Things Will Still Get Done…Just More Slowly
Welcome to this week's News Brief, a round up of some of Ignites' top stories of the past week.
The government shutdown could lead to a wave of precedent-setting funds that will go live without any Securities and Exchange Commission scrutiny, Ignites' David Isenberg reports. New fund registrations will become automatically effective until the SEC "returns to open and operational status," the commission's Division of Investment Management said last week. Typically, a new fund's registration statement becomes effective 75 days after its filed, and certain updates for existing funds go live after 60 days.
"In the case that you had a controversial product or didn't meet the disclosure requirements of the agency, that back-and-forth that you have with the agency is effectively over and you could just take it effective immediately," an investor advocate told Ignites.
The looming shutdown could have also pushed the SEC's move last week to approve Dimensional Fund Advisors' application to offer multi-share-class funds, industry lawyers told Ignites. However, as long as the government is on pause, it's not clear if or when any other shops will get approval for the structure, Daniel Gil reports. Scores of other companies await permission to launch ETF shares of their existing mutual funds or vice versa. "I expect they'll get things done [during the shutdown]," a lawyer told Ignites. "It'll just be significantly slower."
American Airlines won't have to pay any money to settle a lawsuit over environmental, social and governance investing in its 401(k) plan – but it will have to make changes to its plan menu, a judge ruled last week. The airline was sued in 2023 for allegedly including pricy, underperforming ESG investments in its retirement plan. The judge had ruled in January that American Airlines retirement plan fiduciaries violated their duty of loyalty by basing their selection of the index funds, in part, on BlackRock's proxy-voting record. The plan sponsor has to make changes related to activities "motivated or directed towards non-pecuniary ends," the judge said last week.
Standing in the Way?
Cerulli Associates expects retail assets in private markets to reach $3.7 trillion by early 2030, up from $1.7 trillion now, Sean Teehan reports. Contributing to this growth is the rise in semiliquid products, like interval funds, an investment executive said. However, some challenges remain.
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