Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices 43269 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–19474 Filed 9–13–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[SEC File No. 270–213, OMB Control No. 

3235–0220] 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE., Washington, DC 

20549–2736. 

Extension: 

Rule 30b2–1 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission (the 

‘‘Commission’’) is soliciting comments 

on the collection of information 

summarized below. The Commission 

plans to submit the existing collection 

of information to the Office of 

Management and Budget (‘‘OMB’’) for 

extension and approval. 

Rule 30b2–1 (17 CFR 270.30b2–1) 

under the Investment Company Act of 

1940 (15 U.S.C. 80a–1 et seq.) (the 

‘‘Investment Company Act’’) requires a 

registered investment company (‘‘fund’’) 

to (1) file a report with the Commission 

on Form N–CSR (17 CFR 249.331 and 

274.128) not later than 10 days after the 

transmission of any report required to 

be transmitted to shareholders under 

rule 30e–1 under the Investment 

Company Act, and (2) file with the 

Commission a copy of every periodic or 

interim report or similar communication 

containing financial statements that is 

transmitted by or on behalf of such fund 

to any class of such fund’s security 

holders and that is not required to be 

filed with the Commission under (1) 

above, not later than 10 days after the 

transmission to security holders. The 

purpose of the collection of information 

required by rule 30b2–1 is to meet the 

disclosure requirements of the 

Investment Company Act and 

certification requirements of the 

Sarbanes-Oxley Act of 2002 (Pub. L. 

107–204, 116 Stat. 745 (2002)), and to 

provide investors with information 

necessary to evaluate an interest in the 

fund. 

The Commission estimates that there 

are 2,401 funds, with a total of 11,555 

portfolios, that are governed by the rule. 

For purposes of this analysis, the 

burden associated with the 

requirements of rule 30b2–1 has been 

included in the collection of 

information requirements of rule 30e–1 

and Form N–CSR, rather than the rule. 

The Commission has, however, 

requested a one hour burden for 

administrative purposes. 

The collection of information under 

rule 30b2–1 is mandatory. The 

information provided under rule 30b2– 

1 is not kept confidential. An agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information unless it 

displays a currently valid OMB control 

number. 

Written comments are invited on: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

(b) the accuracy of the agency’s estimate 

of the burden of the collection of 

information; (c) ways to enhance the 

quality, utility, and clarity of the 

information collected; and (d) ways to 

minimize the burden of the collection of 

information on respondents, including 

through the use of automated collection 

techniques or other forms of information 

technology. Consideration will be given 

to comments and suggestions submitted 

in writing within 60 days of this 

publication. 

Please direct your written comments 

to Pamela Dyson, Director/Chief 

Information Officer, Securities and 

Exchange Commission, C/O Remi 

Pavlik-Simon, 100 F Street NE., 

Washington, DC 20549; or send an email 

to: PRA_Mailbox@sec.gov. 

Dated: September 11, 2017. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–19510 Filed 9–13–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

32809; File No. 812–14778] 

Medley Capital Corporation, et al. 

September 8, 2017. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of application for an order 

under sections 17(d) and 57(i) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) and rule 17d–1 under the Act to 

permit certain joint transactions 

otherwise prohibited by sections 17(d) 

and 57(a)(4) of the Act and rule 17d–1 

under the Act. 

SUMMARY OF APPLICATION: Applicants 

request an order to permit certain 

business development companies (each, 

a ‘‘BDC’’) and closed-end management 

investment companies to co-invest in 

portfolio companies with each other and 

with certain affiliated investment funds 

and accounts. 

APPLICANTS: Medley Capital Corporation 

(‘‘MCC’’); Medley SBIC, LP (‘‘Medley 

SBIC’’); Medley SBIC GP, LLC (the 

‘‘SBIC General Partner’’); Medley LLC; 

MCC Advisors LLC (‘‘MCC Advisors’’); 

Medley Capital LLC, MOF II 

Management LLC, and MOF III 

Management LLC (collectively, the 

‘‘Existing Affiliated Investment 

Advisers’’); MOF II GP LLC, MOF III GP 

LLC, and Medley Credit Strategies GP, 

LLC (collectively, the ‘‘Existing General 

Partners’’); Medley Opportunity Fund III 

LP, Medley Opportunity Fund II LP, and 

Medley Credit Strategies (KOC) LLC 

(collectively, the ‘‘Existing Affiliated 

Funds’’); Sierra Income Corporation 

(‘‘Sierra’’); SIC Advisors LLC (‘‘SIC 

Advisors’’); Sierra Total Return Fund 

(‘‘STRF’’); STRF Advisors LLC (‘‘STRF 

Advisors’’); Sierra Opportunity Fund 

(‘‘SOF’’); and SOF Advisor LLC (‘‘SOF 

Advisors’’). 

FILING DATE: The application was filed 

on May 24, 2017. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the requested relief 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 October 3, 2017 and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Hearing requests should state 

the nature of the writer’s interest, the 

reason for the request, and the issues 

contested. Persons who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F St. 

NE., Washington, DC 20549–1090. 

