Companies looking to avoid running afoul of the Securities and Exchange Commission (SEC) in their efforts to transition away from the London Interbank Offered Rate (LIBOR) would be wise to include fallback language in their contracts and investments that reference the soon-expiring benchmark rate.
A staff statement from the SEC on Tuesday noted the duties broker-dealers and registered investment advisers and funds have to their clients under agency rules including Regulation Best Interest (Reg BI) and the Investment Advisers Act of 1940 (Advisers Act). SEC staff also touched on disclosure considerations for public companies and asset-backed securities issuers regarding progress toward LIBOR transition risk identification and mitigation.
