Alternative Strategies Fund and Ladenburg Thalmann Asset Management, Inc.; Notice of Application, 72715-72718 [2014-28648]

Download as PDF Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices The public is invited to submit material in writing to the Chair on Federal Wage System pay matters felt to be deserving of the Committee’s attention. Additional information on these meetings may be obtained by contacting the Committee at U.S. Office of Personnel Management, Federal Prevailing Rate Advisory Committee, Room 5H27, 1900 E Street NW., Washington, DC 20415, (202) 606–2858. U.S. Office of Personnel Management. Sheldon Friedman, Chairman, Federal Prevailing Rate Advisory Committee. [FR Doc. 2014–28616 Filed 12–5–14; 8:45 am] 20415. Phone (202) 606–0020 FAX (202) 606–2183 or email at veronica.villalobos@opm.gov. U.S. Office of Personnel Management. Katherine L. Archuleta, Director. [FR Doc. 2014–28615 Filed 12–5–14; 8:45 am] BILLING CODE 6820–B2–P [Docket Nos. MC2015–14 and CP2015–17; Order No. 2268] New Postal Product ACTION: Hispanic Council on Federal Employment; Meeting U.S. Office of Personnel Management. ACTION: Updated time of December 19, 2014 council meeting. AGENCY: The Hispanic Council on Federal Employment (Council) is updating the time of the Friday, December 19, 2014 meeting and will hold the next Council meeting at the location shown below at the following time: 2:00 to 4:00 p.m. The Council is an advisory committee composed of representatives from Hispanic organizations and senior government officials. Along with its other responsibilities, the Council shall advise the Director of the Office of Personnel Management on matters involving the recruitment, hiring, and advancement of Hispanics in the Federal workforce. The Council is cochaired by the Director of the Office of Personnel Management and the Chair of the National Hispanic Leadership Agenda (NHLA). The meeting is open to the public. Please contact the Office of Personnel Management at the address shown below if you wish to present material to the Council at any of the meetings. The manner and time prescribed for presentations may be limited, depending upon the number of parties that express interest in presenting information. Location: U.S. Office of Personnel Management, 1900 E St. NW., Washington, DC 20415. FOR FURTHER INFORMATION CONTACT: Veronica E. Villalobos, Director for the Office of Diversity and Inclusion, Office of Personnel Management, 1900 E St. NW., Suite 5H35, Washington, DC mstockstill on DSK4VPTVN1PROD with NOTICES SUMMARY: VerDate Sep<11>2014 20:19 Dec 05, 2014 Postal Regulatory Commission. Notice. The Commission is noticing a recent Postal Service filing concerning the addition of Priority Mail Express Contract 21 negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps. DATES: Comments are due: December 10, 2014. ADDRESSES: Submit comments electronically via the Commission’s Filing Online system at https:// www.prc.gov. Those who cannot submit comments electronically should contact the person identified in the FOR FURTHER INFORMATION CONTACT section by telephone for advice on filing alternatives. FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 202–789–6820. SUPPLEMENTARY INFORMATION: SUMMARY: OFFICE OF PERSONNEL MANAGEMENT Jkt 235001 copy of the Governors’ Decision authorizing the product, proposed changes to the Mail Classification Schedule, a Statement of Supporting Justification, a certification of compliance with 39 U.S.C. 3633(a), and an application for non-public treatment of certain materials. It also filed supporting financial workpapers. II. Notice of Commission Action POSTAL REGULATORY COMMISSION AGENCY: BILLING CODE 6325–49–P 72715 Table of Contents I. Introduction II. Notice of Commission Action III. Ordering Paragraphs I. Introduction In accordance with 39 U.S.C. 3642 and 39 CFR 3020.30 et seq., the Postal Service filed a formal request and associated supporting information to add Priority Mail Express Contract 21 to the competitive product list.1 The Postal Service contemporaneously filed a redacted contract related to the proposed new product under 39 U.S.C. 3632(b)(3) and 39 CFR 3015.5. Id. Attachment B. To support its Request, the Postal Service filed a copy of the contract, a 1 Request of the United States Postal Service to Add Priority Mail Express Contract 21 to Competitive Product List and Notice of Filing (Under Seal) of Unredacted Governors’ Decision, Contract, and Supporting Data, December 2, 2014 (Request). PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 The Commission establishes Docket Nos. MC2015–14 and CP2015–17 to consider the Request pertaining to the proposed Priority Mail Express Contract 21 product and the related contract, respectively. The Commission invites comments on whether the Postal Service’s filings in the captioned dockets are consistent with the policies of 39 U.S.C. 3632, 3633, or 3642, 39 CFR part 3015, and 39 CFR part 3020, subpart B. Comments are due no later than December 10, 2014. The public portions of these filings can be accessed via the Commission’s Web site (https://www.prc.gov). The Commission appoints Pamela A. Thompson to serve as Public Representative in these dockets. III. Ordering Paragraphs It is ordered: 1. The Commission establishes Docket Nos. MC2015–14 and CP2015–17 to consider the matters raised in each docket. 2. Pursuant to 39 U.S.C. 505, Pamela A. Thompson is appointed to serve as an officer of the Commission to represent the interests of the general public in these proceedings (Public Representative). 3. Comments are due no later than December 10, 2014. 4. The Secretary shall arrange for publication of this order in the Federal Register. By the Commission. Shoshana M. Grove, Secretary. [FR Doc. 2014–28675 Filed 12–5–14; 8:45 am] BILLING CODE 7710–FW–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 31360; File No. 812–14328] Alternative Strategies Fund and Ladenburg Thalmann Asset Management, Inc.; Notice of Application December 1, 2014. Securities and Exchange Commission (‘‘Commission’’). AGENCY: E:\FR\FM\08DEN1.SGM 08DEN1 72716 Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices Notice of an application under section 6(c) of the Investment Company Act of 1940 (the ‘‘Act’’) for an exemption from sections 18(c) and 18(i) of the Act, under sections 6(c) and 23(c)(3) of the Act for an exemption from rule 23c–3 under the Act, and for an order pursuant to section 17(d) of the Act and rule 17d–1 under the Act. ACTION: Summary of Application: Applicants request an order to permit certain registered closed-end management investment companies to issue multiple classes of shares and to impose asset-based distribution fees and early withdrawal charges (‘‘EWCs’’). APPLICANTS: Alternative Strategies Fund (‘‘Initial Fund’’) and Ladenburg Thalmann Asset Management, Inc. (‘‘Adviser’’). FILING DATES: The application was filed on July 2, 2014, and amended on September 19, 2014 and November 25, 2014. HEARING OR NOTIFICATION OF HEARING: An order granting the requested relief 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 23, 2014 and should be accompanied by proof of service on the applicants, in the form of an affidavit, or, for lawyers, a certificate of service. Pursuant to rule 0–5 under the Act, hearing requests should state the nature of the writer’s interest, any facts bearing upon the desirability of a hearing on the matter, 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. 