The Blackstone Group, LP; Notice of Application, 48999-49005 [2010-19854]
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Federal Register / Vol. 75, No. 155 / Thursday, August 12, 2010 / Notices
date and page number of this Federal
Register Notice. Comments submitted in
writing or in electronic form will be
posted on the NRC Web site and on the
Federal rulemaking Web site https://
www.regulations.gov. Because your
comments will not be edited to remove
any identifying or contact information,
the NRC cautions you against including
any information in your submission that
you do not want to be publicly
disclosed.
The NRC requests that any party
soliciting or aggregating comments
received from other persons for
submission to the NRC inform those
persons that the NRC will not edit their
comments to remove any identifying or
contact information, and therefore, they
should not include any information in
their comments that they do not want
publicly disclosed. To be considered,
written comments should be
postmarked by the end date of the
comment period. Any comments of any
Federal, State, and local agencies,
Indian tribes or other interested persons
will be made available for public
inspection when received.
The NRC and Corps staff will hold
two public meetings to present an
overview of the DEIS and to accept
public comments on the document on
Tuesday, September 21, 2010, at the
Glen Rose Expo Center, 202 Bo Gibbs
Blvd., Glen Rose, Texas 76043. The first
meeting will convene at 1 p.m. and will
continue until 4:00 p.m. as necessary.
The second meeting will convene at 7
p.m., with a repeat of the overview
portions of the first meeting, and will
continue until 10 p.m., as necessary.
The meetings will be transcribed and
will include a presentation of the
contents of the DEIS and the
opportunity for interested government
agencies, organizations, and individuals
to provide comments on the draft report.
To be considered, comments must be
provided during the transcribed public
meeting either orally or in writing.
Additionally, the NRC and Corps staff
will host informal discussions one hour
before the start of each meeting during
which members of the public may meet
and talk with NRC and Corps staff
members on an informal basis. No
formal comments on the DEIS will be
accepted during these informal
discussions.
Persons may pre-register to attend or
present oral comments at the meeting by
contacting Mr. Michael Willingham by
telephone at 1–800–368–5642,
extension 3924 or by e-mail to
Comanche.COLEIS@nrc.gov no later
than October 27, 2010. Members of the
public may also register to speak at the
meeting within 15 minutes of the start
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of the meeting. Individual oral
comments may be limited by the time
available depending on the number of
persons who register. Members of the
public who have not registered may also
have an opportunity to speak, if time
permits. Mr. Willingham will need to be
contacted no later than September 14,
2010, if special equipment or
accommodations are needed to attend or
present information at the public
meeting, so that the NRC staff can
determine whether the request can be
accommodated.
Mr.
Michael Willingham, Environmental
Projects Branch 1, U.S. Nuclear
Regulatory Commission, Mail Stop T7–
E30, Washington, DC 20555–0001. Mr.
Willingham may also be contacted at the
aforementioned telephone number or email address.
FOR FURTHER INFORMATION CONTACT:
Dated at Rockville, Maryland, August 6,
2010.
For the Nuclear Regulatory Commission.
Scott Flanders,
Director, Division of Site and Environmental
Reviews, Office of New Reactors.
[FR Doc. 2010–19956 Filed 8–11–10; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
29378; File No. 813–00375]
The Blackstone Group, LP; Notice of
Application
August 5, 2010.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order under sections 6(b) and 6(e) of the
Investment Company Act of 1940 (the
‘‘Act’’) granting an exemption from all
provisions of the Act, except section 9,
and sections 36 through 53, and the
rules and regulations under the Act.
With respect to sections 17 and 30 of the
Act, and the rules and regulations
thereunder, and rule 38a–1 under the
Act, the exemption is limited as set
forth in the application.
AGENCY:
Summary of Application:
Applicant requests an order to exempt
certain future partnerships, limited
liability companies and other
investment vehicles that it and/or its
affiliates sponsor (‘‘Partnerships’’)
formed for the benefit of eligible
employees of The Blackstone Group, LP
and its affiliates from certain provisions
of the Act. Each Partnership will be an
‘‘employees’ securities company’’ within
SUMMARY:
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48999
the meaning of section 2(a)(13) of the
Act.
APPLICANT: The Blackstone Group LP
(‘‘Company’’).
DATES: Filing Dates: The application was
filed on October 16, 2008 and amended
on May 14, 2009 and May 27, 2010.
Applicant has agreed to file an
amendment during the notice period,
the substance of which is reflected in
this notice.
HEARING OR NOTIFICATION OF HEARING: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicant with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on August 30, 2010 and
should be accompanied by proof of
service on applicant, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090; Applicant, The Blackstone Group
LP, 345 Park Avenue, New York, NY
10154.
FOR FURTHER INFORMATION CONTACT:
Laura L. Solomon, Senior Counsel, at
(202) 551–6915, or Julia Kim Gilmer,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicant’s Representations
1. The Company is a Delaware limited
partnership. The Company and its
‘‘Affiliates,’’ as defined in rule 12b–2
under the Securities Exchange Act of
1934 (the ‘‘Exchange Act’’), are referred
to collectively as ‘‘Blackstone.’’
Blackstone is a global alternative asset
manager and provider of financial
advisory services. The alternative asset
management businesses include the
management of corporate private equity
funds, real estate funds, funds of hedge
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funds, credit-oriented funds,
collateralized loan obligation vehicles,
and publicly-traded closed-end mutual
funds. Blackstone also provides various
financial advisory services, including
corporate and mergers and acquisitions
advisory, restructuring and
reorganization advisory and fund
placement services.
2. Each of the Partnerships will be a
limited partnership, limited liability
company, corporation, business trust or
other entity organized under the laws of
the state of Delaware or any other U.S.
or non-U.S. jurisdiction. Each
Partnership will be identical in all
material respects (other than investment
objectives and strategies, form of
organization and related structural and
operative provisions contained in the
constitutive documents of such
Partnerships). The Partnerships will be
formed as an ‘‘employees’ securities
company’’ within the meaning of section
2(a)(13) of the Act and will operate as
a diversified or non-diversified, closedend management investment company,
provided that the governing documents
of a Partnership may provide for
periodic subscriptions and
redemptions.1 The Partnerships will be
established primarily for the benefit of
Eligible Employees (defined below) of
the Company or of any Affiliate of the
Company as part of a program designed
to create capital building opportunities
that are competitive with those at other
financial services firms and to facilitate
1 Applicant also may implement a pretax plan
arrangement (‘‘Pretax Plan’’). In this case, no
investment vehicle will be formed with respect to
such Pretax Plan. Pursuant to a Pretax Plan,
Blackstone will enter into arrangements with
certain Eligible Employees, as defined below, of
Blackstone, which will generally provide that (a) an
Eligible Employee will defer a portion of his or her
compensation payable by Blackstone, (b) such
deferred compensation will be treated as having
been notionally invested in investments designated
for these purposes pursuant to the specific
compensation plan, and (c) an Eligible Employee
will be entitled to receive cash, securities or other
property at the times and in the amounts set forth
in the specific compensation plan, where the
aggregate amount received by such Eligible
Employee would be based upon the investment
performance of the investments designated for these
purposes pursuant to such compensation plan. The
Pretax Plan will not actually purchase or sell any
securities. Blackstone expects to offer, through
Pretax Plans, economic benefits comparable to what
would have been offered in an arrangement where
an investment vehicle is formed. For purposes of
the application, a Partnership will be deemed to be
formed with respect to each Pretax Plan and each
reference in the application to ‘‘Partnership,’’
‘‘capital contribution,’’ ‘‘General Partner,’’ ‘‘Limited
Partner,’’ ‘‘loans,’’ and ‘‘Interest’’ will be deemed to
refer to the Pretax Plan, the notional capital
contribution to the Pretax Plan, Blackstone, a
participant of the Pretax Plan, notional loans, and
participation rights in the Pretax Plan, respectively.
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the recruitment of high caliber
professionals.
3. The general partner of each
Partnership will be an Affiliate of the
Company (‘‘General Partner’’). Any
partner, member of, or other investor in
a Partnership (collectively, the
‘‘Partners’’) other than a General Partner
is a ‘‘Limited Partner’’ or ‘‘Participant.’’
The General Partner of each Partnership
will manage, operate, and control that
Partnership. The General Partner will be
authorized to delegate investment
management responsibility to a
Blackstone entity or a group of
Blackstone employees (the ‘‘Investment
Manager’’). The ultimate responsibility
for the Partnerships’ investments
delegated to an Investment Manager will
remain with the General Partner. Any
Blackstone entity that is delegated the
responsibility of making investment
decisions for a Partnership will be
registered as an investment adviser
under the Investment Advisers Act of
1940 (the ‘‘Advisers Act’’) (or, in the case
of a group of Blackstone employees, be
reflected in the Form ADV of the
applicable Blackstone entity) if required
under applicable law.
4. The General Partner, Blackstone or
any employee of the General Partner or
Blackstone may be entitled to receive a
performance-based fee (such as a
‘‘carried interest’’) based on the gains
and losses of the investment program or
of the Partnership’s investment
portfolio.2 All Partnership investments
are referred to herein collectively as
‘‘Portfolio Investments.’’
5. Ownership interests in the
Partnerships (‘‘Interests’’) will be offered
without registration in reliance on
section 4(2) of the Securities Act of 1933
(the ‘‘Securities Act’’), or Regulation D
under the Securities Act, and will be
sold only to ‘‘Eligible Employees’’ and
‘‘Qualified Participants,’’ in each case as
defined below, or to Blackstone
entities.3 Prior to offering Interests to an
Eligible Employee, the General Partner
2 A ‘‘carried interest’’ is an allocation to the
General Partner, a Limited Partner, or an Investment
Manager based on net gains in addition to the
amount allocable to such entity in proportion to its
invested capital. A General Partner, Limited Partner
or Investment Manager that is registered as an
investment adviser under the Advisers Act may
charge a carried interest only if permitted by rule
205–3 under the Advisers Act. Any carried interest
paid to a General Partner, Limited Partner or
Investment Manager that is not registered under the
Advisers Act may be paid only if permitted by rule
205–3 as if such General Partner, Limited Partner
or Investment Manager were registered under the
Advisers Act.
