Insights
Chapman wrote the book on the marketplace lending regulatory landscape that the entire industry has come to rely upon. First published in 2013, the 2024 update covers a vast array of topics affecting the marketplace lending industry.
The Division of Examinations of the Securities and Exchange Commission published its examination priorities for fiscal year 2025. The 2025 Exam Priorities reflect practices, products, and services the Division believes present heightened risks to investors and the U.S. capital markets.
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There have been several recent notable enforcement actions, including continued enforcement by the SEC and CFTC against off-channel communications, as well as an SEC fraud settlement with Macquarie Investment Management Business Trust.
Chapman's quarterly Regulatory Update contains an overview of the latest regulatory actions, market happenings, and litigation and enforcement activity in the investment management space.
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On September 12, 2024, the Commodity Futures Trading Commission (CFTC) adopted amendments to CFTC Regulation 4.7 (Reg. 4.7), a rule that provides exemptions from the broader compliance requirements under Part 4 of the CFTC regulations (Part 4) for registered commodity pool operators (CPOs) with respect to pools (4.7 pools) offered solely to “Qualified Eligible Persons” (QEPs) and registered commodity trading advisors (CTAs) that advise or manage commodity trading accounts of QEPs. The amendments (i) increase the financial thresholds in the “Portfolio Requirement” of the QEP definition and (ii) permit CPOs of fund of fund pools offered solely to QEPs to provide monthly account statements within 45 days of the month-end, rather than providing quarterly account statements within 30 days of the quarter-end. The CFTC chose not to adopt, at this time, the proposed minimum QEP disclosures.
A recognized securities and commodities regulatory authority, Peter’s practice focuses on the registration and regulation of investment advisers, broker-dealers, commodity trading advisors, commodity pool operators, and introducing brokers, as well as the formation and ongoing compliance obligations of registered and private investment companies.
Chapman's 2024 Social Impact and Sustainability report showcases our commitment to the United Nations Global Compact (UNGC).
On August 22, 2024, a proposed rule (the “Proposed Joint Rule”) mandated by the Financial Data Transparency Act of 2022 (the “FDTA”) and adopted by nine federal financial regulators, including the U.S. Securities and Exchange Commission (the “SEC” and, together with the other eight regulators, the “Covered Agencies”), was published in the Federal Register.
Chapman's white paper provides a summary of the interval fund and tender offer fund structures, including their basic legal framework, their investment restrictions, how they are distributed and how they facilitate redemptions. It also provides a comparison of interval funds and tender offer funds, both to each other and to other types of investment companies.
- Topic: Disclosure
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Chapman wrote the book on the marketplace lending regulatory landscape that the entire industry has come to rely upon. First published in 2013, the 2024 update covers a vast array of topics affecting the marketplace lending industry.
On August 22, 2024, a proposed rule (the “Proposed Joint Rule”) mandated by the Financial Data Transparency Act of 2022 (the “FDTA”) and adopted by nine federal financial regulators, including the U.S. Securities and Exchange Commission (the “SEC” and, together with the other eight regulators, the “Covered Agencies”), was published in the Federal Register.
The much anticipated updated regulations for disclosure requirements for commercial financing in New York have been adopted by the New York Department of Financial Services ("NYDFS").
The Securities and Exchange Commission is taking significant steps to combat “greenwashing,” which occurs when a company conveys false or misleading information to overstate its environmental or sustainability practices, as well as other activities the SEC perceives to be potentially misleading to investors with respect to a company’s ESG efforts.
At the urging of investors and in accordance with the Biden Administration’s climate agenda, the United States Securities and Exchange Commission (“SEC”) yesterday issued long-awaited new proposed rules to increase climate-related disclosures. The Enhancement and Standardization of Climate-Related Disclosures for Investors (the “Proposed Rule”), if finalized, would amend the SEC’s rules under the Securities Act of 1933 and Securities Act of 1934 to require that registrants provide robust climate related information in their registration statements and annual reports. The rule would apply to all domestic and foreign companies required to be registered with the SEC.
