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A few notes from the recently held American Bar Association
\nBusiness Law Section Annual meeting, where we heard from two key
\ndecision-makers from the Securities and Exchange Commission:<\/p>\n
First, last Wednesday, Hester Peirce, a Commissioner from the
She stated that some type of rulemaking regarding custody of
As an aside, and further to Commissioner’s Peirce’s view
At the Investment Adviser, Investment Company and Private
On the Investment Company side, he discussed the names rule
More importantly he addressed the private funds rule<\/a>, which he said has two main
Unfortunately, we were instructed in advance that he would not
Needless to say, I’m not sure I’m convinced that this
The content of this article is intended to provide a general
POPULAR ARTICLES ON: Technology from United States<\/p>\n
\nU.S. Securities and Exchange Commission spoke at the Blockchain,
\nCryptocurrencies and Investment Management Task Force Meeting. I
\nwas impressed with Commissioner Peirce’s broad understanding of
\nthe issues facing lawyers and crypto participants. She clearly
\nbelieves everyone would be better off with clear regulatory
\nframeworks, rather than the current approach of using enforcement
\nactions as a method of developing the law in this area. However,
\nshe did believe that ultimately many products are likely securities
\nunder
\nThe Howey<\/u> Test<\/a> and can (and should) be regulated by the
\nSEC. In particular, she indicated that most digital lending
\nproducts are in this category. However, she thought that the SEC
\nshould be crafting regulations which are more closely tailored to
\nthe type of transactions being pursued.<\/p>\n
\ndigital assets is going to be done soon.<\/p>\n
\non the use of the enforcement actions in this space, on Monday the
\nSEC filed a federal lawsuit on Monday against crypto influencer Ian
\nBalina for his failure to register an initial coin offering. While
\nthis is hardly noteworthy on its own, the SEC in the complaint
\nnoted that the ICO was handled over the Ethereum blockchain, whose
\n“network of nodes . . . are clustered more densely in the
\nUnited States than in any other country. As a result, those
\ntransactions took place in the United States.” Read more here:
\nSEC Claims All of Ethereum Falls Under US
\nJurisdiction \u2013 Decrypt<\/a><\/p>\n
\nFund’s Joint Subcommittee meetings, we heard from William
\nBirdthistle, the Director of Division of Investment Management. As
\nthere has been a tremendous amount of rulemaking in this area
\nrecently, it was great to hear directly from the director of the
\ndivision.<\/p>\n
\n(Section 35(d)), which prohibits registered investment companies
\nfrom adopting names that the SEC finds materially deceptive or
\nmisleading and requires that the investment fund adopt a policy to
\ninvest at least 80% of the value of its assets in accordance with
\nits name. The proposed amendments<\/a> to the Names Rule covers,
\n(1) the expansion of the current Names Rule to fund names,
\nsuggesting certain investment characteristics; (2) changing various
\nregistration forms to include disclosures that define terms used in
\nthe fund’s name; (3) addressing temporary deviations from the
\n80% investment requirement; (4) providing guidance on derivative
\nvaluation; (5) restricting fundamental investment policy changes
\nfor unlisted closed-end funds and business development companies;
\n(6) prohibitions for integration funds; and (7) new bookkeeping
\nrequirements.” In Mr. Birdthistle’s view, this is really
\ntruth in advertising: A fund’s name is important. And if you
\nsay something about your investing style in your name, you should
\nfollow it.<\/p>\n
\npoints (1) additional disclosure; and (2) stricter prohibitions on
\ncertain adviser activities. He thought that the heightened
\ndisclosures were relatively well-received. He acknowledged that
\nthere were more concerns regarding the second prong than the SEC
\nanticipated.<\/p>\n
\nbe willing to discuss the SEC’s rulemaking authority in this
\narea in light of the recent Supreme Court decision in West Virginia vs. EPA<\/u><\/a> \u2013 which
\ncould have been a very enlightened conversation…<\/p>\n
\nrule will survive in its current form. However, it is almost
\nequally certain that the pace of rulemaking in the investment
\nmanagement area will continue.<\/p>\n
\nguide to the subject matter. Specialist advice should be sought
\nabout your specific circumstances.<\/em><\/p>\n<\/div>\n<\/div>\n