Steadfast Alcentra Global Credit Fund and Steadfast Investment Adviser, LLC, 48557-48560 [2017-22517]

Download as PDF Federal Register / Vol. 82, No. 200 / Wednesday, October 18, 2017 / Notices ethrower on DSK3G9T082PROD with NOTICES have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. In this instance, the proposed changes to the credits available to member organizations for displayed quotes and orders do not impose a burden on competition because the Exchange’s execution services are completely voluntary and subject to extensive competition both from other exchanges and from off-exchange venues. The Exchange has determined that the two credit tiers have not been as successful at attracting participation on the Exchange. Consequently, the Exchange is decreasing the qualification criteria required to receive the $0.0031 per share executed credit to the level of the $0.0029 per share executed credit. This will effectively increase the credit provided to member organizations that currently qualify for the $0.0029 per share executed credit, while possibly providing additional incentive to member organizations that do not provide and access 0.25% or more of Consolidated Volume during the month to do so. In sum, the Exchange is making it easier for member organizations to receive a credit in an effort to increase participation on the Exchange. If the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result. The Exchange notes that competing order execution venues are free to increase their credits, or decrease qualification criteria required to receive credits, in reaction to the proposed changes. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.6 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments 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– Phlx–2017–78 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–Phlx–2017–78. 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., VerDate Sep<11>2014 17:50 Oct 17, 2017 Jkt 244001 PO 00000 U.S.C. 78s(b)(3)(A)(ii). Frm 00082 Fmt 4703 Sfmt 4703 Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–Phlx– 2017–78, and should be submitted on or before November 8, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.7 Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–22536 Filed 10–17–17; 8:45 am] 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: 6 15 48557 BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 32860; 812–14725] Steadfast Alcentra Global Credit Fund and Steadfast Investment Adviser, LLC October 12, 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 ‘‘1940 Act’’) for an exemption from sections 18(a)(2), 18(c) and 18(i) of the 1940 Act, under sections 6(c) and 23(c) of the 1940 Act for an exemption from rule 23c–3 under the 1940 Act, and for an order pursuant to section 17(d) of the 1940 Act and rule 17d–1 under the 1940 Act. SUMMARY OF APPLICATION: Applicants request an order to permit certain registered closed-end management investment companies to issue multiple classes of shares of beneficial interest (‘‘Shares’’) with varying sales loads, asset-based service and/or distribution fees and early withdrawal charges. APPLICANTS: Steadfast Alcentra Global Credit Fund (the ‘‘Initial Fund’’) and Steadfast Investment Adviser, LLC (the ‘‘Adviser’’). FILING DATES: The application was filed on December 8, 2016 and amended on April 13, 2017, August 18, 2017 and September 28, 2017. HEARING OR NOTIFICATION OF HEARING: An order granting the requested relief will be issued unless the Commission orders 7 17 E:\FR\FM\18OCN1.SGM CFR 200.30–3(a)(12). 18OCN1 48558 Federal Register / Vol. 82, No. 200 / Wednesday, October 18, 2017 / Notices a hearing. Interested persons may request a hearing by writing to the Commission’s Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on November 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 1940 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: 18100 Van Karman Avenue, Suite 500, Irvine, CA 92612. FOR FURTHER INFORMATION CONTACT: Rachel Loko, Senior Counsel, at (202) 551–6883, or Holly Hunter-Ceci, 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 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. ethrower on DSK3G9T082PROD with NOTICES Applicants’ Representations 1. The Initial Fund is a Delaware statutory trust that is registered under the 1940 Act as a non-diversified, closed-end management investment company. The Initial Fund’s investment objective is to provide current income and capital preservation with the potential for capital appreciation. The Initial Fund seeks to achieve its investment objective primarily by providing customized financing solutions to lower middle market and middle market companies (as defined in the Initial Fund’s prospectus) in the form of floating and fixed rate senior secured loans, second lien loans and subordinated debt, which, under normal circumstances will collectively represent at least 80% of the Initial Fund’s net assets (plus the amount of any borrowings for investment purpose). 2. The Adviser, a Delaware limited liability company, is registered as an investment adviser under the Investment Advisers Act of 1940. The VerDate Sep<11>2014 17:50 Oct 17, 2017 Jkt 244001 Adviser serves as investment adviser to the Initial Fund. 3. The applicants seek an order to permit the Initial Fund to issue multiple classes of Shares, that may (but would not necessarily) be subject to a front-end sales load, an annual asset-based service and/or distribution fee and an early withdrawal charge. 4. Applicants request that the order also apply to any other registered closed-end management investment company that conducts a continuous offering of its shares, existing now or 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 1940 Act or provides periodic liquidity with respect to its Shares pursuant to rule 13e–4 under the Securities Exchange Act of 1934 (‘‘1934 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 Shares. Shares of the Funds will not be listed on any securities exchange nor traded on an over the counter system such as NASDAQ. The Funds do not expect there to be a secondary trading market for their Shares. 