Alerts

SEC Staff Issues No-Action Letter Providing Guidance with Respect to Principal Transactions

July 10, 2006

Recently, the staff of the Securities and Exchange Commission (the "Staff") issued a no-action letter (Gardner Russo & Gardner, File No. 810-41357, the "GRG Letter") allowing Gardner Russo & Gardner ("GRG"), an investment adviser to various private investment funds, to affect cross trades between such private investment funds and other client accounts where a controlling person of GRG had a less than 25% ownership interest in any such fund, without obtaining client consent as contemplated by Section 206(3) of the Investment Advisers Act of 1940, as amended (the "Advisers Act"). The GRG Letter provides welcome and much-needed guidance to investment advisers seeking to engage in periodic rebalancing transactions among client investment funds