May 6, 2021 

Robert J. Rhatigan 

Dechert LLP 

1900 K Street, N.W. 

Washington, D.C. 20006 

Dear Mr. Rhatigan: 

 

 This is in response to your request for a determination that your client, 

Virtus Investment Partners, Inc., Hartford, Connecticut,1

 and its subsidiaries and 

affiliates (individually and collectively, “Virtus”), may acquire up to 25 percent of 

any class of voting securities of a bank holding company, bank, savings and loan 

holding company, or savings association2

 (each a “Regulated Company”) without 

being deemed to have acquired control of the Regulated Company under the Bank 

Holding Company Act (“BHC Act”) or Home Owners’ Loan Act (“HOLA”). This 

letter also responds to your request for a determination that Virtus may acquire up 

to 15 percent of any class of voting securities of a bank holding company, savings 

and loan holding company, or state member bank without having to file a notice 

under the Change in Bank Control Act (“CIBC Act”). 

 Virtus currently holds Regulated Company shares through a variety of 

investment companies registered under the Investment Company Act of 1940, 

other pooled investment vehicles, and institutional accounts that are sponsored, 

1

 Virtus is not, and is not affiliated with, a bank holding company or a savings and 

loan holding company. 

2

 The terms bank holding company and bank have the same meanings as set forth 

in the BHC Act and the Board’s Regulation Y. The terms savings and loan 

holding company and savings association have the same meanings as set forth in 

the HOLA and the Board’s Regulation LL. 
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managed, or advised by Virtus (collectively, the “Virtus-Advised Entities” and 

together with Virtus, the “Virtus Parties”). In connection with the requested 

determinations, Virtus has proposed to agree to conditions and commitments based 

upon those that other investment managers have agreed to in connection with 

similar determinations made by Federal Reserve staff. 

 For purposes of the BHC Act, a company controls another company if 

the first company (i) directly or indirectly or acting in concert through one or more 

other persons owns, controls, or has power to vote 25 percent or more of any class 

of voting securities of the second company; (ii) controls in any manner the election 

of a majority of the directors of the second company; or (iii) directly or indirectly 

exercises a controlling influence over the management or policies of the second 

company.3

 HOLA includes a substantially similar definition of control.4 The 

Board’s Regulation Y and Regulation LL also set forth several rebuttable 

presumptions of control.5

 Based on the limits on ownership and director 

representatives under the proposal, Virtus would only be deemed to control a 

Regulated Company under the BHC Act or HOLA, as applicable, if the Board 

were to find that Virtus exercises a controlling influence over the management or 

policies of a Regulated Company.6

 

 For purposes of the CIBC Act, the Virtus Parties are presumed 

by Regulation Y or Regulation LL to control a bank holding company, savings and 

loan holding company, or state member bank if, individually or collectively, 

“immediately after the transaction ... [they] will own, control, or hold with power 

to vote 10 percent or more of any class of voting securities of the institution” and 

either the institution has registered securities or no other person owns or controls a 

greater percentage of the same class of voting securities of the institution.7

 Under 

the proposal, the Virtus Parties would, from time to time, acquire in excess of 10 

percent of a class of voting securities of a bank holding company, savings and loan 

holding company, or state member bank, and therefore in some circumstances 

3

 12 U.S.C. §1841(a)(2); 12 CFR 225.2(e), 238.2(e). 

4

 12 U.S.C. § 1467a(a)(2); 12 CFR 238.2(e). Additionally, Virtus will be deemed 

to control a company under HOLA if Virtus has contributed more than 25 percent 

of the capital of the company. 12 U.S.C. § 1467a(a)(2)(B); 12 CFR 238.2(e)(2). 

5

 12 CFR 225.32, 238.22, as amended by 85 FR 12398. 

6

 See 12 CFR 225.31 et seq. and 12 CFR 238.21 et seq. 

7

 12 CFR 225.41(c). 
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would be presumed to have acquired control for purposes of the CIBC Act, absent 

relief. 

