The following are summaries of key developments in the investment management industry. More detailed coverage of these and other topics can be found here.

SEC's Champ Outlines Investment Management Staff Priorities

In a March speech to industry professionals, Norm Champ, the Director of the Division of Investment Management of the SEC, identified the following priorities of the SEC's investment management staff:

  1. Complete the pending money market fund proposal.
  2. Complete analyzing comments on the proposed rule regarding general solicitation and advertising.
  3. Revise Form N-SAR.
  4. Reform variable annuity disclosures.
  5. Reform disclosures on target date funds.
  6. Complete Congressional mandates relating to the deletion of credit ratings references.
  7. Review distribution fees and practices after consultation with the Office of Compliance, Inspections, and Examinations.

SEC's Guidance on Unbundling of Proxy Proposals

The staff of the SEC Division of Corporation Finance recently issued three Compliance and Disclosure Interpretations providing guidance on the unbundling of proxy proposals.

  • Multiple matters that are so "inextricably intertwined" that they effectively constitute a single matter need not be unbundled.
  • A single "material" matter may be presented with a number of "immaterial" matters.
  • Multiple amendments to the equity incentive plan may be presented as one matter.

In each of these interpretations, the SEC staff furnished examples under which the staff believes it is permissible for a registrant to combine multiple matters into a single proposal.

SEC Staff Issues Guidance Updates on S-X Rules for Business Development Companies

The Division of Investment Management of the SEC released guidance regarding rules that require business development companies (BDCs) to include certain financial information about unconsolidated subsidiaries in their registration statements. The main purpose of the guidance was to point out that Rules 3-09 and 4-08(g) of Regulation S-X do apply to a BDC's Form N-2. The staff observed that some BDCs had been failing to provide separate financial statements or summarized financial information for subsidiaries when Rule 3-09 or Rule 4-08(g) actually required such financial statements or information.

The SEC staff noted that if a BDC believes that complying with Rule 3-09 or Rule 4-08(g) would result in the presentation of either separate financial statements or summarized financial information of an unconsolidated subsidiary that is not reasonably necessary to inform investors, the BDC should contact the Chief Accountant's Office of the SEC's Division of Investment Management.

To learn more about these developments and other investment management news, please contact a member of the Ballard Spahr Investment Management Group or the attorney with whom you regularly work.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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