Columbia Funds Series Trust, et al., 11341-11343 [2021-03715]
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Federal Register / Vol. 86, No. 35 / Wednesday, February 24, 2021 / Notices
concern market dominant product(s),
applicable statutory and regulatory
requirements include 39 U.S.C. 3622, 39
U.S.C. 3642, 39 CFR part 3030, and 39
CFR part 3040, subpart B. For request(s)
that the Postal Service states concern
competitive product(s), applicable
statutory and regulatory requirements
include 39 U.S.C. 3632, 39 U.S.C. 3633,
39 U.S.C. 3642, 39 CFR part 3035, and
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
1. Docket No(s).: MC2021–70 and
CP2021–73; Filing Title: USPS Request
to Add Priority Mail Express & Priority
Mail Contract 124 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: February 18, 2021; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Christopher C. Mohr; Comments Due:
February 26, 2021.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2021–03832 Filed 2–23–21; 8:45 am]
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34197; 812–15130]
February 18, 2021.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
Section 6(c) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from Section 15(c) of the Act.
khammond on DSKJM1Z7X2PROD with NOTICES
AGENCY:
Applicants: Columbia Funds Series
Trust, Columbia Funds Series Trust I,
Columbia Funds Series Trust II,
Columbia Funds Variable Insurance
Trust, Columbia Funds Variable Series
Trust II, Columbia ETF Trust I and
Columbia ETF Trust II (each a ‘‘Trust’’),
each of which is either a Massachusetts
business trust or a Delaware statutory
trust and is registered under the Act as
an open-end management investment
company with multiple series, and
Columbia Management Investment
Advisers, LLC (‘‘Adviser’’), a Minnesota
limited liability company registered as
an investment adviser under the
Investment Advisers Act of 1940
(‘‘Advisers Act’’) that serves an
investment adviser to such series
(collectively the ‘‘Applicants’’).
17:21 Feb 23, 2021
Jkt 253001
The Commission:
Secretarys-Office@sec.gov. Applicants:
Columbia Funds Series Trust; Columbia
Funds Series Trust I; Columbia Funds
Series Trust II; Columbia Funds
Variable Insurance Trust; Columbia
Funds Variable Series Trust II;
Columbia ETF Trust I; Columbia ETF
Trust II; and Columbia Management
Investment Advisers, LLC, c/o Ryan C.
Larrenaga, Columbia Management
Investment Advisers, LLC,
ryan.c.larrenaga@
columbiathreadneedle.com.
ADDRESSES:
Columbia Funds Series Trust, et al.
VerDate Sep<11>2014
Summary of Application: The
requested exemption would permit each
Trust’s board of trustees (the ‘‘Board’’)
to approve new sub-advisory
agreements and material amendments to
existing sub-advisory agreements for the
Subadvised Series (as defined below),
without complying with the in-person
meeting requirement of Section 15(c) of
the Act.
Filing Dates: The application was
filed on May 26, 2020, and amended on
September 24, 2020 and November 10,
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 March
15, 2020, and should be accompanied
by proof of service on 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
Secretarys-Office@sec.gov.
FOR FURTHER INFORMATION CONTACT:
Harry Eisenstein, Senior Special
Counsel, at (202) 551–6764, or Kaitlin C.
Bottock, Branch Chief, at (202) 551–
6821 (Division of Investment
Management, Chief Counsel’s Office).
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.
SUPPLEMENTARY INFORMATION:
PO 00000
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Fmt 4703
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11341
I. Requested Exemptive Relief
1. Applicants request an exemption
from Section 15(c) of the Act to permit
the Board,1 including the Independent
Trustees,2 to approve an agreement
(each a ‘‘Sub-Advisory Agreement’’)
pursuant to which a sub-adviser
manages all or a portion of the assets of
one or more of the series, or a material
amendment thereof (a ‘‘Sub-Adviser
Change’’), without complying with the
in-person meeting requirement of
Section 15(c).3 Under the requested
relief, the Independent Trustees could
instead approve a Sub-Adviser Change
at a meeting at which members of the
Board participate by any means of
communication that allows them to hear
each other simultaneously during the
meeting.
