Carillon Series Trust, et al.; Notice of Application, 19980-19984 [2019-09334]
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223,428 hours (183,813 + 33,850 +
5,765).
In addition, the Commission staff
estimates that covered entities will
incur costs of approximately $6,617,298
annually, primarily as payment to third
party data base providers that will
search for the missing securityholders.
The retention period for the
recordkeeping requirement under Rule
17Ad–17 is not less than three years.
The recordkeeping requirement under
this rule is mandatory to assist the
Commission in monitoring compliance
with the rule. This rule does not involve
the collection of confidential
information.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549, or send an email to: PRA_
Mailbox@sec.gov.
Dated: May 2, 2019.
Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019–09287 Filed 5–6–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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Proposed Collection; Comment
Request
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Extension:
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Rule 17a–8, SEC File No. 270–225, OMB
Control No. 3235–0235
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501–3520), the Securities
and Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget for extension
and approval.
Rule 17a–8 (17 CFR 270.17a–8) under
the Investment Company Act of 1940
(the ‘‘Act’’) (15 U.S.C. 80a–1 et seq.) is
entitled ‘‘Mergers of affiliated
companies.’’ Rule 17a–8 exempts
certain mergers and similar business
combinations (‘‘mergers’’) of affiliated
registered investment companies
(‘‘funds’’) from prohibitions under
section 17(a) of the Act (15 U.S.C. 80a–
17(a)) on purchases and sales between a
fund and its affiliates. The rule requires
fund directors to consider certain issues
and to record their findings in board
minutes. The rule requires the directors
of any fund merging with an
unregistered entity to approve
procedures for the valuation of assets
received from that entity. These
procedures must provide for the
preparation of a report by an
independent evaluator that sets forth the
fair value of each such asset for which
market quotations are not readily
available. The rule also requires a fund
being acquired to obtain approval of the
merger transaction by a majority of its
outstanding voting securities, except in
certain situations, and requires any
surviving fund to preserve written
records describing the merger and its
terms for six years after the merger (the
first two in an easily accessible place).
The average annual burden of meeting
the requirements of rule 17a–8 is
estimated to be 7 hours for each fund.
The Commission staff estimates that
each year approximately 468 funds rely
on the rule. The estimated total average
annual burden for all respondents
therefore is 3,276 hours.
The average cost burden of preparing
a report by an independent evaluator in
a merger with an unregistered entity is
estimated to be $15,000. The average net
cost burden of obtaining approval of a
merger transaction by a majority of a
fund’s outstanding voting securities is
estimated to be $100,000. The
Commission staff estimates that each
year approximately 0 mergers with
unregistered entities occur and
approximately 137 funds hold
shareholder votes that would not
otherwise have held a shareholder vote.
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The total annual cost burden of meeting
these requirements is estimated to be
$13,700,000.
The estimates of average burden hours
and average cost burdens are made
solely for the purposes of the Paperwork
Reduction Act, and are not derived from
a comprehensive or even a
representative survey or study. An
agency may not conduct or sponsor, and
a person is not required to respond to,
a collection of information unless it
displays a currently valid OMB control
number.
Written comments are requested on:
(a) Whether the collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information has practical utility; (b) the
accuracy of the Commission’s estimate
of the burdens of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
technology. Consideration will be given
to comments and suggestions submitted
in writing within 60 days of this
publication.
Please direct your written comments
to Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, C/O Candace
Kenner, 100 F Street NE, Washington,
DC 20549; or send an email to: PRA_
Mailbox@sec.gov.
Dated: May 2, 2019.
Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019–09293 Filed 5–6–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33464; 812–14194–03]
Carillon Series Trust, et al.; Notice of
Application
May 2, 2019.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (‘‘Act’’) for an exemption from
section 15(a) of the Act, as well as from
certain disclosure requirements in rule
20a–1 under the Act, Item 19(a)(3) of
Form N–1A, Items 22(c)(1)(ii),
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of
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Schedule 14A under the Securities
Exchange Act of 1934 (‘‘1934 Act’’), and
sections 6–07(2)(a), (b), and (c) of
Regulation S–X (‘‘Disclosure
Requirements’’).
Applicants: Carillon Series Trust
(‘‘Trust’’), a Delaware statutory trust
registered under the Act as an open-end
management investment company with
multiple series (each a ‘‘Fund’’) and
Carillon Tower Advisers, Inc. (‘‘Initial
Adviser’’), a Florida corporation
registered as an investment adviser
under the Investment Advisers Act of
1940 (‘‘Advisers Act’’) that serves an
investment adviser to the Funds
(collectively with the Trust, the
‘‘Applicants’’).
Summary of Application: The
requested exemption would permit
Applicants to enter into and materially
amend subadvisory agreements with
subadvisers without shareholder
approval and would grant relief from
the Disclosure Requirements as they
relate to fees paid to the subadvisers.
The requested exemptions are novel as
they extend not only to Wholly-Owned
and Non-Affiliated Subadvisers, but also
to Affiliated Subadvisers (defined
below). The requested order would
supersede a prior order.1
Filing Dates: The application was
filed on August 5, 2013, and amended
on February 18, 2014, December 4,
2018, December 21, 2018, March 26,
2019, and April 25, 2019.
Hearing or Notification of Hearing: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
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 May 28, 2019, 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: Susan L. Walzer, Carillon
Tower Advisers, Inc., 880 Carillon
1 Eagle Series Trust, et al., Investment Company
Act Rel. Nos. 32802A (Sept. 18, 2017) (notice) and
32861 (Oct. 16, 2017) (order) (included Carillon
Tower Advisers, Inc. as an applicant).
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Parkway, St. Petersburg, FL 33716 and
Kathy Kresch Ingber, K&L Gates LLP,
1601 K Street NW, Washington, DC
20006.
FOR FURTHER INFORMATION CONTACT:
Jessica Shin, Attorney-Adviser, at (202)
551–3685, or Kaitlin C. Bottock, 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
website by searching for the file number
or an Applicant using the ‘‘Company’’
name box, at https://www.sec.gov/
search/search.htm or by calling (202)
551–8090.
I. Requested Exemptive Relief
1. Applicants request an order to
permit the Adviser,2 subject to the
approval of the board of trustees of each
Trust (collectively, the ‘‘Board’’),3
including a majority of the trustees who
are not ‘‘interested persons’’ of the Trust
or the Adviser, as defined in section
2(a)(19) of the Act (the ‘‘Independent
Trustees’’), without obtaining
shareholder approval, to: (i) Select
investment subadvisers (‘‘Subadvisers’’)
for all or a portion of the assets of one
or more of the Funds pursuant to an
investment subadvisory agreement with
each Subadviser (each a ‘‘Subadvisory
Agreement’’); and (ii) materially amend
Subadvisory Agreements with the
Subadvisers.
