As the developments affecting the investment management industry continue to unfold, we have once again prepared our annual compendium of relevant Sidley Updates for our investment fund and adviser clients and friends.

The compendium includes a summary of each 2016 Sidley Update, in reverse chronological order, along with a link to its full text. We have included all of the Sidley Updates, making the compendium repetitive in instances where we revisited a topic to report on emerging information and breaking news in the industry.

If you would like additional information on any of these topics, please contact the Sidley lawyer with whom you usually work.

December 19, 2016

CFTC Finalizes Aggregation Rules and Reproposes Position Limit Rules

On December 5, 2016, the Commodity Futures Trading Commission (the CFTC) voted unanimously to repropose regulations implementing limits on speculative futures and swaps positions (the Reproposed Position Limit Rules), including position limits for 25 core physical, agricultural, metals and energy commodity futures contracts traded pursuant to the rules of a designated contract market and their “economically equivalent” options and swaps. In a separate vote, the CFTC unanimously approved final aggregation rules that will be applicable to the CFTC’s existing position limits regime and, if adopted, the Reproposed Position Limit Rules. The Reproposed Position Limits Rules will be open for a 60-day public comment period upon publication in the Federal Register, which had not occurred as of the date of this Sidley Update.

December 8, 2016

Monetary Authority of Singapore Consults on Proposed Amendments to the Code on Collective Investment Schemes

On November 10, the Monetary Authority of Singapore issued a Consultation Paper on Proposed Amendments to the Code on Collective Investment Schemes (Consultation Paper).

The Code on Collective Investment Schemes applies to Singapore-domiciled collective investment schemes authorized under Section 286 of the Securities and Futures Act, Chapter 289 of Singapore for retail offer in Singapore and, to a lesser extent, to offshore-domiciled collective investment schemes recognized under Section 287 of the SFA also for retail offer in Singapore.

December 1, 2016

SEC Enforcement Quarterly Newsletter: Third Quarter 2016  

Sidley Austin LLP is pleased to distribute this issue of the SEC Enforcement Quarterly newsletter. Each quarter, our Securities & Derivatives Enforcement and Regulatory practice publishes this review of recent developments in securities enforcement and regulatory matters.  

In this issue, we feature the following articles:

  • D.C. Circuit Upholds Constitutionality of SEC ALJs 
  • SEC Again Sets Record for Enforcement Actions 
  • Whistleblower Program Remains a Key Tool for the SEC’s Division of Enforcement 
  • SEC Keeps Focus on Financial Reporting Issues and Gatekeepers 
  • Recent SEC Staff Changes 
  • FCPA Focus

November 30, 2016

SEC Adopts Amendments to Modernize and Enhance Reporting by Investment Companies  

At an open meeting held on October 13, 2016, the Securities and Exchange Commission adopted, by a vote of 2-1, amendments (the Amendments) to rules and forms under the Investment Company Act of 1940, that are designed to improve the frequency, quality and usability of the information reported by registered funds. The Adopting Release reflecting the Amendments was issued the same day. 

November 30, 2016

SEC Adopts New Rules and Rule Amendments for Liquidity Risk Management Programs and Swing Pricing

On October 13, 2016, the Securities and Exchange Commission adopted new rules and rule amendments relating to liquidity risk management and swing pricing. The new and amended rules are part of an effort to promote effective liquidity risk management across the registered open-end investment company (open-end fund or fund) industry, reduce the risk of dilution of open-end fund shareholders resulting from purchases and sales of fund shares by other shareholders, and enhance disclosure regarding fund liquidity and redemption practices. The rules will have a significant impact on registered open-end funds, including exchange-traded funds, and are designed to reduce the risk that funds will not be able to meet shareholder redemptions and to mitigate potential dilution of the interests of fund shareholders. 

