80 FR 17117 - Princeton Private Equity Fund and Princeton Fund Advisors, LLC; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 61 (March 31, 2015)

[Federal Register Volume 80, Number 61 (Tuesday, March 31, 2015)]
[Notices]
[Pages 17117-17119]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-07302]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31512; 812-14367]


Princeton Private Equity Fund and Princeton Fund Advisors, LLC; 
Notice of Application

March 25, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').

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

-----------------------------------------------------------------------

    Summary of Application: Applicants request an order to permit 
certain registered closed-end management investment companies to issue 
multiple classes of shares of beneficial interest (``Shares'') and to 
impose asset-based service and/or distribution and contingent deferred 
sales loads (``CDSCs'').
    Applicants: Princeton Private Equity Fund (the ``Fund'') and 
Princeton Fund Advisors, LLC (the ``Adviser'') (together, the 
``Applicants'').

DATES: The application was filed on October 2, 2014 and amended on 
February 6, 2015.
    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 writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on April 20, 2015, and should be accompanied by proof of 
service on the applicants, in the form of an affidavit, or, for 
lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, the 
reason for the request, and the issues contested. Persons who wish to 
be notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090; Applicants, c/o Michael Wible, 
Esq., Thompson Hine LLP, 41 S. High Street, Suite 1700, Columbus, OH 
43065.

FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Senior Counsel, at 
(202) 551-6868 or Daniele Marchesani, 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 Web site by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.html or 
by calling (202) 551-8090.

Applicants' Representations

    1. The Fund is a continuously offered non-diversified closed-end 
management investment company registered under the Act and organized as 
a Delaware statutory trust.
    2. The Adviser, a Delaware limited liability company, is registered 
with the Commission as an investment adviser under the Investment 
Advisers Act of 1940, as amended (the ``Advisers Act''). Northern 
Lights Fund Distributors, LLC, a registered broker-dealer under the 
Securities Exchange Act of 1934, as amended (``1934 Act''), will act as 
a placement agent for the Fund Northern Lights Fund Distributors, LLC 
is not an affiliated person, as defined in section 2(a)(3) of the Act, 
of the Adviser or of the Fund.
    3. The Fund will continuously offer Shares in private placements in 
reliance on the provisions of Regulation D under the Securities Act of 
1933, as amended (``Securities Act'').\1\ Shares of the Fund

[[Page 17118]]

are not listed on any securities exchange and do not trade on an over-
the-counter system such as NASDAQ. Applicants do not expect that any 
secondary market will develop for the Shares.
---------------------------------------------------------------------------

    \1\ Shares of the Fund will be sold only to ``accredited 
investors,'' as defined in Regulation D under the Securities Act. 
The Fund reserves the right to conduct a public offering of the 
Shares to accredited investors under the Securities Act in the 
future. These Shares will be offered subject to minimum initial and 
subsequent purchase requirements.
---------------------------------------------------------------------------

    4. The Fund currently issues a single class of Shares (``Initial 
Class'') at net asset value per share plus a servicing fee.\2\ The Fund 
proposes to offer multiple classes of Shares at net asset value per 
share that may (but would not necessarily) be subject to a front-end 
sales load, an annual asset-based service and/or distribution fee, and/
or an Early Withdrawal Fee (defined below), in each case as set forth 
in the Fund's Confidential Memorandum.
---------------------------------------------------------------------------

    \2\ Before relying on the relief requested in this application, 
the Fund will convert the servicing fee currently charged to holders 
of its current class of Shares to an asset-based service and/or 
distribution fee that complies with rule 12b-1 under the Act.
---------------------------------------------------------------------------

    5. In order to provide a limited degree of liquidity to 
shareholders, the Fund may from time to time offer to repurchase Shares 
at their then current net asset value pursuant to rule 13e-4 under the 
1934 Act pursuant to written tenders by shareholders.\3\ Repurchases 
will be made at such times, in such amounts and on such terms as may be 
determined by the Fund's board of trustees (the ``Board''), in its sole 
discretion. The Adviser expects to ordinarily recommend that the Board 
authorize the Fund to offer to repurchase Shares from shareholders 
quarterly.
---------------------------------------------------------------------------

    \3\ Shares will be subject to an early repurchase fee at a rate 
of 2% of the aggregate net asset value of a shareholder's Shares 
repurchased by the Fund (the ``Early Withdrawal Fee'') with respect 
to any repurchase of Shares from a shareholder at any time prior to 
the day immediately preceding the one-year anniversary of the 
shareholder's purchase of the Shares. The Early Withdrawal Fee 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 the 
Fund determines to waive, impose scheduled variations of, or 
eliminate the Early Withdrawal Fee, it will do so consistently with 
the requirements of rule 22d-1 under the Act and the Fund's waiver 
of, scheduled variation in, or elimination of, the Withdrawal Fee 
will apply uniformly to all classes of shares of the Fund.
---------------------------------------------------------------------------

