

[Federal Register: April 3, 2007 (Volume 72, Number 63)]
[Notices]               
[Page 15919-15923]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03ap07-95]                         


[[Page 15919]]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 27770; 813-264]

 
Silas Partners I, LLC et al.; Notice of Application

March 27, 2007.
AGENCY: Securities and Exchange Commission (SEC).

ACTION: Notice of an 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 and 53, and the rules and regulations under the Act. 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 
investment funds formed for the benefit of eligible current and former 
employees of Winston & Strawn LLP and its affiliates from certain 
provisions of the Act. Each fund will be an ``employees'' securities 
company'' as defined in section 2(a)(13) of the Act.

APPLICANTS: Silas Partners I, LLC (the ``Investment Fund'') and Winston 
& Strawn LLP (together with any business organization that results from 
a reorganization of Winston & Strawn LLP into a different type of 
business organization or into an entity organized under the laws of 
another jurisdiction, the ``Firm'').

FILING DATES: The application was filed on April 24, 2000 and amended 
on March 16, 2007. Applicants have agreed to file an amendment during 
the notice period, the substance of which is reflected in this notice.

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 April 23, 2007 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, Securities and Exchange Commission, 100 F St., 
NE., Washington, DC 20549-1090. Applicants, 35 West Wacker Drive, 
Chicago, IL 60601.

FOR FURTHER INFORMATION CONTACT: Jean Minarick, Senior Counsel, at 
(202) 551-6811, or Nadya Roytblat, 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 for a fee at the 
Commission's Public Reference Branch, 100 F St., NE., Washington, DC 
20549-0102 (tel. 202-551-5850).

Applicants' Representations

    1. The Firm is a law firm organized as an Illinois limited 
liability partnership. The Firm and its ``affiliates,'' as defined in 
rule 12b-2 under the Securities Exchange Act of 1934 (the ``Exchange 
Act''), are referred to collectively as the ``Winston Group'' and 
individually as a ``Winston Entity.'' The shareholders of the Firm are 
referred to as ``Partners.''
    2. The Investment Fund is a Delaware limited liability company. The 
applicants may in the future offer additional pooled investment 
vehicles identical in all material respects to the Investment Fund 
(other than investment objectives and strategies) (the ``Subsequent 
Funds'') (together, the Investment Fund and the Subsequent Funds are 
referred to as the ``Funds''). The applicants anticipate that each 
Subsequent Fund will also be structured as a limited liability company, 
although a Subsequent Fund could be structured as a limited 
partnership, corporation, trust or other business organization formed 
as an ``employees'' securities company'' within the meaning of the 
section 2(a)(13) of the Act. The Funds will operate as non-diversified, 
closed-end management investment companies. The Funds will be 
established to enable the Partners and certain employees of Winston 
