Jefferies Employees Special Opportunities Partners, LLC, et al.; Notice of Application, 19039-19041 [2012-7519]
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Federal Register / Vol. 77, No. 61 / Thursday, March 29, 2012 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30007; 813–228]
Jefferies Employees Special
Opportunities Partners, LLC, et al.;
Notice of Application
March 23, 2012.
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 sections 9,
17, 30 and 36 through 53, and the rules
and regulations under the Act (the
‘‘Rules and Regulations’’). With respect
to sections 17(a), (d), (f), (g), and (j) of
the Act, sections 30(a), (b), (e), and (h)
of the Act and the Rules and
Regulations and rule 38a–1 under the
Act, applicants request a limited
exemption as set forth in the
application.
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AGENCY:
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, 520 Madison Avenue, 12th
Floor, New York, New York 10022.
FOR FURTHER INFORMATION CONTACT:
Marilyn Mann, Special Counsel, at (202)
551–6813 or Mary Kay Frech, 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 for an applicant using the
Company name box, at https://
www.sec.gov/search/seach.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. JESOP is a Delaware limited
liability company and is an employees’
securities company within the meaning
of section 2(a)(13) of the Act. Interests
in JESOP (‘‘Interests’’) were offered to (i)
SUMMARY: Summary of the Application:
current and former employees, officers,
Applicants request an order to exempt
directors, and consultants of the
a limited liability company formed for
Jefferies Group, (ii) spouses, parents,
the benefit of eligible employees of
children, spouses of children, siblings,
Jefferies Group, Inc. and its affiliates
and grandchildren of such persons, (iii)
from certain provisions of the Act. The
trusts and other investment vehicles
limited liability company is an
used or created by such persons, and
‘‘employees’ securities company’’
within the meaning of section 2(a)(13) of (iv) the Managing Member and certain
other Jefferies Entities. Jefferies Group,
the Act.
Inc. and its ‘‘affiliates,’’ as defined in
APPLICANTS: Jefferies Employees Special
rule 12b–2 under the Securities
Opportunities Partners, LLC (‘‘JESOP’’),
Exchange Act of 1934 (the ‘‘Exchange
Jefferies Special Opportunities Advisers,
Act’’), are referred to collectively as
LLC (the ‘‘Investment Manager’’) and
‘‘Jefferies Group’’ and individually as a
Jefferies & Company, Inc. (the
‘‘Jefferies Entity.’’ Interests were not
‘‘Managing Member’’).
registered under the Securities Act of
DATES: Filing Dates: The application was 1933 (‘‘Securities Act’’) in reliance on
filed on January 20, 2000 and amended
section 4(2) of the Securities Act or
on January 6, 2004, October 17, 2008,
Regulation D under the Securities Act
January 9, 2012, January 11, 2012 and
and were sold only to ‘‘accredited
March 16, 2012.
investors’’ within the meaning of rule
HEARING OR NOTIFICATION OF HEARING: An 501(a) of Regulation D. JESOP is not
order granting the application will be
currently offering Interests and will not
issued unless the Commission orders a
do so in the future, nor will it make
hearing. Interested persons may request capital calls on existing Interest holders
a hearing by writing to the
(‘‘Members’’).
2. JESOP will terminate on March 29,
Commission’s Secretary and serving
2013 (the ‘‘Termination’’) and its term
applicants with a copy of the request,
will not be extended unless at that time
personally or by mail. Hearing requests
it is able to rely on section 3(c)(1) of the
should be received by the Commission
Act. The chief compliance officer of
by 5:30 p.m. on April 17, 2012 and
JESOP or the Investment Manager will
should be accompanied by proof of
certify to the Office of Investment
service on applicants, in the form of an
Company Regulation of the Division of
affidavit or, for lawyers, a certificate of
Investment Management every six
service. Hearing requests should state
months beginning from the date six
the nature of the writer’s interest, the
months following the date of the
reason for the request, and the issues
requested order until March 29, 2013
contested. Persons who wish to be
that JESOP is in compliance with the
notified of a hearing may request
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19039
terms and conditions of the requested
order, as reflected in the application and
this notice.
