19242 Federal Register / Vol. 74, No. 80 / Tuesday, April 28, 2009 / Notices 

the Comptroller of the Currency, the 

Board of Governors of the Federal 

Reserve System, the Federal Deposit 

Insurance Corporation, and the Office of 

Thrift Supervision (together, the 

‘‘Agencies’’), in May 2006. The 

Statement describes the types of internal 

controls and risk management 

procedures that the Agencies believe are 

particularly effective in assisting 

financial institutions to identify and 

address the reputational, legal, and 

other risks associated with elevated risk 

complex structured finance 

transactions. 

The primary purpose of the Statement 

is to ensure that these transactions 

receive enhanced scrutiny by the 

institution and to ensure that the 

institution does not participate in illegal 

or inappropriate transactions. 

The Commission estimates that 

approximately 5 registered brokerdealers or investment advisers will 

spend an average of approximately 25 

hours per year complying with the 

Statement. Thus, the total compliance 

burden is estimated to be approximately 

125 burden-hours per year. 

Written comments are invited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 

(b) the accuracy of the Commission’s 

estimates of the burden of the proposed 

collection of information; (c) ways to 

enhance the quality, utility, and clarity 

of the information to be collected; and 

(d) ways to minimize the burden of the 

collection of information on 

respondents, including through the use 

of automated collection techniques or 

other forms of information technology. 

Consideration will be given to 

comments and suggestions submitted in 

writing within 60 days of this 

publication. 

Comments should be directed to 

Charles Boucher, Director/Chief 

Information Officer, Securities and 

Exchange Commission, c/o Shirley 

Martinson, 6432 General Green Way, 

Alexandria, VA 22312 or send an e-mail 

to: PRA_Mailbox@sec.gov. 

Dated: April 20, 2009. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–9554 Filed 4–27–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28700; File No. 813–00274] 

William Blair & Company, L.L.C. and 

Wilblairco II, L.L.C.; Notice of 

Application 

April 22, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of 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 of the Act 

and the rules and regulations under 

those sections. 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 

limited partnerships and other 

investment vehicles formed for the 

benefit of eligible employees of William 

Blair & Company, L.L.C. (‘‘Blair’’) and 

its affiliates from certain provisions of 

the Act. Each limited partnership or 

other investment vehicle will be an 

‘‘employees’ securities company’’ 

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

the Act. 

APPLICANTS: Blair and Wilblairco II, 

L.L.C. (the ‘‘Initial Company’’). 

FILING DATES: The application was filed 

on June 8, 2000, and amended on March 

11, 2004, May 15, 2007, January 25, 

2008, May 27, 2008 and April 10, 2009. 

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 May 19, 2009, 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, 222 West Adams 

Street, Chicago, Illinois 60606. 

INFORMATION CONTACT: Laura J. Riegel, 

Senior Counsel, at (202) 551–6873, 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 via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http:// 

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

calling (202) 551–8090. 

Applicants’ Representations 

1. Blair, a Delaware limited liability 

company, is an investment firm that 

offers investment banking, equity 

research, institutional banking, 

institutional and private brokerage, asset 

management and private capital to 

various clients. Blair and its ‘‘affiliates,’’ 

as defined in rule 12b–2 under the 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’), are referred to 

collectively as ‘‘WB Group’’ and 

individually as a ‘‘WB Entity.’’ 

2. The Initial Company is a Delaware 

limited liability company. Blair may 

form in the future other investment 

vehicles identical in all material 

respects to the Initial Fund (other than 

specific investment terms, investment 

objectives and strategies and form of 

organization) (together with the Initial 

Company, the ‘‘Companies’’). Interests 

in a Company (‘‘Interests’’) will be 

offered without registration in reliance 

on section 4(2) of the Securities Act of 

1933 (the ‘‘1933 Act’’) or Regulation D 

under the 1933 Act, and will be issued 

in one or more designated series, each 

of which may correspond to a 

Company’s investment in a particular 

transaction, collective investment 

vehicle or other investment opportunity 

(each, a ‘‘Series’’). Each Company will 

be organized as a limited partnership or 

other investment vehicle. Each 

Company and Series will be an 

‘‘employees’ security company’’ within 

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

Act. 