3 If applicant implements a Pretax Plan,
participation rights in such Pretax Plan will only be
offered to Eligible Employees who are current
employees or Consultants, as defined below, of
Blackstone.
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must reasonably believe that the Eligible
Employee will be a sophisticated
investor capable of understanding and
evaluating the risks of participating in
the Partnership without the benefit of
regulatory safeguards.
6. An ‘‘Eligible Employee’’ is (a) an
individual who is a current or former
employee, officer, director, or current
‘‘Consultant’’ of Blackstone and, except
for certain individuals who manage the
day-to-day affairs of the Partnership in
question (‘‘Managing Employees’’) 4 and
a limited number of other employees of
Blackstone 5 (collectively, ‘‘NonAccredited Investors’’), meets the
standards of an accredited investor
under rule 501(a)(5) or 501(a)(6) of
Regulation D under the Securities Act,
or (b) an entity that is a current
‘‘Consultant’’ of Blackstone and meets
the standards of an accredited investor
under rule 501(a) of Regulation D.6 A
Partnership may not have more than 35
Non-Accredited Investors.
7. A ‘‘Qualified Participant,’’ is an
individual or entity (a) that is an
Eligible Family Member or Qualified
Investment Vehicle (in each case as
defined below) of an Eligible Employee,
and (b) purchasing an Interest from a
Partnership (except as discussed below)
and comes within one of the categories
of an ‘‘accredited investor’’ under rule
501(a) of Regulation D. An ‘‘Eligible
Family Member’’ is a spouse, parent,
child, spouse of child, brother, sister, or
grandchild of an Eligible Employee,
including step and adoptive
relationships. A ‘‘Qualified Investment
Vehicle’’ is (a) a trust of which the
trustee, grantor and/or beneficiary is an
4 A Managing Employee may invest in a
Partnership if he or she meets the definition of
‘‘knowledgeable employee’’ in rule 3c–5(a)(4) under
the Act with the Partnership treated as though it
were a ‘‘Covered Company’’ for purposes of the rule.
5 Such employees must meet the sophistication
requirements set forth in rule 506(b)(2)(ii) of
Regulation D under the Securities Act and may be
permitted to invest his or her own funds in the
Partnership if, at the time of the employee’s
investment in a Partnership, he or she (a) has a
graduate degree in business, law or accounting, (b)
has a minimum of five years of consulting,
investment banking or similar business experience,
and (c) has had reportable income from all sources
of at least $100,000 in each of the two most recent
years and a reasonable expectation of income from
all sources of at least $140,000 in each year in
which such person will be committed to make
investments in a Partnership. In addition, such an
employee will not be permitted to invest in any
year more than 10% of his or her income from all
sources for the immediately preceding year in the
aggregate in such Partnership and in all other
Partnerships in which he or she has previously
invested.
6 A ‘‘Consultant’’ is a person or entity whom
Blackstone has engaged on retainer to provide
services and professional expertise on an ongoing
basis as a regular consultant or as a business or legal
adviser and who shares a community of interest
with Blackstone and Blackstone employees.
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Eligible Employee, (b) a partnership,
corporation or other entity controlled by
an Eligible Employee, or (c) a trust or
other entity established solely for the
benefit of Eligible Family Members of an
Eligible Employee.7 A Qualified
Investment Vehicle that is not an
accredited investor will be counted in
accordance with Regulation D toward
the 35 person limit for Non-Accredited
Investors.
8. The terms of a Partnership will be
fully disclosed to each Eligible
Employee and, if applicable, to a
Qualified Participant of the Eligible
Employee, in the offering materials,
including a copy of the partnership
agreement or other organizational
document (the ‘‘Partnership
Agreement’’), which will be furnished
prior to the time such person or entity
is admitted to the Partnership. The
General Partner of each Partnership will
send its Partners audited financial
statements within 120 days after the end
of its fiscal year of the Partnership or as
soon as practicable thereafter, except for
any Partnership that was formed to
make a single portfolio investment (in
which case audited financial statements
will be prepared for either the
Partnership or the entity that is the
single portfolio investment).8 In
addition, as soon as practicable after the
end of each tax year of a Partnership,
each Partner will receive a report
showing the Partner’s share of income,
credits, deductions, and other tax items.
9. Interests in a Partnership will be
non-transferable except with the prior
7 The inclusion of partnerships, corporations, or
other entities controlled by an Eligible Employee in
the definition of ‘‘Qualified Investment Vehicle’’ is
intended to enable Eligible Employees to make
investments in the Partnerships through personal
investment vehicles over which they exercise
investment discretion or other investment vehicles
the management or affairs of which they otherwise
control. In the case of a partnership, corporation, or
other entity controlled by a Consultant entity,
individual participants will be limited to senior
level employees, members, or partners of the
Consultant who will be required to qualify as an
‘‘accredited investor’’ under rule 501(a)(5) or
501(a)(6) of Regulation D and who will have access
to the directors and officers of the General Partner.
8 If applicant implements a Pretax Plan, Eligible
Employees participating in such Pretax Plan will be
furnished with a copy of the Pretax Plan, which
will set forth at a minimum the same terms of the
proposed investment program as those that would
have been set forth in a Partnership Agreement for
a Partnership. Blackstone will prepare an audited
informational statement with respect to the
investments deemed to be made by such Pretax
Plan, including, with respect to each investment,
the name of the portfolio company and the amount
deemed invested by such Pretax Plan in the
portfolio company. Blackstone will send each
participant of such Pretax Plan a separate statement
based on the audited informational statement
within 120 days after the end of the fiscal year of
Blackstone or as soon as practicable thereafter.
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written consent of the General Partner.9
No person or entity will be admitted
into a Partnership unless such person or
entity is an Eligible Employee, a
Qualified Participant of an Eligible
Employee, or a Blackstone entity. No
sales load will be charged in connection
with the sale of Interests.
10. An Eligible Employee’s interest in
a Partnership may be subject to
repurchase or cancellation in certain
circumstances as described in the
offering documents related to the
relevant Partnership. Upon repurchase
or cancellation, the General Partner will
at a minimum pay to the Eligible
Employee the lesser of (a) the amount
actually paid by the Eligible Employee
to acquire the Interest plus interest less
prior distributions, and (b) the fair
market value of the Interest as
determined at the time of repurchase or
cancellation by the General Partner. The
terms of any repurchase or cancellation
will apply equally to any Qualified
Participant of an Eligible Employee.
11. Subject to the terms of the
applicable Partnership Agreement, a
Partnership will be permitted to enter
into transactions involving (a) a
Blackstone entity, (b) a portfolio
company, (c) any Partner or person or
entity affiliated with a Partner, (d) an
investment fund or separate account
that is organized for the benefit of
investors who are not affiliated with
Blackstone and over which a Blackstone
entity will exercise investment
discretion or which is sponsored by a
Blackstone entity (‘‘Blackstone Third
Party Fund’’), or (e) any person or entity
who is not affiliated with Blackstone
and is a partner or other investor in a
Blackstone Third Party Fund or a ‘‘Third
Party Sponsored Fund’’ 10 (each a ‘‘Third
Party Investor’’). Prior to entering into
any of these transactions, the General
Partner or board of directors (or similar
body) of the General Partner or any
committee serving similar functions of
the General Partner (‘‘Board’’) must
determine that the terms are fair to the
Partners.
12. A Blackstone entity (including the
General Partner) acting as agent or
broker may receive placement fees,
advisory fees, or other compensation
from a Partnership or a portfolio
company in connection with a
Partnership’s purchase or sale of
9 If applicant implements a Pretax Plan, an
Eligible Employee’s participation rights in such
Pretax Plan may not be transferred, other than to
a Qualified Participant in the event of the Eligible
Employee’s death.
10 ‘‘Third Party Sponsored Fund’’ is an investment
fund or pooled investment vehicle for which
entities or persons unaffiliated with Blackstone are
the sponsors or investment advisers.
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securities, provided that such placement
fees, advisory fees, or other
compensation can be deemed to be
‘‘usual and customary.’’ Such fees or
other compensation will be deemed
‘‘usual and customary’’ only if (a) the
Partnership is purchasing or selling
securities (directly or indirectly)
alongside other unaffiliated third
parties, including Blackstone Third
Party Funds or Third Party Investors,
who are similarly purchasing or selling
securities, (b) the fees or other
compensation being charged to the
Partnership (directly or indirectly) are
also being charged to the unaffiliated
third parties, including Blackstone
Third Party Funds or Third Party
Investors (directly or indirectly), and (c)
the amount of securities being
purchased or sold by the Partnership
does not exceed 50% of the total
amount of securities being purchased or
sold by the Partnership and the
unaffiliated third parties, including
Blackstone Third Party Funds and Third
Party Investors. A Blackstone entity,
including the General Partner, also may
be compensated for services to entities
in which the Partnerships invest and to
entities that are competitors of these
entities, or from other unaffiliated
persons or entities.
13. The investment objective of each
Partnership will be set forth in the
offering documents relating to the
specific Partnership. A Partnership may
invest directly or through investment
pools (including private funds relying
on sections 3(c)(1) and 3(c)(7) of the
Act) 11 and registered investment
companies sponsored or managed by
Blackstone or by third parties. A
Partnership will not acquire any
security issued by a registered
investment company if immediately
after the acquisition the Partnership will
own more than 3% of the outstanding
voting stock of the registered investment
company.
