82 FR 11490 - Blackstone Alternative Investment Funds and Blackstone Alternative Investment Advisors LLC; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 35 (February 23, 2017)

[Federal Register Volume 82, Number 35 (Thursday, February 23, 2017)]
[Notices]
[Pages 11490-11491]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-03476]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32481; 812-14590]


Blackstone Alternative Investment Funds and Blackstone 
Alternative Investment Advisors LLC; Notice of Application

February 16, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act and rule 18f-2 under the Act, as well as from certain 
disclosure requirements in rule 20a-1 under the Act, Item 19(a)(3) of 
Form N-1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of 
Schedule 14A under the Securities Exchange Act of 1934, and Sections 6-
07(2)(a), (b), and (c) of Regulation S-X (``Disclosure Requirements''). 
The requested exemption would permit an investment adviser to hire and 
replace certain sub-advisers without shareholder approval and grant 
relief from the Disclosure Requirements as they relate to fees paid to 
the sub-advisers.

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

Applicants:  Blackstone Alternative Investment Funds (the ``Trust''), a 
Massachusetts business trust registered under the Act as an open-end 
management investment company with multiple series, and Blackstone 
Alternative Investment Advisors LLC a Delaware limited liability 
company registered as an investment adviser under the Investment 
Advisers Act of 1940 (``BAIA'' or the ``Advisor,'' and, collectively 
with the Trust, the ``Applicants'').

Filing Dates: The application was filed December 14, 2015, and amended 
on May 26, 2016 and February 8, 2017.

Hearing or Notification of Hearing:  An order granting the application 
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 13, 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: 345 Park Avenue, 28th Floor, New York, NY 10154.

FOR FURTHER INFORMATION CONTACT: Rachel Loko, Senior Counsel, at (202) 
551-6883, or Holly Hunter-Ceci, Acting Assistant Chief Counsel, at 
(202) 551-6825 (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 an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Summary of the Application

    1. The Advisor will serve as the investment adviser to the 
Subadvised Series pursuant to an investment advisory agreement with the 
Trust (each an ``Investment Management Agreement'').\1\ The Advisor 
will provide the Subadvised Series with continuous and comprehensive 
investment management services subject to the supervision of, and 
policies established by, each board of trustees of the Trust 
(``Board''). The Investment Management Agreement permits the Advisor, 
subject to the approval of the Board, to delegate to one or more sub-
advisers (each, a ``Sub-Advisor'' and collectively, the ``Sub-
Advisors'') the responsibility to provide the day-to-day portfolio 
investment management of each Subadvised Series, subject to the 
supervision and direction of the Advisor. The primary responsibility 
for managing the Subadvised Series will remain vested in the Advisor. 
The Advisor will hire, evaluate, allocate assets to and oversee the 
Sub-Advisors, including determining whether a Sub-Advisor should be 
terminated, at all times subject to the authority of the Board.
---------------------------------------------------------------------------

    \1\ Applicants request relief with respect to any existing and 
any future series of the Trust and any other existing or future 
registered open-end management company or series thereof that 
intends to rely on the requested order in the future and that: (a) 
Is advised by BAIA or its successor or by any entity controlling, 
controlled by, or under common control with BAIA or its successor 
(each, also an ``Advisor''); (b) uses the multi-managers structure 
described in the application; and (c) complies with the terms and 
conditions of the application (any such series, a ``Subadvised 
Series''). 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.
---------------------------------------------------------------------------

    2. Applicants request an exemption to permit the Advisor, subject 
to Board approval, to hire certain Sub-Advisors pursuant to Sub-
Advisory Agreements and materially amend existing Sub-Advisory 
Agreements without obtaining the shareholder approval required under 
section 15(a) of the Act and rule 18f-2 under the Act.\2\ Applicants 
also seek an exemption from the Disclosure Requirements to permit a 
Subadvised Series to disclose (as both a dollar amount and a percentage 
of the Subadvised Series's net assets): (a) The aggregate fees paid to 
the Advisor and any Wholly-Owned Sub-Advisors; (b) the aggregate fees 
paid to Sub-Advisors other than Affiliated Sub-Advisors and (c) the 
aggregate fees paid to any Affiliated Sub-Advisor (collectively, 
``Aggregate Fee Disclosure'').
---------------------------------------------------------------------------

    \2\ The requested relief will not extend to any Sub-Advisor, 
other than a Wholly-Owned Sub-Advisor, that is an affiliated person, 
as defined in section 2(a)(3) of the Act, of a Subadvised Series or 
the Advisor, other than by reason of serving as a sub-adviser to one 
or more of the Subadvised Series (``Affiliated Sub-Advisor'').
---------------------------------------------------------------------------

    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the Application. 
Such terms and conditions provide for, among other safeguards, 
appropriate disclosure to Subadvised Series shareholders and 
notification about sub-advisory changes and enhanced Board oversight to 
protect the interests of the Subadvised Series' shareholders.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provisions of the Act, or 
any rule thereunder, if such relief is necessary or appropriate in the 
public interest and consistent with the protection of investors and 
purposes fairly intended by the policy and provisions of the Act. 
Applicants believe that the requested relief meets this standard 
because, as further explained in the Application, the Investment 
Management Agreements will remain subject to shareholder approval, 
while the role of the Sub-Advisors is substantially similar to that

[[Page 11491]]

of individual portfolio managers, so that requiring shareholder 
approval of Sub-Advisory Agreements would impose unnecessary delays and 
expenses on the Subadvised Series. Applicants believe that the 
requested relief from the Disclosure Requirements meets this standard 
because it will improve the Advisor's ability to negotiate fees paid to 
the Sub-Advisors that are more advantageous for the Funds.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-03476 Filed 2-22-17; 8:45 am]
 BILLING CODE 8011-01-P