[Federal Register Volume 76, Number 110 (Wednesday, June 8, 2011)]
[Notices]
[Pages 33376-33377]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-14063]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29689; 812-13851]
Altegris Advisors, L.L.C. and Northern Lights Fund Trust; Notice
of Application
June 1, 2011.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: 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
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Summary of Application: Applicants request an order that would
permit them to enter into and materially amend subadvisory agreements
without shareholder approval.
Applicants: Altegris Advisors, L.L.C. (the ``Adviser'') and
Northern Lights Fund Trust (the ``Trust'').
DATES: Filing Dates: The application was filed on December 8, 2010, and
amended on April 12, 2011, and May 19, 2011.
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 27, 2011, and should be accompanied by proof of
service on the applicants, in the form of an affidavit or, for lawyers,
a certificate of service. Hearing requests should state the nature of
the writer's interest, 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: Adviser, 1200
Prospect Street, Suite 550, La Jolla, CA 92037; Trust: 4020 South 147th
Street, Omaha, NE 68137.
FOR FURTHER INFORMATION CONTACT: Lewis B. Reich, Senior Counsel, at
(202) 551-6919, or Jennifer L. Sawin, Branch Chief, at (202) 551-6821
(Division of Investment Management, Office of Investment Company
Regulation).
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 an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicants' Representations:
1. The Trust, a Delaware statutory trust, is registered under the
Act as an open-end management investment company and comprises
approximately ninety series, including the Altegris Managed Futures
Strategy Fund (the ``MF Fund'') and the Altegris Macro Strategy Fund
(the ``MS Fund''). The MF Fund currently employs one unaffiliated
investment subadviser (a ``Subadviser'') and the MS Fund employs one
Subadviser.\1\ The Adviser is a Delaware limited liability company
registered as an investment adviser under the Investment Advisers Act
of 1940 (``Advisers Act'') and serves as the investment adviser to the
MF Fund and the MS Fund pursuant to investment advisory agreements
(``Advisory Agreements'') with the Trust. The Adviser will also serve
as the investment adviser to the other Funds. The Advisory Agreements
were approved by the Trust's board of trustees (together with the board
of directors or trustees of any other Fund, the ``Board''), including a
majority of the trustees who are not ``interested persons,'' as defined
in section 2(a)(19) of the Act, of the Trust or the Adviser
(``Independent Trustees'') and by the initial shareholder of the MF
Fund and the MS Fund.
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\1\ Applicants also request relief with respect to existing and
future series of the Trust and any other existing or future
registered open-end management investment company or series thereof
that: (a) Is advised by the Adviser; (b) uses the manager of
managers structure (``Manager of Managers Structure'') described in
the application; and (c) complies with the terms and conditions of
the application (together with the MF Fund and the MS Fund, the
``Funds'' and each, individually, a ``Fund.'') The only existing
registered open-end management investment company that currently
intends to rely on the requested order is named as an applicant. The
MF Fund and the MS Fund are the only Funds that currently intend to
rely on the requested order. If the name of any Fund contains the
name of a Subadviser, the name of the Adviser will precede the name
of the Subadviser.
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2. Under the terms of the Advisory Agreements, the Adviser is
responsible for the overall management of the business affairs of the
MF Fund and the MS Fund and selecting those Funds' investments in
accordance with the Funds' respective investment objectives, policies
and restrictions. For the investment management services that it
provides to those Funds, the Adviser receives the fee specified in the
Advisory Agreements. The Advisory Agreements also permit the Adviser to
retain one or more subadvisers for the purpose of managing the
investments of the MF Fund and the MS Fund. Pursuant to this authority,
the Adviser has entered into investment subadvisory agreements with one
Subadviser to provide investment advisory services to the MF Fund and
with another Subadviser to provide investment advisory service to the
MS Fund (such agreements with Subadvisers, ``Subadvisory Agreements'').
Each Subadviser is and each future Subadviser will be registered as an
investment adviser under the Advisers Act. The Adviser will supervise,
evaluate and allocate assets to the Subadvisers, and make
recommendations to the Board about their hiring, retention or release,
at all times subject to the authority of the Board. The Adviser will
compensate each Subadviser out of the fees paid to the Adviser under
the Advisory Agreement.
3. Applicants request an order to permit the Adviser, subject to
Board approval, to enter into and materially amend Subadvisory
Agreements without obtaining shareholder approval. The requested relief
will not extend to any subadviser that is an affiliated person, as
defined in section 2(a)(3) of the Act, of the Trust, a Fund or the
Adviser, other than by reason of serving
[[Page 33377]]
as a subadviser to one or more of the Funds (``Affiliated
Subadviser'').
