80_FR_26208 80 FR 26121 - Starboard Investment Trust and Foliometrix, LLC; Notice of Application

80 FR 26121 - Starboard Investment Trust and Foliometrix, LLC; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 87 (May 6, 2015)

Page Range26121-26124
FR Document2015-10511

Applicants request an order that would permit them to enter into and materially amend sub-advisory agreements (each, a ``Sub- Advisory Agreement'' and collectively, the ``Sub-Advisory Agreements'') without shareholder approval and that would grant relief from certain disclosure requirements. Applicants: Starboard Investment Trust (the ``Trust'') and Foliometrix, LLC (the ``Adviser'').

Federal Register, Volume 80 Issue 87 (Wednesday, May 6, 2015) 
[Federal Register Volume 80, Number 87 (Wednesday, May 6, 2015)]
[Notices]
[Pages 26121-26124]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-10511]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31587; 812-14170]


Starboard Investment Trust and Foliometrix, LLC; Notice of 
Application

April 30, 2015.
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(a) of 
the Act and rule 18f-2 under the Act, as well as from certain 
disclosure requirements.

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SUMMARY: Applicants request an order that would permit them to enter 
into and materially amend sub-advisory agreements (each, a ``Sub-
Advisory Agreement'' and collectively, the ``Sub-Advisory Agreements'') 
without shareholder approval and that would grant relief from certain 
disclosure requirements.
    Applicants: Starboard Investment Trust (the ``Trust'') and 
Foliometrix, LLC (the ``Adviser'').

DATES:  Filing Dates: The application was filed June 21, 2013, and 
amended on February 27, 2014, July 3, 2014, November 26, 2014, and 
March 11, 2015.

[[Page 26122]]

    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 May 26, 2015, 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 writing to the 
Commission's Secretary.

ADDRESSES: Brent J. Fields, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants: 
the Trust, 116 South Franklin Street, Rocky Mount, NC 27804; the 
Adviser, 821 Pacific Street, Omaha, NE 68108.

FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior 
Counsel, at (202) 551-6879, or David P. Bartels, 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 Web site by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. The Trust, a Delaware statutory trust, is registered under the 
Act as an open-end management investment company. The Trust currently 
consists of twenty-three series (each, a ``Series'').\1\
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    \1\ Applicants request that the relief apply to the named 
applicants, as well as to any future Series 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 or by an entity 
controlling, controlled by, or under common control with the Adviser 
or its successor (each, also an ``Adviser''), (ii) uses the multi-
manager structure described in the application, and (iii) complies 
with the terms and conditions set forth in the application (each, a 
``Subadvised Series''). 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. For the purpose of the requested order, ``successor'' 
is limited to an entity resulting from a reorganization into another 
jurisdiction or a change in the type of business organization. If 
the name of any Subadvised Series contains the name of a Sub-Adviser 
(as defined below), the name of the Adviser that serves as the 
primary adviser to the Subadvised Series, or a trademark or trade 
name that is owned by or publicly used to identify that Adviser, 
will precede the name of the Sub-Adviser.
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    2. The Adviser is a limited liability company organized under 
Oregon law. Each Adviser is or will be registered as an investment 
adviser under the Investment Advisers Act of 1940 (``Advisers Act''). 
The Adviser serves as the investment adviser to the Series pursuant to 
an investment advisory agreement with the Trust (the ``Investment 
Management Agreement''). The Investment Management Agreement has been 
approved by the Trust's board of trustees (the ``Board''), including a 
majority of the trustees who are not ``interested persons,'' as defined 
in section 2(a)(19) of the Act, of the Trust, the Series, or the 
Adviser (``Independent Board Members''), and by the shareholders of the 
relevant Series in the manner required by sections 15(a) and 15(c) of 
the Act and rule 18f-2 under the Act. The terms of the Investment 
Management Agreement comply with section 15(a) of the Act. Applicants 
are not seeking any exemption from the provisions of the Act with 
respect to the Investment Management Agreement.
    3. Under the terms of the Investment Management Agreement, the 
Adviser, subject to the supervision of the Board, provides continuous 
investment management of the assets of each Series. The Adviser 
periodically reviews a Series' investment policies and strategies and 
based on the need of a particular Series may recommend changes to the 
investment policies and strategies of the Series for consideration by 
the Board. For its services to each Series under the Investment 
Management Agreement, the Adviser receives an investment management fee 
from that Series.
    4. The Investment Management Agreement provides that the Adviser 
may, subject to the approval of the Board, delegate portfolio 
management responsibilities of all or a portion of the assets of a 
Subadvised Series to one or more sub-advisers (each, a ``Sub-Adviser'' 
and collectively, the ``Sub-Advisers'').\2\ If the Adviser determines 
to delegate portfolio management responsibilities to one or more Sub-
Advisers, the Adviser will evaluate, select and recommend Sub-Advisers 
to manage the assets (or portion thereof) of a Subadvised Series, 
oversee, monitor and review the Sub-Advisers and their performance and 
their compliance with the Subadvised Series' investment policies and 
restrictions.
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    \2\ Each Sub-Adviser will be an investment adviser as defined in 
section 2(a)(20) of the Act and registered, or not subject to 
registration, under the Advisers Act.
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    5. Applicants request an order to permit the Adviser, subject to 
the approval of the Board, including a majority of the Independent 
Board Members, to, without obtaining shareholder approval: (i) Select 
certain non-affiliated Sub-Advisers to manage all or a portion of the 
assets of a Series and enter into Sub-Advisory Agreements with the Sub-
Advisers, and (ii) materially amend Sub-Advisory Agreements with the 
Sub-Advisers.\3\ The requested relief will not extend to any Sub-
Adviser that is an affiliated person, as defined in section 2(a)(3) of 
the Act, of the Trust, a Subadvised Series, or the Adviser, other than 
by reason of serving as a sub-adviser to one or more of the Subadvised 
Series (``Affiliated Sub-Adviser'').
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    \3\ Shareholder approval will continue to be required for any 
other sub-adviser changes and material amendments to an existing 
Sub-Advisory Agreement with any affiliated sub-adviser (all such 
changes requiring shareholder approval referred to as ``Ineligible 
Sub-Adviser Changes''), except as otherwise permitted by applicable 
law or by rule.
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    6. The terms of each Sub-Advisory Agreement comply or will comply 
fully with the requirements of section 15(a) of the Act and have been 
or will be approved by the Board, including a majority of the 
Independent Board Members and the initial shareholder of the applicable 
Subadvised Series, in accordance with sections 15(a) and 15(c) of the 
Act and rule 18f-2 thereunder. The Sub-Advisers, subject to the 
supervision of the Adviser and oversight of the Board, will determine 
the securities and other investments to be purchased or sold by a 
Subadvised Series and place orders with brokers or dealers that they 
select.
    7. Subadvised Series will inform shareholders of the hiring of a 
new Sub-Adviser pursuant to the following procedures (``Modified Notice 
and Access Procedures''): (a) Within 90 days after a new Sub-Adviser is 
hired for any Subadvised Series, that Subadvised Series will send its 
shareholders either a Multi-manager Notice or a Multi-manager Notice 
and Multi-manager Information Statement; \4\ and (b) the

