SEC Adopts Rules and Forms to Modernize Reporting Requirements for Registered Investment Companies

November 08, 2016

The U.S. Securities and Exchange Commission (SEC or Commission) has adopted, by a 2-to-1 vote, new rules and forms, as well as amendments to certain rules and forms (Final Rule), to modernize the reporting of information by registered investment companies (funds). Guided by the recent implementation of enhanced data reporting requirements for money market funds and private funds, the Final Rule is designed to improve the quality and type of information that all funds provide to the SEC and investors. Among other things, the Final Rule requires that portfolio-wide and position-level information and census information be provided in a “structured data format,” which will allow the SEC to more efficiently analyze the data to respond to market and fund-specific events. SEC Chair Mary Jo White stated at the open meeting at which the Final Rule was adopted that the Final Rule represents a “sweeping change for the industry by requiring strong transparency provisions and enhanced investor protections.”

The Final Rule has four key components:

  • Adoption of Form N-PORT, for reporting portfolio-wide and position-level information, and the rescission of Form N-Q;
  • Adoption of Form N-CEN, for reporting census-type information, and the rescission of Form N‑SAR;
  • Amendments to Regulation S-X to require (among other changes) standardized reporting of derivatives holdings in a fund’s financial statements; and
  • Amendments to Forms N-1A, N-3 and N-CSR to require certain disclosures regarding a fund’s securities lending activities.

This Dechert OnPoint briefly discusses the background leading up to the Final Rule, provides an overview of the Final Rule and then summarizes its key components, highlighting various issues that may be raised by the new reporting regime. As further discussed below, the SEC decided not to take action with respect to proposed Rule 30e-3, which, as proposed, would have allowed a fund to satisfy current shareholder report delivery obligations by making the reports and certain other materials accessible on a fund’s website. The SEC continues to evaluate proposed Rule 30e-3, and Chair White stated that she has directed the staff to prepare a recommendation for the Commission’s consideration by the end of the year.

Read "SEC Adopts Rules and Forms to Modernize Reporting Requirements for Registered Investment Companies."

The article was republished by the Journal of Investment Compliance in May 2017.