83 FR 23005 - BlackRock Advisors, LLC, et al.

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 96 (May 17, 2018)

Page Range		23005-23007
FR Document		2018-10499
Federal Register, Volume 83 Issue 96 (Thursday, May 17, 2018)
[Federal Register Volume 83, Number 96 (Thursday, May 17, 2018)]
[Notices]
[Pages 23005-23007]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-10499]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Advisers Act Release No. 4912; 803-00240]


BlackRock Advisors, LLC, et al.

May 11, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for an exemptive order under Section 206A of 
the Investment Advisers Act of 1940 (the ``Act'') and Rule 206(4)-5(e).

APPLICANTS: BlackRock Advisors, LLC, BlackRock Financial Management, 
Inc. and BlackRock Fund Advisors (Collectively the ``Applicants'' or 
``Advisers'').

RELEVANT SECTIONS OF THE ACT: Exemption requested under section 206A of 
the Act and rule 206(4)-5(e) from rule 206(4)-5(a)(1) under the Act.

SUMMARY OF APPLICATION: Applicants request that the Commission issue an 
order under section 206A of the Act and rule 206(4)-5(e) exempting it 
from rule 206(4)-5(a)(1) under the Act to permit Applicants to receive 
compensation from certain government entities for investment advisory 
services provided to government entities within the two-year period 
following a contribution by a covered associate of the Applicants to an 
official of the government entities.

FILING DATES: The application was filed on May 26, 2017, and amended 
and restated applications were filed on November 21, 2017 and March 28, 
2018.

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 June 5, 2018, 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 may request notification of a hearing 
by writing to the Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street 
NE, Washington, DC 20549-1090. Applicants: BlackRock Advisors, LLC and 
BlackRock Financial Management, Inc., 55 East 52nd Street, New York, NY 
10055 and BlackRock Fund Advisors, 400 Howard Street, San Francisco, CA 
94105.

FOR FURTHER INFORMATION CONTACT: Rachel Loko, Senior Counsel, or Holly 
Hunter-Ceci, 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 website at http://www.sec.gov/rules/iareleases.shtml or by 
calling (202) 551-8090.

Applicants' Representations

    1. Applicants are registered with the Commission as investment 
advisers pursuant to the Act. BlackRock, Inc. (``BlackRock'') is the 
parent company of the Advisers. Applicants act as advisers to 
registered investment companies and investment companies exempt from 
registration under the Investment Company Act of 1940.
    2. The individual who made the campaign contribution that triggered 
the two-year compensation ban (the ``Contribution'') is Mark Wiedman 
(the ``Contributor''). The Contributor is a Senior Managing Director at 
BlackRock, the head of BlackRock's ETF and Index Investments business, 
and a member of BlackRock's Global Executive Committee. BlackRock's ETF 
business focuses on selling interests in RICs directly to investors, 
including certain government entities, which is not covered business 
under rule 206(4)-5. However, Applicants submit that, as a member of 
BlackRock's Global Executive Committee, the Contributor is, and at the 
time of the Contribution was, an executive officer of the Advisers 
under rule 206(4)-5(f)(4), and thus by definition is and at all 
relevant times was a covered associate pursuant to rule 206(4)-
5(f)(2)(i).
    3. Certain Ohio government entities have selected mutual funds 
(``RICs'') advised by BlackRock Advisors, LLC and BlackRock Fund 
Advisors to be options in their participant-directed plans and one Ohio 
government pension plan has invested in an unregistered fund managed by 
BlackRock Financial Management, Inc. Such government entities, are 
``government entities'' as defined under Rule 206(4)-5(f)(5) and, 
throughout the application, are referred to individually as a 
``Client'' and collectively as the ``Clients.''
    4. The recipient of the Contribution was John Kasich (the 
``Official''), the Governor of Ohio, in his campaign for President of 
the United States. The investment decisions of each Client are overseen 
by a board of trustees or directors (the ``Board'' or the ``Boards''), 
to which the Governor appoints certain members. The Applicants submit 
that due to the power of appointment, the Governor is an ``official'' 
of each Client under rule 206(4)-5.
    5. The Contribution that triggered rule 206(4)-5's prohibition on 
compensation under rule 206(4)-5(a)(1) was made on January 15, 2016 
(``the Contribution Date'') for the amount of $2,700 to the Official's 
campaign for President of the United States via credit card to attend a 
lunch hosted by the campaign at the invitation of a business 
acquaintance who was an independent director of a BlackRock fund and 
who shared the Contributor's personal political views. Applicants 
submit that the Contribution was not motivated by any desire to 
influence the award of investment advisory business. Applicants 
represent that in addition to being entitled to vote in the 
presidential election, the Contributor was interested in the GOP 
presidential primary. Aside from a brief introduction while Governor 
Kasich welcomed a group of attendees at lunch, the Contributor has 
never met the Official or dealt with the Official or his staff in any 
capacity. Moreover, the

