[Federal Register Volume 74, Number 80 (Tuesday, April 28, 2009)]
[Notices]
[Pages 19242-19247]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-9576]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28700; File No. 813-00274]


William Blair & Company, L.L.C. and Wilblairco II, L.L.C.; Notice 
of Application

April 22, 2009.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: 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, except section 9 and sections 
36 through 53 of the Act and the rules and regulations under those 
sections. With respect to sections 17 and 30 of the Act, and the rules 
and regulations thereunder, and rule 38a-1 under the Act, the exemption 
is limited as set forth in the application.

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Summary of Application: Applicants request an order to exempt certain 
limited partnerships and other investment vehicles formed for the 
benefit of eligible employees of William Blair & Company, L.L.C. 
(``Blair'') and its affiliates from certain provisions of the Act. Each 
limited partnership or other investment vehicle will be an ``employees' 
securities company'' within the meaning of section 2(a)(13) of the Act.

Applicants: Blair and Wilblairco II, L.L.C. (the ``Initial Company'').

Filing Dates: The application was filed on June 8, 2000, and amended on 
March 11, 2004, May 15, 2007, January 25, 2008, May 27, 2008 and April 
10, 2009.

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 May 19, 2009, 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, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090; Applicants, 222 West Adams 
Street, Chicago, Illinois 60606.

Information Contact: Laura J. Riegel, Senior Counsel, at (202) 551-
6873, or Julia Kim Gilmer, 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. Blair, a Delaware limited liability company, is an investment 
firm that offers investment banking, equity research, institutional 
banking, institutional and private brokerage, asset management and 
private capital to various clients. Blair and its ``affiliates,'' as 
defined in rule 12b-2 under the Securities Exchange Act of 1934 
(``Exchange Act''), are referred to collectively as ``WB Group'' and 
individually as a ``WB Entity.''
    2. The Initial Company is a Delaware limited liability company. 
Blair may form in the future other investment vehicles identical in all 
material respects to the Initial Fund (other than specific investment 
terms, investment objectives and strategies and form of organization) 
(together with the Initial Company, the ``Companies''). Interests in a 
Company (``Interests'') will be offered without registration in 
reliance on section 4(2) of the Securities Act of 1933 (the ``1933 
Act'') or Regulation D under the 1933 Act, and will be issued in one or 
more designated series, each of which may correspond to a Company's 
investment in a particular transaction, collective investment vehicle 
or other investment opportunity (each, a ``Series''). Each Company will 
be organized as a limited partnership or other investment vehicle. Each 
Company and Series will be an ``employees' security company'' within 
the meaning of section 2(a)(13) of the Act.
    3. Each Company will operate as a closed-end management investment 
company. Applicants state that they anticipate that each Company will 
operate as a non-diversified vehicle. The Companies are intended to 
provide investment opportunities to Eligible Employees (as defined 
below) that are competitive with those at other financial services 
firms and to facilitate the recruitment and retention of high caliber 
professionals. All investors in a Company are ``Members.''

[[Page 19243]]

