[Federal Register Volume 83, Number 185 (Monday, September 24, 2018)]
[Notices]
[Pages 48346-48349]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-20739]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Securities Exchange Act of 1934; Release No. 84210/September 19, 2018; 
Investment Company Act of 1940; Release No. 33240/September 19, 2018]


Order Under Section 15B, Section 17A and Section 36 of the 
Securities Exchange Act of 1934 Granting Exemptions From Specified 
Provisions of the Exchange Act and Certain Rules Thereunder; Order 
Under Section 6(c) and Section 38(a) of the Investment Company Act of 
1940 Granting Exemptions From Specified Provisions of the Investment 
Company Act and Certain Rules Thereunder

    On September 14, 2018, Hurricane Florence made landfall near the 
North Carolina and South Carolina border. The storm and subsequent 
flooding has

[[Page 48347]]

displaced individuals and businesses and disrupted communications and 
transportation across the affected region. We are issuing this Order to 
address the needs of companies and individuals with obligations under 
the federal securities laws who have been directly or indirectly 
affected by Hurricane Florence and its aftermath.
    Section 15B(a)(4) of the Securities Exchange Act of 1934 (the 
``Exchange Act'') provides that the Securities and Exchange Commission 
(the ``Commission''), by rule or order, upon its own motion or upon 
application, may conditionally or unconditionally exempt any broker, 
dealer, municipal securities dealer or municipal advisor, or class of 
brokers, dealers, municipal securities dealers, or municipal advisors 
from any provision of Section 15B or the rules or regulations 
thereunder, if the Commission finds that such exemption is consistent 
with the public interest, the protection of investors and the purposes 
of Section 15B.
    Section 36 of the Exchange Act authorizes the Commission, by rule, 
regulation or order, to exempt, either conditionally or 
unconditionally, any person, security or transaction, or any class or 
classes of persons, securities or transactions, from any provision or 
provisions of the Exchange Act or any rule or regulation thereunder, to 
the extent that such exemption is necessary or appropriate in the 
public interest, and is consistent with the protection of investors.
    Section 17A(c)(1) of the Exchange Act provides that the appropriate 
regulatory agency, by rule or by order, upon its own motion or upon 
application, may conditionally or unconditionally exempt any person or 
security or class of persons or securities from any provision of 
Section 17A or any rule or regulation prescribed under Section 17A, if 
the appropriate regulatory agency \1\ finds that such exemption is in 
the public interest and consistent with the protection of investors and 
the purposes of Section 17A, including the prompt and accurate 
clearance and settlement of securities transactions and the 
safeguarding of securities and funds. Section 17A(c)(1) also requires 
that the Commission not object to the use of exemptive authority in 
instances where an appropriate regulatory authority other than the 
Commission is providing exemptive relief.
---------------------------------------------------------------------------

    \1\ Section 3(a)(34)(B) of the Exchange Act defines 
``appropriate regulatory authority.''
---------------------------------------------------------------------------

    Section 6(c) of the Investment Company Act of 1940 (the ``Company 
Act'') provides that the Commission may conditionally or 
unconditionally exempt any person, security or transaction, or any 
class or classes of persons, securities or transactions, from any 
provision or provisions of the Company Act, or any rule or regulation 
thereunder, if and to the extent that such exemption is necessary or 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policy and 
provisions of the Company Act. Section 38(a) of the Company Act 
provides that the Commission may make, issue, amend and rescind such 
rules and regulations and such orders as are necessary or appropriate 
to the exercise of the powers conferred upon the Commission under the 
Company Act.
    The necessity for prompt action of the Commission does not permit 
prior notice of the Commission's action.

I. Time Period for the Relief

    The time period for the relief specified in Sections II and VI of 
this Order is as follows:
     With respect to those persons or entities affected by 
Hurricane Florence, for the period from and including September 14, 
2018 to October 26, 2018, all reports, schedules or forms must be filed 
on or before October 29, 2018.

II. Filing Requirements for Registrants and Other Persons

    The lack of communications, transportation, electricity, facilities 
and available staff and professional advisors as a result of Hurricane 
Florence could hamper the efforts of public companies and other persons 
with filing obligations to meet their filing deadlines. At the same 
time, investors have an interest in the timely availability of required 
information about these companies and the activities of persons 
required to file schedules and reports with respect to these companies. 
While the Commission believes that the relief from filing requirements 
provided by the exemption below is necessary and appropriate in the 
public interest and consistent with the protection of investors, we 
remind public companies and other persons who are the subjects of this 
Order to continue to evaluate their obligations to make materially 
accurate and complete disclosures in accordance with the anti-fraud 
provisions of the federal securities laws.
    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act, that a registrant (as defined in Exchange Act Rule 12b-2) subject 
to the reporting requirements of Exchange Act Section 13(a) or 15(d), 
and any person required to make any filings with respect to such a 
registrant, is exempt from any requirement to file or furnish materials 
with the Commission under Exchange Act Sections 13(a), 13(d), 13(f), 
13(g), 14(a), 14(c), 14(f), 15(d) and 16(a), Regulations 13A, 13D-G, 
14A, 14C and 15D, and Exchange Act Rules 13f-1, 14f-1 and 16a-3, as 
applicable, where the conditions below are satisfied.

