81_FR_37077 81 FR 36967 - Carey Credit Income Fund, et al.; Notice of Application

81 FR 36967 - Carey Credit Income Fund, et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 110 (June 8, 2016)

Page Range36967-36973
FR Document2016-13514

Federal Register, Volume 81 Issue 110 (Wednesday, June 8, 2016)
[Federal Register Volume 81, Number 110 (Wednesday, June 8, 2016)]
[Notices]
[Pages 36967-36973]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-13514]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-32138; File No. 812-14426]


Carey Credit Income Fund, et al.; Notice of Application

June 2, 2016.
AGENCY:  Securities and Exchange Commission (``Commission'').

ACTION:  Notice of application for an order under sections 17(d) and 
57(i) of the Investment Company Act of 1940 (the ``Act'') and rule 17d-
1 under the Act to permit certain joint transactions otherwise 
prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 
under the Act.

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    Summary of Application: Applicants request an order to permit 
certain business development companies (``BDC'') and closed-end 
management investment companies to co-invest in portfolio companies 
with each other and with affiliated investment funds.
    Applicants: Carey Credit Income Fund (the ``Fund''); Carey Credit 
Advisors, LLC (``W.P. Carey''); Guggenheim Partners Investment 
Management, LLC (``Guggenheim''); Guggenheim Funds Distributors, LLC, 
Guggenheim Funds Investment Advisors, LLC, Security Investors, LLC 
(collectively, together with Guggenheim, the ``Existing Guggenheim 
Advisers''); Guggenheim European Credit Fund, Guggenheim Private Debt 
Fund Note Issuer, LLC, Guggenheim Private Debt Fund, LLC, Guggenheim 
Private Debt Fund, Ltd., Guggenheim Private Debt Master Fund, LLC, 
Guggenheim Private Debt Fund Note Issuer 2.0, LLC, Guggenheim Private 
Debt Fund 2.0, LLC, Guggenheim Private Debt Fund 2.0, Ltd., Guggenheim 
Private Debt Master Fund 2.0, LLC, NZC Guggenheim Fund LLC, NZC 
Guggenheim Fund Limited, NZC Guggenheim Master Fund Limited, NZCG 
Funding Ltd., NZCG Funding 2 Limited, South Dock Funding Limited, NZCG 
Feeder I, L.P., NZCG Funding 2, LLC, NZCG Funding LLC, Guggenheim U.S. 
Loan Fund, Guggenheim U.S. Loan Fund II, Guggenheim U.S. Loan Fund III, 
Guggenheim Opportunistic U.S. Loan and Bond Fund IV, Guggenheim Loan 
and Bond Fund V, Guggenheim Loan and Bond Fund VI, GFI Fund, and GHY 
Fund (collectively, the ``Existing Affiliated Investors'').
    Filing Dates: The application was filed on February 23, 2015, and 
amended on June 12, 2015, October 20, 2015, February 25, 2016 and April 
29, 2016.
    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 June 27, 2016, 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

[[Page 36968]]

hearing may request notification by writing to the Commission's 
Secretary.

ADDRESSES:  Secretary, U.S. Securities and Exchange Commission, 100 F 
St. NE., Washington, DC 20549-1090. Applicants: W.P. Carey and the 
Fund: 50 Rockefeller Plaza, New York, NY 10020; the Existing Guggenheim 
Advisers and the Existing Affiliated Investors: 100 Wilshire Boulevard, 
5th Floor, Santa Monica, CA 90401.

FOR FURTHER INFORMATION CONTACT:  Robert Shapiro, Senior Counsel, at 
(202) 551-7758 or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(Chief Counsel's Office, Division of Investment Management).

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 Fund is a Delaware statutory trust organized as a closed-end 
management investment company that has elected to be regulated as a BDC 
under the Act.\1\ The Fund serves as the master fund in a master-feeder 
structure with two feeder funds and makes investments with the proceeds 
it receives from the sale of shares of the feeder funds.\2\ The Fund's 
Objectives and Strategies \3\ are to provide shareholders with current 
income, capital preservation and, to a lesser extent, long-term capital 
appreciation. The Fund invests primarily in large, privately-negotiated 
loans to private middle market U.S. companies and in opportunities that 
are originated by various intermediaries where the Fund is able to play 
a differentiated role gaining outsized allocation, influencing 
structure, pricing, and fees compared to the broader market (this could 
include more broadly syndicated assets such as bank loans and corporate 
bonds). The Fund has a five member Board,\4\ of which three members are 
Independent Trustees.\5\
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    \1\ Section 2(a)(48) of the Act defines a ``BDC'' to be any 
closed-end investment company that operates for the purpose of 
making investments in securities described in sections 55(a)(1) 
through 55(a)(3) of the Act and makes available significant 
managerial assistance with respect to the issuers of such securities
    \2\ The existing feeder funds are Carey Credit Income Fund--I 
and Carey Credit Income Fund 2016 T. Any future feeder fund will be 
created by W.P. Carey.
    \3\ ``Objectives and Strategies'' means a Regulated Entity's (as 
defined below) investment objectives and strategies, as described in 
the Regulated Entity's registration statement on Form N-2, other 
filings the Regulated Entity has made with the Commission under the 
Securities Act of 1933 (the ``Securities Act''), or under the 
Securities Exchange Act of 1934, and the Regulated Entity's reports 
to shareholders.
    \4\ The term ``Board'' refers to the board of directors or 
trustees of any Regulated Entity.
    \5\ The term ``Independent Trustees'' refers to the trustees or 
directors of any Regulated Entity that are not ``interested 
persons'' of the Regulated Entity within the meaning of section 
2(a)(19) of the Act.
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    2. W.P. Carey is a Delaware limited liability company and is 
registered as an investment adviser under the Investment Advisers Act 
of 1940 (the ``Advisers Act''). W.P. Carey serves as the investment 
adviser to the Fund. W.P. Carey also provides administrative services 
to the Fund under an administrative services agreement.
    3. Guggenheim is a Delaware limited liability company and is 
registered as an investment adviser under the Advisers Act. Guggenheim 
serves as the sub-adviser to the Fund. Guggenheim is part of the 
investment management business of Guggenheim Partners LLC, a privately 
held, global financial services firm.
    4. Each Existing Affiliated Investor is a privately-offered fund 
that would be an investment company but for section 3(c)(1) or 3(c)(7) 
of the Act. An Existing Guggenheim Adviser serves as the investment 
adviser to each Existing Affiliated Investor. Each Existing Guggenheim 
Adviser is either controlled by Guggenheim or under common control with 
Guggenheim and is registered as an investment adviser under the 
Advisers Act.
    5. Applicants seek an order (``Order'') to permit one or more 
Regulated Entities \6\ and/or one or more Affiliated Investors \7\ to 
participate in the same investment opportunities through a proposed co-
investment program (the ``Co-Investment Program'') where such 
participation would otherwise be prohibited under sections 17(d) and 
57(a)(4) and the rules under the Act. For purposes of the application, 
``Co-Investment Transaction'' means any transaction in which a 
Regulated Entity (or its Wholly-Owned Investment Subsidiary, as defined 
below) participated together with one or more other Regulated Entities 
and/or one or more Affiliated Investors in reliance on the requested 
Order. ``Potential Co-Investment Transaction'' means any investment 
opportunity in which a Regulated Entity (or its Wholly-Owned Investment 
Subsidiary) could not participate together with one or more Affiliated 
Investors and/or one or more other Regulated Entities without obtaining 
and relying on the Order.\8\ The term ``Adviser'' means any W.P. Carey 
Adviser or any Guggenheim Adviser.
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    \6\ ``Regulated Entity'' means the Fund and any Future Regulated 
Entity. ``Future Regulated Entity'' means a closed-end management 
investment company (a) that is registered under the Act or has 
elected to be regulated as a BDC under the Act, (b) whose investment 
adviser is a W.P. Carey Adviser and (c) whose investment sub-adviser 
is a Guggenheim Adviser. ``W.P. Carey Adviser'' means W.P. Carey or 
any future investment adviser that (i) controls, is controlled by or 
is under common control with W.P. Carey, (ii) is registered as an 
investment adviser under the Advisers Act and (iii) is not a 
Regulated Entity or a subsidiary of a Regulated Entity. ``Guggenheim 
Adviser'' means any Existing Guggenheim Adviser or any future 
investment adviser that (i) controls, is controlled by or is under 
common control with Guggenheim, (ii) is registered as an investment 
adviser under the Advisers Act, and (iii) is not a Regulated Entity 
or a subsidiary of a Regulated Entity.
    \7\ ``Affiliated Investors'' means the Existing Affiliated 
Investors and any Future Affiliated Investor. ``Future Affiliated 
Investor'' means an entity (a) whose investment adviser is a 
Guggenheim Adviser and (b) that would be an investment company but 
for section 3(c)(1) or 3(c)(7) of the Act.
    \8\ All existing entities that currently intend to rely upon the 
requested Order have been named as applicants. Any other existing or 
future entity that subsequently relies on the Order will comply with 
the terms and conditions of the application.
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    6. Applicants state that a Regulated Entity may, from time to time, 
form a Wholly-Owned Investment Subsidiary.\9\ Such a subsidiary would 
be prohibited from investing in a Co-Investment Transaction with any 
Affiliated Investor because it would be a company controlled by its 
parent Regulated Entity for purposes of section 57(a)(4) and rule 17d-
1. Applicants request that each Wholly-Owned Investment Subsidiary be 
permitted to participate in Co-Investment Transactions in lieu of its 
parent Regulated Entity and that the Wholly-Owned Investment 
Subsidiary's participation in any such transaction be treated, for 
purposes of the requested Order, as though the parent Regulated

[[Page 36969]]

