ETFs

For Regulators, It’s All About Timing

By Adriana Z. Robertson November 13, 2023 by renholding

Regulators have a hard job. Novel financial products are developed and launched all the time. At first, regulators have very little information about these products; it makes sense to let the market develop a bit before taking action. But waiting …

How to Restore Shareholder Agency With Pass-Through Voting

By Georgia Stewart August 11, 2023 by renholding

Sign up for an investment account, and you will likely be presented with a dizzying range of investment products. The industry caters to investors with different risk appetites, savings pots, time horizons, ESG outlooks, religious commitments, and more. In some …

SEC Chair Gensler Speaks to Investor Advisory Committee

By Gary Gensler June 23, 2023 by renholding

Good morning. I’m pleased to speak with the Investor Advisory Committee. As is customary, I’d like to note that my views are my own as Chair of the Securities and Exchange Commission, and I am not speaking on behalf of

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Do Bonds Affect Equity Monitoring?

By Todd A. Gormley and Manish Jha April 12, 2023 by renholding

As institutional investors grow in size and influence, questions arise as to whether they are effective stewards for equity investors. That the three mutual fund families with the most total net assets each holds equity positions in around 5,000 U.S. …

Using ETFs to Conceal Insider Trading

By Elza Eglīte, Dans Štaermans, Vinay Patel and Tālis Putniņš March 1, 2023 by renholding

On August 17, 2021, the Securities and Exchange Commission (SEC) filed the first lawsuit charging insider trading in an economically related stock. A former employee of Medivation (MDVN, a mid-sized biopharmaceutical company) was charged for trading on confidential information about …

What the Rise of Indexing Means for Corporate Governance

By Alon Brav, Andrey Malenko and Nadya Malenko December 12, 2022 by renholding

The amount of assets that passive (index) funds have under management has grown significantly in recent decades. Domestic passive funds and ETFs now manage more than half of all assets under management (AUM) of domestic equity mutual funds and ETFs, …

SEC Investment Management Chief Speaks on Regulation Outside the U.S.

By William A. Birdthistle November 15, 2022 by renholding

Good morning.  Thank you, Mark, for your kind invitation to speak with you all today – and congratulations on the 25^th anniversary of this conference.  I am deeply honored to be giving the Scott Friestad Memorial Keynote address, particularly

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ISS Discusses Increase in Fund Flows for 2021

By Christopher Davis January 4, 2022 by renholding

Back to normal doesn’t mean what it used to. Following a year like no other, demand came roaring out the gate in 2021. While the pace of new demand has slowed somewhat in recent months amidst concern of new COVID

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Common Ownership: Solutions in Search of a Problem

By Keith Klovers and Douglas H. Ginsburg August 25, 2021 by renholding

Mutual funds and exchange-traded funds are the cornerstone of many Americans’ investment and retirement plans.  (For simplicity, we refer to all these investments as “mutual funds.”)  Collectively, investment companies such as BlackRock, Fidelity, State Street, and Vanguard hold more than …

Morrison & Foerster Discusses U.S. Treasury Sanctions on Chinese Military Companies

By John Smith, Chen Zhu, Jiang Liu, John Carlin and Kristofer Readling January 20, 2021 by Nisha Chandra

On December 28, 2020, the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) issued five new frequently asked questions (“FAQs”) that clarify the scope of Executive Order (“E.O.”) 13959, the basis for …

Passive Exit

By Joshua Mitts January 6, 2021 by renholding

Economist Albert O. Hirschman (1970) classically set out the two alternatives facing dissatisfied members of an organization: They can voice displeasure or exit for greener pastures. Hirschman’s model has long explained the tradeoff facing shareholders of a poorly governed firm: …

The Push Towards Corporate Guidelines

By Asaf Eckstein November 10, 2020 by renholding

In recent years, there has been a debate in the corporate world about the capabilities and incentives of institutional investors to invest in corporate stewardship – defined as monitoring, voting, and engagement – of their portfolio companies. The main focus …

SEC Officials Issue Joint Statement on Complex Financial Products and Retail Investors

By Jay Clayton, Dalia Blass, William Hinman and Brett Redfearn October 29, 2020 by renholding

Retail investors have a wide array of investment options available to them, including an increasing number and type of investment products that are more complex than conventional stock and bond investments.[1] These complex products may be exchange-traded or sold

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The Conflict Between BlackRock’s Shareholder Activism and ERISA’s Fiduciary Duties

By Bernard S. Sharfman September 29, 2020 by renholding

BlackRock, an investment adviser that primarily markets and manages index funds to millions of passive investors around the globe, has become a leading shareholder activist. Based on the extremely large amount of assets it has under management ($7.3 trillion), its …

Exchange-Traded Confusion: How Industry Practices Undermine Product Comparisons in Exchange Traded Funds

By Ryan Clements September 22, 2020 by renholding

Despite their popularity[1] and growing importance in U.S. capital markets,[2] exchange traded funds (ETFs) are incredibly difficult (at times even impossible) to accurately compare side-by-side.  In a new article, I show how a variety of discretionary industry …

The Politics of Institutional Shareholder Voting: Transparency Before Reform

By Isabel Verkes August 13, 2020 by renholding

On July 22, the SEC finalized a sweeping rule change to enhance the transparency around the role of proxy advisers. This follows an earlier proposal to reform the process for including shareholder proposals in a company’s proxy statement.^[1] These …

Are ETFs Making Some Asset Managers Too Interconnected to Fail?

By Ryan Clements April 7, 2020 by renholding

Exchange traded funds (ETFs) sit at the center of the COVID-19 crisis selloff.[1]  This isn’t surprising, since ETFs are a low-cost highly liquid vehicle for trading entire sectors, asset classes, and even global economies.  Yet the use of ETFs …

How the SEC Modernized Regulation of Exchange-Traded Funds and the Task Ahead

By Georges Ugeux February 6, 2020 by renholding

On September 26, 2019, the SEC released the much-anticipated new rule and form amendments designed to modernize the regulation of Exchange-Traded Funds (ETFs).[1] Rule 6c-11 under the Investment Company Act permits ETFs that satisfy certain conditions to operate without …

SEC’s Director of Investment Management Division Talks Securities Law Developments

By Dalia Blass December 4, 2019 by renholding

Good Morning. Thank you Susan [Olson], and thank you all for the opportunity to come back and update you on the Division’s work.[1]

I recently came across a September Compliance Minute Podcast, titled: Where Have you Gone, Dalia Blass?

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SEC Commissioners Peirce and Roisman on Proposed Rules for Funds’ Use of Derivatives

By Hester M. Peirce and Elad L. Roisman November 27, 2019 by renholding

We thank the staff of the Division of Investment Management (the “Division”) for undertaking the challenging task of devising and presenting for Commission vote a proposal to modernize the way we regulate the use of derivatives in investment funds’ portfolios.

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