82 FR 22592 - Sierra Total Return Fund, et al.
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 93 (May 16, 2017)
Federal Register Volume 82, Issue 93 (May 16, 2017)
| Page Range | 22592-22595 | |
| FR Document | 2017-09790 |
[Federal Register Volume 82, Number 93 (Tuesday, May 16, 2017)] [Notices] [Pages 22592-22595] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-09790] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 32632; 812-14713] Sierra Total Return Fund, et al. May 10, 2017. AGENCY: Securities and Exchange Commission (``Commission''). ACTION: Notice. ----------------------------------------------------------------------- Notice of an application under section 6(c) of the Investment Company Act of 1940 (the ``Act'') for an exemption from sections 18(a)(2), 18(c) and 18(i) of the Act, under sections 6(c) and 23(c)(3) of the Act for an exemption from rule 23c-3 under the Act, and for an order pursuant to section 17(d) of the Act and rule 17d-1 under the Act. Summary of Application: Applicants request an order to permit certain registered closed-end management investment companies to issue multiple classes of shares and to impose asset-based distribution and shareholder service fees and early withdrawal charges. Applicants: Sierra Total Return Fund (``STRF''), STRF Advisors LLC (``STRF Advisors''), Sierra Opportunity Fund (``SOF''), and SOF Advisors LLC (``SOF Advisors''). Filing Dates: The application was filed on October 31, 2016 and amended on March 8, 2017 and April 18, 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 June 5, 2017, and should be accompanied by proof of [[Page 22593]] 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: 280 Park Ave., 6th Floor East, New York, NY 10017. FOR FURTHER INFORMATION CONTACT: Hae-Sung Lee, Attorney-Adviser, at (202) 551-7345, or Robert H. Shapiro, 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. Applicants' Representations 1. STRF is a Delaware statutory trust that is registered under the Act as a continuously offered, non-diversified, closed-end management investment company. STRF's primary investment objective is to seek total return through a combination of current income and long-term capital appreciation by investing in a portfolio of debt securities and equities. 2. STRF Advisors is a Delaware limited liability company and is registered as an investment adviser under the Investment Advisers Act of 1940 (``Advisers Act''). STRF Advisors serves as investment adviser to STRF. 3. SOF is a Delaware statutory trust that is registered under the Act as a continuously offered, non-diversified, closed-end management investment company. SOF's primary investment objective is to generate current income and, as a secondary objective, long-term capital appreciation. 4. SOF Advisors is a Delaware limited liability company and is registered as an investment adviser under the Advisers Act. SOF Advisors serves as investment adviser to SOF. 5. The applicants seek an order to permit the Funds (as defined below) to issue multiple classes of shares, each having its own fee and expense structure and to impose early withdrawal charges and asset- based distribution and shareholder service fees with respect to certain classes. 6. Applicants request that the order also apply to any continuously-offered registered closed-end management investment company that has been previously organized or that may be organized in the future for which STRF Advisors, SOF Advisors or any entity controlling, controlled by, or under common control with STRF Advisors and SOF Advisors, or any successor in interest to any such entity,\1\ acts as investment adviser and which operates as an interval fund pursuant to rule 23c-3 under the Act or provides periodic liquidity with respect to its shares pursuant to rule 13e-4 under the Securities Exchange Act of 1934 (``Exchange Act'') (each, a ``Future Fund'' and together with STRF and SOF, the ``Funds'').\2\ --------------------------------------------------------------------------- \1\ A successor in interest is limited to an entity that results from a reorganization into another jurisdiction or a change in the type of business organization. \2\ Any Fund relying on this relief in the future will do so in a manner consistent with the terms and conditions of the application. Applicants represent that each entity presently intending to rely on the requested relief is listed as an applicant. --------------------------------------------------------------------------- 7. Each Fund intends to engage in a continuous offering of its shares of beneficial interest. Applicants state that additional offerings by any Fund relying on the order may be on a private placement or public offering basis. Shares of the Funds will not be listed on any securities exchange nor publicly traded. There is currently no secondary market for the Funds' shares and the Funds expect that no secondary market will develop. 