UNITED STATES 


SECURITIES AND EXCHANGE COMMISSION 


WASHINGTON, D.C. 20549 


DIVISION OF 


INVESTMENT MANAGEMENT 


August 2, 2013 

Philippe M. Salomon, Esq. 


Blank Rome LLP 


405 Lexington A venue 


New York, NY 10174-0208 


Re: 	 Letter, Dated June 18, 2013, from the Staff of the Securities and Exchange Commission 

("Commission"), Denying Copley Fund, Inc.'s ("Copley's") Request for Commission 

Review ofthe Division of Investment Management's AprilS, 2013 Denial of Copley's 

Request for No-Action Relief under Regulation S-X and Rule 22c-1 under the Investment 

Company Act of 1940 ("Staff Response") 

. Dear Mr. Salomon: 

We received your letter dated July 15, 2013. As explained in our letter, dated June 18, 

20 13, the StaffResponsewas issued pursuant to Rule 202.1(d) ofthe Commission's Rules of 

Informal and Other Procedures (17 C.F.R. 202.1(d)). This rule gives the staff authority to 

provide informal advice and assistance, including no-action relief. It also permits the staff to 

present questions to the Commission which involve matters of substantial importance and where 

the issues are novel or highly complex; it does not otherwise provide for Commission review of 

such staff actions. 

To the extent that you seek Commission consideration of your request, you may want to 

consider submitting a request for exemptive relief pursuant to Section 36 ofthe Securities 

Exchange Act of 1934 ("1934 Act"). 1 Section 36 provides, in relevant part, that the 

Commission, by order, "may conditionally or unconditionally exempt any person, security, or 

transaction, or any class or classes of persons, securities, or transactions, from any provision or 

provisions ofthis title or of any rule or regulation thereunder, to the extent that such exemption is 

necessary or appropriate in the public interest, and is consistent with the protection of 

15 U.S.C. 78mm. 
investors."2 Section 36 further provides, in relevant part, that the Commission "may, in its sole 

discretion, decline to entertain any application for an order of exemption under this section. " 3 

Based on our understanding of your requested relief thus far, we must advise you that the 

staff would not support such relief. In addition, we can give no assurances that the Commission 

will entertain the request and, if the request is entertained, that the Commission would grant the 

requested relief. 

Very truly yours, 

Douglas 

~~ Scheidt 

Associate Director and Chief Counsel 

Your letter, dated April 12, 20 13, indicates that Copley "should be permitted flexibility to depart 

from a strict interpretation ofGAAP." The requirements ofGAAP are made applicable to 

financial statements filed with the Commission, including those filed by investment companies, 

by Rule 4-01(a)(l) of Regulation S-X under the 1934 Act. 

Rule 0-12 under the 1934 Act sets forth procedures for filing applications for orders for 

exemptive reliefunder Section 36 ofthe 1934 Act. See 17 C.P.R. 240.0-12. 

2 

BLANK ROME nP COUNSELORS AT LAW 

Phone : (212) 885-5455 

Fax .· (917) 332-3792 

Email: PSalomon@B/"ankRome.com 

July 15, 2013 

BYFEDEX 

Douglas Scheidt, Esquire 

Associate Director and Chief Counsel 

United States Securities and Exchange Commission 

Division of Investment Management 

Washington, DC 20549 

Re: Letter, Dated June 18, 2013, from the Staff ofthe Securities and Exchange 

Commission (the "Commission" or "SEC"), Declining the Copley Fund, Inc.'s 

("Copley" or the "Fund") Request that the Full Commission Review de Novo the 

Issues Presented by the Fund 

Dear.Mr. Scheidt: 

This Firm represents the Fund and, on its behalf, responds to your letter to me, dated June 

18, 2013, in which the Staff-- not the Commission-- summarily rejected Copley's request for a 

full de novo review by the SEC Commissioners ofthe-Staffs denial of the Fund's request for _ 

No-Action relief and for the issuance of a final written order by the Commission, over-ruling the 

Staffs response and granting no-action assurance. The net result of this action is an attempt to 

insulate the Staffs decision and to deny Copley its lawful, administrative right to appeal for full 

Commission consideration. 

As you well know, Copley, which concededly has a unique corporate structure and 

unusual tax issues, seeks the right to alter the current manner in which it has been mandated by 

the SEC to account for deterred .Federal tax liability for unrealized gains, by establishing a tax 

reserve based on a management developed pre-set formula. This approach, which the Fund 

employed from 1992 to 2007, results in a fair and more accurate disclosure of its current and 

ongoing financial operations, together with its true net asset value . 