2. Applicants request that the relief
apply to Applicants, as well as to any
future series of the Trust 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; 4 (ii) uses
the multi-manager structure described
in the application; and (iii) complies
with the terms and conditions of the
application (each, a ‘‘Subadvised
Series’’).5
II. Management of the Subadvised
Series
3. The Adviser will serve as the
investment adviser to each Subadvised
Series pursuant to an investment
advisory agreement with the Trust (each
an ‘‘Investment Management
Agreement’’). The Adviser, subject to
the oversight of the Board, will provide
1 The term ‘‘Board’’ also includes the board of
trustees or directors of a future Subadvised Series
(as defined below).
2 The term ‘‘Independent Trustees’’ means the
members of the Board who are not parties to the
Sub-Advisory Agreement (as defined below), or
‘‘interested persons’’, as defined in Section 2(a)(19)
of the Act, of any such party.
3 Applicants do not request relief that would
permit the Board and the Independent Trustees to
approve renewals of Sub-Advisory Agreements at
non-in-person meetings.
4 The term ‘‘Adviser’’ includes (i) the Adviser or
its successors, and (ii) any entity controlling,
controlled by or under common control with, the
Adviser or its successors. 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.
5 The term ‘‘Subadvised Series’’ also includes a
wholly-owned subsidiary, as defined in the Act, of
a Subadvised Series (each a ‘‘Subsidiary’’) and the
term ‘‘Sub-Adviser’’ includes any Sub-Adviser to a
Subsidiary. 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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11342
Federal Register / Vol. 86, No. 35 / Wednesday, February 24, 2021 / Notices
continuous investment management
services to each Subadvised Series.
Applicants are not seeking an
exemption from the Act with respect to
the Investment Management
Agreements.
4. Applicants state that the
Subadvised Series may seek to provide
exposure to multiple strategies across
various asset classes, thus allowing
investors to more easily access such
strategies without the additional
transaction costs and administrative
burdens of investing in multiple funds
to seek to achieve comparable
exposures.
5. To that end, the Adviser may
achieve its desired exposures to specific
strategies by allocating discrete portions
of the Subadvised Series’ assets to
various sub-advisers. Consistent with
the terms of each Investment
Management Agreement and subject to
the Board’s approval,6 the Adviser
would delegate management of all or a
portion of the assets of a Subadvised
Series to a sub-adviser.7 Each subadviser would be an ‘‘investment
adviser’’ to the Subadvised Series
within the meaning of Section 2(a)(20)
of the Act.8 The Adviser would retain
overall responsibility for the
management and investment of the
assets of each Subadvised Series.
III. Applicable Law
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6. Section 15(c) of the Act prohibits a
registered investment company having a
board from entering into, renewing or
performing any contract or agreement
whereby a person undertakes regularly
to act as an investment adviser
(including a sub-adviser) to the
investment company, unless the terms
of such contract or agreement and any
renewal thereof have been approved by
the vote of a majority of the investment
company’s board members who are not
parties to such contract or agreement, or
interested persons of any such party,
cast in person at a meeting called for the
purpose of voting on such approval.
6 A Sub-Advisory Agreement may also be subject
to approval by a Subadvised Series’ shareholders.
Applicants currently rely on a multi-manager
exemptive order to enter into and materially amend
Sub-Advisory Agreements without obtaining
shareholder approval. See Columbia Funds Series
Trust, et al., Investment Company Act Release Nos.
33495 (May 30, 2019) (notice) and 33519 (June 26,
2019) (order).
7 A sub-adviser may manage the assets of a
Subadvised Series directly or provide the Adviser
with model portfolio or investment
recommendation(s) that would be utilized in
connection with the management of a Subadvised
Series.
8 Each sub-adviser would be registered with the
Commission as an investment adviser under the
Advisers Act or not subject to such registration.
VerDate Sep<11>2014
17:21 Feb 23, 2021
Jkt 253001
7. 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
8. Applicants assert that boards of
registered investment companies,
including the Board, typically hold inperson meetings on a quarterly basis.
Applicants state that during the three to
four month period between board
meeting dates, market conditions may
change or investment opportunities may
arise such that the Adviser may wish to
make a Sub-Adviser Change. Applicants
also state that at these moments it may
be impractical and costly to hold an
additional in-person Board meeting,
especially given the geographic
diversity of Board members and the
additional cost of holding in-person
meetings.
