Hamilton Lane Private Assets Fund and Hamilton Lane Advisors, L.L.C., 37703-37705 [2020-13405]
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Federal Register / Vol. 85, No. 121 / Tuesday, June 23, 2020 / Notices
substantially similar to FINRA rules;
and confirm that the remaining rules on
the list of Common Rules continue to be
MEMX rules that are substantially
similar to FINRA rules.15 FINRA will
then confirm in writing whether the
rules listed in any updated list are
Common Rules as defined in the Plan.
Under the Plan, MEMX will also
provide FINRA with a current list of
common members and shall update the
list no less frequently than once each
quarter.16 The Commission believes that
these provisions are designed to provide
for continuing communication between
the Parties to ensure the continued
accuracy of the scope of the proposed
allocation of regulatory responsibility.
The Commission is hereby declaring
effective a Plan that, among other
things, allocates regulatory
responsibility to FINRA for the
oversight and enforcement of all MEMX
rules that are substantially similar to the
rules of FINRA for common members of
MEMX and FINRA. Therefore,
modifications to the Certification need
not be filed with the Commission as an
amendment to the Plan, provided that
the Parties are only adding to, deleting
from, or confirming changes to MEMX
rules in the Certification in conformance
with the definition of Common Rules
provided in the Plan. However, should
the Parties decide to add an MEMX rule
to the Certification that is not
substantially similar to a FINRA rule;
delete an MEMX rule from the
Certification that is substantially similar
to a FINRA rule; or leave on the
Certification an MEMX rule that is no
longer substantially similar to a FINRA
rule, then such a change would
constitute an amendment to the Plan,
which must be filed with the
Commission pursuant to Rule 17d–2
under the Act.17
IV. Conclusion
This Order gives effect to the Plan
filed with the Commission in File No.
4–762. The Parties shall notify all
members affected by the Plan of their
rights and obligations under the Plan.
It is therefore ordered, pursuant to
Section 17(d) of the Act, that the Plan
in File No. 4–762, between FINRA and
MEMX, filed pursuant to Rule 17d–2
under the Act, is approved and declared
effective.
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15 See
paragraph 2 of the Plan.
paragraph 3 of the Plan.
17 The Commission also notes that the addition to
or deletion from the Certification of any federal
securities laws, rules, and regulations for which
FINRA would bear responsibility under the Plan for
examining, and enforcing compliance by, common
members, also would constitute an amendment to
the Plan.
16 See
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It is further ordered that MEMX is
relieved of those responsibilities
allocated to FINRA under the Plan in
File No. 4–762.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–13433 Filed 6–22–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
33896; 812–15098]
Hamilton Lane Private Assets Fund
and Hamilton Lane Advisors, L.L.C.
June 17, 2020.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
Notice of an application under section
6(c) of the Investment Company Act of
1940 (the ‘‘Act’’) for an exemption from
sections 18(a)(2), 18(c) and 18(i) of the
Act, and for an order pursuant to section
17(d) of the Act and rule 17d–1 under
the Act.
SUMMARY OF APPLICATION: Applicants
request an order to permit certain
registered closed-end management
investment companies to issue multiple
classes of shares of beneficial interest
with varying sales loads and to impose
asset-based distribution and/or service
fees.
APPLICANTS: Hamilton Lane Private
Assets Fund (the ‘‘Initial Fund’’) and
Hamilton Lane Advisors, L.L.C. (the
‘‘Adviser’’).
FILING DATES: The application was filed
on February 24, 2020, and amended on
April 24, 2020.
HEARING OR NOTIFICATION OF HEARING:
An order granting the requested relief
will be issued unless the Commission
orders a hearing. Interested persons may
request a hearing by emailing the
Commission’s Secretary at SecretarysOffice@sec.gov and serving Applicants
with a copy of the request email.
Hearing requests should be received by
the Commission by 5:30 p.m. on July 13,
2020, 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,
18 17
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37703
the reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by emailing the
Commission’s Secretary.
