SEC Staff Says to File Exemptive Application If It Won’t Grant No-Action Relief
The SEC staff indicated that a party wishing to appeal the denial of no-action relief should consider submitting a request for exemptive relief rather than trying to force the staff to present the issue to the full Commission. In this recent situation, the staff denied the fund’s no-action request related to a tax issue. The staff did not feel that the requested relief presented questions “which involve matters of substantial importance and where the issues are novel or highly complex.” Counsel argued for a de novo review by the full Commission and accused the staff of denying the fund “its lawful administrative right to appeal.” Counsel also wrote that the firm would “consider and pursue its further rights and remedies to the fullest extent permitted under applicable law.” The staff indicated that it would not support a request for exemptive relief.
OUR TAKE: The staff has a great deal of discretion when considering no-action requests. It is unclear whether a firm has any legal argument to overturn the staff’s discretionary denial of no-action relief.