Keynote Address: ALI CLE 2020 Conference on Life Insurance Company Products
Nov. 10, 2020
Good morning and thank you Stephen Roth for the kind introduction and the warm welcome. I would like to start by wishing you, your families and colleagues good health during these difficult and often unnerving times. This is my fourth year that I have been invited to speak at this conference, although now in a virtual setting. I appreciate the opportunity to connect and engage with you, especially at a time when constructive dialogue and exchange of ideas are perhaps more important than ever.
Today, I would like to reflect on the work of the Division and its accomplishments this year. As my remarks today will make clear, nothing stops the incredible, talented staff in the Division of Investment Management.
While the staff made significant progress on numerous important projects and initiatives since last fall, we also faced new challenges and risks posed by a pandemic that continues to disrupt our lives. I will begin by talking about those challenges and the Division’s response to the COVID-19 market disruptions. Then I will focus on three areas that have guided our work throughout my tenure: first, our efforts to modernize regulations and facilitate healthy innovation; second, the significant headway we made on our investor experience initiative; and third, our efforts to be more efficient regulators of the asset management industry.
Before I begin, I want to remind you that I am speaking today only for myself and not for the Commission, the Commissioners, or the staff.
COVID-19 Response, Industry Engagement and Data Driven Policymaking
It is almost impossible to have a discussion about the past year without addressing the COVID-19 pandemic and resulting market disruptions. As each one of you is aware from your own personal experiences, the pandemic has caused disruptions to how businesses function, impacting the operational and strategic plans of companies and regulators alike. I am incredibly proud of how the Division’s staff responded. We have remained focused on pragmatic solutions that protect investors, ensure market integrity and foster capital formation at a time when each of these elements of our mission was under significant stress.
The staff has worked around the clock to understand the effects of the pandemic on our registrants and the market. In particular, I commend the team in the Division’s Analytics Office, which includes our data analysts, examiners, ERISA, exchange-traded fund (ETF), money market fund (MMF), operations and portfolio specialists. This team has led our efforts to engage with registrants on a variety of critically important issues faced by market participants in the past few months, including those involving ETFs, MMFs, and mutual funds facing substantial outflows. The team continues to analyze data that we receive from registered funds and advisers to better inform the Division’s and the Commission’s assessment of how various market segments functioned in the past few months. The team has also conducted hundreds of industry outreach calls designed to garner insight directly from market participants.
The team has also played an important role in our efforts to maintain constructive dialogue with international regulators and has become an integral part of our interoffice and interagency monitoring efforts. For example, the team’s outreach and data analysis contributed to the efforts of a cross-divisional working group that is monitoring and responding to the effects of COVID-19 on the securities markets. Members of this group recently issued a report and held a roundtable on the interconnectedness of the U.S. credit markets.
Staff from across the Division, including the Chief Counsel’s, Chief Accountant’s and Rulemaking Offices also played a key role in our emergency response to the pandemic while continuing their work on other important issues. In particular, since the beginning of the COVID-19 market disruptions the Chief Counsel’s Office was instrumental in drafting recommended Commission relief and staff statements that provided much needed flexibility to funds and advisers. They also responded to a tremendous variety of novel and fast-developing questions from the industry and published responses to many COVID-related frequently asked questions. Among other things, the relief provided reasonable accommodations to filing and delivery requirements for funds and investment advisers, expanded the tools available to funds for obtaining credit, and permitted fund boards to meet virtually. To date, Division staff have contributed to more than 20 COVID-related temporary rules, exemptive orders, staff no-action letters, and other staff statements.
The Division’s work related to the impact of COVID-19 is ongoing. First, we are continuing data-driven conversations with the industry and analyzing the experiences of market participants. Our engagement covers a variety of issues, often simultaneously, including those involving ETFs with market price deviations from net asset value and MMFs approaching regulatory limits on liquidity. Second, we are considering whether some of the temporary, conditional relief should be extended. For example, the Commission granted an order that temporarily permits fund boards to meet virtually and we have heard from boards and other interested parties that they would like to see some form of that relief made permanent. I also encourage you to engage with us if you have views on how long the temporary relief should remain available. Should any of the relief that expires on a specific date be extended, and when would it be okay to terminate the relief that expires only after staff notice? In considering any next steps, we will continue to monitor the current situation and consider all necessary and appropriate actions to assist market participants.
