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Our Take Blog

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SEC Staff Offers Relief for Pay-to-Play Recordkeeping Requirements

SEC Staff Offers Relief for Pay-to-Play Recordkeeping Requirements

The staff of the Division of Investment Management has granted no-action relief from the pay-to-play recordkeeping requirements with respect to government entities investing in fund through intermediaries. The Investment Company Institute asked for no-action relief because fund sponsors may have no way of knowing whether an investor coming through an intermediary is a government entity subject to the recordkeeping requirements. Rather than strictly following the rule, a fund sponsor must identify any government entity solicited by the fund sponsor as well as all government entities that “can reasonably be identified.” 

OUR TAKE: This no-action position cures a problem initially expressed by the ICI with the rule as adopted.
/files/5/4/0/0/2/128517-120045/ICI_Pay_to_Play_NAL_Response.pdf”>ICI No-Action Letter Response
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