82 FR 47272 - Whitford Asset Management, LLC, et al.
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 195 (October 11, 2017)
Federal Register Volume 82, Issue 195 (October 11, 2017)
| Page Range | 47272-47274 | |
| FR Document | 2017-21811 |
[Federal Register Volume 82, Number 195 (Wednesday, October 11, 2017)] [Notices] [Pages 47272-47274] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-21811] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Investment Company Act Release No. 32853; 812-14817] Whitford Asset Management, LLC, et al. October 4, 2017. AGENCY: Securities and Exchange Commission (``Commission''). ACTION: Notice. ----------------------------------------------------------------------- Notice of an application for an order under section 6(c) of the Investment Company Act of 1940 (the ``Act'') for an exemption from sections 2(a)(32), 5(a)(1), 22(d), and 22(e) of the Act and rule 22c-1 under the Act, under sections 6(c) and 17(b) of the Act for an exemption from sections 17(a)(1) and 17(a)(2) of the Act, and under section 12(d)(1)(J) for an exemption from sections 12(d)(1)(A) and 12(d)(1)(B) of the Act. The requested order would permit (a) index- based series of certain open-end management investment companies (``Funds'') to issue shares redeemable in large aggregations only (``Creation Units''); (b) secondary market transactions in Fund shares to occur at negotiated market prices rather than at net asset value (``NAV''); (c) certain Funds to pay redemption proceeds, [[Page 47273]] under certain circumstances, more than seven days after the tender of shares for redemption; (d) certain affiliated persons of a Fund to deposit securities into, and receive securities from, the Fund in connection with the purchase and redemption of Creation Units; and (e) certain registered management investment companies and unit investment trusts outside of the same group of investment companies as the Funds (``Funds of Funds'') to acquire shares of the Funds. Applicants: Whitford Asset Management LLC (the ``Initial Adviser''), a Delaware limited liability company that is registered as an investment adviser under the Investment Advisers Act of 1940, ETF Series Solutions (the ``Trust''), a Delaware statutory trust registered under the Act as an open-end management investment company with multiple series, and Quasar Distributors, LLC (the ``Distributor''), a Delaware limited liability company and broker-dealer registered under the Securities Exchange Act of 1934 (``Exchange Act''). Filing Date: The application was filed on August 25, 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 October 30, 2017, and should be accompanied by proof of service on 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, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants: Whitford Asset Management LLC, 43 Leopard Road, Suite 201, Paoli, Pennsylvania 19301; ETF Series Solutions, 615 East Michigan Street, Milwaukee, Wisconsin 53202; Quasar Distributors, LLC, 777 East Wisconsin Avenue, 6th Floor, Milwaukee, Wisconsin 53202. FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel, at (202) 551-6812, 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 that would allow Funds to operate as index exchange traded funds (``ETFs'').\1\ Fund shares will be purchased and redeemed at their NAV in Creation Units only. All orders to purchase Creation Units and all redemption requests will be placed by or through an ``Authorized Participant'', which will have signed a participant agreement with the Distributor. Shares will be listed and traded individually on a national securities exchange, where share prices will be based on the current bid/offer market. Any order granting the requested relief would be subject to the terms and conditions stated in the application. --------------------------------------------------------------------------- \1\ Applicants request that the order apply to Volshares Large Cap ETF, a new series of the Trust, and any additional series of the Trust and any other open-end management investment company or series thereof (each, included in the term ``Fund''), each of which will operate as an ETF and will track a specified index comprised of domestic or foreign equity and/or fixed income securities (each, an ``Underlying Index''). Each Fund will (a) be advised by the Initial Adviser or an entity controlling, controlled by, or under common control with the Initial Adviser or its successor (each, an ``Adviser'') and (b) comply with the terms and conditions of the application. 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. Each Fund will hold investment positions selected to correspond generally to the performance of an Underlying Index. In the case of Self-Indexing Funds, an affiliated person, as defined in section 2(a)(3) of the Act (``Affiliated Person''), or an affiliated person of an Affiliated Person (``Second-Tier Affiliate''), of the Trust or a Fund, of the Adviser, of any sub-adviser to or promoter of a Fund, or of the Distributor will compile, create, sponsor or maintain the Underlying Index.