Bandon Capital Management, LLC and Northern Lights Fund Trust; Notice of Application, 72462-72463 [2011-30226]

Download as PDF 72462 Federal Register / Vol. 76, No. 226 / Wednesday, November 23, 2011 / Notices SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 29864; 812–13936] Bandon Capital Management, LLC and Northern Lights Fund Trust; Notice of 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 http:// www.sec.gov/search/search.htm or by calling (202) 551–8090. Applicants’ Representations 1. The Trust, a Delaware statutory trust, is registered under the Act as an open-end management investment AGENCY: Securities and Exchange company and as of November 9, 2011 Commission (‘‘Commission’’). was comprised of 123 individual ACTION: Notice of an application under section 6(c) of the Investment Company registered series, including the Bandon Isolated Alpha Fixed Income Fund (the Act of 1940 (‘‘Act’’) for an exemption ‘‘Bandon Fund’’), and 10 additional from section 15(a) of the Act and rule series that are in registration. The 18f–2 under the Act. Bandon Fund currently employs two unaffiliated investment subadvisers SUMMARY OF APPLICATION: Applicants request an order that would permit them (each, a ‘‘Subadviser’’).1 Bandon Capital, an Oregon limited liability to enter into and materially amend company, is, and each other Adviser subadvisory agreements without will be, registered as an investment shareholder approval. adviser under the Investment Advisers APPLICANTS: Bandon Capital Management, LLC (‘‘Bandon Capital’’ or Act of 1940 (‘‘Advisers Act’’). Bandon Capital serves as the investment adviser the ‘‘Adviser’’) and Northern Lights of the Bandon Fund, and an Adviser Fund Trust (the ‘‘Trust’’). will serve as investment adviser to each DATES: Filing Dates: The application was future Fund, pursuant to an investment filed on August 4, 2011, and amended advisory agreement (‘‘Advisory on November 15, 2011. Agreement’’). The Bandon Fund’s HEARING OR NOTIFICATION OF HEARING: An Advisory Agreement was approved by order granting the application will be the Trust’s board of trustees (together issued unless the Commission orders a with the board of directors or trustees of hearing. Interested persons may request any other Fund, the ‘‘Board’’), including a hearing by writing to the a majority of the trustees who are not Commission’s Secretary and serving ‘‘interested persons,’’ as defined in applicants with a copy of the request, section 2(a)(19) of the Act, of the Trust personally or by mail. Hearing requests or the Adviser (‘‘Independent Trustees’’) should be received by the Commission and by the initial shareholder of the by 5:30 p.m. on December 12, 2011, and Bandon Fund. should be accompanied by proof of 2. Under the terms of the Bandon service on the applicants, in the form of Fund’s Advisory Agreement, the an affidavit or, for lawyers, a certificate Adviser is responsible for the overall of service. Hearing requests should state management of the Bandon Fund’s the nature of the writer’s interest, the business affairs and selecting reason for the request, and the issues investments according to the Bandon contested. Persons who wish to be Fund’s investment objectives, policies notified of a hearing may request notification by writing to the 1 Applicants also request relief with respect to Commission’s Secretary. any existing or future series of the Trust and any other existing or future registered open-end ADDRESSES: Secretary, U.S. Securities management investment company or series thereof and Exchange Commission, 100 F Street that: (a) Is advised by the Adviser or any entity NE., Washington, DC 20549–1090. controlling, controlled by, or under common control with the Adviser or its successors (included Applicants: Bandon Capital, 317 SW. within the term ‘‘Adviser’’); (b) uses the manager of Alder Street, Suite 1110, Portland, OR managers structure (‘‘Manager of Managers 97204; Trust: 4020 South 147th Street, Structure’’) described in the application; and (c) Omaha, NE 68137. complies with the terms and conditions of the application (together with the Bandon Fund, the FOR FURTHER INFORMATION CONTACT: ‘‘Funds’’ and each, individually, a ‘‘Fund’’). For the Steven I. Amchan, Senior Counsel, at purposes of the requested order, ‘‘successor’’ is (202) 551–6826, or Jennifer L. Sawin, limited to those one or more entities that would result from a reorganization into another Branch Chief, at (202) 551–6821 jurisdiction or a change in the type of business (Division of Investment Management, organization. All existing entities that currently Office of Investment Company intend to rely on the requested order are named as