8. If the requested relief is granted, STRF and SOF will offer Class A, Class T, Class I, Class S, and Class L shares, with each class having its own fee and expense structure, and may also offer additional classes of shares in the future. Because of the different distribution and/or shareholder services fees, services and any other class expenses that may be attributable to each of STRF's and SOF's Class A, Class T, Class I, Class S, and Class L shares, the net income attributable to, and the dividends payable on, each class of shares may differ from each other. 9. Applicants state that, from time to time, the Funds may create additional classes of shares, the terms of which may differ from Class A, Class T, Class I, Class S, and Class L shares in the following respects: (i) The amount of fees permitted by different distribution plans or different shareholder services fee arrangements; (ii) voting rights with respect to a distribution and/or shareholder services plan of a class; (iii) different class designations; (iv) the impact of any class expenses directly attributable to a particular class of shares allocated on a class basis as described in the application; (v) any differences in dividends and net asset value resulting from differences in fees under a distribution and/or shareholder services plan or in class expenses; (vi) any early withdrawal charge or other sales load structure; and (vii) exchange or conversion privileges of the classes as permitted under the Act. 10. Applicants state that each of STRF and SOF has adopted a fundamental policy to repurchase a specified percentage of its shares (no less than 5% and not more than 25%) at net asset value on a quarterly basis and on an annual basis, respectively. Such repurchase offers will be conducted pursuant to rule 23c-3 under the Act. Each of the other Funds will likewise adopt fundamental investment policies in compliance with rule 23c-3 and make repurchase offers to its shareholders at periodic intervals and/or provide periodic liquidity with respect to its shares pursuant to rule 13e-4 under the Exchange Act.\3\ Any repurchase offers made by the Funds will be made to all holders of shares of each such Fund. --------------------------------------------------------------------------- \3\ Applicants submit that rule 23c-3 and Regulation M under the Exchange Act permit an interval fund to make repurchase offers to repurchase its shares while engaging in a continuous offering of its shares pursuant to Rule 415 under the Securities Act of 1933, as amended. --------------------------------------------------------------------------- 11. Applicants represent that any asset-based shareholder services and distribution fees for each class of shares will comply with the provisions of FINRA Rule 2341(d) (``FINRA Sales Charge Rule'').\4\ Applicants also represent that each Fund will disclose in its prospectus the fees, expenses and other characteristics of each class of shares offered for sale by the prospectus, as is required for open- end multiple class funds under Form N-1A.\5\ As is required for open- end funds, each Fund will disclose its expenses in shareholder reports, and describe any arrangements that result in breakpoints in or elimination of sales loads in its prospectus.\6\ In addition, applicants will [[Page 22594]] comply with applicable enhanced fee disclosure requirements for fund of funds, including registered funds of hedge funds.\7\ --------------------------------------------------------------------------- \4\ All references in the application to the FINRA Sales Charge Rule include any Financial Industry Regulatory Authority successor or replacement rule to the FINRA Sales Charge Rule. \5\ In all respects other than class-by-class disclosure, each Fund will comply with the requirements of Form N-2. \6\ See Shareholder Reports and Quarterly Portfolio Disclosure of Registered Management Investment Companies, Investment Company Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring open-end investment companies to disclose fund expenses in shareholder reports); and Disclosure of Breakpoint Discounts by Mutual Funds, Investment Company Act Release No. 26464 (June 7, 2004) (adopting release) (requiring open-end investment companies to provide prospectus disclosure of certain sales load information). \7\ Fund of Funds Investments, Investment Company Act Rel. Nos. 26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006) (adopting release). See also Rules 12d1-1, et seq. of the Act. --------------------------------------------------------------------------- 12. Each of the Funds will comply with any requirements that the Commission or FINRA may adopt 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 prospectus disclosure of sales loads and revenue sharing arrangements, as if those requirements applied to the Fund. In addition, each Fund will contractually require that any distributor of the Fund's shares comply with such requirements in connection with the distribution of such Fund's shares. 