Calamos-Avenue Opportunities Fund and Calamos Avenue Management, LLC, 33463-33466 [2021-13280]

Download as PDF Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 34300; 812–15131] Calamos-Avenue Opportunities Fund and Calamos Avenue Management, LLC June 14, 2021. Securities and Exchange Commission (‘‘Commission’’). ACTION: Notice. khammond on DSKJM1Z7X2PROD with NOTICES AGENCY: Notice of an application under section 6(c) of the Investment Company Act of 1940 (the ‘‘Act’’) for an exemption from sections 18(a)(2), 18(c), and 18(i) of the Act, pursuant to sections 6(c) and 23(c) of the Act, granting an exemption from rule 23c–3 under the Act, and for an order pursuant to section 17(d) of the Act and rule 17d–1 under the Act. SUMMARY OF APPLICATION: Applicants request an order to permit certain registered closed-end management investment companies to issue multiple classes of shares of beneficial interest (‘‘Shares’’) and to impose asset-based service and/or distribution fees and early withdrawal charges. APPLICANTS: Calamos-Avenue Opportunities Fund (the ‘‘Initial Fund’’) and Calamos Avenue Management, LLC (the ‘‘Advisor’’). FILING DATES: The application was filed on May 27, 2020, and amended on December 16, 2020, and March 17, 2021. 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 July 9, 2021, 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 to the Commission’s Secretary at SecretarysOffice@sec.gov. ADDRESSES: The Commission: Secretarys-Office@sec.gov. Applicants: c/o Richard Horowitz, by email to richard.horowitz@dechert.com. FOR FURTHER INFORMATION CONTACT: Asaf Barouk, Attorney-Advisor, at (202) 551– VerDate Sep<11>2014 19:19 Jun 23, 2021 Jkt 253001 4029 or Parisa Haghshenas, Branch Chief at (202) 551–6825 (Division of Investment Management, Chief Counsel’s Office). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained by searching the Commission’s website, at https:// www.sec.gov/search/search.htm, using the application’s file number or the applicant’s name, or by calling the Commission at (202) 551–8090. Applicants’ Representations 1. The Initial Fund is a newly organized Delaware statutory trust registered under the Act as a closed-end management investment company that is operated as an interval fund. The Initial Fund will be classified as a diversified investment company as defined under section 5(b)(1) of the Act. The Initial Fund’s investment objectives are to generate attractive risk-adjusted total returns, comprised of both capital appreciation and current income, by opportunistically investing in a global portfolio of distressed credit opportunities and other primarily illiquid debt instruments, complemented by liquid credit and alternative investment 2. The Advisor is a limited liability company organized under the laws of the state of Delaware. The Advisor, established in 2019, will serve as investment adviser to the Initial Fund. The Advisor is registered with the Commission as an investment adviser under the Investment Advisers Act of 1940. 3. The applicants seek an order to permit the Initial Fund to offer investors multiple classes of Shares of beneficial interest with varying sales loads and asset-based service and/or distribution fees and to impose early withdrawal charges. 4. Applicants request that the order also apply to any other registered closed-end management investment company that conducts a continuous offering of its shares, existing now or in the future, for which the Advisor, its successors,1 or any entity controlling, controlled by, or under common control with the Advisor, or its successors, acts as investment adviser, and which provides periodic liquidity with respect to its Shares through tender offers conducted in compliance with either rule 23c–3 under the Act or rule 13e– 4 under the Securities Exchange Act of 1 A successor in interest is limited to an entity that results from a reorganization into another jurisdiction or a change in the type of business organization. PO 00000 Frm 00258 Fmt 4703 Sfmt 4703 33463 1934 (the ‘‘1934 Act’’) (each such closed-end investment company, a ‘‘Future Fund’’ and, together with the Initial Fund, each, a ‘‘Fund’’ and collectively, the ‘‘Funds’’).2 5. The Initial Fund intends to issue a class of Shares atnet asset value plus the applicable front-end sales load and an annual asset-based distribution and/or service fee (the ‘‘InitialClass Shares’’). The Shares will be offered on a continuous basis at net asset value pershare plus the applicable sales load. The Shares will not be offered or traded in a secondary market and will not be listed on any securities exchange or quoted on any quotation medium. Shareholders of the Initial Fund are not able to have their Shares redeemed or otherwise sell their Shares on a daily basis because the Initial Fund is an unlisted closed-end fund. 6. If the requested relief is granted, the Initial Fund proposes to offer multiple classes of Shares, such as the Initial Class Shares, or any other classes. Because of the different distribution fees, shareholder services fees, and any other class expenses that may be attributable to the different classes, the net income attributable to, and any dividends payable on, each class of Shares may differ from each other from time to time. As a result, the net asset value per Share of the classes may differ over time. 7. Applicants state that, from time to time, the Board of a Fund may create and offer additional classes of Shares, or may vary the characteristics of