US Securities and Exchange Commission Developments

Requests for Comment

SEC extends comment period on possible changes to required disclosures by bank holding companies. The SEC has extended the deadline to submit comments on its request for public input regarding the disclosures required by Industry Guide 3, Statistical Disclosure by Bank Holding Companies. Comments are now due on or before July 7, 2017. (4/18/2017) SEC commission notice. 

SEC issues semiannual regulatory agenda. The SEC provided notice that it has submitted an agenda of its rulemaking actions, as required by the Regulatory Flexibility Act, for inclusion in the Unified Agenda of Federal Regulatory and Deregulatory Actions. Comments on the agenda are due within 30 days of publication in the Federal Register. (4/17/2017) SEC commission notice. 


Amendment to Securities Transaction Settlement Cycle – A Small Entity Compliance Guide. The SEC’s Division of Trading and Markets prepared Amendment to Securities Transaction Settlement Cycle – A Small Entity Compliance Guide, summarizing and explaining the agency’s amendment to Exchange Act Rule 15c6-1(a) that shortens the standard settlement cycle for most broker-dealer transactions from three to two business days after trade date. (4/21/2017) 

SEC updates C&DI on intrastate offers and sales. The SEC added question and answer 141.06 to its Securities Act Rules Compliance and Disclosure Interpretations, explaining that an issuer making ongoing offers and sales pursuant to Rule 147 would be able to transition to offers and sales in reliance on Rule 147A. See also Intrastate Offering Exemptions: A Small Entity Compliance Guide for Issuers. (4/19/2017) 

No-Action Relief and Exemptive Orders 

SEC staff approves Merrill Lynch’s methodology on CDS portfolio margin program. The SEC’s Division of Trading and Markets approved Bank of America – Merrill Lynch, Pierce, Fenner & Smith’s margin methodology for calculating margin amounts that must be collected from customers in a CDS portfolio margin program. (4/24/2017) 

No enforcement against feeder or master fund. The SEC’s Chief Counsel’s Office stated that it will not recommend any enforcement action to the SEC against Ironwood Multi-Strategy Fund LLC (feeder fund) or Ironwood Institutional Multi-Strategy Fund LLC (master fund) if the feeder fund does not pay registration fees on shares it sells to the public or tender offer registration fees on shares it offers to repurchase from the public. (4/19/2017) See Incoming letter

Exemptive relief from Exchange Act Rule 14e-5 is granted. The SEC’s Division of Corporation Finance granted First Trust Exchange-Traded Fund VIII an exemption from Exchange Act Rule 14e-5 in connection with purchases of, and arrangements to purchase, subject securities and related securities outside of a tender offer. (4/11/2017)

Selected Enforcement Actions 

SEC charges investment adviser with using false information to induce investments. The SEC brought contested civil fraud charges against an investment adviser and one of its founders for misleading prospective investors and clients. The SEC alleged that the founder sent emails to prospective investors in which he claimed that the investment adviser managed between US$17 million and US$25 million in assets when it managed no more than US$5.5 million. The SEC also alleged that the founder falsely touted a “quantitative” trading strategy and a fake fund, claiming that the fund had US$25 million in assets with historical performance returns based on a proprietary algorithm that did not exist. The SEC charged the firm and its founder with violating the anti-fraud provisions of the securities laws. (4/17/2017) SEC v. Justin D. Meadlin and Hyaline Capital Management, LLC, SEC Lit. Release No. 23808. 

Speeches and Statements

  Piwowar suggests that SEC should propose its own fiduciary rule. The Wall Street Journal reported that Acting SEC Chair Michael S. Piwowar, in remarks at a conference sponsored by the Mutual Fund Directors Forum, indicated support for the SEC to write its own version of a rule establishing standards for brokers providing advice to retail investors to replace the Department of Labor’s fiduciary rule, which has been put on hold by the Trump administration. (4/21/2017) 

Other Developments 

Small and Emerging Companies Advisory Committee meeting. The SEC’s Advisory Committee on Small and Emerging Companies will hold a public meeting on May 10, 2017. Written statements to the Committee are due on or before May 8, 2017. (4/24/2017) SEC meeting notice. 

Money market fund statistics. The SEC’s Division of Investment Management released updated money market fund statistics, which include data as of March 31, 2017. (4/20/2017) Money market fund statistics.