Document ID: SEC-2019-0732-0001
Agency: sec
Document Type: Notice
Title: Applications: Tudor Investment Corp. and Tudor Employee Investment Fund, LLC
Posted Date: 2019-05-29T04:00Z

[Federal Register Volume 84, Number 103 (Wednesday, May 29, 2019)]
[Notices]
[Pages 24846-24852]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11205]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33492; 813-00391]

Tudor Investment Corporation and Tudor Employee Investment Fund 
LLC

May 23, 2019.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    Notice of application for an order under sections 6(b) and 6(e) of 
the Investment Company Act of 1940 (the ``Act'') granting an exemption 
from all provisions of the Act and the rules and regulations 
thereunder, except sections 9, 17, 30, and 36 through 53 of the Act, 
and the rules and regulations thereunder (the ``Rules and 
Regulations''). With respect to sections 17(a), (d), (e), (f), (g) and 
(j) and 30(a), (b), (e), and (h) of the Act, and the Rules and 
Regulations, and rule 38a-1 under

[[Page 24847]]

the Act, the exemption is limited as set forth in the application.

Summary of Application: Applicants request an order to exempt certain 
limited partnerships, limited liability companies, business trusts or 
other entities (``Funds'') formed for the benefit of eligible employees 
of Tudor Investment Corporation (``Tudor'') and its affiliates from 
certain provisions of the Act. Each series of a Fund will be an 
``employees' securities company'' within the meaning of section 
2(a)(13) of the Act.

Applicants: The Company and Tudor Employee Investment Fund LLC. The 
requested order would supersede a prior order.\1\
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    \1\ Tudor Employee Investment Fund LLC and Tudor Investment 
Corporation, Investment Company Release Nos. 29409 (Sep. 3, 2010) 
(notice) and 29449 (Sep. 29, 2010) (Order).

Filing Dates: The application was filed on December 1, 2017 and was 
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amended on October 19, 2018, April 4, 2019, and May 14, 2019.

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 June 14, 2019, 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 
Street NE, Washington, DC 20549-1090; Applicants: 200 Elm Street, 
Stamford, CT 06902.

FOR FURTHER INFORMATION CONTACT: Jennifer O. Palmer, Senior Counsel, at 
(303) 844-1012, or Kaitlin C. Bottock, 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 website 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. Tudor and its ``affiliates,'' as defined in rule 12b-2 under the 
Securities Exchange Act of 1934 (the ``Exchange Act'') (collectively, 
the ``Tudor Group,'' and each, a ``Tudor Group Entity''), have 
organized Tudor Employee Investment Fund LLC, a Delaware limited 
liability company (the ``Investment Fund'') and will in the future 
organize limited partnerships, limited liability companies, business 
trusts or other entities (each a ``Future Fund'' and, collectively with 
the Investment Fund, the ``Funds'') as ``employees' securities 
companies,'' as defined in section 2(a)(13) of the Act. The Funds are 
intended to provide investment opportunities that are competitive with 
those at other investment management and financial services firms and 
to facilitate the recruitment and retention of high caliber 
professionals.
    2. The Investment Fund was formed on November 14, 2005 as a 
Delaware limited liability company. Tudor currently serves as the 
managing member and investment adviser to the Investment Fund. The 
Investment Fund operates as a closed-end management investment company. 
It seeks to achieve long-term capital appreciation through investment 
in affiliated and non-affiliated private investment funds, which will 
generally be exempt from registration under the Act pursuant to section 
3(c)(1) or section 3(c)(7) of the Act and may also be funds not 
primarily engaged in the business of investing, reinvesting, or trading 
in securities, e.g., commodity pools.
    3. A Future Fund may be structured as a domestic or offshore 
limited or general partnership, limited liability company, corporation, 
business trust or other entity. The Tudor Group may also form parallel 
funds organized under the laws of various jurisdictions in order to 
create the same investment opportunities for Eligible Employees 
(defined below) in other jurisdictions. Interests in a Fund may be 
issued in one or more series, each of which corresponds to particular 
Fund investments (each, a ``Series''). In such event, each Series will 
be an ``employees' securities company'' within the meaning of section 
2(a)(13) of the Act. A Fund will operate as a management investment 
company, and a particular Fund may operate as a ``diversified'' or 
``non-diversified'' vehicle within the meaning of the Act. The 
investment objectives and policies may vary from one Fund to the next.
    4. The Tudor group will control each Fund within the meaning of 
section 2(a)(9) of the Act. Each Fund has, or will have, a Tudor Group 
Entity serving as a general partner, managing member or other such 
similar entity that manages, operates and controls such Fund (a 
``Manager''). The Manager will be responsible for the overall 
management of the Fund. The same or a different Tudor Group Entity will 
serve as investment adviser (``Investment Adviser'') to each Fund and 
will be responsible for making all investment decisions on behalf of 
the Fund.
    5. Each of the Manager and the Investment Adviser will be an 
investment adviser within the meaning of sections 9 and 36 of the Act 
and subject to those sections. The Investment Adviser may be paid a 
management fee for its services to a Fund. The Manager or Investment 
Adviser may receive a performance-based fee or allocation (a ``Carried 
Interest'') based on the net gains of the Fund's investments, in 
addition to any amount allocable to the Manager's or Investment 
Adviser's capital contribution.\2\ An Investment Adviser may also 
receive compensation for acting as an investment adviser to an 
Underlying Fund (as defined below). The Tudor Group will not receive 
any management fees or other compensation at both the Fund level and 
the Underlying Fund level with respect to a Fund's investment in an 
Underlying Fund (so as to avoid duplication).
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    \2\ If a Manager or Investment Adviser is registered under the 
Investment Advisers Act of 1940 (``Advisers Act''), the Carried 
Interest payable to it by a Fund will be pursuant to an arrangement 
that complies with rule 205-3 under the Advisers Act. All or a 
portion of the Carried Interest may be paid to individuals who are 
officers, employees or stockholders of the Investment Adviser or its 
affiliates. If the Manager or Investment Adviser is not required to 
register under the Advisers Act, the Carried Interest payable to it 
will comply with section 205(b)(3) of the Advisers Act (with such 
Fund treated as though it were a business development company solely 
for the purpose of that section).
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    6. If the Manager or Investment Adviser elects to recommend that a 
Fund enter into any side-by-side investment with an unaffiliated 
entity, the Manager or Investment Adviser will be permitted to engage 
as sub-investment adviser the unaffiliated entity (an ``Unaffiliated 
Subadviser''), which will be responsible for the management of such 
side-by-side investment.
    7. Interests in the Funds will be offered in a transaction exempt 
from registration under section 4(a)(2) of the Securities Act of 1933, 
as amended (the ``1933 Act''), or Regulation D or Regulation S 
promulgated thereunder, and will be sold only to Qualified 
Participants, which term refers to: (i)