The Commission:
Secretarys-Office@sec.gov. Applicants:
Attn: General Counsel, hllegal@
hamiltonlane.com.
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817, or Kaitlin C. Bottock,
Branch Chief, 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
website by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. The Initial Fund is a Delaware
statutory trust that is registered under
the Act as a non-diversified, closed-end
management investment company. The
Initial Fund’s primary investment
objective will be to generate capital
appreciation over the medium- and
long-term through investments in
private assets globally.
2. The Adviser, a Pennsylvania
limited liability company, is registered
as an investment adviser under the
Investment Advisers Act of 1940, as
amended (the ‘‘Advisers Act’’). The
Adviser will serve as investment adviser
to the Initial Fund.
3. Applicants seek an order to permit
the Initial Fund to issue multiple classes
of shares of beneficial interest with
varying sales loads and to impose assetbased distribution and/or service fees
and early repurchase fees.
4. Applicants request that the order
also apply to any continuously offered
registered closed-end management
investment company that has been
previously organized or that may be
organized in the future for which the
Adviser, or any entity controlling,
controlled by, or under common control
with the Adviser, or any successor in
interest to any such entity,1 acts as
investment adviser and which provides
periodic liquidity with respect to its
shares pursuant to rule 13e–4 under the
Securities Exchange Act of 1934 (each,
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.
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Federal Register / Vol. 85, No. 121 / Tuesday, June 23, 2020 / Notices
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a ‘‘Future Fund’’ and together with the
Initial Fund, the ‘‘Funds’’).2
5. The Initial Fund will initially will
register three classes of shares, ‘‘Class R
Shares’’, ‘‘Class C Shares’’ and ‘‘Class I
Shares.’’ Shares of the Initial Fund will
be sold only to persons who are
‘‘accredited investors,’’ as defined in
Regulation D under the Securities Act of
1933, and ‘‘qualified clients,’’ as defined
in the Advisers Act. The Funds will
offer their Shares continuously at a
price based on net asset value. Shares of
the Funds will not be listed on any
securities exchange nor quoted on any
quotation medium. The Funds do not
expect there to be a secondary trading
market for their shares.
6. Applicants state that if the Initial
Fund’s initial registration statement is
declared effective prior to receipt of the
requested relief, the Initial Fund will
only offer one class of shares, Class R
Shares, until receipt of the requested
relief. Each of Class R Shares, Class C
Shares and Class I Shares will have its
own fee and expense structure.
Additional offerings by any Fund
relying on the order may be on a private
placement or public offering basis.
7. Applicants state that, from time to
time, the Initial Fund may create
additional classes of shares, the terms of
which may differ between Class R
Shares, Class C Shares and Class I
Shares pursuant to and in compliance
with rule 18f–3 under the Act.
8. Applicants state that shares of a
Fund may be subject to an early
repurchase fee (‘‘Early Repurchase Fee’’)
at a rate of no greater than 2% of the
shareholder’s repurchase proceeds if the
interval between the date of purchase of
the shares and the valuation date with
respect to the repurchase of those shares
is less than one year.3 Any Early
Repurchase Fee will apply equally to all
classes of shares of a Fund, in
compliance with section 18 of the Act
and rule 18f–3 thereunder. To the extent
a Fund determines to waive, impose
scheduled variations of, or eliminate
any Early Repurchase Fee, it will do so
in compliance with the requirements of
rule 22d–1 under the Act as if the Early
2 Any Fund relying on this relief in the future will
do so in compliance with the terms and conditions
of the application. Applicants represent that each
entity presently intending to rely on the requested
relief is listed as an applicant.
