September 25, 2020

Volume X, Number 269

September 25, 2020

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September 23, 2020

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SEC Adopts Expedited Review Process for Exemptive Applications Under the Investment Company Act

On July 6, 2020, the SEC adopted amendments to Rule 0-5 under the Investment Company Act of 1940, establishing an expedited review process for exemptive applications. Under amended Rule 0-5, an applicant may request expedited review if an application is substantially identical to two other applications for which an order granting the requested relief has been issued within three years of the date of the application’s initial filing. An application is “substantially identical” if it contains identical terms and conditions, and differs only with respect to factual differences that are not material to the relief requested. An applicant seeking expedited review must (i) prominently state that expedited review is requested, (ii) submit exhibits with marked copies of the application showing changes from the two precedent applications and (iii) submit a cover letter identifying the precedent applications, and explaining why the applicant chose those particular precedents if more recent applications of the same type have been approved. An applicant must also certify that the application meets the requirements of the expedited review process.

Under the expedited review process, the SEC staff will issue a notice of application no later than 45 days from the initial filing date, unless the staff determines that the application is ineligible for expedited treatment or that further consideration is required. The 45-day period will pause if the staff requests that an application be modified and will resume on the 14th day after the applicant files an amended application responsive to the staff’s request. If an unsolicited amendment is filed, the 45-day period will similarly pause, but resume on the 30th day following the amendment filing. Whether or not requested by the staff, amended applications must include a marked copy showing any changes made and a certification that it is complete and accurate. If the SEC staff notifies the applicant under Rule 0-5(f)(1)(ii) that an application is not eligible for expedited review, it will give the applicant the option to either withdraw the application or amend it to make changes so that the application could proceed outside of the expedited review process.

Other amendments adopted by the SEC include an informal procedure setting forth the intended timeframe for exemptive applications filed outside of the expedited review process—i.e., “standard review”—directing that the SEC staff should take action within 90 days of the initial filing and each of the first three amendments thereto, and within 60 days of any subsequent amendment thereafter. In addition, if an applicant has not responded in writing to a request for clarification or modification of an application filed under standard review within 120 days after the request, the application will be deemed withdrawn.

The amendments will become effective 270 days after the date of their publication in the Federal Register.

The SEC’s final rule is available here.

© 2020 Vedder PriceNational Law Review, Volume X, Number 220

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About this Author

Legal, Business, John Marten, Investment Attorney, Vedder Price Law FIrm
Shareholder

John S. Marten, a Shareholder in the Chicago office of Vedder Price, has substantial experience representing clients in the investment management industry.

As a member of the firm’s Investment Services group, Mr. Marten counsels clients on a wide variety of matters involving the application of the federal securities laws to investment companies, investment advisers and broker-dealers. He has significant experience counseling investment company clients with respect to new products and was recently involved in the creation of two mutual funds...

(312) 609 7753
Nathaniel Segal, Investment Attorney, Vedder Price Law Firm
Associate

Nathaniel Segal is an Associate at Vedder Price and a member of the Investment Services group. He focuses his practice on investment companies and investment advisers in connection with the organization and operation of investment products and services, including traditional mutual funds, closed-end investment companies (including interval funds and listed closed-end funds), variable insurance products and registered hedge funds, as well as mutual funds utilizing complex hedging and absolute return strategies. Mr. Segal has experience in conducting transactional due diligence and drafting regulatory disclosures in connection with fund reorganizations and management acquisitions. He counsels clients on a wide variety of regulatory matters, including interpretive and no-action letter requests and SEC exemptive orders, as well as governance matters and internal compliance procedures in response to SEC examinations and inquiries.

(312) 609 7747
Jacob Tiedt, Vedder Price, investment services attorney
Shareholder

Jacob C. Tiedt is a Shareholder at Vedder Price and a member of the Investment Services group.

Mr. Tiedt’s practice includes the representation of registered mutual funds, closed-end funds and exchange-traded funds; private funds; investment advisers; and other financial institutions on a broad range of regulatory, governance and compliance matters. Mr. Tiedt regularly counsels clients on matters relating to SEC registration, disclosure and compliance; shareholder solicitation; NYSE, Nasdaq and FINRA regulation; corporate governance; and board administration. Mr....

312-609-7697
Cody Lipke Investment Attorney Vedder Price Chicago
Associate
Cody L. Lipke is an Associate in the Chicago office of Vedder Price and a member of the firm’s Investment Services group.

While in law school, Mr. Lipke was a Notes & Comments Editor for the Chicago-Kent Law Review and a member of the Moot Court Honor Society. He worked as a Research Assistant for Professors Adrian Walters and Sungjoon Cho at Chicago-Kent College of Law. Mr. Lipke studied for one exchange semester at Bucerius Law School in Hamburg, Germany, focusing on areas of corporate governance and European securities law. Prior to joining Vedder Price, he was an...

312-609-7669