SEC IM Staff Issues Guidance Update on Mixed and Shared Funding

December 12, 2014

The staff of the U.S. Securities and Exchange Commission Division of Investment Management (Staff) has issued an IM Guidance Update regarding mixed and shared funding (Guidance Update). In the Guidance Update, the Staff acknowledged that the relief provided by mixed and shared funding exemptive orders is infrequently, if ever, relied upon. As a result, the Staff noted that it is not necessary for a fund to obtain a mixed and shared funding order if no person will rely on the relief, and that funds with existing mixed and shared funding orders do not need to comply with the orders if the exemptions are not being relied upon.

While it is still too soon to gauge the impact of the Guidance Update, it has the potential to greatly simplify the operations of insurers issuing variable annuity (VA) and variable life insurance (VLI) contracts, as well as the operations of funds that serve as the underlying investment options in those contracts.

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