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Eligible Employees (as defined below); (ii) Eligible Family Members (as 
defined below); (iii) Eligible Investment Vehicles (as defined below); 
and (iv) the Tudor Group. Prior to offering interests in a Fund to a 
Qualified Participant, the Tudor Group must reasonably believe that the 
Eligible Employee or Eligible Family Member will be capable of 
understanding and evaluating the merits and risks of participation in a 
Fund and that each such individual is able to bear the economic risk of 
such participation and afford a complete loss of his or her investments 
in the Fund.
    8. The term ``Eligible Employees'' is defined as current or former 
employees, officers and directors of the Tudor Group (including people 
in administration, marketing and operations) and current consultants 
engaged on retainer to provide services and professional expertise on 
an ongoing basis to the Tudor Group (``Consultants'').\3\ The term 
``Eligible Family Members'' is defined as spouses, parents, children, 
spouses of children, brothers, sisters and grandchildren of Eligible 
Employees, including step and adoptive relationships.\4\ The term 
``Eligible Investment Vehicles'' is defined as: (i) A trust of which a 
trustee, grantor and/or beneficiary is an Eligible Employee; \5\ (ii) a 
partnership, corporation, or other entity controlled by an Eligible 
Employee; and (iii) a trust or other entity established solely for the 
benefit of Eligible Employees and/or Eligible Family Members. Each 
Eligible Employee and Eligible Family Member will be an Accredited 
Investor under rule 501(a)(5) or rule 501(a)(6) of Regulation D under 
the 1933 Act, except that a maximum of 35 Eligible Employees who are 
sophisticated investors but who are not Accredited Investors may become 
investors in a Fund if each of them falls into one of the following 
categories: (i) An Eligible Employee who (a) has a graduate degree in 
business, law or accounting, (b) has a minimum of five years of 
consulting, investment management, investment banking, legal or similar 
business experience, and (c) had reportable income from all sources 
(including any profit shares or bonus) of $100,000 in each of the two 
most recent years immediately preceding the Eligible Employee's 
admission as an investor of the Fund and has a reasonable expectation 
of income from all sources of at least $140,000 in each year in which 
the Eligible Employee will be committed to make investments in the 
Fund; \6\ or (ii) Eligible Employees who are ``knowledgeable 
employees'' as defined in rule 3c-5 under the Act, of the Fund (with 
the Fund treated as though it were a ``covered company'' for purposes 
of the rule).
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    \3\ In order to participate in the Funds, Consultants must be 
currently engaged by the Tudor Group and will be required to be 
sophisticated investors who qualify as accredited investors 
(``Accredited Investors'') under rule 501(a) of Regulation D. If a 
Consultant is an entity (such as, for example, a law firm or 
consulting firm), and the Consultant proposes to invest in the Fund 
through a partnership, corporation or other entity that is 
controlled by the Consultant, the individual participants in such 
partnership, corporation or other entity will be limited to senior 
level employees, members or partners of the Consultant who are 
responsible for the activities of the Consultant or the activities 
of the Consultant in relation to the Tudor Group and will be 
required to qualify as Accredited Investors. In addition, such 
entities will be limited to businesses controlled by individuals who 
have levels of expertise and sophistication in the area of 
investments in securities that are comparable to other Eligible 
Employees who are employees, officers or directors of the Tudor 
Group and who have an interest in maintaining an ongoing 
relationship with the Tudor Group. The individuals participating 
through such entities will belong to that class of persons who will 
have access to the directors and officers of the Manager and its 
affiliates and/or the officers of the Tudor Group responsible for 
making investments for the Funds similar to the access afforded 
other Eligible Employees who are employees, officers or directors of 
the Tudor Group.
    \4\ In order to ensure that a close nexus between the Qualified 