Applicants: c/o Brooke Taube, Medley 

Capital Corporation, Seth Taube, Sierra 

Income Corporation, Sierra Total Return 

Fund, and Sierra Opportunity Fund, 280 

Park Avenue, 6th Floor East, New York, 

NY 10017. 

FOR FURTHER INFORMATION CONTACT: HaeSung Lee, Attorney-Adviser, at (202) 


asabaliauskas on DSKBBXCHB2PROD with NOTICES
43270 Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices 

1Section 2(a)(48) defines a BDC to be any closedend investment company that operates for the 

purpose of making investments in securities 

described in sections 55(a)(1) through 55(a)(3) of the 

Act and makes available significant managerial 

assistance with respect to the issuers of such 

securities. 

2 ‘‘Affiliated Investment Advisers’’ means the 

Existing Affiliated Investment Adviser and any 

future investment adviser that Medley LLC controls. 

3The requested order (the ‘‘Order’’) would 

supersede an exemptive order issued by the 

Commission on March 29, 2017 (the ‘‘Prior Order’’) 

that was granted pursuant to sections 57(a)(4) and 

57(i) and rule 17d–1, with the result that no person 

will continue to rely on the Prior Order if the Order 

is granted. Medley Capital Corporation, et al., 

Investment Company Act Release Nos. 32520 (Mar. 

03, 2017) (notice) and 32581 (Mar. 29, 2017) (order). 

All existing entities that currently intend to rely on 

the Order have been named as applicants. Any 

other existing or future entity that relies on the 

Order in the future will comply with the terms and 

conditions of the application. 

4 ‘‘Future Affiliated Funds’’ means any entity 

whose (i) investment adviser is an Affiliated 

Investment Adviser, (ii) that would be an 

investment company but for section 3(c)(1) or 

3(c)(7) of the Act, (iii) that is not a subsidiary of a 

Regulated Entity, and (iv) that intends to participate 

in the Co-Investment Program. ‘‘Affiliated Funds’’ 

means the Existing Affiliated Funds, the Existing 

Medley Proprietary Accounts, the Future Affiliated 

Funds, and any Future Medley Proprietary 

Accounts. ‘‘Regulated Entity’’ means any of (i) 

MCC, (ii) Sierra, (iii) STRF, (iv) SOF, or (v) any 

future closed-end investment company that is 

registered under the Act or has elected to be 

regulated as a BDC under the Act, whose 

investment adviser is a Regulated Entity Adviser, 

and that intends to participate in the Co-Investment 

Program. ‘‘Regulated Entity Advisers’’ means (i) 

MCC Advisors, (ii) SIC Advisors, (iii) STRF 

Advisors, (iv) SOF Advisors, and (v) any future 

investment adviser that Medley LLC controls. 

‘‘Future Medley Proprietary Account’’ means any 

direct or indirect, wholly- or majority-owned 

subsidiary of Medley LLC that is formed in the 

future that, from time to time, may hold various 

financial assets in a principal capacity. 

551–7345, or David J. Marcinkus, 

Branch Chief, at (202) 551–6821 (Chief 

Counsel’s Office, Division of Investment 

Management). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or for an applicant using the 

Company name box, at http://

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

calling (202) 551–8090. 

Applicants’ Representations 

1. MCC is an externally managed, 

non-diversified, closed-end 

management investment company that 

has elected to be regulated as a BDC 

under the Act.1 MCC’s investment 

objective is to generate current income 

and capital appreciation by lending 

directly to privately-held middle market 

companies. MCC’s board of directors 

(the ‘‘MCC Board’’) currently consists of 

seven members, four of whom are not 

‘‘interested persons’’ as defined in 

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

‘‘Independent Directors’’). Each of 

Brooke Taube and Seth Taube (the 

‘‘Principals’’) and Jeff Tonkel serves as 

an interested director on the MCC 

Board. 

2. Applicants represent that Medley 

SBIC was organized as a limited 

partnership under the laws of the state 

of Delaware and is licensed by the Small 

Business Administration (‘‘SBA’’) to 

operate under the Small Business 

Investment Act of 1958, as amended 

(‘‘SBA Act’’), as a small business 

investment company (each such 

licensed entity, an ‘‘SBIC Subsidiary’’). 

Applicants state that Medley SBIC will 

not be registered under the Act based on 

the exclusion from the definition of 

investment company contained in 

section 3(c)(7). The SBIC General 

Partner was organized as a limited 

liability company under the laws of the 

state of Delaware and is the general 

partner of Medley SBIC. Applicants 

represent that Medley SBIC is 

functionally a wholly-owned subsidiary 

of MCC because MCC and the SBIC 

General Partner (which is a whollyowned subsidiary of MCC) own all of 

the equity and voting interests in 

Medley SBIC. 

3. Sierra is an externally managed, 

non-diversified, closed-end 

management investment company that 

has elected to be regulated as a BDC 

under the Act. Sierra’s investment 

objective is to generate current income 

and capital appreciation by investing 

primarily in the debt of privately-held 

U.S. companies with a focus on senior 

secured debt, second lien debt and, to 

a lesser extent, subordinated debt. 

