New Final Rules
Nationally Recognized Statistical Rating Organizations
On August 27th, the Securities and Exchange Commission (“SEC”) adopted new requirements for credit rating agencies to enhance governance, protect against conflicts of interest, and increase transparency. The new rules apply to credit rating agencies registered with the Commission as nationally recognized statistical rating organizations. The requirements provide for an annual certification by the CEO as to the effectiveness of internal controls and additional certifications to accompany credit ratings attesting that the rating was not influenced by other business activities. The Commission also adopted requirements for issuers, underwriters, and third-party due diligence services to promote the transparency of the findings and conclusions of third-party due diligence regarding asset-backed securities. SEC Press Release.
Requests for Comment
Small Cap Tick Pilot Proposed
On August 26th, the SEC announced that the national securities exchanges and the Financial Industry Regulatory Authority filed a proposal that would establish a national market system plan implementing a 12-month pilot program which would widen minimum quoting and trading increments for certain stocks with smaller capitalization. The Commission will use the pilot program to assess whether such changes would enhance market quality for smaller capitalization stocks for the benefit of investors and issuers. The pilot program will include stocks with a market capitalization of $5 billion or less; an average daily trading volume of one million shares or less; and a closing share price of at least $2 per share. The pilot will consist of one control group and three test groups with 400 securities in each test group selected by stratified sampling. Comments should be submitted within 21 days after publication in the Federal Register, which is expected shortly. SEC Press Release.
On September 4th, Reuters discussed the SEC’s study of the fees paid by and between investment advisers, investment companies, and broker-dealers. Fund Fees.
Investment Adviser User Fees
On September 3rd, Think Advisor summarized the findings of RIA in a Box, a compliance consultant, on the user fees investment advisers might pay under a proposed plan that would allow the SEC to collect fees from investment advisers to fund SEC inspections. User Fees.
2015 Fee Rate
On August 29th, the SEC announced that the fees public companies and other issuers will pay to register their securities with the Commission will be set at $116.20 per million dollars for the 2015 fiscal year. SEC Release No. 33-9635.
On August 31st, InvestmentNews reported the SEC is examining wrap accounts to determine whether advisers’ use of them comply with the fiduciary and contractual obligations advisers owe their clients. Wrap Fees.
On September 5th, the SEC announced that Brent J. Fields has been appointed as the agency’s Secretary. On August 29th, the SEC announced that Martin Murphy, the Associate Regional Director for Examinations in the agency’s Los Angeles office, has retired after 24 years at the SEC.
On August 26th, Investment News noted the recent increase in the number of SEC first-time examinations of investment advisers. First Timers.
The SEC’s Use of Administrative Proceedings
On August 25th, DealBook summarized the criticism levelled at the SEC for its use of administrative proceedings, and not the courts, to bring enforcement actions. Administrative Proceedings.
On August 25th Think Advisor, in anticipation of “Fiduciary September,” asked industry representatives and consumer advocates to consider whether the SEC will adopt a harmonized fiduciary standard for advisors and brokers and whether the industry itself has a role to play in fostering such a standard. Consider the Following.