11062 Federal Register / Vol. 72, No. 47 / Monday, March 12, 2007 / Notices 

1The inclusion of entities controlled by an 

Eligible Employee in the definition of Eligible 

Investor is intended to enable Eligible Employees 

and their immediate family members to make 

investments in the Funds through private 

investment vehicles for the purpose of personal and 

family investment and estate planning objectives. 

Eligible Employees will exercise investment 

discretion and control over these investment 

vehicles, thereby creating a close nexus between the 

Firm and these investment vehicles. 

do not include in your comments 

information of a confidential nature, 

such as sensitive personal information 

or proprietary information. 

FOR FURTHER INFORMATION CONTACT: 

Mabel Echols, Office of Information and 

Regulatory Affairs, Office of 

Management and Budget, NEOB, Room 

10201, 725 17th Street, NW., 

Washington, DC 20503. Telephone: 

(202) 395–3093. 

SUPPLEMENTARY INFORMATION: Congress 

directed the Office of Management and 

Budget (OMB) to prepare an annual 

Report to Congress on the Costs and 

Benefits of Federal Regulations. 

Specifically, Section 624 of the FY 2001 

Treasury and General Government 

Appropriations Act, also known as the 

‘‘Regulatory Right-to-Know Act,’’ (the 

Act) requires OMB to submit a report on 

the costs and benefits of Federal 

regulations together with 

recommendation for reform. The Act 

states that the report should contain 

estimates of the costs and benefits of 

regulations in the aggregate, by agency 

and agency program, and by major rule, 

as well as an analysis of impacts of 

Federal regulation on State, local, and 

tribal governments, small businesses, 

wages, and economic growth. The Act 

also states that the report should go 

through notice and comment and peer 

review. 

Steven D. Aitken, 

Acting Administrator, Office of Information 

and Regulatory Affairs. 

[FR Doc. E7–4375 Filed 3–9–07; 8:45 am] 

BILLING CODE 3110–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

27747; 813–284] 

SA Investment Partners LLC, et al.; 

Notice of Application 

March 5, 2007. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under sections 6(b) and 6(e) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) granting an exemption from all 

provisions of the Act, except section 9, 

and sections 36 through 53, and the 

rules and regulations under the Act. 

With respect to sections 17 and 30 of the 

Act, and the rules and regulations 

thereunder, and rule 38a–1 under the 

Act, the exemption is limited as set 

forth in the application. 

SUMMARY OF APPLICATION: Applicants 

request an order to exempt certain 

investment funds formed for the benefit 

of eligible current and former employees 

of Sidley Austin LLP and its affiliates 

from certain provisions of the Act. Each 

fund will be an employees’ securities 

company within the meaning of section 

2(a)(13) of the Act. 

APPLICANTS: SA Investment Partnership 

LLC (the ‘‘Investment Fund’’), and 

Sidley Austin LLP and any entity 

controlling, controlled by, or under 

common control with Sidley Austin LLP 

(the ‘‘Firm’’). 

FILING DATES: The application was filed 

on July 26, 2000, and amended on 

March 8, 2001, March 23, 2001, 

November 14, 2003, and November 13, 

2006. Applicants have agreed to file an 

amendment during the notice period, 

the substance of which is reflected in 

this notice. 

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, March 30, 2007, 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: One South Dearborn, 

Chicago, IL 60603. 

FOR FURTHER INFORMATION CONTACT: 

Deepak T. Pai, Senior Counsel, at (202) 

551–6876 or Julia Kim Gilmer, 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 for a fee at the 

Commission’s Public Reference Branch, 

100 F Street, NE., Washington, DC 

20549–0102 (telephone (202) 551–5850). 

Applicants’ Representations 

1. The Firm is a law firm organized 

as a Delaware limited liability 

partnership. The Investment Fund is a 

Delaware limited liability company. 

Applicants may offer additional pooled 

investment vehicles to the same class of 

investors eligible to invest in the 

Investment Fund (the ‘‘Subsequent 

Funds,’’ and together with the 

Investment Fund, the ‘‘Funds’’) which 

will be substantially similar in all 

material respects to the Investment 

Fund except for investment objectives 

and strategies, operational differences 

related to the form of organization, and 

differences which reflect revisions to 

applicable law. Each Subsequent Fund, 

if any, will be structured as a general 

partnership, limited partnership or 

limited liability company, although a 

Subsequent Fund could be structured as 

a corporation, trust or other entity. The 

Funds will operate as non-diversified, 

closed-end management investment 

companies. 

