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ARTICLE · 01 SEPTEMBER 2017

SEC Grants ETF Exemption From Tender Offer Rules

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The SEC Division of Corporation Finance granted an exemption to an exchange-traded fund ("ETF") from certain requirements under Securities Exchange Act Rule 14e-5.

United StatesFinance and Banking
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The SEC Division of Corporation Finance granted an exemption to an exchange-traded fund ("ETF") from certain requirements under Securities Exchange Act Rule 14e-5. Substantially similar relief was granted to an ETF on April 11, 2017 (see previous coverage). The exemption permits the following, subject to certain conditions:

  • any broker-dealer that acts as the dealer-manager of a tender offer for a security in which the ETF invests may redeem shares in "creation unit" size aggregations for a redemption "basket" that may include a subject security or related security, as defined under Rule 14e-5(c);
  • covered persons may engage in secondary market transactions with respect to the ETF's shares after the first public announcement of, and during, the tender offer; and

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