70582 Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Notices 

that is not controlled by such person) 

any interest in a Sub-Advisor except for 

(a) ownership of interests in the Advisor 

or any entity, other than a WhollyOwned Sub-Advisor, that controls, is 

controlled by, or is under common 

control with the Advisor, or (b) 

ownership of less than 1% of the 

outstanding securities of any class of 

equity or debt of any publicly traded 

company that is either a Sub-Advisor or 

an entity that controls, is controlled by, 

or is under common control with, a SubAdvisor. 

12. Each Subadvised Series and any 

Feeder Fund that invests in a 

Subadvised Series that is a Master Fund 

will disclose the Aggregate Fee 

Disclosure in its registration statement. 

13. In the event the Commission 

adopts a rule under the Act providing 

substantially similar relief to that 

requested in the application, the 

requested order will expire on the 

effective date of that rule. 

14. Any new Sub-Advisory 

Agreement or any amendment to a 

Subadvised Series’ existing Investment 

Management Agreement or SubAdvisory Agreement that directly or 

indirectly results in an increase in the 

aggregate advisory fee rate payable by 

the Subadvised Series will be submitted 

to the Subadvised Series’ shareholders 

for approval. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–27981 Filed 11–25–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

31341; File No. 813–366] 

BlackRock, Inc., et al.; Notice of 

Application 

November 20, 2014. 

AGENCY: Securities and Exchange 

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, and the rules and 

regulations thereunder, except sections 

9, 17, 30, 36 through 53 and the rules 

and regulations under those sections. 

With respect to sections 17(a), (d), (e), 

(f), (g) and (j) and 30(a), (b), (e) and (h) 

of the Act, and the rules and regulations 

thereunder, and rule 38a–1 under the 

Act, applicants request a limited 

exemption as set forth in the 

application. 

SUMMARY: Applicants request an order to 

exempt certain investment vehicles 

formed for the benefit of eligible 

employees of BlackRock, Inc. and its 

affiliates (‘‘Partnerships’’) from certain 

provisions of the Act. Each Partnership 

will be an ‘‘employees’ securities 

company’’ within the meaning of 

section 2(a)(13) of the Act. Applicants: 

BlackRock, Inc. (‘‘BlackRock’’), 

BlackRock Energy Opportunity 

(Employees) Fund, L.P. (the ‘‘Energy 

Fund’’), Vesey Street Employee Fund 

IV, L.P. (the ‘‘Vesey Street Fund’’), 

BlackRock Energy Opportunity Fund 

GP, LLC (the ‘‘Energy Fund GP’’), 

BlackRock DivPEP IV, LLC (the ‘‘Vesey 

Street Fund GP’’), BlackRock Capital 

Management, Inc. (‘‘BCM’’), and 

BlackRock Investment Management, 

LLC (‘‘BIM’’). 

DATES: The application was filed on 

April 23, 2007, and amended on June 

29, 2010, January 15, 2013, May 17, 

2013, October 17, 2013, April 3, 2014, 

and November 19, 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 December 15, 2014, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Pursuant to rule 0–5 under the 

Act, hearing requests should state the 

nature of the writer’s interest, any facts 

bearing upon the desirability of a 

hearing on the matter, the reason for the 

request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

writing to the Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090; 

Applicants, 40 East 52nd Street, New 

York, NY 10022. 

FOR FURTHER INFORMATION CONTACT: 

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

551–6876, or Mary Kay Frech, 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’s name box, at http://

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

calling (202) 551–8090. 

Applicants’ Representations 

1. BlackRock, a Delaware corporation, 

and its affiliates provide investment 

management, risk management and 

advisory services to institutional and 

retail clients around the world. 

2. The Partnerships have been or will 

be established primarily for the benefit 

of key employees of BlackRock or of any 

affiliate within the meaning of rule 12b– 

2 under the Securities Exchange Act of 

1934 (the ‘‘1934 Act’’) of BlackRock (all 

such affiliates are subsidiaries of 

BlackRock, and together with BlackRock 

are referred to collectively as the 

‘‘BlackRock Group’’ and individually as 

a ‘‘BlackRock Group entity’’) as part of 

a program designed to create capital 

building opportunities that are 

competitive with those at other financial 

services firms and to facilitate the 

BlackRock Group’s recruitment of high 

caliber professionals. Each of the 

Partnerships will be structured as a 

limited liability company, limited 

partnership, corporation, business trust 

or other entity organized under the laws 

of the state of Delaware or another U.S. 

or non-U.S. jurisdiction or any other 

‘‘issuer’’ (as defined in section 2(a)(22) 

of the Act). Each Partnership will be an 

‘‘employees’ securities company’’ 

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

the Act and will operate as a diversified 

or non-diversified closed-end 

management investment company. 

