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We have one operating segment, investment management and related services.
−Removed: We offer our services and products under our various distinct brand names, including, but not limited to, Alcentra ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin ® , Franklin Bissett ® , Franklin Mutual Series ® , K2 ® , Legg Mason ® , Lexington Partners ® , Martin Currie ® , O’Shaughnessy ® Asset Management, Royce ® Investment Partners, Templeton ® and Western Asset Management Company ® .
+Added: We offer our services and products under our various distinct brand names, including, but not limited to, Alcentra ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin ® , Franklin Mutual Series ® , K2 ® , Legg Mason ® , Lexington Partners ® , Martin Currie ® , O’Shaughnessy ® , Putnam ® , Royce ® , Templeton ® and Western Asset Management Company ® .
Unless otherwise indicated, our “funds” means the funds offered under our various brand names.
−Removed: We are a global investment management organization with approximately $1.4 trillion in assets under management (“AUM”) as of September 30, 2023.
+Added: We are a global investment management organization with over $1.6 trillion in assets under management (“AUM”) as of September 30, 2024.
Our mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions.
−Removed: Through our specialist investment managers, we offer specialization on a global scale bringing extensive capabilities in fixed income, equity, alternatives and multi-asset solutions.
+Added: Through our specialist investment managers, we offer specialization on a global scale bringing extensive capabilities in equity, fixed income, alternatives and multi-asset solutions.
For over 75 years, we have been committed to providing clients with exceptional investment management services and have developed a globally diversified business, including through strategic acquisitions.
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Incorporated herein by reference is certain financial information about our segment and geographic areas contained in Note 19 – Segment and Geographic Information in the notes to consolidated financial statements in Item 8 of Part II of this Annual Report.
−Removed: Recent Developments
−Removed: In May 2023, we entered into a definitive agreement to acquire Putnam Investments from Great-West Lifeco., Inc.
−Removed: (“Great-West”), a member of the Power Corporation group of companies.
−Removed: The Power Corporation group of companies including Great-West are leaders in the global insurance, retirement, asset management and wealth management sectors.
−Removed: The acquisition is subject to customary closing conditions and is expected to close in the first quarter of fiscal year 2024.
Company History
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We have added, among others:
−Removed: (i) the Templeton global investment firm in 1992, (ii) the Franklin Mutual Series investment firm in 1996, (iii) the Franklin Bissett Canadian investment firm in 2000, (iv) the Fiduciary Trust International investment and trust services firm in 2001, (v) the Benefit Street Partners alternative credit management firm in 2019, (vi) the Athena Capital Advisors investment and wealth management firm in March 2020, (vii) The Pennsylvania Trust Company investment and trust services firm in May 2020, (viii) the Legg Mason global investment firm in July 2020, (ix) the O’Shaughnessy Asset Management quantitative asset management firm in December 2021, (x) the Lexington Partners global alternatives investment firm in April 2022, and (xi) the Alcentra alternative credit investment firm in November 2022.
+Added: (i) the Templeton global investment firm in 1992, (ii) the Franklin Mutual Series investment firm in 1996, (iii) the Franklin Bissett Canadian investment firm in 2000, (iv) the Fiduciary Trust International investment and trust services firm in 2001, (v) the Benefit Street Partners alternative credit management firm in 2019, (vi) the Athena Capital Advisors investment and wealth management firm in March 2020, (vii) The Pennsylvania Trust Company investment and trust services firm in May 2020, (viii) the Legg Mason global investment firm in July 2020, (ix) the O’Shaughnessy Asset Management quantitative asset management firm in December 2021, (x) the Lexington Partners global alternatives investment firm in April 2022, (xi) the Alcentra alternative credit investment firm in November 2022, and (xii) the Putnam global investment firm in January 2024.
OUR BUSINESS STRUCTURE
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Our business is conducted through our subsidiaries, including our specialist investment managers.
−Removed: Our specialist investment managers include subsidiaries registered with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) as investment advisers under the Investment Advisers Act of 1940 (the “Advisers Act”), as well as subsidiaries registered as investment adviser equivalents in jurisdictions including Australia, Brazil, Canada, China, Hong Kong, Ireland, India, Japan, Luxembourg, Malaysia, Mexico, Singapore, Switzerland, South Korea, Commonwealth of The Bahamas, the United Arab Emirates and the United Kingdom (“U.K.”).
+Added: Our specialist investment managers include subsidiaries registered with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”) as investment advisers under the Investment Advisers Act of 1940 (the “Advisers Act”), as well as subsidiaries registered as investment adviser equivalents in jurisdictions including Australia, Brazil, Canada, China, Commonwealth of The Bahamas, Hong Kong, Ireland, India, Japan, Luxembourg, Malaysia, Mexico, Saudi Arabia, Singapore, Switzerland, South Korea, the United Arab Emirates and the United Kingdom (“U.K.”).