6. The Initial Fund currently issues a single class of Shares, Class T Shares (the ‘‘Initial Class Shares’’) and proposes to offer Class A, Class D and Class I Shares (the ‘‘New Classes of Shares’’). Each of the Initial Class Shares and New Class Shares will have its own fee and expense structure. Each New Class Shares would be offered at net asset value per Share and may be subject to a front-end sales load, an annual assetbased service and/or distribution fee and an early withdrawal charge. The Funds may in the future offer additional classes of Shares and/or another sales charges structure. Because of the different distribution and/or service fees, services and any other class expenses that may be attributable to the Initial Class Shares or the New Class Shares, the net income attributable to, and the dividends payable on, each class of Shares may differ from each other. 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 any person presently intending to rely on the requested relief is listed as an Applicant. PO 00000 Frm 00083 Fmt 4703 Sfmt 4703 7. Applicants state that, from time to time, the Board of a Fund may create and offer additional classes of Shares, or may vary the characteristics described above of Initial Class Shares and New Class Shares in the following respects: (i) The amount of fees permitted by a distribution and/or service plan as to such class; (ii) voting rights with respect to a distribution and/or service plan of such 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) differences in any dividends and net asset value per Share resulting from differences in fees under a distribution and/or service plan or in class expenses; (vi) any sales load structure; and (vii) any conversion features of the classes as permitted under the 1940 Act. 8. Applicants state that Shares of a Fund will be subject to an ‘‘early withdrawal charge’’ or a ‘‘repurchase fee’’ of up to 2.0% of the shareholder’s repurchase proceeds in the event that the shareholder tenders his or her Shares for repurchase by such Fund at any time prior to the one-year anniversary of the purchase of such Shares. Early withdrawal charges will apply equally to all shareholders of the Fund, regardless of class, consistent with section 18 of the 1940 Act and rule 18f–3 thereunder. To the extent a Fund determines to waive, impose scheduled variations of, or eliminate the early withdrawal charge, it will do so consistently with the requirements of rule 22d–1 under the 1940 Act as if the early withdrawal charge were a CDSC (defined below) and as if the Fund were an open-end investment company and the Fund’s waiver of, scheduled variation in, or elimination of, the early withdrawal charge will apply uniformly to all shareholders of the Fund regardless of class. 9. Applicants state that the Initial Fund currently intends to limit the number of Shares to be repurchased in any calendar year to the number of Shares the Initial Fund can repurchase with the proceeds it receives from the issuance of Shares under its distribution reinvestment plan. In addition, the Initial Fund will limit the number of Shares to be repurchased in any calendar year to 10% of the weighted average number of Shares outstanding in a prior calendar year or 2.5% in each quarter, though the actual number of Shares that the Initial Fund offers to purchase may be less. If a Future Fund is structured to operate as an interval fund, it will adopt an investment policy and make periodic repurchase offers to E:\FR\FM\18OCN1.SGM 18OCN1 Federal Register / Vol. 82, No. 200 / Wednesday, October 18, 2017 / Notices ethrower on DSK3G9T082PROD with NOTICES its shareholders in compliance with rule 23c–3 or will provide periodic liquidity with respect to its shares pursuant to rule 13e–4 under the Exchange Act.3 Any repurchase offers made by a Fund will be made to all holders of shares of each such Fund. 10. Applicants represent that any asset-based distribution and service fees will comply with the provisions of the Financial Industry Regulatory Authority (‘‘FINRA’’) Rule 2341 (‘‘FINRA Rule 2341’’).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. As if it were an open-end management investment company, each Fund will disclose its expenses in shareholder reports, and describe any arrangements that result in breakpoints in sales loads in its prospectus.5 In addition, applicants will comply with applicable enhanced fee disclosure requirements for fund of funds, including registered funds of hedge funds.6 11. 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. 12. Each Fund will allocate all expenses incurred by it among the 3 Applicants submit that rule 23c–3 and Regulation M under the 1934 Act permit an interval fund to make repurchase offers to repurchase its shares while engaging in a continuous offering of its shares pursuant to Rule 415 under the Securities Act of 1933. 4 Any reference to the FINRA Rule 2341 includes FINRA Rule 2342 as such rule may be amended or any successor thereto. 5 See Shareholder Reports and Quarterly Portfolio Disclosure of Registered Management Investment Companies, Investment Company Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring open-end investment companies to disclose fund expenses in shareholder reports); and Disclosure of Breakpoint Discounts by Mutual Funds, Investment Company Act Release No. 26464 (June 7, 2004) (adopting release) (requiring open-end investment companies to provide prospectus disclosure of certain sales load information). 6 Fund of Funds Investments, Investment Company Act Rel. Nos. 26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006) (adopting release). See also Rules 12d1–1, et seq. of the 1940 Act. VerDate Sep<11>2014 17:50 Oct 17, 2017 Jkt 244001 various classes of Shares based on the net assets of that Fund attributable to each class, except that the net asset value and expenses of each class will reflect the expenses associated with the distribution and/or service plan of that class, shareholder service fees, and any other incremental expenses of that class. Expenses of a Fund allocated to a particular class of the Fund’s 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 1940 Act as if it were an open-end investment company. 