3. JESOP is controlled by the
Managing Member, within the meaning
of section 2(a)(9) of the Act. The
Investment Manager serves as
investment adviser to JESOP. JESOP
currently owns only (i) Series E Interests
of Jefferies High Yield Holdings, LLC
(‘‘Holdings’’), the sole member of
Jefferies High Yield Trading, LLC, a
registered broker-dealer, (ii) ‘‘eligible
securities,’’ as defined in rule 2a–7
under the Act (‘‘Eligible Securities’’),
(iii) shares of money market funds
registered under the Act, and (iv) cash
(collectively, ‘‘Permitted Instruments’’).
JESOP will not hold any assets other
than Permitted Instruments.
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
2(a)(13) defines an employees’ securities
company as any investment company
all of whose securities (other than shortterm paper) are beneficially owned (a)
by current or former employees, or
persons on retainer, of one or more
affiliated employers, (b) by immediate
family members of such persons, or (c)
by such employer or employers together
with any of the persons in (a) or (b).
2. Section 7 of the Act generally
prohibits investment companies that are
not registered under section 8 of the Act
from selling or redeeming their
securities. Section 6(e) of the Act
provides that, in connection with any
order exempting an investment
company from any provision of section
7, certain provisions of the Act, as
specified by the Commission, will be
applicable to the company and other
persons dealing with the company as
though the company were registered
under the Act. Applicants request an
order under sections 6(b) and 6(e) of the
Act exempting applicants from all
provisions of the Act, except sections 9,
17, 30, 36 through 53, and the Rules and
Regulations. With respect to sections
17(a), (d), (f), (g) and (j) and 30(a), (b),
(e) and (h) of the Act and the Rules and
Regulations, and rule 38a–1 under the
Act, applicants request a limited
exemption as set forth in the
application.
3. Section 17(a) of the Act 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
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Federal Register / Vol. 77, No. 61 / Thursday, March 29, 2012 / Notices
other property to or from the company.
Applicants request an exemption from
section 17(a) to permit Holdings, in
connection with the Termination, to
engage in any principal transaction
directly or indirectly with JESOP.
4. Section 17(d) of the Act and rule
17d–1 under the Act prohibit any
affiliated person of a registered
investment company, or any affiliated
person of such person, acting as
principal, from participating in any joint
arrangement with the registered
investment company unless authorized
by the Commission. Applicants request
an exemption from section 17(d) and
rule 17d–1 to the extent necessary to
permit JESOP to engage in any
transactions in which an Affiliated CoInvestor, or an affiliated person of such
person, is a participant, solely in
connection with the Termination. The
requested exemption would permit
JESOP to redeem its Series E Interests in
Holdings at or about the same time that
another Jefferies Entity is redeeming
another series of interests in Holdings.
The term ‘‘Affiliated Co-Investor’’ with
respect to JESOP means any person who
is (a) an ‘‘affiliated person’’ (as defined
in section 2(a)(3) of the Act) of JESOP;
(b) a Jefferies Entity; (c) an officer,
director, or employee of a Jefferies
Entity or the Jefferies Group; or (d) an
entity in which a Jefferies Entity acts as
general partner, or has a similar capacity
to control the sale or disposition of the
entity’s securities.
5. 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 to
permit the following exceptions from
the requirements of rule 17f–2: (i)
Compliance with paragraph (b) of the
rule may be achieved through
safekeeping in the locked files or secure
server of a Jefferies Entity; (ii) for the
purposes of paragraph (d) of the rule,
(A) employees of the Managing Member
or a designated affiliate of the Managing
Member will be deemed to be
employees of JESOP, (B) officers of the
Managing Member or a designated
affiliate of the Managing Member will be
deemed to be officers of JESOP, and (C)
the Managing Member or a designated
affiliate of the Managing Member will be
deemed to be the board of directors of
JESOP; and (iii) instead of the
verification procedure under paragraph
(f) of the rule, verification will be
effected quarterly by two employees of
the Managing Member or a designated
affiliate of the Managing Member.
6. Section 17(g) and rule 17g–1
generally require the bonding of officers
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and employees of a registered
investment company who have access to
its securities or funds. Rule 17g–1
requires that a majority of directors who
are not interested persons of a registered
investment company (‘‘disinterested
directors’’) take certain actions and give
certain approvals relating to fidelity
bonding. Paragraph (g) of rule 17g–1 sets
forth certain materials relating to the
fidelity bond that must be filed with the
Commission and certain notices relating
to the fidelity bond that must be given
to each member of the investment
company’s board of directors. Paragraph
(h) of rule 17g–1 provides that an
investment company must designate
one of its officers to make the filings and
give the notices required by paragraph
(g). Paragraph (j) of rule 17g–1 exempts
a joint insured bond provided and
maintained by an investment company
and one or more other parties from
section 17(d) of the Act and the rules
thereunder. Rule 17g–1(j)(3) requires
that the board of directors of an
investment company satisfy the fund
governance standards defined in rule 0–
l(a)(7).