Participants and the Tudor Group is maintained, the terms of each 
governing document for a Fund will provide that any Eligible Family 
Member participating in such Fund (either through direct beneficial 
ownership of an interest or as an indirect beneficial owner through 
an Eligible Investment Vehicle) cannot, in any event, be more than 
two generations removed from an Eligible Employee.
    \5\ The inclusion of partnerships, corporations, or other 
entities controlled by an Eligible Employee in the definition of 
``Eligible Investment Vehicle'' is intended to enable Eligible 
Employees to make investments in the Funds through personal 
investment vehicles for the purpose of personal and family 
investment and estate planning objectives.
    \6\ An Eligible Employee described in this category (i) will 
only be permitted to invest in a Fund if such individual represents 
and warrants that he or she will not commit in any year more than 
10% of his or her income from all sources for the immediately 
preceding year, in the aggregate, in a Fund and in all other Funds 
in which that investor has previously invested.
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    9. A Qualified Participant may purchase an interest through an 
Eligible Investment Vehicle only if either (i) the investment vehicle 
is an accredited investor, as defined in rule 501(a) of Regulation D 
under the 1933 Act or (ii) the Eligible Employee is a settlor \7\ and 
principal investment decision-maker with respect to the investment 
vehicle. Eligible Investment Vehicles that are not Accredited Investors 
will be counted in accordance with Regulation D toward the 35 non-
Accredited Investor limit discussed above.
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    \7\ If such investment vehicle is an entity other than a trust, 
the term ``settlor'' will be read to mean a person who created such 
vehicle, alone or together with other eligible individuals, and 
contributed funds to such vehicle.
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    10. The terms of each Fund will be fully disclosed to each 
Qualified Participant (or person making the investment on behalf of the 
Qualified Participant) at the time the Qualified Participant is invited 
to participate in the Fund. The Fund will send its investors an annual 
financial statement in accordance with Rule 206(4)-2(b)(4)(i) under the 
Advisers Act. The financial statement will be audited \8\ by 
independent certified public accountants. In addition, as soon as 
practicable after the end of each calendar year, a report will be sent 
to each investor setting forth the information with respect such 
investor's share of income, gains, losses, credits, and other items for 
U.S. federal and state income tax purposes resulting from the operation 
of the Fund during that year.
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    \8\ ``Audit'' has the meaning defined in rule 1-02(d) of 
Regulation S-X.
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    11. Interests in a Fund will not be transferable except with the 
express consent of the Manager, and then only to a Qualified 
Participant. No sales load or similar fee of any kind will be charged 
in connection with the sale of interests in a Fund.
    12. A Fund may or may not offer investors the right to redeem their 
interests at such times and subject to such conditions as are set forth 
in the governing documents of the Fund. A Manager may have the right, 
but not the obligation, to repurchase, redeem, cancel or transfer to 
another Qualified Participant the interest of (i) an Eligible Employee 
who ceases to be an employee, officer, director or current consultant 
of any Tudor Group Entity for any reason or (ii) any Eligible Family 
Member of any person described in clause (i). The governing documents 
for each Fund will describe, if applicable, the amount that an investor 
would receive upon repurchase, redemption, cancellation or transfer of 
its interest.
    13. Among other assets, a Fund may invest in one or more pooled 
investment vehicles (including private funds relying on sections 
3(c)(1) and 3(c)(7) under the Act) sponsored by the Tudor Group or by 
third parties (each, an ``Underlying Fund'').\9\ One Fund may also 
invest in another Fund in a ``master-feeder'' or similar structure. A 
Fund may also be operated as a parallel