Entity were participating directly. Applicants represent that this 
treatment is justified because a Wholly-Owned Investment Subsidiary 
would have no purpose other than serving as a holding vehicle for the 
Regulated Entity's investments and, therefore, no conflicts of interest 
could arise between the Regulated Entity and the Wholly-Owned 
Investment Subsidiary. The Regulated Entity's Board would make all 
relevant determinations under the conditions with regard to a Wholly-
Owned Investment Subsidiary's participation in a Co-Investment 
Transaction, and the Regulated Entity's Board would be informed of, and 
take into consideration, any proposed use of a Wholly-Owned Investment 
Subsidiary in the Regulated Entity's place. If the Regulated Entity 
proposes to participate in the same Co-Investment Transaction with any 
of its Wholly-Owned Investment Subsidiaries, the Board will also be 
informed of, and take into consideration, the relative participation of 
the Regulated Entity and the Wholly-Owned Investment Subsidiary.
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    \9\ The term ``Wholly-Owned Investment Subsidiary'' means an 
entity (i) that is wholly-owned by a Regulated Entity (with such 
Regulated Entity at all times holding, beneficially and of record, 
100% of the voting and economic interests); (ii) whose sole business 
purpose is to hold one or more investments on behalf of the 
Regulated Entity (and, in the case of an entity that is licensed by 
the Small Business Administration to operate under the Small 
Business Investment Act of 1958, as amended (the ``SBA Act''), as a 
small business investment company (an ``SBIC''), to maintain a 
license under the SBA Act and issue debentures guaranteed by the 
Small Business Administration); (iii) with respect to which the 
Regulated Entity's Board has the sole authority to make all 
determinations with respect to the entity's participation under the 
conditions of the application; and (iv) that would be an investment 
company but for section 3(c)(1) or 3(c)(7) of the Act. All 
subsidiaries participating in the Co-Investment Program will be 
Wholly-Owned Investment Subsidiaries and will have Objectives and 
Strategies that are either substantially the same as, or a subset 
of, their parent Regulated Entity's Objectives and Strategies. A 
subsidiary that is an SBIC may be a Wholly-Owned Investment 
Subsidiary if it satisfies the conditions in this definition.
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    7. It is anticipated that a Guggenheim Adviser will periodically 
determine that certain investments the Guggenheim Adviser recommends 
for a Regulated Entity would also be appropriate investments for one or 
more other Regulated Entities and/or one or more Affiliated Investors. 
Such a determination may result in the Regulated Entity, one or more 
other Regulated Entities and/or one or more Affiliated Investors co-
investing in certain investment opportunities. For each such investment 
opportunity, the Advisers to each Regulated Entity will independently 
analyze and evaluate the investment opportunity as to its 
appropriateness for such Regulated Entity taking into consideration the 
Regulated Entity's Objectives and Strategies.
    8. Applicants state that W.P. Carey serves as the Fund's investment 
adviser and administrator and either it or another W.P. Carey Adviser 
will serve in the same capacity to any Future Regulated Entity, and 
that Guggenheim serves as the Fund's sub-adviser and either it or 
another Guggenheim Adviser will serve in the same capacity to any 
Future Regulated Entity. Applicants represent that although a 
Guggenheim Adviser will identify and recommend investments \10\ for 
each Regulated Entity, prior to any investment by the Regulated Entity, 
the Guggenheim Adviser will present each proposed investment to the 
W.P. Carey Adviser which has the authority to approve or reject all 
investments proposed for the Regulated Entity by the Guggenheim 
Adviser.
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    \10\ Applicants represent that the W.P. Carey Advisers will not 
source any Potential Co-Investment Transactions under the requested 
Order.
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    9. Applicants state that each Guggenheim Adviser has (or will have, 
in the case of future advisers) an investment committee through which 
it will carry out its obligation under condition 1 to make a 
determination as to the appropriateness of a Potential Co-Investment 
Transaction for each Regulated Entity. Applicants represent that each 
Guggenheim Adviser, as a registered investment adviser, has (or will 
have, in the case of future advisers) developed a robust allocation 
process that is designed to allocate investment opportunities fairly 
and equitably among its clients over time. Applicants state that, in 
the case of a Potential Co-Investment Transaction, the applicable 
Guggenheim Adviser would apply its allocation policies and procedures 
in determining the proposed allocation for the Regulated Entity 
consistent with the requirements of condition 2(a).
    10. Applicants state that, once the applicable Guggenheim Adviser 
determined a proposed allocation for a Regulated Entity, such 
Guggenheim Adviser would notify the applicable W.P. Carey Adviser of 
the Potential Co-Investment Transaction and the Guggenheim Adviser's 
recommended allocation for such Regulated Entity. Applicants further 
state that the applicable W.P. Carey Adviser would then present the 
Potential Co-Investment Transaction and the Guggenheim Adviser's 
proposed allocation to the W.P. Carey Adviser's investment committee 
for its approval. Applicants represent that the W.P. Carey Adviser's 
investment committee would review the Guggenheim Adviser's 
recommendation for the Regulated Entity and would have the ability to 
ask questions of the Guggenheim Adviser and request additional 
information from the Guggenheim Adviser. Applicants further submit that 
if the W.P. Carey Adviser's investment committee approved the 
investment for the Regulated Entity, the investment and all relevant 
allocation information would then be presented to the Regulated 
Entity's Board for its approval in accordance with the conditions to 
the application. Applicants state that they believe the investment 
process between the Guggenheim Advisers and the W.P. Carey Advisers, 
prior to seeking approval from the Regulated Entity's Board (which is 
in addition to, rather than in lieu of, the procedures required under 
the conditions of the application), is significant and provides for 
additional procedures and processes to ensure that the Regulated Entity 
is being treated fairly in respect of Potential Co-Investment 
Transactions.
    11. If the Advisers to a Regulated Entity determine that a 
Potential Co-Investment Transaction is appropriate for the Regulated 
Entity (and the applicable W.P. Carey Adviser approves the investment 
for such Regulated Entity), and one or more other Regulated Entities 
and/or one or more Affiliated Investors may also participate, the 
Advisers will present the investment opportunity to the Eligible 
Trustees \11\ of the Regulated Entity prior to the actual investment by 
the Regulated Entity. As to any Regulated Entity, a Co-Investment 
Transaction will be consummated only upon approval by a required 
majority of the Eligible Trustees of such Regulated Entity within the 
meaning of section 57(o) of the Act (``Required Majority'').\12\
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    \11\ ``Eligible Trustees'' means the trustees or directors of a 
Regulated Entity that are eligible to vote under section 57(o) of 
the Act.
    \12\ In the case of a Regulated Entity that is a registered 
closed-end fund, the trustees or directors that make up the Required 
Majority will be determined as if the Regulated Entity were a BDC 
subject to section 57(o). As defined in section 57(o), ``required 
majority'' means ``both a majority of a business development 
company's directors or general partners who have no financial 
interest in such transaction, plan, or arrangement and a majority of 
such directors or general partners who are not interested persons of 
such company.''
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    12. With respect to the pro rata dispositions and follow-on 
Investments provided in conditions 7 and 8, a Regulated Entity may 
participate in a pro rata disposition or follow-on investment without 
obtaining prior approval of the Required Majority if, among other 
things: (i) The proposed participation of each Regulated Entity and 
Affiliated Investor in such disposition is proportionate to its 
outstanding investments in the issuer immediately preceding the 
disposition or follow-on investment, as the case may be; and (ii) each 
Regulated Entity's Board has approved that Regulated Entity's 
participation in pro rata dispositions and follow-on investments as 
being in the best interests of the Regulated Entity. If the Board does 
not so approve, any such disposition or follow-on investment will be 
submitted to the Regulated Entity's Eligible Trustees. The Board of any 
Regulated Entity may at any time rescind, suspend or qualify its 
approval of pro rata dispositions and follow-on investments with the 
result that all dispositions and/or follow-on investments must be 
submitted to the Eligible Trustees.

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    13. No Independent Trustee of a Regulated Entity will have a 
financial interest in any Co-Investment Transaction.
    14. Under condition 15, if an Adviser or its principals, or any 
person controlling, controlled by, or under common control with the 
Adviser or its the principals, and any Affiliated Investors 
(collectively, the ``Holders'') own in the aggregate more than 25% of 
the outstanding voting securities of a Regulated Entity (``Shares''), 
then the Holders will vote such Shares as directed by an independent 
third party when voting on matters specified in the condition. 
Applicants believe that this condition will ensure that the Independent 
Trustees will act independently in evaluating the Co-Investment 
Program, because the ability of the Adviser or its principals to 
influence the Independent Trustees by a suggestion, explicit or 
implied, that the Independent Trustees can be removed will be limited 
significantly. Applicants represent that the Independent Trustees shall 
evaluate and approve any such independent third party, taking into 
account its qualifications, reputation for independence, cost to the 
shareholders, and other factors that they deem relevant.

Applicants' Legal Analysis

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
participation by a registered investment company and an affiliated 
person in any ``joint enterprise or other joint arrangement or profit-
sharing plan,'' as defined in the rule, without prior approval by the 
Commission by order upon application. Section 17(d) of the Act and rule 
17d-1 under the Act are applicable to Regulated Entities that are 
registered closed-end investment companies. Similarly, with regard to 
BDCs, section 57(a)(4) of the Act makes it unlawful for any person who 
is related to a BDC in a manner described in section 57(b), acting as 
principal, knowingly to effect any transaction in which the BDC (or a 
company controlled by such BDC) is a joint or a joint and several 
participant with that person in contravention of rules as prescribed by 
the Commission. Because the Commission has not adopted any rules 
expressly under section 57(a)(4), section 57(i) provides that the rules 
under section 17(d) applicable to registered closed-end investment 
companies (e.g., rule 17d-1) are, in the interim, deemed to apply to 
transactions subject to section 57(a). Rule 17d-1, as made applicable 
to BDCs by section 57(i), prohibits any person who is related to a BDC 
in a manner described in section 57(b), as modified by rule 57b-1, from 
acting as principal, from participating in, or effecting any 
transaction in connection with, any joint enterprise or other joint 
arrangement or profit-sharing plan in which the BDC (or a company 
controlled by such BDC) is a participant, unless an application 
regarding the joint enterprise, arrangement, or profit-sharing plan has 
been filed with the Commission and has been granted by an order entered 
prior to the submission of the plan or any modification thereof, to 
security holders for approval, or prior to its adoption or modification 
if not so submitted.
    2. In passing upon applications under rule 17d-1, the Commission 
considers whether the company's participation in the joint transaction 
is consistent with the provisions, policies, and purposes of the Act 
and the extent to which such participation is on a basis different from 
or less advantageous than that of other participants.
    3. Applicants submit that each Regulated Entity may be deemed to be 
an ``affiliated person'' of each other Regulated Entity within the 
meaning of section 2(a)(3) of the Act. Applicants state that the 
Regulated Entities, by virtue of each having a W.P. Carey Adviser, may 
be deemed to be under common control, and thus affiliated persons of 
each other under section 2(a)(3)(C) of the Act. Section 17(d) and 
section 57(b) apply to any investment adviser to a closed-end fund or a 
BDC, respectively, including the sub-adviser. Thus, a Guggenheim 
Adviser and any Affiliated Investors that it advises could be deemed to 
be persons related to Regulated Entities in a manner described by 
sections 17(d) and 57(b) and therefore prohibited by sections 17(d) and 
57(a)(4) and rule 17d-1 from participating in the Co-Investment 
Program. Applicants further submit that, because the Guggenheim 
Advisers are ``affiliated persons'' of other Guggenheim Advisers, 
Affiliated Investors advised by any of them could be deemed to be 
persons related to Regulated Entities (or a company controlled by a 
Regulated Entity) in a manner described by sections 17(d) and 57(b) and 
also prohibited from participating in the Co-Investment Program.
    4. Applicants state that they expect that that co-investment in 
portfolio companies by a Regulated Entity, one or more other Regulated 
Entities and/or one or more Affiliated Investors will increase 
favorable investment opportunities for each Regulated Entity.
    5. Applicants submit that the fact that the Required Majority will 
approve each Co-Investment Transaction before investment (except for 
certain dispositions or follow-on investments, as described in the 
conditions), and other protective conditions set forth in the 
application, will ensure that each Regulated Entity will be treated 
fairly. Applicants state that each Regulated Entity's participation in 
the Co-Investment Transactions will be consistent with the provisions, 
policies and purposes of the Act and on a basis that is not different 
from or less advantageous than that of other participants. Applicants 
further state that the terms and conditions proposed herein will ensure 
that all such transactions are reasonable and fair to each Regulated 
Entity and the Affiliated Investors and do not involve overreaching by 
any person concerned, including W.P. Carey or Guggenheim.