Our AUM by Asset Class and Product Type
−Removed: We offer a broad product mix under our fixed income, equity, alternative, multi-asset and cash management asset classes.
−Removed: Our fixed income capabilities include government, municipals, corporate credit, bank loans, securitized, multi-sector, and other investments.
+Added: We offer a broad product mix under our equity, fixed income, alternative, multi-asset and cash management asset classes.
Our equity capabilities include value, deep value, core value, blend, growth and growth at a reasonable price, convertibles, sector, Shariah, smart beta and thematic investments.
+Added: Our fixed income capabilities include government, municipals, corporate credit, bank loans, securitized, multi-sector, and other investments.
Our alternative capabilities include private debt, hedge funds, private equity, real estate and infrastructure investments.
−Removed: Our multi-asset capabilities include income, real return, balanced/hybrid, total return, target data/risk, absolute return, tactical asset allocation and managed volatility investments.
+Added: Our multi-asset capabilities include income, real return, balanced/hybrid, total return, target date/risk, absolute return, tactical asset allocation and managed volatility investments.
We believe, despite market risks, that we have a competitive advantage as a result of the economic and geographic diversity of our products available to our clients.
funds include U.S.
−Removed: mutual funds, closed-end funds, ETFs and other products.
+Added: mutual funds, closed-end funds, ETFs, private funds, sub-advised funds and other products.
funds include a variety of cross-border funds principally domiciled in Luxembourg or Ireland, registered for sale to non-U.S.
investors in certain other countries, and international locally domiciled funds and products for the particular local market.
−Removed: Our institutional separate account services are provided to various institutions for which we serve as an investment adviser.
+Added: Our institutional separate account services are provided to various institutions globally for which we serve as an investment adviser.
Our retail separately managed accounts, commonly known as managed accounts or wrap programs, are sponsored by various financial institutions.
We also offer and serve as investment adviser to various other products.
−Removed: Our fees for providing investment management services are generally based on a percentage of AUM in the accounts that we advise, the asset classes of the accounts, and the types of services that we provide.
+Added: Our fees for providing investment management services are generally based on a percentage of AUM in the accounts that we advise, and vary based on the asset classes of the accounts, the types of services that we provide, and the market for those services.
AUM by asset class and product type was as follows:
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Funds Institutional Separate Accounts Retail Separately Managed Accounts Other Total Percentage
+Added: $ 359.1 $ 101.9 $ 60.7 $ 94.4 $ 16.0 $ 632.1 38 %
Fixed Income 179.1 63.9 251.3 34.1 28.0 556.4 33 %
−Removed: Equity 207.4 74.9 36.8 72.7 38.6 430.4 31 %
Alternative 145.9 79.8 23.9 0.2 0.1 249.9 15 %
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Total $ 817.0 $ 286.5 $ 341.5 $ 145.3 $ 88.3 $ 1,678.6 100 %
−Removed: See “Assets under Management” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report for additional information about our AUM.
+Added: See “Assets under Management” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Part II of this Annual Report for additional information about our AUM.
Broadly speaking, other than AUM changes due to acquisitions, changes in our AUM depend primarily upon two factors:
(i) the increase or decrease in the market value of the securities and instruments held in the portfolio of investments, and (ii) the level and direction of net flows.
−Removed: Changing market conditions and the evolving needs of our clients may cause asset volatility and a shift in our asset mix, potentially resulting in an increase or decrease in our revenues and income depending upon the nature of our AUM and the level of management fees we earn based on our AUM.
+Added: Changing market conditions, reputational harm and the evolving needs of our clients may cause asset volatility and a shift in our asset mix, which may result in an increase or decrease in our revenues and income.
Our Investment Management Related Services and Products
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Across our business, our specialist investment managers generally focus on a portion of the asset management industry in terms of the types of assets managed and each may differ in the types of products and services offered, the investment styles utilized, and the types and geographic locations of its clients.
−Removed: Each typically markets its products and
−Removed: services under its own brand name, with certain distribution functions provided by our corporate distribution subsidiaries where applicable.
+Added: Each typically markets its products and services under its own brand name, with certain distribution functions provided by our corporate distribution subsidiaries where applicable.
We have in place revenue sharing arrangements with certain of our specialist investment managers.
Our specialist investment managers include:
−Removed: Benefit Street Partners, Brandywine Global, Clarion Partners, ClearBridge Investments, Fiduciary Trust International, Franklin Equity Group, Franklin Income Investors, Franklin Mutual Series, Franklin Templeton Emerging Markets Equity, Franklin Templeton Fixed Income, Franklin Templeton Global Private Equity, Franklin Templeton Investment Solutions, K2 Advisors, Lexington Partners, Martin Currie, O’Shaughnessy Asset Management, Royce Investment Partners, Templeton Global Equity Group, Templeton Global Macro and Western Asset Management.