14. The Partnerships may borrow
from a General Partner or a Blackstone
entity. The interest rate on such loans
will be no less favorable to the
Partnerships than the rate that could be
obtained on an arm’s length basis. A
Partnership will not borrow from any
person if the borrowing would cause
any person not named in section
2(a)(13) of the Act to own outstanding
securities of the Partnership (other than
short-term paper). Any indebtedness of
a Partnership will be non-recourse to
11 Applicant is not requesting any exemption
from any provision of the Act or any rule
thereunder that may govern a Partnership’s
eligibility to invest in a Portfolio Investment relying
on section 3(c)(1) or 3(c)(7) of the Act or the
Portfolio Investment’s status under the Act.
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the Limited Partners of the Partnership,
except indebtedness incurred
specifically on behalf of a Limited
Partner where such Limited Partner has
agreed to guarantee the loan or act as coobligor on the loan.
Applicant’s Legal Analysis
1. Section 6(b) of the Act provides, in
part, that the Commission will exempt
employees’ securities companies from
the provisions of the Act to the extent
that the exemption is consistent with
the protection of investors. Section 6(b)
provides that the Commission will
consider, in determining the provisions
of the Act from which the company
should be exempt, the company’s form
of organization and capital structure, the
persons owning and controlling its
securities, the price of the company’s
securities and the amount of any sales
load, how the company’s funds are
invested, and the relationship between
the company and the issuers of the
securities in which it invests. Section
2(a)(13) defines an employees’ securities
company, in relevant part, as any
investment company all of whose
securities (other than short-term paper)
are beneficially owned (a) by current or
former employees, or persons on
retainer, of one or more affiliated
employers, (b) by immediate family
members of such persons, or (c) by such
employer or employers together with
any of the persons in (a) or (b).
2. Section 7 of the Act generally
prohibits investment companies that are
not registered under section 8 of the Act
from selling or redeeming their
securities. Section 6(e) of the Act
provides that, in connection with any
order exempting an investment
company from any provision of section
7, certain provisions of the Act, as
specified by the Commission, will be
applicable to the company and other
persons dealing with the company as
though the company were registered
under the Act. Applicant requests an
order under sections 6(b) and 6(e) of the
Act exempting applicant and any
Partnerships from all provisions of the
Act, except section 9 and sections 36
through 53 of the Act, and the rules and
regulations under the Act. With respect
to sections 17 and 30 of the Act, and the
rules and regulations thereunder, and
rule 38a–1 under the Act, the exemption
is limited as set forth in the application.
3. Section 17(a) generally prohibits
any affiliated person of a registered
investment company, or any affiliated
person of an affiliated person, acting as
principal, from knowingly selling or
purchasing any security or other
property to or from the company.
Applicant requests an exemption from
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section 17(a) to permit: (a) a Blackstone
entity or a Blackstone Third Party Fund
(or any affiliated person of the
Blackstone Third Party Fund), acting as
principal, to engage in any transaction
directly or indirectly with any
Partnership or any company controlled
by the Partnership; (b) any Partnership
to invest in or engage in any transaction
with any Blackstone entity or
Blackstone Third Party Fund, acting as
principal, (i) in which the Partnership,
any company controlled by the
Partnership, or any Blackstone entity or
Blackstone Third Party Fund has
invested or will invest, or (ii) with
which the Partnership, any company
controlled by the Partnership, or any
Blackstone entity or Blackstone Third
Party Fund is or will become affiliated;
and (c) any Third Party Investor, acting
as principal, to engage in any
transaction directly or indirectly with a
Partnership or any company controlled
by the Partnership.
4. Applicant states that an exemption
from section 17(a) is consistent with the
protection of investors and is necessary
to promote the purpose of each
Partnership. Applicant states that the
Participants in each Partnership will be
fully informed of the possible extent of
the Partnership’s dealings with
Blackstone. Applicant also states that, as
professionals with experience in
financial services businesses,
Participants in each Partnership will be
able to understand and evaluate the
attendant risks. Applicant asserts that
the community of interest among the
Participants in each Partnership and
Blackstone will provide the best
insurance against any risk of abuse.
5. Section 17(d) of the Act and rule
17d–1 under the Act prohibit any
affiliated person of a registered
investment company, or any affiliated
person of such person, acting as
principal, from participating in any joint
arrangement with the company unless
authorized by the Commission.
Applicant requests relief to permit
affiliated persons of each Partnership, or
affiliated persons of any of these
persons, to participate in or effect any
transaction in connection with, any
joint enterprise or other joint
arrangement or profit sharing plan in
which the Partnership or a company
controlled by the Partnership is a
participant.
6. Applicant asserts that compliance
with section 17(d) would cause the
Partnerships to forego investment
opportunities simply because a
Participant or other affiliated person of
the Partnerships (or any affiliate of the
affiliated person) made or is
concurrently making a similar
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investment. Applicant also states that
because certain attractive investment
opportunities often require that each
participant make available funds in an
amount substantially greater than that
available to one Partnership alone, there
may be attractive opportunities that a
Partnership may be unable to take
advantage of except by co-investing
with other persons, including affiliated
persons. Applicant notes that each
Partnership will primarily be organized
for the benefit of the employee
Participants, as an incentive for them to
remain with Blackstone and for the
generation and maintenance of
goodwill. Applicant asserts that the
flexibility to structure co-investments
and joint investments will not involve
abuses of the type section 17(d) and rule
17d–1 were designed to prevent.
7. Co-investments with a Blackstone
Third Party Fund, or by a Blackstone
entity pursuant to a contractual
obligation to a Blackstone Third Party
Fund, will not be subject to condition 3
below. Applicant notes that it is
common for a Blackstone Third Party
Fund to require that Blackstone invest
its own capital in Blackstone Third
Party Fund investments, and that
Blackstone investments be subject to
substantially the same terms as those
applicable to the Blackstone Third Party
Fund. Applicant believes it is important
that the interests of the Blackstone
Third Party Fund take priority over the
interests of the Partnerships, and that
the Blackstone Third Party Fund not be
burdened or otherwise affected by
activities of the Partnerships. In
addition, applicant asserts that the
relationship of a Partnership to a
Blackstone Third Party Fund is
fundamentally different from a
Partnership’s relationship to Blackstone.
Applicant contends that the focus of,
and the rationale for, the protections
contained in the requested relief are to
protect the Partnerships from any
overreaching by Blackstone in the
employer/employee context, whereas
the same concerns are not present with
respect to the Partnerships and a
Blackstone Third Party Fund.
8. Section 17(e) of the Act and rule
17e–1 under the Act limit the
compensation an affiliated person may
receive when acting as agent or broker
for a registered investment company.
Applicant requests an exemption from
section 17(e) to permit a Blackstone
entity (including the General Partner)
that acts as an agent or broker to receive
placement fees, advisory fees, or other
compensation from a Partnership in
connection with the purchase or sale by
the Partnership of securities, provided
that the fees or other compensation can
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be deemed ‘‘usual and customary.’’
Applicant states that for the purposes of
the application, fees or other
compensation will be deemed ‘‘usual
and customary’’ only if (a) the
Partnership is purchasing or selling
securities alongside other unaffiliated
third parties, including Blackstone
Third Party Funds or Third Party
Investors, who are similarly purchasing
or selling securities, (b) the fees or other
compensation being charged to the
Partnership are also being charged to the
unaffiliated third parties, including
Blackstone Third Party Funds and Third
Party Investors, and (c) the amount of
securities being purchased or sold by
the Partnership does not exceed 50% of
the total amount of securities being
purchased or sold by the Partnership
and the unaffiliated third parties,
including Blackstone Third Party Funds
or Third Party Investors. Applicant
asserts that, because Blackstone does
not wish it to appear as if it is favoring
the Partnerships, compliance with
section 17(e) would prevent a
Partnership from participating in
transactions where the Partnership is
being charged lower fees than
unaffiliated third parties. Applicant
asserts that the fees or other
compensation paid by a Partnership to
a Blackstone entity will be the same as
those negotiated at arm’s length with
unaffiliated third parties.
9. Rule 17e–1(b) under the Act
requires that a majority of directors who
are not ‘‘interested persons’’ (as defined
in section 2(a)(19) of the Act) take
actions and make approvals regarding
commissions, fees, or other
remuneration. Rule 17e–1(c) under the
Act requires each Partnership to comply
with the fund governance standards
defined in rule 0–1(a)(7) under the Act.
Applicant requests an exemption from
rule 17e–1 to the extent necessary to
permit each Partnership to comply with
the rule without having a majority of the
Board who are not interested persons
take actions and make determinations as
set forth in paragraph (b) of the rule, and
without having to satisfy the standards
set forth in paragraph (c) of the rule.
Applicant states that because all the
Board members will be affiliated
persons, without the relief requested, a
Partnership could not comply with rule
17e–1. Applicant states that each
Partnership will comply with rule 17e–
1 by having a majority of the Board
members take actions and make
approvals as are set forth in rule 17e–
1. Applicant states that each Partnership
will comply with all other requirements
of rule 17e–1.
10. Section 17(f) of the Act designates
the entities that may act as investment
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company custodians, and rule 17f–1
under the Act imposes certain
requirements when the custodian is a
member of a national securities
exchange. Applicant requests an
exemption from section 17(f) and rule
17f–1 to permit a Blackstone entity to
act as custodian of Partnership assets
without a written contract. Applicant
also requests an exemption from the
rule 17f–1(b)(4) requirement that an
independent accountant periodically
verify the assets held by the custodian.
Applicant states that, because of the
community of interest of all the parties
involved and the existing requirement
for an independent audit, compliance
with these requirements would be
unnecessary. Each Partnership will
otherwise comply with all the
provisions of rule 17f–1.