Regulation). applicants, and the Bandon Fund is the only series sroberts on DSK5SPTVN1PROD with NOTICES November 17, 2011. SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application VerDate Mar<15>2010 17:03 Nov 22, 2011 Jkt 226001 that currently intends to rely on the requested order. If the name of any Fund contains the name of a Subadviser, the name of the Adviser will precede the name of the Subadviser. PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 and restrictions. For the investment management services that it provides to the Bandon Fund, the Adviser receives the fee specified in the Advisory Agreement. The Advisory Agreement also permits the Adviser to retain one or more subadvisers for the purpose of managing the investments of all or a portion of the assets of the Bandon Fund. Pursuant to this authority, the Adviser has entered into investment subadvisory agreements with two Subadvisers to provide investment advisory services to the Bandon Fund (such agreements with Subadvisers, ‘‘Subadvisory Agreements’’). Each of these two Subadvisers is, and each future Subadviser will be, registered as an investment adviser under the Advisers Act. The Adviser will supervise, evaluate and allocate assets to the Subadvisers, and make recommendations to the Board about their hiring, retention or release, at all times subject to the authority of the Board. The Adviser will compensate each Subadviser out of the fees paid to the Adviser under the Advisory Agreement. 3. Applicants request an order to permit the Adviser, subject to Board approval, to enter into and materially amend Subadvisory Agreements without obtaining shareholder approval. The requested relief will not extend to any subadviser that is an affiliated person, as defined in section 2(a)(3) of the Act, of the Trust, a Fund or the Adviser, other than by reason of serving as a subadviser to one or more of the Funds (‘‘Affiliated Subadviser’’). Applicants’ Legal Analysis 1. Section 15(a) of the Act provides, in relevant part, that it is unlawful for any person to act as an investment adviser to a registered investment company except pursuant to a written contract that has been approved by the vote of a majority of the company’s outstanding voting securities. Rule 18f– 2 under the Act provides that each series or class of securities in a series investment company affected by a matter must approve that matter if the Act requires shareholder approval. 2. Section 6(c) of the Act provides that the Commission may exempt any person, security, or transaction or any class or classes of persons, securities, or transactions from any provisions of the Act, or from any rule thereunder, if such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants state that the requested relief meets this standard. E:\FR\FM\23NON1.SGM 23NON1 Federal Register / Vol. 76, No. 226 / Wednesday, November 23, 2011 / Notices sroberts on DSK5SPTVN1PROD with NOTICES 3. Applicants assert that the shareholders expect the Adviser and the Board to select the Subadvisers for the Funds that are best suited to achieve each Fund’s investment objective. Applicants assert that, from the perspective of the investor, the role of the Subadvisers is substantially equivalent to that of the individual portfolio managers employed by the Adviser. Applicants state that requiring shareholder approval of each Subadvisory Agreement would impose costs and unnecessary delays on the Funds, and may preclude the Adviser from acting promptly in a manner considered advisable by the Board. Applicants note that the Advisory Agreements and any Subadvisory Agreement with an Affiliated Subadviser will remain subject to section 15(a) of the Act and rule 18f–2 under the Act. Applicants’ Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: 1. Before a Fund may rely on the requested order, the operation of the Fund in the manner described in the application will be approved by a majority of the Fund’s outstanding voting securities, as defined in the Act, or in the case of a Fund whose public shareholders purchase shares on the basis of a prospectus containing the disclosure contemplated by condition 2 below, by the initial shareholder(s) before offering shares of that Fund to the public. 2. Each Fund relying on the requested order will disclose in its prospectus the existence, substance, and effect of any order granted pursuant to this application. Each Fund will hold itself out to the public as utilizing the Manager of Managers Structure. The prospectus will prominently disclose that the Adviser has ultimate responsibility (subject to oversight by the Board) to oversee the Subadvisers and recommend their hiring, termination, and replacement. 