November 29, 2016

SEC Approves New FINRA and MSRB Rules Requiring Disclosure of Mark-Ups/Mark-Downs for Debt Transactions 

On November 17, the U.S. Securities and Exchange Commission approved final rules, proposed in coordination with the Financial Industry Regulatory Authority (FINRA) and the Municipal Securities Rulemaking Board (MSRB), which will amend transaction confirmation requirements to require disclosure of mark-ups/mark-downs in corporate, agency and municipal debt transactions where a FINRA member or MSRB registrant is transacting in a principal capacity with a non-institutional customer (respectively, the FINRA Rule and MSRB Rule, and collectively, the Rules). In addition, the Rules will require that all transaction confirmations for corporate, agency and municipal debt transactions with non-institutional customers, whether or not mark-up/mark-down disclosure is required, include a hyperlink (if the confirmation is electronic) or otherwise include a reference to publicly available trade data on the subject security, as well as the execution time of the transaction (to the second for the FINRA Rule, and to the minute for the MSRB Rule). 

November 23, 2016

Monetary Authority of Singapore Announces Review of Regulatory Regime for Venture Capital Managers

On November 10, at the launch of LATTICE80, the first innovation space in Singapore dedicated to and designed specifically to support FinTech, Tharman Shanmugaratnam announced that the Monetary Authority of Singapore (MAS) is reviewing its regulatory regime for venture capital (VC) managers.

The announcement underscores the Singapore government’s continuing commitment and efforts to build a “Smart Financial Center” and to create a FinTech ecosystem where innovation thrives. The MAS is working with the VC industry to grow the funding landscape for startups in Singapore. 

As a part of its review, to encourage VC funds and VC fund managers to set up operations in Singapore, the MAS is studying the possibility of enhancing the existing incentives for funds and fund managers. The MAS is also reviewing the regulatory regime for VC managers, whereby it is looking to simplify and shorten the licensing process for new VC managers as well as to exempt them from the business conduct requirements that apply to fund managers in general. 

November 22, 2016

CFTC Approves Supplemental Proposal for Reg AT

On November 4, 2016, the Commodity Futures Trading Commission approved a supplemental proposal (Supplemental Proposal) to amend a previously proposed regulation known as Regulation Automated Trading (Reg AT). The Supplemental Proposal makes certain limited but key modifications to proposed Reg AT. While we expect further revisions to proposed Reg AT to follow the change of administrations in January 2017, the opportunity to consider and comment on the current proposal will be important to the ongoing evolution and ultimate form of this ground-breaking regulation.

November 10, 2016

Derivatives Quarterly Newsletter: Third Quarter 2016 

This issue of Sidley’s Derivatives Quarterly Newsletter highlights and discusses what we consider to be the more important regulatory developments that may affect entities that trade derivatives products. This issue covers developments that arose in the third quarter of 2016.

November 9, 2016

CFTC Proposes Cross-Border Swap Rule, Revisits 2013 Cross-Border Swap Guidance 

On October 11, 2016, the Commodity Futures Trading Commission (CFTC) proposed a rule (the Proposed Rule) that addresses the cross-border application of certain of its swaps rules. The Proposed Rule, if adopted, would supersede, in important respects, the cross border interpretive guidance that the CFTC originally published in 2013 (the Cross-Border Guidance), which sets forth the CFTC’s initial approach to the cross-border application of its swaps rules. The Proposed Rule would extend the  cross-border application of CFTC swap rules in some ways, but would limit it in others. In doing so, the Proposed Rule would generally reinforce the approach that the CFTC took earlier this year when it adopted its final rule for the cross border application of margin requirements for non-cleared swaps (the Cross-Border Margin Rule).

October 17, 2016

Final Debt-Equity Tax Regulations Significantly Narrow the Scope of the Proposed Regulations

On October 13, 2016, the Treasury Department (Treasury) and the Internal Revenue Service (IRS) published final and temporary Treasury regulations on the classification of purported debt instruments as either debt or equity for U.S. federal income tax purposes (Regulations). The Regulations substantially revise and narrow the scope of the proposed Treasury regulations issued by the Treasury and the IRS on April 4, 2016 (Proposed Regulations) that were subject to significant comments. This Sidley Update includes a summary of the changes made to the Proposed Regulations.