3. The Energy Fund was formed on 

April 9, 2007 as a Delaware limited 

partnership. The Energy Fund GP acts 

as General Partner (as defined below) to 

the Energy Fund. The Energy Fund 

invests concurrently with BlackRock 

Energy Opportunity Master Fund, L.P., 

a BlackRock Third Party Fund (as 

defined below), which seeks to achieve 

long term capital appreciation through 

various types of non-control 

investments in companies primarily 

engaged in the energy and natural 

resource industries. The Energy Fund is 

no longer accepting additional 

investors. BCM, an indirect whollyowned subsidiary of BlackRock, serves 

as Investment Adviser (as defined 

below) for the Energy Fund and 

provides portfolio management, 

research and administrative services for 

the Energy Fund. The Vesey Street Fund 

was formed on November 3, 2008 as a 

Delaware limited partnership. The 

Vesey Street Fund GP acts as General 

Partner to the Vesey Street Fund. The 

Vesey Street Fund invests concurrently 

with Vesey Street Fund IV, L.P., a 

BlackRock Third Party Fund, and other 

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Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Notices 70583 

1The term ‘‘General Partner’’ refers to any 

BlackRock Group entity that acts as the general 

partner, manager or the equivalent of a Partnership. 

2 In order for a current or former officer or 

director of any member of the BlackRock Group to 

be an ‘‘Eligible Employee,’’ such current or former 

officer or director must be an employee or former 

employee of a BlackRock Group entity. 

3A ‘‘Sophisticated Employee’’ is an employee 

that (a) has a graduate degree in business, law or 

accounting, (b) has a minimum of five years of 

consulting, investment banking or similar business 

experience, and (c) has had reportable income from 

all sources of at least $100,000 in each of the two 

most recent years and a reasonable expectation of 

income from all sources of at least $140,000 in each 

year in which such person will be committed to 

make investments in a Partnership. In addition, a 

Sophisticated Employee 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 such Partnership 

and in all other Partnerships in which he or she has 

previously invested. With respect to any 

Partnership, up to 35 employees may be permitted 

to invest in the Partnership if, at the time of the 

employee’s investment in the Partnership, he or she 

is a Managing Employee or a Sophisticated 

Employee; provided, however, that if a Managing 

Employees meets the standards of an ‘‘accredited 

investor’’ under rule 501(a) of Regulation D, such 

Managing Employee will not be counted toward 

this 35 employee limit. 

associated BlackRock Group entities to 

give investors globally diversified 

exposure to the private equity asset 

class. The Vesey Street Fund is no 

longer accepting additional investors. 

BIM, an indirect, wholly-owned 

subsidiary of BlackRock, serves as 

Investment Adviser of the Vesey Street 

Fund and provides portfolio 

management, research and 

administrative services for the Vesey 

Street Fund. 

4. The BlackRock Group will control 

the Partnerships within the meaning of 

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

Partner of each Partnership is or will be 

a BlackRock Group entity.1 Each 

BlackRock Group entity acting as an 

investment adviser to a Partnership, 

including, if applicable, the General 

Partner (each, an ‘‘Investment Adviser’’) 

will be registered as an investment 

adviser under the Investment Advisers 

Act of 1940, if required under 

applicable law. The General Partner will 

manage, operate and control each of the 

Partnerships and will be authorized to 

delegate investment management 

responsibility with respect to the 

acquisition, management and 

disposition of the investments of a 

Partnership (‘‘Portfolio Investments’’) 

only to a BlackRock Group entity or to 

a committee of BlackRock Group 

employees (‘‘Investment Committee’’). 

5. All partners or members of, or other 

investors in (‘‘Partners’’), the 

Partnerships other than the applicable 

general partner (the ‘‘Limited Partners’’) 

will be informed that (i) interests in the 

Partnerships will be sold in transactions 

exempt under section 4(2) of the 

Securities Act of 1933 (the ‘‘1933 Act’’), 

or Regulation D under the 1933 Act and 

thus offered without registration under, 

and without the protections afforded by 

the 1933 Act, and (ii) the Partnerships 

will be exempt from most provisions of 

the Act and from the protections 

afforded thereby. With the exception of 

Plan Interest Holders (as defined below), 

Limited Partner interests, membership 

interests or similar ownership interests 

in Partnerships (‘‘Interests’’) will be sold 

only (i) to Eligible Employees (as 

defined below), (ii) at the request of 

Eligible Employees and in the discretion 

of the General Partner, to Qualified 

Participants (as defined below) of such 

Eligible Employees and (iii) to 

BlackRock Group entities. Prior to 

offering Interests to an Eligible 

Employee or Qualified Participant, the 

General Partner must reasonably believe 

that each Eligible Employee who 

participates, or requests that a related 

Qualified Participant be permitted to 

participate, in a Partnership will be a 

sophisticated investor capable of 

understanding and evaluating the risks 

of participating in the Partnership 

without the benefit of regulatory 

safeguards. In the case of a Consultant 

(as defined below) that is an entity, the 

General Partner will make this 

determination with respect to the 

persons who make the investment 

decision on behalf of the Consultant. 

Participation in a Partnership will be 

voluntary on the part of Eligible 

Employees and Qualified Participants. 

6. An ‘‘Eligible Employee’’ is either (a) 

an individual who (i) is a current or 

former employee, officer or director 2 or 

current Consultant of any member of the 

BlackRock Group and (ii) except for a 

limited number of Sophisticated 

Employees 3 (as defined below) and 

certain individuals who meet the 

definition of ‘‘knowledgeable 

employee’’ in rule 3c–5(a)(4) under the 

Act as if the Partnerships were ‘‘Covered 

Companies’’ within the meaning of the 

rule (‘‘Managing Employees’’), meets the 

standards of an ‘‘accredited investor’’ 

under rule 501(a) of Regulation D or (b) 

an entity that (i) is a current Consultant 

of the BlackRock Group and (ii) meets 

the standards of an ‘‘accredited 

investor’’ under rule 501(a) of 

Regulation D. 