[[Page 26123]]

Subadvised Series will make the Multi-manager Information Statement 
available on the Web site identified in the Multi-manager Notice no 
later than when the Multi-manager Notice (or Multi-manager Notice and 
Multi-manager Information Statement) is first sent to shareholders, and 
will maintain it on that Web site for at least 90 days. Applicants 
assert that in the circumstances described in the application, a proxy 
solicitation to approve the appointment of new Sub-Advisers provides no 
more meaningful information to shareholders than the proposed Multi-
manager Information Statement. Applicants state that each Board would 
comply with the requirements of sections 15(a) and 15(c) of the Act 
before entering into or amending Sub-Advisory Agreements.
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    \4\ A ``Multi-manager Notice'' will be modeled on a Notice of 
Internet Availability as defined in rule 14a-16 under the Securities 
Exchange Act of 1934 (``Exchange Act''), and specifically will, 
among other things: (a) Summarize the relevant information regarding 
the new Sub-Adviser (except as modified to permit Aggregate Fee 
Disclosure (as defined below); (b) inform shareholders that the 
Multi-manager Information Statement is available on a Web site; (c) 
provide the Web site address; (d) state the time period during which 
the Multi-manager Information Statement will remain available on 
that Web site; (e) provide instructions for accessing and printing 
the Multi-manager Information Statement; and (f) instruct the 
shareholder that a paper or email copy of the Multi-manager 
Information Statement may be obtained, without charge, by contacting 
the Subadvised Series.
    A ``Multi-manager Information Statement'' will meet the 
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 
14A under the Exchange Act for an information statement, except as 
modified by the order to permit Aggregate Fee Disclosure. Multi-
manager Information Statements will be filed with the Commission via 
the EDGAR system.
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    8. Applicants also request an order exempting the Subadvised Series 
from certain disclosure provisions described below that may require the 
Subadvised Series to disclose fees paid by the Adviser to each Sub-
Adviser. Applicants seek an order to permit a Subadvised Series to 
disclose (as both a dollar amount and a percentage of the Subadvised 
Series' net assets): (a) The aggregate fees paid to the Adviser and any 
Affiliated Sub-Advisers; and (b) the aggregate fees paid to Sub-
Advisers (collectively, ``Aggregate Fee Disclosure''). Any Subadvised 
Series that employs an Affiliated Sub-Adviser will provide separate 
disclosure of any fees paid to the Affiliated Sub-Adviser.

Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by a vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series investment company affected by a matter must 
approve that matter if the Act requires shareholder approval.
    2. Form N-1A is the registration statement used by open-end 
investment companies. Item 19(a)(3) of Form N-1A requires disclosure of 
the method of computing and amount of the investment adviser's 
compensation.
    3. Rule 20a-1 under the Act requires proxies solicited with respect 
to a registered investment company to comply with Schedule 14A under 
the Securities Exchange Act of 1934 (``1934 Act''). Items 22(c)(1)(ii), 
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, taken together, 
require a proxy statement for a shareholder meeting at which the 
advisory contract will be voted upon to include the ``rate of 
compensation of the investment adviser,'' the ``aggregate amount of the 
investment adviser's fees,'' a description of the ``terms of the 
contract to be acted upon,'' and, if a change in the advisory fee is 
proposed, the existing and proposed fees and the difference between the 
two fees.
    4. Regulation S-X under the Securities Act of 1933 sets forth the 
requirements for financial statements required to be included as part 
of a registered investment company's registration statement and 
shareholder reports filed with the Commission. Sections 6-07(2)(a), 
(b), and (c) of Regulation S-X require a registered investment company 
to include in its financial statement information about investment 
advisory fees.
    5. 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 
from 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.
    6. Applicants assert that the shareholders expect the Adviser, 
subject to the review and approval of the Board, to select the Sub-
Advisers who are in the best position to achieve the Subadvised Series' 
investment objective. Applicants assert that, from the perspective of 
the shareholder, the role of the Sub-Advisers is substantially 
equivalent to the role of the individual portfolio managers employed by 
an investment adviser to a traditional investment company. Applicants 
believe that permitting the Adviser to perform the duties for which the 
shareholders of the Subadvised Series are paying the Adviser--the 
selection, supervision and evaluation of the Sub-Advisers--without 
incurring unnecessary delays or expenses is appropriate in the interest 
of the Subadvised Series' shareholders and will allow such Subadvised 
Series to operate more efficiently. Applicants note that the Investment 
Management Agreements and any Sub-Advisory Agreements with Affiliated 
Sub-Advisers will remain subject to the shareholder approval 
requirements of section 15(a) of the Act and rule 18f-2 under the Act.
    7. Applicants assert that disclosure of the individual fees that 
the Adviser would pay to the Sub-Advisers of Subadvised Series that 
operate under the multi-manager structure described in the application 
would not serve any meaningful purpose. Applicants contend that the 
primary reasons for requiring disclosure of individual fees paid to 
Sub-Advisers are to inform shareholders of expenses to be charged by a 
particular Subadvised Series and to enable shareholders to compare the 
fees to those of other comparable investment companies. Applicants 
believe that the requested relief satisfies these objectives because 
the advisory fee paid to the Adviser will be fully disclosed and, 
therefore, shareholders will know what the Subadvised Series' fees and 
expenses are and will be able to compare the advisory fees a Subadvised 
Series is charged to those of other investment companies. Applicants 
assert that the requested disclosure relief will benefit shareholders 
of the Subadvised Series because it will improve the Adviser's ability 
to negotiate the fees paid to Sub-Advisers. Applicants state that the 
Adviser may be able to negotiate rates that are below a Sub-Adviser's 
``posted'' amounts if the Adviser is not required to disclose the Sub-
Adviser's fees to the public.
    8. For the reasons discussed above, applicants submit that the 
requested relief meets the standards for relief under section 6(c) of 
the Act.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions: \5\
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    \5\ Applicants will only comply with conditions 7, 8, 9 and 12 
if they rely on the relief that would allow them to provide 
Aggregate Fee Disclosure.
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    1. Before a Subadvised Series may rely on the order requested in 
the application, the operation of the Subadvised Series in the manner 
described in the application will be approved by a majority of the 
Subadvised Series' outstanding voting

[[Page 26124]]

