PREDEX and PREDEX Capital Management, LLC, 46103-46106 [2017-21156]
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Federal Register / Vol. 82, No. 190 / Tuesday, October 3, 2017 / Notices
SUPPLEMENTARY INFORMATION:
I. Discussion
The NRC issued a revision to
NUREG–1556, Volume 18, Revision 1,
to provide guidance to existing
materials service provider licensees and
to applicants preparing an application
for a materials service provider license.
This NUREG volume also provides the
NRC staff with criteria for evaluating
these license applications. The purpose
of this notice is to notify the public that
the NUREG–1556 volume listed in this
Federal Register notice was issued as a
Final Report.
II. Additional Information
The NRC published a notice of the
availability of the draft report for
comment version of NUREG–1556,
Volume 18, Revision 1 in the Federal
Register on July 8, 2014 (79 FR 38600)
for a 30-day public comment period.
The public comment period closed on
August 7, 2014. Public comments on the
draft NUREG–1556, Volume 18,
Revision 1 and the NRC staff’s responses
to the public comments are available in
ADAMS under Accession No.
ML16036A128.
III. Congressional Review Act
This NUREG volume is a rule as
defined in the Congressional Review
Act (5 U.S.C. 801–808). However, the
Office of Management and Budget has
not found this NUREG revision to be a
major rule as defined in the
Congressional Review Act.
For the U.S. Nuclear Regulatory
Commission.
Kevin Williams,
Deputy Director, Division of Material Safety,
State, Tribal and Rulemaking Programs,
Office of Nuclear Material Safety and
Safeguards.
[FR Doc. 2017–21205 Filed 10–2–17; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
asabaliauskas on DSKBBXCHB2PROD with NOTICES
[Release No. 34–81734; File No. SR–
BatsBZX–2017–50]
Self-Regulatory Organizations; Bats
BZX Exchange, Inc.; Notice of
Withdrawal of a Proposed Rule Change
To Extend the Implementation Date For
Certain Changes to Exchange Rules
14.11 and 14.12
September 27, 2017.
On July 31, 2017, Bats BZX Exchange,
Inc. (‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’), pursuant to Section
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19(b)(1) of the Securities Exchange Act
of 1934 1 and Rule 19b–4 thereunder,2 a
proposed rule change to extend the
implementation date for certain changes
to Exchange Rules 14.11 and 14.12
relating to continued listing standards
for exchange-traded products. The
proposed rule change was published for
comment in the Federal Register on
August 18, 2017.3 The Commission
received one comment letter on the
proposed rule change.4 On September
22, 2017, the Exchange withdrew the
proposed rule change (SR–BatsBZX–
2017–50).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.5
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–21160 Filed 10–2–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
32837; 812–14770]
PREDEX and PREDEX Capital
Management, LLC
September 27, 2017.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 18(a)(2), 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.
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 assetbased distribution and/or service fees
and early withdrawal charges.
APPLICANTS: PREDEX (the ‘‘Initial
Fund’’), and PREDEX Capital
Management, LLC (the ‘‘Adviser’’).
FILING DATES: The application was filed
on May 5, 2017, and amended on
August 14, 2017.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 81387
(August 14, 2017), 82 FR 39473.
4 See letter from Jane Heinrichs, Associate
General Counsel, Investment Company Institute, to
Brent J. Fields, Secretary, Commission, dated
September 1, 2017.
5 17 CFR 200.30–3(a)(12).
2 17
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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
October 23, 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: PREDEX, 17605 Wright
Street, Suite 2, Omaha, NE 68130;
Adviser, 18500 Von Karman Ave., Suite
350, Irvine, CA 92612.
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817, 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 https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
HEARING OR NOTIFICATION OF HEARING:
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 consistent current
income while secondarily seeking longterm capital appreciation with moderate
volatility. The Initial Fund pursues its
investment objectives by investing up to
95% of its total assets in real estate
investment funds managed by
institutional asset managers with
expertise in managing portfolios of real
estate and real estate related industry
securities.