\2\ --------------------------------------------------------------------------- \2\ Each Self-Indexing Fund will post on its Web site the identities and quantities of the investment positions that will form the basis for the Fund's calculation of its NAV at the end of the day. Applicants believe that requiring Self-Indexing Funds to maintain full portfolio transparency will help address, together with other protections, conflicts of interest with respect to such Funds. --------------------------------------------------------------------------- 3. Shares will be purchased and redeemed in Creation Units and generally on an in-kind basis. Except where the purchase or redemption will include cash under the limited circumstances specified in the application, purchasers will be required to purchase Creation Units by depositing specified instruments (``Deposit Instruments''), and shareholders redeeming their shares will receive specified instruments (``Redemption Instruments''). The Deposit Instruments and the Redemption Instruments will each correspond pro rata to the positions in the Fund's portfolio (including cash positions) except as specified in the application. 4. Because shares will not be individually redeemable, applicants request an exemption from section 5(a)(1) and section 2(a)(32) of the Act that would permit the Funds to register as open-end management investment companies and issue shares that are redeemable in Creation Units only. 5. Applicants also request an exemption from section 22(d) of the Act and rule 22c-1 under the Act as secondary market trading in shares will take place at negotiated prices, not at a current offering price described in a Fund's prospectus, and not at a price based on NAV. Applicants state that (a) secondary market trading in shares does not involve a Fund as a party and will not result in dilution of an investment in shares, and (b) to the extent different prices exist during a given trading day, or from day to day, such variances occur as a result of third-party market forces, such as supply and demand. Therefore, applicants assert that secondary market transactions in shares will not lead to discrimination or preferential treatment among purchasers. Finally, applicants represent that share market prices will be disciplined by arbitrage opportunities, which should prevent shares from trading at a material discount or premium from NAV. 6. With respect to Funds that effect creations and redemptions of Creation Units in kind and that are based on certain Underlying Indexes that include foreign securities, applicants request relief from the requirement imposed by section 22(e) in order to allow such Funds to pay redemption proceeds within fifteen calendar days following the tender of Creation Units for redemption. Applicants assert that the requested relief would not be inconsistent with the spirit and intent of section 22(e) to prevent unreasonable, undisclosed or unforeseen delays in the actual payment of redemption proceeds. 7. Applicants request an exemption to permit Funds of Funds to acquire Fund shares beyond the limits of section 12(d)(1)(A) of the Act; and the Funds, [[Page 47274]] and any principal underwriter for the Funds, and/or any broker or dealer registered under the Exchange Act, to sell shares to Funds of Funds beyond the limits of section 12(d)(1)(B) of the Act. The application's terms and conditions are designed to, among other things, help prevent any potential (i) undue influence over a Fund 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) and (B) of the Act. 8. Applicants request an exemption from sections 17(a)(1) and 17(a)(2) of the Act to permit persons that are Affiliated Persons, or Second-Tier Affiliates, of the Funds, solely by virtue of certain ownership interests, to effectuate purchases and redemptions in-kind. The deposit procedures for in-kind purchases of Creation Units and the redemption procedures for in-kind redemptions of Creation Units will be the same for all purchases and redemptions and Deposit Instruments and Redemption Instruments will be valued in the same manner as those investment positions currently held by the Funds. Applicants also seek relief from the prohibitions on affiliated transactions in section 17(a) to permit a Fund to sell its shares to and redeem its shares from a Fund of Funds, and to engage in the accompanying in-kind transactions with the Fund of Funds.\3\ The purchase of Creation Units by a Fund of Funds directly from a Fund will be accomplished in accordance with the policies of the Fund of Funds and will be based on the NAVs of the Funds. --------------------------------------------------------------------------- \3\ The requested relief would apply to direct sales of shares in Creation Units by a Fund to a Fund of Funds and redemptions of those shares. Applicants are not seeking relief from section 17(a) for, and the requested relief will not apply to, transactions where a Fund could be deemed an Affiliated Person, or a Second-Tier Affiliate, of a Fund of Funds because an Adviser or an entity controlling, controlled by or under common control with an Adviser provides investment advisory services to that Fund of Funds. --------------------------------------------------------------------------- 9. 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. 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. For the Commission, by the Division of Investment Management, under delegated authority. Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-21811 Filed 10-10-17; 8:45 am] BILLING CODE 8011-01-P
