[Federal Register Volume 80, Number 161 (Thursday, August 20, 2015)]
[Notices]
[Pages 50681-50683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20550]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31761; File No. 812-14434]
Archstone Alternative Solutions Fund and A.P. Management Company,
LLC; Notice of Application
August 14, 2015.
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: Summary of Application: Applicants request an order to permit
a registered closed-end management investment company to issue multiple
classes of shares (``Classes'') with varying sales loads and to impose
asset-based service and/or distribution fees.
Applicants: Archstone Alternative Solutions Fund (``Fund'') and
A.P. Management Company, LLC (``Adviser'').
DATES: Filing Dates: The application was filed on March 19, 2015 and
amended on July 14, 2015.
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 September 9, 2015, and should be accompanied by proof of
service on the 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
reasons 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: 360 Madison Avenue,
20th Floor, New York, NY 10017.
FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at (202)
551-6870, or David P. Bartels, 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 Fund will be a continuously offered non-diversified, closed-
end management investment company registered under the Act and
organized as a Delaware statutory trust. The Adviser, a New York
limited liability company, is registered as an investment adviser under
the Investment Advisers Act of 1940 and serves as investment adviser to
the Fund.
2. The Fund will continuously offer its shares pursuant to its
currently effective registration statement under the Securities Act of
1933 (``Securities Act'').\1\ The Fund's shares are not listed on any
securities exchange and do not trade on an over-the-counter system such
as Nasdaq. Applicants do not expect that any secondary market will
develop for the Fund's shares.
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\1\ Shares of the Fund will only be sold to ``accredited
investors'' as defined in regulation D under the Securities Act.
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3. The Fund currently intends to offer a Class of shares at net
asset value per share (``NAV'') which will not be subject to any sales
load or distribution and/or service fees. The Fund proposes to offer an
additional Class of shares that will adopt a distribution and service
plan in compliance with rules 12b-1 and 17d-3 under the Act as if such
rules applied to closed-end management investment companies
(``Distribution and Service Plan'') and which may be subject to a sales
load, a distribution fee (``Distribution Fee''), and/or a service fee
(``Service Fee'').\2\
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\2\ All Classes of shares will be subject to an ``early
withdrawal charge'' (``Repurchase Fee'') if a shareholder has shares
repurchased during the first eleven months following such
shareholder's initial investment in the Fund. The Repurchase Fee
will apply equally to all shareholders of a Fund, regardless of
Class, consistent with section 18 of the Act and rule 18f-3
thereunder. With respect to any waiver of, scheduled variation in,
or elimination of the Repurchase Fee, the Fund will comply with rule
22d-1 under the Act as if the Repurchase Fee were a contingent
deferred sales charge (``CDSC'') and as if the Fund were an open-end
investment company and the Fund's waiver of, scheduled variation in,
or elimination of the Repurchase Fee will apply uniformly to all
shareholders of the Fund regardless of Class.
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4. In order to provide a limited degree of liquidity to
shareholders, the Fund may from time to time offer to repurchase shares
at their then-current NAV in accordance with rule 13e-4 under the 1934
Act pursuant to written
[[Page 50682]]
tenders by shareholders. Repurchases of the Fund's shares are made at
such times, in such amounts and on such terms as may be determined by
the board of trustees of the Fund (``Board'') in its sole discretion.
The Adviser anticipates recommending that the Board authorize the Fund
to offer to repurchase shares from shareholders quarterly.
5. Applicants represent that any asset-based Distribution and
Service 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'').\3\ Applicants also represent that the
Fund will disclose in its prospectus, the fees, expenses and other
characteristics of each Class offered for sale by the prospectus, as is
required for open-end, multiple class funds under Form N-1A. As if it
were an open-end management investment company, the Fund will disclose
fund expenses in shareholder reports, and disclose in its prospectus
any arrangements that result in breakpoints in, or elimination of,
sales loads.\4\ Applicants will also 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 prospectus disclosure of sales
loads and revenue sharing arrangements as if those requirements applied
to the Fund and any distributor of shares of the Fund.\5\
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\3\ Any references to NASD Conduct Rule 2830 include any
successor or replacement Financial Industry Regulatory Authority
Rule to NASD Conduct Rule 2830.
\4\ See Shareholder Reports and Quarterly Portfolio Disclosure
of Registered Management Investment Companies, Investment Company
Act Release No. 26372 (Feb. 27, 2004) (adopting release); and
Disclosure of Breakpoint Discounts by Mutual Funds, Investment
Company Act Release No. 26464 (June 7, 2004) (adopting release).
\5\ See 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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6. The Fund will allocate all expenses incurred by it among the
various Classes based on net assets of the Fund attributable to each
such Class, except that the NAV and expenses of each Class will reflect
the expenses associated with the Distribution and Service Plan of that
Class (if any), and any other incremental expenses of that Class
(including transfer agency fees, if any). Expenses of the Fund
allocated to a particular Class of the Fund's shares will be borne on a
pro rata basis by each outstanding share of that Class. Applicants
state that the Fund will comply with the provisions of rule 18f-3 under
the Act as if it were an open-end investment company.
7. In the event the Fund imposes a CDSC, 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
Fund will comply with the requirements of rule 22d-1 under the Act as
if the Fund were an open-end investment company.
Applicants' Legal Analysis
Multiple Classes of Shares
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 the Fund may be prohibited by section 18(c).
2. 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 the 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.
3. 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 Fund to issue multiple
Classes.
4. 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 shareholders. Applicants
submit that the proposed system would permit the Fund to facilitate the
distribution of Classes through diverse distribution channels and would
provide investors with a broader choice of shareholder 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 the Fund will comply with the provisions of rule
18f-3 as if it were an open-end investment company. Applicants believe
that the requested relief meets the standards of Section 6(c) of the
1940 Act.
CDSCs
5. 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 the Fund does not anticipate imposing CDSCs and
would only do so in compliance with rule 6c-10 under the Act as if that
rule were applied to closed-end investment companies. The Fund also
will make all required disclosures in accordance with the requirements
of Form N-1A concerning CDSCs. Applicants further state that, in the
event the Fund imposes CDSCs, the Fund will apply the CDSCs (and any
waivers or scheduled variations of the CDSCs) uniformly to all
shareholders in a given class and consistently with the requirements of
rule 22d-1 under the Act.
Asset-Based Service and/or Distribution Fees
6. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
an 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 which such registered
company is a joint or a joint and several participant 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.
7. 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
[[Page 50683]]
Fund to impose Distribution Fees and/or Service 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 the 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.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-20550 Filed 8-19-15; 8:45 am]
BILLING CODE 8011-01-P