2. The Adviser, a Delaware limited
liability company, is registered as an
investment adviser under the
Investment Advisers Act of 1940. The
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Federal Register / Vol. 82, No. 190 / Tuesday, October 3, 2017 / Notices
Adviser serves as investment adviser to
the Initial Fund.
3. The applicants seek an order to
permit the Funds (as defined below) to
issue multiple classes of shares, each
having its own fee and expense
structure and to impose early
withdrawal charges and asset-based
distribution and/or service fees with
respect to certain classes.
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 are not expected to
be listed on any securities exchange nor
quoted on any quotation medium and
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 I Shares’’ and
to commence a continuous offering of
two additional classes of shares (‘‘Class
A Shares’’ and ‘‘Class C Shares’’), with
each class having its own fee and
expense structure and may also offer
additional classes of shares in the
future. Because of the different
distribution fees, services, and any other
class expenses that may be attributable
to the Class A Shares, Class I Shares,
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
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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additional classes of shares, the terms of
which may differ from Class A Shares,
Class I Shares 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 early withdrawal
charge 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/or distribution fees
for each class of shares of the Funds will
comply with the provisions of FINRA
Rule 2341 (‘‘FINRA 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.5 As is
required for open-end funds, each Fund
will disclose its expenses in shareholder
reports, and describe any arrangements
that result in breakpoints in or
elimination of sales loads in its
prospectus.6 In addition, applicants will
comply with applicable enhanced fee
disclosure requirements for fund of
funds, including registered funds of
hedge funds.7
10. Each of the Funds will comply
with any requirements that the
Commission or FINRA may adopt
regarding disclosure at the point of sale
and in transaction confirmations about
the costs and conflicts of interest arising
out of the distribution of open-end
investment company shares, and
regarding prospectus disclosure of sales
loads and revenue sharing
arrangements, as if those requirements
applied to the Fund. In addition, each
Fund will contractually require that any
distributor of the Fund’s shares comply
with such requirements in connection
with the distribution of such Fund’s
shares.
11. Each Fund will allocate all
expenses incurred by it among the
various classes of shares based on the
net assets of the Fund attributable to
each class, except that the net asset
value and expenses of each class will
reflect the expenses associated with the
distribution plan of that class, service
fees, and any other incremental
expenses of that class. Expenses of a
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 openend investment company.
12. Applicants state that each Fund
may impose an early withdrawal charge
on shares submitted for repurchase that
have been held less than a specified
period and may waive the early
withdrawal charge for certain categories
of shareholders or transactions to be
established from time to time.
Applicants state that each Fund will
apply the early withdrawal charge (and
any waivers or scheduled variations of
the early withdrawal charge) 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
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, as amended.
4 Any reference in the application to the FINRA
Sales Charge Rule includes any successor or
replacement to the FINRA Sales Charge Rule.
5 In all respects other than class by class
disclosure, each Fund will comply with the
requirements of Form N–2.
6 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).
7 Fund of Funds Investments, Investment
Company Act Rel. Nos. 26198 (Oct. 1, 2003)
(proposing release) and 27399 (Jun. 20, 2006)
(adopting release). See also Rules 12d1–1, et seq. of
the Act.
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Federal Register / Vol. 82, No. 190 / Tuesday, October 3, 2017 / Notices
Act may offer its shareholders an
exchange feature under which the
shareholders of the Fund may, in
connection with the Fund’s periodic
repurchase offers, exchange their shares
of the Fund for shares of the same class
of (i) registered open-end investment
companies or (ii) other registered
closed-end investment companies that
comply with rule 23c–3 under the Act
and continuously offer their shares at
net asset value, that are in the Fund’s
group of investment companies
(collectively, ‘‘Other Funds’’). Shares of
a Fund operating pursuant to rule 23c–
3 that are exchanged for shares of Other
Funds will be included as part of the
amount of the repurchase offer amount
for such Fund as specified in rule 23c–
3 under the Act. Any exchange option
will comply with rule 11a–3 under the
Act, as if the Fund were an open-end
investment company subject to rule
11a–3. In complying with rule 11a–3,
each Fund will treat an early
withdrawal charge as if it were a
contingent deferred sales load.
asabaliauskas on DSKBBXCHB2PROD with NOTICES
Applicants’ Legal Analysis
Multiple Classes of Shares
1. Section 18(a)(2) of the Act provides
that a closed-end investment company
may not issue or sell a senior security
that is a stock unless certain
requirements are met. Applicants state
that the creation of multiple classes of
shares of the Funds may violate section
18(a)(2) because the Funds may not
meet such requirements with respect to
a class of shares that may be a senior
security.