9. As a result, Applicants believe that
the requested relief would allow the
Subadvised Series to operate more
efficiently. In particular, Applicants
assert that without the delay inherent in
holding in-person Board meetings (and
the attendant difficulty of obtaining the
necessary quorum for, and the
additional costs of, an unscheduled inperson Board meeting), the Subadvised
Series would be able to act quicker and
with less expense to add or replace subadvisers when the Board and the
Adviser believe that a Sub-Adviser
Change would benefit the Subadvised
Series.
10. Applicants also note that the inperson meeting requirement in Section
15(c) of the Act was designed to prohibit
absentee approval of advisory
agreements. Applicants state that
condition 1 to the requested relief is
designed to avoid such absentee
approval by requiring that the Board
approve a Sub-adviser Change at a
meeting where all participating Board
members can hear each other and be
heard by each other during the
meeting.9
9 Applicants state that technology that includes
visual capabilities will be used unless
unanticipated circumstances arise. Applicants also
state that the Board could not rely upon the relief
to approve a Sub-Advisory Agreement by written
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Frm 00126
Fmt 4703
Sfmt 4703
11. Applicants, moreover, represent
that the Board would conduct any such
non-in-person consideration of a SubAdvisory Agreement in accordance with
its typical process for approving SubAdvisory Agreements. Consistent with
Section 15(c) of the Act, the Board
would request and evaluate such
information as may reasonably be
necessary to evaluate the terms of any
Sub-Advisory Agreement, and the
Adviser and sub-adviser would provide
such information.
12. Finally, Applicants note that that
if one or more Board members request
that a Sub-Adviser Change be
considered in-person, then the Board
would not be able to rely on the relief
and would have to consider the SubAdviser Change at an in-person meeting.
V. Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. The Independent Trustees will
approve a Sub-Adviser Change at a nonin-person meeting in which Board
members may participate by any means
of communication that allows those
Board members participating to hear
each other simultaneously during the
meeting.
2. Management will represent that the
materials provided to the Board for the
non-in-person meeting include the same
information the Board would have
received if a Sub-Adviser Change were
sought at an in-person Board meeting.
3. The notice of the non-in-person
meeting will explain the need for
considering the Sub-Adviser Change at
a non-in-person meeting. Once notice of
the non-in-person meeting to consider a
Sub-Adviser Change is sent, Board
members will be given the opportunity
to object to considering the Sub-Adviser
Change at a non-in-person Board
meeting. If a Board member requests
that the Sub-Adviser Change be
considered in-person, the Board will
consider the Sub-Adviser Change at an
in-person meeting, unless such request
is rescinded.
4. A Subadvised Series’ ability to rely
on the requested relief will be disclosed
in the Subadvised Series’ registration
statement.
5. In the event that the Commission
adopts a rule under the 1940 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.
consent or another form of absentee approval by the
Board.
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Federal Register / Vol. 86, No. 35 / Wednesday, February 24, 2021 / Notices
For the Commission, by the Division of
Investment Management, under delegated
authority.
J. Matthew DeLesDernier,
Assistant Secretary.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
[FR Doc. 2021–03715 Filed 2–23–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91159; File No. SR–Phlx–
2021–09]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend the
Exchange’s Pricing Schedule at Equity
7, Section 3
February 18, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
10, 2021, Nasdaq PHLX LLC (‘‘Phlx’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) the proposed rule
change as described in Items I, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
khammond on DSKJM1Z7X2PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Exchange’s pricing schedule at Equity 7,
Section 3, as described further below.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/phlx/rules, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Sep<11>2014
17:21 Feb 23, 2021
The Exchange proposes to amend its
pricing schedule, at Equity 7, Section 3,
to make a change to its Qualified Market
Maker (‘‘QMM’’) Program. The QMM
Program provides supplemental
incentives to member organizations that
meet certain quality standards in acting
as market makers for securities on the
Exchange.
Specifically, the Exchange proposes to
adjust upward the percentage of time for
which a member organization must
quote at the national best bid and offer
(‘‘NBBO’’) during market hours to
qualify as a QMM as set forth in Equity
7, Section 3(c)(1). Currently, a member
organization must quote at the NBBO at
least 10 percent of the time during
market hours in an average of at least
400 securities per day during a month
to qualify as a QMM. The Exchange
proposes to increase the percentage to
15 percent.
