When the Dodd-Frank Act passed in 2010, an urgency existed to enact its many provisions. A decade later, 11 of its rules remain unfinished. Will a change in leadership at the SEC get the law across the finish line?
The Office of the Chief Accountant of the SEC's Division of Investment Management periodically issues "Dear Chief Financial Officer" letters to help registered investment companies.
Tuesday, June 1, 2021
On April 9, 2021, the SEC’s Division of Examinations (formerly the Office of Compliance Inspections and Examinations) issued a risk alert highlighting the staff’s observations from recent examinations of investment advisers, registered investment companies and private funds offering
environmental, social and governance (ESG) products and services. In light of the increased investor demand for ESG products and services and the variability of ESG definitions and terms, the risk alert elaborates on the focus of future examinations, as well as on deficiencies and best practices observed in past examinations.
The staff stated that future examinations of firms engaging in ESG investing will focus on, among other things, the following:
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In a sign of the times, the SEC’s Office of Compliance Inspections and Examinations is now including document requests relating to ESG, SRI, Impact, responsible, sustainable, green, ethical, impact or good governance investments recommended to advisory clients. A review of OCIE’s most recent document request suggests that advisers should take a moment to revisit their preservation of all due diligence materials, including meeting notes, related to ESG investments. Advisers can anticipate enquiry into the adviser’s “internal definition of any terms that related to ESG and/or SRI”, each factor utilized, and written policies and procedures relating to the application of such factors. OCIE’s inquiry will include adherence to the UN Principles for Responsible Investment and written documentation of the adviser’s consideration of these principles in its investment processes. OCIE will request also a 15-step table o
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