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, 570 Lexington Avenue, 11th Floor, New York, NY 10022. FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel, at (202) 551–6812 or David P. Bartels, Branch Chief, at (202) 551–6821 (Division of Investment Management, Chief Counsel’s Office). 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:// mstockstill on DSK4VPTVN1PROD with NOTICES SUMMARY: VerDate Sep<11>2014 20:19 Dec 05, 2014 Jkt 235001 www.sec.gov/search/search.htm or by calling (202) 551–8090. Applicants’ Representations 1. The Initial Fund is a Delaware statutory trust that is registered under the Act as a diversified, closed-end management investment company. The Initial Fund’s primary investment objective is to seek attractive riskadjusted returns with low to moderate volatility and low correlation to the broader markets, through a concentrated multi-strategy alternative investment approach with an emphasis on income generation. The Initial Fund pursues its investment objectives by investing primarily in private and publicly traded alternative investment funds and real estate investment trusts. The Initial Fund will limit its total investments in private pooled vehicles to 35% or less of its total assets, including no more than 15% in hedge funds. 2. The Adviser is a New York corporation and is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. The Adviser serves as investment adviser to the Initial Fund. The Adviser is responsible for the overall management of the Initial Fund’s business affairs and selecting the Initial Fund’s investments according to the Initial Fund’s investment objectives, policies, and restrictions. 3. The Applicants seek an order to permit the Initial Fund to issue multiple classes of shares, each having its own fee and expense structure, and to impose EWCs and asset-based distribution fees with respect to a certain class. 4. Applicants request that the order also apply to any continuously-offered registered closed-end management investment company that has been previously organized or that may be organized in the future for which the Adviser or any entity controlling, controlled by, or under common control with the Adviser, or any successor in interest to any such entity,1 acts as investment adviser and which operates as an interval fund pursuant to rule 23c–3 under the Act or provides periodic liquidity with respect to its shares pursuant to rule 13e–4 under the Securities Exchange Act of 1934 (‘‘Exchange Act’’) (together with the Initial Fund, the ‘‘Funds’’).2 1 A successor in interest is limited to an entity that results from a reorganization into another jurisdiction or a change in the type of business organization. 2 Any Fund relying on this relief in the future will do so in a manner consistent with the terms and conditions of the application. Applicants represent PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 5. The Initial Fund is currently making a continuous public offering of its common shares following the effectiveness of its registration statement. The Initial Fund anticipates that it will continue its continuous public offering of its common shares. Applicants state that additional offerings by any Fund relying on the order may be on a private placement or public offering basis. Shares of the Funds will not be listed on any securities exchange, nor quoted on any quotation medium. The Funds do not expect there to be a secondary trading market for their shares. 6. If the requested relief is granted, the Initial Fund intends to redesignate its common shares as ‘‘Class A Shares.’’ Additionally, if the requested relief is granted, the Initial Fund intends to continuously offer an additional class of shares (‘‘Class C Shares’’), with such class having its own fee and expense structure. Applicants state that Class A Shares will be subject to a front-end sales charge, with breakpoints generally based on the size of the investment, but no distribution fees or EWCs. Class C Shares will be subject to a deferred sales charge (load), as well as a distribution and service fee, an EWC, and other expenses. 7. Applicants state that, from time to time, the Initial Fund may create additional classes of shares, the terms of which may differ from the Class A and Class C Shares in the following respects: (i) The amount of fees permitted by different distribution plans or different service fee arrangements; (ii) voting rights with respect to a distribution plan of a class; (iii) different class designations; (iv) the impact of any class expenses directly attributable to a particular class of shares allocated on a class basis as described in this application; (v) any differences in dividends and net asset value resulting from differences in fees under a distribution plan or in class expenses; (vi) any EWC or other sales load structure; and (vii) exchange or conversion privileges of the classes as permitted under the Act. 8. Applicants state that the Initial Fund has adopted a fundamental policy to repurchase a specified percentage of its shares (no less than 5%) at net asset value on a quarterly basis. Such repurchase offers will be conducted pursuant to rule 23c–3 under the Act. Each of the other Funds will likewise adopt fundamental investment policies in compliance with rule 23c–3 and make quarterly repurchase offers to its that each entity presently intending to rely on the requested relief is listed as an applicant. E:\FR\FM\08DEN1.SGM 08DEN1 Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES shareholders or provide periodic liquidity with respect to its shares pursuant to rule 13e–4 under the Exchange Act.3 Any repurchase offers made by the Funds will be made to all holders of shares of each such Fund. 9. Applicants represent that any assetbased service and distribution fees for each class of shares will comply with the provisions of NASD Rule 2830(d) (‘‘NASD Sales Charge Rule’’).4 Applicants also represent that