The SEC’s Division of Investment Management’s plate is full. In a recent speech, IM director Dalia Blass stated that her division plans to make recommendations for next steps to the Commission on all the outstanding proposals in its pipeline.
That agenda includes fund of funds arrangements, funds’ use of derivatives, fund valuation practices and consideration of the hotly anticipated IA advertising and solicitation proposed changes. Updating e-delivery guidance and permitting virtual board meetings beyond the current temporary covid-19 relief also appear on its regulatory plate.
Blass looks even further ahead. “Regulatory updates that respond solely to the last event risk creating a regime that does not take into account new changes, risks and innovations that are occurring around us or have not yet occurred,” she stated.
IM focuses on regulation that will balance flexibility to accommodate future changes with promoting resiliency to future crises, Blass noted. She pointed to IM initiatives in areas such as exchange-traded funds, derivatives and valuation.
Blass further flagged staff statements as another area where it is important to be forward looking to account for evolution in the asset management industry. IM staff provide views in many ways, including written statements, letters, and responses to frequently asked questions, she noted. Although SEC Chairman Jay Clayton has emphasized only the Commission makes policy.
Reviewing staff statements
A review of prior staff statements is underway within the division. “As the markets and the industry evolve, it is important to examine whether prior staff statements continue to be relevant and consistent with the Commission’s overall regulatory approach,” Blass stated.
The initiative has already yielded the withdrawal of letters that addressed investment advisers’ responsibilities in voting client proxies and retaining proxy advisory firms, and that tackled voting requirements for closed-end funds.
Blass encouraged firms to examine past staff statements and determine whether the Commission has spoken recently on the particular issue and whether the markets have significantly changed. If the Commission statements “look like they move in a different direction” or if the markets have evolved since issuance, she recommends you take a look at the impact of those developments on the staff statement.
“Reconsideration of prior staff statements certainly will be a continued priority of the Division,” Blass stated.
This article first appeared in sister publication Regulatory Compliance Watch