[Federal Register Volume 86, Number 37 (Friday, February 26, 2021)]
[Notices]
[Pages 11815-11817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-03966]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34198; 812-15205]


Infinity Q Diversified Alpha Fund, a Series of Trust for Advised 
Portfolios, and Infinity Q Capital Management, LLC; Notice of 
Application and Temporary Order

February 22, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application and a temporary order under Section 
22(e)(3) of the Investment Company Act of 1940 (the ``Act'').

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Summary of Application:  Applicants request a temporary order to permit 
Infinity Q Diversified Alpha Fund (the ``Fund''), a series of Trust for 
Advised Portfolios (the ``Trust''), to suspend the right of redemption 
of its outstanding redeemable securities.

Applicants:  The Trust, on behalf of the Fund, and Infinity Q Capital 
Management LLC, the Fund's investment adviser (``Infinity Q'' and 
together with the Trust, the ``Applicants'').

Filing Date: The application was filed on February 22, 2021.

Hearing or Notification of Hearing:  Interested persons may request a 
hearing by writing to the Commission's Secretary at <a href="/cdn-cgi/l/email-protection#71221412031405100308025c3e1717181214310214125f161e07"><span class="__cf_email__" data-cfemail="7b281e18091e0f1a09020856341d1d12181e3b081e18551c140d">[email protected]</span></a> 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 March 19, 2021, 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, 
<a href="/cdn-cgi/l/email-protection#4d1e282e3f28392c3f343e60022b2b242e280d3e282e632a223b"><span class="__cf_email__" data-cfemail="c794a2a4b5a2b3a6b5beb4ea88a1a1aea4a287b4a2a4e9a0a8b1">[email protected]</span></a>. Applicants: Trust, on behalf of the Fund, c/
o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, Wisconsin 
53201-0701, with copies to Christopher D. Menconi, Esq., Ivan P. 
Harris, Esq., Morgan, Lewis & Bockius LLP, 1111 Pennsylvania Avenue NW, 
Washington, DC 20004; Infinity Q, 888 Seventh Avenue, Suite 3700, New 
York, NY 10106, with copies to Alexander J. Willscher, Esq., Frederick 
Wertheim, Esq., Sullivan & Cromwell LLP, 125 Broad Street, New York, NY 
10004.

FOR FURTHER INFORMATION CONTACT: Daniel T. Gallagher, Attorney-Adviser, 
Jennifer L. Sawin, Senior Counsel, or Janet M. Grossnickle, Assistant 
Director, at (202) 551-6821 (Division of Investment Management, Chief 
Counsel's Office).

SUPPLEMENTARY INFORMATION: 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.

Background

    1. The Trust is registered under the Act as an open-end series 
management investment company. Infinity Q is the investment adviser to 
the Fund, a series of the Trust. Infinity Q is registered as an 
investment adviser under the Investment Advisers Act of 1940. Infinity 
Q valued its assets under management as of January 31, 2021, at 
approximately $3.0 billion, of which approximately $1.8 billion was 
attributable to the Fund. The Fund is a ``commodity pool'' under the 
U.S. Commodity Exchange Act, and Infinity Q is a ``commodity pool 
operator'' registered with and regulated by the Commodity Futures 
Trading Commission.
    2. Applicants state that the request for relief arises from 
Infinity Q's inability, as required under the Fund's valuation 
procedures, to value certain Fund holdings and the Fund's resulting 
inability to calculate net asset value (``NAV''). According to 
Applicants, the Fund's current portfolio includes swap instruments (the 
``Swaps'') for which

[[Page 11816]]

