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Investment Advisers Act of 1940 - Section 206(4) and Rule 206(4)-3
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RESPONSE OF THE OFFICE OF CHIEF COUNSEL |
IM Ref. No. 20061231648 |
We would not recommend enforcement action to the 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 a cash fee, directly or indirectly, to American International Group, Inc. (the "Settling Firm")1 for the solicitation of advisory clients in accordance with Rule 206(4)-3,2 notwithstanding a judgment of injunction from 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 the Settling Firm a solicitation fee.3
Our position is based on the facts and representations in your incoming letter dated February 21, 2006, particularly the Settling Firm's representations that:
Our position also is based on your representation that the Settling Firm currently is not engaged in any cash solicitation activities that are subject to Rule 206(4)-3. This position applies only to the Final Judgment and any State Judgment5 and not to any other basis for disqualification under Rule 206(4)-3 that may exist or arise with respect to the Settling Firm.
Tara L. Royal
Senior Counsel
The entry of the Final Judgment, absent the issuance of an order by the Commission pursuant to Section 9(c) of the Investment Company Act that exempts the Settling Firm from the provisions of Section 9(a) of the Investment Company Act, would effectively prohibit the Settling Firm and its associated persons from, among other things, acting as an investment adviser to any registered investment company. You state that, pursuant to Section 9(c) of the Investment Company Act, certain affiliates of the Settling Firm, on behalf of themselves and the Settling Firm, submitted an application to the Commission requesting (i) an order of temporary exemption from Section 9(a) of the Investment Company Act and (ii) a permanent order exempting the Settling Firm and certain affiliates from the provisions of Section 9(a) of the Investment Company Act.
On February 21, 2006, the Commission issued an order granting the Settling Firm and certain affiliates a temporary exemption from Section 9(a) of the Investment Company Act pursuant to Section 9(c) of the Investment Company Act, with respect to the Final Judgment, until the date the Commission takes final action on the application for a permanent order. In re American International Group, Inc., et. al., SEC Rel. No. IC-27227 (Feb. 21, 2006) ("Release"). Therefore, the Settling Firm and its associated persons are not currently barred or suspended from acting in any capacity under the federal securities laws as a result of the Final Judgment.
The Incoming Letter is in Acrobat format.
http://www.sec.gov/divisions/investment/noaction/aig022106.htm
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