78114 Federal Register / Vol. 79, No. 248 / Monday, December 29, 2014 / Notices 

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

2 17 CFR 240.19b–4. 

adviser. The Investor is a ‘‘government 

entity,’’ as defined in rule 206(4)–5(f)(5), 

the Contributor is a ‘‘covered associate’’ 

as defined in rule 206(4)-5(f)(2), and the 

Official is an ‘‘official’’ as defined in 

rule 206(4)–5(f)(6). Rule 206(4)–5(c) 

provides that when a government entity 

invests in a covered investment pool, 

the investment adviser to that covered 

investment pool is treated as providing 

advisory services directly to the 

government entity. The Fund is a 

‘‘covered investment pool,’’ as defined 

in rule 206(4)–5(f)(3)(ii). 

2. Section 206A of the Advisers Act 

grants the Commission the authority to 

‘‘conditionally or unconditionally 

exempt any person or transaction . . . 

from any provision or provisions of [the 

Advisers Act] or of any rule or 

regulation thereunder, if and to the 

extent that 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 Advisers Act].’’ 

3. Rule 206(4)–5(e) provides that the 

Commission may exempt an investment 

adviser from the prohibition under rule 

206(4)–5(a)(1) upon consideration of the 

factors listed below, among others: 

(1) Whether the 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 Advisers Act; 

(2) Whether the investment adviser: 

(i) Before the contribution resulting in 

the prohibition was made, adopted and 

implemented policies and procedures 

reasonably designed to prevent 

violations of the rule; and (ii) prior to or 

at the time the contribution which 

resulted in such prohibition was made, 

had no actual knowledge of the 

contribution; and (iii) after learning of 

the contribution: (A) Has taken all 

available steps to cause the contributor 

involved in making the contribution 

which resulted in such prohibition to 

obtain a return of the contribution; and 

(B) has taken such other remedial or 

preventive measures as may be 

appropriate under the circumstances; 

(3) Whether, at the time of the 

contribution, the contributor was a 

covered associate or otherwise an 

employee of the investment adviser, or 

was seeking such employment; 

(4) The timing and amount of the 

contribution which resulted in the 

prohibition; 

(5) The nature of the election (e.g., 

federal, state or local); and 

(6) The contributor’s apparent intent 

or motive in making the contribution 

which resulted in the prohibition, as 

evidenced by the facts and 

circumstances surrounding such 

contribution. 

4. Applicant requests an order 

pursuant to section 206A and rule 

206(4)–5(e), exempting it from the twoyear prohibition on compensation 

imposed by rule 206(4)–5(a)(1) with 

respect to investment advisory services 

provided to the Investor within the twoyear period following the Contribution. 

5. Applicant submits that the 

exemption is necessary and appropriate 

in the public interest and consistent 

with the protection of investors and the 

purposes fairly intended by the policy 

and provisions of the Advisers Act. 

Applicant further submits that the other 

factors set forth in rule 206(4)–5(e) 

similarly weigh in favor of granting an 

exemption to the Applicant to avoid 

consequences disproportionate to the 

violation. 

6. Applicant states that the 

relationship with the Investor pre-dates 

the Contribution and that the Investor 

did not make an additional commitment 

to the Fund subsequent to the 

Contribution (although the Applicant 

notes that the Investor made an 

investment in a successor fund managed 

by the Applicant 22 months following 

the return of the Contribution). 

Applicant states that the Contribution 

was made three and a half years after 

the Investor’s investment in the Fund 

and at a time when the Investor was not 

contemplating any investment-related 

decisions with respect to the Applicant. 

Applicant notes that it established and 

maintains its relationships with the 

Applicant on an arms’-length basis free 

from any improper influence as a result 

of the Contribution. 

7. Applicant states that at all relevant 

times it had policies which were fully 

compliant with, and more rigorous than, 

rule 206(4)–5’s requirements at the time 

of the Contribution. Applicant further 

states that at no time did Applicant or 

any employees of Applicant, other than 

the Contributor, have any knowledge 

that the Contribution had been made 

prior to its discovery by Crestview’s 

Compliance Department in January 

2012. After learning of the Contribution, 

Applicant and the Contributor took all 

available steps to obtain a return of the 

Contribution, which was returned 

within one week of discovery, and an 

escrow account was set up for the 

Investor and a sum equal to the carried 

interest and all fees charged to the 

Investor’s capital account in the Fund 

since the date of the Contribution were 

deposited by Applicant in the escrow 

account for immediate return to the 

Investor should an exemptive order not 

be granted. 

