Federal Register / Vol. 79, No. 208 / Tuesday, October 28, 2014 / Notices 64235 

1Applicants request relief with respect to any 

existing and any future series of the Trust or any 

other registered open-end management company 

that: (a) Is advised by the Adviser or its successor 

or by a person controlling, controlled by, or under 

common control with the Adviser or its successor 

(each, also an ‘‘Adviser’’); (b) uses the manager of 

managers structure described in the application 

(‘‘Manager of Managers Structure’’); and (c) 

complies with the terms and conditions of the 

requested order (any such series, a ‘‘Fund’’ and 

collectively, the ‘‘Funds’’). The only existing 

registered open-end management investment 

company that currently intends to rely on the 

requested order is named as an applicant, and the 

only series that currently intends to rely on the 

requested order as a Fund is the Angel Oak Flexible 

Income Fund (‘‘Initial Fund’’). For purposes of the 

requested order, ‘‘successor’’ is limited to an entity 

that results from a reorganization into another 

jurisdiction or a change in the type of business 

organization. If the name of any Fund contains the 

name of a Sub-Adviser (as defined below), that 

name will be preceded by the name of the Adviser. 

2 ‘‘Advisory Agreement’’ includes advisory 

agreements with an Adviser for the Initial Fund and 

any future Funds. 

3Each Sub-Adviser will be an investment adviser 

as defined in section 2(a)(20) of the Act and 

registered, or not subject to registration, under the 

Advisers Act. 

2. Pursuant to 39 U.S.C. 505, the 

Commission appoints James F. Callow 

to serve as an officer of the Commission 

(Public Representative) to represent the 

interests of the general public in this 

proceeding. 

3. Comments are due no later than 

October 29, 2014. 

4. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

By the Commission. 

Shoshana M. Grove, 

Secretary. 

[FR Doc. 2014–25495 Filed 10–27–14; 8:45 am] 

BILLING CODE 7710–FW–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

31302; 812–14332] 

Angel Oak Funds Trust and Angel Oak 

Capital Advisors, LLC; Notice of 

Application 

October 22, 2014. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application under 

section 6(c) of the Investment Company 

Act of 1940 (‘‘Act’’) for an exemption 

from section 15(a) of the Act and rule 

18f–2 under the Act, as well as from 

certain disclosure requirements. 

Summary of Application: Applicants 

request an order that would permit 

them to enter into and materially 

amend sub-advisory agreements 

(‘‘Sub-Advisory Agreements’’) 

without shareholder approval and 

that would grant relief from certain 

disclosure requirements. 

Applicants: Angel Oak Funds Trust (the 

‘‘Trust’’) and Angel Oak Capital 

Advisors, LLC (the ‘‘Adviser’’). 

Filing Dates: The application was filed 

July 15, 2014. 

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 

November 17, 2014, and should be 

accompanied by proof of service on 

the 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, One Buckhead Plaza, 3060 

Peachtree Road NW., Suite 500, Atlanta, 

GA 30305. 

FOR FURTHER INFORMATION CONTACT: 

Courtney S. Thornton, Senior Counsel, 

at (202) 551–6812, or David P. Bartels, 

Branch Chief, at (202) 551–6821 

(Division of Investment Management, 

Chief Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http://

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

calling (202) 551–8090. 

Applicants’ Representations 

1. The Trust, a Delaware statutory 

trust, is registered under the Act as an 

open-end management investment 

company. The Trust is organized as a 

series trust and currently consists of one 

series.1

2. The Adviser is a limited liability 

company organized under Delaware 

law. The Adviser is, and any future 

Adviser will be, registered as an 

investment adviser under the 

Investment Advisers Act of 1940 

(‘‘Advisers Act’’). The Adviser will 

serve as the investment adviser to the 

Initial Fund pursuant to an investment 

advisory agreement with the Trust (the 

‘‘Advisory Agreement’’).2 The Advisory 

Agreement was or will have been 

approved by a Fund’s board of trustees 

(the ‘‘Board’’), including a majority of 

the trustees who are not ‘‘interested 

persons,’’ as defined in section 2(a)(19) 

of the Act, of the Trust, the Fund, or the 

Adviser (‘‘Independent Trustees’’), and 

by the Fund’s shareholders in the 

manner required by sections 15(a) and 

15(c) of the Act and rule 18f–2 under 

the Act. The terms of the Advisory 

Agreement will comply with section 

15(a) of the Act. Applicants are not 

seeking any exemption from the 

provisions of the Act with respect to the 

Advisory Agreement. 