13. Applicants state that each Future 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 on repurchases in connection with certain categories of shareholders or transactions to be established from time to time. Applicants state that each Future 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 1940 Act as if the Future Funds were open-end investment companies. 14. If a Future Fund is structured to operate as an interval fund, it will adopt a fundamental investment policy in compliance with Rule 23c–3 and make periodic repurchase offers to its shareholders, or provide periodic liquidity with respect to its Shares. To the extent the Fund determines to waive, impose scheduled variations of, or eliminate, the early withdrawal charge, the Fund will do so consistently with the requirements of Rule 22d–1 under the 1940 Act as if the early withdrawal charge were a CDSC (as defined below) and as if the Fund were an open-end investment company and the Fund’s waiver of, scheduled variation in, or elimination of, the early withdrawal charge will apply uniformly to all shareholders. Contingent deferred sales charges (‘‘CDSC’’) are distributionrelated charges payable to a distributor and assessed by an open-end investment company pursuant to Rule 6c–10 under the 1940 Act. Applicants’ Legal Analysis Multiple Classes of Shares 1. Section 18(a)(2) of the 1940 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 PO 00000 Frm 00084 Fmt 4703 Sfmt 4703 48559 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 1940 Act provides, in relevant part, that a closedend 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 1940 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 1940 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 1940 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 1940 Act, or from any rule or regulation under the 1940 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 1940 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 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 1940 Act to any greater degree than open-end investment companies’ multiple class structures that are permitted by rule 18f–3 under the 1940 Act. Applicants state that each Fund will comply with E:\FR\FM\18OCN1.SGM 18OCN1 48560 Federal Register / Vol. 82, No. 200 / Wednesday, October 18, 2017 / Notices ethrower on DSK3G9T082PROD with NOTICES the provisions of rule 18f–3 as if it were an open-end investment company. Early Withdrawal Charges 1. Section 23(c) of the 1940 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 1940 Act permits 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 1940 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. 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 Future Funds to impose early withdrawal charges, which are distribution-related fees payable to the distributor, 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 CDSCs imposed by open-end investment companies under rule 6c–10 under the 1940 Act. Rule 6c–10 permits open-end investment companies to impose CDSCs, subject to certain conditions. Applicants note that rule 6c–10 is grounded in policy considerations supporting the employment of CDSCs 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 VerDate Sep<11>2014 17:50 Oct 17, 2017 Jkt 244001 distribution costs. Applicants represent that any early withdrawal charge imposed by the Funds will comply with rule 6c–10 under the 1940 Act as if the rule were applicable to closed-end investment companies. Each Future Fund will disclose early withdrawal charges in accordance with the requirements of Form N–1A concerning CDSCs. 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 1940 Act and does not involve participation on a basis different from or less advantageous than that of other participants. Asset-Based Distribution and/or Service Fees 1. Section 17(d) of the 1940 Act and rule 17d–1 under the 1940 Act prohibit an affiliated person of a registered investment company, or an affiliated person of such person, acting as principal, from participating in or effecting any transaction in connection with any joint enterprise or joint arrangement in which the investment company participates unless the Commission issues an order permitting the transaction. In reviewing applications submitted under section 17(d) and rule 17d–1, the Commission considers whether the participation of the investment company in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the 1940 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 1940 Act provides an exemption from section 17(d) and rule 17d–1 to permit openend investment companies to enter into distribution arrangements pursuant to rule 12b–1 under the 1940 Act. Applicants request an order under section 17(d) and rule 17d–1 under the 1940 Act to the extent necessary to permit the Fund to impose asset-based distribution and 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 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 1940 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 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 1940 Act, as amended from time to time, as if those rules applied to closed-end management investment companies, and will comply with the FINRA Rule 2341, as amended from time to time, as if that rule applied to all closed-end management investment companies. PO 00000 Frm 00085 Fmt 4703 Sfmt 4703 Applicants’ Condition For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017–22517 Filed 10–17–17; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–81864; File No. SRBatsBZX–2017–61] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Provide Interpretation With Respect to the Meaning, Administration, or Enforcement of Rule 14.11, Other Securities, and Rule 14.12, Failure To Meet Listing Standards October 12, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 29, 2017, Bats BZX Exchange, Inc. (‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 2 17 E:\FR\FM\18OCN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 18OCN1