Sierra’s board of directors (the ‘‘Sierra 

Board’’) currently consists of five 

members, three of whom are 

Independent Directors. Each of the 

Principals serves as an interested 

director on the Sierra Board. 

4. STRF is an externally managed, 

non-diversified, closed-end 

management investment company 

registered under the Act. STRF will be 

operated as an interval fund. STRF’s 

investment objective is to generate total 

return through a combination of current 

income and long-term capital 

appreciation by investing in a portfolio 

of debt securities and equities. STRF’s 

board of directors (the ‘‘STRF Board’’) 

currently consists of five members, three 

of whom are Independent Directors. 

Each of the Principals serves as an 

interested trustee on the STRF Board. 

5. SOF is an externally managed, nondivsersified, closed-end management 

investment company registered under 

the Act. SOF will be operated as an 

interval fund. SOF’s investment 

objective is to generate current income 

and, as a secondary objective, long-term 

capital appreciation. SOF’s board of 

directors (the ‘‘SOF Board’’) currently 

consists of five members, three of whom 

are Independent Directors. Each of the 

Principals serves as an interested trustee 

on the SOF Board. 

6. MCC Advisors is registered as an 

investment adviser under the 

Investment Advisers Act of 1940 (the 

‘‘Advisers Act’’) and serves as the 

investment adviser to MCC. SIC 

Advisors is registered as an investment 

adviser under the Advisers Act and 

serves as the investment adviser to 

Sierra. STRF Advisors is registered as an 

investment adviser under the Advisers 

Act and serves as an investment adviser 

to STRF. SOF Advisors is registered as 

an investment adviser under the 

Advisers Act and serves as an 

investment adviser to SOF. The Existing 

Affiliated Investment Advisers are 

registered under the Advisers Act and 

currently serve as investment advisers 

to the Existing Affiliated Funds. Medley 

LLC, which is controlled by the 

Principals, controls each of the Existing 

Affiliated Investment Advisers.2 The 

Existing General Partners are the general 

partners of certain of the Existing 

Affiliated Funds. The Existing General 

Partners are direct, wholly-owned 

subsidiaries of Medley GP Holdings 

LLC, which is controlled by the 

Principals. 

7. Medley LLC, and its direct, whollyowned subsidiary, Medley Capital LLC, 

from time to time, may hold various 

financial assets in a principal capacity 

(together, in such capacity, ‘‘Existing 

Medley Proprietary Accounts’’ and 

together with any Future Medley 

Proprietary Account (as defined below), 

the ‘‘Medley Proprietary Accounts’’). 

8. Each of the Existing Affiliated 

Funds is a separate legal entity and is 

excluded from the definition of 

‘‘investment company’’ under section 

3(c)(1) or 3(c)(7) of the Act. 

9. Applicants seek to supersede the 

Prior Order 3 to permit a Regulated 

Entity and one or more other Regulated 

Entities and/or one or more Affiliated 

Funds to participate in the same 

investment opportunities through a 

proposed co-investment program where 

such participation would otherwise be 

prohibited under sections 17(d) and 

57(a)(4) and rule 17d–1 (the ‘‘CoInvestment Program’’).4 For purposes of 

the application, a ‘‘Co-Investment 

Transaction’’ means any transaction in 

which a Regulated Entity (or its WhollyOwned Investment Sub, as defined 


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Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices 43271 

5The term ‘‘Wholly-Owned Investment Sub’’ 

means an entity (i) that is wholly-owned by a 

Regulated Entity (with such Regulated Entity at all 

times holding, beneficially and of record, 100% of 

the voting and economic interests), (ii) whose sole 

business purpose is to hold one or more 

investments on behalf of such Regulated Entity 

(and, in the case of an SBIC Subsidiary, maintain 

a license under the SBA Act and issue debentures 

guaranteed by the SBA); (iii) with respect to which 

the Regulated Entity’s board of directors (‘‘Board’’) 

has the sole authority to make all determinations 

with respect to the entity’s participation under the 

conditions of the application; and (iv) that would 

be an investment company but for section 3(c)(1) or 

3(c)(7) of the Act. All subsidiaries participating in 

the Co-Investment Program will be Wholly-Owned 

Investment Subs and will have Objectives and 

Strategies (as defined below) that are either 

substantially the same as, or a subset of, their parent 

Regulated Entity’s Objectives and Strategies. An 

SBIC Subsidiary may be a Wholly-Owned 

Investment Sub if it satisfies the conditions in this 

definition. 

6The Regulated Entities, however, will not be 

obligated to invest, or co-invest, when investment 

opportunities are referred to them. 

7 ‘‘Follow-On Investments’’ means additional 

investments in securities of issuers, including 

through the exercise of warrants, conversion 

privileges, and other rights to purchase securities of 

the issuers. 

below) participated, in reliance on the 

Order or the Prior Order), (a) together 

with one or more other Regulated 

Entities and/or (b) together with one or 

more Affiliated Funds. A ‘‘Potential CoInvestment Transaction’’ means any 

investment opportunity in which a 

Regulated Entity (or its Wholly-Owned 

Investment Sub) could not participate 

together with one or more Regulated 

Entities and/or together with one or 

more Affiliated Funds without obtaining 

and relying on the Order. Affiliated 

Funds that have the capacity to, and 

elect to, co-invest with the Regulated 

Entities are referred to as ‘‘Participating 

Funds.’’ 

