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SEC Adopts New Rules Mandating Open-End Fund Liquidity Risk Management Programs and Permitting Swing Pricing

On October 13, 2016, the Securities and Exchange Commission (the “SEC”) adopted new Rule 22e-4 under the Investment Company Act of 1940 (the “1940 Act”), which will require registered open-end investment companies (including open-end exchange-traded funds (“ETFs”) but excluding money market funds) to establish comprehensive liquidity risk management programs comprised of policies and procedures designed to address specified criteria. The SEC also adopted a new confidential reporting requirement to notify the SEC when a fund’s liquidity level exceeds 15 percent of net assets or when certain funds’ highly liquid investments fall below a stated minimum. The new rule establishes additional board responsibilities, and requires the board to appoint either the fund’s investment adviser or one or more fund officers as being responsible for administering the liquidity risk management program. In addition, the SEC adopted certain related recordkeeping requirements, as well as changes to Form N-1A and new Forms N-CEN and N-PORT to require certain disclosures and reporting regarding fund liquidity and liquidity risk management (collectively, the “Liquidity Rules”).

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    © 2021 Vedder PriceNational Law Review, Volume VI, Number 318
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    About this Author

    Deborah Bielicke Eades, Vedder Price Law Firm, Finance Attorney
    Shareholder

    Deborah Bielicke Eades joined Vedder Price P.C. as a shareholder and is a member of the firm’s Investment Services Group.

    Ms. Eades has extensive experience in all aspects of mutual fund and investment adviser regulation and compliance, including product design, federal and state registration, representation of fund boards, portfolio compliance, derivative instruments, affiliated transactions, electronic commerce and Web site design, privacy matters and general regulatory matters.

    312-609-7661
    Renee Hardt, Money Managers, Financial Services, Vedder Price Law FIrm
    Shareholder

    Renee M. Hardt is a Shareholder at Vedder Price and a member of the Investment Services group.

    Ms. Hardt has significant experience representing mutual funds and their boards of directors, money managers, broker-dealers, banks, insurance companies and other financial institutions in connection with investment company, investment adviser, broker-dealer and insurance product matters, including securities, regulatory, product design and transaction counseling.

    Ms. Hardt was selected for inclusion in Illinois Rising Stars by Law & Politics (which names the top 2.5...

    312-609 7616
    Maureen Miller, Corporate, Securities Matters, Investment Companies, Shareholder, Vedder Price Law FIrm
    Shareholder

    Maureen A. Miller is a Shareholder in Vedder Price’s Investment Services group. Ms. Miller concentrates her practice on corporate and securities matters with a focus on investment companies and investment advisers. She counsels independent directors of open-end, closed-end and exchange-traded funds on their special responsibilities under the law. Ms. Miller works with clients on federal and state registration and regulatory issues, SEC examinations and investigations, compliance policies and procedures, insurance arrangements, governance matters, negotiation of contracts, and business...

    312-609 7699
    Jacob Tiedt,Vedder Price law firm investment services attorney
    Shareholder

    Jacob C. Tiedt is a Shareholder at Vedder Price and a member of the Investment Services group.

    Mr. Tiedt’s practice includes the representation of registered mutual funds, closed-end funds and exchange-traded funds; private funds; investment advisers; and other financial institutions on a broad range of regulatory, governance and compliance matters. Mr. Tiedt regularly counsels clients on matters relating to SEC registration, disclosure and compliance; shareholder solicitation; NYSE, Nasdaq and FINRA regulation; corporate governance; and board administration. Mr....

    312-609-7697
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