Conditions.

    (a) The registrant or person other than a registrant is not able to 
meet a filing deadline due to Hurricane Florence and its aftermath;
    (b) The registrant or person other than a registrant files with the 
Commission any report, schedule or form required to be filed during the 
applicable period of relief on or before the applicable deadline set 
forth in Section I; and
    (c) In any such report, schedule or form filed pursuant to this 
Order, the registrant or person other than a registrant must disclose 
that it is relying on this Order and state the reasons why, in good 
faith, it could not file such report, schedule or form on a timely 
basis.

III. Furnishing of Proxy and Information Statements

    The conditions in the areas affected by Hurricane Florence, 
including displacement of thousands of individuals and the destruction 
of property, have prevented and will continue to prevent the delivery 
of mail to the affected areas. In light of these conditions, we believe 
that relief is warranted for those seeking to comply with our rules 
imposing requirements to furnish materials to security holders when 
mail delivery is not possible and that the following exemption is 
necessary and appropriate in the public interest and consistent with 
the protection of investors.
    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act, that a registrant or any other person is exempt from the 
requirements to furnish proxy statements, annual reports and other 
soliciting materials, as applicable (the ``Soliciting Materials''), and 
the requirements of the Exchange Act and the rules thereunder to 
furnish information statements and annual reports, as applicable (the 
``Information Materials''), where the conditions below are satisfied.

Conditions

    (a) The registrant's security holder has a mailing address located 
within a zip code where, as a result of Hurricane Florence, the 
registrant's common carrier has suspended delivery service of the type 
or class customarily used by the registrant;

[[Page 48348]]

    (b) The registrant or other person making a solicitation has 
followed normal procedure when furnishing the Soliciting Materials to 
the security holder in order to ensure that the Soliciting Materials 
preceded or accompanied the proxy, as required by the rules applicable 
to the particular form of Soliciting Materials, or, in the case of 
Information Materials, the registrant has followed normal procedure 
when furnishing the Information Materials to the security holder in 
accordance with the rules applicable to Information Materials; and
    (c) If requested by the security holder, the registrant or other 
person provides the Soliciting Materials or Information Materials by a 
means reasonably designed to furnish the Soliciting Materials or 
Information Materials to the security holder.
    Any registrant or other person in need of additional assistance 
related to deadlines, delivery obligations or their public filings, 
should contact the Division of Corporation Finance at (202) 551-3500 or 
at https://tts.sec.gov/cgi-bin/corp_fin_interpretive.

IV. Transmittal of Annual and Semi-Annual Reports to Investors Required 
by the Company Act and the Rules Thereunder

    For reasons similar to those cited in Section III, we believe that 
relief is warranted for the transmittal by registered management 
investment companies and registered unit investment trusts 
(collectively, ``registered investment companies'') of annual and semi-
annual reports to investors and that the following exemption is 
necessary and appropriate in the public interest and consistent with 
the protection of investors.
    Accordingly, it is ordered, pursuant to Sections 6(c) and 38(a) of 
the Company Act that for the period from and including September 14, 
2018 to October 26, 2018, a registered investment company is exempt 
from the requirements of Section 30(e) of the Company Act and Rule 30e-
1 thereunder to transmit annual and semi-annual reports to investors 
affected by Hurricane Florence; and
    For the period from and including September 14, 2018 to October 26, 
2018, a registered unit investment trust is exempt from the 
requirements of Section 30(e) of the Company Act and Rule 30e-2 
thereunder to transmit annual and semi-annual reports to unitholders 
affected by Hurricane Florence,
    Provided that:
    (a) The affected investor's mailing address for transmittal as 
listed in the records of the registered investment company has a zip 
code for which the registered investment company's common carrier has 
suspended mail service, as a result of Hurricane Florence, of the type 
or class customarily used by the registered investment company for 
transmittal of reports; and
    (b) The registered investment company or other person promptly 
transmits the reports to affected investors: Either (a) if requested by 
the investor; or (b) at the earlier of (i) October 29, 2018 or (ii) the 
resumption of the applicable mail service.
    Registered investment companies who are unable to meet a deadline 
as extended by this relief, or in need of additional assistance 
regarding issues under the Company Act, should contact the Division of 
Investment Management, Office of Chief Counsel, at (202) 551-6825 or 
[email protected].
    Registered investment advisers in need of additional assistance 
regarding issues under the Investment Advisers Act of 1940 should 
contact the Division of Investment Management, Investment Adviser 
Regulation Office, at (202) 551-6999 or [email protected].