Infinity Q calculates fair value using models provided by a third-party 
pricing vendor. Applicants state that as of February 18, 2021, the 
Fund's reported NAV was derived using a valuation for these Swaps that 
resulted in the value of the Swaps constituting approximately 18% of 
the Fund's reported NAV. Applicants state that on February 18, 2021, 
based on information learned by the Commission staff and shared with 
Infinity Q, Infinity Q informed the Fund that Infinity Q's Chief 
Investment Officer had been adjusting certain parameters within the 
third-party pricing model that affected the valuation of the Swaps. 
Applicants state that on February 19, 2021, Infinity Q informed the 
Fund that at such time it was unable to conclude that these adjustments 
were reasonable, and, further, that it was unable to verify that the 
values it had previously determined for the Swaps were reflective of 
fair value. Applicants state further that Infinity Q also informed the 
Fund that it would not be able to calculate a fair value for any of the 
Swaps in sufficient time to calculate an accurate NAV for at least 
several days.
    3. Applicants represent that they have begun the effort to value 
these Swap positions accurately and have retained an independent 
valuation expert. They currently believe that this may take several 
days or weeks. Applicants state that Infinity Q and the Fund are also 
determining whether the fair values previously calculated for positions 
other than the Swaps are reliable, and the extent of the impact on 
historical valuations. According to Applicants, as a result, the Fund 
was unable to calculate an NAV on February 19, 2021, and it is 
uncertain when the Fund will be able to calculate an NAV that would 
enable it to satisfy requests for redemptions of Fund shares.
    4. Applicants believe that the best course of action for current 
and former shareholders of the Fund is to liquidate the Fund in a 
reasonable period of time, determine the extent and impact of the 
historical valuation errors, and return the maximum amount of proceeds 
to such shareholders. Applicants represent that relief permitting the 
Fund to suspend redemptions and postpone the date of payment of 
redemption proceeds with respect to redemption orders received but not 
yet paid will permit the Fund to arrive at a valuation for the Swaps 
and any other portfolio holdings for which current and reliable market 
quotations are not available, and to liquidate its holdings in an 
orderly manner.

Relief Requested

    1. Applicants request an order pursuant to Section 22(e) of the Act 
to suspend the right of redemption with respect to shares of the Fund 
effective February 19, 2021, and postpone the date of payment of 
redemption proceeds with respect to redemption orders received but not 
yet paid as of February 22, 2021, for more than seven days after the 
tender of securities to the Fund, until the Fund completes the 
liquidation of its portfolio and distributes all its assets to current 
and former shareholders, as described in the conditions, or until the 
Commission rescinds the order granted herein. Applicants believe that 
the relief requested is appropriate for the protection of shareholders 
of the Fund.

Applicants' Legal Analysis

    1. Section 22(e)(1) of the Act provides that a registered 
investment company may not suspend the right of redemption or postpone 
the date of payment or satisfaction upon redemption of any redeemable 
security in accordance with its terms for more than seven days after 
the tender of such security to the company or its designated agent 
except for any period during which the New York Stock Exchange 
(``NYSE'') is closed other than customary week-end and holiday 
closings, or during which trading on the NYSE is restricted.
    2. Section 22(e)(3) of the Act provides that redemptions may be 
suspended by a registered investment company for such other periods as 
the Commission may by order permit for the protection of security 
holders of the registered investment company.
    3. Applicants submit that granting the requested relief would be 
for the protection of the shareholders of the Fund, as provided in 
Section 22(e)(3) of the Act. Applicants assert that in requesting an 
order by the Commission, the goal of the Board of Trustees of the Trust 
(the ``Board'') and Infinity Q is to ensure that the Fund's current and 
former shareholders will be treated appropriately in view of the 
otherwise detrimental effect on the Fund of Infinity Q's inability to 
calculate a fair value for any of the Swaps and an accurate NAV for the 
fund. The requested relief is intended to permit an orderly liquidation 
of the Fund's portfolio and ensure that all of the shareholders are 
protected in the process.