3. Each Company will operate as a 

closed-end management investment 

company. Applicants state that they 

anticipate that each Company will 

operate as a non-diversified vehicle. The 

Companies are intended to provide 

investment opportunities to Eligible 

Employees (as defined below) that are 

competitive with those at other financial 

services firms and to facilitate the 

recruitment and retention of high 

caliber professionals. All investors in a 

Company are ‘‘Members.’’ 


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1A ‘‘carried interest’’ is an allocation to the 

Manager based on the net gains of an investment 

program. A Manager that is registered under the 

Advisers Act may charge a carried interest only if 

permitted by rule 205–3 under the Advisers Act. 

Any carried interest paid to a Manager that is not 

registered under the Advisers Act will be structured 

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

Act as if the Company were a business development 

company as defined in the Advisers Act. 

2 If the Eligible Investment Vehicle is an entity 

other than a trust, the term ‘‘settlor’’ will be read 

to mean a person who created the Eligible 

Investment Vehicle, alone or together with others, 

and contributed funds to such vehicle. 

3Applicants are not requesting any exemption 

from any provision of the Act or any rule 

Continued 

4. Each Company will have a general 

partner, manager or other similar entity 

(a ‘‘Manager’’) that is a WB Entity that 

will manage, operate and control such 

Company. The Manager of a Company 

will be registered as an investment 

adviser under the Investment Advisers 

Act of 1940 (the ‘‘Advisers Act’’) or 

exempt from such registration. Blair, the 

Manager of the Initial Company, is 

registered as an investment adviser 

under the Advisers Act. The Manager 

will be permitted to delegate certain of 

its responsibilities regarding the 

acquisition, management and 

disposition of Company investments, or 

other management responsibilities, to a 

WB Entity or to a principal, member, 

employee, executive, officer or director 

of one or more WB Entities, or to a 

committee of principals, members, 

employees, executives, officers or 

directors of one or more WB Entities 

(each such committee, a ‘‘Manager 

Committee’’). The ultimate 

responsibility for a Company’s 

operations will remain with the 

Manager. The Manager may be entitled 

to receive a performance-based fee (a 

‘‘carried interest’’) in addition to any 

amount allocable to the Manager’s 

capital contribution.1

5. Interests in a Company or any 

Series will be sold only to ‘‘Qualified 

Participants’’ (as defined below). Prior 

to offering Interests to a Qualified 

Participant, a Manager must reasonably 

believe that the Qualified Participant 

will be capable of understanding and 

evaluating the merits and risks of 

participation in a Company or any 

Series and that each such individual is 

able to bear the economic risk of such 

participation and afford a complete loss 

of his or her investment. 

6. ‘‘Qualified Participants’’ are (a) 

current key principals, members, 

employees, executives, officers and 

directors of the WB Group (collectively, 

‘‘Eligible Employees’’), (b) spouses, 

parents, children, spouses of children, 

brothers, sisters and grandchildren of 

Eligible Employees (‘‘Eligible Family 

Members’’ and, together with Eligible 

Employees, ‘‘Eligible Individuals’’), (c) 

trusts or other investment vehicles 

established solely for the benefit of 

Eligible Employees or Eligible Family 

Members (‘‘Eligible Investment 

Vehicles’’), and (d) WB Entities. Each 

Eligible Employee and Eligible Family 

Member will be an ‘‘accredited 

investor’’ under rule 501(a)(5) or rule 

501(a)(6) of Regulation D (‘‘Accredited 

Investor’’), except that a maximum of 35 

Eligible Employees per Series who are 

sophisticated investors but who are not 

Accredited Investors may become 

Members if each of them falls into one 

of the following two categories: (A) 

Eligible Employees who (i) have a 

graduate degree in business, law or 

accounting, (ii) have a minimum of 

three years of consulting, investment 

management, investment banking, 

financial services, legal or similar 

business experience, and (iii) had 

reportable income from all sources 

(including any profit shares or bonus) of 

$100,000 in each of the two most recent 

years immediately preceding the 

Eligible Employee’s admission as a 

Member and have a reasonable 

expectation of income from all sources 

of at least $140,000 in each year in 

which the Eligible Employee will be 

committed to make investments in the 

Series; or (B) Eligible Employees who 

are ‘‘knowledgeable employees,’’ as 

defined in rule 3c–5 of the Act, of the 

Company (with the Company treated as 

though it were a ‘‘covered company’’ for 

purposes of the rule). An Eligible 

Employee who is described in category 

(A) above will not be permitted to invest 

in any year more than 10% of his or her 

income from all sources for the 

immediately preceding year in the 

aggregate in a Company or relevant 

Series of a Company and in all other 

Companies in which that investor has 

previously invested. 