Agencies

[Federal Register Volume 82, Number 200 (Wednesday, October 18, 2017)]
[Notices]
[Pages 48557-48560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-22517]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32860; 812-14725]


Steadfast Alcentra Global Credit Fund and Steadfast Investment 
Adviser, LLC

October 12, 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 ``1940 Act'') for an exemption from sections 
18(a)(2), 18(c) and 18(i) of the 1940 Act, under sections 6(c) and 
23(c) of the 1940 Act for an exemption from rule 23c-3 under the 1940 
Act, and for an order pursuant to section 17(d) of the 1940 Act and 
rule 17d-1 under the 1940 Act.

SUMMARY OF APPLICATION: Applicants request an order to permit certain 
registered closed-end management investment companies to issue multiple 
classes of shares of beneficial interest (``Shares'') with varying 
sales loads, asset-based service and/or distribution fees and early 
withdrawal charges.

APPLICANTS: Steadfast Alcentra Global Credit Fund (the ``Initial 
Fund'') and Steadfast Investment Adviser, LLC (the ``Adviser'').

FILING DATES: The application was filed on December 8, 2016 and amended 
on April 13, 2017, August 18, 2017 and September 28, 2017.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested 
relief will be issued unless the Commission orders

[[Page 48558]]

a hearing. Interested persons may request a hearing by writing to the 
Commission's Secretary and serving applicants with a copy of the 
request, personally or by mail.
    Hearing requests should be received by the Commission by 5:30 p.m. 
on November 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 1940 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: 18100 Van Karman 
Avenue, Suite 500, Irvine, CA 92612.