2. The Funds will enable Eligible 

Investors to participate in investment 

opportunities that come to the attention 

of the Firm. Each entity in which a 

Fund invests is referred to as a 

‘‘Portfolio Company.’’ Participation as 

investors in a Fund will allow Eligible 

Investors (defined below) to diversify 

their investments and to have the 

opportunity to participate in 

investments that might not otherwise be 

available to them or that might be 

beyond their individual means. 

3. Interests in each Fund (‘‘Interests’’) 

will be offered and sold in reliance 

upon the exemption from registration 

contained in Section 4(2) of the 

Securities Act of 1933 (the ‘‘Securities 

Act’’) or Regulation D under the 

Securities Act. Interests will be offered 

solely to investors who, at the time of 

the offer, are: (a) Eligible Employees 

(defined below); (b) trusts of which the 

trustees and/or grantors are Eligible 

Employees or of which the sole 

beneficiaries are Eligible Employees and 

their immediate family members 

(spouses, parents, brothers, sisters, 

children, spouses of children, and 

grandchildren) (‘‘Eligible Trusts’’); (c) 

entities, all of the voting power of which 

is controlled by Eligible Employees 1

(together with Eligible Trusts, 

‘‘Qualified Investment Vehicles’’); (d) 

spouses of Eligible Employees; and (e) 

the Firm (collectively, ‘‘Eligible 

Investors’’). 

4. ‘‘Eligible Employees’’ are current or 

former partners of the Firm, lawyers and 

other professionals employed by the 

Firm, and certain current or former 


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2Any such former partners, lawyers or employees 

will maintain a sufficiently close nexus with the 

Firm so as to preserve the community of interest 

between the Eligible Employee and the Firm. 3 In addition, such Eligible Employee may not 

invest or commit to invest (as applicable) in any 

year more than 10% of such person’s income from 

all sources for the immediately preceding year, in 

the aggregate in a Fund and in all other Funds in 

which that Eligible Employee has previously 

invested. 4 If such Qualified Investment Vehicle is an entity 

other than a trust, the reference to ‘‘settlor’’ shall 

be construed to mean a person who created the 

vehicle, alone or together with others and who 

contributed funds or other assets to the vehicle. 

5An Adviser will register as an investment 

adviser under the Investment Advisers Act of 1940 

(‘‘Advisers Act’’) if required. Any performance fee 

or carried interest payable by a Fund to an Adviser 

(a) will be charged only if permitted by rule 205–

3 under the Advisers Act if paid to an Adviser 

registered under the Advisers Act, and (b) will 

comply with section 205(b)(3) of the Advisers Act 

(with the Fund treated as if it were a business 

development company solely for the purpose of that 

section) if paid to an Adviser not registered under 

the Advisers Act. A ‘carried interest’ is an 

allocation to an Adviser based on the net gains in 

addition to the amount allocable to the Adviser that 

is in proportion to its capital contributions, if any. 

employees of the Firm involved in 

managing the day-to-day affairs of the 

Funds.2 An Eligible Employee must be 

either an accredited investor who meets 

the income requirements in rule 

501(a)(6) of regulation D under the 

Securities Act, or, one of a maximum of 

35 people (collectively, ‘‘NonAccredited Investors’’) who: (a) Meets 

the sophistication requirements in rule 

506(b)(2)(ii) of regulation D under the 

Securities Act, has a graduate degree, a 

minimum of five years of legal or 

business experience, and compensation 

of at least $150,000 in the prior year and 

a reasonable expectation of at least 

$150,000 in each of the two 

immediately succeeding years; 3 or (b) 

meets the definition of a knowledgeable 

employee in rule 3c–5 under the Act 

(with a Fund treated as though it were 

a covered company for purposes of the 

rule. Qualified Investment Vehicles that 

are not accredited investors must (a) 

