Tudor Employee Investment Fund LLC and Tudor Investment Corporation; Notice of Application, 55372-55376 [2010-22622]
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Federal Register / Vol. 75, No. 175 / Friday, September 10, 2010 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
29409; File No. 813–359]
Tudor Employee Investment Fund LLC
and Tudor Investment Corporation;
Notice of Application
September 3, 2010.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an 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 those
sections. 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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AGENCY:
1090; Applicants, 1275 King Street,
Greenwich, CT 06831.
FOR FURTHER INFORMATION CONTACT: Jean
E. Minarick, Senior Counsel, at (202)
551–6811 or Janet M. Grossnickle,
Assistant Director, 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.
Applicants’ Representations
1. Tudor, a Delaware corporation, is
registered with the Commodity Futures
Trading Commission (‘‘CFTC’’) as a
commodity pool operator and
commodity trading advisor, and is a
SUMMARY: Summary of Application:
member of the U.S. National Futures
Applicants request an order to exempt
Association in such capacities.
certain limited liability companies and
Applicants represent that Tudor is
other investment vehicles formed for the
exempt from registration as an
benefit of eligible employees of Tudor
investment adviser with the
Investment Corporation (‘‘Tudor’’) and
Commission under the Investment
its affiliates from certain provisions of
Advisers Act of 1940 (the ‘‘Advisers
the Act. Each limited liability company
Act’’). Tudor and its ‘‘affiliates,’’ as
and other investment vehicle will be an
defined in rule 12b–2 under the
‘‘employees’ securities company’’ within
Securities Exchange Act of 1934
the meaning of section 2(a)(13) of the
(‘‘Exchange Act’’), are referred to
Act.
collectively as the ‘‘Tudor Group’’ and
Applicants: Tudor Employee
each entity within the Tudor Group is
Investment Fund LLC (‘‘Investment
referred to individually as a ‘‘Tudor
Fund’’) and Tudor.
Group Entity.’’
DATES: Filing Dates: The application was
2. Tudor has established the
filed on December 6, 2005, and
Investment Fund as a Delaware limited
amended on August 22, 2007, June 9,
liability company and may in the future
2008, June 26, 2009, June 25, 2010 and
establish additional pooled investment
September 1, 2010.
vehicles identical in all material
Hearing or Notification of Hearing: An respects to the Investment Fund (other
order granting the application will be
than investment objectives and
issued unless the Commission orders a
strategies and form of organization) (the
hearing. Interested persons may request ‘‘Subsequent Funds’’ and collectively
a hearing by writing to the
with the Investment Fund, the ‘‘Funds,’’
Commission’s Secretary and serving
and each, a ‘‘Fund’’) for the benefit of
applicants with a copy of the request,
current or former key employees,
personally or by mail. Hearing requests
officers, directors and current
should be received by the Commission
consultants of the Tudor Group and
by 5:30 p.m. on September 28, 2010,
certain entities and individuals
and should be accompanied by proof of
affiliated with employees of the Tudor
service on applicants, in the form of an
Group who invest in a Fund (‘‘Fund
affidavit or, for lawyers, a certificate of
Investors’’). The Funds are designed
service. Hearing requests should state
primarily to create capital building
the nature of the writer’s interest, the
opportunities that are competitive with
reason for the request, and the issues
those at other investment management
contested. Persons who wish to be
firms and to facilitate the recruitment
notified of a hearing may request
and retention of high caliber
notification by writing to the
professionals. Tudor will control each
Commission’s Secretary.
Fund within the meaning of the Act.
3. Each Fund will operate as a nonADDRESSES: Secretary, U.S. Securities
diversified closed-end management
and Exchange Commission, 100 F
investment company. Each Fund will be
Street, NE., Washington, DC 20549–
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an ‘‘employees’ securities company’’
within the meaning of section 2(a)(13) of
the Act. Each Fund will be established
to enable Eligible Investors, as defined
below, through their investment in a
Fund to achieve long-term capital
appreciation through investment in
affiliated and non-affiliated private
investment funds (each an ‘‘Underlying
Fund’’), certain of which are advised by
a Tudor Group Entity.1 The Underlying
Funds in which a Fund invests will be
either investment companies excluded
from registration under the Act or funds
not primarily engaged in the business of
investing, reinvesting, or trading
securities, e.g., commodity pools. The
investment objectives and policies for
each Fund may vary from Fund to Fund.
Participation in the Funds is voluntary.
4. A Tudor Group Entity will serve as
the manager (‘‘Manager’’) of each Fund.2
The same or a different Tudor Group
Entity will serve as the investment
adviser (each an ‘‘Investment Adviser’’)
of each Fund. The Investment Adviser
will register as an investment adviser
under the Advisers Act, if required
under applicable law.
5. The Tudor Group, the Manager and
any other person acting for or on behalf
of a Fund shall act in the best interest
of the Fund and its Fund Investors.
Whenever the Tudor Group, the
Manager or any other person acting for
or on behalf of the Funds is required or
permitted to make a decision, take or
approve an action, or omit to do any of
the foregoing in such person’s
discretion, then that person shall
exercise such discretion in accordance
with reasonableness and good faith and
any fiduciary duties owed to the Fund
and its Fund Investors. The
organizational documents for, and any
other contractual arrangement
regarding, the Funds will not contain
any provision which protects or
purports to protect the Tudor Group, the
Manager or their delegates against any
liability to a Fund or its Fund Investors
to which such person would otherwise
be subject by reason of willful
misfeasance, bad faith, or gross
negligence in the performance of such
person’s duties, or by reason of such
person’s reckless disregard of such
person’s obligations and duties under
1 Applicants are not requesting any exemption
from any provision of the Act or any rule
thereunder that may govern a Fund’s eligibility to
invest in an Underlying Fund relying on section
3(c)(1) or 3(c)(7) of the Act or any Underlying
Fund’s status under the Act.
2 A ‘‘Manager’’ is either the general partner of any
Fund organized as a limited partnership or the
managing member of any Fund organized as a
limited liability company.
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such contract or organizational
documents.
