IAA COVID-19 Relief Resource Chart

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IAA COVID-19 Relief Resource Chart

Updated April 12, 2021

The information in this chart may change frequently and will only include relief that is still active. We will inform members of developments related to the coronavirus pandemic through IAA Member Alerts and Coronavirus Updates on our online newsletter IAA Today. This Chart is focused on issues of interest for SEC-registered investment advisers and does not reflect the entirety of each SEC order or relief.

This chart is not intended to be a comprehensive treatment of each issue an adviser must consider in response to regulatory requirements and is not a substitute for legal advice. The IAA undertakes no responsibility to update this chart.

 

Filing/Report Date Order Name and Link Relief/Time Conditions/Guidance Notes
SEC

Disclosure of Paycheck Protection Loan in Form ADV Brochure

4/27/20

Division of Investment Management Coronavirus (COVID-19) Response FAQs - SEC FAQ II.4

N/A

The staff stated that, as a fiduciary under federal law, an adviser must make full and fair disclosure to clients of all material facts relating to the advisory relationship. If the circumstances leading a firm to seek a PPP loan or other type of financial assistance constitute material facts relating to the advisory relationship with clients, it is the staff’s view that the firm should provide disclosure of, for example, the nature, amounts and effects of such assistance. If, for instance, the adviser requires such assistance to pay the salaries of its employees who are primarily responsible for performing advisory functions for clients, it is the staff’s view that the adviser would need to disclose this fact.

In addition, if the firm is experiencing conditions that are reasonably likely to impair its ability to meet contractual commitments to its clients, the adviser may be required to disclose this financial condition in response to Item 18 (Financial Information) of Part 2A of Form ADV (brochure), or as part of Part 2A, Appendix 1 of Form ADV (wrap fee program brochure).

See changes to PPP in H.R.133 - Consolidated Appropriations Act, 2021 (12/27/20); See also: Small Business Administration (SBA) PPP Webpage; SBA/Treasury Department FAQs on PPP loan eligibility and other guidance, including but not limited to:

  • SBA guidance on a borrower’s good faith “necessity certification” that it must take into account its current business activity and ability to access other sources of liquidity sufficient to support its ongoing operations in a manner that is not significantly detrimental to the business;

  • For a borrower that received PPP loans with an original principal amount of less than $2 million (together with its affiliates): New SBA guidance announced in FAQ 46 on May 13, 2020 that such a borrower will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

  • SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns; and

  • For a borrower that received PPP loans with an original principal amount of more than $2 million (together with its affiliates): SBA guidance announced in FAQ 46 on May 13, 2020 that SBA will review borrower’s access to other sources of liquidity under guidance in FAQs 31 and 37. However, if SBA determines the certification was improperly made, and the loan proceeds are then repaid, SBA will not pursue enforcement or referrals to other agencies based on the certification.
No-Action Relief for Item 1.F of Form ADV Part 1A (reporting principal office and place of business) and Section 1.F of Schedule D (reporting each office, other than your principal office and place of business, at which you conduct investment advisory business) 3/16/20 (SEC Staff FAQ updated 4/6/21)

Staff Responses to Questions about IARD and Form ADV

No-action position for reporting temporary teleworking addresses of its employees operating under BCP plan due to COVID-19

An adviser’s employees are temporarily conducting investment advisory business from a temporary location other than their usual place of business (e.g., their homes) as part of the adviser’s business continuity plan due to circumstances related to COVID-19

On April 6, 2021, the SEC added the following: 
For purposes of this FAQ, “temporarily teleworking” includes prolonged plans to telework, provided that the firm maintains a physical office location.

