Emergency Relief Provided by Regulators

FrontLine Compliance has been monitoring the regulatory environment closely these past few weeks as our industry grapples with the COVID-19 (Coronavirus) outbreak. With the situation still unfolding here in the US, the regulators are trying to get a handle on the situation. The SEC, FINRA, and NFA have all issued guidance or information for the investment community in relation to the outbreak. In this emergency ComplianceAlert, we summarize that information for you so the information you need will be readily available and at your fingertips. As the crisis evolves, FrontLine is continuing to monitor new and updated regulatory information and will provide future alerts to keep you updated.

US Securities and Exchange Commission:

The SEC’s DC headquarters has experienced the COVID-19 virus, so the Staff has been told to work from home until further notice. Critical staff such as those that are responsible for monitoring the markets in real-time are still on-site at headquarters in some capacity. Other offices are also telecommuting, as allowed by the office policy for that location.

The SEC just recently created as specific web page for all COVID-19 related items. This page gives information on exemptive relief provided and all guidance to date:

See https://www.sec.gov/sec-coronavirus-covid-19-response

For example, required in-person Board meetings for mutual funds have been provided with exemptive relief for the “in-person” requirement through June 15, 2020. In addition, advisory firms affected by the outbreak may apply for an extension of time to file Form ADV and the deadline will be extended to April 30, 2020 for qualifying firms.

OCIE has not put out any statements, but exams are continuing, albeit off-site. The upcoming April 21st National Compliance Outreach Seminar is still planned but an update on its status may be issued soon. This event is scheduled to take place at the SEC’s DC headquarters, with attendees and speakers traveling in, so it will likely be postponed.

The Division of Investment Management (IM) has put out a notice regarding its operations and has assured the asset management industry that it is operating under normal conditions, but remotely. Since the Staff is off-site, it will be helpful to have the specific email contact information and phone numbers (where available) for the various departments within IM, when needed:

Emails are being monitored and the appropriate person will eventually see your message. If you receive an automated voicemail box upon calling one of the above numbers, it may be best to email your message instead.

FINRA:

Of all the regulators, FINRA has been most transparent these past few weeks. They have an entire section on their website dedicated to industry issues surrounding the virus and actions taken to benefit member firms. For exemptive relief and guidance go to:

https://www.finra.org/rules-guidance/key-topics/covid-19

National Futures Association:

The NFA is beginning to understand the impact on its registrants. On March 13, 2020, the NFA distributed a Coronavirus Update on NFA Branch Office Requirements, Interpretive Notice 9002. Essentially, the relief allows for associated persons to work from home temporarily without the home being considered a branch office under Compliance Rule 2-7.

Previously on March 4, 2020, another notice was released that provided general guidance for member firm’s instituting Business Continuity Plans during the virus outbreak.

You can find recent NFA notices related to the virus via the link below:

https://www.nfa.futures.org/news/newsNoticeList.asp

FrontLine will provide future Alerts as the situation warrants. For now, we hope you find this information helpful in keeping you apprised of the current COVID-19 regulatory updates, as well as allowing you to stay connected to your regulators during this stressful time. Be well – and should you require remote consulting assistance at this time, please Contact us.