SEC Division of Investment Management staff letter: Wells Fargo Securities, LLC, et al.

March 21, 2019 Stacy L. Fuller stacy.fuller@klgates.com By E-mail T + 1 202 778 9475 F +1202778 9100 Paul Cellupica, Esq. Deputy Director and Chief Counsel Division of Investment Management U.S. Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: Securities and Exchange Commission v. R.I. Commerce Corp. (f/kla R.I. Econ. Dev. Corp.), eta/., Case No. 1:16-cv-107-M-PAS (D.R.I.) - Request for Relief under Rule 206(4)-3 under the Investment Advisers Act of 1940 Dear Mr. Cellupica:
This letter is submitted on behalf of our client, Wells Fargo Securities, LLC ('WFS"). in connection with the settlement of the above-captioned civil injunctive action ("Action") brought by the U.S. Securities and Exchange Commission ("Commission") in the U.S. District Court for the District of Rhode Island ("District Court"). Pursuant to the terms of the settlement, a judgment will be entered by the District Court in the Action against WFS ("Final Judgment"). WFS seeks the assurance of the Staff of the Division of Investment Management (the "Staff') that it will not recommend any enforcement action to the Commission under Section 206(4) of the Investment Advisers Act of 1940, as amended (the "Advisers Act") or Rule 206(4)-3 thereunder (the "Rule") if an investment adviser required to be registered pursuant to Section 203 of the Advisers Act directly or indirectly pays to WFS or any person through whom WFS directly or indirectly conducts its solicitation activities a cash solicitation fee pursuant to the Rule, notwithstanding the existence of the Final Judgment, which would otherwise preclude an investment adviser from making such a payment. WFS is an indirect wholly-owned subsidiary of Wells Fargo & Company, a registered financial holding company and bank holding company. WFS is a broker-dealer registered under the Securities Exchange Act of 1934 ("Exchange Act'') as well as a municipal securities broker and a municipal securities dealer subject to the rules of the Municipal Securities Rulemaking Board ("MSRB"). Historically, WFS has engaged in cash solicitation activities from time to time that are subject to the Rule. The Final Judgment permanently enjoins WFS from violating Section 17(a)(2) of the Securities Act of 1933 ("Securities Act"}, Section 15B(c)(1) of the Exchange Act, and MSRB Rule G-17. Although the Final Judgment does not itself relate to cash solicitation activities, the District Court's entrance of the Final Judgment may operate to limit the ability of WFS and its associated persons to receive cash solicitation fees. The Rule prohibits an investment adviser that is required to be registered under the Advisers Act from paying such fees to any solicitor that "is subject to an order, judgment or decree described in Section 203(e)(4) of the [Advisers] K&L GATES LLP 1601 KSTREETNW WASHINGTON DC20006-1600 T +1202 778 9000 F +1202778 9100 KLGATES.COM klgates.com