The following are excerpts from articles about key developments in the investment management industry. To read the full articles on these and other topics, please click here.

IRS Issues Proposed Regulations Providing Guidance On The Tax Qualification Of Mutual Funds

On September 27, 2016, the Internal Revenue Service (IRS) issued proposed regulations (Proposed Regulations) that provide guidance relating to the gross income and asset diversification tests used to determine whether a mutual fund qualifies as a regulated investment company (RIC) for federal income tax purposes. The IRS simultaneously announced that it no longer will issue rulings on whether a financial instrument constitutes a security for certain purposes applicable to RICs. The Proposed Regulations, if adopted in their current form, would have a significant effect on RICs that hold investments in controlled foreign corporations (CFCs) or passive foreign investment companies (PFICs). Because of their situs outside the United States, CFCs and PFICs are subject to special Internal Revenue Code provisions designed to prevent deferral of federal income tax.

This article appeared in Ballard Spahr's Tax Truths: Volume 1, Issue 2 – December 2016. Click here to read the full article.

Director of OCIE Speaks at the National Society of Compliance Professionals 2016 National Conference

Calling the Office of Compliance Inspections and Examinations (OCIE) the eyes and ears of the Securities and Exchange Commission, OCIE Director Marc Wyatt discussed the National Exam Program (NEP) and the office's function, mission, and impact in keynote remarks at the National Society of Compliance Professionals 2016 National Conference.

Mr. Wyatt noted that OCIE has examination responsibility for more than 28,000 registrants, including more than 12,000 investment advisers, approximately 11,000 mutual funds and exchange-traded funds, more than 4,000 broker-dealers, 650 municipal advisers, 400 transfer agents, 18 national securities exchanges, the Financial Industry Regulatory Authority (FINRA), the Municipal Securities Rulemaking Board, the Securities Investor Protection Corporation, the PCAOB, and eight active clearing agencies.

SEC Announces Record Enforcement Results for FY 2016

The Securities and Exchanges Commission (SEC) has announced the enforcement results for its 2016 fiscal year. During 2016, the SEC filed 868 enforcement actions alleging financial reporting-related misconduct by companies and their executives and misconduct by registrants and gatekeepers. This is a record for enforcement actions in a single year.

The 2016 enforcement actions included a single-year record of 160 cases involving investment advisers or investment companies. The agency also reached new highs for Foreign Corrupt Practices Act (FCPA) related enforcement actions (21) and in money distributed to whistleblowers ($57 million) in a single year.

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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