CLA Strategic Allocation Fund and CLA Asset Management, LLC; Notice of Application, 61857-61860 [2015-26029]
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Federal Register / Vol. 80, No. 198 / Wednesday, October 14, 2015 / Notices
determine whether the proposed rule
should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposal is
consistent with the Act. Comments may
be submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rulecomments@sec.gov. Please include File
No. SR–BATS–2015–77 on the subject
line.
Paper Comments
tkelley on DSK3SPTVN1PROD with NOTICES
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File No.
SR–BATS–2015–77. This file number
should be included on the subject line
if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing will also be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File No. SR–BATS–
2015–77 and should be submitted on or
before November 4, 2015.
18 17
CFR 200.30–3(a)(12).
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–26033 Filed 10–13–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76088; File No. SR–NYSE–
2015–35]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Designation of a Longer Period for
Commission Action on a Proposed
Rule Change, as Modified by
Amendment Nos. 1 and 2, To Amend
Certain Exchange Disciplinary Rules
To Facilitate the Reintegration of
Certain Regulatory Functions From
Financial Industry Regulatory
Authority, Inc.
On August 5, 2015, New York Stock
Exchange LLC (‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’) pursuant
to section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change amending certain of its
disciplinary rules to facilitate the
reintegration of certain regulatory
functions from Financial Industry
Regulatory Authority, Inc.. On August
14, 2015, the Exchange filed
Amendment No. 1 to the proposed rule
change, which amended and replaced
the proposed rule change in its entirety.
The proposed rule change, as modified
by Amendment No. 1, was published in
the Federal Register on August 24,
2015.3 On October 6, 2015, the
Exchange filed Amendment No. 2 to the
proposal. No comments were received
on the proposed rule change.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
1 15
U.S.C. 19s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 75721
(August 18, 2015), 80 FR 51334.
4 15 U.S.C. 78s(b)(2).
2 17
Frm 00068
Fmt 4703
proposed rule change should be
disapproved. The 45th day for this filing
is October 8, 2015. The Commission is
extending this 45-day time period. The
Commission finds it appropriate to
designate a longer period within which
to take action on the proposed rule
change so that it has sufficient time to
consider this proposed rule change, as
modified by Amendment Nos. 1 and 2.
Accordingly, the Commission,
pursuant to section 19(b)(2) of the Act,5
designates November 22, 2015, as the
date by which the Commission should
either approve or disapprove, or
institute proceedings to determine
whether to disapprove, the proposed
rule change (File No. SR–NYSE–2015–
35).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–26031 Filed 10–13–15; 8:45 am]
BILLING CODE 8011–01–P
October 7, 2015.
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61857
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SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31863; File No. 812–14533]
CLA Strategic Allocation Fund and
CLA Asset Management, LLC; Notice
of Application
October 7, 2015.
Securities and Exchange
Commission (‘‘Commission’’).
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.
AGENCY:
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: CLA Strategic Allocation
Fund (the ‘‘Initial Fund’’) and CLA
Asset Management, LLC (the
‘‘Adviser’’).
DATES: Filing Dates: The application
was filed on August 13, 2015, and
amended on September 29, 2015.
Hearing or Notification of Hearing: An
order granting the requested relief will
SUMMARY:
5 15
6 17
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U.S.C. 78s(b)(2).
CFR 200.30–3(a)(31).
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Federal Register / Vol. 80, No. 198 / Wednesday, October 14, 2015 / Notices
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 November 2, 2015, 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.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090;
Applicants: CLA Strategic Allocation
Fund and CLA Asset Management, LLC,
c/o JoAnn Strasser, Esq., Thompson
Hine LLP, 41 South High Street, Suite
1700, Columbus, OH 43215.
FOR FURTHER INFORMATION CONTACT:
Robert Shapiro, Senior Counsel, at (202)
551–7758, or Mary Kay Frech, 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.
tkelley on DSK3SPTVN1PROD with NOTICES
Applicants’ Representations
1. The Initial Fund is a Delaware
statutory trust that is registered under
the Act as a non-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. Applicants represent
that the Initial Fund pursues its
investment objective by investing
primarily in the income-producing
securities, including real estate
investment trusts and alternative
investment funds, as well as common
stocks, preferred stocks, and structured
notes, notes, bonds and asset-backed
securities.
2. The Adviser is a Delaware
corporation and is registered as an
investment adviser under the
Investment Advisers Act of 1940. The
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Adviser serves as investment adviser to
the Initial Fund.
3. 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 assetbased distribution fees and EWCs.
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’’) (each, a ‘‘Future
Fund’’ and together with the Initial
Fund, the ‘‘Funds’’).2
5. The Initial Fund is currently
making a 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’’ and
to continuously offer two additional
classes of shares (‘‘Class I Shares’’ and
‘‘Class C Shares’’). Because of the
different distribution fees, services and
any other class expenses that may be
attributable to the Class A, Class I and
Class C Shares, the net income
attributable to, and the dividends
payable on, each class of shares may
differ from each other.
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,
Class I 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;
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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(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 the 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
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
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 to the
NASD Sales Charge 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).
