In a recent letter to the executive vice president of the Securities Industry and Financial Markets Association, David Grim, director of the SEC’s Division of Investment Management, stated that SEC Rule 206(3)-3T under the Investment Advisers Act of 1940 will expire at the end of 2016. Further, the SEC will not act to extend it.
Some registered investment advisers who are also registered broker-dealers under the Securities Exchange Act of 1934 rely on the rule to effect securities transactions on a principal basis for its advisory clients. According to Director Grim, only a few registrants still rely on the rule, and those registrants may apply for an exemption order with the SEC in order to continue with relief from the prohibition under Sec. 206(3) of the Advisers Act.
Registrants that will need regulatory relief for the principal transitions after the end of the year are urged to contact the division’s chief counsel’s office about filing an exemption order application.