Funds Talk: January 2021

Topics covered in this issue include:

• Privacy and Data Security Worldwide: 2020 and Beyond
  2020 has been a busy year in privacy law. Some of the most striking developments included enforcement of the California Consumer Privacy Act (CCPA) and passage of the California Privacy Rights Act expanding the CCPA; the invalidation of the U.S.-EU Privacy Shield Framework in July; and the passage of legislation mirroring Europe’s General Data Protection Regulation in multiple countries, including China and Canada. The linked article explores all of these 2020 privacy and data security developments as well as many others, including major settlements and fines; judicial decisions concerning the Computer Fraud and Abuse Act (CFAA) and biometric data collection and processing; and the impacts of COVID-19 on data collection and contact tracing.
  
  

• SEC Adopts New Marketing Rule
  The Securities and Exchange Commission (SEC) announced on Dec. 22, 2020, that it has finalized amendments to the current advertising rule (Rule 206(4)-1) and cash solicitation rule (Rule 206(4)-3) under the Investment Advisers Act of 1940. The amendments unify the current advertising and cash solicitation rules into a single rule (Marketing Rule) designed to comprehensively regulate an investment adviser’s marketing communications.
  
  

• The Diligence Process for Privacy and Data Security
  The rapid expansion of data security and privacy laws and regulations harbors the potential for substantial liability, with the consequence that cyber compliance has become an important focus of the mergers and acquisitions diligence process. In this article, Kramer Levin’s privacy counsel and members of the firm’s M&A practice break down key considerations for buyer due diligence of a target company’s privacy and data security program. 
  
  

• New Tax Law Update: Deductibility of PPP-Funded Expenditures
  After initial hesitation, President Trump signed into law Sunday evening H.R. 133, which contains appropriations bills and provides approximately $900 billion in COVID-19 relief. One tax provision of note permits the deductibility of expenses funded by forgiven PPP loans, reversing the IRS interpretation of the March 27 CARES Act.
  
  

• SEC Adopts Rule Modifying Fund Valuation Oversight Practices
  On Dec. 3, the Securities and Exchange Commission (SEC) adopted a new rule (Rule 2a-5) under the Investment Company Act of 1940 that establishes an updated regulatory framework for fund valuation oversight practices affecting all registered investment companies and business development companies.