Federal Register / Vol. 77, No. 61 / Thursday, March 29, 2012 / Notices 19039 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

30007; 813–228] 

Jefferies Employees Special 

Opportunities Partners, LLC, et al.; 

Notice of Application 

March 23, 2012. 

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 sections 9, 

17, 30 and 36 through 53, and the rules 

and regulations under the Act (the 

‘‘Rules and Regulations’’). With respect 

to sections 17(a), (d), (f), (g), and (j) of 

the Act, sections 30(a), (b), (e), and (h) 

of the Act and the Rules and 

Regulations and rule 38a–1 under the 

Act, applicants request a limited 

exemption as set forth in the 

application. 

SUMMARY: Summary of the Application: 

Applicants request an order to exempt 

a limited liability company formed for 

the benefit of eligible employees of 

Jefferies Group, Inc. and its affiliates 

from certain provisions of the Act. The 

limited liability company is an 

‘‘employees’ securities company’’ 

within the meaning of section 2(a)(13) of 

the Act. 

APPLICANTS: Jefferies Employees Special 

Opportunities Partners, LLC (‘‘JESOP’’), 

Jefferies Special Opportunities Advisers, 

LLC (the ‘‘Investment Manager’’) and 

Jefferies & Company, Inc. (the 

‘‘Managing Member’’). 

DATES: Filing Dates: The application was 

filed on January 20, 2000 and amended 

on January 6, 2004, October 17, 2008, 

January 9, 2012, January 11, 2012 and 

March 16, 2012. 

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 April 17, 2012 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, U.S. Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090. 

Applicants, 520 Madison Avenue, 12th 

Floor, New York, New York 10022. 

FOR FURTHER INFORMATION CONTACT: 

Marilyn Mann, Special Counsel, at (202) 

551–6813 or Mary Kay Frech, 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 for an applicant using the 

Company name box, at http:// 

www.sec.gov/search/seach.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. JESOP is a Delaware limited 

liability company and is an employees’ 

securities company within the meaning 

of section 2(a)(13) of the Act. Interests 

in JESOP (‘‘Interests’’) were offered to (i) 

current and former employees, officers, 

directors, and consultants of the 

Jefferies Group, (ii) spouses, parents, 

children, spouses of children, siblings, 

and grandchildren of such persons, (iii) 

trusts and other investment vehicles 

used or created by such persons, and 

(iv) the Managing Member and certain 

other Jefferies Entities. Jefferies Group, 

Inc. and its ‘‘affiliates,’’ as defined in 

rule 12b–2 under the Securities 

Exchange Act of 1934 (the ‘‘Exchange 

Act’’), are referred to collectively as 

‘‘Jefferies Group’’ and individually as a 

‘‘Jefferies Entity.’’ Interests were not 

registered under the Securities Act of 

1933 (‘‘Securities Act’’) in reliance on 

section 4(2) of the Securities Act or 

Regulation D under the Securities Act 

and were sold only to ‘‘accredited 

investors’’ within the meaning of rule 

501(a) of Regulation D. JESOP is not 

currently offering Interests and will not 

do so in the future, nor will it make 

capital calls on existing Interest holders 

(‘‘Members’’). 

2. JESOP will terminate on March 29, 

2013 (the ‘‘Termination’’) and its term 

will not be extended unless at that time 

it is able to rely on section 3(c)(1) of the 

Act. The chief compliance officer of 

JESOP or the Investment Manager will 

certify to the Office of Investment 

Company Regulation of the Division of 

Investment Management every six 

months beginning from the date six 

months following the date of the 

requested order until March 29, 2013 

that JESOP is in compliance with the 

terms and conditions of the requested 

order, as reflected in the application and 

this notice. 

