[Federal Register Volume 85, Number 79 (Thursday, April 23, 2020)]
[Notices]
[Pages 22761-22762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08582]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 33842; 812-15049]


Capitol Series Trust and Cornerstone Capital Inc.

April 17, 2020.
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 section 15(a) 
of the Act and rule 18f-2 under the Act, as well as from certain 
disclosure requirements in rule 20a-1 under the Act, Item 19(a)(3) of 
Form N-1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of 
Schedule 14A under the Securities Exchange Act of 1934, and sections 6-
07(2)(a), (b), and (c) of Regulation S-X (``Disclosure Requirements''). 
The requested exemption would permit an investment adviser to hire and 
replace certain sub-advisers without shareholder approval and grant 
relief from the Disclosure Requirements as they relate to fees paid to 
the sub-advisers.
    Applicants: Capitol Series Trust (the ``Trust''), a Ohio business 
trust registered under the Act as an open-end management investment 
company, and Cornerstone Capital Inc. (the ``Adviser''), a Delaware 
corporation registered as an investment adviser

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under the Investment Advisers Act of 1940 (together with the Trust, the 
``Applicants'').
    Filing Dates: The application was filed on July 16, 2019 and 
amended on October 4, 2019 and February 5, 2020.
    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 emailing the Commission's 
Secretary at [email protected] 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 May 12, 2020, 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 at [email protected].

ADDRESSES: The Commission: [email protected]. Applicants: 
[email protected].

FOR FURTHER INFORMATION CONTACT: Jay M. Williamson, Senior Counsel, at 
(202) 551-3393, or David Nicolardi, 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 an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Summary of the Application

    1. The Adviser serves or will serve as the investment adviser to 
the Subadvised Series pursuant to an investment advisory agreement with 
the Trust (each, an ``Investment Management Agreement'' and, 
collectively, the ``Investment Management Agreements'').\1\ The Adviser 
provides or will provide the Subadvised Series with continuous and 
comprehensive investment management services, subject to the 
supervision of, and policies established by, the Trust's board of 
trustees (the ``Board''). The Investment Management Agreement permits 
the Adviser, subject to the approval of the Board, to delegate to one 
or more Sub-Advisers the responsibility to provide the day-to-day 
portfolio investment management of each Subadvised Series, subject to 
the supervision and direction of the Adviser.\2\ The primary 
responsibility for managing the Subadvised Series will remain vested in 
the Adviser. The Adviser will hire, evaluate, allocate assets to and 
oversee the Sub-Advisers, including determining whether a Sub-Adviser 
should be terminated, at all times subject to the authority of the 
Board.
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    \1\ Applicants request relief with respect to any existing or 
future series of the Trust and any other existing or future 
registered open-end management company or series thereof that 
intends to rely on the requested order and that: (a) Is advised by 
the Adviser, or any person controlling, controlled by or under 
common control with the Adviser or its successors; (b) uses the 
multi-manager structure described in the application; and (c) 
complies with the terms and conditions of the application (each, a 
``Subadvised Series''). For purposes of the requested order, 
``successor'' is limited to an entity that results from a 
reorganization into another jurisdiction or a change in the type of 
business organization.
    \2\ A ``Sub-Adviser'' for a Subadvised Series is an investment 
sub-adviser for that Series that is not an ``affiliated person'' (as 
such term is defined in Section 2(a)(3) of the Act) of the 
Subadvised Series or the Adviser, except to the extent that an 
affiliation arises solely because the Sub-Adviser serves as a sub-
adviser to one or more Subadvised Series (each a ``Non-Affiliated 
Sub-Adviser'' and collectively, the ``Non-Affiliated Sub-
Advisers'').
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    2. Applicants request an exemption to permit the Adviser, subject 
to Board approval, to enter into investment sub-advisory agreements 
with Non-Affiliated Sub-Advisers (each, a ``Sub-Advisory Agreement'') 
and materially amend such Sub-Advisory Agreements without obtaining the 
shareholder approval required under section 15(a) of the Act and rule 
18f-2 under the Act.\3\ Applicants also seek an exemption from the 
Disclosure Requirements to permit a Subadvised Series to disclose (as 
both a dollar amount and a percentage of the Subadvised Series' net 
assets): (a) The aggregate fees paid to the Adviser; (b) the aggregate 
fees paid to Non-Affiliated Sub-Advisers; and (c) the fee paid to each 
Affiliated Sub-Adviser.
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    \3\ The requested relief will not extend to any sub-adviser 
which is an affiliated person, as defined in section 2(a)(3) of the 
Act, of the Subadvised Series or of its Adviser, other than by 
reason of serving as a sub-adviser to one or more of the Subadvised 
Series (``Affiliated Sub-Adviser'').
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    3. Applicants agree that any order granting the requested relief 
will be subject to the terms and conditions stated in the application. 
Such terms and conditions provide for, among other safeguards, 
appropriate disclosure to Subadvised Series' shareholders and 
notification about sub-advisory changes and enhanced Board oversight to 
protect the interests of the Subadvised Series' shareholders.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security, or transaction or any class or classes of 
persons, securities, or transactions from any provisions of the Act, or 
any rule thereunder, if such relief is necessary or appropriate in the 
public interest and consistent with the protection of investors and 
purposes fairly intended by the policy and provisions of the Act. 
Applicants believe that the requested relief meets this standard 
because, as further explained in the application, the Investment 
Management Agreements will remain subject to shareholder approval while 
the role of the Sub-Advisers is substantially equivalent to that of 
individual portfolio managers, so that requiring shareholder approval 
of Sub-Advisory Agreements would impose unnecessary delays and expenses 
on the Subadvised Series. Applicants believe that the requested relief 
from the Disclosure Requirements meets this standard because it will 
improve the Adviser's ability to negotiate fees paid to the Sub-
Advisers that are more advantageous for the Subadvised Series.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-08582 Filed 4-22-20; 8:45 am]
 BILLING CODE 8011-01-P