COVID-19 Coronavirus: Financial Services

Federal regulators and self-regulatory agencies have provided relief to registered funds and investment advisers whose operations may be affected by the COVID-19 coronavirus outbreak. They acknowledge that Coronavirus-related disruptions may pose challenges to satisfying certain requirements under the Investment Company Act of 1940 as well as the Investment Advisers Act of 1940. In light of these challenges, Dechert has created the COVID-19 Coronavirus U.S. Regulatory Relief Tracker for Registered Funds and Investment Advisers.

Read our guidance: COVID-19 Coronavirus U.S. Regulatory Relief Tracker for Registered Funds and Investment Advisers (U.S.) - June 3, 2020

When clients are adversely affected by governmental measures, we assist them in evaluating what forms of recourse might be available and, where appropriate, pursuing recourse through international arbitration or other means. This OnPoint addresses the types of measures arising out of past crises that have been so severe as to result in international arbitration, and identifies immediate action items that investors in the banking and finance sectors could take to protect their investments.

Read our guidance: COVID-19 Economic Crisis: Protecting International Banking and Finance Investors and Their Investments (Global) - April 30, 2020

Financial services providers that have non-U.S. affiliates should evaluate whether they are required to file the Benchmark Survey of U.S. Direct Investments Abroad (BE-10). Citing the disruptions caused by the COVID-19 coronavirus pandemic, the Commerce Department's Bureau of Economic Analysis recently reiterated that U.S. Reporters may request extensions of the applicable filing deadline.

Read our guidance: BEA's 2020 BE-10 Benchmark Survey of U.S. Direct Investments Abroad and COVID-19 Coronavirus-Related Guidance: Implications for U.S. Asset Managers (U.S.) - April 28, 2020

The Central Bank of Ireland has issued a markets update confirming flexibility for filing dates relating to certain regulatory returns due from investment firms, fund service providers and investment funds over the COVID-19 period.

Read our guidance: Central Bank of Ireland Announces COVID-19-related Forbearance Measures (Ireland) – April 23, 2020

New guidelines from the German Tax Administration confirm that a passive breach of investment thresholds/limitations between 1 March 2020 and 30 April 2020 is generally not considered to be a “substantial breach” of the investment restrictions, and so will not impact the tax exemptions available to German investors in the investment fund.

Read our guidance: German Tax Administration Provides COVID-19 Coronavirus Temporary Relief for Investment Restrictions of German and Foreign Investment Funds (Germany) – April 21, 2020

A registered investment adviser (RIA) that has “custody” of client funds or securities must comply with the provisions of Rule 206(4)-2 under the Investment Advisers Act of 1940 (Rule), including those related to the use of a qualified custodian to hold client assets and annual verification of client assets, absent certain exceptions. Recently, the Staff of the SEC’s Division of Investment Management has entertained requests for guidance or relief when circumstances arising from the COVID-19 coronavirus pandemic have resulted in RIAs being unable to meet certain requirements.

Read our guidance: SEC IM Staff Updates Custody Rule FAQs to Address Issues Arising in Connection with Surprise Examinations and Certain Certificated, Privately Offered Securities due to the COVID-19 Coronavirus (U.S.) - April 3, 2020

Despite acknowledging the regulatory challenges that firms are facing with the COVID-19 coronavirus outbreak, the SEC chairman said that the agency currently has no plans to extend the June 30, 2020 compliance date for Reg BI and Form CRS, or the filing dates for Form CRS.

Read our guidance: Firms Should Move Full Steam Ahead on Regulation Best Interest and Form CRS (U.S.) - April 2, 2020

As the impacts of the COVID-19 pandemic on the global economy are surfacing, liquidity risks are increasingly prevalent. Hong Kong's prudential regulator has adopted measures to ensure that banks are properly prepared for such risks. At the same time, fund managers are also reminded of their obligations to manage the liquidity of funds given the present volatility of the local and international markets.

Read our guidance: Liquidity Issues in Hong Kong (Hong Kong) – April 2, 2020

The COVID-19 coronavirus outbreak has undoubtedly increased firms' exposure to market abuse risks in a number of ways. Due to the rapidly changing consequences of restrictions caused by COVID-19 for companies and global markets, individuals with access to "inside" information are more frequently learning new inside information regarding firms' financial outlooks. Such information is likely to be more valuable now than in normal circumstances.

Read our guidance: Regulatory Impact – Focus on Global Market Abuse Risks (U.S., UK and Hong Kong) - March 30, 2020

Several federal agencies have announced various measures to help the United States respond to the economic dislocations from the COVID-19 coronavirus pandemic. This OnPoint summarizes several significant initiatives affecting financial institutions.

Read our guidance: U.S. Government Non-Legislative COVID-19 Coronavirus Response Initiatives (U.S.) - March 27, 2020

The outbreak of the COVID-19 coronavirus is causing business disruption on an unprecedented scale. After more than a decade of sustained economic growth, market volatility and central bank intervention has returned. Dechert's private funds team presents this report of general considerations for all fund and alternative asset managers to help them navigate this complex and fast-changing situation.

