81 FR 6064 - Susa Registered Fund, LLC and Susa Fund Management LLP; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 23 (February 4, 2016)

Page Range		6064-6066
FR Document		2016-02065
Federal Register, Volume 81 Issue 23 (Thursday, February 4, 2016)
[Federal Register Volume 81, Number 23 (Thursday, February 4, 2016)]
[Notices]
[Pages 6064-6066]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-02065]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31975; 812-14518]


Susa Registered Fund, LLC and Susa Fund Management LLP; Notice of 
Application

January 29, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

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

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Summary of Application:  Applicants request an order to permit certain 
registered closed-end management investment companies to issue multiple 
classes of limited liability company interests (``Interests'') and to 
impose asset-based service and/or distribution and contingent deferred 
sales loads (``CDSCs'').

Applicants:  Susa Registered Fund, LLC (the ``Fund'') and Susa Fund 
Management LLP (the ``Adviser'') (together, the ``Applicants'').

Filing Dates:  The application was filed on July 23, 2015 and amended 
on October 13, 2015.

Hearing or Notification of Hearing:  An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail.
    Hearing requests should be received by the Commission by 5:30 p.m. 
on February 23, 2016, and should be accompanied by proof of service on 
the applicants, in the form of an affidavit, or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Act, hearing 
requests should state the nature of the writer's interest, any facts 
bearing upon the desirability of a hearing on the matter, the reason 
for the request, and the issues contested. Persons who wish to be 
notified of a hearing may request notification by writing to the 
Commission's Secretary.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090; Applicants, c/o Kenneth S. 
Gerstein, Esq., Schulte Roth & Zabel LLP, 919 Third Avenue, New York, 
NY 10022.

FOR FURTHER INFORMATION CONTACT: Vanessa M. Meeks, Senior Counsel, or 
Melissa R. Harke, Branch Chief, at (202) 551-6825 (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 an applicant 
using the Company name box, at http://www.sec.gov/search/search.html or 
by calling (202) 551-8090.

Applicants' Representations

    1. The Fund is a continuously offered non-diversified closed-end 
management investment company registered under the Act and organized as 
a Delaware limited liability company.
    2. The Adviser, a limited liability partnership incorporated under 
the laws of England and Wales, is registered with the Commission as an 
investment adviser under the Investment Advisers Act of 1940, as 
amended (the ``Advisers Act'').
    3. The Fund will continuously offer Interests in private placements 
in reliance on the provisions of Regulation D under the Securities Act 
of 1933, as amended (``Securities Act'').\1\ Interests in the Fund are 
not listed on any securities exchange and do not trade on an over-the-
counter system such as NASDAQ. Applicants do not expect that any 
secondary market will develop for Interests.
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    \1\ Interests in the Fund will be sold only to persons who are 
both: (a) ``accredited investors,'' as defined in Regulation D under 
the Securities Act; and (b) ``qualified clients,'' as defined in 
rule 205-3 under the Advisers Act. The Fund reserves the right to 
register Interests under the Securities Act and to conduct a public 
offering of Interests in the future. These Interests will be offered 
subject to minimum initial and subsequent purchase requirements.
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    4. The Fund currently issues a single class of Interests (``Initial 
Class'') at net asset value. The Fund proposes to offer multiple 
classes of Interests at net asset value that may (but would not 
necessarily) be subject to a front-end sales load, an asset-based 
service fee and/or distribution fee, and/or an Early Repurchase Fee 
(defined below), in each case as set forth in the Fund's confidential 
private placement