13. Each Fund will allocate all expenses incurred by it among the various classes of shares 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, shareholder service fees, and any other incremental expenses of that class. Expenses of the Fund allocated to a particular class of shares will be borne on a pro rata basis by each outstanding share of that class. Applicants state that each Fund will comply with the provisions of rule 18f-3 under the Act as if it were an open-end investment company. 14. Applicants state that each Fund may impose an early withdrawal charge on shares submitted for repurchase that have been held less than a specified period and may waive the early withdrawal charge for certain categories of shareholders or transactions to be established from time to time. Applicants state that each of the Funds will apply the early withdrawal charge (and any waivers or scheduled variations of the early withdrawal charge) uniformly to all shareholders in a given class and consistently with the requirements of rule 22d-1 under the Act as if the Funds were open-end investment companies. 15. Each Fund operating as an interval fund pursuant to rule 23c-3 under the Act may offer its shareholders an exchange feature under which the shareholders of the Fund may, in connection with the Fund's periodic repurchase offers, exchange their shares of the Fund for shares of the same class of (i) registered open-end investment companies or (ii) other registered closed-end investment companies that comply with rule 23c-3 under the Act and continuously offer their shares at net asset value, that are in the Fund's group of investment companies (collectively, ``Other Funds''). Shares of a Fund operating pursuant to rule 23c-3 that are exchanged for shares of Other Funds will be included as part of the amount of the repurchase offer amount for such Fund as specified in rule 23c-3 under the Act. Any exchange option will comply with rule 11a-3 under the Act, as if the Fund were an open-end investment company subject to rule 11a-3. In complying with rule 11a-3, each Fund will treat an early withdrawal charge as if it were a contingent deferred sales load. Applicants' Legal Analysis Multiple Classes of Shares 1. Section 18(a)(2) of the Act provides that a closed-end investment company may not issue or sell a senior security that is a stock unless certain requirements are met. Applicants state that the creation of multiple classes of shares of the Funds may violate section 18(a)(2) because the Funds may not meet such requirements with respect to a class of shares that may be a senior security. 2. Section 18(c) of the Act provides, in relevant part, that a 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 shares of the Funds may be prohibited by section 18(c), as a class may have priority over another class as to payment of dividends because shareholders of different classes would pay different fees and expenses. 3. 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 multiple classes of shares of the Funds 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. 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 provision of the Act, or from any rule or regulation under the Act, if and to the extent 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. Applicants request an exemption under section 6(c) from sections 18(a)(2), 18(c) and 18(i) to permit the Funds to issue multiple classes of shares. 5. Applicants submit that the proposed allocation of expenses relating to distribution and voting rights among multiple classes is equitable and will not discriminate against any group or class of shareholders. Applicants submit that the proposed arrangements would permit a Fund to facilitate the distribution of its shares and provide investors with a broader choice of shareholder services. Applicants assert 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 that are permitted by rule 18f-3 under the Act. Applicants state that each Fund will comply with the provisions of rule 18f-3 as if it were an open-end investment company. Early Withdrawal Charges 1. Section 23(c) of the Act provides, in relevant part, that no registered closed-end investment company shall purchase securities of which it is the issuer, except: (a) On a securities exchange or other open market; (b) pursuant to tenders, after reasonable opportunity to submit tenders given to all holders of securities of the class to be purchased; or (c) under other circumstances as the Commission may permit by rules and regulations or orders for the protection of investors. 2. Rule 23c-3 under the Act permits a registered closed-end investment company (an ``interval fund'') to make repurchase offers of between five and twenty-five percent of its outstanding shares at net asset value at periodic intervals pursuant to a fundamental policy of the interval fund. Rule 23c-3(b)(1) under the Act permits an interval fund to deduct from repurchase proceeds only a repurchase fee, not to exceed two percent of the proceeds, that is paid to the interval fund and is reasonably intended to compensate the fund for expenses directly related to the repurchase. 