RegAlert2016-04-14
Added · Updated
SEC Division of Investment Management staff letter: J.P. Morgan Securities LLC
J.P. Morgan Securities LLC and its broker-dealer affiliates request no-action relief from Section 206(3) of the Investment Advisers Act of 1940 to purchase fractional shares from advisory client accounts without obtaining transaction-by-written consent. The request specifies that these purchases must occur on the same day and at the same market closing price as the sale or transfer of corresponding whole shares, with no commissions charged and prior written disclosure provided to clients. The staff letter addresses the legal interpretation of principal transactions involving these immaterial, illiquid interests to determine if enforcement action is warranted.
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Davis Polk
Nora M. Jordan
Davis Pol & Wardwell LLP 212 450 4684 tel
450 Lexin ton Avenue 212 450 6824 fax
New York
Menlo Park
Washington DC
Sao Paulo
London
Paris
Madrid
Tokyo
Beijing
Hong Kong
New York, NY 10017 nora.jordan@davispolk com
Advisers Act
Section 206(3)
April 14, 2016
Mr. Douglas J. Scheidt
Chief Counsel
Office of Chief Counsel
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
CONFIDENTIAL TREATMENT REQUESTED BY
J.P. MORGAN SECURITIES LLC
Re: Request for no-action relief: Section 206(3) and fractional shares Dear Mr. Scheidt:
On behalf of J.P. Morgan Securities LLC ("JPMS"), we respectfully request that the staff (the "Staff') of the Division of Investment Management of the Commission advise us that the Staff will not recommend Commission enforcement action under Section 206(3) of the Investment Advisers Act of 1940, as amended (the "Advisers Act"), against JPMS or certain of its affiliates that are broker-dealers registered with the Commission ("broker-dealer affiliates"), if JPMS and the broker-dealer affiliates purchase fractional shares (as defined below) from advisory client accounts as described below.
- Factual Background
JPMS is a wholly-owned subsidiary of JPMorgan Chase & Co., a publicly-held financial services holding company. JPMS is registered with the Commission as both a broker-dealer and investment adviser. Certain JPMS affiliates are also registered as investment advisers with the Commission (together with JPMS, each an "Adviser" and together the "Advisers"). The Advisers' investment advisory services include managing and exercising investment discretion over client accounts, through which the assets of their clients are invested in individual securities (as well as other instruments such as mutual funds and ETFs). #86233733v29
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