each Fund will disclose in its prospectus the fees, expenses and other characteristics of each class of shares offered for sale by the prospectus, as is required for open-end multiple class funds under Form N–1A. As is required for open-end funds, each Fund will disclose its expenses in shareholder reports, and disclose any arrangements that result in breakpoints in or elimination of sales loads in its prospectus.5 In addition, applicants will comply with applicable enhanced fee disclosure requirements for fund of funds, including registered funds of hedge funds.6 10. Each of the Funds will comply with any requirements that the Commission or FINRA may adopt regarding disclosure at the point of sale and in transaction confirmations about the costs and conflicts of interest arising out of the distribution of open-end investment company shares, and regarding prospectus disclosure of sales loads and revenue sharing arrangements, as if those requirements applied to the Fund. In addition, each Fund will contractually require that any distributor of the Fund’s shares comply with such requirements in connection with the distribution of such Fund’s shares. 11. Each Fund will allocate all expenses incurred by it among the 3 Applicants submit that rule 23c–3 and Regulation M under the Exchange Act permit an interval fund to make repurchase offers to repurchase its shares while engaging in a continuous offering of its shares pursuant to Rule 415 under the Securities Act of 1933. 4 Any reference to the NASD Sales Charge Rule includes any successor or replacement rule that may be adopted by the Financial Industry Regulatory Authority (‘‘FINRA’’). 5 See Shareholder Reports and Quarterly Portfolio Disclosure of Registered Management Investment Companies, Investment Company Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring open-end investment companies to disclose fund expenses in shareholder reports); and Disclosure of Breakpoint Discounts by Mutual Funds, Investment Company Act Release No. 26464 (June 7, 2004) (adopting release) (requiring open-end investment companies to provide prospectus disclosure of certain sales load information). 6 Fund of Funds Investments, Investment Company Act Rel. Nos. 26198 (Oct. 1 2003) (proposing release) and 27399 (Jun. 20, 2006) (adopting release). See also Rules 12d1–1, et seq. of the Act. VerDate Sep<11>2014 20:19 Dec 05, 2014 Jkt 235001 various classes of shares based on the net assets of the Fund attributable to each class, except that the net asset value and expenses of each class will reflect the expenses associated with the distribution plan of that class (if any), service fees attributable to that class (if any), including transfer agency fees, and any other incremental expenses of that class. Expenses of the Fund allocated to a particular class of shares will be borne on a pro rata basis by each outstanding share of that class. Applicants state that each Fund will comply with the provisions of rule 18f–3 under the Act as if it were an open-end investment company. 12. Applicants state that each Fund may impose an EWC on shares submitted for repurchase that have been held less than a specified period and may waive the EWC for certain categories of shareholders or transactions to be established from time to time. Applicants represent that each of the Funds will apply the EWC (and any waivers or scheduled variations of the EWC) uniformly to all shareholders in a given class and consistently with the requirements of rule 22d–1 under the Act as if the Funds were open-end investment companies. 13. Each Fund operating as an interval fund pursuant to rule 23c–3 under the Act may offer its shareholders an exchange feature under which the shareholders of the Fund may, in connection with the Fund’s periodic repurchase offers, exchange their shares of the Fund for shares of the same class of (i) registered open-end investment companies or (ii) other registered closed-end investment companies that comply with rule 23c–3 under the Act and continuously offer their shares at net asset value, that are in the Fund’s group of investment companies (collectively, ‘‘Other Funds’’). Shares of a Fund operating pursuant to rule 23c– 3 that are exchanged for shares of Other Funds will be included as part of the amount of the repurchase offer amount for such Fund as specified in rule 23c– 3 under the Act. Any exchange option will comply with rule 11a–3 under the Act, as if the Fund were an open-end investment company subject to rule 11a–3. In complying with rule 11a–3, each Fund will treat an EWC as if it were a contingent deferred sales load (‘‘CDSL’’). Applicants’ Legal Analysis Multiple Classes of Shares 1. Section 18(c) of the Act provides, in relevant part, that a closed-end investment company may not issue or sell any senior security if, immediately PO 00000 Frm 00097 Fmt 4703 Sfmt 4703 72717 thereafter, the company has outstanding more than one class of senior security. Applicants state that the creation of multiple classes of shares of the Funds may be prohibited by section 18(c), as a class may have priority over another class as to payment of dividends because shareholders of different classes would pay different fees and expenses. 2. Section 18(i) of the Act provides that each share of stock issued by a registered management investment company will be a voting stock and have equal voting rights with every other outstanding voting stock. Applicants state that multiple classes of shares of the Funds may violate section 18(i) of the Act because each class would be entitled to exclusive voting rights with respect to matters solely related to that class. 3. 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 provision of the Act, or from any rule thereunder, if and to the extent 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 request an exemption under section 6(c) from sections 18(c) and 18(i) to permit the Funds to issue multiple classes of shares. 4. Applicants submit that the proposed allocation of expenses and voting rights among multiple classes is equitable and will not discriminate against any group or class of shareholders. Applicants submit that the proposed arrangements would permit a Fund to facilitate the distribution of its shares and provide investors with a broader choice of shareholder services. Applicants assert that the proposed closed-end investment company multiple class structure does not raise the concerns underlying section 18 of the Act to any greater degree than open-end investment companies’ multiple class structures that are permitted by rule 18f–3 under the Act. Applicants state that each Fund will comply with the provisions of rule 18f–3 as if it were an open-end investment company. Early Withdrawal Charges 1. Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company will purchase securities of which it is the issuer, except: (a) On a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to E:\FR\FM\08DEN1.SGM 08DEN1 mstockstill on DSK4VPTVN1PROD with NOTICES 72718 Federal Register / Vol. 79, No. 235 / Monday, December 8, 2014 / Notices all holders of securities of the class to be purchased; or (c) under other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors. 2. Rule 23c–3 under the Act permits a registered closed-end investment company (an ‘‘interval fund’’) to make repurchase offers of between five and twenty-five percent of its outstanding shares at net asset value at periodic intervals pursuant to a fundamental policy of the interval fund. Rule 23c– 3(b)(1) under the Act provides that an interval fund may deduct from repurchase proceeds only a repurchase fee, not to exceed two percent of the proceeds, that is paid to the interval fund and is reasonably intended to compensate the fund for expenses directly related to the repurchase. 3. Section 23(c)(3) provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased. 4. Applicants request relief under sections 6(c), discussed above, and 23(c)(3) from rule 23c–3 to the extent necessary for the Funds to impose EWCs on shares of the Funds submitted for repurchase that have been held for less than a specified period. 5. Applicants state that the EWCs they intend to impose are functionally similar to CDSLs imposed by open-end investment companies under rule 6c–10 under the Act. Rule 6c–10 permits openend investment companies to impose CDSLs, subject to certain conditions. Applicants note that rule 6c–10 is grounded in policy considerations supporting the employment of CDSLs where there are adequate safeguards for the investor and state that the same policy considerations support imposition of EWCs in the interval fund context. In addition, applicants state that EWCs may be necessary for the distributor to recover distribution costs. Applicants represent that any EWC imposed by the Funds will comply with rule 6c–10 under the Act as if the rule were applicable to closed-end investment companies. The Funds will disclose EWCs in accordance with the requirements of Form N–1A concerning CDSLs. Applicants further state that the Funds will apply the EWC (and any waivers or scheduled variations of the EWC) uniformly to all shareholders in a given class and consistently with the requirements of rule 22d–1 under the Act. VerDate Sep<11>2014 20:19 Dec 05, 2014 Jkt 235001 Asset-Based Distribution Fees 1. Section 17(d) of the Act and rule 17d–1 under the Act prohibit an affiliated person of a registered investment company or an affiliated person of such person, acting as principal, from participating in or effecting any transaction in connection with any joint enterprise or joint arrangement in which the investment company participates unless the Commission issues an order permitting the transaction. In reviewing applications submitted under section 17(d) and rule 17d–1, the Commission considers whether the participation of the investment company in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants. 2. Rule 17d–3 under the Act provides an exemption from section 17(d) and rule 17d–1 to permit open-end investment companies to enter into distribution arrangements pursuant to rule 12b–1 under the Act. Applicants request an order under section 17(d) and rule 17d–1 under the Act to the extent necessary to permit the Fund to impose asset-based distribution fees. Applicants have agreed to comply with rules 12b– 1 and 17d–3 as if those rules applied to closed-end investment companies, which they believe will resolve any concerns that might arise in connection with a Fund financing the distribution of its shares through asset-based distribution fees. For the reasons stated above, applicants submit that the exemptions requested under section 6(c) are necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants further submit that the relief requested pursuant to section 23(c)(3) will be consistent with the protection of investors and will insure that applicants do not unfairly discriminate against any holders of the class of securities to be purchased. Finally, applicants state that the Funds’ institution of asset-based distribution fees is consistent with the provisions, policies and purposes of the Act and does not involve participation on a basis different from or less advantageous than that of other participants. Applicants’ Condition Applicants agree that any order granting the requested relief will be subject to the following condition: PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 Each Fund relying on the order will comply with the provisions of rules 6c– 10, 12b–1, 17d–3, 18f–3, 22d–1, and, where applicable, 11a–3 under the Act, as amended from time to time, as if those rules applied to closed-end management investment companies, and will comply with the NASD Sales Charge Rule, as amended from time to time, as if that rule applied to all closedend management investment companies. For the Commission, by the Division of Investment Management, under delegated authority. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–28648 Filed 12–5–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 31363; 812–14264] Elkhorn Investments, LLC and Elkhorn ETF Trust; Notice of Application December 2, 2014. Securities and Exchange Commission (‘‘Commission’’). AGENCY: Notice of an application for an order under section 12(d)(1)(J) of the Investment Company Act of 1940 (the ‘‘Act’’) for exemptions from sections 12(d)(1)(A), (B), and (C) of the Act, under sections 6(c) and 17(b) of the Act for an exemption from section 17(a) of the Act, and under section 6(c) of the Act for an exemption from rule 12d1– 2(a) under the Act. ACTION: SUMMARY OF THE APPLICATION: Applicants request an order that would (a) permit certain registered open-end management investment companies that operate as ‘‘funds of funds’’ to acquire shares of certain registered open-end management investment companies, registered closed-end management investment companies, business development companies, as defined by section 2(a)(48) of the Act (‘‘business development companies’’), and registered unit investment trusts that are within or outside the same group of investment companies as the acquiring investment companies and (b) permit certain registered open-end management investment companies relying on rule 12d1–2 under the Act to invest in certain financial instruments. Elkhorn Investments, LLC (‘‘Adviser’’) and Elkhorn ETF Trust (‘‘Trust’’). APPLICANTS: E:\FR\FM\08DEN1.SGM 08DEN1