Group to participate in certain investment opportunities that come to 
the attention of Winston Group. Participation as investors in the Funds 
will allow the Eligible Investors, as defined below, to diversify their 
investments and to have the opportunity to participate in investments 
that might not otherwise be available to them or that might be beyond 
their individual means.
    3. A group of Eligible Investors, as defined below, appointed by 
the Firm, who are current or retired Partners of the Firm (the 
``Managers'') will manage the Funds. The Funds will have one or more 
investment committees (``Investment Committees''), each member of which 
shall be a current Partner. The Managers shall appoint the members of 
each Investment Committee. The Managers or any person involved in the 
operation of the Funds will register as investment advisers if required 
under the Investment Advisers Act of 1940, or the rules under that Act.
    4. Interests in the Funds (``Interests'') will be offered without 
registration in reliance on section 4(2) of the Securities Act of 1933 
(the ``Securities Act'') or Regulation D under the Securities Act, or 
any successor rule, and will be sold solely to Eligible Investors. 
Eligible Investors consist of ``Eligible Employees,'' ``Qualified 
Investment Vehicles,'' ``Immediate Family Members,'' each as defined 
below, and Winston Entities. The term ``Fund Investors'' refers to 
Eligible Investors who invest in the Funds. Prior to offering Interests 
in a Fund to an individual, the Managers must reasonably believe that 
the individual is a sophisticated investor capable of understanding and 
evaluating the risks of participating in the Fund without the benefit 
of regulatory safeguards. An ``Eligible Employee'' is a person who is, 
at the time of investment, a current or former Partner of the Firm or 
an employee of the Winston Group who (a) meets the standards of an 
``accredited investor'' set forth in rule 501(a)(5) or rule 501(a)(6) 
of Regulation D under the Securities Act, or (b) is one of 35 or fewer 
Partners or employees of the Winston Group who meets certain 
requirements (``Category 2 investors'').
    5. Each Category 2 investor will be a Partner or an employee of the 
Winston Group, who meets the sophistication requirements set forth in 
rule 506(b)(2)(ii) of Regulation D under the Securities Act and who (a) 
has a graduate degree, has a minimum of 3 years of business and/or 
professional experience, has had compensation of at least $150,000 in 
the preceding 12 month period, and has a reasonable expectation of 
compensation of at least $150,000 in each of the 2 immediately 
succeeding 12 month periods, or (b) is a ``knowledgeable employee,'' as 
defined in rule 3c-5 under the Act, of the Fund (with the Fund treated 
as though it were a ``Covered Company'' for purposes of the rule). In 
addition, a Category 2 investor qualifying under (a) above will not be 
permitted to invest in any calendar or fiscal year (as determined by 
the Firm) more than 10% of his or her income from all sources for the 
immediately preceding calendar or fiscal year in one or more Funds.