10. Applicants state that a Regulated 

Entity may, from time to time, form one 

or more Wholly-Owned Investment 

Subs.5 Such a subsidiary would be 

prohibited from investing in a CoInvestment Transaction with any 

Affiliated Fund or another Regulated 

Entity because it would be a company 

controlled by the Regulated Entity for 

purposes of sections 17(d) and 57(a)(4) 

and rule 17d–1. Applicants request that 

each Wholly-Owned Investment Sub be 

permitted to participate in CoInvestment Transactions in lieu of the 

Regulated Entity that owns it and that 

the Wholly-Owned Investment Sub’s 

participation in any such transaction be 

treated, for purposes of the Order, as 

though the Regulated Entity were 

participating directly. Applicants 

represent that this treatment is justified 

because a Wholly-Owned Investment 

Sub would have no purpose other than 

serving as a holding vehicle for the 

Regulated Entity’s investments and, 

therefore, no conflicts of interest could 

arise between the Regulated Entity and 

the Wholly-Owned Investment Sub. The 

Regulated Entity’s Board would make 

all relevant determinations under the 

conditions with regard to a WhollyOwned Investment Sub’s participation 

in a Co-Investment Transaction, and the 

Regulated Entity’s Board would be 

informed of, and take into 

consideration, any proposed use of a 

Wholly-Owned Investment Sub in the 

Regulated Entity’s place. If the 

Regulated Entity proposes to participate 

in the same Co-Investment Transaction 

with any of its Wholly-Owned 

Investment Subs, the Board of the 

Regulated Entity will also be informed 

of, and take into consideration, the 

relative participation of the Regulated 

Entity and the Wholly-Owned 

Investment Sub. 

11. In selecting investments for each 

Regulated Entity, the Regulated Entity 

Advisers will consider the investment 

objective, investment policies, 

investment position, capital available 

for investment, and other factors 

relevant to the respective Regulated 

Entities they advise. The Regulated 

Entity Advisers expect that any portfolio 

company that is an appropriate 

investment for a Regulated Entity 

should also be an appropriate 

investment for one or more other 

Regulated Entities and/or one or more 

Affiliated Funds, with certain 

exceptions based on available capital or 

diversification.6 The Regulated Entity 

Adviser, as applicable, will present each 

Potential Co-Investment Transaction 

and the proposed allocation of each 

investment opportunity to the directors 

of the relevant Regulated Entity’s Board 

that are eligible to vote under section 

57(o) of the Act (the ‘‘Eligible 

Directors’’). The ‘‘required majority,’’ as 

defined in section 57(o) (‘‘Required 

Majority’’) of a Regulated Entity will 

approve each Co-Investment 

Transaction prior to any investment by 

the Regulated Entity. 

12. All subsequent activity (i.e., exits 

or Follow-On Investments, as defined 

below) in a Co-Investment Transaction 

will also be made in accordance with 

the terms and conditions set forth in the 

application.7 A Regulated Entity may 

participate in a pro rata disposition or 

Follow-On Investment without 

obtaining prior approval of the Required 

Majority if, among other things: (i) The 

proposed participation of each 

Regulated Entity and Affiliated Fund is 

proportionate to its outstanding 

investments in the issuer immediately 

preceding the disposition or Follow-On 

Investment, as the case may be; and (ii) 

the Board of the Regulated Entity has 

approved that Regulated Entity’s 

participation in pro rata dispositions 

and Follow-On Investments as being in 

the best interests of the Regulated 

Entity. If the Board has not given such 

approval in advance, any such 

disposition or Follow-On Investment 

will be submitted to the Regulated 

Entity’s Eligible Directors. The Board of 

a Regulated Entity may at any time 

rescind, suspend or qualify its approval 

of pro rata dispositions and Follow-On 

Investments with the result that all 

dispositions and/or Follow-On 

Investments must be submitted to the 

Eligible Directors. 

13. Applicants state that none of the 

Principals will benefit directly or 

indirectly from any Co-Investment 

Transaction (other than by virtue of the 

ownership of securities of MCC and the 

Affiliated Investment Advisers) or 

participate individually in any CoInvestment Transaction. In addition, no 

Independent Director will have any 

direct or indirect financial interest in 

any Co-Investment Transaction or any 

interest in any portfolio company, other 

than through an interest (if any) in the 

securities of a Regulated Entity. 

Applicants’ Legal Analysis 

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

17d–1 under the Act are applicable to 

Regulated Entities that are registered 

closed-end investment companies. 

Section 17(d) of the Act and rule 17d– 

1 under the Act prohibit participation 

by a registered investment company and 

an affiliated person in any ‘‘joint 

enterprise or other joint arrangement or 

profit-sharing plan,’’ as defined in the 

rule, without prior approval by the 

Commission by order upon application. 