3. Within 90 days of the hiring of a new Subadviser, shareholders of the affected Fund will be furnished all information about the new Subadviser that would be included in a proxy statement. To meet this obligation, each Fund will provide shareholders within 90 days of the hiring of a new Subadviser an information statement meeting the requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 14A under the Securities Exchange Act of 1934. 4. The Adviser will not enter into a subadvisory agreement with any VerDate Mar<15>2010 17:03 Nov 22, 2011 Jkt 226001 Affiliated Subadviser without such agreement, including the compensation to be paid thereunder, being approved by the shareholders of the applicable Fund. 5. At all times, at least a majority of the Board will be Independent Trustees, and the nomination of new or additional Independent Trustees will be placed within the discretion of the thenexisting Independent Trustees. 6. Whenever a subadviser change is proposed for a Fund with an Affiliated Subadviser, the Board, including a majority of the Independent Trustees, will make a separate finding, reflected in the applicable Board minutes, that such change is in the best interests of the Fund and its shareholders, and does not involve a conflict of interest from which the Adviser or the Affiliated Subadviser derives an inappropriate advantage. 7. The Adviser will provide general management services to each Fund, including overall supervisory responsibility for the general management and investment of each Fund’s assets and, subject to review and approval of the Board, will: (a) Set each Fund’s overall investment strategies; (b) evaluate, select and recommend Subadvisers to manage all or a part of each Fund’s assets; (c) allocate and, when appropriate, reallocate each Fund’s assets among one or more Subadvisers; (d) monitor and evaluate the performance of Subadvisers; and (e) implement procedures reasonably designed to ensure that the Subadvisers comply with each Fund’s investment objective, policies and restrictions. 8. No trustee or officer of the Trust or a Fund, or director, manager, or officer of the Adviser, will own directly or indirectly (other than through a pooled investment vehicle that is not controlled by such person), any interest in a Subadviser, except for (a) Ownership of interests in the Adviser or any entity that controls, is controlled by, or is under common control with the Adviser or (b) ownership of less than 1% of the outstanding securities of any class of equity or debt of any publicly traded company that is either a Subadviser or an entity that controls, is controlled by, or is under common control with a Subadviser. 9. In the event the Commission adopts a rule under the Act providing substantially similar relief to that in the order requested in the application, the requested order will expire on the effective date of that rule. PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 72463 For the Commission, by the Division of Investment Management, under delegated authority. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2011–30226 Filed 11–22–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–65787; File No. SR–FINRA– 2011–044] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of Proposed Rule Change Relating to FINRA’s Code of Procedure November 18, 2011. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b-4 thereunder,2 notice is hereby given that on November 8, 2011, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by FINRA. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change FINRA is proposing to amend FINRA’s Code of Procedure that includes: (1) Allowing service of a complaint (and notices of certain expedited proceedings) on counsel or another person authorized to represent others when such representative agrees to accept service; (2) permitting electronic filing of papers with an adjudicator; (3) decreasing the number of copies required to be filed with the adjudicator; (4) giving counsel to the National Adjudicatory Council (‘‘NAC’’) authority to set the specifications and the number of copies of all papers to be filed with the NAC; (5) requiring an attorney seeking to withdraw from a disciplinary case to file a motion before withdrawal would be approved; (6) adding an additional, permissive subject for a pre-hearing conference; (7) allowing FINRA staff to set the rate for copies; (8) allowing Hearing Officers to manage the parties’ pre-hearing submissions to reduce and eliminate duplicative filings; (9) giving Hearing Panels and the NAC additional 1 15 2 17 E:\FR\FM\23NON1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 23NON1

