SEC Proposes Exemptions to Application Procedures
SEC Proposes Exemptions to Application Procedures

The Securities and Exchange Commission (“SEC”) has announced that it voted to establish an expedited review process for Investment Company Act applications that are substantially identical to recent precedent. Intended to make the application process more efficient by streamlining the process for routine applications and reduce the likelihood that applicants would need to file amendments to applications in response to staff comments.

By streamlining the process for routine applications, the goal is that applicants will experience reduced costs in drafting applications and responding to amendments. The staff will gain time and resources to devote toward novel requests that would foster industry innovation and develop new investment opportunities for investors.

Read the SEC Press Release Here.

Proposed Expedited Review Process

To qualify for the newly proposed expedited review, the application must be “substantially identical” to recent precedent, citing two other applications for which an order has been granted within the past two years.

To be substantially identical, the applications must 

  • Seek relief from the same sections of the Act and rules thereunder;
  • Contain identical terms and conditions;
  • Differ only with respect to factual matters that are not material to relief requested.

Response Times

The SEC proposal states that it would grant notice for files under expedited review within 45 days of the filing date unless the application is ineligible, requires comments from staff. Other exceptions to the 45-day response rate would be if the applicant is considering policy changes relevant to an expedited application or if there is an irregular closure of the SEC offices due to a national emergency, government shutdown, federal holiday or inclement weather.

The SEC is also proposing to amend rule 0-5 to consider an application withdrawn if the applicant does not respond in writing to staff comments within 120 days. The withdrawn classification, which will be without prejudice and eligible for reapplication, will help the SEC to provide a more accurate record of the pending applications under consideration.

Novel Review Applications

The amount of time gained by the streamlining of the expedited review process will enable staff to devote more time to applications that seek unprecedented relief or raise additional questions of fact, law or policy. These applications often involve time consuming communications between the reviewing staff and the applicant who work closely together to refine the proposal and develop conditions for the requested relief.

The hope is that the proposed actions could foster the submission of a greater number of novel applications leading to greater innovation in investment products, benefitting investors.

Increased Transparency

Additionally, the SEC proposal plans to publicly disseminate staff comments on both expedited and novel applications, including the responses to the comments, no later than 120 days after the final decision has been made. The increased transparency is intended to provide clearer expectations and help applicants learn from previous comments.

The SEC invites public comment on the proposed changes through November 29, 2019. It will review the comments before proceeding with any changes.

Let Our Experience Work for You

If you have a private fund that you would like to take public, potential changes in review procedures may pave the way for an easier path. Jacko Law Group and our team of attorneys may help your firm with applications and with registrations both under the current landscape and once the proposed changes are implemented. Contact our team of attorneys today.

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