3. JESOP is controlled by the 

Managing Member, within the meaning 

of section 2(a)(9) of the Act. The 

Investment Manager serves as 

investment adviser to JESOP. JESOP 

currently owns only (i) Series E Interests 

of Jefferies High Yield Holdings, LLC 

(‘‘Holdings’’), the sole member of 

Jefferies High Yield Trading, LLC, a 

registered broker-dealer, (ii) ‘‘eligible 

securities,’’ as defined in rule 2a–7 

under the Act (‘‘Eligible Securities’’), 

(iii) shares of money market funds 

registered under the Act, and (iv) cash 

(collectively, ‘‘Permitted Instruments’’). 

JESOP will not hold any assets other 

than Permitted Instruments. 

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 

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

company as any investment company 

all of whose securities (other than shortterm paper) 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 investment companies that are 

not registered under section 8 of the Act 

from selling or redeeming their 

securities. Section 6(e) of the Act 

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 an 

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

Act exempting applicants from all 

provisions of the Act, except sections 9, 

17, 30, 36 through 53, and the Rules and 

Regulations. With respect to sections 

17(a), (d), (f), (g) and (j) and 30(a), (b), 

(e) and (h) of the Act and the Rules and 

Regulations, and rule 38a–1 under the 

Act, applicants request a limited 

exemption as set forth in the 

application. 

3. Section 17(a) of the Act generally 

prohibits any affiliated person of a 

registered investment company, or any 

affiliated person of an affiliated person, 

acting as principal, from knowingly 

selling or purchasing any security or 

mstockstill on DSK4VPTVN1PROD with NOTICES

19040 Federal Register / Vol. 77, No. 61 / Thursday, March 29, 2012 / Notices 

other property to or from the company. 

Applicants request an exemption from 

section 17(a) to permit Holdings, in 

connection with the Termination, to 

engage in any principal transaction 

directly or indirectly with JESOP. 

4. Section 17(d) of the Act and rule 

17d–1 under the Act 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 registered 

investment company unless authorized 

by the Commission. Applicants request 

an exemption from section 17(d) and 

rule 17d–1 to the extent necessary to 

permit JESOP to engage in any 

transactions in which an Affiliated CoInvestor, or an affiliated person of such 

person, is a participant, solely in 

connection with the Termination. The 

requested exemption would permit 

JESOP to redeem its Series E Interests in 

Holdings at or about the same time that 

another Jefferies Entity is redeeming 

another series of interests in Holdings. 

The term ‘‘Affiliated Co-Investor’’ with 

respect to JESOP means any person who 

is (a) an ‘‘affiliated person’’ (as defined 

in section 2(a)(3) of the Act) of JESOP; 

(b) a Jefferies Entity; (c) an officer, 

director, or employee of a Jefferies 

Entity or the Jefferies Group; or (d) an 

entity in which a Jefferies Entity acts as 

general partner, or has a similar capacity 

to control the sale or disposition of the 

entity’s securities. 

5. Section 17(f) of the Act designates 

the entities that may act as investment 

company custodians, and rule 17f–2 

under the Act allows an investment 

company to act as self-custodian. 

Applicants request an exemption to 

permit the following exceptions from 

the requirements of rule 17f–2: (i) 

Compliance with paragraph (b) of the 

rule may be achieved through 

safekeeping in the locked files or secure 

server of a Jefferies Entity; (ii) for the 

purposes of paragraph (d) of the rule, 

(A) employees of the Managing Member 

or a designated affiliate of the Managing 

Member will be deemed to be 

employees of JESOP, (B) officers of the 

Managing Member or a designated 

affiliate of the Managing Member will be 

deemed to be officers of JESOP, and (C) 

the Managing Member or a designated 

affiliate of the Managing Member will be 

deemed to be the board of directors of 

JESOP; and (iii) instead of the 

verification procedure under paragraph 

(f) of the rule, verification will be 

effected quarterly by two employees of 

the Managing Member or a designated 

affiliate of the Managing Member. 

6. 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 of a registered 

investment company (‘‘disinterested 

directors’’) 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. Rule 17g–1(j)(3) requires 

that the board of directors of an 

investment company satisfy the fund 

governance standards defined in rule 0– 

l(a)(7). 