3 Applicants state that an Early Repurchase Fee
charged by a Fund is not the same as a contingent
deferred sales load (‘‘CDSL’’) assessed by an openend fund pursuant to rule 6c–10 under the Act, as
CDSLs are distribution-related charges payable to a
distributor, whereas the Early Repurchase Fee is
payable to the Fund to compensate long-term
shareholders for the expenses related to shorter
term investors, in light of the Fund’s generally
longer-term investment horizons and investment
operations.
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Repurchase Fee were a CDSL and as if
the Fund were an open-end investment
company and the Fund’s waiver of,
scheduled variation in, or elimination
of, any such Early Repurchase Fee will
apply uniformly to all shareholders of
the Fund regardless of class. Applicants
state that the Initial Fund intends to
impose an Early Repurchase Fee of 2%.
9. Applicants represent that any assetbased service and/or distribution fees
for each class of shares of the Funds will
comply with the provisions of the
FINRA Rule 2341(d) (‘‘FINRA Sales
Charge Rule’’).4 Applicants also
represent that each Fund will disclose
in its prospectus the fees, expenses and
other characteristics of each class of
shares offered for sale by the prospectus,
as is required for open-end multiple
class funds under Form N–1A. As is
required for open-end funds, each Fund
will disclose its expenses in shareholder
reports, and describe any arrangements
that result in breakpoints in or
elimination of sales loads in its
prospectus.5 In addition, applicants will
comply with applicable enhanced fee
disclosure requirements for fund of
funds, including registered funds of
hedge funds.6
10. Each of the Funds will comply
with any requirements that the
Commission or FINRA may adopt
regarding disclosure at the point of sale
and in transaction confirmations about
the costs and conflicts of interest arising
out of the distribution of open-end
investment company shares, and
regarding prospectus disclosure of sales
loads and revenue sharing
arrangements, as if those requirements
applied to the Fund. In addition, each
Fund will contractually require that any
distributor of the Fund’s shares comply
with such requirements in connection
with the distribution of such Fund’s
shares.
4 Any reference to the FINRA Sales Charge Rule
includes any successor or replacement to the
FINRA Sales Charge Rule.
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 Act.
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Applicants’ Legal Analysis
Multiple Classes of Shares
1. Section 18(a)(2) of the Act provides
that a closed-end investment company
may not issue or sell a senior security
that is a stock unless certain
requirements are met. Applicants state
that the creation of multiple classes of
shares of the Funds may violate section
18(a)(2) because the Funds may not
meet such requirements with respect to
a class of shares that may be a senior
security.
2. Section 18(c) of the Act provides,
in relevant part, that a closed-end
investment company may not issue or
sell any senior security if, immediately
thereafter, the company has outstanding
more than one class of senior security.
Applicants state that the creation of
multiple classes of shares of the Funds
may be prohibited by section 18(c), as
a class may have priority over another
class as to payment of dividends
because shareholders of different classes
would pay different fees and expenses.
3. Section 18(i) of the Act provides
that each share of stock issued by a
registered management investment
company will be a voting stock and
have equal voting rights with every
other outstanding voting stock.
Applicants state that multiple classes of
shares of the Funds may violate section
18(i) of the Act because each class
would be entitled to exclusive voting
rights with respect to matters solely
related to that class.
4. Section 6(c) of the Act provides that
the Commission may exempt any
person, security or transaction or any
class or classes of persons, securities or
transactions from any provision of the
Act, or from any rule or regulation
under the Act, if and to the extent such
exemption is necessary or appropriate
in the public interest and consistent
with the protection of investors and the
purposes fairly intended by the policy
and provisions of the Act. Applicants
request an exemption under section 6(c)
from sections 18(a)(2), 18(c) and 18(i) to
permit the Funds to issue multiple
classes of shares.