11. Applicant also requests an
exemption from rule 17f–2 to permit the
following exceptions from the
requirements of rule 17f–2: (a) A
Partnership’s investments may be kept
in the locked files of the General Partner
(or a Blackstone entity) for purposes of
paragraph (b) of the rule; (b) for
purposes of paragraph (d) of the rule, (i)
employees of the General Partner (or a
Blackstone entity) will be deemed to be
employees of the Partnerships, (ii)
officers or managers of the General
Partner of a Partnership (or a Blackstone
entity) will be deemed to be officers of
the Partnership, and (iii) the Board will
be deemed to be the board of directors
of the Partnership and (c) in place of the
verification procedure under paragraph
(f) of the rule, verification will be
effected quarterly by two employees of
the General Partner (or a Blackstone
entity). Applicant expects that some of
the Partnerships’ investments will be
evidenced only by partnership
agreements, participation agreements or
similar documents, rather than by
negotiable certificates that could be
misappropriated. Applicant asserts that
these instruments are most suitably kept
in the files of the General Partner (or a
Blackstone entity), where they can be
referred to as necessary.
12. Section 17(g) of the Act and rule
17g–1 under the Act generally require
the bonding of officers and employees of
a registered investment company who
have access to its securities or funds.
Rule 17g–1 requires that a majority of
directors who are not interested persons
take certain actions and give certain
approvals relating to fidelity bonding.
Applicant requests exemptive relief to
permit the Board, regardless of whether
it is (or each of its members are) deemed
interested persons, to take actions and
make determinations set forth in the
rule. Applicant states that, because the
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49003
General Partner will be affiliated with
the Partnership, a Partnership could not
comply with rule 17g–1 without the
requested relief. Applicant also states
that each Partnership will comply with
all other requirements of rule 17g–1,
except that the Partnerships request an
exemption from the requirements of
paragraphs (g) and (h) or rule 17g–1
relating to the filing of copies of fidelity
bonds and related information with the
Commission and relating to this
provision of notices to the board of
directors, and an exemption from the
requirements of paragraph (j)(3) of rule
17g–1 that the Partnerships comply with
the fund governance standards defined
in rule 0–1(a)(7).
13. Section 17(j) of the Act and
paragraph (b) of rule 17j–1 under the
Act make it unlawful for certain
enumerated persons to engage in
fraudulent or deceptive practices in
connection with the purchase or sale of
a security held or to be acquired by a
registered investment company. Rule
17j–1 also requires that every registered
investment company adopt a written
code of ethics and that every access
person of a registered investment
company report personal securities
transactions. Applicant requests an
exemption from the provisions of rule
17j–1, except for the anti-fraud
provisions of paragraph (b), because
they are unnecessarily burdensome as
applied to the Partnerships.
14. Applicant requests an exemption
from the requirements in sections 30(a),
30(b), and 30(e) of the Act, and the rules
under those sections, that registered
investment companies prepare and file
with the Commission and mail to their
shareholders certain periodic reports
and financial statements. Applicant
contends that the forms prescribed by
the Commission for periodic reports
have little relevance to a Partnership
and would entail administrative and
legal costs that outweigh any benefit to
the Participants. Applicant requests
exemptive relief to the extent necessary
to permit each Partnership to report
annually to its Participants. Applicant
also requests an exemption from section
30(h) of the Act to the extent necessary
to exempt the General Partner of each
Partnership, directors and officers of the
General Partner and any other persons
who may be deemed to be members of
an advisory board of a Partnership from
filing Forms 3, 4, and 5 under section
16(a) of the Exchange Act with respect
to their ownership of Interests in the
Partnership. Applicant asserts that,
because there will be no trading market
and the transfers of Interests will be
severely restricted, these filings are
unnecessary for the protection of
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investors and burdensome to those
required to make them.
15. Rule 38a–1 requires investment
companies to adopt, implement and
periodically review written policies
reasonably designed to prevent violation
of the Federal securities law and to
appoint a chief compliance officer. Each
Partnership will comply with rule 38a–
1(a), (c) and (d), except that (a) because
the Partnership does not have a board of
directors, the board of directors or other
governing body of the General Partner
will fulfill the responsibilities assigned
to the Partnership’s board of directors
under the rule, (b) since the board of
directors or other governing body of the
General Partner does not have any
disinterested members, approval by a
majority of the disinterested board
members required by rule 38a–1 will
not be obtained, and (c) since the board
of directors or other governing body of
the General Partner does not have any
independent directors, the Partnerships
will comply with the requirement in
rule 38a–1(a)(4)(iv) that the chief
compliance officer meet with the
independent directors by having the
chief compliance officer meet with the
board of directors or other governing
body of the General Partner as
constituted.
Applicant’s Conditions
Applicant agrees that any order
granting the requested relief will be
subject to the following conditions:
1. Each proposed transaction
otherwise prohibited by section 17(a) or
section 17(d) and rule 17d–1 to which
a Partnership is a party (the ‘‘Section 17
Transactions’’) will be effected only if
the Board determines that:
(a) The terms of the Section 17
Transaction, including the
consideration to be paid or received, are
fair and reasonable to the Partners of the
participating Partnership and do not
involve overreaching of such
Partnership or its Partners on the part of
any person concerned; and
(b) The Section 17 Transaction is
consistent with the interests of the
Partners of the participating
Partnership, such Partnership’s
organizational documents and such
Partnership’s reports to its Partners.
In addition, the Board will record and
will preserve a description of all Section
17 Transactions, the Board’s findings
and the information or materials upon
which the Board’s findings are based
and the basis for the findings. All such
records will be maintained for the life
of the Partnership and at least six years
thereafter, and will be subject to
examination by the Commission and its
staff. Each Partnership will preserve the
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16:22 Aug 11, 2010
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accounts, books and other documents
required to be maintained in an easily
accessible place for the first two years.
2. The Board will adopt, and
periodically review and update,
procedures designed to ensure that
reasonable inquiry is made, prior to the
consummation of any Section 17
Transaction, with respect to the possible
involvement in the transaction of any
affiliated person or promoter of or
principal underwriter for such
Partnership, or any affiliated person of
such a person, promoter or principal
underwriter.
3. The General Partner will not make
on behalf of a Partnership any
investment in which a ‘‘Co-Investor’’
with respect to any Partnership (as
defined below) has acquired or proposes
to acquire the same class of securities of
the same issuer, where the investment
involves a joint enterprise or other joint
arrangement within the meaning of rule
17d–1 in which such Partnership and
the Co-Investor are participants, unless
any such Co-Investor, prior to disposing
of all or part of its investment, (a) gives
such General Partner sufficient, but not
less than one day’s notice of its intent
to dispose of its investment; and (b)
refrains from disposing of its investment
unless the participating Partnership
holding such investment has the
opportunity to dispose of its investment
prior to or concurrently with, on the
same terms as, and on a pro rata basis
with the Co-Investor. The term ‘‘CoInvestor’’ with respect to any
Partnership means any person who is:
(a) An ‘‘affiliated person’’ (as defined in
section 2(a)(3) of the Act) of such
Partnership (other than a Blackstone
Third Party Fund); (b) a Blackstone
entity; (c) an officer, director or partner
of a Blackstone entity; or (d) an entity
(other than a Blackstone Third Party
Fund) in which the Company or an
Affiliate acts as a general partner or has
a similar capacity to control the sale or
other disposition of the entity’s
securities. The restrictions contained in
this condition, however, shall not be
deemed to limit or prevent the
disposition of an investment by a CoInvestor: (a) To its direct or indirect
wholly-owned subsidiary, to any
company (a ‘‘Parent’’) of which such CoInvestor is a direct or indirect whollyowned subsidiary, or to a direct or
indirect wholly-owned subsidiary of its
Parent; (b) to immediate family
members of such Co-Investor, including
step and adoptive relationships, or to a
trust or other investment vehicle
established for any such immediate
family member; (c) when the investment
is comprised of securities that are listed
on any exchange registered as a national
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securities exchange under section 6 of
the Exchange Act; (d) when the
investment is comprised of securities
that are NMS securities pursuant to
section 11A(a)(2) of the Exchange Act
and rule 600(a) of Regulation NMS
thereunder; (e) when the investment is
comprised of securities that are listed on
or traded on any foreign securities
exchange or board of trade that satisfies
regulatory requirements under the law
of the jurisdiction in which such foreign
securities exchange or board of trade is
organized similar to those that apply to
a national securities exchange or a
national market system for securities; or
(f) when the investment is comprised of
securities that are government securities
as defined in section 2(a)(16) of the Act.
4. Each Partnership and its General
Partner will maintain and preserve, for
the life of such Partnership and at least
six years thereafter, such accounts,
books, and other documents as
constitute the record forming the basis
for the audited financial statements that
are to be provided to the Participants in
such Partnership, and each annual
report of such Partnership required to be
sent to such Participants, and agree that
all such records will be subject to
examination by the Commission and its
staff. Each Partnership will preserve the
accounts, books and other documents
required to be maintained in an easily
accessible place for the first two years.
5. The General Partner of each
Partnership will send to each
Participant in that Partnership, at any
time during the fiscal year then ended,
Partnership financial statements audited
by such Partnership’s independent
accountants, except under certain
circumstances in the case of a
Partnership formed to make a single
Portfolio Investment. In such cases, the
Partnership may send unaudited
financial statements, but each
Participant will receive financial
statements of the single Portfolio
Investment audited by such entity’s
independent accountants. At the end of
each fiscal year, the General Partner will
make a valuation or have a valuation
made of all of the assets of the
Partnership as of such fiscal year end in
a manner consistent with customary
practice with respect to the valuation of
assets of the kind held by the
Partnership. In addition, within 120
days after the end of each fiscal year of
each Partnership or as soon as
practicable thereafter, the General
Partner will send a report to each person
who was a Participant at any time
during the fiscal year then ended,
setting forth such tax information as
shall be necessary for the preparation by
the Participant of his, her or its U.S.
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Federal and State income tax returns
and a report of the investment activities
of the Partnership during that fiscal
year.
