Document ID: SEC-2015-0210-0001
Agency: sec
Document Type: Notice
Title: Applications: Crow Point Partners, LLC and Northern Lights Fund Trust
Posted Date: 2015-02-03T05:00Z

[Federal Register Volume 80, Number 22 (Tuesday, February 3, 2015)]
[Notices]
[Pages 5849-5851]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-02019]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31431; 812-13858]

Crow Point Partners, LLC and Northern Lights Fund Trust; Notice 
of Application

January 28, 2015.
AGENCY: Securities and Exchange Commission (the ``Commission'').

ACTION: Notice of an application for an order under section 6(c) of the 
Investment Company Act of 1940, as amended (the ``Act''), for an 
exemption from section 15(a) of the Act and rule 18f-2 under the Act.

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SUMMARY: Summary of Application: Applicants request an order that would 
permit them to enter into and materially amend subadvisory agreements 
without shareholder approval.

APPLICANT: Crow Point Partners, LLC (``Crow Point'') and Northern 
Lights Fund Trust (the ``Trust'').

DATES: Filing Dates: The application was filed on January 12, 2011 and 
amended on July 11, 2011, April 4, 2012, July 22, 2014 and January 14, 
2015.

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 February 23, 2015, and should be accompanied by proof of 
service on the 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: Crow Point Partners, 
LLC, 25 Recreation Park Drive, Suite 110, Hingham, MA 02043-4256 and 
Northern Lights Fund Trust c/o Gemini Fund Services, LLC, 80 Arkay 
Drive, Suite 110, Hauppauge, New York 11788.

FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at (202) 
551-6870, or David P. Bartels, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or 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. The Trust is organized as a Delaware statutory trust and is 
registered under the Act as an open-end management investment company. 
The Trust offers shares of approximately 92 individual registered 
series, including the EAS Crow Point Alternatives Fund (``Crow Point 
Fund''). The Crow Point Fund does not currently employ unaffiliated 
investment subadvisers (each, a ``Subadviser''), but anticipates doing 
so in the future.\1\
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    \1\ Applicants also request relief with respect to any existing 
or future series of the Trust and any other existing or future 
registered open-end management investment company or series thereof 
that: (a) Is advised by Crow Point or any entity controlling, 
controlled by, or under common control with Crow Point or its 
successors (each an ``Adviser''); (b) uses the manager of managers 
structure (the ``Manager of Managers Structure'') described in the 
application; and (c) complies with the terms and conditions of the 
application (together with the Crow Point Fund, the ``Funds'' and 
each, individually, a ``Fund''). The only existing investment 
company that currently intends to rely on the requested order is 
named as an Applicant, and the Crow Point Fund is the only Fund that 
currently intend to rely on the requested order. If the name of any 
Fund contains the name of a Subadviser, the name of the Adviser will 
precede the name of the Subadviser. For the purposes of the 
requested order, ``successor'' is limited to an entity that results 
from a reorganization into another jurisdiction or a change in the 
type of business organization.
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    2. Crow Point, a limited liability company organized under the laws 
of the State of Delaware, is, and each other Adviser will be, 
registered as an investment adviser under the Investment Advisers Act 
of 1940, as amended (the ``Advisers Act''). Crow Point serves as the 
investment adviser of

[[Page 5850]]

