[Federal Register Volume 78, Number 95 (Thursday, May 16, 2013)]
[Notices]
[Pages 28904-28906]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-11605]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30512; 812-14089]
CPG Carlyle Private Equity Fund, LLC, et al.; Notice of
Application
May 9, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under section 6(c) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from sections 18(c)
and 18(i) of the Act and for an order pursuant to section 17(d) of the
Act and rule 17d-1 under the Act.
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Summary of Application: Applicants request an order to permit
certain registered closed-end management investment companies to issue
multiple classes of units of beneficial interest (``Units'') with
varying sales loads and to impose asset-based service and/or
distribution fees and contingent deferred sales loads (``CDSCs'').
Applicants: CPG Carlyle Private Equity Fund, LLC (the ``Feeder
Fund''), CPG Carlyle Private Equity Master Fund, LLC (the ``Master
Fund''), and Central Park Advisers, LLC (the ``Adviser'').
Filing Dates: The application was filed on October 30, 2012, and
amended on March 26, 2013 and May 8, 2013.
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 June 3, 2013, 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: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants, c/
o Gary L. Granik, Esq., Stroock & Stroock & Lavan LLP, 180 Maiden Lane,
New York, New York 10038.
FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel,
(202) 551-6811 or Daniele Marchesani, 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 Web site 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 Feeder Fund and the Master Fund are continuously offered
non-diversified closed-end management investment companies registered
under the Act and organized as Delaware limited liability companies.
The Feeder Fund operates as a feeder fund in a master-feeder structure
and intends to invest substantially all of its assets in the Master
Fund. The Master Fund invests primarily in ``alternative'' investment
funds with an emphasis on private equity funds (e.g., buyout, growth,
and mezzanine).
2. The Adviser, a Delaware limited liability company and wholly-
owned subsidiary of Central Park Group, LLC, is registered as an
investment adviser under the Investment Advisers Act of 1940 and serves
as investment adviser to the Feeder Fund and the Master Fund.
3. The Feeder Fund continuously offers its Units \1\ in private
placements in reliance on the provisions of Regulation D under the
Securities Act of 1933. Units of the Feeder Fund are not listed on any
securities exchange and do not trade on an over-the-counter system.
Applicants do not expect that any secondary market will develop for the
Units.
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\1\ ``Units'' includes any other equivalent designation of a
proportionate ownership interest of the Feeder Fund (or any other
registered closed-end management investment company relying on the
requested order).
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4. The Feeder Fund currently offers a single class of Units (the
``Class A Units'') at net asset value per Unit subject to a sales load
and annual asset-based distribution fee. The Feeder Fund proposes to
offer an additional Unit class (the ``Class I Units'') at net asset
value that may (but would not necessarily) be subject to a front-end
sales load and an annual asset-based service and/or distribution fee.
Both classes would be subject to minimum purchase requirements.
5. In order to provide a limited degree of liquidity to
unitholders, the Feeder Fund may from time to time offer to repurchase
Units at their then current net asset value in accordance with rule
13e-4 under the Securities Exchange Act of 1934 (``1934 Act'') pursuant
to written tenders by unitholders.\2\ Repurchases will be made at such
times, in such amounts and on such terms as may be determined by the
Feeder Fund's board of trustees (``Board''), in its sole discretion.\3\
The Adviser
[[Page 28905]]
anticipates to recommend that the Board authorize the Feeder Fund to
offer to repurchase Units from unitholders quarterly.
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\2\ Likewise, the Master Fund's repurchase offers will be
conducted pursuant to rule 13e-4 under the 1934 Act.
