The SEC Division of Corporation Finance granted no-action relief from SEA Rule 14e-5 ("Prohibiting Purchases Outside of a Tender Offer") requirements to an exchange-traded fund ("ETF").

As described in its letter to the SEC, the ETF could not rely on the relief generally granted to funds that comply with ICA Rule 6c-11 ("Exchange-Traded Funds") because the ETF does not disclose its portfolio holdings on a daily basis.

The 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 purchas of portfolio securities by a dealer-manager during a tender offer will be effected as an adjustment 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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