the Initial Class described in the application, including without limitation, in the following respects: (1) The amount of fees permitted by a Distribution and Shareholder Services Plan as to such class; (2) voting rights with respect to a Distribution and Shareholder Services Plan as to such class; (3) different class designations; (4) the impact of any class expenses directly attributable to a particular class of Shares allocated on a class basis as described in the application; (5) differences in any dividends and net asset values per Share resulting from differences in fees under a distribution plan or in class expenses; (6) any early withdrawal charge or other sales load structure; and (7) any exchange or conversion features, as permitted under the Act. 8. Applicants state that, in order to provide some liquidity to shareholders, 2 The Initial Fund and any Future Fund relying on the requested relief will do so in a manner consistent with the terms and conditions of the application. Applicants represent that any person presently intending to rely on the requested relief is listed as an applicant. E:\FR\FM\24JNN1.SGM 24JNN1 33464 Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices khammond on DSKJM1Z7X2PROD with NOTICES the Initial Fund isstructured as an ‘‘interval fund’’ and makes semi-annual offers to repurchase between 5% and 25% of its outstanding Shares at net assetvalue (‘‘NAV’’), pursuant to Rule 23c–3 under the Act, unless such offer is suspended or postponed in accordance with regulatory requirements. Any other closed-end investment company that intends to rely on this relief will provide periodic liquidity to shareholders in accordance with either Rule 23c–3 under the Act or Rule 13e–4 under the 1934 Act. 9. Applicants represent that any assetbased service and/or distribution fees of a Fund will comply with the provisions of Rule 2341 of the Rules of the Financial Industry Regulatory Authority (‘‘FINRA Rule 2341’’) as if that rule applied to the Fund.3 Applicants also represent that each Fund will disclose in its prospectus the fees, expenses and other characteristics of each class of Shares offered for sale by the prospectus, as is required for open-end, multiple class funds under Form N–1A. As is required for open-end funds, each Fund will disclose its expenses in shareholder reports, and describe any arrangements that result in breakpoints in, or elimination of, sales loads in its prospectus.4 In addition, applicants will comply with applicable enhanced fee disclosure requirements for fund of funds, including registered funds of hedge funds.5 10. Each Fund and its distributor (the ‘‘Distributor’’) will also comply with any requirements that may be adopted by the Commission or FINRA regarding disclosure at the point of sale and in transaction confirmations about the costs and conflicts of interest arising out of the distribution of open-end investment company shares, and regarding prospectus disclosure of sales loads and revenue sharing arrangements as if those requirements applied to the Fund and the Distributor. Each Fund or the Distributor will contractually require that any other distributor of the Fund’s Shares comply with such requirements in connection with the distribution of Shares of the Fund. 3 Any references to FINRA Rule 2341 include any successor or replacement rule that may be adopted by the Financial Industry Regulatory Authority (‘‘FINRA’’). 4 See Shareholder Reports and Quarterly Portfolio Disclosure of Registered Management Investment Companies, Investment Company Act Release No. 26372 (Feb. 27, 2004) (adopting release); and Disclosure of Breakpoint Discounts by Mutual Funds, Investment Company Act Release No. 26464 (June 7, 2004) (adopting release). 5 Fund of Funds Investments, Investment Company Act Rel. Nos. 26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006) (adopting release). See also rules 12d1–1, et seq. of the Act. VerDate Sep<11>2014 19:19 Jun 23, 2021 Jkt 253001 11. Each Fund will allocate all expenses incurred by it among its various classes of Shares based on the net assets of the Fund attributable to each class, except that the net asset value and expenses of each class will reflect the expenses associated with the Distribution and Shareholder Services Plan of that class (if any), shareholder services fees attributable to a particular class (including transfer agency fees, if any), and any other incremental expenses of that class. Expenses of a Fund allocated to a particular class of the Fund’s Shares will be borne on a pro rata basis by each outstanding Share of that class. Applicants state that each Fund will comply with the provisions of rule 18f–3 under the Act as if it were an open-end investment company. 12. Applicants state that the Initial Fund does not intend to offer any exchange privilege or conversion feature, but any such privilege or feature introduced in the future by a Fund will comply with rule 11a–1, rule 11a–3, and rule 18f–3 as if the Fund were an openend investment company. 13. Applicants state that the Initial Fund does not currently intend to impose an early withdrawal charge. However, in the future a Fund may impose an early withdrawal charge on shares submitted for repurchase that have been held less than a specified period. The Fund may waive the early withdrawal charge for certain categories of shareholders or transactions to be established from time to time. Applicants state that each Fund will apply the early withdrawal charge (and any waivers or scheduled variations of the early withdrawal charge) uniformly to all shareholders in a given class and consistently with the requirements of rule 22d–1 under the Act as if the Fund was an open-end investment company. 