Advanced Series Trust, et al.; Notice of Application, 13529-13531 [2017-04812]
Download as PDF
<![CDATA[
Federal Register / Vol. 82, No. 47 / Monday, March 13, 2017 / Notices
In particular, the proposed rule
change to amend the Board size range in
the Bylaws and Certificate of
Incorporation provides the Board with
flexibility. Additionally, the Exchange is
not proposing to amend any of the
compositional requirements currently
set forth in the Bylaws. The Exchange
therefore believes that the proposed
changes will provide greater flexibility
to the Exchange in populating a Board
of Directors that includes directors with
relevant and diverse expertise, while
continuing to ensure that the Board is of
adequate size and the existing
compositional requirements of the
Exchange are met, including the
provision relating to the fair
representation of members.
The Exchange believes eliminating
the Exchange-level Compensation
Committee allows the Exchange to
eliminate a board committee whose
responsibilities overlap with, and are
adequately handled by, the
corresponding committee of the
Exchange’s ultimate parent. This will
allow directors of the Exchange to focus
their attention on matters falling
directly within the purview of the
Exchange’s board, including its orderly
discharge of regulatory duties to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
mstockstill on DSK3G9T082PROD with NOTICES
The Exchange does not believe the
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act. The proposed rule
change relates to the corporate
governance of CBOE and not the
operations of the Exchange. This is not
a competitive filing and, therefore,
imposes no burden on competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
VerDate Sep<11>2014
17:49 Mar 10, 2017
Jkt 241001
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the self-regulatory organization
consents, the Commission will:
(A) By order approve or disapprove
such proposed rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change 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 rule-comments@
sec.gov. Please include File Number SR–
CBOE–2017–017 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549.
All submissions should refer to File
Number SR–CBOE–2017–017. 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 also will be available for
Frm 00102
Fmt 4703
Sfmt 4703
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 Number SR–CBOE–
2017–017 and should be submitted on
or before April 3, 2017.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–04815 Filed 3–10–17; 8:45 am]
BILLING CODE 8011–01–P
IV. Solicitation of Comments
PO 00000
13529
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32523; File No. 812–14608]
Advanced Series Trust, et al.; Notice of
Application
March 7, 2017.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order pursuant to: (a) Section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) granting an exemption from
sections 18(f) and 21(b) of the Act; (b)
section 12(d)(1)(J) of the Act granting an
exemption from section 12(d)(1) of the
Act; (c) sections 6(c) and 17(b) of the
Act granting an exemption from sections
17(a)(1), 17(a)(2) and 17(a)(3) of the Act;
and (d) section 17(d) of the Act and rule
17d–1 under the Act to permit certain
joint arrangements and transactions.
Applicants request an order that would
permit certain registered open-end
management investment companies to
participate in a joint lending and
borrowing facility.
AGENCY:
Advanced Series Trust,
Prudential’s Gibraltar Fund, Inc., The
Prudential Series Fund, Prudential
Global Total Return Fund, Inc.,
Prudential Government Money Market
Fund, Inc., The Prudential Investment
Portfolios, Inc., Prudential Investment
Portfolios 2, Prudential Investment
Portfolios 3, Prudential Investment
Portfolios 4, Prudential Investment
Portfolios 5, Prudential Investment
Portfolios 6, Prudential Investment
Portfolios 7, Prudential Investment
Portfolios 8, Prudential Investment
Portfolios 9, Prudential Investment
Portfolios, Inc. 10, Prudential
APPLICANTS:
12 17
E:\FR\FM\13MRN1.SGM
CFR 200.30–3(a)(12).
13MRN1
mstockstill on DSK3G9T082PROD with NOTICES
13530
Federal Register / Vol. 82, No. 47 / Monday, March 13, 2017 / Notices
Investment Portfolios 12, Prudential
Investment Portfolios, Inc. 14,
Prudential Investment Portfolios, Inc.
15, Prudential Investment Portfolios 16,
Prudential Investment Portfolios, Inc.
17, Prudential Investment Portfolios 18,
Prudential Jennison Blend Fund, Inc.,
Prudential Jennison Mid-Cap Growth
Fund, Inc., Prudential Jennison Natural
Resources Fund, Inc., Prudential
Jennison Small Company Fund, Inc.,
Prudential National Muni Fund, Inc.,
Prudential Sector Funds, Inc.,
Prudential Short-Term Corporate Bond
Fund, Inc., Prudential World Fund, Inc.,
The Prudential Variable Contract
Account–2, The Prudential Variable
Contract Account–10, The Prudential
Variable Contract Account–11, and The
Target Portfolio Trust, each registered
under the Act as an open-end
management investment company with
one or more series or portfolios, and
Prudential Investments LLC and AST
Investment Services, Inc., each
registered as an investment adviser
under the Investment Advisers Act of
1940.