The Exchange proposes to increase
the threshold percentage of time in
which a member organization must
quote at the NBBO during a month to
qualify as a QMM as a means of
encouraging member organizations to
increase liquidity adding activity,
increase quoting at the NBBO, enhance
price discovery, and improve the overall
quality of the equity markets. The
Exchange believes that QMM activity on
the Exchange is already robust enough
to accommodate the establishment of a
higher qualification threshold without
compromising the ability of existing
QMMs to maintain their current statuses
in the program.
The Exchange also proposes to make
conforming changes to Equity 7, Section
3(c)(5) to add the proposed 15 percent
NBBO requirement.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,3 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,4 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
3 15
4 15
Jkt 253001
PO 00000
U.S.C. 78f(b).
U.S.C. 78f(b)(4) and (5).
Frm 00127
Fmt 4703
Sfmt 4703
11343
The Proposal Is Reasonable
The Exchange’s proposed changes to
its QMM Program are reasonable in
several respects. As a threshold matter,
the Exchange is subject to significant
competitive forces in the market for
equity securities transaction services
that constrain its pricing determinations
in that market. The fact that this market
is competitive has long been recognized
by the courts. In NetCoalition v.
Securities and Exchange Commission,
the D.C. Circuit stated as follows: ‘‘[n]o
one disputes that competition for order
flow is ‘fierce.’ . . . As the SEC
explained, ‘[i]n the U.S. national market
system, buyers and sellers of securities,
and the broker-dealers that act as their
order-routing agents, have a wide range
of choices of where to route orders for
execution’; [and] ‘no exchange can
afford to take its market share
percentages for granted’ because ‘no
exchange possesses a monopoly,
regulatory or otherwise, in the execution
of order flow from broker
dealers’. . . .’’ 5
The Commission and the courts have
repeatedly expressed their preference
for competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. In Regulation NMS, while
adopting a series of steps to improve the
current market model, the Commission
highlighted the importance of market
forces in determining prices and SRO
revenues and, also, recognized that
current regulation of the market system
‘‘has been remarkably successful in
promoting market competition in its
broader forms that are most important to
investors and listed companies.’’ 6
Numerous indicia demonstrate the
competitive nature of this market. For
example, clear substitutes to the
Exchange exist in the market for equity
security transaction services. The
Exchange is only one of several equity
venues to which market participants
may direct their order flow. Competing
equity exchanges offer similar tiered
pricing structures to that of the
Exchange, including schedules of
rebates and fees that apply based upon
members achieving certain volume
thresholds.7
Within this environment, market
participants can freely and often do shift
5 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C. Cir.
2010) (quoting Securities Exchange Act Release No.
59039 (December 2, 2008), 73 FR 74770, 74782–83
(December 9, 2008) (SR–NYSEArca–2006–21)).
6 Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005)
(‘‘Regulation NMS Adopting Release’’).
7 See Cboe EDGX U.S. Equities Exchange Fee
Schedule, available at https://markets.cboe.com/us/
equities/membership/fee_schedule/edgx/.
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]]>Agencies
[Federal Register Volume 86, Number 35 (Wednesday, February 24, 2021)]
[Notices]
[Pages 11341-11343]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-03715]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34197; 812-15130]
Columbia Funds Series Trust, et al.
February 18, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under Section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from Section 15(c) of
the Act.
-----------------------------------------------------------------------
Applicants: Columbia Funds Series Trust, Columbia Funds Series
Trust I, Columbia Funds Series Trust II, Columbia Funds Variable
Insurance Trust, Columbia Funds Variable Series Trust II, Columbia ETF
Trust I and Columbia ETF Trust II (each a ``Trust''), each of which is
either a Massachusetts business trust or a Delaware statutory trust and
is registered under the Act as an open-end management investment
company with multiple series, and Columbia Management Investment
Advisers, LLC (``Adviser''), a Minnesota limited liability company
registered as an investment adviser under the Investment Advisers Act
of 1940 (``Advisers Act'') that serves an investment adviser to such
series (collectively the ``Applicants'').
