New Fund of Funds Rule: Avoiding Regulatory Pitfalls and Investor Disputes When Funds Invest in Other Funds

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


Wednesday, February 3, 2021

1:00pm-2:30pm EST, 10:00am-11:30am PST

or call 1-800-926-7926

This CLE webinar will analyze the SEC's new fund of funds rule and guide counsel on the regulatory requirements and investor protections that investment fund managers must consider when investing in other funds.

Description

On Oct. 7, 2020, the SEC adopted a new rule under the Investment Company Act of 1940, which provides a new framework governing investments by a registered investment company or a business development company (BDC) in other registered investment companies or BDCs. Fund managers must understand the new rule’s complexities to avoid compliance pitfalls.

Fund of funds arrangements are limited by the "anti-pyramiding" provisions in Section 12(d)(1)(A), which generally prohibit a regulated fund from acquiring securities of another regulated fund over certain thresholds. The new rule permits a fund to acquire shares of other funds above those thresholds, subject to new limitations: the acquiring fund may not acquire "control" over any acquired fund and must comply with new requirements with respect to voting rights. Investment advisers of acquiring funds and acquired funds must make certain evaluations and findings designed to address investor protection concerns associated with fund of funds arrangements.

Funds with different investment advisers must enter into an agreement that memorializes the terms governing the arrangement and permits the investment advisers to make the necessary findings. This agreement must be filed as an exhibit to the funds' registration statements. In addition, the new rule will limit certain complex fund of funds arrangements that are commonly used in the registered funds industry today.

Listen as our authoritative panel discusses the new investment options presented by the new rule and the structural and regulatory issues which must be considered when making fund of funds investments.

READ MORE

Outline

  1. Previous regulation of fund of funds arrangements--Section 12(d)(1) of the Investment Company Act of 1940
  2. The new fund of funds rule--comprehensive framework for investment funds to invest in other funds
  3. Restrictions and requirements under the new rule
    1. Ownership thresholds
    2. Limitations on control and what constitutes control
    3. Limitations on voting rights
    4. Required fund findings
    5. Complex structures
  4. Fund of funds investment agreements--key features
  5. Effect on ETF investments
  6. Compliance challenges

Benefits

The panel will review these and other key issues:

  • In what respect does the new rule expand on funds' ability to hold investments in other funds?
  • When is one fund deemed to have control over another under the new rule?
  • How are the voting rights of acquiring funds limited under the rule?
  • When is an investment agreement required, and what issues should be addressed in the investment agreement?
  • How will the limitations of complex structures require modifications of current arrangements?
  • How will the new rule affect current ETF fund of funds arrangements?

Faculty

Baris, Jay
Jay G. Baris

Partner
Sidley Austin

Mr. Baris has practiced in the asset management area for more than 35 years. He is widely recognized for his breadth of...  |  Read More

Simanek, Eric
Eric D. Simanek

Partner
Sullivan & Worcester

Mr. Simanek’s practice focuses on financial services, including mutual funds, closed-end funds, exchange-traded...  |  Read More

Live Webinar

Buy Live Webinar

Live Webinar

$347

Buy Live Webinar & Recording
A savings of $250

Live Webinar & Download

$444

Live Webinar & DVD

$444 + $24.45 S&H

Other Formats
— Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

48 hours after event

$347

Download

48 hours after event

$347

DVD

10 business days after event

$347 + $24.45 S&H