Document ID: SEC-2011-1144-0001
Agency: sec
Document Type: Notice
Title: Applications: RidgeWorth Funds and RidgeWorth Capital Management, Inc.
Posted Date: 2011-08-09T04:00Z

[Federal Register Volume 76, Number 153 (Tuesday, August 9, 2011)]
[Notices]
[Pages 48927-48929]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20102]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29743; File No. 812-13860]

RidgeWorth Funds and RidgeWorth Capital Management, Inc.; Notice 
of Application

August 3, 2011.
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 section 15(a) of 
the Act and rule 18f-2 under the Act.

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

Applicants:  RidgeWorth Funds (the ``Trust'') and RidgeWorth Capital 
Management, Inc. (the ``Adviser'').

DATES: Filing Dates: The application was filed on January 20, 2011 and 
amended on June 29, 2011.

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 August 29, 2011 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, 3333 Piedmont Road, 
NE., Suite 1500, Atlanta, GA 30305-1740.

FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at 
(202) 551-6876, or Dalia Osman Blass, 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. The Trust is a Massachusetts business trust registered under the 
Act as an open-end management investment company and offers multiple 
series (each a ``Fund'').\1\
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    \1\ Applicants request that any relief granted pursuant to the 
application also apply to (a) All other existing or future open-end 
management investment companies or series thereof that (i) are 
advised by the Adviser or any entity controlling, controlled by or 
under common control with the Adviser or its successors (each such 
entity included in the term ``Adviser''), (ii) are registered under 
the Act, (iii) use the manager of managers structure (as described 
in the application), and (iv) comply with the terms and conditions 
in the application (such companies or series included in the term 
``Funds''); and (b) the Adviser. Each 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 conditions in the 
application. If the name of any Fund relying on the requested relief 
contains the name of a Subadviser (defined below), the name 
``RidgeWorth'' or other name being used by the Adviser will precede 
the name of the Subadviser.
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    2. The Adviser, a Georgia corporation with its principal office in 
Atlanta, serves as investment adviser to the Funds and is registered 
under the Investment Advisers Act of 1940 (the ``Advisers Act'') 
pursuant to an investment advisory agreement with the Trust (``Advisory 
Agreement''). The Adviser is a wholly owned subsidiary of SunTrust 
Banks, Inc. The Advisory Agreement was approved by the board of 
trustees of the Trust (``Board''),\2\, 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 was approved by the initial shareholder of each Fund in 
the manner required by sections 15(a) and (c) of the Act and rule 18f-2 
thereunder. With respect to new Funds offered in the future, the 
Advisory Agreement will be approved by the initial shareholder of the 
Fund in the manner required by sections 15(a) and (c) of the Act and 
rule 18f-2 thereunder. Applicants are not seeking any exemptions from 
the provisions of the Act with respect to the

[[Page 48928]]

requirements that the Advisory Agreement be approved by the Board and 
the shareholders of the relevant Funds.
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    \2\ The Board is also the board of each individual Fund.
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    3. The Adviser, subject to the oversight and authority of the 
Board, is responsible for furnishing the overall investment program for 
each Fund and providing continuous investment management for each 
Fund's assets pursuant to the Advisory Agreement. For the investment 
management services that it provides to each Fund, the Adviser receives 
the fee specified in the Advisory Agreement from each Fund based on the 
Fund's average daily net assets. The Advisory Agreement permits the 
Adviser to retain one or more unaffiliated investment subadvisers (each 
a ``Subadviser''), at the Adviser's own expense, subject to the 
approval of the Fund's Board, including approval by a majority of its 
Independent Trustees, for the purpose of managing the investment of the 
assets of one or more Funds.\3\ Each Subadviser will be registered as 
an investment adviser under the Advisers Act. Each Subadviser will be 
responsible, subject to the supervision of the Adviser and the Board, 
for the purchase, retention and sale of securities for the applicable 
Fund. The Adviser will establish an investment program for each Fund 
and will select, supervise and evaluate the Subadvisers who make the 
day-to-day investment decisions for the Fund. The Adviser will evaluate 
and recommend Subadvisers to the Board and will monitor and evaluate 
each Subadviser's investment programs, performance and compliance. The 
Adviser will also recommend to the Board whether investment advisory 
agreements with a Subadviser (``Subadvisory Agreements'') should be 
renewed, modified or terminated. The Adviser will compensate each 
Subadviser out of the fee paid to the Adviser under the relevant Fund's 
Advisory Agreement. Neither the Trust nor any Fund will be responsible 
for paying subadvisory fees to any subadviser.
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    \3\ The Adviser has entered into subadvisory agreements with 
subadvisers that are ``affiliated persons'' (as defined in section 
2(a)(3) of the Act) of the Trust, a Fund or of the Adviser (other 
than by reason of serving as a subadviser to one or more of the 
Funds) (``Affiliated Subadvisers'') to assist with monitoring and/or 
management of certain markets with which the Affiliated Subadvisers 
have expertise. The requested relief does not apply with respect to 
existing or future Affiliated Subadvisers.
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    4. Applicants request an order to permit the Adviser, subject to 
Board approval, including a majority of the Independent Trustees, to 
enter into and materially amend Subadvisory Agreements without 
shareholder approval.

