Regulatory Developments
SEC Modernizes Filing Fee Disclosure and Payment Methods
On October 13, the SEC adopted amendments to modernize filing fee disclosure and payment methods. Operating companies and investment companies (funds) pay filing fees when engaging in certain transactions, including registered securities offerings, tender offers, and mergers and acquisitions. The amendments revise most fee-bearing forms, schedules, and related rules to require companies and funds to include all required information for filing fee calculation in a structured format. The amendments also add new options for Automated Clearing House (ACH) and debit and credit card payment of filing fees and eliminate infrequently used options for filing fee payment via paper checks and money orders.
The amendments generally will be effective on January 31, 2022. Amendments that will add options for filing fee payment via ACH and debit and credit cards and eliminate the option for filing fee payment via paper checks and money orders will be effective on May 31, 2022. The SEC is providing an extended transition period to give filers additional time to comply with the Inline XBRL structuring requirements for filing fee information.
FINRA Conducting Special Purpose Acquisition Companies Examination
On October 11, FINRA announced an examination of Special Purpose Acquisition Companies (SPACs) and their affiliates’ activities during July 1, 2018 and September 20, 2021. SEC Chairman Gary Gensler has recently expressed concern over SPAC investor protections. Accordingly, FINRA is requesting extensive information about SPACs through a list of 10 broad requests, which include (1) identification of SPACs’ and affiliates’ policies and procedures, (2) descriptions of services offered by the SPACs and affiliates, (3) identification of third-party diligence providers, and (4) lists of those involved in the investment banking services.
FINRA Encourages Incorporation of Government-wide AML and Countering the Financing of Terrorism Priorities Into AML Programs
On October 8, FINRA issued Regulatory Notice 21-36 encouraging firms to consider how to incorporate government-wide anti-money laundering (AML) and countering the financing of terrorism (CFT) priorities into their AML programs. The AML Act became law on January 1, 2021, and, among other amendments to the Bank Secrecy Act (BSA), requires FinCEN to issue the AML/CFT Priorities and update them at least once every four years. FinCEN issued the first government-wide priorities for AML and CTF policy which was mandated by the Anti-Money Laundering Act of 2020. FinCEN also issued a statement to provide covered non-bank financial institutions, including broker-dealers, with guidance on how to approach the AML/CFT Priorities.
Although the issuance of the AML/CFT Priorities does not trigger an immediate change in the BSA requirements or supervisory expectations for member firms, in its notice, FINRA encouraged member firms to begin to evaluate how they will incorporate and document the AML/CFT Priorities, as appropriate, into their risk-based AML programs. FINRA’s notice recommends that member firms to consider potential updates to the red flags that they have incorporated into their risk-based AML compliance programs in light of the risks presented by factors such as their business activities, size, the geographic locations in which they operate, the types of accounts they maintain, and the types of transactions in which they and their customers engage. FINRA’s notice also recommended that firms consider any potential technological changes that may be appropriate in order to incorporate the AML/CFT Priorities into their risk-based AML compliance programs, including changes to the technology that they use to monitor and investigate suspicious activity.
“These updates, which will be phased in over the coming years, will make the filing process faster, less expensive, and more efficient for SEC staff and market participants.”
– SEC Chair Gary Gensler
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