2. Similarly, with regard to BDCs, 

Section 57(a)(4) of the Act prohibits 

certain affiliated persons of a BDC from 

participating in joint transactions with 

the BDC or a company controlled by 

such BDC in contravention of rules as 

prescribed by the Commission. Under 

section 57(b)(2) of the Act, any person 

who is directly or indirectly controlling, 

controlled by, or under common control 

with a BDC is subject to section 57(a)(4). 

Applicants submit that each of the 

Affiliated Funds and the other 

Regulated Entities could be deemed to 

be a person related to each Regulated 

Entity in a manner described by section 

57(b) by virtue of being under common 

control with such Regulated Entity. 

3. Section 57(i) of the Act provides 

that, until the Commission prescribes 

rules under section 57(a)(4), the 

Commission’s rules under section 17(d) 

of the Act applicable to registered 


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43272 Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices 

8 ‘‘Objectives and Strategies’’ means the Regulated 

Entity’s investment objectives and strategies, as 

described in the Regulated Entity’s registration 

statement on Form N–2, other filings the Regulated 

Entity has made with the Commission under the 

Securities Act of 1933, as amended (the ‘‘1933 

Act’’), or under the Securities Exchange Act of 

1934, as amended, and the Regulated Entity’s 

reports to stockholders. 

closed-end investment companies will 

be deemed to apply to BDCs. Because 

the Commission has not adopted any 

rules under section 57(a)(4), rule 17d–1 

applies. 

4. Rule 17d–1, as made applicable to 

BDCs by section 57(i), prohibits any 

person who is related to a BDC in a 

manner described in section 57(b), 

acting as principal, from participating 

in, or effecting any transaction in 

connection with, any joint enterprise or 

other joint arrangement or profit-sharing 

plan in which the BDC or a company 

controlled by such BDC is a participant, 

absent an order from the Commission. 

In passing upon applications under rule 

17d–1, the Commission considers 

whether the participation by the BDC or 

controlled company in the joint 

transaction is consistent with the 

provisions, policies, and purposes of the 

Act and the extent to which such 

participation is on a basis different from 

or less advantageous than that of other 

participants. 

5. Applicants state that they expect 

that co-investment in portfolio 

companies by the Regulated Entities and 

the Affiliated Funds will increase the 

number of favorable investment 

opportunities for the Regulated Entities 

and that the Co-Investment Program will 

be implemented only if the Required 

Majority of the applicable Regulated 

Entity approves it. 

6. Applicants submit that the 

Required Majority’s approval of each 

Co-Investment Transaction before 

investment, and other protective 

conditions set forth in the application, 

will ensure that the applicable 

Regulated Entity will be treated fairly. 

Applicants state that the Regulated 

Entities’ participation in the CoInvestment Transactions will be 

consistent with the provisions, policies, 

and purposes of the Act and on a basis 

that is not different from or less 

advantageous than that of other 

participants. 

7. Under condition 14, if the 

Regulated Entity Advisers or the 

Principals, or any person controlling, 

controlled by, or under common control 

with the Regulated Entity Advisers or 

the Principals, and the Affiliated Funds 

(collectively, the ‘‘Holders’’) own in the 

aggregate more than 25% of the 

outstanding voting securities of a 

Regulated Entity (‘‘Shares’’), then the 

Holders will vote such Shares as 

directed by an independent third party 

when voting on matters specified in the 

condition. Applicants believe that this 

condition will ensure that the 

Independent Directors will act 

independently in evaluating the CoInvestment Program, because the ability 

of the Regulated Entity Advisers or the 

Principals to influence the Independent 

Directors by a suggestion, explicit or 

implied, that the Independent Directors 

can be removed will be limited 

significantly. Applicants represent that 

the Independent Directors will evaluate 

and approve any independent third 

party, taking into accounts its 

qualifications, reputation for 

independence, cost to the shareholders, 

and other factors that they deem 

relevant. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. Each time a Regulated Entity 

Adviser or an Affiliated Investment 

Adviser considers a Potential CoInvestment Transaction for an Affiliated 

Fund or another Regulated Entity that 

falls within the then-current Objectives 

and Strategies of a Regulated Entity,8

the appropriate Regulated Entity 

Adviser will make an independent 

determination of the appropriateness of 

the investment for the Regulated Entity 

in light of the Regulated Entity’s thencurrent circumstances. 

2. (a) If a Regulated Entity Adviser 

deems a Regulated Entity’s participation 

in any Potential Co-Investment 

Transaction to be appropriate for such 

Regulated Entity, it will then determine 

an appropriate level of investment for 

such Regulated Entity. 

(b) If the aggregate amount 

recommended by Regulated Entity 

Advisers to be invested by the Regulated 

Entities in such Potential Co-Investment 

Transaction, together with the amount 

proposed to be invested by each 

Participating Fund, collectively, in the 

same transaction, exceeds the amount of 

the investment opportunity, the amount 

proposed to be invested by each such 

party will be allocated among them pro 

rata based on each participating party’s 

capital available for investment in the 

asset class being allocated, up to the 

amount proposed to be invested by 

each. The Regulated Entity Advisers 

will provide the respective Eligible 

Directors with information concerning 

each party’s available capital to assist 

the Eligible Directors with their review 

of such Regulated Entity’s investments 

for compliance with these allocation 

procedures. 

