USAA Asset Management Company, et al.; Notice of Application, 10834-10835 [2017-02973]

Download as PDF 10834 Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 32474; File No. 812–14693] USAA Asset Management Company, et al.; Notice of Application February 9, 2017. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice of an application for an order under section 12(d)(1)(J) of the Investment Company Act of 1940 (the ‘‘Act’’) for an exemption from sections 12(d)(1)(A), (B), and (C) of the Act and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (2) of the Act. The requested order would permit certain registered openend investment companies to acquire shares of certain registered open-end investment companies, registered closed-end investment companies, business development companies, as defined in section 2(a)(48) of the Act, and unit investment trusts (collectively, ‘‘Underlying Funds’’) that are within and outside the same group of investment companies as the acquiring investment companies, in excess of the limits in section 12(d)(1) of the Act. AGENCY: USAA Mutual Funds Trust (the ‘‘Mutual Funds Trust’’), a Delaware statutory trust that is registered under the Act as an open-end management investment company with multiple series; USAA ETF Trust (the ‘‘ETF Trust’’), a Delaware statutory trust that will be registered under the Act as an open-end management investment company with multiple series (together, the Mutual Funds Trust and the ETF Trust, the ‘‘Trusts,’’ and individually each a ‘‘Trust’’); USAA Asset Management Company (‘‘USAA AMC’’), a Delaware corporation registered as an investment adviser under the Investment Advisers Act of 1940; and USAA Investment Management Company, a Delaware corporation registered as a broker-dealer under the Securities Exchange Act of 1934 (‘‘Exchange Act’’). FILING DATES: The application was filed on August 18, 2016 and amended on January 27, 2017. 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 March 6, 2017 and mstockstill on DSK3G9T082PROD with NOTICES APPLICANTS: VerDate Sep<11>2014 18:44 Feb 14, 2017 Jkt 241001 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: 9800 Fredericksburg Road, San Antonio, Texas 78288–0227. FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202) 551– 6819 or David J. Marcinkus, 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 http:// www.sec.gov/search/search.htm, or by calling (202) 551–8090. Summary of the Application 1. Applicants request an order to permit (a) a Fund 1 (each a ‘‘Fund of Funds’’) to acquire shares of Underlying Funds 2 in excess of the limits in sections 12(d)(1)(A) and (C) of the Act and (b) the Underlying Funds that are registered open-end investment companies or series thereof, their principal underwriters and any broker or dealer registered under the Exchange Act to sell shares of the Underlying 1 Applicants request that the order apply to each existing and future series of the Trusts and to each existing and future registered open-end investment company or series thereof that is advised by USAA AMC or its successors or by any other investment adviser controlling, controlled by, or under common control with USAA AMC or its successors and is part of the same ‘‘group of investment companies’’ as the Trusts (each, a ‘‘Fund’’). For purposes of the requested order, ‘‘successor’’ is limited to an entity that results from a reorganization into another jurisdiction or a change in the type of business organization. For purposes of the requested order, unless otherwise noted in the application, the term ‘‘group of investment companies’’ means any two or more investment companies, that are either registered investment companies, including closed-end investment companies, or business development companies, that hold themselves out to investors as related companies for purposes of investment and investor services. 2 Certain of the Funds and Underlying Funds have obtained or may obtain exemptions from the Commission necessary to permit their shares to be listed and traded on a national securities exchange at negotiated prices and, accordingly, to operate as exchange-traded funds (‘‘ETFs’’). PO 00000 Frm 00101 Fmt 4703 Sfmt 4703 Fund to the Fund of Funds in excess of the limits in section 12(d)(1)(B) of the Act.3 Applicants also request an order of exemption under sections 6(c) and 17(b) of the Act from the prohibition on certain affiliated transactions in section 17(a) of the Act to the extent necessary to permit the Underlying Funds to sell their shares to, and redeem their shares from, the Funds of Funds.4 Applicants state that such transactions will be consistent with the policies of each Fund of Funds and each Underlying Fund and with the general purposes of the Act and will be based on the net asset values of the Underlying Funds. 2. Applicants agree that any order granting the requested relief will be subject to the terms and conditions stated in the application. Such terms and conditions are designed to, among other things, help prevent any potential (i) undue influence over an Underlying Fund that is not in the same ‘‘group of investment companies’’ as the Fund of Funds through control or voting power, or in connection with certain services, transactions, and underwritings, (ii) excessive layering of fees, and (iii) overly complex fund structures, which are the concerns underlying the limits in sections 12(d)(1)(A), (B), and (C) of the Act. 3. Section 12(d)(1)(J) 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 section 12(d)(1) if the exemption is consistent with the public interest and the protection of investors. Section 17(b) of the Act authorizes the Commission to grant an order permitting a transaction otherwise prohibited by section 17(a) if it finds that (a) the terms of the proposed transaction are fair and reasonable and do not involve overreaching on the part of any person concerned; (b) the proposed transaction is consistent with the policies of each registered 3 Applicants represent that a Funds of Funds will not invest in reliance on the order in business development companies or closed-end investment companies that are not listed and traded on a national securities exchange. 4 A Fund of Funds generally would purchase and sell shares of an Underlying Fund that operates as an ETF through secondary market transactions rather than through principal transactions with the Underlying Fund. Applicants nevertheless request relief from section 17(a) to permit a Fund of Funds to purchase or redeem shares from the ETF. A Fund of Funds will purchase and sell shares of an Underlying Fund that is a closed-end fund through secondary market transactions at market prices rather than through principal transactions with the closed-end fund. Accordingly, applicants are not requesting section 17(a) relief with respect to transactions in shares of closed-end funds (including business development companies). E:\FR\FM\15FEN1.SGM 15FEN1 Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices investment company involved; and (c) the proposed transaction is consistent with the general purposes of the Act. Section 6(c) of the Act permits the Commission to exempt any persons or transactions from any provision of the Act if 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. