The SEC has proposed to exempt an investment adviser and its affiliated “employees’ securities company” from certain provisions of the Investment Company Act of 1940, including Section 30(h). An employee’ securities company is a type of closed end investment company through which employees of an investment adviser and its affiliated funds may invest in the adviser’s managed funds. Section 30(h) applies Section 16 to a broad class of “insiders” of a closed end investment company and its investment adviser. The employees’ securities company that is the subject of this application for exemption has a small number of investors, and there is no trading market for its securities. So, Section 16(a) reporting wouldn’t provide much useful information. The Commission will grant the application unless someone requests a hearing.
-Alan Dye, Section16.net May 28,2019
