New SEC Rules Regarding Investment Fund Valuation: Board Oversight, Methodology, Recordkeeping

A live 90-minute premium CLE video webinar with interactive Q&A


Tuesday, March 30, 2021

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

or call 1-800-926-7926

This CLE webinar will analyze the SEC's newly adopted Rule 2a-5 and Rule 31a-4 and their impact on investment fund practices in determining fair value for investment portfolios. The panel will discuss the steps counsel should take to ensure compliance by investment company boards with the oversight, recordkeeping, and reporting requirements of the new rules.

Description

On Dec. 3, 2020, SEC adopted new Rule 2a-5, which establishes a framework for fund valuation practices, and new Rule 31a-4, which expands recordkeeping requirements concerning fair value determinations. Counsel should review the valuation policies and the recordkeeping and reporting procedures of the investment funds it advises and make any adjustments necessary to comply with the new rules.

The new rules allow the board of directors (the board) to delegate fair value calculations to the fund's investment adviser or, if the fund is internally managed, to an officer of the fund (the valuation designee). The valuation designee must provide periodic reports to the board, including a quarterly report on any material changes in valuation risks and deviations from agreed valuation methodologies. The board is required to oversee the valuation designee's work, including addressing any conflicts of interest and continually reviewing the fair value determination process.

Rule 2a-5 requires the fund to establish a process for approving, monitoring, and evaluating each pricing service provider and challenging the pricing service's determination where materially different from the fund's view of the fair value. Rule 31a-4 requires funds or their advisers to maintain appropriate documentation to support fair value determinations.

Listen as our authoritative panel discusses the new rules regarding investment fund valuation practices and what investment funds must do to comply.

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Outline

  1. Investment fund valuation under the Investment Company Act
  2. New valuation topics introduced in Rule 2a-5
  3. Changes made under new Rule 2a-5
    1. Establishing a valuation methodology: appointment a valuation designee
    2. Board oversight obligations
    3. Reporting requirements for the valuation designee
    4. Use of pricing services
  4. Recordkeeping under new Rule 31a-4
  5. The effective date of the new rules
  6. Implications for fund managers

Benefits

The panel will review these and other key issues:

  • How will the new final rules change the valuation processes of investment funds?
  • What are the landmines to avoid in maintaining compliance?
  • Who may act as a valuation designee, and what is their role?
  • How to vet a potential third-party valuation board designee
  • What are the oversight responsibilities of the board?
  • When may a pricing service provider be used, and when should their valuation determinations be challenged by the board?
  • How will the final rules affect the records retention protocols of investment funds?

Faculty

Hourihan, Brian
Brian Hourihan

Managing Director, Public Securities
Brookfield Asset Management

Mr. Hourihan is Chief Compliance Officer and Regulatory Counsel for the Brookfield Public Securities Group LLC (PSG)...  |  Read More

Kuczmarski, Justin
Justin Kuczmarski, MBA, CPA, CVA, ABV

President
NAV Valuation & Advisory

Prior to founding NAV, Mr. Kuczmarski served as an NYC Practice Leader in Financial Advisory Services for a top 10...  |  Read More

Robert M. Kurucza
Robert M. Kurucza

Partner
Seward & Kissel

Mr. Kurucza is recognized as one of the country’s leading legal advisors in the financial services industry. He...  |  Read More

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