7. In the discretion of the General 

Partner and at the request of an Eligible 

Employee, Interests may be assigned by 

such Eligible Employee, or sold directly 

by the Partnership, to a Qualified 

Participant of an Eligible Employee. In 

order to qualify as a ‘‘Qualified 

Participant,’’ an individual or entity 

must (i) be an Eligible Family Member 

or Qualified Investment Vehicle (in each 

case as defined below) and (ii) if 

purchasing an Interest from a 

Partnership, come within one of the 

categories of an ‘‘accredited investor’’ 

under rule 501(a) of Regulation D. An 

‘‘Eligible Family Member’’ is a spouse, 

parent, child, spouse of a child, brother, 

sister or grandchild of an Eligible 

Employee, including step and adoptive 

relationships. A ‘‘Qualified Investment 

Vehicle’’ is (i) a trust of which the 

trustee, grantor and/or beneficiary is an 

Eligible Employee, (ii) a partnership, 

corporation or other entity controlled by 

an Eligible Employee, or (iii) a trust or 

other entity established solely for the 

benefit of an Eligible Employee and/or 

one or more Eligible Family Members of 

an Eligible Employee. 

8. Certain employees of the BlackRock 

Group who do not qualify as Eligible 

Employees may receive Interests as part 

of an employee benefit plan without 

payment in order to reward and retain 

these employees (‘‘Plan Interest 

Holders’’). The Partnerships will not 

register Interests awarded to Plan 

Interest Holders under the 1933 Act in 

reliance on an opinion of counsel that 

the awards of Interests are not sales 

within the meaning of section 2(a)(3) of 

the 1933 Act. No relief from the 

provisions of the 1933 Act is requested 

by the BlackRock Group with respect to 

the award of Interests to Plan Interest 

Holders. Plan Interest Holders will not 

be required to meet the sophistication 

and salary requirements to which 

Eligible Employees are subject. 

9. It is anticipated that, at the 

discretion of the General Partner, 

consultants or business or legal advisors 

of the BlackRock Group (‘‘Consultants’’) 

may be offered the opportunity to 

participate in the Partnerships, either 

directly or through a Qualified 

Participant of such consultant or 

advisor. In order to participate in the 

Partnerships, Consultants must be 

currently engaged by the BlackRock 

Group and will be required to be 

sophisticated investors who qualify as 

‘‘accredited investors’’ under rule 501(a) 

of Regulation D. If a Consultant is an 

entity (such as, for example, a law firm 

or consulting firm), and the Consultant 

proposes to invest in the Partnership 

through a partnership, corporation or 

other entity that is controlled by the 

Consultant, the individual participants 

in such partnership, corporation or 

other entity will be limited to senior 

level employees, members or partners of 

the Consultant who are responsible for 

the activities of the Consultant or the 

activities of the Consultant in relation to 

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70584 Federal Register / Vol. 79, No. 228 / Wednesday, November 26, 2014 / Notices 

4A fund of funds is a pooled investment vehicle 

that invests 10 percent or more of its total assets in 

other pooled investment vehicles that are not, and 

are not advised by, a related person (as defined in 

Form ADV) of the pool, its general partner, or its 

adviser. 

5For purposes of this requirement, ‘‘audit’’ shall 

have the meaning defined in rule 1–02(d) of 

Regulation S–X. 

6 In such cases, audited financial statements will 

be prepared for either the Partnership or the entity 

that is the subject of the Portfolio Investment. 

7A separate account refers to an account of an 

affiliated insurance company, trust company or 

similar entity where under applicable state or other 

law such separate account provides special rights 

or other special treatment for separate account 

holders that are distinguishable from the rights of 

the entity’s general account. 

8Applicants are not requesting any exemption 

from any provision of the Act or any rule 

thereunder that may govern a Partnership’s 

eligibility to invest in a Portfolio Investment relying 

on section 3(c)(1) or 3(c)(7) of the Act or the 

Portfolio Investment’s status under the Act. 

the BlackRock Group and will be 

required to qualify as ‘‘accredited 

investors’’ under rule 501(a) of 

Regulation D. 

10. Once a Consultant’s engagement 

with the BlackRock Group is 

terminated, or once an Eligible Family 

Member of an Eligible Employee ceases 

to be an Eligible Family Member, as of 

the date of such termination or 

cessation, such Consultant and its 

Qualified Participants, if any, or such 

Eligible Family Member, will not be 

permitted to contribute any additional 

capital to a Partnership and the existing 

Interests of such Consultant and its 

Qualified Participants, if any, or such 

Eligible Family Member, will (i) to the 

extent the governing documents of a 

Partnership provide for periodic 

redemptions in the ordinary course, be 

redeemed as of the next regularly 

scheduled redemption date and (ii) to 

the extent the governing documents of 

a Partnership do not provide for such 

periodic redemptions (e.g., as a result of 

the vehicle primarily investing in 

illiquid investments), be retained. 