[[Page 15920]]

    6. A Qualified Investment Vehicle is a trust or other entity the 
sole beneficiaries of which are Eligible Employees or their Immediate 
Family Members or the settlors and trustees of which consist of 
Eligible Employees or Eligible Employees together with Immediate Family 
Members. Immediate Family Members include any parent, child, spouse of 
a child, spouse, brother or sister, and includes any step and adoptive 
relationships. A Qualified Investment Vehicle must be either (a) an 
accredited investor as defined in rule 501(a) of Regulation D or (b) an 
entity for which an Eligible Employee is a settlor and principal 
investment decision-maker and counted toward the 35 non-accredited Fund 
Investors.\1\
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    \1\ If a Qualified Investment Vehicle is an entity other than a 
trust, (a) the reference to ``settlor'' shall be construed to mean a 
person who created the vehicle, alone or together with others, and 
who contributed funds or other assets to the vehicle, and (b) the 
reference to ``trustee'' shall be construed to mean a person who 
performs functions similar to those of a trustee.
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    7. Each Fund may issue its Interests in series (each, a ``Series'' 
and collectively, the ``Series'') with new Series of Interests being 
offered from time to time. Each Series will represent an interest in 
some or all of those Fund investments made by the Fund during a 
specified period of time (the ``Investment Period'').
    8. The terms of a Fund will be fully disclosed in the private 
placement memorandum of the Fund, and each Eligible Investor will 
receive a private placement memorandum and the Fund's limited liability 
company agreement (or other organizational documents) prior to his or 
her investment in the Fund. Each Fund will send its Fund Investors 
annual reports, which will contain audited financial statements with 
respect to those Series in which the Fund Investor has Interests, as 
soon as practicable after the end of each fiscal year. In addition, as 
soon as practicable after the end of each fiscal year, the Funds will 
send a report to each Fund Investor setting forth such tax information 
as shall be necessary for the preparation by the Fund Investor of his 
or her federal and state tax returns.
    9. Fund Investors will be permitted to transfer their Interests 
only with the express consent of the Managers. The Managers do not 
anticipate giving such consent. Any such transfer must be to another 
Eligible Investor. No fee of any kind will be charged in connection 
with the sale of Interests.
    10. The Managers may require a Fund Investor to withdraw from a 
Fund if: (a) A Fund Investor ceases to be an Eligible Investor; (b) a 
Fund Investor is no longer deemed to be able to bear the economic risk 
of investment in a Fund; (c) adverse tax consequences were to inure to 
the Fund were a particular Fund Investor to remain; or (d) the 
continued membership of the Fund Investor would violate applicable law 
or regulations. In addition, the Firm reserves the right to impose 
vesting provisions on a Fund Investor's investments in a Fund. In an 
investment program that provides for vesting provisions, all or a 
portion of a Fund Investor's Interests will be treated as unvested, and 
vesting will occur through the passage of a specified period of time. 
After the end of a Series' Investment Period, to the extent a Fund 
Investor's Interests become ``vested,'' the termination of such Fund 
Investor's association or employment with the Firm will not affect the 
Fund Investor's rights with respect to the vested Interests. Following 
the Investment Period, any portion of a Fund Investor's Interests that 
are unvested at the time of the termination of a Fund Investor's 
association or employment with the Firm may be subject to repurchase or 
cancellation by the Fund. Upon any repurchase or cancellation of all or 
a portion of a Fund Investor's Interests, a Fund will at a minimum pay 
to the Fund Investor the lesser of (a) the amount actually paid by the 
Fund Investor to acquire the Interests less the amount of any 
distributions received by that Fund Investor from the Fund (plus 
interest at or above the prime rate, as determined by the Managers) and 
(b) the fair market value of the Interests determined at the time of 
repurchase or cancellation, as determined in good faith by the 
Managers. Any interest owed to a Fund Investor pursuant to (a) above 
will begin to accrue at the end of the Investment Period.
    11. The Firm may be reimbursed by a Fund for reasonable and 
necessary out-of-pocket costs directly associated with the organization 
and operation of the Funds, including administrative and overhead 
expenses. There will be no allocation of any of the Firm's operating 
expenses to a Fund. In addition, the Firm may allocate to a Series any 
out-of-pocket expenses specifically attributable to the organization 
and operation of that Series. No separate management fee will be 
charged to a Fund by the Managers for their services.
    12. The Funds may borrow from Winston Group, a Partner, or a bank 
or other financial institution, provided that 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 outstanding securities of the Fund 
(other than short-term paper). Any borrowings by a Fund will be non-
recourse other than to the Winston Group. If a Winston Entity or a 
Partner makes a loan to the Funds, the interest rate on the loan will 
be no less favorable to the Funds than the rate that could be obtained 
on an arm's length basis.
    13. No Fund will acquire any security issued by a registered 
investment company if immediately after the acquisition the Fund would 
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, 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 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) 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 Funds from all provisions of the Act, except section 9 
and sections 36 through 53, and the rules and regulations under the 
Act. 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