\3\ Units are subject to an early withdrawal fee at a rate of
2.00% of the aggregate net asset value of the investors' Units
repurchased by the Feeder Fund (the ``Early Withdrawal Fee'') with
respect to any repurchase of Units from an investor at any time
prior to the day immediately preceding the one-year anniversary of
the investor's purchase of the Units. The Early Withdrawal Fee will
equally apply to all investors of the Feeder Fund, regardless of
class, consistent with section 18 of the Act and rule 18f-3 under
the Act. To the extent the Feeder Fund determines to waive, impose
scheduled variations of, or eliminate the Early Withdrawal Fee, it
will comply with the requirements of rule 22d-1 under the Act as if
it were a CDSC and such waiver, scheduled variation or elimination
will apply uniformly to all unitholders of the Feeder Fund.
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6. Applicants request that the order also apply to any other
continuously offered registered closed-end management investment
company existing now or in the future for which the Adviser, or any
entity controlling, controlled by, or under common control with the
Adviser acts as investment adviser, and which provides periodic
liquidity with respect to its Units through tender offers conducted in
compliance with rule 13e-4 under the 1934 Act.\4\
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\4\ The Feeder Fund and any other entity relying on the
requested relief will do so in a manner consistent with the terms
and conditions of the application.
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7. Applicants represent that any asset-based service and/or
distribution fees will comply with the provisions of rule 2830(d) of
the Conduct Rules of the National Association of Securities Dealers,
Inc. (``NASD Conduct Rule 2830'') as if that rule applied to the Feeder
Fund.\5\ Applicants also represent that the Feeder Fund will disclose
in its Confidential Memorandum, the fees, expenses and other
characteristics of each class of Units offered for sale by the
Confidential Memorandum, as is required for open-end, multiple class
funds under Form N-1A. As is required for open-end funds, the Feeder
Fund will disclose its expenses in unitholder reports, and disclose any
arrangements that result in breakpoints in or elimination of sales
loads in its Confidential Memorandum.\6\ The Feeder Fund will also
comply, and will contractually require its placement agency to comply,
with any requirements that may be adopted by the Commission or FINRA
regarding disclosure at the point of sale and in transaction
confirmations about the costs and conflicts of interest arising out of
the distribution of open-end investment company shares, and regarding
Confidential Memorandum disclosure of sales loads and revenue sharing
arrangements as if those requirements applied to the Feeder Fund.\7\
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\5\ All references to NASD Conduct Rule 2830 include any
successor or replacement rule that may be adopted by the Financial
Industry Regulatory Authority (``FINRA''). Any Fund or Adviser
presently intending to rely on the order requested in this
application is listed as an applicant.
\6\ See Shareholder Reports and Quarterly Portfolio Disclosure
of Registered Management Investment Companies, Investment Company
Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring
open-end investment companies to disclose fund expenses in
shareholder reports); and Disclosure of Breakpoint Discounts by
Mutual Funds, Investment Company Act Release No. 26464 (June 7,
2004) (adopting release) (requiring open-end investment companies to
provide prospectus disclosure of certain sales load information).
\7\ See, e.g., Confirmation Requirements and Point of Sale
Disclosure Requirements for Transactions in Certain Mutual Funds and
Other Securities, and Other Confirmation Requirement Amendments, and
Amendments to the Registration Form for Mutual Funds, Investment
Company Act Release No. 26341 (Jan. 29, 2004) (proposing release).
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8. The Feeder Fund will allocate all expenses incurred by it among
the various classes of Units based on the net assets of the Feeder Fund
attributable to each class, except that the net asset value and
expenses of each class will reflect distribution fees, service fees,
and any other incremental expenses of that class. Expenses of a Feeder
Fund allocated to a particular class of Units will be borne on a pro
rata basis by each outstanding Unit of that class. Applicants state
that the Feeder Fund will comply with the provisions of rule 18f-3
under the Act as if it were an open-end investment company.
9. In the event the Feeder Fund imposes a CDSC, the applicants will
comply with the provisions of rule 6c-10 under the Act, as if that rule
applied to closed-end management investment companies. With respect to
any waiver of, scheduled variation in, or elimination of the CDSC, the
Feeder Fund will comply with rule 22d-1 under the Act as if the Feeder
Fund were an open-end investment company.