6. If a Partnership makes purchases or
sales from or to an entity affiliated with
the Partnership by reason of an officer,
director or employee of Blackstone (a)
serving as an officer, director, general
partner or investment adviser of the
entity, or (b) having a 5% or more
investment in the entity, such
individual will not participate in the
Partnership’s determination of whether
or not to effect the purchase or sale.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010–19854 Filed 8–11–10; 8:45 am]
BILLING CODE 8010–01–P
International, Inc. (n/k/a PBHG, Inc.)
because it has not filed any periodic
reports since the period ended
December 31, 1997.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Women
First Healthcare, Inc. because it has not
filed any periodic reports since the
period ended December 31, 2003.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
companies. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted companies is suspended for the
period from 9:30 a.m. EDT on August
10, 2010, through 11:59 p.m. EDT on
August 23, 2010.
SECURITIES AND EXCHANGE
COMMISSION
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[File No. 500–1]
[FR Doc. 2010–20002 Filed 8–10–10; 4:15 pm]
BILLING CODE 8010–01–P
In the Matter of Appiant Technologies,
Inc., Cobalis Corp., FutureLink Corp.,
STM Wireless, Inc., Supermail
International, Inc. (n/k/a PBHG, Inc.),
and Women First Healthcare, Inc.;
Order of Suspension of Trading
jlentini on DSKJ8SOYB1PROD with NOTICES
August 10, 2010.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Appiant
Technologies, Inc. because it has not
filed any periodic reports since the
period ended September 30, 2002.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Cobalis
Corp. because it has not filed any
periodic reports since the period ended
December 31, 2007.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of FutureLink
Corp. because it has not filed any
periodic reports since the period ended
March 31, 2001.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of STM
Wireless, Inc. because it has not filed
any periodic reports since the period
ended September 30, 2002.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Supermail
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SECURITIES AND EXCHANGE
COMMISSION
[File No. 500–1]
In the Matter of Geotec, Inc., InnoPet
Brands Corp., Marbledge Group, Inc.
(n/k/a AR Growth Finance Corp.), Phlo
Corp., Pliant Systems, Inc., Southeast
Banking Corp., TNX Television
Holdings, Inc., and WestPoint Stevens,
Inc.; Order of Suspension of Trading
August 10, 2010.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Geotec, Inc.
because it has not filed any periodic
reports since the period ended March
31, 2007.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of InnoPet
Brands Corp. because it has not filed
any periodic reports since the period
ended March 31, 1998.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Marbledge
Group, Inc. (n/k/a AR Growth Finance
Corp.) because it has not filed any
periodic reports since the period ended
November 30, 1996.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
PO 00000
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49005
concerning the securities of Phlo Corp.
because it has not filed any periodic
reports since the period ended
December 31, 2007.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Pliant
Systems, Inc. because it has not filed
any periodic reports since the period
ended June 30, 2001.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of Southeast
Banking Corp. because it has not filed
any periodic reports since the period
ended June 30, 1991.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of TNX
Television Holdings, Inc. because it has
not filed any periodic reports since the
period ended September 30, 2004.
It appears to the Securities and
Exchange Commission that there is a
lack of current and accurate information
concerning the securities of WestPoint
Stevens, Inc. because it has not filed any
periodic reports since the period ended
September 30, 2004.
The Commission is of the opinion that
the public interest and the protection of
investors require a suspension of trading
in the securities of the above-listed
companies. Therefore, it is ordered,
pursuant to Section 12(k) of the
Securities Exchange Act of 1934, that
trading in the securities of the abovelisted companies is suspended for the
period from 9:30 a.m. EDT on August
10, 2010, through 11:59 p.m. EDT on
August 23, 2010.
By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2010–20001 Filed 8–10–10; 4:15 pm]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–62657; File No. 4–274]
Program for Allocation of Regulatory
Responsibilities Pursuant to Rule 17d–
2; Notice of Filing of an Amended 17d–
2 Plan Between the Financial Industry
Regulatory Authority, Inc. and the
Chicago Stock Exchange, Inc.
August 5, 2010.
Pursuant to Section 17(d) of the
Securities Exchange Act of 1934
E:\FR\FM\12AUN1.SGM
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]]>Agencies
[Federal Register Volume 75, Number 155 (Thursday, August 12, 2010)]
[Notices]
[Pages 48999-49005]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-19854]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29378; File No. 813-00375]
The Blackstone Group, LP; Notice of Application
August 5, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order under sections 6(b) and 6(e)
of the Investment Company Act of 1940 (the ``Act'') granting an
exemption from all provisions of the Act, except section 9, and
sections 36 through 53, and the rules and regulations under the Act.
With respect to sections 17 and 30 of the Act, and the rules and
regulations thereunder, and rule 38a-1 under the Act, the exemption is
limited as set forth in the application.
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SUMMARY: Summary of Application: Applicant requests an order to exempt
certain future partnerships, limited liability companies and other
investment vehicles that it and/or its affiliates sponsor
(``Partnerships'') formed for the benefit of eligible employees of The
Blackstone Group, LP and its affiliates from certain provisions of the
Act. Each Partnership will be an ``employees' securities company''
within the meaning of section 2(a)(13) of the Act.
Applicant: The Blackstone Group LP (``Company'').
DATES: Filing Dates: The application was filed on October 16, 2008 and
amended on May 14, 2009 and May 27, 2010. Applicant has agreed to file
an amendment during the notice period, the substance of which is
reflected in this notice.
Hearing or Notification of Hearing: An order granting the application
will be issued unless the Commission orders a hearing. Interested
persons may request a hearing by writing to the Commission's Secretary
and serving applicant with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on August 30, 2010 and should be accompanied by proof of service
on applicant, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090; Applicant, The Blackstone Group
LP, 345 Park Avenue, New York, NY 10154.
FOR FURTHER INFORMATION CONTACT: Laura L. Solomon, Senior Counsel, at
(202) 551-6915, or Julia Kim Gilmer, Branch Chief, at (202) 551-6821
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicant's Representations
1. The Company is a Delaware limited partnership. The Company and
its ``Affiliates,'' as defined in rule 12b-2 under the Securities
Exchange Act of 1934 (the ``Exchange Act''), are referred to
collectively as ``Blackstone.'' Blackstone is a global alternative
asset manager and provider of financial advisory services. The
alternative asset management businesses include the management of
corporate private equity funds, real estate funds, funds of hedge
[[Page 49000]]
funds, credit-oriented funds, collateralized loan obligation vehicles,
and publicly-traded closed-end mutual funds. Blackstone also provides
various financial advisory services, including corporate and mergers
and acquisitions advisory, restructuring and reorganization advisory
and fund placement services.
2. Each of the Partnerships will be a limited partnership, limited
liability company, corporation, business trust or other entity
organized under the laws of the state of Delaware or any other U.S. or
non-U.S. jurisdiction. Each Partnership will be identical in all
material respects (other than investment objectives and strategies,
form of organization and related structural and operative provisions
contained in the constitutive documents of such Partnerships). The
Partnerships will be formed as an ``employees' securities company''
within the meaning of section 2(a)(13) of the Act and will operate as a
diversified or non-diversified, closed-end management investment
company, provided that the governing documents of a Partnership may
provide for periodic subscriptions and redemptions.\1\ The Partnerships
will be established primarily for the benefit of Eligible Employees
(defined below) of the Company or of any Affiliate of the Company as
part of a program designed to create capital building opportunities
that are competitive with those at other financial services firms and
to facilitate the recruitment of high caliber professionals.
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\1\ Applicant also may implement a pretax plan arrangement
(``Pretax Plan''). In this case, no investment vehicle will be
formed with respect to such Pretax Plan. Pursuant to a Pretax Plan,
Blackstone will enter into arrangements with certain Eligible
Employees, as defined below, of Blackstone, which will generally
provide that (a) an Eligible Employee will defer a portion of his or
her compensation payable by Blackstone, (b) such deferred
compensation will be treated as having been notionally invested in
investments designated for these purposes pursuant to the specific
compensation plan, and (c) an Eligible Employee will be entitled to
receive cash, securities or other property at the times and in the
amounts set forth in the specific compensation plan, where the
aggregate amount received by such Eligible Employee would be based
upon the investment performance of the investments designated for
these purposes pursuant to such compensation plan. The Pretax Plan
will not actually purchase or sell any securities. Blackstone
expects to offer, through Pretax Plans, economic benefits comparable
to what would have been offered in an arrangement where an
investment vehicle is formed. For purposes of the application, a
Partnership will be deemed to be formed with respect to each Pretax
Plan and each reference in the application to ``Partnership,''
``capital contribution,'' ``General Partner,'' ``Limited Partner,''
``loans,'' and ``Interest'' will be deemed to refer to the Pretax
Plan, the notional capital contribution to the Pretax Plan,
Blackstone, a participant of the Pretax Plan, notional loans, and
participation rights in the Pretax Plan, respectively.
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3. The general partner of each Partnership will be an Affiliate of
the Company (``General Partner''). Any partner, member of, or other
investor in a Partnership (collectively, the ``Partners'') other than a
General Partner is a ``Limited Partner'' or ``Participant.'' The
General Partner of each Partnership will manage, operate, and control
that Partnership. The General Partner will be authorized to delegate
investment management responsibility to a Blackstone entity or a group
of Blackstone employees (the ``Investment Manager''). The ultimate
responsibility for the Partnerships' investments delegated to an
Investment Manager will remain with the General Partner. Any Blackstone
entity that is delegated the responsibility of making investment
decisions for a Partnership will be registered as an investment adviser
under the Investment Advisers Act of 1940 (the ``Advisers Act'') (or,
in the case of a group of Blackstone employees, be reflected in the
Form ADV of the applicable Blackstone entity) if required under
applicable law.
4. The General Partner, Blackstone or any employee of the General
Partner or Blackstone may be entitled to receive a performance-based
fee (such as a ``carried interest'') based on the gains and losses of
the investment program or of the Partnership's investment portfolio.\2\
All Partnership investments are referred to herein collectively as
``Portfolio Investments.''
