Managed Portfolio Series and Tortoise Index Solutions, LLC, 68937-68941 [2020-24015]

Download as PDF jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 211 / Friday, October 30, 2020 / Notices resources to enable it to cover a wide range of foreseeable stress scenarios that include the default of the two participant family clearing members that would potentially cause the largest aggregate credit exposure for the covered clearing agency in extreme but plausible market conditions.12 As noted above, the amended Framework is designed to enhance LCH SA’s to measure, monitor, and manage the liquidity risk that may arise in connection with its activities as a covered clearing agency. As such the amendments to the Framework regarding LCH SA’s liquidity requirements in the event of the assignment and exercise of equity American options involving a defaulting clearing member so that LCH SA can also maintain sufficient liquid resources at the minimum in all relevant currencies to effect the relevant settlement process of payment obligations with a higher degree of confidence are consistent with the requirements of Regulation 17dA– 22(e)(4)(ii) and 17dA–22(e)(7).13 Regulation 17dA–22(e)(4)(i) and (vi)(A) requires a clearing agency to maintain and enforce written policies and procedures reasonably designed to conduct stress testing of its total financial resources once each day using standard predetermined parameters and assumptions to assure that it has sufficient financial resources to cover its credit exposure to each participant fully with a high degree of confidence.14 As discussed above, by clarifying the daily process for computation of the liquidity needs coming from the physical settlement linked to the exercise of equity American options under stressed liquidity conditions, the proposed amendments enhance LCH SA’s written policies and procedures with regard to stress testing practices and thereby assures that LCH SA maintains sufficient additional financial resources to enable it to cover a wide range of stress scenarios that include the default of the two participant family clearing members that would potentially cause the largest aggregate credit exposure for LCH SA in extreme but plausible market conditions. As such, therefore, the proposed amendments, therefore, are consistent with the requirements of Regulation 17dA– 22(e)(4)(i) and (vi)(A).15 12 17 CFR 240.17Ad–22(e)(4)(ii). CFR 240.17Ad–22(e)(4)(ii) and 17dA– 22(e)(7). 14 17 CFR 240.17Ad–22(e)(4)(i) and (vi)(A). 15 Id. 13 17 VerDate Sep<11>2014 21:10 Oct 29, 2020 Jkt 253001 B. Clearing Agency’s Statement on Burden on Competition. Section 17A(b)(3)(I) of the Act requires that the rules of a clearing agency not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.16 LCH SA does not believe the Proposed Rule Change would have any impact, or impose any burden, on competition. The Proposed Rule Change does not address any competitive issue or have any impact on the competition among central counterparties. LCH SA operates an open access model, and the Proposed Rule Change will have no effect on this model for any clearing member. C. Clearing Agency’s Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments relating to the proposed rule change have not been solicited or received. LCH SA will notify the Commission of any written comments received by LCH SA. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove such proposed rule change, or (B) institute proceedings to determine whether the proposed rule change should be disapproved. 68937 Commission, 100 F Street NE, Washington, DC 20549–1090. All submissions should refer to File Number SR–LCH SA–2020–006. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission’s internet website (https://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of LCH SA and on LCH SA’s website at: https://www.lch.com/ resources/rules-and-regulations/ proposed-rule-changes-0. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–LCH SA–2020–006 and should be submitted on or before November 20, 2020. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 J. Matthew DeLesDernier, Assistant Secretary. Electronic Comments • Use the Commission’s internet comment form (https://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– LCH SA–2020–006 on the subject line. SECURITIES AND EXCHANGE COMMISSION Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange October 26, 2020. 16 15 PO 00000 U.S.C. 78q–1(b)(3)(I). Frm 00105 Fmt 4703 Sfmt 4703 [FR Doc. 2020–24022 Filed 10–29–20; 8:45 am] BILLING CODE 8011–01–P [Investment Company Act Release No. 34072; 812–15116] Managed Portfolio Series and Tortoise Index Solutions, LLC Securities and Exchange Commission (‘‘Commission’’). AGENCY: 17 17 E:\FR\FM\30OCN1.SGM CFR 200.30–3(a)(12). 30OCN1 68938 jbell on DSKJLSW7X2PROD with NOTICES ACTION: Federal Register / Vol. 85, No. 211 / Friday, October 30, 2020 / Notices Notice. 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 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: Managed Portfolio Series (‘‘Trust’’), a Delaware statutory trust registered under the Act as an open-end management investment company with multiple series (each a ‘‘Fund’’) and Tortoise Index Solutions, LLC (‘‘Initial Adviser’’), a Delaware limited liability company 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. Filing Dates: The application was filed on March 27, 2020, and amended on June 2, 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, by email. Hearing requests should be received by the Commission by 5:30 p.m. on November 20, 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 at SecretarysOffice@sec.gov. ADDRESSES: The Commission: Secretarys-Office@sec.gov. Applicants: Thomas A. Bausch, Managed Portfolio Series, by email: thomas.bausch@ usbank.com and Tortoise Index VerDate Sep<11>2014 21:10 Oct 29, 2020 Jkt 253001 Solutions, LLC, by email: jkruske@ tortoiseadvisors.com. FOR FURTHER INFORMATION CONTACT: Laura L. Solomon, Senior Counsel, at (202) 551–6915, 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,1 subject to the approval of the board of trustees of each Trust (collectively, the ‘‘Board’’),2 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’’).3 Applicants seek an 1 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 future Adviser also will be registered with the Commission as an investment adviser under the Advisers Act. 2 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. 3 A ‘‘Wholly-Owned Subadviser’’ is any investment adviser that is (1) an indirect or direct ‘‘wholly-owned subsidiary’’ (as such term is defined in the Act) of the Adviser, (2) a ‘‘sister PO 00000 Frm 00106 Fmt 4703 Sfmt 4703 exemption to permit a Subadvised Fund to include only the Aggregate Fee Disclosure.4 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’’).5 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 Fund. For its services to each Fund, the Adviser receives or will receive an investment advisory fee from that Fund as specified in the applicable Investment Advisory Agreement. 