In response to last weeks disaster, the Securities and Exchange Commission on Friday issued an industry-wide order exempting funds from certain requirements under the Investment Company Act of 1940. The order temporarily waives certain requirements concerning directors meetings and lending arrangements.
For 30 days beginning Sept. 14, a rule that mandates in-person directors meetings will be waived, allowing directors to hold meetings via telephone or other communications, the SEC said.
The order also allows funds to borrow money "from any affiliated person that is not itself a registered investment company." That waiver is effective for five days following today. The temporary order also allows funds to borrow money from an entity other than a bank and deviate from established borrowing policies without shareholder approval. In addition, funds that have secured inter-fund lending exemptions will be allowed to loan up to 25% of a funds net assets as long as its exemption does not state otherwise, according to the SEC.
All of the lending and borrowing exemptions are effective today through Friday and must be approved by the funds board of directors.