[[Page 6065]]

memorandum (the ``Confidential Memorandum'').
    5. In order to provide a limited degree of liquidity to 
shareholders, the Fund may from time to time offer to repurchase 
Interests at their then current net asset value pursuant to rule 13e 4 
under the 1934 Act pursuant to written tenders by persons owning 
Interests in the Fund (``Members'').\2\ Repurchases will be made at 
such times, in such amounts and on such terms as may be determined by 
the Fund's Board of Managers (the ``Board''), in its sole discretion. 
The Adviser expects to ordinarily recommend that the Board authorize 
the Fund to offer to repurchase Interests from Members four times each 
year, effective at the end of March, June, September and December.
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    \2\ A repurchase fee equal to 2.0% of the value of the Interests 
repurchased, which is retained by the Fund (the ``Early Repurchase 
Fee''), will apply with respect to any repurchases of Interests if 
the date as of which the Interests are to be valued for purposes of 
repurchase is less than one year following the date of a Member's 
initial investment in the Fund. The Early Repurchase Fee will 
equally apply to all classes of Interests of the Fund, consistent 
with section 18 of the Act and rule 18f-3 thereunder. To the extent 
the Fund determines to waive, impose scheduled variations of, or 
eliminate the Early Repurchase Fee, it will do so consistently with 
the requirements of rule 22d-1 under the Act and the Fund's waiver 
of, scheduled variation in, or elimination of, the Early Repurchase 
Fee will apply uniformly to all classes of Interests of the Fund.
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    6. The Applicants request that the order also apply to any other 
continuously-offered registered closed-end management investment 
company existing now or in the future, for which the Adviser or any 
entity controlling, controlled by, or under common control (as the term 
``control'' is defined in section 2(a)(9) of the Act) with the Adviser 
acts as investment adviser, and which either (a) provides liquidity to 
investors by means of issuer tender offers made in compliance with rule 
13e-4 under the 1934 Act or (b) operates as an ``interval fund'' 
pursuant to rule 23c-3 under the Act.\3\
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    \3\ Any Fund relying on this relief will do so in a manner 
consistent with the terms and conditions of the application. 
Applicants represent that each person presently intending to rely on 
the order requested in the application is listed as an applicant.
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    7. Applicants represent that any asset-based service and 
distribution fees will comply with the provisions of rule 2830(d) of 
the Conduct Rules of the National Association of Securities Dealers, 
Inc. (``NASD Conduct Rule 2830'').\4\ Applicants also represent that 
the Fund will disclose in its Confidential Memorandum the fees, 
expenses and other characteristics of each class of Interests offered 
for sale, as is required for open-end, multiple class funds under Form 
N-1A. As is required for open-end funds, the Fund will disclose its 
expenses in shareholder reports, and disclose any arrangements that 
result in breakpoints in or elimination of sales loads in its 
Confidential Memorandum.\5\ The Fund will also comply with any 
requirement that may be adopted by the Commission or FINRA regarding 
disclosure at the point of sale and in transaction confirmations about 
the costs and conflicts of interest arising out of the distribution of 
open-end investment company shares, and regarding private placement 
memorandum disclosure of sales loads and revenue sharing arrangements 
as if those requirements applied to the Fund and the Placement 
Agents.\6\
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    \4\ All references to NASD Conduct Rule 2830 include any 
successor or replacement rule that may be adopted by FINRA.
    \5\ See Shareholder Reports and Quarterly Portfolio Disclosure 
of Registered Management Investment Companies, Investment Company 
Act Release No. 26372 (Feb. 27, 2004) (adopting release); and 
Disclosure of Breakpoint Discounts by Mutual Funds, Investment 
Company Act Release No. 26464 (June 7, 2004) (adopting release).
    \6\ See Confirmation Requirements and Point of Sale Disclosure 
Requirements for Transactions in Certain Mutual Funds and Other 
Securities and Other Confirmation Requirement Amendments, and 
Amendments to the Registration Form for Mutual Funds, Investment 
Company Act Release No. 26341 (Jan. 29, 2004) (proposing release).
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    8. The Fund will allocate all expenses incurred by it among the 
various classes of Interests based on the net assets of the Fund 
attributable to each class, except that the net asset value and 
expenses of each class will reflect distribution fees, service fees, 
and any other incremental expenses of that class. Expenses of the Fund 
allocated to a particular class of the Fund's Interests will be borne 
on a pro rata basis by each outstanding Interest of that class. The 
Fund will comply with the provisions of rule 18f-3 as if it were an 
open-end investment company.
    9. Although the Fund does not presently anticipate imposing CDSCs, 
the Applicants would only do so in compliance with the provisions of 
rule 6c-10 of the Act, as if that rule applied to closed-end management 
investment companies. With respect to any waiver of, scheduled 
variation in, or elimination of the CDSC, the Fund will comply with 
rule 22d-1 under the Act as if the Fund were an open-end investment 
company.