6. Interests in the Funds (‘‘Interests’’)
will be offered without registration in
reliance on section 4(2) of the Securities
Act of 1933 (‘‘Securities Act’’) or
Regulation D under the Securities Act
(‘‘Regulation D’’), and will be offered and
sold only to Eligible Investors. An
‘‘Eligible Investor’’ is defined as (a) any
Tudor Group Entity that meets the
standards set forth below and (b) an
officer, director, or employee of the
Tudor Group who has been employed
by a Tudor Group Entity for at least one
year and ‘‘Consultants’’ 3 of the Tudor
Group (collectively, ‘‘Tudor
Employees’’), each of which meets the
standards, as applicable, set forth below.
Each Eligible Investor must have, in the
reasonable belief of the Manager, the
knowledge, sophistication and
experience in business and financial
matters to be capable of evaluating the
merits and risks of investing in a Fund
and be able to bear the economic risk of
such investment, and be able to afford
a complete loss of the investment.
7. To be a Tudor Employee, an
individual must be (a) an accredited
investor under rule 501(a)(5) or
501(a)(6) of Regulation D under the
Securities Act and (b) a ‘‘qualified
eligible person’’ under rule 4.7
promulgated by the CFTC. A Tudor
Employee is a ‘‘qualified eligible person’’
under CFTC rule 4.7(a)(2)(vii) if he or
she is a ‘‘knowledgeable employee,’’ as
defined in rule 3c–5 under the Act, of
a Tudor Group Entity. Any Tudor Group
Entity including the Manager and the
Investment Adviser will be required to
be accredited investors under
Regulation D under the Securities Act to
be an Eligible Investor.
8. The investment objectives and
strategies for each Fund will be set forth
in offering documents relating to the
Interests offered by the Fund. Prior to
being invited to participate in a Fund,
each Eligible Investor will receive a
copy of the offering documents and the
operating agreement (or other
organizational document) of the Fund or
an offering memorandum, which will
set forth all the terms of participation in
the Fund. The Managers will send an
annual report to each Fund Investor not
later than 120 days after the close of the
fiscal year, which will contain financial
statements of the Fund that have been
3 A ‘‘Consultant’’ is a person or entity who is on
retainer with a Tudor Group Entity at the time
Interests are offered to the Consultant to provide
services and professional expertise to a Tudor
Group Entity on an ongoing basis as a regular
consultant or as a business or legal adviser and who
shares a community of interest with the Tudor
Group and its employees.
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audited by independent accountants.
For purposes of this requirement ‘‘audit’’
shall have the meaning defined in rule
1–02(d) of Regulation S–X. In addition,
Fund Investors will receive at least
annually all information necessary to
enable the Fund Investors to prepare
their Federal and State income tax
returns.
9. Interests in the Funds will be nontransferable by a Fund Investor except
with the express consent of the
Manager. No person will be admitted as
a Fund Investor unless the person is an
Eligible Investor, except that a legal
representative of the estate of a deceased
Fund Investor may hold that Fund
Investor’s Interest in order to settle the
Fund Investor’s estate or administer its
property. No fee of any kind will be
charged in connection with the sale of
Interests.
10. Upon termination of employment
with a Tudor Group Entity, an Eligible
Investor, other than a Consultant, who
has been employed by the Tudor Group
for at least three years will remain
eligible to invest in a Fund or continue
to hold Interests in a Fund, as
applicable, at the discretion of the
Manager of that Fund, for a period of
one year for each full year of
employment (subject to a maximum of
ten years), and thereafter such Interests
will be subject to a mandatory
redemption. Interests held by a
Consultant whose retainer has been
terminated or expired will be subject to
mandatory redemption, and unlike
other Eligible Investors, Consultants
may not invest in a Fund or continue to
hold Interests in a Fund based on their
length of service to the Tudor Group.
Consultants no longer on retainer with
a Tudor Group Entity will no longer be
Eligible Investors. The repurchase price
for Interests will be based on net asset
value pursuant to the Fund’s
organization and offering documents.
11. A Fund may leverage its
investments in any of the Underlying
Funds by entering into borrowing
arrangements with third parties,
including a Tudor Group Entity, in
order to gain greater exposure to the
Underlying Funds. Each such Fund loan
will be made at an interest rate no less
favorable than that which could be
obtained on an arm’s length basis. A
Fund 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 Fund (other than short-term paper).
Any loan made to a Fund will be nonrecourse to the Fund Investors.
12. A Fund will not acquire any
security issued by a registered
investment company if, immediately
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after the acquisition, the Fund would
own more than 3% of the outstanding
voting stock of the registered investment
company.
13. Neither the Manager nor any
Investment Adviser will receive any
management fees from a Fund. An
Investment Adviser may receive
compensation for acting as an
investment adviser to an Underlying
Fund, but will waive any such
compensation it receives directly related
to a Fund’s investment in such
Underlying Funds.
Applicants’ 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) provides that, if,
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.
Applicants request an order under
sections 6(b) and 6(e) of the Act
exempting the Funds 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.
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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.
Applicants request an exemption from
section 17(a) to permit: (a) A Tudor
Group Entity or a Third Party Fund 4 (or
any affiliated person of a Third Party
Fund), acting as principal, to engage in
any transaction directly or indirectly
with any Fund or any entity controlled
by the Fund; (b) a Fund to invest in or
engage in any transaction with any
entity, acting as principal (i) in which
the Fund, any company controlled by
the Fund or any Tudor Group Entity or
a Third Party Fund has invested or will
invest or (ii) with which the Fund, any
company controlled by the Fund, or a
Tudor Group Entity or Third Party Fund
is or will otherwise become affiliated or
(c) a partner or other investor in any
entity in which a Fund invests, acting
as principal, to engage in transactions
directly or indirectly with a Fund or any
company controlled by a Fund.
4. Applicants submit that an
exemption from section 17(a) is
consistent with the protection of
investors and the purposes of the Act.
Applicants state that the Fund Investors
in each Fund will be informed of the
possible extent of the Fund’s dealings
with Tudor Group Entities or Third
Party Funds and of the potential
conflicts of interest that may exist.
Applicants also state that, as
professionals engaged in the investment
management business, the Fund
Investors will be able to understand and
evaluate the attendant risks. Applicants
assert that the community of interest
among the Fund Investors and the
Tudor Group will serve to reduce any
risk of abuse in transactions involving a
Fund and a Tudor Group Entity.
