Notice2021-20323
Point72 Employee Investment Fund, L.P. and Point72 Asset Management, L.P.
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 21, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 180 (Tuesday, September 21, 2021)</title>
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[Federal Register Volume 86, Number 180 (Tuesday, September 21, 2021)]
[Notices]
[Pages 52524-52529]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-20323]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34365A; 813-00393]
Point72 Employee Investment Fund, L.P. and Point72 Asset
Management, L.P.
September 15, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
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Notice of application for an order under sections 6(b) and 6(e) of
the Investment Company Act of 1940 (the ``Act'') granting an exemption
from all provisions of the Act and the rules and regulations
thereunder, except sections 9, 17, 30, and 36 through 53 of the Act,
and the rules and regulations thereunder (the ``Rules and
Regulations''). With respect to sections 17(a), (d), (e), (f), (g) and
(j) and 30(a), (b), (e), and (h) of the Act, and the Rules and
Regulations, and rule 38a-1 under the Act, the exemption is limited as
set forth in the application.
Summary of Application: Applicants request an order to exempt certain
limited partnerships, limited liability companies, business trusts or
other entities (``Funds'') formed for the benefit of eligible employees
of Point72 Asset Management, L.P. (``Point72'') and its affiliates from
certain provisions of the Act. Each series of a Fund will be an
``employees' securities company'' within the meaning of section
2(a)(13) of the Act.\1\
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\1\ The Commission issued a notice of application on August 26,
2021, Release No. IC-34365 (``Notice''). Due to a clerical error,
the Notice was not published in the Federal Register and, therefore,
the Commission is now publishing this notice in the Federal
Register.
Applicants: Point72 Employee Investment Fund, L.P. and Point72 Asset
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Management, L.P.
Filing Dates: The application was filed on September 28, 2018 and
amended on July 21, 2020, and June 16, 2021.
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 emailing the Commission's
Secretary at <a href="/cdn-cgi/l/email-protection#590a3c3a2b3c2d382b202a74163f3f303a3c192a3c3a773e362f"><span class="__cf_email__" data-cfemail="491a2c2a3b2c3d283b303a64062f2f202a2c093a2c2a672e263f">[email protected]</span></a> and serving applicants with a
copy of the request by email. Hearing requests should be received by
the Commission by 5:30 p.m. on October 12, 2021, 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 1940 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 emailing the Commission's Secretary at <a href="/cdn-cgi/l/email-protection#580b3d3b2a3d2c392a212b75173e3e313b3d182b3d3b763f372e"><span class="__cf_email__" data-cfemail="a3f0c6c0d1c6d7c2d1dad08eecc5c5cac0c6e3d0c6c08dc4ccd5">[email protected]</span></a>.
ADDRESSES: The Commission: <a href="/cdn-cgi/l/email-protection#580b3d3b2a3d2c392a212b75173e3e313b3d182b3d3b763f372e"><span class="__cf_email__" data-cfemail="5407313726312035262d27791b32323d3731142731377a333b22">[email protected]</span></a>. Applicants:
Jessica Forbes, Esq. <a href="/cdn-cgi/l/email-protection#6f250a1c1c060c0e4129001d0d0a1c2f091d060a0b091d0e0104410c0002"><span class="__cf_email__" data-cfemail="602a0513130903014e260f120205132006120905040612010e0b4e030f0d">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Bruce R. MacNeil, Senior Counsel, at
(202) 551-6817, or Nadya Roytblat, Assistant Director, 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 website by searching for the file number, or for an
applicant using the Company name box, at <a href="http://www.sec.gov/search/search.htm">http://www.sec.gov/search/search.htm</a> or by calling (202) 551-8090.
Applicants' Representations
1. Point72 Asset Management. L.P. and its ``affiliates,'' as
defined in rule 12b-2 under the Securities Exchange Act of 1934 (the
``Exchange Act'') (collectively, ``Point72,'' and each, a ``Point72
Entity''), have organized Point72 Employee Investment Fund, L.P., a
Delaware limited partnership (the ``Initial Partnership'') and will in
the future organize limited partnerships, limited liability companies,
business trusts or other entities (each a ``Future Fund'' and,
collectively with the Initial Partnership, the ``Funds'') as
``employees' securities companies,'' as defined in section 2(a)(13) of
the Act. The Funds are intended to provide investment opportunities
that are competitive with those at other investment management and
financial services firms and to facilitate the recruitment and
retention of high caliber professionals.
2. The Initial Partnership was formed on August 17, 2018 as a
Delaware limited partnership. Point72 Capital Management, LLC acts as
general partner to the Initial Partnership. Point72 serves as
investment adviser to the Initial Partnership. The Initial Partnership
currently invests substantially all of its assets in private investment
funds managed by Point72 (each, a ``Subsidiary Fund''). The investments
of the Initial Partnership and the Subsidiary Funds may include,
without limitation, equities, secured and unsecured debt, futures,
forward contracts, options, convertible bonds, derivative instruments,
swaps, currencies, commodities and pooled investment vehicles managed
by third parties.
