SEC Proposes Rule 17f-4 Amendments
- The Securities and Exchange Commission recently proposed amendments
to Rule 17f-4 under the Investment Company Act of 1940, the rule governing
investment companies' use of domestic securities depositories. Release No.
IC-25266, 66 Fed. Reg. 58412 (Nov. 15, 2001). Rule 17f-4 was adopted in
1978, and the amendments are intended to reflect changes in custody practice
and commercial law since then, particularly the changes in Article 8 of the
Uniform Commercial Code, the article governing investment securities.
According to the SEC release, approximately 97% of registered investment
companies maintain assets in securities depositories, most frequently the
Depository Trust Company.
The proposed amendments would eliminate the existing segregation,
earmarking, and confirmation requirements. Instead, the proposed amendments
would substitute more general contractual requirements for custodians and
depositories - a change that would require amendments to existing contracts
with custodians and depositories. The proposed amendments would also
eliminate the requirement that directors approve all custody arrangements
and changes to those arrangements. Comments on the proposed amendments are
due January 31, 2002.
The SEC release is available online at
It can also be accessed from the Federal Register, which can be
searched online at
John M. Baker <JBaker@...>
Stradley, Ronon, Stevens & Young, LLP Http://www.stradley.com
1220 19th Street, N.W., Suite 700, Washington, DC 20036
(202) 419-8413 Fax (202) 822-0140
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