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Federal Register / Vol. 80, No. 198 / Wednesday, October 14, 2015 / Notices
for fund of funds, including registered
funds of hedge funds.6
10. Each Fund 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),
services 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 state 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 such 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
6 Fund of Funds Investments, Investment
Company Act Release 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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16:39 Oct 13, 2015
Jkt 238001
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 or regulation
under the Act, 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
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Fmt 4703
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61859
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 shall
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
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
section 6(c), discussed above, and
section 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
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Federal Register / Vol. 80, No. 198 / Wednesday, October 14, 2015 / Notices
tkelley on DSK3SPTVN1PROD with NOTICES
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
from shareholders who exit their
investments early. 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.
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
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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’ imposition 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 closedend management investment
companies.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–26029 Filed 10–13–15; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–76099; File No. SR–NSCC–
2015–004]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Notice of Filing of
Proposed Rule Change to Require
Real-Time Trade Submission and to
Prohibit Pre-Netting Practices through
NSCC’s Correspondent Clearing
Service
October 7, 2015.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (‘‘Act’’)
and Rule 19b–4 2 thereunder, notice is
hereby given that on September 30,
2015, National Securities Clearing
Corporation (‘‘NSCC’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00071
Fmt 4703
I. Clearing Agency’s Statement of the
Terms of Substance of the Proposed
Rule Change
The proposed rule change consists of
amendments to NSCC’s Rules &
Procedures (‘‘Rules’’) in order to require
that trade data submitted to NSCC
through its Correspondent Clearing
service, other than position movements
between NSCC Members that are
Affiliates and Client Custody
Movements, as described further below,
be submitted in real-time, and to
prohibit pre-netting and other practices
that prevent real-time trade
submission.4
II. Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
In its filing with the Commission,
NSCC included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. NSCC has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
(A) Clearing Agency’s Statement of the
Purpose of, and Statutory Basis for, the
Proposed Rule Change
BILLING CODE 8011–01–P
1 15
by NSCC. NSCC filed the proposed rule
change pursuant to Section 19(b)(2) 3 of
the Act. The Commission is publishing
this notice to solicit comments on the
proposed rule change from interested
persons.
Sfmt 4703
1. Purpose 5
Requiring trades to be submitted in
real-time facilitates efficient risk
management for both NSCC and its
Members, enables same-day
bookkeeping and reconciliation, and,
therefore, significantly reduces risk to
the industry. Receipt of trade data on a
real-time basis permits NSCC’s risk
management processes to monitor trades
closer to trade execution on an intra-day
basis, and to identify and risk manage
any issues relating to exposures earlier
in the day. Contract information is
currently reported out to submitting
firms by NSCC’s Universal Trade
Capture (‘‘UTC’’) system upon trade
comparison and validation, and receipt
of trade data in real-time enables NSCC
3 15
U.S.C. 78s(b)(2).
not defined herein are defined in the
Rules, available at https://dtcc.com/∼/media/Files/
Downloads/legal/rules/nscc_rules.pdf.
5 Pursuant to a telephone call with NSCC’s
internal counsel on October 1, 2015, staff in the
Office of Clearance and Settlement added the
heading. NSCC inadvertently omitted the heading.
4 Terms
E:\FR\FM\14OCN1.SGM
14OCN1
Agencies
[Federal Register Volume 80, Number 198 (Wednesday, October 14, 2015)]
[Notices]
[Pages 61857-61860]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-26029]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31863; File No. 812-14533]
CLA Strategic Allocation Fund and CLA Asset Management, LLC;
Notice of Application
October 7, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').
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: CLA Strategic Allocation Fund (the ``Initial Fund'')
and CLA Asset Management, LLC (the ``Adviser'').
DATES: Filing Dates: The application was filed on August 13, 2015, and
amended on September 29, 2015.
Hearing or Notification of Hearing: An order granting the requested
relief will
[[Page 61858]]
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
November 2, 2015, 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.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090; Applicants: CLA Strategic
Allocation Fund and CLA Asset Management, LLC, c/o JoAnn Strasser,
Esq., Thompson Hine LLP, 41 South High Street, Suite 1700, Columbus, OH
43215.
FOR FURTHER INFORMATION CONTACT: Robert Shapiro, Senior Counsel, at
(202) 551-7758, or Mary Kay Frech, 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 non-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. Applicants
represent that the Initial Fund pursues its investment objective by
investing primarily in the income-producing securities, including real
estate investment trusts and alternative investment funds, as well as
common stocks, preferred stocks, and structured notes, notes, bonds and
asset-backed securities.
2. The Adviser is a Delaware corporation and is registered as an
investment adviser under the Investment Advisers Act of 1940. The
Adviser serves as investment adviser to the Initial Fund.
3. 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 asset-based distribution fees and EWCs.
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'')
(each, a ``Future Fund'' and 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. 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'' and to continuously
offer two additional classes of shares (``Class I Shares'' and ``Class
C Shares''). Because of the different distribution fees, services and
any other class expenses that may be attributable to the Class A, Class
I and Class C Shares, the net income attributable to, and the dividends
payable on, each class of shares may differ from each other.
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, Class I 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
the 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
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
[[Page 61859]]
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 to the NASD Sales Charge 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 Release
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 Fund 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), services 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 state 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 such 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 or regulation under the Act, 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 shall 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 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 section 6(c), discussed above,
and section 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
[[Page 61860]]
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 from shareholders who
exit their investments early. 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.
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' imposition 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.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-26029 Filed 10-13-15; 8:45 am]
BILLING CODE 8011-01-P