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\2\ A ``carried interest'' is an allocation to the General
Partner, a Limited Partner, or an Investment Manager based on net
gains in addition to the amount allocable to such entity in
proportion to its invested capital. A General Partner, Limited
Partner or Investment Manager that is registered as an investment
adviser under the Advisers Act may charge a carried interest only if
permitted by rule 205-3 under the Advisers Act. Any carried interest
paid to a General Partner, Limited Partner or Investment Manager
that is not registered under the Advisers Act may be paid only if
permitted by rule 205-3 as if such General Partner, Limited Partner
or Investment Manager were registered under the Advisers Act.
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5. Ownership interests in the Partnerships (``Interests'') will be
offered without registration in reliance on section 4(2) of the
Securities Act of 1933 (the ``Securities Act''), or Regulation D under
the Securities Act, and will be sold only to ``Eligible Employees'' and
``Qualified Participants,'' in each case as defined below, or to
Blackstone entities.\3\ Prior to offering Interests to an Eligible
Employee, the General Partner must reasonably believe that the Eligible
Employee will be a sophisticated investor capable of understanding and
evaluating the risks of participating in the Partnership without the
benefit of regulatory safeguards.
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\3\ If applicant implements a Pretax Plan, participation rights
in such Pretax Plan will only be offered to Eligible Employees who
are current employees or Consultants, as defined below, of
Blackstone.
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6. An ``Eligible Employee'' is (a) an individual who is a current
or former employee, officer, director, or current ``Consultant'' of
Blackstone and, except for certain individuals who manage the day-to-
day affairs of the Partnership in question (``Managing Employees'') \4\
and a limited number of other employees of Blackstone \5\
(collectively, ``Non-Accredited Investors''), meets the standards of an
accredited investor under rule 501(a)(5) or 501(a)(6) of Regulation D
under the Securities Act, or (b) an entity that is a current
``Consultant'' of Blackstone and meets the standards of an accredited
investor under rule 501(a) of Regulation D.\6\ A Partnership may not
have more than 35 Non-Accredited Investors.
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\4\ A Managing Employee may invest in a Partnership if he or she
meets the definition of ``knowledgeable employee'' in rule 3c-
5(a)(4) under the Act with the Partnership treated as though it were
a ``Covered Company'' for purposes of the rule.
\5\ Such employees must meet the sophistication requirements set
forth in rule 506(b)(2)(ii) of Regulation D under the Securities Act
and may be permitted to invest his or her own funds in the
Partnership if, at the time of the employee's investment in a
Partnership, he or she (a) has a graduate degree in business, law or
accounting, (b) has a minimum of five years of consulting,
investment banking or similar business experience, and (c) has had
reportable income from all sources of at least $100,000 in each of
the two most recent years and a reasonable expectation of income
from all sources of at least $140,000 in each year in which such
person will be committed to make investments in a Partnership. In
addition, such an employee will not be permitted to invest in any
year more than 10% of his or her income from all sources for the
immediately preceding year in the aggregate in such Partnership and
in all other Partnerships in which he or she has previously
invested.
\6\ A ``Consultant'' is a person or entity whom Blackstone has
engaged on retainer to provide services and professional expertise
on an ongoing basis as a regular consultant or as a business or
legal adviser and who shares a community of interest with Blackstone
and Blackstone employees.
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7. A ``Qualified Participant,'' is an individual or entity (a) that
is an Eligible Family Member or Qualified Investment Vehicle (in each
case as defined below) of an Eligible Employee, and (b) purchasing an
Interest from a Partnership (except as discussed below) and comes
within one of the categories of an ``accredited investor'' under rule
501(a) of Regulation D. An ``Eligible Family Member'' is a spouse,
parent, child, spouse of child, brother, sister, or grandchild of an
Eligible Employee, including step and adoptive relationships. A
``Qualified Investment Vehicle'' is (a) a trust of which the trustee,
grantor and/or beneficiary is an
[[Page 49001]]
Eligible Employee, (b) a partnership, corporation or other entity
controlled by an Eligible Employee, or (c) a trust or other entity
established solely for the benefit of Eligible Family Members of an
Eligible Employee.\7\ A Qualified Investment Vehicle that is not an
accredited investor will be counted in accordance with Regulation D
toward the 35 person limit for Non-Accredited Investors.
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\7\ The inclusion of partnerships, corporations, or other
entities controlled by an Eligible Employee in the definition of
``Qualified Investment Vehicle'' is intended to enable Eligible
Employees to make investments in the Partnerships through personal
investment vehicles over which they exercise investment discretion
or other investment vehicles the management or affairs of which they
otherwise control. In the case of a partnership, corporation, or
other entity controlled by a Consultant entity, individual
participants will be limited to senior level employees, members, or
partners of the Consultant who will be required to qualify as an
``accredited investor'' under rule 501(a)(5) or 501(a)(6) of
Regulation D and who will have access to the directors and officers
of the General Partner.
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8. The terms of a Partnership will be fully disclosed to each
Eligible Employee and, if applicable, to a Qualified Participant of the
Eligible Employee, in the offering materials, including a copy of the
partnership agreement or other organizational document (the
``Partnership Agreement''), which will be furnished prior to the time
such person or entity is admitted to the Partnership. The General
Partner of each Partnership will send its Partners audited financial
statements within 120 days after the end of its fiscal year of the
Partnership or as soon as practicable thereafter, except for any
Partnership that was formed to make a single portfolio investment (in
which case audited financial statements will be prepared for either the
Partnership or the entity that is the single portfolio investment).\8\
In addition, as soon as practicable after the end of each tax year of a
Partnership, each Partner will receive a report showing the Partner's
share of income, credits, deductions, and other tax items.
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\8\ If applicant implements a Pretax Plan, Eligible Employees
participating in such Pretax Plan will be furnished with a copy of
the Pretax Plan, which will set forth at a minimum the same terms of
the proposed investment program as those that would have been set
forth in a Partnership Agreement for a Partnership. Blackstone will
prepare an audited informational statement with respect to the
investments deemed to be made by such Pretax Plan, including, with
respect to each investment, the name of the portfolio company and
the amount deemed invested by such Pretax Plan in the portfolio
company. Blackstone will send each participant of such Pretax Plan a
separate statement based on the audited informational statement
within 120 days after the end of the fiscal year of Blackstone or as
soon as practicable thereafter.
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9. Interests in a Partnership will be non-transferable except with
the prior written consent of the General Partner.\9\ No person or
entity will be admitted into a Partnership unless such person or entity
is an Eligible Employee, a Qualified Participant of an Eligible
Employee, or a Blackstone entity. No sales load will be charged in
connection with the sale of Interests.
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\9\ If applicant implements a Pretax Plan, an Eligible
Employee's participation rights in such Pretax Plan may not be
transferred, other than to a Qualified Participant in the event of
the Eligible Employee's death.
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10. An Eligible Employee's interest in a Partnership may be subject
to repurchase or cancellation in certain circumstances as described in
the offering documents related to the relevant Partnership. Upon
repurchase or cancellation, the General Partner will at a minimum pay
to the Eligible Employee the lesser of (a) the amount actually paid by
the Eligible Employee to acquire the Interest plus interest less prior
distributions, and (b) the fair market value of the Interest as
determined at the time of repurchase or cancellation by the General
Partner. The terms of any repurchase or cancellation will apply equally
to any Qualified Participant of an Eligible Employee.
11. Subject to the terms of the applicable Partnership Agreement, a
Partnership will be permitted to enter into transactions involving (a)
a Blackstone entity, (b) a portfolio company, (c) any Partner or person
or entity affiliated with a Partner, (d) an investment fund or separate
account that is organized for the benefit of investors who are not
affiliated with Blackstone and over which a Blackstone entity will
exercise investment discretion or which is sponsored by a Blackstone
entity (``Blackstone Third Party Fund''), or (e) any person or entity
who is not affiliated with Blackstone and is a partner or other
investor in a Blackstone Third Party Fund or a ``Third Party Sponsored
Fund'' \10\ (each a ``Third Party Investor''). Prior to entering into
any of these transactions, the General Partner or board of directors
(or similar body) of the General Partner or any committee serving
similar functions of the General Partner (``Board'') must determine
that the terms are fair to the Partners.
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\10\ ``Third Party Sponsored Fund'' is an investment fund or
pooled investment vehicle for which entities or persons unaffiliated
with Blackstone are the sponsors or investment advisers.
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12. A Blackstone entity (including the General Partner) acting as
agent or broker may receive placement fees, advisory fees, or other
compensation from a Partnership or a portfolio company in connection
with a Partnership's purchase or sale of securities, provided that such
placement fees, advisory fees, or other compensation can be deemed to
be ``usual and customary.'' Such fees or other compensation will be
deemed ``usual and customary'' only if (a) the Partnership is
purchasing or selling securities (directly or indirectly) alongside
other unaffiliated third parties, including Blackstone Third Party
Funds or Third Party Investors, who are similarly purchasing or selling
securities, (b) the fees or other compensation being charged to the
Partnership (directly or indirectly) are also being charged to the
unaffiliated third parties, including Blackstone Third Party Funds or
Third Party Investors (directly or indirectly), and (c) the amount of
securities being purchased or sold by the Partnership does not exceed
50% of the total amount of securities being purchased or sold by the
Partnership and the unaffiliated third parties, including Blackstone
Third Party Funds and Third Party Investors. A Blackstone entity,
including the General Partner, also may be compensated for services to
entities in which the Partnerships invest and to entities that are
competitors of these entities, or from other unaffiliated persons or
entities.
