U.S. Securities & Exchange Commission
SEC Seal
Home | Previous Page
U.S. Securities and Exchange Commission

Investment Advisers Act of 1940 — Section 206(4) / Rule 206(4)-3
Macquarie Capital (USA) Inc.

June 1, 2017


We would not recommend enforcement action to the United States Securities and Exchange Commission ("Commission") under section 206(4) of the Investment Advisers Act of 1940 ("Advisers Act") and Rule 206(4)-3 thereunder if any investment adviser that is required to be registered pursuant to section 203 of the Advisers Act pays to Macquarie Capital (USA) Inc. ("MCUSA"), a cash payment, directly or indirectly, for the solicitation of advisory clients in accordance with Rule 206(4)-3,[1] notwithstanding a final judgment as to MCUSA, which has been entered by the United States District Court for the Southern District of New York (the "Final Judgment"), that otherwise would preclude such an investment adviser from paying such a payment, directly or indirectly, to MCUSA.[2] 

Our position is based on the facts and representations in your letter dated April 14, 2017, particularly the representations of MCUSA that:

  1. It, directly or indirectly, will conduct any cash solicitation arrangement entered into with any investment adviser required to be registered under section 203 of the Advisers Act in compliance with the terms of Rule 206(4)-3 as if MCUSA were not a disqualified person for purposes of Rule 206(4)-3 by virtue of the Final Judgment;
  2. The Final Judgment does not bar or suspend any person currently associated with MCUSA from acting in any capacity under the federal securities laws;[3]
  3. It has complied and will continue to comply with the terms of the Final Judgment, including, but not limited to, the Injunction and the payment of a disgorgement and a civil monetary penalty; and
  4. Until April 1, 2025 (ten (10) years from the date of the entry of the Final Judgment), MCUSA and any person through whom MCUSA directly or indirectly conducts its solicitation activities or any investment adviser with which it or any such person has a solicitation arrangement subject to Rule 206(4)-3 will disclose the Final Judgment in a written document that is delivered to each person whom MCUSA or such persons solicit (a)  not less than 48 hours before the person enters into a written or oral investment advisory contract with the investment adviser, or (b) at the time the person enters into such a contract, if the person has the right to terminate such contract without penalty within five business days after entering into the contract.

This position applies only to the Final Judgment and not to any other basis for disqualification under Rule 206(4)-3 that may exist or arise with respect to MCUSA.

  Jean E. Minarick
Senior Counsel
Jessica Shin

[1] Rule 206(4)-3 prohibits any investment adviser that is required to be registered under the Advisers Act from paying a cash fee, directly or indirectly, to any solicitor with respect to solicitation activities if, among other things, the solicitor is subject to an order, judgment or decree that is described in section 203(e)(4) of the Advisers Act.

[2] Securities and Exchange Commission v. Macquarie Capital (USA) Inc., et al., Civil Action No. 15-CV-02304 (S.D.N.Y. Apr. 1, 2015).

[3] Under section 9(a) of the Investment Company Act of 1940 (the "Investment Company Act"), as a result of the injunction ("Injunction") included in the Final Judgment, MCUSA and its Fund Servicing Affiliates (as defined below) were prohibited from serving or acting as, among other things, an investment adviser or depositor to any registered investment company or as principal underwriter for any registered open-end investment company or registered unit investment trust ("Fund Servicing Activities").  On August 3, 2015, the Commission issued a permanent order exempting certain affiliated persons of MCUSA:  Delaware Management Business Trust, on behalf of its series, Delaware Management Company and Delaware Investments Fund Advisers; Four Corners Capital Management, LLC; Macquarie Capital Investment Management LLC; Macquarie Funds Management Hong Kong Limited; and Delaware Distributors L.P. (the "Fund Servicing Affiliates") and any existing company of which MCUSA was an affiliated person within the meaning of section 2(a)(3) of the Investment Company Act, and any other company of which MCUSA may become an affiliated person in the future (together with the Fund Servicing Affiliates, the "Covered Affiliates").  In re Macquarie Capital (USA) Inc., et al., SEC Rel. No. IC-31734 (Aug. 3, 2015) ("Order").  Therefore, the Covered Affiliates are not currently barred or suspended from acting in any capacity specified in section 9(a) of the Investment Company Act as a result of the Injunction.  MCUSA was a party to the application that requested the Order, but MCUSA did not request relief under section 9(a) of the Investment Company Act for itself, because MCUSA did not engage in Fund Servicing Activities.  MCUSA currently does not engage in, and will not engage in, any Fund Servicing Activities absent seeking relief under section 9(a) of the Investment Company Act.  Since the entry of the Injunction, MCUSA has not received, directly or indirectly, any cash solicitation fees under Rule 206(4)-3.

Incoming Letter

The Incoming Letter is in Acrobat format.



Modified: 6/2/2017