[Federal Register Volume 77, Number 206 (Wednesday, October 24, 2012)]
[Notices]
[Pages 65025-65028]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-26163]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30235; 812-14012]


Trust for Professional Managers and Collins Capital Investments, 
LLC; Notice of Application

October 18, 2012.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (``Act'') for an exemption from section 15(a) of 
the Act and rule 18f-2 under the Act, as well as from certain 
disclosure requirements.

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Summary of Application: Applicants request an order that would permit 
them to enter into and materially amend subadvisory agreements without 
shareholder approval and that would grant relief from certain 
disclosure requirements.

Applicants: Trust for Professional Managers (the ``Trust'') and Collins 
Capital Investments, LLC (the ``Advisor'') (collectively, 
``Applicants'').

Filing Dates: The application was filed March 7, 2012, and amended on 
June 26, 2012 and October 18, 2012.

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 November 13, 2012, and should be accompanied by proof of 
service on the applicants, in the form of an affidavit or, for lawyers, 
a certificate of service. Hearing requests should state

[[Page 65026]]

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: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-1090. Applicants: 
Joseph C. Neuberger, 615 East Michigan Street, Milwaukee, WI 53202; 
Kent A. Windhorst, Collins Capital Investments, LLC, 806 Douglas Road, 
Suite 570, Coral Gables, FL 33134.

FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at (202) 
551-6870 or Janet M. Grossnickle, Assistant Director, 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. The Trust, a Delaware statutory trust, is registered under the 
Act as an open-end management investment company. The Trust is 
organized as a series investment company and currently consists of 27 
series, one of which is advised by the Advisor.\1\ The Applicants are 
not requesting relief for any series other than those advised by the 
Advisor. The Advisor is a limited liability company organized under 
Delaware law. The Advisor is, and any future Advisor will be, 
registered as an investment adviser under the Investment Advisers Act 
of 1940 (``Advisers Act''). The Advisor serves as the investment 
adviser to each Series pursuant to an investment advisory agreement 
with the Trust (each an ``Advisory Agreement'' and collectively, the 
``Advisory Agreements'').\2\ Each Advisory Agreement was approved or 
will be approved by the board of trustees of the Trust (the ``Board''), 
including a majority of the trustees who are not ``interested 
persons,'' as defined in section 2(a)(19) of the Act, of the Trust, the 
Fund, or the Advisor (``Independent Trustees'') and by the shareholders 
of the relevant Fund in the manner required by sections 15(a) and 15(c) 
of the Act and rule 18f-2 under the Act.
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    \1\ Applicants are not requesting relief for any series other 
than those advised by the Advisor. Applicants request relief with 
respect to any existing and any future series of the Trust or any 
other registered open-end management company that: (a) Is advised by 
the Advisor or a person controlling, controlled by, or under common 
control with the Advisor or its successor (each, also an 
``Advisor''); (b) uses the manager of managers structure described 
in the application; and (c) complies with the terms and conditions 
of the requested order (any such series, a ``Fund'' and 
collectively, the ``Funds''). The only existing registered open-end 
management investment company that currently intends to rely on the 
requested order is named as an Applicant, and the only series that 
currently intends to rely on the requested order as a Fund is the 
Collins Alternative Solutions Fund. For purposes of the requested 
order, ``successor'' is limited to an entity that results from a 
reorganization into another jurisdiction or a change in the type of 
business organization. If the name of any Fund contains the name of 
a Subadvisor (as defined below), that name will be preceded by the 
name of the Advisor.
    \2\ Each future investment advisory agreement between an Advisor 
and a Fund is also included in the term ``Advisory Agreement''. The 
Advisor currently serves as investment advisor only to the Collins 
Alternative Solutions Fund, a series of the Trust, under the 
Advisory Agreement.
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    2. Under the terms of each Advisory Agreement, the Advisor will 
provide the Funds with overall management services and as it deems 
appropriate, continuously review, supervise and administer each Fund's 
investment program, subject to the supervision of, and policies 
established by the Board. For the investment management services it 
will provide to each Fund, the Advisor will receive the fee specified 
in the Advisory Agreement from such Fund based on the average daily net 
assets of the Fund. The Advisory Agreement permits the Advisor, subject 
to the approval of the Board, to delegate certain responsibilities to 
one or more subadvisors (``Subadvisors''). The Advisor has entered into 
subadvisory agreements with various Subadvisors (``Subadvisory 
Agreements'') to provide investment advisory services to the Funds.\3\ 
Each Subadvisor is, and any future Subadvisor will be, an investment 
adviser as defined in section 2(a)(20) of the Act as well as registered 
with the Commission as an ``investment adviser'' under the Advisers 
Act. The Advisor evaluates, allocates assets to and oversees the 
Subadvisors, and makes recommendations about their hiring, termination 
and replacement to the Board, at all times subject to the authority of 
the Board. The Advisor will compensate the Subadvisors out of the 
advisory fee paid by a Fund to the Advisor under the Advisory 
Agreement.
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    \3\ As of the date of the amended application, the Advisor had 
entered into Subadvisory Agreements with Whitebox Advisors, LLC, 
Stadion Money Management, LLC, Pinebank Asset Management, LP, 
Battenkill Asset Management, Inc. and The Cambridge Strategy (Asset 
Management) Limited. None of the existing Subadvisors is affiliated 
with the Advisor.
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    3. Applicants request an order to permit the Advisor, subject to 
Board approval, to select certain Subadvisors to manage all or a 
portion of the assets of a Fund or Funds pursuant to a Subadvisory 
Agreement and materially amend Subadvisory Agreements without obtaining 
shareholder approval. The requested relief will not extend to any 
Subadvisor that is an affiliated person, as defined in section 2(a)(3) 
of the Act, of the Trust or of the Advisor, other than by reason of 
serving as a subadvisor to one or more of the Funds (``Affiliated 
Subadvisor'').
    4. Applicants also request an order exempting the Funds from 
certain disclosure provisions described below that may require the 
Applicants to disclose fees paid by the Advisor or a Fund to each 
Subadvisor. Applicants seek an order to permit the Trust to disclose 
for a Fund (as both a dollar amount and as a percentage of the Fund's 
net assets): (a) The aggregate fees paid to the Advisor and any 
Affiliated Subadvisor; and (b) the aggregate fees paid to Subadvisors 
other than Affiliated Subadvisors (collectively, ``Aggregate Fee 
Disclosure''). Any Fund that employs an Affiliated Subadvisor will 
provide separate disclosure of any fees paid to the Affiliated 
Subadvisor.
    Applicants' Legal Analysis:
    1. Section 15(a) of the Act provides, in relevant part, that is 
unlawful for any person to act as an investment adviser to a registered 
investment company except pursuant to a written contract that has been 
approved by a vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of stock in a series investment company affected by a matter must 
approve that matter if the Act requires shareholder approval.
    2. Form N-1A is the registration statement used by open-end 
investment companies. Item 19(a)(3) of Form N-1A requires disclosure of 
the method and amount of the investment adviser's compensation.
    3. Rule 20a-1 under the Act requires proxies solicited with respect 
to a registered investment company to comply with Schedule 14A under 
the Securities Exchange Act of 1934 (``1934 Act''). Items 22(c)(1)(ii), 
22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A, taken together, 
require a proxy statement for a shareholder meeting at which the 
advisory contract will be voted upon to include the ``rate of 
compensation of the investment adviser,'' the ``aggregate amount of the 
investment adviser's fees,'' a description of the ``terms of the 
contract to be acted upon,'' and, if a change in the advisory