have an Eligible Employee or a spouse 

of an Eligible Employee as the settlor, 

and the Eligible Employee as principal 

investment decision maker, and (b) be 

counted as one of the 35 NonAccredited Investors.4 A spouse of an 

Eligible Employee must be an accredited 

investor who meets the requirements of 

rule 501(a)(5) or 501(a)(6) of regulation 

D under the Securities Act. Any other 

Eligible Investor must be an accredited 

investor as defined in rule 501(a) of 

Regulation D. Prior to offering Interests 

in a Fund to an Eligible Employee or a 

spouse of an Eligible Employee, the 

Managing Members (defined below) 

must reasonably believe that such 

individual has such knowledge, 

sophistication, and experience in 

business and financial matters to be 

capable of evaluating the merits and 

risks of participating in the Fund, is able 

to bear the economic risk of the 

investment and is able to afford a 

complete loss of the investment. Each 

investor in a Fund shall be a 

(‘‘Member’’) of such Fund. 

5. Administration of the Funds, 

including the screening of investment 

opportunities, will be vested in one or 

more (‘‘Managing Members’’) who are 

also Eligible Investors. Managing 

Members may delegate certain functions 

to one or more investment committees 

consisting of partners or employees of 

the Firm or delegate investment 

decisions to one or more advisers (each, 

an ‘‘Adviser’’). An Adviser will either be 

an individual that is a Managing 

Member, or an entity that is whollyowned by the Firm.5 An Eligible 

Investor who is a Managing Member 

will not receive any form of 

compensation for acting as a Managing 

Member. 

6. The Investment Fund will bear its 

own expenses. No fees or compensation 

shall be paid to the Firm by the Funds, 

except for the reimbursement of direct 

out of pocket costs of disbursements and 

expenses incurred on behalf of such 

Funds. These direct out of pocket 

expenses will not include any markup 

or profit component. 

7. Each Eligible Investor will receive 

a copy of the organizational documents 

and offering memorandum for a Fund, 

which will disclose the Fund’s specific 

investment objective and strategies and 

other material terms of the Fund, before 

investing in such Fund. Each Fund will 

send its Members an annual report 

regarding its operations which will 

contain audited financial statements. 

Each Fund will also transmit a report to 

each Member containing information on 

that Member’s distributive share of 

income, gains, losses, credits and other 

items for federal and state income tax 

purposes, resulting from operations of 

the Fund that year. Members will not be 

entitled to redeem their Interests in the 

Investment Fund, but the Investment 

Fund may in the future be restructured 

to periodically repurchase Interests from 

Members. Subsequent Funds may also 

periodically repurchase Interests from 

Members. Except in the case of death, a 

Member will not be permitted to 

transfer or assign his or her Interest in 

the Investment Fund absent approval of 

a Managing Member. No fee will be 

charged in connection with the sale or 

a Fund’s repurchase of Interests of the 

Funds. 

8. A Member may be required to 

withdraw from a Fund if that Member’s 

continued participation would subject 

the Fund to possible adverse tax 

consequences, or violate applicable law 

or regulations. Upon withdrawal, the 

Member shall receive an amount equal 

to the Member’s net capital 

contributions (capital contributions less 

all distributions received to the date of 

withdrawal) plus interest from the date 

each capital contribution was made at 

the prime rate. 

9. A Fund will not acquire any 

security issued by a registered 

investment company if immediately 

after the acquisition such Fund would 

own more than 3% of the total 

outstanding voting securities of the 

registered investment company. 

10. A Fund or Member will not 

borrow from any person if such 

borrowing would cause any person not 

named in section 2(a)(13) of the Act to 

own outstanding securities of the Fund 

(other than short term paper). Any 

borrowing by a Fund will be nonrecourse to the Fund’s Members. 

11. The applicants reserve the right to 

impose vesting provisions on a 

Member’s investments in a Fund. In an 

investment program that provides for 

vesting, all or a portion of a Member’s 

Interests would be treated as unvested, 

and vesting would occur over a 

specified period of time. To the extent 

a Member’s Interests are or become 

vested, the termination of the Member’s 

association or employment with the 

Firm would not affect the Member’s 

rights with respect to the vested 

Interests. The portion of a Member’s 

Interests that are unvested at the time of 

the termination of a Member’s 

association or employment with the 

Firm may be subject to repurchase or 

cancellation by the Fund. Upon any 

repurchase or cancellation of all or a 

portion of a Member’s Interests, the 

Fund will at a minimum pay to the 

Member the lesser of (a) the amount 

actually paid by the Member to acquire 

the Interests (plus interest at or above 

the prime rate, as determined by the 

Managing Members); and (b) the fair 

market value of the Interests determined 

at the time of repurchase or 

cancellation, as the case may be, as 

determined in good faith by the 

Managing Members. Any interest owed 

to a Member pursuant to (a) above will 

begin to accrue at the end of the 

investment period. 

