SEC Proposes Modernization Overhaul Of Transfer Agent Rules

The SEC is proposing to substantively overhaul the securities transfer agent regulatory framework, which has largely remained unchanged since the paperwork-based system of the mid-1970s. Since this time, modern-day transfer agent operations have expanded in scope and complexity, outpacing rules mainly established prior to the advent of the Internet. Many of the SEC’s proposed changes are designed to technologically neutralize the rules for adaptation to the modern environment, including utilization of distributed ledger technology. However, there are several changes that fund advisers and their transfer agents should specifically note:

• Rescission of Rule 17ad-4. The rule proposal would eliminate exemptions for turnaround, processing, and recordkeeping requirements for interests in registered open-end funds, limited partnerships, and dividend reinvestment plans under Rule 17ad-4.