Approval to Acquire Control
July 17, 2015
Re: _____________ – Approval to Acquire Control
This responds to your letter, dated May 8, 2015, on behalf of _____________ regarding the acquisition of more that 10 percent of _____________’s voting securities by both _____________ and _____________. _____________ is a licensee under the Money Transmission Act (MTA).
According to your letter, _____________ believes that _____________and _____________ may have each acquired control of _____________ without the prior approval of the Commissioner of Business Oversight (Commissioner) in violation of Financial Code section 2035(a).
_____________ has requested on behalf of _____________ and _____________ that the Department of Business Oversight (Department), under Financial Code section 2035(g), waive any requirement that _____________ and _____________ obtain approval to acquire control of _____________. The request is made on the grounds that _____________ and _____________ have each filed beneficial ownership reports with the United States Securities and Exchange Commission (SEC) on SEC Schedule 13G. _____________ also asks that instead of requiring institutional investors that make passive investments in _____________ to obtain the prior approval of the Commissioner before acquiring control of _____________ that the Department only require that _____________ provide notice within 10 days of these investors’ public filings with the SEC.
The MTA does not give the Department the authority to approve or exempt an acquisition of control after it occurs. Accordingly, if _____________ or _____________ have already acquired control of _____________, the Department cannot now waive any requirement that they obtain prior approval to acquire control of _____________ that has been violated.
Furthermore, the Department will not waive the prior approval requirement for future acquisitions of control of _____________ by institutional investors as passive investors merely because their public filings with the SEC are provided to the Department. The Commissioner must make significant substantive finding under Financial Code section 2035(b) about the proposed acquirer before giving prior approval for that acquirer to acquire control of a MTA licensee. The filing of a post-acquisition disclosure schedule with the SEC under the federal securities laws, such as a Schedule 13D or Schedule 13G, is not a sufficient basis for waiving the prior approval requirement of Financial Code section 2035(a).
It is the responsibility of the person acquiring control of a MTA licensee to obtain the prior approval of the Commissioner required by Financial Code section 2035(a). _____________ should make clear to purchasers of its voting securities, whether on the open market or directly from _____________, that a purchaser must obtain the prior approval of the Commissioner under Financial Code section 2035(a) if the stock purchase results in the purchaser acquiring control of _____________.
Please contact the undersigned at 213.897.2172 if you have any questions.
Jan Lynn Owen
Commissioner of Business Oversight
Wallace M. Wong