80 FR 74177 - ETF Series Solutions and AlphaClone, Inc.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 228 (November 27, 2015)

Page Range		74177-74178
FR Document		2015-30092

Federal Register, Volume 80 Issue 228 (Friday, November 27, 2015)

[Federal Register Volume 80, Number 228 (Friday, November 27, 2015)]
[Notices]
[Pages 74177-74178]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-30092]


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

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31906; File No. 812-14475]


ETF Series Solutions and AlphaClone, Inc.; Notice of Application

November 19, 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 in rule 20a-1 under the Act, Item 19(a)(3) of 
Form N-1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of 
Schedule 14A under the Securities Exchange Act of 1934, and Sections 6-
07(2)(a), (b), and (c) of Regulation S-X (``Disclosure Requirements''). 
The requested exemption would permit an investment adviser to hire and 
replace certain sub-advisers without shareholder approval and grant 
relief from the Disclosure Requirements as they relate to fees paid to 
the sub-advisers.

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

    Applicants: ETF Series Solutions (the ``Trust''), a Delaware 
statutory trust registered under the Act as an open-end management 
investment company with multiple series, and AlphaClone, Inc. (the 
``Initial Adviser''), a Delaware corporation registered as an 
investment adviser under the Investment Advisers Act of 1940.
    Filing Dates: The application was filed on May 28, 2015 and amended 
on September 25, 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 December 14, 2015, and

[[Page 74178]]

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: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090. Applicants: ETF Series 
Solutions, 615 E. Michigan Street, Milwaukee, WI 53202, and AlphaClone, 
Inc., One Market Street, Steuart Tower, Suite 1208, San Francisco, CA 
94105.

FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel, 
at (202) 551-6812, 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.

Summary of the Application

    1. The Initial Adviser is the investment adviser to the Trust's 
AlphaClone Small Cap ETF, AlphaClone International ETF, AlphaClone 
Activist ETF, and AlphaClone Value ETF (collectively, ``Initial 
Funds'') pursuant to an investment management agreement with the Trust 
(``Investment Management Agreement'').\1\ Under the terms of the 
Investment Management Agreement, the Adviser, subject to the 
supervision of the board of trustees of the Trust (``Board''), provides 
continuous investment management of the assets of each Subadvised Fund. 
Consistent with the terms of the Investment Management Agreement, 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 Fund to one or more Sub-Advisers.\2\ The Adviser will 
continue to have overall responsibility for the management and 
investment of the assets of each Subadvised Fund. The Adviser will 
evaluate, select, and recommend Sub-Advisers to manage the assets of a 
Subadvised Fund and will oversee, monitor and review the Sub-Advisers 
and their performance and recommend the removal or replacement of Sub-
Advisers.
---------------------------------------------------------------------------

    \1\ Applicants request relief with respect to the Initial Funds, 
as well as to any future series of the Trust and any other existing 
or future registered open-end management investment company or 
series thereof that, in each case, is advised by the Initial Adviser 
or any entity controlling, controlled by, or under common control 
with, the Initial Adviser or its successors (each, also an 
``Adviser''), uses the multi-manager structure described in the 
application, and complies with the terms and conditions set forth in 
the application (each, a ``Subadvised Fund''). For purposes of the 
requested order, ``successor'' is limited to an entity that results 
from a reorganization into another jurisdiction or a change in the 
type of business organization. Future Subadvised Funds may be 
operated as a master-feeder structure pursuant to section 
12(d)(1)(E) of the Act. In such a structure, certain series of the 
Trust (each, a ``Feeder Fund'') may invest substantially all of 
their assets in a Subadvised Fund (a ``Master Fund'') pursuant to 
section 12(d)(1)(E) of the Act. No Feeder Fund will engage any sub-
advisers other than through approving the engagement of one or more 
of the Master Fund's sub-advisers.
    \2\ As used herein, a ``Sub-Adviser'' for a Subadvised Fund is 
(1) an indirect or direct ``wholly owned subsidiary'' (as such term 
is defined in the Act) of the Adviser for that Subadvised Fund, or 
(2) a sister company of the Adviser for that Subadvised Fund that is 
an indirect or direct ``wholly-owned subsidiary'' of the same 
company that, indirectly or directly, wholly owns the Adviser (each 
of (1) and (2) a ``Wholly-Owned Sub-Adviser'' and collectively, the 
``Wholly-Owned Sub-Advisers''), or (3) not an ``affiliated person'' 
(as such term is defined in section 2(a)(3) of the Act) of the 
Subadvised Fund, any Feeder Fund invested in a Master Fund, the 
Trust, or the Adviser, except to the extent that an affiliation 
arises solely because the Sub-Adviser serves as a sub-adviser to a 
Subadvised Fund (``Non-Affiliated Sub-Advisers'').
---------------------------------------------------------------------------