    4. Each Company will have a general partner, manager or other 
similar entity (a ``Manager'') that is a WB Entity that will manage, 
operate and control such Company. The Manager of a Company will be 
registered as an investment adviser under the Investment Advisers Act 
of 1940 (the ``Advisers Act'') or exempt from such registration. Blair, 
the Manager of the Initial Company, is registered as an investment 
adviser under the Advisers Act. The Manager will be permitted to 
delegate certain of its responsibilities regarding the acquisition, 
management and disposition of Company investments, or other management 
responsibilities, to a WB Entity or to a principal, member, employee, 
executive, officer or director of one or more WB Entities, or to a 
committee of principals, members, employees, executives, officers or 
directors of one or more WB Entities (each such committee, a ``Manager 
Committee''). The ultimate responsibility for a Company's operations 
will remain with the Manager. The Manager may be entitled to receive a 
performance-based fee (a ``carried interest'') in addition to any 
amount allocable to the Manager's capital contribution.\1\
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    \1\ A ``carried interest'' is an allocation to the Manager based 
on the net gains of an investment program. A Manager that is 
registered under the Advisers Act may charge a carried interest only 
if permitted by rule 205-3 under the Advisers Act. Any carried 
interest paid to a Manager that is not registered under the Advisers 
Act will be structured to comply with section 205(b)(3) of the 
Advisers Act as if the Company were a business development company 
as defined in the Advisers Act.
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    5. Interests in a Company or any Series will be sold only to 
``Qualified Participants'' (as defined below). Prior to offering 
Interests to a Qualified Participant, a Manager must reasonably believe 
that the Qualified Participant will be capable of understanding and 
evaluating the merits and risks of participation in a Company or any 
Series and that each such individual is able to bear the economic risk 
of such participation and afford a complete loss of his or her 
investment.
    6. ``Qualified Participants'' are (a) current key principals, 
members, employees, executives, officers and directors of the WB Group 
(collectively, ``Eligible Employees''), (b) spouses, parents, children, 
spouses of children, brothers, sisters and grandchildren of Eligible 
Employees (``Eligible Family Members'' and, together with Eligible 
Employees, ``Eligible Individuals''), (c) trusts or other investment 
vehicles established solely for the benefit of Eligible Employees or 
Eligible Family Members (``Eligible Investment Vehicles''), and (d) WB 
Entities. Each Eligible Employee and Eligible Family Member will be an 
``accredited investor'' under rule 501(a)(5) or rule 501(a)(6) of 
Regulation D (``Accredited Investor''), except that a maximum of 35 
Eligible Employees per Series who are sophisticated investors but who 
are not Accredited Investors may become Members if each of them falls 
into one of the following two categories: (A) Eligible Employees who 
(i) have a graduate degree in business, law or accounting, (ii) have a 
minimum of three years of consulting, investment management, investment 
banking, financial services, legal or similar business experience, and 
(iii) had reportable income from all sources (including any profit 
shares or bonus) of $100,000 in each of the two most recent years 
immediately preceding the Eligible Employee's admission as a Member and 
have a reasonable expectation of income from all sources of at least 
$140,000 in each year in which the Eligible Employee will be committed 
to make investments in the Series; or (B) Eligible Employees who are 
``knowledgeable employees,'' as defined in rule 3c-5 of the Act, of the 
Company (with the Company treated as though it were a ``covered 
company'' for purposes of the rule). An Eligible Employee who is 
described in category (A) above will not be permitted to invest in any 
year more than 10% of his or her income from all sources for the 
immediately preceding year in the aggregate in a Company or relevant 
Series of a Company and in all other Companies in which that investor 
has previously invested.
    7. An Eligible Individual 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 the settlor \2\ 
and principal investment decision-maker with respect to the investment 
vehicle. Any Eligible Investment Vehicles that is not an accredited 
investor will be counted in accordance with Regulation D under the 1933 
Act toward the 35 non-accredited investor limit discussed above. A WB 
Entity that acquires an Interest in a Company will be an ``accredited 
investor'' as defined in rule 501(a) of Regulation D under the 1933 
Act.
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    \2\ If the Eligible Investment Vehicle is an entity other than a 
trust, the term ``settlor'' will be read to mean a person who 
created the Eligible Investment Vehicle, alone or together with 
others, and contributed funds to such vehicle.
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    8. The terms of a Company will be fully disclosed to the Qualified 
Participants at the time they are offered the right to subscribe for 
Interests, at which time they will be furnished with a copy of the 
private placement memorandum, the operating agreement (except with 
respect to Qualified Participants that are already Members of the 
Company and are subscribing for Interests in a Series thereof) and the 
operative documents of the relevant Series of a Company. A Manager will 
send to a Company's Members an audited financial statement with respect 
to those Series in which the Member held Interests as soon as 
practicable after the end of the Company's fiscal year. In addition, 
the Manager will send a report to each person who was a Member at any 
time during the fiscal year then ended setting forth the tax 
information necessary for the preparation by the person of his, her or 
its federal and state income tax returns.
    9. Except for certain involuntary transfers resulting from the 
death or incapacity of a Member, Interests in the Companies will be 
non-transferable except with the express consent of the Manager and 
then only to Qualified Participants. No sales load or similar fee of 
any kind will be charged in connection with the sale of Interests.
    10. The operating agreement of the Initial Company will provide 
that the company may have the right, but not the obligation, to 
purchase all or any portion of the Interests of a Member who ceases to 
be or is not, a current principal, member, employee, executive officer, 
or director of a WB Entity for any reason, including but not limited 
to, death, bankruptcy, becoming permanently disabled, removal or 
termination (with or without cause), withdrawal, or resignation 
(``Terminated Member''). Other Companies may offer Interests with 
repurchase rights. The Manager of a Company may repurchase Interests 
for cash, in-kind or a combination of both. With respect to cash 
repurchases, the Manager will pay the fair market value, as defined in 
the application, of any repurchased Interests as of the time the 
affected Member is deemed to be a Terminated Member.
    11. The investment objectives and policies of the Companies will be 
disclosed to Qualified Participants when Interests are offered, and may 
vary among the Companies. The Companies may invest directly or through 
investment pools (including registered investment companies and 
companies that rely on section 3(c)(1) or section 3(c)(7) of the 
Act).\3\ A Company may