(c) After making the determinations 

required in conditions 1 and 2(a), the 

Regulated Entity Advisers will 

distribute written information 

concerning the Potential Co-Investment 

Transaction, including the amount 

proposed to be invested by each 

Regulated Entity and any Participating 

Fund, to the Eligible Directors of the 

each participating Regulated Entity for 

their consideration. A Regulated Entity 

will co-invest with another Regulated 

Entity and/or any Participating Fund 

only if, prior to participating in the 

Potential Co-Investment Transaction, a 

Required Majority of the Regulated 

Entity concludes that: 

(i) The terms of the transaction, 

including the consideration to be paid, 

are reasonable and fair to the Regulated 

Entity and its stockholders and do not 

involve overreaching in respect of the 

Regulated Entity or its stockholders on 

the part of any person concerned; 

(ii) the transaction is consistent with 

(A) the interests of the Regulated 

Entity’s stockholders; and 

(B) the Regulated Entity’s then-current 

Objectives and Strategies. 

(iii) the investment by another 

Regulated Entity or one or more 

Participating Funds would not 

disadvantage the Regulated Entity, and 

participation by such Regulated Entity 

is not on a basis different from or less 

advantageous than that of any 

Participating Fund or other Regulated 

Entity; provided that, if any 

Participating Fund or other Regulated 

Entity, but not the Regulated Entity 

itself, gains the right to nominate a 

director for election to a portfolio 

company’s board of directors or the 

right to have a board observer or any 

similar right to participate in the 

governance or management of the 

portfolio company, such event shall not 

be interpreted to prohibit the Required 

Majority from reaching the conclusions 

required by this condition (2)(c)(iii), if 

(A) the Eligible Directors shall have 

the right to ratify the selection of such 

director or board observer, if any; 

(B) the Regulated Entity Adviser 

agrees to, and does, provide periodic 

reports to the Board of the applicable 

Regulated Entity with respect to the 

actions of such director or the 

information received by such board 

observer or obtained through the 

exercise of any similar right to 

participate in the governance or 

management of the portfolio company; 

and 

(C) any fees or other compensation 

that any other Regulated Entity or any 

Participating Fund or any affiliated 

person of either receives in connection 

with the right of a Participating Fund or 


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Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices 43273 

9This exception applies only to Follow-On 

Investments by a Regulated Entity in issuers in 

which that Regulated Entity already holds 

investments. 

other Regulated Entity to nominate a 

director or appoint a board observer or 

otherwise to participate in the 

governance or management of the 

portfolio company will be shared 

proportionately among any Participating 

Funds (who may, in turn, share their 

portion with their affiliated persons) 

and the participating Regulated Entities 

in accordance with the amount of each 

party’s investment; and 

(iv) the proposed investment by the 

Regulated Entity will not benefit the 

Regulated Entity Advisers, the Affiliated 

Funds or other Regulated Entities, or 

any affiliated person of any of them 

(other than the other parties to the CoInvestment Transaction), except (a) to 

the extent permitted by condition 13; (b) 

to the extent permitted by sections 17(e) 

or 57(k), as applicable; (c) indirectly, as 

a result of an interest in securities 

issued by one of the parties to the CoInvestment Transaction; or (d) in the 

case of fees or other compensation 

described in condition 2(c)(iii)(C). 

3. Each Regulated Entity has the right 

to decline to participate in any Potential 

Co-Investment Transaction or to invest 

less than the amount proposed. 

4. The Regulated Entity Advisers will 

present to the Board of each Regulated 

Entity, as applicable, on a quarterly 

basis, a record of all investments in 

Potential Co-Investment Transactions 

made by the Affiliated Funds and other 

Regulated Entities during the preceding 

quarter that fell within the Regulated 

Entity’s then-current Objectives and 

Strategies that were not made available 

to the respective Regulated Entity, and 

an explanation of why the investment 

opportunities were not offered to the 

Regulated Entity. All information 

presented to the Board pursuant to this 

condition will be kept for the life of the 

Regulated Entity and at least two years 

thereafter, and will be subject to 

examination by the Commission and its 

staff. 

5. Except for Follow-On Investments 

made pursuant to condition 8 below,9 a 

Regulated Entity will not invest in 

reliance on the Order in any portfolio 

company in which any other Regulated 

Entity, any Affiliated Fund, or any 

affiliated person of any other Regulated 

Entity or Affiliated Fund is an existing 

investor. 

6. A Regulated Entity will not 

participate in any Potential CoInvestment Transaction unless the 

terms, conditions, price, class of 

securities to be purchased, settlement 

date and registration rights will be the 

same for such Regulated Entity as for 

the Participating Funds and/or other 

Regulated Entities. The grant to an 

Affiliated Fund or another Regulated 

Entity, but not such Regulated Entity, of 

the right to nominate a director for 

election to a portfolio company’s board 

of directors, the right to have an 

observer on the board of directors or 

similar rights to participate in the 

governance or management of the 

portfolio company will not be 

interpreted so as to violate this 

condition 6, if conditions 2(c)(iii)(A), (B) 

and (C) are met. 