2. Applicants also request an order
exempting the Subadvised Funds (as
defined below) from the Disclosure
Requirements, which require each Fund
to disclose fees paid to a Subadviser.
Applicants seek relief to permit each
Subadvised Fund to disclose (as a dollar
amount and a percentage of the Fund’s
net assets): (i) The aggregate fees paid to
the Adviser and any Wholly-Owned
Subadvisers; and (ii) The aggregate fees
paid to Affiliated and Non-Affiliated
Subadvisers (‘‘Aggregate Fee
Disclosure’’).4 Applicants seek an
2 The term ‘‘Adviser’’ means (i) The Initial
Adviser, (ii) its successors, and (iii) any entity
controlling, controlled by or under common control
with, the Initial Adviser or its successors that serves
as the primary adviser to a Subadvised Fund. For
the purposes of the requested order, ‘‘successor’’ is
limited to an entity or entities that result from a
reorganization into another jurisdiction or a change
in the type of business organization. Any other
Adviser also will be registered with the
Commission as an investment adviser under the
Advisers Act.
3 The term ‘‘Board’’ also includes the board of
trustees or directors of a future Subadvised Fund (as
defined below), if different from the board of
trustees (‘‘Trustees’’) of the Trust.
4 A ‘‘Wholly-Owned Subadviser’’ is any
investment subadviser that is (1) an indirect or
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19981
exemption to permit a Subadvised Fund
to include only the Aggregate Fee
Disclosure.5
3. Applicants request that the relief
apply to Applicants, as well as to any
future Fund and any other existing or
future registered open-end management
investment company or series thereof
that intends to rely on the requested
order in the future and that: (i) Is
advised by the Adviser; (ii) uses the
multi-manager structure described in
the application; and (iii) complies with
the terms and conditions of the
application (each, a ‘‘Subadvised
Fund’’).6
II. Management of the Subadvised
Funds
4. The Adviser serves or will serve as
the investment adviser to each
Subadvised Fund pursuant to an
investment advisory agreement with the
Fund (each an ‘‘Investment Advisory
Agreement’’). Each Investment Advisory
Agreement has been or will be approved
by the Board, including a majority of the
Independent Trustees, and by the
shareholders of the relevant Subadvised
Fund in the manner required by
sections 15(a) and 15(c) of the Act. The
terms of these Investment Advisory
Agreements comply or will comply with
section 15(a) of the Act. Applicants are
not seeking an exemption from the Act
with respect to the Investment Advisory
Agreements. Pursuant to the terms of
each Investment Advisory Agreement,
the Adviser, subject to the oversight of
the Board, will provide continuous
investment management for each
Subadvised Fund. For its services to
each Subadvised Fund, the Adviser
receives or will receive an investment
advisory fee from that Fund as specified
direct ‘‘wholly-owned subsidiary’’ (as such term is
defined in the Act) of the Adviser, (2) a ‘‘sister
company’’ of the Adviser that is an indirect or
direct ‘‘wholly-owned subsidiary’’ of the same
company that indirectly or directly wholly owns
the Adviser (the Adviser’s ‘‘parent company’’), or
(3) a parent company of the Adviser. An ‘‘Affiliated
Subadviser’’ is any investment subadviser that is
not a Wholly-Owned Subadviser, but is an
‘‘affiliated person’’ (as defined in section 2(a)(3) of
the Act) of a Subadvised Fund or the Adviser for
reasons other than serving as investment subadviser
to one or more Funds. A ‘‘Non-Affiliated
Subadviser’’ is any investment subadviser that is
not an ‘‘affiliated person’’ (as defined in the Act) of
a Subadvised Fund or the Adviser, except to the
extent that an affiliation arises solely because the
Subadviser serves as a subadviser to one or more
Funds.
5 Applicants note that all other items required by
sections 6–07(2)(a), (b) and (c) of Regulation S–X
will be disclosed.
6 All registered open-end investment companies
that currently intend to rely on the requested order
are named as Applicants. Any entity that relies on
the requested order will do so only in accordance
with the terms and conditions contained in the
application.
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in the applicable Investment Advisory
Agreement.
5. Consistent with the terms of each
Investment Advisory Agreement, the
Adviser may, subject to the approval of
the Board, including a majority of the
Independent Trustees, and the
shareholders of the applicable
Subadvised Fund (if required by
applicable law), delegate portfolio
management responsibilities of all or a
portion of the assets of a Subadvised
Fund to a Subadviser. The Adviser will
retain overall responsibility for the
management and investment of the
assets of each Subadvised Fund. This
responsibility includes recommending
the removal or replacement of
Subadvisers, allocating the portion of
that Subadvised Fund’s assets to any
given Subadviser and reallocating those
assets as necessary from time to time.7
The Subadvisers will be ‘‘investment
advisers’’ to the Subadvised Funds
within the meaning of Section 2(a)(20)
of the Act and will provide investment
management services to the Funds
subject to, without limitation, the
requirements of Sections 15(c) and 36(b)
of the Act.8 The Subadvisers, subject to
the oversight of the Adviser and the
Board, will determine the securities and
other investments to be purchased, sold
or entered into by a Subadvised Fund’s
portfolio or a portion thereof, and will
place orders with brokers or dealers that
they select.9
6. The Subadvisory Agreements will
be approved by the Board, including a
majority of the Independent Trustees, in
accordance with sections 15(a) and 15(c)
of the Act. In addition, the terms of each
Subadvisory Agreement will comply
fully with the requirements of section
15(a) of the Act. The Adviser may
compensate the Subadvisers or the
Subadvised Funds may compensate the
Subadvisers directly.
7. Subadvised Funds will inform
shareholders of the hiring of a new
Subadviser pursuant to the following
7 Applicants represent that if the name of any
Subadvised Fund contains the name of a
subadviser, the name of the Adviser that serves as
the primary adviser to the Fund, or a trademark or
trade name that is owned by or publicly used to
identify the Adviser, will precede the name of the
subadviser.
8 The Subadvisers will be registered with the
Commission as an investment adviser under the
Advisers Act or not subject to such registration.
9 A ‘‘Subadviser’’ also includes an investment
subadviser that will provide the Adviser with a
model portfolio reflecting a specific strategy, style
or focus with respect to the investment of all or a
portion of a Subadvised Fund’s assets. The Adviser
may use the model portfolio to determine the
securities and other instruments to be purchased,
sold or entered into by a Subadvised Fund’s
portfolio or a portion thereof, and place orders with
brokers or dealers that it selects.
