Notice2022-00113
Fairway Private Equity & Venture Capital Opportunities Fund and Fairway Capital Management, LLC
Primary source
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Published
January 7, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 5 (Friday, January 7, 2022)</title>
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[Federal Register Volume 87, Number 5 (Friday, January 7, 2022)]
[Notices]
[Pages 995-997]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-00113]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34462; 812-15257]
Fairway Private Equity & Venture Capital Opportunities Fund and
Fairway Capital Management, LLC
January 4, 2022.
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 (the ``Act'') for an exemption from sections
18(a)(2), 18(c) and 18(i) of the Act, and for an order pursuant to
section 17(d) of the Act and rule 17d-1 under the Act.
Summary of Application: Applicants request an order to permit certain
registered closed-end management investment companies to issue multiple
classes of shares of beneficial interest with varying sales loads and
to impose asset-based distribution and/or service fees.
Applicants: Fairway Private Equity & Venture Capital Opportunities
Fund (the ``Initial Fund'') and Fairway Capital Management, LLC (the
``Adviser'').
Filing Dates: The application was filed on August 16, 2021, and
amended on November 24, 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#e2b1878190879683909b91cfad84848b8187a2918781cc858d94"><span class="__cf_email__" data-cfemail="580b3d3b2a3d2c392a212b75173e3e313b3d182b3d3b763f372e">[email protected]</span></a> and serving Applicants with a
copy of the request email. Hearing requests should be received by the
Commission by 5:30 p.m. on January 31, 2022, 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 emailing the
Commission's Secretary.
ADDRESSES: The Commission: <a href="/cdn-cgi/l/email-protection#3c6f595f4e59485d4e454f11735a5a555f597c4f595f125b534a"><span class="__cf_email__" data-cfemail="da89bfb9a8bfaebba8a3a9f795bcbcb3b9bf9aa9bfb9f4bdb5ac">[email protected]</span></a>. Applicants:
<a href="/cdn-cgi/l/email-protection#274055424048555e094346514e546755485742544055465e0944484a"><span class="__cf_email__" data-cfemail="0d6a7f686a627f7423696c7b647e4d7f627d687e6a7f6c74236e6260">[email protected]</span></a>; <a href="/cdn-cgi/l/email-protection#96f8f7e2fef7f8b8e5f9fbf9f1fff3d6e4f9e6f3e5f1e4f7efb8f5f9fb"><span class="__cf_email__" data-cfemail="2947485d414847075a4644464e404c695b46594c5a4e5b4850074a4644">[email protected]</span></a>; and
<a href="/cdn-cgi/l/email-protection#48030b29242429202926082e29213a3f29312b293825662b2725"><span class="__cf_email__" data-cfemail="0a41496b66666b626b644a6c6b63787d6b73696b7a6724696567">[email protected]</span></a>.
FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202)
551-6819 or Lisa Reid Ragen, 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 website by searching for the file number, or for an
applicant using the Company name box, at <a href="https://www.sec.gov/search/search.htm">https://www.sec.gov/search/search.htm</a> or by calling (202) 551-8090.
Applicants' Representations
1. The Initial Fund is a Delaware statutory trust that is
registered under the Act as a non-diversified, closed-end management
investment company. The Initial Fund's investment objective is to
generate long-term capital appreciation.
2. The Adviser, a Delaware limited liability company, is registered
as an investment adviser under the Investment Advisers Act of 1940 (the
``Advisers Act''). The Adviser will serve as investment adviser to the
Initial Fund.
3. Applicants seek an order to permit the Initial Fund to issue
multiple classes of shares of beneficial interest with varying sales
loads and to impose asset-based distribution and/or service fees and
early repurchase fees.
4. Applicants request that the order also apply to any continuously
offered registered closed-end management investment company that has
been previously organized or that may be organized in the future for
which the Adviser, or any entity controlling, controlled by, or under
common control with the Adviser, or any successor in interest to any
such entity,\1\ acts as investment adviser and which provides periodic
liquidity with respect to its shares pursuant to rule 13e-4 under the
Securities Exchange Act of 1934 (each, a ``Future Fund'' and together
with the Initial Fund, the ``Funds'').\2\
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\1\ A successor in interest is limited to an entity that results
from a reorganization into another jurisdiction or a change in the
type of business organization.