3. A Future Fund may be structured as a domestic or offshore
limited or general partnership, limited liability company, corporation,
business trust or other entity. Point72 may also form parallel funds
organized under the laws of various jurisdictions in order to create
the same investment opportunities for Eligible Employees (defined
below) in other jurisdictions. Interests in a Fund may be issued in one
or more series, each of which corresponds to particular Fund
investments (each, a ``Series''). Each Series will be an ``employees'
securities company'' within the meaning of section 2(a)(13) of the Act.
A Future Fund may operate as a ``diversified'' or ``non-diversified''
vehicle within the meaning of the Act. The investment objectives and
policies may vary from one Future Fund to the next.
4. Point72 will control each Fund within the meaning of section
2(a)(9) of the Act. Each Fund has, or will have, a Point72 Entity
serving as a general partner, managing member or other such similar
entity that manages, operates and controls such Fund (a ``General
Partner''). The General Partner will be responsible for the overall
management of the Fund. The General Partner may appoint a Point72
Entity to serve as investment adviser (``Investment Adviser'') to a
Fund and delegate to the Investment Adviser the authority to make all
decisions regarding the acquisition, management and disposition of Fund
investments.
5. Each of the General Partner and the Investment Adviser will be
an investment adviser within the meaning of sections 9 and 36 of the
Act and subject to those sections. The Investment Adviser expects to be
paid a management fee for its services to a Fund. The General Partner
or Investment Adviser may receive a performance-based fee or allocation
(an ``Incentive Fee'') based on the net gains of the Fund's
investments, in addition to any amount allocable to the General
Partner's or Investment Adviser's capital contribution.\2\ Point72 will
not receive
[[Page 52525]]
any management fee or other compensation at both the Fund level and the
Underlying Fund (as defined below) level with respect to a Fund's
investment in an Underlying Fund (so as to avoid duplication).
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\2\ If a General Partner or Investment Adviser is registered
under the Investment Advisers Act of 1940 (``Advisers Act''), the
Incentive Fee payable to it by a Fund will be pursuant to an
arrangement that complies with rule 205-3 under the Advisers Act.
All or a portion of the Incentive Fee may be paid to individuals who
are officers, employees or equity holders of the Investment Adviser
or its affiliates. If the General Partner or Investment Adviser is
not required to register under the Advisers Act, the Incentive Fee
payable to it will comply with section 205(b)(3) of the Advisers Act
(with such Fund treated as though it were a business development
company solely for the purpose of that section).
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6. If the General Partner elects to recommend that a Fund enter
into any side-by-side investment with an unaffiliated entity, the
General Partner will be permitted to engage as sub-investment adviser
the unaffiliated entity (an ``Unaffiliated Subadviser''), which will be
responsible for the management of such side-by-side investment.
7. Interests in the Funds will be offered in a transaction exempt
from registration under section 4(a)(2) of the Securities Act of 1933,
as amended (the ``1933 Act''), or Regulation D or Regulation S
promulgated thereunder, and will be sold only to Qualified
Participants, which term refers to: (i) Eligible Employees (as defined
below); (ii) Eligible Family Members (as defined below); (iii) Eligible
Investment Vehicles (as defined below); and (iv) Point72. Prior to
offering interests in a Fund to a Qualified Participant, Point72 must
reasonably believe that the Eligible Employee or Eligible Family Member
will be capable of understanding and evaluating the merits and risks of
participation in a Fund and that each such individual is able to bear
the economic risk of such participation and afford a complete loss of
his or her investments in the Fund.
8. The term ``Eligible Employees'' is defined as current or former
employees, officers and directors of Point72 (including people in
administration, marketing and operations) and current consultants
engaged on retainer to provide services and professional expertise on
an ongoing basis to Point72 (``Consultants'').\3\ The term ``Eligible
Family Members'' is defined as spouses, parents, children, spouses of
children, brothers, sisters and grandchildren of Eligible Employees,
including step and adoptive relationships.\4\ The term ``Eligible
Investment Vehicles'' is defined as: (i) A trust of which a trustee,
grantor and/or beneficiary is an Eligible Employee; \5\ (ii) a
partnership, corporation, or other entity controlled by an Eligible
Employee; and (iii) a trust or other entity established solely for the
benefit of Eligible Employees and/or Eligible Family Members. Each
Eligible Employee and Eligible Family Member will be an Accredited
Investor under rule 501(a)(5), 501(a)(6), 501(a)(10) or 501(a)(11) of
Regulation D under the 1933 Act.
