Wednesday, February 17, 2021 On Jan. 13, 2021, the Division of Investment Management staff (Staff) of the Securities and Exchange Commission (Commission) issued a no-action letter advising that it would not recommend enforcement action to the Commission under Section 17(f) of the Investment Company Act of 1940 (1940 Act), and paragraphs (b)-(f) of Rule 17f-2 thereunder, if certain registered management investment companies or series thereof (Funds), or their directors or officers, if the Funds, acting as self-custodians, maintain certain Loan Interests (as defined below) without strict compliance with paragraphs (b)-(e) of Rule 17f-2. Background Section 17(f) of the 1940 Act generally requires a registered investment company to maintain its securities and similar investments in the custody of a bank, a member of a national securities exchange, or to self-custody such assets subject to any rules prescribed by the Commission. Rule 17f-2 under the 1940 Act sets forth the conditions under which a fund may act as a self-custodian, a number of which some view as burdensome. For example, the rule requires that: (1) fund investments (with limited exception) must be deposited in the safekeeping of a bank (often referred to as the “vaulting requirement,” which assumes certification or physical possession); (2) the fund’s board must designate no more than five “authorized persons” for the fund and adopt a resolution permitting access to the fund’s investments only by two persons acting together; (3) any person depositing or withdrawing investments from the depository or ordering their withdrawal and delivery from the safekeeping of the fund or other company must sign a specific notation; and (4) investments maintained by a fund must be verified by complete examination by an independent public accountant retained by the fund at least three times during the fiscal year, at least two of which must be on a “surprise” basis.