+Added: Benefit Street Partners, Brandywine Global, Clarion Partners, ClearBridge Investments, Fiduciary Trust International, Franklin Equity Group, Franklin Income Investors, Franklin Mutual Series, Franklin Templeton Fixed Income, Franklin Templeton Investment Solutions, Lexington Partners, Martin Currie, O’Shaughnessy Asset Management, Putnam Investments, Royce Investment Partners, Templeton Global Investments, Templeton Global Macro and Western Asset Management.
Through our specialist investment managers, our investment products are offered globally to retail, institutional and high-net-worth clients, which may include, among others, individual investors, institutional investors, sovereign wealth funds, defined benefit and contribution plans, endowments and charitable foundations, healthcare systems and insurance companies.
−Removed: Our investment products include mutual funds, closed-end funds, private funds, institutional separate accounts, retail separately managed accounts, and other products.
−Removed: Our products and capabilities are designed to accommodate a variety of investment goals and preferences, from capital appreciation to capital preservation, as well as sustainable investing and other environmental, social and governance (“ESG”) preferences.
+Added: Our investment products include mutual funds, closed-end funds, collective investment trusts, interval funds, private funds, institutional separate accounts, retail separately managed accounts, and other products.
+Added: Our products and capabilities are designed to accommodate a variety of investment goals and preferences, from capital appreciation to capital preservation, as well as other investor preferences, which may include sustainable investing and other environmental, social and governance (“ESG”) preferences.
We are committed to partnering closely with our clients to understand their challenges and aspirations, and drawing on our investment capabilities and resources to offer and/or design the right investment solutions for them.
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Our specialist investment managers provide investment management services pursuant to agreements with each of our investment products and/or clients, including products for which we provide sub-advisory services.
−Removed: Investment management fees are generally determined as a percentage of AUM pursuant to such contractual arrangements.
−Removed: Our investment management services include services to accounts for which we have full investment discretion and to accounts for which we have no investment discretion.
−Removed: Our services include fundamental investment research and valuation analyses, including original economic, political, industry and company research, and analyses of suppliers, customers and competitors.
+Added: Our investment management services include fundamental investment research and valuation analyses, including original economic, political, industry and company research, and analyses of suppliers, customers and competitors.
Our management fees vary with the types of services that we provide, and fees may at times be waived or voluntarily reduced by the parties, among other things.
−Removed: Our investment managers manage a fund’s portfolio of securities in accordance with the fund’s stated objectives.
+Added: Our specialist investment managers manage a fund’s portfolio of securities in accordance with the fund’s stated objectives.
To support the funds’ operations, our subsidiaries either provide or arrange for the investment and other management, shareholder servicing and administrative services required by the funds.
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Retail Separately Managed Account Programs
−Removed: Certain of our specialist investment managers provide asset management services to retail separately managed account programs sponsored by various financial institutions.
−Removed: These programs typically allow securities brokers or other financial intermediaries to offer their clients the opportunity to choose from a number of asset management services pursuing different investment strategies provided by one or more investment managers, and generally charge an all-inclusive fee that can cover asset management, asset allocation and custodial and administrative services.
+Added: Certain of our specialist investment managers provide investment management services to retail separately managed account programs sponsored by various financial institutions.
+Added: These programs typically allow securities brokers or other financial intermediaries to offer their clients the opportunity to choose from a number of investment management services
+Added: pursuing different investment strategies provided by one or more investment managers, and generally charge an all-inclusive fee that can cover asset management, asset allocation and custodial and administrative services.
Alternative Products and Strategies
Certain of our specialist investment managers manage alternative products and investment strategies which provide our clients with alternatives to traditional equity and fixed income products and services.
−Removed: Our alternative products include private credit funds and structured products, business development companies, hedge funds (funds of funds and custom advisory solutions), private equity funds, secondary funds, venture capital funds and real estate funds.
+Added: Our alternative products include private credit funds and structured products, business development companies, hedge funds (such as funds of funds and custom advisory solutions), private equity funds, secondary funds, venture capital funds and real estate funds.
These products employ various investment strategies and approaches, including loan origination, collateralized loan obligations, high-yield credit, hedge fund advisory, private equity and infrastructure transactions in emerging markets, global macro, consumer loans, direct real estate investments, and custom-tailored investment programs.
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Sales and Distribution
−Removed: Our global distribution framework is organized into two groups.
−Removed: Our global advisory services group is responsible for sales, marketing and business development and maintains a regional distribution model, with regional teams responsible for driving initiatives in collaboration with global teams.
−Removed: Our global alliances and new business strategies group oversees our digital wealth management and distribution-related technology, joint ventures, product governance, seed capital allocations, fund board management, and direct-to-consumer initiatives.
