Investment Industry Wire | July 2026

The pace and intricacies of regulatory change in the asset management industry are, at times, nothing short of overwhelming. Yet, organizations in this space need to have a clear understanding of evolving regulations, their timing and overall impact.

To help you stay up to date, below is Cohen & Co’s quarterly recap of the latest developments at a variety of regulatory agencies likely to impact our clients.

FASB

ASU 2026-01, Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock

This update aims to provide authoritative guidance on how issuers should initially measure paid-in-kind (PIK) dividends on equity-classified preferred stock. This amendment does not affect an entity’s determination of when to recognize PIK dividends.

The amendment requires PIK dividends on equity-classified preferred stock to be initially measured based on the PIK dividend rate per the preferred stock agreement. As such, if the agreement states the PIK rate is the dividend rate on outstanding preferred stock times the liquidation value (or liquidation preference), then the dividend should be recorded in line with this amount.

The amendment is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted. Entities adopting the amendments should apply as of the beginning of the annual reporting period that includes that interim reporting period.

NOTE: Entities can apply the update either:

• On a prospective basis or
• On a modified retrospective basis for equity-classified preferred stock instruments that are outstanding as of the initial application date.

For the modified retrospective transition approach, an issuer should recast prior reporting periods presented and recognize a cumulative-effect adjustment to equity as of the beginning of the earliest period presented related to previously issued PIK dividends recognized on equity-classified preferred stock that is outstanding as of the initial application date.

>> Our Take: The ASU provides welcome clarity regarding initial measurement of PIK dividends on equity-classified preferred stock, reducing diversity in practice. For asset managers, fund sponsors and portfolio companies, the primary impact will be ensuring accounting policies and processes align with the contractual provisions governing preferred stock arrangements, particularly where liquidation preferences drive the PIK calculation. While the guidance does not change recognition timing, it may affect reported equity balances and dividend disclosures. Entities with outstanding equity-classified preferred stock instruments may experience changes in measurement methodologies and related reporting outcomes, particularly if adopting the amendments using the modified retrospective approach.

SEC

Form PF Reporting Requirements

The SEC and the Commodities Futures Trading Commission (CFTC) have proposed amendments to Form PF. The proposed amendments would eliminate certain filing and reporting obligations, streamline existing requirements, and make various technical corrections and clarifications. The public comment period has closed.

The proposal aims to:

• Increase the filing threshold for all Form PF filers, increase the reporting threshold for large hedge fund advisers, and simplify industry concentration reporting in Form PF question 36.

The proposal also aims to eliminate:

• The look-through requirement,
• Form PF question 23(c) on volatility reporting,
• Certain trading and clearing reporting,
• Form PF questions 32(b)(2) on adjusted exposure reporting based on internal methodology and
• Form PF question 34 on monthly asset turnover reporting.

>> Our Take: The proposed amendments reflect a continued effort by regulators to balance systemic risk visibility with reduced reporting burden. The proposed increase in reporting thresholds and elimination of certain granular reporting requirements suggest a shift toward more targeted data collection rather than broad-based information gathering. For advisers, the proposal could meaningfully reduce compliance complexity and filing costs if adopted as drafted. However, firms should not assume a wholesale easing of scrutiny — regulators will likely continue to focus on key risk indicators through other channels.

SEC Staff May 7 Dear CFO Letter

The SEC staff's May 7 Dear CFO Letter includes a series of updates and new staff positions addressing key accounting, disclosure and filing considerations for investment companies.

• Presentation of Fee Waivers, Reimbursements and Recaptures. Modifications were made to clarify staff views regarding the presentation of fee waivers and expense reimbursements when such amounts exceed total operating expenses for a registered fund-of-funds.
• Master/Feeder Structures. Modifications were made to requirements for closed-end management investment companies that prepare a summary schedule of investments. The modifications address situations in which the master fund and feeder fund have different fiscal year-ends.
• Changes in Independent Public Accountants. Modifications were made to incorporate revised form requirements and clarify staff views regarding information required when reporting changes in independent registered public accountants.
• Senior Securities Table Disclosure. Further modifications were made to incorporate references to the current registration statement instructions related to senior securities table disclosures.
• Financial Statement Requirements in Initial Registration Statements. A modification was made to expand the guidance to all registered investment companies, rather than only business development companies, and to incorporate the applicable form requirements.
• Extraordinary Expenses. A new staff position addresses the treatment of extraordinary expenses for open-end investment companies, including their classification within the fee table.
• Certification of Disclosure in Companies’ Annual Reports. A new staff position clarifies the certifications required when filing amendments to Form N-CSR and aligns with the requirements of Exchange Act Rules 13a-14 and 15d-14.

>> Our Take: The updates in the Dear CFO Letter reflect the SEC staff’s continued emphasis on consistency, transparency, and consistency in financial reporting and disclosures practices for investment companies. Although many of the updates are clarifications or refinements, they highlight areas where staff appear to have observed inconsistent interpretations or application in practice — particularly around expense presentation, master-feeder structures and auditor changes. The introduction of new positions, e.g., extraordinary expenses and certifications tied to Form N-CSR amendments, reinforces expectations around strong governance and documentation. Investment companies should consider evaluating current disclosure and reporting practices in these areas, as they may receive increased attention in future SEC comment letter reviews, examinations and filing reviews.

AICPA

AICPA & CIMA published “Retail Funds and The New Valuation Paradigm in Private Markets”

This publication discusses the industry’s shift toward more frequent (often monthly) valuation processes for retail-facing, evergreen and semi-liquid funds with private market exposure. The publication highlights several key drivers, including investor demand for more timely NAV reporting, liquidity management considerations, market volatility and increasing governance expectations. It also discusses process implications, including valuation roll-forwards, scenario analysis and threshold-based review procedures, as well as best practices and technology-enabled solutions designed to support consistency, auditability and compliance with ASC 820 fair value measurement requirements. This is highly relevant for investment companies managing private market portfolios.

>> Our Take: The AICPA & CIMA publication underscores a broader industry shift toward more frequent and operationally complex valuation processes for private market exposures, particularly in retail-oriented products. As investor demand for more timely NAV reporting continues to grow, asset managers must balance responsiveness with robust governance, control framework, valuation consistency and ASC 820 compliance. This evolution introduces heightened risk in areas such as data timeliness, reliance on stale information, model governance, valuation adjustments and internal control design. The publication further emphasizes the importance of scalable valuation processes, well-documented governance procedures and technology-enabled solutions as firms seek to meet growing investor expectations, support audit readiness and withstand increased regulatory scrutiny.
 

Contact Bryan Friedmann or a member of your service team to discuss this topic further.

In this blog Cohen & Co is not rendering legal, accounting, investment, tax or other professional advice. Rather, the information contained in this blog is for general informational purposes only. Any decisions or actions based on the general information contained in this blog should be made or taken only after a detailed review of the specific facts, circumstances and current law with your professional advisers.