[[Page 19244]]

make investments side-by-side with a WB Entity or a Third Party Fund 
(as defined below) in investment funds or accounts collectively 
organized for the primary benefit of investors who are not affiliated 
with the WB Group and over which a WB Entity exercises investment 
discretion (``Third Party Funds'').
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    \3\ Applicants are not requesting any exemption from any 
provision of the Act or any rule thereunder that may govern the 
eligibility of a Company or Series to invest in an entity relying on 
section 3(c)(1) or 3(c)(7) of the Act or any such entity's status 
under the Act.
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    12. If a WB Entity makes a loan to a Company, the loan would bear 
interest at a rate no less favorable to the Company than the rate that 
could be obtained on an arm's length basis. A Company 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 Company (other 
than short-term paper). Any borrowing by a Company will be non-recourse 
to the Members.
    13. A Company will not acquire any security issued by a registered 
investment company if, immediately after the acquisition, the Company 
will own in the aggregate more than 3% of the outstanding voting stock 
of the registered investment company.

Applicants' Legal Analysis

    1. Section 6(b) of the Act provides, in part, that the Commission 
will exempt employees' securities companies from the provisions of the 
Act to the extent that the 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 provisions of the Act, as specified by 
the Commission, will be applicable to the company and other persons 
dealing with the company as though the company were registered under 
the Act. Applicants request an order under sections 6(b) and 6(e) of 
the Act exempting the Companies from all provisions of the Act, except 
section 9 and sections 36 through 53 of the Act and the rules and 
regulations under those sections. With respect to sections 17 and 30 of 
the Act, and the rules and regulations thereunder, and rule 38a-1 under 
the Act, the exemption is limited as set forth in the application.
    3. Section 17(a) generally prohibits any affiliated person of a 
registered investment company, or any affiliated person of an 
affiliated person, acting as principal, from knowingly selling or 
purchasing any security or other property to or from the company. 
Applicants request an exemption from section 17(a) to permit: (A) A WB 
Entity or a Third Party Fund (or any affiliated person of a WB Entity 
or a Third Party Fund), acting as principal, to engage in any 
transaction directly or indirectly with any Company or any company 
controlled by such Company; (b) a Company to invest in or engage in any 
transaction with any entity, acting as principal (i) in which such 
Company, any company controlled by such Company or any WB Entity or 
Third Party Fund has invested or will invest, or (ii) with which such 
Company, any company controlled by such Company or any WB Entity or 
Third Party Fund is or will otherwise become affiliated; and (c) a 
Third Party Investor, acting as principal, to engage in any transaction 
directly or indirectly with a Company or any company controlled by such 
Company. The term ``Third Party Investor'' refers to any person or 
entity that is not a WB Entity or affiliated with the WB Group and is a 
partner or other investor from a Third Party Fund.
    4. Applicants submit that an exemption from section 17(a) is 
consistent with the purposes of the Companies and the protection of 
investors. Applicants state that the Members in each Company will be 
informed of the possible extent of such Company's dealings with the WB 
Group. Applicants also state that, as professionals employed in the 
financial services businesses, the Members will be able to understand 
and evaluate the attendant risks. Applicants assert that the community 
of interest among the Members in each Company and the WB Group will 
serve to reduce the risk of abuse.
    5. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
any affiliated person of a registered investment company, or any 
affiliated person of such person, acting as principal, from 
participating in any joint arrangement with the company unless 
authorized by the Commission. Applicants request relief to permit 
affiliated persons of each Company, or affiliated persons of any of 
these persons to participate in, or effect any transaction in 
connection with, any joint enterprise or other joint arrangement or 
profit-sharing plan in which the Company or a company controlled by 
such Company is a participant.
    6. Applicants assert that compliance with section 17(d) would cause 
a Company to forego investment opportunities simply because the 
Members, the Manager or any other affiliated person of the Company (or 
any affiliate of such a person) had made a similar investment. 
Applicants also submit that the types of investment opportunities 
considered by a Company often require each participant to make 
available funds in an amount that may be substantially greater than may 
be available to such Company alone. Applicants contend that, as a 
result, the only way in which a Company may be able to participate in 
such opportunities may be to co-invest with other persons, including 
its affiliates. Applicants note that each Company will be primarily 
organized for the benefit of Eligible Employees as an incentive for 
them to remain with the WB Group and for the generation and maintenance 
of goodwill. Applicants assert that the flexibility to structure co-
investments and joint investments in the context of employees' 
securities companies will not involve abuses of the type section 17(d) 
and rule 17d-1 were designed to prevent.
    7. Co-investments with a Third Party Fund will not be subject to 
condition 3 below. Applicants believe it is important that the 
interests of the Third Party Fund take priority over the interests of 
the Companies, and that the Third Party Fund not be burdened or 
otherwise affected by activities of the Companies. In addition, 
applicants assert that the relationship of a Company to a Third Party 
Fund is fundamentally different from such Company's relationship to the 
WB Group. Applicants contend that the focus of, and the rationale for, 
the protections contained in the requested relief are to protect the 
Companies from any overreaching by the WB Group in the employer/
employee context, whereas the same concerns are not

