82_FR_10864 82 FR 10834 - USAA Asset Management Company, et al.; Notice of Application

82 FR 10834 - USAA Asset Management Company, et al.; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 30 (February 15, 2017)

Page Range10834-10835
FR Document2017-02973

Federal Register, Volume 82 Issue 30 (Wednesday, February 15, 2017) 
[Federal Register Volume 82, Number 30 (Wednesday, February 15, 2017)]
[Notices]
[Pages 10834-10835]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-02973]



[[Page 10834]]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32474; File No. 812-14693]


USAA Asset Management Company, et al.; Notice of Application

February 9, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application for an order under section 12(d)(1)(J) 
of the Investment Company Act of 1940 (the ``Act'') for an exemption 
from sections 12(d)(1)(A), (B), and (C) of the Act and under sections 
6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 
(2) of the Act. The requested order would permit certain registered 
open-end investment companies to acquire shares of certain registered 
open-end investment companies, registered closed-end investment 
companies, business development companies, as defined in section 
2(a)(48) of the Act, and unit investment trusts (collectively, 
``Underlying Funds'') that are within and outside the same group of 
investment companies as the acquiring investment companies, in excess 
of the limits in section 12(d)(1) of the Act.

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Applicants: USAA Mutual Funds Trust (the ``Mutual Funds Trust''), a 
Delaware statutory trust that is registered under the Act as an open-
end management investment company with multiple series; USAA ETF Trust 
(the ``ETF Trust''), a Delaware statutory trust that will be registered 
under the Act as an open-end management investment company with 
multiple series (together, the Mutual Funds Trust and the ETF Trust, 
the ``Trusts,'' and individually each a ``Trust''); USAA Asset 
Management Company (``USAA AMC''), a Delaware corporation registered as 
an investment adviser under the Investment Advisers Act of 1940; and 
USAA Investment Management Company, a Delaware corporation registered 
as a broker-dealer under the Securities Exchange Act of 1934 
(``Exchange Act'').

Filing Dates: The application was filed on August 18, 2016 and amended 
on January 27, 2017.

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 March 6, 2017 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: 9800 Fredericksburg 
Road, San Antonio, Texas 78288-0227.

For Further Information Contact: Jill Ehrlich, Senior Counsel, at (202) 
551-6819 or David J. Marcinkus, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Summary of the Application

    1. Applicants request an order to permit (a) a Fund \1\ (each a 
``Fund of Funds'') to acquire shares of Underlying Funds \2\ in excess 
of the limits in sections 12(d)(1)(A) and (C) of the Act and (b) the 
Underlying Funds that are registered open-end investment companies or 
series thereof, their principal underwriters and any broker or dealer 
registered under the Exchange Act to sell shares of the Underlying Fund 
to the Fund of Funds in excess of the limits in section 12(d)(1)(B) of 
the Act.\3\ Applicants also request an order of exemption under 
sections 6(c) and 17(b) of the Act from the prohibition on certain 
affiliated transactions in section 17(a) of the Act to the extent 
necessary to permit the Underlying Funds to sell their shares to, and 
redeem their shares from, the Funds of Funds.\4\ Applicants state that 
such transactions will be consistent with the policies of each Fund of 
Funds and each Underlying Fund and with the general purposes of the Act 
and will be based on the net asset values of the Underlying Funds.
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    \1\ Applicants request that the order apply to each existing and 
future series of the Trusts and to each existing and future 
registered open-end investment company or series thereof that is 
advised by USAA AMC or its successors or by any other investment 
adviser controlling, controlled by, or under common control with 
USAA AMC or its successors and is part of the same ``group of 
investment companies'' as the Trusts (each, a ``Fund''). For 
purposes of the requested order, ``successor'' is limited to an 
entity that results from a reorganization into another jurisdiction 
or a change in the type of business organization. For purposes of 
the requested order, unless otherwise noted in the application, the 
term ``group of investment companies'' means any two or more 
investment companies, that are either registered investment 
companies, including closed-end investment companies, or business 
development companies, that hold themselves out to investors as 
related companies for purposes of investment and investor services.
    \2\ Certain of the Funds and Underlying Funds have obtained or 
may obtain exemptions from the Commission necessary to permit their 
shares to be listed and traded on a national securities exchange at 
negotiated prices and, accordingly, to operate as exchange-traded 
funds (``ETFs'').
    \3\ Applicants represent that a Funds of Funds will not invest 
in reliance on the order in business development companies or 
closed-end investment companies that are not listed and traded on a 
national securities exchange.
    \4\ A Fund of Funds generally would purchase and sell shares of 
an Underlying Fund that operates as an ETF through secondary market 
transactions rather than through principal transactions with the 
Underlying Fund. Applicants nevertheless request relief from section 
17(a) to permit a Fund of Funds to purchase or redeem shares from 
the ETF. A Fund of Funds will purchase and sell shares of an 
Underlying Fund that is a closed-end fund through secondary market 
transactions at market prices rather than through principal 
transactions with the closed-end fund. Accordingly, applicants are 
not requesting section 17(a) relief with respect to transactions in 
shares of closed-end funds (including business development 
companies).
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    2. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the application. 
Such terms and conditions are designed to, among other things, help 
prevent any potential (i) undue influence over an Underlying Fund that 
is not in the same ``group of investment companies'' as the Fund of 
Funds through control or voting power, or in connection with certain 
services, transactions, and underwritings, (ii) excessive layering of 
fees, and (iii) overly complex fund structures, which are the concerns 
underlying the limits in sections 12(d)(1)(A), (B), and (C) of the Act.
    3. Section 12(d)(1)(J) of the Act provides that the Commission may 
exempt any person, security, or transaction, or any class or classes of 
persons, securities, or transactions, from any provision of section 
12(d)(1) if the exemption is consistent with the public interest and 
the protection of investors. Section 17(b) of the Act authorizes the 
Commission to grant an order permitting a transaction otherwise 
prohibited by section 17(a) if it finds that (a) the terms of the 
proposed transaction are fair and reasonable and do not involve 
overreaching on the part of any person concerned; (b) the proposed 
transaction is consistent with the policies of each registered