7. Applicants request an exemption
from rule 17g–1(d), (e) and (g) to the
extent necessary to permit the Managing
Member or its affiliates to act and
approve as required by the rule, rather
than a majority of the disinterested
directors of JESOP or of the Managing
Member. JESOP will comply with all
other requirements of rule 17g–1, except
that JESOP requests 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 relating to the
provisions of notices to the board of
directors, and an exemption from the
requirements of rule 17g–1(j)(3) that
JESOP comply with the fund
governance standards defined in rule 0–
1(a)(7). The Managing Member or an
affiliate of the Managing Member will
maintain the materials otherwise
required to be filed with the
Commission by rule 17g–1(g) and agrees
that all such material will be subject to
examination by the Commission and its
staff. The Managing Member will
designate a person to maintain the
records otherwise required to be filed
with the Commission under paragraph
(g) of the rule.
8. Applicants request an exemption
from the requirements, contained in
section 17(j) of the Act and rule 17j–1
under the Act, that every registered
investment company adopt a written
code of ethics and every ‘‘access
person’’ of such registered investment
company report to the investment
company with respect to transactions in
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any security in which such access
person has, or by reason of the
transaction acquires, any direct or
indirect beneficial ownership in the
security. Applicants request an
exemption from the requirements in
rule 17j–1, with the exception of the
antifraud provisions of rule 17j–1(b),
because they are burdensome and
unnecessary and would serve little
purpose in light of the community of
interest among Members by virtue of
their common association with the
Jefferies Group.
9. 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
request exemptive relief to the extent
necessary to permit JESOP to report
annually to its Members. Applicants
also request an exemption from section
30(h) of the Act to the extent necessary
to exempt the Managing Member, the
Investment Manager, and any other
persons who are subject to section 30(h),
from filing Forms 3, 4 and 5 under
section 16 of the Exchange Act with
respect to their ownership of Interests.
10. Rule 38a–1 requires investment
companies to adopt, implement and
periodically review written policies and
procedures reasonably designed to
prevent violation of the federal
securities laws and to appoint a chief
compliance officer. JESOP will comply
with rule 38a–1(a), (c) and (d), except
that (i) because JESOP does not have a
board of directors, the board of directors
of the Managing Member will fulfill the
responsibilities assigned to JESOP’s
board of directors under the rule, and
(ii) because the board of directors of the
Managing Member does not have any
disinterested members, approval by a
majority of the disinterested board
members required by rule 38a–1 will
not be obtained and (iii) since the board
of directors of the Managing Member
does not have any disinterested
members, JESOP will comply with the
requirement in rule 38a–1(a)(4)(iv) that
the chief compliance officer meet with
the disinterested directors by having the
chief compliance officer meet with the
board of directors of the Managing
Member as constituted.
Applicants’ Conditions
Applicants agree that the requested
order will be subject to the following
conditions:
1. Each proposed transaction
otherwise prohibited by section 17(a) or
section 17(d) and rule 17d–1 to which
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JESOP is a party (each a ‘‘Section 17
Transaction’’) will be effected only if the
Investment Manager determines that:
(a) The terms of the Section 17
Transaction, including the
consideration to be paid or received, are
fair and reasonable to the Members of
JESOP and do not involve overreaching
of JESOP or its Members on the part of
any person concerned;
(b) the Section 17 Transaction is
consistent with the interests of the
Members of JESOP, JESOP’s constitutive
documents, and JESOP’s reports to its
Members; and
(c) the Section 17 Transaction is
undertaken only in connection with the
Termination.
The Investment Manager will record
and preserve a description of all Section
17 Transactions, its findings, the
information or materials upon which its
findings are based, and the basis
therefor. All such records will be
maintained for the life of JESOP, and at
least six years thereafter, and will be
subject to examination by the
Commission and its staff. All such
records will be maintained in an easily
accessible place for at least the first two
years after such a transaction.