−Removed: Our groups work together to meet the needs of our advisors, clients and investors.
+Added: Our global distribution group is responsible for sales, marketing and business development and maintains a regional distribution model, with regional teams responsible for driving initiatives in collaboration with global teams.
+Added: Our groups collaborate to meet the needs of our advisors, clients and investors.
There are many sales channels across each region, which may include retail, institutional, private wealth, retirement, insurance, and other specialty sales.
−Removed: Our global footprint and breadth of investment capability provides the opportunity for us to work with global financial institutions to add value through and beyond investing, including by building business relationships and global economic partnerships.
+Added: Our global footprint and breadth of investment capabilities provide the opportunity for us to work with global financial institutions to add value through and beyond investing, including by providing thought leadership and building business relationships and global economic partnerships.
In addition, certain of our specialist investment managers have their own sales and marketing teams that distribute their products and services, primarily to institutional investors, both directly and through consultants.
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Substantially all shareholder servicing fees are earned from our funds for providing transfer agency services, which include providing shareholder statements, transaction processing, client service and tax reporting.
−Removed: Fees for U.S.
−Removed: funds are based on the level of AUM and applicable transactions in shareholder accounts, while outside of the U.S., the fees are based on the level of AUM and/or the number of shareholder accounts.
+Added: Shareholder servicing fees are primarily determined based on a contractual margin, or a percentage of AUM and either the number of transactions in shareholder accounts or the number of shareholder accounts.
We outsource various transfer agency and other services for our funds to third-party providers who serve as a sub-agent or delegate, depending on the jurisdiction.
+Added: Our fees and expenses are routinely benchmarked against applicable industry standards.
The financial services industry is a highly competitive global industry.
Competition is based on various factors, including, among others, business reputation, investment performance, product mix and offerings, service quality and innovation, distribution relationships, and fees charged.
−Removed: We face strong competition from numerous investment management companies, securities brokerage and investment banking firms, insurance companies, banks and other financial institutions, which offer a wide range of financial and investment management services and products to the same retail, institutional and high-net-worth investors and accounts that we are seeking to attract.
+Added: We face strong competition from numerous investment management companies, securities brokerage and investment banking firms, insurance companies, banks, hedge fund firms and other financial management institutions, which offer a wide range of financial and investment management services and products to the same retail, institutional and high-net-worth investors and accounts that we are seeking to attract.
We offer a broad product mix that meets a variety of investment goals and needs for different investors, and we may periodically introduce new products to provide investors with additional investment options.
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Due to our international presence and varied product mix, it is difficult to assess our market position relative to other investment managers on a worldwide basis, but we believe that we are one of the more widely diversified investment managers based in the U.S.
−Removed: We believe that our fixed income, equity, alternative and multi-asset asset mix, coupled with our global presence, will serve our competitive needs well over the long term.
+Added: We believe that our equity, fixed income, alternative and multi-asset asset mix, coupled with our global presence, will serve our competitive needs well over the long term.
We continue to focus on the long-term performance of our investment products, service to clients and extensive marketing activities through our strong broker-dealer and other financial institution distribution network as well as with high-net-worth and institutional clients.
−Removed: The establishment of new investment management firms and continuous development of investment products
−Removed: increases the competition that we face.
+Added: The establishment of new investment management firms and continuous development of investment products increases the competition that we face.
Many of our competitors have long-standing and established relationships with broker-dealers, investment advisers and their clients, and some have affiliated brokerage businesses.
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Our subsidiaries with custody of client assets or accounts are also subject to the applicable laws and regulations of U.S.
−Removed: states and other non-U.S.
−Removed: jurisdictions regarding the reporting and escheatment of unclaimed or abandoned property.
+Added: states and non-U.S.
+Added: jurisdictions regarding the reporting and escheatment of unclaimed or abandoned property, and applicable banking, trust company and/or fiduciary related regulations.
We also must comply with complex and changing tax regimes in the jurisdictions where we operate our business.
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In addition, a public regulatory issue can have a negative impact on our reputation, and as a result have indirect impacts on our business or growth.
−Removed: See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report, for financial information about our business.
+Added: See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of Part II of this Annual Report, for financial information about our business.
Regulatory Framework.
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Department of Justice (“DOJ”), the U.S.
−Removed: Department of Labor, and the USDT.
+Added: Department of Labor (“DOL”), and the USDT.
operations also may be subject to regulation by U.S.
regulators, including the SEC, the CFTC and the DOJ (for example with respect to the FCPA).
−Removed: Certain of our subsidiaries are registered with the SEC under the Advisers Act and/or the CFTC, and many of our funds are registered with the SEC under the Investment Company Act.
+Added: Certain of our subsidiaries are registered with the SEC under the Advisers Act and/or with the CFTC, and many of our funds are registered with the SEC under the Investment Company Act.