5. Consistent with the terms of each Investment Advisory Agreement, the 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 adviser that is not an ‘‘affiliated person’’ (as defined in the Act) of a 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. 4 Applicants note that all other items required by sections 6–07(2)(a), (b) and (c) of Regulation S–X will be disclosed. 5 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. E:\FR\FM\30OCN1.SGM 30OCN1 Federal Register / Vol. 85, No. 211 / Friday, October 30, 2020 / Notices jbell on DSKJLSW7X2PROD with NOTICES 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.6 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.7 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.8 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 6 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. 7 The Subadvisers will be registered with the Commission as an investment adviser under the Advisers Act or not subject to such registration. 8 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. VerDate Sep<11>2014 21:10 Oct 29, 2020 Jkt 253001 its shareholders either a Multi-manager Notice or a Multi-manager Notice and Multi-manager Information Statement; 9 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.10 68939 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. 9 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. 10 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. 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 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 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 E:\FR\FM\30OCN1.SGM 30OCN1 jbell on DSKJLSW7X2PROD with NOTICES 68940 Federal Register / Vol. 85, No. 211 / Friday, October 30, 2020 / Notices 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 VerDate Sep<11>2014 21:10 Oct 29, 2020 Jkt 253001 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. Relief for Affiliated Subadvisers 17. The Commission has granted the requested relief with respect to WhollyOwned and Non-Affiliated Subadvisers through numerous exemptive orders. The Commission also has extended the requested relief to Affiliated Subadvisers.11 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. 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. 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 11 Carillon Series Trust, et al., Investment Co. Act Rel. Nos. 33464 (May 2, 2019) (notice) and 33494 (May 29, 2019) (order). PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 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 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 E:\FR\FM\30OCN1.SGM 30OCN1 jbell on DSKJLSW7X2PROD with NOTICES Federal Register / Vol. 85, No. 211 / Friday, October 30, 2020 / Notices 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. VerDate Sep<11>2014 21:10 Oct 29, 2020 Jkt 253001 For the Commission, by the Division of Investment Management, under delegated authority. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2020–24015 Filed 10–29–20; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Pub. L. 94–409, that the Securities and Exchange Commission Asset Management Advisory Committee (‘‘AMAC’’) will hold a public meeting on Thursday, November 5, 2020 at 9:00 a.m. (ET). PLACE: The meeting will be conducted by remote means. Members of the public may watch the webcast of the meeting on the Commission’s website at www.sec.gov. STATUS: The meeting will begin at 9:00 a.m. (ET) and will be open to the public by webcast on the Commission’s website at www.sec.gov. MATTER TO BE CONSIDERED: On October 16, 2020, the Commission issued notice of the meeting (Release No. 34–90211), indicating that the meeting is open to the public and inviting the public to submit written comments to AMAC. This Sunshine Act notice is being issued because a majority of the Commission may attend the meeting. At the meeting, AMAC will consider recommendations concerning COVID– 19 related operational issues. CONTACT PERSON FOR MORE INFORMATION: For further information, please contact Vanessa A. Countryman from the Office of the Secretary at (202) 551–5400. TIME AND DATE: Dated: October 28, 2020. Vanessa A. Countryman, Secretary. [FR Doc. 2020–24193 Filed 10–28–20; 11:15 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION and Section 107.1900 of the Small Business Administration Rules and Regulations (13 CFR 107.1900) to function as a small business investment company under the Small Business Investment Company License No. 09/ 09–0466 issued to Silver Lake Waterman Fund L.P. said license is hereby declared null and void. Small Business Administration. Donald DeFosset, Associate Administrator, Office of Investment and Innovation. [FR Doc. 2020–24053 Filed 10–29–20; 8:45 am] BILLING CODE P DEPARTMENT OF STATE [Public Notice: 11244] Determination Pursuant to the Foreign Missions Act Pursuant to the authority vested in the Secretary of State by the laws of the United States including the Foreign Missions Act (22 U.S.C. 4301 et seq.) and delegated pursuant to Department of State Delegation of Authority No. 214, dated September 30, 1994, I hereby determine that the representative offices and operations in the United States of the Beijing Review, including their real property and personnel, are a foreign mission within the meaning of 22 U.S.C. 4302(a)(3). Furthermore, I hereby determine it to be reasonably necessary to protect the interests of the United States to require the representative offices and operations in the United States of the Beijing Review, and their agents or employees acting on their behalf, to comply with the terms and conditions specified by the Department of State’s Office of Foreign Missions relating to the above named entities’ activities in the United States. Finally, I determine that the requirement established by Foreign Missions Act Designation and Determination No. 2020–2, dated June 5, 2020, will not be applied to the Beijing Review unless and until further notice. Clifton C. Seagroves, Acting Director, Office of Foreign Missions. [FR Doc. 2020–24089 Filed 10–29–20; 8:45 am] [License No. 09/09–0466] BILLING CODE 4710–43–P Silver Lake Waterman Fund L.P.; Surrender of License of Small Business Investment Company DEPARTMENT OF STATE Pursuant to the authority granted to the United States Small Business Administration under the Small Business Investment Act of 1958, as amended, under Section 309 of the Act PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 68941 [Public Notice: 11243] Determination Pursuant to the Foreign Missions Act Pursuant to the authority vested in the Secretary of State by the laws of the E:\FR\FM\30OCN1.SGM 30OCN1