8. Applicant states that the 

Contributor’s apparent intent in making 

the Contribution was not to influence 

the selection or retention of the 

Applicant. Applicant states that the 

Contributor has a long-standing history 

of supporting the Official. The amount 

of the Contribution, profile of the 

candidate, and characteristics of the 

campaign fall generally within the 

pattern of the Contributor’s other 

political donations. Applicant further 

states, as discussed above, that the 

Contributor has confirmed that he has 

not, at any time, had any contact with 

the Official regarding the Investor’s 

investment activities with the 

Applicant, and apart from requesting in 

January 2012 that his Contribution be 

returned, the Contributor’s contact with 

the Official concerning campaign 

contributions was limited to the 

fundraising event at which the 

Contribution was made. Applicant 

further states that since the date of the 

Contribution, the Contributor’s role with 

the Investor was limited to making a 

presentation to the Investor’s 

representatives regarding the 

Applicant’s media and communication 

portfolio companies. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–30277 Filed 12–24–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73888; File No. SR–BATS– 

2014–070] 

Self-Regulatory Organizations; BATS 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Extend the Penny 

Pilot Program 

December 19, 2014. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on December 

17, 2014, BATS Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BATS’’) filed with the 

Securities and Exchange Commission 

(the ‘‘SEC’’ or ‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. The 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 79, No. 248 / Monday, December 29, 2014 / Notices 78115 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(6)(iii). 

5The rules of BATS Options, including rules 

applicable to BATS Options’ participation in the 

Penny Pilot, were approved on January 26, 2010. 

See Securities Exchange Act Release No. 61419 

(January 26, 2010), 75 FR 5157 (February 1, 2010) 

(SR–BATS–2009–031). BATS Options commenced 

operations on February 26, 2010. The Penny Pilot 

was extended for BATS Options through December 

31, 2014. See Securities Exchange Act Release No. 

72371 (June 12, 2014), 79 FR 34810 (June 18, 2014) 

(SR–BATS–2014–023). 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 15 U.S.C. 78s(b)(3)(A)(iii). 

9 17 CFR 240.19b–4(f)(6). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change along with a brief 

description and the text of the proposed rule 

change, at least five business days prior to the date 

of filing of the proposed rule change, or such 

shorter time as designated by the Commission. The 

Exchange has satisfied this pre-filing requirement. 

12 17 CFR 240.19b–4(f)(6)(iii). 

Exchange has designated this proposal 

as a ‘‘non-controversial’’ proposed rule 

change pursuant to section 19(b)(3)(A) 

of the Act 3 and Rule 19b–4(f)(6)(iii) 

thereunder,4 which renders it effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange filed a proposal for the 

BATS Options Market (‘‘BATS 

Options’’) to extend through June 30, 

2015, the Penny Pilot Program (‘‘Penny 

Pilot’’) in options classes in certain 

issues (‘‘Pilot Program’’) previously 

approved by the Commission.5

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.batstrading.com/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of 

and basis for the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of these statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of this filing is to extend 

the Penny Pilot, which was previously 

approved by the Commission, through 

June 30, 2015, and to provide a revised 

date for adding replacement issues to 

the Pilot Program. The Exchange 

proposes that any Pilot Program issues 

that have been delisted may be replaced 

on the second trading day following 

January 1, 2015. The replacement issues 

will be selected based on trading 

activity for the six month period 

beginning June 1, 2014, and ending 

November 30, 2014. 

The Exchange represents that the 

Exchange has the necessary system 

capacity to continue to support 

operation of the Penny Pilot. The 

Exchange believes the benefits to public 

customers and other market participants 

who will be able to express their true 

prices to buy and sell options have been 

demonstrated to outweigh the increase 

in quote traffic. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with the 

requirements of the Act and the rules 

and regulations thereunder that are 

applicable to a national securities 

exchange, and, in particular, with the 

requirements of section 6(b) of the Act.6

In particular, the proposal is consistent 

with section 6(b)(5) of the Act,7 because 

it would promote just and equitable 

principles of trade, remove 

impediments to, and perfect the 

mechanism of, a free and open market 

and a national market system. The 

Exchange believes that the Pilot 

Program promotes just and equitable 

principles of trade by enabling public 

customers and other market participants 

to express their true prices to buy and 

sell options. Accordingly, the Exchange 

believes that the proposal is consistent 

with the Act because it will allow the 

Exchange to extend the Pilot Program 

prior to its expiration on December 31, 

2014. The Exchange notes that this 

proposal does not propose any new 

policies or provisions that are unique or 

unproven, but instead relates to the 

continuation of an existing program that 

operates on a pilot basis. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. In this 

regard, the Exchange notes that the rule 

change is being proposed in order to 

continue the Pilot Program, which is a 

competitive response to analogous 

programs offered by other options 

exchanges. The Exchange believes this 

proposed rule change is necessary to 

permit fair competition among the 

options exchanges. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any written 

comments from members or other 

interested parties. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to section 

