ADMINISTRATIVE PROCEEDING
File No. 3-21705

September 22, 2023 - The Securities and Exchange Commission today announced settled charges against Elsa Doyle for engaging in unlawful pre-arranged cross trades involving five money market funds, four of which were registered investment companies, for which she acted as a portfolio manager.

According to the SEC's order, from May 2020 until March 30, 2022, Doyle engaged in 27 cross trades. The order finds that, for some of these cross trades, Doyle directly engaged with a third-party broker-dealer to sell the securities from one fund and then to buy the same securities back through the same broker-dealer on behalf of another fund. The order further finds that Doyle showed a trader she worked with at a large financial institution how she effected cross trades by interpositioning a broker-dealer, and then directed the trader to conduct additional cross trades between funds in the same manner. In total, Doyle's cross trades cost the funds approximately $39,000, according to the order. Prior to and throughout the time she and the trader conducted the cross trades, the order finds, Doyle attended annual trainings that advised employees that such transactions were prohibited.

Sections 17(a)(1) and 17(a)(2) of the Investment Company Act generally prohibit any affiliated person of a registered investment company or any affiliated person of such affiliated person, acting as principal, from engaging in cross trades unless the person first obtains an exemptive order from the Commission under Section 17(b) or complies with Rule 17a-7. Rule 17a-7 requires, among other things, that cross trades be executed at the "independent current market price," which is defined in relevant part as "the average of the highest current independent bid and lowest current independent offer, determined on the basis of reasonable inquiry." Furthermore, if the adviser pays a brokerage commission, fee, or other remuneration in connection with the cross trade, the cross trade is not eligible for an exemption under Rule 17a-7, and is therefore impermissible.

As set forth in the SEC's order, when Doyle sold securities from particular funds, she did not effect the cross trades in accordance with Rule 17a-7 under the Investment Company Act and the large financial institution's applicable policies and procedures. Accordingly, the order finds that Doyle caused violations of Sections 17(a)(1) and 17(a)(2) of the Investment Company Act.  Without admitting or denying the findings in the order, Doyle consented to a cease-and-desist order and agreed to pay a civil money penalty of $30,000 to settle the charges.

The investigation was conducted by Salvatore Massa and Brian Fitzpatrick and was supervised by Lee A. Greenwood, Andrew Dean, and Corey Schuster, all of the Enforcement Division's Asset Management Unit.