Last week the SEC issued a concept release announcing that it plans to review the use of derivatives by registered investment companies and other companies that have elected to be treated as business development companies under the Investment Company Act of 1940. The SEC is requesting comments to determine the risks, benefits and cost issues related to the use of derivatives by these funds, including the potential implications for fund leverage, diversification, exposure to certain securities-related issuers, portfolio concentration and valuations. Of particular interest for the SEC is the risk management employed by the funds due to the complexity and volume of derivatives, including prospectus risk disclosures and board oversight.

View SEC concept release on use of derivatives

FrontLine Compliance, LLC is a regulatory compliance consulting firm of former high-level regulatory insiders offering customized services to investment advisers, broker-dealers, hedge funds, private equity firms, investment companies, and insurance company affiliates. Staffed by former SEC and FINRA regulators, and chief compliance officers, FrontLine Compliance provides the kind of industry knowledge, experience and expertise on regulatory issues only available from well-seasoned insiders. For more information about the firm, please visit www.frontlinecompliance.com.

FrontLine Compliance, LLC
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www.frontlinecompliance.com
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