3. Section 23(c)(3) provides that the Commission may issue an order that would permit a closed-end investment company to repurchase its shares in circumstances in which the repurchase [[Page 22595]] is made in a manner or on a basis that does not unfairly discriminate against any holders of the class or classes of securities to be purchased. 4. Applicants request relief under section 6(c), discussed above, and section 23(c)(3) from rule 23c-3 to the extent necessary for the Funds to impose early withdrawal charges on shares of the Funds submitted for repurchase that have been held for less than a specified period. 5. Applicants state that the early withdrawal charges they intend to impose are functionally similar to contingent deferred sales loads imposed by open-end investment companies under rule 6c-10 under the Act. Rule 6c-10 permits open-end investment companies to impose contingent deferred sales loads, subject to certain conditions. Applicants note that rule 6c-10 is grounded in policy considerations supporting the employment of contingent deferred sales loads where there are adequate safeguards for the investor and state that the same policy considerations support imposition of early withdrawal charges in the interval fund context. In addition, applicants state that early withdrawal charges may be necessary for the distributor to recover distribution costs. Applicants represent that any early withdrawal charge imposed by the Funds will comply with rule 6c-10 under the Act as if the rule were applicable to closed-end investment companies. The Funds will disclose early withdrawal charges in accordance with the requirements of Form N-1A concerning contingent deferred sales loads. Asset-Based Distribution and Shareholder Service 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) and rule 17d-1 under the Act to the extent necessary to permit the Fund to impose asset- based distribution and shareholder service fees. Applicants have agreed to comply with rules 12b-1 and 17d-3 as if those rules applied to closed-end investment companies, which they believe will resolve any concerns that might arise in connection with a Fund financing the distribution of its shares through asset-based distribution fees. For the reasons stated above, applicants submit that the exemptions requested under section 6(c) are necessary and appropriate in the public interest and are consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants further submit that the relief requested pursuant to section 23(c)(3) will be consistent with the protection of investors and will insure that applicants do not unfairly discriminate against any holders of the class of securities to be purchased. Finally, applicants state that the Funds' imposition of asset-based distribution and shareholder service fees is consistent with the provisions, policies and purposes of the Act and does not involve participation on a basis different from or less advantageous than that of other participants. Applicants' Condition Applicants agree that any order granting the requested relief will be subject to the following condition: Each Fund relying on the order will comply with the provisions of rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3 under the Act, as amended from time to time, as if those rules applied to closed-end management investment companies, and will comply with the FINRA Sales Charge Rule, 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. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-09790 Filed 5-15-17; 8:45 am] BILLING CODE 8011-01-P
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19(b)(3)(A) of the Act 12 and Rule 19b– At any time within 60 days of the office of the Exchange. All comments
4(f)(6) thereunder.13 filing of the proposed rule change, the received will be posted without change;
A proposed rule change filed under Commission summarily may the Commission does not edit personal
Rule 19(b)–4(f)(6) normally does not temporarily suspend such rule change if identifying information from
become operative prior to 30 days after it appears to the Commission that such submissions. You should submit only
the date of the filing. However, pursuant action is necessary or appropriate in the information that you wish to make
to Rule 19b–4(f)(6)(iii), the Commission public interest, for the protection of available publicly. All submissions
may designate a shorter time if such investors, or otherwise in furtherance of should refer to File Number SR–
action is consistent with the protection the purposes of the Act. If the NYSEMKT–2017–24 and should be
of investors and the public interest. The Commission takes such action, the submitted on or before June 6, 2017.