3. Under the terms of the Advisory 

Agreement, the Adviser will provide a 

Fund with overall investment 

management services and will 

continuously review, supervise and 

administer each Fund’s investment 

program, subject to the supervision of, 

and policies established by the Board. 

For the investment management 

services it will provide to a Fund, the 

Adviser will receive the fee specified in 

the Advisory Agreement from that Fund 

based on the average daily net assets of 

the Fund. 

4. The Advisory Agreement will 

permit the Adviser, subject to the 

approval of the Board, to delegate 

certain responsibilities to one or more 

sub-advisers (‘‘Sub-Advisers’’).3 The 

Adviser currently intends to delegate 

certain day-to-day portfolio 

management responsibilities for all or a 

portion of the assets of a Fund to one 

or more Sub-Advisers, subject to the 

approval of the Board. The Adviser will 

evaluate, allocate assets to, and oversee 

the Sub-Advisers, and will make 

recommendations about their hiring, 

termination and replacement to the 

Board, at all times subject to the 

authority of the Board. The Adviser will 

compensate the Sub-Advisers out of the 

advisory fee paid by the Funds to the 

Adviser under the Advisory Agreement. 

5. Applicants request an order to 

permit the Adviser, subject to Board 

approval, to select certain Sub-Advisers 

to manage all or a portion of the assets 

of a Fund or Funds pursuant to a SubAdvisory Agreement, and materially 

amend existing Sub-Advisory 

Agreements without obtaining 

shareholder approval. The requested 

relief will not extend to any SubAdviser that is an affiliated person, as 

defined in section 2(a)(3) of the Act, of 

the Trust, a Fund, or the Adviser, other 

than by reason of serving as a subadviser to one or more of the Funds 

(‘‘Affiliated Sub-Adviser’’). 


asabaliauskas on DSK4SPTVN1PROD with NOTICES
64236 Federal Register / Vol. 79, No. 208 / Tuesday, October 28, 2014 / Notices 

4A ‘‘Multi-manager Notice’’ will be modeled on 

a Notice of Internet Availability as defined in rule 

14a–16 under the 1934 Act, and specifically will, 

among other things: (a) Summarize the relevant 

information regarding the new Sub-Adviser; (b) 

inform shareholders that the Multi-manager 

Information Statement is available on a Web site; 

(c) provide the Web site address; (d) state the time 

period during which the Multi-manager Information 

Statement will remain available on that Web site; 

(e) provide instructions for accessing and printing 

the Multi-manager Information Statement; and (f) 

instruct the shareholder that a paper or email copy 

of the Multi-manager Information Statement may be 

obtained, without charge, by contacting the Fund. 

A ‘‘Multi-manager Information Statement’’ will 

meet the requirements of Regulation 14C, Schedule 

14C and Item 22 of Schedule 14A under the 1934 

Act for an information statement, except as 

modified by the requested order to permit Aggregate 

Fee Disclosure. Multi-manager Information 

Statements will be filed electronically with the 

Commission via the EDGAR system. 

6. Applicants also request an order 

exempting the Funds from certain 

disclosure provisions described below 

that may require the Funds to disclose 

fees paid by the Adviser to each SubAdviser. Applicants seek an order to 

permit a Fund to disclose (as both a 

dollar amount and a percentage of the 

Fund’s net assets): (a) The aggregate fees 

paid to the Adviser and any Affiliated 

Sub-Adviser; and (b) the aggregate fees 

paid to Sub-Advisers other than 

Affiliated Sub-Advisers (collectively, 

‘‘Aggregate Fee Disclosure’’). Any Fund 

that employs an Affiliated Sub-Adviser 

will provide separate disclosure of any 

fees paid to the Affiliated Sub-Adviser. 

