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|  |  | **Effective November 4, 2022, This Letter is Withdrawn.**Please consult the following web page for more information: https://www.sec.gov/divisions/investment/im-modified-withdrawn-staff-statements.
Investment Advisers Act of 1940 - Section 206(4) and Rule 206(4)-3UBS AG, May 20, 2015
RESPONSE OF THE CHIEF COUNSEL’S    OFFICEDIVISION OF INVESTMENT MANAGEMENT

May 20,    2015       IM Ref. No. 20155201021      UBS  AG. File No. 801-34910

We would not recommend enforcement action to the United States Securities and Exchange Commission (“Commission”) under Section 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) and Rule 206(4)-3 thereunder if any investment adviser that is required to be registered pursuant to Section 203 of the Advisers Act pays to UBS AG (“UBS”) or any of its associated persons, as defined in Section 202(a)(17) of the Advisers Act, a cash solicitation fee, directly or indirectly, for the solicitation of advisory clients in accordance with Rule 206(4)-3,[1] notwithstanding the existence of a guilty plea (“Guilty Plea”) entered by UBS in the United States District Court, District of Connecticut, the result of a plea agreement negotiated between UBS and the U.S Department of Justice (“Plea Agreement”), that otherwise would preclude such an investment adviser from paying such a fee, directly or indirectly, to UBS or certain related persons.[2]   

Our position is based on the facts and representations in your letter dated May 20, 2015, particularly the representations of UBS that:
- it or any person associated with it will conduct any cash solicitation arrangement entered into with any investment adviser registered or required to be registered under Section 203 of the Advisers Act in compliance with the terms of Rule 206(4)-3 as if UBS was not a disqualified person for purposes of Rule 206(4)-3 by virtue of the Guilty Plea;   
- the Plea Agreement does not bar or suspend UBS or any person currently associated with UBS from acting in any capacity under the federal securities laws; [3]   
- it will comply with the terms of the Plea Agreement, including, but not limited to, the payment of a fine; and   
- for ten years from the entry of the Guilty Plea, UBS and any person associated with it or any investment adviser with which UBS or any person associated with it has a solicitation arrangement subject to Rule 206(4)-3 will disclose the Plea Agreement and Guilty Plea in a written document that is delivered to each person who UBS or its associated persons solicits (a) not less than 48 hours before the person enters into a written or oral investment advisory contract with the investment adviser or (b) at the time the person enters into such contract, if the person has the right to terminate the contract without penalty within five business days after entering into the contract.   

This position applies only to the Guilty Plea, and not to any other basis for disqualification under Rule 206(4)-3 that may exist or arise with respect to UBS or any of its associated persons.

David Joire Senior Counsel

[1] Rule 206(4)-3 prohibits any investment adviser that is required to be registered under the Advisers Act from paying a cash fee, directly or indirectly, to any solicitor with respect to solicitation activities if, among other things, the solicitor is subject to an order, judgment or decree described in Section 203(e)(4) of the Advisers Act.  

[2] *United States of America v. UBS AG,*No. 3:15-cr-76-RNC (D. Conn. May 20, 2015).  

[3] Section 9(a)(2) of the Investment Company Act of 1940 (the “Investment Company Act”) provides, in pertinent part, that a person may not serve or act as, among other things, an investment adviser or depositor of any investment company registered under the Investment Company Act or a principal underwriter for any registered open-end investment company or registered unit investment trust if, among other things, that person, by reason of any misconduct, is permanently or temporarily enjoined from acting, among other things, as an underwriter, broker, dealer, investment adviser or bank, or from engaging in or continuing any conduct or practice in connection with any such activity, or in connection with the purchase or sale of any security.  Section 9(a)(3) extends the prohibition to any company any affiliated person of which is disqualified pursuant to Section 9(a)(2).              The Guilty Plea, absent the issuance of an order by the Commission pursuant to Section 9(c) of the Investment Company Act that exempts UBS from the provisions of Section 9(a) of the Investment Company Act, would effectively prohibit UBS and companies of which it is an affiliated person from acting in any of the capacities set forth in Section 9(a) of the Investment Company Act.  You state that, pursuant to Section 9(c) of the Investment Company Act, UBS and certain affiliated persons, on behalf of themselves and future affiliated persons, submitted an application to the Commission requesting (i) an order of temporary exemption from Section 9(a) of the Investment Company Act and (ii) a permanent order exempting such persons from the provisions of Section 9(a) of the Investment Company Act.   

On May 20, 2015, the Commission issued an order granting UBS, certain affiliated persons and future affiliated persons a temporary exemption from Section 9(a) of the Investment Company Act pursuant to Section 9(c) of the Investment Company Act, with respect to the Guilty Plea, until the date the Commission takes final action on the application for a permanent order.  *In re UBS AG, et al.*, SEC Rel. No. IC-3612 (May 20, 2015).  Therefore, UBS, certain affiliated persons and future affiliated persons are not currently barred or suspended from acting in any capacity specified in Section 9(a) of the Investment Company Act as a result of the Guilty Plea.  
Incoming Letter
The Incoming Letter is in Acrobat format.

*http://www.sec.gov/divisions/investment/noaction/2015/ubs-ag-052015-206(4).htm*Home | Previous PageModified: 05/22/2015 |
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