7. An Eligible Individual may 

purchase an Interest through an Eligible 

Investment Vehicle only if either (i) the 

investment vehicle is an ‘‘accredited 

investor,’’ as defined in rule 501(a) of 

Regulation D under the 1933 Act, or (ii) 

the Eligible Employee is the settlor 2 and 

principal investment decision-maker 

with respect to the investment vehicle. 

Any Eligible Investment Vehicles that is 

not an accredited investor will be 

counted in accordance with Regulation 

D under the 1933 Act toward the 35 

non-accredited investor limit discussed 

above. A WB Entity that acquires an 

Interest in a Company will be an 

‘‘accredited investor’’ as defined in rule 

501(a) of Regulation D under the 1933 

Act. 

8. The terms of a Company will be 

fully disclosed to the Qualified 

Participants at the time they are offered 

the right to subscribe for Interests, at 

which time they will be furnished with 

a copy of the private placement 

memorandum, the operating agreement 

(except with respect to Qualified 

Participants that are already Members of 

the Company and are subscribing for 

Interests in a Series thereof) and the 

operative documents of the relevant 

Series of a Company. A Manager will 

send to a Company’s Members an 

audited financial statement with respect 

to those Series in which the Member 

held Interests as soon as practicable 

after the end of the Company’s fiscal 

year. In addition, the Manager will send 

a report to each person who was a 

Member at any time during the fiscal 

year then ended setting forth the tax 

information necessary for the 

preparation by the person of his, her or 

its federal and state income tax returns. 

9. Except for certain involuntary 

transfers resulting from the death or 

incapacity of a Member, Interests in the 

Companies will be non-transferable 

except with the express consent of the 

Manager and then only to Qualified 

Participants. No sales load or similar fee 

of any kind will be charged in 

connection with the sale of Interests. 

10. The operating agreement of the 

Initial Company will provide that the 

company may have the right, but not the 

obligation, to purchase all or any 

portion of the Interests of a Member 

who ceases to be or is not, a current 

principal, member, employee, executive 

officer, or director of a WB Entity for 

any reason, including but not limited to, 

death, bankruptcy, becoming 

permanently disabled, removal or 

termination (with or without cause), 

withdrawal, or resignation (‘‘Terminated 

Member’’). Other Companies may offer 

Interests with repurchase rights. The 

Manager of a Company may repurchase 

Interests for cash, in-kind or a 

combination of both. With respect to 

cash repurchases, the Manager will pay 

the fair market value, as defined in the 

application, of any repurchased 

Interests as of the time the affected 

Member is deemed to be a Terminated 

Member. 

11. The investment objectives and 

policies of the Companies will be 

disclosed to Qualified Participants 

when Interests are offered, and may vary 

among the Companies. The Companies 

may invest directly or through 

investment pools (including registered 

investment companies and companies 

that rely on section 3(c)(1) or section 

3(c)(7) of the Act).3 A Company may 


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thereunder that may govern the eligibility of a 

Company or Series to invest in an entity relying on 

section 3(c)(1) or 3(c)(7) of the Act or any such 

entity’s status under the Act. 

make investments side-by-side with a 

WB Entity or a Third Party Fund (as 

defined below) in investment funds or 

accounts collectively organized for the 

primary benefit of investors who are not 

affiliated with the WB Group and over 

which a WB Entity exercises investment 

discretion (‘‘Third Party Funds’’). 

12. If a WB Entity makes a loan to a 

Company, the loan would bear interest 

at a rate no less favorable to the 

Company than the rate that could be 

obtained on an arm’s length basis. A 

Company will not borrow from any 

person if the borrowing would cause 

any person not named in section 

2(a)(13) of the Act to own securities of 

the Company (other than short-term 

paper). Any borrowing by a Company 

will be non-recourse to the Members. 

13. A Company will not acquire any 

security issued by a registered 

investment company if, immediately 

after the acquisition, the Company will 

own in the aggregate more than 3% of 

the outstanding voting stock of the 

registered investment company. 