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 unless authorized by the
Commission. Applicants request relief
to permit affiliated persons of each
Fund, or affiliated persons of such
persons, to participate in, or effect any
transaction in connection with, any
joint arrangement in which the Fund or
an entity controlled by the Fund is a
participant.
4 An investment fund or separate account
organized for the benefit of investors who are not
affiliated with a Tudor Group Entity and over
which a Tudor Group Entity exercises investment
discretion (the ‘‘Third Party Funds’’).
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6. Applicants assert that compliance
with section 17(d) would cause a Fund
to forego investment opportunities
simply because a Fund Investor, the
Manager, or any other affiliated person
of the Fund (or any affiliate of the
affiliated person) had made a similar
investment. Applicants also submit that
the types of investment opportunities
considered by a Fund often require each
investor to make funds available in an
amount that may be substantially greater
than what a Fund may make available
on its own. Applicants contend that, as
a result, the only way in which a Fund
may be able to participate in these
opportunities may be to co-invest with
other persons, including its affiliates.
Applicants assert 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 Third Party
Funds will not be subject to condition
3 below. Applicants note that, if a Tudor
Group Entity invests its own capital in
Third Party Fund investments,
investments by the Tudor Group Entity
will be subject to substantially the same
terms as those applicable to the Third
Party Fund. Applicants believe it is
important that the interests of the Third
Party Fund take priority over the
interests of the Funds, and that the
Third Party Fund not be burdened or
otherwise affected by activities of the
Funds. In addition, applicants assert
that the relationship of a Fund to a
Third Party Fund is fundamentally
different from a Fund’s relationship to
Tudor Group Entities. Applicants
contend that the focus of, and the
rationale for, the protections contained
in the requested relief are to protect the
Funds from any overreaching by any
Tudor Group Entity in the employer/
employee context, whereas the same
concerns are not present with respect to
the Funds and a Third Party Fund.
8. Section 17(f) of the Act designates
the entities that may act as investment
company custodians, and rule 17f–2
under the Act allows an investment
company to act as self-custodian.
Applicants request an exemption from
section 17(f) and rule 17f–2 to permit
the following exceptions from the
requirements of rule 17f–2: (a) A Fund’s
investments may be kept in the locked
files of its Investment Adviser; (b) for
purposes of paragraph (d) of the rule, (i)
employees of the Investment Adviser
will be deemed to be employees of the
Fund, (ii) officers or managers of the
Investment Adviser of a Fund will be
deemed to be officers of the Fund, and
(iii) the Investment Adviser of a Fund or
its executive committee will be deemed
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to be the board of directors of the Fund
and (c) in place of the verification
procedure under paragraph (f) of the
rule, verification will be effected
quarterly by two high level officers of
the Investment Adviser. With respect to
the Funds, Applicants expect that many
of their investments will be evidenced
only by partnership or operating
agreements, subscription agreements or
similar documents, rather than by
negotiable certificates that could be
misappropriated. Applicants assert that
for such a Fund these instruments are
most suitably kept in the Investment
Adviser’s files, where they can be
referred to as necessary.
9. 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.
The rule requires that the board of
directors of an investment company
satisfy the fund governance standards
defined in rule 0–1(a)(7) (the ‘‘Fund
Governance Standards’’). Applicants
request an exemption from section 17(g)
and rule 17g–1 to permit the Manager to
take such actions and make
determinations set forth in the rule.
Applicants state that, because the
Manager will be an interested person of
each Fund, a Fund could not comply
with rule 17g–1 without the requested
relief. Specifically, each Fund will
comply with rule 17g–1 by having the
Manager take such actions and make
such approvals as are set forth in rule
17g–1. Applicants also request an
exemption from the requirements of rule
17g–1(g) and (h) relating to the filing of
copies of fidelity bonds and related
information with the Commission and
the provision of notices to the board of
directors and paragraph (h) of rule 17g–
1 relating to the appointment of a
person to make the filings and provide
the notices required by paragraph (g)
and paragraph (j)(3) of rule 17g–1
relating to compliance with the Fund
Government Standards. Applicants
believe the filing requirements are
burdensome and unnecessary as applied
to the Funds. The Manager will
maintain the materials otherwise
required to be filed with the
Commission by rule 17g–1(g) and agrees
that all material will be subject to
examination by the Commission and its
staff. The Manager will designate a
person to maintain the records
otherwise required to be filed with the
Commission under paragraph (g) of the
rule. Applicants also state that the
notices otherwise required to be given to
the board of directors would be
unnecessary as the Funds will not have
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boards of directors. Each Fund will
comply with all other requirements of
rule 17g–1. In light of the purpose of the
Funds and the community of interest
among the Funds and between the
Funds and the Managers, the applicants
believe that little purpose would be
served by the requirement even if it
were feasible.
10. 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. Applicants request 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 Funds. In light of the
purpose of the Funds and the
community of interest among the Funds
and between the Funds and the
Managers, the applicants believe that
little purpose would be served by this
requirement even if it were feasible.
11. Applicants request 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. Applicants
contend that the forms prescribed by the
Commission for periodic reports have
little relevance to the Funds and would
entail administrative and legal costs that
outweigh any benefit to the Fund
Investors. Applicants request exemptive
relief to the extent necessary to permit
each Fund to report annually to its Fund
Investors. Applicants also request also
an exemption from section 30(h) of the
Act to the extent necessary to exempt
the Managers of each Fund, and any
other person who may be deemed to be
a member of an advisory board of a
Fund, from filing Forms 3, 4, and 5
under section 16(a) of the Exchange Act
with respect to their ownership of
Interests in a Fund. Applicants assert
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
investors and burdensome to those
required to make them.
12. Rule 38a–1 requires investment
companies to adopt, implement and
periodically review written policies
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reasonably designed to prevent violation
of the Federal securities laws and to
appoint a chief compliance officer. Each
Fund will comply with rule 38a–1(a), (c)
and (d), except that (a) because the
Funds do not have boards of directors,
the Manager of each Fund will fulfill the
responsibilities assigned to a Fund’s
board of directors under the rule, and
(b) because a Manager would be
considered an interested person of the
Fund, approval by a majority of
disinterested directors required by rule
38a–1 will not be obtained. In addition,
the Funds 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
Manager.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. Each proposed transaction
involving a Fund otherwise prohibited
by section 17(a) or section 17(d) of the
Act and rule 17d–1 under the Act to
which a Fund is a party (each, a
‘‘Section 17 Transaction’’) will be
effected only if its Manager, in
consultation with its Investment
Adviser, determines that:
(a) The terms of the Section 17
Transaction, including the
consideration to be paid or received, are
fair and reasonable to the Fund
Investors and do not involve
overreaching of such Fund or its Fund
Investors on the part of any person
concerned; and
(b) The Section 17 Transaction is
consistent with the interests of the Fund
Investors, the Fund’s organizational
documents and the Fund’s reports to its
Fund Investors.
