SEC Staff Issues No-Action Letter Providing Relief for Multi-Manager Funds with Respect to Shareholder Approval Requirement for Affiliated Sub-Advisers

July 23, 2019

On July 9, 2019, the SEC staff granted no-action relief under Section 15(a) of the Investment Company Act of 1940 and certain disclosure requirements, which relief provides additional flexibility to multi-manager funds and investment advisers operating under an existing multi-manager exemptive order, without having to seek amendments to their current orders. Under the relief, such funds are permitted to enter into new or modified sub-advisory agreements with an existing or new sub-adviser without the approval of fund shareholders, irrespective of the level of the sub-adviser’s level of affiliation with the fund’s investment adviser. The relief also permits the funds to disclose advisory fees paid to the sub-advisers on an aggregate, rather than individual, basis. To benefit from the relief, the funds would need to comply with conditions set forth in a recent exemptive order for multi-managers with respect to affiliated sub-advisers, including obtaining shareholder approval to operate as a fund using multi-manager relief for affiliated sub-advisers. Prior to this recent exemptive order, SEC orders granting multi-manager relief extended only to sub-advisers that were not affiliated sub-advisers or were wholly owned subsidiaries of the fund’s primary investment adviser.

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Compliance, Investment Advisers, Investment Companies, Mutual Funds, Regulatory