Funds Talk: May 2018

Topics covered in this issue include: 

• OCIE Warns Advisers to Check Fee and Expense Compliance
  After observing several issues during its routine inspections, the SEC’s Office of Compliance Inspections and Examinations issued a risk alert outlining the most common shortcomings so that advisers can ensure their practices are compliant. 
  

   

• SEC Proposes Enhanced Investment Adviser and Broker-Dealer Standards of Conduct
  Citing “investor confusion” with regard to broker-dealers and investment advisers, the SEC issued three proposals outlining standards of conduct that seek to protect and inform retail investors while improving disclosure practices — particularly regarding potential conflicts of interest.

•  

• The Rise of the #MeToo Movement: An Opportunity, Not an Obligation
  The #MeToo movement has raised difficult discussions in offices across the U.S., but rather than shying away from the conversation, companies should understand that embracing this cultural shift isn’t only good business — it’s the right thing to do.
  

   

• Supreme Court Rules Microsoft Case Moot as CLOUD Act Becomes Law
  Recent updates to U.S. legislation governing data privacy and government surveillance substantially alter digital service providers’ obligations, and the changes have already had an impact on a high-profile case before the Supreme Court.
  
  
• Closed-End Fund House Bill Doesn’t Go Far Enough
  “Closed-End Fund House Bill Doesn’t Go Far Enough,” by Corporate partner George M. Silfen was published in Ignites on March 29, 2018. George writes that the Expanding Investment Opportunities Act (H.R. 4279) must address a current rule under the Investment Advisers Act of 1940 in order to expand investment opportunities for closed-end funds, as desired. The bill, which passed the House by an overwhelming 418 to 2 vote, would direct the SEC to revise its rules to enable closed-end companies to use the securities offering and proxy rules currently available to other issuers of securities. However, George argues that a simple modification to the legislation would remove a key limitation and stimulate increased activity in the closed-end fund IPO market.
  
  
• LIBOR Replacement Begins Publication
  As the New York Federal Reserve Bank launched its Secured Overnight Financing Rate as its alternative to LIBOR, a new report details the transition period and the pursuit of a baseline level of liquidity for derivatives contracts using the new rate.
  
  
• OFAC Issues Cryptocurrency Compliance Guidance
  Continuing the approach taken by various U.S. agencies and market regulators, OFAC advises that entities face the same compliance obligations for transactions denominated in virtual currencies as they do for traditional currencies.
  
  
• Tax and Cryptocurrencies
  Despite the meteoric rise of cryptocurrencies, the IRS has issued minimal guidance on the issue. Nonetheless, investors must be aware of the significant tax considerations associated with buying and selling these virtual currencies.