5. Applicants submit that the
proposed allocation of expenses relating
to distribution and 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 securities 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
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Federal Register / Vol. 85, No. 121 / Tuesday, June 23, 2020 / Notices
underlying section 18 of the Act to any
greater degree than open-end
investment companies’ multiple class
structures that are permitted by rule
18f–3 under the Act. Applicants state
that each Fund will comply with the
provisions of rule 18f–3 as if it were an
open-end investment company.
jbell on DSKJLSW7X2PROD with NOTICES
Asset-Based Distribution and/or Service
Fees
1. Section 17(d) of the Act and rule
17d–1 under the Act prohibit an
affiliated person of a registered
investment company, or an affiliated
person of such person, acting as
principal, from participating in or
effecting any transaction in connection
with any joint enterprise or joint
arrangement in which the investment
company participates unless the
Commission issues an order permitting
the transaction. In reviewing
applications submitted under section
17(d) and rule 17d–1, the Commission
considers whether the participation of
the investment company in a joint
enterprise or joint arrangement is
consistent with the provisions, policies
and purposes of the Act, and the extent
to which the participation is on a basis
different from or less advantageous than
that of other participants.
2. Rule 17d–3 under the Act provides
an exemption from section 17(d) and
rule 17d–1 to permit open-end
investment companies to enter into
distribution arrangements pursuant to
rule 12b–1 under the Act. Applicants
request an order under section 17(d) and
rule 17d–1 under the Act to the extent
necessary to permit the Fund to impose
asset-based distribution and/or service
fees. Applicants have agreed to comply
with rules 12b–1 and 17d–3 as if those
rules applied to closed-end investment
companies, which they believe will
resolve any concerns that might arise in
connection with a Fund financing the
distribution of its shares through assetbased distribution fees.
3. For the reasons stated above,
applicants submit that the exemptions
requested under section 6(c) are
necessary and appropriate in the public
interest and are consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the Act. Applicants also
state that the Funds’ imposition of assetbased distribution and/or service fees is
consistent with the provisions, policies
and purposes of the Act and does not
involve participation on a basis different
from or less advantageous than that of
other participants.
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37705
Applicants’ Condition
Electronic Statements
Applicants agree that any order
granting the requested relief will be
subject to the following condition:
Each Fund relying on the order will
comply with the provisions of rules 6c–
10, 12b–1, 17d–3, 18f–3, 22d–1, and,
where applicable, 11a–3 under the Act,
as amended from time to time, as if
those rules applied to closed-end
management investment companies,
and will comply with the FINRA Sales
Charge Rule, as amended from time to
time, as if that rule applied to all closedend management investment
companies.
• Use the Commission’s internet
submission form (https://www.sec.gov/
rules/other.shtml); or
• Send an email message to rulecomments@sec.gov. Please include File
Number 265–33 on the subject line; or
For the Commission, by the Division of
Investment Management, under delegated
authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–13405 Filed 6–22–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89087; File No. 265–33]
Asset Management Advisory
Committee
Securities and Exchange
Commission.
ACTION: Notice of meeting.
AGENCY:
Notice is being provided that
the Securities and Exchange
Commission Asset Management
Advisory Committee will hold a public
meeting on July 16, 2020, by remote
means. The meeting will begin at 9:00
a.m. (ET) and will be open to the public
via webcast on the Commission’s
website at www.sec.gov. Persons
needing special accommodations to take
part because of a disability should
notify the contact person listed below.
The public is invited to submit written
statements to the Committee. The
meeting will include a discussion of
matters in the asset management
industry relating to two topics:
Improving diversity and inclusion and
data and technology.
DATES: The public meeting will be held
on July 16, 2020. Written statements
should be received on or before July 13,
2020.
ADDRESSES: The meeting will be held by
remote means and webcast on
www.sec.gov. Written statements may be
submitted by any of the following
methods. To help us process and review
your statement more efficiently, please
use only one method. At this time,
electronic statements are preferred.
SUMMARY:
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Paper Statements
• Send paper statements to Vanessa
Countryman, Federal Advisory
Committee Management Officer,
Securities and Exchange Commission,
100 F Street NE, Washington, DC
20549–1090.
All submissions should refer to File No.