FILING DATES: The application was filed
on February 3, 2016, and amended on
June 30, 2016, February 7, 2017 and
March 1, 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 April 3, 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, c/o Jonathan D. Shain, Esq.,
Prudential Investments LLC, 655 Broad
Street, 17th Floor, Newark, NJ 07102.
FOR FURTHER INFORMATION CONTACT:
Kaitlin C. Bottock, Senior Counsel, at
(202) 551–8658 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
VerDate Sep<11>2014
17:49 Mar 10, 2017
Jkt 241001
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Summary of the Application
1. Applicants request an order that
would permit the applicants to
participate in an interfund lending
facility where each Fund could lend
money directly to and borrow money
directly from other Funds to cover
unanticipated cash shortfalls, such as
unanticipated redemptions or trade
fails.1 The Funds will not borrow under
the facility for leverage purposes and
the loans’ duration will be no more than
7 days.2
2. Applicants anticipate that the
proposed facility would provide a
borrowing Fund with a source of
liquidity at a rate lower than the bank
borrowing rate at times when the cash
position of the Fund is insufficient to
meet temporary cash requirements. In
addition, Funds making short-term cash
loans directly to other Funds would
earn interest at a rate higher than they
otherwise could obtain from investing
their cash in repurchase agreements or
certain other short-term money market
instruments. Thus, applicants assert that
the facility would benefit both
borrowing and lending Funds.
3. Applicants agree that any order
granting the requested relief will be
subject to the terms and conditions
stated in the application. Among others,
an Adviser, through a designated
committee, would administer the
facility as a disinterested fiduciary as
part of its duties under the investment
management and administrative
agreements with the Funds and would
receive no additional fee as
compensation for its services in
connection with the administration of
the facility. The facility would be
subject to oversight and certain
approvals by the Funds’ Board,
1 Applicants request that the order apply to the
applicants and to any existing or future registered
open-end management investment company or
series thereof for which Prudential Investments
LLC, AST Investment Services, Inc., or any
successor thereto or an investment adviser
controlling, controlled by, or under common
control with Prudential Investments LLC, AST
Investment Services, Inc., or any successor thereto
serves as investment adviser (each a ‘‘Fund’’ and
collectively the ‘‘Funds’’ and each such investment
adviser an ‘‘Adviser’’). For purposes of the
requested order, ‘‘successor’’ is limited to any entity
that results from a reorganization into another
jurisdiction or a change in the type of a business
organization.
2 Any Fund, however, will be able to call a loan
on one business day’s notice.
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
including, among others, approval of the
interest rate formula and of the method
for allocating loans across Funds, as
well as review of the process in place to
evaluate the liquidity implications for
the Funds. A Fund’s aggregate
outstanding interfund loans will not
exceed 15% of its net assets, and the
Fund’s loans to any one Fund will not
exceed 5% of the lending Fund’s net
assets.3
4. Applicants assert that the facility
does not raise the concerns underlying
section 12(d)(1) of the Act given that the
Funds are part of the same group of
investment companies and there will be
no duplicative costs or fees to the
Funds.4 Applicants also assert that the
proposed transactions do not raise the
concerns underlying sections 17(a)(1),
17(a)(3), 17(d) and 21(b) of the Act as
the Funds would not engage in lending
transactions that unfairly benefit
insiders or are detrimental to the Funds.
Applicants state that the facility will
offer both reduced borrowing costs and
enhanced returns on loaned funds to all
participating Funds and each Fund
would have an equal opportunity to
borrow and lend on equal terms based
on an interest rate formula that is
objective and verifiable. With respect to
the relief from section 17(a)(2) of the
Act, applicants note that any collateral
pledged to secure an interfund loan
would be subject to the same conditions
imposed by any other lender to a Fund
that imposes conditions on the quality
of or access to collateral for a borrowing
(if the lender is another Fund) or the
same or better conditions (in any other
circumstance).5
5. Applicants also believe that the
limited relief from section 18(f)(1) of the
Act that is necessary to implement the
facility (because the lending Funds are
not banks) is appropriate in light of the
conditions and safeguards described in
the application and because the Funds
would remain subject to the
requirement of section 18(f)(1) that all
borrowings of a Fund, including
combined interfund loans and bank
borrowings, have at least 300% asset
coverage.