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\3\ In order to participate in the Funds, Consultants must be
currently engaged by Point72 and will be required to be
sophisticated investors who qualify as accredited investors
(``Accredited Investors'') under rule 501(a) of Regulation D. If a
Consultant is an entity (such as, for example, a law firm or
consulting firm), and the Consultant proposes to invest in the Fund
through a partnership, corporation or other entity that is
controlled by the Consultant, the individual participants in such
partnership, corporation or other entity will be limited to senior
level employees, members or partners of the Consultant who are
responsible for the activities of the Consultant or the activities
of the Consultant in relation to Point72 and will be required to
qualify as Accredited Investors. In addition, such entities will be
limited to businesses controlled by individuals who have levels of
expertise and sophistication in the area of investments in
securities that are comparable to other Eligible Employees who are
employees, officers or directors of Point72 and who have an interest
in maintaining an ongoing relationship with Point72. The individuals
participating through such entities will belong to that class of
persons who will have access to the directors and officers of the
General Partner and its affiliates and/or the officers of Point72
responsible for making investments for the Funds similar to the
access afforded other Eligible Employees who are employees, officers
or directors of Point72.
\4\ In order to ensure that a close nexus between the Qualified
Participants and Point72 is maintained, the terms of each governing
document for a Fund will provide that any Eligible Family Member
participating in such Fund (either through direct beneficial
ownership of an interest or as an indirect beneficial owner through
an Eligible Investment Vehicle) cannot, in any event, be more than
two generations removed from an Eligible Employee.
\5\ The inclusion of partnerships, corporations, or other
entities controlled by an Eligible Employee in the definition of
``Eligible Investment Vehicle'' is intended to enable Eligible
Employees to make investments in the Funds through personal
investment vehicles for the purpose of personal and family
investment and estate planning objectives.
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9. A Qualified Participant may purchase an interest through an
Eligible Investment Vehicle only if either (i) the investment vehicle
is an accredited investor, as defined in rule 501(a) of Regulation D
under the 1933 Act or (ii) the Eligible Employee is a settlor \6\ and
principal investment decision-maker with respect to the investment
vehicle.
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\6\ If such investment vehicle is an entity other than a trust,
the term ``settlor'' will be read to mean a person who created such
vehicle, alone or together with other eligible individuals, and
contributed funds to such vehicle.
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10. The terms of each Fund will be fully disclosed to each
Qualified Participant (or person making the investment on behalf of the
Qualified Participant) at the time the Qualified Participant is invited
to participate in the Fund. The Fund will send its investors an annual
financial statement with respect to those investments in which the
investor had an interest within 120 days after the end of each fiscal
year of the Fund, or as soon as practicable after the end of the Fund's
fiscal year. The financial statement will be audited \7\ by independent
certified public accountants. In addition, as soon as practicable after
the end of each calendar year, a report will be sent to each investor
setting forth the information with respect such investor's share of
income, gains, losses, credits, and other items for U.S. federal and
state income tax purposes resulting from the operation of the Fund
during that year.
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\7\ ``Audit'' has the meaning defined in rule 1-02(d) of
Regulation S-X.
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11. Interests in a Fund will not be transferable except with the
express consent of the General Partner, and then only to a Qualified
Participant. No sales load or similar fee of any kind will be charged
in connection with the sale of interests in a Fund.
12. A Fund may or may not offer investors the right to redeem their
interests at such times and subject to such conditions as are set forth
in the governing documents of the Fund. A General Partner may have the
right, but not the obligation, to repurchase, cancel, mandatorily
redeem, cancel or transfer to another Qualified Participant the
interest of (i) an Eligible Employee who ceases to be an employee,
officer, director or current consultant of any Point72 Entity for any
reason or (ii) any Eligible Family Member of any person described in
clause (i). The governing documents for each Fund will describe, if
applicable, the amount that an investor would receive upon repurchase,
cancellation, redemption or transfer of its interest.
13. The Initial Partnership currently invests, and a Future Fund
may invest in Subsidiary Funds. The Initial Partnership and a Future
Fund may also in the future invest in one or more pooled investment
vehicles (including private funds relying on sections 3(c)(1) and
3(c)(7) under the Act and funds relying on section 3(c)(5) under the
Act) managed by third parties (each a ``Third Party Underlying Fund,''
and together with the Subsidiary Funds, the ``Underlying Funds'').\8\
One Fund may also invest in another Fund in a ``master-feeder'' or
similar structure.\9\ A Fund may also be operated as a parallel
[[Page 52526]]
fund making investments on a side-by-side basis with Underlying Funds.
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\8\ Applicants are not requesting any exemption from any
provision of the Act or any rule thereunder that may govern a Fund's
eligibility to invest in an Underlying Fund relying on section
3(c)(1) or 3(c)(7) of the Act or an Underlying Fund's status under
the Act.
\9\ For example, a Fund established under non-U.S. law may be
organized primarily for non-U.S. Eligible Employees that would
invest in a Fund established under U.S. law primarily with U.S.
resident Eligible Employees in order to more efficiently address
U.S. or non-U.S. tax issues.
