SEC issues statement on celebrities promoting investments, Chairman Clayton's remarks on governance and transparency, and more in this issue of Fund Forum

This issue of Venable's Fund Forum includes:

• SEC Issues Section 3(c)(5)(C) No-Action Guidance
• Celebrity Scrutiny: SEC Issues Statement on Potentially Unlawful Promotion of ICOs and Other Investments by Celebrities
• SEC Chairman Clayton's Remarks on Governance and Transparency
• Comparing the House-passed (H.R. 1) and Senate Finance Versions of the Tax Cuts and Jobs Act
• Federal Court Strikes Down IRS Temporary Regulations

SEC Issues Section 3(c)(5)(C) No-Action Guidance

Section 3(c)(5)(C) of the Investment Company Act of 1940 provides an exclusion from the definition of investment company for any person who is "primarily engaged in…[the business of] purchasing or otherwise acquiring mortgages and other liens on and interests in real estate." This exclusion is available to issuers if they are able to satisfy the "Asset Composition Test," which consists of a series of asset classification metrics that must be satisfied. The SEC recently provided no-action guidance with respect to the treatment of Credit Risk Transfer securities when applying this test.

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Celebrity Scrutiny: SEC Issues Statement on Potentially Unlawful Promotion of ICOs and Other Investments by Celebrities

The SEC recently issued a statement regarding the use of social media by celebrities and others to encourage the public to purchase stocks and other investments. The SEC asserted that such endorsements may be unlawful. In particular, the SEC noted that celebrities and others have recently promoted investments in Initial Coin Offerings.

SEC Chairman Clayton Speaks on Governance and Transparency

In his remarks at the PLI 49th Annual Institute on Securities Regulation, SEC Chairman Jay Clayton focused on two themes: governance and transparency. In particular, Chairman Clayton discussed the SEC's new strategic plan, which is scheduled for release in 2018 and will outline the SEC's vision for the next four years. Chairman Clayton's remarks present an opportunity for market participants to assess the themes, initiatives, and priorities being considered by the SEC.

Comparing the House-passed (H.R. 1) and Senate Finance Versions of the Tax Cuts and Jobs Act

Later this week, the Senate is expected to begin consideration of the Tax Cuts and Jobs Act, which the Senate Finance Committee approved on November 16. The House of Representatives passed its own version of the tax legislation (H.R. 1) on November 16.

To assist in understanding how the House and Senate versions may affect your personal or business tax situation, we have prepared the following analysis, which compares the key proposals contained in the House and Senate versions. The analysis covers five tax policy areas: Individual, Business, International, Employer-Employee related, and Compensation and Exempt Organizations. Also included is a brief description of present law and some observations and key differences.

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Federal Court Strikes Down IRS Temporary Regulations

In Chamber of Commerce of U.S. v. IRS (September 2017), a U.S. District Court in the Western District of Texas struck down a U.S. Treasury Department (Treasury) temporary regulation that expanded existing rules designed to prevent U.S. companies from redomiciling outside of the U.S. for tax purposes (referred to as the "anti-inversion rules"). This opinion is significant because it is the first instance in which a federal court has nullified a Treasury regulation due to the Treasury's failure to comply with administrative law.

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