Applicants’ Legal Analysis 

1. Section 6(b) of the Act provides, in 

part, that the Commission will exempt 

employees’ securities companies from 

the provisions of the Act to the extent 

that the exemption is consistent with 

the protection of investors. Section 6(b) 


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provides that the Commission will 

consider, in determining the provisions 

of the Act from which the company 

should be exempt, the company’s form 

of organization and capital structure, the 

persons owning and controlling its 

securities, the price of the company’s 

securities and the amount of any sales 

load, how the company’s funds are 

invested, and the relationship between 

the company and the issuers of the 

securities in which it invests. Section 

2(a)(13) defines an employees’ securities 

company, in relevant part, as any 

investment company all of whose 

securities are beneficially owned (a) by 

current or former employees, or persons 

on retainer, of one or more affiliated 

employers, (b) by immediate family 

members of such persons, or (c) by such 

employer or employers together with 

any of the persons in (a) or (b). 

2. Section 7 of the Act generally 

prohibits an investment company that is 

not registered under section 8 of the Act 

from selling or redeeming its securities. 

Section 6(e) provides that, in connection 

with any order exempting an investment 

company from any provision of section 

7, certain provisions of the Act, as 

specified by the Commission, will be 

applicable to the company and other 

persons dealing with the company as 

though the company were registered 

under the Act. Applicants request relief 

under sections 6(b) and 6(e) of the Act 

for an exemption from all provisions of 

the Act except section 9 and sections 36 

through 53, and the rules and 

regulations under the Act. With respect 

to sections 17 and 30 of the Act, and the 

rules and regulations thereunder, and 

rule 38a–1 under the Act, the exemption 

is limited as set forth in the application. 

3. Section 17(a) generally prohibits 

any affiliated person of a registered 

investment company, or any affiliated 

person of such an affiliated person, 

acting as principal, from knowingly 

selling or purchasing any security or 

other property to or from the company. 

Applicants request an exemption from 

section 17(a) to the extent necessary to 

permit a Fund: (a) To purchase, from the 

Firm or any affiliated person thereof, 

securities or interests in properties 

acquired for the account of the Firm or 

any affiliated person thereof; (b) to sell, 

to the Firm or any affiliated person 

thereof, securities or interests in 

properties previously acquired by the 

Funds; (c) to invest in companies, 

partnerships, or other investment 

vehicles offered, sponsored or managed 

by the Firm or any affiliated person 

thereof; (d) to invest in securities of 

issuers for which the Firm or any 

affiliated person thereof have performed 

services and from which they may have 

received fees; (e) to purchase interests in 

any company or other investment 

vehicle: (i) In which the Firm or its 

partners or employees own 5% or more 

of the voting securities, or (ii) that is 

otherwise an affiliated person of the 

Fund or the Firm (or any affiliated 

person of the Fund); and (f) to 

participate as a selling security holder 

in a public offering in which the Firm 

or any affiliated person thereof acts as 

or represents as counsel a member of the 

selling group or the issuer or 

underwriter. 

4. Applicants state that an exemption 

from Section 17(a) is consistent with the 

purposes of the Act and the protection 

of investors. Applicants state that the 

risks associated with a Fund engaging in 

transactions with affiliated parties will 

be disclosed to Eligible Investors. 

Applicants state that Eligible Investors, 

as financially sophisticated persons, 

will be able to understand and evaluate 

the risks associated with those dealings. 

Applicants also assert that the 

community of interest among the 

Members and the Firm will serve to 

reduce the risk of abuse in transactions 

involving a Fund and the Firm or any 

affiliated person thereof. 

5. Section 17(d) and rule 17d–1 

thereunder prohibit any affiliated 

person of a registered investment 

company, or any affiliated person of 

such person, acting as principal, from 

participating in any joint arrangement 

with the company unless authorized by 

the Commission. Applicants request 

relief under section 17(d) and rule 17d–

1 to the extent necessary to permit a 

Fund to engage in transactions in which 

an affiliated person of the Fund or an 

affiliated person of such person 

participates as a joint, or a joint and 

several participants with such Fund. 