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14. A Fund may co-invest in a portfolio company (or a pooled
investment vehicle) with a Point72 Entity or with an investment fund or
separate account organized primarily for the benefit of investors who
are not affiliated with Point72 (``Third Party Investors) and over
which a Point72 Entity exercises investment discretion or which is
sponsored by a Point72 Entity (a ``Point72 Third Party Fund''). Co-
investments with a Point72 Entity or with a Point72 Third Party Fund in
a transaction in which Point72's investment was made pursuant to a
contractual obligation to a Point72 Third Party Fund will not be
subject to Condition 3 below. All other side-by-side investments held
by Point72 entities will be subject to Condition 3.
15. If Point72 makes loans to a Fund, the lender will be entitled
to receive interest, provided that the interest rate will be no less
favorable to the borrower than the rate obtainable on an arm's length
basis. The possibility of any such borrowings, as well as the terms
thereof, would be disclosed to Qualified Participants prior to their
investment in a Fund. Any indebtedness of the Fund will be the debt of
the Fund and without recourse to the investors. A Fund will not borrow
from any person if the borrowing would cause any person not named in
section 2(a)(13) of the Act to own securities of the Fund (other than
short-term paper). A Fund will not lend any funds to a Point72 Entity.
16. A Fund will not acquire any security issued by a registered
investment company if immediately after such acquisition such Fund will
own more than 3% of the outstanding voting stock of the registered
investment company.
Applicants' Legal Analysis
1. Section 6(b) of the Act provides that the Commission shall
exempt employees' securities companies from the provisions of the Act
if and to the extent that such exemption is consistent with the
protection of investors. Section 6(b) provides that the Commission will
consider, in determining the provisions of the Act from which the
company should be exempt, the company's form of organization and
capital structure, the persons owning and controlling its securities,
the price of the company's securities and the amount of any sales load,
how the company's funds are invested, and the relationship between the
company and the issuers of the securities in which it invests. Section
2(a)(13) defines an employees' securities company, in relevant part, as
any investment company all of whose securities (other than short-term
paper) are beneficially owned (a) by current or former employees, or
persons on retainer, of one or more affiliated employers, (b) by
immediate family members of such persons, or (c) by such employer or
employers together with any of the persons in (a) or (b).
2. Section 7 of the Act generally prohibits investment companies
that are not registered under section 8 of the Act from selling or
redeeming their securities. Section 6(e) of the Act provides that in
connection with any order exempting an investment company from any
provision of section 7, certain specified provisions of the Act shall
be applicable to such company, and to other persons in their
transactions and relations with such company, as though such company
were registered under the Act, if the Commission deems it necessary and
appropriate in the public interest or for the protection of investors.
Applicants submit that it would be 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 for the Commission
to issue an order under sections 6(b) and 6(e) of the Act exempting the
Funds from all provisions of the Act and the rules and regulations
thereunder, except sections 9, 17, 30, and 36 through 53 of the Act,
and the Rules and Regulations. With respect to sections 17(a), (d),
(e), (f), (g) and (j) and 30(a), (b), (e), and (h) of the Act, and the
Rules and Regulations, and rule 38a-1 under the Act, Applicants request
a limited exemption as set forth in the application.
3. Section 17(a) of the Act generally prohibits any affiliated
person of a registered investment company, or any affiliated person of
such a person, acting as principal, from knowingly selling or
purchasing any security or other property to or from the investment
company. Applicants request an exemption from section 17(a) to the
extent necessary to (a) permit a Point72 Entity or a Point72 Third
Party Fund (or any affiliated person of such Point72 Entity or Point72
Third Party Fund), or any affiliated person of a Fund (or affiliated
persons of such persons), acting as principal, to engage in any
transaction directly or indirectly with any Fund or any company
controlled by such Fund; and (b) to permit a Fund to invest or engage
in any transaction with any Point72 Entity, acting as principal, (i) in
which such Fund, any company controlled by such Fund or any Point72
Entity or any Point72 Third Party Fund has invested or will invest, or
(ii) with which such Fund, any company controlled by such Fund or any
Point72 Entity or Point72 Third Party Fund is or will become otherwise
affiliated; and (c) permit a Third Party Investor, acting as a
principal, to engage in any transaction directly or indirectly with a
Fund or any company controlled by such Fund. The transactions to which
any Fund is a party will be effected only after a determination by the
General Partner that the requirements of Conditions 1, 2 and 6 (set
forth below) have been satisfied. Applicants, on behalf of the Funds,
represent that any transactions otherwise subject to section 17(a) of
the Act, for which exemptive relief has not been requested, would
require approval of the Commission.
4. Applicants submit that an exemption from section 17(a) is
consistent with the policy of each Fund and the protection of
investors. Applicants state that the investors in each Fund will have
been fully informed of the possible extent of such Fund's dealings with
Point72 and of the potential conflicts of interest that may exist.
