Davidson Kempner Capital Management LLC; Notice of Application, 63253-63255 [2013-24771]

Download as PDF Federal Register / Vol. 78, No. 205 / Wednesday, October 23, 2013 / Notices BILLING CODE 8011–01–P Office Building, Washington, DC 20503, or by sending an email to: Shagufta_ Ahmed@omb.eop.gov; and (ii) Thomas Bayer, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549 or send an email to: PRA_Mailbox@ sec.gov. Comments must be submitted to OMB within 30 days of this notice. SECURITIES AND EXCHANGE COMMISSION Dated: October 17, 2013. Kevin M. O’Neill, Deputy Secretary. 100 F Street NE., Washington, DC 20549 or send an email to: PRA_Mailbox@ sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: October 17, 2013. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–24773 Filed 10–22–13; 8:45 am] [FR Doc. 2013–24774 Filed 10–22–13; 8:45 am] Submission for OMB Review; Comment Request BILLING CODE 8011–01–P Upon Written Request Copies Available From: Securities and Exchange Commission, Office of Investor Education and Advocacy, Washington, DC 20549–0213. SECURITIES AND EXCHANGE COMMISSION [Release No. IA–3693/803–00215] emcdonald on DSK67QTVN1PROD with NOTICES Extension: Regulation 12B; OMB Control No. 3235– 0062, SEC File No. 270–70. Davidson Kempner Capital Management LLC; Notice of Application Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the Securities and Exchange Commission (‘‘Commission’’) has submitted to the Office of Management and Budget the request for extension of the previously approved collection of information discussed below. Regulation 12B (17 CFR 240.12b–1– 12b–37) under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) (‘‘Exchange Act’’) includes rules governing the registration and periodic reporting under Sections 12(b), 12(g), 13(a), and 15(d) (15 U.S.C. 78l(b), 78l(g), 78m(a) and 78o(d)) of the Exchange Act. The purpose of the regulation is to set forth guidelines for the uniform preparation of Exchange Act registration statement and reports. All information is provided to the public for review. The information required is filed on occasion and it is mandatory. Regulation 12B is assigned one burden hour for administrative convenience because the regulation simply prescribes the disclosure that must appear in other filings under the federal securities laws. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. The public may view the background documentation for this information collection at the following Web site, www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive October 17, 2013. VerDate Mar<15>2010 18:13 Oct 22, 2013 Jkt 232001 Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of application for an exemptive order under Section 206A of the Investment Advisers Act of 1940 (the ‘‘Advisers Act’’) and Rule 206(4)– 5(e) thereunder. AGENCY: 63253 should be received by the Commission by 5:30 p.m. on November 12, 2013, and should be accompanied by proof of service on Applicant, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer’s interest, the reason for the request, and the issues contested. Persons may request notification of a hearing by writing to the Commission’s Secretary. ADDRESSES: Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Applicant, Davidson Kempner Capital Management LLC, c/o Shulamit Leviant, 65 East 55th Street, 19th Floor, New York, New York 10022. FOR FURTHER INFORMATION CONTACT: Melissa S. Gainor, Senior Counsel, or Sarah A. Buescher, Branch Chief, at (202) 551–6787 (Investment Adviser Regulation Office, Division of Investment Management). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee at the SEC’s Public Reference Branch, 100 F Street NE., Washington, DC 20549–0102 (telephone (202) 551–5850). Applicant’s Representations 1. Applicant is a limited liability APPLICANT: Davidson Kempner Capital company registered with the Management LLC (‘‘Applicant’’). Commission as an investment adviser RELEVANT ADVISERS ACT SECTIONS: under the Advisers Act. Applicant Exemption requested under section serves as investment adviser to 206A of the Advisers Act and rule Davidson Kempner Institutional 206(4)-5(e) thereunder from rule 206(4)Partners, L.P. (the ‘‘Fund’’), an issuer 5(a)(1) under the Advisers Act. excluded from the definition of SUMMARY OF APPLICATION: Applicant investment company pursuant to requests that the Commission issue an section 3(c)(7) of the Investment order under section 206A of the Company Act of 1940. Three of the Advisers Act and rule 206(4)-5(e) investors in the Fund (the ‘‘Clients’’) are thereunder exempting it from rule Ohio public pension plans. The 206(4)-5(a)(1) under the Advisers Act to investment decisions for each Client are permit Applicant to receive overseen by a board of between 9 and compensation from three government 11 trustees that includes one individual entities for investment advisory services appointed by the Ohio State Treasurer. provided to the government entities 2. On May 22, 2011, Anthony within the two-year period following a Yoseloff, a