Applicants' Legal Analysis
Multiple Classes of Units
1. Section 18(c) of the Act provides, in relevant part, that a
closed-end investment company may not issue or sell any senior security
if, immediately thereafter, the company has outstanding more than one
class of senior security. Applicants state that the creation of
multiple classes of Units of the Feeder Fund may be prohibited by
section 18(c). Section 18(i) of the Act provides that each share of
stock issued by a registered management investment company will be a
voting stock and have equal voting rights with every other outstanding
voting stock. Applicants state that permitting multiple classes of
Units of the Feeder Fund may violate section 18(i) of the Act because
each class would be entitled to exclusive voting rights with respect to
matters solely related to that class.
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 provision of the Act, or from any
rule under the Act, if and to the extent 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 request an exemption under section
6(c) from sections 18(c) and 18(i) to permit the Feeder Fund to issue
multiple classes of Units.\8\
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\8\ The Master Fund will not issue multiple classes of its units
and is an applicant because of the master-feeder structure.
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3. Applicants submit that the proposed allocation of expenses and
voting rights among multiple classes is equitable and will not
discriminate against any group or class of unitholders. Applicants
submit that the proposed arrangements would permit the Feeder Fund to
facilitate the distribution of its Units and provide investors with a
broader choice of unitholder options. Applicants assert that the
proposed closed-end investment company multiple class structure does
not raise the concerns underlying section 18 of the Act to any greater
degree than open-end investment companies' multiple class structures
that are permitted by rule 18f-3 under the Act. Applicants state that
the Feeder Fund will comply with the provisions of rule 18f-3 as if it
were an open-end investment company.
CDSCs
4. Applicants believe that the requested relief meets the standards
of section 6(c) of the Act. Rule 6c-10 under the Act permits open-end
investment companies to impose CDSCs, subject to certain conditions.
Applicants state that any CDSC imposed by the Feeder Fund will comply
with rule 6c-10 under the Act as if the rule were applicable to closed-
end investment companies. The Feeder Fund also will disclose CDSCs in
accordance with the requirements of Form N-1A concerning CDSCs as if
the Feeder Fund were an open-end investment company. Applicants further
state that the Feeder Fund will apply the CDSC (and any waivers or
scheduled variations of the CDSC) uniformly to all unitholders in a
given class and consistently with the requirements of rule 22d-1 under
the Act.
Asset-Based Service and/or Distribution Fees
5. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
an
[[Page 28906]]
affiliated person of a registered investment company or an affiliated
person of such person, acting as principal, from participating in or
effecting any transaction in connection with any joint enterprise or
joint arrangement in which the investment company participates unless
the Commission issues an order permitting the transaction. In reviewing
applications submitted under section 17(d) and rule 17d-1, the
Commission considers whether the participation of the investment
company in a joint enterprise or joint arrangement is consistent with
the provisions, policies and purposes of the Act, and the extent to
which the participation is on a basis different from or less
advantageous than that of other participants.
6. Rule 17d-3 under the Act provides an exemption from section
17(d) and rule 17d-1 to permit open-end investment companies to enter
into distribution arrangements pursuant to rule 12b-1 under the Act.
Applicants request an order under section 17(d) and rule 17d-1 under
the Act to permit the Feeder Fund to impose asset-based service and/or
distribution fees. Applicants have agreed to comply with rules 12b-1
and 17d-3 as if those rules applied to closed-end investment companies.
Applicants' Condition
Applicants agree that any order granting the requested relief will
be subject to the following condition:
Applicants will comply with the provisions of rules 6c-10, 12b-1,
17d-3, 18f-3 and 22d-1 under the Act, as amended from time to time or
replaced, as if those rules applied to closed-end management investment
companies, and will comply with NASD Conduct Rule 2830, as amended from
time to time, as if that rule applied to all closed-end management
investment companies.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-11605 Filed 5-15-13; 8:45 am]
BILLING CODE 8011-01-P