6. Applicants submit that compliance 

with section 17(d) would cause the 

Funds to forgo investment opportunities 

simply because a Member, the Firm, or 

another affiliated person of a Fund 

made, or is concurrently making, an 

investment. Applicants also state that 

because certain attractive investment 

opportunities often require that each 

participant make available funds in an 

amount that may be substantially greater 

than that available to one Fund alone, 

there may be attractive opportunities 

that a Fund may be unable to take 

advantage of except as a co-participant 

with other persons, including affiliated 

persons. Applicants assert that the 

flexibility to structure co-investments 

and joint investments will not involve 

abuses of the type section 17(d) and rule 

17d–1 were designed to prevent. 

7. Section 17(f) of the Act designates 

the entities that may act as investment 

company custodians, and rule 17f–2 

allows an investment company to act as 

self-custodian, subject to certain 

requirements. Applicants request an 

exemption from section 17(f) and rule 

17f–2 to permit the following exceptions 

from the requirements of rule 17f–2: (a) 

Compliance with paragraph (b) of the 

rule may be achieved through 

safekeeping in the locked files of the 

Firm, a partner of the Firm, or a senior 

administrator of the Firm; (b) for 

purposes of paragraph (d) of the rule, (i) 

employees of the Firm will be deemed 

employees of the Funds, (ii) officers and 

Managing Members of a Fund will be 

deemed to be officers of such Fund, and 

(iii) the Managing Members of a Fund 

will be deemed to be the board of 

directors of such Fund; and (c) instead 

of the verifications procedure under 

paragraph (f) of the rule, the verification 

will be effected quarterly by no fewer 

than two employees of the Firm. 

Applicants state that they expect that 

many of the Funds’ investments are 

most suitably kept in the Firm’s files 

where they can be referred to as 

necessary. 

8. Section 17(g) and rule 17g–1 

generally require the bonding of officers 

and employees of a registered 

investment company who have access to 

its securities or funds. Rule 17g–1 

requires that a majority of directors who 

are not interested persons take certain 

actions and give certain approvals 

relating to fidelity bonding. Paragraph 

(g) of rule 17g–1 sets forth certain 

materials relating to the fidelity bond 

that must be filed with the Commission 

and certain notices relating to the 

fidelity bond that must be given to each 

member of the investment company’s 

board of directors. Paragraph (h) of rule 

17g–1 provides that an investment 

company must designate one of its 

officers to make the filings and give the 

notices required by paragraph (g). 

Paragraph (j) of rule 17g–1 exempts a 

joint insured bond provided and 

maintained by an investment company 

and one or more other parties from 

section 17(d) of the Act and the rules 

thereunder, but also requires, in 17g–

1(j)(3), that the board of directors of 

such company satisfy the fund 

governance standards in rule 0–1(a)(7). 

9. Applicants request an exemption 

from section 17(g) and rule 17g–1 to the 

extent necessary to permit the Managing 

Members, who would all be considered 

interested persons of the Funds, to take 

the actions and make the approvals set 

forth in rule 17g–1. Applicants could 

not comply with rule 17g–1 absent such 

relief. Applicants also request an 

exemption from the requirements of 

17g–1(g) and (h) because applicants 


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believe that they are burdensome and 

unnecessary as applied to the Funds. 

The Managing Members will retain the 

materials required to be filed under 

17g–1(g) and designate a person to 

maintain such records. Finally, 

applicants request an exemption from 

section 17g–1(j)(3) because the Funds 

will not have boards of directors. 

Additionally, in light of the purpose of 

the Funds and the community of 

interest among the Funds, and between 

the Funds and the Managing Members, 

applicants believe that little purpose 

would be served by this requirement. 

10. Section 17(j) and paragraph (b) of 

rule 17j–1 make it unlawful for certain 

enumerated persons to engage in 

fraudulent or deceptive practices in 

connection with the purchase or sale of 

a security held or to be acquired by a 

registered investment company. Rule 

17j–1 also requires that every registered 

investment company adopt a written 

code of ethics and that every access 

person of a registered investment 

company report personal securities 

transactions. Applicants request an 

exemption from the requirements of rule 

17j–1, except for the anti-fraud 

provisions of paragraph (b), because 

they are unnecessarily burdensome as 

applied to the Funds and would serve 

little purpose in light of the community 

of interests among the Members of the 

Funds by virtue of their common 

association with the Firm. 