September 22, 2016

Commodity Futures Trading Commission Issues Final Rules on Cybersecurity System Safeguards

On September 8, the Commodity Futures Trading Commission approved amendments to its system safeguards rules. These rules obligate designated contract markets, swap execution facilities and swap data repositories (for convenience, collectively referred to as Exchanges) as well as derivatives clearing organizations (Clearinghouses) to have in place cybersecurity programs of risk analysis and oversight. As part of such a program, Exchanges and Clearinghouses must conduct testing and review sufficient to ensure that their automated systems are reasonably reliable and secure and have adequate scalable capacity. 

September 9, 2016

SEC Adopts Form ADV Amendments to Require Reporting on Separately Managed Accounts and Clarify “Umbrella” Registration  

On August 25, 2016, the Securities and Exchange Commission adopted amendments to Form ADV and to the books and records rule under the Investment Advisers Act of 1940 (the Amendments). The Amendments, among other things:   

  • Require advisers to provide specific information about separately managed accounts (i.e., advisory accounts that are not pooled investment vehicles), including the types of assets held and the use of derivatives and borrowings to fill in existing data gaps; 
  • Streamline and standardize the process of "umbrella" registration of related advisers on one Form ADV; 
  • Require advisers to maintain additional materials related to the calculation and distribution of performance information to better protect investors from fraudulent investment performance claims; and
  • Provide ADV disclosure regarding social media, outsourced compliance officers and multiple office locations.

September 8, 2016

Significant Trial Decision in Favor of Mutual Fund Adviser that Delegated Services to Sub-Advisers

On August 25, 2016, in a closely watched case, a New Jersey federal court ruled in favor of a mutual fund adviser that allegedly received excessive fees because it delegated certain investment management and administrative services to sub-advisers and sub-administrators. As with all other trials concerning claims for violations of Section 36(b) of the Investment Company Act of 1940 (the Act), the court ruled that the plaintiffs failed to meet their burden of proof. This ruling is significant because there are many similar lawsuits involving the use of sub-advisers pending around the country. 

August 23, 2016

SEC Enforcement Quarterly Newsletter: Second Quarter 2016  

In this issue, we feature the following articles:

  • Second and Eleventh Circuits Are Latest Circuit Courts to Reject Collateral Challenges to SEC Administrative Proceedings CFTC and NFA
  • U.S. Supreme Court Takes Middle Ground on Ability of State Courts to Decide Securities Cases
  • SEC Tries to Reduce Concerns of Compliance Officers
  • First Circuit Declines to Follow Newman's Reading of the Personal Benefit Requirement in Insider Trading Cases
  • Recent SEC Staff Changes
  • FCPA Focus

August 17, 2016

Derivatives Quarterly Newsletter: Second Quarter 2016  

In this issue:

  • U.S. Derivatives Developments
    • CFTC and NFA
    • SEC and FINRA
    • Other
  • U.S. Enforcement Developments
  • European Derivatives Developments
  • Asia Derivatives Developments

August 8, 2016

Monetary Authority of Singapore Consults on Enhancements to Regulatory Requirements on Protection of Customer’s Moneys and Assets   

On July 19, the Monetary Authority of Singapore (MAS) issued a “Consultation Paper on Enhancements to Regulatory Requirements on Protection of Customer’s Moneys and Assets.” 

The MAS has undertaken a review of the requirements governing the protection of customers’ moneys and assets held by holders of a capital markets services license and is proposing to enhance those relating to the safeguarding, identification and use of customer’s moneys and assets, and those relating to disclosures to customers. The MAS proposals take into account the international standards promulgated by the International Organization of Securities Commission and the Financial Stability Board. 

