SEC Rule Amendments from Last Week

Last week, the Securities and Exchange Commission announced the approval to revise regulations under the Privacy Act and enhancements to the Investment Company Act “Names Rule”.

The Privacy Act serves as the principal law governing the handling of personal and sensitive information in the federal government. The approved revisions will aim to streamline the Commission’s Privacy Act, as they revise procedural and fee provisions and eliminate unnecessary provisions. Additionally, the amendments will allow for electronic methods to verify one’s identity and submit Privacy Act requests.

The Commission noted that the revisions to the Privacy Act is seen as an overhaul of the existing Privacy Act, which was last updated in 2011. The revisions to the Privacy Act are aimed at codifying current practices for processing requests made by the public. SEC Chairman Gary Gensler, believes that “these amendments will provide more clarity on how the public can access their records maintained by the Commission and request amendments.”

The adopted amendments to the Investment Company Act “Names Rule” are aimed to modernize and enhance the Names Rule and other names-related regulatory requirements. Currently, the Names Rule requires registered investment companies whose names imply a particular type of investment to adopt a policy to invest at least 80 percent of their assets in those investments (an “80 percent investment policy”). The amendments to the Names Rule will enhance the rule’s protections by requiring more funds to adopt an 80 percent investment policy, including funds with names suggesting a focus in investments with particular characteristics, such as a thematic investment focus rather than simply the asset type. The amendments will also require a fund to review its portfolio on a quarterly basis to make sure that it meets the 80 percent threshold. Additionally, the amendments will include specific time frames for funds to return to compliance if it breaches the 80 percent threshold.

The amendments will include new prospectus disclosure requirements for terminology in fund names. Any terms used in the fund’s name that suggest a specific investment focus must also be consistent with similar terms in plain English or established industry use. The amendments will also include additional reporting and recordkeeping requirements for funds.

The Commission believes that the enhancements to the Names Rule will assist in meeting its investor protection goals and to address developments in the fund industry 20 years since the rule was originally adopted. SEC Chairman Gary Gensler, believes that the “final rules will help ensure that a fund’s portfolio aligns with a fund’s name.”

SEC³ can assist investment advisers with the implementation of the Privacy Act and the amendments to the Investment Company Act Name Rule. SEC³ works with clients to customize firm’s policies and procedures to address the amendments. Additionally, SEC³ provides guidance and recommendation on how to monitor fund requirements in order to address regulatory requirements.

For more information, please contact us at, at (212) 706-4029 x 229, through LinkedIn or visit us on our website at

SEC Rule Amendments from Last Week