[Federal Register Volume 75, Number 193 (Wednesday, October 6, 2010)]
[Notices]
[Pages 61786-61787]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-25072]
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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