Investment Management/Broker-Dealer

By Val Dahiya, Anna Smith-Sandy

On April 7, 2020, the Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (“OCIE”) published two risk alerts intended to provide market participants with advance information regarding (1) upcoming inspections for broker-dealer compliance with Regulation Best Interest (“Regulation BI”) and (2) upcoming inspections for broker-dealer and investment adviser compliance with Form CRS. The compliance date for both Regulation BI and Form CRS is June 30, 2020.

OCIE is preparing for potential issues that may arise in connection with the COVID-19 pandemic. Notwithstanding the current climate, OCIE remains fully operational nationwide. In a related press release, Director of OCIE Pete Driscoll stated “[b]ased on conversations we have had with the industry, we know firms have made substantial progress in implementing these new rules. We understand that this implementation will be an iterative process, and our focus will be on firms continuing good faith and reasonable efforts, including taking into account firm-specific effects from disruptions caused by COVID-19.”


Continue Reading SEC Staff Publishes Risk Alerts Regarding Reg BI and Form CRS Inspections and Possible COVID-19 Impact

By Andrew Cross, Anna Smith-Sandy

On April 6, 2020, the Commodity Futures Trading Commission (“CFTC”) Office of Customer Education and Outreach (“OCEO”) published an additional customer advisory (“Advisory”) cautioning the public regarding potential fee scams. OCEO noted that many of these schemes are now targeting individuals that may be financially impacted by the Coronavirus pandemic. OCEO previously published a Customer Advisory on March 31, 2020 regarding potential fraudulent schemes posing to take advantage of market volatility related to the pandemic. (See our blog post on this advisory here).


Continue Reading CFTC Publishes New Customer Advisory Cautioning Away From Potential Coronavirus-Related Fee Scams

On March 26, 2020, the Securities and Exchange Commission (“SEC”), announced two agency actions providing additional relief to market participants in response to the impacts of COVID-19 on the markets. First, the SEC adopted an interim final rule providing relief related to (a) market participants needing to gain access to make filings on the EDGAR

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In our previous post, we reviewed how the financial markets’ reaction to the COVID-19 pandemic requires mutual funds to review, and possibly reclassify, the liquidity of their investments. As liquidity and valuation are often two sides of the same coin, factors that may lead to reclassifying a security’s liquidity may also raise questions concerning how to value the security for purposes of calculating a mutual fund’s net asset value (“NAV”). This post discusses when this may be the case.
Continue Reading Navigating Mutual Funds in Rough Markets—Valuation

Authored by Andrew Cross

Three federal bank regulatory agencies – the FRB, FDIC, and OCC – today announced two COVID-19 related actions to support the U.S. economy and allow banking organizations to continue to lending to households and businesses:

  • Allow early adoption of the “standardized approach for measuring counterparty credit risk,” or “SA-CCR,” which is

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During a recent webinar, Steve explained that the market and trading conditions caused by the COVID-19 pandemic might be “reasonably expected to materially affect one or more of [a mutual fund’s] investments’ classifications” for purposes of the fund’s liquidity risk management program (its “LRM Program”). In this circumstance, Rule 22e-4 under the Investment Company Act of 1940 requires more frequent review of these classifications. This post describes how a rough market may require a mutual fund (other than a money market fund or in-kind exchange traded fund) to reclassify an investment’s liquidity classification.
Continue Reading Navigating Mutual Funds in Rough Markets—Liquidity

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The U.S. Securities and Exchange Commission (“SEC”) recently provided relief relating to the implementation of the Consolidated Audit Trail (“CAT”). First, on March 16, 2020, the SEC’s Division of Trading & Markets staff issued a No-Action Letter (“NAL”) to temporarily allow broker-dealer personnel who are working on CAT implementation to focus on critical operations. Second, on March 17, 2020, the SEC granted relief aimed at reducing CAT cybersecurity risks by exempting self-regulatory organizations (“SROs”) from collecting or retaining certain retail customer data. In addition, as a result of the market volatility caused by the COVID-19 pandemic, the SEC’s Division of Enforcement issued a reminder on the importance of maintaining market integrity.
Continue Reading The SEC Stays Busy: CAT Relief in Response to COVID-19 Pandemic, CAT Cybersecurity Relief for SROs, and Enforcement Has Its Eye on Insider Trading

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In the midst of the COVID-19 pandemic, the financial markets have experienced significant volatility. During the course of this volatility, exchanges have halted trading multiple times after declines in trading trigged circuit breakers. In addition, trading floors are transitioning to electronic trading in efforts to prevent the transmission of COVID-19 on physical trading floors. With the recent turmoil, this post provides a high-level summary of the various types of circuit breakers and what can be expected.
Continue Reading Understanding Circuit Breakers, Our New Reality, in the Time of COVID-19

Authored by Andrew Cross

Federal and state bank regulators today issued an interagency statement to provide additional information to financial institutions (“FIs”) that are working with borrowers affected by the Coronavirus Disease 2019 (“COVID-19”).

This post will provide a bullet point summary of this statement.


Continue Reading Federal and State Regulators Issue Statement Encouraging Banks to Work with Borrowers Affected by COVID-19