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SEC Proposes Streamlining Financial Information for Fund Acquisitions

The SEC has proposed modernizing the financial information for acquisitions and dispositions, including the acquisitions of investment companies. Proposed changes to Regulation S-X and Form N-14 include eliminating certain pro forma financial statement requirements and changing the “significant subsidiary” test. The proposal also includes specific reporting rules for investment companies rather than relying on financial statement requirements generally applicable to the acquisition of operating companies.

Revising the investment company acquisition process should facilitate legitimate transactions while ensuring that shareholders receive relevant, rather than voluminous, financial information.

SEC Staff Provides Guidance for Adviser M&A and Reorg Transactions


The staff of the SEC’s Investment Management Division has provided guidance clarifying that, absent a change in control, an internal reorganization of an investment adviser does not require a new registration.  The staff opines that an unregistered entity that acquires the assets of an affiliate RIA need only file a succession by amendment, so long as the same parent company continues to control both entities.  The staff offered similar guidance with respect changes in jurisdiction and form of organization.  However, a change in control would require the filing of a succession by application.   In either event, the registrant must file within 30 days of the subject event.

OUR TAKE: With expected consolidation coming in the asset management sector, the staff offers practical regulatory guidance that will facilitate transactions.