[[Page 15921]]

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 Fund to: (a) Purchase, from the Firm or any 
affiliated person thereof, securities or interests in properties 
previously acquired for the account of the Firm or any affiliated 
person thereof; (b) sell, to the Firm or any affiliated person thereof, 
securities or interests in properties previously acquired by the Funds; 
(c) invest in companies, partnerships or other investment vehicles 
offered, sponsored or managed by the Firm or any affiliated person 
thereof; and (d) purchase interests in any company or other investment 
vehicle (i) in which the Firm owns 5% or more of the voting securities, 
or (ii) that otherwise is an affiliated person of the Fund (or an 
affiliated person of such a person) or an affiliated person of the 
Firm.
    4. Applicants state that an exemption from section 17(a) is 
consistent with the protection of investors and the purposes of the 
Act. Applicants state that the Fund Investors will be informed in the 
Fund's private placement memorandum of the possible extent of the 
Fund's dealings with the Firm or any affiliated person thereof. 
Applicants also state that, as financially sophisticated professionals, 
Fund Investors will be able to evaluate the attendant risks. Applicants 
assert that the community of interest among the Fund Investors and the 
Firm will provide the best protection against any risk of abuse.
    5. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
any affiliated person or principal underwriter of a registered 
investment company, or any affiliated person of an affiliated person or 
principal underwriter, 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 Fund, or 
affiliated persons of any of these persons, to participate in any joint 
arrangement in which the Fund is a participant. Joint transactions in 
which a Fund may participate could include the following: (a) An 
investment by one or more Funds in a security in which the Firm or its 
affiliated person, or another Fund, is a participant, or with respect 
to which the Firm or an affiliated person is entitled to receive fees 
(including, but not limited to, legal fees, placement fees, investment 
banking fees, brokerage commissions, or other economic benefits or 
interests); (b) an investment by one or more Funds in an investment 
vehicle sponsored, offered or managed by the Firm; and (c) an 
investment by one or more Funds in a security in which an affiliate is 
or may become a participant.
    6. Applicants state that compliance with section 17(d) would cause 
the Funds to forego investment opportunities simply because a Fund 
Investor, the Firm or other affiliates of the Fund also had made or 
contemplated making a similar investment. In addition, because 
investment opportunities of the types considered by the Funds often 
require that each participant make available funds in an amount that 
may be substantially greater than that available to the investor alone, 
there may be certain attractive opportunities of which a Fund may be 
unable to take advantage except as a co-participant with other persons, 
including affiliates. Applicants note that, in light of the Firm's 
purpose of establishing the Funds so as to reward Eligible Investors 
and to attract highly qualified personnel to the Firm, the possibility 
is minimal that an affiliated party investor will enter into a 
transaction with a Fund with the intent of disadvantaging the Fund. 
Finally, applicants contend that the possibility that a Fund may be 
disadvantaged by the participation of an affiliate in a transaction 
will be minimized by compliance with the lockstep procedures described 
in condition 4 below. 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.
    7. Section 17(f) of the Act designates the entities that may act as 
investment company custodians, and rule 17f-2 allows an investment 
company to act as self-custodian, subject to certain requirements. 
Applicants request an exemption 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 Firm or 
of a Partner; (b) for purposes of paragraph (d) of the rule, (i) 
employees of the Firm will be deemed employees of the Funds, (ii) the 
Managers of a Fund will be deemed to be officers of the Fund; and (iii) 
the Managers of a Fund will be deemed to be the board of directors of 
the Fund; and (c) in place of the verification procedures under 
paragraph (f) of the rule, verification will be effected quarterly by 
two employees of the Firm. Applicants assert that the securities held 
by the Funds are most suitably kept in the Firm's files, where they can 
be referred to as necessary.
    8. Section 17(g) and rule 17g-1 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 (``disinterested 
directors'') take certain actions and give certain approvals relating 
to fidelity bonding. Paragraph (g) of rule 17g-1 sets forth certain 
materials relating to the fidelity bond that must be filed with the 
Commission and certain notices relating to the fidelity bond that must 
be given to each member of the investment company's board of directors. 
Paragraph (h) of rule 17g-1 provides that an investment company must 
designate one of its officers to make the filings and give the notices 
required by paragraph (g). Paragraph (j) of rule 17g-1 exempts a joint 
insured bond provided and maintained by an investment company and one 
or more other parties from section 17(d) of the Act and the rules 
thereunder. Rule 17g-1(j)(3) requires that the board of directors of an 
investment company satisfy the fund governance standards defined in 
rule 0-1(a)(7).
    9. Applicants request an exemption from section 17(g) and rule 17g-
1 to the extent necessary to permit each Fund to comply with rule 17g-1 
without the necessity of having a majority of the disinterested 
directors take such action and make such approvals as are set forth in 
the rule. Specifically, each Fund will comply by having the Managers 
take such actions and make such approvals as are set forth in rule 17g-
1. Applicants state that, because the Managers will be interested 
persons of the Fund, 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 believe the filing 
requirements are burdensome and unnecessary as applied to the Funds. 
The Managers will maintain the materials otherwise required to be filed 
with the Commission by rule 17g-1(g) and agree that all such material 
will be subject to examination by the Commission and its staff. The 
Managers will designate a person to maintain the records otherwise 
required to be filed with the Commission under paragraph (g) of the 
rule. Applicants also state that the notices otherwise required to be 
given to the board of directors would be unnecessary as the Funds will 
not have boards of directors. The Funds will