Modernization and Healthy Innovation
While providing swift and well informed action throughout the COVID-19 market disruptions, we also continued our work to modernize regulations and foster healthy innovation in the asset management industry, and to improve the experience of investors. The Division’s Rulemaking Office set a high standard of professionalism and commitment to excellence, recommending that the Commission take significant steps forward to modernize key areas of regulation, many of which had remained unchanged for decades. Since 2017, the Rulemaking Office handled more than 65 regulatory initiatives affecting investment companies and investment advisers. This year in particular, the Rulemaking Office worked on regulatory updates in 15 key areas.
Starting with modernization and innovation, two recent examples are the new rules the Commission adopted to put in place comprehensive regulatory frameworks for fund of funds arrangements and funds’ use of derivatives. In each case, the Division sought to replace a piecemeal, outdated regulatory regime where substantially similar arrangements or transactions were treated differently.
The fund of funds rule reflects the Commission’s decades of experience with these arrangements. Under the rule, a registered investment company or a business development company (BDC) will be able to acquire the securities of another fund in excess of the limits in the Investment Company Act without obtaining an individual exemptive order from the Commission. The rule includes certain conditions designed to enhance investor protection, including conditions restricting funds' ability to improperly influence other funds, charge excessive fees, or create overly complex fund of funds structures. The Commission also rescinded most exemptive relief permitting fund of funds arrangements because the rule will create a comprehensive rule-based regime. These reforms will impact the approximately 40% of all registered funds that hold an investment in at least one other fund.
Moving to derivatives, the final derivatives rule provides a modernized, comprehensive approach to the regulation of funds’ derivatives use that addresses investor protection concerns and reflects developments over the past decades. To rely on the rule, funds must comply with certain conditions designed to protect investors, including the adoption of a derivatives risk management program and compliance with an outer limit on a fund’s ability to obtain leverage or incur obligations through the issuance of “senior securities.” While the final rule is substantially as proposed, there were several key changes in response to commenter input. For example, the final rule modestly increased the VaR limits from 150/15 to 200/20. This increase is to account for the fact that VaR is a measure of risk, not just leverage risk. With that, one has to account for the noise in the calculation from things other than leverage. This change also aligns with the UCITS regime which will enable global asset managers to have a uniform risk management program. Also in a change from the proposal, the rule’s leverage limits would apply to leverage or inverse ETFs that operate at a 2x leverage multiple. Existing leveraged or inverse ETFs with a higher leverage multiple would be exempt from the VaR-based limit so long as there are no changes to the underlying market index or an increase in the level of leveraged or inverse market exposure that the fund seeks to provide. The Commission also directed the staff to review the effectiveness of existing regulatory requirements in protecting investors who invest in complex investment products, particularly those with self-directed accounts.
This spring, the Commission also adopted rule amendments to allow closed-end funds and BDCs to use a streamlined registration process that has long been available to operating companies, including modernized communications and prospectus delivery procedures. The Commission also proposed a new rule that would establish a framework for fund valuation practices, which is an area that was last addressed by the Commission in a comprehensive manner in 1969 and 1970. The proposed rule would provide a framework for how a board can meet its statutory obligation, including when it assigns the determination of fair value to the fund’s investment adviser.
Adding to the tremendous efforts of our Rulemaking Office, our CCO staff recommended the Commission issue guidance regarding proxy voting responsibilities of investment advisers. The guidance addresses circumstances where additional information from issuers may become available, as well as investment advisers’ use of a proxy advisory firm’s electronic vote management system and disclosure and client consent obligations when investment advisers use these services for voting.
The Division’s Rulemaking Office also collaborated extensively with other divisions and offices within the agency as well as fellow regulators on a number of important regulatory initiatives, including to:
- modify and clarify requirements related to the covered fund provisions of the Volcker Rule;
- update the “loan provision” and other auditor independence rule requirements;
- amend requirements for financial disclosures regarding acquired businesses;
- add new categories of qualifying natural persons (based on demonstrated sophistication) and entities to the definition of accredited investor; and
- simplify, harmonize, and improve certain aspects of the exempt offering framework.