[[Page 23006]]

Contribution is consistent with other contributions made by the 
Contributor over the years. Applicants state that the Contributor made 
the Contribution without pre-clearance from BlackRock's Legal 
department. Applicants also represent that at the time he attended the 
campaign lunch where he made the Contribution, the Contributor was 
focused on the Official in his capacity as a candidate for President of 
the United States, and the potential that a contribution to such a 
federal candidate would be covered under rule 206(4)-5 simply did not 
occur to him in that frame of mind. The Contributor never told any 
prospective or existing investor (including the Clients) about the 
Contribution, and did not discuss the Contribution with BlackRock, the 
Advisers or any of their covered associates.
    6. The initial selection process pursuant to which each Client 
decided to invest in a fund advised by an Adviser or to select a RIC 
advised by an Adviser as an investment option in a participant-directed 
plan, as applicable, had been completed before the contribution was 
made. Applicants state that the Contributor had no intention to seek, 
and no action was taken by the Contributor or the Applicants, to obtain 
any direct or indirect influence from the Official or any other person 
with respect to those investments. The Contributor did not participate 
in any capacity in soliciting those investments or any other investment 
advisory business covered under rule 206(4)-5 from any government 
entity.
    7. The Contribution was discovered on October 6, 2016 by 
Blackrock's Compliance department in the course of internal compliance 
testing. Specifically, Blackrock discovered the Contribution after a 
routine search on the Federal Election Commission's website. The 
Contributor requested a refund of the full $2,700 on November 11, 2016 
and received a refund on November 23, 2016. Applicants represent that 
all compensation earned that is attributable to the Clients' 
investments since the Contribution Date has been placed in escrow 
pending the outcome of this Application.
    8. BlackRock's political contribution policies and procedures (the 
``Policy'') which apply to BlackRock as well as its subsidiaries, 
including the Advisers, were adopted and implemented in order to 
coincide with the effective date of rule 206(4)-5, well before the 
Contribution was made. The Applicants submit that at the time of the 
Contribution, the Policy required, and continues to require, that all 
employees pre-clear all political contributions made in the United 
States. There is no de minimis exception from the pre-clearance 
requirement. Under the existing Policy, BlackRock requires employees to 
certify annually to their compliance with the Policy, sends reminders 
about the Policy and its pre-clearance requirement twice every year, 
and requires all employees to complete an annual computer-based 
training module that addresses the Policy and its pre-clearance 
requirement. In addition, BlackRock periodically conducts searches of 
public websites for contributions made by employees.