Applicants' Conditions

    Applicants agree that the Order will be subject to the following 
conditions:
    1. Each time a Guggenheim Adviser considers a Potential Co-
Investment Transaction for an Affiliated Investor or another Regulated 
Entity that falls within a Regulated Entity's then-current Objectives 
and Strategies, the Advisers to the Regulated Entity will make an 
independent determination of the appropriateness of the investment for 
the Regulated Entity in light of the Regulated Entity's then-current 
circumstances.
    2. a. If the Advisers to a Regulated Entity deem participation in 
any Potential Co-Investment Transaction to be appropriate for the 
Regulated Entity, the Advisers will then determine an appropriate level 
of investment for such Regulated Entity.
    b. If the aggregate amount recommended by the Advisers to a 
Regulated Entity to be invested by the Regulated Entity in the 
Potential Co-Investment Transaction, together with the amount proposed 
to be invested by the other participating Regulated Entities and 
Affiliated Investors, collectively, in the same transaction, exceeds 
the amount of the investment opportunity, the amount of the investment 
opportunity will be allocated among the Regulated Entities and such 
Affiliated Investors, pro rata based on each participant's Available 
Capital \13\ for investment in the asset

[[Page 36971]]

class being allocated, up to the amount proposed to be invested by 
each. The Advisers to each participating Regulated Entity will provide 
the Eligible Trustees of each participating Regulated Entity with 
information concerning each participating party's Available Capital to 
assist the Eligible Trustees with their review of the Regulated 
Entity's investments for compliance with these allocation procedures.
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    \13\ ``Available Capital'' means (a) for each Regulated Entity, 
the amount of capital available for investment determined based on 
the amount of cash on hand, existing commitments and reserves, if 
any, the targeted leverage level, targeted asset mix and other 
investment policies and restrictions set from time to time by the 
Board of the applicable Regulated Entity or imposed by applicable 
laws, rules, regulations or interpretations and (b) for each 
Affiliated Investor, the amount of capital available for investment 
determined based on the amount of cash on hand, existing commitments 
and reserves, if any, the targeted leverage level, targeted asset 
mix and other investment policies and restrictions set by the 
Affiliated Investor's directors, general partners or adviser or 
imposed by applicable laws, rules, regulations or interpretations.
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    c. After making the determinations required in conditions 1 and 
2(a) above, the Advisers to the Regulated Entity will distribute 
written information concerning the Potential Co-Investment Transaction, 
including the amount proposed to be invested by each Regulated Entity 
and any Affiliated Investor, to the Eligible Trustees of each 
participating Regulated Entity for their consideration. A Regulated 
Entity will co-invest with one or more other Regulated Entities and/or 
an Affiliated Investor only if, prior to the Regulated Entities' and 
the Affiliated Investors' participation in the Potential Co-Investment 
Transaction, a Required Majority concludes that:
    (i) The terms of the Potential Co-Investment Transaction, including 
the consideration to be paid, are reasonable and fair to the Regulated 
Entity and its shareholders and do not involve overreaching in respect 
of the Regulated Entity or its shareholders on the part of any person 
concerned;
    (ii) the Potential Co-Investment Transaction is consistent with:
    (a) The interests of the Regulated Entity's shareholders; and
    (b) the Regulated Entity's then-current Objectives and Strategies;
    (iii) the investment by any other Regulated Entity or an Affiliated 
Investor would not disadvantage the Regulated Entity, and participation 
by the Regulated Entity would not be on a basis different from or less 
advantageous than that of any other Regulated Entity or Affiliated 
Investor; provided, that if another Regulated Entity or Affiliated 
Investor, but not the Regulated Entity itself, gains the right to 
nominate a director for election to a portfolio company's board of 
directors or the right to have a board observer, or any similar right 
to participate in the governance or management of the portfolio 
company, such event shall not be interpreted to prohibit a Required 
Majority from reaching the conclusions required by this condition 
2(c)(iii), if:
    (a) The Eligible Trustees will have the right to ratify the 
selection of such director or board observer, if any; and
    (b) the Advisers to the Regulated Entity agree to, and do, provide 
periodic reports to the Regulated Entity's Board with respect to the 
actions of such director or the information received by such board 
observer or obtained through the exercise of any similar right to 
participate in the governance or management of the portfolio company; 
and
    (c) any fees or other compensation that any other Regulated Entity 
or any Affiliated Investor or any affiliated person of any other 
Regulated Entity or an Affiliated Investor receives in connection with 
the right of one or more Regulated Entities or Affiliated Investors to 
nominate a director or appoint a board observer or otherwise to 
participate in the governance or management of the portfolio company 
will be shared proportionately among the participating Affiliated 
Investors (who may, in turn, share their portion with their affiliated 
persons) and any participating Regulated Entity in accordance with the 
amount of each party's investment; and
    (iv) the proposed investment by the Regulated Entity will not 
benefit the Advisers, any other Regulated Entity or the Affiliated 
Investors or any affiliated person of any of them (other than the 
parties to the Co-Investment Transaction), except (A) to the extent 
permitted by condition 13, (B) to the extent permitted under sections 
17(e) and 57(k) of the Act, as applicable, (C) in the case of fees or 
other compensation described in condition 2(c)(iii)(c), or (D) 
indirectly, as a result of an interest in the securities issued by one 
of the parties to the Co-Investment Transaction.
    3. Each Regulated Entity will have the right to decline to 
participate in any Potential Co-Investment Transaction or to invest 
less than the amount proposed.
    4. The Advisers will present to the Board of each Regulated Entity, 
on a quarterly basis, a record of all investments in Potential Co-
Investment Transactions made by any of the other Regulated Entities or 
any of the Affiliated Investors during the preceding quarter that fell 
within the Regulated Entity's then-current Objectives and Strategies 
that were not made available to the Regulated Entity, and an 
explanation of why the investment opportunities were not offered to the 
Regulated Entity. All information presented to the Board pursuant to 
this condition will be kept for the life of the Regulated Entity and at 
least two years thereafter, and will be subject to examination by the 
Commission and its staff.
    5. Except for follow-on investments made in accordance with 
condition 8,\14\ a Regulated Entity will not invest in reliance on the 
Order in any issuer in which another Regulated Entity or an Affiliated 
Investor or any affiliated person of another Regulated Entity or an 
Affiliated Investor is an existing investor.
---------------------------------------------------------------------------

    \14\ This exception applies only to follow-on investments by a 
Regulated Entity in issuers in which that Regulated Entity already 
holds investments.
---------------------------------------------------------------------------

    6. A Regulated Entity will not participate in any Potential Co-
Investment Transaction unless the terms, conditions, price, class of 
securities to be purchased, settlement date, and registration rights 
will be the same for each participating Regulated Entity and Affiliated 
Investor. The grant to one or more Regulated Entities or Affiliated 
Investors, but not the Regulated Entity itself, of the right to 
nominate a director for election to a portfolio company's board of 
directors, the right to have an observer on the board of directors or 
similar rights to participate in the governance or management of the 
portfolio company will not be interpreted so as to violate this 
condition 6, if conditions 2(c)(iii)(a), (b) and (c) are met.
    7. a. If any Regulated Entity or Affiliated Investor elects to 
sell, exchange or otherwise dispose of an interest in a security that 
was acquired by one or more Regulated Entities and/or Affiliated 
Investors in a Co-Investment Transaction, the Advisers will:
    (i) Notify each Regulated Entity that participated in the Co-
Investment Transaction of the proposed disposition at the earliest 
practical time; and
    (ii) formulate a recommendation as to participation by each 
Regulated Entity in the disposition.
    b. Each Regulated Entity will have the right to participate in such 
disposition on a proportionate basis, at the same price and on the same 
terms and conditions as those applicable to the Affiliated Investors 
and any other Regulated Entity.
    c. A Regulated Entity may participate in such disposition without 
obtaining prior approval of the Required Majority if: (i) The proposed 
participation of each Regulated Entity and each Affiliated Investor in 
such disposition is proportionate to its outstanding investments in the 
issuer immediately

[[Page 36972]]

preceding the disposition; (ii) the Regulated Entity's Board has 
approved as being in the best interests of the Regulated Entity the 
ability to participate in such dispositions on a pro rata basis (as 
described in greater detail in the application); and (iii) the 
Regulated Entity's Board is provided on a quarterly basis with a list 
of all dispositions made in accordance with this condition. In all 
other cases, the Advisers will provide their written recommendation as 
to the Regulated Entity's participation to the Eligible Trustees, and 
the Regulated Entity will participate in such disposition solely to the 
extent that a Required Majority determines that it is in the Regulated 
Entity's best interests.
    d. Each Regulated Entity and each Affiliated Investor will bear its 
own expenses in connection with the disposition.
    8. a. If any Regulated Entity or Affiliated Investor desires to 
make a ``follow-on investment'' (i.e., an additional investment in the 
same entity, including through the exercise of warrants or other rights 
to purchase securities of the issuer) in a portfolio company whose 
securities were acquired by the Regulated Entity and the Affiliated 
Investor in a Co-Investment Transaction, the Advisers will:
    (i) Notify each Regulated Entity of the proposed transaction at the 
earliest practical time; and
    (ii) formulate a recommendation as to the proposed participation, 
including the amount of the proposed follow-on investment, by each 
Regulated Entity.
    b. A Regulated Entity may participate in such follow-on investment 
without obtaining prior approval of the Required Majority if: (i) The 
proposed participation of each Regulated Entity and each Affiliated 
Investor in such investment is proportionate to its outstanding 
investments in the issuer immediately preceding the follow-on 
investment; and (ii) the Regulated Entity's Board has approved as being 
in the best interests of such Regulated Entity the ability to 
participate in follow-on investments on a pro rata basis (as described 
in greater detail in the application). In all other cases, the Advisers 
will provide their written recommendation as to such Regulated Entity's 
participation to the Eligible Trustees, and the Regulated Entity will 
participate in such follow-on investment solely to the extent that the 
Required Majority determines that it is in such Regulated Entity's best 
interests.
    c. If, with respect to any follow-on investment:
    (i) The amount of a follow-on investment is not based on the 
Regulated Entities' and the Affiliated Investors' outstanding 
investments immediately preceding the follow-on investment; and
    (ii) the aggregate amount recommended by the Advisers to be 
invested by the Regulated Entity in the follow-on investment, together 
with the amount proposed to be invested by the other participating 
Regulated Entities and the Affiliated Investors in the same 
transaction, exceeds the amount of the opportunity; then the amount 
invested by each such party will be allocated among them pro rata based 
on each participant's Available Capital for investment in the asset 
class being allocated, up to the amount proposed to be invested by 
each.
    d. The acquisition of follow-on investments as permitted by this 
condition will be considered a Co-Investment Transaction for all 
purposes and be subject to the other conditions set forth in the 
application.
    9. The Independent Trustees of each Regulated Entity will be 
provided quarterly for review all information concerning Potential Co-
Investment Transactions and Co-Investment Transactions, including 
investments made by other Regulated Entities or Affiliated Investors 
that a Regulated Entity considered but declined to participate in, so 
that the Independent Trustees may determine whether all investments 
made during the preceding quarter, including those investments which 
the Regulated Entity considered but declined to participate in, comply 
with the conditions of the Order. In addition, the Independent Trustees 
will consider at least annually the continued appropriateness for such 
Regulated Entity of participating in new and existing Co-Investment 
Transactions.
    10. Each Regulated Entity will maintain the records required by 
section 57(f)(3) of the Act as if each of the Regulated Entities were a 
BDC and each of the investments permitted under these conditions were 
approved by a Required Majority under section 57(f).
    11. No Independent Trustee of a Regulated Entity will also be a 
trustee, director, general partner, managing member or principal, or 
otherwise an ``affiliated person'' (as defined in the Act) of any 
Affiliated Investor.
    12. The expenses, if any, associated with acquiring, holding or 
disposing of any securities acquired in a Co-Investment Transaction 
(including, without limitation, the expenses of the distribution of any 
such securities registered for sale under the Securities Act) shall, to 
the extent not payable by the Advisers under their respective advisory 
agreements with the Regulated Entities and the Affiliated Investors, be 
shared by the Regulated Entities and the Affiliated Investors in 
proportion to the relative amounts of the securities held or to be 
acquired or disposed of, as the case may be.
    13. Any transaction fee (including break-up or commitment fees but 
excluding brokers' fees contemplated by section 17(e) or 57(k) of the 
Act, as applicable) \15\ received in connection with a Co-Investment 
Transaction will be distributed to the participating Regulated Entities 
and Affiliated Investors on a pro rata basis based on the amount they 
invested or committed, as the case may be, in such Co-Investment 
Transaction. If any transaction fee is to be held by an Adviser pending 
consummation of the transaction, the fee will be deposited into an 
account maintained by the Adviser at a bank or banks having the 
qualifications prescribed in section 26(a)(1) of the Act, and the 
account will earn a competitive rate of interest that will also be 
divided pro rata among the participating Regulated Entities and 
Affiliated Investors based on the amount they invest in the Co-
Investment Transaction. None of the other Regulated Entities, 
Affiliated Investors, the Advisers nor any affiliated person of the 
Regulated Entities or the Affiliated Investors will receive additional 
compensation or remuneration of any kind as a result of or in 
connection with a Co-Investment Transaction (other than (a) in the case 
of the Regulated Entities and the Affiliated Investors, the pro rata 
transaction fees described above and fees or other compensation 
described in condition 2(c)(iii)(c) and (b) in the case of the 
Advisers, investment advisory fees paid in accordance with the 
Regulated Entities' and the Affiliated Investors' investment advisory 
agreements).
---------------------------------------------------------------------------

    \15\ Applicants are not requesting and the Commission is not 
providing any relief for transaction fees received in connection 
with any Co-Investment Transaction.
---------------------------------------------------------------------------

