- SEC Adopts Amendments to Enhance Private Fund Reporting / SEC
On May 3, 2023 The Securities and Exchange Commission (“SEC”) adopted amendments to Form PF, the confidential reporting form for certain SEC-registered investment advisers to private funds. The amendments are designed to enhance the ability of the Financial Stability Oversight Council (FSOC) to assess systemic risk and to bolster the Commission’s oversight of private fund advisers and its investor protection efforts.
The amendments will require large hedge fund advisers and all private equity fund advisers to file current reports upon the occurrence of certain reporting events that could indicate significant stress at a fund or investor harm. Reporting events for large hedge fund advisers include certain extraordinary investment losses, significant margin and default events, terminations or material restrictions of prime broker relationships, operations events, and events associated with withdrawals and redemptions. Large hedge fund advisers must file these reports as soon as practicable, but not later than 72 hours from the occurrence of the relevant event. Reporting events for private equity fund advisers include the removal of a general partner, certain fund termination events, and the occurrence of an adviser-led secondary transaction. Private equity fund advisers must file these reports on a quarterly basis within 60 days of the fiscal quarter end.
2. ECB welcomes the EPI’s progress on building a European payment solution / ECB
On April 25, 2023 The European Central Bank (ECB) welcomes the announcement by the European Payments Initiative (EPI) of new shareholders and planned acquisitions for building an instant payment solution in Europe.
With this step, in 2023-24 the EPI is proceeding with the launch of a digital wallet solution based on instant account-to-account payments, under a single brand and covering multiple use cases.
As outlined in its retail payments strategy, the Eurosystem supports the creation of European payment solutions for point-of-interaction payments. Such solutions should have a pan-European reach and customer experience; and should have a European brand and governance. They should be convenient and low cost, safe and efficient, and in the long run they should be globally accepted.
3. CFPB and Federal Partners Confirm Automated Systems and Advanced Technology Not an Excuse for Lawbreaking Behavior / CFBP
On April 25, 2023 four federal agencies jointly pledged to uphold America’s commitment to the core principles of fairness, equality, and justice as emerging automated systems, including those sometimes marketed as “artificial intelligence” or “AI,” have become increasingly common in our daily lives – impacting civil rights, fair competition, consumer protection, and equal opportunity.
The Civil Rights Division of the United States Department of Justice, the Consumer Financial Protection Bureau, the Federal Trade Commission, and the U.S. Equal Employment Opportunity Commission released a joint statement outlining a commitment to enforce their respective laws and regulations.
4. Singapore and China Establish Green Finance Taskforce to Strengthen Collaboration in Green and Transition Finance / MAS
On April 21, 2023 The Monetary Authority of Singapore (MAS) and the People’s Bank of China (PBC) announced the establishment of the China-Singapore Green Finance Taskforce (GFTF). The GFTF will deepen bilateral cooperation in green and transition finance between Singapore and China and facilitate greater public-private sector collaboration to better meet Asia’s needs as it transitions to a low carbon future.
The GFTF will establish three initial workstreams to focus on the following priority areas:
- Taxonomies and Definitions: MAS and PBC will work together under the International Platform on Sustainable Finance (IPSF) to achieve interoperability between the Singapore and China taxonomies, and will collaborate subsequently to enhance the use of the IPSF’s Common Ground Taxonomy [1] , as well as deepen understanding of transition activities defined by China and Singapore.
- Products and Instruments: Singapore Exchange and China International Capital Corporation will establish a workstream to strengthen sustainability bond market connectivity between China and Singapore, including the issuances of and mutual access to green and transition bond products in China and Singapore.
- Technology: Metaverse Green Exchange and Beijing Green Exchange will establish a workstream that leverages technology to facilitate sustainable finance adoption, including piloting of digital green bonds with carbon credits.
5. SEC Charges Merrill Lynch for Failing to Disclose Foreign Exchange Fees to Clients / SEC
On April 3, 2023, The Securities and Exchange Commission (“SEC”) charged Merrill Lynch, Pierce, Fenner & Smith Incorporated for charging advisory clients more than $4 million in undisclosed foreign exchange fees for transfers to or from their accounts. To settle the charges, Merrill Lynch has agreed to pay disgorgement, prejudgment interest, and a civil penalty totaling more than $9.5 million and has agreed to distribute funds to harmed clients.
The SEC’s order finds that, between May 2016 and July 2020, Merrill Lynch offered programs to advisory clients in which the clients paid Merrill a fee in exchange for a range of investment advisory services, including foreign currency exchanges. In the program’s client agreements and brochures, Merrill Lynch disclosed that it charged a markup or markdown on foreign currency exchanges, but it did not disclose an additional fee it referred to as a production credit, which, in more than 80 percent of the transactions, was equal to or greater than the disclosed markup or markdown. Merrill Lynch paid a percentage of these production credits to its financial advisors and referred to this charge as a commission in internal documents. The SEC’s order also finds that Merrill Lynch failed to adopt and implement policies and procedures reasonably designed to prevent its disclosures from being misleading about the fees it charged on foreign currency exchanges.
This update is provided as general information only and may not be relied upon in any individual case without additional legal advice.
