As an attempt to provide relief from Covid19, the Securities and Exchange Commission granted the following exemptions to the registered transfer agents on March 20, 2020:
- The clearance and settlement of securities transactions: Exemption under Sections 17A and 17(f)(1) of the Exchange Act, as well as Rules 17Ad-1 through 17Ad-11, 17Ad-13 through 17Ad-20, and 17f-1 thereunder (the “Transfer Agent Exempted Provisions”) and
- The safeguarding of securities and funds: Exemption under Section 17(f)(2) of the Exchange Act and Rule 17f-2 thereunder (the “Fingerprinting Exempted Provisions”)
The transfer agents using the relief are required to provide a notice to the SEC detailing:
- The registrant or other person is relying on the Order,
- “Why” and “Which” regulatory exemptions they are unable to comply with and
- Complete and accurate description of the extent and type of books and records that it has failed to maintain under Section 17A, along with the steps taken to alleviate such failure.
However, the Order does not provide relief from Rule 17Ad-12 under the Exchange Act. The SEC has advised transfer agents facing adverse effects on their operations, facilities, or systems to:
- Maintain a separate bank account for all its security holders and issuer funds until proper processing.
- To display a notice on their and their issuer’s websites or provide toll-free numbers to respond to shareholder concerns.
“The relief provided by this Order reflects the continued focus of the SEC and the Division of Trading and Markets on monitoring the effects of COVID-19 on regulated entities, financial professionals, and other market participants,” said Brett Redfearn, Director of the SEC’s Division of Trading and Markets. The Commission continues to monitor the situation, prepared to extend the period for relief, with any additional relief should the need arise.
Transfer agents, financial professionals, and other regulated entities in need of additional assistance can contact the Division of Trading and Markets at (202) 551-5777 or tradingandmarkets@sec.gov.
Important Update: Earlier, the rules were scheduled to expire on May 30, 2020, which was later extended till June 30, 2020, by the SEC pursuant to its authority under Sections 36 and 17A(c)(1) of the Exchange Act. Section 36 of the Exchange Act authorizes the Commission to issue an exemption from any provision of the Exchange Act wherever necessary or appropriate in the public interest and consistent investors protection.