11. If the General Partner elects to 

recommend that a Partnership enter into 

any side-by-side investment with an 

unaffiliated entity, the General Partner 

will be permitted to engage as a subinvestment adviser the unaffiliated 

entity (an ‘‘Unaffiliated Subadviser’’), 

which will be responsible for the 

management of such side-by-side 

investment. If an Unaffiliated 

Subadviser is entitled to receive a 

carried interest, it may also act as an 

additional General Partner of a 

Partnership solely in order to address 

certain tax issues relating to such 

carried interest. In all such instances, 

however, a BlackRock Group entity will 

also be a General Partner of the 

Partnership and will have exclusive 

responsibility for making the 

determinations required to be made by 

the General Partner. No Unaffiliated 

Subadviser will beneficially own any 

outstanding securities of any 

Partnership. 

12. The terms of a Partnership will be 

fully disclosed to each Eligible 

Employee or Qualified Participant (or 

person making the investment decision 

on behalf of the Qualified Participant) at 

the time the Eligible Employee or 

Qualified Participant is invited to 

participate in the Partnership, or to a 

Plan Interest Holder at the time he or 

she receives an Interest. Each Eligible 

Employee, Qualified Participant (or 

person making the investment decision 

on behalf of the Qualified Participant) or 

Plan Interest Holder will be furnished 

with a copy of the partnership 

agreement or other organizational 

document (‘‘Partnership Agreement’’). 

The Partnership Agreement will set 

forth whether a Limited Partner’s 

Interests are subject to forfeiture upon 

termination of the relationship of the 

Limited Partner (or relevant Eligible 

Employee) to the BlackRock Group or 

the employment of the Limited Partner 

(or relevant Eligible Employee) by a 

competitor to the BlackRock Group or 

otherwise and, if such forfeiture 

provisions exist, the terms of the 

repurchase or cancellation of the 

Limited Partner’s Interests. Upon any 

repurchase, cancellation or forfeiture of 

a former Limited Partner’s Interest, the 

Limited Partner will at a minimum be 

paid the lesser of (i) the amount actually 

paid by or (subject to any vesting 

requirements) on behalf of the Limited 

Partner to acquire the Interest (plus 

interest, as reasonably determined by 

the General Partner) less any amounts 

paid to the Limited Partner as 

distributions, and (ii) the fair value, 

determined at the time of repurchase in 

good faith by the General Partner, of 

such Interest. 

13. Each Partnership will send its 

Partners annual financial statements 

within 120 days after the end of the 

fiscal year of the Partnership or as soon 

as practicable thereafter or, in the case 

of a Partnership that is a fund of funds,4

within 180 days after the end of the 

fiscal year of the Partnership. The 

financial statements of each Partnership 

will be audited by independent certified 

public accountants,5 except in the case 

of Partnerships formed to make a single 

Portfolio Investment.6 In addition, to 

enable Limited Partners to determine 

the U.S. federal income tax 

consequences of their investments, as 

soon as practicable after end of each tax 

year of a Partnership, a report will be 

transmitted to each Partner showing 

such Partner’s share of income, gains, 

losses, credits, deductions, and other tax 

items for U.S. federal income tax 

purposes, resulting from the 

Partnership’s operations during that 

year. 

14. Interests in the Partnerships will 

be non-transferable except with the 

prior written consent of the General 

Partner, and, in any event, no person or 

entity will be admitted into a 

Partnership as a Partner or allowed to 

continue to hold an Interest unless such 

person is (i) an Eligible Employee, (ii) a 

Plan Interest Holder, (iii) a Qualified 

Participant of an Eligible Employee or 

(iv) a BlackRock Group entity. The 

Interests in the Partnerships will be sold 

without a sales load. 

15. It is possible that an investment 

program may be structured in which a 

Partnership will co-invest in a portfolio 

company (or a pooled investment 

vehicle) with the BlackRock Group or 

with an investment fund or separate 

account,7 organized primarily for the 

benefit of investors that are not affiliated 

with the BlackRock Group (‘‘Third Party 

Investors’’) and over which a BlackRock 

Group entity exercises investment 

discretion or which is sponsored by a 

BlackRock Group entity (a ‘‘BlackRock 

Third Party Fund’’). Co-investments 

with a BlackRock Third Party Fund or 

with a BlackRock Group entity in a 

transaction in which the BlackRock 

Group’s investment was made pursuant 

to a contractual obligation to a 

BlackRock Third Party Fund will not be 

subject to condition 3 below. All other 

side-by-side investments held by 

BlackRock Group entities will be subject 

to the restrictions contained in 

condition 3. 

16. Subject to the terms of the 

applicable Partnership Agreement and 

the application, a Partnership will be 

permitted to enter into transactions 

involving (i) a BlackRock Group entity, 

(ii) a portfolio company, (iii) any Partner 

or person or entity affiliated with a 

Partner, (iv) a BlackRock Third Party 

Fund, or (v) any Third Party Investor. 

With regard to any such transactions 

that are Section 17 Transactions (as 

defined below), the General Partner 

must make the findings and comply 

with the recordkeeping requirements of 

condition 1. 