Summary of Application: The requested exemption would permit each
Trust's board of trustees (the ``Board'') to approve new sub-advisory
agreements and material amendments to existing sub-advisory agreements
for the Subadvised Series (as defined below), without complying with
the in-person meeting requirement of Section 15(c) of the Act.
Filing Dates: The application was filed on May 26, 2020, and
amended on September 24, 2020 and November 10, 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 March 15, 2020, and should be
accompanied by proof of service on 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:
Columbia Funds Series Trust; Columbia Funds Series Trust I; Columbia
Funds Series Trust II; Columbia Funds Variable Insurance Trust;
Columbia Funds Variable Series Trust II; Columbia ETF Trust I; Columbia
ETF Trust II; and Columbia Management Investment Advisers, LLC, c/o
Ryan C. Larrenaga, Columbia Management Investment Advisers, LLC,
[email protected].
FOR FURTHER INFORMATION CONTACT: Harry Eisenstein, Senior Special
Counsel, at (202) 551-6764, 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 exemption from Section 15(c) of the Act to
permit the Board,\1\ including the Independent Trustees,\2\ to approve
an agreement (each a ``Sub-Advisory Agreement'') pursuant to which a
sub-adviser manages all or a portion of the assets of one or more of
the series, or a material amendment thereof (a ``Sub-Adviser Change''),
without complying with the in-person meeting requirement of Section
15(c).\3\ Under the requested relief, the Independent Trustees could
instead approve a Sub-Adviser Change at a meeting at which members of
the Board participate by any means of communication that allows them to
hear each other simultaneously during the meeting.
---------------------------------------------------------------------------
\1\ The term ``Board'' also includes the board of trustees or
directors of a future Subadvised Series (as defined below).
\2\ The term ``Independent Trustees'' means the members of the
Board who are not parties to the Sub-Advisory Agreement (as defined
below), or ``interested persons'', as defined in Section 2(a)(19) of
the Act, of any such party.
\3\ Applicants do not request relief that would permit the Board
and the Independent Trustees to approve renewals of Sub-Advisory
Agreements at non-in-person meetings.
---------------------------------------------------------------------------
2. Applicants request that the relief apply to Applicants, as well
as to any future series of the Trust 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; \4\ (ii) uses the multi-manager structure
described in the application; and (iii) complies with the terms and
conditions of the application (each, a ``Subadvised Series'').\5\
---------------------------------------------------------------------------
\4\ The term ``Adviser'' includes (i) the Adviser or its
successors, and (ii) any entity controlling, controlled by or under
common control with, the Adviser or its successors. 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.
\5\ The term ``Subadvised Series'' also includes a wholly-owned
subsidiary, as defined in the Act, of a Subadvised Series (each a
``Subsidiary'') and the term ``Sub-Adviser'' includes any Sub-
Adviser to a Subsidiary. 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.
---------------------------------------------------------------------------
II. Management of the Subadvised Series
3. The Adviser will serve as the investment adviser to each
Subadvised Series pursuant to an investment advisory agreement with the
Trust (each an ``Investment Management Agreement''). The Adviser,
subject to the oversight of the Board, will provide
[[Page 11342]]
continuous investment management services to each Subadvised Series.
Applicants are not seeking an exemption from the Act with respect to
the Investment Management Agreements.
4. Applicants state that the Subadvised Series may seek to provide
exposure to multiple strategies across various asset classes, thus
allowing investors to more easily access such strategies without the
additional transaction costs and administrative burdens of investing in
multiple funds to seek to achieve comparable exposures.
5. To that end, the Adviser may achieve its desired exposures to
specific strategies by allocating discrete portions of the Subadvised
Series' assets to various sub-advisers. Consistent with the terms of
each Investment Management Agreement and subject to the Board's
approval,\6\ the Adviser would delegate management of all or a portion
of the assets of a Subadvised Series to a sub-adviser.\7\ Each sub-
adviser would be an ``investment adviser'' to the Subadvised Series
within the meaning of Section 2(a)(20) of the Act.\8\ The Adviser would
retain overall responsibility for the management and investment of the
assets of each Subadvised Series.
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\6\ A Sub-Advisory Agreement may also be subject to approval by
a Subadvised Series' shareholders. Applicants currently rely on a
multi-manager exemptive order to enter into and materially amend
Sub-Advisory Agreements without obtaining shareholder approval. See
Columbia Funds Series Trust, et al., Investment Company Act Release
Nos. 33495 (May 30, 2019) (notice) and 33519 (June 26, 2019)
(order).