Environmental, Social and Governance (“ESG”) investing continued to grow throughout 2021 and this growth is expected to continue into 2022 as ESG investments are estimated to surpass $41 trillion in assets under management globally by the end of the year. ESG investing occurs when investors make investment decisions based on a company’s environmental, social and governance policies and performance alongside traditional financial metrics. As investment firms, lending institutions, and individual investors are increasingly looking at ESG factors to identify material risks and growth opportunities, a number of trends are expected to emerge in the upcoming year. These include regulation of ESG disclosures, growth in green technology, renewable energy and infrastructure investments, and heightened standards associated with sustainable finance.
On September 16, 2021, the Securities and Exchange Commission charged Sweetwater Union High School District, a San Diego County, California, school district serving approximately 47,000 students, and its former Chief Financial Officer, Karen Michel, with making material misstatements and omissions in connection with the District’s April 2018 $28 million bond issue.
As Environmental, Social and Governance (ESG) performance becomes more prominent, institutional investors, asset managers, financial institutions, and other stakeholders are increasingly looking at ESG factors in making investment and lending decisions. In doing so, these entities are relying on a number of information sources, including ESG ratings and reports.
The Securities and Exchange Commission this month announced that the Divisions of Corporation Finance, Examinations, and Enforcement are all undertaking climate or ESG-related initiatives.
On December 22, the U.S. Securities and Exchange Commission adopted amended Rule 206(4)‑1 under the Investment Advisers Act of 1940, as amended, which addresses investment advisers marketing their services to clients and investors
This fall, the Securities and Exchange Commission has proposed additional avenues for businesses to raise capital away from the use of registered broker‑dealers.
On May 4, the SEC Chairman and the Director of the Office of Municipal Securities issued a public statement encouraging issuers, conduit borrowers and other obligated persons of municipal securities to make disclosures describing the effects of the COVID‑19 pandemic on their finances and operations.
On April 8, the SEC adopted rule amendments that will allow closed-end funds and business development companies the ability to use registration, offering and communications rules that are currently available to publicly‑registered operating companies.
The SEC has taken several actions to assist funds and advisers in light of the effects of COVID-19. Similarly, FINRA also has taken several actions to provide guidance and certain regulatory relief to its member firms.
On February 18, the SEC issued an order approving a proposed MSRB rule change updating the MSRB’s Electronic Municipal Market Access system website.
On February 7, the SEC Office of Municipal Securities published Staff Legal Bulletin No. 21 that addresses the application of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934.
On February 10, the SEC’s Fixed Income Market Structure Advisory Committee approved a series of recommendations designed to improve the timeliness of disclosure in the municipal securities market.
FINRA recently issued its 2020 Risk Monitoring and Examination Priorities Letter. The letter highlights the areas of focus for FINRA’s risk monitoring, surveillance and examination programs for 2020 and contain numerous links to Regulatory Notices, FINRA Reports and other resources to aid broker-dealers in complying with the priority areas.
- The Banking Law Journal
On September 17, the SEC announced proposed rules to update the statistical disclosures that bank and savings and loan registrants provide to investors and eliminate disclosures that overlap with other SEC rules, U.S. GAAP or IFRS.
- Law360
On September 26, the SEC adopted final Rule 6c-11 under the Investment Company Act of 1940, and certain form amendments that standardize the regulatory regime governing exchange-traded funds.
On September 26, the SEC adopted Rule 6c-11 under the Investment Company Act of 1940 and amendments to Form N-1A and Form N-8B-2 that overhaul the patchwork regulatory framework that currently governs the $3.32 trillion ETF industry. The adopted rule and form amendments are largely similar, but not identical, to the versions that were proposed in June 2018.
On March 28, the Securities and Exchange Commission charged the former controller of the College of New Rochelle, a New York-based not-for-profit college, with violating, and aiding and abetting violations of, the antifraud provisions of the federal securities laws.