17. Applicants state that a 

Partnership’s investments may be made 

on a side-by-side basis with BlackRock 

Group entities or indirectly through 

pooled investment vehicles (including 

private funds relying on sections 3(c)(1) 

and 3(c)(7) of the Act and funds relying 

on section 3(c)(5) of the Act) 8 and/or 

registered investment companies 

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sponsored by the BlackRock Group or 

by third parties. One Partnership may 

invest in another Partnership in a 

‘‘master-feeder’’ or similar structure. A 

Partnership will not acquire any 

security issued by a registered 

investment company if, immediately 

after the acquisition, such Partnership 

will own 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 if and 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 Partnerships from all 

provisions of the Act, and the rules and 

regulations thereunder, except sections 

9, 17, 30, 36 through 53 and the rules 

and regulations under those sections. 

With respect to sections 17(a), (d), (e), 

(f), (g) and (j) and 30(a), (b), (e) and (h) 

of the Act, and the rules and regulations 

thereunder, and rule 38a–1 under the 

Act, applicants request a limited 

exemption 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 investment 

company. Applicants request an 

exemption from section 17(a) to the 

extent necessary to permit a BlackRock 

Group entity or a BlackRock Third Party 

Fund (or any affiliated person of such 

entity or BlackRock Third Party Fund), 

or any affiliated person of a Partnership 

(or affiliated persons of such persons), 

acting as principal, to engage in any 

transaction directly or indirectly with 

any Partnership or any company 

controlled by such Partnership. 

Applicants state that the relief is 

requested to permit each Partnership the 

flexibility to deal with its Portfolio 

Investments in the manner the General 

Partner deems most advantageous to all 

Limited Partners in the Partnership, 

including borrowing funds from a 

BlackRock Group entity, restructuring 

its Portfolio Investments, having its 

Portfolio Investments redeemed, 

tendering such Partnership’s securities 

or negotiating options or implementing 

exit strategies with respect to its 

Portfolio Investments. Applicants state 

the requested exemption is sought to 

ensure that a BlackRock Third Party 

Fund or a Third Party Investor will not 

directly or indirectly become subject to 

a burden, restriction, or other adverse 

effect by virtue of a Partnership’s 

participation in an investment 

opportunity. 

4. Applicants submit that an 

exemption from section 17(a) is 

consistent with the policy of each 

Partnership and the protection of 

investors and is necessary to promote 

the basic purpose of such Partnership. 

Applicants state that the Limited 

Partners in each Partnership will be 

fully informed of the possible extent of 

Partnership’s dealings with the 

BlackRock Group and of the potential 

conflicts of interest that may exist. As 

professionals employed in the 

investment management and securities 

businesses, the Limited Partners will be 

able to understand and evaluate the 

attendant risks. Applicants assert that 

the community of interest among the 

Limited Partners in each Partnership 

and the BlackRock Group is the best 

insurance against any risk of abuse. 

Applicants acknowledge that the 

requested relief will not extend to any 

transactions between a Partnership and 

an Unaffiliated Subadviser or an 

affiliated person of the Unaffiliated 

Subadviser, or between a Partnership 

and any person who is not an employee, 

officer or director of the BlackRock 

Group or is an entity outside of the 

BlackRock Group and is an affiliated 

person of the Partnership as defined in 

section 2(a)(3)(E) of the Act (‘‘Advisory 

Person’’) or any affiliated person of such 

person. In addition, applicants on behalf 

of the Partnerships represent that any 

transactions otherwise subject to section 

17(a) of the Act, for which exemptive 

relief has not been requested, would 

require approval of the Commission. 

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 Partnership or 

affiliated persons of such persons to 

participate in, or effect any transaction 

in connection with, any joint enterprise 

or joint arrangement or profit-sharing 

plan in which such Partnership or a 

company controlled by the Partnership 

is a participant. Applicants 

acknowledge that the requested relief 

will not extend to any transaction in 

which an Unaffiliated Subadviser or an 

Advisory Person or an affiliated person 

of either has an interest. 

6. Applicants assert that compliance 

with section 17(d) would cause a 

Partnership to forego investment 

opportunities simply because a Limited 

Partner or any other affiliated person of 

such Partnership (or any affiliated 

person of such a person) also had, or 

contemplated making, a similar 

investment. Applicants further assert 

that attractive investment opportunities 

of the types considered by a Partnership 

often require each participant in the 

transaction to make funds available in 

an amount that may be substantially 

greater than those the Partnership 

would be able to provide on its own. 

Applicants contend that, as a result, the 

only way in which a Partnership may be 

able to participate in such opportunities 

may be to co-invest with other persons, 

including its affiliates. Applicants assert 

that the flexibility to structure coinvestments and joint investments will 

not involve abuses of the type section 

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

prevent. 

7. Co-investments with a BlackRock 

Third Party Fund, or with a BlackRock 

Group entity in a transaction in which 

the BlackRock Group’s investment was 

made pursuant to a contractual 

obligation to a BlackRock Third Party 

Fund, will not be subject to condition 3 

below. All other side-by-side 

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investments held by BlackRock Group 

entities will be subject to condition 3. 

Applicants assert that in structuring a 

BlackRock Third Party Fund, it is 

common for the unaffiliated investors of 

such fund to require that the BlackRock 

Group invests its own capital in 

BlackRock Third Party Funds’ 

investments, and that such BlackRock 

Group investments be subject to similar 

terms as those applicable to the 

BlackRock Third Party Fund’s 

investments. Applicants state that it is 

important that the interests of the 

BlackRock Third Party Fund take 

priority over the interests of the 

Partnerships, and that the activities of 

the BlackRock Third Party Fund not be 

burdened or otherwise affected by 

activities of the Partnerships. 