These registrations, licenses and authorizations impose numerous obligations, as well as detailed operational requirements, on such subsidiaries and funds.
The Advisers Act imposes numerous obligations on our registered investment adviser subsidiaries, including record keeping, operating and marketing requirements, disclosure obligations and prohibitions against fraudulent activities.
−Removed: The Investment Company Act imposes similar obligations on the registered investment companies advised by our subsidiaries.
+Added: The Investment Company Act similarly imposes extensive obligations on the registered investment companies advised by our subsidiaries.
Regulatory Reforms.
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that impact or relate to our business, and may cause, or continue to cause, us to incur additional obligations, include:
−Removed: Executive Compensation Clawback Rules .
−Removed: In October 2023, we adopted an executive compensation clawback policy in order to comply with new Section 10D and Rule 10D-1 of the Exchange Act, and the listing standards of the NYSE, providing for the repayment or forfeiture of certain excess compensation following an applicable accounting restatement from persons who served as an executive officer of Franklin at any time during the performance period for such incentive-based compensation and who received such compensation during the three fiscal years preceding the date on which Franklin is required to prepare an accounting restatement.
−Removed: A copy of the policy is filed as an exhibit to this Annual Report.
−Removed: Issuer Share Repurchase Plan Disclosure.
−Removed: In May 2023, the SEC adopted final rules requiring additional disclosure of issuer share repurchases, requiring expanded quarterly reporting in tabular format of detailed information regarding share repurchases made by or on behalf of an issuer during the quarter as well as narrative disclosure regarding issuer share repurchase programs and policies.
−Removed: The rules also require new quarterly disclosure of whether a U.S.
−Removed: issuer has adopted or terminated a Rule 10b5-1 trading plan during the quarter, similar to the required disclosure of the adoption and termination of such plans by an issuer’s directors and officers.
−Removed: We will become subject to the new quarterly issuer disclosure requirements in our quarterly report for the fiscal quarter ending December 31, 2023.
+Added: Antitrust Rules and Disclosure.
+Added: In October 2024, the Federal Trade Commission (“FTC”) approved various rule changes under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) that amend certain premerger reporting and notification rules.
+Added: The HSR Act and its implementing rules require parties to certain mergers and acquisitions to submit premerger notifications to the FTC and DOJ and observe a waiting period before consummating such transactions.
+Added: The new rule changes, scheduled to take effect in January 2025, significantly expand the premerger information and documentation required to be submitted in connection with an HSR filing, which could substantially increase our required disclosure and notification expenses and delay transactions.
Cybersecurity Disclosure.
−Removed: In July 2023, the SEC adopted amendments to its rules to require disclosure regarding cybersecurity risk management, strategy, governance and incident reporting by public companies.
−Removed: The SEC’s adopted amendments require public companies to (i) disclose, on a current basis, any cybersecurity incident it deems to be material within four business days on a Form 8-K;
−Removed: (ii) describe, on a periodic basis, the company’s processes, if any, for the assessment, identification and management of material risks from cybersecurity threats, as well as whether any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect their business strategy, results of operations or financial condition;
−Removed: and (iii) describe, on a periodic basis, the board’s oversight of risks from cybersecurity threats and management’s role in assessing and managing those risks.
−Removed: The amendments will require ongoing evaluation and analysis of possible changes in our applicable processes and procedures, including regarding cyber incident response plans and procedures, disclosure analysis framework, risk management processes, and board oversight structure.
−Removed: The current disclosure reporting requirements become effective in December 2023, and we will become subject to the annual disclosure requirements in our annual report for the fiscal year ending September 30, 2024.
+Added: The SEC’s amended rules requiring disclosure regarding cybersecurity risk management, strategy, governance and incident reporting by public companies became effective in December 2023.
+Added: The amendments require public companies to (i) disclose, on a current basis, any cybersecurity incident it deems to be material within four business days on a Form 8-K;
+Added: (ii) describe, on an annual basis, the company’s processes, if any, for the assessment, identification and management of material risks from cybersecurity threats, as well as whether any risks from cybersecurity threats have materially affected or are reasonably likely to materially affect their business strategy, results of operations or financial condition;
+Added: and (iii) describe, on an annual basis, the board’s oversight of risks from cybersecurity threats and management’s role in assessing and managing those risks.
+Added: The amendments require ongoing evaluation and analysis of our applicable processes and procedures, including regarding cyber incident response plans and procedures, disclosure analysis framework, risk management processes, and board oversight structure.
Sustainable Investing and ESG, and Climate-Related Disclosure .
−Removed: Sustainable investing and ESG continue to be the focus of increased regulatory scrutiny across jurisdictions.
−Removed: In the U.S., the SEC has proposed climate disclosure rules to require public issuers to include enhanced disclosure regarding corporate climate-related information in their periodic reports and registration statements.