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present with respect to the Companies vis-[agrave]-vis the investors of 
a Third Party Fund.
    8. Section 17(e) of the Act and rule 17e-1 under the Act 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 WB Entity including the 
Manager), acting as an agent or broker, to receive placement fees, 
advisory fees, or other compensation from a Company in connection with 
the purchase or sale by the Company of securities, provided that such 
placement fees, advisory fees or other compensation can be deemed 
``usual and customary.'' Applicants state that for purposes of the 
application, fees or other compensation that are charged or received by 
a WB Entity will be deemed ``usual and customary'' only if (a) the 
Company is purchasing or selling securities alongside other 
unaffiliated third parties, including Third Party Funds, (b) the fees 
or other compensation being charged to the Company are also being 
charged to the unaffiliated third parties, including Third Party Funds, 
and (c) the amount of securities being purchased or sold by the Company 
does not exceed 50% of the total amount of securities being purchased 
or sold by the Company and the unaffiliated third parties, including 
Third Party Funds. Applicants assert that, because the WB Group does 
not wish to appear to be favoring the Companies, compliance with 
section 17(e) would prevent a Company from participating in 
transactions where the Company is being charged lower fees than 
unaffiliated third parties. Applicants assert that the fees or other 
compensation paid by a Company to a WB Entity are those established at 
arm's length with unaffiliated third parties.
    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 Company 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 to permit each Company to comply with the 
rule without having a majority of the members of the governing body of 
the Manager or, the Manager Committee, as applicable, who are not 
interested persons take actions and make determinations as set forth in 
paragraph (b) of the rule, and without having to satisfy the standards 
as required by paragraph (c) of the rule. Applicants state that because 
all the members of the governing body of the Manager of a Company or, 
the Manager Committee, as applicable, will be affiliated persons, 
without the relief requested, a Company could not comply with rule 17e-
1. Applicants state that each Company will comply with rule 17e-1 by 
having a majority of the members of the governing body of the Manager 
take such actions and make such approvals as are set forth in rule 17e-
1. Applicants state that each Company will comply with all other 
requirements of rule 17e-1.
    10. Section 17(f) of the Act designates the entities that may act 
as investment company custodians, and rule 17f-1 under the Act imposes 
certain requirements when the custodian is a member of a national 
securities exchange. Applicants request an exemption from section 17(f) 
and rule 17f-1 to permit a WB Entity to act as custodian without a 
written contract. Applicants also request an exemption from the rule 
17f-1(b)(4) requirement that an independent accountant periodically 
verify the assets held by the custodian. Applicants state that, given 
the community of interest of all the parties involved and the existing 
requirement for an independent audit, compliance with this requirement 
would be unnecessary. Each Company will otherwise comply with all the 
provisions of rule 17f-1.
    11. Applicants also request an exemption from rule 17f-2 to permit 
the following exceptions from the requirements of rule 17f-2: (A) A 
Company's investments may be kept in the locked files of the Manager 
for purposes of paragraph (b) of the rule; (b) for purposes of 
paragraph (d) of the rule, (i) employees of the Manager will be deemed 
to be employees of the Companies, (ii) officers or managers of the 
Manager of a Company will be deemed to be officers of the Company, and 
(iii) the Manager or, where applicable, the Manager Committee, of a 
Company will be deemed to be the board of directors of the Company; and 
(c) in place of the verification procedure under paragraph (f) of the 
rule, verification will be effected quarterly by two employees of the 
Manager. With respect to certain Companies, applicants expect that 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 
believe that these instruments are most suitably kept in the files of 
the Manager, where they can be referred to as necessary.
    12. Section 17(g) of the Act and rule 17g-1 under the Act 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 take certain actions and give certain approvals relating to 
fidelity bonding. Applicants state that, because the Manager of each 
Company, or the Manager Committee, as applicable, will be interested 
persons, a Company could not comply with rule 17g-1 without the 
requested relief. Specifically, each Company will comply with rule 17g-
1 by having the Manager of the Company, or the Manager Committee, as 
applicable, take such actions and make such approvals as are set forth 
in rule 17g-1. Applicants also request an exemption from the 
requirements of paragraph (g) of rule 17g-1 (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), paragraph (h) 
of rule 17g-1 (relating to the appointment of a person to make the 
filings and provide the notices required by paragraph (g)), and an 
exemption from the requirements of paragraph (j)(3) of rule 17g-1 that 
the Companies comply with the fund governance standards defined in rule 
0-1(a)(7). Applicants state that each Company will comply with all 
other requirements of rule 17g-1.
    13. Section 17(j) of the Act and paragraph (b) of rule 17j-1 under 
the Act make it unlawful for certain enumerated persons to engage in 
fraudulent or deceptive practices in connection with the purchase or 
sale of a security held or to be acquired by a registered investment 
company. Rule 17j-1 also requires that every registered investment 
company adopt a written code of ethics and that every access person of 
a registered investment company report personal securities 
transactions. Applicants request an exemption from the provisions of 
rule 17j-1, except for the anti-fraud provisions of paragraph (b), 
because they are unnecessarily burdensome as applied to the Companies.
    14. Applicants request an exemption from the requirements in 
sections 30(a), 30(b), and 30(e) of the Act, and the rules under those 
sections, 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 the 
Companies and would entail administrative and legal

