SEC Modifies the Submission Deadlines for Filing Form N-PORT Citing Cybersecurity Concerns

On February 27, 2019, the Securities and Exchange Commission (SEC) modified its submission deadlines for registered investment companies filing non-public monthly reports on Form N-PORT. Rather than requiring funds to file monthly reports with the SEC within 30 days after each month end, funds will be required to file all three monthly reports no later than 60 days after the end of each fiscal quarter. The amount and timing of the information on Form N-PORT that will be made available to the public will not change.

The SEC also amended Form N-LIQUID to add a voluntary explanatory notes section.

Discussion of Changes

Amended Rule 30b1-9 will require funds to file all three monthly reports on Form N-PORT no later than 60 days after the end of each fiscal quarter. Funds must still maintain in their records the information included on Form N-PORT no later than 30 days after the end of each month. While funds are not required to store such information in XML format, the SEC noted that doing so would facilitate the timely filing of Form N-PORT after quarter end.

The SEC indicated that it adopted these changes in order to reduce the sensitivity of data collected from funds while still allowing the SEC to fulfill its mission. Extending the fiscal quarter-end filing deadline from 30 to 60 days allows the quarter-end report on Form N-PORT to be made public immediately upon filing, which results in the SEC retaining non-public data for a shorter period of time. Delaying the filing deadline for funds’ non-public first and second month reports for each fiscal quarter on Form N-PORT until when the quarter-end report will be submitted and made public also significantly reduces the sensitivity of the non-public data.

The SEC previously delayed the dates by which funds must file Form N-PORT on the EDGAR system in December 2017, citing concerns about its own cybersecurity framework. That delay came a few months after it was announced that personal information included in a non-public filing had been accessed in a cyber-intrusion of the EDGAR system.

Finally, the SEC also amended Form N-LIQUID to provide for a voluntary explanatory notes section. This will allow funds to include additional narrative information regarding liquidity events as appropriate.

Compliance Dates

With the adoption of the amendments, the current compliance dates for Form N-PORT will not change. Larger fund complexes with net assets of $1 billion or more (the “larger fund groups”) will still be required to maintain Form N-PORT information internally and make it available to the SEC upon request in lieu of filing the form on EDGAR beginning with the initial compliance date of June 1, 2018. Below is a chart describing the current compliance dates for filing reports on Form N-PORT.

Form N-Port

Larger Funds Groups

Given the timing considerations relating to the amendments, the SEC acknowledged that some funds in larger fund groups, with fiscal quarters ending in March or April, may not be prepared to file all three months of Form N-PORT reports at the end of their next fiscal quarter. To give larger fund groups sufficient time to prepare their reports, the SEC is exempting funds in larger fund groups with fiscal quarters ending in March from the requirement to file their reports on Form N-PORT for the first two months of data with the SEC (January and February), and funds with fiscal quarters ending in April from the requirement to file the report for the first month of data with the SEC (February). Below is a chart that describes the filing dates for larger funds groups’ first reports on Form N-PORT.

Practice Points and Tips

Service providers should consistently review their capabilities and evaluate changes needed to ensure that they will be able to collect, process and present the required information for Form N-PORT, particularly larger funds groups that are currently required to maintain the information internally and make it available to the SEC upon request. In addition, fund directors should be apprised of regulatory updates and how they will influence funds and their reporting requirements. Directors may consider requesting regular status updates from their service providers as they prepare to meet the new reporting obligations.

For more information on the application of these rules and Form N-PORT, please see our previous alerts or reach out to your contact within the Investment Management Group.