Applicants' Legal Analysis

    1. Rule 206(4)-5(a)(1) under the Act prohibits a registered 
investment adviser from providing investment advisory services for 
compensation to a government entity within two years after a 
contribution to an official of a government entity is made by the 
investment adviser or any covered associate of the investment adviser. 
Each of the Clients is a ``government entity,'' as defined in rule 
206(4)-5(f)(5), the Contributor is a ``covered associate'' as defined 
in rule 206(4)-5(f)(2), and the Official is an ``official'' as defined 
in rule 206(4)-5(f)(6).
    2. Section 206A of the Act authorizes the Commission to 
``conditionally or unconditionally exempt any person or transaction . . 
. from any provision or provisions of [the Act] or of any rule or 
regulation thereunder, if and to the extent that 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].''
    3. Rule 206(4)-5(e) provides that the Commission may conditionally 
or unconditionally grant an exemption to an investment adviser from the 
prohibition under rule 206(4)-5(a)(1) upon consideration of the factors 
listed below, among others:
    (1) Whether the 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;
    (2) Whether the investment adviser: (i) Before the contribution 
resulting in the prohibition was made, adopted and implemented policies 
and procedures reasonably designed to prevent violations of the rule; 
and (ii) prior to or at the time the contribution which resulted in 
such prohibition was made, had no actual knowledge of the contribution; 
and (iii) after learning of the contribution: (A) Has taken all 
available steps to cause the contributor involved in making the 
contribution which resulted in such prohibition to obtain a return of 
the contribution; and (B) has taken such other remedial or preventive 
measures as may be appropriate under the circumstances;
    (3) Whether, at the time of the contribution, the contributor was a 
covered associate or otherwise an employee of the investment adviser, 
or was seeking such employment;
    (4) The timing and amount of the contribution which resulted in the 
prohibition;
    (5) The nature of the election (e.g., federal, state or local); and
    (6) The contributor's apparent intent or motive in making the 
contribution which resulted in the prohibition, as evidenced by the 
facts and circumstances surrounding such contribution.
    4. Applicants request an order pursuant to section 206A and rule 
206(4)-5(e), exempting them from the two-year prohibition on 
compensation imposed by rule 206(4)-5(a)(1) with respect to investment 
advisory services provided to the Clients within the two-year period 
following the Contribution.
    5. Applicants submit that the exemption is necessary and 
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 further submit that the other factors 
set forth in rule 206(4)-5(e) similarly weigh in favor of granting an 
exemption to the Applicants to avoid consequences disproportionate to 
the violation.
    6. Applicants contend that given the nature of the Contribution, 
and the lack of any evidence that the Advisers or the Contributor 
intended to, or actually did, interfere with any Client's merit-based 
process for the selection or retention of advisory services, the 
Clients' interests are best served by allowing the Advisers and their 
Clients to continue their relationship uninterrupted. Applicants state 
that causing the Advisers to forgo the impacted compensation 
attributable to the two-year period would result in a financial loss of 
approximately $37 million or 13,700 times the amount of the 
Contribution. Applicants suggest that the policy underlying rule 
206(4)-5 is served by ensuring that no improper influence is exercised 
over investment decisions by governmental entities as a result of 
campaign contributions and not by withholding compensation as a result 
of unintentional violations.
    7. Applicants represent that the Policy was adopted and published 
well before the Contribution was made. Applicants further represent 
that, the Policy has conformed to the requirements of rule

[[Page 23007]]

206(4)-5 and has been more rigorous than rule 206(4)-5's requirements 
as BlackRock has monitored compliance with the Policy by searching for 
an individual employee's past political contributions on the Federal 
Election Commission's database whenever an individual makes a request 
to BlackRock to pre-clear a contribution to a federal candidate. 
Applicants submit that BlackRock is in the process of enhancing this 
monitoring protocol.
    8. Applicants assert that at no time did any employee or covered 
associate of BlackRock, the Advisers or any of their affiliates, other 
than the Contributor have any knowledge that the Contribution had been 
made before its discovery by the Compliance department in October 2016.
    9. Applicants assert that after learning of the Contribution and 
confirming the Contributor's covered status, BlackRock caused the 
Contributor to promptly obtain a full refund of the Contribution. 
Applicants submit that in response to the contribution, BlackRock has 
begun the process of implementing enhancements to the Policy that will 
include (a) sending its employees, including employees of its 
affiliates a third annual reminder to pre-clear all political 
contributions in the United States, including those to federal 
candidates (b) revising its annual computer-based training module to 
highlight the need to pre-clear all political contributions in the 
United States, including those to federal candidates, and (c) enhancing 
its protocol to monitor compliance with the Policy's pre-clearance 
requirements by searching the FEC's and certain states' campaign 
finance databases for contributions made by a sampling of covered 
associates on a quarterly basis. Finally, BlackRock's Compliance 
department will remind the Contributor of the Policy's pre-clearance 
requirement on at least a quarterly basis.
    10. Applicants state that the Contributor is and has, at all 
relevant times, been a covered associate of the Advisers. Applicants 
note that the Contributor has never solicited investment advisory 
business covered under rule 206(4)-5 from government entities and has 
had no direct contact or involvement with any of the Clients or the 
members of their Boards regarding any business matters.
    11. Applicants assert that the Clients' initial investments with 
the Advisers substantially predate the Contribution. They were done on 
an arm's length basis and the Contributor and the Applicants took no 
action to obtain any direct or indirect influence from the Official.
    12. Applicants submit that neither the Advisers nor the Contributor 
sought to interfere with the Clients' merit-based selection process for 
advisory services, nor did they seek to negotiate higher fees or 
greater ancillary benefits than would be achieved in arms' length 
transactions. Applicants further submit that there was no violation of 
the Advisers' fiduciary duty to deal fairly or disclose material 
conflicts given the absence of any intent or action by the Advisers or 
the Contributor to influence the selection process. Applicants contend 
that in the case of the Contribution, the imposition of the two-year 
prohibition on compensation does not achieve rule 206(4)-5's purposes 
and would result in consequences disproportionate to the mistake that 
was made.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-10499 Filed 5-16-18; 8:45 am]
BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 96 / Thursday, May 17, 2018 / Notices 23005