2. 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.
3. 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.
4. Section 6(c) of the Act provides that
the Commission may exempt any
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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(a)(2), 18(c) and 18(i) to
permit the Funds to issue multiple
classes of shares.
5. Applicants submit that the
proposed allocation of expenses relating
to distribution and/or services 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 permits an interval
fund to 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. A Fund will not impose a
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46105
repurchase fee on investors who
purchase and tender their shares.
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 early withdrawal charges on
shares of the Funds submitted for
repurchase that have been held for less
than a specified period.
5. Applicants state that the early
withdrawal charges they intend to
impose are functionally similar to
contingent deferred sales loads imposed
by open-end investment companies
under rule 6c–10 under the Act. Rule
6c–10 permits open-end investment
companies to impose contingent
deferred sales loads, subject to certain
conditions. Applicants note that rule
6c–10 is grounded in policy
considerations supporting the
employment of contingent deferred
sales loads where there are adequate
safeguards for the investor and state that
the same policy considerations support
imposition of early withdrawal charges
in the interval fund context. In addition,
applicants state that early withdrawal
charges may be necessary for the
distributor to recover distribution costs.
Applicants represent that any early
withdrawal charge 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
early withdrawal charges in accordance
with the requirements of Form N–1A
concerning contingent deferred sales
loads.
Asset-Based Distribution and/or Service
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
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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 and/or service
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 assetbased distribution and/or service fees.
3. 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 and/or service 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 FINRA 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.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017–21156 Filed 10–2–17; 8:45 am]
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–81737; File No. SR–
NYSEArca–2017–112]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of Proposed
Rule Change To List and Trade Shares
of the GraniteShares Palladium Trust
Under NYSE Arca Rule 8.201–E
September 27, 2017.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 12, 2017, NYSE Arca, Inc.
(the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to list and
trade shares of the GraniteShares
Palladium Trust under NYSE Arca
Equities Rule 8.201 [sic]. The proposed
change is available on the Exchange’s
Web site at www.nyse.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization 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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
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of the most significant parts of such
statements.
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1. Purpose
The Exchange proposes to list and
trade shares (‘‘Shares’’) of the
GraniteShares Palladium Trust (the
‘‘Trust’’), under NYSE Arca Equities
Rule 8.201.4 Under NYSE Arca Equities
Rule 8.201 [sic], the Exchange may
propose to list and/or trade pursuant to
unlisted trading privileges (‘‘UTP’’)
Commodity-Based Trust Shares.5
The Trust will not be registered as an
investment company under the
Investment Company Act of 1940, as
amended,6 and is not required to
register under such act. The Trust is not
a commodity pool for purposes of the
Commodity Exchange Act, as amended.7
The Sponsor of the Trust is
GraniteShares LLC, a Delaware limited
liability company. The Bank of New
York Mellon is the trustee of the Trust
(the ‘‘Trustee’’) 8 and ICBC Standard
Bank PLC is the custodian of the Trust
(the ‘‘Custodian’’).9
4 On September 8, 2017, the Trust submitted to
the Commission its draft registration statement on
Form S–1 (the ‘‘Registration Statement’’) under the
Securities Act of 1933 (15 U.S.C. 77a) (‘‘Securities
Act’’). The Jumpstart Our Business Startups Act,
enacted on April 5, 2012, added Section 6(e) to the
Securities Act. Section 6(e) of the Securities Act
provides that an ‘‘emerging growth company’’ may
confidentially submit to the Commission a draft
registration statement for confidential, non-public
review by the Commission staff prior to public
filing, provided that the initial confidential
submission and all amendments thereto shall be
publicly filed not later than 21 days before the date
on which the issuer conducts a road show, as such
term is defined in Securities Act Rule 433(h)(4). An
emerging growth company is defined in Section
2(a)(19) of the Securities Act as an issuer with less
than $1,000,000,000 total annual gross revenues
during its most recently completed fiscal year. The
Trust meets the definition of an emerging growth
company and consequently has submitted its Form
S–1 Registration Statement on a confidential basis
with the Commission.