managing member and senior contribution by a covered associate of investment professional of Applicant Applicant to an official of the (the ‘‘Contributor’’), made a contribution government entities. of $2,500 (the ‘‘Contribution’’) to the DATES: Filing Dates: The application was federal senate campaign of Joshua filed on October 16, 2012, and an Mandel, the Ohio State Treasurer (the amended and restated application was ‘‘Official’’). The Contributor’s wife also filed on July 5, 2013. made a contribution for the same HEARING OR NOTIFICATION OF HEARING: amount. Applicant represents that the An order granting the application will amount of the Contribution, profile of be issued unless the Commission orders the candidate and characteristics of the a hearing. Interested persons may campaign are consistent with the request a hearing by writing to the pattern of the Contributor’s other Commission’s Secretary and serving political contributions. 3. Applicant represents that the Applicant with a copy of the request, Contributor did not solicit any persons personally or by mail. Hearing requests PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 E:\FR\FM\23OCN1.SGM 23OCN1 emcdonald on DSK67QTVN1PROD with NOTICES 63254 Federal Register / Vol. 78, No. 205 / Wednesday, October 23, 2013 / Notices to make contributions to the Official’s campaign, and that the executive managing member of Applicant was informed of the Contributor’s plan to meet with the Official, but never learned that the Contributor made the Contribution. 4. Applicant represents that each Client’s relationship with the Applicant pre-dates the Contribution and only one investment made by the Clients occurred after the contribution. The Applicant also represents that it took steps designed to limit the Contributor’s contact with each Client and each Client’s representatives during the duration of the two-year compensation time out. Applicant represents that the Contributor’s role with the Clients was limited to making substantive presentations to the Client’s representatives regarding the investment strategy for which the Contributor is a manager. Applicant represents that the Contributor had no contact with any representative of a Client outside of those presentations, and no contact with any member of a Client’s board. No member of a Client’s board serving at the time of the Contribution was appointed by the Official. 5. Applicant represents that at no time did any employees of the Adviser other than the Contributor have any knowledge of the Contribution prior to its discovery by the Adviser on November 2, 2011. The Contribution was discovered by the Adviser’s compliance department during compliance testing that included random testing of campaign contribution databases for the names of employees. After discovery of the Contribution, the Adviser and Contributor obtained the Official’s agreement to return the full amount of the Contribution, which was subsequently returned. An escrow account was established and all fees paid from the Clients’ capital accounts in the Fund for the two-year period beginning on May 22, 2011 were deposited in the account. Applicant represents that it notified each Client of the Contribution and resulting two-year prohibition on compensation absent exemptive relief from the Commission. 6. The Adviser’s policies and procedures regarding pay-to-play (‘‘Payto-Play Policies and Procedures’’) were initially adopted and implemented in August 2009 and required covered employees of the Adviser to pre-clear contributions to state and local office incumbents (including state and local officials running for federal office) and candidates. Applicant represents that the Contributor’s violation of Applicant’s Pay-to-Play Policies and VerDate Mar<15>2010 18:13 Oct 22, 2013 Jkt 232001 Procedures resulted from his mistaken belief that all contributions to federal campaigns were permissible and exempt from Pay-to-Play Policies and Procedures. After learning of the Contributor’s misunderstanding, Applicant represents that it revised its Pay to Play Policies and Procedures to require covered employees of the Adviser to pre-clear all campaign contributions to avoid similar misunderstandings by covered associates. Applicant’s Legal Analysis 1. Rule 206(4)–5(a)(1) under the Advisers Act prohibits a registered investment adviser from providing investment advisory services for compensation to a government entity within two years after a contribution to an official of the government entity is made by the investment adviser or any covered associate of the investment adviser. Each Client is a ‘‘government entity,’’ as defined in rule 206(4)–5(f)(5), the Contributor is a ‘‘covered associate’’ as defined in rule 206(4)–5(f)(2), and the Official is an ‘‘official’’ as defined in rule 206(4)–5(f)(6). Rule 206(4)–5(c) provides that when a government entity invests in a covered investment pool, the investment adviser to that covered investment pool is treated as providing advisory services directly to the government entity. The Fund is a ‘‘covered investment pool,’’ as defined in rule 206(4)–5(f)(3)(ii). 