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 BlackRock 

Group entity (including the General 

Partner) that acts as an agent or broker 

to receive placement fees, advisory fees, 

brokerage fees, or other compensation 

from a Partnership in connection with 

the purchase or sale by the Partnership 

of securities, provided that the fees or 

other compensation are deemed ‘‘usual 

and customary.’’ Applicants state that 

for purposes of the application, fees or 

other compensation that are charged or 

received by a BlackRock Group entity 

will be deemed ‘‘usual and customary’’ 

only if (a) the Partnership is purchasing 

or selling securities alongside other 

unaffiliated third parties, including 

BlackRock Third Party Funds or Third 

Party Investors, (b) the fees or 

compensation being charged to the 

Partnership are also being charged to the 

unaffiliated third parties, BlackRock 

Third Party Funds or Third Party 

Investors, and (c) the amount of 

securities being purchased or sold by 

the Partnership does not exceed 50% of 

the total amount of securities being 

purchased or sold by the Partnership 

and the unaffiliated third parties, 

BlackRock Third Party Funds or Third 

Party Investors. Applicants assert that, 

because the BlackRock Group does not 

wish to appear to be favoring the 

Partnerships, compliance with section 

17(e) would prevent a Partnership from 

participating in transactions where the 

Partnership is being charged lower fees 

than unaffiliated third parties. 

Applicants assert that the fees or other 

compensation paid by a Partnership to 

a BlackRock Group entity will be the 

same as those negotiated 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 investment company 

relying on the rule to satisfy the fund 

governance standards defined in rule 0– 

1(a)(7) under the Act. Applicants 

request an exemption from rule 17e–1 to 

the extent necessary to permit each 

Partnership to comply with the rule 

without having a majority of the 

directors of the Partnership 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 set forth 

in paragraph (c) of the rule. Applicants 

state that because all the directors of the 

General Partner will be affiliated 

persons, without the relief requested, a 

Partnership could not comply with rule 

17e–1. Applicants state that each 

Partnership will comply with rule 17e– 

1 by having a majority of the directors 

of the Partnership or the General Partner 

take actions and make approvals as set 

forth in the rule. Applicants state that 

each Partnership will otherwise comply 

with rule 17e–1. 

10. Section 17(f) of the Act provides 

that the securities and similar 

investments of a registered management 

investment company must be placed in 

the custody of a bank, a member of a 

national securities exchange or the 

company itself in accordance with 

Commission rules. Rule 17f–1 under the 

Act specifies the requirements that must 

be satisfied for a registered management 

investment company to maintain 

custody of its securities and similar 

investments with a company that is a 

member of a national securities 

exchange. Applicants request relief from 

section 17(f) and subsections (a), (b) (to 

the extent such subsection refers to 

contractual requirements), (c) and (d) of 

rule 17f–1 under the Act to permit a 

BlackRock Group entity to act as 

custodian for a Partnership’s assets 

without a written contract and to permit 

ratification of that arrangement by 

members of the governing body of the 

General Partner or Investment Adviser, 

if applicable, of the Partnership in lieu 

of ratification by the governing body of 

the Partnership. In addition, an 

exemption is requested from the terms 

of rule 17f–1(b)(4) that an independent 

accountant periodically verify the 

Partnership’s assets held by the 

custodian, and from the terms of rule 

17f–1(c) that requires the Partnership to 

transmit to the Commission a copy of 

any contract pursuant to rule 17f–1. 

Applicants state that, because of the 

community of interest between the 

Partnerships and the BlackRock Group, 

applicants do not believe these 

requirements are warranted. Applicants 

will comply with rule 17f–1(d) provided 

that ratification by the General Partner 

or Investment Adviser, if applicable, of 

a Partnership will be deemed to be 

ratification by a majority of the 

governing body of the Partnership. 

Except as set forth above, each 

Partnership will otherwise comply with 

all the provisions of rule 17f–1. 

11. Rule 17f–2 under the Act specifies 

the requirements that must be satisfied 

for a registered management investment 

company to act as a custodian of its own 

investments. Applicants request an 

exemption from section 17(f) and rule 

17f–2 to permit the following exceptions 

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

A Partnership’s investments may be 

kept in the locked files of the General 

Partner or the Investment Adviser for 

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

for purposes of paragraph (d) of the rule, 

(i) employees of the BlackRock Group 

will be deemed to be employees of the 

Partnerships, (ii) officers or managers of 

the General Partner of a Partnership will 

be deemed to be officers of the 

Partnership, and (iii) the General 

Partner or its board of directors will be 

deemed to be the board of directors of 

the Partnership; and (c) in place of the 

verification procedure under paragraph 

(f) of the rule, verification will be 

effected quarterly by two employees of 

the General Partner who are also 

employees of the BlackRock Group 

responsible for the administrative, legal 

and/or compliance functions for funds 

managed or sponsored by the BlackRock 

Group and who have specific 

knowledge of custody requirements, 

policies and procedures of the 

Partnerships. With respect to certain 

Partnerships, applicants expect that 

many of their investments may be 

evidenced only by partnership 

agreements, participation agreements or 

similar documents, rather than by 

negotiable certificates that could be 

misappropriated. Applicants assert that, 

for such a Partnership, these 

instruments are most suitably kept in 

the files of the General Partner or its 

Investment Adviser, where they can be 

referred to as necessary. Applicants will 

comply with all other provisions of rule 

17f–2. 