Custody Rule (206(4)-2) - Surprise Exam 3/30/20

Staff Responses to Questions About the Custody Rule - Question IV.7

No-action position related to failure of independent public accountant to complete its surprise exam and submit Form ADV-E to file its certificate of accounting within 120 days after the date chosen by the independent public accountant

45 day extension
  1. Adviser must have reasonably believed that its independent public accountant would complete its surprise examination under the custody rule and submit Form ADV-E to file its certificate of accounting within 120 days after the date chosen by the independent public accountant, but failed to do so due to logistical disruptions related to COVID-19; and

  2. The independent public accountant files the report: (i) as soon as practicable; and (ii) not later than 45 days after the original due date.
Custody Rule (206(4)-2) - Audited Financial Statements for Pooled Vehicles 4/27/20

Staff Responses to Questions About the Custody Rule - Question VI.9

No-action position if an adviser relying on Rule 206(4)-2(b)(4) failed to have the pooled vehicle's audited financial statements distributed in time under certain unforeseeable circumstances
  1. Adviser reasonably believed that the pooled vehicle's audited financial statements would be distributed within 120 days (or 180 days in the case of a fund of funds or a pool investing in a fund of funds) (or 260 days in the case of a “top tier” pooled investment vehicle investing in one or more funds of funds) after the end of its fiscal year; and

  2. “Failed to have them distributed in time under certain unforeseeable circumstances”. 
The staff indicated that this FAQ is responsive to concerns about delays in obtaining audited financial statements under the COVID-19 circumstances
Custody Rule (206(4)-2) - Definition of Custody 3/16/20

Staff Responses to Questions About the Custody Rule - Question II.1

The staff would not consider the adviser to have received client assets at its office location until firm personnel are able to access the mail or deliveries at the office location

Where an adviser’s personnel may be unable to access mail or deliveries at an office location due to the firm’s business continuity plan put in place in response to COVID-19, the staff would not consider the adviser to have received client assets at its office location until firm personnel are able to access the mail or deliveries at the office location

Custody Rule (206(4)-2) - Condition to be held by a Qualified Custodian 4/2/20

Staff Responses to Questions About the Custody Rule - Question VII.4

No-action position related to an adviser not maintaining physical certificates with a qualified custodian

An adviser is not able to place physical certificates with a qualified custodian due to business disruptions related to COVID-19 affecting the vaulting of physical certificates, and these conditions are met:

  1. The physical certificates can only be used to effect a transfer or to otherwise facilitate a change in beneficial ownership of the security with the prior consent of the issuer or holders of the outstanding securities of the issuer;

  2. Ownership of the security is recorded on the books of the issuer or its transfer agent (or person performing similar functions) in the name of the client;

  3. The physical certificates contain a legend restricting transfer;

  4. The physical certificates are appropriately safeguarded by the adviser and can be replaced upon loss or destruction; and

  5. The adviser makes and keeps (in accordance with the terms of Advisers Act Rule 204-2) a record of the custodian’s closure.
EDGAR Filings - Signatures 11/17/20

Electronic Signatures in Regulation S-T Rule 302

Rule amendments permit the use of e-signatures when executing authentication documents in connection with EDGAR filings.

EDGAR Filer Manual includes full requirements including that the process must provide for:

  • Signatory to present a physical, logical, or digital credential that authenticates the signatory’s individual identity;
  • Non-repudiation of the signature; and
  • Signature to be attached, affixed, or otherwise logically associated with the signature page or document being signed; and
  • A timestamp to record the date and time of the signature.
Form ID notarization requirement 3/26/20

Release No. 33-10768

Relief for Form ID Filers and Regulation Crowdfunding and Regulation A Issuers Related to Coronavirus Disease 2019 (COVID-19)

Covered March 26 -July 1, 2020

Provides relief from notarization requirement

SEC will issue codes necessary to file on EDGAR

After July 1, 2020, the EDGAR Business Office will work with filers to continue to accept electronic and remote online notarizations

(a) Filer may upload the manually signed PDF copy of the attachment to the Form ID filing without the notarization provided that it indicates on the face of the signed document that it could not provide the required notarization due to circumstances relating to COVID-19.

(b) The required notarized document must be submitted as correspondence via EDGAR within 90 days of EDGAR codes issuance. If it is not, the Commission staff is authorized to inactivate the filer’s EDGAR codes.