2. Section 206A of the Advisers Act grants the Commission the authority to ‘‘conditionally or unconditionally exempt any person or transaction . . . from any provision or provisions of [the Advisers Act] or of any rule or regulation thereunder, if and to the extent that 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 Advisers Act].’’ 3. Rule 206(4)–5(e) provides that the Commission may exempt an investment adviser from the prohibition under Rule 206(4)–5(a)(1) upon consideration of the factors listed below, among others: (1) Whether the 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 Advisers Act; (2) Whether the investment adviser: (i) Before the contribution resulting in the prohibition was made, adopted and implemented policies and procedures reasonably designed to prevent violations of the rule; and (ii) prior to or at the time the contribution which PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 resulted in such prohibition was made, had no actual knowledge of the contribution; and (iii) after learning of the contribution: (A) Has taken all available steps to cause the contributor involved in making the contribution which resulted in such prohibition to obtain a return of the contribution; and (B) has taken such other remedial or preventive measures as may be appropriate under the circumstances; (3) Whether, at the time of the contribution, the contributor was a covered associate or otherwise an employee of the investment adviser, or was seeking such employment; (4) The timing and amount of the contribution which resulted in the prohibition; (5) The nature of the election (e.g., federal, state or local); and (6) The contributor’s apparent intent or motive in making the contribution which resulted in the prohibition, as evidenced by the facts and circumstances surrounding such contribution. 4. Applicant requests an order pursuant to section 206A and rule 206(4)–5(e) thereunder, exempting it from the two-year prohibition on compensation imposed by rule 206(4)– 5(a)(1) with respect to investment advisory services provided to the Clients within the two-year period following the Contribution. 5. Applicant submits that the exemption is necessary and 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. Applicant further submits that the other factors set forth in rule 206(4)–5(e) similarly weigh in favor of granting an exemption to the Applicant to avoid consequences disproportionate to the violation. 6. Applicant states that each Client determined to invest with Applicant and established those advisory relationships on an arms’ length basis free from any improper influence as a result of the Contribution. In support of this argument, Applicant notes that each Client’s relationship with the Applicant pre-dates the Contribution and only one investment made by the Clients occurred after the contribution. Furthermore, the Official’s influence on each Client is limited, as was the Contributor’s contact with each Client’s representatives. Applicant also argues that the interests of the Clients are best served by allowing the Applicant and its Clients to continue their relationship uninterrupted. 7. Applicant notes that it adopted and implemented Pay-to-Play Policies and Procedures compliant with the rule’s E:\FR\FM\23OCN1.SGM 23OCN1 Federal Register / Vol. 78, No. 205 / Wednesday, October 23, 2013 / Notices requirements and it implemented compliance testing procedures prior to the date of the Contribution. Applicant further represents that at no time did any employees of Applicant other than the Contributor have any knowledge that the Contribution had been made prior to discovery by the Applicant in November 2011. After learning of the Contribution, Applicant and the Contributor obtained the Official’s agreement to return the Contribution, which was subsequently returned, and the Applicant set up an escrow account for all fees charged to the Clients’ capital accounts in the Fund for the two-year period beginning May 22, 2011. 8. Applicant states that the Contributor’s apparent intent in making the Contribution was not to influence the selection or retention of Applicant. Applicant represents that the amount of the Contribution, profile of the candidate and characteristics of the campaign are consistent with the pattern of the Contributor’s other substantial political donations. Applicant notes that the Contributor failed to appreciate that contributions to federal candidates who held state or local office could trigger the prohibition on compensation under Rule 206(4)–5 or that such contributions were subject to the Applicant’s Pay-to-Play Policies and Procedures. Applicant represents that the Contributor had no contact with any representative of the Clients (or their boards) outside of making limited substantive presentations to the Clients’ representatives and consultants about the investment strategy he manages and that the Applicant took steps designed to limit such contact during the duration of the two-year time out on compensation. By the Commission. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–24771 Filed 10–22–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. IC–30745; File No. 812–14152] emcdonald on DSK67QTVN1PROD with NOTICES Arden Investment Series Trust, et al.; Notice of Application 15(a) and 15(b) of the 1940 Act and Rules 6e–2(b)(15) and 6e–3(T)(b)(15) thereunder. Arden Investment Series Trust (the ‘‘Trust’’) and Arden Asset Management LLC (‘‘Arden’’) (collectively, the ‘‘Applicants’’). SUMMARY OF APPLICATION: Applicants request an order granting exemptions from the provisions of Sections 9(a), 13(a), 15(a), and 15(b) of the Act and Rules 6e–2(b)(15) and 6e–3(T)(b)(15) thereunder in cases where a life insurance company separate account supporting variable life insurance contracts (‘‘VLI Accounts’’) holds shares of Arden Variable Alternative Strategies Fund, an existing portfolio of the Trust (the ‘‘Existing Variable Fund’’), or a ‘‘Future Variable Fund,’’ 1 (any Existing Variable Fund or Future Variable Fund is referred to herein as a ‘‘Fund,’’ and collectively, the ‘‘Funds’’), and one or more of the following other types of investors also hold shares of the Funds: (i) Any life insurance company separate account supporting variable annuity contracts (‘‘VA Accounts’’); (ii) any VLI Account; (iii) trustees of qualified group pension or group retirement plans (‘‘Plans’’ or ‘‘Qualified Plans’’) outside the separate account context; (iv) the investment adviser or any subadviser to a Fund or affiliated persons of the adviser or subadviser (representing seed money investments in the Fund) (‘‘Advisers’’); and (v) any general account of an insurance company depositor of VA Accounts and/or VLI Accounts and affiliated persons of such insurance company (‘‘General Accounts’’). FILING DATE: The application was filed on May 2, 2013, and amended and restated on October 2, 2013. 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 Secretary of the Commission 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 November 11, 2013, 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 APPLICANTS: October 17, 2013. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of application pursuant to Section 6(c) of the Investment Company Act of 1940, as amended (the ‘‘1940 Act’’ or ‘‘Act’’), seeking exemptions from Sections 9(a), 13(a), AGENCY: VerDate Mar<15>2010 18:13 Oct 22, 2013 Jkt 232001 1 As used herein, a Future Variable Fund is any investment company (or investment portfolio or series thereof), other than the Existing Variable Fund, designed to be sold to VA Accounts and/or VLI Accounts and to which Applicants or their affiliates may in the future serve as investment advisers, investment subadvisers, investment managers, administrators, principal underwriters or sponsors. PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 63255 of the writer’s interest, the reason for the request, and the issues contested. Persons may request notification of a hearing by writing to the Secretary of the Commission. ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. Applicants, 375 Park Avenue, 32nd Floor, New York, NY 10152. FOR FURTHER INFORMATION CONTACT: Sonny Oh, Senior Counsel, or Joyce M. Pickholz, Branch Chief, Insured Investments Office, Division of Investment Management at (202) 551– 6795. 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 http:// www.sec.gov/search.htm, or by calling (202) 551–8090. Applicants’ Representations 1. The Trust was organized as a Delaware statutory trust on April 11, 2012 and is registered under the Act as an open-end management investment company (Reg. File No. 811–22701). The Trust is a series investment company as defined by Rule 18f–2 under the Act and the Existing Variable Fund is a series of the Trust. The Trust has registered two classes of shares of the Existing Variable Fund under the Securities Act of 1933 (the ‘‘1933 Act’’) (Reg. File No. 333–180881) on Form N– 1A. The Trust may in the future establish additional Funds and additional classes of shares for any of the Funds. Shares of the Funds will not be offered to the general public. The existing series of the Trust are the Existing Variable Fund, Arden Alternative Strategies Fund and Arden Alternative Strategies II. This Application seeks exemptive relief only for the Existing Variable Fund and any Future Variable Fund of the Trust as defined herein but does not seek exemptive relief for the Arden Alternative Strategies Fund or Arden Alternative Strategies II because they are not designed to be sold to VA Accounts and/or VLI Accounts. 2. Arden serves as the investment adviser to the Trust and the Existing Variable Fund. Arden is a Delaware limited liability company and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. Subject to the authority of the Board of Trustees of the Trust, Arden is responsible for the overall management of the business E:\FR\FM\23OCN1.SGM 23OCN1

