New Final Rules
EDGAR File Manual Revisions
On December 18th, the Securities and Exchange Commission (“SEC”) adopted revisions to the Electronic Data Gathering, Analysis, and Retrieval System (“EDGAR”) Filer Manual and related rules to reflect updates to the EDGAR system. The updates are being made primarily to make available a new exhibit type EX1.01 and disallow Exhibit type EX1.02 on EDGARLink Online for submission form types SD and SD/A, to implement the “Calendar Year Ending” value validation rule for form type 13HA, to require Transfer Agents with file numbers in the range 08515000 to 08519999 to select “Comptroller of the Currency” as the registrant’s appropriate regulatory agency on Form TA2 and its amendment, and to update the EDGAR Portal to include a new option, “Do you need more information?” that links to the ‘Guidance for Filers and FAQs’ section on the SEC’s Public Website. The new revisions are effective immediately. SEC Release No. 339692. See also EDGAR Filer Information, below.
Extension of Temporary Rule Regarding Principal Trades with Certain Advisory Clients
On December 17th, the SEC amended Rule 206(3)3T under the Investment Advisers Act of 1940, a temporary rule that establishes an alternative means for investment advisers who are registered with the Commission as brokerdealers to meet the requirements of Section 206(3) of the Investment Advisers Act when they act in a principal capacity in transactions with certain of their advisory clients. The amendment extends the date on which Rule 206(3)3T will sunset from December 31, 2014 to December 31, 2016. SEC Release No. IA3984.
Revised Registration Thresholds Proposed
On December 18th, the SEC published for comment proposed amendments to implement Title V and Title VI of the Jumpstart Our Business Startups Act (the “JOBS Act”). The proposed amendments would revise rules adopted under Section 12(g) of the Securities Exchange Act of 1934 to reflect the new, higher thresholds for registration, termination of registration and suspension of reporting that were set forth in the JOBS Act. The proposed rules also would apply the thresholds specified for banks and bank holding companies to savings and loan holding companies. In addition, the proposed amendments would revise the definition of “held of record” in Exchange Act Rule 12g51, in accordance with the JOBS Act, to exclude certain securities held by persons who received them pursuant to employee compensation plans and establish a nonexclusive safe harbor for determining whether securities are “held of record” for purposes of registration under Exchange Act Section 12(g). Comments should be submitted on or before March 2, 2015. SEC Press Release.
Family Office Guidance
On December 22nd, the SEC’s Division of Investment Management provided guidance on whether certain key employee trusts would qualify as family clients under the Investment Adviser Act’s “Family Office Rule”, Rule 202(a)(11)(G)1.
SEC to Consider Swaps Rules
The SEC will hold an open meeting on January 14, 2015 to consider: (1) whether to adopt rules governing the securitybased swap data repository ("SDR") registration process, the duties of such repositories, and the core principles applicable to such repositories; (2) whether to adopt Regulation SBSR under the Securities Exchange Act to provide for regulatory reporting of securitybased swap information and the public dissemination of securitybased swap transaction, volume, and pricing information by registered SDRs; and (3) whether to propose new rules, rule amendments, and guidance to Regulation SBSR to address the reporting duties for cleared and platformexecuted securitybased swap transactions. Open Meeting Notice.
On January 7th, Think Advisor summarized the remarks of Andrew Bowden, Director of the SEC’s Office of Compliance Inspections and Examinations. Bowden discussed the agency’s 2015 exam priorities, which include presence exams for neverbeforeexamined investment advisers. Priorities.
SEC to Make Financial Statement Datasets Available
On December 30th, the SEC launched a pilot program which makes financial statement data available for bulk download. The data sets initially will contain financial statement data from eXtensible Business Reporting Language (“XBRL”) exhibits as filed with the SEC. To facilitate the use of this information, the SEC’s Division of Economic and Risk Analysis will organize it into combined data sets on the SEC’s website in formats other than XBRL. The data posted will be as reported by filers; no changes will be made to the information. Each data set posted will include all of the relevant filings submitted for the particular quarter or year. SEC Press Release.
SEC Examination of Credit Rating Agencies
On December 23rd, the SEC issued its annual staff report on credit rating agencies. The report presents the results of the staff’s examination of credit rating agencies registered as nationally recognized statistical rating organizations (“NRSROs”). The SEC also published a separate report on NRSROs which was sent to Congress. SEC Press Release. On January 5th, CFO.com summarized the staff report’s findings. Among other things, the examinations revealed that five of the 10 NSRSOs failed to follow their policies and procedures for issuing ratings and four were weak in their management of conflicts of interest. Summary.
SEC Investor Advocate
On December 23rd, the Office of the Investor Advocate published its first report describing its activities. The Office identified three products and practices which appeared to be the most problematic for retail investors during 2014: private placement offerings, variable annuities, and nontraded real estate investment trusts. Two additional emerging risks were also noted, binary options and reverse churning. Report.
Third Party Examination of Investment Advisers
On December 17th, Investment News summarized SEC Chair Mary Jo White’s response to a letter from Representatives Jeb Hensarling and Scott Garrett which suggested that the SEC reallocate funds from broker dealer examinations for use in investment adviser examinations. White declined to do so but said that the agency may consider using third parties to conduct investment adviser examinations. Response.
Advisory Committee on Small and Emerging Companies
On December 17th, the SEC’s Advisory Committee on Small and Emerging Companies met to discuss the accredited investor definition, among other things. SEC Chair Mary Jo White provided a general overview of SEC activities during the last year and SEC Commissioner Luis A. Aguilar explained his concerns for the existing definition. SEC Commissioner Daniel M. Gallagher discussed his reasons for opposing changes to the definition.
Commissioner Aguilar on Transfer Agents
On December 17th, SEC Commissioner Luis A. Aguilar explained why he believes new rules for transfer agents are important. Aguilar Statement.
EDGAR Filer Information
On December 15th, the SEC published the following EDGAR documents:
Version 14 of the EDGARLink Online XML technical specification, which provides the details for the valid structure and content of the EDGARLink Online submission types to allow interested filers to create EDGARLink Online submissions without the use of the EDGARLink Online Application.
XML Technical Specifications: EDGAR Form TA1 XML Technical Specification (Version 3.4.0), EDGAR Form TA2 XML Technical Specification (Version 5.5.0), and EDGAR Form TAW XML Technical Specification (Version 1.4.0). These specifications allow interested filers to create Transfer Agent XML forms without using the EDGARLite tool.