Insights
Chapman's quarterly Regulatory Update contains an overview of the latest regulatory actions, market happenings, and litigation and enforcement activity in the investment management space.
On September 12, 2024, the Commodity Futures Trading Commission (CFTC) adopted amendments to CFTC Regulation 4.7 (Reg. 4.7), a rule that provides exemptions from the broader compliance requirements under Part 4 of the CFTC regulations (Part 4) for registered commodity pool operators (CPOs) with respect to pools (4.7 pools) offered solely to “Qualified Eligible Persons” (QEPs) and registered commodity trading advisors (CTAs) that advise or manage commodity trading accounts of QEPs. The amendments (i) increase the financial thresholds in the “Portfolio Requirement” of the QEP definition and (ii) permit CPOs of fund of fund pools offered solely to QEPs to provide monthly account statements within 45 days of the month-end, rather than providing quarterly account statements within 30 days of the quarter-end. The CFTC chose not to adopt, at this time, the proposed minimum QEP disclosures.
A recognized securities and commodities regulatory authority, Peter’s practice focuses on the registration and regulation of investment advisers, broker-dealers, commodity trading advisors, commodity pool operators, and introducing brokers, as well as the formation and ongoing compliance obligations of registered and private investment companies.
Chapman's 2024 Social Impact and Sustainability report showcases our commitment to the United Nations Global Compact (UNGC).
On August 22, 2024, a proposed rule (the “Proposed Joint Rule”) mandated by the Financial Data Transparency Act of 2022 (the “FDTA”) and adopted by nine federal financial regulators, including the U.S. Securities and Exchange Commission (the “SEC” and, together with the other eight regulators, the “Covered Agencies”), was published in the Federal Register.
Chapman's white paper provides a summary of the interval fund and tender offer fund structures, including their basic legal framework, their investment restrictions, how they are distributed and how they facilitate redemptions. It also provides a comparison of interval funds and tender offer funds, both to each other and to other types of investment companies.
Chapman acted as counsel on the registration and listing of two of the first eight spot Ethereum (ether) exchange-traded funds (ETFs) to begin trading in the United States, following the U.S. Securities and Exchange Commission (SEC) declaring the registration statements for the ether ETFs effective on July 22, 2024.
A recognized authority in the commercial law, regulatory, and insolvency aspects of derivatives, Curtis Doty further expands the firm's capacity to advise on complex derivatives issues and transactions across multiple sectors of finance.
On June 27, 2024, the United States Supreme Court ruled in favor of the United States Trustee, who had objected to Purdue’s plan of reorganization that granted releases of third party claims to members of the Sackler family in exchange for their contribution of up to $6 billion to the Purdue bankruptcy estate. Justice Neil Gorsuch, writing for the majority, found that the type of relief being granted to the Sacklers (i.e., a blanket shield from all existing or potential liability relating to the opioid crisis) represented the kind of “discharge” only available to debtors who have “placed all their assets on the table.”
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In a decision that should help restore investors’ faith in the protections afforded municipal bondholders under the United States Bankruptcy Code (the “Bankruptcy Code”), on June 12, 2024, the United States Court of Appeals for the First Circuit (the “First Circuit” or the “Court”) held that the bondholders (the “Bondholders”) of certain Puerto Rico Electric Power Authority (“PREPA”) electric revenue bonds (the “Bonds”) have a non-recourse claim against PREPA’s estate in PREPA’s reorganization proceedings under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act, 48 U.S.C. §§ 2161-78 (“PROMESA”), for the full principal amount of their outstanding Bonds, plus matured interest, of approximately $8.5 billion, and that the Bonds are secured by PREPA’s current and future Net Revenues.
- Topic: Examinations
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On April 9, 2021, the Securities and Exchange Commission Division of Examinations issued a Risk Alert highlighting observations made by the Division from recent examinations of investment advisers, registered investment companies, and private funds offering products and services that incorporate environmental, social, and governance factors.
The Financial Industry Regulatory Authority, Inc. recently issued its 2021 Report on FINRA’s Risk Monitoring and Examination Activities. The new Report is designed to assist FINRA member firms’ compliance programs by providing annual insights from FINRA’s ongoing regulatory operations.
With the Regulation Best Interest compliance date set for June 30, 2020, the SEC's Office of Compliance Inspections and Examinations recently announced that it would begin conducting broker‑dealer examinations focused on Reg BI compliance and outlined the scope of exams likely to occur in the first year following the compliance date.
With the Form CRS compliance date set for June 30, 2020, the SEC's Office of Compliance Inspections and Examinations recently announced that it would begin conducting examinations focused on Form CRS compliance and outlined the focus of exams likely to occur in the first year following the compliance date.
