Crestview Advisors, L.L.C.; Notice of Application, 78112-78114 [2014-30277]
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78112
Federal Register / Vol. 79, No. 248 / Monday, December 29, 2014 / Notices
SEC orders a hearing. Interested persons
may request a hearing on any
application by writing to the SEC’s
Secretary at the address below and
serving the relevant applicant with a
copy of the request, personally or by
mail. Hearing requests should be
received by the SEC by 5:30 p.m. on
January 13, 2015, and should be
accompanied by proof of service on
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.
ADDRESSES: The Commission: Brent J.
Fields, Secretary, U.S. Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549–1090.
FOR FURTHER INFORMATION CONTACT:
Diane L. Titus at (202) 551–6810, SEC,
Division of Investment Management,
Chief Counsel’s Office, 100 F Street NE.,
Washington, DC 20549–8010.
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Morgan Creek Global Equity Long/Short
Fund [File No. 811–22460]
Summary: Applicant, a closed-end
investment company, seeks an order
declaring that it has ceased to be an
investment company. On June 30, 2012,
applicant made a liquidating
distribution to its shareholders, based
on net asset value. Applicant incurred
no expenses in connection with the
liquidation.
Filing Date: The application was filed
on December 10, 2014.
Applicant’s Address: 301 West Barbee
Chapel Rd., Suite 200, Chapel Hill, NC
27517.
WY Funds [File No. 811–21675]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On September 26,
2014, applicant made a liquidating
distribution to its shareholders, based
on net asset value. Expenses of $2,400
incurred in connection with the
liquidation were paid by Wertz York
Capital Management Group, LLC,
applicant’s investment adviser.
Filing Date: The application was filed
on December 5, 2014.
Applicant’s Address: 5502 N.
Nebraska Ave., Tampa, FL 33604.
Pax World Funds Trust II [File No. 811–
22187]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. Applicant
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transferred its assets to Pax World
Funds Series Trust I, and on March 31,
2014, made a distribution to its
shareholders based on net asset value.
Expenses of approximately $419,000
incurred in connection with the
reorganization were paid by the
acquiring fund and Pax World
Management LLC, applicant’s
investment adviser.
Filing Date: The application was filed
on December 2, 2014.
Applicant’s Address: 30 Penhallow
Street, Suite 400, Portsmouth, NH
03801.
COUNTRY Mutual Funds Trust [File
No. 811–10475]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. On October 31,
2013, applicant made a liquidating
distribution to its shareholders, based
on net asset value. Expenses of $57,097
incurred in connection with the
liquidation were paid by applicant and
COUNTRY Fund Management,
applicant’s investment adviser.
Filing Date: The application was filed
on November 25, 2014.
Applicant’s Address: 1705 North
Towanda Ave., Bloomington, IL 61702.
BlackRock Income Opportunity Trust,
Inc. [File No. 811–6443]
Summary: Applicant, a closed-end
investment company, seeks an order
declaring that it has ceased to be an
investment company. Applicant
transferred its assets to BlackRock Core
Bond Trust, and on November 10, 2014,
made a distribution to its shareholders
based on net asset value. Expenses of
approximately $409,641 incurred in
connection with the reorganization were
paid by applicant and BlackRock
Advisors, LLC, applicant’s investment
adviser.
Filing Date: The application was filed
on November 21, 2014.
Applicant’s Address: 100 Bellevue
Pkwy., Wilmington, DE 19809.
J.P. Morgan Series Trust II [File No.
811–8212]
Summary: Applicant seeks an order
declaring that it has ceased to be an
investment company. Applicant
transferred its assets to JPMorgan
Insurance Trust, and on April 24, 2009,
made distributions to its shareholders
based on net asset value. Expenses of
$676,471 incurred in connection with
the reorganization were paid by J.P.
Morgan Investment Management Inc.
and JPMorgan Funds Management, Inc.,
applicant’s investment adviser and
administrator, and JPMorgan Investment
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Fmt 4703
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Advisors Inc., investment adviser to the
acquiring fund.
Filing Dates: The application was
filed on July 3, 2012, and amended on
September 13, 2012 and November 7,
2014.
Applicant’s Address: 270 Park Ave.,
New York, NY 10017.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–30278 Filed 12–24–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IA–3987/803–00217]
Crestview Advisors, L.L.C.; Notice of
Application
December 19, 2014.
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).
AGENCY:
Applicant: Crestview Advisors, L.L.C.