As an initial matter, the Fund respectfully disagrees with your interpretation and 

characterization of Copley's request as being made pursuant to Rule 202.1(d) ofthe 

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BLANK ROMEnP 

COUNSEl O RS AT lAW 

Douglas Scheidt, Esquire 

July 15, 2013 

Page 2 

Commission's Rules oflnformal and Other Procedures, 17 C.P.R. 202.l(d). Copley expressly 

petitioned, and addressed its application, directly to the SEC Commissioners for a full de novo 

review of its No-Action application and "that the Commissioners issue a final order on behalf of 

the SEC granting the Fund the relief it has requested." See Copley Application for Full 

Commission Review, dated April12, 2013, at 1, 2 & 4 ("April12 , 2013 Application"). At no 

time did the Fund request the Staff of the Division of Investment Management to exercise its 

discretion, pursuant to 17 C.F.R. 202.l(d), to present Copley's Aprill2, 2013 Application to the 

SEC Commissioners. 

While the Staffs response to Copley ' s March 28, 2012 request for No-Action relief may 

have been issued pursuant to SEC Rule 202.1(d), the Fund's April12, 2013 Application was not 

made pursuant to that Rule. Put simply, Copley did not request that the Staff exercise its 

discretion to present the Fund's April 12, 2013 Application to the Commission for its review of a 

Division No-Action response. Rather, Copley appealed directly to the Commissioners for a 

review de novo by the Commission of the issues raised by the Fund. 

With all due respect, Copley further disagrees with the Staffs conclusion that the Fund's 

request does not involve a matter "of substantial importance where the issues are novel or highly 

complex." The Staff has previously acknowledged, in its letter dated September 26, 2007, that it 

"is unaware of any investment company (other than the Company) that chooses not to qualify as 

a RIC and does not accrue a deferred tax liability associated with its unrealized appreciation." 

See April12, 2013 Application, Ex. 2 at Ex. B, p. 3-4 . And in his correspondence on July 15, 

2010, Staff member Kevin Rupert acknowledged that "this fund has really unusual tax issues." 

See April12, 2013 Application, Ex. 2 at Ex. I (emphasis added). Equally significant is the fact 

that the Commission has on at least two occasions permitted management discretion in 

comparable circumstances relating to recognition of deferred tax liabilities and that the Fund's 

compliance with the Staff's mandated accounting methodology has resulted in a materially 

misleading NAV reporting since 2007. This disparate treatment by the SEC respecting these 

accounting issues, coupled with the misleading public disclosures now directed by the Staff, are 

substantially important for the Commission's resolution and certainly have raised novel and 

highly sophisticated matters. Consequently, assuming, arguendo, that Rule 202.1 (d) is 

controlling here, when these facts are measured against the standards of SEC Rule 202.1 (d) , it is 

clear that Copley's April 12, 2013 Application " involve[s] matters of substantial importance 

where the issues are novel or highly complex ...." 

Given that the Staffhas currently attempted to foreclose the possibility ofreview by the 

Commission, the Fund is now faced with a Hobson ' s choice: (a) Copley can continue to report 

inaccurately its NA V based on the Staffs preferred accounting method, or (b) the Fund can 

return to the more accurate accounting methodology and face threatened enforcement adiou by 
BLANK ROMELLP 

COUNSElORS AT lAW 

Douglas Scheidt, Esquire 

July 15,2013 

Page 3 

the SEC. Furthermore, given the present status, unless Copley can secure a hearing and review 

de novo from the Commissioners, the Fund has no alternative choices but to treat and consider 

your letter of June 18,2013, as the views ofthe Division oflnvestment Management, capable of 

judicial review on the basis ofthe administrative record and as effectively, constituting a 

determination by, and final "Order" of, the Commission. 

Based on the foregoing, Copley respectfully requests that the Staffreconsider its June 18, 

2013 response and agree that the Fund's April12, 2013 Application will now be submitted to the 

full Commission for its de novo review. It is imperative that the Fund be permitted flexibility for 

its management to set a reserve for deferred tax liability that will result in a per-share NAV that 

accurately reflects the true value of the Fund's shares. As Copley has represented several times, 

any return to its historic reporting methodology would include a full disclosure ofthe differences 

in method and result. Absent notification from the SEC by July 31,2013, that Copley's April 

12, 2013 Application has been presented for a formal consideration and review by all the 

Commissioners, and that a final Order will be issued, the Fund will have no other recourse but, 

and will be forced, to consider and pursue its further rights and remedies to the fullest extent 

permitted under applicable law. 

I am confident that you and the Staff will accord Copley its rightful, administrative due 

process and accordingly, I await the Staff's favorable reply. 

If you would like to discuss this matter further, please do not hesitate to contact me at 

(212) 885-5455. 

cc: 	 Chairwoman Mary Jo White (By FedEx) 

Commissioners ofthe Securities and Exchange Commission (By FedEx) 

Ms. Jaime Eichen (By U.S. Mail) 


Chief Accountant 


Division ofInvestment Management 


David I. Faust, Esq. (By E-mail Transmission)