August 8, 2016

The Choice Between UK LLP and UK LTD in the Changing UK Tax Landscape

Following its introduction in 2001, the UK limited liability partnership (LLP) has tended to be the vehicle of choice for fund managers looking to operate out of the United Kingdom. When compared to a UK limited company (LTD), the draw of the LLP has been twofold; an LLP offers commercial and legal flexibility alongside a lower overall tax cost.

August 8, 2016

SEC Proposes Rules to Enhance Order Handling Information Available to Investors

On July 13, 2016, the U.S. Securities and Exchange Commission voted unanimously to propose amendments to Rule 606 of Regulation NMS to enhance order handling information available to investors. The proposed amendments to Rule 606 would require broker-dealers to disclose their handling of “institutional orders” upon request and in an aggregate quarterly report, as well as expand existing disclosure obligations related to retail customer orders.

August 5, 2016

MAS Issues Revised Guidelines on Outsourcing in Singapore

On July 27, the Monetary Authority of Singapore (MAS) issued the revised Guidelines on Outsourcing (Guidelines). The revised Guidelines represent a culmination of extensive industry and public consultation on this topic, beginning with the Consultation Paper on Guidelines on Outsourcing issued on September 5, 2014. In conjunction with the revised Guidelines, the MAS also issued its response to feedback received on the Consultation Paper.

August 4, 2016

CFTC Adopts Cross-Border Margin Rule for Non-Cleared Swaps

On May 24, 2016, the Commodity Futures Trading Commission (CFTC) adopted a final rule (the CFTC  Cross-Border Rule) for the cross-border application of the CFTC's margin requirements for non-cleared swaps pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. The CFTC  Cross-Border Rule overlaps to a large extent with the analogous cross-border rule adopted last year by five U.S. prudential regulators (the PR Cross-Border Rule; together with the CFTC Cross-Border Rule, the Cross-Border Rules). However, the CFTC Cross-Border Rule differs in a few key substantive respects from the PR Cross-Border Rule; in many ways, it differs in form and terminology.

July 29, 2016

MiFID II 2016 Update–Implications for EU and Non-EU Investment Managers

MiFID II, which is to be implemented throughout the European Union on January 3, 2018, represents a comprehensive and far-reaching set of reforms that will reshape the way in which EU markets and their participants operate. This Sidley Update considers the implications of MiFID II for EU and non-EU investment managers.

July 25, 2016

AIFMD 2016 Update–Implications of ESMA’s July 2016 Advice on the Third-Country AIFMD Passport for Non-EU Managers and Funds

On July 19, 2016, the European Securities and Markets Authority (ESMA) published its advice to the European Commission, the European Parliament and the Council of the European Union on the application of the AIFMD passport to non-EU AIFMs and AIFs (the Advice). In its Advice, ESMA considered the extension of the AIFMD marketing passport to 12 non-EU countries.

This Sidley Update follows on from our August 2015 Sidley Update, in which we discussed ESMA’s previous advice on the possible extension of the AIFMD passport to six non-EU countries (the Previous Advice). In its Previous Advice, ESMA gave a positive assessment in respect of Guernsey, Jersey and (pending an amendment to local law) Switzerland, while recommending that any extension to the United States, Singapore and Hong Kong be delayed. 

July 25, 2016

The SEC “Pay-to-Play” Rule, the 2016 Elections and the Indiana Public Employee Retirement System

The nomination of Indiana Governor Mike Pence for vice president of the United States raises potential issues with respect to political contributions by investment advisers under Rule 206(4)-5 under the Investment Advisers Act of 1940 (commonly referred to as the Securities and Exchange Commission, or SEC, “pay-to-play” rule). Under that rule, a contribution to Republican nominee Donald Trump by an investment adviser or its covered associates may bar the investment adviser from receiving compensation for two years from the Indiana public employee pension system.

