FrontLine Compliance has continued to monitor the regulatory environment closely these past several weeks as our industry grapples with the COVID-19 (Coronavirus) pandemic. Note: we have included key updates and new information in this ComplianceAlert, originally posted March 16, 2020.
The SEC, FINRA, CFTC and NFA have all issued guidance or information for the investment community in relation to COVID-19. In this updated 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 has a specific web page for all COVID-19 related items. This page gives information on exemptive relief provided and all guidance to date:
On April 8, 2020, the SEC granted new exemptions for Business Development Companies (BDCs) in order to facilitate funding for portfolio companies. Exemptions under Section 57(a)(4) and Rule 17d-1 under the Investment Company Act have been granted through December 31, 2020 (updated April 13, 2020). See details for the exemptions here https://www.sec.gov/rules/exorders/2020/ic-33837.pdf
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 are allowed an extension of time to file Form ADV and Form PF, with deadlines extended at least 45 days from the original due date (updated April 13, 2020). See UpFront News posting, “Amy Lynch details latest ADV filing relief and other extensions granted (ThinkAdvisor),” March 30, 2020.
OCIE has stated exams are continuing, albeit off-site via its correspondence process. The upcoming April 21st National Compliance Outreach Seminar has been postponed and the SEC posted an update that it will take place later in 2020 (updated April 13, 2020). For more on the status of SEC exams and regulatory filings, See UpFront Event posting, “Podcast interview with Amy Lynch on regulatory response to COVID-19,” March 20, 2020.
The Division of Investment Management (IM) has issued a notice regarding its operations and has assured the asset management industry that it is operating under normal conditions, but remotely. A new Information Update released by IM provides that any current written hearing requests that have been mailed since March 1, 2020, should be resubmitted via email by April 21, 2020 (updated April 13, 2020).
Since IM 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:
- Hearing request for pending applications – Secretarys-Office@sec.gov (updated April 13, 2020)
- Analytics Office – IM-Analytics@sec.gov
- ADV Filing Interpretations – IARDLIVE@sec.gov
- Form PF Filing Interpretations – FormPF@sec.gov
- Other interpretive questions – IMOCC@sec.gov or 202-551-6825 (unlikely to reach anyone)
- Adviser Registration status – OCIERegistrationsInquiries@sec.gov or 202-551-7250
- General Form ADV support – firstname.lastname@example.org or 240-386-4848 (support Hotline)
- General Form PF support – email@example.com or 240-386-4848
- General Edgar Filing support – 202-551-6989
- Shareholder proposals – Imshareholderproposals@sec.gov or 202-551-6921
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.
Of all the regulators, FINRA was the most transparent initially and continues to provide updates. 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.
CFTC (updated April 13, 2020):
The CFTC has also been providing regulatory relief to its members. Private fund commodity pool operators (CPOs) have been granted exemptions for filing of Form CPO-PQR, pool annual reports, and pool periodic account statements. Generally, extensions have been granted to CPOs allowing for an additional 45 days to conduct the above filings or mailings to participants. See the CFTC letter to CPOs, CFTC No-Action Letter No. 20-11, March 20, 2020, plus all CFTC COVID-19 related relief granted at https://cftc.gov/coronavirus.
National Futures Association:
The NFA has demonstrated that it understands 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.
On March 4, 2020, a 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 and other relief guidance related to the virus via the link 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 now or in the future, please CONTACT US and learn more.