The SEC Division of Corporation Finance (the "Division") granted conditional no-action relief to three exchange-traded funds ("ETFs") from requirements under SEA Rule 14e-5 ("Prohibiting purchases outside of a tender offer"). As described in a letter to the SEC, the ETFs could not rely on the relief generally granted to funds that comply with ICA Rule 6c-11 ("Exchange-traded funds") (see 84 FR 57089, Order Granting a Conditional Exemption from [14e-5] for Certain Exchange Traded Funds) because the ETFs do not provide daily portfolio transparency.
The Division stated that the exemptive relief is subject to the following conditions:
- the purchase of subject securities by a broker-dealer acting as a dealer-manager will not be for the purpose of facilitating a tender offer;
- any purchases of a portfolio security by a dealer-manager during a tender offer will be effected as adjustments to a basket of securities in the ordinary course of business as a result of a change in the composition of the ETF's portfolio; and
- except for the relief granted in the no-action letter, any dealer-manager of a tender offer will comply with SEA Rule 14e-5.
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