    14. The Advisers to the Regulated Entities and Affiliated Investors 
will maintain written policies and procedures reasonably designed to 
ensure compliance with the foregoing conditions. These policies and 
procedures will require, among other things, that each of the Advisers 
to each Regulated Entity will be notified of all Potential Co-
Investment Transactions that fall within a Regulated Entity's then-
current Objectives and Strategies and will be given sufficient 
information to make its independent determination

[[Page 36973]]

and recommendations under conditions 1, 2(a), 7 and 8.
    15. If the Holders own in the aggregate more than 25 percent of the 
shares of a Regulated Entity, then the Holders will vote such shares as 
directed by an independent third party when voting on (1) the election 
of directors or trustees; (2) the removal of one or more directors or 
trustees; or (3) any matters requiring approval by the vote of a 
majority of the outstanding voting securities, as defined in section 
2(a)(42) of the Act.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2016-13514 Filed 6-7-16; 8:45 am]
 BILLING CODE 8011-01-P



                                                                                Federal Register / Vol. 81, No. 110 / Wednesday, June 8, 2016 / Notices                                              36967

                                                  proposed rule change should be                           comments on the proposed rule                             Summary of Application: Applicants
                                                  disapproved. The Commission is                           change.5                                               request an order to permit certain
                                                  extending this 45-day time period.                          Section 19(b)(2) of the Act 6 provides              business development companies
                                                    The Commission finds that it is                        that, within 45 days of the publication                (‘‘BDC’’) and closed-end management
                                                  appropriate to designate a longer period                 of the notice of the filing of a proposed              investment companies to co-invest in
                                                  within which to take action on the                       rule change, or within such longer                     portfolio companies with each other and
                                                  proposed rule change so that it has                      period up to 90 days as the Commission                 with affiliated investment funds.
                                                  sufficient time to consider the proposed                 may designate if it finds such longer                     Applicants: Carey Credit Income
                                                  rule change. Accordingly, the                            period to be appropriate and publishes                 Fund (the ‘‘Fund’’); Carey Credit
                                                  Commission, pursuant to Section                          its reasons for so finding or as to which              Advisors, LLC (‘‘W.P. Carey’’);
                                                  19(b)(2) of the Act,7 designates July 21,                the self-regulatory organization                       Guggenheim Partners Investment
                                                  2016, as the date by which the                           consents, the Commission shall approve                 Management, LLC (‘‘Guggenheim’’);
                                                  Commission should approve,                               the proposed rule change, disapprove                   Guggenheim Funds Distributors, LLC,
                                                  disapprove, or institute proceedings to                  the proposed rule change, or institute                 Guggenheim Funds Investment
                                                  determine whether to disapprove the                      proceedings to determine whether the                   Advisors, LLC, Security Investors, LLC
                                                  proposed rule change (File No. SR–                       proposed rule change should be                         (collectively, together with Guggenheim,
                                                  NYSEMKT–2016–15), as modified by                         disapproved. The Commission is                         the ‘‘Existing Guggenheim Advisers’’);
                                                  Amendment No. 1.                                         extending this 45-day time period.                     Guggenheim European Credit Fund,
                                                                                                              The Commission finds that it is                     Guggenheim Private Debt Fund Note
                                                    For the Commission, by the Division of                 appropriate to designate a longer period
                                                  Trading and Markets, pursuant to delegated                                                                      Issuer, LLC, Guggenheim Private Debt
                                                  authority.8
                                                                                                           within which to take action on the                     Fund, LLC, Guggenheim Private Debt
                                                                                                           proposed rule change so that it has                    Fund, Ltd., Guggenheim Private Debt
                                                  Brent J. Fields,
                                                                                                           sufficient time to consider the proposed               Master Fund, LLC, Guggenheim Private
                                                  Secretary.                                               rule change. Accordingly, the
                                                  [FR Doc. 2016–13476 Filed 6–7–16; 8:45 am]                                                                      Debt Fund Note Issuer 2.0, LLC,
                                                                                                           Commission, pursuant to Section                        Guggenheim Private Debt Fund 2.0,
                                                  BILLING CODE 8011–01–P                                   19(b)(2) of the Act,7 designates July 21,
                                                                                                                                                                  LLC, Guggenheim Private Debt Fund
                                                                                                           2016, as the date by which the
                                                                                                                                                                  2.0, Ltd., Guggenheim Private Debt
                                                                                                           Commission should approve,
                                                  SECURITIES AND EXCHANGE                                                                                         Master Fund 2.0, LLC, NZC Guggenheim
                                                                                                           disapprove, or institute proceedings to
                                                  COMMISSION                                                                                                      Fund LLC, NZC Guggenheim Fund
                                                                                                           determine whether to disapprove the
                                                                                                                                                                  Limited, NZC Guggenheim Master Fund
                                                  [Release No. 34–77977; File No. SR–                      proposed rule change (File No. SR–
                                                                                                                                                                  Limited, NZCG Funding Ltd., NZCG
                                                  NYSEArca–2016–19]                                        NYSEArca–2016–19), as modified by
                                                                                                                                                                  Funding 2 Limited, South Dock Funding
                                                                                                           Amendment No. 1.
                                                  Self-Regulatory Organizations; NYSE                                                                             Limited, NZCG Feeder I, L.P., NZCG
                                                                                                             For the Commission, by the Division of               Funding 2, LLC, NZCG Funding LLC,
                                                  Arca, Inc.; Notice of Designation of                     Trading and Markets, pursuant to delegated
                                                  Longer Period for Commission Action                                                                             Guggenheim U.S. Loan Fund,
                                                                                                           authority.8
                                                  on a Proposed Rule Change, as                                                                                   Guggenheim U.S. Loan Fund II,
                                                                                                           Brent J. Fields,                                       Guggenheim U.S. Loan Fund III,
                                                  Modified by Amendment No. 1, To                          Secretary.
                                                  Establish Certain End User Fees,                                                                                Guggenheim Opportunistic U.S. Loan
                                                                                                           [FR Doc. 2016–13475 Filed 6–7–16; 8:45 am]             and Bond Fund IV, Guggenheim Loan
                                                  Amend the Definition of Affiliate, and
                                                  Amend the Co-Location Section of the
                                                                                                           BILLING CODE 8011–01–P                                 and Bond Fund V, Guggenheim Loan
                                                  Fee Schedule To Reflect the Changes                                                                             and Bond Fund VI, GFI Fund, and GHY
                                                                                                                                                                  Fund (collectively, the ‘‘Existing
                                                  June 2, 2016.                                            SECURITIES AND EXCHANGE                                Affiliated Investors’’).
                                                     On April 4, 2016, NYSE Arca, Inc.                     COMMISSION                                                Filing Dates: The application was
                                                  (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed                [Release No. IC–32138; File No. 812–14426]             filed on February 23, 2015, and
                                                  with the Securities and Exchange                                                                                amended on June 12, 2015, October 20,
                                                  Commission (‘‘Commission’’), pursuant                    Carey Credit Income Fund, et al.;                      2015, February 25, 2016 and April 29,
                                                  to Section 19(b)(1) of the Securities                    Notice of Application                                  2016.
                                                  Exchange Act of 1934 (‘‘Act’’) 1 and Rule                June 2, 2016.
                                                                                                                                                                     Hearing or Notification of Hearing: An
                                                  19b–4 thereunder,2 a proposed rule                       AGENCY:  Securities and Exchange                       order granting the requested relief will
                                                  change to establish fees relating to                     Commission (‘‘Commission’’).                           be issued unless the Commission orders
                                                  certain end users, amend the definition                                                                         a hearing. Interested persons may
                                                                                                           ACTION: Notice of application for an
                                                  of Affiliate, and amend the co-location                                                                         request a hearing by writing to the
                                                                                                           order under sections 17(d) and 57(i) of
                                                  section of the Fee Schedule to reflect the                                                                      Commission’s Secretary and serving
                                                                                                           the Investment Company Act of 1940
                                                  changes. The Commission published the                                                                           applicants with a copy of the request,
                                                                                                           (the ‘‘Act’’) and rule 17d–1 under the
                                                  proposed rule change for comment in                                                                             personally or by mail. Hearing requests
                                                                                                           Act to permit certain joint transactions
                                                  the Federal Register on April 22, 2016.3                                                                        should be received by the Commission
                                                                                                           otherwise prohibited by sections 17(d)
                                                  On April 29, 2016, the Exchange filed                                                                           by 5:30 p.m. on June 27, 2016, and
                                                                                                           and 57(a)(4) of the Act and rule 17d–1
                                                  Amendment No. 1 to the proposed rule                                                                            should be accompanied by proof of
                                                                                                           under the Act.
                                                  change.4 The Commission received no                                                                             service on applicants, in the form of an
                                                                                                                                                                  affidavit or, for lawyers, a certificate of
mstockstill on DSK3G9T082PROD with NOTICES




                                                    7 Id.
                                                                                                           references in the Co-location section of the Fee       service. Pursuant to rule 0–5 under the
                                                    8 17 CFR 200.30–3(a)(12).                              Schedule.                                              Act, hearing requests should state the
                                                    1 15 U.S.C. 78s(b)(1).                                   5 The Commission notes that it did receive two
                                                                                                                                                                  nature of the writer’s interest, any facts
                                                    2 17 CFR 240.19b–4.                                    comment letters on a related filing, NYSE–2016–11,
                                                    3 See Securities Exchange Act Release No. 34–          which are equally relevant to this filing.             bearing upon the desirability of a
                                                  77641 (April 18, 2016), 81 FR 23773 (‘‘Notice’’).          6 15 U.S.C. 78s(b)(2).                               hearing on the matter, the reason for the
                                                    4 Amendment No. 1 made technical changes                 7 Id.                                                request, and the issues contested.
                                                  relating to the General Notes numbering and                8 17 CFR 200.30–3(a)(12).                            Persons who wish to be notified of a


                                             VerDate Sep<11>2014   17:30 Jun 07, 2016   Jkt 238001    PO 00000   Frm 00108   Fmt 4703   Sfmt 4703   E:\FR\FM\08JNN1.SGM   08JNN1


