MFDF News Feed

August 3, 2023

Dimensional Fund Advisors filed an application with the Commission to permit the Advisor’s mutual funds to offer an ETF share class. In a client alert from Ropes & Gray, the authors highlight that Dimensional’s application would “rely on a fund’s board of directors to assess, both initially and periodically, whether the multi-class structure is in the best interests of each mutual fund class and ETF class individually and of the fund as a whole, as well as whether the multi-class structure is operating effectively.”

August 2, 2023

The Nasdaq Center for Board Excellence recently released a white paper entitled, “Revolutionary Technology: How Boards Can Learn from Emerging Innovation.” The paper notes “directors will want to ask questions of their CEO and senior leadership teams about AI usage, product integrations, competitor intelligence, and how it is influencing the evolving business strategy.”

August 1, 2023

The Senate Appropriations Subcommittee on Financial Services and General Government held a hearing entitled, “A Review of the Fiscal Year 2024 Budget for the U.S. Securities and Exchange Commission.” In his written testimony, Chair Gensler stated the agency’s work has increased substantially, noting that the Division of Enforcement “brought more than 750 enforcement actions in FY 2022, a 9 percent increase over the prior year,” which resulted in orders for $6.4 billion in penalties and disgorgement.

July 31, 2023

The EY Center for Board Matters plans to host a webinar entitled, “Why now is historic for the evolution of board governance.” The program will cover the impact emerging technologies are having in the board room, and how directors are proactively approaching these changes.

July 27, 2023

In July, two House Financial Services Subcommittees heard testimony on issues related to the proxy voting process and the oversight of proxy advisory firms. In her opening statement at one hearing, Subcommittee Chair Ann Wagner (R-MO) noted “For our public markets to remain focused on long-term shareholder value, it is crucial to reform the proxy process to reduce the financial burdens on small and mid-sized companies and minimize distractions for management.”

July 26, 2023

SEC Chair Gary Gensler delivered remarks at a National Press Club event covering Artificial Intelligence and its application to the financial markets, noting innovation in this space opens up “tremendous opportunities for humanity,” including benefits in the area of financial inclusion, user experience, and efficiency. Gensler stated the development and use of AI in financial markets will require new macro-prudential policy considerations.

July 25, 2023

The Securities and Exchange Commission (SEC) allowed an almost 6-year old MiFID II temporary no-action relief letter to expire relating to the bundling of investment research. Under the now-expired relief, the SEC committed that Commission staff would not recommend enforcement action under Section 202(a)(11) of the Advisers Act against a broker-dealer providing “investment advice” to an investment manager that was required by MiFID II to pay for research with its own funds or with “hard dollars” passed through a separate research payment account.

July 24, 2023

K&L Gates recently launched a technology hub focused on policy and regulatory updates in the Artificial Intelligence (AI) space. According the Hub these areas will continue to grow and as they do, “AI and generative AI will impact a number of legal regulations that currently exist and are expected to be enacted shortly.”

July 20, 2023

In a recent publication from Institutional Shareholder Services (ISS), President and CEO Gary Retelny notes that ISS is “not an activist or advocacy organization,” rather the organization is, “an impartial, federally regulated service provider to institutional investors who direct and control their own proxy voting decisions.” Retelny argues that certain ISS clients “recognize that environmental and social factors can be financially material to their investment decisions.”

July 19, 2023

Perkins Coie Partners Molly Moynihan and Sumedha Ahuja will provide an introduction to the technology and discuss key opportunities and threats for the asset management industry.

July 18, 2023

The report focuses primarily on the environmental aspect of ESG factors and examines the impacts of the Biden administration’s proposed legislative and regulatory policies on capital markets and economic performance. The House Financial Services Committee is likely to spend July holding hearings on ESG-related issues, including at least one mark-up.

July 17, 2023

Ernst & Young plans to host a webinar titled, “2023 alternative and registered funds midyear update.” The program will cover the latest developments impacting alternative and Registered Investment Companies, including tax, legislative, regulatory, and accounting updates.

July 13, 2023

Yesterday, the SEC voted 3 – 2 to adopt amendments to the rule governing money market funds. Notably, the Commission abandoned its swing pricing proposal in favor of a mandatory liquidity fee. As expected, the Commission removed the temporary redemption gates imposed and decoupled discretionary liquidity fees from a fund’s weekly asset minimum that were required by the 2014 money market fund amendments.

July 12, 2023

The program, featuring presentations from the digital asset and blockchain team at Ernst & Young, will focus on digital asset trends in asset management, tokenization, and opportunities and considerations for offerings in the industry.

July 11, 2023

Chair Gary Gensler briefly touched on the rise in popularity of single-stock ETFs, including inverse and levered products. Gensler noted that holding a single-stock ETF is not the same as directly holding a share of an issuer, it involves more risk, particularly to retail investors. His comments also touched on predicative data analytics, and he noted the potential conflict of interest inherent in using AI and machine learning in the financial services space.

July 10, 2023

The Capital Markets Subcommittee, chaired by Representative Ann Wagner (R-MO) heard testimony from the Director of the Division of Trading and Markets, Haoxiang Zhu, and Dr. Jessica Wachter, SEC Chief Economist and Director of the Division of Economic and Risk Analysis (DERA). Chair Wagner noted agencies typically advance one proposal at a time by presenting clear and convincing evidence of a problem or failure warranting such a drastic policy change, she argued that has not been the case at the Commission. Additionally, the Financial Services Oversight Subcommittee, chaired by Representative Bill Huizenga (R-MI), heard testimony from the SEC’s General Counsel Megan Barbero. The hearing focused on the Commission’s slow response to inquiries from the full Committee and from the Subcommittee.

July 6, 2023

On Wednesday, July 12 at 12:00pm ET, Dechert plans to host a webinar titled, “ESG Backlash in the United States: Litigation Risks.” The program will focus on the risks of litigation for corporate boards and investment managers who face “increasingly difficult choices regarding their consideration of ESG factors.”

July 5, 2023

SEC Compliance Consultants (SEC3) recently published a tipsheet for SEC Exam Preparedness that covers what to do before Commission staff come in as well as what to do once an entity is notified of an exam. SEC3 notes that funds should focus on disclosure, performance metrics, and “adequate resources to comply with securities laws in this changing regulatory environment.”

June 29, 2023

The report sites nine recommendations for boards to consider as AI technology continues to proliferate the business community. While the recommendations are mostly focused on what corporate boards should be considering, there is likely to be overlap for fund boards as part of their oversight and understanding of the fund’s investments and strategy.

June 27, 2023

The paper focuses on SEC Enforcement actions through the first part of the year and notes the Commission’s workload has been particularly focused in “all aspects of crypto,” as the Commission “claimed jurisdiction over crypto exchanges, lending platforms, and other intermediaries by not only charging exchanges for failing to register with the Commission but also by enforcing the more traditional anti-fraud and anti-manipulation provisions of the Exchange Act.”