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SEC Proposes New Framework for Fund Valuation Practices  

Author:  Amy R. Doberman.; Phillip Gillespie.; Seth Davis.

Source: Volume 53, Number 21, December 1 2020 , pp.251-257(7)

Review of Securities & Commodities Regulation

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The SEC has issued a proposed 1940 Act rule setting forth a new framework for funds’ fair value determinations when a market value for a portfolio holding is not readily available. The authors discuss the proposed rule, focusing on six requirements for fair value determinations. They then turn to the definition of “readily available” market quotations and delegation of fair value determinations to fund advisers. They close with notes on rescission of prior SEC and staff guidance and the one-year transition period for the new rule.

Keywords: Rule 2a-5; Fair Value Determinations; “Readily Available Market Quotations”; Delegation to Investment Advisers

Affiliations:  1: WilmerHale; 2: WilmerHale; 3: WilmerHale.

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