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Financial Services & Investments

Asset Management ADVocate

The Asset Management ADVocate provides unique analysis and insight into legal developments affecting asset managers in the United States.

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July 6, 2016

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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May 17, 2016

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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May 11, 2016

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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May 5, 2016

10666 and All That

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

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May 2, 2016

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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April 28, 2016

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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April 18, 2016

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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April 4, 2016

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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March 31, 2016

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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March 17, 2016

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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March 9, 2016

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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March 2, 2016

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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February 23, 2016

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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February 22, 2016

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

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January 19, 2016

Fund Boards and Advisers Called to Action by SEC “Distribution in Guise” Update - Part Two

This post continues my discussion of the IM Guidance Update released on January 6, 2016, in which the SEC staff urges bo