securities as defined in the 1940 Act, or, in the case of a new 
Subadvised Series whose public shareholders purchase shares on the 
basis of a prospectus containing the disclosure contemplated by 
condition 2 below, by the sole initial shareholder before offering the 
Subadvised Series' shares to the public.
    2. The prospectus for each Subadvised Series will disclose the 
existence, substance, and effect of any order granted pursuant to the 
application. Each Subadvised Series will hold itself out to the public 
as employing the multi-manager structure described in the application. 
Each prospectus will prominently disclose that the Adviser has the 
ultimate responsibility, subject to oversight by the Board, to oversee 
the Sub-Advisers and recommend their hiring, termination and 
replacement.
    3. The Adviser will provide general management services to a 
Subadvised Series, including overall supervisory responsibility for the 
general management and investment of the Subadvised Series' assets. 
Subject to review and approval of the Board, the Adviser will (a) set a 
Subadvised Series' overall investment strategies, (b) evaluate, select, 
and recommend Sub-Advisers to manage all or a portion of a Subadvised 
Series' assets, and (c) implement procedures reasonably designed to 
ensure that Sub-Advisers comply with a Subadvised Series' investment 
objective, policies and restrictions. Subject to review by the Board, 
the Adviser will (a) when appropriate, allocate and reallocate a 
Subadvised Series' assets among multiple Sub-Advisers; and (b) monitor 
and evaluate the performance of Sub-Advisers.
    4. A Subadvised Series will not make any Ineligible Sub-Adviser 
Changes without such agreement, including the compensation to be paid 
thereunder, being approved by the shareholders of the applicable 
Subadvised Series.
    5. Subadvised Series will inform shareholders of the hiring of a 
new Sub-Adviser within 90 days after the hiring of the new Sub-Adviser 
pursuant to the Modified Notice and Access Procedures.
    6. At all times, at least a majority of the Board will be 
Independent Board Members, and the selection and nomination of new or 
additional Independent Board Members will be placed within the 
discretion of the then-existing Independent Board Members.
    7. Independent Legal Counsel, as defined in Rule 0-1(a)(6) under 
the 1940 Act, will be engaged to represent the Independent Board 
Members. The selection of such counsel will be within the discretion of 
the then- existing Independent Board Members.
    8. The Adviser will provide the Board, no less frequently than 
quarterly, with information about the profitability of the Adviser on a 
per Subadvised Series basis. The information will reflect the impact on 
profitability of the hiring or termination of any sub-adviser during 
the applicable quarter.
    9. Whenever a sub-adviser is hired or terminated, the Adviser will 
provide the Board with information showing the expected impact on the 
profitability of the Adviser.
    10. Whenever a sub-adviser change is proposed for a Subadvised 
Series with an Affiliated Sub-Advisor, the Board, including a majority 
of the Independent Board Members, will make a separate finding, 
reflected in the Board minutes, that such change is in the best 
interests of the Subadvised Series and its shareholders, and does not 
involve a conflict of interest from which the Advisor or the Affiliated 
Sub-Advisor derives an inappropriate advantage.
    11. No trustee or officer of the Trust or a Subadvised Series, or 
partner, director, manager or officer of the Adviser, will own directly 
or indirectly (other than through a pooled investment vehicle that is 
not controlled by such person), any interest in a Sub-Adviser, except 
for (a) ownership of interests in the Adviser or any entity that 
controls, is controlled by, or is under common control with the 
Adviser; or (b) ownership of less than 1% of the outstanding securities 
of any class of equity or debt of a publicly traded company that is 
either a Sub-Adviser or an entity that controls, is controlled by, or 
is under common control with a Sub-Adviser.
    12. Each Subadvised Series will disclose the Aggregate Fee 
Disclosure in its registration statement.
    13. Any new Sub-Advisory Agreement or any amendment to a Subadvised 
Series' existing Investment Management Agreement or Sub-Advisory 
Agreement that directly or indirectly results in an increase in the 
aggregate advisory fee rate payable by the Subadvised Series will be 
submitted to the Subadvised Series' shareholders for approval.
    14. In the event the Commission adopts a rule under the Act 
providing substantially similar relief to that requested in the 
application, the requested order will expire on the effective date of 
that rule.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015-10511 Filed 5-5-15; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 80, No. 87 / Wednesday, May 6, 2015 / Notices 26121 of the Act,10 in particular in that it is Exchange, Nasdaq and NYSE MKT’s proposed rule change between the designed to promote just and equitable rule in this regard and enable the Commission and any person, other than principles of trade, to foster cooperation Exchange to more effectively compete those that may be withheld from the and coordination with persons engaged for the listing of Early Stage Companies. public in accordance with the in regulating, clearing, settling, provisions of 5 U.S.C. 552, will be C. Self-Regulatory Organization’s available for Web site viewing and processing information with respect to, and facilitating transactions in Statement on Comments on the printing in the Commission’s Public securities, to remove impediments to Proposed Rule Change Received From Reference Room, 100 F Street NE., and perfect the mechanism of a free and Members, Participants, or