The Securities and Exchange Commission has summarily dismissed Standard & Poor's request for it to halt the launch of Vanguard's Viper exchange-traded funds.

S&P has disputed Vanguard's right to use the index as the basis for its new ETFs under its current licensing agreement. S&P claims that the ETFs are a new product. Vanguard claims that the ETFs are another share class of its existing index fund are therefore already covered under the license. The suit was filed in New York Federal Court.

S&P had asked the SEC to hold a hearing before granting an exemption to Vanguard to launch the products. It had argued that if Vanguard were to ultimately to lose the suit, shareholders in the fund would be irreparably harmed.

The text of the SEC statement is as follows:

An order has been issued on an application filed by Vanguard Index Funds, et al. The order denies a hearing request filed with respect to the application and exempts applicants from Sections 2(a)(32), 17(a)(1) and (2), 18(f)(1), 18(i), 22(d), and 24(d) of the Investment Company Act and from Rule 22c-1 under the Act. The order permits each of certain registered open-end management investment companies whose portfolios consist of the component securities of certain indices to issue a new class of shares with limited redeemability. The order permits transactions in the shares of the new classes at negotiated prices in the secondary market and allows dealers to sell the shares to secondary market purchasers unaccompanied by a prospectus, when prospectus delivery is not required by the Securities Act of 1933. The order also permits certain affiliated persons of the investment companies to deposit securities into, and receive securities from, the investment companies in connection with the purchase and redemption of aggregations of shares of the new classes. (Rel. IC-24789 - December 12)  

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