Applicants' Legal Analysis

Multiple Classes of Interests

    1. Section 18(c) of the Act provides, in relevant part, that a 
registered closed-end investment company may not issue or sell any 
senior security if, immediately thereafter, the company has outstanding 
more than one class of senior security. Applicants state that the 
creation of multiple classes of Interests of the Fund may be prohibited 
by section 18(c) of the Act.
    2. Section 18(i) of the Act provides that each share of stock 
issued by a registered management investment company will be a voting 
stock and have equal voting rights with every other outstanding voting 
stock. Applicants state that permitting multiple classes of Interests 
of the Fund may violate section 18(i) of the Act because each class 
would be entitled to exclusive voting rights with respect to matters 
solely related to that class.
    3. Section 6(c) of the Act provides that, the Commission may, by 
order upon application, conditionally or unconditionally exempt any 
person, security, or transaction, or any class or classes of persons, 
securities, or transactions, from any provision or provisions of the 
Act or from any rule or regulation under the Act, if and to the extent 
that the exemption is necessary or appropriate in the public interest 
and consistent with the protection of investors and the purposes fairly 
intended by the policy and provisions of the Act. Applicants request 
exemptive relief under section 6(c) from sections 18(c) and 18(i) to 
permit the Funds to issue multiple classes of Interests.
    4. Applicants also believe that the proposed allocation of expenses 
and voting rights among multiple classes is equitable and will not 
discriminate against any group or class of Members. Applicants submit 
that the proposed arrangements would permit the Fund to facilitate the 
distribution of Interests and provide a broader choice of investment 
options. Applicants believe that the proposed closed-end investment 
company multiple class structure does not raise the concerns underlying 
section 18 of the Act to any greater degree than open-end investment 
companies' multiple class structures. Applicants state that the Fund 
will comply with the provisions of rule 18f-3 as if it were an open-end 
investment company.
CDSCs
    1. Applicants believe that the requested relief meets the standards 
of section 6(c) of the Act. Rule 6c-10 under the Act permits open-end 
investment companies to impose CDSCs, subject to certain conditions. 
Applicants state that although the Fund does not currently intend to 
impose CDSCs, the Fund will only impose a CDSC in compliance with rule 
6c-10 as if that rule applied to closed-end

[[Page 6066]]

management investment companies. The Fund would also make required 
disclosures in accordance with the requirements of Form N-1A concerning 
CDSCs as if the Fund were an open-end investment company. Applicants 
further state that, in the event it imposes CDSCs, the Fund will apply 
the CDSCs (and any waivers or scheduled variations of the CDSCs) 
uniformly to all Members of a given class and consistently with the 
requirements of rule 22d-1 under the Act.

Asset-Based Service and Distribution Fees

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company or an 
affiliated person of such person, acting as principal, from 
participating in or effecting any transaction in connection with any 
joint enterprise or joint arrangement in which the investment company 
participates unless the Commission issues an order permitting the 
transaction. In reviewing applications submitted under section 17(d) 
and rule 17d-1, the Commission considers whether the participation of 
the investment company in a joint enterprise or joint arrangement is 
consistent with the provisions, policies and purposes of the Act, and 
the extent to which the participation is on a basis different from or 
less advantageous than that of other participants.
    2. Rule 17d-3 under the Act provides an exemption from section 
17(d) and rule 17d-1 to permit open-end investment companies to enter 
into distribution arrangements pursuant to rule 12b-1 under the Act. 
Applicants request an order under section 17(d) of the Act and rule 
17d-1 under the Act to permit the Fund to impose asset-based service 
and/or distribution fees. Applicants have agreed to comply with rules 
12b-1 and 17d-3 as if those rules applied to closed-end investment 
companies.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Applicants will comply with the provisions of rules 6c-10, 12b-1, 
17d-3, 18f-3, and 22d-1 under the Act, as amended from time to time or 
replaced, as if those rules applied to closed-end management investment 
companies, and will comply with NASD Conduct Rule 2830, as amended from 
time to time, as if that rule applied to all closed-end management 
investment companies.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-02065 Filed 2-3-16; 8:45 am]
 BILLING CODE 8011-01-P
6066 Federal Register / Vol. 81, No. 23 / Thursday, February 4, 2016 / Notices

