According to recent statements by David Grim, acting director of the SEC’s Division of Investment Management, the SEC is working on several proposed rules that would affect registered investment advisers (RIAs). Those proposals would address: (i) an increase in the amount of data reporting; (ii) greater portfolio composition disclosures; and (iii) the requirement to create plans for severe business disruption for RIAs.
The SEC’s rulemaking overall goal is to add to investor protection, according to acting director Grim. Specifically, a new rule would require RIAs to establish written procedures with respect to certain events that would serve to provide an orderly transition of client accounts to one or more other investment advisers when the adviser is unable to service clients. Examples of such events include a material departure of key personnel or the adviser’s termination of business.
In order to obtain more data from RIAs, it is possible that Form ADV and Form PF will be revised to capture additional information in order for the SEC to keep informed of changes in a constantly changing industry. In addition, Form N-SAR, which is required to be filed by certain RIAs, may be amended to require additional data and possibly, filed on a more frequent basis with the SEC. The data collection rules are expected to be the first wave of the SEC’s 2015 rulemaking process affecting RIAs.
According to Mr. Grim, those mutual funds that include derivative investments may in the future have increased reporting and disclosure requirements due to the risks associated with such investment instruments.