proposed rule change between the investment advisory services provided Senior Managing Director at BlackRock,
Commission and any person, other than to government entities within the two- the head of BlackRock’s ETF and Index
those that may be withheld from the year period following a contribution by Investments business, and a member of
public in accordance with the a covered associate of the Applicants to BlackRock’s Global Executive
provisions of 5 U.S.C. 552, will be an official of the government entities. Committee. BlackRock’s ETF business
available for website viewing and FILING DATES: The application was filed focuses on selling interests in RICs
printing in the Commission’s Public on May 26, 2017, and amended and directly to investors, including certain
Reference Room, 100 F Street NE, restated applications were filed on government entities, which is not
Washington, DC 20549, on official November 21, 2017 and March 28, 2018. covered business under rule 206(4)–5.
business days between the hours of HEARING OR NOTIFICATION OF HEARING: An However, Applicants submit that, as a
10:00 a.m. and 3:00 p.m. Copies of the order granting the application will be member of BlackRock’s Global
filing also will be available for issued unless the Commission orders a Executive Committee, the Contributor
inspection and copying at the principal hearing. Interested persons may request is, and at the time of the Contribution
office of the Exchange. All comments a hearing by writing to the was, an executive officer of the Advisers
received will be posted without change. Commission’s Secretary and serving under rule 206(4)–5(f)(4), and thus by
Persons submitting comments are Applicants with a copy of the request, definition is and at all relevant times
cautioned that we do not redact or edit personally or by mail. Hearing requests was a covered associate pursuant to rule
personal identifying information from should be received by the Commission 206(4)–5(f)(2)(i).
comment submissions. You should by 5:30 p.m. on June 5, 2018, and 3. Certain Ohio government entities
submit only information that you wish should be accompanied by proof of have selected mutual funds (‘‘RICs’’)
to make available publicly. All service on Applicants, in the form of an advised by BlackRock Advisors, LLC
submissions should refer to File affidavit or, for lawyers, a certificate of and BlackRock Fund Advisors to be
Number SR–NYSEARCA–2018–28 and service. Pursuant to rule 0–5 under the options in their participant-directed
should be submitted on or before June Act, hearing requests should state the plans and one Ohio government pension
7, 2018. nature of the writer’s interest, any facts plan has invested in an unregistered
bearing upon the desirability of a fund managed by BlackRock Financial
For the Commission, by the Division of Management, Inc. Such government
Trading and Markets, pursuant to delegated hearing on the matter, the reason for the
authority.25 request, and the issues contested. entities, are ‘‘government entities’’ as
Persons may request notification of a defined under Rule 206(4)–5(f)(5) and,
Eduardo A. Aleman,
hearing by writing to the Commission’s throughout the application, are referred
Assistant Secretary. to individually as a ‘‘Client’’ and
[FR Doc. 2018–10501 Filed 5–16–18; 8:45 am]
Secretary.
collectively as the ‘‘Clients.’’
ADDRESSES: Secretary, Securities and
BILLING CODE 8011–01–P 4. The recipient of the Contribution
Exchange Commission, 100 F Street NE,
was John Kasich (the ‘‘Official’’), the
Washington, DC 20549–1090.
Governor of Ohio, in his campaign for
SECURITIES AND EXCHANGE Applicants: BlackRock Advisors, LLC
President of the United States. The
COMMISSION and BlackRock Financial Management,
investment decisions of each Client are
Inc., 55 East 52nd Street, New York, NY overseen by a board of trustees or
[Investment Advisers Act Release No. 4912; 10055 and BlackRock Fund Advisors,
803–00240] directors (the ‘‘Board’’ or the ‘‘Boards’’),
400 Howard Street, San Francisco, CA to which the Governor appoints certain
BlackRock Advisors, LLC, et al. 94105. members. The Applicants submit that
FOR FURTHER INFORMATION CONTACT: due to the power of appointment, the
May 11, 2018. Rachel Loko, Senior Counsel, or Holly Governor is an ‘‘official’’ of each Client
AGENCY: Securities and Exchange Hunter-Ceci, Assistant Chief Counsel, at under rule 206(4)–5.
Commission (‘‘Commission’’). (202) 551–6825 (Division of Investment 5. The Contribution that triggered rule
ACTION: Notice. Management, Chief Counsel’s Office). 206(4)–5’s prohibition on compensation
SUPPLEMENTARY INFORMATION: The under rule 206(4)–5(a)(1) was made on
Notice of application for an exemptive
following is a summary of the January 15, 2016 (‘‘the Contribution
order under Section 206A of the Date’’) for the amount of $2,700 to the
Investment Advisers Act of 1940 (the application. The complete application
may be obtained via the Commission’s Official’s campaign for President of the
‘‘Act’’) and Rule 206(4)–5(e). United States via credit card to attend
website at http://www.sec.gov/rules/
APPLICANTS: BlackRock Advisors, LLC, a lunch hosted by the campaign at the
iareleases.shtml or by calling (202) 551–
BlackRock Financial Management, Inc. invitation of a business acquaintance
8090.
and BlackRock Fund Advisors who was an independent director of a
(Collectively the ‘‘Applicants’’ or Applicants’ Representations BlackRock fund and who shared the
‘‘Advisers’’). 1. Applicants are registered with the Contributor’s personal political views.
RELEVANT SECTIONS OF THE ACT: Commission as investment advisers Applicants submit that the Contribution
Exemption requested under section pursuant to the Act. BlackRock, Inc. was not motivated by any desire to
206A of the Act and rule 206(4)–5(e) (‘‘BlackRock’’) is the parent company of influence the award of investment
from rule 206(4)–5(a)(1) under the Act. the Advisers. Applicants act as advisers advisory business. Applicants represent
SUMMARY OF APPLICATION: Applicants to registered investment companies and that in addition to being entitled to vote
request that the Commission issue an investment companies exempt from in the presidential election, the
daltland on DSKBBV9HB2PROD with NOTICES