[[Page 10835]]

investment company involved; and (c) the proposed transaction is 
consistent with the general purposes of the Act. Section 6(c) of the 
Act permits the Commission to exempt any persons or transactions from 
any provision of the Act if such exemption is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-02973 Filed 2-14-17; 8:45 am]
 BILLING CODE 8011-01-P

10834 Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices SECURITIES AND EXCHANGE should be accompanied by proof of Fund to the Fund of Funds in excess of COMMISSION service on the applicants, in the form of the limits in section 12(d)(1)(B) of the an affidavit, or, for lawyers, a certificate Act.3 Applicants also request an order of [Investment Company Act Release No. of service. Pursuant to Rule 0–5 under exemption under sections 6(c) and 17(b) 32474; File No. 812–14693] the Act, hearing requests should state of the Act from the prohibition on USAA Asset Management Company, et the nature of the writer’s interest, any certain affiliated transactions in section al.; Notice of Application facts bearing upon the desirability of a 17(a) of the Act to the extent necessary hearing on the matter, the reason for the to permit the Underlying Funds to sell February 9, 2017. request, and the issues contested. their shares to, and redeem their shares AGENCY: Securities and Exchange Persons who wish to be notified of a from, the Funds of Funds.4 Applicants Commission (‘‘Commission’’). hearing may request notification by state that such transactions will be ACTION: Notice of an application for an writing to the Commission’s Secretary. consistent with the policies of each order under section 12(d)(1)(J) of the ADDRESSES: Secretary, U.S. Securities Fund of Funds and each Underlying Investment Company Act of 1940 (the and Exchange Commission, 100 F Street Fund and with the general purposes of ‘‘Act’’) for an exemption from sections NE., Washington, DC 20549–1090. the Act and will be based on the net 12(d)(1)(A), (B), and (C) of the Act and Applicants: 9800 Fredericksburg Road, asset values of the Underlying Funds. under sections 6(c) and 17(b) of the Act San Antonio, Texas 78288–0227. 2. Applicants agree that any order for an exemption from sections 17(a)(1) FOR FURTHER INFORMATION CONTACT: Jill granting the requested relief will be and (2) of the Act. The requested order Ehrlich, Senior Counsel, at (202) 551– subject to the terms and conditions would permit certain registered open- 6819 or David J. Marcinkus, Branch stated in the application. Such terms end investment companies to acquire Chief, at (202) 551–6821 (Division of and conditions are designed to, among shares of certain registered open-end Investment Management, Chief other things, help prevent any potential investment companies, registered Counsel’s Office). (i) undue influence over an Underlying closed-end investment companies, SUPPLEMENTARY INFORMATION: The Fund that is not in the same ‘‘group of business development companies, as following is a summary of the investment companies’’ as the Fund of defined in section 2(a)(48) of the Act, application. The complete application Funds through control or voting power, and unit investment trusts (collectively, may be obtained via the Commission’s or in connection with certain services, ‘‘Underlying Funds’’) that are within Web site by searching for the file transactions, and underwritings, (ii) and outside the same group of number, or for an applicant using the excessive layering of fees, and (iii) investment companies as the acquiring Company name box, at http:// overly complex fund structures, which investment companies, in excess of the www.sec.gov/search/search.htm, or by are the concerns underlying the limits limits in section 12(d)(1) of the Act. calling (202) 551–8090. in sections 12(d)(1)(A), (B), and (C) of the Act. APPLICANTS: USAA Mutual Funds Trust Summary of the Application 3. Section 12(d)(1)(J) of the Act (the ‘‘Mutual Funds Trust’’), a Delaware 1. Applicants request an order to provides that the Commission may statutory trust that is registered under permit (a) a Fund 1 (each a ‘‘Fund of exempt any person, security, or the Act as an open-end management Funds’’) to acquire shares of Underlying transaction, or any class or classes of investment company with