July 18, 2016

ISDA Article 55 BRRD Protocol: Contractual Recognition of Bail-In

The International Swaps and Derivatives Association, Inc. (ISDA) has released the “ISDA 2016 Article 55 BRRD Protocol (Dutch/French/German/Irish/Italian/Luxembourg/Spanish/UK entity-in-resolution)” (the Protocol).

The purpose of the Protocol is to amend derivatives agreements of certain EU institutions that are governed by New York law or the law of another non-EU jurisdiction. The amendments relate to Article 55 of the Bank Recovery and Resolution Directive (the BRRD).

July 14, 2016

Volcker Rule: Final Extension of Conformance Period for Certain Legacy Covered Funds

On July 7, 2016, the Board of Governors of the Federal Reserve System (the Board) issued an order (the New Extension) that extends the Volcker Rule conformance period with respect to investments in, and relationships with, covered funds and foreign funds that were in place prior to December 31, 2013 (legacy covered funds). The Board originally provided a general conformance period extension, until July 21, 2015, covering all Volcker Rule requirements. It subsequently provided a limited conformance period extension, until July 21, 2016, covering only legacy covered funds (the 2014 Extension and, together with the New Extension, the Extensions). The Board stated in the 2014 Extension that it intended to extend—for an additional one-year period, until July 21, 2017—the limited conformance period for legacy covered funds; the New Extension affects that additional extension. 

July 7, 2016

SEC Proposes New Rule for Investment Advisers that Would Require Business Continuity and Transition Plans

On June 28, 2016, the Securities and Exchange Commission (SEC) proposed new Rule 206(4)-4 under the Investment Advisers Act of 1940. The rule would require registered investment advisers to adopt and implement written business continuity and transition plans “reasonably designed to address operational and other risks related to a significant disruption in the investment adviser’s operations.” The SEC also proposed amendments to existing Rule 204-2 that would impose recordkeeping and other compliance requirements related to business continuity and transition plans. 

June 15, 2016

Monetary Authority of Singapore Proposes Regulatory Sandbox for FinTech Experiments in Singapore

On June 6, the Monetary Authority of Singapore released a consultation paper entitled “Consultation Paper on FinTech Regulatory Sandbox Guidelines,” which sets out proposals for a regulatory sandbox approach aimed at carving out a safe and conducive space to experiment with financial technology solutions.

June 8, 2016

EU Market Abuse Regulation 2016 – Implications for EU and Non-EU Investment Managers

On July 3, 2016, the new EU Market Abuse Regulation (MAR) will apply and replace the existing EU Market Abuse Directive (MAD) and the existing national laws implementing MAD in each EU Member State. This Sidley Update examines the implications of the MAR, in particular the differences between the MAR and MAD, for investment managers and other buy-side firms who deal in financial instruments within the scope of the MAR. Although many of the concepts relating to market abuse that were implemented as part of MAD will continue under the MAR, it is important to note that certain aspects of the MAR are extraterritorial in nature; thus, non-EU investment managers need to have an understanding of the MAR framework.

June 1, 2016

BEA Announces Potential Changes to Direct Investment Survey Reporting Requirements for Certain Private Funds

The Bureau of Economic Analysis, Department of Commerce (BEA) conducts various surveys that currently require certain U.S. entities to report inbound or outbound investments comprising voting interests of 10 percent or more held across the U.S. border (direct investments), while the U.S. Treasury Department (Treasury Department) conducts Treasury International Capital (TIC) surveys that require certain U.S. entities to report certain other types of cross border investments (portfolio investments). The BEA recently announced on its website that it plans to implement, in cooperation with the Treasury Department, important changes to its direct investment surveys. These changes are intended to simplify reporting for private funds by recharacterizing certain direct investments in private funds as portfolio investments based on the nature of the private fund’s investments. Under the proposed changes, the BEA expects that most hedge funds that have been subject to BEA direct investment reporting as a result of cross border voting interests will instead be subject to reporting in the TIC system if a hedge fund group’s total cross border investments (both cross border voting investments of 10 percent or more and other cross border investments) exceed the much higher TIC reporting thresholds, however, many private equity funds will remain subject to BEA direct investment reporting. If these reporting changes are implemented as described by the BEA, effective with surveys conducted on or after January 1, 2017, cross border voting investments of 10 percent or more in, or by, private funds will only be subject to BEA reporting if such investments involve, directly or indirectly, a direct investment in an “operating company,” which the BEA defines as “companies that are not other private funds or holding companies.”

