The following brief updates exemplify trends and areas of current focus of relevant regulatory authorities:
IM Guidance Update Discusses Common Mistakes in Applications on Form N-8F — Deregistration of Investment Companies
The Division of Investment Management of the SEC has issued an IM Guidance Update regarding Form N-8F, the application to deregister investment companies that fall into one of the enumerated categories covered by the form. The IM Guidance Update provides a brief description of the staff’s process for reviewing Form N-8F applications and the timing for issuance of SEC deregistration notices and orders. In the IM Guidance Update, the staff notes that, while many applications for deregistration proceed based on the initial application filing, there are six common deficiencies that result in comments by the staff requesting revisions or additional information. The staff has observed that a significant number of these comments relate to a handful of items on the Form. In order to assist applicants in filling out the Form, the IM Guidance Update clarifies how the SEC staff expects applicants to answer these items.
MSRB Adopts Rule Establishing Fees for Municipal Advisor Professionals
On April 17, 2014, the Municipal Securities Rulemaking Board (“MSRB”) announced it was implementing new MSRB Rule A-11, which will impose an annual fee of $300 per individual registered as a municipal advisor pursuant to the new SEC Form MA-I. The new rule is effective immediately. The initial fee will be assessed on each municipal advisor registered either temporarily or permanently with the SEC on or before September 30, 2014, and will be due ten business days after the acceptance of its permanent registration by the SEC. The recurring annual fee is assessed for each individual person who is registered as a municipal advisor pursuant to SEC Form MA-I as of January 31 in the relevant year, and the annual fee is due by April 30 of each year. The proceeds of this fee will be used to defray the costs and expenses of operating and administering the MSRB, particularly the costs associated with the regulation of municipal advisors.
SEC to Test Alternative Mutual Funds’ Leverage, Liquidity
According to reports, the SEC plans to test approximately 25 funds over the next several months to review whether alternative mutual funds that mimic hedge-fund strategies are complying with leverage and liquidity rules for registered funds. Bloomberg reports that Jane Jarcho, an associate director in the SEC’s examination program, explained that the exams will shed light on how mutual funds are trying to generate yield, how much risk they are taking and whether boards are engaged in appropriate oversight. The SEC will look at four types of alternative mutual funds: non-traditional bond funds; long-short equity funds; multi-alternative funds; and market-neutral funds. Further details can be found here.