Simultaneously with our modernization efforts, staff engaged with the industry on new types of investment products that expand investment opportunities and choices for Main Street investors. For example, after the Commission adopted rule 6c-11 which modernized ETF regulation by codifying existing relief, the Commission took further measures to innovate in this space by issuing orders that permit certain actively managed ETFs to operate without being subject to daily portfolio transparency. This relief provided active managers with the opportunity to offer an ETF structure that has long been dominated by index managers. Collectively, these actions preserved important investor protections and disclosures while helping to facilitate greater competition among ETFs, one of the fastest growing investment products available to investors, with nearly $5 trillion in assets and accounting for roughly 20% of registered fund assets.
As part of our efforts to support healthy industry innovation, Division staff have been actively participating in the work of the agency's Strategic Hub for Innovation and Financial Technology, known as FinHub. FinHub serves as a resource for public engagement on the SEC's FinTech-related issues and initiatives. In addition, staff have engaged with the industry on innovative ideas and technological developments, including new fund launches that are expanding into novel financial technologies for their investments and operations. This includes, for example, a recently-launched closed-end fund that issues its shares in digital format, enabling blockchain-based transactions between certain shareholders. Staff are also examining the impact of FinTech developments on our regulatory regime, such as the application of the Advisers Act custody rule to digital assets. The Division in consultation with FinHub recently issued a statement encouraging interested parties to engage directly with our staff on these issues, including with respect to the definition of “qualified custodian” under the rule.
Another core initiative that has been a top priority for the Division, and the Rulemaking and Disclosure Offices in particular, has been the investor experience initiative. This year the staff delivered tangible results for Main Street investors that will improve their overall experience and help them make more informed investment decisions.
Early in March, the Commission adopted a new framework for variable annuity and variable life insurance contracts that streamlines disclosures for investors. The new framework permits variable annuity and variable life insurance contracts to use a concise and reader-friendly initial and updating summary prospectuses to provide disclosures to investors. The framework leverages both technology and a layered disclosure approach to improve investors’ ability to understand and evaluate variable contracts and their features, fees and risks. As you work on transitioning to the new disclosure framework, I encourage you to engage with our staff early and often. We have partnered our already skilled reviewers with staff who are insurance product experts, provided training on the changes, and prepared written guides to support the consistency of staff comments. We have also had a constructive dialog with registrants, legal counsel, and service providers. One area of focus has been when insurers of certain variable contracts that are discontinued may provide alternative disclosures to investors in lieu of updating the registration statement.
More recently we received questions about the process to request so-called “template relief.” In particular, registrants have raised concerns about the representation typically included in the relief request related to substantially identical disclosure changes between the template and replicate filings. Let me be clear – we hear your concerns and we are working to develop an approach. I encourage you to start communicating with your reviewers now and to get your filings in early. In fact, we have already begun to receive filings on the new forms. Getting your filings in early will give both registrants and the staff more time to work out any issues related to the new form requirements.
In addition to adopting the new summary prospectuses, this year the Commission also proposed comprehensive reforms to the disclosure framework for mutual funds and ETFs. The proposal would promote a layered disclosure framework and efficient communication with investors by streamlining fund reporting and disclosures. Shareholder reports would serve as the central source of information for existing investors to help them more easily monitor their fund investments and make informed investment decisions. The new reports would highlight key information regarding fund investments, including fund expenses, performance, illustrations of holdings, and material changes. Additional information would remain available online and would be delivered upon request and free of charge. The proposal also would amend prospectus disclosure requirements to provide clearer, more consistent information regarding fees, expenses, and principal risks, and would amend fund advertising rules to promote more transparent and balanced statements about investment costs.
Finally, in the spring, the Commission requested public comment on the “Names Rule,” which prohibits funds from using materially deceptive or misleading names. Under the rule, a fund with a name suggesting that it focuses on a particular type of investment must invest at least 80% of its assets accordingly. The request for comment asked whether the rule continues to accomplish its purpose in light of market and other developments, and whether there are viable alternatives that the Commission should consider.
