82 FR 42869 - Active Weighting Funds ETF Trust and Active Weighting Advisors LLC

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 175 (September 12, 2017)

[Federal Register Volume 82, Number 175 (Tuesday, September 12, 2017)]
[Notices]
[Pages 42869-42870]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-19236]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32808; File No. 812-14697]


Active Weighting Funds ETF Trust and Active Weighting Advisors 
LLC

September 6, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    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 (``BDCs''), and registered 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.

Applicants: Active Weighting Funds ETF Trust (the ``Trust''), a 
Delaware statutory trust that will be registered under the Act as an 
open-end management investment company with multiple series, and Active 
Weighting Advisors LLC (the ``Initial Advisor''), a limited liability 
company organized under the laws of the state of Delaware that is, or 
will be, registered as an investment adviser under the Investment 
Advisers Act of 1940.

Filing Dates: The application was filed on August 31, 2016, and amended 
on January 13, 2017, and May 25, 2017. Applicants have agreed to file 
an amendment during the notice period, the substance of which is 
reflected in this notice.

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 October 2, 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, 490 Royal Lake 
Drive, Cape Girardeau, MO 63701.

[[Page 42870]]


FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior 
Counsel, at (202) 551-6879, 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.

Summary of the Application

    1. Applicants request an order to permit (a) each 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) each 
Underlying Fund that is a registered open-end management investment 
company or series thereof, their principal underwriters and any broker 
or dealer registered under the Securities Exchange Act of 1934 to sell 
shares of the Underlying Funds 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 not only to any 
existing series of the Trust, but that the order also extend to any 
future series of the Trust and any other existing or future 
registered open-end management investment companies and any series 
thereof that are, or may in the future be, advised by the Initial 
Advisor or its successor or any other investment adviser 
controlling, controlled by, or under common control with the Initial 
Advisor or its successor and that are part of the same group of 
investment companies, as defined in section 12(d)(1)(G)(ii) of the 
Act, as the Trust (together with the existing series of the Trust, 
each series a ``Fund'' and collectively, the ``Funds''). 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 request for relief, the term ``group of investment companies'' 
means any two or more registered investment companies, including 
closed-end investment companies and BDCs, that hold themselves out 
to investors as related companies for purposes of investment and 
investor services.
    \2\ Certain of the Underlying Funds have obtained 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 an exchange-traded fund (``ETF'').
    \3\ Applicants are not requesting relief for a Fund of Funds to 
invest in BDCs and registered closed-end investment companies that 
are not listed and traded on a national securities exchange.
    \4\ Applicants note that a Fund of Funds generally would 
purchase and sell shares of an Underlying Fund that operates as an 
ETF or closed-end fund through secondary market transactions rather 
than through principal transactions with the Underlying Fund. 
Applicants nevertheless request relief from sections 17(a)(l) and 
(2) to permit each Fund of Funds that is an affiliated person, or an 
affiliated person of an affiliated person, as defined in section 
2(a)(3) of the 1940 Act, of an ETF or closed-end fund to purchase or 
redeem shares from the ETF or closed-end fund. Applicants are not 
seeking relief from section 17(a) for, and the requested relief will 
not apply to, transactions where an ETF, BDC or closed-end fund 
could be deemed an affiliated person, or an affiliated person of an 
affiliated person, of a Fund of Funds because an investment adviser 
to the ETF, BDC or closed-end fund or an entity controlling, 
controlled by or under common control with the investment adviser to 
the ETF, BDC or closed-end fund is also an investment adviser to the 
Fund of Funds.
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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 
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. 2017-19236 Filed 9-11-17; 8:45 am]
 BILLING CODE 8011-01-P