Applicants also state that, as professionals employed in the investment
management business, or in administrative, financial, accounting,
legal, sales, marketing, risk management or operational activities
related thereto, the investors will be able to understand and evaluate
the attendant risks. Applicants assert that the community of interest
among the investors in each Fund, on the one hand, and Point72, on the
other hand, is the best insurance against any risk of abuse. Applicants
acknowledge that the requested relief will not extend to any
transactions between a Fund and an Unaffiliated Subadviser or an
affiliated person of the Unaffiliated Subadviser, or between a Fund and
any person who is not an employee, officer or director of Point72 or is
an entity outside of Point72 and is an affiliated person of the Fund as
defined in section 2(a)(3)(E) of the Act (``Advisory Person'') or any
affiliated person of such person.
5. Section 17(d) of the Act and rule 17d-1 thereunder prohibit any
affiliated person or principal underwriter of a registered investment
company, or any affiliated person of such a person or principal
underwriter, acting as principal, from participating in any joint
arrangement with the company unless authorized by the Commission.
Applicants request an exemption from section 17(d) and rule 17d-1 to
the extent necessary to permit affiliated persons of each Fund, or
affiliated persons of any of such persons, to participate in, or effect
any transaction in connection with, any joint enterprise
[[Page 52527]]
or other joint arrangement or profit-sharing plan in which such Fund or
a company controlled by such Fund is a participant. The exemption would
permit, among other things, co-investments by each Fund, Point72 Third
Party Fund and individual members or employees, officers, directors or
consultants of Point72 making their own individual investment decisions
apart from Point72. Applicants acknowledge that the requested relief
will not extend to any transaction in which an Unaffiliated Subadviser
or an Advisory Person or an affiliated person of either has an
interest.
6. Applicants assert that compliance with section 17(d) would
prevent each Fund from achieving a principal purpose, which is to
provide a vehicle for Eligible Employees (and other permitted
investors) to co-invest with Point72 or, to the extent permitted by the
terms of the Fund, with other employees, officers, directors or
consultants of Point72 or Point72 Entities or with a Point72 Third
Party Fund. Applicants further contend that compliance with section
17(d) would cause a Fund to forego investment opportunities simply
because an investor in such Fund or other affiliated person of such
Fund also had, or contemplated making, a similar investment. Applicants
submit that it is likely that suitable investments will be brought to
the attention of a Fund because of its affiliation with Point72's large
capital resources and investment management experience, and that
attractive investment opportunities of the types considered by a Fund
often require each participant in the transaction to make funds
available in an amount that may be substantially greater than those the
Fund would independently be able to provide. Applicants contend that,
as a result, a Fund's access to such opportunities may have to be
through co-investment with other persons, including its affiliates.
Applicants assert that the flexibility to structure co-investments and
joint investments will not involve abuses of the type section 17(d) and
rule 17d-1 were designed to prevent. In addition, Applicants represent
that any transactions otherwise subject to section 17(d) of the Act and
rule 17d-1 thereunder, for which exemptive relief has not been
requested, would require approval by the Commission.
7. Co-investments with a Point72 Entity or with a Point72 Third
Party Fund in a transaction in which Point72's investment was made
pursuant to a contractual obligation to a Point72 Third Party Fund will
not be subject to Condition 3 below. Applicants believe that the
interests of the Eligible Employees participating in a Fund will be
adequately protected in such situations because Point72 is likely to
invest a portion of its own capital in Point72 Third Party Fund
investments, either through such Point72 Third Party Fund or on a side-
by-side basis (which Point72 investments will be subject to
substantially the same terms as those applicable to such Point72 Third
Party Fund, except as otherwise disclosed in the governing documents of
the relevant Fund). Applicants assert that if Condition 3 were to apply
to Point72's investment in these situations, Point72 Third Party Fund
would be indirectly burdened by the requirements of Condition 3.
Applicants further assert that the relationship of a Fund to a Point72
Third Party Fund is fundamentally different from such Fund's
relationship to Point72. Applicants contend that the focus of, and the
rationale for, the protections contained in the requested relief are to
protect the Funds from any overreaching by Point72 in the employer/
employee context, whereas the same concerns are not present with
respect to the Funds vis-[agrave]-vis the investors in a Point72 Third
Party Fund.
8. Section 17(e) of the Act and rule 17e-1 thereunder limit the
compensation an affiliated person may receive when acting as agent or
broker for a registered investment company. Applicants request an
exemption from section 17(e) to permit a Point72 Entity (including the
General Partner) that acts as an agent or broker to receive placement
fees, advisory fees, or other compensation from a Fund in connection
with the purchase or sale by the Fund of securities, provided that the
fees or other compensation are deemed ``usual and customary.''