Agencies

[Federal Register Volume 78, Number 205 (Wednesday, October 23, 2013)]
[Notices]
[Pages 63253-63255]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-24771]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IA-3693/803-00215]


Davidson Kempner Capital Management LLC; Notice of Application

October 17, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an exemptive order under Section 206A 
of the Investment Advisers Act of 1940 (the ``Advisers Act'') and Rule 
206(4)-5(e) thereunder.

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Applicant:  Davidson Kempner Capital Management LLC (``Applicant'').

Relevant Advisers Act Sections:  Exemption requested under section 206A 
of the Advisers Act and rule 206(4)-5(e) thereunder from rule 206(4)-
5(a)(1) under the Advisers Act.
Summary of Application:  Applicant requests that the Commission issue 
an order under section 206A of the Advisers Act and rule 206(4)-5(e) 
thereunder exempting it from rule 206(4)-5(a)(1) under the Advisers Act 
to permit Applicant to receive compensation from three government 
entities for investment advisory services provided to the government 
entities within the two-year period following a contribution by a 
covered associate of Applicant to an official of the government 
entities.

DATES: Filing Dates: The application was filed on October 16, 2012, and 
an amended and restated application was filed on July 5, 2013.

Hearing or Notification of Hearing:  An order granting the application 
will be issued unless the Commission orders a hearing. Interested 
persons may request a hearing by writing to the Commission's Secretary 
and serving Applicant with a copy of the request, personally or by 
mail. Hearing requests should be received by the Commission by 5:30 
p.m. on November 12, 2013, and should be accompanied by proof of 
service on Applicant, in the form of an affidavit or, for lawyers, a 
certificate of service. Hearing requests should state the nature of the 
writer's interest, the reason for the request, and the issues 
contested. Persons may request notification of a hearing by writing to 
the Commission's Secretary.

ADDRESSES:  Elizabeth M. Murphy, Secretary, Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicant, 
Davidson Kempner Capital Management LLC, c/o Shulamit Leviant, 65 East 
55th Street, 19th Floor, New York, New York 10022.

FOR FURTHER INFORMATION CONTACT: Melissa S. Gainor, Senior Counsel, or 
Sarah A. Buescher, Branch Chief, at (202) 551-6787 (Investment Adviser 
Regulation Office, Division of Investment Management).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch, 100 F Street NE., Washington, DC 20549-
0102 (telephone (202) 551-5850).