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–02973 Filed 2–14–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–80004; File No. SR–FINRA– 2016–047] Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Granting Approval of a Proposed Rule Change To Amend FINRA Rules To Conform to the Commission’s Proposed Amendment to Commission Rule 15c6–1(a) and the Industry-Led Initiative To Shorten the Standard Settlement Cycle for Most BrokerDealer Transactions From T+3 to T+2 February 9, 2017. mstockstill on DSK3G9T082PROD with NOTICES I. Introduction On December 14, 2016, Financial Industry Regulatory Authority, Inc. (‘‘FINRA’’) 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 to conform its rules to an amendment proposed by the Commission to Rule 15c6–1(a) under the Act to shorten the standard settlement cycle for most broker-dealer transactions from three business days after the trade date (‘‘T+3’’) to two business days after the trade date (‘‘T+2’’).3 The proposed rule change was published for comment in the Federal Register on December 28, 2016.4 The Commission received three comment 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 78962 (Sep. 28, 2016), 81 FR 69240 (Oct. 5, 2016) (Amendment to Securities Transaction Settlement Cycle) (File No. S7–22–16) (T+2 Proposing Release’’). 4 See Securities Exchange Act Release No. 79648 (Dec. 21, 2016), 81 FR 95705. 2 17 VerDate Sep<11>2014 18:44 Feb 14, 2017 Jkt 241001 letters on the proposed rule change.5 This order approves the proposed rule change. II. Description of the Proposal FINRA is proposing to amend FINRA Rules 2341 (Investment Company Securities), 11140 (Transactions in Securities ‘‘Ex-Dividend,’’ ‘‘Ex-Rights’’ or ‘‘Ex-Warrants’’), 11150 (Transactions ‘‘Ex-Interest’’ in Bonds Which Are Dealt in ‘‘Flat’’), 11210 (Sent by Each Party), 11320 (Dates of Delivery), 11620 (Computation of Interest), 11810 (Buy-In Procedures and Requirements), and 11860 (COD Orders), to conform to the Commission’s proposed amendment to Rule 15c6–1(a) under the Act that would shorten the standard settlement cycle for most broker-dealer transactions from T+3 to T+2. FINRA Rule 2341(m) requires members, including underwriters, that engage in direct retail transactions for investment company shares to transmit payments received from customers for the purchase of investment company shares to the payee by the end of the third business day after receipt of a customer’s order to purchase the shares, or by the end of one business day after receipt of a customer’s payment for the shares, whichever is later. FINRA is proposing to amend Rule 2341(m) to change the three-business day transmittal requirement to two business days, while retaining the one-business day alternative. FINRA Rule 11140(b)(1) concerns the determination of normal ex-dividend and ex-warrants dates for certain types of dividends and distributions. Currently, with respect to cash dividends or distributions, or stock dividends, and the issuance or distribution of warrants, which are less than 25% of the value of the subject security, if the definitive information is received sufficiently in advance of the record date, the date designated as the ‘‘ex-dividend date’’ is the second business day preceding the record date if the record date falls on a business day, or the third business day preceding the record date if the record date falls on a day designated by FINRA’s UPC Committee as a non-delivery day. Under the proposal, the ‘‘ex-dividend date’’ would be the first business day preceding the record date if the record 5 See Letters to Brent J. Fields, Secretary, Commission from Mike Nicholas, Chief Executive Officer, Bond Dealers of America (‘‘BDA’’), dated Jan. 18, 2017 (‘‘BDA Letter’’), Manisha Kimmel, Chief Regulatory Officer, Wealth Management, Thomson Reuters, dated Jan. 19, 2017, and Thomas F. Price, Managing Director, Operations, Technology & BCP, Securities Industry and Financial Markets Association (‘‘SIFMA’’), dated Jan. 19, 2017 (‘‘SIFMA Letter ’’). PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 10835 date falls on a business day, or the second business day preceding the record date if the record date falls on a day designated by FINRA’s UPC Committee as a non-delivery date. FINRA Rule 11150(a) concerns the determination of normal ex-interest dates for certain types of transactions. Currently, all transactions, except ‘‘cash’’ transactions, in bonds or similar evidences of indebtedness which are traded ‘‘flat’’ are ‘‘ex-interest’’ on the second business day preceding the record date if the record date falls on a business day, on the third business day preceding the record date if the record date falls on a day other than a business day, and on the third business day preceding the date on which an interest payment is to be made if no record date has been fixed. Under the proposal, these transactions would be ‘‘exinterest’’ on the first business day preceding the record date if the record date falls on a business day, on the second business day preceding the record date if the record date falls on a day other than a business day, and on the second business day preceding the date on which an interest payment is to be made if no record date has been fixed. FINRA Rules 11210(c) and (d) set forth ‘‘DK’’ procedures using ‘‘Don’t Know Notices’’ and other forms of notices, respectively.6 FINRA Rule 11210(c) currently provides that, when a party to a transaction sends a comparison or confirmation of a trade, but does not receive a comparison or confirmation or a signed DK from the contra-member by the close of four business days following the trade date of the transaction, the party may use the procedures set forth in the rule. FINRA proposes to shorten the ‘‘four business days’’ time period to one business day. FINRA Rule 11210(c)(2)(A) currently provides that a contra-member has four business days after the ‘‘Don’t Know Notice’’ is received to either confirm or DK the transaction in accordance with FINRA Rule 11210(c)(2)(B) or (C). FINRA proposes to shorten the ‘‘four business days’’ time period to two business days.7 FINRA Rule 11210(c)(3) currently provides that if the confirming member does not receive a response from the contra-member by the close of four business days after receipt by the confirming member the fourth copy of 6 FINRA Rule 11210 does not apply to transactions that clear through the National Securities Clearing Corporation or other clearing organizations registered under the Act. See FINRA Rule 11210(a)(4). 7 FINRA also proposes to make non-substantive, formatting changes to cross-references to reflect FINRA Manual style convention. E:\FR\FM\15FEN1.SGM 15FEN1