11. Applicants request an exemption 

from the requirements in sections 30(a), 

30(b) and 30(e) of the Act, and the rules 

and regulations thereunder, that 

registered investment companies file 

with the Commission and mail their 

shareholders certain periodic reports 

and financial statements. Applicants 

contend that the forms prescribed by the 

Commission for periodic reports have 

little relevance to a Fund and would 

entail administrative and legal costs that 

outweigh any benefit to the Members. 

Applicants request exemptive relief to 

the extent necessary to permit a Fund to 

report annually to its Members in the 

manner described in the application. 

Applicants also request an exemption 

from section 30(h) of the Act to the 

extent necessary to exempt the 

Managing Members and any other 

persons who may be deemed to be 

members of an advisory board of a Fund 

from filing Forms 3, 4, and 5, under 

Section 16 of the Securities Exchange 

Act of 1934, as amended (‘‘Exchange 

Act’’) with respect to their ownership of 

Interests in a Fund. Applicants assert 

that, because there is no trading market 

for Interests and the transferability of 

Interests is severely restricted, these 

filings are unnecessary for the 

protection of investors and burdensome 

to those required to file them. 

12. Rule 38a–1 requires investment 

companies to adopt, implement and 

periodically review written policies and 

procedures reasonably designed to 

prevent violation of the federal 

securities laws, appoint a chief 

compliance officer and maintain certain 

records. The Funds will comply with 

rule 38a–1(a), (c) and (d), except that the 

Managing Members of each Fund will 

fulfill the responsibilities assigned to a 

Fund’s board of directors under the rule, 

and since all Managing Members would 

be considered interested persons of the 

Funds, approval by a majority of the 

disinterested directors required by rule 

38a–1 will not be obtained. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Each proposed transaction to which 

a Fund is a party otherwise prohibited 

by section 17(a) or section 17(d) and 

Rule 17d–1 (the ‘‘Section 17 

Transactions’’) will be effected only if 

the Managing Members determine that: 

(a) The terms of the Section 17 

Transaction, including the 

consideration to be paid or received, are 

fair and reasonable to the Members of 

the participating Fund and do not 

involve overreaching of the Fund or its 

Members on the part of any person 

concerned, and (b) the Section 17 

Transaction is consistent with the 

interests of the Members of the 

participating Fund, the Fund’s 

organizational documents and the 

Fund’s reports to its Members. In 

addition, the Managing Members will 

record and preserve a description of 

Section 17 Transactions, their findings, 

the information or materials upon 

which their findings are based and the 

basis therefore. All such records will be 

maintained for the life of a Fund and at 

least six years thereafter, and will be 

subject to examination by the 

Commission and its staff. All such 

records will be maintained in an easily 

accessible place for at least the first two 

years. 

2. If purchases or sales are made by 

a Fund from or to a Portfolio Company 

affiliated with the Fund by reason of a 

partner or employee of the Firm (a) 

serving as officer, director, general 

partner or investment adviser of the 

Portfolio Company, or (b) having a 5% 

or more investment in the Portfolio 

Company, such individual will not 

participate in the Fund’s determination 

of whether or not to effect the purchase 

or sale. 

3. The Managing Members will adopt, 

and periodically review and update, 

procedures designed to ensure that 

reasonable inquiry is made, prior to the 

consummation of any Section 17 

Transaction, with respect to the possible 

involvement in the transaction of any 

affiliated person or promoter of or 

principal underwriter for the Funds, or 

any affiliated person of such a person, 

promoter, or principal underwriter. 

