83 FR 36646 - Advisors Asset Management, Inc. and ETF Series Solutions; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 146 (July 30, 2018)

Page Range		36646-36647
FR Document		2018-16155
Federal Register, Volume 83 Issue 146 (Monday, July 30, 2018)
[Federal Register Volume 83, Number 146 (Monday, July 30, 2018)]
[Notices]
[Pages 36646-36647]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-16155]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33169; 812-14833]


Advisors Asset Management, Inc. and ETF Series Solutions; Notice 
of Application

July 24, 2018.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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

Applicants:  ETF Series Solutions (the ``Trust''), a Delaware statutory 
trust registered under the Act as an open-end management investment 
company with multiple series, and Advisors Asset Management, Inc. (the 
``Initial Adviser''), a Delaware corporation registered as an 
investment adviser under the Investment Advisers Act of 1940.

Filing Dates:  The application was filed on October 11, 2017 and 
amended on May 3, 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 August 20, 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 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: ETF Series Solutions, 
615 E Michigan Street, Milwaukee, WI 53202; and Advisors Asset 
Management, Inc., 18925 Base Camp Road, Suite 203, Monument, CO 80132.

FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior 
Counsel, at (202) 551-6879, or Andrea Ottomanelli Magovern, 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 website 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. The Initial Adviser is the investment adviser to the AAM S&P 500 
High Dividend Value ETF and AAM S&P Emerging Markets High Dividend 
Value ETF (together, the ``Initial Funds''), each a series of the 
Trust, pursuant to an investment management agreement with the Trust 
(``Investment Management Agreement'').\1\ Under the terms of the 
Investment Management Agreement, the Adviser, subject to the

[[Page 36647]]

supervision of the board of trustees of the Trust (``Board''), provides 
continuous investment management of the assets of each Subadvised Fund. 
Consistent with the terms of the Investment Management Agreement, the 
Adviser may, subject to the approval of the Board, delegate portfolio 
management responsibilities of all or a portion of the assets of a 
Subadvised Fund to one or more Sub-Advisers.\2\ The Adviser will 
continue to have overall responsibility for the management and 
investment of the assets of each Subadvised Fund. The Adviser will 
evaluate, select, and recommend Sub-Advisers to manage the assets of a 
Subadvised Fund and will oversee, monitor and review the Sub-Advisers 
and their performance and recommend the removal or replacement of Sub-
Advisers.
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    \1\ Applicants request relief with respect to the Initial Funds, 
as well as to any future series of the Trust and any other existing 
or future registered open-end management investment company or 
series thereof that, in each case, is advised by the Initial Adviser 
or any entity controlling, controlled by, or under common control 
with, the Initial Adviser or its successors (each, also an 
``Adviser''), uses the multi-manager structure described in the 
application, and complies with the terms and conditions set forth in 
the application (each, a ``Subadvised Fund''). 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. Future Subadvised Funds may be 
operated as a master-feeder structure pursuant to section 
12(d)(1)(E) of the Act. In such a structure, certain series of the 
Trust (each, a ``Feeder Fund'') may invest substantially all of 
their assets in a Subadvised Fund (a ``Master Fund'') pursuant to 
section 12(d)(1)(E) of the Act. No Feeder Fund will engage any sub-
advisers other than through approving the engagement of one or more 
of the Master Fund's sub-advisers.
    \2\ As used herein, a ``Sub-Adviser'' for a Subadvised Fund is 
(1) an indirect or direct ``wholly owned subsidiary'' (as such term 
is defined in the Act) of the Adviser for that Subadvised Fund, or 
(2) a sister company of the Adviser for that Subadvised Fund that is 
an indirect or direct ``wholly-owned subsidiary'' of the same 
company that, indirectly or directly, wholly owns the Adviser (each 
of (1) and (2) a ``Wholly-Owned Sub-Adviser'' and collectively, the 
``Wholly-Owned Sub-Advisers''), or (3) not an ``affiliated person'' 
(as such term is defined in section 2(a)(3) of the Act) of the 
Subadvised Fund, any Feeder Fund invested in a Master Fund, the 
Trust, or the Adviser, except to the extent that an affiliation 
arises solely because the Sub-Adviser serves as a sub-adviser to a 
Subadvised Fund (``Non-Affiliated Sub-Advisers'').
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    2. Applicants request an order to permit the Adviser, subject to 
the approval of the Board, to enter into investment sub-advisory 
agreements with the Sub-Advisers (each, a ``Sub-Advisory Agreement'') 
and materially amend such Sub-Advisory Agreements without obtaining the 
shareholder approval required under section 15(a) of the Act and rule 
18f-2 under the Act.\3\ Applicants also seek an exemption from the 
Disclosure Requirements to permit a Subadvised Fund to disclose (as 
both a dollar amount and a percentage of the Subadvised Fund's net 
assets): (a) The aggregate fees paid to the Adviser and any Wholly-
Owned Sub-Adviser; (b) the aggregate fees paid to Non-Affiliated Sub-
Advisers; and (c) the fee paid to each Affiliated Sub-Adviser 
(collectively, Aggregate Fee Disclosure'').\4\
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    \3\ The requested relief will not extend to any sub-adviser, 
other than a Wholly-Owned Sub-Adviser, who is an affiliated person, 
as defined in section 2(a)(3) of the Act, of the Subadvised Fund, of 
any Feeder Fund, or of the Adviser, other than by reason of serving 
as a sub-adviser to one or more of the Subadvised Funds 
(``Affiliated Sub-Adviser'').
    \4\ For any Subadvised Fund that is a Master Fund, the relief 
would also permit any Feeder Fund invested in that Master Fund to 
disclose Aggregate Fee Disclosure.
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    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the application. 
Such terms and conditions provide for, among other safeguards, 
appropriate disclosure to Subadvised Funds' shareholders and 
notification about sub-advisory changes and enhanced Board oversight to 
protect the interests of the Subadvised Funds' shareholders.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provisions of the Act, or 
any rule thereunder, if such relief is necessary or appropriate in the 
public interest and consistent with the protection of investors and 
purposes fairly intended by the policy and provisions of the Act. 
Applicants believe that the requested relief meets this standard 
because, as further explained in the application, the Investment 
Management Agreements will remain subject to shareholder approval, 
while the role of the Sub-Advisers is substantially equivalent to that 
of individual portfolio managers, so that requiring shareholder 
approval of Sub-Advisory Agreements would impose unnecessary delays and 
expenses on the Subadvised Funds. Applicants believe that the requested 
relief from the Disclosure Requirements meets this standard because it 
will improve the Adviser's ability to negotiate fees paid to the Sub-
Advisers that are more advantageous for the Subadvised Funds.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-16155 Filed 7-27-18; 8:45 am]
 BILLING CODE 8011-01-P
Federal Register / Vol. 83, No. 146 / Monday, July 30, 2018 / Notices 36647