Applicants’ Legal Analysis 

1. Section 15(a) of the Act provides, 

in relevant part, that is unlawful for any 

person to act as an investment adviser 

to a registered investment company 

except pursuant to a written contract 

that has been approved by a vote of a 

majority of the company’s outstanding 

voting securities. Rule 18f–2 under the 

Act provides that each series or class of 

stock in a series investment company 

affected by a matter must approve that 

matter if the Act requires shareholder 

approval. 

2. Form N–1A is the registration 

statement used by open-end investment 

companies. Item 19(a)(3) of Form N–1A 

requires disclosure of the method and 

amount of the investment adviser’s 

compensation. 

3. Rule 20a–1 under the Act requires 

proxies solicited with respect to a 

registered investment company to 

comply with Schedule 14A under the 

Securities Exchange Act of 1934 (‘‘1934 

Act’’). Items 22(c)(1)(ii), 22(c)(1)(iii), 

22(c)(8) and 22(c)(9) of Schedule 14A, 

taken together, require a proxy 

statement for a shareholder meeting at 

which the advisory contract will be 

voted upon to include the ‘‘rate of 

compensation of the investment 

adviser,’’ the ‘‘aggregate amount of the 

investment adviser’s fees,’’ a description 

of the ‘‘terms of the contract to be acted 

upon,’’ and, if a change in the advisory 

fee is proposed, the existing and 

proposed fees and the difference 

between the two fees. 

4. Regulation S–X under the 

Securities Act of 1933 sets forth the 

requirements for financial statements 

required to be included as part of a 

registered investment company’s 

registration statement and shareholder 

reports filed with the Commission. 

Sections 6–07(2)(a), (b), and (c) of 

Regulation S–X require a registered 

investment company to include in its 

financial statement information about 

investment advisory fees. 

5. Section 6(c) of the Act provides that 

the Commission may exempt any 

person, security, or transaction or any 

class or classes of persons, securities, or 

transactions from any provisions of the 

Act, or from any rule thereunder, if such 

exemption is necessary or appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Act. Applicants 

state that the requested relief meets this 

standard for the reasons discussed 

below. 

6. Applicants assert that the 

shareholders expect the Adviser, subject 

to the review and approval of the Board, 

to select the Sub-Advisers who are best 

suited to achieve each Fund’s 

investment objectives. Applicants assert 

that, from the perspective of the 

shareholder, the role of the SubAdvisers is substantially equivalent to 

that of the individual portfolio managers 

employed by traditional investment 

company advisory firms. Applicants 

state that requiring shareholder 

approval of each Sub-Advisory 

Agreement would impose unnecessary 

delays and expenses on the Funds and 

may preclude the Funds from acting 

promptly when the Adviser and Board 

consider it appropriate to hire SubAdvisers or amend Sub-Advisory 

Agreements. Applicants note that the 

Advisory Agreements and any SubAdvisory Agreements with Affiliated 

Sub-Advisers will remain subject to the 

shareholder approval requirements of 

section 15(a) of the Act and rule 18f–2 

under the Act. 

7. If a new Sub-Adviser is retained in 

reliance on the requested order, the 

applicable Fund will inform its 

shareholders of the hiring of a new SubAdviser pursuant to the following 

procedures (‘‘Modified Notice and 

Access Procedures’’): (a) Within 90 days 

after a new Sub-Adviser is hired for a 

Fund, the Fund will send its 

shareholders either a Multi-manager 

Notice or a Multi-manager Notice and 

Multi-manager Information Statement; 4

and (b) the Fund will make the Multimanager Information Statement 

available on the Web site identified in 

the Multi-manager Notice no later than 

when the Multi-manager Notice (or 

Multi-manager Notice and Multimanager Information Statement) is first 

sent to shareholders, and will maintain 

it on that Web site for at least 90 days. 