(‘‘Applicant’’).
Relevant Advisers Act Sections:
Exemption requested under section
206A of the Advisers Act and rule
206(4)–5(e) 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)
exempting it from rule 206(4)–5(a)(1)
under the Advisers Act to permit
Applicant to receive compensation for
investment advisory services provided
to a government entity within the twoyear period following a contribution by
a covered associate of Applicant to an
official of the government entity.
Filing Dates: The application was
filed on November 14, 2012, and
amended and restated applications were
filed on March 26, 2014, July 11, 2014
and November 13, 2014.
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 January 13, 2015, and
should be accompanied by proof of
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Federal Register / Vol. 79, No. 248 / Monday, December 29, 2014 / Notices
tkelley on DSK3SPTVN1PROD with NOTICES
service on Applicant, in the form of an
affidavit or, for lawyers, a certificate of
service. Pursuant to rule 0–5 under the
Advisers 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 may request notification of a
hearing by writing to the Commission’s
Secretary.
ADDRESSES: Secretary, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549–1090.
Applicant, Crestview Advisors, L.L.C.,
667 Madison Avenue, 10th Floor, New
York, NY 10065.
FOR FURTHER INFORMATION CONTACT:
Aaron T. Gilbride, Senior Counsel, at
(202) 551–6906, or Melissa R. Harke,
Branch Chief, at (202) 551–6722
(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 either at https://www.sec.gov/
rules/iareleases.shtml or 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.
Applicant’s Representations
1. Applicant is a limited liability
company organized in Delaware and
registered with the Commission as an
investment adviser under the Advisers
Act. Applicant serves as investment
adviser to a private equity fund (the
‘‘Fund’’) that is a ‘‘covered investment
pool,’’ as defined in rule 206(4)-5 under
the Advisers Act. One of the investors
in the Fund is a public pension plan
identified as a government entity with
respect to the State of Texas (the
‘‘Investor’’). The investment decisions
for the Investor are overseen by a board
of trustees composed of nine members,
all of whom are appointed by the
Governor of Texas.
2. On August 29, 2011, Jeffrey A.
Marcus, a senior investment
professional of the Applicant (the
‘‘Contributor’’), made a $2,500 campaign
contribution (the ‘‘Contribution’’) to the
campaign of James Richard ‘‘Rick’’ Perry
(the ‘‘Official’’), the Governor of Texas.
The Contribution was given in
connection with a fundraiser held in
Colorado for the Official’s Presidential
campaign on or about August 25, 2011,
which the Contributor attended (the
‘‘Fundraiser’’). At the time of the
Contribution, the Official was a
candidate for the federal office of
President of the United States.
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3. Applicant represents that the
amount of the Contribution, profile of
the candidate, and characteristics of the
campaign fall generally within the
pattern of the Contributor’s other
political donations.
4. Applicant represents that the
Contributor has confirmed that he has
not, at any time, had any contact with
the Official regarding the Investor’s
investment activities with the
Applicant.
5. Applicant represents that since the
date of the Contribution through the
two-year period ended August 29, 2013,
the Contributor’s role with the Investor
was limited to making a presentation to
the Investor’s representatives regarding
the Applicant’s media and
communication portfolio companies.
Applicant represents that the
Contributor had no contact with any
representative of the Investor outside of
such presentation and no contact with
any member of the board of trustees
which oversees the investment
decisions of the Investor. Applicant
represents that since August 29, 2013,
the Contributor has had similarly
limited interaction with the Investor.
Applicant represents that the
Contributor was not involved in any
discussions with the Investor regarding
the Investor’s decision to invest in the
Fund.
6. Applicant represents that the
Investor made its first investment in the
Fund in December 2007, and made its
most recent investment in a successor
fund complex in November 2013 (with
an additional commitment in June
2014).
7. Applicant represents that the
Contributor did not solicit any other
persons to make contributions to the
Official’s campaign and did not arrange
any introductions to potential
supporters.
8. Applicant represents that the
Contribution was discovered by
Crestview’s Compliance Department
through the Contributor’s voluntary
disclosure in response to an annual
certification, and that the Contributor
obtained a full refund of the
Contribution within one week after the
Contribution was discovered. Applicant
established an escrow account for the
benefit of the Investor and deposited an
amount equal to the sum of carried
interest and management fees payable
for the two years from the date of the
Contribution.