[[Page 24849]]

fund making investments on a side-by-side basis with Tudor Group 
entities.
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    \9\ Applicants are not requesting any exemption from any 
provision of the Act or any rule thereunder that may govern a Fund's 
eligibility to invest in an Underlying Fund relying on section 
3(c)(1) or 3(c)(7) of the Act or an Underlying Fund's status under 
the Act.
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    14. A Fund may co-invest in a portfolio company (or a pooled 
investment vehicle) with a Tudor Group Entity or with an investment 
fund or separate account organized primarily for the benefit of 
investors who are not affiliated with the Tudor Group (``Third Party 
Investors) and over which a Tudor Group Entity exercises investment 
discretion or which is sponsored by a Tudor Group Entity (a ``Tudor 
Group Third Party Fund''). Co-investments with a Tudor Group Entity or 
with a Tudor Group Third Party Fund in a transaction in which the Tudor 
Group's investment was made pursuant to a contractual obligation to a 
Tudor Group Third Party Fund will not be subject to Condition 3 below. 
All other side-by-side investments held by Tudor Group entities will be 
subject to Condition 3.
    15. If the Tudor Group makes loans to a Fund, the lender will be 
entitled to receive interest, provided that the interest rate will be 
no less favorable to the borrower than the rate obtainable on an arm's 
length basis. The possibility of any such borrowings, as well as the 
terms thereof, would be disclosed to Qualified Participants prior to 
their investment in a Fund. Any indebtedness of the Fund will be the 
debt of the Fund and without recourse to the investors. A Fund will not 
borrow from any person if the borrowing would cause any person not 
named in section 2(a)(13) of the Act to own securities of the Fund 
(other than short-term paper). A Fund will not lend any funds to a 
Tudor Group Entity.
    16. A Fund will not acquire any security issued by a registered 
investment company if immediately after such acquisition such Fund will 
own more than 3% of the outstanding voting stock of the registered 
investment company.