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procedures (‘‘Modified Notice and
Access Procedures’’): (a) Within 90 days
after a new Subadviser is hired for any
Subadvised Fund, that Fund will send
its shareholders either a Multi-manager
Notice or a Multi-manager Notice and
Multi-manager Information
Statement; 10 and (b) the Subadvised
Fund will make the Multi-manager
Information Statement available on the
website identified in the Multi-manager
Notice no later than when the Multimanager Notice (or Multi-manager
Notice and Multi-manager Information
Statement) is first sent to shareholders,
and will maintain it on that website for
at least 90 days.11
III. Applicable Law
8. Section 15(a) of the Act states, in
part, that it is unlawful for any person
to act as an investment adviser to a
registered investment company ‘‘except
pursuant to a written contract, which
contract, whether with such registered
company or with an investment adviser
of such registered company, has been
approved by the vote of a majority of the
outstanding voting securities of such
registered company.’’
9. Form N–1A is the registration
statement used by open-end investment
companies. Item 19(a)(3) of Form N–1A
requires a registered investment
company to disclose in its statement of
additional information the method of
computing the ‘‘advisory fee payable’’
by the investment company with respect
to each investment adviser, including
the total dollar amounts that the
investment company ‘‘paid to the
adviser (aggregated with amounts paid
to affiliated advisers, if any), and any
10 A ‘‘Multi-manager Notice’’ will be modeled on
a Notice of Internet Availability as defined in Rule
14a–16 under the 1934 Act, and specifically will,
among other things: (a) Summarize the relevant
information regarding the new Subadviser (except
as modified to permit Aggregate Fee Disclosure); (b)
inform shareholders that the Multi-manager
Information Statement is available on a website; (c)
provide the website address; (d) state the time
period during which the Multi-manager Information
Statement will remain available on that website; (e)
provide instructions for accessing and printing the
Multi-manager Information Statement; and (f)
instruct the shareholder that a paper or email copy
of the Multi-manager Information Statement may be
obtained, without charge, by contacting the
Subadvised Fund. A ‘‘Multi-manager Information
Statement’’ will meet the requirements of
Regulation 14C, Schedule 14C and Item 22 of
Schedule 14A under the 1934 Act for an
information statement, except as modified by the
requested order to permit Aggregate Fee Disclosure.
Multi-manager Information Statements will be filed
with the Commission via the EDGAR system.
11 In addition, Applicants represent that
whenever a Subadviser is hired or terminated, or a
Subadvisory Agreement is materially amended, the
Subadvised Fund’s prospectus and statement of
additional information will be supplemented
promptly pursuant to rule 497(e) under the
Securities Act of 1933.
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advisers who are not affiliated persons
of the adviser, under the investment
advisory contract for the last three fiscal
years.’’
10. Rule 20a–1 under the Act requires
proxies solicited with respect to a
registered investment company to
comply with Schedule 14A under the
1934 Act. Items 22(c)(1)(ii), 22(c)(1)(iii),
22(c)(8) and 22(c)(9) of Schedule 14A,
taken together, require a proxy
statement for a shareholder meeting at
which the advisory contract will be
voted upon to include the ‘‘rate of
compensation of the investment
adviser,’’ the ‘‘aggregate amount of the
investment adviser’s fee,’’ a description
of the ‘‘terms of the contract to be acted
upon,’’ and, if a change in the advisory
fee is proposed, the existing and
proposed fees and the difference
between the two fees.
11. Regulation S–X sets forth the
requirements for financial statements
required to be included as part of a
registered investment company’s
registration statement and shareholder
reports filed with the Commission.
Sections 6–07(2)(a), (b), and (c) of
Regulation S–X require a registered
investment company to include in its
financial statements information about
investment advisory fees.
12. 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 provisions of the
Act, or any rule thereunder, if such
exemption is necessary or appropriate
in the public interest and consistent
with the protection of investors and the
purposes fairly intended by the policy
and provisions of the Act. Applicants
state that the requested relief meets this
standard for the reasons discussed
below.
IV. Arguments in Support of the
Requested Relief
13. Applicants assert that, from the
perspective of the shareholder, the role
of the Subadvisers is substantially
equivalent to the limited role of the
individual portfolio managers employed
by an investment adviser to a traditional
investment company. Applicants also
assert that the shareholders expect the
Adviser, subject to review and approval
of the Board, to select a Subadviser who
is in the best position to achieve the
Subadvised Fund’s investment
objective. Applicants believe that
permitting the Adviser to perform the
duties for which the shareholders of the
Subadvised Fund are paying the
Adviser—the selection, oversight and
evaluation of the Subadviser—without
incurring unnecessary delays or
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expenses of convening special meetings
of shareholders is appropriate and in the
interest of the Fund’s shareholders, and
will allow such Fund to operate more
efficiently. Applicants state that each
Investment Advisory Agreement will
continue to be fully subject to section
15(a) of the Act and approved by the
relevant Board, including a majority of
the Independent Trustees, in the
manner required by section 15(a) and
15(c) of the Act.
14. Applicants submit that the
requested relief meets the standards for
relief under section 6(c) of the Act.
Applicants state that the operation of
the Subadvised Fund in the manner
described in the Application must be
approved by shareholders of that Fund
before it may rely on the requested
relief. Applicants also state that the
proposed conditions to the requested
relief are designed to address any
potential conflicts of interest or
economic incentives, and provide that
shareholders are informed when new
Subadvisers are hired.
15. Applicants contend that, in the
circumstances described in the
application, a proxy solicitation to
approve the appointment of new
Subadvisers provides no more
meaningful information to shareholders
than the proposed Multi-manager
Information Statement. Applicants state
that, accordingly, they believe the
requested relief 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.
16. With respect to the relief
permitting Aggregate Fee Disclosure,
Applicants assert that disclosure of the
individual fees paid to the Subadvisers
does not serve any meaningful purpose.
Applicants contend that the primary
reasons for requiring disclosure of
individual fees paid to Subadvisers are
to inform shareholders of expenses to be
charged by a particular Subadvised
Fund and to enable shareholders to
compare the fees to those of other
comparable investment companies.
Applicants believe that the requested
relief satisfies these objectives because
the Subadvised Fund’s overall advisory
fee will be fully disclosed and,
therefore, shareholders will know what
the Subadvised Fund’s fees and
expenses are and will be able to
compare the advisory fees a Subadvised
Fund is charged to those of other
investment companies. In addition,
Applicants assert that the requested
relief would benefit shareholders of the
Subadvised Fund because it would
improve the Adviser’s ability to
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negotiate the fees paid to Subadvisers.
