White Makes Good On a Fund Reg Promise While Giving Ground On SEC Courts
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Monday, September 28, 2015

White Makes Good On a Fund Reg Promise While Giving Ground On SEC Courts

Last week was a busy one at the SEC and for fundsters who pay close attention to every move made by Mary Jo White and her staff. The upshot for fundsters is mixed.

Mary Jo White
Securities and Exchange Commission
On the plus side, the SEC's in-house courts may be about to get a lot friendly to fundsters and others targeted by the regulatory agency. After another courtroom setback in the fight over the in-house courts, last Thursday SEC Chair White and her fellow commissioners proposed a host of changes to what it calls its "administrative proceedings", including giving defendants more time to prepare their defense and the opportunity to depose witnesses during discovery, before the actual hearing.

InvestmentNews and the Wall Street journal covered the proposal.

On the minus side, last Monday the SEC smote its first "Distribution in Guise" target, to the tune of a $40-million settlement. And last Tuesday White followed through on her 2014 promise to push new liquidity management regulations for mutual funds and ETFs. As predicted by SEC watchers earlier this month, the unanimously-approved proposal would allow funds to use "swing pricing" to penalize stampeding investors who all try to exit or enter the fund at the same time. And it would require funds to "implement liquidity risk management programs".

Barron's, (twice), ETF Trends, the Financial Times, InvestmentNews, Pensions & Investments, Reuters, and the Wall Street Journal all covered the new liquidity risk management proposal.

So, be careful how you pay for distribution and prepare to do more planning and paperwork around liquidity, but also enjoy more time and preparation to defend yourself or your employer if the SEC ever comes a-knocking in an unfriendly way.

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