No one could be blamed for having difficulty understanding the intricacies of the rules under Section 17(d) of the Investment Company Act, the statute that prohibits “joint transactions” without an SEC order. At the end of 2013, the SEC may have helped reduce some of the anxiety when it quietly reinstated a part of an obscure rule that was missing from the Federal Register since 2003.

Now follow closely: Rule 17d-1(d) under the 1940 Act provides a laundry list of exceptions to the requirement for obtaining an order. Researchers checking the official version of the law would find that the exception contained in Rule 17d-1(d)(6) included an exception to the exception that is difficult, if not impossible, to understand, with a reference to another section that didn’t exist. It turns out that when the SEC amended the rule in 2003, the adopting release incorrectly included a cross-reference to a section that was renumbered, and inadvertently omitted three paragraphs (i.e., (d)(6)(i)-(iii)) that should have followed immediately after the exception to the exception. The missing paragraphs provided an exception to the exception to the exception. In December, the SEC corrected this decade-old omission from the Federal Register.

Now everything is crystal clear.