SEC Division of Investment Management Director Champ Discusses Monitoring of Industry Trends and Communication with Market Participants
SEC Division of Investment Management Director Norm Champ delivered remarks at the Insured Retirement Institute Government Regulatory Conference. In his speech, Director Champ discussed the SEC's efforts to monitor industry trends and enhance communications between the SEC staff and industry participants.
Director Champ explained that the SEC strives to monitor industry trends through a variety of sources. Among these sources, Director Champ pointed to: (i) reviewing disclosure filings for new products, (ii) examining requests for exempting relief, and (iii) engaging directly with executives of asset management firms and boards. Through meetings with industry participants, Director Champ said, the SEC has learned a great deal about the identification and management of risks affecting both individual firms and the industry as a whole. In addressing these risks, Director Champ explained, the SEC Risk and Examinations Office provides ongoing financial analysis with an emphasis on investment advisers and funds.
Director Champ also said that the staff is attempting to communicate more directly with industry participants through more Guidance Updates from the SEC staff. He explained further that these updates, in particular, are expected to serve as a vehicle for enhancing communications with the public and for "addressing a range of disclosure, regulatory, and compliance matters, by setting forth and discussing the staff’s views on a particular matter in a timely and transparent way."
Director Champ highlighted specific areas in which the SEC recently issued staff Guidance Updates that pertain to investment products. These updates emphasized the importance of:
- disclosing living benefits and death benefits in a clear and concise manner;
- ensuring that funds and products are not named in a way that leads investors to believe that they are protected from risk;
- understanding the SEC's current views regarding certain disclosure and compliance matters relevant to funds that invest in derivatives; and
- reviewing the SEC's guidelines on multi-manager funds and the exemptions available, and fund fees in a multi-manager structure.
Additionally, Director Champ encouraged participants to review the SEC's guidance on the deregistration of investment companies, which he stated would be particularly useful for insurance company separate accounts, the unique organizational structure of which often results in staff comments.