Both rulemakings and the request for comment reflect a bottom-up approach to rulemaking. In each case, we asked our front-line disclosure reviewers to identify potential areas of disclosure improvement and then solicited input from Main Street investors through a Commission request for comment. Ultimately we developed our rule recommendations from the input we received. The rulemakings also reflect the Division’s work to shift from self-contained disclosure documents to layered disclosures that help investors obtain the most relevant information that they need. I look forward to engaging with you as the Division continues to work on these and other elements of our investor experience initiative.
Efficient Oversight and Monitoring
The final major objective for the Division that I will highlight today is improving the use of our limited resources, which is critical to our ability to serve Main Street investors now and in the future. The Division’s staff of approximately 200 dedicated professionals is tasked with overseeing over 14,000 SEC-registered investment companies with more than $27 trillion in assets, as well as more than 13,800 registered investment advisers that report nearly $97 trillion in regulatory assets under management. This year staff reviewed disclosures relating to more than 10,700 funds, including more than 1,200 new funds — an increase of 7% over last year. As the asset management industry continues to grow, improving our internal processes and streamlining the Division’s operations and oversight capabilities is not simply an aspirational goal. It is a necessity.
We have focused on reforms that would allow the Division and its staff to make better and more efficient use of its resources, which in turn allows us to focus on emerging issues and trends, promoting further healthy industry innovation, and expanding investment choices for investors. For example, the Commission finalized rule amendments to the exemptive relief application process under the Investment Company Act. The new rules established an expedited review process for routine applications and created a review timeframe for all other applications. This process will allow applicants to realize the benefits of relief more quickly. It also will decrease applicant costs and will ensure that staff can devote additional resources to the review of more novel requests.
Further, the team in CCO has continued its comprehensive review of past staff statements, and many have been addressed as the Commission adopted or amended rules. Our website includes a list of more than 70 statements withdrawn following the adoption of new rule requirements, including, for example, offering reform for closed-end funds, variable annuity summary prospectuses, and the fund of funds rule. Please keep in mind, however, that the webpage is not an exhaustive list. As you look at staff statements, I encourage you to think about whether the Commission has spoken recently in that space and whether the markets have significantly changed. That is what we are doing. As the markets and the industry evolve, the Division will examine whether prior staff statements continue to be relevant and consistent with the Commission’s overall regulatory approach. Our focused efforts in this area affords us a holistic view of the regulatory landscape and allows us to be more efficient when thinking about necessary changes.
The Division’s Disclosure Office also adopted significant process improvements this year, setting the standard for operational effectiveness during challenging times. For example, the staff has been implementing a new disclosure review framework for BDCs and closed-end funds. The changes include enhancing coordination to assure consistency of reviews, adjusting their review processes, and answering open questions from BDCs and closed end funds. In addition, our Chief Accountant’s Office created an Accounting Matters Bibliography to express staff views on accounting matters and issued new Dear CFO letters. The most recent Dear CFO letter, among other things, discussed two long-standing staff positions: first, the date on which a fund is deemed to have commenced operations for performance calculation and financial reporting purposes; and second, the financial statement requirements in an initial registration statement for BDCs. The Chief Accountant’s Office, pursuant to delegated authority, also continued to consider requests for relief to allow the substitution of statutory reporting for certain insurance product sponsors.
Finally, I would like to emphasize the tremendous efforts of our Managing Executive’s Office as they continue to help the Division run more efficiently and effectively while we are in an extended virtual posture. Their support has been invaluable in the past months, as our staff has transitioned to working remotely. The team’s support has been mission critical and has allowed the rest of the staff in the Division to work more efficiently and effectively under exigent circumstances. The improvements we put in place have prepared us to meet future challenges and will allow us to be a more efficient and more effective regulators of the asset management industry.