Agencies

[Federal Register Volume 79, Number 235 (Monday, December 8, 2014)]
[Proposed Rules]
[Pages 72715-72718]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-28648]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31360; File No. 812-14328]


Alternative Strategies Fund and Ladenburg Thalmann Asset 
Management, Inc.; Notice of Application

December 1, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').

[[Page 72716]]


ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from sections 18(c) 
and 18(i) of the Act, under sections 6(c) and 23(c)(3) of the Act for 
an exemption from rule 23c-3 under the Act, and for an order pursuant 
to section 17(d) of the Act and rule 17d-1 under the Act.

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SUMMARY: Summary of Application: Applicants request an order to permit 
certain registered closed-end management investment companies to issue 
multiple classes of shares and to impose asset-based distribution fees 
and early withdrawal charges (``EWCs'').

Applicants:  Alternative Strategies Fund (``Initial Fund'') and 
Ladenburg Thalmann Asset Management, Inc. (``Adviser'').

Filing Dates:  The application was filed on July 2, 2014, and amended 
on September 19, 2014 and November 25, 2014.

Hearing or Notification of Hearing:  An order granting the requested 
relief 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 23, 2014 and should be accompanied by proof of 
service on the applicants, in the form of an affidavit, or, for 
lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, 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. 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, 570 Lexington 
Avenue, 11th Floor, New York, NY 10022.

FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel, 
at (202) 551-6812 or David P. Bartels, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

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/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. The Initial Fund is a Delaware statutory trust that is 
registered under the Act as a diversified, closed-end management 
investment company. The Initial Fund's primary investment objective is 
to seek attractive risk-adjusted returns with low to moderate 
volatility and low correlation to the broader markets, through a 
concentrated multi-strategy alternative investment approach with an 
emphasis on income generation. The Initial Fund pursues its investment 
objectives by investing primarily in private and publicly traded 
alternative investment funds and real estate investment trusts. The 
Initial Fund will limit its total investments in private pooled 
vehicles to 35% or less of its total assets, including no more than 15% 
in hedge funds.
    2. The Adviser is a New York corporation and is registered as an 
investment adviser under the Investment Advisers Act of 1940, as 
amended. The Adviser serves as investment adviser to the Initial Fund. 
The Adviser is responsible for the overall management of the Initial 
Fund's business affairs and selecting the Initial Fund's investments 
according to the Initial Fund's investment objectives, policies, and 
restrictions.
    3. The Applicants seek an order to permit the Initial Fund to issue 
multiple classes of shares, each having its own fee and expense 
structure, and to impose EWCs and asset-based distribution fees with 
respect to a certain class.
    4. Applicants request that the order also apply to any 
continuously-offered registered closed-end management investment 
company that has been previously organized or that may be organized in 
the future for which the Adviser or any entity controlling, controlled 
by, or under common control with the Adviser, or any successor in 
interest to any such entity,\1\ acts as investment adviser and which 
operates as an interval fund pursuant to rule 23c-3 under the Act or 
provides periodic liquidity with respect to its shares pursuant to rule 
13e-4 under the Securities Exchange Act of 1934 (``Exchange Act'') 
(together with the Initial Fund, the ``Funds'').\2\
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    \1\ A successor in interest is limited to an entity that results 
from a reorganization into another jurisdiction or a change in the 
type of business organization.
    \2\ Any Fund relying on this relief in the future will do so in 
a manner consistent with the terms and conditions of the 
application. Applicants represent that each entity presently 
intending to rely on the requested relief is listed as an applicant.
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    5. The Initial Fund is currently making a continuous public 
offering of its common shares following the effectiveness of its 
registration statement. The Initial Fund anticipates that it will 
continue its continuous public offering of its common shares. 
Applicants state that additional offerings by any Fund relying on the 
order may be on a private placement or public offering basis. Shares of 
the Funds will not be listed on any securities exchange, nor quoted on 
any quotation medium. The Funds do not expect there to be a secondary 
trading market for their shares.
    6. If the requested relief is granted, the Initial Fund intends to 
redesignate its common shares as ``Class A Shares.'' Additionally, if 
the requested relief is granted, the Initial Fund intends to 
continuously offer an additional class of shares (``Class C Shares''), 
with such class having its own fee and expense structure. Applicants 
state that Class A Shares will be subject to a front-end sales charge, 
with breakpoints generally based on the size of the investment, but no 
distribution fees or EWCs. Class C Shares will be subject to a deferred 
sales charge (load), as well as a distribution and service fee, an EWC, 
and other expenses.
    7. Applicants state that, from time to time, the Initial Fund may 
create additional classes of shares, the terms of which may differ from 
the Class A and Class C Shares in the following respects: (i) The 
amount of fees permitted by different distribution plans or different 
service fee arrangements; (ii) voting rights with respect to a 
distribution plan of a class; (iii) different class designations; (iv) 
the impact of any class expenses directly attributable to a particular 
class of shares allocated on a class basis as described in this 
application; (v) any differences in dividends and net asset value 
resulting from differences in fees under a distribution plan or in 
class expenses; (vi) any EWC or other sales load structure; and (vii) 
exchange or conversion privileges of the classes as permitted under the 
Act.
    8. Applicants state that the Initial Fund has adopted a fundamental 
policy to repurchase a specified percentage of its shares (no less than 
5%) at net asset value on a quarterly basis. Such repurchase offers 
will be conducted pursuant to rule 23c-3 under the Act. Each of the 
other Funds will likewise adopt fundamental investment policies in 
compliance with rule 23c-3 and make quarterly repurchase offers to its

[[Page 72717]]