May 31, 2016

Proposed Legislation Would Increase 13D and Other Securities Disclosure Requirements for Hedge Funds and Others

Senators Tammy Baldwin (D-Wis.) and Jeff Merkley (D-Ore.) have formally introduced legislation entitled the Brokaw Act (S. 2720) that seeks principally to increase transparency and strengthen oversight of activist hedge funds by, among other things, reducing the Schedule 13D filing window from 10 calendar days to two business days for all investors; expanding the definition of beneficial ownership for all investors to cover securities in which an investor has a direct or indirect pecuniary interest; defining the term “person” for the purposes of beneficial ownership reporting to explicitly include hedge funds; and requiring the disclosure of short positions in excess of five percent for all investors. Although the bill faces significant hurdles in moving through Congress, it nevertheless has considerable support among influential U.S. senators, including Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.).

May 17, 2016

Derivatives Quarterly Newsletter: First Quarter 2016  

In this issue, we feature the following articles:

  • U.S. Derivatives Developments
    • CFTC and NFA
    • SEC
  • U.S. Enforcement Developments
  • European Derivatives Developments
  • Asia Derivatives Developments

May 16, 2016

SEC and FDIC Proposed Rules on the Orderly Liquidation of Certain Large Broker-Dealers

On February 18, the U.S. Securities and Exchange Commission and Federal Deposit Insurance Corporation (FDIC) (collectively, the Agencies) jointly proposed rules regarding the orderly liquidation of certain covered securities brokers and dealers. The proposal would implement provisions in Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) requiring the Agencies' joint promulgation of rules establishing an orderly liquidation process for certain large broker-dealers that would be distinct from the liquidation process under the Securities Investor Protection Act of 1970, as amended (SIPA). A resolution of a covered broker-dealer pursuant to the proposal (a Title II resolution) would not be a judicially supervised liquidation under SIPA. Rather, it represents an FDIC administrative proceeding under Title II of Dodd-Frank that incorporates the customer protection provisions of SIPA. The proposal seeks to clarify and integrate the requirements of Dodd-Frank and SIPA, to delineate the roles of the FDIC and Securities Investor Protection Corporation (SIPC), to establish a procedure for judicial recognition of a Title II resolution and to impose timing, notice and similar procedural requirements.

May 13, 2016

New ISDA Resolution Stay Protocol and UK Module; Federal Reserve Rule Proposal

On May 3, 2016, the International Swaps and Derivatives Association, Inc. (ISDA) published the ISDA Resolution Stay Jurisdictional Modular Protocol (the JMP). The JMP complements the ISDA 2015 Universal Resolution Stay Protocol (the 2015 Protocol), which ISDA published in November 2015. Both the JMP and the 2015 Protocol relate to regulatory efforts to reduce risks associated with  “too-big-to-fail” institutions; both are intended to help ensure the preservation of transactions of banking organizations that become subject to resolution or reorganization proceedings. They do so via contractual amendments pursuant to which a bank’s counterparties agree to the applicability of  short-term stay mechanisms under bank resolution regimes. Affected agreements include master repurchase and securities lending agreements, as well as ISDA master agreements.