−Removed: Such information would include climate-related risks that are reasonably likely to have a material impact on an issuer’s business or results of operations, as well as certain climate-related financial statement metrics.
−Removed: In addition, we expect state laws and regulations regarding these topics to continue to evolve and impose new and additional requirements.
−Removed: For example, in October 2023, California enacted a new climate accountability package pursuant to its new Climate Corporate Data Accountability Act that will require annual disclosure of certain greenhouse gas
−Removed: emissions and new Climate-Related Financial Risk Act that will require biennial disclosure of certain climate-related financial risks and mitigation measures, each beginning in 2026, subject to applicable implementing regulations and rulemaking that may impact final scope and compliance timing.
+Added: Sustainable investing and ESG continue to be the focus of increased regulatory and legal scrutiny across jurisdictions.
+Added: In the U.S., the SEC adopted, but subsequently stayed implementation of, climate disclosure rules to require public issuers to include enhanced disclosure and financial metrics regarding corporate climate-related information in their periodic reports and registration statements, and these rules remain subject to applicable legal challenges.
+Added: In addition, state laws and regulations regarding these topics continue to evolve and impose further requirements.
+Added: For example, in October 2023, California enacted a new climate accountability package pursuant to its Climate Corporate Data Accountability Act that requires annual disclosure of certain greenhouse gas emissions and Climate-Related Financial Risk Act that requires biennial disclosure of certain climate-related financial risks and mitigation measures, each beginning in 2026, subject to applicable implementing regulations and rulemaking that may impact final scope and compliance timing.
Also, the SEC has increased its focus on disclosure and compliance related to ESG strategies of investment advisers and funds.
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There is the risk that full mutual recognition may not be achieved between the various regulators, which may cause us to incur duplicate regulation and transaction costs.
+Added: The DOL’s 2024 amended fiduciary rule broadening the definition of who is considered an “investment advice fiduciary” to a retirement investor, and adding significant restrictions and requirements for the use of prohibited transaction exemptions typically relied upon by investment firms such as ours, remains subject to applicable legal challenges.
+Added: Under the new rule, a financial services provider that provides one-time advice to a retirement investor may become subject to the Employee Retirement Income Security Act (ERISA) fiduciary standard.
+Added: In addition to the 2024 fiduciary rule, the DOL amended the Qualified Professional Asset Manager (QPAM) exemption as of June 2024, which many investment firms have relied upon when providing services to and engaging in transactions on behalf of applicable retirement plans, individual retirement accounts (IRAs) and/or certain commingled investment vehicles that have retirement plan investors.
+Added: The QPAM amendment makes material changes and imposes additional conditions and affirmative requirements for the ongoing use of such exemption.
Private Fund Adviser Reforms.
In May 2023, the SEC adopted amendments to Form PF, which is the confidential reporting form that investment advisers to private funds file to provide confidential information to the SEC and the FSOC.
−Removed: The amendments were adopted largely as proposed and will require (i) current and quarterly reporting by large hedge fund advisers regarding certain events that may indicate stress at a fund or signal broader systemic risk;
+Added: The amendments require (i) current and quarterly reporting by large hedge fund advisers regarding certain events that may indicate stress at a fund or signal broader systemic risk;
and (ii) enhanced reporting by large private equity advisers to allow the FSOC to monitor systemic risk.
−Removed: The amendments also will require large private equity fund advisers to report information on general partner and limited partner clawbacks on an annual basis as well as additional information on their strategies and borrowings as a part of their annual filing.
−Removed: The current and quarterly event reporting requirements become effective in November 2023 and the remaining amendments become effective in May 2024.
−Removed: In August 2023, the SEC also adopted new rules and amendments that will require advisers to private funds to (i) obtain an annual audit for each private fund;
−Removed: (ii) provide investors with quarterly statements regarding private fund performance, fees and expenses;
−Removed: and (iii) obtain a fairness or valuation opinion in connection with an adviser-led secondary transaction.
−Removed: Compliance with certain aspects of the rules is required effective in September 2024 and with the remaining elements effective in March 2025.
+Added: The amendments also require large private equity fund advisers to report information on general partner and limited partner clawbacks on an annual basis as well as additional information on their strategies and borrowings as a part of their annual filing.
+Added: The current and quarterly event reporting requirements became effective in November 2023 and the remaining amendments became effective in May 2024.
Money Market Fund Reforms .
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money market funds was previously reformed to address perceived systemic risks of money market funds relating to fund stability and investor risks, including allowing certain funds to impose liquidity fees and redemption gates under certain circumstances.
−Removed: In July 2023, the SEC adopted
−Removed: additional rule and form amendments concerning money market funds registered under the Investment Company Act.