Agencies

[Federal Register Volume 76, Number 226 (Wednesday, November 23, 2011)]
[Notices]
[Pages 72462-72463]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-30226]



[[Page 72462]]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29864; 812-13936]


Bandon Capital Management, LLC and Northern Lights Fund Trust; 
Notice of Application

November 17, 2011.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act and rule 18f-2 under the Act.

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Summary of Application: Applicants request an order that would permit 
them to enter into and materially amend subadvisory agreements without 
shareholder approval.

Applicants: Bandon Capital Management, LLC (``Bandon Capital'' or the 
``Adviser'') and Northern Lights Fund Trust (the ``Trust'').

DATES: Filing Dates: The application was filed on August 4, 2011, and 
amended on November 15, 2011.

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 December 12, 2011, and should be accompanied by proof of 
service on the 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: Bandon Capital, 317 
SW. Alder Street, Suite 1110, Portland, OR 97204; Trust: 4020 South 
147th Street, Omaha, NE 68137.

FOR FURTHER INFORMATION CONTACT: Steven I. Amchan, Senior Counsel, at 
(202) 551-6826, or Jennifer L. Sawin, 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 http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. The Trust, a Delaware statutory trust, is registered under the 
Act as an open-end management investment company and as of November 9, 
2011 was comprised of 123 individual registered series, including the 
Bandon Isolated Alpha Fixed Income Fund (the ``Bandon Fund''), and 10 
additional series that are in registration. The Bandon Fund currently 
employs two unaffiliated investment subadvisers (each, a 
``Subadviser'').\1\ Bandon Capital, an Oregon limited liability 
company, is, and each other Adviser will be, registered as an 
investment adviser under the Investment Advisers Act of 1940 
(``Advisers Act''). Bandon Capital serves as the investment adviser of 
the Bandon Fund, and an Adviser will serve as investment adviser to 
each future Fund, pursuant to an investment advisory agreement 
(``Advisory Agreement''). The Bandon Fund's Advisory Agreement was 
approved by the Trust's board of trustees (together with the board of 
directors or trustees of any other Fund, the ``Board''), including a 
majority of the trustees who are not ``interested persons,'' as defined 
in section 2(a)(19) of the Act, of the Trust or the Adviser 
(``Independent Trustees'') and by the initial shareholder of the Bandon 
Fund.
---------------------------------------------------------------------------

    \1\ Applicants also request relief with respect to any existing 
or future series of the Trust and any other existing or future 
registered open-end management investment company or series thereof 
that: (a) Is advised by the Adviser or any entity controlling, 
controlled by, or under common control with the Adviser or its 
successors (included within the term ``Adviser''); (b) uses the 
manager of managers structure (``Manager of Managers Structure'') 
described in the application; and (c) complies with the terms and 
conditions of the application (together with the Bandon Fund, the 
``Funds'' and each, individually, a ``Fund''). For the purposes of 
the requested order, ``successor'' is limited to those one or more 
entities that would result from a reorganization into another 
jurisdiction or a change in the type of business organization. All 
existing entities that currently intend to rely on the requested 
order are named as applicants, and the Bandon Fund is the only 
series that currently intends to rely on the requested order. If the 
name of any Fund contains the name of a Subadviser, the name of the 
Adviser will precede the name of the Subadviser.
---------------------------------------------------------------------------

    2. Under the terms of the Bandon Fund's Advisory Agreement, the 
Adviser is responsible for the overall management of the Bandon Fund's 
business affairs and selecting investments according to the Bandon 
Fund's investment objectives, policies and restrictions. For the 
investment management services that it provides to the Bandon Fund, the 
Adviser receives the fee specified in the Advisory Agreement. The 
Advisory Agreement also permits the Adviser to retain one or more 
subadvisers for the purpose of managing the investments of all or a 
portion of the assets of the Bandon Fund. Pursuant to this authority, 
the Adviser has entered into investment subadvisory agreements with two 
Subadvisers to provide investment advisory services to the Bandon Fund 
(such agreements with Subadvisers, ``Subadvisory Agreements''). Each of 
these two Subadvisers is, and each future Subadviser will be, 
registered as an investment adviser under the Advisers Act. The Adviser 
will supervise, evaluate and allocate assets to the Subadvisers, and 
make recommendations to the Board about their hiring, retention or 
release, at all times subject to the authority of the Board. The 
Adviser will compensate each Subadviser out of the fees paid to the 
Adviser under the Advisory Agreement.
    3. Applicants request an order to permit the Adviser, subject to 
Board approval, to enter into and materially amend Subadvisory 
Agreements without obtaining shareholder approval. The requested relief 
will not extend to any subadviser that is an affiliated person, as 
defined in section 2(a)(3) of the Act, of the Trust, a Fund or the 
Adviser, other than by reason of serving as a subadviser to one or more 
of the Funds (``Affiliated Subadviser'').