4. The Managing Members will not 

make available to the Members of a 

Fund any investment in which a CoInvestor (as defined below), with respect 

to any Fund, has or proposes to acquire 

the same class of securities of the same 

issuer, where the investment may 

involve a joint enterprise or other joint 

arrangement within the meaning of rule 

17d–1 in which the Fund and the CoInvestor are participants, unless any 

such Co-Investor, prior to disposing of 

all or part of its investment: (a) Gives 

the Managing Members of the 

participating Fund holding such 

investment sufficient, but not less than 

one day’s, notice of its intent to dispose 

of its investment, and (b) refrains from 

disposing of its investment unless the 

participating Fund holding such 

investment has the opportunity to 

dispose of its investment prior to or 

concurrently with, on the same terms as, 

and on a pro rata basis with, the CoInvestor. The term (‘‘Co-Investor’’) with 

respect to any Fund, means any person 

who is: (a) An ‘‘affiliated person’’ (as 

such term is defined in section 2(a)(3) 

of the Act) of the Fund, (b) the Firm and 

any entities controlled by the Firm, (c) 

a current or former partner or employee 

of the Firm, (d) an investment vehicle 

offered, sponsored, or managed by the 

Firm or an affiliated person of the Firm, 

or (e) a company in which the Firm or 

a Managing Member acts as an officer, 

director, or general partner, or has a 

similar capacity to control the sale or 

disposition of the company’s securities. 

The restrictions contained in this 

condition, however, shall not be 

deemed to limit or prevent the 

disposition of an investment by a CoInvestor: (a) To its direct or indirect 

wholly-owned subsidiary, to any 

company (a ‘‘parent’’) of which the CoInvestor is a direct or indirect whollyowned subsidiary, or to a direct or 

indirect wholly-owned subsidiary of its 

parent, (b) to immediate family 

members of the Co-Investor or a trust 

established for any such family member, 

(c) when the investment is comprised of 

securities that are listed on a national 

securities exchange registered under 

section 6 of the Exchange Act, or (d) 

when the investment is composed of 

securities that are national market 


pwalker on PROD1PC71 with NOTICES
11066 Federal Register / Vol. 72, No. 47 / Monday, March 12, 2007 / Notices 

1 15 U.S.C. 78k–1. 

2 17 CFR 242.608. 

3The ITS Plan is a National Market System 

(‘‘NMS’’) plan, which was designed to facilitate 

intermarket trading in exchange-listed equity 

securities based on current quotation information 

emanating from the linked markets. See Securities 

Exchange Act Release No. 19456 (January 27, 1983), 

48 FR 4938 (February 3, 1983). 

The ITS Participants currently include the 

American Stock Exchange LLC (‘‘Amex’’), the 

Boston Stock Exchange, Inc. (‘‘BSE’’), the Chicago 

Board Options Exchange, Inc. (‘‘CBOE’’), the 

Chicago Stock Exchange, Inc. (‘‘CHX’’), the Nasdaq 

Stock Market LLC (‘‘Nasdaq’’), the National 

Association of Securities Dealers, Inc. (‘‘NASD’’), 

the National Stock Exchange, Inc. (‘‘NSX’’), the New 

York Stock Exchange LLC (‘‘NYSE’’), NYSE Arca, 

Inc. (‘‘NYSE Arca’’), and the Philadelphia Stock 

Exchange, Inc. (‘‘Phlx’’) (‘‘Participants’’). 

4Trading Phase Date is the required date for full 

operation of Regulation NMS-compliant trading 

systems of all automated trading centers that intend 

to qualify their quotations for trade-through 

protection under Rule 611. See Securities Exchange 

Act Release No. 53829 (May 18, 2006), 71 FR 30038 

(May 24, 2006). See also Securities Exchange Act 

Release No. 55160 (January 24, 2007), 72 FR 4202 

(January 30, 2007) (extending the Trading Phase 

Date until March 5, 2007). 

5 17 CFR 242.608(b)(3)(ii). 

6The NMS Linkage Plan participants include 

Amex, BSE, CBOE, CHX, Nasdaq, NSX, NYSE, 

NYSE Arca, and PHLX. The NASD is not 

participating in the NMS Linkage Plan. The current 

ITS technology is being used to effectuate the NMS 

Linkage Plan. See Securities Exchange Act Release 

No. 54551 (September 29, 2006), 71 FR 59148 

(October 6, 2006) (approving the NMS Linkage 

Plan). 

7NMS Linkage Plan participants that wish to 

extend the term could agree to do so, subject to 

Commission approval. See Section 11 of the NMS 

Linkage Plan. 

system securities pursuant to section 

11A(a)(2) of the Exchange Act and rule 

11Aa2–1 thereunder. 

