Targeted Examination Letter on Non-Traded Business Development Companies

August 2016

FINRA is conducting an inquiry with respect to non-traded Business Development Companies (“BDCs”). In connection with our inquiry, we request the following documents and information for the period from January 1, 2015 through June 30, 2016 to the undersigned by no later than September 9, 2016:

  1. A list of each BDC offered by the firm that includes: (a) the name of the BDC; (b) the S.E.C. File Number for each registration statement (or “offering”); (c) the dates of each offering; and, (d) the firm’s role in each offering, e.g. sole dealer-manager, lead dealer-manager, distributor, etc.
  2. For each BDC offered: (a) a list of all participating broker-dealers that have a selling agreement with the firm per each registration statement; and, (b) sample copies representative of each type of selling agreement utilized.
  3. A list, in excel format, by date, of all broker-dealers that sold the aforementioned identified BDCs to its customers in initial or follow-on offerings that includes for each BDC: (a) the name of the participating broker-dealer; (b) the total number of shares bought and sold; (c) the total dollar value of proceeds; and, (d) the number of customers purchasing the BDC.  
  4. A copy of the firm’s due diligence procedures and, if not already included in the due diligence procedures, a written description of the due diligence that the firm conducts of the BDC initially and on an ongoing basis as well as a written description of the due diligence that the firm conducts of participating broker-dealers with which the firm has a selling agreement.