265–33. This file number should be
included on the subject line if email is
used. The Commission will post all
statements on the Commission’s website
at (https://www.sec.gov/comments/26533/265-33.htm).
Statements also will be available for
website viewing and printing in the
Commission’s Public Reference Room,
100 F Street NE, Room 1580,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. For up-to-date
information on the availability of the
Public Reference Room, please refer to
https://www.sec.gov/fast-answers/
answerspublicdocshtm.html or call
(202) 551–5450.
All statements received will be posted
without change. Persons submitting
comments are cautioned that we do not
redact or edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly.
FOR FURTHER INFORMATION CONTACT:
Christian Broadbent, Senior Special
Counsel, Sirimal Mukerjee, Branch
Chief, or Angela Mokodean, Senior
Counsel, at (202) 551–6720, Division of
Investment Management, Securities and
Exchange Commission, 100 F Street NE,
Washington DC 20549–3628.
In
accordance with Section 10(a) of the
Federal Advisory Committee Act, 5
U.S.C.-App. 1, and the regulations
thereunder, Dalia Blass, Designated
Federal Officer of the Committee, has
ordered publication of this notice.
SUPPLEMENTARY INFORMATION:
Dated: June 18, 2020.
Vanessa A. Countryman,
Committee Management Officer.
[FR Doc. 2020–13484 Filed 6–22–20; 8:45 am]
BILLING CODE 8011–01–P
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]]>Agencies
[Federal Register Volume 85, Number 121 (Tuesday, June 23, 2020)]
[Notices]
[Pages 37703-37705]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13405]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33896; 812-15098]
Hamilton Lane Private Assets Fund and Hamilton Lane Advisors,
L.L.C.
June 17, 2020.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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Notice of an application under section 6(c) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from sections
18(a)(2), 18(c) and 18(i) of the Act, and for an order pursuant to
section 17(d) of the Act and rule 17d-1 under the Act.
Summary of Application: Applicants request an order to permit certain
registered closed-end management investment companies to issue multiple
classes of shares of beneficial interest with varying sales loads and
to impose asset-based distribution and/or service fees.
Applicants: Hamilton Lane Private Assets Fund (the ``Initial Fund'')
and Hamilton Lane Advisors, L.L.C. (the ``Adviser'').
Filing Dates: The application was filed on February 24, 2020, and
amended on April 24, 2020.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by emailing the Commission's
Secretary at [email protected] and serving Applicants with a
copy of the request email. Hearing requests should be received by the
Commission by 5:30 p.m. on July 13, 2020, 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 emailing the
Commission's Secretary.
ADDRESSES: The Commission: [email protected]. Applicants: Attn:
General Counsel, [email protected].
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817, or Kaitlin C. Bottock, Branch Chief, 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 website by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Applicants' Representations
1. The Initial Fund is a Delaware statutory trust that is
registered under the Act as a non-diversified, closed-end management
investment company. The Initial Fund's primary investment objective
will be to generate capital appreciation over the medium- and long-term
through investments in private assets globally.
2. The Adviser, a Pennsylvania limited liability company, is
registered as an investment adviser under the Investment Advisers Act
of 1940, as amended (the ``Advisers Act''). The Adviser will serve as
investment adviser to the Initial Fund.
3. Applicants seek an order to permit the Initial Fund to issue
multiple classes of shares of beneficial interest with varying sales
loads and to impose asset-based distribution and/or service fees and
early repurchase fees.
4. Applicants request that the order also apply to any continuously
offered registered closed-end management investment company that has
been previously organized or that may be organized in the future for
which the Adviser, or any entity controlling, controlled by, or under
common control with the Adviser, or any successor in interest to any
such entity,\1\ acts as investment adviser and which provides periodic
liquidity with respect to its shares pursuant to rule 13e-4 under the
Securities Exchange Act of 1934 (each,
[[Page 37704]]
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
compliance with the terms and conditions of the application.