Agencies

[Federal Register Volume 82, Number 30 (Wednesday, February 15, 2017)]
[Notices]
[Pages 10834-10835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-02973]



[[Page 10834]]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32474; File No. 812-14693]


USAA Asset Management Company, et al.; Notice of Application

February 9, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 12(d)(1)(J) 
of the Investment Company Act of 1940 (the ``Act'') for an exemption 
from sections 12(d)(1)(A), (B), and (C) of the Act and under sections 
6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 
(2) of the Act. The requested order would permit certain registered 
open-end investment companies to acquire shares of certain registered 
open-end investment companies, registered closed-end investment 
companies, business development companies, as defined in section 
2(a)(48) of the Act, and unit investment trusts (collectively, 
``Underlying Funds'') that are within and outside the same group of 
investment companies as the acquiring investment companies, in excess 
of the limits in section 12(d)(1) of the Act.

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Applicants: USAA Mutual Funds Trust (the ``Mutual Funds Trust''), a 
Delaware statutory trust that is registered under the Act as an open-
end management investment company with multiple series; USAA ETF Trust 
(the ``ETF Trust''), a Delaware statutory trust that will be registered 
under the Act as an open-end management investment company with 
multiple series (together, the Mutual Funds Trust and the ETF Trust, 
the ``Trusts,'' and individually each a ``Trust''); USAA Asset 
Management Company (``USAA AMC''), a Delaware corporation registered as 
an investment adviser under the Investment Advisers Act of 1940; and 
USAA Investment Management Company, a Delaware corporation registered 
as a broker-dealer under the Securities Exchange Act of 1934 
(``Exchange Act'').

