March 30, 1993
TO: SEC RULES COMMITTEE NO. 28-93
RE: SEC PROPOSES EXPEDITED REVIEW PROCEDURES FOR CERTAIN
EXEMPTIVE APPLICATIONS
__________________________________________________________
The Securities and Exchange Commission has proposed for
public comment an amendment to Rule 0-5 under the Investment
Company Act of 1940 that would establish an expedited review
procedure for certain exemptive applications. In addition, the
Commission has proposed an amendment to Rule 30-5 under the Act
to expand the delegated authority of the Director of the Division
of Investment Management. These amendments would implement the
staff's recommendations made in its report on reform of the 1940
Act. A copy of the release is attached.
Specifically, the proposed amendment to Rule 0-5 would
allow certain applicants to receive an exemptive order within 90
days of filing an application. The expedited review procedures
would be available only to applicants who are seeking relief that
is consistent in all material respects with the "most recent
order" issued on applications for the same relief. The rule
defines "most recent order" as an order that was issued at least
thirty days and not more than two years preceding the filing of
the application seeking expedited review.
Applicants seeking expedited review would be required to
include in their applications each condition and each material
representation included in the final version of the most recent
precedential application. In addition, an application would have
to include, among other things, a copy of the application marked
to show all changes from the application that was granted by the
most recent order submitted as precedent and a statement signed
by counsel representing that the application meets each of the
requirements of subparagraph (b)(1) of amended Rule 0-5.
As you may recall, the Institute sent a letter to the staff
urging the adoption of a procedure for the automatic issuance of
orders after a stated period of time, which we initially
suggested in our comment letter on the 1940 Act study release.
(See Memorandum to SEC Rules Committee No. 69-92, dated September
11, 1992.) The Commission states in the release that it objects
to an automatic exemptive procedure for several reasons,
including its concern that the passive granting of exemptive
relief could be inconsistent with the limitation in Section 6(c)
that the Commission grant an exemption only if it is necessary or
appropriate in the public interest and consistent with the
protections of investors and other purposes intended by the Act.
The proposal to expand the Director's delegated authority
would amend Rule 30-5 to grant delegated authority with respect
to all sections of the 1940 Act and Investment Advisers Act,
except as specifically limited. In addition, the amendments
would incorporate a new concept of discretion so that the
Division Director generally could issue notices and orders under
all provisions of those Acts if the matter did not appear to
present significant issues not previously settled by the
Commission, or to raise questions of fact or policy indicating
that the public interest or the interest of investors warranted
consideration of the matter by the Commission.
The Commission has solicited comment on a number of aspects
of the proposed expedited review procedures. Comments are due
within 90 days after the date the release is published in the
Federal Register. Please provide me with your comments on the
proposal by May 14, 1993. My direct number is 202/955-3523 and
our fax number is 202/659-1519.
Amy B.R. Lancellotta
Associate Counsel
Attachment