The SEC staff issued no-action relief on February 11, 2014 to The Brink’s Company (“Brink’s”), permitting registered investment companies (“Funds”) to use Brink’s as a custodian of precious metals even though Brink’s is not a bank, a member of a national security exchange, or any other entity permitted to serve as a custodian under Section 17(f) of the 1940 Act. In granting the relief, the staff noted that: (i) Brink’s shareholder equity and surplus exceeds $500 million (which is greater than that required under Section 17(f)(1) or Section 26(a)(1) of the 1940 Act); (ii) Brink’s maintains $1 billion in insurance coverage against any precious metals losses sustained by Brink’s customers; (iii) Brink’s vault facilities are indistinguishable from the same type of vault facilities used by banks and provide substantially the same protection against misappropriation; (iv) Brink’s U.S. facilities are NYMEX/COMEX-approved depositories, which are subject to oversight by NYMEX/COMEX pursuant to regulations enforced by the U.S. Commodity Futures Trading Commission; and (v) Brink’s London facilities are subject to the guidance of the London Bullion Market Association.

The relief is also subject to the condition that a majority of a fund’s board of directors, including a majority of the independent directors, must determine that using Brink’s custody services for precious metals is in the best interest of the fund and its shareholders. The no-action letter notes that in making this determination, a fund’s board of directors should consider whether the services provided by Brink’s will be equal in nature and quality to services provided by bank custodians in the same market and whether reasonable care will be exercised with regard to the Fund’s precious metals.