On December 3, 2020, the Securities and Exchange Commission (SEC) adopted new rule 2a-5 (Rule 2a-5 or the Final Rule) under the Investment Company Act of 1940, as amended (1940 Act) that provides the requirements for determining the fair value of a fund’s investments in good faith for purposes of section 2(a)(41) of the 1940 Act. According to the SEC, the Final Rule is intended to provide a consistent framework and standard of baseline practices for fair value determinations, and applies to all registered investment companies and business development companies (BDCs). Although the key components of the Final Rule are similar to the proposed version published in April 2020 (the Proposed Rule), the SEC made a variety of changes to the Final Rule in response to public comments. The Final Rule will become effective March 8, 2021. The compliance date for the rule will be September 8, 2022.
This Alert will summarize the SEC’s Final Rule and will conclude by highlighting certain important issues for fund boards and fund advisers to consider. The Alert also includes Exhibit A, which highlights a variety of key public comments that were made on the Proposed Rule, and how the Final Rule addresses those comments. Exhibit B is a marked version of the Final Rule that shows the changes that were made to the rule text between the Proposed Rule and Final Rule. Read More...
David Grim Discusses the SEC’s Valuation Rule With KPMG
David Grim joined Deputy Practice Leader for the KPMG Public Investment Management Practice Matt Giordano to present the podcast, “What Does the New SEC Fund Valuation Framework Mean for You?,” on Jan. 11. In the two-part conversation, Grim discussed the new regulatory framework and its implications for fund boards and advisers.
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