6. 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
3 Under certain circumstances, a borrowing Fund
will be required to pledge collateral to secure the
loan.
4 Applicants state that the obligation to repay an
interfund loan could be deemed to constitute a
security for the purposes of sections 17(a)(1) and
12(d)(1) of the Act.
5 Applicants state that any pledge of securities to
secure an interfund loan could constitute a
purchase of securities for purposes of section
17(a)(2) of the Act.
E:\FR\FM\13MRN1.SGM
13MRN1
Federal Register / Vol. 82, No. 47 / Monday, March 13, 2017 / Notices
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. 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
investment company involved; and (c)
the proposed transaction is consistent
with the general purposes of the Act.
Rule 17d–1(b) under the Act provides
that in passing upon an application filed
under the rule, the Commission will
consider whether the participation of
the registered investment company in a
joint enterprise, joint arrangement or
profit sharing plan on the basis
proposed is consistent with the
provisions, policies and purposes of the
Act and the extent to which such
participation is on a basis different from
or less advantageous than that of the
other participants.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–04812 Filed 3–10–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IA–4659; File No. 803–00231]
The Jeffrey Company; Notice of
Application
March 7, 2017.
Securities and Exchange
Commission (the ‘‘Commission’’).
ACTION: Notice of application for an
exemptive order under the Investment
Advisers Act of 1940 (‘‘Advisers Act’’).
mstockstill on DSK3G9T082PROD with NOTICES
AGENCY:
The Jeffrey Company (the
‘‘Applicant’’).
RELEVANT ADVISERS ACT SECTIONS:
Exemption requested under Section
202(a)(11)(H) of the Advisers Act from
Section 202(a)(11) of the Advisers Act.
APPLICANT:
VerDate Sep<11>2014
17:49 Mar 10, 2017
Jkt 241001
The Applicant
requests that the Commission issue an
order declaring the Applicant to be a
person not within the intent of Section
202(a)(11) of the Advisers Act, which
defines the term ‘‘investment adviser.’’
FILING DATES: The application was filed
on September 2, 2016, and amended on
December 14, 2016 and February 9,
2017.
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 the
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 April 3, 2017, and
should be accompanied by proof of
service on the 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. Applicant, The
Jeffrey Company, c/o Dan L. Jaffe, Vorys,
Sater, Seymour and Pease LLP, 52 East
Gay Street, Columbus, Ohio 43215.
FOR FURTHER INFORMATION CONTACT:
James McGinnis, Senior Counsel, at
(202) 551–3025 or Holly Hunter-Ceci,
Acting Assistant Chief Counsel, at (202)
551–6825 (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.
SUMMARY OF APPLICATION:
Applicant’s Representations
1. The Applicant, an Ohio
corporation, is the managing member of
Jeffrey LLC, a Delaware limited liability
company. By acting as managing
member of Jeffrey LLC, the Applicant
provides services to the family and
descendants of Joseph A. Jeffrey (1836–
1928) (‘‘J.A. Jeffrey’’); all of the
membership interests in Jeffrey LLC
(‘‘units’’) are owned directly or
indirectly by the descendants of J.A.
Jeffrey. The securities of the Applicant
PO 00000
Frm 00104
Fmt 4703
Sfmt 4703
13531
also are 100% owned directly or
indirectly by the descendants of J.A.
Jeffrey. The Applicant is managed by a
board of directors (the ‘‘Board’’), a
majority of the members of which are
Family Members as defined in
paragraph (d)(6) of Rule 202(a)(11)(G)–1
(the ‘‘Family Office Rule’’) (with J.A.
Jeffrey being the ‘‘common ancestor’’ for
this purpose). Unless otherwise defined
herein, capitalized terms have the same
meaning as defined in the Family Office
Rule.
2. The Applicant provides services
(both advisory and non-advisory) to
Jeffrey LLC in its capacity as the
managing member of Jeffrey LLC.
3. The Applicant has engaged
Katahdin Asset Management LLC, a
Delaware limited liability company
(‘‘KAM’’), to provide advisory and nonadvisory services to, and to conduct the
day-to-day operations of, Jeffrey LLC
and the Applicant, with KAM’s own
employees (neither Jeffrey LLC nor the
Applicant having employees of its own),
subject to the direction of the Board.
The Board also has the responsibility to
establish and periodically review and
change as necessary the policies,
directives, and goals of Jeffrey LLC, as
well as the right to monitor and evaluate
the performance of KAM in
implementing the policies and
directives and in obtaining the goals of
Jeffrey LLC.