Exchange has filed the proposed rule Commission shall institute proceedings For the Commission, by the Division of
change for immediate effectiveness and to determine whether the proposed rule Trading and Markets, pursuant to delegated
has requested that the Commission should be approved or disapproved. authority.17
waive the requirement that the proposed Eduardo A. Aleman,
rule change not become operative for 30 IV. Solicitation of Comments
Assistant Secretary.
days after the date of the filing so that Interested persons are invited to [FR Doc. 2017–09820 Filed 5–15–17; 8:45 am]
it may become operative on the date of submit written data, views, and
BILLING CODE 8011–01–P
filing. arguments concerning the foregoing,
The Exchange notes that the proposed including whether the proposed rule
rule change is intended to mitigate change is consistent with the Act. SECURITIES AND EXCHANGE
confidentiality concerns raised in Comments may be submitted by any of COMMISSION
connection with Section VII(A) of the the following methods:
Plan, which provides that the data made [Investment Company Act Release No.
publicly available will not identify the Electronic Comments 32632; 812–14713]
Trading Center that generated the data. • Use the Commission’s Internet
Sierra Total Return Fund, et al.
The Exchange states that the additional comment form (http://www.sec.gov/
time would allow consideration of a rules/sro.shtml); or May 10, 2017.
methodology to mitigate concerns • Send an email to rule-comments@ AGENCY: Securities and Exchange
related to the publication of Appendix sec.gov. Please include File Number SR– Commission (‘‘Commission’’).
B data.14 NYSEMKT–2017–24 on the subject line. ACTION: Notice.
The Commission believes that Paper Comments
waiving the 30-day operative delay is Notice of an application under section
consistent with the protection of • Send paper comments in triplicate 6(c) of the Investment Company Act of
investors and the public interest to Brent J. Fields, Secretary, Securities 1940 (the ‘‘Act’’) for an exemption from
because it will synchronize the timing and Exchange Commission, 100 F Street sections 18(a)(2), 18(c) and 18(i) of the
for publication of Appendix B data for NE., Washington, DC 20549–1090. Act, under sections 6(c) and 23(c)(3) of
all Participants, which should enhance All submissions should refer to File the Act for an exemption from rule 23c–
the consistency and usefulness of the Number SR–NYSEMKT–2017–24. This 3 under the Act, and for an order
data.15 Therefore, the Commission file number should be included on the pursuant to section 17(d) of the Act and
hereby waives the 30-day operative subject line if email is used. To help the rule 17d–1 under the Act.
delay and designates the proposed rule Commission process and review your Summary of Application: Applicants
change to be operative on the date of comments more efficiently, please use request an order to permit certain
filing.16 only one method. The Commission will registered closed-end management
post all comments on the Commission’s investment companies to issue multiple
12 15 U.S.C. 78s(b)(3)(A). Internet Web site (http://www.sec.gov/ classes of shares and to impose asset-
13 17 CFR 240.19b–4(f)(6). rules/sro.shtml). Copies of the based distribution and shareholder
14 The Commission recently approved a FINRA
submission, all subsequent service fees and early withdrawal
proposal to implement an aggregated, anonymous charges.
grouped masking methodology for the publication amendments, all written statements
of Appendix B data related to OTC trading activity. with respect to the proposed rule Applicants: Sierra Total Return Fund
See Securities Exchange Release No. 80551, (April change that are filed with the (‘‘STRF’’), STRF Advisors LLC (‘‘STRF
28, 2017), 82 FR 20948 (May 4, 2017). See also Commission, and all written Advisors’’), Sierra Opportunity Fund
Letter from David S. Shillman, Associate Director, (‘‘SOF’’), and SOF Advisors LLC (‘‘SOF
Division of Trading and Markets, Commission, to communications relating to the
Marcia E. Asquith, Executive Vice President FINRA, proposed rule change between the Advisors’’).
dated April 28, 2017. Commission and any person, other than Filing Dates: The application was
15 The Commission recently granted exemptive
those that may be withheld from the filed on October 31, 2016 and amended
relief to the Participants delay the publication of
public in accordance with the on March 8, 2017 and April 18, 2017.
their Appendix B data until August 31, 2017. See Hearing or Notification of Hearing: An
Letter from David S. Shillman, Associate Director, provisions of 5 U.S.C. 552, will be
Division of Trading and Markets, Commission, to available for Web site viewing and order granting the requested relief will
Jennifer Piorko Mitchell, Vice President and Deputy printing in the Commission’s Public be issued unless the Commission orders
Corporate Secretary, FINRA, dated April 27, 2017.
