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Regulatory Insights - November 2021

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


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

CONTENTS

SEC

  • SEC staff releases report on equity and options market structure conditions in early 2021
  • Shareholder proposal guidance
  • Asset Management Advisory Committee meetings
  • Proposed amendments to electronic filing requirements
  • Consolidated Audit Trail (CAT) update
  • Universal Proxy rule

NYSE/FINRA

  • Notice of filing of proposed rule change to amend the shareholder voting requirement set forth in Section 312.07 of the NYSE Listed Company Manual
  • Special Purpose Acquisition Companies (SPACs) exams

DEPARTMENT OF LABOR

  • Department of Labor proposes rule to remove barriers to considering environmental, social and governance factors (ESG) in plan management
  • Department of Labor announces temporary enforcement policy on prohibited transaction rules applicable to investment advice fiduciaries

CRYPTO

  • President’s Working Group report on stablecoins
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SEC

SEC staff releases report on equity and options market structure conditions in early 2021

On October 18, the SEC published a “Staff Report on Equity and Options Market Structure Conditions in Early 2021” focused on the January 2021 trading activity of GameStop Corp. (GME).

Read the press release and staff report.Opens in new window(PDF :KB)

Shareholder proposal guidance

In November, the SEC’s Division of Corporation Finance issued new guidance that revokes prior staff guidance regarding the criteria the SEC staff uses for determining if companies can exclude certain shareholder proposals from their ballots.

Review the SEC Bulletin “Shareholder Proposals: Staff Legal Bulletin No. 14L (CF)”.Opens in new window(PDF :KB)

Read Chair Gensler’s statement.Opens in new window(PDF :KB)

Read the joint statement by Commissioners Peirce and Roisman.Opens in new window(PDF :KB)

Asset Management Advisory Committee (AMAC) meetings

The AMAC held its last two meetings in October and November and has concluded. The AMAC tackled a number of topics over the last two years, including the evolution of advice, ESG investing, diversity in the asset management industry and operational issues. All of the reports and committee information can be viewed on the AMAC spotlight web pageOpens in new window(PDF :KB) .

Below is a list of the reports and recommendations:

Proposed amendments to electronic filing requirements

The amendments update electronic filing requirements and apply to: applications for orders under the Advisers Act; certification that a security has been approved by an exchange for listing and registration under Section 12(d) of the Exchange Act and Exchange Act Rule 12d1-3; “glossy” annual reports; confidential treatment requests for Form 13-F filings; and Form ADV-NR. The proposal also mandates that electronic submissions of Form 11-K (reporting company stock purchases by employees and in-house savings plans) use eXtensible Business Reporting Language (XBRL).

The proposed amendments are subject to 30 days of public comment after publication in the Federal Register. Read the SEC press release and proposed amendments.

Consolidated Audit Trail (CAT) update

On October 29, the SEC disapproved an amendment to the National Market System Plan that would have required industry members (e.g., broker-dealers) and participants (the exchanges and SROs) to include limitation of liability provisions in the agreements that are required for industry members to participate in the CAT.

https://www.sec.gov/rules/sro/nms/2021/34-93484.pdfOpens in new window(PDF :KB)

Withdrawal and modification of staff letters related to rulemaking on adviser marketing

On October 29, the SEC’s Division of Investment Management announced it was withdrawing and modifying certain staff statements (e.g., no action letters and other staff guidance) relating to the Advertising and Cash Solicitation rules under the Advisers Act. The withdrawals and modification are identified in Appendix A of the SEC’s Information Update (IM-INFO-2021-10).

View the Information Update.

Universal Proxy rule

On October 19, SEC Chair Gary Gensler announced that his fellow commissioners received a draft from agency staff for a final "universal proxy" rule. The comment period closed in June 2021, and the SEC is due to take final action by April 2022.

Read the entire rule proposal.


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NYSE/FINRA

Notice of filing of proposed rule change to amend the shareholder voting requirement set forth in Section 312.07 of the NYSE Listed Company Manual

The Exchange proposes to amend Section 312.07 to provide that a company must calculate the votes cast with respect to a proposal that is subject to Section 312.07 in accordance with its own governing documents and any applicable state law.

Read the entire notice.

Special Purpose Acquisition Companies (SPACs) exams

FINRA is examining firms’ offering of, and services provided to, special purpose acquisition companies (SPACs) and their affiliates (e.g., sponsors, principal stockholders, board members, and related parties).

Review the FINRA guidance.


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Department of Labor (DOL)

Department of Labor proposes rule to remove barriers to considering environmental, social and governance factors (ESG) in plan management

On October 13, the DOL announced a proposed rule that would remove barriers to plan fiduciaries’ ability to consider climate change and other ESG factors when they select investments and exercise shareholder rights. The comment period closes December 13, 2021.

Read the press release and proposed rules.

Review the related DOL fact sheet.

Department of Labor announces temporary enforcement policy on prohibited transaction rules applicable to investment advice fiduciaries

On October 25, the DOL announced that from December 21, 2021, through January 31, 2022, the department will not pursue prohibited transaction claims against investment advice fiduciaries who are working diligently, and in good faith, to comply with the impartial conduct standards for transactions exempted in PTE 2020-02.

Read the press release.


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CRYPTO

President’s Working Group report on stablecoins

On November 1, the President’s Working Group on Financial Markets (PWG), joined by the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), released a report on stablecoins, recommending congressional action.

Read the press release and full report

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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