−Removed: The amendments are intended to address problems experienced by certain money market funds in connection with the economic shock at the onset of the COVID-19 pandemic.
−Removed: The new and amended rules will phase in through October 2024 and will, among other changes, impose increased minimum liquidity requirements, impose mandatory liquidity fees on institutional prime and institutional tax-exempt funds under certain circumstances, eliminate redemption gates, and permit share cancellation measures during periods of negative interest rates.
+Added: In July 2023, the SEC adopted additional rule and form amendments concerning money market funds registered under the Investment Company Act, intended to address problems experienced by certain money market funds in connection with the COVID-19 pandemic.
+Added: The new and amended rules were phased in through October 2024 and, among other changes, impose increased minimum liquidity requirements, impose mandatory liquidity fees on institutional prime and institutional tax-exempt funds under certain circumstances, eliminate redemption gates, and permit share cancellation measures during periods of negative
+Added: interest rates.
In addition, the Form PF was further amended to require additional information regarding the private liquidity funds that an investment manager advises.
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Both UCITS are also registered for public sale in many countries around the world, both in the EU and beyond, and thus are also subject to the laws of, and certain supervision by, the governmental authorities of those countries.
−Removed: In the U.K., the Financial Conduct Authority (the “FCA”) and the Prudential Regulation Authority (the “PRA”) currently regulate certain of our subsidiaries.
−Removed: Authorization by the FCA and the PRA is required to conduct any financial services-related business in the U.K.
+Added: In the U.K., the Financial Conduct Authority (the “FCA”) regulates certain of our subsidiaries.
+Added: Authorization by the FCA is required to conduct any financial services-related business in the U.K.
pursuant to the Financial Services and Markets Act 2000.
−Removed: The FCA’s and PRA ’ s rules under that act govern a firm’s capital resources requirements, senior management arrangements, business conduct, interaction with clients, and systems and controls.
+Added: The FCA’s rules under that act govern a firm’s capital resources requirements, senior management arrangements, business conduct, interaction with clients, and systems and controls.
+Added: The FCA recently established Sustainability Disclosure Requirements and we are reviewing the applicable product, marketing and other disclosure requirements for compliance with the December 2024 deadline.
+Added: We offer a significant number of EU UCITS to U.K.
+Added: retail investors which will need to apply for registration under the U.K.’s new Offshore Funds Regime by mid-2025 in order to continue such offerings.
+Added: We await a further consultation from the U.K.
+Added: Treasury as to how such funds may in the future also be covered by the Sustainability Disclosure Requirements.
In addition, the EU Markets in Financial Instruments Directive, as revised and expanded in 2018 (“MiFID II”), regulates the provision of investment services and conduct of investment activities throughout the European Economic Area (“EEA”).
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The AIFMD also regulates the marketing within the EU of all AIFs, including those domiciled outside the EU.
−Removed: The introduction of a third-country passport to non-EU AIFs/AIF managers has been delayed until further positive advice is delivered to the European Commission regarding a sufficient number of non-EU countries to better evaluate the impact, including with respect to the withdrawal of the U.K.
Compliance with the AIFMD’s requirements may restrict AIF marketing and imposes compliance obligations in the form of remuneration policies, capital requirements, reporting requirements, leverage oversight, valuation, stakes in EU companies, the domicile, duties and liability of custodians and liquidity management.
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Related amendments to applicable legislation require that all covered investment managers must consider in their investment process any ESG risks which are likely to have a material impact on the value of the investment and require investment advisers to inquire as to the investor’s desire for ESG-focused products in their portfolio when assessing suitability.
−Removed: The availability of such sustainability disclosure may impact the investment decisions of European investors.
−Removed: The EU’s proposal for a Corporate Sustainability Due Diligence Directive (“CSDD”) would impose due diligence obligations requiring companies to identify, and to prevent or at least mitigate, adverse impacts on human rights and the environment, including by their subsidiaries and supply chain partners.
+Added: The availability of such sustainability disclosures may impact the investment decisions of European investors.
+Added: The EU’s Corporate Sustainability Due Diligence Directive (“CSDD”) will impose due diligence obligations requiring companies to identify, and to prevent or at least mitigate, adverse impacts on human rights and the environment across their value chain, including by their subsidiaries, supply chain partners and clients.
Obligations would be enforced through administrative sanctions and civil liability, with a defense of having exercised reasonable due diligence.
−Removed: The CSDD proposal remains subject to ongoing review and negotiation in the EU.
+Added: The CSDD remains subject to further secondary rulemaking and guidance around implementation.
+Added: While CSDD does not currently apply to investment funds, the European Commission is required to consider the merits of potentially extending the requirements to funds within the next two years.
+Added: As investors in the public markets do not have the contractual relationship with issuers to compel them to provide the information required by CSDD, the imposition of CSDD to funds could prove problematic for the industry.