Effective February 27, 2019, there are two new reportable events for which an issuer must provide notice to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) website.
The SEC Rule 15c2-12 amendments will be effective on and after February 27, 2019 with the effect described in the Release. In addition, the Release describes the SEC’s position on certain material financial obligations that may have an impact on primary offerings in addition to disclosures of reportable events made in the future under Rule 15c2-12.
In October, the U.S. District Court for the Southern District of New York entered a final judgment against Christopher St. Lawrence, the former Supervisor of the Town of Ramapo, New York and Director of Finance and President of the Ramapo Local Development Corporation.
On August 20, the SEC issued Release No. 34-83885 adopting amendments to Rule 15c2-12 under the Securities Exchange Act of 1934, as amended. The amendments add two new events to the list of reportable events for which an issuer or obligated person must provide notice to the MSRB's Electronic Municipal Market Access website.
On June 28, the Securities and Exchange Commission proposed Rule 6c-11 under the Investment Company Act of 1940 and amendments to Form N-1A and Form N-8B-2 that overhaul the patchwork regulatory framework that currently governs the $3.4 trillion ETF industry.
The Securities and Exchange Commission recently proposed new and amended rules and forms under the Investment Advisers Act of 1940 and the Securities Exchange Act of 1934 to require registered investment advisers and broker-dealers to provide a brief relationship summary to retail investors regarding their offered services, the standard of conduct and fees associated with the services.
Today, the Securities and Exchange Commission voted 4 to 1 to propose highly anticipated new and amended rules and guidance relating to registered investment advisers’ and broker-dealers’ conduct and interactions with retail customers.
In light of the increasing significance of cybersecurity incidents, the SEC published a press release and additional Commission-level guidance regarding disclosure obligations relating to cybersecurity risks and incidents, which reinforces and expands upon the SEC staff guidance provided in 2011 and addresses two additional topics.
The Municipal Securities Rulemaking Board recently issued a market advisory to increase awareness among market participants, including issuers and obligated persons, of the importance of disclosing material information fairly, equitably and in the public domain.
On August 23, the Securities and Exchange Commission announced settlements in enforcement actions against the Beaumont Financing Authority; Alan Kapanicas, the former executive director of BFA; O’Connor & Company Securities Inc., the underwriter of the BFA obligations; and Anthony Wetherbee, the co-founder and former primary investment banker of O’Connor Securities.
- July 2017National Association of Bond Lawyers
This paper, published by the National Association of Bond Lawyers, identifies various issues that arise in connection with the structuring and negotiation of direct purchase transactions, and explores some of the more commonly encountered provisions present in direct purchase documents.
The former Director of Finance for Ramapo, New York, was found guilty by a federal jury of 20 counts of conspiracy, securities fraud and wire fraud in connection with municipal bonds issued by the Town and by the Ramapo Local Development Corporation, a local not-for-profit corporation to further economic development in the Town.
On March 1, the Securities and Exchange Commission issued a release seeking comments on proposed amendments to Rule 15c2-12 under the Securities Exchange Act of 1934, as amended.
The Financial Industry Regulatory Authority, Inc. announced the effective date of amendments to FINRA Rule 2232 requiring firms to disclose additional transaction-related information for certain fixed income securities principal transactions with retail customers.
The municipal industry has seen a significant change in recent years with the increased activity of the SEC Enforcement Division and, in particular, its Public Finance Abuse Unit. This is an updated version of an article Chapman attorney Kelly Kost authored for the October 2016 issue of the Illinois GFOA Newsletter.
On January 10, 2017, the Securities and Exchange Commission (SEC) issued a cease-and-desist order (Order) to the Port Authority of New York and New Jersey (Port Authority) under which the Port Authority acknowledged that it acted negligently in failing to disclose certain risks in official statements for over $2.3 billion of bonds issued between January 2012 and June 2014.