Applicants state that for purposes of the application, fees or other
compensation that are charged or received by a Point72 Entity will be
deemed to be ``usual and customary'' only if (i) the Fund is purchasing
or selling securities alongside other unaffiliated third parties,
Point72 Third Party Funds or Third Party Investors who are also
similarly purchasing or selling securities, (ii) the fees or other
compensation being charged to the Fund are also being charged to the
unaffiliated third parties, Point72 Third Party Funds or Third Party
Investors, and (iii) the amount of securities being purchased or sold
by the Fund does not exceed 50% of the total amount of securities being
purchased or sold by the Fund and the unaffiliated third parties,
Point72 Third Party Funds or Third Party Investors. Applicants state
that compliance with section 17(e) would prevent a Fund from
participating in a transaction in which Point72, for other business
reasons, does not wish to appear as if the Fund is being treated in a
more favorable manner (by being charged lower fees) than other third
parties also participating in the transaction. Applicants assert that
the concerns of overreaching and abuse that section 17(e) and rule 17e-
1 were designed to prevent are alleviated by the conditions that ensure
that (i) the fees or other compensation paid by a Fund to a Point72
Entity are those negotiated at arm's length with unaffiliated third
parties and (ii) the unaffiliated third parties have as great or
greater interest as the Fund in the transactions as a whole.
9. Rule 17e-1(b) under the Act requires that a majority of
directors who are not ``interested persons'' (as defined in section
2(a)(19) of the Act) take actions and make approvals regarding
commissions, fees, or other remuneration. Rule 17e-1(c) under the Act
requires each Fund to comply with the fund governance standards defined
in rule 0-1(a)(7) under the Act. Applicants request an exemption from
rule 17e-1(b) to the extent necessary to permit each Fund to comply
with rule 17e-1(b) without the necessity of having a majority of the
directors of the Fund who are not ``interested persons'' take such
actions and make such approvals as are set forth in rule 17(e)-1(b).
Applicants note that in the event that all the directors of the General
Partner or other governing body of the General Partner will be
affiliated persons, a Fund could not comply with rule 17(e)-1(b)
without the relief requested. Applicants represent that in such an
event, the Fund will comply with rule 17e-1(b) by having a majority of
the directors (or members of a comparable body) of the Fund or its
General Partner take such actions and make such approvals as are set
forth in rule 17e-1(b). Applicants state that each Fund will otherwise
comply with all other requirements of rule 17e-1(b). Applicants further
request an exemption from rule 17(e)-1(c) to the extent necessary to
permit each Fund to comply with rule 17e-1 without the necessity of
having a majority of the directors of the Fund be ``disinterested
persons'' as set forth in rule 17e-1(c). Applicants note that in the
event that all the directors of the General Partner will be affiliated
persons, a Fund could not comply with rule 17e-1 without the relief
requested. Applicants represent
[[Page 52528]]
that each Fund will otherwise comply with all other requirements of
rule 17e-1(c).
10. Section 17(f) of the Act provides that the securities and
similar investments of a registered management investment company must
be placed in the custody of a bank, a member of a national securities
exchange or the company itself in accordance with Commission rules.
Rule 17f-2 under the Act specifies the requirements that must be
satisfied for a registered management investment company to act as a
custodian of its own investments. Applicants request relief from
section 17(f) and rule 17f-2 to permit the following exceptions from
the requirements of rule 17f-2: (a) A Fund's investments may be kept in
the locked files of the General Partner or the Investment Adviser for
purposes of paragraph (b) of the rule; (b) for purposes of paragraph
(d) of the rule, (i) employees of Point72 or its affiliates (including
the General Partner) will be deemed to be employees of the Funds, (ii)
officers or managers of the General Partner of a Fund will be deemed to
be officers of the Fund and (iii) the General Partner of a Fund or its
board of directors will be deemed to be the board of directors of the
Fund; and (c) in place of the verification procedure under rule 17f-
2(f), verification will be effected quarterly by two employees of the
General Partner who are also employees of Point72 responsible for the
administrative, legal and/or compliance functions for funds managed or
sponsored by Point72 and who have specific knowledge of custody
requirements, policies and procedures of the Funds. Applicants expect
that, with respect to certain Funds, many of their investments will be
evidenced only by partnership agreements, participation agreements or
similar documents, rather than by negotiable certificates that could be
misappropriated. Applicants assert that for such a Fund, these
instruments are most suitably kept in the files of the General Partner
or its Investment Adviser, where they can be referred to as necessary.
Applicants represent that they will comply with all other provisions of
rule 17f-2, including the recordkeeping requirements of paragraph (e).
11. Section 17(g) of the Act and rule 17g-1 thereunder generally
require the bonding of officers and employees of a registered
investment company who have access to its securities or funds. Rule
17g-1 requires that a majority of directors who are not ``interested
persons'' of a registered investment company take certain actions and
give certain approvals relating to fidelity bonding. Among other
things, the rule also requires that the board of directors of an
investment company relying on the rule satisfy the fund governance
standards defined in rule 0-1(a)(7). Applicants request an exemption
from rule 17g-1 to the extent necessary to permit a Fund to comply with
rule 17g-1 by having the General Partner of the Fund take such actions
and make such approvals as are set forth in rule 17g-1. Applicants
state that in the event all the directors of the General Partner or
other governing body of the General Partner will be affiliated persons,
a Fund could not comply with rule 17g-1 without the requested relief.