In addition, the Manager of each Fund
will record and preserve a description of
all Section 17 Transactions, the
Manager’s and the Investment Adviser’s
findings, the information or materials
upon which their findings are based and
the basis therefor. All such records will
be maintained for the life of a Fund and
at least six years thereafter, and will be
subject to examination by the
Commission and its staff.5
2. The Manager of each Fund, in
consultation with the Investment
Adviser of each Fund, will adopt, and
periodically review and update,
procedures designed to ensure that
reasonable inquiry is made, before the
consummation of any Section 17
5 Each Fund will preserve the accounts, books,
and other documents required to be maintained in
an easily accessible place for the first two years.
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Transaction, with respect to the possible
involvement in the transaction of any
affiliated person or promoter of or
principal underwriter for such Fund, or
any affiliated person of an affiliated
person, promoter, or principal
underwriter.
3. The Investment Adviser of a Fund
will not invest the funds of such Fund
in any investment in which an
‘‘Affiliated Co-Investor’’ (as defined
below) has acquired or proposes to
acquire the same class of securities of
the same issuer and where the
investment involves a joint enterprise or
other joint arrangement within the
meaning of rule 17d–1 in which the
Fund and an Affiliated Co-Investor are
participants, unless any such Affiliated
Co-Investor, prior to disposing of all or
part of its investment, (a) gives the
Investment Adviser 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 Fund has the opportunity to
dispose of the Fund’s investment prior
to or concurrently with, on the same
terms as, and pro rata with the
Affiliated Co-Investor. The term
‘‘Affiliated Co-Investor’’ with respect to
a Fund means any person who is: (a) An
‘‘affiliated person,’’ as such term is
defined in section 2(a)(3) of the Act, of
the Fund (other than a Third Party
Fund); (b) a Tudor Group Entity; (c) an
officer, director or employee of the
Tudor Group; or (d) an entity (other
than a Third Party Fund) in which a
Tudor Group Entity 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,
will not be deemed to limit or prevent
the disposition of an investment by an
Affiliated Co-Investor: (a) To its direct
or indirect wholly-owned subsidiary, to
any company (a ‘‘Parent’’) of which the
Affiliated 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 the Affiliated CoInvestor or a trust or other investment
vehicle established for any Affiliated
Co-Investor or any such immediate
family member; or (c) when the
investment is comprised of securities
that are (i) listed on any exchange
registered under section 6 of the
Exchange Act; (ii) NMS stocks pursuant
to section 11A(a)(2) of the Exchange Act
and rule 600(a) of Regulation NMS
thereunder; (iii) government securities
as defined in section 2(a)(16) of the Act
or other securities that meet the
definition of ‘‘Eligible Security’’ in rule
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Federal Register / Vol. 75, No. 175 / Friday, September 10, 2010 / Notices
srobinson on DSKHWCL6B1PROD with NOTICES
2a–7 under the Act; or (iv) 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.
4. Each Fund and its Manager will
maintain and preserve, for the life of
each Fund and at least six years
thereafter, all accounts, books, and other
documents constituting the record
forming the basis for the audited
financial statements that are to be
provided to the Fund Investors, and
each annual report of such Fund
required to be sent to the Fund
Investors, and agree that all such
records will be subject to examination
by the Commission and its staff.6
5. The Manager will send to each
Fund Investor who had an Interest in
the Fund, at any time during the fiscal
year then ended, Fund financial
statements that have been audited by
that Fund’s independent accountants.
At the end of each fiscal year, the
Manager will make a valuation or have
a valuation made of all of the assets of
the Fund 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 Fund. In
addition, within 120 days after the end
of each fiscal year of the Fund, the
Manager of a Fund shall send a report
to each person who was a Fund Investor
at any time during the fiscal year then
ended setting forth tax information
necessary for the preparation by the
Fund Investor of his or her Federal and
State income tax returns and a report of
the investment activities of the Fund
during that year.
6. Whenever a Fund makes a purchase
from or sale to an entity that is affiliated
with the Fund by reason of a Tudor
Group director, officer, or employee (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, that individual
will not participate in the determination
by the Fund 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. 2010–22622 Filed 9–9–10; 8:45 am]
BILLING CODE 8010–01–P
6 Each Fund will preserve the accounts, books
and other documents required to be maintained in
an easily accessible place for the first two years.
VerDate Mar<15>2010
16:29 Sep 09, 2010
Jkt 220001
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
[Investment Company Act Release No.
and Exchange Commission, 100 F
29410; File No. 812–13661]
Street, NE., Washington, DC 20549–
1090; Applicants: Adviser, 570 Carillon
Transamerica Asset Management, Inc.
Parkway, St Petersburg, Florida 33716.
et al.; Notice of Application
FOR FURTHER INFORMATION CONTACT:
September 3, 2010
Laura J. Riegel, Senior Counsel, at (202)
AGENCY: Securities and Exchange
551–6873, or Michael W. Mundt,
Commission (‘‘Commission’’).
Assistant Director, at (202) 551–6821
ACTION: Notice of an application for an
(Division of Investment Management,
order under section 12(d)(1)(J) of the
Office of Investment Company
Investment Company Act of 1940 (the
Regulation).
‘‘Act’’) for an exemption from sections
SUPPLEMENTARY INFORMATION: The
12(d)(1)(A) and (B) of the Act, under
following is a summary of the
sections 6(c) and 17(b) of the Act for an
exemption from section 17(a) of the Act, application. The complete application
may be obtained via the Commission’s
and under section 6(c) of the Act for an
Web site by searching for the file
exemption from rule 12d1–2(a) under
number, or an applicant using the
the Act.
