SEC Proposes Amendments to Issuer Repurchase Rule (Rule 10b-18)
On January 25, the Securities and Exchange Commission (SEC) proposed changes to Rule 10b-18—the issuer repurchase rule under the Securities Exchange Act of 1934 (Exchange Act). Rule 10b-18 provides a safe harbor for open-market common stock purchases by the issuer and by affiliated purchasers, such as directors and executive officers. Under this nonexclusive safe harbor, issuers (and their affiliated purchasers) will not be deemed to have violated the Exchange Act anti-manipulation rules if they comply with the following provisions of the Rule regarding the method, timing, price and amount of their common stock purchases: >>> continued
SEC Adopts Amendments to Advisers Act Custody Rule
On December 30, 2009, the Securities and Exchange Commission (SEC) adopted amendments to the custody rule under the Advisers Act of 1940 (the Custody Rule) designed to strengthen controls over the custody of client assets by registered advisers and their related persons. The proposed amendments would have imposed sweeping new obligations on advisers that have custody or are deemed to have custody of client assets by, among other things, requiring an annual surprise examination to verify client assets and promoting the use of independent qualified custodians. >>> continued
SEC Adopts Interim Final Temporary Money Market Funds Reporting Requirement
On Friday, September 18, the Securities and Exchange Commission (SEC) adopted interim final temporary rule 30b1-6T under the Investment Company Act of 1940 (the Rule) requiring any money market fund with a market-based net asset value (NAV) per share below $0.9975 to report certain portfolio holdings and valuation information on a weekly basis. The Rule was adopted concurrent with the expiration of the U.S. Treasury Temporary Guarantee Program for Money Market Funds (the Guarantee Program), which had required money market funds participating in the Guarantee Program to provide substantially similar reporting to the SEC. >>> continued
SEC Announces Actions on Short Sales
On July 27, the Securities and Exchange Commission (SEC) announced several actions in its continuing examination of short sale regulation. First, the SEC adopted Rule 204 of Regulation SHO under the Securities Exchange Act of 1934 (Exchange Act), making permanent its interim rule imposing close-out requirements on short sales. Second, the SEC announced that it would not extend its interim rule requiring the filing of short sale disclosures on Form SH (Rule 10a-3T under the Exchange Act), and would instead be working with the SROs to develop alternative means of disclosure. Third, the SEC announced that it would hold another roundtable on trading- and market-related practices in short selling, this one on September 30, 2009. The SEC has not announced official plans to take action on its April 2009 proposal to amend Regulation SHO, leaving it unclear for the moment as to whether it will postpone action on the proposal until after the September 30 roundtable. >>> continued
Proposed Rule under Investment Advisers Act Would Limit “Pay to Play” Practices
On August 3, the Securities and Exchange Commission (SEC) proposed new Rule 206(4)-5 under the Investment Advisers Act of 19401 (Advisers Act) aimed at curtailing “pay to play” practices by investment advisers that seek to manage assets of state and local governments. The proposed rule would substantially restrict contribution and solicitation practices of investment advisers and certain of their related persons, and poses possibly draconian consequences for slip-ups. If adopted, the proposed rule will significantly affect investment advisers’ compliance policies and procedures as well as recordkeeping requirements. Below, we discuss key aspects of the proposed rule and some of the many unresolved issues that will have to be sorted out in the comment process. >>> continued