 Virtus proposes several conditions and commitments to ensure that 

the Virtus Parties would not exercise a controlling influence over a Regulated 

Company for purposes of the BHC Act and HOLA, and to rebut the presumption 

of control for purposes of the CIBC Act. In particular, the Virtus Parties 

collectively would not own or control 25 percent or more of any class of voting 

securities, or control the election of a majority of the directors of, any Regulated 

Company. In addition, the Virtus Parties would not acquire 15 percent or more of 

any class of voting securities of a Regulated Company without receiving the 

Board’s prior non-objection under the CIBC Act. Moreover, neither Virtus nor 

any Virtus-Advised Entity would individually own or control more than 10 percent 

of any class of voting securities of a Regulated Company. 

 Furthermore, Virtus has made a number of commitments designed to 

mitigate the ability of the Virtus Parties to control a Regulated Company. Among 

these commitments, Virtus has committed that, whenever the Virtus Parties own or 

control, in the aggregate, 10 percent or more of any class of voting securities of a 

Regulated Company, the Virtus Parties will not, individually or collectively: 

1) take any action to control the Regulated Company within the 

meaning of the BHC Act or HOLA, as applicable; 

2) have more than one director interlock with the Regulated 

Company; 

3) have any officer or employee interlocks with the Regulated 

Company; 

4) except in the context of a tender offer or in certain other specified 

transactions, dispose of voting shares of the Regulated Company (i) to 

any person seeking control over the institution or (ii) in block 

transactions exceeding 5 percent of any class of voting shares of the 

institution; or 
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5) threaten to dispose of voting shares in any manner as a condition of 

specific action or non-action by the Regulated Company.8

 In addition to considering the commitments made by Virtus, Board 

staff has considered the nature of Virtus and its proposed investments. Virtus 

operates and provides investment advice to the Virtus-Advised Entities. The 

proposed acquisitions in Regulated Companies would not be proprietary 

investments by Virtus. Rather, they would be investments made by VirtusAdvised Entities and on behalf of the beneficial owners of the Virtus-Advised 

Entities. The Virtus-Advised Entities are not operating companies, and Virtus does 

not lend to the Virtus-Advised Entities or to their portfolio companies. Moreover, 

Virtus is not in the business of operating or controlling Regulated Companies, or 

other companies. The proposed acquisitions will be made for investment purposes 

with the expectation of resale and not for the purpose of exercising a controlling 

influence over the management or policies of any Regulated Company. 

In light of the nature of the business and proposed investments of 

Virtus, staff believes that the commitments that Virtus has executed in connection 

with this letter are appropriate to mitigate concerns about whether Virtus will 

exercise a controlling influence over Regulated Companies. 

 In view of the commitments made by Virtus and the facts described in 

this letter, Board staff would not recommend that the Board find that acquisitions 

made within the parameters, and subject to the conditions, set forth in this letter 

would cause Virtus or any of the Virtus-Advised Entities: (i) to control a bank 

holding company or bank for purposes of the BHC Act; (ii) to control a savings 

and loan holding company or savings association for purposes of the HOLA; or 

(iii) to control a bank holding company, savings and loan holding company, or 

state member bank for purposes of the CIBC Act.9

 

 The preceding opinions are based expressly on the facts and 

circumstances of this case as they have been described to Board staff, and any 

8

 For a complete list of the commitments that Virtus has made to the Board, see 

the Appendix. 

9

 To the extent Virtus were to make acquisitions outside the parameters of this 

letter, or contrary to the conditions and commitments described herein, Virtus 

would be required to comply with all other applicable filing requirements, 

including the filing of applications or notices, respectively, under the BHC Act, 

HOLA, and the CIBC Act. 
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change in these facts or circumstances may result in a different opinion. In 

addition, this letter expresses no opinion as to whether a CIBC Act notice would be 

required for transactions involving direct investments in national banks, state nonmember banks, or savings associations, nor as to any requirement under state or 

federal law not explicitly discussed herein. If you have any questions about this 

matter, please contact Patricia Yeh, at (202) 452-3089, or Nathaniel Balk, at 

(202) 872-7517, both of the Board’s Legal Division. 

Sincerely, 

 

cc: Federal Reserve Bank of New York 

 Federal Reserve Bank of San Francisco 
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APPENDIX 

Commitments of Virtus to the Board 

 Aggregate investments by Virtus and the Virtus-Advised Entities in 

10 percent or more of any class of voting securities of a bank holding company, 

bank, savings and loan holding company, or savings association (each, a “Bank”) 

will be conducted in accordance with the commitments and restrictions listed 

below. 