5 Commodity-Based Trust Shares are securities
issued by a trust that represents investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the
Trust.
6 15 U.S.C. 80a–1.
7 17 U.S.C. 1.
8 The Trustee is responsible for the day-to-day
administration of the Trust. The responsibilities of
the Trustee include (1) processing orders for the
creation and redemption of Baskets; (2)
coordinating with the Custodian the receipt and
delivery of palladium transferred to, or by, the Trust
in connection with each issuance and redemption
of Baskets; (3) calculating the net asset value of the
Trust on each business day; and (4) selling the
Trust’s palladium as needed to cover the Trust’s
expenses. The Trust does not have a Board of
Directors or persons acting in a similar capacity.
9 The Custodian is responsible for safekeeping the
palladium owned by the Trust. The Custodian is
E:\FR\FM\03OCN1.SGM
03OCN1
]]>Agencies
[Federal Register Volume 82, Number 190 (Tuesday, October 3, 2017)]
[Notices]
[Pages 46103-46106]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-21156]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 32837; 812-14770]
PREDEX and PREDEX Capital Management, LLC
September 27, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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Notice of an application under section 6(c) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from sections
18(a)(2), 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.
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 and/or service
fees and early withdrawal charges.
Applicants: PREDEX (the ``Initial Fund''), and PREDEX Capital
Management, LLC (the ``Adviser'').
Filing Dates: The application was filed on May 5, 2017, and amended on
August 14, 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 October 23, 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: PREDEX, 17605 Wright
Street, Suite 2, Omaha, NE 68130; Adviser, 18500 Von Karman Ave., Suite
350, Irvine, CA 92612.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817, 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 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 consistent current income while secondarily seeking long-term
capital appreciation with moderate volatility. The Initial Fund pursues
its investment objectives by investing up to 95% of its total assets in
real estate investment funds managed by institutional asset managers
with expertise in managing portfolios of real estate and real estate
related industry securities.
2. The Adviser, a Delaware limited liability company, is registered
as an investment adviser under the Investment Advisers Act of 1940. The
[[Page 46104]]
Adviser serves as investment adviser to the Initial Fund.
3. The applicants seek an order to permit the Funds (as defined
below) to issue multiple classes of shares, each having its own fee and
expense structure and to impose early withdrawal charges and asset-
based distribution and/or service fees with respect to certain classes.
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 are not
expected to be listed on any securities exchange nor quoted on any
quotation medium and 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 I Shares'' and to commence a
continuous offering of two additional classes of shares (``Class A
Shares'' and ``Class C Shares''), with each class having its own fee
and expense structure and may also offer additional classes of shares
in the future. Because of the different distribution fees, services,
and any other class expenses that may be attributable to the Class A
Shares, Class I Shares, 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
Class A Shares, Class I Shares 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 early withdrawal charge 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, as
amended.
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9. Applicants represent that any asset-based service and/or
distribution fees for each class of shares of the Funds will comply
with the provisions of FINRA Rule 2341 (``FINRA 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.\5\ As is required for
open-end funds, each Fund will disclose its expenses in shareholder
reports, and describe any arrangements that result in breakpoints in or
elimination of sales loads in its prospectus.\6\ In addition,
applicants will comply with applicable enhanced fee disclosure
requirements for fund of funds, including registered funds of hedge
funds.\7\
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\4\ Any reference in the application to the FINRA Sales Charge
Rule includes any successor or replacement to the FINRA Sales Charge
Rule.
