Recently, the staff (Staff) of the US Securities and Exchange Commission's (SEC) Division of Investment Management issued an information update (the "Information Update") for investment advisers registered under the Investment Advisers Act of 1940 (the "Advisers Act") that use the investment advisory services of non-US affiliates ("participating affiliates") that are not registered under the Advisers Act. The participating affiliates are not registered under the Advisers Act in reliance on a series of no-action letters referred to as the "Unibanco letters." The Information Update provides guidance as to what information should be submitted to the SEC to meet the requirements of the Unibanco letters.
The Unibanco Letters
In order to provide investment advice to US clients, an investment adviser generally must be registered with the SEC under the Advisers Act. However, in the Unibanco letters, the Staff agreed not to recommend enforcement action against participating affiliates not registered under the Advisers Act that share personnel with and provide advisory services to US clients through their registered adviser affiliates if the following conditions are met: (1) the unregistered participating affiliates and the registered advisers are separately organized; (2) the registered advisers employ personnel (located in the United States or abroad) who are capable of providing investment advice; (3) all personnel of the participating affiliates involved in providing advice to US clients are deemed "associated persons" of their affiliated registered advisers; and (4) the SEC has adequate access to trading and other records of the participating affiliates and to their personnel to the extent needed to allow the SEC to identify conduct that may harm US clients or markets.
Information To Be Submitted
Under the Unibanco letters, certain documentation and representations required by the letters must be submitted to the SEC. However, the Staff did not explain in the Unibanco letters how such information should be submitted. The Information Update states that such information should be submitted to the Staff by email at IMOCC@sec.gov with the subject line "Participating Affiliate." In addition, the Information Update suggests that certain additional representations and information required by the Unibanco letters, but to date not required to be submitted to the SEC, should also be submitted to the Staff. Specifically, the Information Update suggests that submitting documentation containing the following representations and undertakings, some of which were already required to be submitted to the SEC, will "most clearly" enable the Staff "to monitor the conduct of participating affiliates":
The Information Update also notes that amendments to any of the above information can also be submitted to the same email address noted above.
While there are legitimate arguments that the Information Update goes beyond merely restating established standards and leaves open questions as to whether submission of all of this documentation is required, the enumerated information should be sent to the SEC for each participating affiliate, and such information should be amended in the event of any material change. Compliance with this Information Update could help avoid needless distractions and expense in a firm's next SEC inspection.
 See, e.g., Uniao de Bancos de Brasileiros S.A. (pub. avail. Jul. 28, 1992); Mercury Asset Management plc (pub. avail. Apr. 16, 1993); Kleinwort Benson Investment Management Limited (pub. avail. Dec. 15, 1993); Murray Johnstone Holdings Limited (pub. avail. Oct. 7, 1994); ABN AMRO Bank, N.V. (pub. avail. Jul. 7, 1997); Royal Bank of Canada (pub. avail. June 3, 1998); ABA Subcommittee on Private Investment Entities (pub. avail. Dec. 8, 2005).