shareholders or provide periodic liquidity with respect to its shares 
pursuant to rule 13e-4 under the Exchange Act.\3\ Any repurchase offers 
made by the Funds will be made to all holders of shares of each such 
Fund.
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    \3\ Applicants submit that rule 23c-3 and Regulation M under the 
Exchange Act permit an interval fund to make repurchase offers to 
repurchase its shares while engaging in a continuous offering of its 
shares pursuant to Rule 415 under the Securities Act of 1933.
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    9. Applicants represent that any asset-based service and 
distribution fees for each class of shares will comply with the 
provisions of NASD Rule 2830(d) (``NASD Sales Charge Rule'').\4\ 
Applicants also represent that each Fund will disclose in its 
prospectus the fees, expenses and other characteristics of each class 
of shares offered for sale by the prospectus, as is required for open-
end multiple class funds under Form N-1A. As is required for open-end 
funds, each Fund will disclose its expenses in shareholder reports, and 
disclose any arrangements that result in breakpoints in or elimination 
of sales loads in its prospectus.\5\ In addition, applicants will 
comply with applicable enhanced fee disclosure requirements for fund of 
funds, including registered funds of hedge funds.\6\
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    \4\ Any reference to the NASD Sales Charge Rule includes any 
successor or replacement rule that may be adopted by the Financial 
Industry Regulatory Authority (``FINRA'').
    \5\ See Shareholder Reports and Quarterly Portfolio Disclosure 
of Registered Management Investment Companies, Investment Company 
Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring 
open-end investment companies to disclose fund expenses in 
shareholder reports); and Disclosure of Breakpoint Discounts by 
Mutual Funds, Investment Company Act Release No. 26464 (June 7, 
2004) (adopting release) (requiring open-end investment companies to 
provide prospectus disclosure of certain sales load information).
    \6\ Fund of Funds Investments, Investment Company Act Rel. Nos. 
26198 (Oct. 1 2003) (proposing release) and 27399 (Jun. 20, 2006) 
(adopting release). See also Rules 12d1-1, et seq. of the Act.
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    10. Each of the Funds will comply with any requirements that the 
Commission or FINRA may adopt regarding disclosure at the point of sale 
and in transaction confirmations about the costs and conflicts of 
interest arising out of the distribution of open-end investment company 
shares, and regarding prospectus disclosure of sales loads and revenue 
sharing arrangements, as if those requirements applied to the Fund. In 
addition, each Fund will contractually require that any distributor of 
the Fund's shares comply with such requirements in connection with the 
distribution of such Fund's shares.
    11. Each Fund will allocate all expenses incurred by it among the 
various classes of shares based on the net assets of the Fund 
attributable to each class, except that the net asset value and 
expenses of each class will reflect the expenses associated with the 
distribution plan of that class (if any), service fees attributable to 
that class (if any), including transfer agency fees, and any other 
incremental expenses of that class. Expenses of the Fund allocated to a 
particular class of shares will be borne on a pro rata basis by each 
outstanding share of that class. Applicants state that each Fund will 
comply with the provisions of rule 18f-3 under the Act as if it were an 
open-end investment company.
    12. Applicants state that each Fund may impose an EWC on shares 
submitted for repurchase that have been held less than a specified 
period and may waive the EWC for certain categories of shareholders or 
transactions to be established from time to time. Applicants represent 
that each of the Funds will apply the EWC (and any waivers or scheduled 
variations of the EWC) uniformly to all shareholders in a given class 
and consistently with the requirements of rule 22d-1 under the Act as 
if the Funds were open-end investment companies.
    13. Each Fund operating as an interval fund pursuant to rule 23c-3 
under the Act may offer its shareholders an exchange feature under 
which the shareholders of the Fund may, in connection with the Fund's 
periodic repurchase offers, exchange their shares of the Fund for 
shares of the same class of (i) registered open-end investment 
companies or (ii) other registered closed-end investment companies that 
comply with rule 23c-3 under the Act and continuously offer their 
shares at net asset value, that are in the Fund's group of investment 
companies (collectively, ``Other Funds''). Shares of a Fund operating 
pursuant to rule 23c-3 that are exchanged for shares of Other Funds 
will be included as part of the amount of the repurchase offer amount 
for such Fund as specified in rule 23c-3 under the Act. Any exchange 
option will comply with rule 11a-3 under the Act, as if the Fund were 
an open-end investment company subject to rule 11a-3. In complying with 
rule 11a-3, each Fund will treat an EWC as if it were a contingent 
deferred sales load (``CDSL'').

Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(c) of the Act provides, in relevant part, that a 
closed-end investment company may not issue or sell any senior security 
if, immediately thereafter, the company has outstanding more than one 
class of senior security. Applicants state that the creation of 
multiple classes of shares of the Funds may be prohibited by section 
18(c), as a class may have priority over another class as to payment of 
dividends because shareholders of different classes would pay different 
fees and expenses.
    2. Section 18(i) of the Act provides that each share of stock 
issued by a registered management investment company will be a voting 
stock and have equal voting rights with every other outstanding voting 
stock. Applicants state that multiple classes of shares of the Funds 
may violate section 18(i) of the Act because each class would be 
entitled to exclusive voting rights with respect to matters solely 
related to that class.
    3. 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 provision of the Act, or from any 
rule thereunder, if and to the extent 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 request an exemption under section 
6(c) from sections 18(c) and 18(i) to permit the Funds to issue 
multiple classes of shares.
    4. Applicants submit that the proposed allocation of expenses and 
voting rights among multiple classes is equitable and will not 
discriminate against any group or class of shareholders. Applicants 
submit that the proposed arrangements would permit a Fund to facilitate 
the distribution of its shares and provide investors with a broader 
choice of shareholder services. Applicants assert that the proposed 
closed-end investment company multiple class structure does not raise 
the concerns underlying section 18 of the Act to any greater degree 
than open-end investment companies' multiple class structures that are 
permitted by rule 18f-3 under the Act. Applicants state that each Fund 
will comply with the provisions of rule 18f-3 as if it were an open-end 
investment company.