5. The Managing Members of each 

Fund will send to each Member who 

had an Interest in that Fund, at any time 

during the fiscal year then ended, Fund 

financial statements. Such financial 

statements shall be audited by 

independent accountants in accordance 

with United States generally accepted 

accounting principles. At the end of 

each fiscal year, the Managing Members 

will make a valuation or have a 

valuation made of all of the assets of the 

Fund as of such fiscal year end in a 

manner consistent with customary 

practice with respect to the valuation of 

assets of the kind held by the Fund. In 

addition, within 90 days after the end of 

each tax year of the Fund, or as 

promptly as practicable thereafter, the 

Managing Members shall send a report 

to each person who was a Member at 

any time during the fiscal year then 

ended, setting forth such tax 

information as shall be necessary for the 

preparation by the Member of his or her 

federal and state income tax returns and 

a report of the investment activities of 

the Fund during such year. 

6. Each Fund and its Managing 

Members will maintain and preserve, 

for the life of each such Fund and at 

least six years thereafter, such accounts, 

books, and other documents as 

constitute the record forming the basis 

for the financial statements and annual 

reports of such Fund to be provided to 

its Members, and agree that all such 

records will be subject to examination 

by the Commission and its staff. All 

such records will be maintained in an 

easily accessible place for at least the 

first two years. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E7–4291 Filed 3–9–07; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55397; File No. 4–208] 

Intermarket Trading System; Notice of 

Filing and Immediate Effectiveness of 

the Twenty Fourth Amendment to the 

ITS Plan Relating to the Elimination of 

the ITS Plan 

March 5, 2007. 

Pursuant to Section 11A of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 608 thereunder,2

notice is hereby given that on February 

27, 2007, the ITS Participants, through 

the ITS Operating Committee, submitted 

to the Securities and Exchange 

Commission (‘‘Commission’’) a 

proposed amendment (‘‘Twenty Fourth 

Amendment’’) to the restated ITS Plan.3

The purpose of the Twenty Fourth 

Amendment is to eliminate the ITS Plan 

concurrent with the Trading Phase 

Date.4 Pursuant to Rule 608(b)(3)(ii) 

under the Act,5 the ITS Participants 

designated the amendment as concerned 

solely with the administration of the 

Plan. As a result, the Twenty Fourth 

Amendment has become effective upon 

filing with the Commission. At any time 

within 60 days of the filing of the 

amendment, the Commission may 

summarily abrogate the amendment and 

require that such amendment be refiled 

in accordance with paragraph (a)(1) of 

Rule 608 and reviewed in accordance 

with paragraph (b)(2) of Rule 608, if it 

appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or the maintenance of fair and 

orderly markets, to remove impediments 

to, and perfect the mechanisms of, a 

national market system or otherwise in 

furtherance of the purposes of the Act. 

The Commission is publishing this 

notice to solicit comments from 

interested persons. 

I. Description and Purpose of the 

Proposed Amendment 

The purpose of the proposed 

amendment is to eliminate the ITS Plan 

concurrent with the Trading Phase Date. 

The ‘‘Plan for the Purpose of Creating 

and Operating an Intermarket 

Communications Linkage Pursuant to 

Section 11A(a)(3)(B) of the Securities 

Exchange Act of 1934’’ (‘‘NMS Linkage 

Plan’’) 6 remains in effect until June 30, 

2007.7

A. Governing or Constituent Documents 

Not applicable. 

B. Implementation of Amendment 

The ITS Participants have manifested 

their approval of the proposed 

amendment by means of their execution 

of the Twenty Fourth Amendment. The 

Twenty Fourth Amendment has become 

effective upon filing. 

C. Development and Implementation 

Phases 

Not applicable. 

D. Analysis of Impact on Competition 

The Participants believe that the 

proposed amendment does not impose 

any burden on competition. 

E. Written Understanding or Agreements 

Relating to Interpretation of, or 

Participation in, Plan 

Not applicable. 

F. Approval by Sponsors in Accordance 

With Plan 

Under section 4(c) of the restated ITS 

Plan, the requisite approval of the 

amendment is achieved by execution of 

the amendment on behalf of each ITS 

Participant. The amendment is so 

executed. 

G. Description of Operation of Facility 

Contemplated by the Proposed 

Amendment 

Not applicable. 

H. Terms and Conditions of Access 

Not applicable. 

I. Method of Determination and 

Imposition, and Amount of, Fees and 

Charges 

Not applicable. 

J. Method of Frequency of Processor 

Evaluation 

Not applicable. 


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