In particular, Applicants state that if the
Adviser is not required to disclose the
Subadvisers’ fees to the public, the
Adviser may be able to negotiate rates
that are below a Subadviser’s ‘‘posted’’
amounts. Applicants assert that the
relief will also encourage Subadvisers to
negotiate lower subadvisory fees with
the Adviser if the lower fees are not
required to be made public.
V. Novel Relief for Affiliated
Subadvisers
17. To date, the Commission has
granted the requested relief with respect
to certain Wholly-Owned and NonAffiliated Subadvisers through
numerous exemptive orders. Applicants
believe the rationale articulated above
supports extending the requested relief
to Affiliated Subadvisers. Applicants
state that although the Adviser’s
judgment in recommending a
Subadviser can be affected by certain
conflicts, they do not warrant denying
the extension of the requested relief to
Affiliated Subadvisers. Specifically, the
Adviser faces those conflicts in
allocating fund assets between itself and
a Subadviser, and across Subadvisers, as
it has an interest in considering the
benefit it will receive, directly or
indirectly, from the fee the Subadvised
Fund pays for the management of those
assets. Applicants also state that to the
extent the Adviser has a conflict of
interest with respect to the selection of
an Affiliated Subadviser, the proposed
conditions are protective of shareholder
interests by ensuring the Board’s
independence and providing the Board
with the appropriate resources and
information to monitor and address
conflicts. Moreover, Applicants note
treating all Subadvisers equally under
the requested relief might help avoid the
selection of Subadvisers potentially
being influenced by considerations
regarding the applicable regulatory
requirements (i.e., whether a
shareholder vote is required) and the
associated costs and delays.
18. With respect to the relief
permitting Aggregate Fee Disclosure,
Applicants assert that it is appropriate
to disclose only aggregate fees paid to
Affiliated Subadvisers for the same
reasons that similar relief has been
granted previously with respect to
Wholly-Owned and Non-Affiliated
Subadvisers.
19. As Applicants note, the
Commission has not previously issued
the requested relief with respect to
Affiliated Subadvisers because of
concerns relating to conflicts of interest
that the Adviser might face with respect
to the hiring or termination of an
PO 00000
Frm 00085
Fmt 4703
Sfmt 4703
19983
Affiliated Subadviser.12 While the
Commission continues to believe that
the selection and retention of Affiliated
Subadvisers by the Adviser potentially
presents different or additional conflicts
of interest than may be the case with
Non-Affiliated or Wholly-Owned
Subadvisers, Applicants have persuaded
the Commission that extending the
relief to Affiliated Subadvisers is
appropriate in the public interest and
consistent with the protection of
investors and the purposes and policies
underlying the Act. Specifically, the
proposed terms and conditions of the
requested relief with respect to
Affiliated Subadvisers, including the
enhanced oversight by the Board, are
designed to address the potential
conflicts of interest with respect to both
those common to all types of
Subadvisers and specific to Affiliated
Subadvisers.
VI. Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. Before a Subadvised Fund may rely
on the order requested in the
Application, the operation of the
Subadvised Fund in the manner
described in the Application will be, or
has been, approved by a majority of the
Subadvised Fund’s outstanding voting
securities as defined in the Act, or, in
the case of a Subadvised Fund whose
public shareholders purchase shares on
the basis of a prospectus containing the
disclosure contemplated by condition 2
below, by the initial shareholder before
such Subadvised Fund’s shares are
offered to the public.
2. The prospectus for each
Subadvised Fund will disclose the
existence, substance and effect of any
order granted pursuant to the
Application. In addition, each
Subadvised Fund will hold itself out to
the public as employing the multimanager structure described in the
Application. The prospectus will
prominently disclose that the Adviser
has the ultimate responsibility, subject
to oversight by the Board, to oversee the
Subadvisers and recommend their
hiring, termination, and replacement.
3. The Adviser will provide general
management services to each
Subadvised Fund, including overall
supervisory responsibility for the
general management and investment of
the Subadvised Fund’s assets, and
subject to review and oversight of the
12 See Exemption from Shareholder Approval for
Certain Subadvisory Contacts, Investment Company
Act Release No. 26230 (Oct. 23, 2003) at section
II.A.3.
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19984
Federal Register / Vol. 84, No. 88 / Tuesday, May 7, 2019 / Notices
Board, will (i) set the Subadvised
Fund’s overall investment strategies, (ii)
evaluate, select, and recommend
Subadvisers for all or a portion of the
Subadvised Fund’s assets, (iii) allocate
and, when appropriate, reallocate the
Subadvised Fund’s assets among
Subadvisers, (iv) monitor and evaluate
the Subadvisers’ performance, and (v)
implement procedures reasonably
designed to ensure that Subadvisers
comply with the Subadvised Fund’s
investment objective, policies and
restrictions.
4. Subadvised Funds will inform
shareholders of the hiring of a new
Subadviser within 90 days after the
hiring of the new Subadviser pursuant
to the Modified Notice and Access
Procedures.
5. At all times, at least a majority of
the Board will be Independent Trustees,
and the selection and nomination of
new or additional Independent Trustees
will be placed within the discretion of
the then-existing Independent Trustees.
6. Independent Legal Counsel, as
defined in Rule 0–1(a)(6) under the Act,
will be engaged to represent the
Independent Trustees. The selection of
such counsel will be within the
discretion of the then-existing
Independent Trustees.
7. Whenever a Subadviser is hired or
terminated, the Adviser will provide the
Board with information showing the
expected impact on the profitability of
the Adviser.
8. The Board must evaluate any
material conflicts that may be present in
a subadvisory arrangement. Specifically,
whenever a subadviser change is
proposed for a Subadvised Fund
(‘‘Subadviser Change’’) or the Board
considers an existing Subadvisory
Agreement as part of its annual review
process (‘‘Subadviser Review’’):
(a) The Adviser will provide the
Board, to the extent not already being
provided pursuant to section 15(c) of
the Act, with all relevant information
concerning:
(i) Any material interest in the
proposed new Subadviser, in the case of
a Subadviser Change, or the Subadviser
in the case of a Subadviser Review, held
directly or indirectly by the Adviser or
a parent or sister company of the
Adviser, and any material impact the
proposed Subadvisory Agreement may
have on that interest;
(ii) Any arrangement or
understanding in which the Adviser or
any parent or sister company of the
Adviser is a participant that (A) may
have had a material effect on the
proposed Subadviser Change or
Subadviser Review, or (B) may be
materially affected by the proposed
VerDate Sep<11>2014
16:24 May 06, 2019
Jkt 247001
Subadviser Change or Subadviser
Review;
(iii) Any material interest in a
Subadviser held directly or indirectly by
an officer or Trustee of the Subadvised
Fund, or an officer or board member of
the Adviser (other than through a
pooled investment vehicle not
controlled by such person); and
(iv) Any other information that may
be relevant to the Board in evaluating
any potential material conflicts of
interest in the proposed Subadviser
Change or Subadviser Review.