Applicants' Legal Analysis

    1. Section 6(b) of the Act provides that the Commission shall 
exempt employees' securities companies from the provisions of the Act 
if and to the extent that such exemption is consistent with the 
protection of investors. Section 6(b) provides that the Commission will 
consider, in determining the provisions of the Act from which the 
company should be exempt, the company's form of organization and 
capital structure, the persons owning and controlling its securities, 
the price of the company's securities and the amount of any sales load, 
how the company's funds are invested, and the relationship between the 
company and the issuers of the securities in which it invests. Section 
2(a)(13) defines an employees' securities company, in relevant part, as 
any investment company all of whose securities (other than short-term 
paper) are beneficially owned (a) by current or former employees, or 
persons on retainer, of one or more affiliated employers, (b) by 
immediate family members of such persons, or (c) by such employer or 
employers together with any of the persons in (a) or (b).
    2. Section 7 of the Act generally prohibits investment companies 
that are not registered under section 8 of the Act from selling or 
redeeming their securities. Section 6(e) of the Act provides that in 
connection with any order exempting an investment company from any 
provision of section 7, certain specified provisions of the Act shall 
be applicable to such company, and to other persons in their 
transactions and relations with such company, as though such company 
were registered under the Act, if the Commission deems it necessary and 
appropriate in the public interest or for the protection of investors. 
Applicants submit that it would be 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 for the Commission 
to issue an order under sections 6(b) and 6(e) of the Act exempting the 
Funds from all provisions of the Act and the rules and regulations 
thereunder, except sections 9, 17, 30, and 36 through 53 of the Act, 
and the Rules and Regulations. With respect to sections 17(a), (d), 
(e), (f), (g) and (j) and 30(a), (b), (e), and (h) of the Act, and the 
Rules and Regulations, and rule 38a-1 under the Act, Applicants request 
a limited exemption as set forth in the application.
    3. Section 17(a) of the Act generally prohibits any affiliated 
person of a registered investment company, or any affiliated person of 
such a person, acting as principal, from knowingly selling or 
purchasing any security or other property to or from the investment 
company. Applicants request an exemption from section 17(a) to the 
extent necessary to (a) permit a Tudor Group Entity or a Tudor Group 
Third Party Fund (or any affiliated person of such Tudor Group Entity 
or Tudor Group Third Party Fund), or any affiliated person of a Fund 
(or affiliated persons of such persons), acting as principal, to engage 
in any transaction directly or indirectly with any Fund or any company 
controlled by such Fund; and (b) to permit a Fund to invest or engage 
in any transaction with any Tudor Group Entity, acting as principal, 
(i) in which such Fund, any company controlled by such Fund or any 
Tudor Group Entity or any Tudor Group Third Party Fund has invested or 
will invest, or (ii) with which such Fund, any company controlled by 
such Fund or any Tudor Group Entity or Tudor Group Third Party Fund is 
or will become otherwise affiliated; and (c) permit a Third Party 
Investor, acting as a principal, to engage in any transaction directly 
or indirectly with a Fund or any company controlled by such Fund. The 
transactions to which any Fund is a party will be effected only after a 
determination by the Manager that the requirements of Conditions 1, 2 
and 6 (set forth below) have been satisfied. Applicants, on behalf of 
the Funds, represent that any transactions otherwise subject to section 
17(a) of the Act, for which exemptive relief has not been requested, 
would require approval of the Commission.
    4. Applicants submit that an exemption from section 17(a) is 
consistent with the policy of each Fund and the protection of 
investors. Applicants state that the investors in each Fund will have 
been fully informed of the possible extent of such Fund's dealings with 
the Tudor Group and of the potential conflicts of interest that may 
exist. Applicants also state that, as professionals employed in the 
investment management and securities businesses, or in administrative, 
financial, accounting, legal, sales, marketing, risk management or 
operational activities related thereto, the investors will be able to 
understand and evaluate the attendant risks. Applicants assert that the 
community of interest among the investors in each Fund, on the one 
hand, and the Tudor Group, on the other hand, is the best insurance 
against any risk of abuse. Applicants acknowledge that the requested 
relief will not extend to any transactions between a Fund and an 
Unaffiliated Subadviser or an affiliated person of the Unaffiliated 
Subadviser, or between a Fund and any person who is not an employee, 
officer or director of the Tudor Group or is an entity outside of the 
Tudor Group and is an affiliated person of the Fund as defined in 
section 2(a)(3)(E) of the Act (``Advisory Person'') or any affiliated 
person of such person.
    5. Section 17(d) of the Act and rule 17d-1 thereunder prohibit any 
affiliated person or principal underwriter of a registered investment 
company, or any affiliated person of such a person or principal 
underwriter, acting as principal, from participating in any joint 
arrangement with the company unless authorized by the Commission. 
Applicants request an exemption from section 17(d) and rule 17d-1 to 
the

