Investment Company Act of 1940 - Section 22(e)Investment Company InstituteJune 1, 2018Response of the Chief Counsel's OfficeDivision of Investment ManagementYour letter dated May 30, 2018 requests our assurance that we would not recommend enforcement action to the Securities and Exchange Commission (the "SEC" ) against a registered open-end investment company (a "mutual fund") or its SEC-registered transfer agent under Section 22(e) of the Investment Company Act of 1940 (the "Act") if, in the limited circumstances and subject to the conditions described in your letter, the transfer agent, acting on behalf of the mutual fund, temporarily delays for more than seven days the disbursement of redemption proceeds from the mutual fund account of a Specified Adult held directly with the transfer agent based on the transfer agent's reasonable belief that financial exploitation of the Specified Adult has occurred, is occurring, has been attempted, or will be attempted. You represent that financial exploitation of seniors and other vulnerable adults is a serious problem, with substantial amounts lost annually to senior financial abuse.You note that FINRA Rule 2165, adopted last year, enables a FINRA member (i.e., a broker-dealer) who has a reasonable belief that financial exploitation of a Specified Adult has occurred, is occurring, has been attempted, or will be attempted, to place a temporary hold on the disbursement of funds or securities from the Specified Adult's account, in accordance with the conditions set forth in FINRA Rule 2165. You further state that some mutual fund shareholder accounts are held directly with the mutual fund and serviced by the fund's transfer agent ("direct-at-fund" accounts). For such accounts, the transfer agent is typically responsible for opening and servicing the accounts, maintaining account records, and serving as the fund's point of contact with those shareholders. You represent that, given its relationship with direct-at-fund shareholders, the fund's transfer agent may be best positioned to detect financial exploitation of certain of the fund's senior and other vulnerable adult shareholders. You state that mutual fund transfer agents may wish to protect Specified Adult shareholders from financial exploitation to the same extent that broker-dealers may do so under FINRA Rule 2165.Based on your facts and representations, we would not recommend enforcement action to the SEC against a mutual fund or its SEC-registered transfer agent under Section 22(e) of the Act if, in accordance with the terms and conditions described in your letter, the transfer agent, acting on behalf of the mutual fund, temporarily delays for more than seven days the disbursement of redemption proceeds from the mutual fund account of a Specified Adult held directly with the transfer agent based on a reasonable belief that financial exploitation of the Specified Adult has occurred, is occurring, has been attempted, or will be attempted. This response expresses our views on enforcement action only and does not express any legal conclusions on the questions presented. Because our position is based on the facts and representations in your letter, different facts or representations may require a different conclusion.Jennifer O. PalmerSenior Counsel= = = Section 17A(c) of the Securities Exchange Act of 1934 and the rules thereunder require that transfer agents register with the SEC or, if the transfer agent is a bank, with a bank regulatory agency. See 12 CFR 9.20(c); 17 CFR 240.17Ac2-1-3. Section22(e) of the Act prohibits a registered investment company from suspending the right of redemption or postponing the date of payment or satisfaction upon redemption of any redeemable security in accordance with its terms for more than seven days after the tender of such security to the company or its agent designated for that purpose for redemption. 15 U.S.C § 80a-22(e). The terms "Specified Adult," "account," and "financial exploitation" as used in this letter have substantially the same meaning as those terms are defined in FINRA Rule 2165, Financial Exploitation of Specified Adults. A Specified Adult is: (A) a natural person age 65 and older; or (B) a natural person age 18 and older who the transfer agent reasonably believes has a mental or physical impairment that renders the individual unable to protect his or her own interests. See FINRA Rule 2165(a)(1). Account means an account for which a Specified Adult has the authority to transact business. See FINRA Rule 2165(a)(2). Financial exploitation means: (A) the wrongful or unauthorized taking, withholding, appropriation, or use of a Specified Adult's funds or securities; or (B) any act or omission by a person, including through the use of a power of attorney, guardianship, or any other authority regarding a Specified Adult, to (i) obtain control, through deception, intimidation or undue influence, over the Specified Adult's money, assets or property, or (ii) convert the Specified Adult's money, assets or property. See FINRA Rule 2165(a)(4).
2 Lies To FINRA Add Up To 1 Bar (BrokeAndBroker.com Blog)
With some folks, it just seems that their luck runs out. After a remarkable run beset with almost losing one's balance, almost falling down, almost getting hit by a falling something or other, almost not getting over an obstacle -- at some point, it ends short of the finish line. No prize. No trophy. Just another also-ran. In today's BrokeAndBroker.com Blog we look back on the career of one stockbroker who almost made it through the Wall Street obstacle course. Perhaps figuring he had several cat lives left, our contestant lied to FINRA and then lied to that regulator again. Not a smart idea the first time. Not a smart idea the second time.
SEC Charges 13 Private Fund Advisers for Repeated Filing Failures (SEC Press Release 2018-100)
Bachrach Asset Management Inc.; Biglari Capital LLC; Brahma Management Ltd.; Bristol Group Inc.; CAI Managers & Co. L.P.; Cherokee Investment Partners LLC; Ecosystem Investment Partners LLC; Elm Partners Management LLC; HEP Management Corp.; Prescott General Partners LLC; RLJ Equity Partners LLC; Rose Park Advisors LLC; and Veteri Place Corp. settled with the SEC in response to the federal regulator's allegations that the 13 registered investment advisers ("RIAs") had failed to file annual reports on Form PF about the private funds they advise, including the amount of assets under management, fund strategy, performance, and use of borrowed money and derivatives; and that each RIA was delinquent in their filings over multi-year periods. Without admitting or denying the findings, the advisers agreed to be censured, to cease and desist, and to each pay a $75,000 civil penalty. During the course of the SEC's investigation, the advisers also remediated their failures by making the necessary filings. READ the FULL TEXT Orders.