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) 

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 (other than short-term 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 the Companies from all 

provisions of the Act, except section 9 

and sections 36 through 53 of the Act 

and the rules and regulations under 

those sections. 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 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 permit: (A) A WB Entity 

or a Third Party Fund (or any affiliated 

person of a WB Entity or a Third Party 

Fund), acting as principal, to engage in 

any transaction directly or indirectly 

with any Company or any company 

controlled by such Company; (b) a 

Company to invest in or engage in any 

transaction with any entity, acting as 

principal (i) in which such Company, 

any company controlled by such 

Company or any WB Entity or Third 

Party Fund has invested or will invest, 

or (ii) with which such Company, any 

company controlled by such Company 

or any WB Entity or Third Party Fund 

is or will otherwise become affiliated; 

and (c) a Third Party Investor, acting as 

principal, to engage in any transaction 

directly or indirectly with a Company or 

any company controlled by such 

Company. The term ‘‘Third Party 

Investor’’ refers to any person or entity 

that is not a WB Entity or affiliated with 

the WB Group and is a partner or other 

investor from a Third Party Fund. 

4. Applicants submit that an 

exemption from section 17(a) is 

consistent with the purposes of the 

Companies and the protection of 

investors. Applicants state that the 

Members in each Company will be 

informed of the possible extent of such 

Company’s dealings with the WB 

Group. Applicants also state that, as 

professionals employed in the financial 

services businesses, the Members will 

be able to understand and evaluate the 

attendant risks. Applicants assert that 

the community of interest among the 

Members in each Company and the WB 

Group will serve to reduce the risk of 

abuse. 

5. 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 company unless 

authorized by the Commission. 

Applicants request relief to permit 

affiliated persons of each Company, or 

affiliated persons of any of these 

persons to participate in, or effect any 

transaction in connection with, any 

joint enterprise or other joint 

arrangement or profit-sharing plan in 

which the Company or a company 

controlled by such Company is a 

participant. 

6. Applicants assert that compliance 

with section 17(d) would cause a 

Company to forego investment 

opportunities simply because the 

Members, the Manager or any other 

affiliated person of the Company (or any 

affiliate of such a person) had made a 

similar investment. Applicants also 

submit that the types of investment 

opportunities considered by a Company 

often require each participant to make 

available funds in an amount that may 

be substantially greater than may be 

available to such Company alone. 

Applicants contend that, as a result, the 

only way in which a Company may be 

able to participate in such opportunities 

may be to co-invest with other persons, 

including its affiliates. Applicants note 

that each Company will be primarily 

organized for the benefit of Eligible 

Employees as an incentive for them to 

remain with the WB Group and for the 

generation and maintenance of 

goodwill. Applicants assert that the 

flexibility to structure co-investments 

and joint investments in the context of 

employees’ securities companies will 

not involve abuses of the type section 

17(d) and rule 17d–1 were designed to 

prevent. 

7. Co-investments with a Third Party 

Fund will not be subject to condition 3 

below. Applicants believe it is 

important that the interests of the Third 

Party Fund take priority over the 

interests of the Companies, and that the 

Third Party Fund not be burdened or 

otherwise affected by activities of the 

Companies. In addition, applicants 

assert that the relationship of a 

Company to a Third Party Fund is 

fundamentally different from such 

Company’s relationship to the WB 

Group. Applicants contend that the 

focus of, and the rationale for, the 

protections contained in the requested 

relief are to protect the Companies from 

any overreaching by the WB Group in 

the employer/employee context, 

whereas the same concerns are not 


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present with respect to the Companies 

vis-a`-vis the investors of a Third Party 

Fund. 

8. Section 17(e) of the Act and rule 

17e–1 under the Act limit the 

compensation an affiliated person may 

receive when acting as agent or broker 

for a registered investment company. 

Applicants request an exemption from 

section 17(e) to permit a WB Entity 

including the Manager), acting as an 

agent or broker, to receive placement 

fees, advisory fees, or other 

compensation from a Company in 

connection with the purchase or sale by 

the Company of securities, provided 

that such placement fees, advisory fees 

or other compensation can be deemed 

‘‘usual and customary.’’ Applicants state 

that for purposes of the application, fees 

or other compensation that are charged 

or received by a WB Entity will be 

deemed ‘‘usual and customary’’ only if 

(a) the Company is purchasing or selling 

securities alongside other unaffiliated 

third parties, including Third Party 

Funds, (b) the fees or other 

compensation being charged to the 

Company are also being charged to the 

unaffiliated third parties, including 

Third Party Funds, and (c) the amount 

of securities being purchased or sold by 

the Company does not exceed 50% of 

the total amount of securities being 

purchased or sold by the Company and 

the unaffiliated third parties, including 

Third Party Funds. Applicants assert 

that, because the WB Group does not 

wish to appear to be favoring the 

Companies, compliance with section 

17(e) would prevent a Company from 

participating in transactions where the 

Company is being charged lower fees 

than unaffiliated third parties. 

