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Compliance March 17, 2020
Responding to Coronavirus, SEC Eases Certain Fund and Adviser Requirements
While in-person participation is an important part of the financial system regulated by the SEC, the virus is forcing market makers to significantly adjust their operations.
Reported by John Manganaro
The U.S. Securities and Exchange Commission (SEC) has announced a broad regulatory relief package aimed at supporting funds and investment advisers whose operations may be affected by the global coronavirus response.
In a statement issued alongside the regulatory relief, SEC Chairman Jay Clayton says the impacts of the coronavirus outbreak may delay or prevent funds and advisers operating in affected areas from meeting certain regulatory obligations because of restrictions on large gatherings, travel and access to facilities, the potential limited availability of personnel, and similar disruptions.
“Today’s relief is designed to enable funds and advisers to meet those obligations and to continue their operations, while recognizing that there may be temporary disruptions outside of their control,” Clayton says. “As investors, investment funds, investment advisers and other market participants endeavor to address these challenges, the commission stands ready to take action in the interest of our investors and our markets as appropriate.”
Moving forward, firms and financial professionals affected by the coronavirus are encouraged to contact SEC staff with questions and concerns. Clayton notes the commission “may extend the time period for relief, with any additional conditions it deems appropriate, or provide additional relief as circumstances warrant.”
The SEC says that for general questions or concerns related to impacts of coronavirus on the operations or compliance of funds and advisers, “including questions about Form N-MFP and Form N-CR,” financial professionals may email IM-EmergencyRelief@sec.gov. For questions regarding Form N-LIQUID, the email address is IM-N-LIQUID@sec.gov. For questions regarding Form ADV, professionals may email IARDLive@sec.gov, and for questions regarding Form PF, FormPF@sec.gov.
In terms of adviser-focused relief provisions that have been granted, flexibility is granted for the preparation and filing of the Form ADV. Further flexibility is granted for the delivery of amended brochures, brochure supplements or summaries of material service changes going to clients.
Reflecting on the SEC’s actions, Thomas Gorman, a partner at the international law firm Dorsey & Whitney, says the actions should prove very helpful to SEC-regulated firms.
“As the coronavirus wreaks havoc across the nation, the Securities and Exchange Commission has immediately stepped up to provide targeted relief,” Gorman says, calling this “an example of good responsive government.”
He says he understands and supports the SEC’s immediately approved rule to permit the Chicago Board Options Exchange to suspend open outcry—a longstanding trading procedure where those involved must physically be present on the trading floor—to go virtual.
“The agency also passed rules permitting investment advisers and investment companies to conduct virtual board meetings and offering targeted relief on certain filing obligations if the virus creates issues,” Gorman says. “These kinds of immediate, targeted action can help mitigate an ongoing crisis.”