14. Each Fund operating as an interval fund pursuant to rule 23c–3 under the Act may offer its shareholders an exchange feature under which the shareholders of the Fund may, in connection with such Fund’s periodic repurchase offers, exchange their Shares of the Fund for shares of the same class of (i) registered open-end investment companies or (ii) other registered closed-end investment companies that comply with rule 23c–3 under the Act and continuously offer their shares at net asset value, that are in the Fund’s group of investment companies (collectively, the ‘‘Other Funds’’). Shares of a Fund operating pursuant to rule 23c–3 that are exchanged for shares of Other Funds will be included as part of the repurchase offer amount for such Fund as specified in rule 23c–3 under the Act. Any exchange option will PO 00000 Frm 00259 Fmt 4703 Sfmt 4703 comply with rule 11a–3 under the Act, as if the Fund were an open-end investment company subject to rule 11a–3. In complying with rule 11a–3 under the Act, each Fund will treat an early withdrawal charge as if it were a contingent deferred sales load. 15. Applicants state that the Initial Fund does not currently intend to impose a repurchase fee, but may do so in the future.6 If a Fund charges a repurchase fee, Shares of the Fund will be subject to a repurchase fee at a rate of no greater than 2% of the shareholder’s repurchase proceeds if the interval between the date of purchase of the Shares and the valuation date with respect to the repurchase of those Shares is less than one year. Repurchase fees, if charged, will equally apply to all classes of Shares of the Fund, consistent with section 18 of the Act and rule 18f– 3 thereunder. To the extent a Fund determines to waive, impose scheduled variations of, or eliminate a repurchase fee, it will do so consistently with the requirements of rule 22d–1 under the Act as if the repurchase fee were a contingent deferred sales load and as if the Fund were a registered open-end investment company and the Fund’s waiver of, scheduled variation in, or elimination of, the repurchase fee will apply uniformly to all shareholders of the Fund regardless of class. Applicants’ Legal Analysis Multiple Classes of Shares 1. Section 18(a)(2)(A) and (B) makes it unlawful for a registered closed-end investment company to issue a senior security that is a stock unless (a) immediately after such issuance it will have an asset coverage of at least 200% and (b) provision is made to prohibit the declaration of any distribution, upon its common stock, or the purchase of any such common stock, unless in every such case such senior security has at the time of the declaration of any such distribution, or at the time of any such purchase, an asset coverage of at least 200% after deducting the amount of such distribution or purchase price, as the case may be. Applicants state that the creation of multiple classes of shares of the Funds may violate section 18(a)(2) because the Funds may not meet such requirements with respect to a class of shares that may be a senior security. 6 Unlike a distribution-related charge, the repurchase fee is payable to the Fund to compensate long-term shareholders for the expenses related to shorter-term investors, in light of the Fund’s generally longer-term investment horizons and investment operations. E:\FR\FM\24JNN1.SGM 24JNN1 khammond on DSKJM1Z7X2PROD with NOTICES Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices 2. Section 18(c) of the Act provides, in relevant part, that a registered closedend investment company may not issue or sell any senior security if, immediately thereafter, the company has outstanding more than one class of senior security. Applicants state that the creation of multiple classes of Shares of a Fund may be prohibited by section 18(c), as a class may have priority over another class as to payment of dividends because shareholders of different classes would pay different fees and expenses. 3. Section 18(i) of the Act provides that each share of stock issued by a registered management investment company will be a voting stock and have equal voting rights with every other outstanding voting stock. Applicants state that permitting multiple classes of Shares of a Fund may violate section 18(i) of the Act because each class would be entitled to exclusive voting rights with respect to matters solely related to that class. 4. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction or any class or classes of persons, securities or transactions from any provision of the Act, or from any rule or regulation under the Act, if and to the extent such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants request an exemption under section 6(c) from sections 18(a)(2), 18(c) and 18(i) to permit the Funds to issue multiple classes of Shares. 5. Applicants submit that the proposed allocation of expenses relating to distribution and voting rights among multiple classes is equitable and will not discriminate against any group or class of shareholders. Applicants submit that the proposed arrangements would permit each Fund to facilitate the distribution of its Shares and provide investors with a broader choice of shareholder options. Applicants assert that the proposed closed-end investment company multiple class structure does not raise the concerns underlying section 18 of the Act to any greater degree than open-end investment companies’ multiple class structures that are permitted by rule 18f–3 under the Act. Applicants state that each Fund will comply with the provisions of rule 18f–3 as if it were an open-end investment company. Early Withdrawal Charges 1. Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall VerDate Sep<11>2014 19:19 Jun 23, 2021 Jkt 253001 purchase securities of which it is the issuer, except: (a) On a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors. 2. Rule 23c–3 under the Act permits a registered closed-end investment company (an ‘‘interval fund’’) to make repurchase offers of between five and twenty-five percent of its outstanding shares at net asset value at periodic intervals pursuant to a fundamental policy of the interval fund. Rule 23c– 3(b)(1) under the Act permits an interval fund to deduct from repurchase proceeds only a repurchase fee, not to exceed two percent of the proceeds, that is paid to the interval fund and is reasonably intended to compensate the fund for expenses directly related to the repurchase. 3. Section 23(c)(3) provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the repurchase is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased. 4. Applicants request relief under section 6(c), discussed above, and section 23(c)(3) from rule 23c–3 to the extent necessary for each Fund to impose early withdrawal charges on shares of the Fund submitted for repurchase that have been held for less than a specified period. 5. Applicants state that the early withdrawal charges they intend to impose are functionally similar to contingent deferred sales loads imposed by open-end investment companies under rule 6c–10 under the Act. Rule 6c–10 permits open-end investment companies to impose contingent deferred sales loads, subject to certain conditions. Applicants note that rule 6c–10 is grounded in policy considerations supporting the employment of contingent deferred sales loads where there are adequate safeguards for the investor and state that the same policy considerations support imposition of early withdrawal charges in the interval fund context. In addition, applicants state that early withdrawal charges may be necessary for the Fund’s Distributor to recover distribution costs. Applicants represent that any early withdrawal charge imposed by a Fund will comply with rule 6c–10 under the Act as if the rule were applicable to closed-end investment companies. Each PO 00000 Frm 00260 Fmt 4703 Sfmt 4703 33465 Fund will disclose early withdrawal charges in accordance with the requirements of Form N–1A concerning contingent deferred sales loads. Asset-Based Service and/or Distribution Fees 1. Section 17(d) of the Act and rule 17d–1 under the Act prohibit an affiliated person of a registered investment company or an affiliated person of such person, acting as principal, from participating in or effecting any transaction in connection with any joint enterprise or joint arrangement in which the investment company participates unless the Commission issues an order permitting the transaction. In reviewing applications submitted under section 17(d) and rule 17d–1, the Commission considers whether the participation of the investment company in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants. 2. Rule 17d–3 under the Act provides an exemption from section 17(d) and rule 17d–1 to permit open-end investment companies to enter into distribution arrangements pursuant to rule 12b–1 under the Act. Applicants request an order under section 17(d) and rule 17d–1 under the Act to permit each Fund to impose asset-based service and/ or distribution fees. Applicants have agreed to comply with rules 12b–1 and 17d–3 as if those rules applied to closed-end investment companies, which they believe will resolve any concerns that might arise in connection with a Fund financing the distribution of its shares through asset-based service and/or distribution fees. For the reasons stated above, applicants submit that the exemptions requested under section 6(c) are necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants further submit that the relief requested pursuant to section 23(c)(3) will be consistent with the protection of investors and will ensure that applicants do not unfairly discriminate against any holders of the class of securities to be purchased. Finally, applicants state that the Funds’ imposition of asset-based service and/or distribution fees is consistent with the provisions, policies and purposes of the Act and does not involve participation on a basis different from or less E:\FR\FM\24JNN1.SGM 24JNN1 33466 Federal Register / Vol. 86, No. 119 / Thursday, June 24, 2021 / Notices advantageous than that of other participants. DEPARTMENT OF STATE [Public Notice: 11446] Applicants’ Condition Applicants agree that any order granting the requested relief will be subject to the following condition: Each Fund relying on the requested order will comply with the provisions of rules 6c–10, 12b–1, 17d–3, 18f–3, 22d– 1 and, where applicable, 11a–3 under the Act, as amended from time to time or replaced, as if those rules applied to closed-end management investment companies, and will comply with FINRA Rule 2341, as amended from time to time, as if that rule applied to all closed-end management investment companies. For the Commission, by the Division of Investment