Applicants' Conditions

    Applicants agree that any order of the Commission granting the 
requested relief will be subject to the following conditions:
    1. The Board, including a majority of the independent Trustees, 
will: (A) Create a plan for the orderly liquidation of Fund assets 
(``Asset Liquidation Plan'') and will submit the Asset Liquidation Plan 
to the staff of the Division of Investment Management no later than 
March 1, 2021; and (B) create a plan for making appropriate payments to 
current and former Fund shareholders (the ``Plan of Distribution''), 
including those whose redemption orders have been received but not 
paid, and will submit the Plan of Distribution to the staff of the 
Division of Investment Management no later than 90 days following the 
date of the order.\1\ The Asset Liquidation Plan and the Plan of 
Distribution will be subject to the supervision of the Commission.
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    \1\ In developing the Plan of Distribution, the Board will 
assess the impact of errors in the calculation of the Fund's net 
asset value with respect to current and former shareholders and 
consider the importance of maintaining regulated investment company 
status under subchapter M of the Internal Revenue Code of 1986, as 
amended. For good cause shown, the Commission staff may extend any 
of the dates set forth in the Order. Deadlines for procedural dates 
shall be counted in calendar days, except that if the last day falls 
on a weekend or federal holiday, the next business day shall be 
considered the last day.
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    2. The Trust, on behalf of the Fund, will engage an independent 
third party to assist in determining the fair value of the Swaps and 
any other Fund holdings for which current and reliable market 
quotations are not readily available, including re-evaluating the 
historical valuations of the Fund.
    3. Without the prior written approval of the Board or the Board's 
designee (other than Infinity Q), Infinity Q and any of its associated 
persons shall not direct any transactions, access assets of the Fund or 
make or alter any valuations of the Fund's portfolio.
    4. Pending distribution, the Fund (with the prior written approval 
of the Board or a designee of the Board other than Infinity Q) will 
invest proceeds of cash dispositions of portfolio holdings solely in 
U.S. government securities, cash equivalents, securities eligible for 
purchase by a registered money market fund with legal maturities not in 
excess of 90 days and, if the Board determines to be necessary to 
protect the value of a portfolio position in a rights offering or other 
dilutive transaction, additional securities of the affected issuer. The 
Fund (with the prior written approval of the Board or a designee of the 
Board other than Infinity Q) may also invest cash in positions that 
offset existing portfolio positions or enter into other

[[Page 11817]]

hedging transactions in connection with the orderly liquidation.
    5. The Fund will make liquidating cash distributions solely in 
accordance with the Plan of Distribution.
    6. The Fund and Infinity Q will make and keep true, accurate and 
current all appropriate records, including but not limited to those 
surrounding the events leading to the requested relief, the Asset 
Liquidation Plan, the Plan of Distribution (and distributions made 
pursuant thereto), the valuation and sale of Fund portfolio holdings, 
and communications with shareholders (including any complaints from 
shareholders and responses thereto).
    7. The Fund and Infinity Q will promptly make available to 
Commission staff all files, books, records and personnel, as requested, 
relating to the Fund.
    8. The Fund and Infinity Q will provide periodic reporting, no less 
frequently than weekly, to Commission staff regarding all activities 
carried out pursuant to the Asset Liquidation Plan and the Plan of 
Distribution.
    9. Infinity Q, its affiliates, and its and their associated 
persons, will not receive any fee for managing the Fund.
    10. The Fund will be in liquidation and will not be engaged and 
does not propose to engage in any business activities other than those 
necessary for the protection of its assets, the protection of current 
and former shareholders and the winding-down of its affairs.
    11. The Fund and Infinity Q will appropriately convey accurate and 
timely information to current and former shareholders of the Fund with 
regard to the status of the Fund and its liquidation (including posting 
such information on the Fund's website), including, without limitation, 
information concerning the dates and amounts of distributions, press 
releases and periodic reports, and will maintain a toll-free number to 
respond to shareholder inquiries.
    12. The Fund shall consult with Commission staff prior to making 
any material amendments to the Asset Liquidation Plan and the Plan of 
Distribution.
    13. The Fund will comply with the requirements of Section 30 of the 
Act and the rules thereunder and will file a report containing a 
liquidation audit, i.e., audited financial statements dated as of or 
near the final distribution date, promptly following the Fund's final 
liquidating distribution.
    14. The Fund and Infinity Q will comply with all provisions of the 
Federal securities laws.
    15. The relief granted pursuant to this application shall be 
without prejudice to, and shall not limit the Commission's rights in 
any manner with respect to, any Commission investigation of, or legal 
proceedings involving or against the Applicants.

Commission Finding

    Based on the representations and conditions in the application, the 
Commission permits the temporary suspension of the right of redemption 
for the protection of the Fund's security holders. Under the 
circumstances described in the application, which require immediate 
action to protect the Fund's security holders, the Commission concludes 
that it is not practicable to give notice or an opportunity to request 
a hearing before issuing the order.
    It is ordered, pursuant to Section 22(e)(3) of the Act, that the 
requested relief from Section 22(e) of the Act is granted with respect 
to the Fund until it has liquidated, or until the Commission rescinds 
the order granted herein. This order shall be in effect as of February 
22, 2021, with suspension of redemption requests as requested by the 
Applicants to be effective as of February 19, 2021.

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-03966 Filed 2-25-21; 8:45 am]
BILLING CODE 8011-01-P


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