Applicants' Legal Analysis:
1. Section 15(a) of the Act provides, in relevant part, that it is
unlawful for any person to act as an investment adviser to a registered
investment company except pursuant to a written contract that has been
approved by the vote of a majority of the company's outstanding voting
securities. Rule 18f-2 under the Act provides that each series or class
of securities in a series investment company affected by a matter must
approve that matter if the Act requires shareholder approval.
2. 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
from any rule thereunder, 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. Applicants state that the requested relief meets this standard for
the reasons discussed below.
3. Applicants assert that the shareholders are relying on the
Adviser's experience to select one or more Subadvisers best suited to
achieve a Fund's investment objectives. Applicants assert that, from
the perspective of the investor, the role of the Subadvisers is
comparable to that of the individual portfolio managers employed by the
Adviser. Applicants state that requiring shareholder approval of each
Subadvisory Agreement would impose costs and unnecessary delays on the
Funds, and may preclude the Adviser from acting promptly in a manner
considered advisable by the Board. Applicants note that the Advisory
Agreement and any Subadvisory Agreement with an Affiliated Subadviser
will remain subject to section 15(a) of the Act and rule 18f-2 under
the Act.
Applicants' Conditions:
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Before a Fund may rely on the requested order, the operation of
the Fund in the manner described in the application will be approved by
a majority of the Fund's outstanding voting securities, as defined in
the Act, or in the case of a Fund whose public shareholders purchase
shares on the basis of a prospectus containing the disclosure
contemplated by condition 2 below, by the initial shareholder(s) before
offering shares of that Fund to the public.
2. Each Fund relying on the requested order will disclose in its
prospectus the existence, substance, and effect of any order granted
pursuant to this application. Each Fund will hold itself out to the
public as utilizing the Manager of Managers Structure. The prospectus
will prominently disclose that the Adviser has ultimate responsibility
(subject to oversight by the Board) to oversee the Subadvisers and
recommend their hiring, termination, and replacement.
3. Within 90 days of the hiring of a new Subadviser, shareholders
of the affected Fund will be furnished all information about the new
Subadviser that would be included in a proxy statement. To meet this
obligation, each Fund will provide shareholders within 90 days of the
hiring of a new Subadviser an information statement meeting the
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule
14A under the Securities Exchange Act of 1934.
4. The Adviser will not enter into a subadvisory agreement with any
Affiliated Subadviser without such agreement, including the
compensation to be paid thereunder, being approved by the shareholders
of the applicable Fund.
5. At all times, at least a majority of the Board will be
Independent Trustees, and the nomination of new or additional
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees.
6. Whenever a subadviser change is proposed for a Fund with an
Affiliated Subadviser, the Board, including a majority of the
Independent Trustees, will make a separate finding, reflected in the
applicable Board minutes, that such change is in the best interests of
the Fund and its shareholders, and does not involve a conflict of
interest from which the Adviser or the Affiliated Subadviser derives an
inappropriate advantage.
7. The Adviser will provide general management services to each
Fund, including overall supervisory responsibility for the general
management and investment of each Fund's assets and, subject to review
and approval of the Board, will: (a) Set each Fund's overall investment
strategies; (b) evaluate, select and recommend Subadvisers to manage
all or a part of each Fund's assets; (c) allocate and, when
appropriate, reallocate each Fund's assets among one or more
Subadvisers; (d) monitor and evaluate the performance of Subadvisers;
and (e) implement procedures reasonably designed to ensure that the
Subadvisers comply with each Fund's investment objective, policies and
restrictions.
8. No trustee or officer of the Trust or a Fund, or director,
manager, or officer of the Adviser, will own directly or indirectly
(other than through a pooled investment vehicle that is not controlled
by such person), any interest in a Subadviser, except for (a) ownership
of interests in the Adviser or any entity that controls, is controlled
by, or is under common control with the Adviser or (b) ownership of
less than 1% of the outstanding securities of any class of equity or
debt of any publicly traded company that is either a Subadviser or an
entity that controls, is controlled by, or is under common control with
a Subadviser.
9. In the event the Commission adopts a rule under the Act
providing substantially similar relief to that in the order requested
in the application, the requested order will expire on the effective
date of that rule.
For the Commission, by the Division of Investment Management,
under delegated authority.
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-14063 Filed 6-7-11; 8:45 am]
BILLING CODE 8011-01-P