COVID-19 and U.S. Regulation Update

In response to the national challenge coronavirus (COVID-19) has caused businesses in 2020, regulators must uphold their position to maintain fair and orderly markets. The Compliance and Regulatory Consulting practice provides outlines regulatory news related to COVID-19 from the first quarter of 2020. 

For more information about Duff & Phelps’ response to COVID-19, view our coronavirus resource center.

SEC Provides Additional Temporary Regulatory Relief and Assistance to Market Participants Affected by COVID-19

The SEC announced on March 26, 2020 that in response to COVID-19 it is providing additional temporary regulatory relief to market participants. 

“The first set of relief seeks to address potential issues filers may have in securing the notarization required to gain access to make filings on the EDGAR system. The Commission has adopted a temporary final rule that provides relief from the notarization requirement from March 26, 2020 through July 1, 2020, subject to certain conditions. Among those conditions are that the filer indicates on its manually signed Form ID that it could not provide the required notarization due to circumstances relating to COVID-19, and that the filer submits a PDF copy of the notarized manually signed document within 90 days of obtaining an EDGAR account.”

“To address potential compliance issues for Regulation A and Regulation Crowdfunding issuers, the Commission adopted temporary final rules that extend the filing deadlines for specified reports and forms that companies must file pursuant to those regulations. The rules provide, subject to certain conditions, affected companies with an additional 45 days to file certain disclosure reports that would otherwise have been due between March 26, 2020 and May 31, 2020. Among other conditions, a company relying on the temporary final rules must promptly disclose to its investors such reliance and when a company files the required report or form, it must disclose that it is relying on the temporary final rules and state the reasons why, in good faith, it could not file such report or form on a timely basis.”1

Read more here.

Coronavirus (COVID-19) Update – Regulatory Relief for IBs

On March 26, 2020 the NFA announced the “NFA Financial Requirements Section 5 and CFTC Regulation 1.10 require each independent introducing broker (IB) member to file a certified financial report as of the close of its fiscal year-end within 90 days after the close of its fiscal year, or within 60 days for IB members that are also registered with the SEC as securities brokers or dealers. IB members are also required to file financial reports semi-annually, quarterly or monthly, within 17 business days of the date for which the report is prepared. Independent IB members generally meet their CFTC requirements by complying with NFA's requirements.”

“Due to COVID-19, a number of independent IB members have inquired whether the NFA would extend the due date for upcoming filings. The NFA understands that the current situation may make it difficult for independent IB members to file their required financial filings within the specified time periods. Therefore, the NFA is providing all independent IB members a 30 calendar day extension for filing certified financial reports for fiscal years ending in December 2019 through March 2020. The NFA is also providing all independent IB members with a 10 business day extension for filing the semi-annual, quarterly or monthly reports for reporting periods ending February through April 2020. This relief is automatic. Independent IB members should NOT file a request for this relief and are NOT required to notify the NFA if they intend to avail themselves of the relief.”2

Read more here.

SEC Extends Conditional Exemptions from Reporting and Proxy Delivery Requirements for Public Companies, Funds and Investment Advisers Affected by COVID-19

The SEC announced on March 25, 2020 that it is “extending the filing periods covered by its previously enacted conditional reporting relief for certain public company filing obligations under the federal securities laws, and that it is also extending regulatory relief previously provided to funds and investment advisers whose operations may be affected by COVID-19. In addition, the SEC’s Division of Corporation Finance issued its current views regarding disclosure considerations and other securities law matters related to COVID-19.”

“To address potential compliance issues, the Commission issued an order that, subject to certain conditions, provides public companies with a 45-day extension to file certain disclosure reports that would otherwise have been due between March 1, 2020 and July 1, 2020. The Commission may provide extensions to the time period for the relief, with any additional conditions it deems appropriate, or provide additional relief as circumstances warrant. Companies and their representatives are encouraged to contact SEC staff with questions or matters of particular concern.”3

Read more here.

COVID-19 Update – Regulatory Relief for CPOs and CTAs

In a notice to members on March 23, 2020 the NFA issued a regulatory relief update in response to COVID-19. “The NFA Compliance Rule 2-46 requires each CPO member to file NFA Form PQR on a quarterly basis with for each pool that it operates within 60 days after the quarters ending in March, June and September and within 90 days after the quarter ending in December. Under these requirements, CPO members are required to file the Form PQR for the quarter ended December 31, 2019 by March 30, 2020 and for the quarter ended March 31, 2020 by May 30, 2020. The NFA is extending the due date for the December 31, 2019 PQR (due on March 30) until May 15, 2020 and the due date for the March 31, 2020 PQR (due on May 30, 2020) until July 15, 2020.”

“NFA Compliance Rule 2-13 requires CPO members to file pool annual reports and provide a copy to participants in accordance with the timing requirements set forth in CFTC Regulations 4.7(b) and 4.22(c). CPO members that are in compliance with the terms of the CFTC's relief providing extended due dates for any of these reports due on or before April 30, 2020 will be deemed to be in compliance with NFA's related requirements.”4

Read more here.

SEC Staff Provides Guidance to Promote Continued Shareholder Engagement, Including at Virtual Annual Meetings, for Companies and Funds Affected by COVID-19

The SEC published guidance on March 13, 2020 to assist public companies, investment companies, shareholders and other market participants affected by COVID-19 with their upcoming annual shareholder meetings. “The guidance is designed to facilitate the ability of companies to hold these important meetings, including through the use of technology, and engage with shareholders while complying with the federal securities laws.”

“Many public companies and investment companies are required to hold annual meetings of security holders, with the federal securities laws requiring the delivery of proxy materials to the voting shareholders. The spread of COVID-19 has affected the ability to hold these in-person meetings. In light of these difficulties, the guidance provides regulatory flexibility to companies and permits them to use new technologies, such as “virtual” shareholder meetings, so there is no need for in-person shareholder attendance and ensures that shareholders and other market participants are informed of any changes.”

“Under the guidance, the affected parties can announce in SEC filings the changes in the meeting date or location or the use of “virtual” meetings without incurring the cost of additional physical mailing of proxy materials. The guidance also encourages companies to provide shareholder proponents with alternative means, such as by telephone, to present their proposals at the annual meetings.”5

Read more here.


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