Applicants assert that the fees or other 

compensation paid by a Company to a 

WB Entity are those established at arm’s 

length with unaffiliated third parties. 

9. Rule 17e–1(b) under the Act 

requires that a majority of directors who 

are not ‘‘interested persons’’ (as defined 

in section 2(a)(19) of the Act) take 

actions and make approvals regarding 

commissions, fees, or other 

remuneration. Rule 17e–1(c) under the 

Act requires each Company to comply 

with the fund governance standards 

defined in rule 0–1(a)(7) under the Act. 

Applicants request an exemption from 

rule 17e–1 to permit each Company to 

comply with the rule without having a 

majority of the members of the 

governing body of the Manager or, the 

Manager Committee, as applicable, who 

are not interested persons take actions 

and make determinations as set forth in 

paragraph (b) of the rule, and without 

having to satisfy the standards as 

required by paragraph (c) of the rule. 

Applicants state that because all the 

members of the governing body of the 

Manager of a Company or, the Manager 

Committee, as applicable, will be 

affiliated persons, without the relief 

requested, a Company could not comply 

with rule 17e–1. Applicants state that 

each Company will comply with rule 

17e–1 by having a majority of the 

members of the governing body of the 

Manager take such actions and make 

such approvals as are set forth in rule 

17e–1. Applicants state that each 

Company will comply with all other 

requirements of rule 17e–1. 

10. Section 17(f) of the Act designates 

the entities that may act as investment 

company custodians, and rule 17f–1 

under the Act imposes certain 

requirements when the custodian is a 

member of a national securities 

exchange. Applicants request an 

exemption from section 17(f) and rule 

17f–1 to permit a WB Entity to act as 

custodian without a written contract. 

Applicants also request an exemption 

from the rule 17f–1(b)(4) requirement 

that an independent accountant 

periodically verify the assets held by the 

custodian. Applicants state that, given 

the community of interest of all the 

parties involved and the existing 

requirement for an independent audit, 

compliance with this requirement 

would be unnecessary. Each Company 

will otherwise comply with all the 

provisions of rule 17f–1. 

11. Applicants also request an 

exemption from rule 17f–2 to permit the 

following exceptions from the 

requirements of rule 17f–2: (A) A 

Company’s investments may be kept in 

the locked files of the Manager for 

purposes of paragraph (b) of the rule; (b) 

for purposes of paragraph (d) of the rule, 

(i) employees of the Manager will be 

deemed to be employees of the 

Companies, (ii) officers or managers of 

the Manager of a Company will be 

deemed to be officers of the Company, 

and (iii) the Manager or, where 

applicable, the Manager Committee, of a 

Company will be deemed to be the 

board of directors of the Company; and 

(c) in place of the verification procedure 

under paragraph (f) of the rule, 

verification will be effected quarterly by 

two employees of the Manager. With 

respect to certain Companies, applicants 

expect that many of their investments 

will be evidenced only by partnership 

agreements, participation agreements or 

similar documents, rather than by 

negotiable certificates that could be 

misappropriated. Applicants believe 

that these instruments are most suitably 

kept in the files of the Manager, where 

they can be referred to as necessary. 

12. Section 17(g) of the Act and rule 

17g–1 under the Act 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. 

Applicants state that, because the 

Manager of each Company, or the 

Manager Committee, as applicable, will 

be interested persons, a Company could 

not comply with rule 17g–1 without the 

requested relief. Specifically, each 

Company will comply with rule 17g–1 

by having the Manager of the Company, 

or the Manager Committee, as 

applicable, take such actions and make 

such approvals as are set forth in rule 

17g–1. Applicants also request an 

exemption from the requirements of 

paragraph (g) of rule 17g–1 (relating to 

the filing of copies of fidelity bonds and 

related information with the 

Commission and the provision of 

notices to the board of directors), 

paragraph (h) of rule 17g–1 (relating to 

the appointment of a person to make the 

filings and provide the notices required 

by paragraph (g)), and an exemption 

from the requirements of paragraph 

(j)(3) of rule 17g–1 that the Companies 

comply with the fund governance 

standards defined in rule 0–1(a)(7). 