[[Page 19246]]

costs that outweigh any benefit to the Members. Applicants request 
exemptive relief to the extent necessary to permit each Company to 
report annually to its Members. Applicants also request an exemption 
from section 30(h) of the Act to the extent necessary to exempt the 
Manager of each Company, members of the Manager, and any other persons 
who may be deemed to be members of a Manager Committee for a Company 
from filing Forms 3, 4, and 5 under section 16(a) of the Exchange Act 
with respect to their ownership of Interests in the Company. Applicants 
assert that, because there will be no trading market and the transfers 
of Interests will be severely restricted, these filings are unnecessary 
for the protection of investors and burdensome to those required to 
make them.
    15. Rule 38a-1 requires investment companies to adopt, implement 
and periodically review written policies reasonably designed to prevent 
violation of the federal securities law and to appoint a chief 
compliance officer. Each Company will comply with rule 38a-1(a), (c) 
and (d), except that (a) because the Company does not have a board of 
directors, the governing body of the Manager of each Company will 
fulfill the responsibilities assigned to the Company's board of 
directors under the rule, (b) since the governing body of the Manager 
does not have any disinterested members, approval by a majority of 
disinterested board members required by rule 38a-1 will not be 
obtained, and (c) because the governing body of the Manager does not 
have any disinterested members, the Company will comply with the 
requirement in rule 38a-1(a)(4)(iv) that the chief compliance officer 
meet with the independent board members by having the chief compliance 
officer meet with the governing body of the Manager as constituted.