Company name box, at https://
www.sec.gov/search/search.htm or by
Summary of the Application: The
requested order would (a) permit certain calling (202) 551–8090.
Applicants’ Representations:
series of registered open-end
1. The Trusts are open-end
management investment companies to
management investment companies
acquire shares of other registered openend management investment companies registered under the Act. Each Trust is
comprised of separate series (the
or unit investment trusts (‘‘UITs’’)
‘‘Funds’’) that pursue distinctive
registered under the Act that are within
investment objectives and strategies.1
or outside of the same group of
TF and TST are statutory trusts
investment companies as the acquiring
organized under the laws of Delaware.
investment companies, and (b) permit
TPFG and TPFGII are business trusts
certain series of registered open-end
organized under the laws of
management investment companies
relying on rule 12d1–2 under the Act to Massachusetts. TPP is organized as a
New York trust. TPFG and TPFGII
invest in certain financial instruments.
include Funds that operate as feeder
Applicants: Transamerica Asset
trusts in a master-feeder structure in
Management, Inc. (the ‘‘Adviser’’),
reliance on section 12(d)(1)(E) of the
Transamerica Funds (‘‘TF’’),
Act, with TPP as their common
Transamerica Partners Funds Group
corresponding master trust.2 TST
(‘‘TPFG’’), Transamerica Partners Funds
includes Funds that are offered solely to
Group II (‘‘TPFGII’’), Transamerica
insurance company separate accounts
Partners Portfolios (‘‘TPP’’) and
(‘‘Separate Accounts’’) that fund variable
Transamerica Series Trust (‘‘TST’’)
annuity and variable life contracts
(collectively, TF, TPFG, TPFGII, TPP,
issued by insurance companies. The
and TST, the ‘‘Trusts’’).
Separate Accounts may be registered
Filing Dates: The application was
under the Act (‘‘Registered Separate
filed on May 28, 2009 and amended on
Accounts’’) or unregistered under the
November 20, 2009 and August 17,
Act (‘‘Unregistered Separate Accounts’’).
2010.
Hearing or Notification of Hearing: An The Adviser, a Florida corporation, is
order granting the application will be
1 Applicants request that the order extend to any
issued unless the Commission orders a
future series of the Trusts and any other existing or
hearing. Interested persons may request future registered open-end management investment
a hearing by writing to the
company and any series thereof that is part of the
same ‘‘group of investment companies,’’ as defined
Commission’s Secretary and serving
in section 12(d)(1)(G)(ii) of the Act, as the Trusts
applicants with a copy of the request,
and that is, or may in the future be advised by the
personally or by mail. Hearing requests
Adviser or any entity controlling, controlled by, or
should be received by the Commission
under common control with the Adviser (included
in the term ‘‘Funds.’’). All existing entities that
by 5:30 p.m. on September 27, 2010,
currently intend to rely on the requested order are
and should be accompanied by proof of
named as applicants. Any other entity that relies on
service on applicants, in the form of an
the order in the future will do so only in accordance
affidavit or, for lawyers, a certificate of
with the terms and conditions of the application.
2 A Fund of Funds may not invest in an
service. Hearing requests should state
Underlying Fund that operates as a feeder fund
the nature of the writer’s interest, the
unless the feeder fund is part of the same group of
reason for the request, and the issues
investment companies (as defined in section
contested. Persons who wish to be
12(d)(1)(G)(ii)) of the Act as its corresponding
master fund.
notified of a hearing may request
SECURITIES AND EXCHANGE
COMMISSION
PO 00000
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]]>Agencies
[Federal Register Volume 75, Number 175 (Friday, September 10, 2010)]
[Notices]
[Pages 55372-55376]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-22622]
[[Page 55372]]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29409; File No. 813-359]
Tudor Employee Investment Fund LLC and Tudor Investment
Corporation; Notice of Application
September 3, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an 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 those sections. 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: Applicants request an order to exempt
certain limited liability companies and other investment vehicles
formed for the benefit of eligible employees of Tudor Investment
Corporation (``Tudor'') and its affiliates from certain provisions of
the Act. Each limited liability company and other investment vehicle
will be an ``employees' securities company'' within the meaning of
section 2(a)(13) of the Act.
Applicants: Tudor Employee Investment Fund LLC (``Investment
Fund'') and Tudor.
DATES: Filing Dates: The application was filed on December 6, 2005, and
amended on August 22, 2007, June 9, 2008, June 26, 2009, June 25, 2010
and September 1, 2010.
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 applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on September 28, 2010, and should be accompanied by proof of
service on applicants, 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; Applicants, 1275 King Street,
Greenwich, CT 06831.
FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at
(202) 551-6811 or Janet M. Grossnickle, Assistant Director, 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.
Applicants' Representations
1. Tudor, a Delaware corporation, is registered with the Commodity
Futures Trading Commission (``CFTC'') as a commodity pool operator and
commodity trading advisor, and is a member of the U.S. National Futures
Association in such capacities. Applicants represent that Tudor is
exempt from registration as an investment adviser with the Commission
under the Investment Advisers Act of 1940 (the ``Advisers Act''). Tudor
and its ``affiliates,'' as defined in rule 12b-2 under the Securities
Exchange Act of 1934 (``Exchange Act''), are referred to collectively
as the ``Tudor Group'' and each entity within the Tudor Group is
referred to individually as a ``Tudor Group Entity.''
2. Tudor has established the Investment Fund as a Delaware limited
liability company and may in the future establish additional pooled
investment vehicles identical in all material respects to the
Investment Fund (other than investment objectives and strategies and
form of organization) (the ``Subsequent Funds'' and collectively with
the Investment Fund, the ``Funds,'' and each, a ``Fund'') for the
benefit of current or former key employees, officers, directors and
current consultants of the Tudor Group and certain entities and
individuals affiliated with employees of the Tudor Group who invest in
a Fund (``Fund Investors''). The Funds are designed primarily to create
capital building opportunities that are competitive with those at other
investment management firms and to facilitate the recruitment and
retention of high caliber professionals. Tudor will control each Fund
within the meaning of the Act.
3. Each Fund will operate as a non-diversified closed-end
management investment company. Each Fund will be an ``employees'
securities company'' within the meaning of section 2(a)(13) of the Act.
