SEC Division of Investment Management Director Speech at the PLI Investment Management Institute

August 5th | 2020

In a speech at the PLI Investment Management Institute, SEC Division of Investment Management ("Division") Director Dalia Blass said the Division will be making recommendations on outstanding proposals concerning:

  • Fund of funds arrangements, which proposes to streamline and enhance the regulatory framework applicable to fund of funds arrangement by, among other things, permitting a fund to acquire shares of another fund in excess of the limits of section 12(d)(1) without obtaining an exemptive order;

  • Funds' use of derivatives, which proposes to provide an updated and more comprehensive approach to the regulation of funds’ use of derivatives transactions and certain other transactions, by among other things, resurrecting its 2015 proposal for a new rule 18f-4;

  • Fund valuation practices, which proposes, among other things, permitting a fund’s board of directors to assign the fair value determination to an investment adviser of the fund, who would then carry out these functions for some or all of the fund’s investments; and

  • Investment adviser solicitation and advertising, which proposes, among other things, to permit the use of testimonials and endorsements, and third-party ratings, subject to certain conditions, and the presentation of performance with tailored requirements based on an advertisement’s intended audience.

Director Blass also highlighted initiatives – one to amend the definition of accredited investor, and another aimed at overhauling the exempt offering framework – to enhance public access to private markets and offered two potential 1940 Act-registered fund structures that could provide enhanced access to private investments: (1) target date funds; and (2) closed-end funds of private funds. Director Blass believes both could provide convenient, professionally managed means for Main Street investors to invest in these markets.

The Division’s work on all these proposals simultaneously is impressive given broad range of financial firms these changes will impact and the fact that these proposals are extraordinarily complex, detailed, and total nearly 2,000 pages of new rules and analysis.

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