Applicants state that each Company will 

comply with all other requirements of 

rule 17g–1. 

13. Section 17(j) of the Act and 

paragraph (b) of rule 17j–1 under the 

Act 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 provisions of rule 

17j–1, except for the anti-fraud 

provisions of paragraph (b), because 

they are unnecessarily burdensome as 

applied to the Companies. 

14. 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 

contend that the forms prescribed by the 

Commission for periodic reports have 

little relevance to the Companies and 

would entail administrative and legal 


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19246 Federal Register / Vol. 74, No. 80 / Tuesday, April 28, 2009 / Notices 

costs that outweigh any benefit to the 

Members. Applicants request exemptive 

relief to the extent necessary to permit 

each Company 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 

Manager of each Company, members of 

the Manager, and any other persons who 

may be deemed to be members of a 

Manager Committee for a Company from 

filing Forms 3, 4, and 5 under section 

16(a) of the Exchange Act with respect 

to their ownership of Interests in the 

Company. Applicants assert that, 

because there will be no trading market 

and the transfers of Interests will be 

severely restricted, these filings are 

unnecessary for the protection of 

investors and burdensome to those 

required to make them. 

15. Rule 38a–1 requires investment 

companies to adopt, implement and 

periodically review written policies 

reasonably designed to prevent violation 

of the federal securities law and to 

appoint a chief compliance officer. Each 

Company will comply with rule 38a– 

1(a), (c) and (d), except that (a) because 

the Company does not have a board of 

directors, the governing body of the 

Manager of each Company will fulfill 

the responsibilities assigned to the 

Company’s board of directors under the 

rule, (b) since the governing body of the 

Manager does not have any 

disinterested members, approval by a 

majority of disinterested board members 

required by rule 38a–1 will not be 

obtained, and (c) because the governing 

body of the Manager does not have any 

disinterested members, the Company 

will comply with the requirement in 

rule 38a–1(a)(4)(iv) that the chief 

compliance officer meet with the 

independent board members by having 

the chief compliance officer meet with 

the governing body of the Manager as 

constituted. 

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 Company is a party otherwise 

prohibited by section 17(a) or section 

17(d) of the Act and rule 17d–1 under 

the Act (the ‘‘Section 17 Transactions’’) 

will be effected only if the 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 

the Company and do not involve 

overreaching of the Company or its 

Members on the part of any person 

concerned and (b) the Section 17 

Transaction is consistent with the 

interests of the Members, the Company’s 

organizational documents and the 

Company’s reports to its Members. 

In addition, the Manager of the 

Company will record and preserve a 

description of all Section 17 

Transactions, the Manager’s findings, 

the information or materials upon 

which the findings are based and the 

basis therefor. All such records will be 

maintained for the life of the Company 

and at least six years thereafter and will 

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. The Manager of each Company 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 Company, 

or any affiliated person of such person, 

promoter or principal underwriter. 

3. The Manager of each Company will 

not invest the funds of the Company in 

any investment in which an ‘‘Affiliated 

Co-Investor’’ (as defined below) has 

acquired or proposes to acquire the 

same class of securities of the same 

issuer and where the investment 

involves a joint enterprise or other joint 

arrangement within the meaning of rule 

17d–1 in which the Company and the 

Affiliated Co-Investor are participants, 

unless any such Affiliated Co-Investor, 

prior to disposing of all or part of its 

investment, (a) gives the Manager 

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 

Company 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 

Affiliated Co-Investor. The term 

‘‘Affiliated Co-Investor’’ with respect to 

any Company means any person who is: 

(A) An ‘‘affiliated person’’ (as defined in 

section 2(a)(3) of the Act) of the 

Company (other than a Third Party 

Fund); (b) a WB Entity; (c) an officer, 

director or employee of the WB Group; 

(d) an investment vehicle offered, 

sponsored or managed by a WB Entity 

(other than a Third Party Fund); or (e) 

an entity (other than a Third Party 

Fund) in which a WB Entity acts as a 

general partner or has a similar capacity 

to control the sale or other disposition 

of the entity’s securities. The 

restrictions contained in this condition, 

however, shall not be deemed to limit 

or prevent the disposition of an 

investment by an Affiliated Co-Investor: 