19(b)(3)(A)(iii) of the Act 8 and Rule 

19b–4(f)(6) thereunder.9 Because the 

proposed rule change does not: (i) 

significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate if consistent 

with the protection of investors and the 

public interest, the proposed rule 

change has become effective pursuant to 

section 19(b)(3)(A) of the Act 10 and 

Rule 19b–4(f)(6)(iii) thereunder. 

A proposed rule change filed under 

Rule 19b–4(f)(6) normally does not 

become operative prior to 30 days after 

the date of the filing.11 However, 

pursuant to Rule 19b–4(f)(6)(iii),12 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. The Commission believes that 

waiving the 30-day operative delay is 

consistent with the protection of 

investors and the public interest 

because doing so will allow the Pilot 

Program to continue without 

interruption in a manner that is 

consistent with the Commission’s prior 

approval of the extension and expansion 

of the Pilot Program and will allow the 

Exchange and the Commission 

additional time to analyze the impact of 


tkelley on DSK3SPTVN1PROD with NOTICES
78116 Federal Register / Vol. 79, No. 248 / Monday, December 29, 2014 / Notices 

13See Securities Exchange Act Release No. 61061 

(November 24, 2009), 74 FR 62857 (December 1, 

2009) (SR–NYSEArca–2009–44). See also supra 

note 5. 

14For purposes only of waiving the operative 

delay for this proposal, the Commission has 

considered the proposed rule’s impact on 

efficiency, competition, and capital formation. See 

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

15 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(6)(iii). 

the Pilot Program.13 Accordingly, the 

Commission designates the proposed 

rule change as operative upon filing 

with the Commission.14

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission shall institute proceedings 

to determine whether the proposed rule 

should be approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

BATS–2014–070 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–BATS–2014–070. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–BATS– 

2014–070 and should be submitted on 

or before January 20, 2015. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.15

Brent J. Fields, 

Secretary. 

[FR Doc. 2014–30272 Filed 12–24–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–73892; File No. SR–EDGA– 

2014–33] 

Self-Regulatory Organizations; EDGA 

Exchange, Inc.; Notice of Filing and 

Immediate Effectiveness of a Proposed 

Rule Change To Convert Direct Edge, 

Inc., the Parent Company of EDGA 

Exchange, Inc., From a Delaware 

Corporation to a Delaware Limited 

Liability Company 

December 19, 2014 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on December 

12, 2014, EDGA Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘EDGA’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange has 

designated this proposal as a ‘‘noncontroversial’’ proposed rule change 

pursuant to section 19(b)(3)(A) of the 

Act 3 and Rule 19b–4(f)(6)(iii) 

thereunder,4 which renders it effective 

upon filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange filed a proposal to: (i) 

Convert Direct Edge, Inc. (‘‘DE’’) from a 

Delaware corporation to a Delaware 

limited liability company (the 

‘‘Conversion’’), and, in connection 

therewith, change the name of DE from 

‘‘Direct Edge, Inc.’’ to ‘‘Direct Edge 

LLC,’’ and (ii) amend the Third 

Amended and Restated Bylaws of the 

Exchange (the ‘‘Exchange Bylaws’’) to 

reflect the name change of DE as the 

Exchange’s sole stockholder. 

The text of the proposed rule change 

is available at the Exchange’s Web site 

at http://www.directedge.com/, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

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

the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange submits this Proposed 

Rule Change to seek the Commission’s 

approval of the Conversion, the 

adoption of the Organizational 

Documents, and the Amended Exchange 

Bylaws. The Conversion is proposed as 

a means to simplify the administration 

associated with the Exchange’s overall 

corporate structure. The name change 

from ‘‘Direct Edge, Inc.’’ to ‘‘Direct Edge 

LLC’’ reflected in the Amended 

Exchange Bylaws is a non-substantive 

change. Other than converting DE from 

a corporation to a limited liability 

company and changing the name of DE 

from ‘‘Direct Edge, Inc.’’ to ‘‘Direct Edge 

LLC’’ in the Amended Exchange 

Bylaws, no changes to the ownership or 

structure of the Exchange, DE Holdings, 

or the other entities included in the 

Exchange’s overall corporate structure 


tkelley on DSK3SPTVN1PROD with NOTICES