This year has been unlike any other and was full of new experiences and routines for all of us. At the same time, Division staff maintained an unwavering dedication to our mission and continued to be a shining example of dedicated public service. I would like to thank the staff for their contributions and efforts in addressing the market disruptions related to the pandemic while also continuing to work on our priorities. What they have accomplished this year is truly extraordinary. I am honored to serve beside each of them.
With that, I will close. Thank you all very much for your time and attention this afternoon.
 The Securities and Exchange Commission (“SEC” or “Commission”) disclaims responsibility for any private publication or statement of any SEC employee or Commissioner. This speech expresses the author's views and does not necessarily reflect those of the Commission, the Commissioners, or other members of the staff.
 S.P. Kothari, Dalia Blass, Alan Cohen, Sumit Rajpal, and SEC Research Staff, U.S. Credit Markets Interconnectedness and the Effects of the COVID-19 Economic Shock (Oct. 2020), available at https://www.sec.gov/files/US-Credit-Markets_COVID-19_Report.pdf. Information about the Roundtable on Interconnectedness and Risk in U.S. Credit Markets is available at https://www.sec.gov/page/roundtable-interconnectedness-and-risk-us-credit-markets, and the webcast is available at https://www.sec.gov/video/webcast-archive-player.shtml?document_id=101420-risk-roundtable.
 In addition to its pandemic-focused work, the Chief Counsel’s Office (CCO) maintained its regular docket: this year, CCO staff participated in the issuance of 61 exemptive orders, including an unusually large number of novel and complex applications; fielded questions and informal requests for guidance from the industry and the general public; reviewed filings referred by the Division of Corporation Finance for consideration of investment company status issues; reviewed OCIE and Enforcement-related matters; and supported multiple Financial Stability Board (FSB) and International Organization of Securities Commissions (IOSCO) workstreams and responded to dozens of requests by our foreign counterparts for technical assistance and supervisory cooperation.
 Thank you to our Chief Counsel’s Office Legal Guidance team: Paul Cellupica, David Bartels, Sara Cortes, Holly Hunter-Ceci, Daniele Marchesani, Nadya Roytblat, Harry Eisenstein, David Joire, Judy Lee, Edward Rubenstein, Penelope Saltzman, Kaitlin Bottock, Parisa Haghshenas, David Marcinkus, David Nicolardi, Lisa Ragen, Trace Rakestraw, Kyle Ahlgren, Steven Amchan, Asaf Barouk, Adam Bolter, Kieran Brown, Jill Ehrlich, Christine Greenlees, Barbara Heussler, Nina Kostyukovsky, Hae-Sung Lee, Steven Levine, Bruce MacNeil, Marc Mehrespand, Jean Minarick, Erin Moore, Stephan Packs, Jennifer Palmer, Asen Parachkevov, Rochelle Plesset, Laura Riegel, Jessica Shin, Laura Solomon, Samuel Thomas, Al Tierney, Joseph Toner, Tara Varghese, and Kay-Mario Vobis.
 See Division of Investment Management Coronavirus (COVID-19) Response FAQs, available at https://www.sec.gov/investment/covid-19-response-faq.
 See SEC Coronavirus (COVID-19) Response, available at https://www.sec.gov/sec-coronavirus-covid-19-response.
 See Order Under Section 6(c) and Section 38(a) of the Investment Company Act of 1940 Granting Exemptions from Sections 15(c) and 32(a) of the Investment Company Act and Rules 12b-1(b)(2) and 15a4(b)(2)(ii) Thereunder, Investment Company Act Release No. 33897 (June 19, 2020), available at https://www.sec.gov/rules/exorders/2020/ic-33897.pdf.
 Thank you to the entire Rulemaking Office team: Sarah ten Siethoff, Melissa Gainor, Brian Johnson, Thoreau Bartmann, Melissa Roverts Harke, Michael Neus, Angela Mokodean, Sirimal Mukerjee, Jennifer Songer, Amanda Wagner, Zeena Abdul-Rahman, Blair Burnett, Joel Cavanaugh, Mykaila DeLesDernier, Pamela Ellis, Brad Gude, Juliet Han, Terri Jordan, John Lee, Adam Lovell, Amy Miller, Olawalé Oriola, Lawrence Pace, Alexis Palascak, Emily Rowland, Aaron Russ, Christine Schleppegrell, Christopher Staley, and Benjamin Tecmire.