management investment companies. For the Commission, by the Division of submitted a response to comments on
The Fund would also make required Investment Management, under delegated December 7, 2015.6 On January 8, 2016,
disclosures in accordance with the authority. ISE Mercury submitted Amendment No.
requirements of Form N–1A concerning Robert W. Errett, 2 to the Form 1 Application.7
CDSCs as if the Fund were an open-end Deputy Secretary.
II. Discussion
investment company. Applicants further [FR Doc. 2016–02065 Filed 2–3–16; 8:45 am]
state that, in the event it imposes BILLING CODE 8011–01–P
Under Sections 6(b) and 19(a) of the
CDSCs, the Fund will apply the CDSCs Act,8 the Commission shall by order
(and any waivers or scheduled grant an application for registration as a
variations of the CDSCs) uniformly to all SECURITIES AND EXCHANGE national securities exchange if the
Members of a given class and COMMISSION Commission finds, among other things,
consistently with the requirements of that the proposed exchange is so
[Release No. 34–76998; File No. 10–221] organized and has the capacity to carry
rule 22d–1 under the Act.
out the purposes of the Act and to
Asset-Based Service and Distribution In the Matter of the Application of ISE
comply, and to enforce compliance by
Fees Mercury, LLC for Registration as a
its members and persons associated
National Securities Exchange;
1. Section 17(d) of the Act and rule with its members, with the provisions of
Findings, Opinion, and Order of the
17d–1 under the Act prohibit an the Act, the rules and regulations
Commission
affiliated person of a registered thereunder, and the rules of the
investment company or an affiliated January 29, 2016. exchange.
person of such person, acting as As discussed in greater detail below,
I. Introduction the Commission finds, after
principal, from participating in or
On September 29, 2014, ISE Mercury, consideration of the comment letter and
effecting any transaction in connection
LLC (‘‘ISE Mercury’’ or ‘‘Exchange’’) the Exchange’s response thereto, that
with any joint enterprise or joint
submitted to the Securities and ISE Mercury’s application for exchange
arrangement in which the investment
Exchange Commission (‘‘Commission’’) registration meets the requirements of
company participates unless the
an Application for Registration as a the Act and the rules and regulations
Commission issues an order permitting
National Securities Exchange (‘‘Form 1 thereunder. Further, the Commission
the transaction. In reviewing
Application’’) 1 under Section 6 of the finds that the proposed rules of ISE
applications submitted under section
Securities Exchange Act of 1934 Mercury are consistent with Section 6 of
17(d) and rule 17d–1, the Commission
(‘‘Act’’).2 On June 26, 2015, ISE Mercury the Act in that, among other things, they
considers whether the participation of
submitted Amendment No. 1 to its Form assure a fair representation of the
the investment company in a joint Exchange’s members in the selection of
enterprise or joint arrangement is 1 Application.3 Notice of the Form 1
Application, as modified by its directors and administration of its
consistent with the provisions, policies affairs and provide that one or more
and purposes of the Act, and the extent Amendment No. 1, was published for
comment in the Federal Register on directors will be representative of
to which the participation is on a basis issuers and investors and not be
different from or less advantageous than September 16, 2015.4 The Commission
received one comment letter regarding associated with a member of the
that of other participants. exchange, or with a broker or dealer; 9
2. Rule 17d–3 under the Act provides the Form 1 Application.5 ISE Mercury
and that they are designed to prevent
an exemption from section 17(d) and 1 ISE Mercury, in conjunction with its submission fraudulent and manipulative acts and
rule 17d–1 to permit open-end of the Form 1 Application, requested an exemption practices, promote just and equitable
investment companies to enter into under Section 36(a)(1) of the Act from certain principles of trade, foster cooperation
distribution arrangements pursuant to requirements of Rules 6a–1(a) and 6a–2 of the Act. and coordination with persons engaged
rule 12b–1 under the Act. Applicants On September 9, 2015, the Commission issued an
order granting ISE Mercury exemptive relief, subject in regulating, clearing, settling,
request an order under section 17(d) of to certain conditions, in connection with the filing processing information with respect to,
the Act and rule 17d–1 under the Act to of its Form 1 Application. See Securities Exchange and facilitating transactions in
permit the Fund to impose asset-based Act Release No. 75867 (September 9, 2015), 80 FR securities, and remove impediments to
service and/or distribution fees. 55395 (September 15, 2015). Because the Form 1
Application was not considered filed without the and perfect the mechanisms of a free
Applicants have agreed to comply with exemptive relief, the date of filing of such and open market and a national market
rules 12b–1 and 17d–3 as if those rules application is September 9, 2015. Id. system and, in general, protect investors
applied to closed-end investment 2 15 U.S.C. 78f.
and the public interest and are not
companies. 3 Amendment No. 1, among other things, includes
designed to permit unfair
changes to the Limited Liability Company
Applicants’ Condition Agreement of ISE Mercury (‘‘ISE Mercury LLC
discrimination between customers,
Agreement’’) and the Constitution of ISE Mercury issuers, or broker-dealers.10 Finally, the
Applicants agree that any order (‘‘ISE Mercury Constitution’’) concerning board
granting the requested relief will be composition and fair representation of the 6 See Letter from Michael Simon, General Counsel