Management, under delegated authority. J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–13280 Filed 6–23–21; 8:45 am] BILLING CODE 8011–01–P DEPARTMENT OF STATE [Public Notice Number: 11453] Overseas Schools Advisory Council Charter Renewal Notice of renewal of an advisory committee charter. ACTION: The Secretary of State announces the renewal of the charter of the Overseas Schools Advisory Council in accordance with the Federal Advisory Committee Act. The main objectives of the Council are: (a) To advise the Department of State regarding matters of policy and funding for the overseas schools; (b) To help the overseas schools become showcases for excellence in education; (c) To help make service abroad more attractive to American citizens who have school-age children, both in the business community and in Government; (d) To identify methods to mitigate risks to American private sector interests worldwide. FOR FURTHER INFORMATION CONTACT: Thomas Shearer, Director of the Office of Overseas Schools and Executive Secretary for the Committee, at (202) 261–8200 or OverseasSchools@ state.gov. khammond on DSKJM1Z7X2PROD with NOTICES SUMMARY: Zachary A. Parker, Director, Office of Directives Management, U.S. Department of State. [FR Doc. 2021–13414 Filed 6–23–21; 8:45 am] BILLING CODE 4710–24–P VerDate Sep<11>2014 19:19 Jun 23, 2021 Jkt 253001 Notice of Department of State— Delisting Sanctioned Entities The Secretary of State has determined to terminate the sanctions that were imposed, pursuant to Executive Order (E.O.) 13846, on Aoxing Ship Management (Shanghai) Ltd and Sea Charming Shipping Company Limited and remove those entities from the List of Specially Designated Nationals and Blocked Persons (SDN List) maintained by the Department of the Treasury’s Office of Foreign Assets Control (OFAC). DATES: The Secretary of State’s determination and selection of certain sanctions to be imposed upon the two entities identified in the SUPPLEMENTARY INFORMATION section was effective as of March 18, 2020. The Secretary of State’s subsequent termination of sanctions with respect to those entities was effective as of June 10, 2021. FOR FURTHER INFORMATION CONTACT: Taylor Ruggles, Director, Office of Economic Sanctions Policy and Implementation, Bureau of Economic and Business Affairs, Department of State, Washington, DC 20520, tel.: (202) 647 7677, email: RugglesTV@state.gov. SUPPLEMENTARY INFORMATION: On June 10, 2021, the Secretary of State determined that the sanctions that had been imposed with respect to Aoxing Ship Management (Shanghai) Ltd and Sea Charming Shipping Company Limited on March 18, 2020 pursuant to section 3(a)(iii) of E.O. 13846 were terminated as of June 10, 2021. Accordingly, Aoxing Ship Management (Shanghai) Ltd and Sea Charming Shipping Company Limited are being removed from the SDN List. SUMMARY: Peter Haas, Acting Assistant Secretary, Bureau of Economic and Business Affairs, Department of State. [FR Doc. 2021–13241 Filed 6–23–21; 8:45 am] BILLING CODE 4710–AE–P DEPARTMENT OF STATE [Public Notice: 11451] Notice of Determinations; Culturally Significant Object Being Imported for Exhibition—Determinations: ‘‘Of Gods and Glamour’’ Exhibition Notice is hereby given of the following determinations: I hereby determine that one object being imported from abroad pursuant to an agreement with its foreign owner or SUMMARY: PO 00000 Frm 00261 Fmt 4703 Sfmt 4703 custodian for temporary display in the exhibition ‘‘Of Gods and Glamour’’ at the Art Institute of Chicago, in Chicago, Illinois, and at possible additional exhibitions or venues yet to be determined, is of cultural significance, and, further, that its temporary exhibition or display within the United States as aforementioned is in the national interest. I have ordered that Public Notice of these determinations be published in the Federal Register. FOR FURTHER INFORMATION CONTACT: Chi D. Tran, Program Administrator, Office of the Legal Adviser, U.S. Department of State (telephone: 202–632–6471; email: section2459@state.gov). The mailing address is U.S. Department of State, L/ PD, SA–5, Suite 5H03, Washington, DC 20522–0505. SUPPLEMENTARY INFORMATION: The foregoing determinations were made pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, et seq.; 22 U.S.C. 6501 note, et seq.), Delegation of Authority No. 234 of October 1, 1999, and Delegation of Authority No. 236–3 of August 28, 2000. Matthew R. Lussenhop, Acting Assistant Secretary, Bureau of Educational and Cultural Affairs, Department of State. [FR Doc. 2021–13355 Filed 6–23–21; 8:45 am] BILLING CODE 4710–05–P SURFACE TRANSPORTATION BOARD 60-Day Notice of Intent to Seek Reinstatement Without Change: Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery Notice and request for comments. ACTION: AGENCY: Surface Transportation Board. SUMMARY: As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act of 1995 (PRA), the Surface Transportation Board (STB or Board) gives notice that it is requesting from the Office of Management and Budget (OMB) a reinstatement without change of Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery. This collection was developed as part of a Federal Government-wide effort to streamline the process for seeking feedback from the public on the Board’s service delivery. E:\FR\FM\24JNN1.SGM 24JNN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 86, Number 119 (Thursday, June 24, 2021)]
[Notices]
[Pages 33463-33466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-13280]