    6. The Applicants request that the order also apply to any other 
continuously-offered registered closed-end management investment 
company existing now or in the future, for which the Adviser or any 
entity controlling, controlled by, or under common control (as the term 
``control'' is defined in section 2(a)(9) of the Act) with the Adviser 
acts as investment adviser, and which provides periodic liquidity with 
respect to its Shares pursuant to rule 13e-4 under the 1934 Act.\4\
---------------------------------------------------------------------------

    \4\ Any Fund relying on this 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 order requested in the application is listed as an applicant.
---------------------------------------------------------------------------

    7. Applicants represent that any asset-based service and 
distribution fees will comply with the provisions of rule 2830(d) of 
the Conduct Rules of the National Association of Securities Dealers, 
Inc. (``NASD Conduct Rule 2830'').\5\ Applicants also represent that 
the Fund will disclose in its Confidential Memorandum the fees, 
expenses and other characteristics of each class of Shares offered for 
sale by the Confidential Memorandum, as is required for open-end, 
multiple class funds under Form N-1A. As is required for open-end 
funds, the Fund will disclose its expenses in shareholder reports, and 
disclose any arrangements that result in breakpoints in or elimination 
of sales loads in its Confidential Memorandum.\6\ The Fund will also 
comply with any requirement 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 
private placement memorandum disclosure of sales loads and revenue 
sharing arrangements as if those requirements applied to the Fund and 
the Distributor.\7\ In addition, Applicants will comply with applicable 
enhanced fee disclosure requirements for fund of funds, including 
registered funds of hedge funds.\8\
---------------------------------------------------------------------------

    \5\ All references to NASD Conduct Rule 2830 include any 
successor or replacement rule that may be adopted by FINRA.
    \6\ 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).
    \7\ See Confirmation Requirements and Point of Sale Disclosure 
Requirements for Transactions in Certain Mutual Funds and Other 
Securities and Other Confirmation Requirement Amendments, and 
Amendments to the Registration Form for Mutual Funds, Investment 
Company Act Release No. 26341 (Jan. 29, 2004) (proposing release).
    \8\ 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.
---------------------------------------------------------------------------

    8. The Fund will allocate all expenses incurred by it among the 
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 distribution fees, service fees, 
and any other incremental expenses of that class. Expenses of the 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. The Fund will 
comply with the provisions of rule 18f-3 as if it were an open-end 
investment company.
    9. Although the Fund does not anticipate imposing CDSCs, the 
Applicants would only do so in compliance with the provisions of rule 
6c-10 of the Act, as if that rule applied to closed-end management 
investment companies. With respect to any waiver of, scheduled 
variation in, or elimination of the CDSC, the Fund will comply with 
rule 22d-1 under the Act as if the Fund were an open-end investment 
company.

Applicants' Legal Analysis

Multiple Classes of Shares

    1. 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 the Fund may be prohibited by 
section 18(c) of the Act.
    2. 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 
the 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.
    3. Section 6(c) of the Act provides that, the Commission may, by 
order upon application, conditionally or unconditionally exempt any 
person, security, or transaction, or any class or classes of persons, 
securities, or transactions, from any provision or provisions of the 
Act or from any rule or regulation under the Act, if and to the extent 
that the 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 
exemptive relief under section 6(c) from sections 18(c) and 18(i) to 
permit the Funds to issue multiple classes of Shares.
    4. Applicants also believe that the proposed allocation of expenses 
and voting rights among multiple classes is equitable and will not 
discriminate against any group or class of

[[Page 17119]]

shareholders. Applicants submit that the proposed arrangements would 
permit the Fund to facilitate the distribution of Shares and provide 
investors with a broader choice of shareholder options. Applicants 
believe 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. Applicants state that the Fund will comply with the 
provisions of rule 18f-3 as if it were an open-end investment company.

CDSCs

    1. Applicants believe that the requested relief meets the standards 
of section 6(c) of the Act. Rule 6c-10 under the Act permits open-end 
investment companies to impose CDSCs, subject to certain conditions. 
Applicants state that although the Fund does not currently intend to 
impose CDSCs, the Fund will only impose a CDSC in compliance with rule 
6c-10 as if that rule applied to closed-end management investment 
companies. The Fund would also make required disclosures in accordance 
with the requirements of Form N-1A concerning CDSCs as if the Fund were 
an open-end investment company. Applicants further state that, in the 
event it imposes CDSCs, the Fund will apply the CDSCs (and any waivers 
or scheduled variations of the CDSCs) uniformly to all shareholders of 
a given class and consistently with the requirements of rule 22d-1 
under the Act.

Asset-based Service and 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) of the Act and rule 
17d-1 under the Act to permit the 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.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Applicants will comply with the provisions of rules 6c-10, 12b-1, 
17d-3, 18f-3, and 22d-1 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 NASD Conduct Rule 2830, 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.
Brent J. Fields,
Secretary.
[FR Doc. 2015-07302 Filed 3-30-15; 8:45 am]
BILLING CODE 8011-01-P