supervision of the board of trustees of 3. Applicants agree that any order SECURITIES AND EXCHANGE
the Trust (‘‘Board’’), provides granting the requested relief will be COMMISSION
continuous investment management of subject to the terms and conditions
[Release No. 34–83699; File No. SR–FINRA–
the assets of each Subadvised Fund. stated in the application. Such terms 2018–026]
Consistent with the terms of the and conditions provide for, among other
Investment Management Agreement, the safeguards, appropriate disclosure to Self-Regulatory Organizations;
Adviser may, subject to the approval of Subadvised Funds’ shareholders and Financial Industry Regulatory
the Board, delegate portfolio notification about sub-advisory changes Authority, Inc.; Notice of Filing of a
management responsibilities of all or a and enhanced Board oversight to protect Proposed Rule Change To Amend the
portion of the assets of a Subadvised Arbitrator Payment Rule To Pay Each
the interests of the Subadvised Funds’
Fund to one or more Sub-Advisers.2 The Arbitrator a $200 Honorarium To
shareholders.
Adviser will continue to have overall Decide Without a Hearing Session a
responsibility for the management and 4. Section 6(c) of the Act provides that
Contested Subpoena Request or a
investment of the assets of each the Commission may exempt any Contested Order for Production or
Subadvised Fund. The Adviser will person, security, or transaction or any Appearance
evaluate, select, and recommend Sub- class or classes of persons, securities, or
Advisers to manage the assets of a transactions from any provisions of the July 24, 2018.
Subadvised Fund and will oversee, Act, or any rule thereunder, if such Pursuant to Section 19(b)(1) of the
monitor and review the Sub-Advisers relief is necessary or appropriate in the Securities Exchange Act of 1934
and their performance and recommend public interest and consistent with the (‘‘Act’’) 1 and Rule 19b–4 thereunder,2
the removal or replacement of Sub- protection of investors and purposes notice is hereby given that on July 13,
Advisers. fairly intended by the policy and 2018, Financial Industry Regulatory
2. Applicants request an order to provisions of the Act. Applicants Authority, Inc. (‘‘FINRA’’) filed with the
permit the Adviser, subject to the Securities and Exchange Commission
believe that the requested relief meets
approval of the Board, to enter into (‘‘SEC’’ or ‘‘Commission’’) the proposed
this standard because, as further
investment sub-advisory agreements rule change as described in Items I, II,
with the Sub-Advisers (each, a ‘‘Sub- explained in the application, the
and III below, which Items have been
Advisory Agreement’’) and materially Investment Management Agreements
prepared by FINRA. The Commission is
amend such Sub-Advisory Agreements will remain subject to shareholder
publishing this notice to solicit
without obtaining the shareholder approval, while the role of the Sub-
comments on the proposed rule change
approval required under section 15(a) of Advisers is substantially equivalent to from interested persons.
the Act and rule 18f–2 under the Act.3 that of individual portfolio managers, so
Applicants also seek an exemption from that requiring shareholder approval of I. Self-Regulatory Organization’s
the Disclosure Requirements to permit a Sub-Advisory Agreements would Statement of the Terms of Substance of
Subadvised Fund to disclose (as both a impose unnecessary delays and the Proposed Rule Change
dollar amount and a percentage of the expenses on the Subadvised Funds. FINRA is proposing to amend FINRA
