SEC Division of Investment Management staff letter: Seward & Kissel

The letter requests an interpretation of the term 'substantial portion' in Investment Company Act Rule 3a-6(b)(2) regarding foreign banks. It argues that foreign banks should not be required to maintain a specific quantitative threshold for deposit-taking, provided they are authorized to take deposits and extend credit at levels making the combination of these activities a substantial portion of their business. The correspondence asserts that this approach aligns with the Rule's intent to place foreign banks on equal footing with domestic banks and reflects modern funding practices.

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INCOMING LETTER:
Anthony C.J. Nuland
Partner
(202) 737-8833
October 12, 2005
VIA HAND DELIVERY
Douglas J. Scheidt
Associate Director and Chief Counsel
Office of the Chief Counsel
Division of Investment Management
U.S. Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-0506
Re: Request for interpretation of “substantial portion” as used in Investment Company Act Rule 3a-6 Dear Mr. Scheidt:
We are writing to you to follow up on our correspondence and telephone conversations with the Staff regarding the Staff’s willingness to entertain a request for an interpretation of the term “substantial portion” as used in subsection (b)(2) of Rule 3a-6 (“Rule 3a-6” or the “Rule”) under the Investment Company Act of 1940 (the “1940 Act”). As discussed further herein, foreign banks we represent are concerned that it may become increasingly uneconomical for them to comport with current interpretations of what constitutes being engaged substantially in commercial banking activities for purposes of reliance on Rule 3a-6. We believe that this concern is not unique to our clients and applies to foreign banks generally. Rule 3a-6 excludes a “foreign bank,” as defined in the Rule, from the definition of investment company within the meaning of the 1940 Act, and was designed to put

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Source: Securities and Exchange Commission — original document · Summary generated with machine assistance and reviewed before publication; the authoritative text is the regulator's original document. How RegAlert works