2. If JESOP makes purchases or sales
from or to an entity affiliated with
JESOP because an officer, director or
employee of the Jefferies Group either:
(a) Serves as an officer, director, general
partner or investment adviser of the
entity, or (b) has a 5% or more
investment in the entity, such
individual will not participate in
JESOP’s determination of whether or not
to effect the purchase or sale. Any such
purchase or sale will be made only in
connection with the Termination.
3. The Investment Manager will
adopt, and periodically review and
update, procedures designed to ensure
that reasonable inquiry is made, prior to
the consummation of any Section 17
Transaction, that (a) the Section 17
Transaction is only effected to facilitate
the Termination, and (b) the possible
involvement in the Section 17
Transaction of any affiliated person or
promoter of or principal underwriter for
JESOP or any affiliated person of such
person, promoter or principal
underwriter, is made in accordance with
these conditions.
4. The Investment Manager will not
invest the funds of JESOP in any
securities other than Series E Interests of
Holdings, shares of money market funds
registered under the Act, and ‘‘eligible
securities,’’ as that term is defined in
rule 2a–7 under the Act.
5. The Managing Member will send,
or cause to be sent, to each person who
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Jkt 226001
was a Member in JESOP at any time
during the fiscal year then ended,
JESOP’s financial statements audited by
independent accountants. At the end of
each fiscal year, as of that year end, the
Managing Member will make or have a
valuation made of all the assets of
JESOP. In addition, within 90 days after
the end of each fiscal year of JESOP, or
as soon as practicable thereafter, the
Managing Member of JESOP shall send,
or cause to be sent, a report to each
person who was a Member at any time
during the fiscal year then ended,
setting forth such tax information as
shall be necessary for the preparation by
the Member of his or her federal and
state income tax returns, and a report of
the investment activities of JESOP
during such fiscal year.
6. JESOP, the Managing Member and
the Investment Manager will maintain
and preserve, for the life of JESOP and
at least six years thereafter, such
accounts, books, and other documents
as constitute the record forming the
basis for the audited financial
statements and annual reports of JESOP
to be sent to the Members, and agree
that all such records will be subject to
examination by the Commission and its
staff. All such records will be
maintained in an easily accessible place
for at least the first two years.
7. The requested relief will terminate
on March 29, 2013 and after that date
JESOP will not rely on any Commission
rule under the Act that provides relief
permitting the operation of employees’
securities companies as such term is
defined in section 2(a)(13) of the Act.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–7519 Filed 3–28–12; 8:45 am]
BILLING CODE 8011–01–P
2012, C2 Options Exchange,
Incorporated (the ‘‘Exchange’’ or ‘‘C2’’)
filed with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
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
The Exchange proposes to amend its
Fees Schedule. The text of the proposed
rule change is available on the
Exchange’s Web site (https://www.
c2exchange.com/Legal/), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend a
number of its application-related fees, as
listed below:
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66651; File No. SR–C2–
2012–010]
Self-Regulatory Organizations; C2
Options Exchange, Incorporated;
Notice of Filing and Immediate
Effectiveness of a Proposed Rule
Change To Amend Its Fees Schedule
March 23, 2012.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’ ) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on March 19,
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
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Fee
Application Fee (Organizations) ...........
Application Fee
(Sole-Proprietors) ..
Engage in Customer
Business ................
Associated Person ....
Renewal (Organizations) .....................
Statutory Disqualification ........................
Fingerprint .................
Current
fee
amount
Proposed
new fee
amount
$4,000
$5,000
2,500
3,000
2,500
350
3,000
500
2,000
2,500
2,750
50
5,000
60
The costs of processing these
applications and activities have
increased, and the Exchange therefore
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[Federal Register Volume 77, Number 61 (Thursday, March 29, 2012)]
[Notices]
[Pages 19039-19041]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-7519]
[[Page 19039]]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30007; 813-228]
Jefferies Employees Special Opportunities Partners, LLC, et al.;
Notice of Application
March 23, 2012.
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 sections 9, 17, 30 and
36 through 53, and the rules and regulations under the Act (the ``Rules
and Regulations''). With respect to sections 17(a), (d), (f), (g), and
(j) of the Act, sections 30(a), (b), (e), and (h) of the Act and the
Rules and Regulations and rule 38a-1 under the Act, applicants request
a limited exemption as set forth in the application.
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SUMMARY: Summary of the Application: Applicants request an order to
exempt a limited liability company formed for the benefit of eligible
employees of Jefferies Group, Inc. and its affiliates from certain
provisions of the Act. The limited liability company is an ``employees'
securities company'' within the meaning of section 2(a)(13) of the Act.