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 a vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series investment company affected by a matter must 
approve the 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 the necessary 
standards for the reasons discussed below.
    3. Applicants believe that the shareholders expect the Adviser and 
the Board to select the portfolio manager or Subadviser for a Fund that 
is best suited to achieve the Fund's investment objective. Applicants 
assert that, from the perspective of the investor, the role of the 
Subadvisers with respect to the Funds utilizing the manager of managers 
structure is substantially equivalent to the role of the individual 
portfolio managers employed by the traditional investment company 
advisory firms. In the absence of exemptive relief from section 15(a) 
of the Act, when a new Subadviser is proposed for retention by a Fund 
or the Trust on behalf of one or more of the Funds, shareholders would 
be required to approve the Subadvisory Agreement with that Subadviser. 
Similarly, if an existing Subadvisory Agreement were to be amended in 
any material respect (e.g., an increase in the subadvisory fee), 
approval by the shareholders of the affected Fund would be required. In 
addition, a Fund would be prohibited from continuing to retain an 
existing Subadviser whose Subadvisory Agreement had been ``assigned'' 
as a result of a change of control of the Subadviser unless shareholder 
approval had been obtained. Applicants contend that this process would 
be time-intensive, costly and slow and, in the case of a poorly 
performing Subadviser or one whose management team had left, 
potentially harmful to a Fund and its shareholders. Applicants also 
note that the Advisory Agreement is and will remain fully subject to 
the requirements of section 15(a) of the Act and, where applicable, 
rule 18f-2 thereunder, 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 order requested in the 
application, 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 that relies on the order requested in the application 
will disclose in its prospectus the existence, substance, and effect of 
any order granted pursuant to the application. Each Fund relying on the 
order requested in the application will hold itself out to the public 
as utilizing the manager of managers structure described in the 
application. 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. Within 90 days of the hiring of a new Subadviser, the affected 
Fund shareholders will be furnished all information about the new 
Subadviser that would be included in a proxy statement. To meet this 
obligation, the Fund will provide shareholders of the affected Fund 
within 90 days of hiring a new Subadviser with an information statement 
meeting the requirements of Regulation 14C, Schedule 14C, and Item 22 
of Schedule 14A under the Securities Exchange Act of 1934, as amended.
    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,

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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 that is subadvised, including overall supervisory responsibility 
for the general management and investment of the Fund's assets, and, 
subject to review and approval of the Board, will: (i) Set each Fund's 
overall investment strategies; (ii) evaluate, select and recommend 
Subadvisers to manage all or a part of a Fund's assets; (iii) allocate 
and, when appropriate, reallocate a Fund's assets among one or more 
Subadvisers; (iv) monitor and evaluate the performance of Subadvisers; 
and (v) implement procedures reasonably designed to ensure that the 
Subadvisers comply with the relevant 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.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-20102 Filed 8-8-11; 8:45 am]
BILLING CODE 8011-01-P