Applicants represent that each entity presently intending to rely on
the requested relief is listed as an applicant.
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5. The Initial Fund will initially will register three classes of
shares, ``Class R Shares'', ``Class C Shares'' and ``Class I Shares.''
Shares of the Initial Fund will be sold only to persons who are
``accredited investors,'' as defined in Regulation D under the
Securities Act of 1933, and ``qualified clients,'' as defined in the
Advisers Act. The Funds will offer their Shares continuously at a price
based on net asset value. Shares of the Funds will not be listed on any
securities exchange nor quoted on any quotation medium. The Funds do
not expect there to be a secondary trading market for their shares.
6. Applicants state that if the Initial Fund's initial registration
statement is declared effective prior to receipt of the requested
relief, the Initial Fund will only offer one class of shares, Class R
Shares, until receipt of the requested relief. Each of Class R Shares,
Class C Shares and Class I Shares will have its own fee and expense
structure. Additional offerings by any Fund relying on the order may be
on a private placement or public offering basis.
7. Applicants state that, from time to time, the Initial Fund may
create additional classes of shares, the terms of which may differ
between Class R Shares, Class C Shares and Class I Shares pursuant to
and in compliance with rule 18f-3 under the Act.
8. Applicants state that shares of a Fund may be subject to an
early repurchase fee (``Early Repurchase Fee'') at a rate of no greater
than 2% of the shareholder's repurchase proceeds if the interval
between the date of purchase of the shares and the valuation date with
respect to the repurchase of those shares is less than one year.\3\ Any
Early Repurchase Fee will apply equally to all classes of shares of a
Fund, in compliance with section 18 of the Act and rule 18f-3
thereunder. To the extent a Fund determines to waive, impose scheduled
variations of, or eliminate any Early Repurchase Fee, it will do so in
compliance with the requirements of rule 22d-1 under the Act as if the
Early Repurchase Fee were a CDSL and as if the Fund were an open-end
investment company and the Fund's waiver of, scheduled variation in, or
elimination of, any such Early Repurchase Fee will apply uniformly to
all shareholders of the Fund regardless of class. Applicants state that
the Initial Fund intends to impose an Early Repurchase Fee of 2%.
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\3\ Applicants state that an Early Repurchase Fee charged by a
Fund is not the same as a contingent deferred sales load (``CDSL'')
assessed by an open-end fund pursuant to rule 6c-10 under the Act,
as CDSLs are distribution-related charges payable to a distributor,
whereas the Early Repurchase Fee is payable to the Fund to
compensate long-term shareholders for the expenses related to
shorter term investors, in light of the Fund's generally longer-term
investment horizons and investment operations.
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9. Applicants represent that any asset-based service and/or
distribution fees for each class of shares of the Funds will comply
with the provisions of the FINRA Rule 2341(d) (``FINRA Sales Charge
Rule'').\4\ Applicants also represent that each Fund will disclose in
its prospectus the fees, expenses and other characteristics of each
class of shares offered for sale by the prospectus, as is required for
open-end multiple class funds under Form N-1A. As is required for open-
end funds, each Fund will disclose its expenses in shareholder reports,
and describe any arrangements that result in breakpoints in or
elimination of sales loads in its prospectus.\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 Sales Charge Rule includes any
successor or replacement to the FINRA Sales Charge Rule.
\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 Act.
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10. Each of the Funds will comply with any requirements that the
Commission or FINRA may adopt regarding disclosure at the point of sale
and in transaction confirmations about the costs and conflicts of
interest arising out of the distribution of open-end investment company
shares, and regarding prospectus disclosure of sales loads and revenue
sharing arrangements, as if those requirements applied to the Fund. In
addition, each Fund will contractually require that any distributor of
the Fund's shares comply with such requirements in connection with the
distribution of such Fund's shares.