order under section 206A of the Act and registration under the Investment Contributor was interested in the GOP
rule 206(4)–5(e) exempting it from rule Company Act of 1940. presidential primary. Aside from a brief
206(4)–5(a)(1) under the Act to permit 2. The individual who made the introduction while Governor Kasich
Applicants to receive compensation campaign contribution that triggered the welcomed a group of attendees at lunch,
from certain government entities for two-year compensation ban (the the Contributor has never met the
‘‘Contribution’’) is Mark Wiedman (the Official or dealt with the Official or his
25 17 CFR 200.30–3(a)(12) and (59). ‘‘Contributor’’). The Contributor is a staff in any capacity. Moreover, the

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Federal Register / Vol. 83, No. 96 / Thursday, May 17, 2018 / Notices 23007

206(4)–5 and has been more rigorous 12. Applicants submit that neither the The text of the proposed rule
than rule 206(4)–5’s requirements as Advisers nor the Contributor sought to change is also available on the
BlackRock has monitored compliance interfere with the Clients’ merit-based Exchange’s website (http://
with the Policy by searching for an selection process for advisory services, www.cboe.com/AboutCBOE/
individual employee’s past political nor did they seek to negotiate higher CBOELegalRegulatoryHome.aspx), at
contributions on the Federal Election fees or greater ancillary benefits than the Exchange’s Office of the Secretary,
Commission’s database whenever an would be achieved in arms’ length and at the Commission’s Public
individual makes a request to BlackRock transactions. Applicants further submit Reference Room.
to pre-clear a contribution to a federal that there was no violation of the
II. Self-Regulatory Organization’s
candidate. Applicants submit that Advisers’ fiduciary duty to deal fairly or
Statement of the Purpose of, and
BlackRock is in the process of disclose material conflicts given the
Statutory Basis for, the Proposed Rule
enhancing this monitoring protocol. absence of any intent or action by the
8. Applicants assert that at no time Change
Advisers or the Contributor to influence
did any employee or covered associate the selection process. Applicants In its filing with the Commission, the
of BlackRock, the Advisers or any of contend that in the case of the Exchange included statements
their affiliates, other than the Contribution, the imposition of the two- concerning the purpose of and basis for
Contributor have any knowledge that year prohibition on compensation does the proposed rule change and discussed
the Contribution had been made before not achieve rule 206(4)–5’s purposes any comments it received on the
its discovery by the Compliance and would result in consequences proposed rule change. The text of these
department in October 2016. disproportionate to the mistake that was statements may be examined at the
9. Applicants assert that after learning made. places specified in Item IV below. The
of the Contribution and confirming the Exchange has prepared summaries, set
For the Commission, by the Division of
Contributor’s covered status, BlackRock Investment Management, under delegated forth in sections A, B, and C below, of
caused the Contributor to promptly authority. the most significant aspects of such
obtain a full refund of the Contribution. Eduardo A. Aleman, statements.
Applicants submit that in response to Assistant Secretary. A. Self-Regulatory Organization’s
the contribution, BlackRock has begun
[FR Doc. 2018–10499 Filed 5–16–18; 8:45 am] Statement of the Purpose of, and
the process of implementing
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule
enhancements to the Policy that will
Change
include (a) sending its employees,
including employees of its affiliates a 1. Purpose
SECURITIES AND EXCHANGE
third annual reminder to pre-clear all COMMISSION The Exchange proposes to amend its
political contributions in the United marketing fee program with respect to