V. Transfer Agent Compliance With Sections 17a and 17(f) of the 
Exchange Act

    Exchange Act Section 17A and Section 17(f), as well as the rules 
promulgated under Sections 17A and 17(f), contain requirements for 
registered transfer agents relating to, among other things, processing 
securities transfers, safekeeping of investor and issuer funds and 
securities and maintaining records of investor ownership. Following the 
events of Hurricane Florence, registered transfer agents located in the 
affected regions may have difficulty complying with some or all of 
their obligations as registered transfer agents. In addition, 
registered transfer agents located outside the affected regions may be 
unable to conduct business with entities or security holders inside the 
regions, thereby making it difficult to process securities transactions 
and corporate actions in conformance with Section 17A, Section 17(f) 
and the rules thereunder.
    While the national clearance and settlement system continues to 
operate well in light of these emergencies, the Commission recognizes 
that the need to effect securities transfers and payments to and from 
security holders in the affected regions may present compliance issues 
for affected transfer agents. Therefore, the Commission is using its 
authority under Section 17A and Section 36 of the Exchange Act to 
provide temporary relief from certain regulatory provisions. This Order 
temporarily exempts transfer agents from the requirements of: (1) 
Section 17A of the Exchange Act and Rules 17Ad-1 through 17Ad-20 
thereunder; and (2) Section 17(f) of the Exchange Act and Rules 17f-1 
and 17f-2 thereunder. The Commission finds the following exemption to 
be in the public interest and consistent with the protection of 
investors and the purpose of Section 17A of the Exchange Act, including 
the prompt and accurate clearance and settlement of securities 
transactions and the safeguarding of securities and funds.
    Accordingly, it is ordered, pursuant to Sections 17A and 36 of the 
Exchange Act, that any registered transfer agent that is unable to 
comply with Section 17A and Section 17(f) of the Exchange Act and the 
rules promulgated thereunder, as applicable, due to Hurricane Florence 
and its aftermath is hereby temporarily exempted from complying with 
such provisions for the period from and including September 14, 2018 to 
October 26, 2018 where the conditions below are satisfied.

Conditions

    (a) A registered transfer agent relying on this Order must notify 
the Commission in writing by October 26, 2018 of the following:
    (1) The transfer agent is relying on this Order;
    (2) A statement of the reasons why, in good faith, the transfer 
agent is unable to comply with Section 17A and Section 17(f) of the 
Exchange Act and the rules promulgated thereunder, as applicable;
    (3) If the transfer agent knows or believes that the books and 
records it is required to maintain pursuant to Section 17A and the 
rules thereunder were lost, destroyed or materially damaged, 
information, to the extent reasonably available, as to the type of 
books and records that were maintained, the names of the issuers for 
whom such books and records were maintained, the extent of the loss of, 
or damage to, such books and records and the steps taken to ameliorate 
any such loss or damage; and
    (4) If the transfer agent knows or believes that funds or 
securities belonging to either issuers or security holders and within 
its possession were, for any reason, lost, destroyed, stolen or 
unaccounted for, information, to the extent reasonably available, 
regarding the dollar amount of any such funds and the number of such 
securities and the steps taken to ameliorate any such loss; and

[[Page 48349]]

    (b) Transfer agents that have custody or possession of any security 
holder or issuer funds or securities shall use all reasonable means 
available to ensure that all such securities are held in safekeeping 
and are handled, in light of all facts and circumstances, in a manner 
reasonably free from risk of theft, loss or destruction and that all 
funds are protected against misuse. To the extent possible, all 
security holder or issuer funds that remain in the custody of the 
transfer agent shall be maintained in a separate bank account held for 
the exclusive benefit of security holders until such funds are properly 
remitted.
    The notification required under (a) above shall be sent to: U.S. 
Securities and Exchange Commission, Division of Trading and Markets, 
Office of Clearance and Settlement, 100 F Street NE, Washington, DC 
20549-7010.
    The Commission encourages registered transfer agents and the 
issuers for whom they act to inform affected security holders whom they 
should contact concerning their accounts, their access to funds or 
securities and other shareholder concerns. If feasible, issuers and 
their transfer agents should place a notice on their websites or 
providing toll free numbers to respond to inquiries.
    Transfer agents who are unable to meet a deadline as extended by 
this relief, or in need of additional assistance, should contact the 
Division of Trading and Markets at (202) 551-5777 or 
[email protected].