(a) To its direct or indirect wholly 

owned subsidiary, to any company (a 

‘‘Parent’’) of which the Affiliated 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 Affiliated Co-Investor or 

a trust or other investment vehicle 

established for any such family member; 

or (c) when the investment is comprised 

of securities that are (i) listed on a 

national securities exchange registered 

under section 6 of the Exchange Act; (ii) 

NMS stocks, pursuant to section 

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

600(a) of Regulation NMS thereunder; 

(iii) government securities as defined in 

section 2(a)(16) of the Act, or (iv) listed 

or traded on any foreign securities 

exchange or board of trade that satisfies 

regulatory requirements under the law 

of the jurisdiction in which such foreign 

securities exchange or board of trade is 

organized similar to those that apply to 

a national securities exchange or a 

national market system for securities. 

4. Each Company and its Manager 

will maintain and preserve, for the life 

of each such Company and at least six 

years thereafter, such accounts, books, 

and other documents constituting the 

record forming the basis for the audited 

financial statements that are to be 

provided to the Members of such 

Company, and each annual report of the 

Company required to be sent to the 

Members, and agree that all such 

records will be subject to examination 

by the Commission and its staff. Each 

Company will preserve the accounts, 

books and other documents required to 

be maintained in an easily accessible 

place for the first two years. 

5. The Manager of each Company will 

send to each Member having an Interest 

in the Company at any time during the 

fiscal year then ended, audited financial 

statements with respect to those Series 

in which the Member held Interests. At 

the end of each fiscal year, the Manager 

will make or cause to be made a 

valuation of all of the assets of the 

Company 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 Company. 

In addition, within 120 days after the 

end of each fiscal year of the Company, 

if possible, or as soon as practicable 

thereafter, the Manager will 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, her 

or its federal and state income tax 

returns and a report of the investment 


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Federal Register / Vol. 74, No. 80 / Tuesday, April 28, 2009 / Notices 19247 

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

2 17 CFR 240.19b–4. 

3Amendment No. 2 replaced and superseded the 

original filing and Amendment No. 1 in their 

entirety. 

4See Securities Exchange Act Release No. 55457 

(March 13, 2007), 72 FR 13328 (‘‘Notice’’). 

5 In Amendment No. 3, Nasdaq made certain 

technical changes to the filing to reflect changes to 

the Nasdaq rules since filing Amendment No. 2. In 

addition, Nasdaq clarified that the only market data 

product currently delivered via Internet ports is its 

TotalView ITCH data product. This technical 

amendment did not require notice and comment, as 

it did not affect the substance of the rule filing. 

6 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. 15 U.S.C. 78c(f). 

7 15 U.S.C. 78f(b)(4). 

8 15 U.S.C. 78f(b)(5). 

9See Securities Exchange Act Release No. 59039 

(December 2, 2008), 73 FR 74770 (December 9, 

2008) (SR–NYSEArca-2006–21). 

10See Securities Exchange Act Release No. 55011 

(December 27, 2006) (order granting petition for 

review of SR–NYSEArca-2006–21). 

11The Commission’s order distinguishes between 

core market data, which is defined as ‘‘the bestpriced quotations and last sale information of all 

markets in U.S.-listed equities that Commission 

rules require to be consolidated and distributed to 

the public by a single central processor,’’ and noncore market data. See 73 FR at 74771. 

12 Id. at 74781. 

13 Id. at 74781–82. 

activities of the Company during that 

fiscal year. 

6. If any purchase or sale is made by 

a Company from or to an entity 

affiliated with the Company by reason 

of an officer, director or employee of a 

WB Entity (a) serving as an officer, 

director, general partner or investment 

adviser to the entity, or (b) having a 5% 

or more interest in the entity, such 

individual will not participate in the 

Manager’s determination of whether or 

not to effect the purchase or sale. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–9576 Filed 4–27–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59795; File No. SR– 

NASDAQ–2006–064] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving Proposed Rule Change as 

Modified by Amendments No. 2 and 3 

Thereto To Modify the Fee for 

Connecting to a Nasdaq Data Center 

Over the Internet 

April 20, 2009. 