May 11, 2016

Federal Regulators Repropose Joint Rule on Incentive-Based Compensation Arrangements at Large Financial Institutions

Six federal financial regulators are seeking comment on a joint reproposed rule implementing Section 956 of the Dodd-Frank Act relating to incentive-based compensation arrangements and practices at certain regulated financial institutions satisfying specified asset size thresholds. In general, the rule would prohibit covered institutions from awarding incentive-based compensation that is believed to encourage inappropriate risks and would impose mandatory deferral and clawback provisions. It would require such institutions to disclose certain information regarding the structure of their incentive-based compensation arrangements to the applicable regulator. 

May 6, 2016

MiFID II 2016 Update: Dealing Commission and Investment Research – the Final European Commission Position

On April 7, 2016, the European Commission published a draft Delegated Directive (the Delegated Directive), which, among other things, sets out detailed rules on inducements and the use of dealing commission for investment research, in particular, the unbundling of research from execution fees. These rules are being introduced as “Level 2” implementing measures pursuant to the revised EU Markets in Financial Instruments Directive (MiFID II). If adopted, the Delegated Directive would need to be transposed into the law of each EU Member State along with the rest of MiFID II by January 3, 2018 (expected). This Sidley Update considers the position as set out in the Delegated Directive, in particular whether the Delegated Directive would allow for existing Commission Sharing Agreement models to be used to satisfy the new unbundling requirements.

May 2, 2016

SEC Enforcement Quarterly Newsletter: First Quarter 2016

In this issue, we feature the following articles:

  • Recent Report Highlights SEC Enforcement Trends for Public Companies
  • Recent Court Challenge Raises Questions on Scope of FINRA’s Enforcement Powers
  • Settlement Concerning “Internal Controls over Financial Reporting” Again Highlights SEC Focus on Financial Reporting Issues
  • Supreme Court Agrees to Hear Case on Insider Trading Standard at Issue in Newman
  • Recent SEC Staff Changes
  • FCPA Focus

April 27, 2016

SFTR Information Statement: EU Securities Financing Transactions Regulation and the Reuse Disclosure Requirement

The Securities Financing Transactions Regulation (SFTR) requires that parties to “reuse arrangements” provide disclosure to their counterparties of the risks and consequences involved in such arrangements (the Reuse Disclosure Requirement). To facilitate compliance with the Reuse Disclosure Requirement, a group of industry associations has recently published an “SFTR information statement” (the Information Statement). This Sidley Update considers the Reuse Disclosure Requirement and how it is addressed by the Information Statement. In a previous Sidley Update, we considered other aspects of the SFTR, namely the investor disclosure and transparency reporting requirements applicable to alternative investment funds managed by alternative investment fund managers authorized or registered in accordance with the Alternative Investment Fund Managers Directive and UCITS or, where relevant, their management companies.

April 6, 2016

EU SFTR Investor Transparency and Disclosure Requirements: Implications for Investment Fund Managers

The European Union Securities Financing Transactions Regulation (SFTR) came into force on January 12, 2016. In this Sidley Update we focus on the implications for investment fund managers, as regards additional investor disclosure and transparency reporting requirements, some of which may apply now. There are other disclosure requirements between counterparties in relation to reuse of financial instruments received under certain contracts common in the financial markets. 

March 8, 2016

U.S. Supreme Court Holds that, for Diversity Jurisdiction Purposes, a Maryland REIT’s Citizenship is Based upon Citizenship of its Shareholders

The U.S. Supreme Court, in Americold Realty Trust v. Conagra Foods, Inc., No. 14-1382  (U.S. Mar. 7, 2016), held that, for diversity jurisdiction purposes, the citizenship of an entity organized as a real estate investment trust under Maryland state law (a Maryland REIT) is based on the citizenship of all its members, including its shareholders. The Court thus declined to depart from the rule it has previously applied to unincorporated entities such as partnerships: while a corporation has existence and citizenship independent of that of its shareholders, other unincorporated entities do not. The Court’s decision may make it more difficult for certain entities not formed as corporations (including public companies organized as Maryland REITs or other unincorporated statutory trusts, and perhaps non-statutory business trusts) to access the federal courts.