Others Washington, DC 20549, on official open market and a national market No written comments were solicited business days between the hours of system, and, in general, to protect or received with respect to the proposed 10:00 a.m. and 3:00 p.m. Copies of the investors and the public interest. The rule change. filing also will be available for Exchange believes that the proposed inspection and copying at the principal III. Date of Effectiveness of the amendment is consistent with the office of the Exchange. All comments Proposed Rule Change and Timing for investor protection objectives of Section received will be posted without change; Commission Action 6(b)(5) because it creates a very limited the Commission does not edit personal exemption to the NYSE’s shareholder Within 45 days of the date of identifying information from approval requirements that would be publication of this notice in the Federal submissions. You should submit only applicable only to share issuances by a Register or up to 90 days (i) as the information that you wish to make narrowly-defined category of Early Stage Commission may designate if it finds available publicly. All submissions Companies. The Exchange believes this such longer period to be appropriate should refer to File Number SR–NYSE– amendment is consistent with the and publishes its reasons for so finding 2015–02 and should be submitted on or protection of investors because: (i) or (ii) as to which the self-regulatory before May 27, 2015. Investors investing in Early Stage organization consents, the Commission For the Commission, by the Division of Companies do so in the knowledge that will: Trading and Markets, pursuant to delegated those companies do not currently (A) by order approve or disapprove authority.11 generate revenue and that their ability to the proposed rule change, or Brent J. Fields, continue to execute their business (B) institute proceedings to determine Secretary. strategy is significantly dependent on whether the proposed rule change [FR Doc. 2015–10503 Filed 5–5–15; 8:45 am] their ability to raise additional capital should be disapproved. BILLING CODE 8011–01–P quickly and cheaply; and (ii) issuances IV. Solicitation of Comments that would be exempt from shareholder approval under the proposed Interested persons are invited to submit written data, views, and SECURITIES AND EXCHANGE amendment would need to be approved COMMISSION by an Early Stage Company’s audit arguments concerning the foregoing, committee or comparable committee including whether the proposed rule [Investment Company Act Release No. comprised of independent directors, change is consistent with the Act. 31587; 812–14170] mitigating the risk of any inappropriate Comments may be submitted by any of the following methods: Starboard Investment Trust and conflict of interest in the transaction. Foliometrix, LLC; Notice of Application B. Self-Regulatory Organization’s Electronic Comments April 30, 2015. Statement on Burden on Competition • Use the Commission’s Internet AGENCY: Securities and Exchange The Exchange does not believe that comment form (http://www.sec.gov/ Commission (‘‘Commission’’). the proposed rule change will impose rules/sro.shtml); or ACTION: Notice of an application under any burden on competition that is not • Send an email to rule-comments@ sec.gov. Please include File Number SR– section 6(c) of the Investment Company necessary or appropriate in furtherance Act of 1940 (‘‘Act’’) for an exemption of the purpose of the Act. The proposed NYSE–2015–02 on the subject line. from section 15(a) of the Act and rule rule change provides a limited Paper Comments 18f–2 under the Act, as well as from exemption to the shareholder approval certain disclosure requirements. requirements of Section 312.03(b) for • Send paper comments in triplicate Early Stage Companies. These to Brent J. Fields, Secretary, Securities SUMMARY: Applicants request an order companies frequently must conduct and Exchange Commission, 100 F Street that would permit them to enter into time-sensitive capital raises in order to NE., Washington, DC 20549–1090. and materially amend sub-advisory continue their research or exploration All submissions should refer to File agreements (each, a ‘‘Sub-Advisory activities and fund their operations. Number SR–NYSE–2015–02. This file Agreement’’ and collectively, the ‘‘Sub- Currently, any such company listed on number should be included on the Advisory Agreements’’) without the Exchange may be required to engage subject line if email is used. To help the shareholder approval and that would in a costly and time consuming process Commission process and review your grant relief from certain disclosure of obtaining shareholder approval for comments more efficiently, please use requirements. certain share issuances to a related only one method. The Commission will Applicants: Starboard Investment party. If the same company was listed post all comments on the Commission’s Trust (the ‘‘Trust’’) and Foliometrix, on Nasdaq or NYSE MKT, however, it Internet Web site (http://www.sec.gov/ LLC (the ‘‘Adviser’’). tkelley on DSK3SPTVN1PROD with NOTICES would not be required to engage in this rules/sro.shtml). Copies of the DATES: Filing Dates: The application process as neither marketplace has a submission, all subsequent was filed June 21, 2013, and amended comparable rule to Section 312.03(b). As amendments, all written statements on February 27, 2014, July 3, 2014, such, the limited exemption proposed with respect to the proposed rule November 26, 2014, and March 11, herein would more closely align the change that are filed with the 2015. Commission, and all written 10 15 U.S.C. 78f(b)(5). communications relating to the 11 17 CFR 200.30–3(a)(12). VerDate Sep<11>2014 18:43 May 05, 2015 Jkt 235001 PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 E:\FR\FM\06MYN1.SGM 06MYN1

