OCC allows extensions of CIF withdrawal period due to Covid-19
On August 4, the OCC issued an interim final rule, which clarifies the rules regarding account withdrawals from collective investment funds (CIF) in response to the Covid-19 pandemic. Specifically, under the OCC’s fiduciary activities regulation (12 CFR 9.18), a bank that is administering a CIF invested “primarily in real estate or other assets that are not readily marketable” may require a prior notice period of up to one year for withdrawals. The interim final rule codifies the OCC’s interpretation of the notice requirement as “requiring the bank to withdraw an account within the prior notice period or, if permissible under the CIF’s written plan, within one year after prior notice was required,” which is known as “the standard withdrawal period.”
In addition to codifying the standard withdrawal period, the interim final rule creates an exception that allows banks to extend the withdrawal period (with opportunities for further extensions) under certain conditions and with OCC approval. The OCC notes that the extension is intended help “preserve the value of the CIF’s assets for the benefit of fund participants during unanticipated and severe market conditions,” such as those resulting from the Covid-19 pandemic.
The interim final rule will be effective upon publication in the Federal Register.