                                                  36968                         Federal Register / Vol. 81, No. 110 / Wednesday, June 8, 2016 / Notices

                                                  hearing may request notification by                     more broadly syndicated assets such as                     participation would otherwise be
                                                  writing to the Commission’s Secretary.                  bank loans and corporate bonds). The                       prohibited under sections 17(d) and
                                                  ADDRESSES: Secretary, U.S. Securities                   Fund has a five member Board,4 of                          57(a)(4) and the rules under the Act. For
                                                  and Exchange Commission, 100 F St.                      which three members are Independent                        purposes of the application, ‘‘Co-
                                                  NE., Washington, DC 20549–1090.                         Trustees.5                                                 Investment Transaction’’ means any
                                                  Applicants: W.P. Carey and the Fund:                       2. W.P. Carey is a Delaware limited                     transaction in which a Regulated Entity
                                                  50 Rockefeller Plaza, New York, NY                      liability company and is registered as an                  (or its Wholly-Owned Investment
                                                  10020; the Existing Guggenheim                          investment adviser under the                               Subsidiary, as defined below)
                                                  Advisers and the Existing Affiliated                    Investment Advisers Act of 1940 (the                       participated together with one or more
                                                  Investors: 100 Wilshire Boulevard, 5th                  ‘‘Advisers Act’’). W.P. Carey serves as                    other Regulated Entities and/or one or
                                                  Floor, Santa Monica, CA 90401.                          the investment adviser to the Fund.                        more Affiliated Investors in reliance on
                                                  FOR FURTHER INFORMATION CONTACT:                        W.P. Carey also provides administrative                    the requested Order. ‘‘Potential Co-
                                                  Robert Shapiro, Senior Counsel, at (202)                services to the Fund under an                              Investment Transaction’’ means any
                                                  551–7758 or Mary Kay Frech, Branch                      administrative services agreement.                         investment opportunity in which a
                                                  Chief, at (202) 551–6821 (Chief                            3. Guggenheim is a Delaware limited                     Regulated Entity (or its Wholly-Owned
                                                  Counsel’s Office, Division of Investment                liability company and is registered as an                  Investment Subsidiary) could not
                                                  Management).                                            investment adviser under the Advisers                      participate together with one or more
                                                                                                          Act. Guggenheim serves as the sub-                         Affiliated Investors and/or one or more
                                                  SUPPLEMENTARY INFORMATION: The
                                                                                                          adviser to the Fund. Guggenheim is part                    other Regulated Entities without
                                                  following is a summary of the
                                                                                                          of the investment management business                      obtaining and relying on the Order.8
                                                  application. The complete application
                                                                                                          of Guggenheim Partners LLC, a privately                    The term ‘‘Adviser’’ means any W.P.
                                                  may be obtained via the Commission’s
                                                                                                          held, global financial services firm.                      Carey Adviser or any Guggenheim
                                                  Web site by searching for the file                         4. Each Existing Affiliated Investor is
                                                  number, or for an applicant using the                                                                              Adviser.
                                                                                                          a privately-offered fund that would be                        6. Applicants state that a Regulated
                                                  Company name box, at http://                            an investment company but for section                      Entity may, from time to time, form a
                                                  www.sec.gov/search/search.htm or by                     3(c)(1) or 3(c)(7) of the Act. An Existing                 Wholly-Owned Investment Subsidiary.9
                                                  calling (202) 551–8090.                                 Guggenheim Adviser serves as the                           Such a subsidiary would be prohibited
                                                  Applicants’ Representations                             investment adviser to each Existing                        from investing in a Co-Investment
                                                     1. The Fund is a Delaware statutory                  Affiliated Investor. Each Existing                         Transaction with any Affiliated Investor
                                                  trust organized as a closed-end                         Guggenheim Adviser is either controlled                    because it would be a company
                                                  management investment company that                      by Guggenheim or under common                              controlled by its parent Regulated Entity
                                                  has elected to be regulated as a BDC                    control with Guggenheim and is                             for purposes of section 57(a)(4) and rule
                                                  under the Act.1 The Fund serves as the                  registered as an investment adviser                        17d–1. Applicants request that each
                                                  master fund in a master-feeder structure                under the Advisers Act.                                    Wholly-Owned Investment Subsidiary
                                                                                                             5. Applicants seek an order (‘‘Order’’)                 be permitted to participate in Co-
                                                  with two feeder funds and makes
                                                                                                          to permit one or more Regulated                            Investment Transactions in lieu of its
                                                  investments with the proceeds it
                                                                                                          Entities 6 and/or one or more Affiliated                   parent Regulated Entity and that the
                                                  receives from the sale of shares of the
                                                                                                          Investors 7 to participate in the same                     Wholly-Owned Investment Subsidiary’s
                                                  feeder funds.2 The Fund’s Objectives
                                                                                                          investment opportunities through a                         participation in any such transaction be
                                                  and Strategies 3 are to provide
                                                                                                          proposed co-investment program (the                        treated, for purposes of the requested
                                                  shareholders with current income,
                                                                                                          ‘‘Co-Investment Program’’) where such                      Order, as though the parent Regulated
                                                  capital preservation and, to a lesser
                                                  extent, long-term capital appreciation.                    4 The term ‘‘Board’’ refers to the board of directors      8 All existing entities that currently intend to rely
                                                  The Fund invests primarily in large,                    or trustees of any Regulated Entity.                       upon the requested Order have been named as
                                                  privately-negotiated loans to private                      5 The term ‘‘Independent Trustees’’ refers to the
                                                                                                                                                                     applicants. Any other existing or future entity that
                                                  middle market U.S. companies and in                     trustees or directors of any Regulated Entity that are     subsequently relies on the Order will comply with
                                                  opportunities that are originated by                    not ‘‘interested persons’’ of the Regulated Entity         the terms and conditions of the application.
                                                                                                          within the meaning of section 2(a)(19) of the Act.            9 The term ‘‘Wholly-Owned Investment
                                                  various intermediaries where the Fund                      6 ‘‘Regulated Entity’’ means the Fund and any
                                                                                                                                                                     Subsidiary’’ means an entity (i) that is wholly-
                                                  is able to play a differentiated role                   Future Regulated Entity. ‘‘Future Regulated Entity’’       owned by a Regulated Entity (with such Regulated
                                                  gaining outsized allocation, influencing                means a closed-end management investment                   Entity at all times holding, beneficially and of
                                                  structure, pricing, and fees compared to                company (a) that is registered under the Act or has        record, 100% of the voting and economic interests);
                                                                                                          elected to be regulated as a BDC under the Act, (b)        (ii) whose sole business purpose is to hold one or
                                                  the broader market (this could include                  whose investment adviser is a W.P. Carey Adviser           more investments on behalf of the Regulated Entity
                                                                                                          and (c) whose investment sub-adviser is a                  (and, in the case of an entity that is licensed by the
                                                     1 Section 2(a)(48) of the Act defines a ‘‘BDC’’ to
                                                                                                          Guggenheim Adviser. ‘‘W.P. Carey Adviser’’ means           Small Business Administration to operate under the
                                                  be any closed-end investment company that               W.P. Carey or any future investment adviser that (i)       Small Business Investment Act of 1958, as amended
                                                  operates for the purpose of making investments in       controls, is controlled by or is under common              (the ‘‘SBA Act’’), as a small business investment
                                                  securities described in sections 55(a)(1) through       control with W.P. Carey, (ii) is registered as an          company (an ‘‘SBIC’’), to maintain a license under
                                                  55(a)(3) of the Act and makes available significant     investment adviser under the Advisers Act and (iii)        the SBA Act and issue debentures guaranteed by
                                                  managerial assistance with respect to the issuers of    is not a Regulated Entity or a subsidiary of a             the Small Business Administration); (iii) with
                                                  such securities                                         Regulated Entity. ‘‘Guggenheim Adviser’’ means             respect to which the Regulated Entity’s Board has
                                                     2 The existing feeder funds are Carey Credit         any Existing Guggenheim Adviser or any future              the sole authority to make all determinations with
                                                  Income Fund—I and Carey Credit Income Fund              investment adviser that (i) controls, is controlled by     respect to the entity’s participation under the
                                                  2016 T. Any future feeder fund will be created by       or is under common control with Guggenheim, (ii)           conditions of the application; and (iv) that would
                                                  W.P. Carey.                                             is registered as an investment adviser under the           be an investment company but for section 3(c)(1) or
mstockstill on DSK3G9T082PROD with NOTICES




                                                     3 ‘‘Objectives and Strategies’’ means a Regulated    Advisers Act, and (iii) is not a Regulated Entity or       3(c)(7) of the Act. All subsidiaries participating in
                                                  Entity’s (as defined below) investment objectives       a subsidiary of a Regulated Entity.                        the Co-Investment Program will be Wholly-Owned
                                                  and strategies, as described in the Regulated              7 ‘‘Affiliated Investors’’ means the Existing           Investment Subsidiaries and will have Objectives
                                                  Entity’s registration statement on Form N–2, other      Affiliated Investors and any Future Affiliated             and Strategies that are either substantially the same
                                                  filings the Regulated Entity has made with the          Investor. ‘‘Future Affiliated Investor’’ means an          as, or a subset of, their parent Regulated Entity’s
                                                  Commission under the Securities Act of 1933 (the        entity (a) whose investment adviser is a                   Objectives and Strategies. A subsidiary that is an
                                                  ‘‘Securities Act’’), or under the Securities Exchange   Guggenheim Adviser and (b) that would be an                SBIC may be a Wholly-Owned Investment
                                                  Act of 1934, and the Regulated Entity’s reports to      investment company but for section 3(c)(1) or              Subsidiary if it satisfies the conditions in this
                                                  shareholders.                                           3(c)(7) of the Act.                                        definition.



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                                                                                Federal Register / Vol. 81, No. 110 / Wednesday, June 8, 2016 / Notices                                                      36969

                                                  Entity were participating directly.                     investment to the W.P. Carey Adviser                   is significant and provides for
                                                  Applicants represent that this treatment                which has the authority to approve or                  additional procedures and processes to
                                                  is justified because a Wholly-Owned                     reject all investments proposed for the                ensure that the Regulated Entity is being
                                                  Investment Subsidiary would have no                     Regulated Entity by the Guggenheim                     treated fairly in respect of Potential Co-
                                                  purpose other than serving as a holding                 Adviser.                                               Investment Transactions.
                                                  vehicle for the Regulated Entity’s                         9. Applicants state that each                          11. If the Advisers to a Regulated
                                                  investments and, therefore, no conflicts                Guggenheim Adviser has (or will have,                  Entity determine that a Potential Co-
                                                  of interest could arise between the                     in the case of future advisers) an                     Investment Transaction is appropriate
                                                  Regulated Entity and the Wholly-Owned                   investment committee through which it                  for the Regulated Entity (and the
                                                  Investment Subsidiary. The Regulated                    will carry out its obligation under
                                                                                                                                                                 applicable W.P. Carey Adviser approves
                                                  Entity’s Board would make all relevant                  condition 1 to make a determination as
                                                                                                                                                                 the investment for such Regulated
                                                  determinations under the conditions                     to the appropriateness of a Potential Co-
                                                                                                                                                                 Entity), and one or more other Regulated
                                                  with regard to a Wholly-Owned                           Investment Transaction for each
                                                                                                                                                                 Entities and/or one or more Affiliated
                                                  Investment Subsidiary’s participation in                Regulated Entity. Applicants represent
                                                                                                                                                                 Investors may also participate, the
                                                  a Co-Investment Transaction, and the                    that each Guggenheim Adviser, as a
                                                                                                                                                                 Advisers will present the investment
                                                  Regulated Entity’s Board would be                       registered investment adviser, has (or
                                                                                                                                                                 opportunity to the Eligible Trustees 11 of
                                                  informed of, and take into                              will have, in the case of future advisers)
                                                                                                                                                                 the Regulated Entity prior to the actual
                                                  consideration, any proposed use of a                    developed a robust allocation process
                                                                                                          that is designed to allocate investment                investment by the Regulated Entity. As
                                                  Wholly-Owned Investment Subsidiary
                                                                                                          opportunities fairly and equitably                     to any Regulated Entity, a Co-
                                                  in the Regulated Entity’s place. If the
                                                                                                          among its clients over time. Applicants                Investment Transaction will be
                                                  Regulated Entity proposes to participate
                                                                                                          state that, in the case of a Potential Co-             consummated only upon approval by a
                                                  in the same Co-Investment Transaction
                                                                                                          Investment Transaction, the applicable                 required majority of the Eligible
                                                  with any of its Wholly-Owned
                                                                                                          Guggenheim Adviser would apply its                     Trustees of such Regulated Entity
                                                  Investment Subsidiaries, the Board will
                                                                                                          allocation policies and procedures in                  within the meaning of section 57(o) of
                                                  also be informed of, and take into
                                                                                                          determining the proposed allocation for                the Act (‘‘Required Majority’’).12
                                                  consideration, the relative participation
                                                  of the Regulated Entity and the Wholly-                 the Regulated Entity consistent with the                  12. With respect to the pro rata
                                                  Owned Investment Subsidiary.                            requirements of condition 2(a).                        dispositions and follow-on Investments
                                                     7. It is anticipated that a Guggenheim                  10. Applicants state that, once the                 provided in conditions 7 and 8, a
                                                  Adviser will periodically determine that                applicable Guggenheim Adviser                          Regulated Entity may participate in a
                                                  certain investments the Guggenheim                      determined a proposed allocation for a                 pro rata disposition or follow-on
                                                  Adviser recommends for a Regulated                      Regulated Entity, such Guggenheim                      investment without obtaining prior
                                                  Entity would also be appropriate                        Adviser would notify the applicable                    approval of the Required Majority if,
                                                  investments for one or more other                       W.P. Carey Adviser of the Potential Co-                among other things: (i) The proposed
                                                  Regulated Entities and/or one or more                   Investment Transaction and the                         participation of each Regulated Entity
                                                  Affiliated Investors. Such a                            Guggenheim Adviser’s recommended                       and Affiliated Investor in such
                                                  determination may result in the                         allocation for such Regulated Entity.                  disposition is proportionate to its
                                                  Regulated Entity, one or more other                     Applicants further state that the                      outstanding investments in the issuer
                                                  Regulated Entities and/or one or more                   applicable W.P. Carey Adviser would                    immediately preceding the disposition
                                                  Affiliated Investors co-investing in                    then present the Potential Co-                         or follow-on investment, as the case
                                                  certain investment opportunities. For                   Investment Transaction and the                         may be; and (ii) each Regulated Entity’s
                                                  each such investment opportunity, the                   Guggenheim Adviser’s proposed                          Board has approved that Regulated
                                                  Advisers to each Regulated Entity will                  allocation to the W.P. Carey Adviser’s                 Entity’s participation in pro rata
                                                  independently analyze and evaluate the                  investment committee for its approval.                 dispositions and follow-on investments
                                                  investment opportunity as to its                        Applicants represent that the W.P.                     as being in the best interests of the
                                                  appropriateness for such Regulated                      Carey Adviser’s investment committee                   Regulated Entity. If the Board does not
                                                  Entity taking into consideration the                    would review the Guggenheim                            so approve, any such disposition or
                                                  Regulated Entity’s Objectives and                       Adviser’s recommendation for the                       follow-on investment will be submitted
                                                  Strategies.                                             Regulated Entity and would have the                    to the Regulated Entity’s Eligible
                                                     8. Applicants state that W.P. Carey                  ability to ask questions of the                        Trustees. The Board of any Regulated
                                                  serves as the Fund’s investment adviser                 Guggenheim Adviser and request                         Entity may at any time rescind, suspend
                                                  and administrator and either it or                      additional information from the                        or qualify its approval of pro rata
                                                  another W.P. Carey Adviser will serve                   Guggenheim Adviser. Applicants                         dispositions and follow-on investments
                                                  in the same capacity to any Future                      further submit that if the W.P. Carey                  with the result that all dispositions and/
                                                  Regulated Entity, and that Guggenheim                   Adviser’s investment committee                         or follow-on investments must be
                                                  serves as the Fund’s sub-adviser and                    approved the investment for the                        submitted to the Eligible Trustees.
                                                  either it or another Guggenheim Adviser                 Regulated Entity, the investment and all
                                                  will serve in the same capacity to any                  relevant allocation information would                     11 ‘‘Eligible Trustees’’ means the trustees or