13. The investment objective of each Partnership will be set forth
in the offering documents relating to the specific Partnership. A
Partnership may invest directly or through investment pools (including
private funds relying on sections 3(c)(1) and 3(c)(7) of the Act) \11\
and registered investment companies sponsored or managed by Blackstone
or by third parties. A Partnership will not acquire any security issued
by a registered investment company if immediately after the acquisition
the Partnership will own more than 3% of the outstanding voting stock
of the registered investment company.
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\11\ Applicant is not requesting any exemption from any
provision of the Act or any rule thereunder that may govern a
Partnership's eligibility to invest in a Portfolio Investment
relying on section 3(c)(1) or 3(c)(7) of the Act or the Portfolio
Investment's status under the Act.
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14. The Partnerships may borrow from a General Partner or a
Blackstone entity. The interest rate on such loans will be no less
favorable to the Partnerships than the rate that could be obtained on
an arm's length basis. A Partnership will not borrow from any person if
the borrowing would cause any person not named in section 2(a)(13) of
the Act to own outstanding securities of the Partnership (other than
short-term paper). Any indebtedness of a Partnership will be non-
recourse to
[[Page 49002]]
the Limited Partners of the Partnership, except indebtedness incurred
specifically on behalf of a Limited Partner where such Limited Partner
has agreed to guarantee the loan or act as co-obligor on the loan.
Applicant's Legal Analysis
1. Section 6(b) of the Act provides, in part, that the Commission
will exempt employees' securities companies from the provisions of the
Act to the extent that the exemption is consistent with the protection
of investors. Section 6(b) provides that the Commission will consider,
in determining the provisions of the Act from which the company should
be exempt, the company's form of organization and capital structure,
the persons owning and controlling its securities, the price of the
company's securities and the amount of any sales load, how the
company's funds are invested, and the relationship between the company
and the issuers of the securities in which it invests. Section 2(a)(13)
defines an employees' securities company, in relevant part, as any
investment company all of whose securities (other than short-term
paper) are beneficially owned (a) by current or former employees, or
persons on retainer, of one or more affiliated employers, (b) by
immediate family members of such persons, or (c) by such employer or
employers together with any of the persons in (a) or (b).
2. Section 7 of the Act generally prohibits investment companies
that are not registered under section 8 of the Act from selling or
redeeming their securities. Section 6(e) of the Act provides that, in
connection with any order exempting an investment company from any
provision of section 7, certain provisions of the Act, as specified by
the Commission, will be applicable to the company and other persons
dealing with the company as though the company were registered under
the Act. Applicant requests an order under sections 6(b) and 6(e) of
the Act exempting applicant and any Partnerships from all provisions of
the Act, except section 9 and sections 36 through 53 of the Act, and
the rules and regulations under the Act. With respect to sections 17
and 30 of the Act, and the rules and regulations thereunder, and rule
38a-1 under the Act, the exemption is limited as set forth in the
application.
3. Section 17(a) generally prohibits any affiliated person of a
registered investment company, or any affiliated person of an
affiliated person, acting as principal, from knowingly selling or
purchasing any security or other property to or from the company.
Applicant requests an exemption from section 17(a) to permit: (a) a
Blackstone entity or a Blackstone Third Party Fund (or any affiliated
person of the Blackstone Third Party Fund), acting as principal, to
engage in any transaction directly or indirectly with any Partnership
or any company controlled by the Partnership; (b) any Partnership to
invest in or engage in any transaction with any Blackstone entity or
Blackstone Third Party Fund, acting as principal, (i) in which the
Partnership, any company controlled by the Partnership, or any
Blackstone entity or Blackstone Third Party Fund has invested or will
invest, or (ii) with which the Partnership, any company controlled by
the Partnership, or any Blackstone entity or Blackstone Third Party
Fund is or will become affiliated; and (c) any Third Party Investor,
acting as principal, to engage in any transaction directly or
indirectly with a Partnership or any company controlled by the
Partnership.
4. Applicant states that an exemption from section 17(a) is
consistent with the protection of investors and is necessary to promote
the purpose of each Partnership. Applicant states that the Participants
in each Partnership will be fully informed of the possible extent of
the Partnership's dealings with Blackstone. Applicant also states that,
as professionals with experience in financial services businesses,
Participants in each Partnership will be able to understand and
evaluate the attendant risks. Applicant asserts that the community of
interest among the Participants in each Partnership and Blackstone will
provide the best insurance against any risk of abuse.
5. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
any affiliated person of a registered investment company, or any
affiliated person of such person, acting as principal, from
participating in any joint arrangement with the company unless
authorized by the Commission. Applicant requests relief to permit
affiliated persons of each Partnership, or affiliated persons of any of
these persons, to participate in or effect any transaction in
connection with, any joint enterprise or other joint arrangement or
profit sharing plan in which the Partnership or a company controlled by
the Partnership is a participant.
6. Applicant asserts that compliance with section 17(d) would cause
the Partnerships to forego investment opportunities simply because a
Participant or other affiliated person of the Partnerships (or any
affiliate of the affiliated person) made or is concurrently making a
similar investment. Applicant also states that because certain
attractive investment opportunities often require that each participant
make available funds in an amount substantially greater than that
available to one Partnership alone, there may be attractive
opportunities that a Partnership may be unable to take advantage of
except by co-investing with other persons, including affiliated
persons. Applicant notes that each Partnership will primarily be
organized for the benefit of the employee Participants, as an incentive
for them to remain with Blackstone and for the generation and
maintenance of goodwill. Applicant asserts that the flexibility to
structure co-investments and joint investments will not involve abuses
of the type section 17(d) and rule 17d-1 were designed to prevent.
7. Co-investments with a Blackstone Third Party Fund, or by a
Blackstone entity pursuant to a contractual obligation to a Blackstone
Third Party Fund, will not be subject to condition 3 below. Applicant
notes that it is common for a Blackstone Third Party Fund to require
that Blackstone invest its own capital in Blackstone Third Party Fund
investments, and that Blackstone investments be subject to
substantially the same terms as those applicable to the Blackstone
Third Party Fund. Applicant believes it is important that the interests
of the Blackstone Third Party Fund take priority over the interests of
the Partnerships, and that the Blackstone Third Party Fund not be
burdened or otherwise affected by activities of the Partnerships. In
addition, applicant asserts that the relationship of a Partnership to a
Blackstone Third Party Fund is fundamentally different from a
Partnership's relationship to Blackstone. Applicant contends that the
focus of, and the rationale for, the protections contained in the
requested relief are to protect the Partnerships from any overreaching
by Blackstone in the employer/employee context, whereas the same
concerns are not present with respect to the Partnerships and a
Blackstone Third Party Fund.
8. Section 17(e) of the Act and rule 17e-1 under the Act limit the
compensation an affiliated person may receive when acting as agent or
broker for a registered investment company. Applicant requests an
exemption from section 17(e) to permit a Blackstone entity (including
the General Partner) that acts as an agent or broker to receive
placement fees, advisory fees, or other compensation from a Partnership
in connection with the purchase or sale by the Partnership of
securities, provided that the fees or other compensation can
[[Page 49003]]
be deemed ``usual and customary.'' Applicant states that for the
purposes of the application, fees or other compensation will be deemed
``usual and customary'' only if (a) the Partnership is purchasing or
selling securities alongside other unaffiliated third parties,
including Blackstone Third Party Funds or Third Party Investors, who
are similarly purchasing or selling securities, (b) the fees or other
compensation being charged to the Partnership are also being charged to
the unaffiliated third parties, including Blackstone Third Party Funds
and Third Party Investors, and (c) the amount of securities being
purchased or sold by the Partnership does not exceed 50% of the total
amount of securities being purchased or sold by the Partnership and the
unaffiliated third parties, including Blackstone Third Party Funds or
Third Party Investors. Applicant asserts that, because Blackstone does
not wish it to appear as if it is favoring the Partnerships, compliance
with section 17(e) would prevent a Partnership from participating in
transactions where the Partnership is being charged lower fees than
unaffiliated third parties. Applicant asserts that the fees or other
compensation paid by a Partnership to a Blackstone entity will be the
same as those negotiated at arm's length with unaffiliated third
parties.
9. Rule 17e-1(b) under the Act requires that a majority of
directors who are not ``interested persons'' (as defined in section
2(a)(19) of the Act) take actions and make approvals regarding
commissions, fees, or other remuneration. Rule 17e-1(c) under the Act
requires each Partnership to comply with the fund governance standards
defined in rule 0-1(a)(7) under the Act. Applicant requests an
exemption from rule 17e-1 to the extent necessary to permit each
Partnership to comply with the rule without having a majority of the
Board who are not interested persons take actions and make
determinations as set forth in paragraph (b) of the rule, and without
having to satisfy the standards set forth in paragraph (c) of the rule.
Applicant states that because all the Board members will be affiliated
persons, without the relief requested, a Partnership could not comply
with rule 17e-1. Applicant states that each Partnership will comply
with rule 17e-1 by having a majority of the Board members take actions
and make approvals as are set forth in rule 17e-1. Applicant states
that each Partnership will comply with all other requirements of rule
17e-1.
10. Section 17(f) of the Act designates the entities that may act
as investment company custodians, and rule 17f-1 under the Act imposes
certain requirements when the custodian is a member of a national
securities exchange. Applicant requests an exemption from section 17(f)
and rule 17f-1 to permit a Blackstone entity to act as custodian of
Partnership assets without a written contract. Applicant also requests
an exemption from the rule 17f-1(b)(4) requirement that an independent
accountant periodically verify the assets held by the custodian.
Applicant states that, because of the community of interest of all the
parties involved and the existing requirement for an independent audit,
compliance with these requirements would be unnecessary. Each
Partnership will otherwise comply with all the provisions of rule 17f-
1.
