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ARTICLE · 26 MAY 2020

SEC Proposes Valuation Rule For Registered Funds

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On April 21, 2020, the US Securities and Exchange Commission ("SEC") proposed new rule 2a-5 under the Investment Company Act of 1940, as amended (the "Investment Company Act")

United StatesCorporate/Commercial Law
Peter McCamman
Peter McCamman
Adam Kanter
Adam Kanter
Leslie Cruz
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Francis R. Monaco
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On April 21, 2020, the US Securities and Exchange Commission ("SEC") proposed new rule 2a-5 under the Investment Company Act of 1940, as amended (the "Investment Company Act"), which is intended to address valuation practices and the role of the board of directors with respect to the fair value of the investments of an investment company or business development company registered under the Investment Company Act (each, a "fund").1 Specifically, proposed rule 2a-5 would establish requirements in connection with the determination of fair value in good faith of fund investments for purposes of Section 2(a)(41) of the Investment Company Act, as well as permit a fund's board of directors to assign this fair value determination to the fund's investment adviser, subject to board oversight and certain other conditions.2 Proposed rule 2a-5 also provides a proposed definition of a "readily available" market quotation for purposes of the Investment Company Act.

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