(b) The Board, including a majority of
the Independent Trustees, will make a
separate finding, reflected in the Board
minutes, that the Subadviser Change or
continuation after Subadviser Review is
in the best interests of the Subadvised
Fund and its shareholders and, based on
the information provided to the Board,
does not involve a conflict of interest
from which the Adviser, a Subadviser,
any officer or Trustee of the Subadvised
Fund, or any officer or board member of
the Adviser derives an inappropriate
advantage.
9. Each Subadvised Fund will
disclose in its registration statement the
Aggregate Fee Disclosure.
10. In the event that the Commission
adopts a rule under the Act providing
substantially similar relief to that in the
order requested in the Application, the
requested order will expire on the
effective date of that rule.
11. Any new Subadvisory Agreement
or any amendment to an existing
Investment Advisory Agreement or
Subadvisory Agreement that directly or
indirectly results in an increase in the
aggregate advisory fee rate payable by
the Subadvised Fund will be submitted
to the Subadvised Fund’s shareholders
for approval.
By the Commission.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–09334 Filed 5–6–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–658, OMB Control No.
3235–0716]
Submission for OMB Review;
Comment Request
Upon Written Request Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736
Frm 00086
Dated: May 2, 2019.
Vanessa A. Countryman,
Acting Secretary.
[FR Doc. 2019–09283 Filed 5–6–19; 8:45 am]
Extension:
Form C
PO 00000
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(‘‘Commission’’) has submitted to the
Office of Management and Budget this
request for extension of the previously
approved collection of information
discussed below.
Form C (17 CFR 239.900) is used by
issuers offering securities in reliance on
the crowdfunding exemption in Section
4(a)(6) (15 U.S.C. 77d(a)(6)) of the
Securities Act of 1933 (‘‘Securities Act’’)
(15 U.S.C. 77a et seq.) Form C will also
be used by issuers that have completed
transactions in reliance on Section
4(a)(6) to file annual reports or to
provide notice of the termination of
reporting obligations.. The information
collected is intended to create a
framework for the filing and disclosure
requirements of Title III Section 4A of
the Jumpstart Our Business Startups Act
(Pub. L. 112–106, 126 Stat. 306) to
implement the exemption from
Securities Act registration for offerings
made in reliance on Section 4(a)(6).
Form C takes approximately 48.96969
hours per response and is filed by
approximately 5,852 respondents. We
estimate that 75% of the 48.96969 hours
per response (36.72727 hours) is
prepared by the issuer for a total annual
reporting burden of 214,928 hours
(36.72727 hours per response × 5,852
responses).
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid
control number.
The public may view the background
documentation for this information
collection at the following website,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503,
or by sending an email to:
Lindsay.M.Abate@omb.eop.gov; and (ii)
Charles Riddle, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o Candace
Kenner, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov. Comments must be
submitted to OMB within 30 days of
this notice.
BILLING CODE 8011–01–P
Fmt 4703
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]]>Agencies
[Federal Register Volume 84, Number 88 (Tuesday, May 7, 2019)]
[Notices]
[Pages 19980-19984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-09334]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33464; 812-14194-03]
Carillon Series Trust, et al.; Notice of Application
May 2, 2019.
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 (``Act'') for an exemption from section 15(a) of
the Act, as well as from certain disclosure requirements in rule 20a-1
under the Act, Item 19(a)(3) of Form N-1A, Items 22(c)(1)(ii),
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of
[[Page 19981]]
Schedule 14A under the Securities Exchange Act of 1934 (``1934 Act''),
and sections 6-07(2)(a), (b), and (c) of Regulation S-X (``Disclosure
Requirements'').
Applicants: Carillon Series Trust (``Trust''), a Delaware statutory
trust registered under the Act as an open-end management investment
company with multiple series (each a ``Fund'') and Carillon Tower
Advisers, Inc. (``Initial Adviser''), a Florida corporation registered
as an investment adviser under the Investment Advisers Act of 1940
(``Advisers Act'') that serves an investment adviser to the Funds
(collectively with the Trust, the ``Applicants'').
Summary of Application: The requested exemption would permit
Applicants to enter into and materially amend subadvisory agreements
with subadvisers without shareholder approval and would grant relief
from the Disclosure Requirements as they relate to fees paid to the
subadvisers. The requested exemptions are novel as they extend not only
to Wholly-Owned and Non-Affiliated Subadvisers, but also to Affiliated
Subadvisers (defined below). The requested order would supersede a
prior order.\1\
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\1\ Eagle Series Trust, et al., Investment Company Act Rel. Nos.
32802A (Sept. 18, 2017) (notice) and 32861 (Oct. 16, 2017) (order)
(included Carillon Tower Advisers, Inc. as an applicant).
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Filing Dates: The application was filed on August 5, 2013, and
amended on February 18, 2014, December 4, 2018, December 21, 2018,
March 26, 2019, and April 25, 2019.
Hearing or Notification of Hearing: An order granting the
application will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving 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 May 28, 2019, 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: Susan L. Walzer,
Carillon Tower Advisers, Inc., 880 Carillon Parkway, St. Petersburg, FL
33716 and Kathy Kresch Ingber, K&L Gates LLP, 1601 K Street NW,
Washington, DC 20006.
FOR FURTHER INFORMATION CONTACT: Jessica Shin, Attorney-Adviser, at
(202) 551-3685, or Kaitlin C. Bottock, 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 website by searching for the file number or an Applicant
using the ``Company'' name box, at https://www.sec.gov/search/search.htm
or by calling (202) 551-8090.
I. Requested Exemptive Relief
1. Applicants request an order to permit the Adviser,\2\ subject to
the approval of the board of trustees of each Trust (collectively, the
``Board''),\3\ including a majority of the trustees who are not
``interested persons'' of the Trust or the Adviser, as defined in
section 2(a)(19) of the Act (the ``Independent Trustees''), without
obtaining shareholder approval, to: (i) Select investment subadvisers
(``Subadvisers'') for all or a portion of the assets of one or more of
the Funds pursuant to an investment subadvisory agreement with each
Subadviser (each a ``Subadvisory Agreement''); and (ii) materially
amend Subadvisory Agreements with the Subadvisers.
