[Federal Register Volume 75, Number 110 (Wednesday, June 9, 2010)]
[Notices]
[Pages 32825-32826]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-13822]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29292; File No. 812-13748]
FFCM, LLC and FQF Trust; Notice of Application
June 2, 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 open-end
management investment companies relying on rule 12d1-2 under the Act to
invest in certain financial instruments.
Applicants: FFCM, LLC (``FFCM,'' and together with any entity
controlling, controlled by or under common control with FFCM, the
``Adviser'') and FQF Trust (``Trust,'' and together with the Adviser,
``Applicants'').
Filing Dates: The application was filed on January 28, 2010, and
amended on May 27, 2010.
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 28, 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: FFCM, LLC and FQF Trust,
230 Congress Street, 5th Floor, Boston, MA 02110.
FOR FURTHER INFORMATION CONTACT: Deepak T. Pai, Senior Counsel, at
(202) 551-6876, or Michael W. Mundt, Assistant Director, 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 organized as a Delaware statutory trust and is
registered with the Commission as an open-end management investment
company. The Adviser, a Delaware limited liability company, will
register as an investment adviser under the Investment Advisers Act of
1940, as amended, prior to relying on the requested order. A broker-
dealer registered under the Securities Exchange Act of 1934, as amended
(``Exchange Act''), will be selected and will serve as distributor.
2. Applicants request the exemption to the extent necessary to
permit any existing or future registered open-end management investment
company or series thereof that (a) is advised by the Adviser, (b) is in
the same group of investment companies, as defined in section
12(d)(1)(G) of the Act, (c) invests in shares of other registered open-
end investment companies (``Underlying Funds'') in reliance on section
12(d)(1)(G) of the Act, and (d) is also eligible to invest in
securities (as defined in section 2(a)(36) of the Act) in reliance on
rule 12d1-2 under the Act (``Funds of Funds''), 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''). Applicants state that all Funds of Funds and Underlying
Funds are or will be registered with the Commission as open-end
management investment companies.
3. Consistent with its fiduciary obligations under the Act, each
Fund of Fund's board of trustees or directors will review the advisory
fees charged by the Fund of Fund's investment adviser to ensure that
they are based on services provided that are in addition to, rather
than duplicative of, services provided
[[Page 32826]]
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: (a) The acquired company and acquiring company
are part of the same group of investment companies; (b) 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; (c) 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 (d) 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: (a)
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; (b) securities (other
than securities issued by an investment company); and (c) 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 proposed arrangement would comply with
the provisions of rule 12d1-2 under the Act, but for the fact that the
Funds of 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 of Funds to
invest in Other Investments. Applicants assert that permitting the
Funds of 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 of Funds 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. 2010-13822 Filed 6-8-10; 8:45 am]
BILLING CODE 8010-01-P