Applicants: Jefferies Employees Special Opportunities Partners, LLC
(``JESOP''), Jefferies Special Opportunities Advisers, LLC (the
``Investment Manager'') and Jefferies & Company, Inc. (the ``Managing
Member'').
DATES: Filing Dates: The application was filed on January 20, 2000 and
amended on January 6, 2004, October 17, 2008, January 9, 2012, January
11, 2012 and March 16, 2012.
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 April 17, 2012 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, 520 Madison Avenue,
12th Floor, New York, New York 10022.
FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Special Counsel, at
(202) 551-6813 or Mary Kay Frech, 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 for an
applicant using the Company name box, at https://www.sec.gov/search/seach.htm or by calling (202) 551-8090.
Applicants' Representations
1. JESOP is a Delaware limited liability company and is an
employees' securities company within the meaning of section 2(a)(13) of
the Act. Interests in JESOP (``Interests'') were offered to (i) current
and former employees, officers, directors, and consultants of the
Jefferies Group, (ii) spouses, parents, children, spouses of children,
siblings, and grandchildren of such persons, (iii) trusts and other
investment vehicles used or created by such persons, and (iv) the
Managing Member and certain other Jefferies Entities. Jefferies Group,
Inc. and its ``affiliates,'' as defined in rule 12b-2 under the
Securities Exchange Act of 1934 (the ``Exchange Act''), are referred to
collectively as ``Jefferies Group'' and individually as a ``Jefferies
Entity.'' Interests were not registered under the Securities Act of
1933 (``Securities Act'') in reliance on section 4(2) of the Securities
Act or Regulation D under the Securities Act and were sold only to
``accredited investors'' within the meaning of rule 501(a) of
Regulation D. JESOP is not currently offering Interests and will not do
so in the future, nor will it make capital calls on existing Interest
holders (``Members'').
2. JESOP will terminate on March 29, 2013 (the ``Termination'') and
its term will not be extended unless at that time it is able to rely on
section 3(c)(1) of the Act. The chief compliance officer of JESOP or
the Investment Manager will certify to the Office of Investment Company
Regulation of the Division of Investment Management every six months
beginning from the date six months following the date of the requested
order until March 29, 2013 that JESOP is in compliance with the terms
and conditions of the requested order, as reflected in the application
and this notice.
3. JESOP is controlled by the Managing Member, within the meaning
of section 2(a)(9) of the Act. The Investment Manager serves as
investment adviser to JESOP. JESOP currently owns only (i) Series E
Interests of Jefferies High Yield Holdings, LLC (``Holdings''), the
sole member of Jefferies High Yield Trading, LLC, a registered broker-
dealer, (ii) ``eligible securities,'' as defined in rule 2a-7 under the
Act (``Eligible Securities''), (iii) shares of money market funds
registered under the Act, and (iv) cash (collectively, ``Permitted
Instruments''). JESOP will not hold any assets other than Permitted
Instruments.
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 2(a)(13) defines an employees' securities company
as any investment company all of whose securities (other than short-
term paper) are beneficially owned (a) by current or former employees,
or persons on retainer, of one or more affiliated employers, (b) by
immediate family members of such persons, or (c) by such employer or
employers together with any of the persons in (a) or (b).
2. Section 7 of the Act generally prohibits investment companies
that are not registered under section 8 of the Act from selling or
redeeming their securities. Section 6(e) of the Act provides that, in
connection with any order exempting an investment company from any
provision of section 7, certain provisions of the Act, as specified by
the Commission, will be applicable to the company and other persons
dealing with the company as though the company were registered under
the Act. Applicants request an order under sections 6(b) and 6(e) of
the Act exempting applicants from all provisions of the Act, except
sections 9, 17, 30, 36 through 53, and the Rules and Regulations. With
respect to sections 17(a), (d), (f), (g) and (j) and 30(a), (b), (e)
and (h) of the Act and the Rules and Regulations, and rule 38a-1 under
the Act, applicants request a limited exemption as set forth in the
application.
3. Section 17(a) of the Act 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
[[Page 19040]]
other property to or from the company. Applicants request an exemption
from section 17(a) to permit Holdings, in connection with the
Termination, to engage in any principal transaction directly or
indirectly with JESOP.
4. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
any affiliated person of a registered investment company, or any
affiliated person of such person, acting as principal, from
participating in any joint arrangement with the registered investment
company unless authorized by the Commission. Applicants request an
exemption from section 17(d) and rule 17d-1 to the extent necessary to
permit JESOP to engage in any transactions in which an Affiliated Co-
Investor, or an affiliated person of such person, is a participant,
solely in connection with the Termination. The requested exemption
would permit JESOP to redeem its Series E Interests in Holdings at or
about the same time that another Jefferies Entity is redeeming another
series of interests in Holdings. The term ``Affiliated Co-Investor''
with respect to JESOP means any person who is (a) an ``affiliated
person'' (as defined in section 2(a)(3) of the Act) of JESOP; (b) a
Jefferies Entity; (c) an officer, director, or employee of a Jefferies
Entity or the Jefferies Group; or (d) an entity in which a Jefferies
Entity acts as general partner, or has a similar capacity to control
the sale or disposition of the entity's securities.
5. 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 to permit the following exceptions from the requirements of
rule 17f-2: (i) Compliance with paragraph (b) of the rule may be
achieved through safekeeping in the locked files or secure server of a
Jefferies Entity; (ii) for the purposes of paragraph (d) of the rule,
(A) employees of the Managing Member or a designated affiliate of the
Managing Member will be deemed to be employees of JESOP, (B) officers
of the Managing Member or a designated affiliate of the Managing Member
will be deemed to be officers of JESOP, and (C) the Managing Member or
a designated affiliate of the Managing Member will be deemed to be the
board of directors of JESOP; and (iii) instead of the verification
procedure under paragraph (f) of the rule, verification will be
effected quarterly by two employees of the Managing Member or a
designated affiliate of the Managing Member.
6. Section 17(g) and rule 17g-1 generally require the bonding of
officers and employees of a registered investment company who have
access to its securities or funds. Rule 17g-1 requires that a majority
of directors who are not interested persons of a registered investment
company (``disinterested directors'') take certain actions and give
certain approvals relating to fidelity bonding. Paragraph (g) of rule
17g-1 sets forth certain materials relating to the fidelity bond that
must be filed with the Commission and certain notices relating to the
fidelity bond that must be given to each member of the investment
company's board of directors. Paragraph (h) of rule 17g-1 provides that
an investment company must designate one of its officers to make the
filings and give the notices required by paragraph (g). Paragraph (j)
of rule 17g-1 exempts a joint insured bond provided and maintained by
an investment company and one or more other parties from section 17(d)
of the Act and the rules thereunder. Rule 17g-1(j)(3) requires that the
board of directors of an investment company satisfy the fund governance
standards defined in rule 0-l(a)(7).
7. Applicants request an exemption from rule 17g-1(d), (e) and (g)
to the extent necessary to permit the Managing Member or its affiliates
to act and approve as required by the rule, rather than a majority of
the disinterested directors of JESOP or of the Managing Member. JESOP
will comply with all other requirements of rule 17g-1, except that
JESOP requests 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 relating to the provisions of
notices to the board of directors, and an exemption from the
requirements of rule 17g-1(j)(3) that JESOP comply with the fund
governance standards defined in rule 0-1(a)(7). The Managing Member or
an affiliate of the Managing Member will maintain the materials
otherwise required to be filed with the Commission by rule 17g-1(g) and
agrees that all such material will be subject to examination by the
Commission and its staff. The Managing Member will designate a person
to maintain the records otherwise required to be filed with the
Commission under paragraph (g) of the rule.
8. Applicants request an exemption from the requirements, contained
in section 17(j) of the Act and rule 17j-1 under the Act, that every
registered investment company adopt a written code of ethics and every
``access person'' of such registered investment company report to the
investment company with respect to transactions in any security in
which such access person has, or by reason of the transaction acquires,
any direct or indirect beneficial ownership in the security. Applicants
request an exemption from the requirements in rule 17j-1, with the
exception of the antifraud provisions of rule 17j-1(b), because they
are burdensome and unnecessary and would serve little purpose in light
of the community of interest among Members by virtue of their common
association with the Jefferies Group.
9. 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 request exemptive relief to the
extent necessary to permit JESOP to report annually to its Members.
Applicants also request an exemption from section 30(h) of the Act to
the extent necessary to exempt the Managing Member, the Investment
Manager, and any other persons who are subject to section 30(h), from
filing Forms 3, 4 and 5 under section 16 of the Exchange Act with
respect to their ownership of Interests.
