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: Underwriters
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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.
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.
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 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.
On June 12, the Department of Treasury issued the first report in a series regarding regulation of the financial system. The report recommends that high-grade municipal bonds be categorized as Level 2B liquid assets instead of generally being excluded as HQLA currently.
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 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.
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 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 second edition of Chapman's book is a valuable resource for municipal debt marketplace participants, including state and local government officials, municipal credit analysts, credit enhancers, investors, legislators, and administrators.
- 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.
- Client Alert
On February 2, 2016, in the third round of settlements with underwriters under its Municipalities Continuing Disclosure Cooperation initiative, the Securities and Exchange Commission issued cease-and-desist orders to 14 underwriting firms.
- Client Alert
On October 1, 2015, the Tax Exempt and Governmental Entities Division of the Internal Revenue Service released its Tax Exempt and Governmental Priorities for Fiscal Year 2016.
- 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
On June 24, 2015, Prop. Treas. Reg. §1.148-1(f) addressing the definition of “Issue Price” was published in the Federal Register. The Internal Revenue Service is accepting comments on the Proposed Regulation through September 22, 2015.
- 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.
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 SEC announced modifications to its Municipalities Continuing Disclosure Cooperation Initiative on July 31, 2014.
- 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.