multiple Funds 2 in excess of the limits in persons, securities, or transactions, from series; USAA ETF Trust (the ‘‘ETF sections 12(d)(1)(A) and (C) of the Act any provision of section 12(d)(1) if the Trust’’), a Delaware statutory trust that and (b) the Underlying Funds that are exemption is consistent with the public will be registered under the Act as an registered open-end investment interest and the protection of investors. open-end management investment companies or series thereof, their Section 17(b) of the Act authorizes the company with multiple series (together, principal underwriters and any broker Commission to grant an order the Mutual Funds Trust and the ETF or dealer registered under the Exchange permitting a transaction otherwise Trust, the ‘‘Trusts,’’ and individually Act to sell shares of the Underlying prohibited by section 17(a) if it finds each a ‘‘Trust’’); USAA Asset that (a) the terms of the proposed 1 Applicants request that the order apply to each Management Company (‘‘USAA AMC’’), transaction are fair and reasonable and existing and future series of the Trusts and to each a Delaware corporation registered as an existing and future registered open-end investment do not involve overreaching on the part investment adviser under the company or series thereof that is advised by USAA of any person concerned; (b) the Investment Advisers Act of 1940; and AMC or its successors or by any other investment proposed transaction is consistent with USAA Investment Management adviser controlling, controlled by, or under the policies of each registered common control with USAA AMC or its successors Company, a Delaware corporation and is part of the same ‘‘group of investment registered as a broker-dealer under the companies’’ as the Trusts (each, a ‘‘Fund’’). For 3 Applicants represent that a Funds of Funds will Securities Exchange Act of 1934 purposes of the requested order, ‘‘successor’’ is not invest in reliance on the order in business limited to an entity that results from a development companies or closed-end investment (‘‘Exchange Act’’). companies that are not listed and traded on a reorganization into another jurisdiction or a change FILING DATES: The application was filed in the type of business organization. For purposes national securities exchange. on August 18, 2016 and amended on of the requested order, unless otherwise noted in 4 A Fund of Funds generally would purchase and January 27, 2017. the application, the term ‘‘group of investment sell shares of an Underlying Fund that operates as companies’’ means any two or more investment an ETF through secondary market transactions HEARING OR NOTIFICATION OF HEARING: An companies, that are either registered investment rather than through principal transactions with the order granting the requested relief will companies, including closed-end investment Underlying Fund. Applicants nevertheless request be issued unless the Commission orders companies, or business development companies, relief from section 17(a) to permit a Fund of Funds mstockstill on DSK3G9T082PROD with NOTICES that hold themselves out to investors as related to purchase or redeem shares from the ETF. A Fund a hearing. Interested persons may companies for purposes of investment and investor of Funds will purchase and sell shares of an request a hearing by writing to the services. Underlying Fund that is a closed-end fund through Commission’s Secretary and serving 2 Certain of the Funds and Underlying Funds secondary market transactions at market prices applicants with a copy of the request, have obtained or may obtain exemptions from the rather than through principal transactions with the Commission necessary to permit their shares to be closed-end fund. Accordingly, applicants are not personally or by mail. Hearing requests listed and traded on a national securities exchange requesting section 17(a) relief with respect to should be received by the Commission at negotiated prices and, accordingly, to operate as transactions in shares of closed-end funds by 5:30 p.m. on March 6, 2017 and exchange-traded funds (‘‘ETFs’’). (including business development companies). 