\2\ Any Fund relying on this relief in the future will do so in
compliance with the terms and conditions of the application.
Applicants represent that each entity presently intending to rely on
the requested relief is listed as an applicant.
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5. The Initial Fund will initially will register two classes of
shares, ``Class A Shares'' and ``Class I Shares.'' Shares of the
Initial Fund will be sold only to persons who are ``accredited
investors,'' as defined in Regulation D under the Securities Act of
1933, and ``qualified clients,'' as defined in the Advisers Act. The
Funds will offer their Shares continuously at a price based on net
asset value. Shares of the Funds will not be listed on any securities
exchange nor quoted on any quotation medium. The Funds do not expect
there to be a secondary trading market for their shares.
6. Applicants state that if the Initial Fund's initial registration
statement is declared effective prior to receipt of the requested
relief, the Initial Fund will only offer one class of shares, Class I
Shares, until receipt of the requested relief. Each of Class A Shares
and Class I Shares will have its own fee and expense structure.
Additional offerings by any Fund relying on the order may be on a
private placement or public offering basis.
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7. Applicants state that, from time to time, the Initial Fund may
create additional classes of shares, the terms of which may differ
between Class A Shares and Class I Shares pursuant to and in compliance
with rule 18f-3 under the Act.
8. Applicants state that shares of a Fund may be subject to an
early repurchase fee (``Early Repurchase Fee'') at a rate of no greater
than 2% of the shareholder's repurchase proceeds if the interval
between the date of purchase of the shares and the valuation date with
respect to the repurchase of those shares is less than one year.\3\ Any
Early Repurchase Fee will apply equally to all classes of shares of a
Fund, in compliance with section 18 of the Act and rule 18f-3
thereunder. To the extent a Fund determines to waive, impose scheduled
variations of, or eliminate any Early Repurchase Fee, it will do so in
compliance with the requirements of rule 22d-1 under the Act as if the
Early Repurchase Fee were a CDSL and as if the Fund were an open-end
investment company and the Fund's waiver of, scheduled variation in, or
elimination of, any such Early Repurchase Fee will apply uniformly to
all shareholders of the Fund regardless of class. Applicants state that
the Initial Fund intends to impose an Early Repurchase Fee of 2%.
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\3\ Applicants state that an Early Repurchase Fee charged by a
Fund is not the same as a contingent deferred sales load (``CDSL'')
assessed by an open-end fund pursuant to rule 6c-10 under the Act,
as CDSLs are distribution-related charges payable to a distributor,
whereas the Early Repurchase Fee is payable to the Fund to
compensate long-term shareholders for the expenses related to
shorter term investors, in light of the Fund's generally longer-term
investment horizons and investment operations.
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9. Applicants represent that any asset-based service and/or
distribution fees for each class of shares of the Funds will comply
with the provisions of the FINRA Rule 2341(d) (``FINRA Sales Charge
Rule'').\4\ Applicants also represent that each Fund will disclose in
its prospectus the fees, expenses and other characteristics of each
class of shares offered for sale by the prospectus, as is required for
open-end multiple class funds under Form N-1A. As is required for open-
end funds, each Fund will disclose its expenses in shareholder reports,
and describe any arrangements that result in breakpoints in or
elimination of sales loads in its prospectus.\5\ In addition,
applicants will comply with applicable enhanced fee disclosure
requirements for fund of funds, including registered funds of hedge
funds.\6\
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\4\ Any reference to the FINRA Sales Charge Rule includes any
successor or replacement to the FINRA Sales Charge Rule.
\5\ See Shareholder Reports and Quarterly Portfolio Disclosure
of Registered Management Investment Companies, Investment Company
Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring
open-end investment companies to disclose fund expenses in
shareholder reports); and Disclosure of Breakpoint Discounts by
Mutual Funds, Investment Company Act Release No. 26464 (June 7,
2004) (adopting release) (requiring open-end investment companies to
provide prospectus disclosure of certain sales load information).
\6\ Fund of Funds Investments, Investment Company Act Rel. Nos.
26198 (Oct. 1, 2003) (proposing release) and 27399 (Jun. 20, 2006)
(adopting release). See also Rules 12d1-1, et seq. of the Act.