[[Page 33463]]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34300; 812-15131]


Calamos-Avenue Opportunities Fund and Calamos Avenue Management, 
LLC

June 14, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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

Summary of Application:  Applicants request an order to permit certain 
registered closed-end management investment companies to issue multiple 
classes of shares of beneficial interest (``Shares'') and to impose 
asset-based service and/or distribution fees and early withdrawal 
charges.

Applicants:  Calamos-Avenue Opportunities Fund (the ``Initial Fund'') 
and Calamos Avenue Management, LLC (the ``Advisor'').

Filing Dates:  The application was filed on May 27, 2020, and amended 
on December 16, 2020, and March 17, 2021.

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 July 9, 2021, 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 to the 
Commission's Secretary at [email protected].

ADDRESSES: The Commission: [email protected]. Applicants: c/o 
Richard Horowitz, by email to [email protected].

FOR FURTHER INFORMATION CONTACT: Asaf Barouk, Attorney-Advisor, at 
(202) 551-4029 or Parisa Haghshenas, Branch Chief at (202) 551-6825 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained by searching the 
Commission's website, at https://www.sec.gov/search/search.htm, using 
the application's file number or the applicant's name, or by calling 
the Commission at (202) 551-8090.

Applicants' Representations

    1. The Initial Fund is a newly organized Delaware statutory trust 
registered under the Act as a closed-end management investment company 
that is operated as an interval fund. The Initial Fund will be 
classified as a diversified investment company as defined under section 
5(b)(1) of the Act. The Initial Fund's investment objectives are to 
generate attractive risk-adjusted total returns, comprised of both 
capital appreciation and current income, by opportunistically investing 
in a global portfolio of distressed credit opportunities and other 
primarily illiquid debt instruments, complemented by liquid credit and 
alternative investment
    2. The Advisor is a limited liability company organized under the 
laws of the state of Delaware. The Advisor, established in 2019, will 
serve as investment adviser to the Initial Fund. The Advisor is 
registered with the Commission as an investment adviser under the 
Investment Advisers Act of 1940.
    3. The applicants seek an order to permit the Initial Fund to offer 
investors multiple classes of Shares of beneficial interest with 
varying sales loads and asset-based service and/or distribution fees 
and to impose early withdrawal charges.
    4. Applicants request that the order also apply to any other 
registered closed-end management investment company that conducts a 
continuous offering of its shares, existing now or in the future, for 
which the Advisor, its successors,\1\ or any entity controlling, 
controlled by, or under common control with the Advisor, or its 
successors, acts as investment adviser, and which provides periodic 
liquidity with respect to its Shares through tender offers conducted in 
compliance with either rule 23c-3 under the Act or rule 13e-4 under the 
Securities Exchange Act of 1934 (the ``1934 Act'') (each such closed-
end investment company, a ``Future Fund'' and, together with the 
Initial Fund, each, a ``Fund'' and collectively, the ``Funds'').\2\
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    \1\ A successor in interest is limited to an entity that results 
from a reorganization into another jurisdiction or a change in the 
type of business organization.
    \2\ The Initial Fund and any Future Fund relying on the 
requested relief will do so in a manner consistent with the terms 
and conditions of the application. Applicants represent that any 
person presently intending to rely on the requested relief is listed 
as an applicant.
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    5. The Initial Fund intends to issue a class of Shares atnet asset 
value plus the applicable front-end sales load and an annual asset-
based distribution and/or service fee (the ``InitialClass Shares''). 
The Shares will be offered on a continuous basis at net asset value 
pershare plus the applicable sales load. The Shares will not be offered 
or traded in a secondary market and will not be listed on any 
securities exchange or quoted on any quotation medium. Shareholders of 
the Initial Fund are not able to have their Shares redeemed or 
otherwise sell their Shares on a daily basis because the Initial Fund 
is an unlisted closed-end fund.
    6. If the requested relief is granted, the Initial Fund proposes to 
offer multiple classes of Shares, such as the Initial Class Shares, or 
any other classes. Because of the different distribution fees, 
shareholder services fees, and any other class expenses that may be 
attributable to the different classes, the net income attributable to, 
and any dividends payable on, each class of Shares may differ from each 
other from time to time. As a result, the net asset value per Share of 
the classes may differ over time.
    7. Applicants state that, from time to time, the Board of a Fund 
may create and offer additional classes of Shares, or may vary the 
characteristics of the Initial Class described in the application, 
including without limitation, in the following respects: (1) The amount 
of fees permitted by a Distribution and Shareholder Services Plan as to 
such class; (2) voting rights with respect to a Distribution and 
Shareholder Services Plan as to such class; (3) different class 
designations; (4) the impact of any class expenses directly 
attributable to a particular class of Shares allocated on a class basis 
as described in the application; (5) differences in any dividends and 
net asset values per Share resulting from differences in fees under a 
distribution plan or in class expenses; (6) any early withdrawal charge 
or other sales load structure; and (7) any exchange or conversion 
features, as permitted under the Act.
    8. Applicants state that, in order to provide some liquidity to 
shareholders,

[[Page 33464]]

the Initial Fund isstructured as an ``interval fund'' and makes semi-
annual offers to repurchase between 5% and 25% of its outstanding 
Shares at net assetvalue (``NAV''), pursuant to Rule 23c-3 under the 
Act, unless such offer is suspended or postponed in accordance with 
regulatory requirements. Any other closed-end investment company that 
intends to rely on this relief will provide periodic liquidity to 
shareholders in accordance with either Rule 23c-3 under the Act or Rule 
13e-4 under the 1934 Act.
    9. Applicants represent that any asset-based service and/or 
distribution fees of a Fund will comply with the provisions of Rule 
2341 of the Rules of the Financial Industry Regulatory Authority 
(``FINRA Rule 2341'') as if that rule applied to the Fund.\3\ 
Applicants also represent that each Fund will disclose in its 
prospectus the fees, expenses and other characteristics of each class 
of Shares offered for sale by the prospectus, as is required for open-
end, multiple class funds under Form N-1A. As is required for open-end 
funds, each Fund will disclose its expenses in shareholder reports, and 
describe any arrangements that result in breakpoints in, or elimination 
of, sales loads in its prospectus.\4\ In addition, applicants will 
comply with applicable enhanced fee disclosure requirements for fund of 
funds, including registered funds of hedge funds.\5\
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    \3\ Any references to FINRA Rule 2341 include any successor or 
replacement rule that may be adopted by the Financial Industry 
Regulatory Authority (``FINRA'').
    \4\ See Shareholder Reports and Quarterly Portfolio Disclosure 
of Registered Management Investment Companies, Investment Company 
Act Release No. 26372 (Feb. 27, 2004) (adopting release); and 
Disclosure of Breakpoint Discounts by Mutual Funds, Investment 
Company Act Release No. 26464 (June 7, 2004) (adopting release).
    \5\ Fund of Funds Investments, Investment Company Act Rel. Nos. 
26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006) 
(adopting release). See also rules 12d1-1, et seq. of the Act.
---------------------------------------------------------------------------

