April 3, 2019
If a parent pays others to get their child into, a good college, it is criminal. However, if the closed-end fund and BDC industry pay to get laws passed so they can make more money, it is somehow OK.
If a company makes payments or takes actions to influence the decisions of a foreign government, it is criminal. If a U.S. entities take these same actions at home, it is OK.
It is a sad state of affairs when industry can pay to push its agenda.
I have a few concerns about this release that I would like to raise.
BDCs and CEF are going to be given WKSI status and other benefits reserved for large corporations. The rationale for providing this relief to large companies is that they have sufficient coverage from analysts and other market participants. However, BDCs and CEFs do not have this same coverage. In fact they are predominantly held by retail investors (where operating companies are mostly held by institutional investors). If anything big BDCs and CEFs should be subject to additional scrutiny, not less because that is where the money is.
Forward incorporation should be granted to all issuers. There is no reason to give big entities a break that small entities cannot take advantage of.
BDCs, CEFs, mutual funds and EFTs should be subject to the same regulatory regime. There should always be a current document where an investor can see a funds strategy, risks, performance, and costs each year. Also, if there are material changes to a fund, the investor should be provided a notice of that change. It is not enough to permit the filing on an 8-K. That is not appropriate notice to an investor that the fund is behaving different than when they purchased it.
All funds need to do a better job of selecting broad-based securities market indices. An index is broad-based if it cover a large swathe on the investment market (e.g., equity or debt U.S. global, or foreign). It should not be:
#9702 industry specific
#9702 investment type specific (other than broad debt and equity)
#9702 limited by geography (other that U.S. or International)
#9702 strategy specific (growth, value, ESG, etc.)
#9702 credit quality specific
It should be a well known index so that investors can compare their fund to a known quantity. Other indices should be allowed to be shown in addition to a broad-based index.
Thank you for your time... and please remember to keep your eyes focused on the investor.