Water Island Capital,Llc

Allegations: ALLEGED VIOLATIONS RELATED TO SECTION 7(F), RULE 12B-1(H) AND 38A-1 OF THE INVESTMENT COMPANY ACT OF 1940. Status: Final Sanction Detail: IN CONNECTION WITH THE CONSENT ORDER, WATER ISLAND CAPITAL AGREED TO PAY A FINE OF $50,000. THE FINE WAS PAID PROMPTLY AFTER THE CONSENT ORDER WAS FINALIZED. Summary: ON FEBRUARY 12, 2015 WATER ISLAND CAPITAL ENTERED INTO A CONSENT ORDER WITH THE SEC FOR THE PURPOSE OF RESOLVING ALLEGATIONS THAT IT HAD FAILED TO IMPLEMENT ITS COMPLIANCE POLICIES AND PROCEDURES PURSUANT TO SECTIONS 12(B) AND 17(F) OF, AND RULE 12B-1(H) UNDER, THE INVESTMENT COMPANY ACT OF 1940. SPECIFICALLY, THE SEC ALLEGED THAT DURING A PERIOD FROM JANUARY TO SEPTEMBER 2012, WATER ISLAND CAPITAL DID NOT ENSURE THAT CERTAIN ASSETS OF INVESTMENT COMPANIES MANAGED BY WATER ISLAND CAPITAL (THE "FUNDS") WERE MAINTAINED IN THE CUSTODY OF THE FUNDS' QUALIFIED BANK CUSTODIAN. THE ASSETS WERE CASH COLLATERAL FROM SWAP TRANSACTIONS THAT WERE TEMPORARILY HELD BY THE FUNDS' BROKER-DEALER COUNTERPARTIES. THE SEC ALSO FOUND THAT WATER ISLAND CAPITAL FAILED TO CREATE AND MAINTAIN AN APPROVED LIST OF EXECUTING BROKERS FOR THE FUNDS, AND DID NOT MAINTAIN DOCUMENTATION SUFFICIENT TO REFLECT ITS ONGOING MONITORING OF THE FUNDS' COMPLIANCE WITH RULE 12B-1(H). EACH OF THESE MATTERS WAS REMEDIED PRIOR TO MAY 31, 2013 AND THE SEC TOOK INTO ACCOUNT THE REMEDIAL ACTS TAKEN BY WATER ISLAND CAPITAL PROMPTLY AFTER DISCOVERY AS WELL AS THE COOPERATION AFFORDED TO THE SEC STAFF BY WATER ISLAND CAPITAL. THE TERMS OF THE CONSENT ORDER REQUIRED WATER ISLAND CAPITAL TO PAY THE FINE SET FORTH IN SECTION 12(A) HEREOF, AND TO CEASE FROM COMMITTING OR CAUSING ANY FUTURE VIOLATIONS. WATER ISLAND CAPITAL PAID THE AGREED UPON FINE PROMPTLY AFTER THE CONSENT ORDER WAS FINALIZED. NO OTHER TERMS OR CONDITIONS WERE IMPOSED.