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\2\ The term ``Adviser'' means (i) The Initial Adviser, (ii) its
successors, and (iii) any entity controlling, controlled by or under
common control with, the Initial Adviser or its successors that
serves as the primary adviser to a Subadvised Fund. For the purposes
of the requested order, ``successor'' is limited to an entity or
entities that result from a reorganization into another jurisdiction
or a change in the type of business organization. Any other Adviser
also will be registered with the Commission as an investment adviser
under the Advisers Act.
\3\ The term ``Board'' also includes the board of trustees or
directors of a future Subadvised Fund (as defined below), if
different from the board of trustees (``Trustees'') of the Trust.
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2. Applicants also request an order exempting the Subadvised Funds
(as defined below) from the Disclosure Requirements, which require each
Fund to disclose fees paid to a Subadviser. Applicants seek relief to
permit each Subadvised Fund to disclose (as a dollar amount and a
percentage of the Fund's net assets): (i) The aggregate fees paid to
the Adviser and any Wholly-Owned Subadvisers; and (ii) The aggregate
fees paid to Affiliated and Non-Affiliated Subadvisers (``Aggregate Fee
Disclosure'').\4\ Applicants seek an exemption to permit a Subadvised
Fund to include only the Aggregate Fee Disclosure.\5\
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\4\ A ``Wholly-Owned Subadviser'' is any investment subadviser
that is (1) an indirect or direct ``wholly-owned subsidiary'' (as
such term is defined in the Act) of the Adviser, (2) a ``sister
company'' of the Adviser that is an indirect or direct ``wholly-
owned subsidiary'' of the same company that indirectly or directly
wholly owns the Adviser (the Adviser's ``parent company''), or (3) a
parent company of the Adviser. An ``Affiliated Subadviser'' is any
investment subadviser that is not a Wholly-Owned Subadviser, but is
an ``affiliated person'' (as defined in section 2(a)(3) of the Act)
of a Subadvised Fund or the Adviser for reasons other than serving
as investment subadviser to one or more Funds. A ``Non-Affiliated
Subadviser'' is any investment subadviser that is not an
``affiliated person'' (as defined in the Act) of a Subadvised Fund
or the Adviser, except to the extent that an affiliation arises
solely because the Subadviser serves as a subadviser to one or more
Funds.
\5\ Applicants note that all other items required by sections 6-
07(2)(a), (b) and (c) of Regulation S-X will be disclosed.
---------------------------------------------------------------------------
3. Applicants request that the relief apply to Applicants, as well
as to any future Fund and any other existing or future registered open-
end management investment company or series thereof that intends to
rely on the requested order in the future and that: (i) Is advised by
the Adviser; (ii) uses the multi-manager structure described in the
application; and (iii) complies with the terms and conditions of the
application (each, a ``Subadvised Fund'').\6\
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\6\ All registered open-end investment companies that currently
intend to rely on the requested order are named as Applicants. Any
entity that relies on the requested order will do so only in
accordance with the terms and conditions contained in the
application.
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II. Management of the Subadvised Funds
4. The Adviser serves or will serve as the investment adviser to
each Subadvised Fund pursuant to an investment advisory agreement with
the Fund (each an ``Investment Advisory Agreement''). Each Investment
Advisory Agreement has been or will be approved by the Board, including
a majority of the Independent Trustees, and by the shareholders of the
relevant Subadvised Fund in the manner required by sections 15(a) and
15(c) of the Act. The terms of these Investment Advisory Agreements
comply or will comply with section 15(a) of the Act. Applicants are not
seeking an exemption from the Act with respect to the Investment
Advisory Agreements. Pursuant to the terms of each Investment Advisory
Agreement, the Adviser, subject to the oversight of the Board, will
provide continuous investment management for each Subadvised Fund. For
its services to each Subadvised Fund, the Adviser receives or will
receive an investment advisory fee from that Fund as specified
[[Page 19982]]
in the applicable Investment Advisory Agreement.
5. Consistent with the terms of each Investment Advisory Agreement,
the Adviser may, subject to the approval of the Board, including a
majority of the Independent Trustees, and the shareholders of the
applicable Subadvised Fund (if required by applicable law), delegate
portfolio management responsibilities of all or a portion of the assets
of a Subadvised Fund to a Subadviser. The Adviser will retain overall
responsibility for the management and investment of the assets of each
Subadvised Fund. This responsibility includes recommending the removal
or replacement of Subadvisers, allocating the portion of that
Subadvised Fund's assets to any given Subadviser and reallocating those
assets as necessary from time to time.\7\ The Subadvisers will be
``investment advisers'' to the Subadvised Funds within the meaning of
Section 2(a)(20) of the Act and will provide investment management
services to the Funds subject to, without limitation, the requirements
of Sections 15(c) and 36(b) of the Act.\8\ The Subadvisers, subject to
the oversight of the Adviser and the Board, will determine the
securities and other investments to be purchased, sold or entered into
by a Subadvised Fund's portfolio or a portion thereof, and will place
orders with brokers or dealers that they select.\9\
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\7\ Applicants represent that if the name of any Subadvised Fund
contains the name of a subadviser, the name of the Adviser that
serves as the primary adviser to the Fund, or a trademark or trade
name that is owned by or publicly used to identify the Adviser, will
precede the name of the subadviser.
\8\ The Subadvisers will be registered with the Commission as an
investment adviser under the Advisers Act or not subject to such
registration.
\9\ A ``Subadviser'' also includes an investment subadviser that
will provide the Adviser with a model portfolio reflecting a
specific strategy, style or focus with respect to the investment of
all or a portion of a Subadvised Fund's assets. The Adviser may use
the model portfolio to determine the securities and other
instruments to be purchased, sold or entered into by a Subadvised
Fund's portfolio or a portion thereof, and place orders with brokers
or dealers that it selects.
---------------------------------------------------------------------------
6. The Subadvisory Agreements will be approved by the Board,
including a majority of the Independent Trustees, in accordance with
sections 15(a) and 15(c) of the Act. In addition, the terms of each
Subadvisory Agreement will comply fully with the requirements of
section 15(a) of the Act. The Adviser may compensate the Subadvisers or
the Subadvised Funds may compensate the Subadvisers directly.