February 17, 2016

SEC Enforcement Quarterly Newsletter: Fourth Quarter 2015

In this issue, we feature the following articles:

  • Questions on Constitutional Challenges to Administrative Proceedings May Be Resolved in 2016
  • SEC Again Reports Record-Breaking Enforcement Figures for Fiscal Year 2015
  • SEC’s Annual Whistleblower Report Reveals Steady Increase in Complaints and Highlights SEC Policy Priorities
  • First Circuit Reverses Important SEC Decision on Primary Liability Under Antifraud Provisions
  • President Obama Announces Nominees to Replace Two Outgoing SEC Commissioners
  • Recent SEC Staff Changes
  • FCPA Focus

February 15, 2016

President’s Budget Proposes to Eliminate Tax Gap

On February 9, 2016, the White House released President Obama’s fiscal 2017 budget, which proposes to eliminate the statutory gap that currently allows owners of pass-through businesses to avoid paying self-employment tax or net investment income tax on certain income (the Proposal). If Congress approves legislation adopting the Proposal, the Proposal would be effective for taxable years beginning after December 31, 2016.

February 5, 2016

The Investment Funds and Advisers 2015 Year-End Client Update Recap

This compendium includes a summary of each 2015 Sidley Update, in reverse chronological order, along with a link to its full text. 

February 1, 2016

Q&A Addressing SEC Proposed New Rule Regulating Funds’ Use of Derivatives

On December 11, 2015, the Securities and Exchange Commission voted to propose Rule 18f-4 (Proposed Rule), a new rule under the Investment Company Act of 1940, as amended (the Act), intended to redress the ad hoc approach by which mutual funds, closed-end funds, exchange-traded funds and companies that elect to be treated as business development companies under the Investment Company Act and address issues raised by investments in derivatives transactions. The proposing release was published on December 28, 2015; the 90-day comment period expires on  March 28, 2016. A copy of the proposing release is available at:

January 29, 2016

2016 Update for Investment Advisers

Investment advisers registered with the Securities and Exchange Commission have certain annual requirements under the Investment Advisers Act of 1940, some of which also either apply to exempt reporting advisers (ERAs) or warrant consideration as best practices for ERAs. This Sidley Update serves as a reminder for investment advisers about certain annual regulatory and compliance obligations, including a number of significant 2016 reporting or filing deadlines.

January 26, 2016

UCITS V Implementation in Europe – Are You Ready?

This Sidley Update is designed to assist UCITS managers in assessing their readiness for UCITS V by providing an overview of the main requirements, together with a summary of the key steps to be taken in order to comply, which include:

  • the establishment or revision of remuneration policies and procedures;
  • changes and additional disclosure to be reflected in the prospectus and key investor information document; 
  • amendments to the depositary agreement; and
  • additional disclosure to be reflected in the financial reports.

January 25, 2016

Derivatives Quarterly Newsletter: Fourth Quarter 2015

This issue of Sidley's Derivatives Quarterly Newsletter highlights and discusses what we consider to be the more important regulatory developments that may affect entities that trade derivatives products. This issue covers developments that arose in the fourth quarter of 2015. 

January 20, 2016

Prudential Regulators and CFTC Adopt Margin Rules for Non-Cleared Swaps

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) mandates the margining of bilateral swaps and security-based swaps that are not cleared by a registered derivatives clearing organization or a registered clearing agency (collectively, Non-Cleared Swaps). Dodd-Frank requires U.S. federal financial regulators to adopt implementing rules for collecting and posting mandated initial and variation margin by the following registered entities (Swap Entities): swap dealers and major swap participants registered with the U.S. Commodity Futures Trading Commission and security-based swap dealers and major security-based swap participants registered with the U.S. Securities and Exchange Commission.