4. The Applicant represents that (i)
each person served by the Applicant is
a Family Client, i.e., the Applicant has
no clients other than a Family Client as
required by paragraph (b)(1) of the
Family Office Rule, (ii) the Applicant is
owned and controlled in a manner that
complies in all respects with paragraph
(b)(2) of the Family Office Rule, and (iii)
the Applicant does not hold itself out to
the public as an investment adviser as
required by paragraph (b)(3) of the
Family Office Rule.
5. The Applicant represents that
Jeffrey LLC currently relies on an
exception from the definition of
investment company pursuant to
Section 3(c)(1) of the Investment
Company Act of 1940, as amended (the
‘‘ICA’’). Jeffrey LLC would like to offer
to additional Family Clients the
opportunity to invest in Jeffrey LLC
(subject to securities law compliance,
including complying with applicable
federal and state exemptions from the
registration of its securities). The
Applicant states that the 100 beneficial
owner limitation of Section 3(c)(1) of
the ICA would cause family friction by
denying to many Family Clients the
opportunity to invest in Jeffrey LLC. The
Applicant states that there are
approximately 350 Family Members.
E:\FR\FM\13MRN1.SGM
13MRN1
]]>Agencies
[Federal Register Volume 82, Number 47 (Monday, March 13, 2017)]
[Notices]
[Pages 13529-13531]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-04812]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32523; File No. 812-14608]
Advanced Series Trust, et al.; Notice of Application
March 7, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application for an order pursuant to: (a) Section
6(c) of the Investment Company Act of 1940 (``Act'') granting an
exemption from sections 18(f) and 21(b) of the Act; (b) section
12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of
the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption
from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d)
section 17(d) of the Act and rule 17d-1 under the Act to permit certain
joint arrangements and transactions. Applicants request an order that
would permit certain registered open-end management investment
companies to participate in a joint lending and borrowing facility.
-----------------------------------------------------------------------
Applicants: Advanced Series Trust, Prudential's Gibraltar Fund, Inc.,
The Prudential Series Fund, Prudential Global Total Return Fund, Inc.,
Prudential Government Money Market Fund, Inc., The Prudential
Investment Portfolios, Inc., Prudential Investment Portfolios 2,
Prudential Investment Portfolios 3, Prudential Investment Portfolios 4,
Prudential Investment Portfolios 5, Prudential Investment Portfolios 6,
Prudential Investment Portfolios 7, Prudential Investment Portfolios 8,
Prudential Investment Portfolios 9, Prudential Investment Portfolios,
Inc. 10, Prudential
[[Page 13530]]
Investment Portfolios 12, Prudential Investment Portfolios, Inc. 14,
Prudential Investment Portfolios, Inc. 15, Prudential Investment
Portfolios 16, Prudential Investment Portfolios, Inc. 17, Prudential
Investment Portfolios 18, Prudential Jennison Blend Fund, Inc.,
Prudential Jennison Mid-Cap Growth Fund, Inc., Prudential Jennison
Natural Resources Fund, Inc., Prudential Jennison Small Company Fund,
Inc., Prudential National Muni Fund, Inc., Prudential Sector Funds,
Inc., Prudential Short-Term Corporate Bond Fund, Inc., Prudential World
Fund, Inc., The Prudential Variable Contract Account-2, The Prudential
Variable Contract Account-10, The Prudential Variable Contract Account-
11, and The Target Portfolio Trust, each registered under the Act as an
open-end management investment company with one or more series or
portfolios, and Prudential Investments LLC and AST Investment Services,
Inc., each registered as an investment adviser under the Investment
Advisers Act of 1940.
Filing Dates: The application was filed on February 3, 2016, and
amended on June 30, 2016, February 7, 2017 and March 1, 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 April 3, 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, c/o Jonathan D.
Shain, Esq., Prudential Investments LLC, 655 Broad Street, 17th Floor,
Newark, NJ 07102.