7. (a) If any Regulated Entity or 

Participating Fund elects to sell, 

exchange, or otherwise dispose of an 

interest in a security that was acquired 

in a Co-Investment Transaction, then: 

(i) the investment adviser to such 

Regulated Entity or Participating Fund 

will notify each other Regulated Entity 

that participated in the Co-Investment 

Transaction of the proposed disposition 

at the earliest practical time; and 

(ii) the investment adviser to each 

other Regulated Entity that participated 

in the Co-Investment Transaction will 

formulate a recommendation as to 

participation by such Regulated Entity 

in the disposition. 

(b) Each Regulated Entity will have 

the right to participate in such 

disposition on a proportionate basis, at 

the same price and on the same terms 

and conditions as those applicable to 

any Participating Funds and any other 

Regulated Entities. 

(c) A Regulated Entity may participate 

in such disposition without obtaining 

prior approval of the Required Majority 

if: (i) The proposed participation of each 

Regulated Entity and the Participating 

Funds in such disposition is 

proportionate to its outstanding 

investments in the issuer immediately 

preceding the disposition; (ii) the Board 

of the applicable Regulated Entity has 

approved as being in the best interests 

of the applicable Regulated Entity the 

ability to participate in such 

dispositions on a pro rata basis (as 

described in greater detail in the 

application); and (iii) the Board of the 

applicable Regulated Entity is provided 

on a quarterly basis with a list of all 

dispositions made in accordance with 

this condition. In all other cases, the 

applicable Regulated Entity Adviser will 

provide its written recommendation as 

to such Regulated Entity’s participation 

to the Eligible Directors, and such 

Regulated Entity will participate in such 

disposition solely to the extent that a 

Required Majority determines that it is 

in such Regulated Entity’s best interests. 

(d) Each Regulated Entity and each of 

the Participating Funds will bear its 

own expenses in connection with any 

such disposition. 

8. (a) If any Regulated Entity or 

Participating Fund desires to make a 

Follow-On Investment in a portfolio 

company whose securities were 

acquired in a Co-Investment 

Transaction, then: 

(i) the investment adviser to such 

Regulated Entity or Participating Fund 

will notify each other Regulated Entity 

that participated in the Co-Investment 

Transaction of the proposed transaction 

at the earliest practical time; and 

(ii) the investment adviser to each 

other Regulated Entity that participated 

in the Co-Investment Transaction will 

formulate a recommendation as to the 

proposed participation, including the 

amount of the proposed investment, by 

such Regulated Entity. 

(b) A Regulated Entity may participate 

in such Follow-On Investment without 

obtaining prior approval of the Required 

Majority if: (i) The proposed 

participation of each Regulated Entity 

and Participating Fund in such 

investment is proportionate to its 

outstanding investments in the issuer 

immediately preceding the Follow-On 

Investment; (ii) the Board of the 

applicable Regulated Entity has 

approved as being in the best interests 

of such Regulated Entity the ability to 

participate in Follow-On Investments on 

a pro rata basis (as described in greater 

detail in the application); and (iii) the 

Board of the applicable Regulated Entity 

is provided on a quarterly basis with a 

list of all Follow-On Investments made 

in accordance with this condition. In all 

other cases, the applicable Regulated 

Entity Adviser will provide its written 

recommendation as to such Regulated 

Entity’s participation to the Eligible 

Directors, and such Regulated Entity 

will participate in such follow-on 

investment solely to the extent that a 

Required Majority determines that it is 

in such Regulated Entity’s best interests. 

(c) If, with respect to any follow-on 

investment: 

(i) The amount of the opportunity is 

not based on the Regulated Entities’ and 

the Participating Funds’ outstanding 

investments immediately preceding the 

follow-on investment; and 

(ii) the aggregate amount 

recommended by the applicable 

Regulated Entity Adviser to be invested 

by each Regulated Entity in such CoInvestment Transaction, together with 

the amount proposed to be invested by 

the Participating Funds and/or other 

Regulated Entity, collectively, in the 

same transaction, exceeds the amount of 

the investment opportunity, then the 


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43274 Federal Register / Vol. 82, No. 177 / Thursday, September 14, 2017 / Notices 

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)(2). 

amount to be invested by each such 

party will be allocated among them pro 

rata based on each party’s capital 

available for investment in the asset 

class being allocated, up to the amount 

proposed to be invested by each. 

(d) The acquisition of Follow-On 

Investments as permitted by this 

condition will be considered a CoInvestment Transaction for all purposes 

and be subject to the other conditions 

set forth in the application. 

9. The Independent Directors of each 

Regulated Entity will be provided 

quarterly for review all information 

concerning Potential Co-Investment 

Transactions and Co-Investment 

Transactions, including investments 

made by other Regulated Entities or 

Affiliated Funds that the Regulated 

Entity considered but declined to 

participate in, so that the Independent 

Directors may determine whether all 

investments made during the preceding 

quarter, including those investments 

that the Regulated Entity considered but 

declined to participate in, comply with 

the conditions of the Order. In addition, 

the Independent Directors will consider 

at least annually the continued 

appropriateness for the Regulated 

Entities of participating in new and 

existing Co-Investment Transactions. 