States, including those to federal [Release No. 34–83220; File No. SR–CBOE– the fee assessed on Russell 2000 Index
candidates (b) revising its annual 2018–034]
(‘‘RUT’’) options. Currently, the
computer-based training module to Exchange assesses the marketing fee on
highlight the need to pre-clear all Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and RUT options at a rate of $0.30 per
political contributions in the United contract. The Exchange no longer
States, including those to federal Immediate Effectiveness of a Proposed
Rule Change To Amend the Marketing wishes to assess the marketing fee to
candidates, and (c) enhancing its RUT options. The Exchange notes that
protocol to monitor compliance with the Fee Program With Respect to the
Russell 2000 Index Options the marketing fee is similarly not
Policy’s pre-clearance requirements by applied to other Underlying Symbol List
searching the FEC’s and certain states’ May 11, 2018. A products, which group includes RUT.
campaign finance databases for Pursuant to Section 19(b)(1) of the The Exchange believes removing the
contributions made by a sampling of Securities Exchange Act of 1934 (the marketing fee will encourage greater
covered associates on a quarterly basis. ‘‘Act’’) 1, and Rule 19b–4 thereunder,2 liquidity in RUT, which benefits all
Finally, BlackRock’s Compliance notice is hereby given that on May 1, market participants.
department will remind the Contributor 2018, Cboe Exchange, Inc. (the
of the Policy’s pre-clearance ‘‘Exchange’’ or ‘‘Cboe Options’’) filed 2. Statutory Basis
requirement on at least a quarterly basis. with the Securities and Exchange The Exchange believes the proposed
10. Applicants state that the Commission (the ‘‘Commission’’) the rule change is consistent with the
Contributor is and has, at all relevant proposed rule change as described in Securities Exchange Act of 1934 (the
times, been a covered associate of the Items I, II, and III below, which Items ‘‘Act’’) and the rules and regulations
Advisers. Applicants note that the have been prepared by the Exchange. thereunder applicable to the Exchange
Contributor has never solicited The Commission is publishing this and, in particular, the requirements of
investment advisory business covered notice to solicit comments on the Section 6(b) of the Act.3 Specifically,
under rule 206(4)–5 from government proposed rule change from interested the Exchange believes the proposed rule
entities and has had no direct contact or persons. change is consistent with the Section
involvement with any of the Clients or 6(b)(5) 4 requirements that the rules of
the members of their Boards regarding I. Self-Regulatory Organization’s an exchange be designed to prevent
any business matters. Statement of the Terms of Substance of fraudulent and manipulative acts and
11. Applicants assert that the Clients’ the Proposed Rule Change practices, to promote just and equitable
daltland on DSKBBV9HB2PROD with NOTICES

initial investments with the Advisers The Exchange proposes to amend its principles of trade, to foster cooperation
substantially predate the Contribution. marketing fee program with respect to and coordination with persons engaged
They were done on an arm’s length the fee assessed on Russell 2000 Index in regulating, clearing, settling,
basis and the Contributor and the (‘‘RUT’’) options. processing information with respect to,
Applicants took no action to obtain any
direct or indirect influence from the 1 15 U.S.C. 78s(b)(1). 3 15 U.S.C. 78f(b).
Official. 2 17 CFR 240.19b–4. 4 15 U.S.C. 78f(b)(5).

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Document Created: 2018-05-17 00:51:14
Document Modified: 2018-05-17 00:51:14
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 May 26, 2017, and amended and restated applications were filed on November 21, 2017 and March 28, 2018.
Contact		Rachel Loko, Senior Counsel, or Holly Hunter-Ceci, Assistant Chief Counsel, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
FR Citation		83 FR 23005