Each Fund will be established to enable Eligible Investors, as defined
below, through their investment in a Fund to achieve long-term capital
appreciation through investment in affiliated and non-affiliated
private investment funds (each an ``Underlying Fund''), certain of
which are advised by a Tudor Group Entity.\1\ The Underlying Funds in
which a Fund invests will be either investment companies excluded from
registration under the Act or funds not primarily engaged in the
business of investing, reinvesting, or trading securities, e.g.,
commodity pools. The investment objectives and policies for each Fund
may vary from Fund to Fund. Participation in the Funds is voluntary.
---------------------------------------------------------------------------
\1\ Applicants are not requesting any exemption from any
provision of the Act or any rule thereunder that may govern a Fund's
eligibility to invest in an Underlying Fund relying on section
3(c)(1) or 3(c)(7) of the Act or any Underlying Fund's status under
the Act.
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4. A Tudor Group Entity will serve as the manager (``Manager'') of
each Fund.\2\ The same or a different Tudor Group Entity will serve as
the investment adviser (each an ``Investment Adviser'') of each Fund.
The Investment Adviser will register as an investment adviser under the
Advisers Act, if required under applicable law.
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\2\ A ``Manager'' is either the general partner of any Fund
organized as a limited partnership or the managing member of any
Fund organized as a limited liability company.
---------------------------------------------------------------------------
5. The Tudor Group, the Manager and any other person acting for or
on behalf of a Fund shall act in the best interest of the Fund and its
Fund Investors. Whenever the Tudor Group, the Manager or any other
person acting for or on behalf of the Funds is required or permitted to
make a decision, take or approve an action, or omit to do any of the
foregoing in such person's discretion, then that person shall exercise
such discretion in accordance with reasonableness and good faith and
any fiduciary duties owed to the Fund and its Fund Investors. The
organizational documents for, and any other contractual arrangement
regarding, the Funds will not contain any provision which protects or
purports to protect the Tudor Group, the Manager or their delegates
against any liability to a Fund or its Fund Investors to which such
person would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of such person's duties,
or by reason of such person's reckless disregard of such person's
obligations and duties under
[[Page 55373]]
such contract or organizational documents.
6. Interests in the Funds (``Interests'') will be offered without
registration in reliance on section 4(2) of the Securities Act of 1933
(``Securities Act'') or Regulation D under the Securities Act
(``Regulation D''), and will be offered and sold only to Eligible
Investors. An ``Eligible Investor'' is defined as (a) any Tudor Group
Entity that meets the standards set forth below and (b) an officer,
director, or employee of the Tudor Group who has been employed by a
Tudor Group Entity for at least one year and ``Consultants'' \3\ of the
Tudor Group (collectively, ``Tudor Employees''), each of which meets
the standards, as applicable, set forth below. Each Eligible Investor
must have, in the reasonable belief of the Manager, the knowledge,
sophistication and experience in business and financial matters to be
capable of evaluating the merits and risks of investing in a Fund and
be able to bear the economic risk of such investment, and be able to
afford a complete loss of the investment.
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\3\ A ``Consultant'' is a person or entity who is on retainer
with a Tudor Group Entity at the time Interests are offered to the
Consultant to provide services and professional expertise to a Tudor
Group Entity on an ongoing basis as a regular consultant or as a
business or legal adviser and who shares a community of interest
with the Tudor Group and its employees.
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7. To be a Tudor Employee, an individual must be (a) an accredited
investor under rule 501(a)(5) or 501(a)(6) of Regulation D under the
Securities Act and (b) a ``qualified eligible person'' under rule 4.7
promulgated by the CFTC. A Tudor Employee is a ``qualified eligible
person'' under CFTC rule 4.7(a)(2)(vii) if he or she is a
``knowledgeable employee,'' as defined in rule 3c-5 under the Act, of a
Tudor Group Entity. Any Tudor Group Entity including the Manager and
the Investment Adviser will be required to be accredited investors
under Regulation D under the Securities Act to be an Eligible Investor.
8. The investment objectives and strategies for each Fund will be
set forth in offering documents relating to the Interests offered by
the Fund. Prior to being invited to participate in a Fund, each
Eligible Investor will receive a copy of the offering documents and the
operating agreement (or other organizational document) of the Fund or
an offering memorandum, which will set forth all the terms of
participation in the Fund. The Managers will send an annual report to
each Fund Investor not later than 120 days after the close of the
fiscal year, which will contain financial statements of the Fund that
have been audited by independent accountants. For purposes of this
requirement ``audit'' shall have the meaning defined in rule 1-02(d) of
Regulation S-X. In addition, Fund Investors will receive at least
annually all information necessary to enable the Fund Investors to
prepare their Federal and State income tax returns.
9. Interests in the Funds will be non-transferable by a Fund
Investor except with the express consent of the Manager. No person will
be admitted as a Fund Investor unless the person is an Eligible
Investor, except that a legal representative of the estate of a
deceased Fund Investor may hold that Fund Investor's Interest in order
to settle the Fund Investor's estate or administer its property. No fee
of any kind will be charged in connection with the sale of Interests.
10. Upon termination of employment with a Tudor Group Entity, an
Eligible Investor, other than a Consultant, who has been employed by
the Tudor Group for at least three years will remain eligible to invest
in a Fund or continue to hold Interests in a Fund, as applicable, at
the discretion of the Manager of that Fund, for a period of one year
for each full year of employment (subject to a maximum of ten years),
and thereafter such Interests will be subject to a mandatory
redemption. Interests held by a Consultant whose retainer has been
terminated or expired will be subject to mandatory redemption, and
unlike other Eligible Investors, Consultants may not invest in a Fund
or continue to hold Interests in a Fund based on their length of
service to the Tudor Group. Consultants no longer on retainer with a
Tudor Group Entity will no longer be Eligible Investors. The repurchase
price for Interests will be based on net asset value pursuant to the
Fund's organization and offering documents.
11. A Fund may leverage its investments in any of the Underlying
Funds by entering into borrowing arrangements with third parties,
including a Tudor Group Entity, in order to gain greater exposure to
the Underlying Funds. Each such Fund loan will be made at an interest
rate no less favorable than that which could be obtained on an arm's
length basis. A Fund 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 Fund (other than short-term paper). Any
loan made to a Fund will be non-recourse to the Fund Investors.
