From the Editor...

The SEC on Friday said it has dismissed charges against Pinnacle Advisors LLC, two of its officers, and two fund independent directors of its Nysa Fund in what was the first—and only, so far—case the regulator brought under Rule 22e-4. In 2023, the SEC alleged that the directors aided and abetted the fund's purported misclassification of illiquid securities in violation of the liquidity rule. Jan Folena, partner and co-chair of Stradley Ronon's securities and regulatory enforcement practice who led the directors' defense team, called the dismissal "a sweeping win for the asset management and fund board industry." 

Stradley argued that "the SEC had no legal basis for its aiding and abetting charges as the independent trustees did not write, review, or even see the liquidity classifications that formed the basis for those charges, did not substantially assist the alleged violation, and otherwise complied with all of their obligations pursuant to the liquidity rule." What's more, the Stradley lawyers maintained the agency lacked the necessary congressional authority to promulgate the liquidity rule. It's unclear what happens next, but we're talking to industry professionals, including Stradley, to get a sense of what might be next for the industry and, specifically, for fund boards.

In other news, we put together a fascinating and informative Q&A with three esteemed fund industry lawyers: Chris Healey from Davis Polk, Jesse Kanach from Stradley Ronon, and Doug Scheidt, a 32-year veteran of the SEC. The three discussed opening private markets to retail investors, covering where the push is coming from, which entities are likely to benefit, and what fund board members should be considering as this trend gains momentum. 

We're also two-thirds of the way through publishing a series on tokenization written by Ethan Cory, Michael Koffler, and Carolyn Garcia from Eversheds Sutherland. In the first two parts, the authors covered how tokenization works and its likely impact on the fund business and began exploring areas that boards may want to discuss as advisers move into this space. Part 3 is scheduled to be published on July 21, so there's plenty of time to catch up on Parts 1 and 2 before the finale.

Don't forget to check out the new sections of our website: AI in the Boardroom is a click-through button on the home page where you'll find stories about artificial intelligence, and the E-book Library along the top menu bar on the home page leads readers to all of the e-books we've published over the years. 

In FBV, you'll always get news, analysis, intelligence, and direction specific to fund boards and fund governance issues. We deliver what we promise, and you get what you pay for!

For now, 

Hillary Jackson, co-founder and editor