The staff of the SEC’s Division of Investment Management issued IM Guidance Update No. 2014-6 in which it advises registered funds organized as series of a “series company” that compliance with the affiliated transactions prohibitions of Section 17(a) of the Investment Company Act of 1940 requires identification of any relevant affiliated persons on a series by series basis. In particular, the Guidance Update notes that affiliated person status with respect to a series can result from the ownership of 5% or more of the outstanding voting securities of that series. The Guidance Update further advises that affiliated person status based on ownership of voting securities should also be monitored at the series company level based on the total outstanding voting securities of the series company.
Alert June 10, 2014