\5\ In all respects other than class by class disclosure, each
Fund will comply with the requirements of Form N-2.
\6\ 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).
\7\ Fund of Funds Investments, Investment Company Act Rel. Nos.
26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006)
(adopting release). See also Rules 12d1-1, et seq. of the Act.
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10. Each of the Funds will comply with any requirements that the
Commission or FINRA may adopt regarding disclosure at the point of sale
and in transaction confirmations about the costs and conflicts of
interest arising out of the distribution of open-end investment company
shares, and regarding prospectus disclosure of sales loads and revenue
sharing arrangements, as if those requirements applied to the Fund. In
addition, each Fund will contractually require that any distributor of
the Fund's shares comply with such requirements in connection with the
distribution of such Fund's shares.
11. Each Fund will allocate all expenses incurred by it among the
various classes of shares based on the net assets of the Fund
attributable to each class, except that the net asset value and
expenses of each class will reflect the expenses associated with the
distribution plan of that class, service fees, and any other
incremental expenses of that class. Expenses of a 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 early withdrawal
charge on shares submitted for repurchase that have been held less than
a specified period and may waive the early withdrawal charge for
certain categories of shareholders or transactions to be established
from time to time. Applicants state that each Fund will apply the early
withdrawal charge (and any waivers or scheduled variations of the early
withdrawal charge) 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
[[Page 46105]]
Act may offer its shareholders an exchange feature under which the
shareholders of the Fund may, in connection with the Fund's periodic
repurchase offers, exchange their shares of the Fund for shares of the
same class of (i) registered open-end investment companies or (ii)
other registered closed-end investment companies that comply with rule
23c-3 under the Act and continuously offer their shares at net asset
value, that are in the Fund's group of investment companies
(collectively, ``Other Funds''). Shares of a Fund operating pursuant to
rule 23c-3 that are exchanged for shares of Other Funds will be
included as part of the amount of the repurchase offer amount for such
Fund as specified in rule 23c-3 under the Act. Any exchange option will
comply with rule 11a-3 under the Act, as if the Fund were an open-end
investment company subject to rule 11a-3. In complying with rule 11a-3,
each Fund will treat an early withdrawal charge as if it were a
contingent deferred sales load.
Applicants' Legal Analysis
Multiple Classes of Shares
1. Section 18(a)(2) of the Act provides that a closed-end
investment company may not issue or sell a senior security that is a
stock unless certain requirements are met. Applicants state that the
creation of multiple classes of shares of the Funds may violate section
18(a)(2) because the Funds may not meet such requirements with respect
to a class of shares that may be a senior security.
2. 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.
3. 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.
4. 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(a)(2), 18(c) and 18(i) to permit the
Funds to issue multiple classes of shares.
5. Applicants submit that the proposed allocation of expenses
relating to distribution and/or services 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 permits an interval
fund to 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. A Fund will not impose a repurchase fee on
investors who purchase and tender their shares.
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 early withdrawal charges on shares of the Funds
submitted for repurchase that have been held for less than a specified
period.
5. Applicants state that the early withdrawal charges they intend
to impose are functionally similar to contingent deferred sales loads
imposed by open-end investment companies under rule 6c-10 under the
Act. Rule 6c-10 permits open-end investment companies to impose
contingent deferred sales loads, subject to certain conditions.
Applicants note that rule 6c-10 is grounded in policy considerations
supporting the employment of contingent deferred sales loads where
there are adequate safeguards for the investor and state that the same
policy considerations support imposition of early withdrawal charges in
the interval fund context. In addition, applicants state that early
withdrawal charges may be necessary for the distributor to recover
distribution costs. Applicants represent that any early withdrawal
charge 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 early withdrawal charges in accordance with the
requirements of Form N-1A concerning contingent deferred sales loads.
Asset-Based Distribution and/or Service 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
[[Page 46106]]
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 and/or service 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 and/or service fees.
3. 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 and/or service 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
FINRA 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.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21156 Filed 10-2-17; 8:45 am]
BILLING CODE 8011-01-P