VI. Filing of Annual Update to Form MA as Required by the Exchange Act 
and the Rules Thereunder

    Section 15B of the Exchange Act and Rule 15Ba1-5(a)(1) thereunder 
requires each registered municipal advisor to file with the Commission 
an annual update to its Form MA. For reasons similar to those cited in 
Section II, the Commission believes that relief is warranted for the 
filing with the Commission of annual updates to Form MA by registered 
municipal advisors and that such relief is consistent with the public 
interest, the protection of investors and the purposes of Section 15B 
of the Exchange Act.
    Accordingly, it is so ordered, pursuant to Section 15B(a)(4) of the 
Exchange Act, that any registered municipal advisor is exempt from the 
requirement to file an annual update to Form MA with the Commission, as 
required by Section 15B of the Exchange Act and Rule 15Ba1-5(a)(1) 
thereunder, where the conditions below are satisfied.

Conditions

    (a) The registered municipal advisor is not able to fulfill its 
obligation to file an annual update to the registered municipal 
advisor's Form MA within 90 days of the end of the registered municipal 
advisor's fiscal year due to Hurricane Florence;
    (b) The registered municipal advisor files with the Commission its 
annual update to Form MA required to be filed during the applicable 
period of relief on or before the applicable deadline set forth in 
Section I; and
    (c) In any such annual update to its Form MA filing, the registered 
municipal advisor must disclose that it is relying on this Order and 
state the reasons why, in good faith, it could not file such annual 
update to Form MA on a timely basis.
    Registered municipal advisors who are unable to meet a deadline as 
extended by this relief or in need of additional assistance, should 
contact the Office of Municipal Securities at (202) 551-5680 or 
[email protected].

VII. Independence--Bookkeeping or Other Services Related to the 
Accounting Records or Financial Statements of the Audit Client

    The conditions in the areas affected by Hurricane Florence, 
including displacement of individuals, the destruction of property and 
loss or destruction of corporate records, may require extraordinary 
efforts to reconstruct lost or destroyed accounting records. The 
Commission understands that in these particularly challenging 
situations an audit client may look to its auditor for assistance in 
reconstruction of its accounting records because of the auditor's 
knowledge of the client's financial systems and records. Under Section 
10A(g)(1) of the Exchange Act and Rule 2-01(c)(4)(i) of Regulation S-X, 
auditors are prohibited from providing bookkeeping or other services 
relating to the accounting records of the audit client, and in Rule 2-
01(c)(4)(i) of Regulation S-X, these prohibited services are described 
as including ``maintaining or preparing the audit client's accounting 
records'' or ``preparing or originating source data underlying the 
audit client's financial statements.'' In light of the conditions in 
areas affected by Hurricane Florence, however, we believe that limited 
relief from these prohibitions is warranted for those registrants and 
other persons that are required to comply with the independence 
requirements of the federal securities laws and the Commission's rules 
and regulations thereunder and that are affected by those conditions. 
The Commission finds the following exemption to be necessary and 
appropriate in the public interest and consistent with the protection 
of investors.
    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act, that independent certified public accountants engaged to provide 
audit services to registrants and other persons required to comply with 
the independence requirements of the federal securities laws and the 
Commission's rules and regulations thereunder are exempt from the 
requirements of Section 10A(g)(1) of the Exchange Act and Rule 2-
01(c)(4)(i) of Regulation S-X, where the conditions below are 
satisfied.

Conditions

    (a) Services provided by the auditor are limited to reconstruction 
of previously existing accounting records that were lost or destroyed 
as a result of Hurricane Florence and such services cease as soon as 
the audit client's lost or destroyed records are reconstructed, its 
financial systems are fully operational and the client can effect an 
orderly and efficient transition to management or other service 
provider; and
    (b) Services provided by the auditor to its audit client pursuant 
to this Order are subject to pre-approval by the audit client's audit 
committee as required by Rule 2-01(c)(7) of Regulation S-X.
    Auditors or audit clients who are in need of additional assistance 
or have other questions relating to auditor independence, should 
contact the Office of the Chief Accountant at (202) 551-5300 or 
[email protected].

    By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2018-20739 Filed 9-21-18; 8:45 am]
BILLING CODE 8011-01-P