SEC Solicits Comments about Extending the Collection of Certain Information from Funds Investing in Registered and Unregistered MMFs

The SEC issued a notice soliciting comments about the extension of information collected from funds under Investment Company Act Rule 12d1-1 ("Exemptions for Investments in Money Market Funds").

Under Investment Company Act Section 12(d), an investment company ("fund") generally is limited in the amount of securities that it may acquire from another fund. Rule 12d1-1 provides an exemption from these limitations for "cash sweep" arrangements, in which a fund invests all or a portion of its available cash in a money market fund ("MMF") rather than directly in short-term instruments. Rule 12d1-1 is intended to provide funds with greater options for cash management by allowing funds to invest in registered and unregistered MMFs.

In order for a registered fund to rely on the exemption, the unregistered MMF must comply with certain requirements for the collection of information for registered MMFs. These requirements are meant to ensure that the unregistered MMF has established procedures for collecting the information necessary to make adequate credit reviews of securities in its portfolio, as well as other recordkeeping requirements to assist (i) the acquiring fund in overseeing the unregistered MMF and (ii) SEC staff in its examination of the unregistered MMF's adviser.

Comments must be submitted to the Office of Management and Budget within 30 days of the publication of the notice.

See: SEC Notice (80 FR 16719).