RegAlert2018-05-30
Added · Updated
SEC Division of Investment Management staff letter: Investment Company Institute
The Investment Company Institute requests no-action relief from the SEC staff to allow mutual fund transfer agents to temporarily delay redemption proceeds for more than seven days for Specified Adults suspected of financial exploitation. This relief would align mutual fund protections with FINRA Rule 2165, permitting holds of up to 25 business days under specific conditions. The requested conditions include obtaining trusted contact person information, notifying authorized parties within two business days, and conducting an internal review. The relief applies to direct-at-fund accounts serviced by SEC-registered transfer agents.
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1401 H Street, NW, Washington, DC 20005-2148, USA 202/326-5800 www.ici.org May 30, 2018 ChiefCounsel Division oflnvestment Management U.S. Securities and Exchange Commission 100 F Street NE Washington, DC 20549-8549 Re: Request for No-Action Relief Under the Redemption Requirements ofSection 22(e) of the Investment Company Act of 1940 Dear Mr. Scheidt:
The Investment Company Institute' seeks assurances from the staff ofthe Division of Investment Management (the "Staff') that it will not recommend enforcement action to the Securities and Exchange Commission ( the "Commission" or "SEC") against a registered open-end investment company (a "mutual fund") or its SEC-registered transfer agent under the redemption requirements of
Section 22(e) ofthe Investment Company Act of 1940 (the "Act") if, in the limited circumstances
described in this letter, the transfer agent, acting on behalfofa mutual fund, temporarily delays for more than seven days the disbursement ofredemption proceeds from the mutual fund account ofa Specified Adult held directly with the transfer agent based on the transfer agent's reasonable belief that financial exploitation ofthe Specified Adult has occurred, is occurring, has been attempted, or will be attempted.2 Providing mutual funds and their transfer agents the relief we request is consistent with 1 The Investment Company Institute is the national association ofU.S. investment companies, including mutual funds, closed-end funds, exchange-traded funds (ETFs), and unit investment trusts (UITs). ICI seeks co encourage adherence to high ethical standards, promote public understanding, and otherwise advance the interests offunds, their shareholders, directors, and advisers. Members ofICI manage total assets of$20.9 trillion and serve over 100 million shareholders. 2 The terms "Specified Adultt "accountt and "financial exploitation" as used in chis letter have substantially the same meaning as chose terms are defined in FINRA Rule 2165, Financial Exploitation ofSpecified Adulcs. A Specified Adult is:
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