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Regulatory Insights - December 2021

Your source for the latest updates from the SEC, DOL and across the industry.


Your source for the latest updates from the SEC, FINRA, DOL and across the industry.

CONTENTS

SEC’S REGULATORY PRIORITIES

  • SEC’s Fall 2021 Regulatory Flexibility Agenda

SEC RULE PROPOSALS

  • SEC proposes rule to provide transparency in the securities lending market
  • SEC proposes updates to electronic recordkeeping requirements
  • SEC proposes rule amendments to proxy rules governing proxy voting advice
  • SEC proposes amendments to money market fund rules

SEC—FINAL RULES

  • SEC adopts new rules for universal proxy cards in contested director elections

SEC—OTHER ITEMS

  • SEC announces Form CRS observations
  • Risk Alert: Advisory fees
  • Risk Alert: Observations from examinations of advisers that provide electronic investment advice
  • SEC Investor Advisory Committee, December meeting
  • SEC staff announces changes to Rule 14a-8 No-Action requests
  • SEC appoints Haoxiang Zhu Director of Division of Trading and Markets & William Birdthistle Director of Division of Investment Management

NYSE

  • SEC approves NYSE rule change to amend the shareholder voting requirement

DOL

  • DOL’s Fall 2021 Regulatory Flexibility Agenda
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SEC’S REGULATORY PRIORITIES

SEC’s Fall 2021 Regulatory Flexibility Agenda

The SEC published their Fall 2021 regulatory priorities for the next 12 months. Key items on the short-term agenda include: Tailored shareholder reports/498B (for final rulemaking); amendments to the broker-dealer electronic books and records rules; amendments to Form N-PX (“to enhance the information reported on Form N-PX”); universal proxy (adopted); and rule amendments to move to T+1 settlement. There is a long list of corporate issuer disclosure proposals, including climate changes and human capital management.

Other items on the agenda include: Proxy advisor advice, Rule 14a-8 amendments and updates to the transfer agency rules. Notably, cryptocurrency and digital assets are not on the agenda, and gamification and digital engagement items were moved from the short-term to the long-term agenda.

Review the short-term agenda (priority for next 12 months).

Review the long-term agenda (not a priority, but SEC may still work on these items):


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SEC RULE PROPOSALS

SEC proposes rule to provide transparency in the securities lending market

On November 18, the SEC published proposed Exchange Act Rule 10c-1, which would require lenders of securities to provide the material terms of securities lending transactions to a registered national securities association.

Read the press release here.

The proposed rule is available here.

SEC proposes updates to electronic recordkeeping requirements

On November 18, the SEC published proposed amendments to the electronic recordkeeping and prompt production of records requirements applicable to broker-dealers, SBSDs and MSBSPs. Comments are due on January 3.

The press release is available here.

The proposed rule can be read here.

SEC proposes rule amendments to proxy rules governing proxy voting advice

On November 17, the SEC proposed amendments to its rules governing proxy voting advice. The Commission is proposing to rescind two recently adopted conditions: (1) registrants that are the subject of proxy voting advice have such advice made available to them in a timely manner, and (2) clients of proxy voting advice businesses are provided with a means of becoming aware of any written responses by registrants to proxy voting advice.

Read the press release.

Read the proposed rule.

SEC proposes changes to money market fund rules

On December 15, the SEC proposed amendments to their money market fund rules in response to the March 2020 economic response to the COVID-19 pandemic. The amendments are focused on prime and tax-exempt money market funds highlighted by these events.

Read the SEC’s press release, fact sheet and rule proposal.


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FINAL RULES

SEC adopts new rules for universal proxy cards in contested director elections

On November 17, the SEC voted to adopt final rules requiring parties in a contested election to use universal proxy cards that include all director nominees presented for election at a shareholder meeting, giving shareholders the ability to vote by proxy for their preferred combination of board candidates.

Read the press release.

Read the final rule.

Watch Chair Gensler’s Office Hours video on this topic.


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SEC—OTHER ITEMS

SEC statement regarding Form CRS disclosures

On December 17, the SEC published a statement regarding Form CRS disclosures. “Accordingly, to further the goals of the relationship summary, and to assist firms as they consider ways to improve their relationship summaries, we describe below some of the Committee’s observations – first, with respect to the specific disclosure topics required by the form’s instructions, and second, with respect to the general requirements pertaining to content, format, and website posting. Firms may wish to review their relationship summaries, especially in light of the observations identified below, and confirm they address each item consistent with the form’s instructions.”

Read the staff statement regarding Form CRS disclosures.

Risk Alert: Advisory fees

On November 10, the Division of Examinations Observations published a Risk Alert regarding investment advisers’ fee calculations.

Read the risk alert.

Risk Alert: Observations from examinations of advisers that provide electronic investment advice

On November 9, the Division of Examinations Observations published a Risk Alert regarding observations from examinations of advisers that provide electronic investment advice.

Read the risk alert.

SEC Investor Advisory Committee – December Meeting

At the SEC’s December meeting, the IAC approved recommendations of the Investor as Purchaser Subcommittee regarding Individual Retirement Accounts.

Read the Committee’s recommendation.

Review other meeting materials and the webcast replay.

SEC Staff announces changes to staff responses to Rule 14a-8 no-action requests

On December 13, the SEC’s Division of Corporation Finance announced that it will return to its prior practice of responding to each shareholder proposal no-action request with a written letter. Response letters will be posted publicly on the Division’s website “in a timely manner… [and] expect to publish a chart upon completion of the proxy season.”

Read Corp Fin’s announcement.

SEC appoints Haoxiang Zhu Director of Division of Trading and Markets

On November 19, the SEC announced the appointment of Haoxiang Zu, Billard Professor of Management and Finance and Associate Professor of Finance at the MIT Sloan School of Management, as Director of Division of Trading and Markets.

The press release is available here.

SEC Appoints William Birdthistle Director of the Division of Investment Management

On December 21, the SEC announced the appointment of William A. Birdthistle, currently a professor at Chicago-Kent College of Law, as Director of the Division of Investment Management.

The press release is available here.


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NYSE

SEC approves NYSE rule change to amend the shareholder voting requirement

On November 19, the SEC approved the NYSE rule change to amend the shareholder voting requirement in section 312.07 of the NYSE Listed Company Manual. Under the change, matters that require shareholder approval subject to the minimum vote required must calculate the votes cast in accordance with its own governing documents and any applicable state law.

Read the SEC order.

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DEPARTMENT OF LABOR

DOL’s Fall 2021 Regulatory Flexibility Agenda

The DOL published their Fall 2021 regulatory priorities for the next 12 months. Key items on the DOL/EBSA’s short-term agenda include: Improving participant engagement and effectiveness of ERISA retirement plan disclosures; definition of the term "fiduciary"; prudence and loyalty in selecting plan investments and exercising shareholder rights; and pension benefit statements-lifetime income illustrations.

Review the DOL’s short-term regulatory agenda.

This newsletter is not intended as legal advice. Broadridge recommends you contact your legal counsel for a complete understanding of the information contained in this publication.

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