Direct answer
No — pro-rata scaling is a legally protected fund defense mechanism under SEC rules, not a compliance violation. When redemption requests exceed the fund's limit, everyone gets an equal percentage of their request fulfilled.
No, it is not a compliance violation. It is a legally protected fund defense mechanism. Under SEC rules, if an interval fund or tender offer fund faces redemption requests that exceed its periodic limit (e.g., 5% capacity but 10% requested), the fund must execute the repurchases on a pro-rata basis. This means everyone who asked to exit gets an equal percentage of their request fulfilled (in this case, 50% of their requested shares), and the remaining shares must wait until the next eligible window.
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