Document ID: SEC-2010-1524-0001
Agency: sec
Document Type: Notice
Title: Application: Northern Lights Fund Trust, et al.
Posted Date: 2010-10-06T04:00Z

[Federal Register: October 6, 2010 (Volume 75, Number 193)]
[Notices]               
[Page 61786-61787]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06oc10-144]                         

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29452; File No. 812-13786]

 
Northern Lights Fund Trust, et al.; Notice of Application

September 30, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from rule 12d1-2(a) 
under the Act.

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Summary of Application: Applicants request an order to permit funds of 
funds relying on rule 12d1-2 under the Act to invest in certain 
financial instruments.

Applicants: Northern Lights Fund Trust (``NLFT''), Arrow Investment 
Advisors, LLC (``AIA''), and Northern Lights Distributors, LLC 
(``NLD'').

Filing Dates: The application was filed on June 22, 2010, and amended 
on September 29, 2010. Applicants have agreed to file an amendment 
during the notice period, the substance of which is reflected in this 
notice.

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 October 25, 2010 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, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-1090; Applicants: Northern Lights Fund Trust, 
450 Wireless Boulevard, Hauppauge, New York 11788; Arrow Investment

[[Page 61787]]

Advisers, LLC, 2943 Olney-Sandy Spring Road, Suite A, Olney, Maryland 
20832; Northern Lights Distributors, LLC, 4020 South 147th Street, 
Omaha, Nebraska 68137.

FOR FURTHER INFORMATION CONTACT: Lewis Reich, Senior Counsel, at (202) 
551-6919, or Jennifer L. Sawin, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. NLFT is organized as a Delaware statutory trust, and is 
registered under the Act as an open-end management investment company. 
AIA is organized as a Maryland corporation, and currently serves as 
investment adviser to each existing Fund (as defined below). Each 
Adviser (as defined below) will be registered under the Investment 
Advisers Act of 1940, as amended. NLD is registered as a broker-dealer 
under the Securities Exchange Act of 1934, as amended (``Exchange 
Act'') and serves as the distributor for the Funds (as defined below) 
that are series of NLFT.
    2. Applicants request the exemption on behalf of NLFT and its 
existing and future series and any other existing or future registered 
open-end investment company or series thereof that (i) is advised by 
AIA or any entity controlling, controlled by or under common control 
with AIA (collectively with AIA, the ``Advisers''), (ii) operates as a 
``fund of funds'' (each, a ``Fund''); (iii) invests in other registered 
open-end investment companies (``Underlying Funds'') in reliance on 
Section 12(d)(1)(G) of the Act; and (iv) is eligible to invest in 
securities (as defined in Section 2(a)(36) of the Act) in reliance on 
Rule 12d1-2 under the Act. Applicants request the exemption to the 
extent necessary to permit each Fund to also invest, to the extent 
consistent with its investment objective, policies, strategies and 
limitations, in financial instruments that may not be securities within 
the meaning of section 2(a)(36) of the Act (``Other Investments'').\1\ 
Applicants also request that the order exempt NLD and any entity 
controlling, controlled by or under common control with NLD that now or 
in the future acts as principal underwriter with respect to the 
transactions described in the application.
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    \1\ Every existing entity that currently intends to rely on the 
requested order is named as an applicant. Any existing or future 
entity that relies on the order in the future will do so only in 
accordance with the terms and condition in the application.
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    3. Consistent with its fiduciary obligations under the Act, each 
Fund's board of trustees will review the advisory fees charged by the 
Fund's investment adviser to ensure that they are based on services 
provided that are in addition to, rather than duplicative of, services 
provided pursuant to the advisory agreement of any investment company 
in which the Fund may invest.

Applicants' Legal Analysis

    1. Section 12(d)(1)(A) of the Act provides that no registered 
investment company (``acquiring company'') may acquire securities of 
another investment company (``acquired company'') if such securities 
represent more than 3% of the acquired company's outstanding voting 
stock or more than 5% of the acquiring company's total assets, or if 
such securities, together with the securities of other investment 
companies, represent more than 10% of the acquiring company's total 
assets. Section 12(d)(1)(B) of the Act provides that no registered 
open-end investment company may sell its securities to another 
investment company if the sale will cause the acquiring company to own 
more than 3% of the acquired company's voting stock, or cause more than 
10% of the acquired company's voting stock to be owned by investment 
companies and companies controlled by them.
    2. Section 12(d)(1)(G) of the Act provides that section 12(d)(1) 
will not apply to securities of an acquired company purchased by an 
acquiring company if: (i) The acquired company and acquiring company 
are part of the same group of investment companies; (ii) the acquiring 
company holds only securities of acquired companies that are part of 
the same group of investment companies, government securities, and 
short-term paper; (iii) the aggregate sales loads and distribution-
related fees of the acquiring company and the acquired company are not 
excessive under rules adopted pursuant to section 22(b) or section 
22(c) of the Act by a securities association registered under section 
15A of the Exchange Act or by the Commission; and (iv) the acquired 
company has a policy that prohibits it from acquiring securities of 
registered open-end investment companies or registered unit investment 
trusts in reliance on section 12(d)(1)(F) or (G) of the Act.
    3. Rule 12d1-2 under the Act permits a registered open-end 
investment company or a registered unit investment trust that relies on 
section 12(d)(1)(G) of the Act to acquire, in addition to securities 
issued by another registered investment company in the same group of 
investment companies, government securities, and short-term paper: (1) 
Securities issued by an investment company that is not in the same 
group of investment companies, when the acquisition is in reliance on 
section 12(d)(1)(A) or 12(d)(1)(F) of the Act; (2) securities (other 
than securities issued by an investment company); and (3) securities 
issued by a money market fund, when the investment is in reliance on 
rule 12d1-1 under the Act. For the purposes of rule 12d1-2, 
``securities'' means any security as defined in section 2(a)(36) of the 
Act.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction from any provision of the Act, or 
from any rule under the Act, 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 policies and 
provisions of the Act.
    5. Applicants state that the Funds will comply with Rule 12d1-2 
under the Act, but for the fact that the Funds may invest a portion of 
their assets in Other Investments. Applicants request an order under 
section 6(c) of the Act for an exemption from rule 12d1-2(a) to allow 
the Funds to invest in Other Investments while investing in Underlying 
Funds. Applicants assert that permitting the Funds to invest in Other 
Investments as described in the application would not raise any of the 
concerns that the requirements of section 12(d)(1) were designed to 
address.

Applicants' Condition

    Applicants agree that the order granting the requested relief will 
be subject to the following condition:
    Applicants will comply with all provisions of rule 12d1-2 under the 
Act, except for paragraph (a)(2) to the extent that it restricts any 
Fund from investing in Other Investments as described in the 
application.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-25072 Filed 10-5-10; 8:45 am]
BILLING CODE 8010-01-P