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

17(g)–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. 

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Rule 17g–1 requires that a majority of 

the directors who are not ‘‘interested 

persons’’ of a registered investment 

company take certain actions and give 

certain approvals relating to the fidelity 

bonding. Rule 17g–1(g) 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. Rule 17g–1(h) 

provides that an investment company 

must designate one of its officers to 

make the filings and give the notices 

required by paragraph (g). Rule 17g–1(j) 

exempts a joint insured bond provided 

and maintained by an investment 

company and one or more 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– 

1(a)(7). Because all the directors of the 

General Partner or other governing body 

of the General Partner will be affiliated 

persons, without the relief requested, a 

Partnership could not comply with rule 

17g–1. Applicants request an exemption 

from rule 17g–1 to the extent necessary 

to permit each Partnership to comply 

with rule 17g–1 by having the General 

Partner of the Partnership take such 

actions and make such approvals as are 

set forth in rule 17g–1. Applicants also 

request 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 the provision of 

notices to the board of directors and 

from the requirements of rule 17g– 

1(j)(3). The General Partner of the 

Partnership will maintain the materials 

otherwise required to be filed with the 

Commission by rule 17g–1(g) and all 

such material will be subject to 

examination by the Commission and its 

staff. The General Partner of the 

Partnership will designate a person to 

maintain the records otherwise required 

to be filed with the Commission under 

rule 17g–1(g). Applicants state that the 

fidelity bond of the Partnerships will 

cover all employees of the BlackRock 

Group who have access to the securities 

or funds of the Partnerships. Each 

Partnership 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 unnecessary and burdensome 

as applied to the Partnerships. The relief 

requested will extend only to entities 

within the BlackRock Group and is not 

requested with respect to any 

Unaffiliated Subadviser or Advisory 

Person. 

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 a Partnership and 

would entail administrative and legal 

costs that outweigh any benefit to the 

Limited Partners of the Partnership. 

Applicants request relief to the extent 

necessary to permit each Partnership to 

report annually to its Limited Partners. 

Applicants also request an exemption 

from section 30(h) of the Act to the 

extent necessary to exempt (i) the 

General Partner and Investment Adviser 

of each Partnership, (ii) directors, 

officers, or any affiliated persons of the 

General Partner and Investment 

Adviser, (iii) the members of any 

Investment Committee or board of 

managers or directors of a Partnership, 

(iv) any other persons who may be 

deemed to be members of an advisory 

board of a Partnership, and (v) any 

BlackRock Group entity or other 

Limited Partner who may be deemed to 

be a beneficial owner of 10% or greater 

of the outstanding securities of a 

Partnership, from filing Forms 3, 4, and 

5 under section 16(a) of the 1934 Act 

with respect to their ownership of 

Interests. 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 laws and to 

appoint a chief compliance officer. Each 

Partnership will comply will rule 38a– 

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

the Partnership does not have a board of 

directors, the board of directors of the 

General Partner will fulfill the 

responsibilities assigned to the 

Partnership’s board of directors under 

the rule, (b) because the board of 

directors or other governing body of the 

General Partner 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 (c) because the 

board of directors or other governing 

body of the General Partner does not 

have any independent members, the 

Partnerships will comply with the 

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

the chief compliance officer meet with 

the independent directors by having the 

chief compliance officer meet with the 

board of directors or other governing 

body of the General Partner as 

constituted. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief 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 

a Partnership is a party (the ‘‘Section 17 

Transactions’’) will be effected only if 

the General Partner determines that: 

(a) the terms of the Section 17 

Transaction, including the 

consideration to be paid or received, are 

fair and reasonable to the Partnership 

and the Partners and do not involve 

overreaching of such Partnership or its 

Partners on the part of any person 

concerned; and 

(b) the Section 17 Transaction is 

consistent with the interests of the 

Partnership and the Partners, such 

Partnership’s organizational documents 

and such Partnership’s reports to its 

Partners. 

In addition, the General Partner will 

record and preserve a description of all 

Section 17 Transactions, the General 

Partner’s findings, the information or 

materials upon which the General 

Partner’s findings are based and the 

basis for such findings. All such records 

will be maintained for the life of the 

Partnership and at least six years 

thereafter, and will be subject to 

examination by the Commission and its 

staff. Each Partnership will preserve the 

accounts, books and other documents 

required to be maintained in an easily 

accessible place for the first two years. 

2. The General Partner 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 

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affiliated person or promoter of or 

principal underwriter for such 

Partnership, or any affiliated person of 

such a person, promoter or principal 

underwriter. 