12. A Fund will not acquire any security issued by a registered
investment company if, immediately after the acquisition, the Fund
would own more than 3% of the outstanding voting stock of the
registered investment company.
13. Neither the Manager nor any Investment Adviser will receive any
management fees from a Fund. An Investment Adviser may receive
compensation for acting as an investment adviser to an Underlying Fund,
but will waive any such compensation it receives directly related to a
Fund's investment in such Underlying Funds.
Applicants' 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) provides that, if, 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. Applicants request an order under sections 6(b) and 6(e) of
the Act exempting the Funds 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.
[[Page 55374]]
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.
Applicants request an exemption from section 17(a) to permit: (a) A
Tudor Group Entity or a Third Party Fund \4\ (or any affiliated person
of a Third Party Fund), acting as principal, to engage in any
transaction directly or indirectly with any Fund or any entity
controlled by the Fund; (b) a Fund to invest in or engage in any
transaction with any entity, acting as principal (i) in which the Fund,
any company controlled by the Fund or any Tudor Group Entity or a Third
Party Fund has invested or will invest or (ii) with which the Fund, any
company controlled by the Fund, or a Tudor Group Entity or Third Party
Fund is or will otherwise become affiliated or (c) a partner or other
investor in any entity in which a Fund invests, acting as principal, to
engage in transactions directly or indirectly with a Fund or any
company controlled by a Fund.
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\4\ An investment fund or separate account organized for the
benefit of investors who are not affiliated with a Tudor Group
Entity and over which a Tudor Group Entity exercises investment
discretion (the ``Third Party Funds'').
---------------------------------------------------------------------------
4. Applicants submit that an exemption from section 17(a) is
consistent with the protection of investors and the purposes of the
Act. Applicants state that the Fund Investors in each Fund will be
informed of the possible extent of the Fund's dealings with Tudor Group
Entities or Third Party Funds and of the potential conflicts of
interest that may exist. Applicants also state that, as professionals
engaged in the investment management business, the Fund Investors will
be able to understand and evaluate the attendant risks. Applicants
assert that the community of interest among the Fund Investors and the
Tudor Group will serve to reduce any risk of abuse in transactions
involving a Fund and a Tudor Group Entity.
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 unless authorized by the
Commission. Applicants request relief to permit affiliated persons of
each Fund, or affiliated persons of such persons, to participate in, or
effect any transaction in connection with, any joint arrangement in
which the Fund or an entity controlled by the Fund is a participant.
6. Applicants assert that compliance with section 17(d) would cause
a Fund to forego investment opportunities simply because a Fund
Investor, the Manager, or any other affiliated person of the Fund (or
any affiliate of the affiliated person) had made a similar investment.
Applicants also submit that the types of investment opportunities
considered by a Fund often require each investor to make funds
available in an amount that may be substantially greater than what a
Fund may make available on its own. Applicants contend that, as a
result, the only way in which a Fund may be able to participate in
these opportunities may be to co-invest with other persons, including
its affiliates. Applicants assert 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 Third Party Funds will not be subject to
condition 3 below. Applicants note that, if a Tudor Group Entity
invests its own capital in Third Party Fund investments, investments by
the Tudor Group Entity will be subject to substantially the same terms
as those applicable to the Third Party Fund. Applicants believe it is
important that the interests of the Third Party Fund take priority over
the interests of the Funds, and that the Third Party Fund not be
burdened or otherwise affected by activities of the Funds. In addition,
applicants assert that the relationship of a Fund to a Third Party Fund
is fundamentally different from a Fund's relationship to Tudor Group
Entities. Applicants contend that the focus of, and the rationale for,
the protections contained in the requested relief are to protect the
Funds from any overreaching by any Tudor Group Entity in the employer/
employee context, whereas the same concerns are not present with
respect to the Funds and a Third Party Fund.
8. Section 17(f) of the Act designates the entities that may act as
investment company custodians, and rule 17f-2 under the Act allows an
investment company to act as self-custodian. Applicants request an
exemption from section 17(f) and rule 17f-2 to permit the following
exceptions from the requirements of rule 17f-2: (a) A Fund's
investments may be kept in the locked files of its Investment Adviser;
(b) for purposes of paragraph (d) of the rule, (i) employees of the
Investment Adviser will be deemed to be employees of the Fund, (ii)
officers or managers of the Investment Adviser of a Fund will be deemed
to be officers of the Fund, and (iii) the Investment Adviser of a Fund
or its executive committee will be deemed to be the board of directors
of the Fund and (c) in place of the verification procedure under
paragraph (f) of the rule, verification will be effected quarterly by
two high level officers of the Investment Adviser. With respect to the
Funds, Applicants expect that many of their investments will be
evidenced only by partnership or operating agreements, subscription
agreements or similar documents, rather than by negotiable certificates
that could be misappropriated. Applicants assert that for such a Fund
these instruments are most suitably kept in the Investment Adviser's
files, where they can be referred to as necessary.
9. 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. The rule
requires that the board of directors of an investment company satisfy
the fund governance standards defined in rule 0-1(a)(7) (the ``Fund
Governance Standards''). Applicants request an exemption from section
17(g) and rule 17g-1 to permit the Manager to take such actions and
make determinations set forth in the rule. Applicants state that,
because the Manager will be an interested person of each Fund, a Fund
could not comply with rule 17g-1 without the requested relief.
Specifically, each Fund will comply with rule 17g-1 by having the
Manager take such actions and make such approvals as are set forth in
rule 17g-1. Applicants also request an exemption from the requirements
of rule 17g-1(g) and (h) relating to the filing of copies of fidelity
bonds and related information with the Commission and the provision of
notices to the board of directors and paragraph (h) of rule 17g-1
relating to the appointment of a person to make the filings and provide
the notices required by paragraph (g) and paragraph (j)(3) of rule 17g-
1 relating to compliance with the Fund Government Standards. Applicants
believe the filing requirements are burdensome and unnecessary as
applied to the Funds. The Manager will maintain the materials otherwise
required to be filed with the Commission by rule 17g-1(g) and agrees
that all material will be subject to examination by the Commission and
its staff. The Manager will designate a person to maintain the records
otherwise required to be filed with the Commission under paragraph (g)
of the rule. Applicants also state that the notices otherwise required
to be given to the board of directors would be unnecessary as the Funds
will not have
[[Page 55375]]
boards of directors. Each Fund will comply with all other requirements
of rule 17g-1. In light of the purpose of the Funds and the community
of interest among the Funds and between the Funds and the Managers, the
applicants believe that little purpose would be served by the
requirement even if it were feasible.
