This week the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) published a set of Frequently Asked Questions (FAQs) addressing compliance obligations for Commodity Pool Operators (CPOs) and Commodity Trading Advisors (CTAs). The FAQs address a number of concerns raised by market participants since CFTC’s adoption of new regulations pursuant to Dodd-Frank. The issues addressed in the FAQs include clarification on what entities must register under the new rules, specific compliance dates, and the process for transitioning from the eliminated exemption under Rule 4.13(a)(4). Of note:

ERISA Rule 404a-5 was enacted in order to provide greater transparency to investors in 401(k) type pension plans. The rule was adopted two years ago, but the August 30, 2012 deadline for plan administrators to issue the required disclosures is just around the corner. As reported earlier this year, the August 30^th deadline gives plan sponsors 60 days from the July 1, 2012 deadline for service providers to provide specific disclosures related to their costs and expenses to plan sponsors.

FINRA recently published Regulatory Notice 12-25 to provide broker-dealers with additional guidance on the SRO’s new suitability rule, which took effect on July 9th. The new suitability standards under Rule 2111 were approved by the SEC in November, 2010. They were initially scheduled to take effect on October 7, 2011, but the deadline was extended in response to requests from the industry for more implementation time. The recent release responds to requests from FINRA member firms for additional direction on issues they identified during the implementation process. The release also provides useful information concerning the implementation of a risk-based approach to documentation of suitability compliance and the scope of appropriate information gathering from clients.

During the June 6^th hearing of the House Financial Services Committee, legislation was introduced by Representative Spencer Bachus (R-Ala.) that would create a new self-regulatory organization for Registered Investment Advisers “(RIA”) (H.R. 4624). During that session Representative Maxine Waters (D-Calif.) stated she was drafting alternative legislation that would allow the SEC to collect fees from advisers to fund the regulator’s examination program. As promised, on July 25^th, Rep. Waters introduced the Investment Adviser Examination Improvement Act of 2012. According to the press release for the new legislation, the bill “would provide the [SEC] with the authority to impose and collect user fees on investment advisors for the purpose of increasing the number and frequency of SEC examinations.” Under the proposed law, the SEC would have a mandate to collect fees directly from advisers to cover the costs of additional examinations by the SEC. Under Water’s bill, the amount of the fee assessed to advisory firms would be based on the firm’s assets under management, the number and types of clients, as well as the firm’s risk profile. Importantly, the measure would take funding for the SEC’s oversight of advisers outside the annual congressional budget process and create a stable source of finding for examinations.

On July 17, 2012 the California Department of Corporations Commission filed final amendments to Section 260.204.9 of Title 10 of the California Code of Regulations with the state’s Office of Administrative Law (OAL). As reported here earlier this year, the amended regulation does away with the old private fund adviser exemption and creates a California corollary to the new federal private fund adviser exemption created by Dodd-Frank. Under California Gov. Code §11349.3. The OAL must approve or disapprove the regulation within 30 working days (the old exemption, extended by emergency regulation, remains in effect while the new regulation is under OAL review).

This month, the SEC and the Commodity Futures Trading Commission (CFTC) adopted final rules defining what derivative products will be regulated under Title VII of Dodd-Frank. That Title establishes a comprehensive new regulatory framework for swaps and security-based swaps, giving the SEC and the CFTC authority to oversee the over-the-counter derivatives market.

On June 28, 2012 SEC Chairman Mary Shapiro appeared before a House subcommittee to testify about the agency’s implementation of the Jumpstart Our Business Startups Act (JOBS Act). Title II of that legislation requires the SEC to implement ground-shifting rule changes that will permit general solicitation and general advertising under Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933. While removing the general solicitation ban, the legislation does specifically require issuers to take reasonable steps to verify that purchasers of the securities are accredited investors or qualified institutional buyers, as applicable, using methods that will be determined by further SEC rulemaking. The Act also specifically called for the Commission to make the rule changes within 90 days of the bill’s April 5, 2012 enactment.

On June 18, 2012 the California Department of Corporations (DOC) published notice of additional changes to its proposed private fund adviser exemption regulation (10 CCR §260.204.9) and a new 15-day public comment period.

On June 8, 2012 the SEC’s Division of Investment Management issued an initial set of frequently asked questions (FAQs) related to the filing of Form PF on the PFRD (Private Fund Reporting Depository). Investment advisers registered with the SEC and their related persons (including commodity pool operators and commodity trading advisers required to register as investment advisers) who manage one or more private funds with assets under management (AUM) of at least $150 million are required to file Form PF. The requirement came into effect last year with the SEC’s unanimous adoption of Rule 204(b)-1 under the Advisers Act (see this helpful article published by JLG last year on Form PF). Under the rule, private fund advisers’ reporting obligations vary based on the type of private fund managed and the adviser’s AUM.

On May 30, 2012, the federal Government Accountability Office (GAO) released a report , mandated by Dodd-Frank, on its study of the SEC’s oversight of FINRA. The report is critical of the agency’s oversight of FINRA, calling on the agency to direct FINRA to conduct “retrospective reviews” of its rules and to identify ineffective rules that should be abandoned.