9. Applicant represents that it has
taken steps designed to limit the
Contributor’s contact with
representatives of the Investor following
the Contribution for the duration of the
two-year period beginning August 29,
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78113
2011. Applicant represents that the
Contributor completed quarterly
certifications beginning the quarter
ended December 31, 2012 through the
quarter ended September 30, 2013 and
has kept a log of any interactions with
the investor.
10. Applicant represents that while it
is possible that the Contributor
mentioned the Fundraiser in passing to
a principal of the Applicant who also
has a home in Colorado, neither the
Contributor nor such principal recalls
any such conversation. Applicant
represents that such principal did not
attend the Fundraiser and did not make
any contribution to the Official.
Applicant represents that at no time did
any other of Applicant’s officers,
principals and employees have any
knowledge that the Contribution had
been made prior to its discovery by
Crestview’s Compliance Department in
January 2012.
11. Applicant represents that at all
relevant times it had compliance
procedures that have been more
restrictive than is required under rule
206(4)–5. Applicant represents that its
compliance procedures prohibit
contributions, with no exceptions for de
minimis contributions, to: (i) Politically
connected individuals or entities with
the intention of influencing such
individuals or entities for business
purposes; (ii) state, local or foreign
government entities, officials,
candidates, political parties or political
action committees; and (iii) any national
political candidates who hold a state or
local office. Applicant represents that its
compliance procedures also require preclearance of contributions to any
national political candidate, party or
action committee. Applicant represents
that its compliance procedures apply to
all of Applicant’s officers, principals
and employees and their covered family
members. Applicant represents that all
employees are required to certify their
compliance on a periodic basis.
Applicant represents that the
Contributor failed to appreciate that
contributions to federal candidates who
held state or local office would trigger
the prohibition on compensation under
rule 206(4)–5 and were prohibited by
the Applicant’s policies.
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
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29DEN1
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78114
Federal Register / Vol. 79, No. 248 / Monday, December 29, 2014 / Notices
adviser. The Investor 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
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19:09 Dec 24, 2014
Jkt 235001
evidenced by the facts and
circumstances surrounding such
contribution.
4. Applicant requests an order
pursuant to section 206A and rule
206(4)–5(e), exempting it from the twoyear prohibition on compensation
imposed by rule 206(4)–5(a)(1) with
respect to investment advisory services
provided to the Investor within the twoyear 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 Advisers 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 the
relationship with the Investor pre-dates
the Contribution and that the Investor
did not make an additional commitment
to the Fund subsequent to the
Contribution (although the Applicant
notes that the Investor made an
investment in a successor fund managed
by the Applicant 22 months following
the return of the Contribution).
Applicant states that the Contribution
was made three and a half years after
the Investor’s investment in the Fund
and at a time when the Investor was not
contemplating any investment-related
decisions with respect to the Applicant.
Applicant notes that it established and
maintains its relationships with the
Applicant on an arms’-length basis free
from any improper influence as a result
of the Contribution.
7. Applicant states that at all relevant
times it had policies which were fully
compliant with, and more rigorous than,
rule 206(4)–5’s requirements at the time
of the Contribution. Applicant further
states that at no time did Applicant or
any employees of Applicant, other than
the Contributor, have any knowledge
that the Contribution had been made
prior to its discovery by Crestview’s
Compliance Department in January
2012. After learning of the Contribution,
Applicant and the Contributor took all
available steps to obtain a return of the
Contribution, which was returned
within one week of discovery, and an
escrow account was set up for the
Investor and a sum equal to the carried
interest and all fees charged to the
Investor’s capital account in the Fund
since the date of the Contribution were
deposited by Applicant in the escrow
account for immediate return to the
Investor should an exemptive order not
be granted.
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Frm 00090
Fmt 4703
Sfmt 4703
8. Applicant states that the
Contributor’s apparent intent in making
the Contribution was not to influence
the selection or retention of the
Applicant. Applicant states that the
Contributor has a long-standing history
of supporting the Official. The amount
of the Contribution, profile of the
candidate, and characteristics of the
campaign fall generally within the
pattern of the Contributor’s other
political donations. Applicant further
states, as discussed above, that the
Contributor has confirmed that he has
not, at any time, had any contact with
the Official regarding the Investor’s
investment activities with the
Applicant, and apart from requesting in
January 2012 that his Contribution be
returned, the Contributor’s contact with
the Official concerning campaign
contributions was limited to the
fundraising event at which the
Contribution was made. Applicant
further states that since the date of the
Contribution, the Contributor’s role with
the Investor was limited to making a
presentation to the Investor’s
representatives regarding the
Applicant’s media and communication
portfolio companies.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–30277 Filed 12–24–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–73888; File No. SR–BATS–
2014–070]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Extend the Penny
Pilot Program
December 19, 2014.