10. 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. Applicants request 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 Funds. In
light of the purpose of the Funds and the community of interest among
the Funds and between the Funds and the Managers, the applicants
believe that little purpose would be served by this requirement even if
it were feasible.
11. Applicants request 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. Applicants contend that the forms prescribed
by the Commission for periodic reports have little relevance to the
Funds and would entail administrative and legal costs that outweigh any
benefit to the Fund Investors. Applicants request exemptive relief to
the extent necessary to permit each Fund to report annually to its Fund
Investors. Applicants also request also an exemption from section 30(h)
of the Act to the extent necessary to exempt the Managers of each Fund,
and any other person who may be deemed to be a member of an advisory
board of a Fund, from filing Forms 3, 4, and 5 under section 16(a) of
the Exchange Act with respect to their ownership of Interests in a
Fund. Applicants assert 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 investors and burdensome
to those required to make them.
12. Rule 38a-1 requires investment companies to adopt, implement
and periodically review written policies reasonably designed to prevent
violation of the Federal securities laws and to appoint a chief
compliance officer. Each Fund will comply with rule 38a-1(a), (c) and
(d), except that (a) because the Funds do not have boards of directors,
the Manager of each Fund will fulfill the responsibilities assigned to
a Fund's board of directors under the rule, and (b) because a Manager
would be considered an interested person of the Fund, approval by a
majority of disinterested directors required by rule 38a-1 will not be
obtained. In addition, the Funds 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 Manager.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Each proposed transaction involving a Fund otherwise prohibited
by section 17(a) or section 17(d) of the Act and rule 17d-1 under the
Act to which a Fund is a party (each, a ``Section 17 Transaction'')
will be effected only if its Manager, in consultation with its
Investment Adviser, determines that:
(a) The terms of the Section 17 Transaction, including the
consideration to be paid or received, are fair and reasonable to the
Fund Investors and do not involve overreaching of such Fund or its Fund
Investors on the part of any person concerned; and
(b) The Section 17 Transaction is consistent with the interests of
the Fund Investors, the Fund's organizational documents and the Fund's
reports to its Fund Investors.
In addition, the Manager of each Fund will record and preserve a
description of all Section 17 Transactions, the Manager's and the
Investment Adviser's findings, the information or materials upon which
their findings are based and the basis therefor. All such records will
be maintained for the life of a Fund and at least six years thereafter,
and will be subject to examination by the Commission and its staff.\5\
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\5\ Each Fund will preserve the accounts, books, and other
documents required to be maintained in an easily accessible place
for the first two years.
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2. The Manager of each Fund, in consultation with the Investment
Adviser of each Fund, will adopt, and periodically review and update,
procedures designed to ensure that reasonable inquiry is made, before
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 Fund, or any affiliated
person of an affiliated person, promoter, or principal underwriter.
3. The Investment Adviser of a Fund will not invest the funds of
such Fund in any investment in which an ``Affiliated Co-Investor'' (as
defined below) has acquired or proposes to acquire the same class of
securities of the same issuer and where the investment involves a joint
enterprise or other joint arrangement within the meaning of rule 17d-1
in which the Fund and an Affiliated Co-Investor are participants,
unless any such Affiliated Co-Investor, prior to disposing of all or
part of its investment, (a) gives the Investment Adviser 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 Fund has the opportunity to dispose of the Fund's investment prior
to or concurrently with, on the same terms as, and pro rata with the
Affiliated Co-Investor. The term ``Affiliated Co-Investor'' with
respect to a Fund means any person who is: (a) An ``affiliated
person,'' as such term is defined in section 2(a)(3) of the Act, of the
Fund (other than a Third Party Fund); (b) a Tudor Group Entity; (c) an
officer, director or employee of the Tudor Group; or (d) an entity
(other than a Third Party Fund) in which a Tudor Group Entity 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, will not be deemed to limit or prevent the
disposition of an investment by an Affiliated Co-Investor: (a) To its
direct or indirect wholly-owned subsidiary, to any company (a
``Parent'') of which the Affiliated 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 the
Affiliated Co-Investor or a trust or other investment vehicle
established for any Affiliated Co-Investor or any such immediate family
member; or (c) when the investment is comprised of securities that are
(i) listed on any exchange registered under section 6 of the Exchange
Act; (ii) NMS stocks pursuant to section 11A(a)(2) of the Exchange Act
and rule 600(a) of Regulation NMS thereunder; (iii) government
securities as defined in section 2(a)(16) of the Act or other
securities that meet the definition of ``Eligible Security'' in rule
[[Page 55376]]
2a-7 under the Act; or (iv) 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.
4. Each Fund and its Manager will maintain and preserve, for the
life of each Fund and at least six years thereafter, all accounts,
books, and other documents constituting the record forming the basis
for the audited financial statements that are to be provided to the
Fund Investors, and each annual report of such Fund required to be sent
to the Fund Investors, and agree that all such records will be subject
to examination by the Commission and its staff.\6\
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\6\ Each Fund will preserve the accounts, books and other
documents required to be maintained in an easily accessible place
for the first two years.
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5. The Manager will send to each Fund Investor who had an Interest
in the Fund, at any time during the fiscal year then ended, Fund
financial statements that have been audited by that Fund's independent
accountants. At the end of each fiscal year, the Manager will make a
valuation or have a valuation made of all of the assets of the Fund 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 Fund.
In addition, within 120 days after the end of each fiscal year of the
Fund, the Manager of a Fund shall send a report to each person who was
a Fund Investor at any time during the fiscal year then ended setting
forth tax information necessary for the preparation by the Fund
Investor of his or her Federal and State income tax returns and a
report of the investment activities of the Fund during that year.
6. Whenever a Fund makes a purchase from or sale to an entity that
is affiliated with the Fund by reason of a Tudor Group director,
officer, or employee (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, that individual will not participate in the
determination by the Fund 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. 2010-22622 Filed 9-9-10; 8:45 am]
BILLING CODE 8010-01-P
