The SEC has proposed a new rule for the expedited review of exemptive applications under the Investment Company Act. Under the proposal, an applicant could request expedited review if the application is substantially identical to two other applications granted within the prior two years. If the staff agrees that expedited review is permitted, the staff will issue the notice within 45 days of filing. Additionally, the SEC has proposed a rule requiring that the staff take some action (e.g. providing comments) within 90 days of filing any exemptive application. The SEC acknowledges that lengthy reviews delay transactions, prevent firms from rapidly adapting to changing market conditions, and slow product development.
The entire industry should get behind this initiative. In fact, we would go further by requiring staff to document any objections and obtaining senior approval before kicking an applicant out of the expedited process. Regardless, let’s not make perfect the enemy of good. The SEC has acknowledged the problem with slow exemptive application reviews as far back as the early 1990s. It’s time to act.