ETF Managers Trust and ETF Managers Group LLC
| Published date | 25 February 2020 |
| Citation | 85 FR 10794 |
| Record Number | 2020-03638 |
| Section | Notices |
| Court | Securities And Exchange Commission |
Federal Register, Volume 85 Issue 37 (Tuesday, February 25, 2020)
[Federal Register Volume 85, Number 37 (Tuesday, February 25, 2020)]
[Notices]
[Pages 10794-10795]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-03638]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33799; File No. 812-15088]
ETF Managers Trust and ETF Managers Group LLC
February 19, 2020.
AGENCY: Securities and Exchange Commission (the ``Commission'').
ACTION: Notice.
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Notice of an application for an order under section 12(d)(1)(J) of
the Investment Company Act of 1940 (the ``Act'') for an exemption from
sections 12(d)(1)(A), (B), and (C) of the Act, and under sections 6(c)
and 17(b) of the Act for an exemption from section 17(a) of the Act.
The requested order would permit certain registered open-end investment
companies to acquire shares of certain registered open-end investment
companies, registered closed-end investment companies, and business
development companies (``BDCs''), as defined in section 2(a)(48) of the
Act, and registered unit investment trusts (``UITs'') (collectively,
the ``Underlying Funds'') that are within and outside the same group of
investment companies as the acquiring investment companies, in excess
of the limits in section 12(d)(1) of the Act.
Applicants: ETF Managers Trust (the ``Trust'') is organized as a
Delaware statutory trust and registered with the Commission under the
Act as an open-end management investment company with multiple series,
each of which has its own investment objectives and principal
investment strategies. ETF Managers Group LLC (``the Adviser''), the
adviser to the Trust, is organized as a limited liability company
established under the laws of the state of Delaware and is registered
as an investment adviser under section 203 of the Investment Advisers
Act of 1940.
Filing Date: The application was filed on January 6, 2020.
Hearing or Notification of Hearing: An order granting the requested
relief 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 March 16, 2020, and should be accompanied by proof of
service on the applicants, in the form of an affidavit, or, for
lawyers, a certificate of service. Pursuant to rule 0-5 under the Act,
hearing requests should state the nature of the writer's interest, any
facts bearing upon the desirability of a hearing on the matter, 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: 30 Maple Street, 2nd
Floor, Summit, NJ 07901.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817, or Kaitlin C. Bottock, Branch Chief, at (202) 551-6825
(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
[[Page 10795]]
website by searching for the file number, or for an applicant using the
Company name box, at https://www.sec.gov/search/search.htm, or by
calling (202) 551-8090.
Summary of the Application
1. Applicants request an order to permit (a) each Fund \1\ (and
each a ``Fund of Funds'') to acquire shares of Underlying Funds \2\ in
excess of the limits in sections 12(d)(1)(A) and (C) of the Act, and
(b) each Underlying Fund that is a registered open-end management
investment company or series thereof, their principal underwriters, and
any broker or dealer registered under the 1934 Act to sell shares of
the Underlying Funds to the Fund of Funds in excess of the limits in
section 12(d)(1)(B) of the Act.\3\ Applicants also request that the
Commission issue an order under sections 6(c) and 17(b) of the Act from
the prohibition on certain affiliated transactions in section 17(a) of
the Act to the extent necessary to permit the Underlying Funds to sell
their shares to, and redeem their shares from, the Funds of Funds.\4\
Applicants state that such transactions will be consistent with the
policies of each Fund of Funds and each Underlying Fund and with the
general purposes of the Act and will be based on the net asset values
of the Underlying Funds.
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\1\ Applicants request that the order apply not only to the
existing series of the Trust (the ``Existing Funds''), but that the
order also extend to any future series of the Trust and any other
existing or future registered open-end management investment
companies and any series thereof that are part of the same ``group
of investment companies,'' as defined in section 12(d)(1)(G)(ii) of
the Act, as the Trust are, or may in the future be, advised by the
Adviser or any other investment adviser controlling, controlled by,
or under common control with the Adviser (together with the Existing
Funds, each series a ``Fund,'' and collectively, the ``Funds''). For
purposes of the request for relief, the term ``group of investment
companies'' means any two or more registered investment companies,
including closed-end investment companies and BDCs, that hold
themselves out to investors as related companies for purposes of
investment and investor services.
\2\ Certain of the Underlying Funds registered under the Act as
either UITs or open-end management investment companies may have
requested and obtained exemptions from the Commission necessary to
permit their shares to be listed and traded on a national securities
exchange at negotiated prices and, accordingly, to operate as
exchange-traded funds (collectively, ``ETFs'' and each an ``ETF'').
\3\ Applicants are not requesting relief for a Fund of Funds to
invest in BDCs and registered closed-end investment companies that
are not listed and traded on a national securities exchange.
\4\ A Fund of Funds generally would purchase and sell shares of
an Underlying Fund that operates as an ETF or closed-end fund
through secondary market transactions rather than through principal
transactions with the Underlying Fund. Applicants nevertheless
request relief from sections 17(a)(1) and (2) to permit each ETF or
closed-end fund that is an affiliated person, or an affiliated
person of an affiliated person, as defined in section 2(a)(3) of the
Act, of a Fund of Funds, to sell shares to or redeem shares from the
Fund of Funds. This includes, in the case of sales and redemptions
of shares of ETFs, the in-kind transactions that accompany such
sales and redemptions. Applicants are not seeking relief from
section 17(a) for, and the requested relief will not apply to,
transactions where an ETF, BDC, or closed-end fund could be deemed
an affiliated person, or an affiliated person of an affiliated
person, of a Fund of Funds because an investment adviser to the ETF,
BDC, or closed-end fund, or an entity controlling, controlled by, or
under common control with the investment adviser to the ETF, BDC, or
closed-end fund, is also an investment adviser to the Fund of Funds.
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2. Applicants agree that any order granting the requested relief
will be subject to the terms and conditions stated in the application.
Such terms and conditions are designed to, among other things, help
prevent any potential (i) undue influence over an Underlying Fund that
is not in the same ``group of investment companies'' as the Fund of
Funds through control or voting power, or in connection with certain
services, transactions, and underwritings, (ii) excessive layering of
fees, and (iii) overly complex fund structures, which are the concerns
underlying the limits in sections 12(d)(1)(A), (B), and (C) of the Act.
3. Section 12(d)(1)(J) 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 provision of section
12(d)(1) if the exemption is consistent with the public interest and
the protection of investors. Section 17(b) of the Act authorizes the
Commission to grant an order permitting a transaction otherwise
prohibited by section 17(a) if it finds that (a) the terms of the
proposed transaction are fair and reasonable and do not involve
overreaching on the part of any person concerned; (b) the proposed
transaction is consistent with the policies of each registered
investment company involved; and (c) the proposed transaction is
consistent with the general purposes of the Act. Section 6(c) of the
Act permits the Commission to exempt any persons, securities, or
transactions from any provision of 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 policy
and provisions of the Act.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2020-03638 Filed 2-24-20; 8:45 am]
BILLING CODE 8011-01-P