Applicant's Representations

    1. Applicant is a limited liability company registered with the 
Commission as an investment adviser under the Advisers Act. Applicant 
serves as investment adviser to Davidson Kempner Institutional 
Partners, L.P. (the ``Fund''), an issuer excluded from the definition 
of investment company pursuant to section 3(c)(7) of the Investment 
Company Act of 1940. Three of the investors in the Fund (the 
``Clients'') are Ohio public pension plans. The investment decisions 
for each Client are overseen by a board of between 9 and 11 trustees 
that includes one individual appointed by the Ohio State Treasurer.
    2. On May 22, 2011, Anthony Yoseloff, a managing member and senior 
investment professional of Applicant (the ``Contributor''), made a 
contribution of $2,500 (the ``Contribution'') to the federal senate 
campaign of Joshua Mandel, the Ohio State Treasurer (the ``Official''). 
The Contributor's wife also made a contribution for the same amount. 
Applicant represents that the amount of the Contribution, profile of 
the candidate and characteristics of the campaign are consistent with 
the pattern of the Contributor's other political contributions.
    3. Applicant represents that the Contributor did not solicit any 
persons

[[Page 63254]]

to make contributions to the Official's campaign, and that the 
executive managing member of Applicant was informed of the 
Contributor's plan to meet with the Official, but never learned that 
the Contributor made the Contribution.
    4. Applicant represents that each Client's relationship with the 
Applicant pre-dates the Contribution and only one investment made by 
the Clients occurred after the contribution. The Applicant also 
represents that it took steps designed to limit the Contributor's 
contact with each Client and each Client's representatives during the 
duration of the two-year compensation time out. Applicant represents 
that the Contributor's role with the Clients was limited to making 
substantive presentations to the Client's representatives regarding the 
investment strategy for which the Contributor is a manager. Applicant 
represents that the Contributor had no contact with any representative 
of a Client outside of those presentations, and no contact with any 
member of a Client's board. No member of a Client's board serving at 
the time of the Contribution was appointed by the Official.
    5. Applicant represents that at no time did any employees of the 
Adviser other than the Contributor have any knowledge of the 
Contribution prior to its discovery by the Adviser on November 2, 2011. 
The Contribution was discovered by the Adviser's compliance department 
during compliance testing that included random testing of campaign 
contribution databases for the names of employees. After discovery of 
the Contribution, the Adviser and Contributor obtained the Official's 
agreement to return the full amount of the Contribution, which was 
subsequently returned. An escrow account was established and all fees 
paid from the Clients' capital accounts in the Fund for the two-year 
period beginning on May 22, 2011 were deposited in the account. 
Applicant represents that it notified each Client of the Contribution 
and resulting two-year prohibition on compensation absent exemptive 
relief from the Commission.
    6. The Adviser's policies and procedures regarding pay-to-play 
(``Pay-to-Play Policies and Procedures'') were initially adopted and 
implemented in August 2009 and required covered employees of the 
Adviser to pre-clear contributions to state and local office incumbents 
(including state and local officials running for federal office) and 
candidates. Applicant represents that the Contributor's violation of 
Applicant's Pay-to-Play Policies and Procedures resulted from his 
mistaken belief that all contributions to federal campaigns were 
permissible and exempt from Pay-to-Play Policies and Procedures. After 
learning of the Contributor's misunderstanding, Applicant represents 
that it revised its Pay to Play Policies and Procedures to require 
covered employees of the Adviser to pre-clear all campaign 
contributions to avoid similar misunderstandings by covered associates.