Reference Room, 100 F Street NE., a hearing. Interested persons may
The Commission notes that other Participants have request a hearing by writing to the
submitted proposed rule changes to delay the Washington, DC 20549 on official
sradovich on DSK3GMQ082PROD with NOTICES
publication of Appendix B data until August 31, business days between the hours of Commission’s Secretary and serving
2017. See e.g., SR–BatsBYX–2017–10; SR– 10:00 a.m. and 3:00 p.m. Copies of the applicants with a copy of the request,
BatsEDGA–2017–10; SR–BatsEDGX–2017–19; SR–
filing also will be available for personally or by mail. Hearing requests
BX–2017–022; SR–CHX–2017–07; SR–FINRA– should be received by the Commission
2017–010; SR–IEX–2017–12; SR–NASDAQ–2017– inspection and copying at the principal
044; SR–Phlx–2017–33; SR–NYSE–2017–19; SR–
by 5:30 p.m. on June 5, 2017, and
NYSEArca–2017–49. considered the proposed rule’s impact on should be accompanied by proof of
16 For purposes only of waiving the operative efficiency, competition, and capital formation. See
delay for this proposal, the Commission has 15 U.S.C. 78c(f). 17 17 CFR 200.30–3(a)(12).
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![Federal Register / Vol. 82, No. 93 / Tuesday, May 16, 2017 / Notices 22595
is made in a manner or on a basis that 2. Rule 17d–3 under the Act provides SECURITIES AND EXCHANGE
does not unfairly discriminate against an exemption from section 17(d) and COMMISSION
any holders of the class or classes of rule 17d–1 to permit open-end
[Release No. 34–80649; File No. SR–GEMX–
securities to be purchased. investment companies to enter into 2017–07]
4. Applicants request relief under distribution arrangements pursuant to
section 6(c), discussed above, and rule 12b–1 under the Act. Applicants Self-Regulatory Organizations; Nasdaq
section 23(c)(3) from rule 23c–3 to the request an order under section 17(d) and GEMX, LLC; Notice of Filing and
extent necessary for the Funds to rule 17d–1 under the Act to the extent Immediate Effectiveness of Proposed
impose early withdrawal charges on necessary to permit the Fund to impose Rule Change To Establish INET Ports
shares of the Funds submitted for asset-based distribution and shareholder
repurchase that have been held for less May 10, 2017.
service fees. Applicants have agreed to Pursuant to Section 19(b)(1) of the
than a specified period. comply with rules 12b–1 and 17d–3 as
5. Applicants state that the early Securities Exchange Act of 1934
if those rules applied to closed-end (‘‘Act’’),1 and Rule 19b–4 thereunder,2
withdrawal charges they intend to investment companies, which they notice is hereby given that on April 27,
impose are functionally similar to believe will resolve any concerns that 2017, Nasdaq GEMX, LLC (‘‘GEMX’’ or
contingent deferred sales loads imposed might arise in connection with a Fund ‘‘Exchange’’) filed with the Securities
by open-end investment companies financing the distribution of its shares and Exchange Commission (‘‘SEC’’ or
under rule 6c–10 under the Act. Rule
through asset-based distribution fees. ‘‘Commission’’) the proposed rule
6c–10 permits open-end investment
For the reasons stated above, change as described in Items I and II,
companies to impose contingent
applicants submit that the exemptions below, which Items have been prepared
deferred sales loads, subject to certain
requested under section 6(c) are by the Exchange. The Commission is
conditions. Applicants note that rule
publishing this notice to solicit
6c–10 is grounded in policy necessary and appropriate in the public
comments on the proposed rule change
considerations supporting the interest and are consistent with the
from interested persons.
