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SEC Proposes Expedited Review Process for Exemptive Applications

On October 18, 2019, the SEC issued a release proposing amendments to Rule 0 5 under the Investment Company Act of 1940 that would expedite the review process for certain applications for exemptive relief under the 1940 Act. The proposed amendments would also result in an application under standard review being deemed withdrawn if the applicant fails to respond to SEC comments within 120 days. In addition, the SEC proposed a new informal procedural rule that would establish a more transparent, informal review process for applications not qualifying for expedited review.

The three primary changes prescribed by the release are:

  • Expedited Review for Routine Exemptive Applications. Under the proposed amendments to Rule 0-5, expedited review would be available for applications for exemptive relief that are substantially identical to two other applications that have been granted relief similar to that requested within two years of the date on which the application is initially filed. As proposed, an applicant requesting expedited review would submit an application with an identifying notation, cover letter and copies of the two applications relied upon as precedent. The SEC would be required to issue notices for all applications submitted for expedited review within 45 days from the date of filing. The 45-day period would pause if the applicant were to request a modification to the application or upon any irregular closure of the SEC’s Washington, D.C. office. Under the proposal, if an applicant undergoing expedited review were to fail to respond to SEC comments within 30 days of receiving notice, the application would be deemed withdrawn without prejudice.

  • Application Deemed Withdrawn after 120 Days. In addition, the proposed amendments to Rule 0-5 would establish a 120-day window for applicants applying for exemptive relief outside the expedited review process to respond in writing to SEC comments. Failure to meet this deadline would result in an application for exemptive relief being deemed withdrawn; however, the withdrawal would be without prejudice and the applicant could refile.

  • New Internal Time Frame for Standard Review. Applications for exemptive relief that are not eligible for expedited review would continue to be subject to the standard review process. Under a proposed informal procedural rule, 17 C.F.R. § 202.13, the SEC would adopt a non-binding guideline under which the staff would take action on applications under standard review within 90 days of the initial filing or the filing date of any amendment, subject to the ability of the SEC to grant 90-day extensions.

Additionally, the SEC announced its intention to publicly release staff comments on applications, and responses to those comments, no later than 120 days after the final disposition of each application. 

The SEC’s release is available here.

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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...

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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.

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Jacob Tiedt, Vedder Price, investment services attorney
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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....

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Tyrique Wilson Investment Attorney Vedder Price Law Firm
Associate

Tyrique J. Wilson is an Associate in the Chicago office of Vedder Price and a member of the firm’s Investment Services group.

Mr. Wilson received his law degree from the Washington University School of Law in St. Louis and his undergraduate degree from The George Washington University. While in law school, Mr. Wilson was Treasurer of the Black Law Students Association, received an award for Excellence in Oral Advocacy and earned a Certificate in Business Law.

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