7. Applicants request an exemption 

from rule 17g–1(d), (e) and (g) to the 

extent necessary to permit the Managing 

Member or its affiliates to act and 

approve as required by the rule, rather 

than a majority of the disinterested 

directors of JESOP or of the Managing 

Member. JESOP will comply with all 

other requirements of rule 17g–1, except 

that JESOP requests an exemption from 

the requirements of rule 17g–1(g) and 

(h) relating to the filing of copies of 

fidelity bonds and related information 

with the Commission and relating to the 

provisions of notices to the board of 

directors, and an exemption from the 

requirements of rule 17g–1(j)(3) that 

JESOP comply with the fund 

governance standards defined in rule 0– 

1(a)(7). The Managing Member or an 

affiliate of the Managing Member will 

maintain the materials otherwise 

required to be filed with the 

Commission by rule 17g–1(g) and agrees 

that all such material will be subject to 

examination by the Commission and its 

staff. The Managing Member will 

designate a person to maintain the 

records otherwise required to be filed 

with the Commission under paragraph 

(g) of the rule. 

8. Applicants request an exemption 

from the requirements, contained in 

section 17(j) of the Act and rule 17j–1 

under the Act, that every registered 

investment company adopt a written 

code of ethics and every ‘‘access 

person’’ of such registered investment 

company report to the investment 

company with respect to transactions in 

any security in which such access 

person has, or by reason of the 

transaction acquires, any direct or 

indirect beneficial ownership in the 

security. Applicants request an 

exemption from the requirements in 

rule 17j–1, with the exception of the 

antifraud provisions of rule 17j–1(b), 

because they are burdensome and 

unnecessary and would serve little 

purpose in light of the community of 

interest among Members by virtue of 

their common association with the 

Jefferies Group. 

9. Applicants request an exemption 

from the requirements in sections 30(a), 

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

under those sections, that registered 

investment companies prepare and file 

with the Commission and mail to their 

shareholders certain periodic reports 

and financial statements. Applicants 

request exemptive relief to the extent 

necessary to permit JESOP to report 

annually to its Members. Applicants 

also request an exemption from section 

30(h) of the Act to the extent necessary 

to exempt the Managing Member, the 

Investment Manager, and any other 

persons who are subject to section 30(h), 

from filing Forms 3, 4 and 5 under 

section 16 of the Exchange Act with 

respect to their ownership of Interests. 

10. 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 and to appoint a chief 

compliance officer. JESOP will comply 

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

that (i) because JESOP does not have a 

board of directors, the board of directors 

of the Managing Member will fulfill the 

responsibilities assigned to JESOP’s 

board of directors under the rule, and 

(ii) because the board of directors of the 

Managing Member does not have any 

disinterested members, approval by a 

majority of the disinterested board 

members required by rule 38a–1 will 

not be obtained and (iii) since the board 

of directors of the Managing Member 

does not have any disinterested 

members, JESOP will comply with the 

requirement in rule 38a–1(a)(4)(iv) that 

the chief compliance officer meet with 

the disinterested directors by having the 

chief compliance officer meet with the 

board of directors of the Managing 

Member as constituted. 

Applicants’ Conditions 

Applicants agree that the requested 

order will be subject to the following 

conditions: 

1. Each proposed transaction 

otherwise prohibited by section 17(a) or 

section 17(d) and rule 17d–1 to which 

mstockstill on DSK4VPTVN1PROD with NOTICES

Federal Register / Vol. 77, No. 61 / Thursday, March 29, 2012 / Notices 19041 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

JESOP is a party (each a ‘‘Section 17 

Transaction’’) will be effected only if the 

Investment Manager determines 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 

JESOP and do not involve overreaching 

of JESOP or its Members on the part of 

any person concerned; 

(b) the Section 17 Transaction is 

consistent with the interests of the 

Members of JESOP, JESOP’s constitutive 

documents, and JESOP’s reports to its 

Members; and 

(c) the Section 17 Transaction is 

undertaken only in connection with the 

Termination. 

