On March 13, 2020, in light of business disruptions resulting from the spread of the coronavirus (COVID-19) and current actions by registrants to protect the health of their employees, clients and the public, the SEC proactively granted relief from certain routine regulatory deadlines and other requirements applicable to investment advisers and registered funds. The SEC extended relief to those advisers and funds whose ability to meet certain requirements is adversely affected by the COVID-19 pandemic.
The SEC recognizes that the outbreak of COVID-19 has resulted in disruptions to transportation and the imposition of quarantines worldwide, which may limit investment advisers’ access to their facilities and personnel. Third-party service providers may be similarly limited. As a result, investment advisers may face difficulty in timely satisfying certain provisions of the Investment Advisers Act of 1940 (the “Advisers Act”) and the rules thereunder related to the filing and delivery of certain reports and disclosures.
The SEC therefore granted exemptions to registered investment advisers and exempt reporting advisers until April 30, 2020, from the following filing obligations and delivery requirements under the Advisers Act:
These exemptions apply only to advisers that meet the following conditions:
An adviser relying on the Advisers Act relief must file its Form ADV or Form PF, as applicable, and deliver the brochure (or summary of material changes) and brochure supplement as soon as practicable, but no later than 45 days after the original due date for filing or delivery, as applicable.
The SEC recognizes that COVID-19 may present challenges for boards of trustees of registered funds and business development companies (BDCs) who must travel in order to meet certain in‑person voting requirements under the 1940 Act and its related rules. The SEC also recognized that registered funds and unit investment trusts (UITs) may face difficulties making certain required filings or timely delivering their prospectuses if their personnel or personnel employed by third-party service providers who are necessary to prepare, file and deliver such reports become unavailable, or are only available on a limited basis. The SEC also noted that, as a result of recent market movements, certain registered closed-end funds and BDCs may seek to call or redeem securities and may face difficulties providing the advance notice required under Rule 23c-2 under the 1940 Act.
Consequently, the SEC granted the following temporary exemptions to registered funds, BDCs and UITs:
A registered fund that relies on the 1940 Act relief to delay its required filing of Form N-CEN or Form N-PORT must file such report as soon as practicable, but not later than 45 days after the original due date; and any Form N-CEN or Form N-PORT filed in reliance on the 1940 Act relief must include a statement that the registered fund relied on the 1940 Act relief and the reasons why it was unable to file such report on a timely basis.
The SEC, like other federal and state regulators, will continue monitoring the current situation and may, if necessary, extend the time period for any of the relief granted in the Advisers Act relief or the 1940 Act relief. Registrants should consider the need to rely on the relief provided in these two orders, and the need to publicly disclose their decision to do so. In particular, investment advisers that rely on the Advisers Act relief and boards that rely on the 1940 Act relief should take into account their fiduciary duties under the federal securities laws and/or state laws when making this decision.