Read our guidance: Facing a Global Challenge: Key Considerations for Fund Managers (Global) - March 26, 2020

The Investment Company Institute (ICI) obtained no-action relief that effectively extends Rule 17a-9 under the 1940 Act to apply to open-end registered funds other than ETFs and money market funds. The relief would permit affiliates of such funds to purchase debt securities from the funds, provided that certain conditions are met.

Read the no-action letter: SEC Staff No-Action Relief Extending Rule 17a-9 to Non-Money Market Funds (U.S.) – March 26, 2020

On March 25, 2020, the Securities and Exchange Commission issued two orders updating and extending relief previously provided to registered funds and investment advisers whose operations may be affected by the COVID-19 coronavirus outbreak. The Updated Orders supersede the corresponding prior SEC orders issued on March 13, 2020.

Read our guidance: SEC Updates and Extends Its Targeted Actions to Assist Funds and Advisers in Light of COVID-19 Coronavirus Pandemic (U.S.) - March 26, 2020

On March 23, 2020, the SEC issued an order providing relief to registered open-end funds and insurance company separate accounts registered as unit investment trusts. The SEC order follows two previous orders which provided relief to funds and investment advisers whose operations may be affected by the COVID-19 coronavirus outbreak. The relief will remain in effect through at least June 30, 2020.

Read our guidance: SEC Takes Further Action to Assist Funds in Light of COVID-19 Coronavirus Pandemic: Provides Flexibility for Funds and Insurance Company Separate Accounts to Obtain Short-Term Funding (U.S.) - March 25, 2020

The Commodity Futures Trading Commission issued industry-wide no-action relief for registered commodity pool operators (CPOs) on March 20, 2020, to permit those CPOs additional time to make certain regulatory filings and issue certain reports that would otherwise be due in the near term.

Read our guidance: CFTC and NFA Issue Relief for Registered CPOs and CTAs in Response to Disruptions Caused by COVID-19 Coronavirus Pandemic (U.S.) - March 23, 2020

Our lawyers cover how the exceptions in executive orders that otherwise restrict business activities of business and residents in the relevant states may affect the ability of asset managers and certain of their personnel to continue certain activities in their offices. 

Read our guidance: Executive Orders Restricting Business Activities – Implications for Asset Managers (U.S.) - March 22, 2020

Public markets have seen severe dislocation with all major stock markets shedding 10 to 30 percent in the past few weeks due primarily to fears about COVID-19 coronavirus and the slump in oil prices.

Read our guidance: Market Disruption: Fund Restructuring Considerations for Private Equity (Global) – March 19, 2020

The ICI also received industry-wide no-action relief under Rule 17a-9 under the 1940 Act that facilitates the purchase of securities from affiliated money market funds by banks and certain affiliates.  

Read the no-action letter: SEC Staff No-Action Relief for Money Market Funds Under Rule 17a-9 (U.S.) – March 19, 2020

Regulators continue to introduce short selling restrictions and other measures in light of the current and ongoing market situation. Below is a non-exhaustive summary of the position in the markets listed as at noon GMT, 19 March. It is a very fast moving environment and new or additional measures may be introduced or other changes made at short notice.

Read our guidance: (World Compass) Update – Short Selling Restrictions and Other Measures (Global) – March 19, 2020

As financial markets react to daily, dramatic news headlines concerning the coronavirus pandemic, an oil market price war, extraordinary government responses and the economic and financial fallout, funds and their liquidity program administrators may want to keep in mind a few key points under the Securities and Exchange Commission’s Liquidity Risk Management Rule.

Read our guidance: Liquidity Rule Reminders in Light of Recent Market Turmoil (U.S.) – March 17, 2020

On March 13, 2020, the SEC issued two orders providing relief related to filings and in-person board meetings to registered funds and investment advisers whose operations may be affected by the COVID-19 coronavirus outbreak. In each order, the SEC acknowledged that coronavirus-related disruptions may pose challenges to satisfying certain requirements under the Investment Company Act of 1940 as well as the Investment Advisers Act of 1940.

In light of these challenges, the SEC provided certain temporary, conditional relief for registered investment companies, unit investment trusts and business development companies, as well as for registered investment advisers (RIAs) and exempt reporting advisers (ERAs). Additionally, the SEC included a statement regarding SEC enforcement action related to certain disclosure delivery obligations.

Read our guidance: SEC Takes Targeted Action to Assist Funds and Advisers in Light of COVID-19 Coronavirus Pandemic (U.S.) – March 16, 2020

The U.S. equity, options and futures markets have adopted market-wide circuit breakers that automatically halt trading across markets in the event of severe market declines, as measured by certain benchmarks against the S&P 500®. In light of the imposition of market-wide trading halts on March 9, 2020, here is a summary of when these circuit breakers are imposed and their duration.

Read our guidance: Refresher on U.S. Market-Wide Circuit Breakers (U.S.) - March 9, 2020