employment of contingent deferred protection of investors and the purposes
sales loads where there are adequate fairly intended by the policy and I. Self-Regulatory Organization’s
safeguards for the investor and state that provisions of the Act. Applicants further Statement of the Terms of Substance of
the same policy considerations support submit that the relief requested the Proposed Rule Change
imposition of early withdrawal charges pursuant to section 23(c)(3) will be The Exchange proposes to establish
in the interval fund context. In addition, consistent with the protection of ports that members use to connect to the
applicants state that early withdrawal investors and will insure that applicants Exchange with the migration of the
charges may be necessary for the do not unfairly discriminate against any Exchange’s trading system to the Nasdaq
distributor to recover distribution costs. holders of the class of securities to be INET architecture.
Applicants represent that any early purchased. Finally, applicants state that The text of the proposed rule change
withdrawal charge imposed by the the Funds’ imposition of asset-based is available on the Exchange’s Web site
Funds will comply with rule 6c–10 at www.ise.com, at the principal office
distribution and shareholder service
under the Act as if the rule were of the Exchange, and at the
fees is consistent with the provisions,
applicable to closed-end investment Commission’s Public Reference Room.
policies and purposes of the Act and
companies. The Funds will disclose
early withdrawal charges in accordance does not involve participation on a basis II. Self-Regulatory Organization’s
with the requirements of Form N–1A different from or less advantageous than Statement of the Purpose of, and
concerning contingent deferred sales that of other participants. Statutory Basis for, the Proposed Rule
loads. Change
Applicants’ Condition
In its filing with the Commission, the
Asset-Based Distribution and Exchange included statements
Applicants agree that any order
Shareholder Service Fees concerning the purpose of and basis for
granting the requested relief will be
1. Section 17(d) of the Act and rule subject to the following condition: the proposed rule change and discussed
17d–1 under the Act prohibit an any comments it received on the
Each Fund relying on the order will
affiliated person of a registered proposed rule change. The text of these
comply with the provisions of rules 6c–
investment company, or an affiliated statements may be examined at the
10, 12b–1, 17d–3, 18f–3, 22d–1, and, places specified in Item IV below. The
person of such person, acting as
where applicable, 11a–3 under the Act, Exchange has prepared summaries, set
principal, from participating in or
as amended from time to time, as if forth in sections A, B, and C below, of
effecting any transaction in connection
with any joint enterprise or joint those rules applied to closed-end the most significant aspects of such
arrangement in which the investment management investment companies, statements.
company participates unless the and will comply with the FINRA Sales
Charge Rule, as amended from time to A. Self-Regulatory Organization’s
Commission issues an order permitting Statement of the Purpose of, and
the transaction. In reviewing time, as if that rule applied to all closed-
end management investment Statutory Basis for, the Proposed Rule
applications submitted under section Change
17(d) and rule 17d–1, the Commission companies.
considers whether the participation of 1. Purpose
sradovich on DSK3GMQ082PROD with NOTICES
For the Commission, by the Division of
the investment company in a joint Investment Management, under delegated The purpose of the proposed rule
enterprise or joint arrangement is authority. change is to establish ports that
consistent with the provisions, policies Eduardo A. Aleman, members use to connect to the Exchange
and purposes of the Act, and the extent with the migration of the Exchange’s
Assistant Secretary.
to which the participation is on a basis
[FR Doc. 2017–09790 Filed 5–15–17; 8:45 am]
different from or less advantageous than 1 15 U.S.C. 78s(b)(1).
that of other participants. BILLING CODE 8011–01–P 2 17 CFR 240.19b–4.
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Document Created: 2017-05-16 13:52:31
Document Modified: 2017-05-16 13:52:31
| 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. | |
| Dates | The application was filed on October 31, 2016 and amended on March 8, 2017 and April 18, 2017. | |
| Contact | Hae-Sung Lee, Attorney-Adviser, at (202) 551-7345, or Robert H. Shapiro, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office). | |
| FR Citation | 82 FR 22592 |
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