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by the vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of securities in a series investment company affected by a matter must 
approve that matter if the Act requires shareholder approval.
    2. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provisions of the Act, or 
from any rule thereunder, if such exemption is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act. Applicants state that the requested relief meets this standard.

[[Page 72463]]

    3. Applicants assert that the shareholders expect the Adviser and 
the Board to select the Subadvisers for the Funds that are best suited 
to achieve each Fund's investment objective. Applicants assert that, 
from the perspective of the investor, the role of the Subadvisers is 
substantially equivalent to that of the individual portfolio managers 
employed by the Adviser. Applicants state that requiring shareholder 
approval of each Subadvisory Agreement would impose costs and 
unnecessary delays on the Funds, and may preclude the Adviser from 
acting promptly in a manner considered advisable by the Board. 
Applicants note that the Advisory Agreements and any Subadvisory 
Agreement with an Affiliated Subadviser will remain subject to section 
15(a) of the Act and rule 18f-2 under the Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Fund may rely on the requested order, the operation of 
the Fund in the manner described in the application will be approved by 
a majority of the Fund's outstanding voting securities, as defined in 
the Act, or in the case of a Fund whose public shareholders purchase 
shares on the basis of a prospectus containing the disclosure 
contemplated by condition 2 below, by the initial shareholder(s) before 
offering shares of that Fund to the public.
    2. Each Fund relying on the requested order will disclose in its 
prospectus the existence, substance, and effect of any order granted 
pursuant to this application. Each Fund will hold itself out to the 
public as utilizing the Manager of Managers Structure. The prospectus 
will prominently disclose that the Adviser has ultimate responsibility 
(subject to oversight by the Board) to oversee the Subadvisers and 
recommend their hiring, termination, and replacement.
    3. Within 90 days of the hiring of a new Subadviser, shareholders 
of the affected Fund will be furnished all information about the new 
Subadviser that would be included in a proxy statement. To meet this 
obligation, each Fund will provide shareholders within 90 days of the 
hiring of a new Subadviser an information statement meeting the 
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 
14A under the Securities Exchange Act of 1934.
    4. The Adviser will not enter into a subadvisory agreement with any 
Affiliated Subadviser without such agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the applicable Fund.
    5. At all times, at least a majority of the Board will be 
Independent Trustees, and the nomination of new or additional 
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees.
    6. Whenever a subadviser change is proposed for a Fund with an 
Affiliated Subadviser, the Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
applicable Board minutes, that such change is in the best interests of 
the Fund and its shareholders, and does not involve a conflict of 
interest from which the Adviser or the Affiliated Subadviser derives an 
inappropriate advantage.
    7. The Adviser will provide general management services to each 
Fund, including overall supervisory responsibility for the general 
management and investment of each Fund's assets and, subject to review 
and approval of the Board, will: (a) Set each Fund's overall investment 
strategies; (b) evaluate, select and recommend Subadvisers to manage 
all or a part of each Fund's assets; (c) allocate and, when 
appropriate, reallocate each Fund's assets among one or more 
Subadvisers; (d) monitor and evaluate the performance of Subadvisers; 
and (e) implement procedures reasonably designed to ensure that the 
Subadvisers comply with each Fund's investment objective, policies and 
restrictions.
    8. No trustee or officer of the Trust or a Fund, or director, 
manager, or officer of the Adviser, will own directly or indirectly 
(other than through a pooled investment vehicle that is not controlled 
by such person), any interest in a Subadviser, except for (a) Ownership 
of interests in the Adviser or any entity that controls, is controlled 
by, or is under common control with the Adviser or (b) ownership of 
less than 1% of the outstanding securities of any class of equity or 
debt of any publicly traded company that is either a Subadviser or an 
entity that controls, is controlled by, or is under common control with 
a Subadviser.
    9. In the event the Commission adopts a rule under the Act 
providing substantially similar relief to that in the order requested 
in the application, the requested order will expire on the effective 
date of that rule.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-30226 Filed 11-22-11; 8:45 am]
BILLING CODE 8011-01-P