Subadvised Fund’s net assets): (a) The Applicants believe that the requested Rule 12214(c) of the Code of Arbitration
aggregate fees paid to the Adviser and relief from the Disclosure Requirements Procedure for Customer Disputes
any Wholly-Owned Sub-Adviser; (b) the meets this standard because it will (‘‘Customer Code’’) and FINRA Rule
aggregate fees paid to Non-Affiliated improve the Adviser’s ability to 13214(c) through (e) of the Code of
Sub-Advisers; and (c) the fee paid to negotiate fees paid to the Sub-Advisers Arbitration Procedure for Industry
each Affiliated Sub-Adviser that are more advantageous for the Disputes (‘‘Industry Code’’ and together,
(collectively, Aggregate Fee Subadvised Funds. ‘‘Codes’’), to provide that FINRA will
Disclosure’’).4 pay each arbitrator a $200 honorarium
For the Commission, by the Division of to decide without a hearing session a
2 As used herein, a ‘‘Sub-Adviser’’ for a
Investment Management, under delegated contested subpoena request or a
Subadvised Fund is (1) an indirect or direct authority. contested order for production or
‘‘wholly owned subsidiary’’ (as such term is defined Eduardo A. Aleman,
in the Act) of the Adviser for that Subadvised Fund,
appearance.
or (2) a sister company of the Adviser for that Assistant Secretary. The text of the proposed rule change
Subadvised Fund that is an indirect or direct [FR Doc. 2018–16155 Filed 7–27–18; 8:45 am] is available on FINRA’s website at
‘‘wholly-owned subsidiary’’ of the same company
BILLING CODE 8011–01–P
http://www.finra.org, at the principal
that, indirectly or directly, wholly owns the Adviser office of FINRA and at the
(each of (1) and (2) a ‘‘Wholly-Owned Sub-Adviser’’
and collectively, the ‘‘Wholly-Owned Sub- Commission’s Public Reference Room.
Advisers’’), or (3) not an ‘‘affiliated person’’ (as such
term is defined in section 2(a)(3) of the Act) of the
II. Self-Regulatory Organization’s
Subadvised Fund, any Feeder Fund invested in a Statement of the Purpose of, and
Master Fund, the Trust, or the Adviser, except to Statutory Basis for, the Proposed Rule
the extent that an affiliation arises solely because Change
the Sub-Adviser serves as a sub-adviser to a
Subadvised Fund (‘‘Non-Affiliated Sub-Advisers’’). In its filing with the Commission,
3 The requested relief will not extend to any sub-
FINRA included statements concerning
adviser, other than a Wholly-Owned Sub-Adviser, the purpose of and basis for the
who is an affiliated person, as defined in section
proposed rule change and discussed any
daltland on DSKBBV9HB2PROD with NOTICES

2(a)(3) of the Act, of the Subadvised Fund, of any
Feeder Fund, or of the Adviser, other than by comments it received on the proposed
reason of serving as a sub-adviser to one or more rule change. The text of these statements
of the Subadvised Funds (‘‘Affiliated Sub- may be examined at the places specified
Adviser’’).
4 For any Subadvised Fund that is a Master Fund,
in Item IV below. FINRA has prepared
the relief would also permit any Feeder Fund
1 15 U.S.C. 78s(b)(1).
invested in that Master Fund to disclose Aggregate
Fee Disclosure. 2 17 CFR 240.19b–4.

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Document Created: 2018-07-28 01:44:43
Document Modified: 2018-07-28 01:44:43
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 11, 2017 and amended on May 3, 2018.
Contact		Christine Y. Greenlees, Senior Counsel, at (202) 551-6879, or Andrea Ottomanelli Magovern, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
FR Citation		83 FR 36646