Early Withdrawal Charges

    1. Section 23(c) of the Act provides, in relevant part, that no 
registered closed-end investment company will purchase securities of 
which it is the issuer, except: (a) On a securities exchange or other 
open market; (b) pursuant to tenders, after reasonable opportunity to 
submit tenders given to

[[Page 72718]]

all holders of securities of the class to be purchased; or (c) under 
other circumstances as the Commission may permit by rules and 
regulations or orders for the protection of investors.
    2. Rule 23c-3 under the Act permits a registered closed-end 
investment company (an ``interval fund'') to make repurchase offers of 
between five and twenty-five percent of its outstanding shares at net 
asset value at periodic intervals pursuant to a fundamental policy of 
the interval fund. Rule 23c-3(b)(1) under the Act provides that an 
interval fund may deduct from repurchase proceeds only a repurchase 
fee, not to exceed two percent of the proceeds, that is paid to the 
interval fund and is reasonably intended to compensate the fund for 
expenses directly related to the repurchase.
    3. Section 23(c)(3) provides that the Commission may issue an order 
that would permit a closed-end investment company to repurchase its 
shares in circumstances in which the repurchase is made in a manner or 
on a basis that does not unfairly discriminate against any holders of 
the class or classes of securities to be purchased.
    4. Applicants request relief under sections 6(c), discussed above, 
and 23(c)(3) from rule 23c-3 to the extent necessary for the Funds to 
impose EWCs on shares of the Funds submitted for repurchase that have 
been held for less than a specified period.
    5. Applicants state that the EWCs they intend to impose are 
functionally similar to CDSLs imposed by open-end investment companies 
under rule 6c-10 under the Act. Rule 6c-10 permits open-end investment 
companies to impose CDSLs, subject to certain conditions. Applicants 
note that rule 6c-10 is grounded in policy considerations supporting 
the employment of CDSLs where there are adequate safeguards for the 
investor and state that the same policy considerations support 
imposition of EWCs in the interval fund context. In addition, 
applicants state that EWCs may be necessary for the distributor to 
recover distribution costs. Applicants represent that any EWC imposed 
by the Funds will comply with rule 6c-10 under the Act as if the rule 
were applicable to closed-end investment companies. The Funds will 
disclose EWCs in accordance with the requirements of Form N-1A 
concerning CDSLs. Applicants further state that the Funds will apply 
the EWC (and any waivers or scheduled variations of the EWC) uniformly 
to all shareholders in a given class and consistently with the 
requirements of rule 22d-1 under the Act.

Asset-Based Distribution Fees

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company or an 
affiliated person of such person, acting as principal, from 
participating in or effecting any transaction in connection with any 
joint enterprise or joint arrangement in which the investment company 
participates unless the Commission issues an order permitting the 
transaction. In reviewing applications submitted under section 17(d) 
and rule 17d-1, the Commission considers whether the participation of 
the investment company in a joint enterprise or joint arrangement is 
consistent with the provisions, policies and purposes of the Act, and 
the extent to which the participation is on a basis different from or 
less advantageous than that of other participants.
    2. Rule 17d-3 under the Act provides an exemption from section 
17(d) and rule 17d-1 to permit open-end investment companies to enter 
into distribution arrangements pursuant to rule 12b-1 under the Act. 
Applicants request an order under section 17(d) and rule 17d-1 under 
the Act to the extent necessary to permit the Fund to impose asset-
based distribution fees. Applicants have agreed to comply with rules 
12b-1 and 17d-3 as if those rules applied to closed-end investment 
companies, which they believe will resolve any concerns that might 
arise in connection with a Fund financing the distribution of its 
shares through asset-based distribution fees.
    For the reasons stated above, applicants submit that the exemptions 
requested under section 6(c) are necessary and appropriate in the 
public interest and are consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the Act. 
Applicants further submit that the relief requested pursuant to section 
23(c)(3) will be consistent with the protection of investors and will 
insure that applicants do not unfairly discriminate against any holders 
of the class of securities to be purchased. Finally, applicants state 
that the Funds' institution of asset-based distribution fees is 
consistent with the provisions, policies and purposes of the Act and 
does not involve participation on a basis different from or less 
advantageous than that of other participants.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Each Fund relying on the order will comply with the provisions of 
rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3 
under the Act, as amended from time to time, as if those rules applied 
to closed-end management investment companies, and will comply with the 
NASD Sales Charge Rule, as amended from time to time, as if that rule 
applied to all closed-end management investment companies.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-28648 Filed 12-5-14; 8:45 am]
BILLING CODE 8011-01-P
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