The staff of the Securities and Exchange Commission’s Division of Investment Management has released guidance focused on disclosure issues and certain procedural requirements associated with mutual funds implementing intermediary‑specific variations to sales loads and adding new share classes.
In a December 13 interview, the chief of Securities and Exchange Commission’s public finance abuse unit stated that the SEC does not expect to recommend any further settlements under its Municipalities Continuing Disclosure Cooperation initiative. Instead, the public finance abuse unit will focus on those issuers and underwriters that did not self-report disclosure violations under the initiative.
The Securities and Exchange Commission recently approved Financial Industry Regulatory Authority, Inc. and Municipal Securities Rulemaking Board rule amendments requiring broker-dealers to disclose trade compensation for certain fixed income securities principal transactions with retail customers.
The Municipal Securities Rulemaking Board recently issued a notice seeking guidance on its strategic priorities for 2017. The MSRB’s notice seeks comment on potential areas where the MSRB should focus its strategic goals and how it should prioritize its core activities.
The Securities and Exchange Commission voted last Thursday to adopt changes to enhance liquidity risk management by open-end funds, including mutual funds and exchange-traded funds.
- Q3 2016 (Originally Published April 14, 2016)Journal of Investment Compliance
On April 4, the Municipal Securities Rulemaking Board and the Financial Industry Regulatory Authority issued a joint regulatory notice reminding firms they regulate of their obligation to determine whether state and local government obligations acquired through direct purchase or “bank loan” transactions constitute municipal securities for federal securities law purposes.
- Illinois GFOA Newsletter
The Municipal Continuing Disclosure Cooperation initiative, as named by the Securities and Exchange Commission in March, 2014, has attracted much attention in the municipal industry and with good reason.
The Securities and Exchange Commission is seeking comments on proposed Municipal Securities Rulemaking Board rule changes that would require dealers to disclose bond mark-ups and mark-downs on retail customer trade confirmations.
The Securities and Exchange Commission recently adopted changes to certain aspects of the reporting, disclosure and recordkeeping obligations of registered investment advisers including changes to Form ADV.
The Securities and Exchange Commission is seeking comments on proposed Financial Industry Regulatory Authority, Inc. rule changes that would require members to disclose bond mark-ups and mark-downs on retail customer trade confirmations.
On August 24, 2016, the Securities and Exchange Commission issued cease-and-desist orders to 71 municipal issuers and obligated persons in response to voluntary self-reporting of potential misrepresentations in municipal bond offering documents regarding compliance with prior disclosure obligations under the SEC’s Municipalities Continuing Disclosure Cooperation initiative.
On August 1, the Municipal Securities Rulemaking Board released details from its most recent quarterly meeting. Among other things, the press release from the meeting stated that the MSRB will not pursue rulemaking with regard to its concept proposal to require municipal advisors to disclose information about bank loans entered into by their municipal issuer clients.
The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently issued a Risk Alert announcing that they will be undertaking an examination initiative focused on the risk that registered advisers may be making conflicted recommendations to their clients.
- Client Alert
On March 9, 2016, the U.S. Securities and Exchange Commission issued a cease and desist order against Westlands Water District, a public agency of the State of California, the District General Manager and General Counsel, and the former District Assistant General Manager.
The staff of the Securities and Exchange Commission’s Division of Investment Management recently released guidance regarding registered investment company risk disclosure.
The Municipal Securities Rulemaking Board is seeking comment on proposed guidance on establishing the “prevailing market price” and calculating mark-ups and mark-downs for principal transactions in municipal securities.
- Client Alert
On February 10, 2016, the Government Finance Officers Association alerted its members that the Enforcement Division of the Securities and Exchange Commission has begun contacting issuers in connection with its Municipalities Continuing Disclosure Cooperation initiative.
- January 19, 2016 (Originally Published December 8, 2015)Law360
Law360 republished a Chapman Corporate Governance Quarterly Update.