Applicants also request an exemption from the requirements of rule 17g-
1(g) and (h) relating to the filing of copies of fidelity bonds and
related information with the Commission and the provision of notices to
the board of directors and from the requirements of rule 17g-1(j)(3).
Applicants contend that the filing requirements are burdensome and
unnecessary as applied to the Funds and represent that the General
Partner of each Fund will designate a person to maintain the records
otherwise required to be filed with the Commission under rule 17g-1(g).
Applicants further contend that the notices otherwise required to be
given to the board of directors will be unnecessary as the Funds
typically will not have boards of directors. Applicants represent that
each Fund will comply with all other requirements of rule 17g-1.
12. Section 17(j) of the Act and rule 17j-1 require that every
registered investment company adopt a written code of ethics that
contains provisions reasonably necessary to prevent ``access persons''
from violating the anti-fraud provisions of the rule. Under rule 17j-1,
the investment company's access persons must report to the investment
company with respect to transactions in any security in which the
access person has, or by reason of the transaction acquires, any direct
or indirect beneficial ownership in such security. Applicants request
an exemption from section 17(j) and the provisions of rule 17j-1
(except for the anti-fraud provisions of rule 17j-1(b)) because they
assert that these requirements are burdensome and unnecessary as
applied to the Funds. The relief requested will extend only to entities
within Point72 and is not requested with respect to any Unaffiliated
Subadviser or Advisory Person.
13. Sections 30(a), (b) and (e) of the Act and the rules thereunder
generally require that registered investment companies prepare and file
with the Commission and mail to their shareholders certain periodic
reports and financial statements. Applicants contend that the forms
prescribed by the Commission for periodic reports have little relevance
to a Fund and would entail administrative and legal costs that outweigh
any benefit to the investors in such Fund. Applicants request relief
under sections 30(a), (b) and (e) to the extent necessary to permit
each Fund to report annually to its investors in the manner described
in the application. Section 30(h) of the Act requires that every
officer, director, member of an advisory board, investment adviser or
affiliated person of an investment adviser of a closed-end investment
company be subject to the same duties and liabilities as those imposed
upon similar classes of persons under section 16(a) of the Exchange
Act. Applicants request an exemption from section 30(h) of the Act to
the extent necessary to exempt the General Partner of each Fund,
directors and officers of the General Partner and any other persons who
may be deemed members of an advisory board or investment adviser (and
affiliated persons thereof) of such Fund from filing Forms 3, 4, and 5
with respect to their ownership of interests in such Fund under section
16 of the Exchange Act. Applicants assert that, because there will be
no trading market and the transfers of interests are severely
restricted, these filings are unnecessary for the protection of
investors and burdensome to those required to make them.
14. Rule 38a-1 requires registered investment companies to adopt,
implement and periodically review written policies reasonably designed
to prevent violation of the federal securities laws and to appoint a
chief compliance officer. Each Fund will comply will rule 38a-1(a), (c)
and (d), except that: (i) To the extent the Fund does not have a board
of directors, the board of directors or other governing body of the
General Partner will fulfill the responsibilities assigned to the
Fund's board of directors under the rule; (ii) to the extent the board
of directors or other governing body of the General Partner does not
have any disinterested members, approval by a majority of the
disinterested board members required by rule 38a-1 will not be
obtained; and (iii) to the extent the board of directors or other
governing body of the General Partner does not have any independent
members, the Funds will comply with the requirement in rule 38a-
1(a)(4)(iv) that the chief compliance officer meet with the independent
directors by having the chief compliance officer
[[Page 52529]]
meet with the board of directors or other governing body of the General
Partner as constituted. Applicants represent that each Fund has adopted
written policies and procedures reasonably designed to prevent
violations of the terms and conditions of the application, has
appointed a chief compliance officer and is otherwise in compliance
with the terms and conditions of the application.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. Each proposed transaction otherwise prohibited by section 17(a)
or section 17(d) of the Act and rule 17d-1 thereunder to which a Fund
is a party (the ``Section 17 Transactions'') will be effected only if
the General Partner determines that: (a) The terms of the Section 17
Transaction, including the consideration to be paid or received, are
fair and reasonable to the Fund and the investors and do not involve
overreaching of such Fund or its investors on the part of any person
concerned; and (b) the Section 17 Transaction is consistent with the
interests of the Fund and the investors, such Fund's organizational
documents and such Fund's reports to its investors. In addition, the
General Partner will record and preserve a description of all Section
17 Transactions, the General Partner's findings, the information or
materials upon which the General Partner's findings are based and the
basis for such findings. All such records will be maintained for the
life of the Fund and at least six years thereafter, and will be subject
to examination by the Commission and its staff.\10\
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\10\ Each Fund will preserve the accounts, books and other
documents required to be maintained in an easily accessible place
for the first two years.