11. Applicant also requests an exemption from rule 17f-2 to permit
the following exceptions from the requirements of rule 17f-2: (a) A
Partnership's investments may be kept in the locked files of the
General Partner (or a Blackstone entity) for purposes of paragraph (b)
of the rule; (b) for purposes of paragraph (d) of the rule, (i)
employees of the General Partner (or a Blackstone entity) will be
deemed to be employees of the Partnerships, (ii) officers or managers
of the General Partner of a Partnership (or a Blackstone entity) will
be deemed to be officers of the Partnership, and (iii) the Board will
be deemed to be the board of directors of the Partnership and (c) in
place of the verification procedure under paragraph (f) of the rule,
verification will be effected quarterly by two employees of the General
Partner (or a Blackstone entity). Applicant expects that some of the
Partnerships' investments will be evidenced only by partnership
agreements, participation agreements or similar documents, rather than
by negotiable certificates that could be misappropriated. Applicant
asserts that these instruments are most suitably kept in the files of
the General Partner (or a Blackstone entity), where they can be
referred to as necessary.
12. Section 17(g) of the Act and rule 17g-1 under the Act generally
require the bonding of officers and employees of a registered
investment company who have access to its securities or funds. Rule
17g-1 requires that a majority of directors who are not interested
persons take certain actions and give certain approvals relating to
fidelity bonding. Applicant requests exemptive relief to permit the
Board, regardless of whether it is (or each of its members are) deemed
interested persons, to take actions and make determinations set forth
in the rule. Applicant states that, because the General Partner will be
affiliated with the Partnership, a Partnership could not comply with
rule 17g-1 without the requested relief. Applicant also states that
each Partnership will comply with all other requirements of rule 17g-1,
except that the Partnerships request an exemption from the requirements
of paragraphs (g) and (h) or rule 17g-1 relating to the filing of
copies of fidelity bonds and related information with the Commission
and relating to this provision of notices to the board of directors,
and an exemption from the requirements of paragraph (j)(3) of rule 17g-
1 that the Partnerships comply with the fund governance standards
defined in rule 0-1(a)(7).
13. Section 17(j) of the Act and paragraph (b) of rule 17j-1 under
the Act make it unlawful for certain enumerated persons to engage in
fraudulent or deceptive practices in connection with the purchase or
sale of a security held or to be acquired by a registered investment
company. Rule 17j-1 also requires that every registered investment
company adopt a written code of ethics and that every access person of
a registered investment company report personal securities
transactions. Applicant requests an exemption from the provisions of
rule 17j-1, except for the anti-fraud provisions of paragraph (b),
because they are unnecessarily burdensome as applied to the
Partnerships.
14. Applicant requests an exemption from the requirements in
sections 30(a), 30(b), and 30(e) of the Act, and the rules under those
sections, that registered investment companies prepare and file with
the Commission and mail to their shareholders certain periodic reports
and financial statements. Applicant contends that the forms prescribed
by the Commission for periodic reports have little relevance to a
Partnership and would entail administrative and legal costs that
outweigh any benefit to the Participants. Applicant requests exemptive
relief to the extent necessary to permit each Partnership to report
annually to its Participants. Applicant also requests an exemption from
section 30(h) of the Act to the extent necessary to exempt the General
Partner of each Partnership, directors and officers of the General
Partner and any other persons who may be deemed to be members of an
advisory board of a Partnership from filing Forms 3, 4, and 5 under
section 16(a) of the Exchange Act with respect to their ownership of
Interests in the Partnership. Applicant asserts that, because there
will be no trading market and the transfers of Interests will be
severely restricted, these filings are unnecessary for the protection
of
[[Page 49004]]
investors and burdensome to those required to make them.
15. Rule 38a-1 requires investment companies to adopt, implement
and periodically review written policies reasonably designed to prevent
violation of the Federal securities law and to appoint a chief
compliance officer. Each Partnership will comply with rule 38a-1(a),
(c) and (d), except that (a) because the Partnership does not have a
board of directors, the board of directors or other governing body of
the General Partner will fulfill the responsibilities assigned to the
Partnership's board of directors under the rule, (b) since the board of
directors or other governing body of the General Partner does not have
any disinterested members, approval by a majority of the disinterested
board members required by rule 38a-1 will not be obtained, and (c)
since the board of directors or other governing body of the General
Partner does not have any independent directors, the Partnerships will
comply with the requirement in rule 38a-1(a)(4)(iv) that the chief
compliance officer meet with the independent directors by having the
chief compliance officer meet with the board of directors or other
governing body of the General Partner as constituted.
Applicant's Conditions
Applicant agrees that any order granting the requested relief will
be subject to the following conditions:
1. Each proposed transaction otherwise prohibited by section 17(a)
or section 17(d) and rule 17d-1 to which a Partnership is a party (the
``Section 17 Transactions'') will be effected only if the Board
determines that:
(a) The terms of the Section 17 Transaction, including the
consideration to be paid or received, are fair and reasonable to the
Partners of the participating Partnership and do not involve
overreaching of such Partnership or its Partners on the part of any
person concerned; and
(b) The Section 17 Transaction is consistent with the interests of
the Partners of the participating Partnership, such Partnership's
organizational documents and such Partnership's reports to its
Partners.
In addition, the Board will record and will preserve a description
of all Section 17 Transactions, the Board's findings and the
information or materials upon which the Board's findings are based and
the basis for the findings. All such records will be maintained for the
life of the Partnership and at least six years thereafter, and will be
subject to examination by the Commission and its staff. Each
Partnership will preserve the accounts, books and other documents
required to be maintained in an easily accessible place for the first
two years.
2. The Board will adopt, and periodically review and update,
procedures designed to ensure that reasonable inquiry is made, prior to
the consummation of any Section 17 Transaction, with respect to the
possible involvement in the transaction of any affiliated person or
promoter of or principal underwriter for such Partnership, or any
affiliated person of such a person, promoter or principal underwriter.
3. The General Partner will not make on behalf of a Partnership any
investment in which a ``Co-Investor'' with respect to any Partnership
(as defined below) has acquired or proposes to acquire the same class
of securities of the same issuer, where the investment involves a joint
enterprise or other joint arrangement within the meaning of rule 17d-1
in which such Partnership and the Co-Investor are participants, unless
any such Co-Investor, prior to disposing of all or part of its
investment, (a) gives such General Partner sufficient, but not less
than one day's notice of its intent to dispose of its investment; and
(b) refrains from disposing of its investment unless the participating
Partnership holding such investment has the opportunity to dispose of
its investment prior to or concurrently with, on the same terms as, and
on a pro rata basis with the Co-Investor. The term ``Co-Investor'' with
respect to any Partnership means any person who is: (a) An ``affiliated
person'' (as defined in section 2(a)(3) of the Act) of such Partnership
(other than a Blackstone Third Party Fund); (b) a Blackstone entity;
(c) an officer, director or partner of a Blackstone entity; or (d) an
entity (other than a Blackstone Third Party Fund) in which the Company
or an Affiliate acts as a general partner or has a similar capacity to
control the sale or other disposition of the entity's securities. The
restrictions contained in this condition, however, shall not be deemed
to limit or prevent the disposition of an investment by a Co-Investor:
(a) To its direct or indirect wholly-owned subsidiary, to any company
(a ``Parent'') of which such Co-Investor is a direct or indirect
wholly-owned subsidiary, or to a direct or indirect wholly-owned
subsidiary of its Parent; (b) to immediate family members of such Co-
Investor, including step and adoptive relationships, or to a trust or
other investment vehicle established for any such immediate family
member; (c) when the investment is comprised of securities that are
listed on any exchange registered as a national securities exchange
under section 6 of the Exchange Act; (d) when the investment is
comprised of securities that are NMS securities pursuant to section
11A(a)(2) of the Exchange Act and rule 600(a) of Regulation NMS
thereunder; (e) when the investment is comprised of securities that are
listed on or traded on any foreign securities exchange or board of
trade that satisfies regulatory requirements under the law of the
jurisdiction in which such foreign securities exchange or board of
trade is organized similar to those that apply to a national securities
exchange or a national market system for securities; or (f) when the
investment is comprised of securities that are government securities as
defined in section 2(a)(16) of the Act.
4. Each Partnership and its General Partner will maintain and
preserve, for the life of such Partnership and at least six years
thereafter, such accounts, books, and other documents as constitute the
record forming the basis for the audited financial statements that are
to be provided to the Participants in such Partnership, and each annual
report of such Partnership required to be sent to such Participants,
and agree that all such records will be subject to examination by the
Commission and its staff. Each Partnership will preserve the accounts,
books and other documents required to be maintained in an easily
accessible place for the first two years.
5. The General Partner of each Partnership will send to each
Participant in that Partnership, at any time during the fiscal year
then ended, Partnership financial statements audited by such
Partnership's independent accountants, except under certain
circumstances in the case of a Partnership formed to make a single
Portfolio Investment. In such cases, the Partnership may send unaudited
financial statements, but each Participant will receive financial
statements of the single Portfolio Investment audited by such entity's
independent accountants. At the end of each fiscal year, the General
Partner will make a valuation or have a valuation made of all of the
assets of the Partnership as of such fiscal year end in a manner
consistent with customary practice with respect to the valuation of
assets of the kind held by the Partnership. In addition, within 120
days after the end of each fiscal year of each Partnership or as soon
as practicable thereafter, the General Partner will send a report to
each person who was a Participant at any time during the fiscal year
then ended, setting forth such tax information as shall be necessary
for the preparation by the Participant of his, her or its U.S.
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Federal and State income tax returns and a report of the investment
activities of the Partnership during that fiscal year.
6. If a Partnership makes purchases or sales from or to an entity
affiliated with the Partnership by reason of an officer, director or
employee of Blackstone (a) serving as an officer, director, general
partner or investment adviser of the entity, or (b) having a 5% or more
investment in the entity, such individual will not participate in the
Partnership's determination of whether or not to effect the purchase or
sale.
For the Commission, by the Division of Investment Management,
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19854 Filed 8-11-10; 8:45 am]
BILLING CODE 8010-01-P