    10. Each Fund and its distributor (the ``Distributor'') will also 
comply with any requirements that may be adopted by the Commission or 
FINRA regarding disclosure at the point of sale and in transaction 
confirmations about the costs and conflicts of interest arising out of 
the distribution of open-end investment company shares, and regarding 
prospectus disclosure of sales loads and revenue sharing arrangements 
as if those requirements applied to the Fund and the Distributor. Each 
Fund or the Distributor will contractually require that any other 
distributor of the Fund's Shares comply with such requirements in 
connection with the distribution of Shares of the Fund.
    11. Each Fund will allocate all expenses incurred by it among its 
various classes of Shares based on the net assets of the Fund 
attributable to each class, except that the net asset value and 
expenses of each class will reflect the expenses associated with the 
Distribution and Shareholder Services Plan of that class (if any), 
shareholder services fees attributable to a particular class (including 
transfer agency fees, if any), and any other incremental expenses of 
that class. Expenses of a Fund allocated to a particular class of the 
Fund's Shares will be borne on a pro rata basis by each outstanding 
Share of that class. Applicants state that each Fund will comply with 
the provisions of rule 18f-3 under the Act as if it were an open-end 
investment company.
    12. Applicants state that the Initial Fund does not intend to offer 
any exchange privilege or conversion feature, but any such privilege or 
feature introduced in the future by a Fund will comply with rule 11a-1, 
rule 11a-3, and rule 18f-3 as if the Fund were an open-end investment 
company.
    13. Applicants state that the Initial Fund does not currently 
intend to impose an early withdrawal charge. However, in the future a 
Fund may impose an early withdrawal charge on shares submitted for 
repurchase that have been held less than a specified period. The Fund 
may waive the early withdrawal charge for certain categories of 
shareholders or transactions to be established from time to time. 
Applicants state that each Fund will apply the early withdrawal charge 
(and any waivers or scheduled variations of the early withdrawal 
charge) uniformly to all shareholders in a given class and consistently 
with the requirements of rule 22d-1 under the Act as if the Fund was an 
open-end investment company.
    14. Each Fund operating as an interval fund pursuant to rule 23c-3 
under the Act may offer its shareholders an exchange feature under 
which the shareholders of the Fund may, in connection with such Fund's 
periodic repurchase offers, exchange their Shares of the Fund for 
shares of the same class of (i) registered open-end investment 
companies or (ii) other registered closed-end investment companies that 
comply with rule 23c-3 under the Act and continuously offer their 
shares at net asset value, that are in the Fund's group of investment 
companies (collectively, the ``Other Funds''). Shares of a Fund 
operating pursuant to rule 23c-3 that are exchanged for shares of Other 
Funds will be included as part of the repurchase offer amount for such 
Fund as specified in rule 23c-3 under the Act. Any exchange option will 
comply with rule 11a-3 under the Act, as if the Fund were an open-end 
investment company subject to rule 11a-3. In complying with rule 11a-3 
under the Act, each Fund will treat an early withdrawal charge as if it 
were a contingent deferred sales load.
    15. Applicants state that the Initial Fund does not currently 
intend to impose a repurchase fee, but may do so in the future.\6\ If a 
Fund charges a repurchase fee, Shares of the Fund will be subject to a 
repurchase fee at a rate of no greater than 2% of the shareholder's 
repurchase proceeds if the interval between the date of purchase of the 
Shares and the valuation date with respect to the repurchase of those 
Shares is less than one year. Repurchase fees, if charged, will equally 
apply to all classes of Shares of the Fund, consistent with section 18 
of the Act and rule 18f-3 thereunder. To the extent a Fund determines 
to waive, impose scheduled variations of, or eliminate a repurchase 
fee, it will do so consistently with the requirements of rule 22d-1 
under the Act as if the repurchase fee were a contingent deferred sales 
load and as if the Fund were a registered open-end investment company 
and the Fund's waiver of, scheduled variation in, or elimination of, 
the repurchase fee will apply uniformly to all shareholders of the Fund 
regardless of class.
---------------------------------------------------------------------------

    \6\ Unlike a distribution-related charge, the repurchase fee is 
payable to the Fund to compensate long-term shareholders for the 
expenses related to shorter-term investors, in light of the Fund's 
generally longer-term investment horizons and investment operations.
---------------------------------------------------------------------------

Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(a)(2)(A) and (B) makes it unlawful for a registered 
closed-end investment company to issue a senior security that is a 
stock unless (a) immediately after such issuance it will have an asset 
coverage of at least 200% and (b) provision is made to prohibit the 
declaration of any distribution, upon its common stock, or the purchase 
of any such common stock, unless in every such case such senior 
security has at the time of the declaration of any such distribution, 
or at the time of any such purchase, an asset coverage of at least 200% 
after deducting the amount of such distribution or purchase price, as 
the case may be. Applicants state that the creation of multiple classes 
of shares of the Funds may violate section 18(a)(2) because the Funds 
may not meet such requirements with respect to a class of shares that 
may be a senior security.

[[Page 33465]]

    2. Section 18(c) of the Act provides, in relevant part, that a 
registered closed-end investment company may not issue or sell any 
senior security if, immediately thereafter, the company has outstanding 
more than one class of senior security. Applicants state that the 
creation of multiple classes of Shares of a Fund may be prohibited by 
section 18(c), as a class may have priority over another class as to 
payment of dividends because shareholders of different classes would 
pay different fees and expenses.
    3. Section 18(i) of the Act provides that each share of stock 
issued by a registered management investment company will be a voting 
stock and have equal voting rights with every other outstanding voting 
stock. Applicants state that permitting multiple classes of Shares of a 
Fund may violate section 18(i) of the Act because each class would be 
entitled to exclusive voting rights with respect to matters solely 
related to that class.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security or transaction or any class or classes of persons, 
securities or transactions from any provision of the Act, or from any 
rule or regulation under the Act, if and to the extent such exemption 
is necessary or appropriate in the public interest and consistent with 
the protection of investors and the purposes fairly intended by the 
policy and provisions of the Act. Applicants request an exemption under 
section 6(c) from sections 18(a)(2), 18(c) and 18(i) to permit the 
Funds to issue multiple classes of Shares.
    5. Applicants submit that the proposed allocation of expenses 
relating to distribution and voting rights among multiple classes is 
equitable and will not discriminate against any group or class of 
shareholders. Applicants submit that the proposed arrangements would 
permit each Fund to facilitate the distribution of its Shares and 
provide investors with a broader choice of shareholder options. 
Applicants assert that the proposed closed-end investment company 
multiple class structure does not raise the concerns underlying section 
18 of the Act to any greater degree than open-end investment companies' 
multiple class structures that are permitted by rule 18f-3 under the 
Act. Applicants state that each Fund will comply with the provisions of 
rule 18f-3 as if it were an open-end investment company.