1. Virtus and the Virtus-Advised Entities in the aggregate: 

a. will not acquire 25 percent or more of any class of voting securities of 

any Bank without receiving the Board’s prior approval under the Bank 

Holding Company Act, or the Home Owners’ Loan Act, as applicable; 

and 

b. will not acquire more than 15 percent of any class of voting securities 

of any bank holding company, savings and loan holding company, or 

state member bank, without receiving the Board’s prior nonobjection 

under the Change in Bank Control Act. 

2. Neither Virtus nor any Virtus-Advised Entities will, directly or indirectly, 

individually or in the aggregate: 

a. take any action to cause a Bank or any of its subsidiaries to become a 

subsidiary of Virtus or any Virtus-Advised Entity for purposes of the 

BHC Act; 

b. unless agreed to by the Federal Reserve Board or its staff, and 

permitted by applicable law, seek or accept representation of more 

than one director on the board of directors of any Bank or its 

subsidiaries; 

c. have or seek to have any representative of Virtus or any VirtusAdvised Entity serve as an officer, agent or employee of any Bank or 

its subsidiaries; 
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d. propose a director or slate of directors in opposition to any nominee or 

slate of nominees proposed by the management or board of directors 

of any Bank; 

e. exercise or attempt to exercise a controlling influence over the 

management or policies of any Bank or any of its subsidiaries; 

f. attempt to influence the dividend policies; loan, credit, or investment 

decisions or policies; pricing of services; personnel decisions; 

operations activities (including the location of any offices or branches 

or their hours of operation, etc.); or any similar activities or decisions 

of any Bank or any of its subsidiaries; 

g. enter into any agreement with a Bank or any of its subsidiaries that 

substantially limits the discretion of the Bank’s management over 

major policies and decisions, including, but not limited to, policies or 

decisions about employing and compensating executive officers; 

engaging in new business lines; raising additional debt or equity 

capital; merging or consolidating with another firm; or acquiring, 

selling, leasing, transferring, or disposing of material assets, 

subsidiaries, or other entities; 

h. solicit or participate in soliciting proxies with respect to any matter 

presented to the shareholders of a Bank or any of its subsidiaries; or 

i. dispose or threaten to dispose (explicitly or implicitly) of equity 

interests of a Bank or any of its subsidiaries in any manner as a 

condition or inducement of specific action or non-action by Bank or 

any of its subsidiaries. 

3. Neither Virtus nor any Virtus-Advised Entity will dispose of voting 

securities of a Bank: 

a. to any person if Virtus or the Virtus-Advised Entity knows that such 

person seeks to change the control of the Bank in any manner; or 

b. to any person whom Virtus or the Virtus-Advised Entity knows (i) has 

made a filing with the U.S. Securities and Exchange Commission or 

other federal agency with respect to the ownership of more than 5 
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percent of the Bank’s voting securities, or (ii) would be required to do 

so as a result of the purchase from Virtus or a Virtus-Advised Entity; 

or 

c. in an amount of more than 5 percent of the Bank’s voting securities in 

any single transaction;10

provided that notwithstanding paragraphs (a) through (c) above, Virtus and 

the Virtus-Advised Entities may dispose of their stock in a Bank in the 

following circumstances: 

(i) in a cross trade between two Virtus-Advised Entities in compliance 

with the rules governing such cross trades under the Investment 

Company Act of 1940, as amended (the “1940 Act”); 

(ii) in a sale by Virtus or a Virtus-Advised Entity to the Bank or one of its 

subsidiaries; 

(iii) in a tender or exchange offer for voting stock of the Bank; or 

(iv) in a widespread public distribution effected on a stock exchange or 

otherwise (which may include a sale to one or more broker-dealers 

acting as market makers or otherwise intending to resell the shares 

sold to it or them in accordance with its or their normal business 

practices). 

4. Neither Virtus nor any Virtus-Advised Entity will individually own, control, or 

hold with power to vote more than 10 percent of any class of voting securities 

of a Bank. 

Virtus and the Virtus-Advised Entities understand that these commitments 

constitute conditions imposed in writing in connection with the Board’s findings 

and decisions related to acquisitions of voting securities of Banks, and, as such, 

may be enforced in proceedings under applicable law. 

10 A single transaction includes a bunched trade effected by two or more VirtusAdvised Entities in compliance with the rules governing bunched trades under the 

1940 Act.