[Federal Register Volume 79, Number 121 (Tuesday, June 24, 2014)]
[Notices]
[Pages 35822-35823]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-14659]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31087; 812-14297]
Northern Lights Fund Trust, et al.; Notice of Application
June 18, 2014.
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 rule 12d1-2(a)
under the Act.
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SUMMARY: Summary of Application: Applicants request an order to permit
open-end management investment companies relying on rule 12d1-2 under
the Act to invest in certain financial instruments.
Applicants: Northern Lights Fund Trust (the ``Trust''), Clark Capital
Management Group, Inc. (``CLARK'') and Northern Lights Distributors,
LLC (``NLD'').
DATES: Filing Date: The application was filed on April 2, 2014, and
amended on June 11, 2014.
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 July 14, 2014, and should be accompanied by proof of service on
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, Securities and Exchange Commission, 100 F Street
NE., Washington, DC 20549-1090; Applicants: c/o James Ash, Gemini Fund
Services, LLC, 80 Arkay Drive, Suite 110, Hauppauge, NY 11788.
FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at
(202) 551-6876, or Mary Kay Frech, 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.
Applicants' Representations
1. The Trust is organized as a Delaware statutory trust and is
registered under the Act as an open-end management investment company.
CLARK, a Pennsylvania corporation, is registered as an investment
adviser under the Investment Advisers Act of 1940 (``Advisers Act'').
CLARK currently serves as investment adviser to certain series of the
Trust.\1\ NLD, a Nebraska limited liability company and a broker-dealer
registered under the Securities and Exchange Act of 1934 (``Exchange
Act''), serves as the distributor for the Funds (as defined below) that
are series of the Trust.
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\1\ Series of the Trust for which CLARK acts as investment
adviser are the (i) Navigator Equity Hedged Fund, (ii) Navigator
Duration Neutral Municipal Bond Fund, (iii) Navigator Sentry Managed
Volatility Fund, and (iv) Navigator Fixed Income Total Return Fund.
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2. Applicants request the exemption to the extent necessary to
permit any existing or 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 CLARK or any person controlling,
controlled by or under common control with CLARK (any such adviser or
CLARK, an ``Adviser''); (b) invests in other registered open-end
management investment companies (``Underlying Funds'') in reliance on
section 12(d)(1)(G) of the Act; and (c) is also eligible to invest in
securities (as defined in section 2(a)(36) of the Act) in reliance on
rule 12d1-2 under the Act (the ``Funds''), to also invest, to the
extent consistent with its investment objectives, policies, strategies
and limitations, in financial instruments that may not be securities
within the meaning of section 2(a)(36) of the Act (``Other
Investments'').\2\ Applicants also request that the order exempt any
entity controlling, controlled by or under common control with NLD,
that now or in the future acts as principal underwriter with respect to
the transactions described in the application.
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\2\ All entities that currently intend to rely on the requested
order are named as applicants. Any other entity that relies on the
order in the future will comply with the terms and condition of the
application.
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3. Consistent with its fiduciary obligations under the Act, each
Fund's board of trustees will review the advisory fees charged by the
Fund's Adviser to ensure that they are based on services provided that
are in addition to, rather than duplicative of, services provided
pursuant to the advisory agreement of any investment company in which
the Fund may invest.
Applicants' Legal Analysis
1. Section 12(d)(1)(A) of the Act provides that no registered
investment company (``acquiring company'') may acquire securities of
another investment company (``acquired company'') if such securities
represent more than 3% of the acquired company's outstanding voting
stock or more than 5% of the acquiring company's total assets, or if
such securities, together with the securities of other investment
companies, represent more than 10% of the acquiring company's total
assets. Section 12(d)(1)(B) of the Act provides that no registered
open-end investment company may sell its securities to another
investment company if the sale will cause the acquiring company to own
more than 3% of the acquired company's voting stock, or cause more than
10% of the acquired company's voting stock to be owned by investment
companies and companies controlled by them.
2. Section 12(d)(1)(G) of the Act provides, in part, that section
12(d)(1) will not apply to securities of an
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acquired company purchased by an acquiring company if: (i) The acquired
company and acquiring company are part of the same group of investment
companies; (ii) the acquiring company holds only securities of acquired
companies that are part of the same group of investment companies,
government securities, and short-term paper; (iii) the aggregate sales
loads and distribution-related fees of the acquiring company and the
acquired company are not excessive under rules adopted pursuant to
section 22(b) or section 22(c) of the Act by a securities association
registered under section 15A of the Exchange Act or by the Commission;
and (iv) the acquired company has a policy that prohibits it from
acquiring securities of registered open-end investment companies or
registered unit investment trusts in reliance on section 12(d)(1)(F) or
(G) of the Act.
3. Rule 12d1-2 under the Act permits a registered open-end
investment company or a registered unit investment trust that relies on
section 12(d)(1)(G) of the Act to acquire, in addition to securities
issued by another registered investment company in the same group of
investment companies, government securities, and short-term paper: (i)
Securities issued by an investment company that is not in the same
group of investment companies, when the acquisition is in reliance on
section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (ii) securities (other
than securities issued by an investment company); and (iii) securities
issued by a money market fund, when the investment is in reliance on
rule 12d1-1 under the Act. For the purposes of rule 12d1-2,
``securities'' means any security as defined in section 2(a)(36) of the
Act.
4. Section 6(c) of the Act provides that the Commission may exempt
any person, security, or transaction from any provision of the Act, or
from any rule under 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 policies and
provisions of the Act. Applicants submit that their request for relief
meets this standard.
5. Applicants request an order under section 6(c) of the Act for an
exemption from rule 12d1-2(a) to allow the Funds to invest in Other
Investments while investing in Underlying Funds. Applicants state that
the Funds will comply with rule 12d1-2 under the Act, but for the fact
that the Funds may invest a portion of their assets in Other
Investments. Applicants assert that permitting the Funds to invest in
Other Investments as described in the application would not raise any
of the concerns that the requirements of section 12(d)(1) were designed
to address.
Applicants' Condition
Applicants agree that any order granting the requested relief will
be subject to the following condition:
Applicants will comply with all provisions of rule 12d1-2 under the
Act, except for paragraph (a)(2) to the extent that it restricts any
Fund from investing in Other Investments as described in the
application.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-14659 Filed 6-23-14; 8:45 am]
BILLING CODE 8011-01-P