FOR FURTHER INFORMATION CONTACT: Rachel Loko, Senior Counsel, at (202) 
551-6883, or Holly Hunter-Ceci, 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 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 1940 Act as a non-diversified, closed-end 
management investment company. The Initial Fund's investment objective 
is to provide current income and capital preservation with the 
potential for capital appreciation. The Initial Fund seeks to achieve 
its investment objective primarily by providing customized financing 
solutions to lower middle market and middle market companies (as 
defined in the Initial Fund's prospectus) in the form of floating and 
fixed rate senior secured loans, second lien loans and subordinated 
debt, which, under normal circumstances will collectively represent at 
least 80% of the Initial Fund's net assets (plus the amount of any 
borrowings for investment purpose).
    2. The Adviser, a Delaware limited liability company, is registered 
as an investment adviser under the Investment Advisers Act of 1940. The 
Adviser serves as investment adviser to the Initial Fund.
    3. The applicants seek an order to permit the Initial Fund to issue 
multiple classes of Shares, that may (but would not necessarily) be 
subject to a front-end sales load, an annual asset-based service and/or 
distribution fee and an early withdrawal charge.
    4. Applicants request that the order also apply to any other 
registered closed-end management investment company that conducts a 
continuous offering of its shares, existing now or 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 1940 Act or provides 
periodic liquidity with respect to its Shares pursuant to rule 13e-4 
under the Securities Exchange Act of 1934 (``1934 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 any person 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 Shares. Shares of the Funds will not be listed on any 
securities exchange nor traded on an over the counter system such as 
NASDAQ. The Funds do not expect there to be a secondary trading market 
for their Shares.
    6. The Initial Fund currently issues a single class of Shares, 
Class T Shares (the ``Initial Class Shares'') and proposes to offer 
Class A, Class D and Class I Shares (the ``New Classes of Shares''). 
Each of the Initial Class Shares and New Class Shares will have its own 
fee and expense structure. Each New Class Shares would be offered at 
net asset value per Share and may be subject to a front-end sales load, 
an annual asset-based service and/or distribution fee and an early 
withdrawal charge. The Funds may in the future offer additional classes 
of Shares and/or another sales charges structure. Because of the 
different distribution and/or service fees, services and any other 
class expenses that may be attributable to the Initial Class Shares or 
the New Class 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 Board of a Fund 
may create and offer additional classes of Shares, or may vary the 
characteristics described above of Initial Class Shares and New Class 
Shares in the following respects: (i) The amount of fees permitted by a 
distribution and/or service plan as to such class; (ii) voting rights 
with respect to a distribution and/or service plan of such 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) differences in any 
dividends and net asset value per Share resulting from differences in 
fees under a distribution and/or service plan or in class expenses; 
(vi) any sales load structure; and (vii) any conversion features of the 
classes as permitted under the 1940 Act.
    8. Applicants state that Shares of a Fund will be subject to an 
``early withdrawal charge'' or a ``repurchase fee'' of up to 2.0% of 
the shareholder's repurchase proceeds in the event that the shareholder 
tenders his or her Shares for repurchase by such Fund at any time prior 
to the one-year anniversary of the purchase of such Shares. Early 
withdrawal charges will apply equally to all shareholders of the Fund, 
regardless of class, consistent with section 18 of the 1940 Act and 
rule 18f-3 thereunder. To the extent a Fund determines to waive, impose 
scheduled variations of, or eliminate the early withdrawal charge, it 
will do so consistently with the requirements of rule 22d-1 under the 
1940 Act as if the early withdrawal charge were a CDSC (defined below) 
and as if the Fund were an open-end investment company and the Fund's 
waiver of, scheduled variation in, or elimination of, the early 
withdrawal charge will apply uniformly to all shareholders of the Fund 
regardless of class.
    9. Applicants state that the Initial Fund currently intends to 
limit the number of Shares to be repurchased in any calendar year to 
the number of Shares the Initial Fund can repurchase with the proceeds 
it receives from the issuance of Shares under its distribution 
reinvestment plan. In addition, the Initial Fund will limit the number 
of Shares to be repurchased in any calendar year to 10% of the weighted 
average number of Shares outstanding in a prior calendar year or 2.5% 
in each quarter, though the actual number of Shares that the Initial 
Fund offers to purchase may be less. If a Future Fund is structured to 
operate as an interval fund, it will adopt an investment policy and 
make periodic repurchase offers to

[[Page 48559]]

its shareholders in compliance with rule 23c-3 or will provide periodic 
liquidity with respect to its shares pursuant to rule 13e-4 under the 
Exchange Act.\3\ Any repurchase offers made by a Fund 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 
1934 Act permit an interval fund to make repurchase offers to 
repurchase its shares while engaging in a continuous offering of its 
shares pursuant to Rule 415 under the Securities Act of 1933.
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    10. Applicants represent that any asset-based distribution and 
service fees will comply with the provisions of the Financial Industry 
Regulatory Authority (``FINRA'') Rule 2341 (``FINRA Rule 2341'').\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. As if it were an open-end management 
investment company, each Fund will disclose its expenses in shareholder 
reports, and describe any arrangements that result in breakpoints in 
sales loads in its prospectus.\5\ In addition, applicants will comply 
with applicable enhanced fee disclosure requirements for fund of funds, 
including registered funds of hedge funds.\6\
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    \4\ Any reference to the FINRA Rule 2341 includes FINRA Rule 
2342 as such rule may be amended or any successor thereto.
    \5\ See Shareholder Reports and Quarterly Portfolio Disclosure 
of Registered Management Investment Companies, Investment Company 
Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring 
open-end investment companies to disclose fund expenses in 
shareholder reports); and Disclosure of Breakpoint Discounts by 
Mutual Funds, Investment Company Act Release No. 26464 (June 7, 
2004) (adopting release) (requiring open-end investment companies to 
provide prospectus disclosure of certain sales load information).
    \6\ Fund of Funds Investments, Investment Company Act Rel. Nos. 
26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006) 
(adopting release). See also Rules 12d1-1, et seq. of the 1940 Act.
---------------------------------------------------------------------------

