Coronavirus Response for Financial Services InstitutionsMarch 16, 2020
|To help our clients and the public navigate this challenging time, we are presenting this summary of recent regulatory, legislative, and legal developments affecting the financial services industry during the Coronavirus pandemic.
We will continue to keep you updated as events develop.
|The Fed, FDIC, OCC, NCUA, CFPB and Conference of State Bank Supervisors issued a statement “encourag[ing] financial institutions to meet the financial needs of customers and members affected by the coronavirus” and noting that “[p]rudent efforts that are consistent with safe and sound lending practices should not be subject to examiner criticism.”
Acknowledging the “potential impact of the coronavirus on the customers, members and operations of many financial institutions,” the agencies pledge to “provide appropriate regulatory assistance to affected institutions subject to their supervision” and “work with affected financial institutions in scheduling examinations or inspections to minimize disruption and burden.” In addition, the agencies also “will expedite, as appropriate, any request to provide more convenient availability of services in affected communities” in “cases in which operational challenges persist.”
The FDIC issued a statement “encourag[ing] [firms] to take prudent steps to assist customers and communities affected” by the coronavirus disease 2019 (COVID-19) and emphasizing that “such efforts serve the long-term interests of communities and the financial system.” These efforts include:
In addition, the FDIC pledges to “work with financial institutions that may experience challenges fulfilling their regulatory reporting responsibilities and will act expeditiously if institutions need to temporarily close facilities.”
The OCC issued a bulletin substantially similar to the FDIC’s statement “encourag[ing] banks to take steps to meet the financial services needs of customers adversely affected by COVID-19-related issues” and pledging that the agency will “provide appropriate regulatory assistance, as warranted, to banks” affected by the outbreak. Similar to the FDIC’s statement, the bulletin outlines potential actions for banks to assist customers affected by COVID-19, which include permitting firms to “ease terms for new loans to affected borrowers, consistent with prudent banking practices.”
The Fed issued a Supervision and Regulation (SR) letter “encourag[ing] [financial institutions] to review” a 2013 SR letter, which:
The staff of the SEC’s Divisions of Corporation Finance and Investment Management issued guidance addressing compliance with the “federal proxy rules for upcoming annual meetings in light of health, transportation, and other logistical issues raised by the spread of . . . COVID-19.” SEC staff will “take the position that an issuer that has already mailed and filed its definitive proxy materials can notify shareholders of a change in the date, time, or location of its annual meeting without mailing additional soliciting materials or amending its proxy materials” under certain conditions.
With respect to holding “virtual” shareholder meetings, the staff “expects” an issuer to:
SEC – Registered Investment Companies
The SEC issued two orders providing temporary exemptive relief to certain registered investment companies, other funds and investment advisers impacted by COVID-19 with respect to “in-person board meetings and certain filing and delivery requirements.” The first order, relating to certain Investment Company Act requirements, temporarily exempts, under certain specified conditions: (1) registered management investment companies, business development companies (BDCs), and “any investment adviser or principal underwriter of such companies” from requirements that certain votes of their board of directors be cast in person; and (2) close-end funds and BDCs from the requirement to file Form N-23C-2 at least 30 days prior to “calling or redeeming securities.” This relief is limited to the period of March 13, 2020 to June 15, 2020.
The order also provides relief from certain filing and transmittal obligations for which the original due date is on or after March 13, 2020, but on or prior to April 30, 2020. Specifically, the order temporarily provides relief, under certain conditions, for registered management investment companies and unit investment trusts from: (1) Form N-CEN and Form N-PORT filing deadlines; and (2) “annual and semi-annual report transmittal deadlines.” The second order, regarding requirements under the Investment Advisers Act, provides relief from certain filing and delivery obligations for which the original due date is on or after March 13, 2020, but on or prior to April 30, 2020. In particular, the order provides temporary exemptive relief, subject to certain conditions, for: (1) registered investment advisers and exempt reporting advisers from filing an amendment to Form ADV or reports on Form ADV part 1A, respectively; (2) registered investment advisers from requirements to “deliver amended brochures, brochure supplements or summary of material changes to clients where the disclosures are not able to be timely delivered because of circumstances related to coronavirus”; and (3) private fund advisers from Form PF filing requirements. In addition, the Commission takes the position that it would not “provide a basis for a Commission enforcement action” if a registered fund “does not deliver to investors the current prospectus of the registered fund where the prospectus is not able to be timely delivered because of circumstances related to coronavirus,” subject to certain conditions.