The Investment Manager will record 

and preserve a description of all Section 

17 Transactions, its findings, the 

information or materials upon which its 

findings are based, and the basis 

therefor. All such records will be 

maintained for the life of JESOP, 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 after such a transaction. 

2. If JESOP makes purchases or sales 

from or to an entity affiliated with 

JESOP because an officer, director or 

employee of the Jefferies Group either: 

(a) Serves as an officer, director, general 

partner or investment adviser of the 

entity, or (b) has a 5% or more 

investment in the entity, such 

individual will not participate in 

JESOP’s determination of whether or not 

to effect the purchase or sale. Any such 

purchase or sale will be made only in 

connection with the Termination. 

3. The Investment Manager 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, that (a) the Section 17 

Transaction is only effected to facilitate 

the Termination, and (b) the possible 

involvement in the Section 17 

Transaction of any affiliated person or 

promoter of or principal underwriter for 

JESOP or any affiliated person of such 

person, promoter or principal 

underwriter, is made in accordance with 

these conditions. 

4. The Investment Manager will not 

invest the funds of JESOP in any 

securities other than Series E Interests of 

Holdings, shares of money market funds 

registered under the Act, and ‘‘eligible 

securities,’’ as that term is defined in 

rule 2a–7 under the Act. 

5. The Managing Member will send, 

or cause to be sent, to each person who 

was a Member in JESOP at any time 

during the fiscal year then ended, 

JESOP’s financial statements audited by 

independent accountants. At the end of 

each fiscal year, as of that year end, the 

Managing Member will make or have a 

valuation made of all the assets of 

JESOP. In addition, within 90 days after 

the end of each fiscal year of JESOP, or 

as soon as practicable thereafter, the 

Managing Member of JESOP shall send, 

or cause to be sent, 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 JESOP 

during such fiscal year. 

6. JESOP, the Managing Member and 

the Investment Manager will maintain 

and preserve, for the life of JESOP and 

at least six years thereafter, such 

accounts, books, and other documents 

as constitute the record forming the 

basis for the audited financial 

statements and annual reports of JESOP 

to be sent to the 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. 

7. The requested relief will terminate 

on March 29, 2013 and after that date 

JESOP will not rely on any Commission 

rule under the Act that provides relief 

permitting the operation of employees’ 

securities companies as such term is 

defined in section 2(a)(13) of the Act. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2012–7519 Filed 3–28–12; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–66651; File No. SR–C2– 

2012–010] 

Self-Regulatory Organizations; C2 

Options Exchange, Incorporated; 

Notice of Filing and Immediate 

Effectiveness of a Proposed Rule 

Change To Amend Its Fees Schedule 

March 23, 2012. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’ ) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 19, 

2012, C2 Options Exchange, 

Incorporated (the ‘‘Exchange’’ or ‘‘C2’’) 

filed with the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the Exchange. 

The Commission is publishing this 

notice to solicit comments on the 

proposed rule change from interested 

persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

Fees Schedule. The text of the proposed 

rule change is available on the 

Exchange’s Web site (http://www.

c2exchange.com/Legal/), at the 

Exchange’s Office of the Secretary, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend a 

number of its application-related fees, as 

listed below: 

Fee 

Current 

fee 

amount 

Proposed 

new fee 

amount 

Application Fee (Organizations) ........... $4,000 $5,000 

Application Fee 

(Sole-Proprietors) .. 2,500 3,000 

Engage in Customer 

Business ................ 2,500 3,000 

Associated Person .... 350 500 

Renewal (Organizations) ..................... 2,000 2,500 

Statutory Disqualification ........................ 2,750 5,000 

Fingerprint ................. 50 60 

The costs of processing these 

applications and activities have 

increased, and the Exchange therefore 

mstockstill on DSK4VPTVN1PROD with NOTICES