                                                  Future Regulated Entity. Applicants                     then be presented to the Regulated                     directors of a Regulated Entity that are eligible to
                                                  represent that although a Guggenheim                    Entity’s Board for its approval in                     vote under section 57(o) of the Act.
                                                  Adviser will identify and recommend                     accordance with the conditions to the                     12 In the case of a Regulated Entity that is a

                                                                                                          application. Applicants state that they                registered closed-end fund, the trustees or directors
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                                                  investments 10 for each Regulated                                                                              that make up the Required Majority will be
                                                  Entity, prior to any investment by the                  believe the investment process between                 determined as if the Regulated Entity were a BDC
                                                  Regulated Entity, the Guggenheim                        the Guggenheim Advisers and the W.P.                   subject to section 57(o). As defined in section 57(o),
                                                  Adviser will present each proposed                      Carey Advisers, prior to seeking                       ‘‘required majority’’ means ‘‘both a majority of a
                                                                                                          approval from the Regulated Entity’s                   business development company’s directors or
                                                                                                                                                                 general partners who have no financial interest in
                                                    10 Applicants represent that the W.P. Carey           Board (which is in addition to, rather                 such transaction, plan, or arrangement and a
                                                  Advisers will not source any Potential Co-              than in lieu of, the procedures required               majority of such directors or general partners who
                                                  Investment Transactions under the requested Order.      under the conditions of the application),              are not interested persons of such company.’’



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                                                  36970                         Federal Register / Vol. 81, No. 110 / Wednesday, June 8, 2016 / Notices

                                                    13. No Independent Trustee of a                       in section 57(b), as modified by rule                  Co-Investment Transaction before
                                                  Regulated Entity will have a financial                  57b–1, from acting as principal, from                  investment (except for certain
                                                  interest in any Co-Investment                           participating in, or effecting any                     dispositions or follow-on investments,
                                                  Transaction.                                            transaction in connection with, any                    as described in the conditions), and
                                                    14. Under condition 15, if an Adviser                 joint enterprise or other joint                        other protective conditions set forth in
                                                  or its principals, or any person                        arrangement or profit-sharing plan in                  the application, will ensure that each
                                                  controlling, controlled by, or under                    which the BDC (or a company                            Regulated Entity will be treated fairly.
                                                  common control with the Adviser or its                  controlled by such BDC) is a participant,              Applicants state that each Regulated
                                                  the principals, and any Affiliated                      unless an application regarding the joint              Entity’s participation in the Co-
                                                  Investors (collectively, the ‘‘Holders’’)               enterprise, arrangement, or profit-                    Investment Transactions will be
                                                  own in the aggregate more than 25% of                   sharing plan has been filed with the                   consistent with the provisions, policies
                                                  the outstanding voting securities of a                  Commission and has been granted by an                  and purposes of the Act and on a basis
                                                  Regulated Entity (‘‘Shares’’), then the                 order entered prior to the submission of               that is not different from or less
                                                  Holders will vote such Shares as                        the plan or any modification thereof, to               advantageous than that of other
                                                  directed by an independent third party                  security holders for approval, or prior to             participants. Applicants further state
                                                  when voting on matters specified in the                 its adoption or modification if not so                 that the terms and conditions proposed
                                                  condition. Applicants believe that this                 submitted.                                             herein will ensure that all such
                                                  condition will ensure that the                             2. In passing upon applications under               transactions are reasonable and fair to
                                                  Independent Trustees will act                           rule 17d–1, the Commission considers                   each Regulated Entity and the Affiliated
                                                  independently in evaluating the Co-                     whether the company’s participation in                 Investors and do not involve
                                                  Investment Program, because the ability                 the joint transaction is consistent with               overreaching by any person concerned,
                                                  of the Adviser or its principals to                     the provisions, policies, and purposes of              including W.P. Carey or Guggenheim.
                                                  influence the Independent Trustees by a                 the Act and the extent to which such
                                                  suggestion, explicit or implied, that the               participation is on a basis different from             Applicants’ Conditions
                                                  Independent Trustees can be removed                     or less advantageous than that of other                   Applicants agree that the Order will
                                                  will be limited significantly. Applicants               participants.                                          be subject to the following conditions:
                                                  represent that the Independent Trustees                    3. Applicants submit that each                         1. Each time a Guggenheim Adviser
                                                  shall evaluate and approve any such                     Regulated Entity may be deemed to be                   considers a Potential Co-Investment
                                                  independent third party, taking into                    an ‘‘affiliated person’’ of each other                 Transaction for an Affiliated Investor or
                                                  account its qualifications, reputation for              Regulated Entity within the meaning of                 another Regulated Entity that falls
                                                  independence, cost to the shareholders,                 section 2(a)(3) of the Act. Applicants                 within a Regulated Entity’s then-current
                                                  and other factors that they deem                        state that the Regulated Entities, by                  Objectives and Strategies, the Advisers
                                                  relevant.                                               virtue of each having a W.P. Carey                     to the Regulated Entity will make an
                                                                                                          Adviser, may be deemed to be under                     independent determination of the
                                                  Applicants’ Legal Analysis                              common control, and thus affiliated                    appropriateness of the investment for
                                                     1. Section 17(d) of the Act and rule                 persons of each other under section                    the Regulated Entity in light of the
                                                  17d–1 under the Act prohibit                            2(a)(3)(C) of the Act. Section 17(d) and               Regulated Entity’s then-current
                                                  participation by a registered investment                section 57(b) apply to any investment                  circumstances.
                                                  company and an affiliated person in any                 adviser to a closed-end fund or a BDC,                    2. a. If the Advisers to a Regulated
                                                  ‘‘joint enterprise or other joint                       respectively, including the sub-adviser.               Entity deem participation in any
                                                  arrangement or profit-sharing plan,’’ as                Thus, a Guggenheim Adviser and any                     Potential Co-Investment Transaction to
                                                  defined in the rule, without prior                      Affiliated Investors that it advises could             be appropriate for the Regulated Entity,
                                                  approval by the Commission by order                     be deemed to be persons related to                     the Advisers will then determine an
                                                  upon application. Section 17(d) of the                  Regulated Entities in a manner                         appropriate level of investment for such
                                                  Act and rule 17d–1 under the Act are                    described by sections 17(d) and 57(b)                  Regulated Entity.
                                                  applicable to Regulated Entities that are               and therefore prohibited by sections                      b. If the aggregate amount
                                                  registered closed-end investment                        17(d) and 57(a)(4) and rule 17d–1 from                 recommended by the Advisers to a
                                                  companies. Similarly, with regard to                    participating in the Co-Investment                     Regulated Entity to be invested by the
                                                  BDCs, section 57(a)(4) of the Act makes                 Program. Applicants further submit that,               Regulated Entity in the Potential Co-
                                                  it unlawful for any person who is                       because the Guggenheim Advisers are                    Investment Transaction, together with
                                                  related to a BDC in a manner described                  ‘‘affiliated persons’’ of other                        the amount proposed to be invested by
                                                  in section 57(b), acting as principal,                  Guggenheim Advisers, Affiliated                        the other participating Regulated
                                                  knowingly to effect any transaction in                  Investors advised by any of them could                 Entities and Affiliated Investors,
                                                  which the BDC (or a company                             be deemed to be persons related to                     collectively, in the same transaction,
                                                  controlled by such BDC) is a joint or a                 Regulated Entities (or a company                       exceeds the amount of the investment
                                                  joint and several participant with that                 controlled by a Regulated Entity) in a                 opportunity, the amount of the
                                                  person in contravention of rules as                     manner described by sections 17(d) and                 investment opportunity will be
                                                  prescribed by the Commission. Because                   57(b) and also prohibited from                         allocated among the Regulated Entities
                                                  the Commission has not adopted any                      participating in the Co-Investment                     and such Affiliated Investors, pro rata
                                                  rules expressly under section 57(a)(4),                 Program.                                               based on each participant’s Available
                                                  section 57(i) provides that the rules                      4. Applicants state that they expect                Capital 13 for investment in the asset
                                                  under section 17(d) applicable to                       that that co-investment in portfolio
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                                                  registered closed-end investment                        companies by a Regulated Entity, one or                  13 ‘‘Available Capital’’ means (a) for each
                                                  companies (e.g., rule 17d–1) are, in the                more other Regulated Entities and/or                   Regulated Entity, the amount of capital available for
                                                  interim, deemed to apply to transactions                one or more Affiliated Investors will                  investment determined based on the amount of cash
                                                  subject to section 57(a). Rule 17d–1, as                increase favorable investment                          on hand, existing commitments and reserves, if any,
                                                                                                                                                                 the targeted leverage level, targeted asset mix and
                                                  made applicable to BDCs by section                      opportunities for each Regulated Entity.               other investment policies and restrictions set from
                                                  57(i), prohibits any person who is                         5. Applicants submit that the fact that             time to time by the Board of the applicable
                                                  related to a BDC in a manner described                  the Required Majority will approve each                Regulated Entity or imposed by applicable laws,



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                                                                                 Federal Register / Vol. 81, No. 110 / Wednesday, June 8, 2016 / Notices                                                    36971

