October 20, 2019
I am confused by this rulemaking.
Why does this required a rule? Can't the staff just review applications and if it is substantially identical to what has already been approved, eye-ball it and quickly notice it?
It just seems odd that the Commission is taking the time to address this issue with a rulemaking when other issues are far more pressing. (e.g. crypto-related issues, proxy access, improving disclosure disclosure, etc.)
The Investment Management Disclosure Office put out an ADI about selective reviews, and there was an IMGU a while back about applications? Why didn't you use those avenues?
As far as disseminating comment letters, that seems like a good idea. I recommend disseminating the comments and responses when the application is noticed to help form the basis of any hearing request. 120 days seems like a long time and longer than the 30 or so days that disclosure comments are release.
I do have some other suggestions:
1. If any application is for a new fund such as there are no interested parties that can object, then a notice period is irrelevant and so should not be required.
2. There are many area where relief should be given, but the Commission has hesitated (e.g., multi-manager relief, multi-class relief for closed-end funds, etc). A rule should be adopted already.
Tow more points:
One thing that I do not understand (and I am a fairly senior '40 Act lawyer) is where no-action relief fits into the exemptve application process. For instance, the Commission can only write a rule or issue an order where it has express authority. However, the staff can write no-action letters letting market participants out of any requirement. Does this mean the staff has more authority than the Commission.
The '40 Act bar has been subject to a lot of change lately. The liquidity rule, 30e-3, ETF rule, reporting modernization with a lot more on the horizon such as dislocsure reform, closed-end fund reform, derivatives, fund of funds and more. I think it is time the IM rulemaking offices to take a break. Let the industry catch its breadth, see what working and whats not, and then reassess its rulemaking agenda.
Best,
Diane
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