subject to the following condition: Exchange’s members, use of confidential and Secretary, ISE Mercury, to Brent J. Fields,
information for non-regulatory purposes, and the Secretary, Commission, dated December 7, 2015
Applicants will comply with the use of regulatory funds. Amendment No. 1 also (‘‘ISE Mercury Response Letter’’).
provisions of rules 6c–10, 12b–1, 17d– includes revisions to the proposed rules of ISE 7 Amendment No. 2, among other things, also

3, 18f–3, and 22d–1 under the Act, as Mercury. Amendment No. 1 further provides includes revisions to the proposed rules of ISE
asabaliauskas on DSK5VPTVN1PROD with NOTICES

additional descriptions in Exhibit E to the Form 1 Mercury to reflect changes to comparable ISE rules
amended from time to time or replaced, Application regarding ISE Mercury’s compliance since the filing of Amendment No. 1. The changes
as if those rules applied to closed-end with Regulation Systems Compliance and Integrity proposed in Amendment No. 2 are not substantive,
management investment companies, (‘‘Regulation SCI’’). are consistent with the existing rules of other
and will comply with NASD Conduct 4 See Securities Exchange Act Release No. 75884 registered national securities exchanges, and do not
(September 10, 2015), 80 FR 55691 (‘‘Notice’’). raise any new or novel regulatory issues.
Rule 2830, as amended from time to 5 See Letter from Kurt Eckert, Principal, 8 15 U.S.C. 78f(b) and 15 U.S.C. 78s(a),
time, as if that rule applied to all closed- Wolverine Trading, LLC (‘‘Wolverine’’), to Elizabeth respectively.
end management investment M. Murphy, Secretary, Commission, dated October 9 See 15 U.S.C. 78f(b)(3).

companies. 23, 2014 (‘‘Wolverine Letter’’). 10 See 15 U.S.C. 78f(b)(5).

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Document Created: 2016-02-04 00:31:37
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Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notice of an application under section 6(c) of the Investment Company Act of 1940 (the ``Act'') for an exemption from sections 18(c) and 18(i) of the Act and for an order pursuant to section 17(d) of the Act and rule 17d-1 under the Act.
Dates		The application was filed on July 23, 2015 and amended on October 13, 2015.
Contact		Vanessa M. Meeks, Senior Counsel, or Melissa R. Harke, Branch Chief, at (202) 551-6825 (Chief Counsel's Office, Division of Investment Management).
FR Citation		81 FR 6064