10. Each Regulated Entity will 

maintain the records required by section 

57(f)(3) as if each of the Regulated 

Entities were a BDC and each of the 

investments permitted under these 

conditions were approved by the 

Required Majority under section 57(f). 

11. No Independent Director of a 

Regulated Entity will also be a director, 

general partner, managing member or 

principal, or otherwise an ‘‘affiliated 

person’’ (as defined in the Act) of, any 

of the Affiliated Funds. 

12. The expenses, if any, associated 

with acquiring, holding or disposing of 

any securities acquired in a CoInvestment Transaction (including, 

without limitation, the expenses of the 

distribution of any such securities 

registered for sale under the 1933 Act) 

shall, to the extent not payable by the 

Regulated Entity Advisers or the 

Affiliated Investment Advisers under 

their respective investment advisory 

agreements with the Regulated Entities 

and the Participating Funds, be shared 

by the applicable Regulated Entities and 

the Participating Funds in proportion to 

the relative amounts of their securities 

held or being acquired or disposed of, 

as the case may be. 

13. Any transaction fee (including 

break-up or commitment fees but 

excluding brokers’ fees contemplated by 

section 57(k)(2) or 17(e)(2), as 

applicable) received in connection with 

a Co-Investment Transaction will be 

distributed to the applicable Regulated 

Entities and the Participating Funds on 

a pro rata basis based on the amounts 

each invested or committed, as the case 

may be, in such Co-Investment 

Transaction. If any transaction fee is to 

be held by a Regulated Entity Adviser or 

an Affiliated Investment Adviser 

pending consummation of the 

transaction, the fee will be deposited 

into an account maintained by the 

Regulated Entity Adviser or such other 

adviser, as the case may be, at a bank 

or banks having the qualifications 

prescribed in Section 26(a)(1), and the 

account will earn a competitive rate of 

interest that will also be divided pro 

rata among each applicable Regulated 

Entity and each Participating Fund 

based on the amount each invests in 

such Co-Investment Transaction. None 

of the Affiliated Funds, Regulated Entity 

Advisers, Affiliated Investment 

Advisers, or any affiliated person of any 

of the Regulated Entities will receive 

additional compensation or 

remuneration of any kind (other than (a) 

in the case of the Regulated Entities and 

the Participating Funds, the pro rata 

transaction fees described above and 

fees or other compensation described in 

condition 2(c)(iii)(C) and (b) in the case 

of the Regulated Entity Advisers and the 

Affiliated Advisers, investment advisory 

fees paid in accordance with the 

Regulated Entities’ and Affiliated 

Funds’ governing agreements) as a result 

of or in connection with a CoInvestment Transaction. 

14. If the Regulated Entity Advisers, 

the Principals, any person controlling, 

controlled by, or under common control 

with the Regulated Entity Advisers or 

the Principals, and the Affiliated Funds 

(collectively, the ‘‘Holders’’) own in the 

aggregate more than 25% of the 

outstanding voting securities of a 

Regulated Entity (‘‘Shares’’), then the 

Holders will vote such Shares as 

directed by an independent third party 

when voting on (1) the election of 

directors; (2) the removal of one or more 

directors; or (3) any other matter under 

either the Act or applicable State law 

affecting the Board’s composition, size 

or manner of election. 

15. The Medley Proprietary Accounts 

will not be permitted to invest in a 

Potential Co-Investment Transaction 

except to the extent the aggregate 

demand from the Regulated Entities and 

the other Affiliated Funds is less than 

the total investment opportunity. 

16. The Regulated Entity Advisers and 

the Affiliated Investment Advisers will 

maintain written policies and 

procedures reasonably designed to 

ensure compliance with the foregoing 

conditions. These policies and 

procedures will require, among other 

things, that each Regulated Entity 

Adviser will be notified of all Potential 

Co-Investment Transactions that fall 

within the then-current Objectives and 

Strategies of any Regulated Entity it 

advises and will be given sufficient 

information to make its independent 

determination and recommendations 

under conditions 1, 2(a), 7 and 8. 

17. Each Regulated Entity’s chief 

compliance officer, as defined in Rule 

38a–1(a)(4), will prepare an annual 

report for its Board each year that 

evaluates (and documents the basis of 

that evaluation) the Regulated Entity’s 

compliance with the terms and 

conditions of the application and the 

procedures established to achieve such 

compliance. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–19473 Filed 9–13–17; 8:45 am] 

BILLING CODE P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81554; File No. SR–DTC– 

2017–017] 

Self-Regulatory Organizations; The 

Depository Trust Company; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Add a 

Discount to the Pricing Schedule for 

Special Requests for Security Position 

Reports Relating to Municipal Security 

Issues 

September 8, 2017. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on 

September 1, 2017, The Depository 

Trust Company (‘‘DTC’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by the clearing agency. DTC filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act 3 and Rule 

19b–4(f)(2) thereunder.4 The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 


asabaliauskas on DSKBBXCHB2PROD with NOTICES