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Regulatory Insights - April 2021

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


This month’s update includes SEC and DOL leadership changes, the latest Environmental, Social and Governance (ESG) developments and other SEC actions.

We’re keeping a close eye on developments and will ensure you stay apprised of the latest.

Table of Contents
LEADERSHIP CHANGES
  • Former Boston Mayor Marty J. Walsh was confirmed as the 29th Secretary of the U.S. Department of Labor.
  • Gary Gensler confirmed by the Senate to lead the SEC.
CLIMATE AND ESG ISSUES
  • The DOL will not enforce recently published final rules on “Financial Factors in Selecting Plan Investments” and “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights.”
  • SEC announces enforcement task force focused on climate and ESG issues.
  • Public input welcomed on climate change disclosures.
  • SEC’s Division of Corporation Finance Public Statement on ESG Disclosures.
  • SEC brings together agency information about climate and ESG issues.
OTHER REGULATORY ITEMS
  • The Division of Investment Management requests feedback on investment company cross trading.
  • SEC’s Asset Management Advisory Committee (AMAC) spring meeting.
  • SEC’s Investor Advisory Committee (IAC) spring meeting.
  • Regulation Best Interest (Reg BI) exams and Frequently Asked Questions about Form CRS.

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LEADERSHIP CHANGES

Statement by Marty J. Walsh following Senate confirmation of his appointment as 29th Secretary of the U.S. Department of Labor

  • On March 22, former Boston Mayor Marty J. Walsh was confirmed by the Senate as the 29th Secretary of the U.S. Department of Labor.
  • Read Walsh’s statement.

Gary Gensler confirmed by the Senate to lead the SEC.


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CLIMATE AND ESG ISSUES

Department of Labor releases statement on enforcement of its final rules on ESG investments, proxy voting by employee benefit plans

  • On March 10, the Department of Labor announced it will not enforce recently published final rules on “Financial Factors in Selecting Plan Investments” and “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights.”
  • Read the press release.

SEC announces enforcement task force focused on climate and ESG issues

  • The initial focus of the task force will be to identify any material gaps or misstatements in issuers’ disclosure of climate risks under existing rules. The task force, which will be led by Kelly L. Gibson, Acting Deputy Director of Enforcement, will also analyze disclosure and compliance issues relating to investment advisers’ and funds’ ESG strategies.
  • Read the SEC’s announcement

Acting SEC Chair Lee welcomes public input on climate change disclosures

  • On March 15, Acting SEC Chair Allison Herren Lee published a letter requesting public input from investors, registrants and other market participants on climate change disclosure.
  • Read the letter.

SEC’s Division of Corporate Finance publishes public statement “ESG Disclosure – Keeping Pace with Developments Affecting Investors, Public Companies and the Capital Markets”

  • On March 11, John Coates, Acting Director of the SEC’s Division of Corporation Finance, published a statement to highlight some of the issues policymakers should consider.
  • Read the statement.

SEC brings together agency information about climate and ESG issues

  • On March 22, the SEC launched a new page on its website to bring together agency actions and the latest information about climate and environmental, social and governance (ESG) investing.
  • Read the press release.

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OTHER REGULATORY ITEMS

Division of Investment Management staff issues statement on investment company cross trading

  • On March 11, the staff of the Division of Investment Management issued a statement requesting feedback on investment company cross trading related to the Division’s recent Valuation Rule.
  • View the statement.

Asset Management Advisory Committee (AMAC) meeting

  • The AMAC’s March 19 meeting included a discussion of matters in the asset management industry relating to ESG, diversity and inclusion and private investments. They also added two new subcommittees: (1) Evolution of Advice, and (2) Small Advisors and Investment Managers.
  • Read the press release

SEC Investor Advisory Committee (IAC) meeting

  • The IAC’s March 11 meeting had a follow-on panel discussion regarding self-directed individual retirement accounts (IRAs), a panel discussion regarding special purpose acquisition companies (SPACs), a discussion of a recommendation regarding minority and underserved inclusion and a discussion of a recommendation regarding credit rating agencies.  
  • View meeting materials.

Regulation Best Interest (Reg BI) and Form CRS

SEC Reg BI Sweep Exam

The SEC will be conducting a sweep of a “large number” of firms that they believe should have filled out Form CRS when they did not do so, said Peter Driscoll, Director of the SEC’s Division of Examinations during a virtual panel at the Investment Company Institute’s annual Mutual Fund Investment Management Conference in March.

“We have a national initiative going on right now where we had reached out to several hundred firms that we felt should have filed and didn’t.” Driscoll reiterated his comments at a SIFMA Compliance and Legal Seminar on March 25, saying that of those firms, many did not respond when the SEC asked them to provide Form CRS. As a result, the sweep will cover about 150 firms.

SEC Frequently Asked Questions about Form CRS

  • The staff of the Division of Investment Management and the Division of Trading and Markets have prepared new responses to questions about Form CRS.
  • Read the responses.

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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