[[Page 24850]]

extent necessary to permit affiliated persons of each Fund, or 
affiliated persons of any of such persons, to participate in, or effect 
any transaction in connection with, any joint enterprise or other joint 
arrangement or profit-sharing plan in which such Fund or a company 
controlled by such Fund is a participant. The exemption would permit, 
among other things, co-investments by each Fund, Tudor Group Third 
Party Fund and individual members or employees, officers, directors or 
consultants of the Tudor Group making their own individual investment 
decisions apart from the Tudor Group. Applicants acknowledge that the 
requested relief will not extend to any transaction in which an 
Unaffiliated Subadviser or an Advisory Person or an affiliated person 
of either has an interest.
    6. Applicants assert that compliance with section 17(d) would 
prevent each Fund from achieving a principal purpose, which is to 
provide a vehicle for Eligible Employees (and other permitted 
investors) to co-invest with the Tudor Group or, to the extent 
permitted by the terms of the Fund, with other employees, officers, 
directors or consultants of the Tudor Group or Tudor Group entities or 
with an Tudor Group Third Party Fund. Applicants further contend that 
compliance with section 17(d) would cause a Fund to forego investment 
opportunities simply because an investor in such Fund or other 
affiliated person of such Fund also had, or contemplated making, a 
similar investment. Applicants submit that it is likely that suitable 
investments will be brought to the attention of a Fund because of its 
affiliation with the Tudor Group's large capital resources and 
investment management experience, and that attractive investment 
opportunities of the types considered by a Fund often require each 
participant in the transaction to make funds available in an amount 
that may be substantially greater than those the Fund would 
independently be able to provide. Applicants contend that, as a result, 
a Fund's access to such opportunities may have to be through co-
investment with other persons, including its affiliates. Applicants 
assert that the flexibility to structure co-investments and joint 
investments will not involve abuses of the type section 17(d) and rule 
17d-1 were designed to prevent. In addition, Applicants represent that 
any transactions otherwise subject to section 17(d) of the Act and rule 
17d-1 thereunder, for which exemptive relief has not been requested, 
would require approval by the Commission.
    7. Co-investments with a Tudor Group Entity or with a Tudor Group 
Third Party Fund in a transaction in which the Tudor Group's investment 
was made pursuant to a contractual obligation to a Tudor Group Third 
Party Fund will not be subject to Condition 3 below. Applicants believe 
that the interests of the Eligible Employees participating in a Fund 
will be adequately protected in such situations because the Tudor Group 
is likely to invest a portion of its own capital in Tudor Group Third 
Party Fund investments, either through such Tudor Group Third Party 
Fund or on a side-by-side basis (which Tudor Group investments will be 
subject to substantially the same terms as those applicable to such 
Tudor Group Third Party Fund, except as otherwise disclosed in the 
governing documents of the relevant Fund). Applicants assert that if 
Condition 3 were to apply to the Tudor Group's investment in these 
situations, the Tudor Group Third Party Fund would be indirectly 
burdened by the requirements of Condition 3. Applicants further assert 
that the relationship of a Fund to a Tudor Group Third Party Fund is 
fundamentally different from such Fund's relationship to the Tudor 
Group. Applicants contend that the focus of, and the rationale for, the 
protections contained in the requested relief are to protect the Funds 
from any overreaching by the Tudor Group in the employer/employee 
context, whereas the same concerns are not present with respect to the 
Funds vis-[agrave]-vis the investors in a Tudor Group Third Party Fund.
    8. Section 17(e) of the Act and rule 17e-1 thereunder limit the 
compensation an affiliated person may receive when acting as agent or 
broker for a registered investment company. Applicants request an 
exemption from section 17(e) to permit a Tudor Group Entity (including 
the Manager) that acts as an agent or broker to receive placement fees, 
advisory fees, or other compensation from a Fund in connection with the 
purchase or sale by the Fund of securities, provided that the fees or 
other compensation are deemed ``usual and customary.'' Applicants state 
that for purposes of the application, fees or other compensation that 
are charged or received by a Tudor Group Entity will be deemed to be 
``usual and customary'' only if (i) the Fund is purchasing or selling 
securities alongside other unaffiliated third parties, Tudor Group 
Third Party Funds or Third Party Investors who are also similarly 
purchasing or selling securities, (ii) the fees or other compensation 
being charged to the Fund are also being charged to the unaffiliated 
third parties, Tudor Group Third Party Funds or Third Party Investors, 
and (iii) the amount of securities being purchased or sold by the Fund 
does not exceed 50% of the total amount of securities being purchased 
or sold by the Fund and the unaffiliated third parties, Tudor Group 
Third Party Funds or Third Party Investors. Applicants state that 
compliance with section 17(e) would prevent a Fund from participating 
in a transaction in which the Tudor Group, for other business reasons, 
does not wish to appear as if the Fund is being treated in a more 
favorable manner (by being charged lower fees) than other third parties 
also participating in the transaction. Applicants assert that the 
concerns of overreaching and abuse that section 17(e) and rule 17e-1 
were designed to prevent are alleviated by the conditions that ensure 
that (i) the fees or other compensation paid by a Fund to a Tudor Group 
Entity are those negotiated at arm's length with unaffiliated third 
parties and (ii) the unaffiliated third parties have as great or 
greater interest as the Fund in the transactions as a whole.
    9. Rule 17e-1(b) under the Act requires that a majority of 
directors who are not ``interested persons'' (as defined in section 
2(a)(19) of the Act) take actions and make approvals regarding 
commissions, fees, or other remuneration. Rule 17e-1(c) under the Act 
requires each Fund to comply with the fund governance standards defined 
in rule 0-1(a)(7) under the Act. Applicants request an exemption from 
rule 17e-1(b) to the extent necessary to permit each Fund to comply 
with rule 17e-1(b) without the necessity of having a majority of the 
directors of the Fund who are not ``interested persons'' take such 
actions and make such approvals as are set forth in rule 17(e)-1(b). 
Applicants note that in the event that all the directors of the Manager 
will be affiliated persons, a Fund could not comply with rule 17(e)-
1(b) without the relief requested. Applicants represent that in such an 
event, the Fund will comply with rule 17e-1(b) by having a majority of 
the directors (or members of a comparable body) of the Fund or its 
Manager take such actions and make such approvals as are set forth in 
rule 17e-1(b). Applicants state that each Fund will otherwise comply 
with all other requirements of rule 17e-1(b). Applicants further 
request an exemption from rule 17(e)-1(c) to the extent necessary to 
permit each Fund to comply with rule 17e-1 without the necessity of 
having a majority of the