- Corporate Governance Quarterly Update
With the 2016 proxy season quickly approaching, reporting companies will begin contemplating the various disclosures they will make. Increasingly, audit committees in particular are being asked to voluntarily provide enhanced disclosure relating to how they perform their oversight duties and responsibilities.
- Client Alert
The Financial Industry Regulatory Authority is requesting comment on a revised proposal to amend FINRA Rule 2232 governing trade confirmation disclosures. The amendments would require member firms to disclose a “reference price” on customer confirmations for principal transactions in corporate and agency debt securities with retail customers.
- Client Alert
On September 30, 2015, in the second round of settlements with underwriters under its Municipalities Continuing Disclosure Cooperation initiative, the Securities and Exchange Commission issued cease-and-desist orders to 22 underwriting firms.
- Client Alert
The Municipal Securities Rulemaking Board recently proposed amendments to MSRB Rule G-15 that would require brokers, dealers and municipal securities dealers to disclose the mark-up or mark-down on retail customer confirmations for specified principal transactions.
- Client Alert
On June 18, 2015, the Securities and Exchange Commission issued cease-and-desist orders to 36 underwriting firms in response to voluntary self-reporting of potential misrepresentations in municipal bond offering documents regarding compliance by issuers with prior disclosure obligations under the SEC’s Municipalities Continuing Disclosure Cooperation initiative.
- Client Alert
On June 18, 2015, the Securities and Exchange Commission issued cease-and-desist orders to 36 underwriting firms in response to voluntary self-reporting of misrepresentations in municipal bond offering documents regarding compliance with prior disclosure obligations under its Municipalities Continuing Disclosure Cooperation initiative.
- Client Alert
The Securities Industry and Financial Markets Association recently proposed that the Financial Industry Regulatory Authority amend its rules to replace the current broker-dealer “suitability” standard with a new “best interests” standard along with enhanced customer disclosure about a broker-dealer’s services, conflicts of interest, fees, and compensation.
- Client Alert
This Client Alert summarizes the Securities and Exchange Commission proposed changes to certain aspects of the reporting, disclosure, and recordkeeping obligations of registered investment advisers.
- Client Alert
This Client Alert summarizes the Securities and Exchange Commission proposed changes to certain aspects of the disclosure and reporting obligations of registered investment companies.
- Client Alert
On May 20, 2015, the Securities and Exchange Commission proposed changes to certain aspects of reporting and disclosure obligations of registered investment advisers and investment companies.
- March 2015White Paper
This Chapman and Cutler white paper provides a summary of, and practical guide to, the principal requirements of federal securities laws relating to municipal bonds. Much of the information discussed in this white paper applies to both higher education bonds and other municipal securities, while certain sections focus on securities laws as applied to the high education sector, in particular.
As part of its charge to promote a fair and efficient municipal securities market, the Municipal Securities Rulemaking Board issued regulatory notice 2015-03 on January 29, 2015, calling for timely disclosure of bank loans extended to municipal borrowers, whether in the form of the direct purchase of bonds or notes, a loan agreement, or any other type of financing with the municipal borrower.
- Client Alert
The Financial Industry Regulatory Authority, Inc. and the Municipal Securities Rulemaking Board recently requested comment on proposals to require disclosure of pricing information on customer trade confirmations for certain fixed income security transactions.
- Client Alert
Issuers and obligated persons are reminded of the approaching deadline for self-reporting materially inaccurate representations in offering documents regarding compliance with continuing disclosure undertakings.
- Client Alert
The Board of Governors of the Financial Industry Regulatory Authority, Inc. recently authorized regulatory notices seeking comment on initiatives to enhance transparency and execution quality in fixed income markets.
- Client Alert
The SEC announced modifications to its Municipalities Continuing Disclosure Cooperation Initiative on July 31, 2014.
- Client Alert
On July 8, 2014, the Securities and Exchange Commission issued its first cease-and-desist order under its Municipalities Continuing Disclosure Cooperation initiative.
