SEC Issues Guidance Update on Disclosure and Compliance Matters for Investment Company Registrants (with Mehta Comment)

The SEC Division of Investment Management has issued a guidance update on certain disclosure and compliance matters relevant to SEC-registered investment companies ("RICs") that trade commodity interests. The SEC staff's guidance was issued more or less in conjunction with the CFTC's new rules regulating RICs that invest in commodity interests (as covered in a separate news story). The guidance is intended to assist those funds in preparing disclosure filings and in their consideration of compliance issues. The guidance update covered the following areas:

• Disclosure of Derivatives and Associated Risks
• Performance Presentations
• Legend Requirement

Mehta Comment: One area in which the SEC and the CFTC have taken somewhat different approaches relates to the permissibility of an adviser publishing performance information as to other funds and accounts of the adviser. In this regard, the SEC has been quite restrictive in comparison to the CFTC. The SEC allows, in limited circumstances, the publication of information for funds and accounts with investment objectives, policies and strategies substantially similar to those of the offered RIC. The attached guidance suggests that the SEC may be rethinking its policy in this regard, perhaps to take an approach that would be more akin to that of the CFTC.

See: SEC Guidance Update.