PFS Funds and Castle Investment Management, LLC.; Notice of Application
| Published date | 29 July 2019 |
| Citation | 84 FR 36635 |
| Record Number | 2019-15954 |
| Section | Notices |
| Court | Securities And Exchange Commission |
Federal Register, Volume 84 Issue 145 (Monday, July 29, 2019)
[Federal Register Volume 84, Number 145 (Monday, July 29, 2019)]
[Notices]
[Pages 36635-36636]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15954]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 33563; 812-15010]
PFS Funds and Castle Investment Management, LLC.; Notice of
Application
July 23, 2019.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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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, as well as from certain
disclosure requirements in rule 20a-1 under the Act, Item 19(a)(3) of
Form N-1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of
Schedule 14A under the Securities Exchange Act of 1934, and sections 6-
07(2)(a), (b), and (c) of Regulation S-X (``Disclosure Requirements'').
The requested exemption would permit an investment adviser to hire and
replace certain sub-advisers without shareholder approval and grant
relief from the Disclosure Requirements as they relate to fees paid to
the sub-advisers.
Applicants: PFS Funds (the ``Trust''), a Massachusetts business trust
that is registered under the Act as an open-end management investment
company, and Castle Investment Management, LLC (the ``Initial
Adviser''), a Virginia limited liability company that is registered as
an investment adviser under the Investment Advisers Act of 1940
(collectively with the Trust, the ``Applicants'').
Filing Dates: The application was filed on March 13, 2019 and amended
on June 14, 2019, July 10, 2019, and July 12, 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 August 19, 2019, 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: John H. Lively, Esq.,
Practus, LLC, 11300 Tomahawk Creek Parkway, Suite 310, Leawood, KS
66211.
FOR FURTHER INFORMATION CONTACT: Jill Corrigan, Senior Counsel, at
(202) 551-8929, or Parisa Haghshenas, Branch Chief, at (202) 551-6723
(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 an applicant
using the Company name box, at http://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Summary of the Application:
1. An Adviser will serve as the investment adviser to each Sub-
advised Series pursuant to an investment advisory agreement with the
Trust (the ``Investment Management Agreement'').\1\ Under the terms of
each Investment Management Agreement, the Adviser, subject to the
supervision of the board of trustees of the Trust (the ``Board'') will
provide continuous investment management of the assets of each Sub-
advised Series. Consistent with the terms of each Investment Management
Agreement, the Adviser may, subject to the approval of the Board,
delegate portfolio management responsibilities of all or a portion of
the assets of a Sub-advised Series to one or more Sub-Advisers \2\ The
Adviser will continue to have overall responsibility for the management
and investment of the assets of each Sub-advised Series. The Adviser
will evaluate, select and recommend Sub-Advisers to manage the assets
of a Sub-advised Series and will oversee, monitor, and review the Sub-
Advisers and their performance and recommend the removal or replacement
of Sub-Advisers.
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\1\ Applicants request relief with respect to the named
Applicants, as well as to any future series of the Trust and any
other registered open-end management investment company or series
thereof that: (a) Is advised by the Initial Adviser, its successors,
or any entity controlling, controlled by or under common control
with the Initial Adviser or its successors (each, an ``Adviser'');
(b) uses the multi-manager structure described in the application;
and (c) complies with the terms and conditions set forth in the
application (each, a ``Sub-advised Series''). For purposes of the
requested order, ``successor'' is limited to an entity that results
from a reorganization into another jurisdiction or a change in the
type of business organization.
\2\ A ``Sub-Adviser'' for a Sub-advised Series is (1) an
indirect or direct ``wholly-owned subsidiary'' (as such term is
defined in the Act) of the Adviser for that Sub-advised Series, or
(2) a sister company of the Adviser for that Sub-advised Series that
is an indirect or direct ``wholly-owned subsidiary'' of the same
company that, indirectly or directly, wholly owns the Adviser (each
of (1) and (2) a ``Wholly-Owned Sub-Adviser'' and collectively, the
``Wholly-Owned Sub-Advisers''), or (3) not an ``affiliated person''
(as such term is defined in section 2(a)(3) of the Act) of the Sub-
advised Series or the Adviser, except to the extent that an
affiliation arises solely because the Sub-Adviser serves as a sub-
adviser to a Sub-advised Series (``Non-Affiliated Sub-Adviser'').
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2. Applicants request an order to permit the Adviser, subject to
Board approval, to enter into investment sub-advisory agreements with
the Sub-Advisers (each, a ``Sub-Advisory Agreement'') and materially
amend such Sub-Advisory Agreements without obtaining the shareholder
approval required under section 15(a) of the Act and rule 18f-2 under
the Act.\3\ Applicants also seek an exemption from the Disclosure
Requirements to permit a Sub-advised Series to disclose (as both a
dollar amount and a percentage of the Sub-advised Series' net assets):
(a) The aggregate fees paid to the Adviser and
[[Page 36636]]
any Wholly-Owned Sub-Adviser; (b) the aggregate fees paid to Non-
Affiliated Sub-Advisers; and (c) the fee paid to each Affiliated Sub-
Adviser (collectively, ``Aggregate Fee Disclosure'').
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\3\ The requested relief will not extend to any sub-adviser,
other than a Wholly-Owned Sub-Adviser, who is an affiliated person,
as defined in section 2(a)(3) of the Act, of the Sub-advised Series,
the Trust or of the Adviser, other than by reason of serving as a
sub-adviser to one or more of the Sub-advised Series (``Affiliated
Sub-Adviser'').
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3. 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 provide for, among other safeguards,
appropriate disclosure to Sub-advised Series shareholders and
notification about sub-advisory changes and enhanced Board oversight to
protect the interests of the Sub-advised Series' shareholders.
4. 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
any rule thereunder, if such relief is necessary or appropriate in the
public interest and consistent with the protection of investors and
purposes fairly intended by the policy and provisions of the Act.
Applicants believe that the requested relief meets this standard
because, as further explained in the application, the Investment
Management Agreements will remain subject to shareholder approval while
the role of the Sub-Advisers is substantially equivalent to that of
individual portfolio managers, so that requiring shareholder approval
of Sub-Advisory Agreements would impose unnecessary delays and expenses
on the Sub-advised Series. Applicants believe that the requested relief
from the Disclosure Requirements meets this standard because it will
improve the Adviser's ability to negotiate fees paid to the Sub-
Advisers that are more advantageous for the Sub-advised Series.
For the Commission, by the Division of Investment Management,
under delegated authority.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-15954 Filed 7-26-19; 8:45 am]
BILLING CODE 8011-01-P