26122 Federal Register / Vol. 80, No. 87 / Wednesday, May 6, 2015 / Notices Hearing or Notification of Hearing: An 2. The Adviser is a limited liability Advisers, the Adviser will evaluate, order granting the requested relief will company organized under Oregon law. select and recommend Sub-Advisers to be issued unless the Commission orders Each Adviser is or will be registered as manage the assets (or portion thereof) of a hearing. Interested persons may an investment adviser under the a Subadvised Series, oversee, monitor request a hearing by writing to the Investment Advisers Act of 1940 and review the Sub-Advisers and their Commission’s Secretary and serving (‘‘Advisers Act’’). The Adviser serves as performance and their compliance with applicants with a copy of the request, the investment adviser to the Series the Subadvised Series’ investment personally or by mail. Hearing requests pursuant to an investment advisory policies and restrictions. should be received by the Commission agreement with the Trust (the 5. Applicants request an order to by 5:30 p.m. on May 26, 2015, and ‘‘Investment Management Agreement’’). permit the Adviser, subject to the should be accompanied by proof of The Investment Management Agreement approval of the Board, including a service on applicants, in the form of an has been approved by the Trust’s board majority of the Independent Board affidavit or, for lawyers, a certificate of of trustees (the ‘‘Board’’), including a Members, to, without obtaining service. Pursuant to rule 0–5 under the majority of the trustees who are not shareholder approval: (i) Select certain Act, hearing requests should state the ‘‘interested persons,’’ as defined in non-affiliated Sub-Advisers to manage nature of the writer’s interest, any facts section 2(a)(19) of the Act, of the Trust, all or a portion of the assets of a Series bearing upon the desirability of a the Series, or the Adviser (‘‘Independent and enter into Sub-Advisory hearing on the matter, the reason for the Board Members’’), and by the Agreements with the Sub-Advisers, and request, and the issues contested. shareholders of the relevant Series in (ii) materially amend Sub-Advisory Persons who wish to be notified of a the manner required by sections 15(a) Agreements with the Sub-Advisers.3 hearing may request notification by and 15(c) of the Act and rule 18f–2 The requested relief will not extend to writing to the Commission’s Secretary. under the Act. The terms of the any Sub-Adviser that is an affiliated ADDRESSES: Brent J. Fields, Secretary, Investment Management Agreement person, as defined in section 2(a)(3) of U.S. Securities and Exchange comply with section 15(a) of the Act. the Act, of the Trust, a Subadvised Commission, 100 F Street NE., Applicants are not seeking any Series, or the Adviser, other than by Washington, DC 20549–1090. exemption from the provisions of the reason of serving as a sub-adviser to one Applicants: the Trust, 116 South Act with respect to the Investment or more of the Subadvised Series Franklin Street, Rocky Mount, NC Management Agreement. (‘‘Affiliated Sub-Adviser’’). 27804; the Adviser, 821 Pacific Street, 3. Under the terms of the Investment 6. The terms of each Sub-Advisory Omaha, NE 68108. Management Agreement, the Adviser, Agreement comply or will comply fully subject to the supervision of the Board, with the requirements of section 15(a) of FOR FURTHER INFORMATION CONTACT: provides continuous investment the Act and have been or will be Christine Y. Greenlees, Senior Counsel, management of the assets of each Series. approved by the Board, including a at (202) 551–6879, or David P. Bartels, The Adviser periodically reviews a majority of the Independent Board Branch Chief, at (202) 551–6821 Series’ investment policies and Members and the initial shareholder of (Division of Investment Management, strategies and based on the need of a the applicable Subadvised Series, in Chief Counsel’s Office). particular Series may recommend accordance with sections 15(a) and 15(c) SUPPLEMENTARY INFORMATION: The of the Act and rule 18f–2 thereunder. changes to the investment policies and following is a summary of the strategies of the Series for consideration The Sub-Advisers, subject to the application. The complete application by the Board. For its services to each supervision of the Adviser and oversight may be obtained via the Commission’s Series under the Investment of the Board, will determine the Web site by searching for the file Management Agreement, the Adviser securities and other investments to be number, or for an applicant using the receives an investment management fee purchased or sold by a Subadvised Company name box, at http:// from that Series. Series and place orders with brokers or www.sec.gov/search/search.htm or by 4. The Investment Management dealers that they select. calling (202) 551–8090. Agreement provides that the Adviser 7. Subadvised Series will inform Applicants’ Representations may, subject to the approval of the shareholders of the hiring of a new Sub- Board, delegate portfolio management Adviser pursuant to the following 1. The Trust, a Delaware statutory procedures (‘‘Modified Notice and responsibilities of all or a portion of the trust, is registered under the Act as an Access Procedures’’): (a) Within 90 days assets of a Subadvised Series to one or open-end management investment after a new Sub-Adviser is hired for any more sub-advisers (each, a ‘‘Sub- company. The Trust currently consists Subadvised Series, that Subadvised Adviser’’ and collectively, the ‘‘Sub- of twenty-three series (each, a Series will send its shareholders either Advisers’’).2 If the Adviser determines ‘‘Series’’).1 a Multi-manager Notice or a Multi- to delegate portfolio management 1 Applicants request that the relief apply to the responsibilities to one or more Sub- manager Notice and Multi-manager named applicants, as well as to any future Series Information Statement; 4 and (b) the and any other existing or future registered open-end contained in the application. For the purpose of the management investment company or series thereof requested order, ‘‘successor’’ is limited to an entity 3 Shareholder approval will continue to be that intends to rely on the requested order in the resulting from a reorganization into another required for any other sub-adviser changes and future and that (i) is advised by the Adviser or by jurisdiction or a change in the type of business material amendments to an existing Sub-Advisory an entity controlling, controlled by, or under organization. If the name of any Subadvised Series Agreement with any affiliated sub-adviser (all such common control with the Adviser or its successor contains the name of a Sub-Adviser (as defined changes requiring shareholder approval referred to (each, also an ‘‘Adviser’’), (ii) uses the multi- below), the name of the Adviser that serves as the as ‘‘Ineligible Sub-Adviser Changes’’), except as tkelley on DSK3SPTVN1PROD with NOTICES manager structure described in the application, and primary adviser to the Subadvised Series, or a otherwise permitted by applicable law or by rule. (iii) complies with the terms and conditions set trademark or trade name that is owned by or 4 A ‘‘Multi-manager Notice’’ will be modeled on forth in the application (each, a ‘‘Subadvised publicly used to identify that Adviser, will precede a Notice of Internet Availability as defined in rule Series’’). All registered open-end investment the name of the Sub-Adviser. 14a–16 under the Securities Exchange Act of 1934 companies that currently intend to rely on the 2 Each Sub-Adviser will be an investment adviser (‘‘Exchange Act’’), and specifically will, among requested order are named as applicants. Any entity as defined in section 2(a)(20) of the Act and other things: (a) Summarize the relevant that relies on the requested order will do so only registered, or not subject to registration, under the information regarding the new Sub-Adviser (except in accordance with the terms and conditions Advisers Act. as modified to permit Aggregate Fee Disclosure (as VerDate Sep<11>2014 18:43 May 05, 2015 Jkt 235001 PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 E:\FR\FM\06MYN1.SGM 06MYN1

