October 16, 1992
TO: SEC RULES MEMBERS NO. 47-92
SMALL FUNDS COMMITTEE NO. 17-92
COMPLIANCE COMMITTEE NO. 19-92
TAX MEMBERS NO. 66-92
RE: NO-ACTION LETTER PERMITTING INVOLUNTARY REDEMPTION FOR
FAILURE TO SUPPLY TIN
__________________________________________________________
The Division of Investment Management recently stated that
it would not recommend enforcement action under the Investment
Company Act if open-end funds involuntarily redeem the account of
any shareholder who has failed to furnish a certified social
security or tax identification number ("TIN") to the funds. The
funds had represented that such involuntarily redemptions would
reduce unnecessary expenses associated with the maintenance of an
account of shareholders who fail to provide a TIN, and therefore
should benefit a majority of fund shareholders.
The staff noted in its response that the funds do not
charge either an initial or deferred sales load, and would not
impose any charge for the redemptions. In addition, the funds
will (1) give shareholders at least 30 days’ notice before
involuntarily redeeming shares, (2) disclose the involuntarily
redemption procedure in their prospectuses, (3) not involuntarily
redeem for any "discriminatory or other improper purposes," and
(4) obtain board approval for implementation of the involuntarily
redemption procedure. The funds also represented that the
procedure would comply with applicable state law.
A copy of the funds’ letter and the staff’s response is
attached.
Thomas M. Selman
Assistant Counsel
Attachment