Teleworking mandates, travel restrictions, movement controls, social distancing and other coronavirus countermeasures are requiring a great deal of flexibility from all. Fortunately, the SEC is also affording flexibility to the financial services industry in the form of regulatory relief and guidance.
On March 13, the Commission announced some regulatory relief for investment advisors and investment funds whose operations are likely being affected by covid-19. The relief covers in-person board meetings (see related story) and certain filing and delivery requirements.
The “targeted relief will provide additional time so affected funds and advisors can continue meeting the expectations of their investors and clients,” said SEC chairman Jay Clayton.
Form ADV/PF filing relief
Key among the welcome relief is tied to the Form ADV and Form PF filing requirements for registered investment advisors and exempt reporting advisors. An extension states that an investment advisor must file the Form ADV or Form PF and brochure “as soon as practicable” but not later than 45 days after the original due date.
The stated conditions are that the IA or ERA is unable to meet a filing deadline or delivery requirement due to the coronavirus. Firms also must “promptly” provide the SEC via e-mail (IARDLive@sec.gov) and disclose on their public website information that it is relying on the relief order, a brief description of the reasons for not being able to timely file, and the estimated date that it will be able to file by. For Form PF the e-mail address is FormPF@sec.gov.
The SEC reminds that advisory clients and the agency have an interest in the timely availability of required information about IAs. The Commission reminds IAs relying on the order to continue to evaluate their obligations, including their fiduciary duty, under the federal securities laws.
The investment company relief order provides for the following:
- A registered management investment company or business development company and any IA of or principal underwriter is exempt until June 15, 2020 from the requirements imposed under the Investment Company Act that votes of the board of directors of either the registered management investment company or BDC be cast in person under certain conditions.
- A registered fund that is required to file Form N-CEN under Investment Company Act rule 30a-1 or Form N-PORT under rule 30b1-9 is temporarily exempt from such form filing requirements until April 30 under certain conditions.
- A registered management investment company is temporarily exempt from the requirements of Investment Company Act rule 30e-1 to transmit annual and semi-annual reports to investors until April 30 under certain conditions.
- Closed-end funds and BDCs are temporarily exempt from the requirement to file with the SEC until June 15 notices of their intention to call or redeem securities at least 30 days in advance if the company files a Form N-23C-2 with the Commission fewer than 30 days prior to, including the same business day as, the company’s call or redemption of securities of which it is the issuer where certain conditions are met.
The SEC also noted that it would not recommend an enforcement action if a registered fund does not deliver to investors its current prospectus where the prospectus cannot be timely delivered because of circumstances related to covid-19. The allowance is for “not later than 45 days after required.”
The SEC stated that going forward it will consider additional relief from other regulatory requirements. The extension of the time period for relief will also be considered.