Filing Dates: The application was filed on August 18, 2016 and amended 
on January 27, 2017.

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 March 6, 2017 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: 9800 Fredericksburg 
Road, San Antonio, Texas 78288-0227.

For Further Information Contact: Jill Ehrlich, Senior Counsel, at (202) 
551-6819 or David J. Marcinkus, 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 http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Summary of the Application

    1. Applicants request an order to permit (a) a Fund \1\ (each a 
``Fund of Funds'') to acquire shares of Underlying Funds \2\ in excess 
of the limits in sections 12(d)(1)(A) and (C) of the Act and (b) the 
Underlying Funds that are registered open-end investment companies or 
series thereof, their principal underwriters and any broker or dealer 
registered under the Exchange Act to sell shares of the Underlying Fund 
to the Fund of Funds in excess of the limits in section 12(d)(1)(B) of 
the Act.\3\ Applicants also request an order of exemption under 
sections 6(c) and 17(b) of the Act from the prohibition on certain 
affiliated transactions in section 17(a) of the Act to the extent 
necessary to permit the Underlying Funds to sell their shares to, and 
redeem their shares from, the Funds of Funds.\4\ Applicants state that 
such transactions will be consistent with the policies of each Fund of 
Funds and each Underlying Fund and with the general purposes of the Act 
and will be based on the net asset values of the Underlying Funds.
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    \1\ Applicants request that the order apply to each existing and 
future series of the Trusts and to each existing and future 
registered open-end investment company or series thereof that is 
advised by USAA AMC or its successors or by any other investment 
adviser controlling, controlled by, or under common control with 
USAA AMC or its successors and is part of the same ``group of 
investment companies'' as the Trusts (each, a ``Fund''). For 
purposes of the requested order, ``successor'' is limited to an 
entity that results from a reorganization into another jurisdiction 
or a change in the type of business organization. For purposes of 
the requested order, unless otherwise noted in the application, the 
term ``group of investment companies'' means any two or more 
investment companies, that are either registered investment 
companies, including closed-end investment companies, or business 
development companies, that hold themselves out to investors as 
related companies for purposes of investment and investor services.
    \2\ Certain of the Funds and Underlying Funds have obtained or 
may obtain exemptions from the Commission necessary to permit their 
shares to be listed and traded on a national securities exchange at 
negotiated prices and, accordingly, to operate as exchange-traded 
funds (``ETFs'').
    \3\ Applicants represent that a Funds of Funds will not invest 
in reliance on the order in business development companies or 
closed-end investment companies that are not listed and traded on a 
national securities exchange.
    \4\ A Fund of Funds generally would purchase and sell shares of 
an Underlying Fund that operates as an ETF through secondary market 
transactions rather than through principal transactions with the 
Underlying Fund. Applicants nevertheless request relief from section 
17(a) to permit a Fund of Funds to purchase or redeem shares from 
the ETF. A Fund of Funds will purchase and sell shares of an 
Underlying Fund that is a closed-end fund through secondary market 
transactions at market prices rather than through principal 
transactions with the closed-end fund. Accordingly, applicants are 
not requesting section 17(a) relief with respect to transactions in 
shares of closed-end funds (including business development 
companies).
---------------------------------------------------------------------------

    2. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the application. 
Such terms and conditions are designed to, among other things, help 
prevent any potential (i) undue influence over an Underlying Fund that 
is not in the same ``group of investment companies'' as the Fund of 
Funds through control or voting power, or in connection with certain 
services, transactions, and underwritings, (ii) excessive layering of 
fees, and (iii) overly complex fund structures, which are the concerns 
underlying the limits in sections 12(d)(1)(A), (B), and (C) of the Act.
    3. Section 12(d)(1)(J) 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 section 
12(d)(1) if the exemption is consistent with the public interest and 
the protection of investors. Section 17(b) of the Act authorizes the 
Commission to grant an order permitting a transaction otherwise 
prohibited by section 17(a) if it finds that (a) the terms of the 
proposed transaction are fair and reasonable and do not involve 
overreaching on the part of any person concerned; (b) the proposed 
transaction is consistent with the policies of each registered

[[Page 10835]]

investment company involved; and (c) the proposed transaction is 
consistent with the general purposes of the Act. Section 6(c) of the 
Act permits the Commission to exempt any persons or transactions from 
any provision of the Act if 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.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02973 Filed 2-14-17; 8:45 am]
 BILLING CODE 8011-01-P