Investment Company Notebook

We're thrilled to share the BBD Investment Management Group 2019-2020 Annual Report. 

In April, the SEC released proposed Rule 2a-5 under the Investment Company Act of 1940.  The proposed Rule is the next step in an ongoing effort to address valuation practices more comprehensively for registered investment companies and business development companies.

Rule 2a-5 will create a significant shift in the roles and interaction of Boards and investment advisors related to fair value determinations.  Everyone involved in the management and oversight of registered funds will be impacted by these developments.

In BBD's latest Webcast, John Braun and Cory Stewart teamed up with Cillian Lynch from Stradley Ronan and Brad Swenson from SS&C ALPS for a lively discussion about The Next Evolution of Fair Value: The SEC's Proposed Rule 2a-5.

The Webcast included considerations from the auditor, legal and administrator perspectives.

To view a replay, click the link below.

The Next Evolution of Fair Value: The SEC's Proposed Rule 2a-5

In August 2018, the Financial Accounting Standards Board (FASB) finalized changes to fair value measurement disclosure requirements that had been under debate for several years as part of the disclosure framework project.

From time to time, we receive resources from industry colleagues that we believe would be of value to our clients and industry friends.

Generally speaking, investment companies are exempt from presenting a statement of cash flows in their semi-annual and annual reports, provided they meet three conditions.

In order to achieve tax efficiency and maintain the single layer of taxation concept of Subchapter M, regulated investment companies (RICs) use various techniques. Two common techniques in the industry are equalization debits and the use of redemptions in-kind instead of cash redemptions. ETFs tend to use in-kind redemptions more than non-ETF groups.

In a recent report published by the Depository Trust & Clearing Corporation (DTCC) in April of 2014, a recommendation was made to shorten the U.S. Trade settlement cycle for equities, municipal and corporate bonds and unit investment trusts from trade date plus three days (T+3) to trade date plus two days (T+2).

One of the more potentially divisive items included in the Auditor’s Report to the Audit Committee is the Summary of Audit Differences (SADs). At times, it seems that SADs are perceived as a black mark on an otherwise clean audit report, which is most likely due to a misunderstanding of what a SAD represents.

The buzz surrounding International Financial Reporting Standards (IFRS) adoption in the United States, once a hot topic, has waned significantly in the past few years.

Commission recapture occurs when a fund enters into an agreement with an institutional broker to rebate a portion of trading commissions directly to a fund. How does commission recapture work?