[[Page 65027]]

fee is proposed, the existing and proposed fees and the difference 
between the two fees.
    4. Regulation S-X sets forth the requirements for financial 
statements required to be included as part of a registered investment 
company's registration statement and shareholder reports filed with the 
Commission. Sections 6-07(2)(a), (b), and (c) of Regulation S-X require 
a registered investment company to include in its financial statement 
information about investment advisory fees.
    5. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provisions of the Act, or 
from any rule thereunder, if such exemption is necessary or appropriate 
in the public interest and consistent with the protection of investors 
and the purposes fairly intended by the policy and provisions of the 
Act. Applicants state that the requested relief meets this standard for 
the reasons discussed below.
    6. Applicants assert that the shareholders expect the Advisor 
subject to the review and approval of the Board, to select the 
Subadvisors who are best suited to achieve the Fund's investment 
objectives. Applicants assert that, from the perspective of the 
shareholder, the role of the Subadvisors is substantially equivalent to 
that of the individual portfolio managers employed by traditional 
investment company advisory firms. Applicants state that requiring 
shareholder approval of each Subadvisory Agreement would impose 
unnecessary delays and expenses on the Funds and may preclude the Funds 
from acting promptly when the Advisor and Board consider it appropriate 
to hire Subadvisors or amend Subadvisory Agreements. Applicants note 
that the Advisory Agreements and any Subadvisory Agreements with 
Affiliated Subadvisors will remain subject to the shareholder approval 
requirements of section 15(a) of the Act and rule 18f-2 under the Act.
    7. If a new Subadvisor is retained in reliance on the requested 
order, the Funds will inform shareholders of the hiring of a new 
Subadvisor pursuant to the following procedures (``Modified Notice and 
Access Procedures''): (a) Within 90 days after a new Subadvisor is 
hired for any Fund, that Fund will send its shareholders either a 
Multi-manager Notice or a Multi-manager Notice and Multi-manager 
Information Statement; \4\ and (b) the Fund will make the Multi-manager 
Information Statement available on the Web site identified in the 
Multi-manager Notice no later than when the Multi-manager Notice (or 
Multi-manager Notice and Multi-manager Information Statement) is first 
sent to shareholders, and will maintain it on that Web site for at 
least 90 days. Applicants assert that a proxy solicitation to approve 
the appointment of new Subadvisors would provide no more meaningful 
information to shareholders than the proposed Multi-manager Information 
Statement. Moreover, as indicated above, the applicable Board would 
comply with the requirements of sections 15(a) and 15(c) of the Act 
before entering into or amending Subadvisory Agreements.
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    \4\ A ``Multi-manager Notice'' will be modeled on a Notice of 
Internet Availability as defined in rule 14a-16 under the Exchange 
Act, and specifically will, among other things: (a) Summarize the 
relevant information regarding the new Subadvisor; (b) inform 
shareholders that the Multi-manager Information Statement is 
available on a Web site; (c) provide the Web site address; (d) state 
the time period during which the Multi-manager Information Statement 
will remain available on that Web site; (e) provide instructions for 
accessing and printing the Multi-manager Information Statement; and 
(f) instruct the shareholder that a paper or email copy of the 
Multi-manager Information Statement may be obtained, without charge, 
by contacting the Funds.
    A ``Multi-manager Information Statement'' will meet the 
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 
14A under the Exchange Act for an information statement, except as 
modified by the requested order to permit Aggregate Fee Disclosure. 
Multi-manager Information Statements will be filed electronically 
with the Commission via the EDGAR system.
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    8. Applicants assert that the requested disclosure relief will 
benefit shareholders of the Funds because it will improve the Advisor's 
ability to negotiate the fees paid to Subadvisors. Applicants state 
that the Advisor may be able to negotiate rates that are below a 
Subadvisor's ``posted'' amounts if the Advisor is not required to 
disclose the Subadvisors' fees to the public.
    Applicants' Conditions:
    Applicants agree that any order granting the requested relief will 
be subject to the following conditions:
    1. Before a Fund may rely on the order requested in the 
application, the operation of the Fund in the manner described in the 
application will be approved by a majority of the Fund's outstanding 
voting securities, as defined in the Act, or, in the case of a Fund 
whose public shareholders purchase shares on the basis of a prospectus 
containing the disclosure contemplated by condition 2 below, by the 
sole initial shareholder before offering the Fund's shares to the 
public.
    2. The prospectus for each Fund will disclose the existence, 
substance, and effect of any order granted pursuant to the application. 
Each Fund will hold itself out to the public as employing the manager 
of managers structure described in the application. The prospectus will 
prominently disclose that the Advisor has ultimate responsibility 
(subject to oversight by the Board) to oversee the Subadvisors and 
recommend their hiring, termination, and replacement.
    3. Funds will inform shareholders of the hiring of a new Subadvisor 
within 90 days after the hiring of the new Subadvisor pursuant to the 
Modified Notice and Access Procedures.
    4. The Advisor will not enter into a Subadvisory Agreement with any 
Affiliated Subadvisor without that agreement, including the 
compensation to be paid thereunder, being approved by the shareholders 
of the applicable Fund.
    5. At all times, at least a majority of the Board will be 
Independent Trustees, and the nomination and selection of new or 
additional Independent Trustees will be placed within the discretion of 
the then-existing Independent Trustees.
    6. When a Subadvisor change is proposed for a Fund with an 
Affiliated Subadvisor, the Board, including a majority of the 
Independent Trustees, will make a separate finding, reflected in the 
applicable Board minutes, that such change is in the best interests of 
the Fund and its shareholders and does not involve a conflict of 
interest from which the Advisor or the Affiliated Subadvisor derives an 
inappropriate advantage.
    7. Independent legal counsel, as defined in rule 0-1(a)(6) under 
the Act, will be engaged to represent the Independent Trustees. The 
selection of such counsel will be within the discretion of the then 
existing Independent Trustees.
    8. Each Advisor will provide the Board, no less frequently than 
quarterly, with information about the profitability of the Advisor on a 
per-Fund basis. The information will reflect the impact on 
profitability of the hiring or termination of any Subadvisor during the 
applicable quarter.
    9. Whenever a Subadvisor is hired or terminated, the Advisor will 
provide the Board with information showing the expected impact on the 
profitability of the Advisor.
    10. The Advisor will provide general management services to each 
Fund, including overall supervisory responsibility for the general 
management and investment of the Fund's assets and, subject to review 
and approval of the Board, will (i) set each Fund's overall investment 
strategies; (ii) evaluate, select and recommend Subadvisors to manage 
all or part of a Fund's assets; (iii) when appropriate,

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allocate and reallocate a Fund's assets among multiple Subadvisors; 
(iv) monitor and evaluate the performance of Subadvisors; and (v) 
implement procedures reasonably designed to ensure that the Subadvisors 
comply with each Fund's investment objective, policies and 
restrictions.
    11. No trustee or officer of the Trust, or of a Fund, or director 
or officer of the Advisor, will own directly or indirectly (other than 
through a pooled investment vehicle that is not controlled by such 
person) any interest in a Subadvisor, except for (a) ownership of 
interests in the Advisor or any entity that controls, is controlled by, 
or is under common control with the Advisor; or (b) ownership of less 
than 1% of the outstanding securities of any class of equity or debt of 
a publicly traded company that is either a Subadvisor or an entity that 
controls, is controlled by, or is under common control with a 
Subadvisor.
    12. Each Fund will disclose in its registration statement the 
Aggregate Fee Disclosure.
    13. In the event the Commission adopts a rule under the Act 
providing substantially similar relief to that in the order requested 
in the application, the requested order will expire on the effective 
date of that rule.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-26163 Filed 10-23-12; 8:45 am]
BILLING CODE 8011-01-P