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2. The General Partner will adopt, and periodically review and
update, procedures designed to ensure that reasonable inquiry is made,
prior to the consummation of any Section 17 Transaction, with respect
to the possible involvement in the transaction of any affiliated person
or promoter of or principal underwriter for such Fund, or any
affiliated person of such a person, promoter or principal underwriter.
3. The General Partner will not cause the funds of any Fund to be
invested in any investment in which a ``Co-Investor'' (as defined
below) has acquired or proposes to acquire the same class of securities
of the same issuer, where the investment involves a joint enterprise or
other joint arrangement within the meaning of rule 17d-1 in which the
Fund and a Co-Investor are participants, unless prior to such
investment any such Co-Investor agrees, prior to disposing of all or
part of its investment, to (a) give the General Partner sufficient, but
not less than one day's, notice of its intent to dispose of its
investment; and (b) refrain from disposing of its investment unless the
Fund has the opportunity to dispose of the Fund's investment prior to
or concurrently with, on the same terms as, and on a pro rata basis
with, the Co-Investor. The term ``Co-Investor'' with respect to any
Fund means any person who is: (a) An ``affiliated person'' (as defined
in section 2(a)(3) of the Act) of the Fund (other than a Point72 Third
Party Fund); (b) Point72 (except when a Point72 Entity co-invests with
a Fund and a Point72 Third Party Fund pursuant to a contractual
obligation to the Point72 Third Party Fund); (c) an officer or director
of a Point72 Entity; or (d) an entity (other than a Point72 Third Party
Fund) in which Point72 acts as a general partner or has a similar
capacity to control the sale or other disposition of the entity's
securities. The restrictions contained in this condition, however,
shall not be deemed to limit or prevent the disposition of an
investment by a Co-Investor: (a) To its direct or indirect wholly-owned
subsidiary, to any company (a ``parent'') of which the Co-Investor is a
direct or indirect wholly-owned subsidiary or to a direct or indirect
wholly-owned subsidiary of its parent; (b) to immediate family members
of the Co-Investor, including step or adoptive relationships, or a
trust or other investment vehicle established for any Co-Investor or
any such family member; or (c) when the investment is comprised of
securities that are (i) listed on a national securities exchange
registered under section 6 of the Exchange Act; (ii) NMS stocks,
pursuant to section 11A(a)(2) of the Exchange Act and rule 600(b) of
Regulation NMS thereunder; (iii) government securities as defined in
section 2(a)(16) of the Act; (iv) ``Eligible Securities'' as defined in
rule 2a-7 under the Act, or (v) listed or traded on any foreign
securities exchange or board of trade that satisfies regulatory
requirements under the law of the jurisdiction in which such foreign
securities exchange or board of trade is organized similar to those
that apply to a national securities exchange or a national market
system for securities.
4. Each Fund and its General Partner will maintain and preserve,
for the life of such Fund and at least six years thereafter, such
accounts, books and other documents as constitute the record forming
the basis for the audited financial statements that are to be provided
to the investors in such Fund, and each annual report of such Fund
required to be sent to such investors, and agree that all such records
will be subject to examination by the Commission and its staff.\11\
---------------------------------------------------------------------------
\11\ Each Fund will preserve the accounts, books and other
documents required to be maintained in an easily accessible place
for the first two years.
---------------------------------------------------------------------------
5. Within 120 days after the end of the fiscal year of each Fund,
or as soon as practicable thereafter, the General Partner of each Fund
will send to each investor in such Fund who had an interest in any
capital account of the Fund, at any time during the fiscal year then
ended, Fund financial statements audited by the Fund's independent
accountants, except in the case of a Fund formed to make a single
portfolio investment. In such cases, financial statements will be
unaudited, but each investor will receive financial statements of the
single portfolio investment audited by such entity's independent
accountants. At the end of each fiscal year and at other times as
necessary in accordance with customary practice, the General Partner
will make a valuation or cause a valuation to be made of all of the
assets of the Fund as of the fiscal year end. In addition, as soon as
practicable after the end of each tax year of a Fund, the General
Partner of such Fund will send a report to each person who was an
investor in such Fund at any time during the fiscal year then ended,
setting forth such tax information as shall be necessary for the
preparation by the investor of his, her or its U.S. federal and state
income tax returns and a report of the investment activities of the
Fund during that fiscal year.
6. If a Fund makes purchases or sales from or to an entity
affiliated with the Fund by reason of an officer, director or employee
of Point72 (a) serving as an officer, director, general partner or
investment adviser of the entity, or (b) having a 5% or more investment
in the entity, such individual will not participate in the Fund's
determination of whether or not to effect the purchase or sale.
For the Commission, by the Division of Investment Management,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-20323 Filed 9-20-21; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on September 21, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.