The SEC's Office of Compliance Inspections and Examinations has released its 2020 Examination Priorities. This Client Alert includes a discussion of the exam priorities.
FINRA recently issued its 2020 Risk Monitoring and Examination Priorities Letter. The letter highlights the areas of focus for FINRA’s risk monitoring, surveillance and examination programs for 2020 and contain numerous links to Regulatory Notices, FINRA Reports and other resources to aid broker-dealers in complying with the priority areas.
On December 14, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations issued a Risk Alert reminding investment advisers of their recordkeeping obligations with respect to electronic messaging and summarizing their related observations from recent examinations.
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations has released its 2019 National Exam Program Examination Priorities.
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations issued a National Exam Program Risk Alert outlining the most common deficiencies that OCIE staff has identified in recent examinations of registered investment advisers’ best execution practices.
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently released its 2018 National Exam Program Examination Priorities. Highlights from the 2018 exam priorities are reviewed in this Client Alert.
The Financial Industry Regulatory Authority, Inc. recently issued its 2018 Regulatory and Examination Priorities Letter. A number of FINRA’s comments direct firms to review the 2017 Examination Findings Report for additional insights into specific areas of concern and effective practices.
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently published a Risk Alert that highlights frequently identified investment adviser advertising compliance issues. The Risk Alert identifies the advertising compliance issues most frequently identified in deficiency letters from investment adviser examinations.
The Supplemental Examination Procedures for Risk Management of Third-Party Relationships issued by the Office of the Comptroller of the Currency on January 24 establish detailed compliance obligations for relationships with third-party service providers.
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently published a Risk Alert listing five compliance topics most frequently identified in deficiency letters to investment advisers following exams.
- Legal, Operations, and Strategy Briefs for Financial Institutions
In this edition:
- Mortgage Servicing Foreclosure Practices
- OCC Semiannual Risk Perspective
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently released its Examinations Priorities for 2017.
The Financial Industry Regulatory Authority, Inc. recently issued its annual Regulatory Examination Priorities Letter. This alert summarizes some of the more significant issues FINRA’s letter raises.
The Financial Industry Regulatory Authority announced that it is conducting a sweep examination on broker-dealer firms to look into incentives and business practices that may encourage employees to engage in inappropriate cross-selling activities.
- Q3 2016 (Originally Published March 2, 2016)Journal of Investment Compliance
The Municipal Securities Rulemaking Board recently published its 2016 Compliance Advisory for Brokers, Dealers and Municipal Securities Dealers. The Compliance Advisory outlines several MSRB rules that the MSRB believes present key compliance risks for brokers, dealers and municipal securities dealers.
- July/August 2016Practical Compliance & Risk Management for the Securities Industry
Following the implementation of Dodd-Frank's rules and regulations and the initial wave of SEC examinations of municipal advisors, management and compliance personnel are navigating through the rules while continuing to run their business and service clients.
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently issued a Risk Alert announcing that they will be undertaking an examination initiative focused on the risk that registered advisers may be making conflicted recommendations to their clients.
- Client Alert
The Financial Industry Regulatory Authority recently issued its annual Regulatory Examination Priorities Letter. FINRA member firms should review their policies, procedures and business activities in light of FINRA’s stated 2016 priorities.
- Client Alert
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently released its Examinations Priorities for 2016. Firms should review their policies, procedures and business activities in light of OCIE’s stated 2016 priorities.
- Client Alert
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently issued a Risk Alert providing information on the areas of focus for the SEC staff’s second round of cybersecurity examinations of registered investment advisers and broker-dealers.
- Client Alert
The Securities and Exchange Commission staff recently announced an initiative to conduct examinations of registered investment company complexes that have not previously been examined.
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently issued its 2015 Regulatory and Examinations Priorities Letter.
The Financial Industry Regulatory Authority, Inc. recently issued its Regulatory and Examinations Priorities Letter. In this alert are brief summaries of some of the more significant issues FINRA’s letter raises.
In this issue:
- Department of Housing and Urban Development 2013 Disparate Impact Rule is Vacated
- FFIEC Cybersecurity Guidance
- 2014 Federal Interagency Fair Lending Hot Topics Webinar
- Client Alert
If your firm is a registered investment adviser that has never been examined by the Securities and Exchange Commission, you might want to prepare to see SEC examiners in the near future.
- Client Alert
The Financial Industry Regulatory Authority, Inc. recently issued Regulatory Notice 13-31 summarizing the typical approach of FINRA examinations on suitability compliance and highlighting effective practices used by member firms to meet suitability obligations under FINRA Rule 2111.
- Client Alert
The U.S. Treasury recently released a report from the Treasury Inspector General for Tax Administration that states that the Internal Revenue Service more than doubled the number of bond examinations conducted per year from the number of examinations it conducted during previous reporting periods.