November 29, 2019
Thank you for the opportunity to comment on proposed rule Amendments to Procedures With Respect to Applications under the Investment Company Act of 1940, Release No. IC-33658. I write to comment on two aspects of the proposal.
1. The Commission asks: Is the view that applications under sections 2(a)(9), 3(b)(2), 6(b), 9(c), and 26(c) of the Act appear unlikely to be suitable for the expedited review procedure appropriate? Should rule 0-5 explicitly exclude such applications from expedited review?
When the Commission proposed similar expedited application procedures in 1993, it explicitly excluded application under most of these sections. The current release acknowledges the Commission still believes that applications under these sections are too fact specific to be rubber stamped under expedited review. But the Commission does not explain why it is reversing its 1993 position.
Additionally, the Commission asserts that the current proposal seeks to add transparency and certainty to the applications process. By stating that applications under these sections generally will not qualify for expedited review, but also reversing its prior position with no explanation and allowing such applications to proceed under the new expedited procedure rules, the Commission is creating substantial uncertainty regarding the new applications rules.
Given that these applications are not the type that should be rubber stamped without serious consideration, they should be explicitly excluded from the new expedited procedures, consistent with the Commissions position in 1993.
These applications could still be granted quickly under the Commissions normal review process when deemed in the public interest.
2. The Commission should address in the adopting release the enforceability of the new expedited procedures.
The new proposed 202.13 Informal procedure with respect to applications under the Investment Company Act of 1940 provides: The provisions of this rule, including the time frames provided for herein, are not intended to create enforceable rights by any interested parties and shall not be deemed to do so. Rather, this rule provides informal non-binding guidelines and procedures that the Commission anticipates the Division following.
The new expedited review procedures provide no similar disclaimer, which appears to be intentional. This creates an inference that the Commission intends to make the new expedited timeline and procedures an enforceable right.
The Commission should clarify whether the expedited review procedures are intended to create an enforceable right for applicants. If so, the Commission should specify the damages applicants will be entitled to if the Commission fails to follow the new expedited procedures. If they are not intended to create an enforceable right, the Commission clarify that with language corresponding to that in the proposed 202.13.