                                                  class being allocated, up to the amount                   be interpreted to prohibit a Required                 pursuant to this condition will be kept
                                                  proposed to be invested by each. The                      Majority from reaching the conclusions                for the life of the Regulated Entity and
                                                  Advisers to each participating Regulated                  required by this condition 2(c)(iii), if:             at least two years thereafter, and will be
                                                  Entity will provide the Eligible Trustees                    (a) The Eligible Trustees will have the            subject to examination by the
                                                  of each participating Regulated Entity                    right to ratify the selection of such                 Commission and its staff.
                                                  with information concerning each                          director or board observer, if any; and                  5. Except for follow-on investments
                                                  participating party’s Available Capital to                   (b) the Advisers to the Regulated                  made in accordance with condition 8,14
                                                  assist the Eligible Trustees with their                   Entity agree to, and do, provide periodic             a Regulated Entity will not invest in
                                                  review of the Regulated Entity’s                          reports to the Regulated Entity’s Board               reliance on the Order in any issuer in
                                                  investments for compliance with these                     with respect to the actions of such                   which another Regulated Entity or an
                                                  allocation procedures.                                    director or the information received by               Affiliated Investor or any affiliated
                                                     c. After making the determinations                     such board observer or obtained through               person of another Regulated Entity or an
                                                  required in conditions 1 and 2(a) above,                  the exercise of any similar right to                  Affiliated Investor is an existing
                                                  the Advisers to the Regulated Entity will                 participate in the governance or                      investor.
                                                  distribute written information                            management of the portfolio company;                     6. A Regulated Entity will not
                                                  concerning the Potential Co-Investment                    and                                                   participate in any Potential Co-
                                                  Transaction, including the amount                            (c) any fees or other compensation                 Investment Transaction unless the
                                                  proposed to be invested by each                           that any other Regulated Entity or any                terms, conditions, price, class of
                                                  Regulated Entity and any Affiliated                       Affiliated Investor or any affiliated                 securities to be purchased, settlement
                                                  Investor, to the Eligible Trustees of each                person of any other Regulated Entity or               date, and registration rights will be the
                                                  participating Regulated Entity for their                  an Affiliated Investor receives in                    same for each participating Regulated
                                                  consideration. A Regulated Entity will                    connection with the right of one or more              Entity and Affiliated Investor. The grant
                                                  co-invest with one or more other                          Regulated Entities or Affiliated Investors            to one or more Regulated Entities or
                                                  Regulated Entities and/or an Affiliated                   to nominate a director or appoint a                   Affiliated Investors, but not the
                                                  Investor only if, prior to the Regulated                  board observer or otherwise to                        Regulated Entity itself, of the right to
                                                  Entities’ and the Affiliated Investors’                   participate in the governance or                      nominate a director for election to a
                                                  participation in the Potential Co-                        management of the portfolio company                   portfolio company’s board of directors,
                                                                                                            will be shared proportionately among                  the right to have an observer on the
                                                  Investment Transaction, a Required
                                                                                                            the participating Affiliated Investors                board of directors or similar rights to
                                                  Majority concludes that:
                                                     (i) The terms of the Potential Co-                     (who may, in turn, share their portion
                                                                                                                                                                  participate in the governance or
                                                                                                            with their affiliated persons) and any
                                                  Investment Transaction, including the                                                                           management of the portfolio company
                                                                                                            participating Regulated Entity in
                                                  consideration to be paid, are reasonable                                                                        will not be interpreted so as to violate
                                                                                                            accordance with the amount of each
                                                  and fair to the Regulated Entity and its                                                                        this condition 6, if conditions
                                                                                                            party’s investment; and
                                                  shareholders and do not involve                              (iv) the proposed investment by the                2(c)(iii)(a), (b) and (c) are met.
                                                  overreaching in respect of the Regulated                  Regulated Entity will not benefit the                    7. a. If any Regulated Entity or
                                                  Entity or its shareholders on the part of                 Advisers, any other Regulated Entity or               Affiliated Investor elects to sell,
                                                  any person concerned;                                     the Affiliated Investors or any affiliated            exchange or otherwise dispose of an
                                                     (ii) the Potential Co-Investment                       person of any of them (other than the                 interest in a security that was acquired
                                                  Transaction is consistent with:                           parties to the Co-Investment                          by one or more Regulated Entities and/
                                                     (a) The interests of the Regulated                                                                           or Affiliated Investors in a Co-
                                                                                                            Transaction), except (A) to the extent
                                                  Entity’s shareholders; and                                                                                      Investment Transaction, the Advisers
                                                                                                            permitted by condition 13, (B) to the
                                                     (b) the Regulated Entity’s then-current                                                                      will:
                                                                                                            extent permitted under sections 17(e)
                                                  Objectives and Strategies;                                                                                         (i) Notify each Regulated Entity that
                                                                                                            and 57(k) of the Act, as applicable, (C)
                                                     (iii) the investment by any other                                                                            participated in the Co-Investment
                                                                                                            in the case of fees or other
                                                  Regulated Entity or an Affiliated                                                                               Transaction of the proposed disposition
                                                                                                            compensation described in condition
                                                  Investor would not disadvantage the                                                                             at the earliest practical time; and
                                                                                                            2(c)(iii)(c), or (D) indirectly, as a result
                                                  Regulated Entity, and participation by                                                                             (ii) formulate a recommendation as to
                                                                                                            of an interest in the securities issued by
                                                  the Regulated Entity would not be on a                                                                          participation by each Regulated Entity
                                                                                                            one of the parties to the Co-Investment
                                                  basis different from or less advantageous                                                                       in the disposition.
                                                                                                            Transaction.
                                                  than that of any other Regulated Entity                      3. Each Regulated Entity will have the                b. Each Regulated Entity will have the
                                                  or Affiliated Investor; provided, that if                 right to decline to participate in any                right to participate in such disposition
                                                  another Regulated Entity or Affiliated                    Potential Co-Investment Transaction or                on a proportionate basis, at the same
                                                  Investor, but not the Regulated Entity                    to invest less than the amount proposed.              price and on the same terms and
                                                  itself, gains the right to nominate a                        4. The Advisers will present to the                conditions as those applicable to the
                                                  director for election to a portfolio                      Board of each Regulated Entity, on a                  Affiliated Investors and any other
                                                  company’s board of directors or the                       quarterly basis, a record of all                      Regulated Entity.
                                                  right to have a board observer, or any                    investments in Potential Co-Investment                   c. A Regulated Entity may participate
                                                  similar right to participate in the                       Transactions made by any of the other                 in such disposition without obtaining
                                                  governance or management of the                           Regulated Entities or any of the                      prior approval of the Required Majority
                                                  portfolio company, such event shall not                   Affiliated Investors during the                       if: (i) The proposed participation of each
                                                                                                            preceding quarter that fell within the                Regulated Entity and each Affiliated
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                                                  rules, regulations or interpretations and (b) for each
                                                                                                            Regulated Entity’s then-current                       Investor in such disposition is
                                                  Affiliated Investor, the amount of capital available                                                            proportionate to its outstanding
                                                  for investment determined based on the amount of          Objectives and Strategies that were not
                                                  cash on hand, existing commitments and reserves,          made available to the Regulated Entity,               investments in the issuer immediately
                                                  if any, the targeted leverage level, targeted asset mix   and an explanation of why the
                                                  and other investment policies and restrictions set                                                                14 This exception applies only to follow-on

                                                  by the Affiliated Investor’s directors, general
                                                                                                            investment opportunities were not                     investments by a Regulated Entity in issuers in
                                                  partners or adviser or imposed by applicable laws,        offered to the Regulated Entity. All                  which that Regulated Entity already holds
                                                  rules, regulations or interpretations.                    information presented to the Board                    investments.



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                                                  36972                         Federal Register / Vol. 81, No. 110 / Wednesday, June 8, 2016 / Notices

                                                  preceding the disposition; (ii) the                        (i) The amount of a follow-on                       the Advisers under their respective
                                                  Regulated Entity’s Board has approved                   investment is not based on the                         advisory agreements with the Regulated
                                                  as being in the best interests of the                   Regulated Entities’ and the Affiliated                 Entities and the Affiliated Investors, be
                                                  Regulated Entity the ability to                         Investors’ outstanding investments                     shared by the Regulated Entities and the
                                                  participate in such dispositions on a pro               immediately preceding the follow-on                    Affiliated Investors in proportion to the
                                                  rata basis (as described in greater detail              investment; and                                        relative amounts of the securities held
                                                  in the application); and (iii) the                         (ii) the aggregate amount                           or to be acquired or disposed of, as the
                                                  Regulated Entity’s Board is provided on                 recommended by the Advisers to be                      case may be.
                                                  a quarterly basis with a list of all                    invested by the Regulated Entity in the                   13. Any transaction fee (including
                                                  dispositions made in accordance with                    follow-on investment, together with the                break-up or commitment fees but
                                                  this condition. In all other cases, the                 amount proposed to be invested by the                  excluding brokers’ fees contemplated by
                                                  Advisers will provide their written                     other participating Regulated Entities                 section 17(e) or 57(k) of the Act, as
                                                  recommendation as to the Regulated                      and the Affiliated Investors in the same               applicable) 15 received in connection
                                                  Entity’s participation to the Eligible                  transaction, exceeds the amount of the                 with a Co-Investment Transaction will
                                                  Trustees, and the Regulated Entity will                 opportunity; then the amount invested                  be distributed to the participating
                                                  participate in such disposition solely to               by each such party will be allocated                   Regulated Entities and Affiliated
                                                  the extent that a Required Majority                     among them pro rata based on each                      Investors on a pro rata basis based on
                                                  determines that it is in the Regulated                  participant’s Available Capital for                    the amount they invested or committed,
                                                  Entity’s best interests.                                investment in the asset class being                    as the case may be, in such Co-
                                                     d. Each Regulated Entity and each                    allocated, up to the amount proposed to                Investment Transaction. If any
                                                  Affiliated Investor will bear its own                   be invested by each.                                   transaction fee is to be held by an
                                                  expenses in connection with the                            d. The acquisition of follow-on                     Adviser pending consummation of the
                                                  disposition.                                            investments as permitted by this                       transaction, the fee will be deposited
                                                                                                          condition will be considered a Co-                     into an account maintained by the
                                                     8. a. If any Regulated Entity or
                                                                                                          Investment Transaction for all purposes                Adviser at a bank or banks having the
                                                  Affiliated Investor desires to make a
                                                                                                          and be subject to the other conditions                 qualifications prescribed in section
                                                  ‘‘follow-on investment’’ (i.e., an
                                                                                                          set forth in the application.                          26(a)(1) of the Act, and the account will
                                                  additional investment in the same                          9. The Independent Trustees of each
                                                  entity, including through the exercise of                                                                      earn a competitive rate of interest that
                                                                                                          Regulated Entity will be provided                      will also be divided pro rata among the
                                                  warrants or other rights to purchase                    quarterly for review all information
                                                  securities of the issuer) in a portfolio                                                                       participating Regulated Entities and
                                                                                                          concerning Potential Co-Investment                     Affiliated Investors based on the amount
                                                  company whose securities were                           Transactions and Co-Investment
                                                  acquired by the Regulated Entity and                                                                           they invest in the Co-Investment
                                                                                                          Transactions, including investments
                                                  the Affiliated Investor in a Co-                                                                               Transaction. None of the other
                                                                                                          made by other Regulated Entities or
                                                  Investment Transaction, the Advisers                                                                           Regulated Entities, Affiliated Investors,
                                                                                                          Affiliated Investors that a Regulated
                                                  will:                                                                                                          the Advisers nor any affiliated person of
                                                                                                          Entity considered but declined to
                                                     (i) Notify each Regulated Entity of the                                                                     the Regulated Entities or the Affiliated
                                                                                                          participate in, so that the Independent
                                                  proposed transaction at the earliest                                                                           Investors will receive additional
                                                                                                          Trustees may determine whether all
                                                  practical time; and                                                                                            compensation or remuneration of any
                                                                                                          investments made during the preceding
                                                     (ii) formulate a recommendation as to                                                                       kind as a result of or in connection with
                                                                                                          quarter, including those investments
                                                  the proposed participation, including                                                                          a Co-Investment Transaction (other than
                                                                                                          which the Regulated Entity considered
                                                  the amount of the proposed follow-on                                                                           (a) in the case of the Regulated Entities
                                                                                                          but declined to participate in, comply
                                                  investment, by each Regulated Entity.                                                                          and the Affiliated Investors, the pro rata
                                                                                                          with the conditions of the Order. In
                                                     b. A Regulated Entity may participate                                                                       transaction fees described above and
                                                                                                          addition, the Independent Trustees will
                                                  in such follow-on investment without                                                                           fees or other compensation described in
                                                                                                          consider at least annually the continued
                                                  obtaining prior approval of the Required                                                                       condition 2(c)(iii)(c) and (b) in the case
                                                                                                          appropriateness for such Regulated
                                                  Majority if: (i) The proposed                                                                                  of the Advisers, investment advisory
                                                                                                          Entity of participating in new and
                                                  participation of each Regulated Entity                                                                         fees paid in accordance with the
                                                                                                          existing Co-Investment Transactions.
                                                  and each Affiliated Investor in such                       10. Each Regulated Entity will                      Regulated Entities’ and the Affiliated
                                                  investment is proportionate to its                      maintain the records required by section               Investors’ investment advisory
                                                  outstanding investments in the issuer                   57(f)(3) of the Act as if each of the                  agreements).
                                                  immediately preceding the follow-on                                                                               14. The Advisers to the Regulated
                                                                                                          Regulated Entities were a BDC and each
                                                  investment; and (ii) the Regulated                                                                             Entities and Affiliated Investors will
                                                                                                          of the investments permitted under
                                                  Entity’s Board has approved as being in                                                                        maintain written policies and
                                                                                                          these conditions were approved by a
                                                  the best interests of such Regulated                                                                           procedures reasonably designed to
                                                                                                          Required Majority under section 57(f).
                                                  Entity the ability to participate in                       11. No Independent Trustee of a                     ensure compliance with the foregoing
                                                  follow-on investments on a pro rata                     Regulated Entity will also be a trustee,               conditions. These policies and
                                                  basis (as described in greater detail in                director, general partner, managing                    procedures will require, among other
                                                  the application). In all other cases, the               member or principal, or otherwise an                   things, that each of the Advisers to each
                                                  Advisers will provide their written                     ‘‘affiliated person’’ (as defined in the               Regulated Entity will be notified of all
                                                  recommendation as to such Regulated                     Act) of any Affiliated Investor.                       Potential Co-Investment Transactions
                                                  Entity’s participation to the Eligible                     12. The expenses, if any, associated                that fall within a Regulated Entity’s
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                                                  Trustees, and the Regulated Entity will                 with acquiring, holding or disposing of                then-current Objectives and Strategies
                                                  participate in such follow-on                           any securities acquired in a Co-                       and will be given sufficient information
                                                  investment solely to the extent that the                Investment Transaction (including,                     to make its independent determination
                                                  Required Majority determines that it is                 without limitation, the expenses of the                   15 Applicants are not requesting and the
                                                  in such Regulated Entity’s best interests.              distribution of any such securities                    Commission is not providing any relief for
                                                     c. If, with respect to any follow-on                 registered for sale under the Securities               transaction fees received in connection with any
                                                  investment:                                             Act) shall, to the extent not payable by               Co-Investment Transaction.