Early Withdrawal Charges

    1. Section 23(c) of the Act provides, in relevant part, that no 
registered closed-end investment company shall purchase securities of 
which it is the issuer, except: (a) On a securities exchange or other 
open market; (b) pursuant to tenders, after reasonable opportunity to 
submit tenders given to all holders of securities of the class to be 
purchased; or (c) under other circumstances as the Commission may 
permit by rules and regulations or orders for the protection of 
investors.
    2. Rule 23c-3 under the Act permits a registered closed-end 
investment company (an ``interval fund'') to make repurchase offers of 
between five and twenty-five percent of its outstanding shares at net 
asset value at periodic intervals pursuant to a fundamental policy of 
the interval fund. Rule 23c-3(b)(1) under the Act permits an interval 
fund to deduct from repurchase proceeds only a repurchase fee, not to 
exceed two percent of the proceeds, that is paid to the interval fund 
and is reasonably intended to compensate the fund for expenses directly 
related to the repurchase.
    3. Section 23(c)(3) provides that the Commission may issue an order 
that would permit a closed-end investment company to repurchase its 
shares in circumstances in which the repurchase is made in a manner or 
on a basis that does not unfairly discriminate against any holders of 
the class or classes of securities to be purchased.
    4. Applicants request relief under section 6(c), discussed above, 
and section 23(c)(3) from rule 23c-3 to the extent necessary for each 
Fund to impose early withdrawal charges on shares of the Fund submitted 
for repurchase that have been held for less than a specified period.
    5. Applicants state that the early withdrawal charges they intend 
to impose are functionally similar to contingent deferred sales loads 
imposed by open-end investment companies under rule 6c-10 under the 
Act. Rule 6c-10 permits open-end investment companies to impose 
contingent deferred sales loads, subject to certain conditions. 
Applicants note that rule 6c-10 is grounded in policy considerations 
supporting the employment of contingent deferred sales loads where 
there are adequate safeguards for the investor and state that the same 
policy considerations support imposition of early withdrawal charges in 
the interval fund context. In addition, applicants state that early 
withdrawal charges may be necessary for the Fund's Distributor to 
recover distribution costs. Applicants represent that any early 
withdrawal charge imposed by a Fund will comply with rule 6c-10 under 
the Act as if the rule were applicable to closed-end investment 
companies. Each Fund will disclose early withdrawal charges in 
accordance with the requirements of Form N-1A concerning contingent 
deferred sales loads.

Asset-Based Service and/or Distribution Fees

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company or an 
affiliated person of such person, acting as principal, from 
participating in or effecting any transaction in connection with any 
joint enterprise or joint arrangement in which the investment company 
participates unless the Commission issues an order permitting the 
transaction. In reviewing applications submitted under section 17(d) 
and rule 17d-1, the Commission considers whether the participation of 
the investment company in a joint enterprise or joint arrangement is 
consistent with the provisions, policies and purposes of the Act, and 
the extent to which the participation is on a basis different from or 
less advantageous than that of other participants.
    2. Rule 17d-3 under the Act provides an exemption from section 
17(d) and rule 17d-1 to permit open-end investment companies to enter 
into distribution arrangements pursuant to rule 12b-1 under the Act. 
Applicants request an order under section 17(d) and rule 17d-1 under 
the Act to permit each Fund to impose asset-based service and/or 
distribution fees. Applicants have agreed to comply with rules 12b-1 
and 17d-3 as if those rules applied to closed-end investment companies, 
which they believe will resolve any concerns that might arise in 
connection with a Fund financing the distribution of its shares through 
asset-based service and/or distribution fees.
    For the reasons stated above, applicants submit that the exemptions 
requested under section 6(c) are necessary and appropriate in the 
public interest and are consistent with the protection of investors and 
the purposes fairly intended by the policy and provisions of the Act. 
Applicants further submit that the relief requested pursuant to section 
23(c)(3) will be consistent with the protection of investors and will 
ensure that applicants do not unfairly discriminate against any holders 
of the class of securities to be purchased. Finally, applicants state 
that the Funds' imposition of asset-based service and/or distribution 
fees is consistent with the provisions, policies and purposes of the 
Act and does not involve participation on a basis different from or 
less

[[Page 33466]]

advantageous than that of other participants.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Each Fund relying on the requested order will comply with the 
provisions of rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1 and, where 
applicable, 11a-3 under the Act, as amended from time to time or 
replaced, as if those rules applied to closed-end management investment 
companies, and will comply with FINRA Rule 2341, as amended from time 
to time, as if that rule applied to all closed-end management 
investment companies.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-13280 Filed 6-23-21; 8:45 am]
BILLING CODE 8011-01-P

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