Applicants assert that a proxy 

solicitation to approve the appointment 

of new Sub-Advisers would provide no 

more meaningful information to 

shareholders than the proposed Multimanager Information Statement. 

Moreover, as indicated above, the 

applicable Board would comply with 

the requirements of sections 15(a) and 

15(c) of the Act before entering into or 

amending Sub-Advisory Agreements. 

8. Applicants assert that the requested 

disclosure relief will benefit 

shareholders of the Funds because it 

will improve the Adviser’s ability to 

negotiate the fees paid to Sub-Advisers. 

Applicants state that the Adviser may be 

able to negotiate rates that are below a 

Sub-Adviser’s ‘‘posted’’ amounts if the 

Adviser is not required to disclose the 

Sub-Adviser’s fees to the public. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Before a Fund may rely on the 

order requested in the application, the 

operation of the Fund in the manner 

described in the application will be 

approved by a majority of the Fund’s 

outstanding voting securities, as defined 

in the Act, or, in the case of a Fund 

whose public shareholders purchase 

shares on the basis of a prospectus 

containing the disclosure contemplated 

by condition 2 below, by the sole initial 

shareholder before offering the Fund’s 

shares to the public. 

2. The prospectus for each Fund will 

disclose the existence, substance, and 

effect of any order granted pursuant to 

the application. Each Fund will hold 

itself out to the public as employing the 

Manager of Managers Structure 

described in the application. The 

prospectus will prominently disclose 

that the Adviser has ultimate 

responsibility (subject to oversight by 

the Board) to oversee the Sub-Advisers 

and recommend their hiring, 

termination, and replacement. 

3. The Funds will inform 

shareholders of the hiring of a new SubAdviser (other than an Affiliated SubVerDate Sep<11>2014 20:06 Oct 27, 2014 Jkt 235001 PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 E:\FR\FM\28OCN1.SGM 28OCN1

asabaliauskas on DSK4SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 208 / Tuesday, October 28, 2014 / Notices 64237 

Adviser) within 90 days after the hiring 

of that new Sub-Adviser pursuant to the 

Modified Notice and Access Procedures. 

4. The Adviser will not enter into a 

Sub-Advisory Agreement with any 

Affiliated Sub-Adviser without that 

agreement, including the compensation 

to be paid thereunder, being approved 

by the shareholders of the applicable 

Fund. 

5. At all times, at least a majority of 

the Board will be Independent Trustees, 

and the nomination and selection of 

new or additional Independent Trustees 

will be placed within the discretion of 

the then-existing Independent Trustees. 

6. When a Sub-Adviser change is 

proposed for a Fund with an Affiliated 

Sub-Adviser, the Board, including a 

majority of the Independent Trustees, 

will make a separate finding, reflected 

in the applicable Board minutes, that 

such change is in the best interests of 

the Fund and its shareholders and does 

not involve a conflict of interest from 

which the Adviser or the Affiliated SubAdviser derives an inappropriate 

advantage. 

7. Independent legal counsel, as 

defined in rule 0–1(a)(6) under the Act, 

will be engaged to represent the 

Independent Trustees. The selection of 

such counsel will be within the 

discretion of the then existing 

Independent Trustees. 

8. Each Adviser will provide the 

Board, no less frequently than quarterly, 

with information about the profitability 

of the Adviser on a per-Fund basis. The 

information will reflect the impact on 

profitability of the hiring or termination 

of any Sub-Adviser during the 

applicable quarter. 

9. Whenever a Sub-Adviser is hired or 

terminated, the Adviser will provide the 

Board with information showing the 

expected impact on the profitability of 

the Adviser. 

10. The Adviser will provide general 

management services to a Fund, 

including overall supervisory 

responsibility for the general 

management and investment of the 

Fund’s assets and, subject to review and 

approval of the Board, will (i) set a 

Fund’s overall investment strategies; (ii) 

evaluate, select and recommend SubAdvisers to manage all or part of a 

Fund’s assets; (iii) when appropriate, 

allocate and reallocate a Fund’s assets 

among multiple Sub-Advisers; (iv) 

monitor and evaluate the performance 

of Sub-Advisers; and (v) implement 

procedures reasonably designed to 

ensure that the Sub-Advisers comply 

with a Fund’s investment objective, 

policies and restrictions. 

