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Director of SEC’S Division of Investment Management Highlights Industry Outreach, Recent Guidance

The SEC’s Director of the Division of Investment Management, Norm Champ, recently spoke at the Insured Retirement Institute Government, Legal & Regulatory Conference. Champ emphasized the Division of Investment Management’s efforts at industry outreach and monitoring. He discussed the Division’s efforts to stay abreast of new developments both through the review of disclosure filings and requests for relief, as well as meetings with senior management of asset management firms and fund boards. Champ stated that these meetings allow the Division “to obtain a focused and informed view of the systems, controls, and personnel, and also to get a sense of the culture of an individual firm.” He also noted the Division’s use of the Risk and Examinations Office (“REO”) to gather information used to better inform policy. These exams can occur on a standalone basis or as a part of exams through the Office of Compliance, Inspections and Examinations.

He discussed the Division’s work on recommendations to “to modernize and streamline the information that funds report to the Commission, and to give the Commission and the staff more timely and useful information about fund operations and portfolio holdings.” Through this initiative, Champ hopes to improve the quality of data reported and to reduce the burden on firms.

Champ highlighted recent guidance issued by the Division including clear and concise disclosure, fund and product names, funds that invest in derivatives, and multi-manager funds. Regarding funds that invest in derivatives, Champ emphasized the need for proper disclosure of “material risks relating to volatility, leverage, liquidity, and counterparty creditworthiness,” and strongly recommended “a careful review of this piece.” Relating to multi-manager funds, Champ emphasized that “the approval of advisory arrangements for funds is among the most critical functions of a mutual fund board.”

Champs remarks can be accessed here.