Annual shareholder meetings

Proxy materials

Staff Guidance for Conducting Shareholder Meetings in Light of COVID-19 Concerns

See also: SEC Update on COVID-19 Relief

In circumstances where delays in printing and mailing full sets of proxy materials and challenges in complying with the proxy notice and access rule (Rule 14a-16) are unavoidable due to COVID-19 related difficulties, an issuer may use the notice-only delivery and not meet all aspects of the Rule’s notice and timing requirements

The issuer provides shareholders with proxy materials sufficiently in advance of the meeting to review these materials and exercise their voting rights under state law.

Guidance on changes in date, time, and location of a shareholder meeting apply to annual and special meetings

Similar guidance applies to a meeting held by an investment company in connection with a business combination or other transactions registered on Form N-14

In-person Investment Company Board meetings 6/19/20

Release No. IC-33897 

See also: SEC Update on COVID-19 Relief

Exempt from holding in-person Board meetings

Began March 13, 2020

The period covered was extended through no earlier than December 31, 2020 

The SEC will issue a public notice giving at least two weeks’ notice before terminating the relief

(a) Necessary or appropriate due to COVID-19;

(b) Votes are cast at a meeting in which all participating directors can hear each other simultaneously during the meeting; and

(c) The Board, including a majority of the independent directors, ratifies the action at the next in-person meeting.

Superseded March 25 Order, Release No. IC-33824, with respect to the In-person Board Relief Only

International mailing 6/24/20

Staff Statement Regarding Temporary International Mail Service Suspensions to Certain Jurisdictions Related to the COVID-19 Pandemic

See also: SEC Update on COVID-19 Relief

The relief will expire when the respective jurisdiction resumes mail delivery

(a) Notify SEC staff via email at IM-EmergencyRelief@sec.gov (for IM) or tradingandmarkets@sec.gov (for T&M);

(b) Prominently publish the notice on its website;

(c) Use “reasonable best efforts” to deliver the documents electronically;

(d) Maintain records of complying with these steps; and

(e) Monitor the postal service websites regularly for updates and mails the document within seven days of service resuming if it was unable to deliver the mailing electronically or the client requests a paper copy.

Mailings covered by this relief include:

  • Annual and semi-annual reports to shareholders
  • Prospectuses and prospectus supplements
  • Form ADV brochures (or summary of material changes) and brochure supplements
  • Form CRS
  • Reg Best Interest written disclosures
  • Written confirmations and alternative periodic reporting

Written statements with respect to free credit balances

Short-term funding (borrowing and lending) for open-end funds and insurance company separate accounts 3/23/20

Release No. IC-33821

Order Under Sections 6(c), 12(d)(1)(J), 17(b), 17(d) and 38(a) of the Investment Company Act of 1940 and Rule 17d-1 Thereunder Granting Exemptions from Specified Provisions of the Investment Company Act and Certain Rules Thereunder

See also: SEC Update on COVID-19 Relief

Began March 23, 2020 (the SEC will issue a public notice giving at least two weeks’ notice before expiry)

Four sets of exemptions:

Borrowing from Affiliated Persons: Can borrow money from certain affiliates, other than RICs, and can make collateralized loans to funds and separate accounts.

The fund must e-mail SEC staff at IM-EmergencyRelief@sec.gov prior to relying on the relief stating that it is relying on the order.

Borrowing from Affiliated Persons:
The fund’s board must make certain findings, included that the borrowing will be used to satisfy shareholder redemptions.

Covered March 23, 2020 – at least June 30, 2020 (a future SEC notice will specify the termination date)

Interfund Lending for Funds with Existing Interfund Lending Orders: A fund that has an order that permits an interfund lending and borrowing facility (IFL) is permitted to:

  • Make loans through the IFL in an aggregate amount that does not exceed 25% of its current net assets, even if there is a lower limit in the fund’s IFL order;
  • Borrow (if permitted under the IFL order) or make loans through the IFL for any term notwithstanding conditions in the IFL order that limit the terms of loans, provided that certain requirements are satisfied; and
  • Rely on relief related to fundamental investment policies.