    2. Applicants request an order to permit the Adviser, subject to 
the approval of the Board, to enter into investment sub-advisory 
agreements with the Sub-Advisers (each, a ``Sub-Advisory Agreement'') 
and materially amend such Sub-Advisory Agreements without obtaining the 
shareholder approval required under section 15(a) of the Act and rule 
18f-2 under the Act.\3\ Applicants also seek an exemption from the 
Disclosure Requirements to permit a Subadvised Fund to disclose (as 
both a dollar amount and a percentage of the Subadvised Fund's net 
assets): (a) The aggregate fees paid to the Adviser and any Wholly-
Owned Sub-Adviser; (b) the aggregate fees paid to Non-Affiliated Sub-
Advisers; and (c) the fee paid to each Affiliated Sub-Adviser 
(collectively, Aggregate Fee Disclosure'').\4\
---------------------------------------------------------------------------

    \3\ The requested relief will not extend to any sub-adviser, 
other than a Wholly-Owned Sub-Adviser, who is an affiliated person, 
as defined in section 2(a)(3) of the Act, of the Subadvised Fund, of 
any Feeder Fund, or of the Adviser, other than by reason of serving 
as a sub-adviser to one or more of the Subadvised Funds 
(``Affiliated Sub-Adviser'').
    \4\ For any Subadvised Fund that is a Master Fund, the relief 
would also permit any Feeder Fund invested in that Master Fund to 
disclose Aggregate Fee Disclosure.
---------------------------------------------------------------------------

    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the application. 
Such terms and conditions provide for, among other safeguards, 
appropriate disclosure to Subadvised Funds' shareholders and 
notification about sub-advisory changes and enhanced Board oversight to 
protect the interests of the Subadvised Funds' shareholders.
    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 provisions of the Act, or 
any rule thereunder, if such relief is necessary or appropriate in the 
public interest and consistent with the protection of investors and 
purposes fairly intended by the policy and provisions of the Act. 
Applicants believe that the requested relief meets this standard 
because, as further explained in the application, the Investment 
Management Agreements will remain subject to shareholder approval, 
while the role of the Sub-Advisers is substantially equivalent to that 
of individual portfolio managers, so that requiring shareholder 
approval of Sub-Advisory Agreements would impose unnecessary delays and 
expenses on the Subadvised Funds. Applicants believe that the requested 
relief from the Disclosure Requirements meets this standard because it 
will improve the Adviser's ability to negotiate fees paid to the Sub-
Advisers that are more advantageous for the Subadvised Funds.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-30092 Filed 11-25-15; 8:45 am]
 BILLING CODE 8011-01-P

Federal Register / Vol. 80, No. 228 / Friday, November 27, 2015 / Notices 74177

Exchange is providing Participants with temporarily suspend such rule change if should refer to File Number SR–
additional information with which to it appears to the Commission that such NASDAQ–2015–142 and should be
anticipate the impact of the Market action is: (i) Necessary or appropriate in submitted on or before December 18,
Order Spread Protection feature. the public interest; (ii) for the protection 2015.
of investors; or (iii) otherwise in For the Commission, by the Division of
B. Self-Regulatory Organization’s
furtherance of the purposes of the Act. Trading and Markets, pursuant to delegated
Statement on Burden on Competition
If the Commission takes such action, the authority.16
The Exchange does not believe that Commission shall institute proceedings Robert W. Errett,
the proposed rule change will impose to determine whether the proposed rule Deputy Secretary.
any burden on competition not should be approved or disapproved. [FR Doc. 2015–30088 Filed 11–25–15; 8:45 am]
necessary or appropriate in furtherance
of the purposes of the Act. The IV. Solicitation of Comments BILLING CODE 8011–01–P