7. Subadvised Funds will inform shareholders of the hiring of a new
Subadviser pursuant to the following procedures (``Modified Notice and
Access Procedures''): (a) Within 90 days after a new Subadviser is
hired for any Subadvised Fund, that Fund will send its shareholders
either a Multi-manager Notice or a Multi-manager Notice and Multi-
manager Information Statement; \10\ and (b) the Subadvised Fund will
make the Multi-manager Information Statement available on the website
identified in the Multi-manager Notice no later than when the Multi-
manager Notice (or Multi-manager Notice and Multi-manager Information
Statement) is first sent to shareholders, and will maintain it on that
website for at least 90 days.\11\
---------------------------------------------------------------------------
\10\ A ``Multi-manager Notice'' will be modeled on a Notice of
Internet Availability as defined in Rule 14a-16 under the 1934 Act,
and specifically will, among other things: (a) Summarize the
relevant information regarding the new Subadviser (except as
modified to permit Aggregate Fee Disclosure); (b) inform
shareholders that the Multi-manager Information Statement is
available on a website; (c) provide the website address; (d) state
the time period during which the Multi-manager Information Statement
will remain available on that website; (e) provide instructions for
accessing and printing the Multi-manager Information Statement; and
(f) instruct the shareholder that a paper or email copy of the
Multi-manager Information Statement may be obtained, without charge,
by contacting the Subadvised Fund. A ``Multi-manager Information
Statement'' will meet the requirements of Regulation 14C, Schedule
14C and Item 22 of Schedule 14A under the 1934 Act for an
information statement, except as modified by the requested order to
permit Aggregate Fee Disclosure. Multi-manager Information
Statements will be filed with the Commission via the EDGAR system.
\11\ In addition, Applicants represent that whenever a
Subadviser is hired or terminated, or a Subadvisory Agreement is
materially amended, the Subadvised Fund's prospectus and statement
of additional information will be supplemented promptly pursuant to
rule 497(e) under the Securities Act of 1933.
---------------------------------------------------------------------------
III. Applicable Law
8. Section 15(a) of the Act states, in part, that it is unlawful
for any person to act as an investment adviser to a registered
investment company ``except pursuant to a written contract, which
contract, whether with such registered company or with an investment
adviser of such registered company, has been approved by the vote of a
majority of the outstanding voting securities of such registered
company.''
9. Form N-1A is the registration statement used by open-end
investment companies. Item 19(a)(3) of Form N-1A requires a registered
investment company to disclose in its statement of additional
information the method of computing the ``advisory fee payable'' by the
investment company with respect to each investment adviser, including
the total dollar amounts that the investment company ``paid to the
adviser (aggregated with amounts paid to affiliated advisers, if any),
and any advisers who are not affiliated persons of the adviser, under
the investment advisory contract for the last three fiscal years.''
10. Rule 20a-1 under the Act requires proxies solicited with
respect to a registered investment company to comply with Schedule 14A
under the 1934 Act. Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and
22(c)(9) of Schedule 14A, taken together, require a proxy statement for
a shareholder meeting at which the advisory contract will be voted upon
to include the ``rate of compensation of the investment adviser,'' the
``aggregate amount of the investment adviser's fee,'' a description of
the ``terms of the contract to be acted upon,'' and, if a change in the
advisory fee is proposed, the existing and proposed fees and the
difference between the two fees.
11. Regulation S-X sets forth the requirements for financial
statements required to be included as part of a registered investment
company's registration statement and shareholder reports filed with the
Commission. Sections 6-07(2)(a), (b), and (c) of Regulation S-X require
a registered investment company to include in its financial statements
information about investment advisory fees.
12. 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 provisions of the Act, or
any rule thereunder, if such exemption is necessary or appropriate in
the public interest and consistent with the protection of investors and
the purposes fairly intended by the policy and provisions of the Act.
Applicants state that the requested relief meets this standard for the
reasons discussed below.
IV. Arguments in Support of the Requested Relief
13. Applicants assert that, from the perspective of the
shareholder, the role of the Subadvisers is substantially equivalent to
the limited role of the individual portfolio managers employed by an
investment adviser to a traditional investment company. Applicants also
assert that the shareholders expect the Adviser, subject to review and
approval of the Board, to select a Subadviser who is in the best
position to achieve the Subadvised Fund's investment objective.
Applicants believe that permitting the Adviser to perform the duties
for which the shareholders of the Subadvised Fund are paying the
Adviser--the selection, oversight and evaluation of the Subadviser--
without incurring unnecessary delays or
[[Page 19983]]
expenses of convening special meetings of shareholders is appropriate
and in the interest of the Fund's shareholders, and will allow such
Fund to operate more efficiently. Applicants state that each Investment
Advisory Agreement will continue to be fully subject to section 15(a)
of the Act and approved by the relevant Board, including a majority of
the Independent Trustees, in the manner required by section 15(a) and
15(c) of the Act.
14. Applicants submit that the requested relief meets the standards
for relief under section 6(c) of the Act. Applicants state that the
operation of the Subadvised Fund in the manner described in the
Application must be approved by shareholders of that Fund before it may
rely on the requested relief. Applicants also state that the proposed
conditions to the requested relief are designed to address any
potential conflicts of interest or economic incentives, and provide
that shareholders are informed when new Subadvisers are hired.
15. Applicants contend that, in the circumstances described in the
application, a proxy solicitation to approve the appointment of new
Subadvisers provides no more meaningful information to shareholders
than the proposed Multi-manager Information Statement. Applicants state
that, accordingly, they believe the requested relief 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.
16. With respect to the relief permitting Aggregate Fee Disclosure,
Applicants assert that disclosure of the individual fees paid to the
Subadvisers does not serve any meaningful purpose. Applicants contend
that the primary reasons for requiring disclosure of individual fees
paid to Subadvisers are to inform shareholders of expenses to be
charged by a particular Subadvised Fund and to enable shareholders to
compare the fees to those of other comparable investment companies.
Applicants believe that the requested relief satisfies these objectives
because the Subadvised Fund's overall advisory fee will be fully
disclosed and, therefore, shareholders will know what the Subadvised
Fund's fees and expenses are and will be able to compare the advisory
fees a Subadvised Fund is charged to those of other investment
companies. In addition, Applicants assert that the requested relief
would benefit shareholders of the Subadvised Fund because it would
improve the Adviser's ability to negotiate the fees paid to
Subadvisers. In particular, Applicants state that if the Adviser is not
required to disclose the Subadvisers' fees to the public, the Adviser
may be able to negotiate rates that are below a Subadviser's ``posted''
amounts. Applicants assert that the relief will also encourage
Subadvisers to negotiate lower subadvisory fees with the Adviser if the
lower fees are not required to be made public.