Applicants' Legal Analysis
Multiple Classes of Shares
1. Section 18(a)(2) of the Act provides that a closed-end
investment company may not issue or sell a senior security that is a
stock unless certain requirements are met. Applicants state that the
creation of multiple classes of shares of the Funds may violate section
18(a)(2) because the Funds may not meet such requirements with respect
to a class of shares that may be a senior security.
2. Section 18(c) of the Act provides, in relevant part, that a
closed-end investment company may not issue or sell any senior security
if, immediately thereafter, the company has outstanding more than one
class of senior security. Applicants state that the creation of
multiple classes of shares of the Funds may be prohibited by section
18(c), as a class may have priority over another class as to payment of
dividends because shareholders of different classes would pay different
fees and expenses.
3. Section 18(i) of the Act provides that each share of stock
issued by a registered management investment company will be a voting
stock and have equal voting rights with every other outstanding voting
stock. Applicants state that multiple classes of shares of the Funds
may violate section 18(i) of the Act because each class would be
entitled to exclusive voting rights with respect to matters solely
related to that class.
4. Section 6(c) of the Act provides that the Commission may exempt
any person, security or transaction or any class or classes of persons,
securities or transactions from any provision of the Act, or from any
rule or regulation under the Act, if and to the extent such exemption
is necessary or appropriate in the public interest and consistent with
the protection of investors and the purposes fairly intended by the
policy and provisions of the Act. Applicants request an exemption under
section 6(c) from sections 18(a)(2), 18(c) and 18(i) to permit the
Funds to issue multiple classes of shares.
5. Applicants submit that the proposed allocation of expenses
relating to distribution and 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 securities 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
[[Page 37705]]
underlying section 18 of the Act to any greater degree than open-end
investment companies' multiple class structures that are permitted by
rule 18f-3 under the Act. Applicants state that each Fund will comply
with the provisions of rule 18f-3 as if it were an open-end investment
company.
Asset-Based Distribution and/or Service Fees
1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
an affiliated person of a registered investment company, or an
affiliated person of such person, acting as principal, from
participating in or effecting any transaction in connection with any
joint enterprise or joint arrangement in which the investment company
participates unless the Commission issues an order permitting the
transaction. In reviewing applications submitted under section 17(d)
and rule 17d-1, the Commission considers whether the participation of
the investment company in a joint enterprise or joint arrangement is
consistent with the provisions, policies and purposes of the Act, and
the extent to which the participation is on a basis different from or
less advantageous than that of other participants.
2. Rule 17d-3 under the Act provides an exemption from section
17(d) and rule 17d-1 to permit open-end investment companies to enter
into distribution arrangements pursuant to rule 12b-1 under the Act.
Applicants request an order under section 17(d) and rule 17d-1 under
the Act to the extent necessary to permit the Fund to impose asset-
based distribution and/or service fees. Applicants have agreed to
comply with rules 12b-1 and 17d-3 as if those rules applied to closed-
end investment companies, which they believe will resolve any concerns
that might arise in connection with a Fund financing the distribution
of its shares through asset-based distribution fees.
3. For the reasons stated above, applicants submit that the
exemptions requested under section 6(c) are necessary and appropriate
in the public interest and are consistent with the protection of
investors and the purposes fairly intended by the policy and provisions
of the Act. Applicants also state that the Funds' imposition of asset-
based distribution and/or service fees is consistent with the
provisions, policies and purposes of the Act and does not involve
participation on a basis different from or less advantageous than that
of other participants.
Applicants' Condition
Applicants agree that any order granting the requested relief will
be subject to the following condition:
Each Fund relying on the order will comply with the provisions of
rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3
under the Act, as amended from time to time, as if those rules applied
to closed-end management investment companies, and will comply with the
FINRA Sales Charge Rule, as amended from time to time, as if that rule
applied to all closed-end management investment companies.
For the Commission, by the Division of Investment Management,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-13405 Filed 6-22-20; 8:45 am]
BILLING CODE 8011-01-P