Exchange does not believe that the Interested persons are invited to
proposal to amend the Market Order submit written data, views, and
SECURITIES AND EXCHANGE
Spread Protection rule text to account arguments concerning the foregoing,
COMMISSION
for Price Improving or Post-Only Orders including whether the proposed rule
or repricing due to trade-through and change is consistent with the Act. [Investment Company Act Release No.
locked and crossed market restrictions Comments may be submitted by any of 31906; File No. 812–14475]
creates an undue burden on competition the following methods:
because it will serve to provide ETF Series Solutions and AlphaClone,
Electronic Comments Inc.; Notice of Application
Participants with greater information to
anticipate the impact of the Market • Use the Commission’s Internet November 19, 2015.
Order Spread Protection feature. Today, comment form (http://www.sec.gov/ AGENCY: Securities and Exchange
Participants are able to submit orders or rules/sro.shtml); or Commission (‘‘Commission’’).
quotes priced between the MPV for • Send an email to rule-comments@
ACTION: Notice of an application under
display at the nearest MPV. This rule sec.gov. Please include File Number SR–
NASDAQ–2015–142 on the subject line. section 6(c) of the Investment Company
change would reflect the ability to enter Act of 1940 (‘‘Act’’) for an exemption
these types of orders on NOM and the Paper Comments from section 15(a) of the Act and rule
impact of the Market Order Spread
Protection feature. The purpose of this • Send paper comments in triplicate 18f–2 under the Act, as well as from
to Secretary, Securities and Exchange certain disclosure requirements in rule
rule change is to protect orders resting 20a–1 under the Act, Item 19(a)(3) of
on the Order Book when the market is Commission, 100 F Street NE.,
Washington, DC 20549–1090. Form N–1A, Items 22(c)(1)(ii),
wide. This feature will be applied in a 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of
similar manner to all Participants on All submissions should refer to File
Number SR–NASDAQ–2015–142. This Schedule 14A under the Securities
NOM. Exchange Act of 1934, and Sections 6–
file number should be included on the
C. Self-Regulatory Organization’s subject line if email is used. To help the 07(2)(a), (b), and (c) of Regulation S–X
Statement on Comments on the Commission process and review your (‘‘Disclosure Requirements’’). The
Proposed Rule Change Received From comments more efficiently, please use requested exemption would permit an
Members, Participants, or Others only one method. The Commission will investment adviser to hire and replace
post all comments on the Commission’s certain sub-advisers without
No written comments were either
Internet Web site (http://www.sec.gov/ shareholder approval and grant relief
solicited or received.
rules/sro.shtml). Copies of the from the Disclosure Requirements as
III. Date of Effectiveness of the they relate to fees paid to the sub-
submission, all subsequent
Proposed Rule Change and Timing for advisers.
amendments, all written statements
Commission Action
with respect to the proposed rule Applicants: ETF Series Solutions (the
Because the foregoing proposed rule change that are filed with the ‘‘Trust’’), a Delaware statutory trust
change does not: (i) Significantly affect Commission, and all written registered under the Act as an open-end
the protection of investors or the public communications relating to the management investment company with
interest; (ii) impose any significant proposed rule change between the multiple series, and AlphaClone, Inc.
burden on competition; and (iii) become Commission and any person, other than (the ‘‘Initial Adviser’’), a Delaware
operative for 30 days from the date on those that may be withheld from the corporation registered as an investment
which it was filed, or such shorter time public in accordance with the adviser under the Investment Advisers
as the Commission may designate, it has provisions of 5 U.S.C. 552, will be Act of 1940.
become effective pursuant to Section available for Web site viewing and Filing Dates: The application was
19(b)(3)(A)(iii) of the Act 14 and printing in the Commission’s Public filed on May 28, 2015 and amended on
subparagraph (f)(6) of Rule 19b–4 Reference Room, 100 F Street NE., September 25, 2015.
thereunder.15 Washington, DC 20549, on official Hearing or Notification of Hearing: An
At any time within 60 days of the business days between the hours of order granting the requested relief will
filing of the proposed rule change, the 10:00 a.m. and 3:00 p.m. Copies of the be issued unless the Commission orders
Commission summarily may filing also will be available for a hearing. Interested persons may
mstockstill on DSK4VPTVN1PROD with NOTICES

14 15
inspection and copying at the principal request a hearing by writing to the
U.S.C. 78s(b)(3)(a)(iii).
15 17
office of the Exchange. All comments Commission’s Secretary and serving
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give received will be posted without change; applicants with a copy of the request,
the Commission written notice of its intent to file the Commission does not edit personal personally or by mail. Hearing requests
the proposed rule change at least five business days identifying information from should be received by the Commission
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
submissions. You should submit only by 5:30 p.m. on December 14, 2015, and
Commission. The Exchange has satisfied this information that you wish to make
requirement. available publicly. All submissions 16 17 CFR 200.30–3(a)(12).

VerDate Sep<11>2014 19:01 Nov 25, 2015 Jkt 238001 PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 E:\FR\FM\27NON1.SGM 27NON1

Document Created: 2015-12-14 14:05:45
Document Modified: 2015-12-14 14:05:45

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
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 in rule 20a-1 under the Act, Item 19(a)(3) of Form N-1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A under the Securities Exchange Act of 1934, and Sections 6- 07(2)(a), (b), and (c) of Regulation S-X (``Disclosure Requirements''). The requested exemption would permit an investment adviser to hire and replace certain sub-advisers without shareholder approval and grant relief from the Disclosure Requirements as they relate to fees paid to the sub-advisers.
Dates		The application was filed on May 28, 2015 and amended on September 25, 2015.
Contact		Courtney S. Thornton, Senior Counsel, at (202) 551-6812, or David P. Bartels, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		80 FR 74177