SEC IM No-Act. to Adviser to Non-U.S. Insurance Company (with Lofchie Comment)

The SEC announced that it will not recommend enforcement action against TACT Asset Management Inc. ("TACT") under Section 203(a) of the Advisers Act if TACT does not register with the Commission as an investment adviser under the Advisers Act. TACT is a wholly owned subsidiary of Sompo Japan Nipponkoa Asset Management Co., Ltd. ("SJNAM"), and its only client was to be be Nipponkoa Insurance Co., Ltd. ("Nipponkoa").

Section 203(b)(2) of the Advisers Act exempts from registration any adviser whose only clients are insurance companies. The argument made in the incoming letter was that, even though Nipponkoa is a Japanese and not a U.S. insurance company, the exemption should be available. The SEC apparently accepted this argument.

Cross-Reference(s): Investment Advisers Act Sec. 203(a).

Lofchie Comment: I don't know how many Japanese entities have "Nipponkoa" in their name, but I wondered if this was an instance of an adviser serving an affiliated entity that is under complete common control. If so, it would have been better if the no-action advice had been based on the corporate relationship. To me, there is no logic in requiring the registration of an entity that gives advice to an affiliate under common control; ultimately, the parent company is just giving advice to itself. (Maybe the name was just a coincidence; the letter makes no mention of the corporate relationship.)

View letter in full here (links externally to SEC website). See also: Incoming Letter.