Monthly LRA Update: March 2022

REGULATORY DEVELOPMENTS

SEC Proposes Cybersecurity Rules for Investment Advisers

Noting concerns that it has encountered during examinations of advisers and funds, the SEC is proposing rules targeted at improving cybersecurity programs for registered investment advisers and investment companies.

The proposed rules, released February 9, include requirements to report significant cybersecurity incidents to the SEC and to include information regarding cybersecurity risks and incidents in Form ADV (for advisers) and other specified forms (for funds).

The proposed rules will be open for public comment for 30 days after publication in the Federal Register or until April 11 (whichever is later).

OTHER DEVELOPMENTS

Russian Economic Sanctions Imposed

The U.S. Department of the Treasury’s Office of Foreign Asset Control (OFAC) has released a directive for economic sanctions against Russian issuers following Russia’s invasion of Ukraine. There have been a number of directives targeted towards Russian government-related entities, Russian government officials, and Russian businesses (most notably financial institutions). The sanctions prohibit any transaction with the entities listed in the directives.

Index providers such as MSCI, JPMorgan, and ICE are in the process of reviewing the inclusion of Russian issuers in their emerging market indices, noting that Russian issuers may not meet liquidity requirements following the sanctions.

We have observed that a small number of Eurobond positions within our clients’ separate account portfolios are impacted by the sanctions.