3. The General Partner will not cause 

the funds of any Partnership to be 

invested in any investment in which a 

‘‘Co-Investor’’ (as defined below) has 

acquired or proposes to acquire the 

same class of securities of the same 

issuer, where the investment involves a 

joint enterprise or other joint 

arrangement within the meaning of rule 

17d–1 in which the Partnership and a 

Co-Investor are participants, unless 

prior to such investment any such CoInvestor agrees, prior to disposing of all 

or part of its investment, to: (a) Give the 

General Partner sufficient, but not less 

than one day’s, notice of its intent to 

dispose of its investment; and (b) refrain 

from disposing of its investment unless 

the Partnership has the opportunity to 

dispose of the Partnership’s investment 

prior to or concurrently with, on the 

same terms as, and on a pro rata basis 

with, the Co-Investor. The term ‘‘CoInvestor’’ with respect to any 

Partnership means any person who is: 

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

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

Partnership (other than a BlackRock 

Third Party Fund); (b) the BlackRock 

Group (except when a BlackRock Group 

entity co-invests with a Partnership and 

a BlackRock Third Party Fund pursuant 

to a contractual obligation to the 

BlackRock Third Party Fund); (c) an 

officer or director of a BlackRock Group 

entity; (d) an entity (other than a 

BlackRock Third Party Fund) in which 

the BlackRock Group 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 a 

Co-Investor: (a) To its direct or indirect 

wholly-owned subsidiary, to any 

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

indirect wholly-owned subsidiary of its 

parent; (b) to immediate family 

members of the Co-Investor, including 

step or adoptive relationships, or a trust 

or other investment vehicle established 

for any Co-Investor or 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 1934 

Act; (ii) NMS stocks, pursuant to section 

11A(a)(2) of the 1934 Act and rule 

600(b) of Regulation NMS thereunder; 

(iii) government securities as defined in 

section 2(a)(16) of the Act; (iv) ‘‘Eligible 

Securities’’ as defined in rule 2a–7 

under the Act, or (v) 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 Partnership and its General 

Partner will maintain and preserve, for 

the life of such Partnership and at least 

six years thereafter, such accounts, 

books, and other documents as 

constitute the record forming the basis 

for the audited financial statements that 

are to be provided to the Limited 

Partners in such Partnership, and each 

annual report of such Partnership 

required to be sent to such Limited 

Partners, and agree that all such records 

will be subject to examination by the 

Commission and its staff. Each 

Partnership will preserve the accounts, 

books and other documents required to 

be maintained in an easily accessible 

place for the first two years. 

5. Within 120 days after the end of the 

fiscal year of the Partnership or as soon 

as practicable thereafter or, in the case 

of a Partnership that is a fund of funds, 

within 180 days after the end of the 

fiscal year of the Partnership, the 

General Partner of each Partnership will 

send to each Limited Partner in such 

Partnership who had an interest in any 

capital account of the Partnership, at 

any time during the fiscal year then 

ended, Partnership financial statements 

audited by the Partnership’s 

independent accountants, except in the 

case of a Partnership formed to make a 

single Portfolio Investment. In such 

cases, financial statements will be 

unaudited, but each Limited Partner 

will receive financial statements of the 

single Portfolio Investment audited by 

such entity’s independent accountants. 

At the end of each fiscal year and at 

other times as necessary in accordance 

with customary practice, the General 

Partner will make a valuation or have a 

valuation made of all of the assets of the 

Partnership as of the fiscal year end. In 

addition, as soon as practicable after the 

end of each tax year of a Partnership, 

the General Partner of such Partnership 

will send a report to each person who 

was a Limited Partner in such 

Partnership at any time during the fiscal 

year then ended, setting forth such tax 

information as shall be necessary for the 

preparation by the Limited Partner of 

his, her or its U.S. federal and state 

income tax returns and a report of the 

investment activities of the Partnership 

during that fiscal year. 

6. If a Partnership makes purchases or 

sales from or to an entity affiliated with 

the Partnership by reason of an officer, 

director or employee of the BlackRock 

Group (a) serving as an officer, director, 

general partner or investment adviser of 

the entity, or (b) having a 5% or more 

investment in the entity, such 

individual will not participate in the 

Partnership’s determination of whether 

or not to effect the purchase or sale. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–27980 Filed 11–25–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

31343; 812–14318] 

Lattice Strategies, LLC, et al.; Notice of 

Application 

November 20, 2014. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application for an 

order under section 6(c) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) for an exemption from sections 

2(a)(32), 5(a)(1), 22(d), and 22(e) of the 

Act and rule 22c–1 under the Act, under 

sections 6(c) and 17(b) of the Act for an 

exemption from sections 17(a)(1) and 

17(a)(2) of the Act, and under section 

12(d)(1)(J) for an exemption from 

sections 12(d)(1)(A) and 12(d)(1)(B) of 

the Act. 

SUMMARY: Applicants request an order 

that would permit (a) series of certain 

open-end management investment 

companies to issue shares (‘‘Shares’’) 

redeemable in large aggregations only 

(‘‘Creation Units’’); (b) secondary market 

transactions in Shares to occur at 

negotiated market prices rather than at 

net asset value (‘‘NAV’’); (c) certain 

series to pay redemption proceeds, 

under certain circumstances, more than 

seven days after the tender of Shares for 

redemption; (d) certain affiliated 

persons of the series to deposit 

securities into, and receive securities 

from, the series in connection with the 

purchase and redemption of Creation 

Units; and (e) certain registered 

management investment companies and 

unit investment trusts outside of the 

same group of investment companies as 

the series to acquire Shares. 

APPLICANTS: Lattice Strategies, LLC 

(‘‘Initial Adviser’’), Lattice Strategies 

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