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Federal Register / Vol. 82, No. 30 / Wednesday, February 15, 2017 / Notices 10835 investment company involved; and (c) letters on the proposed rule change.5 date falls on a business day, or the the proposed transaction is consistent This order approves the proposed rule second business day preceding the with the general purposes of the Act. change. record date if the record date falls on a Section 6(c) of the Act permits the day designated by FINRA’s UPC II. Description of the Proposal Commission to exempt any persons or Committee as a non-delivery date. transactions from any provision of the FINRA is proposing to amend FINRA FINRA Rule 11150(a) concerns the Act if such exemption is necessary or Rules 2341 (Investment Company determination of normal ex-interest appropriate in the public interest and Securities), 11140 (Transactions in dates for certain types of transactions. consistent with the protection of Securities ‘‘Ex-Dividend,’’ ‘‘Ex-Rights’’ Currently, all transactions, except investors and the purposes fairly or ‘‘Ex-Warrants’’), 11150 (Transactions ‘‘cash’’ transactions, in bonds or similar intended by the policy and provisions of ‘‘Ex-Interest’’ in Bonds Which Are Dealt evidences of indebtedness which are the Act. in ‘‘Flat’’), 11210 (Sent by Each Party), traded ‘‘flat’’ are ‘‘ex-interest’’ on the 11320 (Dates of Delivery), 11620 second business day preceding the For the Commission, by the Division of Investment Management, pursuant to (Computation of Interest), 11810 (Buy-In record date if the record date falls on a delegated authority. Procedures and Requirements), and business day, on the third business day Eduardo A. Aleman, 11860 (COD Orders), to conform to the preceding the record date if the record Assistant Secretary. Commission’s proposed amendment to date falls on a day other than a business Rule 15c6–1(a) under the Act that day, and on the third business day [FR Doc. 2017–02973 Filed 2–14–17; 8:45 am] would shorten the standard settlement preceding the date on which an interest BILLING CODE 8011–01–P cycle for most broker-dealer transactions payment is to be made if no record date from T+3 to T+2. has been fixed. Under the proposal, FINRA Rule 2341(m) requires these transactions would be ‘‘ex- SECURITIES AND EXCHANGE members, including underwriters, that interest’’ on the first business day COMMISSION engage in direct retail transactions for preceding the record date if the record [Release No. 34–80004; File No. SR–FINRA– investment company shares to transmit date falls on a business day, on the 2016–047] payments received from customers for second business day preceding the the purchase of investment company record date if the record date falls on a Self-Regulatory Organizations; shares to the payee by the end of the day other than a business day, and on Financial Industry Regulatory third business day after receipt of a the second business day preceding the Authority, Inc.; Order Granting customer’s order to purchase the shares, date on which an interest payment is to Approval of a Proposed Rule Change or by the end of one business day after be made if no record date has been To Amend FINRA Rules To Conform to receipt of a customer’s payment for the fixed. the Commission’s Proposed shares, whichever is later. FINRA is FINRA Rules 11210(c) and (d) set Amendment to Commission Rule proposing to amend Rule 2341(m) to forth ‘‘DK’’ procedures using ‘‘Don’t 15c6–1(a) and the Industry-Led change the three-business day Know Notices’’ and other forms of Initiative To Shorten the Standard transmittal requirement to two business notices, respectively.6 FINRA Rule Settlement Cycle for Most Broker- days, while retaining the one-business 11210(c) currently provides that, when Dealer Transactions From T+3 to T+2 day alternative. a party to a transaction sends a February 9, 2017. FINRA Rule 11140(b)(1) concerns the comparison or confirmation of a trade, determination of normal ex-dividend but does not receive a comparison or I. Introduction and ex-warrants dates for certain types confirmation or a signed DK from the On December 14, 2016, Financial of dividends and distributions. contra-member by the close of four Industry Regulatory Authority, Inc. Currently, with respect to cash business days following the trade date (‘‘FINRA’’) filed with the Securities and dividends or distributions, or stock of the transaction, the