- Client Alert
In 2013, the Securities and Exchange Commission brought a number of enforcement actions in the municipal market that not only reinforced the agency’s commitment to regulating the municipal market, but also brought about a number of firsts for the SEC’s municipal securities enforcement program.
- Client Alert
The Securities and Exchange Commission recently approved the Municipal Securities Rulemaking Board’s rule proposals that focus on fair dealing obligations of dealers in municipal securities.
- Client Alert
With fixed income markets already in decline in May 2013, speculation regarding Federal Reserve action reached a pinnacle in the last half of June, sparking a bond market selloff of historic proportions.
- Client Alert
In accordance with provisions of the Jumpstart Our Business Startups Act, enacted in 2012, the staff of the Securities and Exchange Commission recently published a report on its review of disclosure requirements under SEC Regulation S-K.
- Client Alert
On September 18, 2013, in accordance with provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Securities and Exchange Commission proposed an executive compensation disclosure rule that, if adopted, will require public companies to calculate and disclose in certain SEC filings (1) the median annual total compensation of all employees of the company, excluding the chief executive officer, (2) the annual total compensation of the company’s CEO and (3) the ratio of those two figures, such figures and ratio hereinafter referred to collectively, as the CEO pay ratio.
- Client Alert
In a recent regulatory notice, the Financial Industry Regulatory Authority, Inc. provided guidance on disclosure of fees in communications concerning retail brokerage accounts and IRAs.
- SEC Charges School District and its Underwriter for Continuing Disclosure and Due Diligence FailuresClient Alert
On July 29, 2013, in the first case of its kind, the Securities and Exchange Commission charged West Clark Community Schools, an Indiana school district, with falsely stating in an official statement that the school district was fully compliant with its duty to provide annual financial reporting and material event notices as required by prior continuing disclosure undertakings.
- Client Alert
The Municipal Securities Rulemaking Boards Interpretative Guidance on Underwriter Fair Dealing Obligations contained in Notice 2012-25 will become effective for bonds sold on or after August 2, 2012. The Notice imposes expansive code of conduct and disclosure requirements on underwriters of municipal securities under the “fair dealing” provisions of MSRB Rule G-17, which provides in pertinent part:
“In the conduct of its municipal securities activities, each broker, dealer and municipal securities dealer shall deal fairly with all persons and shall not engage in any deceptive, dishonest, or unfair practice.”
- Client Alert
The Securities and Exchange Commission recently approved the Municipal Securities Rulemaking Boardʼs proposed interpretative notice on the obligations of underwriters to municipal securities issuers under the fair dealing and anti-fraud provisions of MSRB Rule G-17. The Notice establishes a comprehensive code of conduct for underwriters in their dealings with municipal entities and imposes detailed disclosure obligations relating to the underwriterʼs role, compensation, and conflicts of interest, as well as the risks associated with complex municipal securities financings. The Notice takes effect on August 2, 2012.
- Client Alert
The Municipal Securities Rulemaking Board (“MSRB”) recently issued a notice seeking comments on a concept proposal that would require underwriters and municipal advisers to publicly disclose on the MSRBʼs Electronic Municipal Market Access (“EMMA”) system whether they have made or received certain payments in connection with new issues of municipal securities.
- Client Alert
On May 4, 2012, the Securities and Exchange Commission approved the Municipal Securities Rulemaking Boardʼs proposed interpretative guidance on the obligations of underwriters to municipal securities issuers under the fair dealing and anti-fraud provisions of MSRB Rule G-17. The guidance establishes a comprehensive code of conduct for underwriters in their dealings with municipal entities and imposes detailed disclosure obligations relating to the underwriterʼs role, compensation, and conflicts of interest, as well as the risks associated with complex municipal securities financings. The guidance also addresses underwritersʼ representations to issuers, review of official statements, and compensation, as well as fair pricing retail order periods. The guidance will be effective on August 2, 2012.