Interfund Lending for Funds with Existing Interfund Lending Orders:

(a) Any loan is otherwise made in accordance with the terms and conditions of the existing IFL order; and

(b) Prior to relying on the relief, the fund must disclose on its public website that it is relying on an SEC exemptive order that modifies the terms of the existing IFL order to permit additional flexibility to or provide or obtain short-term funding from its IFL.

Interfund Lending Arrangements for Funds without Existing Interfund Lending Orders:
May establish and participate in an IFL as described in any IFL order issued by the SEC order within the past 12 months

Interfund Lending Arrangements for Funds without Existing Interfund Lending Orders:
(a) Satisfies the terms and conditions of the recent IFL order, except for certain requirements; and

(b) Prior to relying on the relief, the fund must disclose on its public website that it is relying on the order to use an IFL. If the fund makes certain filings, it must update its disclosure regarding its participation in the IFL.

Ability to Deviate from a Fundamental Policy:
A fund is permitted to enter into a lending or borrowing transaction that deviates from a fundamental policy without obtaining shareholder approval

Ability to Deviate from a Fundamental Policy:
(a) Fund board reasonably determines that the lending or borrowing is in the best interest of the fund and its shareholders; and

(b) Fund files a prospectus supplement and includes a statement on its public website.

No-Action Relief for Money Market Funds 3/19/20

Investment Company Institute

See also: SEC Update on COVID-19 Relief

In effect until notice provided by SEC staff

Permits affiliated person of a money market fund that is subject to certain bank regulations to purchase securities from the fund

(a) The purchase price of the purchased security would be its fair market value as determined by a reliable third-party pricing service;

(b) The purchases satisfy the conditions of Rule 17a-9 under the Act except to the extent that the terms of such purchases would otherwise conflict with (i) applicable banking regulations or (ii) the exemption issued by the Board of Governors of the Federal Reserve System on March 17, 2020, defining “covered transaction” for purposes of section 23A of the Federal Reserve Act to not include the purchase of assets from an affiliated money market fund; and

(c) The Fund timely files Form N-CR reporting such transaction under Part C and reports in Part H that the purchase was conducted in reliance on this letter.

No-Action Relief for Purchases of Debt Securities by Affiliated Persons 3/26/20

Investment Company Institute

See also: SEC Update on COVID-19 Relief

In effect until notice provided by SEC staff

Permits affiliated persons that are not registered investment companies to purchase debt securities from a fund

(a) The purchase price is paid in cash;

(b) The price of the purchased debt security is its fair market value under Section 2(a)(41) of the Investment Company Act, provided that this price is not materially different from the fair market value of the security indicated by a reliable third-party pricing service;

(c) In the event that the purchaser sells the purchased security for a higher price than the purchase price paid to the fund, the purchaser shall promptly pay to the fund the amount by which the subsequent sale price exceeds the purchase price paid to the fund. If the purchaser is subject to Sections 23A and 23B of the Federal Reserve Act, this condition does not apply to the extent that it would otherwise conflict with (i) applicable banking regulations or (ii) any applicable exemption from such regulations issued by the Board of Governors of the Federal Reserve System; and

(d) Within one business day of the purchase of the security, the fund publicly posts on its website and informs the Staff via email to IM-EmergencyRelief@sec.gov stating the name of the fund, the name of the purchaser, the security(s) purchased (including a legal identifier if available), the amount purchased, and the total price paid.

NFA
Branch Offices 3/13/20

Notice I-20-12

Coronavirus Update—NFA Branch Office Requirements

The NFA will not pursue a disciplinary action against a member that permits its associated persons to temporarily work from locations not listed as a branch office and without a branch manager

(a) Implement alternative supervisory procedures to adequately supervise APs and meet member’s recordkeeping requirements;

(b) Document supervisory procedures; and

(c) APs are expected to return to the member’s main office or listed branch location once the firm is no longer operating under contingencies pursuant to its business continuity plan.