![47272 Federal Register / Vol. 82, No. 195 / Wednesday, October 11, 2017 / Notices
and Index Fund Shares.31 Thus, the of the purposes of the Act. While the proposed rule change between the
Commission has recognized that it is rule may permit more Acquisition Commission and any person, other than
appropriate to create different listing Companies to list, or remain listed, on those that may be withheld from the
standards for different categories of Nasdaq, other exchanges could adopt public in accordance with the
companies and that such differences do similar rules to compete for such provisions of 5 U.S.C. 552, will be
not preclude the Commission from listings. available for Web site viewing and
finding those securities are Covered printing in the Commission’s Public
Securities. C. Self-Regulatory Organization’s Reference Room, 100 F Street NE.,
Nasdaq notes that it is not proposing Statement on Comments on the Washington, DC 20549, on official
to reduce the shareholder requirement Proposed Rule Change Received From business days between the hours of
for operating companies listed on the Members, Participants, or Others 10:00 a.m. and 3:00 p.m. Copies of such
Nasdaq Capital Market. The proposed No written comments were either filing also will be available for
change affects only the separate listing solicited or received. inspection and copying at the principal
requirements for Acquisition office of the Exchange. All comments
III. Date of Effectiveness of the
Companies, which were adopted received will be posted without change;
Proposed Rule Change and Timing for
because Nasdaq viewed Acquisition the Commission does not edit personal
Commission Action
Companies as presenting different risks identifying information from
than operating companies and created Within 45 days of the date of submissions. You should submit only
listing requirements designed to address publication of this notice in the Federal information that you wish to make
those risks. Similarly, and as described Register or within such longer period (i) available publicly. All submissions
above, just as Nasdaq believes as the Commission may designate up to should refer to File Number SR–
Acquisition Companies have unique 90 days of such date if it finds such NASDAQ–2017–087 and should be
risks, other facets of their structure and longer period to be appropriate and submitted on or before November 1,
the requirements of Nasdaq’s rules for publishes its reasons for so finding or 2017.
Acquisition Companies minimize the (ii) as to which the Exchange consents, For the Commission, by the Division of
need for a shareholder requirement. As the Commission shall: (a) By order Trading and Markets, pursuant to delegated
described above, the Commission has approve or disapprove such proposed authority.32
previously concluded that categories of rule change, or (b) institute proceedings Eduardo A. Aleman,
securities differing from common stock to determine whether the proposed rule Assistant Secretary.
of operating companies can be Covered change should be disapproved. [FR Doc. 2017–21814 Filed 10–10–17; 8:45 am]
Securities, even though such securities
IV. Solicitation of Comments BILLING CODE 8011–01–P
are subject to lower listing
requirements. Nasdaq believes that, Interested persons are invited to
here, the earlier decision to regulate submit written data, views, and
SECURITIES AND EXCHANGE
Acquisition Companies listed on the arguments concerning the foregoing,
COMMISSION
Capital Market under the quantitative including whether the proposed rule
requirements of the Rule 5500 Series change is consistent with the Act. [Investment Company Act Release No.
should not preclude the decision now to Comments may be submitted by any of 32853; 812–14817]
adopt a lower minimum shareholder the following methods:
Whitford Asset Management, LLC, et
requirement for Acquisition Companies, Electronic Comments al.
which are a unique category of
securities, nor should it affect the • Use the Commission’s Internet October 4, 2017.
designation of securities listed on the comment form (http://www.sec.gov/ AGENCY: Securities and Exchange
Capital Market as Covered Securities so rules/sro.shtml); or Commission (‘‘Commission’’).
long as the other investor protection • Send an email to rule-comments@
ACTION: Notice.
requirements of the Act are satisfied. As sec.gov. Please include File Number SR–
described above, Nasdaq believes such NASDAQ–2017–087 on the subject line. Notice of an application for an order
investor protection requirements are Paper Comments under section 6(c) of the Investment
satisfied. Moreover, preventing Nasdaq Company Act of 1940 (the ‘‘Act’’) for an
• Send paper comments in triplicate exemption from sections 2(a)(32),
from making this change for the Capital to Secretary, Securities and Exchange
Market would create the perverse, anti- 5(a)(1), 22(d), and 22(e) of the Act and
Commission, 100 F Street NE., rule 22c–1 under the Act, under
competitive result that the Named Washington, DC 20549–1090.