Applicant's Legal Analysis

    1. Rule 206(4)-5(a)(1) under the Advisers Act prohibits a 
registered investment adviser from providing investment advisory 
services for compensation to a government entity within two years after 
a contribution to an official of the government entity is made by the 
investment adviser or any covered associate of the investment adviser. 
Each Client is a ``government entity,'' as defined in rule 206(4)-
5(f)(5), the Contributor is a ``covered associate'' as defined in rule 
206(4)-5(f)(2), and the Official is an ``official'' as defined in rule 
206(4)-5(f)(6). Rule 206(4)-5(c) provides that when a government entity 
invests in a covered investment pool, the investment adviser to that 
covered investment pool is treated as providing advisory services 
directly to the government entity. The Fund is a ``covered investment 
pool,'' as defined in rule 206(4)-5(f)(3)(ii).
    2. Section 206A of the Advisers Act grants the Commission the 
authority to ``conditionally or unconditionally exempt any person or 
transaction . . . from any provision or provisions of [the Advisers 
Act] or of any rule or regulation thereunder, if and to the extent that 
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 Advisers Act].''
    3. Rule 206(4)-5(e) provides that the Commission may exempt an 
investment adviser from the prohibition under Rule 206(4)-5(a)(1) upon 
consideration of the factors listed below, among others:
    (1) Whether the 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 Advisers 
Act;
    (2) Whether the investment adviser: (i) Before the contribution 
resulting in the prohibition was made, adopted and implemented policies 
and procedures reasonably designed to prevent violations of the rule; 
and (ii) prior to or at the time the contribution which resulted in 
such prohibition was made, had no actual knowledge of the contribution; 
and (iii) after learning of the contribution: (A) Has taken all 
available steps to cause the contributor involved in making the 
contribution which resulted in such prohibition to obtain a return of 
the contribution; and (B) has taken such other remedial or preventive 
measures as may be appropriate under the circumstances;
    (3) Whether, at the time of the contribution, the contributor was a 
covered associate or otherwise an employee of the investment adviser, 
or was seeking such employment;
    (4) The timing and amount of the contribution which resulted in the 
prohibition;
    (5) The nature of the election (e.g., federal, state or local); and
    (6) The contributor's apparent intent or motive in making the 
contribution which resulted in the prohibition, as evidenced by the 
facts and circumstances surrounding such contribution.
    4. Applicant requests an order pursuant to section 206A and rule 
206(4)-5(e) thereunder, exempting it from the two-year prohibition on 
compensation imposed by rule 206(4)-5(a)(1) with respect to investment 
advisory services provided to the Clients within the two-year period 
following the Contribution.
    5. Applicant submits that the exemption is necessary and 
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. Applicant further submits that the other factors 
set forth in rule 206(4)-5(e) similarly weigh in favor of granting an 
exemption to the Applicant to avoid consequences disproportionate to 
the violation.
    6. Applicant states that each Client determined to invest with 
Applicant and established those advisory relationships on an arms' 
length basis free from any improper influence as a result of the 
Contribution. In support of this argument, Applicant notes that each 
Client's relationship with the Applicant pre-dates the Contribution and 
only one investment made by the Clients occurred after the 
contribution. Furthermore, the Official's influence on each Client is 
limited, as was the Contributor's contact with each Client's 
representatives. Applicant also argues that the interests of the 
Clients are best served by allowing the Applicant and its Clients to 
continue their relationship uninterrupted.
    7. Applicant notes that it adopted and implemented Pay-to-Play 
Policies and Procedures compliant with the rule's

[[Page 63255]]

requirements and it implemented compliance testing procedures prior to 
the date of the Contribution. Applicant further represents that at no 
time did any employees of Applicant other than the Contributor have any 
knowledge that the Contribution had been made prior to discovery by the 
Applicant in November 2011. After learning of the Contribution, 
Applicant and the Contributor obtained the Official's agreement to 
return the Contribution, which was subsequently returned, and the 
Applicant set up an escrow account for all fees charged to the Clients' 
capital accounts in the Fund for the two-year period beginning May 22, 
2011.
    8. Applicant states that the Contributor's apparent intent in 
making the Contribution was not to influence the selection or retention 
of Applicant. Applicant represents that the amount of the Contribution, 
profile of the candidate and characteristics of the campaign are 
consistent with the pattern of the Contributor's other substantial 
political donations. Applicant notes that the Contributor failed to 
appreciate that contributions to federal candidates who held state or 
local office could trigger the prohibition on compensation under Rule 
206(4)-5 or that such contributions were subject to the Applicant's 
Pay-to-Play Policies and Procedures. Applicant represents that the 
Contributor had no contact with any representative of the Clients (or 
their boards) outside of making limited substantive presentations to 
the Clients' representatives and consultants about the investment 
strategy he manages and that the Applicant took steps designed to limit 
such contact during the duration of the two-year time out on 
compensation.

    By the Commission.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-24771 Filed 10-22-13; 8:45 am]
BILLING CODE 8011-01-P