RegAlert2005-04-28
Added · Updated
SEC Division of Investment Management staff letter: American Skandia Life Assurance Corporation
The SEC staff agrees not to recommend enforcement action against registered investment advisers who deduct advisory fees directly from client variable annuity accounts maintained with American Skandia or its insurance affiliates, rather than with a qualified custodian as defined in Rule 206(4)-2. This relief applies to advisers deemed to have custody because they are authorized to withdraw funds from these accounts, provided the arrangements include written client authorization, accurate record-keeping via the Variable Annuity Product System, and quarterly account statements disclosing fee deductions. The staff's position relies on the similarity between these insurance company arrangements and the mutual fund exception, noting that state insurance regulations provide solvency and capital adequacy protections comparable to those for qualified custodians.
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DEBEVOISE & PLIMPTON LLP
555 13th Street, N.W.
Washington, D.C. 20004
Tel 202 383 8000
Fax 202 383 8118 www.debevoise.com
April 28, 2005
Douglas J. Scheidt, Esq.
Associate Director and Chief Counsel
Division of Investment Management
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C. 20549
Re: Investment Adviser Custody/Rule 206(4)-2
Dear Mr. Scheidt:
We are submitting this letter on behalf of American Skandia Life Assurance Corporation (“American Skandia”), a stock life insurance company domiciled in Connecticut with licenses in all 50 states, the District of Columbia and Puerto Rico. American Skandia is a wholly-owned subsidiary of American Skandia, Inc. (“ASI”), whose ultimate parent is Prudential Financial, Inc.
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