10. Rule 38a-1 requires investment companies to adopt, implement
and periodically review written policies and procedures reasonably
designed to prevent violation of the federal securities laws and to
appoint a chief compliance officer. JESOP will comply with rule 38a-
1(a), (c) and (d), except that (i) because JESOP does not have a board
of directors, the board of directors of the Managing Member will
fulfill the responsibilities assigned to JESOP's board of directors
under the rule, and (ii) because the board of directors of the Managing
Member does not have any disinterested members, approval by a majority
of the disinterested board members required by rule 38a-1 will not be
obtained and (iii) since the board of directors of the Managing Member
does not have any disinterested members, JESOP will comply with the
requirement in rule 38a-1(a)(4)(iv) that the chief compliance officer
meet with the disinterested directors by having the chief compliance
officer meet with the board of directors of the Managing Member as
constituted.
Applicants' Conditions
Applicants agree that the requested order will be subject to the
following conditions:
1. Each proposed transaction otherwise prohibited by section 17(a)
or section 17(d) and rule 17d-1 to which
[[Page 19041]]
JESOP is a party (each a ``Section 17 Transaction'') will be effected
only if the Investment Manager determines that:
(a) The terms of the Section 17 Transaction, including the
consideration to be paid or received, are fair and reasonable to the
Members of JESOP and do not involve overreaching of JESOP or its
Members on the part of any person concerned;
(b) the Section 17 Transaction is consistent with the interests of
the Members of JESOP, JESOP's constitutive documents, and JESOP's
reports to its Members; and
(c) the Section 17 Transaction is undertaken only in connection
with the Termination.
The Investment Manager will record and preserve a description of all
Section 17 Transactions, its findings, the information or materials
upon which its findings are based, and the basis therefor. All such
records will be maintained for the life of JESOP, and at least six
years thereafter, and will be subject to examination by the Commission
and its staff. All such records will be maintained in an easily
accessible place for at least the first two years after such a
transaction.
2. If JESOP makes purchases or sales from or to an entity
affiliated with JESOP because an officer, director or employee of the
Jefferies Group either: (a) Serves as an officer, director, general
partner or investment adviser of the entity, or (b) has a 5% or more
investment in the entity, such individual will not participate in
JESOP's determination of whether or not to effect the purchase or sale.
Any such purchase or sale will be made only in connection with the
Termination.
3. The Investment Manager will adopt, and periodically review and
update, procedures designed to ensure that reasonable inquiry is made,
prior to the consummation of any Section 17 Transaction, that (a) the
Section 17 Transaction is only effected to facilitate the Termination,
and (b) the possible involvement in the Section 17 Transaction of any
affiliated person or promoter of or principal underwriter for JESOP or
any affiliated person of such person, promoter or principal
underwriter, is made in accordance with these conditions.
4. The Investment Manager will not invest the funds of JESOP in any
securities other than Series E Interests of Holdings, shares of money
market funds registered under the Act, and ``eligible securities,'' as
that term is defined in rule 2a-7 under the Act.
5. The Managing Member will send, or cause to be sent, to each
person who was a Member in JESOP at any time during the fiscal year
then ended, JESOP's financial statements audited by independent
accountants. At the end of each fiscal year, as of that year end, the
Managing Member will make or have a valuation made of all the assets of
JESOP. In addition, within 90 days after the end of each fiscal year of
JESOP, or as soon as practicable thereafter, the Managing Member of
JESOP shall send, or cause to be sent, a report to each person who was
a Member at any time during the fiscal year then ended, setting forth
such tax information as shall be necessary for the preparation by the
Member of his or her federal and state income tax returns, and a report
of the investment activities of JESOP during such fiscal year.
6. JESOP, the Managing Member and the Investment Manager will
maintain and preserve, for the life of JESOP and at least six years
thereafter, such accounts, books, and other documents as constitute the
record forming the basis for the audited financial statements and
annual reports of JESOP to be sent to the Members, and agree that all
such records will be subject to examination by the Commission and its
staff. All such records will be maintained in an easily accessible
place for at least the first two years.
7. The requested relief will terminate on March 29, 2013 and after
that date JESOP will not rely on any Commission rule under the Act that
provides relief permitting the operation of employees' securities
companies as such term is defined in section 2(a)(13) of the Act.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-7519 Filed 3-28-12; 8:45 am]
BILLING CODE 8011-01-P