Federal Register / Vol. 80, No. 87 / Wednesday, May 6, 2015 / Notices 26123 Subadvised Series will make the Multi- matter must approve that matter if the are paying the Adviser—the selection, manager Information Statement Act requires shareholder approval. supervision and evaluation of the Sub- available on the Web site identified in 2. Form N–1A is the registration Advisers—without incurring the Multi-manager Notice no later than statement used by open-end investment unnecessary delays or expenses is when the Multi-manager Notice (or companies. Item 19(a)(3) of Form N–1A appropriate in the interest of the Multi-manager Notice and Multi- requires disclosure of the method of Subadvised Series’ shareholders and manager Information Statement) is first computing and amount of the will allow such Subadvised Series to sent to shareholders, and will maintain investment adviser’s compensation. operate more efficiently. Applicants it on that Web site for at least 90 days. 3. Rule 20a–1 under the Act requires note that the Investment Management Applicants assert that in the proxies solicited with respect to a Agreements and any Sub-Advisory circumstances described in the registered investment company to Agreements with Affiliated Sub- application, a proxy solicitation to comply with Schedule 14A under the Advisers will remain subject to the approve the appointment of new Sub- Securities Exchange Act of 1934 (‘‘1934 shareholder approval requirements of Advisers provides no more meaningful Act’’). Items 22(c)(1)(ii), 22(c)(1)(iii), section 15(a) of the Act and rule 18f–2 information to shareholders than the 22(c)(8) and 22(c)(9) of Schedule 14A, under the Act. proposed Multi-manager Information taken together, require a proxy 7. Applicants assert that disclosure of Statement. Applicants state that each statement for a shareholder meeting at the individual fees that the Adviser Board would comply with the which the advisory contract will be would pay to the Sub-Advisers of requirements of sections 15(a) and 15(c) voted upon to include the ‘‘rate of Subadvised Series that operate under of the Act before entering into or compensation of the investment the multi-manager structure described amending Sub-Advisory Agreements. adviser,’’ the ‘‘aggregate amount of the in the application would not serve any 8. Applicants also request an order investment adviser’s fees,’’ a description meaningful purpose. Applicants exempting the Subadvised Series from of the ‘‘terms of the contract to be acted contend that the primary reasons for certain disclosure provisions described upon,’’ and, if a change in the advisory requiring disclosure of individual fees below that may require the Subadvised fee is proposed, the existing and paid to Sub-Advisers are to inform Series to disclose fees paid by the proposed fees and the difference shareholders of expenses to be charged Adviser to each Sub-Adviser. between the two fees. by a particular Subadvised Series and to Applicants seek an order to permit a 4. Regulation S–X under the enable shareholders to compare the fees Subadvised Series to disclose (as both a Securities Act of 1933 sets forth the to those of other comparable investment dollar amount and a percentage of the requirements for financial statements companies. Applicants believe that the Subadvised Series’ net assets): (a) The required to be included as part of a requested relief satisfies these objectives aggregate fees paid to the Adviser and registered investment company’s because the advisory fee paid to the any Affiliated Sub-Advisers; and (b) the registration statement and shareholder Adviser will be fully disclosed and, aggregate fees paid to Sub-Advisers reports filed with the Commission. therefore, shareholders will know what (collectively, ‘‘Aggregate Fee Sections 6–07(2)(a), (b), and (c) of the Subadvised Series’ fees and Disclosure’’). Any Subadvised Series Regulation S–X require a registered expenses are and will be able to that employs an Affiliated Sub-Adviser investment company to include in its compare the advisory fees a Subadvised will provide separate disclosure of any financial statement information about Series is charged to those of other fees paid to the Affiliated Sub-Adviser. investment advisory fees. 5. Section 6(c) of the Act provides that investment companies. Applicants Applicants’ Legal Analysis the Commission may exempt any assert that the requested disclosure 1. Section 15(a) of the Act provides, person, security, or transaction or any relief will benefit shareholders of the in relevant part, that it is unlawful for class or classes of persons, securities, or Subadvised Series because it will any person to act as an investment transactions from any provisions of the improve the Adviser’s ability to adviser to a registered investment Act, or from any rule thereunder, if such negotiate the fees paid to Sub-Advisers. company except pursuant to a written exemption is necessary or appropriate Applicants state that the Adviser may be contract that has been approved by a in the public interest and consistent able to negotiate rates that are below a vote of a majority of the company’s with the protection of investors and the Sub-Adviser’s ‘‘posted’’ amounts if the outstanding voting securities. Rule 18f– purposes fairly intended by the policy Adviser is not required to disclose the 2 under the Act provides that each and provisions of the Act. Applicants Sub-Adviser’s fees to the public. series or class of stock in a series state that the requested relief meets this 8. For the reasons discussed above, investment company affected by a standard for the reasons discussed applicants submit that the requested below. relief meets the standards for relief defined below); (b) inform shareholders that the 6. Applicants assert that the under section 6(c) of the Act. Multi-manager Information Statement is available shareholders expect the Adviser, subject on a Web site; (c) provide the Web site address; (d) Applicants’ Conditions state the time period during which the Multi- to the review and approval of the Board, Applicants agree that any order manager Information Statement will remain to select the Sub-Advisers who are in granting the requested relief will be available on that Web site; (e) provide instructions the best position to achieve the for accessing and printing the Multi-manager subject to the following conditions: 5 Subadvised Series’ investment Information Statement; and (f) instruct the 1. Before a Subadvised Series may shareholder that a paper or email copy of the Multi- objective. Applicants assert that, from rely on the order requested in the manager Information Statement may be obtained, the perspective of the shareholder, the without charge, by contacting the Subadvised application, the operation of the role of the Sub-Advisers is substantially Series. Subadvised Series in the manner tkelley on DSK3SPTVN1PROD with NOTICES equivalent to the role of the individual A ‘‘Multi-manager Information Statement’’ will described in the application will be meet the requirements of Regulation 14C, Schedule portfolio managers employed by an approved by a majority of the 14C and Item 22 of Schedule 14A under the investment adviser to a traditional Exchange Act for an information statement, except Subadvised Series’ outstanding voting investment company. Applicants as modified by the order to permit Aggregate Fee Disclosure. Multi-manager Information Statements believe that permitting the Adviser to 5 Applicants will only comply with conditions 7, will be filed with the Commission via the EDGAR perform the duties for which the 8, 9 and 12 if they rely on the relief that would system. shareholders of the Subadvised Series allow them to provide Aggregate Fee Disclosure. VerDate Sep<11>2014 18:43 May 05, 2015 Jkt 235001 PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 E:\FR\FM\06MYN1.SGM 06MYN1