\7\ A sub-adviser may manage the assets of a Subadvised Series
directly or provide the Adviser with model portfolio or investment
recommendation(s) that would be utilized in connection with the
management of a Subadvised Series.
\8\ Each sub-adviser would be registered with the Commission as
an investment adviser under the Advisers Act or not subject to such
registration.
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III. Applicable Law
6. Section 15(c) of the Act prohibits a registered investment
company having a board from entering into, renewing or performing any
contract or agreement whereby a person undertakes regularly to act as
an investment adviser (including a sub-adviser) to the investment
company, unless the terms of such contract or agreement and any renewal
thereof have been approved by the vote of a majority of the investment
company's board members who are not parties to such contract or
agreement, or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval.
7. 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
8. Applicants assert that boards of registered investment
companies, including the Board, typically hold in-person meetings on a
quarterly basis. Applicants state that during the three to four month
period between board meeting dates, market conditions may change or
investment opportunities may arise such that the Adviser may wish to
make a Sub-Adviser Change. Applicants also state that at these moments
it may be impractical and costly to hold an additional in-person Board
meeting, especially given the geographic diversity of Board members and
the additional cost of holding in-person meetings.
9. As a result, Applicants believe that the requested relief would
allow the Subadvised Series to operate more efficiently. In particular,
Applicants assert that without the delay inherent in holding in-person
Board meetings (and the attendant difficulty of obtaining the necessary
quorum for, and the additional costs of, an unscheduled in-person Board
meeting), the Subadvised Series would be able to act quicker and with
less expense to add or replace sub-advisers when the Board and the
Adviser believe that a Sub-Adviser Change would benefit the Subadvised
Series.
10. Applicants also note that the in-person meeting requirement in
Section 15(c) of the Act was designed to prohibit absentee approval of
advisory agreements. Applicants state that condition 1 to the requested
relief is designed to avoid such absentee approval by requiring that
the Board approve a Sub-adviser Change at a meeting where all
participating Board members can hear each other and be heard by each
other during the meeting.\9\
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\9\ Applicants state that technology that includes visual
capabilities will be used unless unanticipated circumstances arise.
Applicants also state that the Board could not rely upon the relief
to approve a Sub-Advisory Agreement by written consent or another
form of absentee approval by the Board.
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11. Applicants, moreover, represent that the Board would conduct
any such non-in-person consideration of a Sub-Advisory Agreement in
accordance with its typical process for approving Sub-Advisory
Agreements. Consistent with Section 15(c) of the Act, the Board would
request and evaluate such information as may reasonably be necessary to
evaluate the terms of any Sub-Advisory Agreement, and the Adviser and
sub-adviser would provide such information.
12. Finally, Applicants note that that if one or more Board members
request that a Sub-Adviser Change be considered in-person, then the
Board would not be able to rely on the relief and would have to
consider the Sub-Adviser Change at an in-person meeting.
V. Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. The Independent Trustees will approve a Sub-Adviser Change at a
non-in-person meeting in which Board members may participate by any
means of communication that allows those Board members participating to
hear each other simultaneously during the meeting.
2. Management will represent that the materials provided to the
Board for the non-in-person meeting include the same information the
Board would have received if a Sub-Adviser Change were sought at an in-
person Board meeting.
3. The notice of the non-in-person meeting will explain the need
for considering the Sub-Adviser Change at a non-in-person meeting. Once
notice of the non-in-person meeting to consider a Sub-Adviser Change is
sent, Board members will be given the opportunity to object to
considering the Sub-Adviser Change at a non-in-person Board meeting. If
a Board member requests that the Sub-Adviser Change be considered in-
person, the Board will consider the Sub-Adviser Change at an in-person
meeting, unless such request is rescinded.
4. A Subadvised Series' ability to rely on the requested relief
will be disclosed in the Subadvised Series' registration statement.
5. In the event that the Commission adopts a rule under the 1940
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.
[[Page 11343]]
For the Commission, by the Division of Investment Management,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-03715 Filed 2-23-21; 8:45 am]
BILLING CODE 8011-01-P