Agencies

[Federal Register Volume 85, Number 211 (Friday, October 30, 2020)]
[Notices]
[Pages 68937-68941]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-24015]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34072; 812-15116]


Managed Portfolio Series and Tortoise Index Solutions, LLC

October 26, 2020.
AGENCY: Securities and Exchange Commission (``Commission'').

[[Page 68938]]


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 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: Managed Portfolio Series (``Trust''), a Delaware 
statutory trust registered under the Act as an open-end management 
investment company with multiple series (each a ``Fund'') and Tortoise 
Index Solutions, LLC (``Initial Adviser''), a Delaware limited 
liability company 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.
    Filing Dates: The application was filed on March 27, 2020, and 
amended on June 2, 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, by email. Hearing requests should be received by 
the Commission by 5:30 p.m. on November 20, 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 at [email protected].

ADDRESSES: The Commission: [email protected]. Applicants: 
Thomas A. Bausch, Managed Portfolio Series, by email: 
[email protected] and Tortoise Index Solutions, LLC, by email: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Laura L. Solomon, Senior Counsel, at 
(202) 551-6915, 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,\1\ subject to 
the approval of the board of trustees of each Trust (collectively, the 
``Board''),\2\ 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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    \1\ 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 future Adviser 
also will be registered with the Commission as an investment adviser 
under the Advisers Act.
    \2\ 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.
---------------------------------------------------------------------------

    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'').\3\ Applicants seek an exemption to permit a Subadvised 
Fund to include only the Aggregate Fee Disclosure.\4\
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    \3\ A ``Wholly-Owned Subadviser'' is any investment adviser 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 adviser that is not an ``affiliated 
person'' (as defined in the Act) of a 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.
    \4\ 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'').\5\
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    \5\ 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 Fund. For its 
services to each Fund, the Adviser receives or will receive an 
investment advisory fee from that Fund as specified in the applicable 
Investment Advisory Agreement.
    5. Consistent with the terms of each Investment Advisory Agreement, 
the

[[Page 68939]]

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.\6\ 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.\7\ 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.\8\
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    \6\ 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.
    \7\ The Subadvisers will be registered with the Commission as an 
investment adviser under the Advisers Act or not subject to such 
registration.
    \8\ 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; \9\ 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.\10\
---------------------------------------------------------------------------

    \9\ 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.
    \10\ 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 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

[[Page 68940]]

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. Relief for Affiliated Subadvisers

    17. The Commission has granted the requested relief with respect to 
Wholly-Owned and Non-Affiliated Subadvisers through numerous exemptive 
orders. The Commission also has extended the requested relief to 
Affiliated Subadvisers.\11\ 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.
---------------------------------------------------------------------------

    \11\ Carillon Series Trust, et al., Investment Co. Act Rel. Nos. 
33464 (May 2, 2019) (notice) and 33494 (May 29, 2019) (order).
---------------------------------------------------------------------------

    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.

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 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

[[Page 68941]]

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.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-24015 Filed 10-29-20; 8:45 am]
BILLING CODE 8011-01-P
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