[[Page 24851]]

directors of the Fund be ``disinterested persons'' as set forth in rule 
17e-1(c). Applicants note that in the event that all the directors of 
the Manager will be affiliated persons, a Fund could not comply with 
rule 17e-1 without the relief requested. Applicants represent that each 
Fund will otherwise comply with all other requirements of rule 17e-
1(c).
    10. Section 17(f) of the Act provides that the securities and 
similar investments of a registered management investment company must 
be placed in the custody of a bank, a member of a national securities 
exchange or the company itself in accordance with Commission rules. 
Rule 17f-2 under the Act specifies the requirements that must be 
satisfied for a registered management investment company to act as a 
custodian of its own investments. Applicants request relief from 
section 17(f) and rule 17f-2 to permit the following exceptions from 
the requirements of rule 17f-2: (a) A Fund's investments may be kept in 
the locked files of the Manager or the Investment Adviser for purposes 
of paragraph (b) of the rule; (b) for purposes of paragraph (d) of the 
rule, (i) employees of Tudor Group or its affiliates (including the 
Manager) will be deemed to be employees of the Funds, (ii) officers or 
managers of the Manager of a Fund will be deemed to be officers of the 
Fund and (iii) the Manager of a Fund or its board of directors will be 
deemed to be the board of directors of the Fund; and (c) in place of 
the verification procedure under rule 17f-2(f), verification will be 
effected quarterly by two employees of the Manager who are also 
employees of the Tudor Group responsible for the administrative, legal 
and/or compliance functions for funds managed or sponsored by the Tudor 
Group and who have specific knowledge of custody requirements, policies 
and procedures of the Funds. Applicants expect that, with respect to 
certain Funds, many of their investments will be evidenced only by 
partnership agreements, participation agreements or similar documents, 
rather than by negotiable certificates that could be misappropriated. 
Applicants assert that for such a Fund, these instruments are most 
suitably kept in the files of the Manager or its Investment Adviser, 
where they can be referred to as necessary. Applicants represent that 
they will comply with all other provisions of rule 17f-2, including the 
recordkeeping requirements of paragraph (e).
    11. Section 17(g) of the Act and rule 17g-1 thereunder generally 
require the bonding of officers and employees of a registered 
investment company who have access to its securities or funds. Rule 
17g-1 requires that a majority of directors who are not ``interested 
persons'' of a registered investment company take certain actions and 
give certain approvals relating to fidelity bonding. Among other 
things, the rule also requires that the board of directors of an 
investment company relying on the rule satisfy the fund governance 
standards defined in rule 0-1(a)(7). Applicants request an exemption 
from rule 17g-1 to the extent necessary to permit a Fund to comply with 
rule 17g-1 by having the Manager of the Fund take such actions and make 
such approvals as are set forth in rule 17g-1. Applicants state that in 
the event all the directors of the Manager will be affiliated persons, 
a Fund could not comply with rule 17g-1 without the requested relief. 
Applicants also request an exemption from the requirements of rule 17g-
1(g) and (h) relating to the filing of copies of fidelity bonds and 
related information with the Commission and the provision of notices to 
the board of directors and from the requirements of rule 17g-1(j)(3). 
Applicants contend that the filing requirements are burdensome and 
unnecessary as applied to the Funds and represent that the Manager of 
each Fund will designate a person to maintain the records otherwise 
required to be filed with the Commission under rule 17g-1(g). 
Applicants further contend that the notices otherwise required to be 
given to the board of directors will be unnecessary as the Funds 
typically will not have boards of directors. Applicants represent that, 
to the extent a Fund does have a board of directors, such notices will 
be delivered in compliance with rule 17g-1. Applicants represent that 
each Fund will comply with all other requirements of rule 17g-1.
    12. Section 17(j) of the Act and rule 17j-1 require that every 
registered investment company adopt a written code of ethics that 
contains provisions reasonably necessary to prevent ``access persons'' 
from violating the anti-fraud provisions of the rule. Under rule 17j-1, 
the investment company's access persons must report to the investment 
company with respect to transactions in any security in which the 
access person has, or by reason of the transaction acquires, any direct 
or indirect beneficial ownership in such security. Applicants request 
an exemption from section 17(j) and the provisions of rule 17j-1 
(except for the anti-fraud provisions of rule 17j-1(b)) because they 
assert that these requirements are burdensome and unnecessary as 
applied to the Funds. The relief requested will extend only to entities 
within the Tudor Group and is not requested with respect to any 
Unaffiliated Subadviser or Advisory Person.
    13. Sections 30(a), (b) and (e) of the Act and the rules thereunder 
generally require that registered investment companies prepare and file 
with the Commission and mail to their shareholders certain periodic 
reports and financial statements. Applicants contend that the forms 
prescribed by the Commission for periodic reports have little relevance 
to a Fund and would entail administrative and legal costs that outweigh 
any benefit to the investors in such Fund. Applicants request relief 
under sections 30(a), (b) and (e) to the extent necessary to permit 
each Fund to report annually to its investors in the manner described 
in the application. Section 30(h) of the Act requires that every 
officer, director, member of an advisory board, investment adviser or 
affiliated person of an investment adviser of a closed-end investment 
company be subject to the same duties and liabilities as those imposed 
upon similar classes of persons under section 16(a) of the Exchange 
Act. Applicants request an exemption from section 30(h) of the Act to 
the extent necessary to exempt the Manager of each Fund, directors and 
officers of the Manager and any other persons who may be deemed members 
of an advisory board or investment adviser (and affiliated persons 
thereof) of such Fund from filing Forms 3, 4, and 5 with respect to 
their ownership of interests in such Fund under section 16 of the 
Exchange Act. Applicants assert that, because there will be no trading 
market and the transfers of interests are severely restricted, these 
filings are unnecessary for the protection of investors and burdensome 
to those required to make them.
    14. Rule 38a-1 requires registered investment companies to adopt, 
implement and periodically review written policies reasonably designed 
to prevent violation of the federal securities laws and to appoint a 
chief compliance officer. Each Fund will comply will rule 38a-1(a), (c) 
and (d), except that: (i) To the extent the Fund does not have a board 
of directors, the board of directors of the Manager will fulfill the 
responsibilities assigned to the Fund's board of directors under the 
rule; (ii) to the extent the board of directors of the Manager does not 
have any disinterested members, approval by a majority of the 
disinterested board members required by rule 38a-1 will not be 
obtained; and (iii) to the extent

[[Page 24852]]