On December 22, 2006, The NASDAQ 

Stock Market LLC (‘‘Nasdaq’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’)1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

modify the fee for connecting to a 

Nasdaq data center over the Internet. On 

January 19, 2007, Nasdaq filed 

Amendment No. 1 to the proposed rule 

change. On February 22, 2007, Nasdaq 

filed Amendment No. 2 to the proposed 

rule change.3 The proposed rule change, 

as amended, was published for 

comment in the Federal Register on 

March 21, 2007.4 On April 6, 2009, 

Nasdaq filed Amendment No. 3 to the 

proposed rule change.5 The Commission 

received no comment letters on the 

proposal. This order approves the 

proposed rule change as modified by 

Amendments No. 2 and 3. 

Nasdaq proposes to increase its fees 

for Internet ports that deliver market 

data. Following the consolidation of 

Nasdaq’s three order books and 

corresponding matching engines—INET, 

Brut, and SuperMontage—into a single 

book (‘‘SingleBook’’) within the Nasdaq 

Market Center (‘‘NMC’’), Nasdaq users 

retained the ability to connect with the 

NMC using the legacy access protocols 

of all three systems. Access to the NMC 

via secure Internet connectivity is one of 

several options available to INET 

protocol users for entering orders and 

receiving market data. Other NMC 

connectivity options include extranet 

connectivity, where a user contracts 

directly with a third-party extranet 

provider, and private line connectivity, 

where a user leases a circuit directly 

from a third-party provider. 

Currently, Nasdaq charges INET 

protocol users an additional $200 (in 

addition to the established charges for 

port pairs) for each port used to connect 

to a Nasdaq data center over the Internet 

because making such ports available 

requires Nasdaq to procure and 

maintain appropriate 

telecommunications circuits connecting 

its data centers to the points-of-presence 

of an Internet service provider. By 

contrast, in the case of extranet and 

private circuit connections, Nasdaq is 

not responsible for the outside 

telecommunications circuits. 

In the Notice, Nasdaq stated that since 

the introduction of SingleBook, the 

volume of market data delivered from 

Nasdaq to subscribers increased from a 

peak of approximately 5Mbs at the end 

of October of 2006 to a peak of 

approximately 25Mbs as of the date of 

filing of the proposal. Nasdaq stated that 

in order to continue to adequately 

support Internet market data 

connections, Nasdaq expanded its 

available Internet bandwidth. In light of 

the expanded Internet bandwidth 

requirements, Nasdaq proposes to 

increase its Internet port fee from $200 

to $600 per Internet port that is used to 

deliver market data. The additional 

Internet port fee with respect to Internet 

ports used for order entry will remain at 

the current $200 level. 

The Commission has reviewed 

carefully the proposed rule change and 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange 6 and, in particular, 

Section 6(b)(4) of the Act,7 which 

requires, among other things, that 

Nasdaq’s rules provide for the equitable 

allocation of reasonable dues, fees and 

other charges among members and 

issuers and other persons using any 

facility or system which Nasdaq 

operates or controls. The Commission 

also finds that the proposed rule change 

is consistent with Section 6(b)(5) of the 

Act,8 which requires, among other 

things, that Nasdaq’s rules are not 

designed to unfairly discriminate 

between customers, issuers, brokers or 

dealers. 

Nasdaq proposes to increase its 

Internet port fee from $200 to $600 per 

Internet port that is used to deliver noncore market data. The proposed fee will 

apply equally to all market participants 

that use an Internet port to receive 

market data from Nasdaq. 

The Commission believes that the 

proposal meets the criteria, formulated 

by the Commission 9 in connection with 

the petition filed by NetCoalition,10 for 

approval of proposed rule changes 

concerning the distribution of non-core 

market data.11 In its order issued in 

connection with the NetCoalition 

petition, the Commission stated that 

‘‘reliance on competitive forces is the 

most appropriate and effective means to 

assess whether the terms for the 

distribution of non-core data are 

equitable, fair and reasonable, and not 

unreasonably discriminatory.’’12 As 

such, the ‘‘existence of significant 

competition provides a substantial basis 

for finding that the terms of an 

exchange’s fee proposal are equitable, 

fair, reasonable, and not unreasonably 

or unfairly discriminatory.’’13 If an 

exchange ‘‘was subject to significant 

competitive forces in setting the terms 

of a proposal,’’ the proposal will be 

approved unless the Commission 

determines that ‘‘there is a substantial 

countervailing basis to find that the 


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