26124 Federal Register / Vol. 80, No. 87 / Wednesday, May 6, 2015 / Notices securities as defined in the 1940 Act, or, the discretion of the then- existing For the Commission, by the Division of in the case of a new Subadvised Series Independent Board Members. Investment Management, under delegated whose public shareholders purchase authority. 8. The Adviser will provide the Brent J. Fields, shares on the basis of a prospectus Board, no less frequently than quarterly, containing the disclosure contemplated Secretary. with information about the profitability by condition 2 below, by the sole initial [FR Doc. 2015–10511 Filed 5–5–15; 8:45 am] of the Adviser on a per Subadvised shareholder before offering the BILLING CODE 8011–01–P Series basis. The information will reflect Subadvised Series’ shares to the public. the impact on profitability of the hiring 2. The prospectus for each Subadvised Series will disclose the or termination of any sub-adviser during SECURITIES AND EXCHANGE existence, substance, and effect of any the applicable quarter. COMMISSION order granted pursuant to the 9. Whenever a sub-adviser is hired or application. Each Subadvised Series terminated, the Adviser will provide the [Release No. 34–74854; File No. SR–CBOE– will hold itself out to the public as Board with information showing the 2015–041] employing the multi-manager structure expected impact on the profitability of described in the application. Each the Adviser. Self-Regulatory Organizations; prospectus will prominently disclose Chicago Board Options Exchange, 10. Whenever a sub-adviser change is Incorporated; Notice of Filing and that the Adviser has the ultimate proposed for a Subadvised Series with responsibility, subject to oversight by Immediate Effectiveness of a Proposed an Affiliated Sub-Advisor, the Board, Rule Change To Amend the Fees the Board, to oversee the Sub-Advisers including a majority of the Independent Schedule and recommend their hiring, termination and replacement. Board Members, will make a separate finding, reflected in the Board minutes, April 30, 2015. 3. The Adviser will provide general Pursuant to Section 19(b)(1) of the management services to a Subadvised that such change is in the best interests of the Subadvised Series and its Securities Exchange Act of 1934 (the Series, including overall supervisory ‘‘Act’’),1 and Rule 19b–4 thereunder,2 responsibility for the general shareholders, and does not involve a conflict of interest from which the notice is hereby given that on April 20, management and investment of the 2015, Chicago Board Options Exchange, Subadvised Series’ assets. Subject to Advisor or the Affiliated Sub-Advisor Incorporated (‘‘Exchange’’ or ‘‘CBOE’’) review and approval of the Board, the derives an inappropriate advantage. filed with the Securities and Exchange Adviser will (a) set a Subadvised Series’ 11. No trustee or officer of the Trust Commission (the ‘‘Commission’’) the overall investment strategies, (b) or a Subadvised Series, or partner, proposed rule change as described in evaluate, select, and recommend Sub- director, manager or officer of the Items I, II, and III below, which Items Advisers to manage all or a portion of Adviser, will own directly or indirectly have been prepared by the Exchange. a Subadvised Series’ assets, and (c) (other than through a pooled investment The Commission is publishing this implement procedures reasonably vehicle that is not controlled by such notice to solicit comments on the designed to ensure that Sub-Advisers person), any interest in a Sub-Adviser, proposed rule change from interested comply with a Subadvised Series’ except for (a) ownership of interests in persons. investment objective, policies and the Adviser or any entity that controls, restrictions. Subject to review by the I. Self-Regulatory Organization’s is controlled by, or is under common Statement of the Terms of Substance of Board, the Adviser will (a) when control with the Adviser; or (b) the Proposed Rule Change appropriate, allocate and reallocate a ownership of less than 1% of the Subadvised Series’ assets among The Exchange proposes to amend its outstanding securities of any class of multiple Sub-Advisers; and (b) monitor Fees Schedule. The text of the proposed and evaluate the performance of Sub- equity or debt of a publicly traded company that is either a Sub-Adviser or rule change is available on the Advisers. Exchange’s Web site (http:// 4. A Subadvised Series will not make an entity that controls, is controlled by, or is under common control with a Sub- www.cboe.com/AboutCBOE/ any Ineligible Sub-Adviser Changes CBOELegalRegulatoryHome.aspx), at without such agreement, including the Adviser. the Exchange’s Office of the Secretary, compensation to be paid thereunder, 12. Each Subadvised Series will and at the Commission’s Public being approved by the shareholders of disclose the Aggregate Fee Disclosure in Reference Room. the applicable Subadvised Series. its registration statement. 5. Subadvised Series will inform II. Self-Regulatory Organization’s 13. Any new Sub-Advisory Statement of the Purpose of, and shareholders of the hiring of a new Sub- Agreement or any amendment to a Adviser within 90 days after the hiring Statutory Basis for, the Proposed Rule Subadvised Series’ existing Investment Change of the new Sub-Adviser pursuant to the Management Agreement or Sub- Modified Notice and Access Procedures. Advisory Agreement that directly or In its filing with the Commission, the 6. At all times, at least a majority of indirectly results in an increase in the Exchange included statements the Board will be Independent Board concerning the purpose of and basis for aggregate advisory fee rate payable by Members, and the selection and the proposed rule change and discussed the Subadvised Series will be submitted nomination of new or additional any comments it received on the to the Subadvised Series’ shareholders Independent Board Members will be proposed rule change. The text of these for approval. tkelley on DSK3SPTVN1PROD with NOTICES placed within the discretion of the then- statements may be examined at the existing Independent Board Members. 14. In the event the Commission places specified in Item IV below. The 7. Independent Legal Counsel, as adopts a rule under the Act providing Exchange has prepared summaries, set defined in Rule 0–1(a)(6) under the 1940 substantially similar relief to that forth in sections A, B, and C below, of Act, will be engaged to represent the requested in the application, the Independent Board Members. The requested order will expire on the 1 15 U.S.C. 78s(b)(1). selection of such counsel will be within effective date of that rule. 2 17 CFR 240.19b–4. VerDate Sep<11>2014 18:43 May 05, 2015 Jkt 235001 PO 00000 Frm 00130 Fmt 4703 Sfmt 4703 E:\FR\FM\06MYN1.SGM 06MYN1


Document Created: 2015-12-16 07:41:43
Document Modified: 2015-12-16 07:41:43
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice of an application under section 6(c) of the Investment Company Act of 1940 (``Act'') for an exemption from section 15(a) of the Act and rule 18f-2 under the Act, as well as from certain disclosure requirements.
ContactChristine Y. Greenlees, Senior Counsel, at (202) 551-6879, or David P. Bartels, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation80 FR 26121 
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