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                                                                                Federal Register / Vol. 81, No. 110 / Wednesday, June 8, 2016 / Notices                                                       36973

                                                  and recommendations under conditions                    II. Self-Regulatory Organization’s                       at once. In such a case, a Subscribing
                                                  1, 2(a), 7 and 8.                                       Statement of the Purpose of, and                         User would receive the services via its
                                                     15. If the Holders own in the aggregate              Statutory Basis for, the Proposed Rule                   standard LCN connection and would be
                                                  more than 25 percent of the shares of a                 Change                                                   charged an initial and monthly fee
                                                  Regulated Entity, then the Holders will                    In its filing with the Commission, the                (‘‘CSP Subscriber fee’’) reflecting the
                                                  vote such shares as directed by an                      self-regulatory organization included                    benefit of receiving services from the
                                                  independent third party when voting on                  statements concerning the purpose of,                    CSP User in this manner.7
                                                  (1) the election of directors or trustees;              and basis for, the proposed rule change
                                                  (2) the removal of one or more directors                                                                            However, Users no longer utilize the
                                                                                                          and discussed any comments it received                   LCN CSP connection offering.
                                                  or trustees; or (3) any matters requiring               on the proposed rule change. The text
                                                  approval by the vote of a majority of the                                                                        Accordingly, the Exchange proposes to
                                                                                                          of those statements may be examined at                   discontinue LCN CSP connections, and
                                                  outstanding voting securities, as defined               the places specified in Item IV below.
                                                  in section 2(a)(42) of the Act.                                                                                  to remove references to LCN CSP access
                                                                                                          The Exchange has prepared summaries,                     and CSP Subscriber fees from the Price
                                                    For the Commission, by the Division of                set forth in sections A, B, and C below,
                                                  Investment Management, under delegated                                                                           List. A CSP User would remain able to
                                                                                                          of the most significant parts of such
                                                  authority.                                                                                                       deliver services to a Subscribing User
                                                                                                          statements.
                                                  Brent J. Fields,                                                                                                 via direct cross connect, as is currently
                                                  Secretary.                                              A. Self-Regulatory Organization’s                        the case and as was the case prior to the
                                                                                                          Statement of the Purpose of, and                         introduction of the LCN CSP connection
                                                  [FR Doc. 2016–13514 Filed 6–7–16; 8:45 am]
                                                                                                          Statutory Basis for, the Proposed Rule                   offering.
                                                  BILLING CODE 8011–01–P
                                                                                                          Change
                                                                                                                                                                   Bundled Network Access
                                                                                                          1. Purpose
                                                  SECURITIES AND EXCHANGE                                    The Exchange proposes to change the                      A User is currently able to select from
                                                  COMMISSION                                              Price List for the co-location 4 services                two ‘‘bundled’’ connectivity options
                                                  [Release No. 34–77975; File No. SR–NYSE–                offered by the Exchange to eliminate                     when connecting to the data center:
                                                  2016–39]                                                certain services that are no longer                      ‘‘Bundled Network Access Option 1’’
                                                                                                          utilized by Users 5 and to remove                        and ‘‘Bundled Network Access Option
                                                  Self-Regulatory Organizations; New                      obsolete text.                                           2’’.8 The Exchange proposes to
                                                  York Stock Exchange LLC; Notice of                                                                               discontinue Bundled Network Access
                                                  Filing and Immediate Effectiveness of                   LCN CSP Access                                           Option 2, as Users no longer utilize it,
                                                  Proposed Rule Change Amending the                          The ‘‘Liquidity Center Network’’                      and to remove references to related
                                                  Exchange’s Price List To Eliminate                      (‘‘LCN’’) is a local area network                        pricing from the Price List. In addition,
                                                  Certain Services That Are No Longer                     available in the data center. A User is                  the Exchange proposes to rename
                                                  Utilized by Users and To Remove                         currently able to act as a content service               ‘‘Bundled Network Access Option 1’’ as
                                                  Obsolete Text                                           provider (a ‘‘CSP’’ User) and deliver                    ‘‘Bundled Network Access,’’ as it would
                                                                                                          services to another User in the data                     be the sole remaining option.
                                                  June 2, 2016.
                                                                                                          center (a ‘‘Subscribing’’ User).6 These
                                                     Pursuant to Section 19(b)(1) 1 of the                                                                         IP Network Access
                                                                                                          services could include, for example,
                                                  Securities Exchange Act of 1934 (the
                                                                                                          order routing/brokerage services and/or
                                                  ‘‘Act’’) 2 and Rule 19b–4 thereunder,3                                                                              The Internet protocol (‘‘IP’’) network
                                                                                                          data delivery services.
                                                  notice is hereby given that, on May 23,                    Currently, the Exchange offers CSP                    is a local area network available in the
                                                  2016, New York Stock Exchange LLC                       Users specific, dedicated 10 gigabyte                    data center.9 IP network access is
                                                  (‘‘NYSE’’ or the ‘‘Exchange’’) filed with               (‘‘Gb’’) LCN connections (‘‘LCN CSP’’)                   offered in 1, 10 and 40 Gb capacities.
                                                  the Securities and Exchange                             that would allow CSP Users to send data                  The Exchange proposes to delete a
                                                  Commission (the ‘‘Commission’’) the                     to, and communicate with, all their                      statement in the Price List that the 40
                                                  proposed rule change as described in                    properly authorized Subscribing Users                    Gb circuit of the IP network is expected
                                                  Items I, II, and III below, which Items                                                                          to be available no later than April 15,
                                                  have been prepared by the self-                            4 The Exchange initially filed rule changes           2016,10 as such statement is obsolete.
                                                  regulatory organization. The                            relating to its co-location services with the            This proposed change would have no
                                                  Commission is publishing this notice to                 Securities and Exchange Commission                       impact on pricing.
                                                  solicit comments on the proposed rule                   (‘‘Commission’’) in 2010. See Securities Exchange
                                                                                                          Act Release No. 62960 (September 21, 2010), 75 FR
                                                  change from interested persons.                         59310 (September 27, 2010) (SR–NYSE–2010–56).               7 Id. Previously, the Exchange also offered a one

                                                                                                          The Exchange operates a data center in Mahwah,           Gb LCN CSP connection, but it was discontinued
                                                  I. Self-Regulatory Organization’s                                                                                as it was no longer utilized by Users. See Securities
                                                                                                          New Jersey (the ‘‘data center’’) from which it
                                                  Statement of the Terms of the Substance                 provides co-location services to Users.                  Exchange Act Release No. 72721 (July 30, 2014), 79
                                                  of the Proposed Rule Change                                5 For purposes of the Exchange’s co-location          FR 45562 (August 5, 2014) (SR–NYSE–2014–37).
                                                                                                                                                                      8 Previously, the Exchange offered other
                                                                                                          services, a ‘‘User’’ means any market participant
                                                     The Exchange proposes to amend the                   that requests to receive co-location services directly   ‘‘bundled’’ connectivity options, but they were
                                                  Exchange’s Price List to eliminate                      from the Exchange. See Securities Exchange Act           discontinued as they were no longer utilized by
                                                  certain services that are no longer                     Release No. 76008 (September 29, 2015), 80 FR            Users. See id., at 45562.
                                                  utilized by Users and to remove obsolete                60190 (October 5, 2015) (SR–NYSE–2015–40). As               9 See Securities Exchange Act Release No. 74222

                                                                                                          specified in the Price List, a User that incurs co-      (February 6, 2015), 80 FR 7888 (February 12, 2015)
                                                  text. The proposed rule change is                       location fees for a particular co-location service       (SR–NYSE–2015–05) (notice of filing and
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                                                  available on the Exchange’s Web site at                 pursuant thereto would not be subject to co-location     immediate effectiveness of proposed rule change to
                                                  www.nyse.com, at the principal office of                fees for the same co-location service charged by the     include IP network connections and fiber cross
                                                  the Exchange, and at the Commission’s                   Exchange’s affiliates NYSE MKT LLC and NYSE              connects between a User’s cabinet and a non-User’s
                                                                                                          Arca, Inc. See Securities Exchange Act Release No.       equipment).
                                                  Public Reference Room.                                  70206 (August 15, 2013), 78 FR 51765 (August 21,            10 See Securities Exchange Act Release No. 76368
                                                                                                          2013) (SR–NYSE–2013–59).                                 (November 5, 2015), 80 FR 70027 (November 12,
                                                    1 15 U.S.C.78s(b)(1).                                    6 See Securities Exchange Act Release No. 67666       2015) (SR–NYSE–2015–54) (notice of filing and
                                                    2 15 U.S.C. 78a.                                      (August 15, 2012), 77 FR 50742 (August 22, 2012)         immediate effectiveness of proposed rule change to
                                                    3 17 CFR 240.19b–4.                                   (SR–NYSE–2012–18).                                       include IP 40 Gb network connections).



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Document Created: 2016-06-08 03:10:23
Document Modified: 2016-06-08 03:10:23
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 application for an order under sections 17(d) and 57(i) of the Investment Company Act of 1940 (the ``Act'') and rule 17d- 1 under the Act to permit certain joint transactions otherwise prohibited by sections 17(d) and 57(a)(4) of the Act and rule 17d-1 under the Act.
DatesThe application was filed on February 23, 2015, and amended on June 12, 2015, October 20, 2015, February 25, 2016 and April 29, 2016.
ContactRobert Shapiro, Senior Counsel, at (202) 551-7758 or Mary Kay Frech, Branch Chief, at (202) 551-6821 (Chief Counsel's Office, Division of Investment Management).
FR Citation81 FR 36967 

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