the Crow Point Fund, and an Adviser will serve as investment adviser to 
the future Funds. The Crow Point Fund has entered into an investment 
advisory agreement with Crow Point (an ``Advisory Agreement''),\2\ 
approved by the Trust's board of trustees (the ``Board''),\3\ including 
a majority of the trustees who are not ``interested persons,'' as 
defined in section 2(a)(19) of the Act, of the Trust or the Adviser 
(the ``Independent Trustees''), and by the Crow Point Fund's 
shareholders. The terms of each Advisory Agreement comply or will 
comply with section 15(a) of the Act.
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    \2\ The Adviser will enter into substantially similar investment 
advisory agreements to provide investment management services to 
each future Fund (each future Advisory Agreement included in the 
term ``Advisory Agreement'').
    \3\ The term ``Board'' also includes the board of trustees or 
directors of a future Fund.
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    3. Under the terms of the Advisory Agreement, the Adviser is 
responsible for the overall management of the Crow Point Fund's 
business affairs and selecting investments according to its investment 
objectives, policies and restrictions. For the investment management 
services that it provides to the Crow Point Fund, the Adviser receives 
the fee specified in the Advisory Agreement, based on the Fund's 
average daily net assets. The Advisory Agreement also permits the 
Adviser to retain one or more subadvisers for the purpose of managing 
the investments of all or a portion of the assets of the Fund. Pursuant 
to this authority under the Advisory Agreement, the Adviser may enter 
into investment subadvisory agreements with Subadvisers to provide 
investment advisory services to the Funds (each, a ``Subadvisory 
Agreement'' and together, the ``Subadvisory Agreements''). Each 
Subadviser will be registered as an investment adviser under the 
Advisers Act or exempt from registration under the Advisers Act. The 
Adviser will supervise, evaluate and allocate assets to the 
Subadvisers, and make recommendations to the Board about their hiring, 
retention or release, at all times subject to the authority of the 
Board. The Adviser will compensate each Subadviser out of the fees paid 
to the Adviser under the Advisory Agreement.
    4. Applicants request an order to permit the Adviser, subject to 
Board approval, to select Subadvisers and enter into and materially 
amend Subadvisory Agreements without obtaining shareholder approval. 
The terms of each Subadvisory Agreement will comply with the 
requirements of section 15(a) of the Act. Each Subadvisory Agreement 
will be approved by the Trust's Board, including by a majority of the 
Independent Trustees, in accordance with section 15(a) and 15(c) of the 
Act. The requested relief will not extend to any subadviser that is an 
affiliated person, as defined in section 2(a)(3) of the Act, of the 
Trust, a Fund or the Adviser, other than by reason of serving as a 
subadviser to one or more of the Funds (an ``Affiliated Subadviser'').
    5. Funds will inform shareholders of the hiring of a new Subadviser 
pursuant to the following procedures (``Modified Notice and Access 
Procedures''): (a) Within 90 days after a new Subadviser is hired for 
any Fund, that Fund will send its shareholders either a Multi-manager 
Notice or a Multi-manager Notice and Multi-manager Information 
Statement; \4\ and (b) the Fund will make the Multi-manager Information 
Statement available on the Web site identified in the Multi-manager 
Notice no later than when the Multi-manager Notice (or Multi-manager 
Notice and Multi-manager Information Statement) is first sent to 
shareholders, and will maintain it on that Web site for at least 90 
days.
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    \4\ A ``Multi-manager Notice'' will be modeled on a Notice of 
Internet Availability as defined in rule 14a-16 under the Securities 
Exchange Act of 1934 (``Exchange Act''), and specifically will, 
among other things: (a) Summarize the relevant information regarding 
the new Subadviser; (b) inform shareholders that the Multi-manager 
Information Statement is available on a Web site; (c) provide the 
Web site address; (d) state the time period during which the Multi-
manager Information Statement will remain available on that Web 
site; (e) provide instructions for accessing and printing the Multi-
manager Information Statement; and (f) instruct the shareholder that 
a paper or email copy of the Multi-manager Information Statement may 
be obtained, without charge, by contacting the Funds.
    A ``Multi-manager Information Statement'' will meet the 
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 
14A under the Exchange Act for an information statement. Multi-
manager Information Statements will be filed electronically with the 
Commission via the EDGAR system.
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Applicants' Legal Analysis