V. Novel Relief for Affiliated Subadvisers
17. To date, the Commission has granted the requested relief with
respect to certain Wholly-Owned and Non-Affiliated Subadvisers through
numerous exemptive orders. Applicants believe the rationale articulated
above supports extending the requested relief to Affiliated
Subadvisers. Applicants state that although the Adviser's judgment in
recommending a Subadviser can be affected by certain conflicts, they do
not warrant denying the extension of the requested relief to Affiliated
Subadvisers. Specifically, the Adviser faces those conflicts in
allocating fund assets between itself and a Subadviser, and across
Subadvisers, as it has an interest in considering the benefit it will
receive, directly or indirectly, from the fee the Subadvised Fund pays
for the management of those assets. Applicants also state that to the
extent the Adviser has a conflict of interest with respect to the
selection of an Affiliated Subadviser, the proposed conditions are
protective of shareholder interests by ensuring the Board's
independence and providing the Board with the appropriate resources and
information to monitor and address conflicts. Moreover, Applicants note
treating all Subadvisers equally under the requested relief might help
avoid the selection of Subadvisers potentially being influenced by
considerations regarding the applicable regulatory requirements (i.e.,
whether a shareholder vote is required) and the associated costs and
delays.
18. With respect to the relief permitting Aggregate Fee Disclosure,
Applicants assert that it is appropriate to disclose only aggregate
fees paid to Affiliated Subadvisers for the same reasons that similar
relief has been granted previously with respect to Wholly-Owned and
Non-Affiliated Subadvisers.
19. As Applicants note, the Commission has not previously issued
the requested relief with respect to Affiliated Subadvisers because of
concerns relating to conflicts of interest that the Adviser might face
with respect to the hiring or termination of an Affiliated
Subadviser.\12\ While the Commission continues to believe that the
selection and retention of Affiliated Subadvisers by the Adviser
potentially presents different or additional conflicts of interest than
may be the case with Non-Affiliated or Wholly-Owned Subadvisers,
Applicants have persuaded the Commission that extending the relief to
Affiliated Subadvisers is appropriate in the public interest and
consistent with the protection of investors and the purposes and
policies underlying the Act. Specifically, the proposed terms and
conditions of the requested relief with respect to Affiliated
Subadvisers, including the enhanced oversight by the Board, are
designed to address the potential conflicts of interest with respect to
both those common to all types of Subadvisers and specific to
Affiliated Subadvisers.
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\12\ See Exemption from Shareholder Approval for Certain
Subadvisory Contacts, Investment Company Act Release No. 26230 (Oct.
23, 2003) at section II.A.3.
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VI. Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Before a Subadvised Fund may rely on the order requested in the
Application, the operation of the Subadvised Fund in the manner
described in the Application will be, or has been, approved by a
majority of the Subadvised Fund's outstanding voting securities as
defined in the Act, or, in the case of a Subadvised Fund whose public
shareholders purchase shares on the basis of a prospectus containing
the disclosure contemplated by condition 2 below, by the initial
shareholder before such Subadvised Fund's shares are offered to the
public.
2. The prospectus for each Subadvised Fund will disclose the
existence, substance and effect of any order granted pursuant to the
Application. In addition, each Subadvised Fund will hold itself out to
the public as employing the multi-manager structure described in the
Application. The prospectus will prominently disclose that the Adviser
has the ultimate responsibility, subject to oversight by the Board, to
oversee the Subadvisers and recommend their hiring, termination, and
replacement.
3. The Adviser will provide general management services to each
Subadvised Fund, including overall supervisory responsibility for the
general management and investment of the Subadvised Fund's assets, and
subject to review and oversight of the
[[Page 19984]]
Board, will (i) set the Subadvised Fund's overall investment
strategies, (ii) evaluate, select, and recommend Subadvisers for all or
a portion of the Subadvised Fund's assets, (iii) allocate and, when
appropriate, reallocate the Subadvised Fund's assets among Subadvisers,
(iv) monitor and evaluate the Subadvisers' performance, and (v)
implement procedures reasonably designed to ensure that Subadvisers
comply with the Subadvised Fund's investment objective, policies and
restrictions.
4. Subadvised Funds will inform shareholders of the hiring of a new
Subadviser within 90 days after the hiring of the new Subadviser
pursuant to the Modified Notice and Access Procedures.
5. At all times, at least a majority of the Board will be
Independent Trustees, and the selection and nomination of new or
additional Independent Trustees will be placed within the discretion of
the then-existing Independent Trustees.
6. Independent Legal Counsel, as defined in Rule 0-1(a)(6) under
the Act, will be engaged to represent the Independent Trustees. The
selection of such counsel will be within the discretion of the then-
existing Independent Trustees.
7. Whenever a Subadviser is hired or terminated, the Adviser will
provide the Board with information showing the expected impact on the
profitability of the Adviser.
8. The Board must evaluate any material conflicts that may be
present in a subadvisory arrangement. Specifically, whenever a
subadviser change is proposed for a Subadvised Fund (``Subadviser
Change'') or the Board considers an existing Subadvisory Agreement as
part of its annual review process (``Subadviser Review''):
(a) The Adviser will provide the Board, to the extent not already
being provided pursuant to section 15(c) of the Act, with all relevant
information concerning:
(i) Any material interest in the proposed new Subadviser, in the
case of a Subadviser Change, or the Subadviser in the case of a
Subadviser Review, held directly or indirectly by the Adviser or a
parent or sister company of the Adviser, and any material impact the
proposed Subadvisory Agreement may have on that interest;
(ii) Any arrangement or understanding in which the Adviser or any
parent or sister company of the Adviser is a participant that (A) may
have had a material effect on the proposed Subadviser Change or
Subadviser Review, or (B) may be materially affected by the proposed
Subadviser Change or Subadviser Review;
(iii) Any material interest in a Subadviser held directly or
indirectly by an officer or Trustee of the Subadvised Fund, or an
officer or board member of the Adviser (other than through a pooled
investment vehicle not controlled by such person); and
(iv) Any other information that may be relevant to the Board in
evaluating any potential material conflicts of interest in the proposed
Subadviser Change or Subadviser Review.
(b) The Board, including a majority of the Independent Trustees,
will make a separate finding, reflected in the Board minutes, that the
Subadviser Change or continuation after Subadviser Review is in the
best interests of the Subadvised Fund and its shareholders and, based
on the information provided to the Board, does not involve a conflict
of interest from which the Adviser, a Subadviser, any officer or
Trustee of the Subadvised Fund, or any officer or board member of the
Adviser derives an inappropriate advantage.
9. Each Subadvised Fund will disclose in its registration statement
the Aggregate Fee Disclosure.
10. In the event that the Commission adopts a rule under the Act
providing substantially similar relief to that in the order requested
in the Application, the requested order will expire on the effective
date of that rule.
11. Any new Subadvisory Agreement or any amendment to an existing
Investment Advisory Agreement or Subadvisory Agreement that directly or
indirectly results in an increase in the aggregate advisory fee rate
payable by the Subadvised Fund will be submitted to the Subadvised
Fund's shareholders for approval.
By the Commission.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-09334 Filed 5-6-19; 8:45 am]
BILLING CODE 8011-01-P
