SEC Issues Guidance About Complying with Exemptive Orders

May 1, 2013

The SEC’s Division of Investment Management issued another IM Guidance Update, which focused on the importance of complying with the terms of exemptive orders granted to investment advisers and mutual funds. The SEC stated that entities that receive and rely upon exemptive orders are at risk of violating the federal securities laws if they fail to comply with the representations and conditions of such orders. In the SEC’s view, the consequences of non-compliance may be severe. The SEC added that one way for such entities to address such risk is to adopt and implement policies and procedures, in accordance with Rule 206(4)-7 under the Advisers Act or Rule 38a-1 under the 1940 Act, that are reasonably designed to ensure ongoing compliance with each representation and condition of the order. For example, a fund may have received an order that includes conditions relating to board review. It noted that the fund could consider adopting a specific policy or procedure to address the required board review.

Click here to access the IM Guidance Update.


Investment Advisers, Investment Companies