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B-332837 1 (2021-01-14)

handle is hein.gao/gaobaeckj0001 and id is 1 raw text is: c rAO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 B-332837 January 14, 2021 The Honorable Mike Crapo Chairman The Honorable Sherrod Brown Ranking Member Committee on Banking, Housing, and Urban Affairs United States Senate The Honorable Maxine Waters Chairwoman The Honorable Patrick McHenry Ranking Member Committee on Financial Services House of Representatives Subject: Securities and Exchange Commission: Good Faith Determinations of Fair Value Pursuant to section 801(a)(2)(A) of title 5, United States Code, this is our report on a major rule promulgated by the Securities and Exchange Commission (Commission) entitled Good Faith Determinations of Fair Value (RIN: 3235-AM71). We received the rule on December 3, 2020. It was published in the Federal Register as a final rule on January 6, 2021. 86 Fed. Reg. 748. The stated effective date of the rule is March 8, 2021. According to the Commission, this final rule is being adopted under the Investment Company Act of 1940 to address valuation practices and the role of the board of directors with respect to the fair value of the investments of a registered investment company or business development company (fund). 15 U.S.C. §§ 80a-1-80a-64. The Commission states the rule will provide requirements for determining fair value in good faith for purposes of the Investment Company Act. According to the Commission, this determination will involve assessing and managing material risks associated with fair value determinations; selecting, applying, and testing fair value methodologies; and overseeing and evaluating any pricing services used. The Commission also states the rule will permit a fund's board of directors to designate certain parties to perform the fair value determinations, who will then carry out these functions for some or all of the fund's investments. This designation will be subject to board oversight and certain reporting and other requirements designed to facilitate the board's ability effectively to oversee this party's fair value determinations. The Commission states the rule will include a specific provision related to the determination of the fair value of investments held by unit investment trusts, which do not have boards of directors. According to the Commission, the rule will also define when market quotations are readily available under the Investment Company Act. The Commission states it is also adopting a separate rule providing the recordkeeping requirements that will be associated with fair value determinations and is rescinding previously issued guidance on the role of the board of directors in determining fair value and the accounting and auditing of fund investments.

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