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10. Each of the Funds will comply with any requirements that the
Commission or FINRA may adopt regarding disclosure at the point of sale
and in transaction confirmations about the costs and conflicts of
interest arising out of the distribution of open-end investment company
shares, and regarding prospectus disclosure of sales loads and revenue
sharing arrangements, as if those requirements applied to the Fund. In
addition, each Fund will contractually require that any distributor of
the Fund's shares comply with such requirements in connection with the
distribution of such Fund's shares.
Applicants' Legal Analysis
Multiple Classes of Shares
1. Section 18(a)(2) of the Act provides that a closed-end
investment company may not issue or sell a senior security that is a
stock unless certain requirements are met. Applicants state that the
creation of multiple classes of shares of the Funds may violate section
18(a)(2) because the Funds may not meet such requirements with respect
to a class of shares that may be a senior security.
2. Section 18(c) of the Act provides, in relevant part, that a
closed-end investment company may not issue or sell any senior security
if, immediately thereafter, the company has outstanding more than one
class of senior security. Applicants state that the creation of
multiple classes of shares of the Funds may be prohibited by section
18(c), as a class may have priority over another class as to payment of
dividends because shareholders of different classes would pay different
fees and expenses.
3. Section 18(i) of the Act provides that each share of stock
issued by a registered management investment company will be a voting
stock and have equal voting rights with every other outstanding voting
stock. Applicants state that multiple classes of shares of the Funds
may violate section 18(i) of the Act because each class would be
entitled to exclusive voting rights with respect to matters solely
related to that class.
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 provision of the Act, or from any
rule or regulation under the Act, if and to the extent 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. Applicants request an exemption under
section 6(c) from sections 18(a)(2), 18(c) and 18(i) to permit the
Funds to issue multiple classes of shares.
5. Applicants submit that the proposed allocation of expenses
relating to distribution and voting rights among multiple classes is
equitable and will not discriminate against any group or class of
shareholders. Applicants submit that the proposed arrangements would
permit a Fund to facilitate the distribution of its securities and
provide investors with a broader choice of shareholder services.
Applicants assert that the proposed closed-end investment company
multiple class structure does not raise the concerns underlying section
18 of the Act to any greater degree than open-end investment companies'
multiple class structures that are permitted by rule 18f-3 under the
Act. Applicants state that each Fund will comply with the provisions of
rule 18f-3 as if it were an open-end investment company.
Asset-Based Distribution and/or Service Fees
1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit
an affiliated person of a registered investment company, or an
affiliated person of such person, acting as principal, from
participating in or effecting any transaction in connection with any
joint enterprise or joint arrangement in which the investment company
participates unless the Commission issues an order permitting the
transaction. In reviewing applications submitted under section 17(d)
and rule 17d-1, the Commission considers whether the participation of
the investment company in a joint enterprise or joint arrangement is
consistent with the provisions, policies and purposes of the Act, and
the extent to which the participation is on a basis different from or
less advantageous than that of other participants.
2. Rule 17d-3 under the Act provides an exemption from section
17(d) and rule 17d-1 to permit open-end investment companies to enter
into
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distribution arrangements pursuant to rule 12b-1 under the Act.
Applicants request an order under section 17(d) and rule 17d-1 under
the Act to the extent necessary to permit the Fund to impose asset-
based distribution and/or service fees. Applicants have agreed to
comply with rules 12b-1 and 17d-3 as if those rules applied to closed-
end investment companies, which they believe will resolve any concerns
that might arise in connection with a Fund financing the distribution
of its shares through asset-based distribution fees.
3. For the reasons stated above, applicants submit that the
exemptions requested under section 6(c) are necessary and appropriate
in the public interest and are consistent with the protection of
investors and the purposes fairly intended by the policy and provisions
of the Act. Applicants also state that the Funds' imposition of asset-
based distribution and/or service fees is consistent with the
provisions, policies and purposes of the Act and does not involve
participation on a basis different from or less advantageous than that
of other participants.
Applicants' Condition
Applicants agree that any order granting the requested relief will
be subject to the following condition:
Each Fund relying on the order will comply with the provisions of
rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1, and, where applicable, 11a-3
under the Act, as amended from time to time, as if those rules applied
to closed-end management investment companies, and will comply with the
FINRA Sales Charge Rule, as amended from time to time, as if that rule
applied to all closed-end management investment companies.
For the Commission, by the Division of Investment Management,
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-00113 Filed 1-6-22; 8:45 am]
BILLING CODE 8011-01-P
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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.