Investment Company Consolidation

On October 31st, the SEC’s Division of Investment Management’s Chief Accountant issued guidance on the presentation of consolidated financial statements for certain investment companies registered under the Investment Company Act and investment companies that have elected to be treated as business development companies that have wholly owned subsidiaries. The guidance highlights examples of the variety of situations that might arise and result in questions concerning consolidation.

Regulatory Orders

Preliminary Approval Granted to Exchange-Traded Managed Fund

On November 6th, the SEC preliminarily granted Eaton Vance Management’s request for exemptive relief allowing it to offer a hybrid, non-transparent, exchange-traded fund (“ETF”). The exchange-traded managed funds (“ETMFs”) would not offer investors the opportunity to transact intraday at prices based on current (versus end-of-day) determinations of the shares’ value. Instead, like intraday orders to buy or sell shares of mutual funds, an ETMF investor would not know the NAV at the time the order is placed, but the levels of premium/discount would be fully transparent allowing investors to see the execution costs of buying or selling shares. Each business day, before the open of trading on the listing exchange, the investment adviser would publish the names and quantities of the basket instruments, as well as the estimated balancing amount (if any), for that day. The published basket would apply until a new basket is announced on the following business day, and there would be no intraday changes to the basket except to correct errors in the published basket. Hearing requests should be submitted on or before December 1, 2014. SEC Release No. IC-31333.

Other Developments

Alternative Trading Systems

On November 4th, the SEC published a list of alternative trading systems with effective registrations as of November 1, 2014.

Sub-Prime  Subpoena

On October 31st, Reuters reported the SEC has subpoenaed Ally Financial seeking information about the firm’s sub-prime auto securitizations. Sub-Prime Subpoena.