party may use the Exchange Commission (‘‘Commission’’), dividends, and the issuance or procedures set forth in the rule. FINRA pursuant to Section 19(b)(1) of the distribution of warrants, which are less proposes to shorten the ‘‘four business Securities Exchange Act of 1934 than 25% of the value of the subject days’’ time period to one business day. (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a security, if the definitive information is FINRA Rule 11210(c)(2)(A) currently proposed rule change to conform its received sufficiently in advance of the provides that a contra-member has four rules to an amendment proposed by the record date, the date designated as the business days after the ‘‘Don’t Know Commission to Rule 15c6–1(a) under ‘‘ex-dividend date’’ is the second Notice’’ is received to either confirm or the Act to shorten the standard business day preceding the record date DK the transaction in accordance with settlement cycle for most broker-dealer if the record date falls on a business FINRA Rule 11210(c)(2)(B) or (C). transactions from three business days day, or the third business day preceding FINRA proposes to shorten the ‘‘four after the trade date (‘‘T+3’’) to two the record date if the record date falls business days’’ time period to two business days after the trade date on a day designated by FINRA’s UPC business days.7 FINRA Rule 11210(c)(3) (‘‘T+2’’).3 The proposed rule change was Committee as a non-delivery day. Under currently provides that if the confirming published for comment in the Federal the proposal, the ‘‘ex-dividend date’’ member does not receive a response Register on December 28, 2016.4 The would be the first business day from the contra-member by the close of preceding the record date if the record Commission received three comment four business days after receipt by the 5 See Letters to Brent J. Fields, Secretary, confirming member the fourth copy of mstockstill on DSK3G9T082PROD with NOTICES 1 15 U.S.C. 78s(b)(1). Commission from Mike Nicholas, Chief Executive 2 17 CFR 240.19b–4. 6 FINRA Rule 11210 does not apply to Officer, Bond Dealers of America (‘‘BDA’’), dated 3 See Securities Exchange Act Release No. 78962 transactions that clear through the National Jan. 18, 2017 (‘‘BDA Letter’’), Manisha Kimmel, (Sep. 28, 2016), 81 FR 69240 (Oct. 5, 2016) Chief Regulatory Officer, Wealth Management, Securities Clearing Corporation or other clearing (Amendment to Securities Transaction Settlement Thomson Reuters, dated Jan. 19, 2017, and Thomas organizations registered under the Act. See FINRA Cycle) (File No. S7–22–16) (T+2 Proposing F. Price, Managing Director, Operations, Rule 11210(a)(4). Release’’). Technology & BCP, Securities Industry and 7 FINRA also proposes to make non-substantive, 4 See Securities Exchange Act Release No. 79648 Financial Markets Association (‘‘SIFMA’’), dated formatting changes to cross-references to reflect (Dec. 21, 2016), 81 FR 95705. Jan. 19, 2017 (‘‘SIFMA Letter ’’). FINRA Manual style convention. VerDate Sep<11>2014 18:44 Feb 14, 2017 Jkt 241001 PO 00000 Frm 00102 Fmt 4703 Sfmt 4703 E:\FR\FM\15FEN1.SGM 15FEN1


Document Created: 2017-02-15 00:55:05
Document Modified: 2017-02-15 00:55:05
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice of an application for an order under section 12(d)(1)(J) of the Investment Company Act of 1940 (the ``Act'') for an exemption from sections 12(d)(1)(A), (B), and (C) of the Act and under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and (2) of the Act. The requested order would permit certain registered open-end investment companies to acquire shares of certain registered open-end investment companies, registered closed-end investment companies, business development companies, as defined in section 2(a)(48) of the Act, and unit investment trusts (collectively, ``Underlying Funds'') that are within and outside the same group of investment companies as the acquiring investment companies, in excess of the limits in section 12(d)(1) of the Act.
DatesThe application was filed on August 18, 2016 and amended on January 27, 2017.
ContactJill Ehrlich, Senior Counsel, at (202) 551-6819 or David J. Marcinkus, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation82 FR 10834 
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