[[Page 15922]]

comply with all other requirements of rule 17g-1.
    10. Section 17(j) and paragraph (b) of rule 17j-1 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 requirements of rule 17j-1, except for the anti-
fraud provisions of paragraph (b), because they are unnecessarily 
burdensome as applied to the Funds.
    11. Applicants request an exemption from the requirements in 
sections 30(a), 30(b) and 30(e), 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 Funds 
and would entail administrative and legal costs that outweigh any 
benefit to the Fund Investors. Applicants request exemptive relief to 
the extent necessary to permit each Fund to report annually to its Fund 
Investors. Applicants also request an exemption from section 30(h) to 
the extent necessary to exempt the Managers of each Fund and any other 
persons who may be deemed members of an advisory board of a Fund from 
filing Forms 3, 4 and 5 under section 16 of the Exchange Act with 
respect to their ownership of Interests in the Fund. 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.
    12. Rule 38a-1 requires investment companies to adopt, implement 
and periodically review written policies and procedures reasonably 
designed to prevent violation of the federal securities laws and to 
appoint a chief compliance officer. The Funds will comply with rule 
38a-1(a), (c) and (d), except that (a) since the Funds do not have 
boards of directors, the Managers will fulfill the responsibilities 
assigned to a Fund's board of directors under the rule, and (b) since 
the Managers are not disinterested persons of the Funds, approval by a 
majority of the disinterested board members required by rule 38a-1 will 
not be obtained.

Applicants' Conditions

    The applicants agree that any order granting the requested relief 
will be subject to the following conditions:
    1. Each proposed transaction to which a Fund is a party otherwise 
prohibited by section 17(a) or section 17(d) and rule 17d-1 (each, a 
``Section 17 Transaction'') will be effected only if the Managers 
determine that: (a) The terms of the Section 17 Transaction, including 
the consideration to be paid or received, are fair and reasonable to 
the Fund Investors of the participating Fund and do not involve 
overreaching of the Fund or its Fund Investors on the part of any 
person concerned; and (b) the Section 17 Transaction is consistent with 
the interests of the Fund Investors of the participating Fund, the 
Fund's organizational documents and the Fund's reports to its Fund 
Investors.
    In addition, the Managers will record and preserve a description of 
such Section 17 Transactions, their findings, the information or 
materials upon which their findings are based and the basis therefor. 
All such records will be maintained for the life of a Fund and at least 
six years thereafter, and will be 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. If purchases or sales are made by a Fund from or to an entity 
affiliated with the Fund by reason of a Partner or employee of the 
Winston Group (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.
    3. The Managers 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 Funds, or any affiliated 
person of such a person, promoter, or principal underwriter.
    4. The Managers will not make on behalf of a Fund any investment in 
which a Co-Investor, as defined below, has 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 the Co-Investor are 
participants, unless any such Co-Investor, prior to disposing all or 
part of its investment, (a) gives the Managers 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 participating 
Fund holding such investment 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 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; (b) 
the Winston Group; (c) a Partner, lawyer, or employee of the Winston 
Group; (d) an investment vehicle offered, sponsored, or managed by the 
Firm or an affiliated person of the Firm; or (e) an entity in which a 
Winston 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 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 or a trust established for any such Immediate Family Member; 
(c) when the investment is comprised of securities that are listed on a 
national securities exchange registered under section 6 of the Exchange 
Act; or (d) when the investment is comprised of securities that are 
national market system securities pursuant to section 11A(a)(2) of the 
Exchange Act and rule 11Aa2-1 thereunder.
    5. The Managers of each Fund will send to each person who was a 
Fund Investor in such Fund at any time during the fiscal year then 
ended audited financial statements of the Fund and with respect to 
those Series in which the Fund Investor held Interests. At the end of 
each fiscal year, the Managers will make a valuation or have a 
valuation made of all of the assets of the Series as of the fiscal year 
end in a manner consistent with customary practice with respect to the 
valuation of assets of the kind held by the Fund. In addition, as soon 
as practicable after the end of each fiscal year of each Fund, the 
Managers of the Fund shall send a report to each person who was a Fund 
Investor at any time during the fiscal year then ended, setting forth 
such tax information as shall be necessary for the preparation by the 
Fund Investor of his

[[Page 15923]]

or her federal and state income tax returns and a report of the 
investment activities of such Fund during such year.
    6. Each Fund and the Managers of each Fund will maintain and 
preserve, for the life of each Series of that 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 and annual reports of such Series to be provided to its Fund 
Investors, and agree that all such records will be 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.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-6081 Filed 4-2-07; 8:45 am]

BILLING CODE 8010-01-P
