In a comment letter to the Securities Exchange Commission today, the American Bankers Association offered support for a recent proposal to update and codify existing guidance and views on determining fair value in good faith for mutual fund investments. The proposal would effectively create a federal regulatory scheme for determining the fair value of investments, including hard-to-value assets such as derivatives, real estate and limited partnership interests.
ABA made several specific recommendations on accounting and adviser-related issues to improve the proposal and provide greater certainty from a compliance perspective. Among other things, ABA called on the SEC to make certain changes to reflect current industry practices and to finalize the proposal as a safe harbor that would provide a non-exclusive means of achieving regulatory compliance.
The association also pointed out that if finalized, the proposal would be the first federal agency rule governing fair value determinations and responsibilities, and may be looked to by other federal agencies as an authoritative source when preparing regulatory or supervisory guidance on fair value determinations and fair valuation practices involving invested assets.