Insights

27 February 2024

New SEC rules target conflicts of interest among staff

The Securities and Exchange Commission (SEC) has approved amendments to its Supplemental Standards of Ethical Conduct for employees and members. The changes aim to strengthen conflict-of-interest rules and public trust in the agency.

Restrict Ownership of “Financial Industry Sector Funds”

The amendments bar employees from owning funds concentrating investments in SEC-regulated entities. This includes registered investment companies, bank common trusts, and exempt or pooled funds with policies focused on SEC-supervised organizations.

Ease Requirements for “Permissible Diversified Funds”

The SEC maintains that certain diversified assets pose fewer ethical issues. The changes would exempt permissible diversified funds from pre-clearance, reporting, and 30-day holding requirements.

Covered assets include:

  • Diversified mutual funds.
  • Money market funds per Rule 2a-7.
  • 529 college savings plans.
  • Diversified holdings in benefit/pension plans.

This eases administrative burdens for safer investments.

Allow Automated Reporting System

The amendments allow using an automated system for reporting securities transactions. Employees could authorize brokers/institutions to transfer data rather than manually filing it.

Supporters noted efficiency gains, while critics raised privacy and security concerns. In response, the automated system would now be voluntary vs. mandatory. Manual reporting requirements are kept for those not using the automated approach.

Apply IPO Rules to Direct Listings

When companies list shares directly on an exchange, direct listings can raise ethical questions like traditional IPOs. The new rules bar buying directly listed securities for seven days post-listing, just as with IPOs.

0
Search
Recent posts
LATEST INSIGHTS
2 August 2024
FDIC Proposes Sweeping Changes to Brokered Deposits Rules
The Federal Deposit Insurance Corporation (FDIC) has proposed a significant overhaul of its brokered deposits rules. This move, announced on July 30, 2024, could reshape the landscape for banks, neobanks, fintechs, and other financial industry players.
2 August 2024
Explaining the FCA's Public Offer Platform rules
The UK's Financial Conduct Authority (FCA) has released a consultation paper outlining proposed rules for the new public offer platform (POP) regime.
25 July 2024
What new ARGA legislation will mean for UK GRC
The King's Speech has unveiled plans for a Draft Audit Reform and Corporate Governance Bill, signalling significant changes in the UK's regulatory landscape. MBK Search has pulled out these crucial aspects that risk managers and compliance professionals need to understand:
24 July 2024
FTC sets its sights on surveillance pricing: Key points
The Federal Trade Commission (FTC) has launched a significant investigation into "surveillance pricing" practices, signalling a new frontier in consumer protection and data privacy. This will have implications for risk managers and compliance professionals across financial services. Here are five key aspects to consider:
css.php