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 December
17, 2014, BATS Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BATS’’) filed with the
Securities and Exchange Commission
(the ‘‘SEC’’ or ‘‘Commission’’) the
proposed rule change as described in
Items I and II 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. The
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
29DEN1
]]>Agencies
[Federal Register Volume 79, Number 248 (Monday, December 29, 2014)]
[Notices]
[Pages 78112-78114]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-30277]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IA-3987/803-00217]
Crestview Advisors, L.L.C.; Notice of Application
December 19, 2014.
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).
-----------------------------------------------------------------------
Applicant: Crestview Advisors, L.L.C. (``Applicant'').
Relevant Advisers Act Sections: Exemption requested under section
206A of the Advisers Act and rule 206(4)-5(e) 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) exempting it from rule 206(4)-5(a)(1) under the Advisers Act to
permit Applicant to receive compensation for investment advisory
services provided to a government entity within the two-year period
following a contribution by a covered associate of Applicant to an
official of the government entity.
Filing Dates: The application was filed on November 14, 2012, and
amended and restated applications were filed on March 26, 2014, July
11, 2014 and November 13, 2014.
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 January 13, 2015, and should be accompanied by proof of
[[Page 78113]]
service on Applicant, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to rule 0-5 under the Advisers 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 may request
notification of a hearing by writing to the Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street
NE., Washington, DC 20549-1090. Applicant, Crestview Advisors, L.L.C.,
667 Madison Avenue, 10th Floor, New York, NY 10065.
FOR FURTHER INFORMATION CONTACT: Aaron T. Gilbride, Senior Counsel, at
(202) 551-6906, or Melissa R. Harke, Branch Chief, at (202) 551-6722
(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 either at https://www.sec.gov/rules/iareleases.shtml or 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.
Applicant's Representations
1. Applicant is a limited liability company organized in Delaware
and registered with the Commission as an investment adviser under the
Advisers Act. Applicant serves as investment adviser to a private
equity fund (the ``Fund'') that is a ``covered investment pool,'' as
defined in rule 206(4)-5 under the Advisers Act. One of the investors
in the Fund is a public pension plan identified as a government entity
with respect to the State of Texas (the ``Investor''). The investment
decisions for the Investor are overseen by a board of trustees composed
of nine members, all of whom are appointed by the Governor of Texas.
2. On August 29, 2011, Jeffrey A. Marcus, a senior investment
professional of the Applicant (the ``Contributor''), made a $2,500
campaign contribution (the ``Contribution'') to the campaign of James
Richard ``Rick'' Perry (the ``Official''), the Governor of Texas. The
Contribution was given in connection with a fundraiser held in Colorado
for the Official's Presidential campaign on or about August 25, 2011,
which the Contributor attended (the ``Fundraiser''). At the time of the
Contribution, the Official was a candidate for the federal office of
President of the United States.
3. Applicant represents that the amount of the Contribution,
profile of the candidate, and characteristics of the campaign fall
generally within the pattern of the Contributor's other political
donations.
4. Applicant represents that the Contributor has confirmed that he
has not, at any time, had any contact with the Official regarding the
Investor's investment activities with the Applicant.
5. Applicant represents that since the date of the Contribution
through the two-year period ended August 29, 2013, the Contributor's
role with the Investor was limited to making a presentation to the
Investor's representatives regarding the Applicant's media and
communication portfolio companies. Applicant represents that the
Contributor had no contact with any representative of the Investor
outside of such presentation and no contact with any member of the
board of trustees which oversees the investment decisions of the
Investor. Applicant represents that since August 29, 2013, the
Contributor has had similarly limited interaction with the Investor.
Applicant represents that the Contributor was not involved in any
discussions with the Investor regarding the Investor's decision to
invest in the Fund.
6. Applicant represents that the Investor made its first investment
in the Fund in December 2007, and made its most recent investment in a
successor fund complex in November 2013 (with an additional commitment
in June 2014).
7. Applicant represents that the Contributor did not solicit any
other persons to make contributions to the Official's campaign and did
not arrange any introductions to potential supporters.