the board of directors of the Manager does not have any independent 
members, the Funds will comply with the requirement in rule 38a-
1(a)(4)(iv) that the chief compliance officer meet with the independent 
directors by having the chief compliance officer meet with the board of 
directors of the Manager as constituted. Applicants represent that each 
Fund has adopted written policies and procedures reasonably designed to 
prevent violations of the terms and conditions of the application, has 
appointed a chief compliance officer and is otherwise in compliance 
with the terms and conditions of the application.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Each proposed transaction otherwise prohibited by section 17(a) 
or section 17(d) of the Act and rule 17d-1 thereunder to which a Fund 
is a party (the ``Section 17 Transactions'') will be effected only if 
the Manager determines that: (a) The terms of the Section 17 
Transaction, including the consideration to be paid or received, are 
fair and reasonable to the Fund and the investors and do not involve 
overreaching of such Fund or its investors on the part of any person 
concerned; and (b) the Section 17 Transaction is consistent with the 
interests of the Fund and the investors, such Fund's organizational 
documents and such Fund's reports to its investors.
    In addition, the Manager will record and preserve a description of 
all Section 17 Transactions, the Manager's findings, the information or 
materials upon which the findings are based and the basis for such 
findings. All such records will be maintained for the life of the Fund 
and at least six years thereafter, and will be subject to examination 
by the Commission and its staff.\10\
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    \10\ Each Fund will preserve the accounts, books and other 
documents required to be maintained in an easily accessible place 
for the first two years.
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    2. The Manager will adopt, and periodically review and update, 
procedures designed to ensure that reasonable inquiry is made, prior to 
the consummation of any Section 17 Transaction, with respect to the 
possible involvement in the transaction of any affiliated person or 
promoter of or principal underwriter for such Fund, or any affiliated 
person of such a person, promoter or principal underwriter.
    3. The Manager will not cause the funds of any Fund to be invested 
in any investment in which a Co-Investor (as defined below) has 
acquired or proposes to acquire the same class of securities of the 
same issuer, where the investment involves a joint enterprise or other 
joint arrangement within the meaning of rule 17d-1 in which the Fund 
and a Co-Investor are participants, unless prior to such investment any 
such Co-Investor agrees, prior to disposing of all or part of its 
investment, to (a) give the Manager sufficient, but not less than one 
day's, notice of its intent to dispose of its investment; and (b) 
refrain from disposing of its investment unless the Fund has the 
opportunity to dispose of the Fund's investment prior to or 
concurrently with, on the same terms as, and on a pro rata basis with, 
the Co-Investor. The term ``Co-Investor'' with respect to any Fund 
means any person who is: (a) An ``affiliated person'' (as defined in 
section 2(a)(3) of the Act) of the Fund (other than a Tudor Group Third 
Party Fund); (b) the Tudor Group (except when a Tudor Group Entity co-
invests with a Fund and a Tudor Group Third Party Fund pursuant to a 
contractual obligation to the Tudor Group Third Party Fund); (c) an 
officer or director of a Tudor Group Entity; or (d) an entity (other 
than a Tudor Group Third Party Fund) in which the Tudor Group acts as 
general partner or has similar capacity to control the sale or other 
disposition of the entity's securities. The restrictions contained in 
this condition, however, shall not be deemed to limit or prevent the 
disposition of an investment by a Co-Investor: (a) To its direct or 
indirect wholly-owned subsidiary, to any company (a ``parent'') of 
which the Co-Investor is a direct or indirect wholly-owned subsidiary 
or to a direct or indirect wholly-owned subsidiary of its parent; (b) 
to immediate family members of the Co-Investor, including step or 
adoptive relationships, or a trust or other investment vehicle 
established for any Co-Investor or any such family member; or (c) when 
the investment is comprised of securities that are (i) listed on a 
national securities exchange registered under section 6 of the Exchange 
Act, (ii) NMS stocks, pursuant to section 11A(a)(2) of the Exchange Act 
and rule 600(a) of Regulation NMS thereunder, (iii) government 
securities as defined in section 2(a)(16) of the Act, (iv) ``Eligible 
Securities'' as defined in rule 2a-7 under the Act, or (v) listed or 
traded on any foreign securities exchange or board of trade that 
satisfies regulatory requirements under the law of the jurisdiction in 
which such foreign securities exchange or board of trade is organized 
similar to those that apply to a national securities exchange or a 
national market system for securities.
    4. Each Fund and its Manager will maintain and preserve, for the 
life of such Fund and at least six years thereafter, such accounts, 
books and other documents as constitute the record forming the basis 
for the audited financial statements that are to be provided to the 
investors in such Fund, and each annual report of such Fund required to 
be sent to such investors, and agree that all such records will be 
subject to examination by the Commission and its staff.\11\
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    \11\ Each Fund will preserve the accounts, books and other 
documents required to be maintained in an easily accessible place 
for the first two years.
---------------------------------------------------------------------------

    5. Within 120 days after the end of each fiscal year of each Fund, 
or as soon as practicable thereafter, the Manager of each Fund will 
send to each investor in such Fund who had an interest in any capital 
account of the Fund, at any time during the fiscal year then ended, 
Fund financial statements audited by the Fund's independent 
accountants, except in the case of a Fund formed to make a single 
portfolio investment. In such cases, financial statements may be 
unaudited, in which event each investor will receive financial 
statements of the single portfolio investment audited by such entity's 
independent accountants. At the end of each fiscal year and at other 
times as necessary in accordance with customary practice, the Manager 
will make a valuation or cause a valuation to be made of all of the 
assets of the Fund as of the fiscal year end. In addition, as soon as 
practicable after the end of each tax year of a Fund, the Manager of 
such Fund will send a report to each person who was an investor in such 
Fund at any time during the fiscal year then ended, setting forth such 
tax information as shall be necessary for the preparation by the 
investor of his, her or its U.S. federal and state income tax returns 
and a report of the investment activities of the Fund during that 
fiscal year.
    6. If a Fund makes purchases or sales from or to an entity 
affiliated with the Fund by reason of an officer, director or employee 
of the Tudor Group (a) serving as an officer, director, general partner 
or investment adviser of the entity, or (b) having a 5% or more 
investment in the entity, such individual will not participate in the 
Fund's determination of whether or not to effect the purchase or sale.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11205 Filed 5-28-19; 8:45 am]
 BILLING CODE 8011-01-P