In Australia, our subsidiaries are subject to various Australian federal and state laws and are regulated by the Australian Securities and Investments Commission (“ASIC”).
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to foster fair, efficient and competitive capital markets;
−Removed: to foster capital formation;
+Added: to foster capital
and to contribute to the stability of the financial system and the reduction of systemic risk.
−Removed: Securities regulatory authorities impose certain requirements on registrants, including a standard of conduct, capital and insurance, record
−Removed: keeping, regulatory financial reporting, conflict of interest management, compliance systems and security holder reporting.
+Added: Securities regulatory authorities impose certain requirements on registrants, including a standard of conduct, capital and insurance, record keeping, regulatory financial reporting, conflict of interest management, compliance systems and security holder reporting.
In addition, one of our Canadian subsidiaries is a federally licensed trust company subject to regulation and supervision by the Office of the Superintendent of Financial Institutions and another subsidiary is a member of and regulated by the Canadian Investment Regulatory Organization.
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Our subsidiaries and employees conducting any of the regulated activities specified in the SFO are required to be licensed with the SFC, and are subject to the rules, codes and guidelines issued by the SFC from time to time.
−Removed: The Securities and Exchange Board of India, Reserve Bank of India, the Ministry of Corporate Affairs and the Department of Industrial Policy and Promotion are the major regulatory authorities that are capable of issuing directions of a binding nature to our subsidiaries in India.
+Added: The Securities and Exchange Board of India, Reserve Bank of India, the International Financial Services Centres Authority, the Ministry of Corporate Affairs and the Department of Industrial Policy and Promotion are the major regulatory authorities that are capable of issuing directions of a binding nature to our subsidiaries in India.
In Japan, our subsidiaries are subject to the Financial Instruments and Exchange Act and the Act on Investment Trusts and Investment Corporations.
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jurisdictions where our subsidiaries, branches and representative offices, as well as certain joint ventures or companies in which we own minority stakes, are authorized to conduct business.
−Removed: We are also subject to regulation and supervision by, among others, the Securities Commission of The Bahamas, the Central Bank of Brazil and the Comissão de Valores Mobiliários in Brazil, the China Securities Regulatory Commission in the People’s Republic of China, the Financial Services Commission and the Financial Supervisory Service in South Korea, the Securities Commission in Malaysia, the Comision Nacional Bancaria y de Valores in Mexico, the Polish Securities and Exchange Commission, the Romanian Financial Services Authority, the Swiss Federal Banking Commission, the Financial Supervisory Commission in the Republic of China, the Dubai Financial Services Authority in the United Arab Emirates, and the State Securities Commission of Vietnam.
+Added: We are also subject to regulation and supervision by, among others, the Securities Commission of The Bahamas, the Central Bank of Brazil and the Comissão de Valores Mobiliários in Brazil, the China Securities Regulatory Commission in the People’s Republic of China, the Financial Services Commission and the Financial Supervisory Service in South Korea, the Securities Commission in Malaysia, the Comision Nacional Bancaria y de Valores in Mexico, the Polish Securities and Exchange Commission, the Romanian Financial Services Authority, the Swiss Federal Banking Commission, the Financial Supervisory Commission in the Republic of China, the Dubai Financial Services Authority in the United Arab Emirates, the Saudi Capital Market Authority, and the State Securities Commission of Vietnam.
INTELLECTUAL PROPERTY
We have used, registered, and/or applied to register certain trademarks, service marks and trade names to distinguish our sponsored products and services from those of our competitors in the U.S.
−Removed: and in other countries and jurisdictions, including, but not limited to, Alcentra ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin ® , Franklin Bissett ® , Franklin Mutual Series ® , K2 ® , Legg Mason ® , Lexington Partners ® , Martin Currie ® , O’Shaughnessy ® Asset Management, Royce ® Investment Partners, Templeton ® and Western Asset Management Company ® .
+Added: and in other countries and jurisdictions, including, but not limited to, Alcentra ® , Benefit Street Partners ® , Brandywine Global Investment Management ® , Canvas ® , Clarion Partners ® , ClearBridge Investments ® , Fiduciary Trust International™, Franklin ® , Franklin Mutual Series ® , K2 ® , Legg Mason ® , Lexington Partners ® , Martin Currie ® , O’Shaughnessy ® , Putnam ® , Royce ® , Templeton ® and Western Asset Management Company ® .
Our trademarks, service marks and trade names are important to us and, accordingly, we enforce our trademark, service mark and trade name rights.
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As of September 30, 2024, we employed approximately 10,200 employees and operated offices in over 30 countries.
+Added: We consider our relations with our employees to be satisfactory.
We depend upon our key personnel to manage our business, including our portfolio managers, investment analysts, sales and management personnel and other professionals as well as our executive officers and business unit heads.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.