SEC Proposes Regulations for Determining Fair Value of Securities Held by Investment Companies
The Securities and Exchange Commission recently provided a long-promised and needed update, in the form of a proposed rule, to guidance on determining the fair value of securities held by registered investment companies. Although the Investment Company Act of 1940 tasks the boards of directors of these funds with determining in good faith the fair value of securities for which market quotations are not readily available, the proposed rule would permit fund boards to assign responsibility for determining the fair value of all, or a portion, of these securities to the fund's investment advisers (including any sub-advisers). The proposed rule would also require written policies and procedures for determining fair values, which must address the following:
- Assessment and management of valuation risks
- Selection and application of fair value methodologies
- Periodic testing of such methodologies
- Oversight of pricing service providers
* * *
Please subscribe to our blog to stay updated on COVID-19-related and other asset management industry developments. You might also find useful our COVID-19 Guidance for Businesses.Print and share
Explore more in
Asset Management ADVocate
The Asset Management ADVocate provides unique analysis and insight into legal developments affecting asset managers in the United States. Subscribe 🡢