SEC Issues No-Action Relief to Fund That Relies on Exemptive Order for Collecting Compensation

The SEC announced that it will not recommend enforcement action under certain provisions of the Investment Company Act against various investment entities (the "Fund") that rely on an exemptive order for employees' securities companies (the "Order").

The Order states that the investment manager of the Fund may receive compensation for advising an underlying fund in which the Fund invests, but that the investment manager will waive any compensation that it receives as a result of the Fund's investment in the underlying fund. The investment manager does not intend to waive its fee due to (a) employees' desire to invest in a particular underlying fund that no longer has the capacity for management-fee-free assets, and (b) employees' ability to redeem their interest in the Fund prior to the fee waiver.

See:No-Action Letter.