The coronavirus pandemic has created stresses on funds not seen in more than a decade. Not only have social distancing and work-from-home orders made routine regulatory compliance a challenge, but also, unprecedented market volatility has made it difficult for funds to manage liquidity. That can be a particularly serious concern for registered investment funds – including alternative mutual funds – which offer daily liquidity to their investors. In recent no-action letters and a temporary exemptive order, the SEC gave managers of registered funds additional flexibility to obtain short-term funding during the crisis, including through the expanded ability to sell assets to affiliates and to participate in inter-fund borrowing and lending facilities. A recent Davis Polk program offered an in-depth look at the temporary relief offered by the SEC and its implications for fund advisers and boards of directors. The program featured Davis Polk partners Nora M. Jordan
and Gregory S. Rowland
, along with counsel Aaron Gilbride. This article synthesizes their insights. For discussion of other regulatory relief during the coronavirus pandemic, see “ACA Briefing: Regulatory Responses to Coronavirus Pandemic and Best Practices for Business Continuity and Compliance
” (Apr. 16, 2020).