Drowning in Liquidity: The SEC's New Liquidity Management Rule for Mutual Funds (Part 1)

Adopted by the Securities and Exchange Commission (“SEC” or “Commission”) in 2016 and due to become effective over the coming months for some fund groups, Rule 22e-4 (the “Liquidity Rule” or “Rule”) under the Investment Company Act of 1940 (the “1940 Act”) has presented mutual funds and their managers with the need to develop a compliance infrastructure to manage and monitor the liquidity of their funds in the specific manner contemplated by the Rule. Implementation of that infrastructure presents funds and their managers with considerable compliance challenges and interpretive questions. As detailed below, the Liquidity Rule generally requires all mutual funds, other than money market funds, to establish liquidity risk management programs (“Liquidity Programs” or“Programs”).

Read full version of "Drowning in Liquidity: The SEC's New Liquidity Management Rule for Mutual Funds (Part 1)."*

*This article has been reproduced from an outline for an ALI-CLE conference held on November 7-9, 2018.