Markets (including the Nasdaq Global sections 6(c) and 17(b) of the Act for an
All submissions should refer to File exemption from sections 17(a)(1) and
Market) would be allowed to make this
Number SR–NASDAQ–2017–087. This 17(a)(2) of the Act, and under section
change, or any change, but that the
file number should be included on the 12(d)(1)(J) for an exemption from
markets identified in Rule 146(b) could
subject line if email is used. To help the sections 12(d)(1)(A) and 12(d)(1)(B) of
never innovate and could only copy the
Commission process and review your the Act. The requested order would
changes made by the Named Markets
comments more efficiently, please use permit (a) index-based series of certain
[sic].
only one method. The Commission will open-end management investment
B. Self-Regulatory Organization’s
asabaliauskas on DSKBBXCHB2PROD with NOTICES
post all comments on the Commission’s companies (‘‘Funds’’) to issue shares
Statement on Burden on Competition Internet Web site (http://www.sec.gov/ redeemable in large aggregations only
The Exchange does not believe that rules/sro.shtml). Copies of the (‘‘Creation Units’’); (b) secondary market
the proposed rule change will impose submission, all subsequent transactions in Fund shares to occur at
any burden on competition not amendments, all written statements negotiated market prices rather than at
necessary or appropriate in furtherance with respect to the proposed rule net asset value (‘‘NAV’’); (c) certain
change that are filed with the Funds to pay redemption proceeds,
31 See, Securities Act Release No. 9251 (August 8, Commission, and all written
2011), 76 FR 49698 (August 11, 2011). communications relating to the 32 17 CFR 200.30–3(a)(12).
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![47274 Federal Register / Vol. 82, No. 195 / Wednesday, October 11, 2017 / Notices
and any principal underwriter for the exemption is consistent with the public I. Self-Regulatory Organization’s
Funds, and/or any broker or dealer interest and the protection of investors. Statement of the Terms of Substance of
registered under the Exchange Act, to Section 17(b) of the Act authorizes the the Proposed Rule Change
sell shares to Funds of Funds beyond Commission to grant an order FINRA is proposing to amend Section
the limits of section 12(d)(1)(B) of the permitting a transaction otherwise 13 of Schedule A to the FINRA By-Laws
Act. The application’s terms and prohibited by section 17(a) if it finds (‘‘Section 13’’) governing the review
conditions are designed to, among other that (a) the terms of the proposed charges for communications filed with
things, help prevent any potential (i) transaction are fair and reasonable and or submitted to FINRA’s Advertising
undue influence over a Fund through do not involve overreaching on the part Regulation Department (the
control or voting power, or in ‘‘Department’’) to account for upcoming
of any person concerned; (b) the
connection with certain services, technological changes that will allow
proposed transaction is consistent with
transactions, and underwritings, (ii)
the policies of each registered Web sites to be filed in native format.
excessive layering of fees, and (iii) Below is the text of the proposed rule
overly complex fund structures, which investment company involved; and (c)
the proposed transaction is consistent change. Proposed new language is in
are the concerns underlying the limits italics; proposed deletions are in
in sections 12(d)(1)(A) and (B) of the with the general purposes of the Act.
brackets.