Applicants' Conditions

    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Each proposed transaction to which a Company is a party 
otherwise prohibited by section 17(a) or section 17(d) of the Act and 
rule 17d-1 under the Act (the ``Section 17 Transactions'') will be 
effected only if the Manager determines that: (a) The terms of the 
Section 17 Transaction, including the consideration to be paid or 
received, are fair and reasonable to the Members of the Company and do 
not involve overreaching of the Company or its Members on the part of 
any person concerned and (b) the Section 17 Transaction is consistent 
with the interests of the Members, the Company's organizational 
documents and the Company's reports to its Members.
    In addition, the Manager of the Company will record and preserve a 
description of all Section 17 Transactions, the Manager's findings, the 
information or materials upon which the findings are based and the 
basis therefor. All such records will be maintained for the life of the 
Company and at least six years thereafter and will subject to 
examination by the Commission and its staff. All such records will be 
maintained in an easily accessible place for at least the first two 
years.
    2. The Manager of each Company 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 the 
Company, or any affiliated person of such person, promoter or principal 
underwriter.
    3. The Manager of each Company will not invest the funds of the 
Company in any investment in which an ``Affiliated Co-Investor'' (as 
defined below) has acquired or proposes to acquire the same class of 
securities of the same issuer and where the investment involves a joint 
enterprise or other joint arrangement within the meaning of rule 17d-1 
in which the Company and the Affiliated Co-Investor are participants, 
unless any such Affiliated Co-Investor, prior to disposing of all or 
part of its investment, (a) gives the Manager sufficient, but not less 
than one day's notice of its intent to dispose of its investment, and 
(b) refrains from disposing of its investment unless the Company has 
the opportunity to dispose of its investment prior to or concurrently 
with, on the same terms as, and on a pro rata basis with, the 
Affiliated Co-Investor. The term ``Affiliated Co-Investor'' with 
respect to any Company means any person who is: (A) An ``affiliated 
person'' (as defined in section 2(a)(3) of the Act) of the Company 
(other than a Third Party Fund); (b) a WB Entity; (c) an officer, 
director or employee of the WB Group; (d) an investment vehicle 
offered, sponsored or managed by a WB Entity (other than a Third Party 
Fund); or (e) an entity (other than a Third Party Fund) in which a WB 
Entity 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 an Affiliated 
Co-Investor: (a) To its direct or indirect wholly owned subsidiary, to 
any company (a ``Parent'') of which the Affiliated 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 Affiliated Co-Investor or a trust or other investment vehicle 
established for 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(a) of Regulation NMS thereunder; (iii) government securities as 
defined in section 2(a)(16) of the Act, or (iv) 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 Company and its Manager will maintain and preserve, for the 
life of each such Company and at least six years thereafter, such 
accounts, books, and other documents constituting the record forming 
the basis for the audited financial statements that are to be provided 
to the Members of such Company, and each annual report of the Company 
required to be sent to the Members, and agree that all such records 
will be subject to examination by the Commission and its staff. Each 
Company will preserve the accounts, books and other documents required 
to be maintained in an easily accessible place for the first two years.
    5. The Manager of each Company will send to each Member having an 
Interest in the Company at any time during the fiscal year then ended, 
audited financial statements with respect to those Series in which the 
Member held Interests. At the end of each fiscal year, the Manager will 
make or cause to be made a valuation of all of the assets of the 
Company as of such fiscal year end in a manner consistent with 
customary practice with respect to the valuation of assets of the kind 
held by the Company. In addition, within 120 days after the end of each 
fiscal year of the Company, if possible, or as soon as practicable 
thereafter, the Manager will send a report to each person who was a 
Member at any time during the fiscal year then ended, setting forth 
such tax information as shall be necessary for the preparation by the 
Member of his, her or its federal and state income tax returns and a 
report of the investment

[[Page 19247]]

activities of the Company during that fiscal year.
    6. If any purchase or sale is made by a Company from or to an 
entity affiliated with the Company by reason of an officer, director or 
employee of a WB Entity (a) serving as an officer, director, general 
partner or investment adviser to the entity, or (b) having a 5% or more 
interest in the entity, such individual will not participate in the 
Manager's determination of whether or not to effect the purchase or 
sale.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-9576 Filed 4-27-09; 8:45 am]
BILLING CODE 8010-01-P