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FEI Signs Letter to SEC Commenting on Proposed Amendments to Rule 2a-7 of the Investment Company Act


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On September 24, 2009, the Committee on Corporate Treasury joined 26 organizations in sending a letter to the Securities and Exchange Commission (SEC), commenting on the proposed amendments to Rule 2a-7 of the Investment Company Act of 1940 and regulation of A2/P2 Securities.  In the letter, it was noted that a majority of the proposed SEC rule changes are agreeable, however, FEI and the rest of the signed companies and associations opposes the prohibition of money market funds from investing in securities that carry the second highest credit rating.  As noted in the letter, this proposal would have an adverse effect on our weakened economy.        

 

Update on SEC Action:  On January 27, the SEC voted 4-1 to withdraw a plan to ban money-market mutual funds from buying anything other than the most highly rated debt after many companies, including FEI members said the requirement would hurt the commercial-paper market.   Instead, according to Chair Schapiro’s opening statements, “with respect to ‘second tier’ securities…we are limiting such securities to 3 percent of a money market fund’s total portfolio instead of the 5 percent permitted today; limiting exposure to any single tier two issuer to ½ of 1 percent; and substantially shortening the permitted maturity of any second tier security from 397 days to 45 days.” 

To read the SEC’s press release, click
here.  

[print version]


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