SEC Offers Additional Relief for Advisers Impacted by Coronavirus

The SEC has made several COVID-19 related announcements this week pertaining to investment managers that offer relief from routine regulatory obligations.

First, the SEC has issued relief in filing due dates and delivery requirements related to the Coronavirus (COVID-19) and the current market conditions. This will extend the reporting deadline 45 days for Forms ADV, PF, N-CEN and N-PORT, but only as needed because of the Coronavirus. The SEC Press Release announcing the exemptive order can be found by clicking here. The exemptive relief only applies if a firm cannot file because of the Coronavirus. Firms that are impacted will need to notify the regulators and make postings on their websites of the impact. There is not an automatic deferral of the filing obligations for those not impacted.

Second, the SEC published FAQs to support work-from-home practices. In one FAQ the SEC indicated that working from home temporarily does not trigger a need to amend Form ADV, Item 1.F as long as employees are doing so as part of the firm’s business continuity plan.

In addition, two custody FAQs provide relief for firms that may not otherwise be able to meet the custody rule requirements in certain circumstances because of COVID-19. The SEC stated that if an adviser’s personnel was unable to access mail or deliveries due to the firm’s business continuity plan in response to such circumstances, the Division of Investment Management would not consider the advisers to have received the assets at that location until firm personnel are able to access the mail or deliveries there. For more, see Questions II.1 and VI.9 here.

Third, the SEC has postponed the National Compliance Outreach Program Seminar in Washington, D.C. scheduled to take place on April 21, 2020, saying it will attempt to reschedule the event later in the year based upon prevailing conditions.

Fourth, the SEC has also announced extended comments periods for rulemaking in the proposal stage. Rules impacting investment managers include (A) Use of Derivatives by Registered Investment Companies and Business Development Companies; Required Due Diligence by Broker-Dealers and Registered Investment Advisers Regarding Retail Customers’ Transactions in Certain Leveraged/Inverse Investment Vehicles, File No. File No: S7-24-15, Release Nos.: 34-87607, IA-5413, IC-33704; and (B) Amending the “Accredited Investor” Definition, File No: S7-25-19, Release Nos.: 33-10734, 34-87784.

Fifth, and finally, reports from the field indicate that SEC examiners are working to see if they can sort out video conference capabilities for examinations. They need to meet quotas, too.

Good luck and be safe, everyone. At CSS, we are here to help you meet your regulatory requirements, so if you need our assistance, please contact us.

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CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.

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