 Use of Derivatives by Registered Investment Companies and Business Development Companies, Investment Company Act Release No. 34084 (Nov. 2, 2020), available at https://www.sec.gov/rules/final/2020/ic-34084.pdf.
 See also Joint Statement Regarding Complex Financial Products and Retail investors (Oct. 28, 2020), available at https://www.sec.gov/news/public-statement/clayton-blass-hinman-redfearn-complex-financial-products-2020-10-28.
 Good Faith Determinations of Fair Value, Investment Company Act Release No. 33845 (Apr. 21, 2020), available at https://www.sec.gov/rules/proposed/2020/ic-33845.pdf.
 Supplement to Commission Guidance Regarding Proxy Voting Responsibilities of Investment Advisers, Release No. IA-5547 (July 22, 2020), available at https://www.sec.gov/rules/policy/2020/ia-5547.pdf.
 Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds, Release No. BHCA-9 (Jun. 25, 2020), available at https://www.sec.gov/rules/final/2020/bhca-9.pdf. See also Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds, Release No. BHCA-7 (Sept. 18, 2019), available at https://www.sec.gov/rules/final/2019/bhca-7.pdf.
 See Auditor Independence With Respect to Certain Loans or Debtor-Creditor Relationships, Securities Act Release No. 10648 (Jun. 18, 2019), available at https://www.sec.gov/rules/final/2019/33-10648.pdf; Qualifications of Accountants, Securities Act Release No. 10876 (Oct. 16, 2020), available at https://www.sec.gov/rules/final/2020/33-10876.pdf.
 Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets, Securities Act Release No. 10884 (Nov. 2, 2020), available at https://www.sec.gov/rules/final/2020/33-10844.pdf.
 See Blue Tractor ETF Trust and Blue Tractor Group, LLC, Investment Company Act Release Nos. 33682 (Nov. 14, 2019)(notice) and 33710 (Dec. 10, 2019)(order); Fidelity Beach Street Trust, et al., Investment Company Act Release Nos. 33683 (Nov. 14, 2019)(notice) and 33712 (Dec. 10, 2019)(order); Natixis ETF Trust II, et al., Investment Company Act Release Nos. 336782 (Nov. 14, 2019)(notice) and 33711 (Dec. 10, 2019)(order); T. Rowe Price Associates, Inc. and T. Rowe Price Equity Series, Inc., Investment Company Act Release Nos. 33685 (Nov. 14, 2019)(notice) and 33713 (Dec. 10, 2019)(order).
 See Registration Statement for Arca U.S. Treasury Fund, available at https://www.sec.gov/Archives/edgar/data/1758583/000121465920006145/j76202497.htm.
 See also Staff Statement on WY Division of Banking’s “NAL on Custody of Digital Assets and Qualified Custodian Status” (Nov. 9, 2020), available at https://www.sec.gov/news/public-statement/statement-im-finhub-wyoming-nal-custody-digital-assets.
 Thank you to our Disclosure Review and Accounting Office team: Brent Fields, Andrea Magovern, Christian Sandoe, Michael Spratt, Alison Staloch, Alex Bradford, Keith Carpenter, Alexis Cunningham, Michael Kosoff, Jennifer McHugh, Michael Pawluk, Jenson Wayne, Vincent DiStefano, Catalina Jaime, Keith O’Connell, Sally Samuel, Jacob Sandoval, Michael Shaffer, Jay Williamson, Sumeera Younis, Christopher Ballacicco, Ed Bartz, Raymond Be, Elisabeth Bentzinger, Samantha Brutlag, Kimberly Browning, Tony Burak, Cindy Chang, Yoon Choo, Mark Cowan, Anu Dubey, Ken Ellington, Chad Eskildsen, Christina Fettig, Jeffrey Foor, Jason Fox, John Ganley, John Grzeskiewicz, Jaea Hahn, Lauren Hamilton, Quinn Kane, John Kernan, Lisa Larkin, Scott Lee, Valerie Lithotomos, Jeffrey Long, Dave Manion, Rebecca Marguigny, DeCarlo McLaren, Megan Miller, Min Sun Oh, Deborah O’Neal, David Orlic, Karen Rosotto, Mindy Rotter, Patrick Scott, Elena Stojic, Ryan Sutcliffe, Ashley Vroman-Lee, Alison White, and Alberto Zapata.
 Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts, Investment Company Act Release No. 33814 (Mar. 11, 2020), available at https://www.sec.gov/rules/final/2020/33-10765.pdf (“VASP Adopting Release).
 More detailed information about the contract will be available online, and an investor can choose to have that information delivered in paper or electronic format at no charge.
 See VASP Adopting Release (summarizing the Commission’s position on existing contracts whose issuers provide alternative disclosures to investors). See also ADI 2020-10, Filing and Delivery Obligations for Certain Discontinued Variable Insurance Contracts (Apr. 22, 2020), available at https://www.sec.gov/investment/accounting-and-disclosure-information/adi-2020-10-filing-and-delivery-obligations.
 Template relief generally allows registrants to make material changes to their registration statements via rule 485(b) of the Securities Act in situations where the staff has already reviewed and commented on one or more filings with substantially identical disclosure changes pursuant to rule 485(a) of the Securities Act. See rule 485(b)(1)(vii) of the Securities Act of 1933; ADI 2018-02, Template Filing Relief, available at https://www.sec.gov/investment/adi-2018-02-template-filing-relief.
 Tailored Shareholder Reports, Treatment of Annual Prospectus Updates for Existing Investors, and Improved Fee and Risk Disclosure for Mutual Funds and Exchange-Traded Funds; Fee Information in Investment Company Advertisements, Investment Company Act Release No. 33963 (Aug. 5, 2020), available at https://www.sec.gov/rules/proposed/2020/33-10814.pdf.
 Amendments to Procedures With Respect to Applications Under the Investment Company Act of 1940, Investment Company Act Release No. 33921 (July 6, 2020), available at https://www.sec.gov/rules/final/2020/ic-33921.pdf.
 See Division of Investment Management Modified or Withdrawn Staff Statements (last updated June 11, 2020), available at https://www.sec.gov/divisions/investment/im-modified-withdrawn-staff-statements.
 In the past fiscal year, the Division’s disclosure staff reviewed disclosures relating to more than 10,700 funds. Our accounting staff reviewed over 5,000 funds, meeting the financial-statement-review mandate established by the Sarbanes-Oxley Act, an overall increase from last year’s number of roughly 4,500 reviews. See Section 408(c) of Sarbanes-Oxley Act of 2002, which mandates such reviews.
 This new framework was finalized in rules the Commission adopted in April, a rulemaking effort that was significantly influenced by consultation with the Division’s disclosure review experts. See Securities Offering Reform for Closed-End Investment Companies, Investment Company Act Release No. 33836 (Apr. 8, 2020), available at https://www.sec.gov/rules/final/2020/33-10771.pdf.
 See Letter from the Chief Accountant of the Division of Investment Management: Industry Comment Letter (Oct. 23, 2020), available at https://www.sec.gov/files/dear-cfo-letter-from-im-chief-accountant-102320.pdf; Letter from the Chief Accountant of the Division of Investment Management: Industry Comment Letter (Nov. 22, 2019), available at https://www.sec.gov/files/industry-comment-letter-112219.pdf. See, also, Accounting Matters Bibliography, available at https://www.sec.gov/investment/accounting-matters-bibliography.
 This relief is issued under our delegated authority under rule 3-13 of Regulation S-X. See rule 3-13 of Regulation S-X (“the Commission may, upon the informal written request of the registrant, and where consistent with the protection of investors, permit the omission of one or more of the financial statements herein required or the filing in substitution therefor of appropriate statements of comparable character.”).
 Thank you also to the teams in the Managing Executive’s Office, Analytics Office and IM Liaison Office. See Dalia Blass, Speech: PLI Investment Management Institute (July 28, 2020), available at https://www.sec.gov/news/speech/blass-speech-pli-investment-management-institute.