8. Applicant represents that the Contribution was discovered by
Crestview's Compliance Department through the Contributor's voluntary
disclosure in response to an annual certification, and that the
Contributor obtained a full refund of the Contribution within one week
after the Contribution was discovered. Applicant established an escrow
account for the benefit of the Investor and deposited an amount equal
to the sum of carried interest and management fees payable for the two
years from the date of the Contribution.
9. Applicant represents that it has taken steps designed to limit
the Contributor's contact with representatives of the Investor
following the Contribution for the duration of the two-year period
beginning August 29, 2011. Applicant represents that the Contributor
completed quarterly certifications beginning the quarter ended December
31, 2012 through the quarter ended September 30, 2013 and has kept a
log of any interactions with the investor.
10. Applicant represents that while it is possible that the
Contributor mentioned the Fundraiser in passing to a principal of the
Applicant who also has a home in Colorado, neither the Contributor nor
such principal recalls any such conversation. Applicant represents that
such principal did not attend the Fundraiser and did not make any
contribution to the Official. Applicant represents that at no time did
any other of Applicant's officers, principals and employees have any
knowledge that the Contribution had been made prior to its discovery by
Crestview's Compliance Department in January 2012.
11. Applicant represents that at all relevant times it had
compliance procedures that have been more restrictive than is required
under rule 206(4)-5. Applicant represents that its compliance
procedures prohibit contributions, with no exceptions for de minimis
contributions, to: (i) Politically connected individuals or entities
with the intention of influencing such individuals or entities for
business purposes; (ii) state, local or foreign government entities,
officials, candidates, political parties or political action
committees; and (iii) any national political candidates who hold a
state or local office. Applicant represents that its compliance
procedures also require pre-clearance of contributions to any national
political candidate, party or action committee. Applicant represents
that its compliance procedures apply to all of Applicant's officers,
principals and employees and their covered family members. Applicant
represents that all employees are required to certify their compliance
on a periodic basis. Applicant represents that the Contributor failed
to appreciate that contributions to federal candidates who held state
or local office would trigger the prohibition on compensation under
rule 206(4)-5 and were prohibited by the Applicant's policies.
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
[[Page 78114]]
adviser. The Investor 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), 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 Investor 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 Advisers 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 the relationship with the Investor pre-
dates the Contribution and that the Investor did not make an additional
commitment to the Fund subsequent to the Contribution (although the
Applicant notes that the Investor made an investment in a successor
fund managed by the Applicant 22 months following the return of the
Contribution). Applicant states that the Contribution was made three
and a half years after the Investor's investment in the Fund and at a
time when the Investor was not contemplating any investment-related
decisions with respect to the Applicant. Applicant notes that it
established and maintains its relationships with the Applicant on an
arms'-length basis free from any improper influence as a result of the
Contribution.
7. Applicant states that at all relevant times it had policies
which were fully compliant with, and more rigorous than, rule 206(4)-
5's requirements at the time of the Contribution. Applicant further
states that at no time did Applicant or any employees of Applicant,
other than the Contributor, have any knowledge that the Contribution
had been made prior to its discovery by Crestview's Compliance
Department in January 2012. After learning of the Contribution,
Applicant and the Contributor took all available steps to obtain a
return of the Contribution, which was returned within one week of
discovery, and an escrow account was set up for the Investor and a sum
equal to the carried interest and all fees charged to the Investor's
capital account in the Fund since the date of the Contribution were
deposited by Applicant in the escrow account for immediate return to
the Investor should an exemptive order not be granted.
8. Applicant states that the Contributor's apparent intent in
making the Contribution was not to influence the selection or retention
of the Applicant. Applicant states that the Contributor has a long-
standing history of supporting the Official. The amount of the
Contribution, profile of the candidate, and characteristics of the
campaign fall generally within the pattern of the Contributor's other
political donations. Applicant further states, as discussed above, that
the Contributor has confirmed that he has not, at any time, had any
contact with the Official regarding the Investor's investment
activities with the Applicant, and apart from requesting in January
2012 that his Contribution be returned, the Contributor's contact with
the Official concerning campaign contributions was limited to the
fundraising event at which the Contribution was made. Applicant further
states that since the date of the Contribution, the Contributor's role
with the Investor was limited to making a presentation to the
Investor's representatives regarding the Applicant's media and
communication portfolio companies.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-30277 Filed 12-24-14; 8:45 am]
BILLING CODE 8011-01-P