11. No trustee or officer of the Trust, 

or of a Fund, or director or officer of the 

Adviser, will own directly or indirectly 

(other than through a pooled investment 

vehicle that is not controlled by such 

person) any interest in a Sub-Adviser, 

except for (i) ownership of interests in 

the Adviser or any entity that controls, 

is controlled by, or is under common 

control with the Adviser; or (ii) 

ownership of less than 1% of the 

outstanding securities of any class of 

equity or debt of a publicly traded 

company that is either a Sub-Adviser or 

an entity that controls, is controlled by, 

or is under common control with a SubAdviser. 

12. Each Fund will disclose in its 

registration statement the Aggregate Fee 

Disclosure. 

13. Any new Sub-Advisory 

Agreement or any amendment to an 

existing Advisory Agreement or SubAdvisory Agreement that directly or 

indirectly results in an increase in the 

aggregate advisory fee rate payable by 

the Fund will be submitted to the 

Fund’s shareholders for approval. 

14. In the event the Commission 

adopts a rule under the Act providing 

substantially similar relief to that in the 

order requested in the application, the 

requested order will expire on the 

effective date of that rule. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–25549 Filed 10–27–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IA–3957/803–00221] 

Ares Real Estate Management 

Holdings, LLC; Notice of Application 

October 22, 2014. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

exemptive order under Section 206A of 

the Investment Advisers Act of 1940 

(the ‘‘Advisers Act’’) and Rule 206(4)– 

5(e). 

Applicant: Ares Real Estate 

Management Holdings, LLC (formerly 

known as AREA Management 

Holdings, LLC) (‘‘Applicant’’). 

Relevant Advisers Act Sections: 

Exemption requested under section 

206A of the Advisers Act and rule 

206(4)–5(e) from rule 206(4)–5(a)(1) 

under the Advisers Act. 

SUMMARY OF APPLICATION: Applicant 

requests that the Commission issue an 

order under section 206A of the 

Advisers Act and rule 206(4)–5(e) 

exempting it from rule 206(4)–5(a)(1) 

under the Advisers Act to permit 

Applicant to receive compensation for 

investment advisory services provided 

to a government entity within the twoyear period following a contribution by 

a covered associate of Applicant to an 

official of the government entity. 

FILING DATES: The application was filed 

on December 23, 2013, and amended 

and restated applications were filed on 

April 28, 2014, and July 15, 2014. 

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 

Applicant with a copy of the request, 

personally or by mail. Hearing 

requests should be received by the 

Commission by 5:30 p.m. on 

November 17, 2014, and should be 

accompanied by proof of service on 

Applicant, in the form of an affidavit 

or, for lawyers, a certificate of service. 

Pursuant to rule 0–5 under the 

Advisers Act, hearing requests should 

state the nature of the writer’s 

interest, any facts bearing upon the 

desirability of a hearing on the matter, 

the reason for the request, and the 

issues contested. Persons may request 

notification of a hearing by writing to 

the Commission’s Secretary. 

ADDRESSES: Secretary, Securities and 

Exchange Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

Applicant, Ares Real Estate 

Management Holdings, LLC, c/o 

Michael Weiner, 2000 Avenue of the 

Stars, Los Angeles, CA 90067. 

FOR FURTHER INFORMATION CONTACT: 

Brian McLaughlin Johnson, Senior 

Counsel, or Melissa R. Harke, Branch 

Chief, at (202) 551–6825 (Division of 

Investment Management, Chief 

Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site either at http://www.sec.gov/

rules/iareleases.shtml or by searching 

for the file number, or for an applicant 

using the Company name box, at 

http://www.sec.gov/search/search.htm, 

or by calling (202) 551–8090. 

Applicant’s Representations 

1. Applicant is a limited liability 

company organized in Delaware and 

registered with the Commission as an 

investment adviser under the Advisers 


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