FOR FURTHER INFORMATION CONTACT: Kaitlin C. Bottock, Senior Counsel, at
(202) 551-8658 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 an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Summary of the Application
1. Applicants request an order that would permit the applicants to
participate in an interfund lending facility where each Fund could lend
money directly to and borrow money directly from other Funds to cover
unanticipated cash shortfalls, such as unanticipated redemptions or
trade fails.\1\ The Funds will not borrow under the facility for
leverage purposes and the loans' duration will be no more than 7
days.\2\
---------------------------------------------------------------------------
\1\ Applicants request that the order apply to the applicants
and to any existing or future registered open-end management
investment company or series thereof for which Prudential
Investments LLC, AST Investment Services, Inc., or any successor
thereto or an investment adviser controlling, controlled by, or
under common control with Prudential Investments LLC, AST Investment
Services, Inc., or any successor thereto serves as investment
adviser (each a ``Fund'' and collectively the ``Funds'' and each
such investment adviser an ``Adviser''). For purposes of the
requested order, ``successor'' is limited to any entity that results
from a reorganization into another jurisdiction or a change in the
type of a business organization.
\2\ Any Fund, however, will be able to call a loan on one
business day's notice.
---------------------------------------------------------------------------
2. Applicants anticipate that the proposed facility would provide a
borrowing Fund with a source of liquidity at a rate lower than the bank
borrowing rate at times when the cash position of the Fund is
insufficient to meet temporary cash requirements. In addition, Funds
making short-term cash loans directly to other Funds would earn
interest at a rate higher than they otherwise could obtain from
investing their cash in repurchase agreements or certain other short-
term money market instruments. Thus, applicants assert that the
facility would benefit both borrowing and lending Funds.
3. Applicants agree that any order granting the requested relief
will be subject to the terms and conditions stated in the application.
Among others, an Adviser, through a designated committee, would
administer the facility as a disinterested fiduciary as part of its
duties under the investment management and administrative agreements
with the Funds and would receive no additional fee as compensation for
its services in connection with the administration of the facility. The
facility would be subject to oversight and certain approvals by the
Funds' Board, including, among others, approval of the interest rate
formula and of the method for allocating loans across Funds, as well as
review of the process in place to evaluate the liquidity implications
for the Funds. A Fund's aggregate outstanding interfund loans will not
exceed 15% of its net assets, and the Fund's loans to any one Fund will
not exceed 5% of the lending Fund's net assets.\3\
---------------------------------------------------------------------------
\3\ Under certain circumstances, a borrowing Fund will be
required to pledge collateral to secure the loan.
---------------------------------------------------------------------------
4. Applicants assert that the facility does not raise the concerns
underlying section 12(d)(1) of the Act given that the Funds are part of
the same group of investment companies and there will be no duplicative
costs or fees to the Funds.\4\ Applicants also assert that the proposed
transactions do not raise the concerns underlying sections 17(a)(1),
17(a)(3), 17(d) and 21(b) of the Act as the Funds would not engage in
lending transactions that unfairly benefit insiders or are detrimental
to the Funds. Applicants state that the facility will offer both
reduced borrowing costs and enhanced returns on loaned funds to all
participating Funds and each Fund would have an equal opportunity to
borrow and lend on equal terms based on an interest rate formula that
is objective and verifiable. With respect to the relief from section
17(a)(2) of the Act, applicants note that any collateral pledged to
secure an interfund loan would be subject to the same conditions
imposed by any other lender to a Fund that imposes conditions on the
quality of or access to collateral for a borrowing (if the lender is
another Fund) or the same or better conditions (in any other
circumstance).\5\
---------------------------------------------------------------------------
\4\ Applicants state that the obligation to repay an interfund
loan could be deemed to constitute a security for the purposes of
sections 17(a)(1) and 12(d)(1) of the Act.
\5\ Applicants state that any pledge of securities to secure an
interfund loan could constitute a purchase of securities for
purposes of section 17(a)(2) of the Act.
---------------------------------------------------------------------------
5. Applicants also believe that the limited relief from section
18(f)(1) of the Act that is necessary to implement the facility
(because the lending Funds are not banks) is appropriate in light of
the conditions and safeguards described in the application and because
the Funds would remain subject to the requirement of section 18(f)(1)
that all borrowings of a Fund, including combined interfund loans and
bank borrowings, have at least 300% asset coverage.
6. 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
[[Page 13531]]
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. 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
investment company involved; and (c) the proposed transaction is
consistent with the general purposes of the Act. Rule 17d-1(b) under
the Act provides that in passing upon an application filed under the
rule, the Commission will consider whether the participation of the
registered investment company in a joint enterprise, joint arrangement
or profit sharing plan on the basis proposed is consistent with the
provisions, policies and purposes of the Act and the extent to which
such participation is on a basis different from or less advantageous
than that of the other participants.
For the Commission, by the Division of Investment Management,
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-04812 Filed 3-10-17; 8:45 am]
BILLING CODE 8011-01-P
