals stemming from the agency’s investigation into mutual fund fee disclosures. (7/16/2015) Referrals.
Meeting of the Advisory Committee on Small and Emerging Businesses. The discussion topics for the July 15, 2015 meeting of the Advisory Committee on Small and Emerging Businesses concerning finders and other intermediaries in small-business capital raising has been released by the SEC (7/15/2015) Discussion topics. The outline for the Advisory Committee’s discussion on disclosure effectiveness has also been made available. (7/15/2015) Outline.
Staff announcements. The SEC announced the promotion of Michele Anderson to the position of Associate Director in the agency’s Division of Corporation Finance. (7/17/2015) SEC press release.
US Chamber of Commerce calls for enforcement reforms. The US Chamber of Commerce published “Examining U.S. Securities and Exchange Commission Enforcement: Recommendations on Current Processes and Practices.” The paper recommends improvements to the SEC’s enforcement process, including the agency’s enforcement policies, Commission oversight of the enforcement program, and SEC investigation processes and practices. The study additionally calls for the adoption of due process reforms concerning the use of administrative proceedings. (7/15/2015) US Chamber of Commerce Press Release.
Legislation to raise SEC penalties introduced. Senators Charles Grassley and Jack Reed introduced the “Stronger Enforcement of Civil Penalties Act of 2015.” If enacted, the new legislation would increase the limits on civil monetary penalties that the SEC could impose, link civil penalties to the scope of harm and investor loss and triple the penalties which could be imposed against recidivists. (7/9/2015) Grassley press release.