    11. 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.
    12. Each Fund will allocate all expenses incurred by it among the 
various classes of Shares based on the net assets of that Fund 
attributable to each class, except that the net asset value and 
expenses of each class will reflect the expenses associated with the 
distribution and/or service plan of that class, shareholder service 
fees, and any other incremental expenses of that class. Expenses of a 
Fund allocated to a particular class of the Fund's 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 1940 Act as if it were an open-end investment company.
    13. Applicants state that each Future 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 on repurchases in connection with certain categories of 
shareholders or transactions to be established from time to time. 
Applicants state that each Future 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 1940 Act as if the Future 
Funds were open-end investment companies.
    14. If a Future Fund is structured to operate as an interval fund, 
it will adopt a fundamental investment policy in compliance with Rule 
23c-3 and make periodic repurchase offers to its shareholders, or 
provide periodic liquidity with respect to its Shares. To the extent 
the Fund determines to waive, impose scheduled variations of, or 
eliminate, the early withdrawal charge, the Fund will do so 
consistently with the requirements of Rule 22d-1 under the 1940 Act as 
if the early withdrawal charge were a CDSC (as defined below) and as if 
the Fund were an open-end investment company and the Fund's waiver of, 
scheduled variation in, or elimination of, the early withdrawal charge 
will apply uniformly to all shareholders. Contingent deferred sales 
charges (``CDSC'') are distribution-related charges payable to a 
distributor and assessed by an open-end investment company pursuant to 
Rule 6c-10 under the 1940 Act.

Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(a)(2) of the 1940 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 1940 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 1940 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 1940 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 1940 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 1940 Act, 
or from any rule or regulation under the 1940 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 1940 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 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 1940 
Act to any greater degree than open-end investment companies' multiple 
class structures that are permitted by rule 18f-3 under the 1940 Act. 
Applicants state that each Fund will comply with

[[Page 48560]]

the provisions of rule 18f-3 as if it were an open-end investment 
company.

Early Withdrawal Charges

    1. Section 23(c) of the 1940 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 1940 Act permits 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 
1940 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.
    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 
Future Funds to impose early withdrawal charges, which are 
distribution-related fees payable to the distributor, 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 CDSCs imposed by open-end 
investment companies under rule 6c-10 under the 1940 Act. Rule 6c-10 
permits open-end investment companies to impose CDSCs, subject to 
certain conditions. Applicants note that rule 6c-10 is grounded in 
policy considerations supporting the employment of CDSCs 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 1940 
Act as if the rule were applicable to closed-end investment companies. 
Each Future Fund will disclose early withdrawal charges in accordance 
with the requirements of Form N-1A concerning CDSCs.

Asset-Based Distribution and/or Service Fees

    1. Section 17(d) of the 1940 Act and rule 17d-1 under the 1940 Act 
prohibit an affiliated person of a registered investment company, or an 
affiliated person of such person, acting as principal, from 
participating in or effecting any transaction in connection with any 
joint enterprise or joint arrangement in which the investment company 
participates unless the Commission issues an order permitting the 
transaction. In reviewing applications submitted under section 17(d) 
and rule 17d-1, the Commission considers whether the participation of 
the investment company in a joint enterprise or joint arrangement is 
consistent with the provisions, policies and purposes of the 1940 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 1940 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 1940 
Act. Applicants request an order under section 17(d) and rule 17d-1 
under the 1940 Act to the extent necessary to permit the Fund to impose 
asset-based distribution and 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 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 1940 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 1940 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 1940 Act, as amended from time to time, as if those rules 
applied to closed-end management investment companies, and will comply 
with the FINRA Rule 2341, 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. 2017-22517 Filed 10-17-17; 8:45 am]
BILLING CODE 8011-01-P
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