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Asset Management ADVocate

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Should Failure to Plan Constitute Fraud?

I have spoken for years about the importance of contingency planning for money market funds. So I understand why business continuity and transition planning is a great idea for investment advisers. I'm troubled, however, by the SEC's recent proposal to require advisers to maintain such plans.

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SEC Judge Recognizes the Limits of Custodian Liability

In a recent enforcement proceeding, In the Matter of Equity Trust Company, the SEC sought to impose a standard of care to an IRA custodian that the administrative law judge ("ALJ") found to be "essentially made up of whole cloth." The ALJ dismissed the case due to this weakness, among othe

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Release 10666 and the Problem of Swaps

In an earlier post, I noted that Release No. IC-10666 was issued before interest rate swaps were invented.

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Should Asset Segregation Do Double Duty?

I've been discussing comments on the SEC's proposed Rule 18f-4 in light of the SEC's initial regulation of derivatives in Release No. IC-10666 ("Release 10666").

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10666 and All That

[Click here for the obscure title reference.] Release No.

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Could the Use of Derivatives Create a “Toxic Brew?”

This post continues my consideration of some conceptual questions underlying the SEC's proposed Rule 18f-4.

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Limitations on the Limitation of Leverage in Investment Companies

A CLE presentation gave me an excuse to read many of the comment letters regarding the SEC's proposed Rule 18f-4, which would regulate the amount of "senior security transactions" in which an investment company could engage.

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MetLife v. FSOC: Alternatives to Appeal?

My earlier post speculated on the reasons the D.C. District Court struck down the Financial Stability Oversight Counsel's ("FSOC") designation of MetLife as a non-bank systemically important financial institution ("SIFI").

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SEC Staff Puts a Bow on Gifts from Christmas 2015 Legislation

Late last fall, Congress faced a serious crisis in trying to pass a comprehensive transportation bill, designated as the Fixing America's Surface Transportation (FAST) Act. Amendments to various Federal securities and banking laws were added to the FAST Act during the reconciliation process.

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MetLife and the Cost of SIFI Designation

MetLife won the first round in its fight against designation as a nonbank systemically important financial institution ("SIFI").

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What Does Liquidity Have to Do with Diversification?

In my recent article on money market fund reforms, I observed:

The minimal credit risk determination for ABS [an Asset-Backed Security] should identify every entity on whose financial strength the fund will rely; the illiquid security determination should

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Will the Department of Labor (DOL) Add to the Fiduciary Murk?

A recent Majority Staff Report from the Senate Committee on Homeland Security and Governmental Affairs raises some concerns. Some of my concerns relate to the state of our federal government.

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Phase Two of Money Market Fund Reform

There are important changes to Rule 2a-7, Form N-MFP and Form N-CR that go into effect on April 14, 2016, and have nothing to do with fees, gates, retail shareholders or floating NAVs. At this point, every fund should be prepared to submit revised procedures to its board of directors for review.

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Are There Still Such Things as Restricted Securities?—Part Two

Funds Don't Identify Rule 144A and Regulation S Securities as "Restricted" Notwithstanding my technical interpretation of "restricted security" in Part One, my sampling of recent annual reports found no funds treating Rule 144A or Regulation S securities

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Are There Still Such Things as Restricted Securities? —Part One

Rule 6-03(f) of Regulation S-X requires investment companies to make specific disclosures regarding any investments in "restricted securities," defined as "securities which cannot be offered for public sale without first being registered under the Securities Ac