    1. Section 15(a) of the Act provides, in relevant part, that it is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by the vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of securities in a series investment company affected by a matter must 
approve that matter if the Act requires shareholder approval.
    2. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provisions of the Act, or 
from any rule thereunder, if such exemption is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act. Applicants state that the requested relief meets this standard.
    3. Applicants assert that the shareholders expect the Adviser and 
the Board to select the Subadvisers for the Funds that are best suited 
to achieve each Fund's investment objective. Applicants assert that, 
from the perspective of the investor, the role of the Subadvisers is 
substantially equivalent to that of the individual portfolio managers 
employed by the Adviser. Applicants state that requiring shareholder 
approval of each Subadvisory Agreement would impose costs and 
unnecessary delays on the Funds, and may preclude the Adviser from 
acting promptly in a manner considered advisable by the Board. 
Applicants note that the Advisory Agreement and any Subadvisory 
Agreement with an Affiliated Subadviser will remain subject to sections 
15(a) and 15(c) of the Act and rule 18f-2 under the Act, including the 
requirement for shareholder voting.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Fund may rely on the requested order, the operation of 
the Fund in the manner described in the application will be approved by 
a majority of the Fund's outstanding voting securities, as defined in 
the Act, or in the case of a Fund whose public shareholders purchase 
shares on the basis of a prospectus containing the disclosure 
contemplated by condition 2 below, by the initial shareholder(s) before 
offering shares of that Fund to the public.
    2. Each Fund relying on the requested order will disclose in its 
prospectus the existence, substance, and effect of any order granted 
pursuant to the application. Each Fund will hold itself out to the 
public as utilizing the Manager of Managers Structure. The prospectus 
will prominently disclose that the Adviser has ultimate responsibility 
(subject to oversight by the Board) to oversee the Subadvisers and 
recommend their hiring, termination, and replacement.
    3. Funds will inform shareholders of the hiring of a new Subadviser 
within 90 days after the hiring of the new

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Subadviser pursuant to the Modified Notice and Access Procedures.
    4. The Adviser will not enter into a subadvisory agreement with any 
Affiliated Subadviser without such agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the applicable Fund.
    5. At all times, at least a majority of the Board will be 
Independent Trustees, and the nomination of new or additional 
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees.
    6. Whenever a subadviser change is proposed for a Fund with an 
Affiliated Subadviser, the Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
applicable Board minutes, that such change is in the best interests of 
the Fund and its shareholders, and does not involve a conflict of 
interest from which the Adviser or the Affiliated Subadviser derives an 
inappropriate advantage.
    7. The Adviser will provide general management services to each 
Fund, including overall supervisory responsibility for the general 
management and investment of each Fund's assets and, subject to review 
and approval of the Board, will: (a) Set each Fund's overall investment 
strategies; (b) evaluate, select and recommend Subadvisers to manage 
all or a part of each Fund's assets; (c) allocate and, when 
appropriate, reallocate each Fund's assets among one or more 
Subadvisers; (d) monitor and evaluate the performance of Subadvisers; 
and (e) implement procedures reasonably designed to ensure that the 
Subadvisers comply with each Fund's investment objective, policies and 
restrictions.
    8. No trustee or officer of the Trust or a Fund, or director, 
manager, or officer of the Adviser, will own directly or indirectly 
(other than through a pooled investment vehicle that is not controlled 
by such person), any interest in a Subadviser, except for (a) ownership 
of interests in the Adviser or any entity that controls, is controlled 
by, or is under common control with the Adviser, 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 Subadviser or an 
entity that controls, is controlled by, or is under common control with 
a Subadviser.
    9. In the event the Commission adopts a rule under the Act 
providing substantially similar relief to that in the order requested 
in the application, the requested order will expire on the effective 
date of that rule.
    10. Any new sub-advisory agreement or any amendments to a Fund's 
existing Advisory Agreement or sub-advisory agreement that directly or 
indirectly results in an increase in the aggregate advisory fee rate 
payable by the Fund will be submitted to the Fund's Shareholders for 
approval.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2015-02019 Filed 2-2-15; 8:45 am]
BILLING CODE 8011-01-P