Act. For the Commission, by the Division of
8. Applicants request an exemption Investment Management, under delegated
* * * * *
from sections 17(a)(1) and 17(a)(2) of the authority. Schedule A to the By-Laws of the
Act to permit persons that are Affiliated Eduardo A. Aleman, Corporation
Persons, or Second-Tier Affiliates, of the
Assistant Secretary. * * * * *
Funds, solely by virtue of certain
ownership interests, to effectuate [FR Doc. 2017–21811 Filed 10–10–17; 8:45 am]
Section 13—Review Charge for
purchases and redemptions in-kind. The BILLING CODE 8011–01–P
Communications Filed or Submitted
deposit procedures for in-kind
There shall be a review charge for
purchases of Creation Units and the
redemption procedures for in-kind SECURITIES AND EXCHANGE each and every communication,
redemptions of Creation Units will be COMMISSION whether in printed, video or other form,
the same for all purchases and filed with or submitted to FINRA,
redemptions and Deposit Instruments except for items that are filed or
[Release No. 34–81801; File No. SR–FINRA–
and Redemption Instruments will be submitted in response to a written
2017–030]
valued in the same manner as those request from FINRA’s Advertising
investment positions currently held by Self-Regulatory Organizations; Regulation Department (‘‘the
the Funds. Applicants also seek relief Financial Industry Regulatory Department’’) issued pursuant to the
from the prohibitions on affiliated spot check procedures set forth in
Authority, Inc.; Notice of Filing and
transactions in section 17(a) to permit a FINRA rules, as follows: (1) For printed
Immediate Effectiveness of a Proposed
Fund to sell its shares to and redeem its or Web site material reviewed, $125.00,
Rule Change Relating to the Review
shares from a Fund of Funds, and to plus $10.00 for each printed page or
Charges for Communications Filed Web page reviewed in excess of 10
engage in the accompanying in-kind With or Submitted to FINRA
transactions with the Fund of Funds.3 pages; and (2) for video or audio media,
The purchase of Creation Units by a October 3, 2017. $125.00, plus $10.00 per minute for
Fund of Funds directly from a Fund will each minute of tape reviewed in excess
Pursuant to Section 19(b)(1) of the of 10 minutes.
be accomplished in accordance with the
Securities Exchange Act of 1934 Where a member requests expedited
policies of the Fund of Funds and will
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 review of material submitted to the
be based on the NAVs of the Funds.
9. Section 6(c) of the Act permits the notice is hereby given that on Department there shall be a review
Commission to exempt any persons or September 26, 2017, Financial Industry charge of $600.00 per item plus $50.00
transactions from any provision of the Regulatory Authority, Inc. (‘‘FINRA’’) for each printed page or Web page
Act if such exemption is necessary or filed with the Securities and Exchange reviewed in excess of 10 pages.
appropriate in the public interest and Commission (‘‘SEC’’ or ‘‘Commission’’) Expedited review shall be completed
consistent with the protection of the proposed rule change as described within three business days, not
investors and the purposes fairly in Items I, II, and III below, which Items including the date the item is received
intended by the policy and provisions of have been prepared by FINRA. FINRA by the Department, unless a shorter or
the Act. Section 12(d)(1)(J) of the Act has designated the proposed rule change longer period is agreed to by the
provides that the Commission may as ‘‘establishing or changing a due, fee Department. The Department may, in its
exempt any person, security, or or other charge’’ under Section sole discretion, refuse requests for
transaction, or any class or classes of 19(b)(3)(A)(ii) of the Act 3 and Rule 19b– expedited review.
persons, securities, or transactions, from 4(f)(2) thereunder,4 which renders the * * * * *
any provision of section 12(d)(1) if the proposal effective upon receipt of this II. Self-Regulatory Organization’s
filing by the Commission. The Statement of the Purpose of, and
asabaliauskas on DSKBBXCHB2PROD with NOTICES
3 The requested relief would apply to direct sales
of shares in Creation Units by a Fund to a Fund of
Commission is publishing this notice to Statutory Basis for, the Proposed Rule
Funds and redemptions of those shares. Applicants solicit comments on the proposed rule Change
are not seeking relief from section 17(a) for, and the change from interested persons.
requested relief will not apply to, transactions In its filing with the Commission,
where a Fund could be deemed an Affiliated FINRA included statements concerning
Person, or a Second-Tier Affiliate, of a Fund of 1 15 U.S.C. 78s(b)(1). the purpose of and basis for the
Funds because an Adviser or an entity controlling,
controlled by or under common control with an
2 17 CFR 240.19b–4. proposed rule change and discussed any
Adviser provides investment advisory services to
3 15 U.S.C. 78s(b)(3)(A)(ii). comments it received on the proposed
that Fund of Funds. 4 17 CFR 240.19b–4(f)(2). rule change. The text of these statements
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Document Created: 2018-10-25 09:58:45
Document Modified: 2018-10-25 09:58:45
| 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 August 25, 2017. | |
| Contact | Courtney S. Thornton, Senior Counsel, at (202) 551-6812, or Robert H. Shapiro, Branch Chief, at (202) 551- 6821 (Division of Investment Management, Chief Counsel's Office). | |
| FR Citation | 82 FR 47272 |
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