
[Federal Register: May 6, 2008 (Volume 73, Number 88)]
[Notices]               
[Page 25056-25061]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06my08-118]                         


[[Page 25056]]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 28258; 813-362]

 
The Bessemer Group, Incorporated, et al.; Notice of Application

April 29, 2008.
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 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 
limited liability companies and other investment vehicles formed for 
the benefit of eligible employees of The Bessemer Group, Incorporated 
(``Bessemer'') and its affiliates from certain provisions of the Act. 
Each limited liability company or other investment vehicle will be an 
``employees' securities company'' within the meaning of section 
2(a)(13) of the Act.

Applicants: Bessemer Employee Investment Fund I LLC, Bessemer Employee 
Fund-Fifth Avenue LLC, Bessemer Employee Fund-OWGREF LLC (each a 
``Bessemer Employee Fund''), Bessemer, and Bessemer Trust Company, N.A. 
(``BTNA'').

Filing Dates: The application was filed on March 30, 2006, and amended 
on March 12, 2008. 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 May 27, 2008, 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, 630 Fifth Avenue, 
New York, NY 10111.

FOR FURTHER INFORMATION CONTACT: Christine Y. Greenlees, Senior 
Counsel, at (202) 551-6879, or Mary Kay Frech, 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 for a fee at the 
Commission's Public Reference Branch, 100 F Street, NE., Washington DC 
20549-1520 (telephone (202) 551-5850).

Applicants' Representations

    1. Bessemer is a bank holding company registered under the Bank 
Holding Company Act of 1956. The shares of Bessemer are privately held 
by descendants of Henry Phipps directly and through a series of trusts 
for the benefit of descendants of Henry Phipps. BTNA, a national bank, 
is a wholly-owned subsidiary of Bessemer. BTNA provides trust, custody, 
investment management and other fiduciary services to very high net 
worth individuals and family groups. Bessemer also has several other 
wholly-owned direct and indirect subsidiaries that are banks or trust 
companies. Bessemer and its ``affiliates,'' as defined in rule 12b-2 
under the Securities Exchange Act of 1934 (the ``1934 Act''), are 
referred to collectively as ``Bessemer'' or ``Bessemer entities.''
    2. Bessemer has established the Bessemer Employee Funds as part of 
a program designed to create capital building opportunities that are 
competitive with those at other financial institutions and to 
facilitate Bessemer's recruitment and retention of high caliber 
professionals. Bessemer expects to establish in the future other 
investment vehicles on terms substantially the same as those described 
in the application for the Bessemer Employee Funds (the ``Other 
Employee Funds,'' and together with Bessemer Employee Funds, the 
``Employee Funds'').
    3. Each of the Employee Funds is or will be a limited partnership 
or limited liability company, organized under the laws of the state of 
Delaware or another jurisdiction. Each Employee Fund will be an 
``employees' securities company'' within the meaning of section 
2(a)(13) of the Act. Each of the Employee Funds will operate as a non-
diversified closed-end management investment company.
    4. Each Employee Fund will have a Manager (as defined below) that 
is controlled by, or is under common control with, Bessemer and that is 
either (i) Registered as an investment adviser under the Investment 
Advisers Act of 1940 (``Advisers Act''), (ii) exempt from the 
registration requirements of the Advisers Act by virtue of section 
203(b)(3) of the Advisers Act, or (iii) excluded from the definition of 
investment adviser under the Advisers Act because it is a bank. The 
initial Manager of Bessemer Employee Funds is BTNA, and the Manager of 
each Other Employee Fund is or will be BTNA or an affiliate that 
controls, is controlled by or is under common control with BTNA. BTNA 
is exempt from registration under the Advisers Act. The term 
``Manager'' refers to BTNA, and any other affiliate that controls, is 
controlled by or is under common control with BTNA that acts as the 
manager of an Employee Fund. The Manager will manage, operate, and 
control each of the Employee Funds. However, the Manager may exercise 
its authority through its board of managers or directors, including a 
committee of Bessemer employees. The Manager will delegate management 
responsibility only to entities that control, are controlled by, or are 
under common control with Bessemer.
    5. The Employee Funds will invest in one or more private ``fund of 
funds'' managed by BTNA and operated primarily for investment by 
clients of BTNA and its affiliates (the ``Underlying Funds''),\1\ or 
alongside the Underlying Funds in the private investment funds and 
other investments in which the Underlying Funds invest.
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    \1\ Applicants are not requesting any exemption from any 
provision of the Act or any rule thereunder that may govern an 
Employee Fund's eligibility to invest in an Underlying Fund relying 
on section 3(c)(1) or 3(c)(7) of the Act or an Underlying Fund's 
status under the Act.
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    6. A Bessemer Employee Fund may pay an administrative fee to its 
Manager. A Bessemer Employee Fund may also pay the Manger or Bessemer 
annually any ``carried interest'' to which the Manager is entitled 
(from the Employee Fund or from a Third Party Fund managed by the 
Manager or a Bessemer entity in which the Employee Fund invests).\2\
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    \2\ 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 an Employee Fund were a business development 
company as defined in the Advisers Act.

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[[Page 25057]]

    7. Interests (``Interests'') in the Employee Funds 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 (``Regulation D''), and will be sold only to Bessemer, Eligible 
Employees (as defined below), and certain related interests of Eligible 
Employees as described below. Prior to offering Interests to an 
Eligible Employee, the Manager must reasonably believe that the 
Eligible Employee will be a sophisticated investor capable of 
understanding and evaluating the risks of participating in an Employee 
Fund without the benefit of regulatory safeguards and is able to afford 
a loss of any investment. All investors in an Employee Fund will be 
``Members'' or ``Participants.''
    8. An ``Eligible Employee'' is an individual who is a current or 
former employee, officer, or director of Bessemer or its direct and 
indirect subsidiaries and an ``accredited investor'' as defined in rule 
501(a)(5) or 501(a)(6) of Regulation D.\3\ In the discretion of 
Bessemer and at the request of an Eligible Employee, Interests may be 
assigned by such Eligible Employee to a Qualified Participant (as 
defined below) of an Eligible Employee or purchased by the Qualified 
Participant. A ``Qualified Participant'' is an individual or entity 
that is an Eligible Family Member or Qualified Entity (in each case as 
defined below), respectively, of an Eligible Employee and, if such 
individual or entity is purchasing an Interest, come within one of the 
categories of an ``accredited investor'' under rule 501(a) of 
Regulation D. An ``Eligible Family Member'' is a parent, sibling, 
spouse, child, spouse of a child, or grandchild of an Eligible Employee 
(including step and adoptive relationships). A ``Qualified Entity'' is 
(a) A trust of which the trustee, grantor and/or beneficiary is an 
Eligible Employee, (b) a partnership, limited liability company, 
corporation or other entity controlled by an Eligible Employee, or (c) 
an individual retirement account, trust or other entity established 
solely for the benefit of the Eligible Employee or Eligible Family 
Members of an Eligible Employee. Bessemer may in its discretion 
circumscribe more narrowly the permitted categories of Qualified 
Participants and Qualified Entities that may invest or own an Interest 
in an Employee Fund.
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    \3\ Bessemer may also, in its discretion, purchase and full fund 
Interests in an Employee Fund and grant such Interests as bonuses to 
certain employees of Bessemer under non-contributory compensation 
programs in which the employee does not have the right to determine 
whether to participate. The recipients of such bonuses would become 
owners of equity interests in the Employee Funds without payment of 
consideration. The employees receiving bonus grants in an Employee 
Fund under such a program would not be required to be limited to 
persons who meet the accredited investor, sophistication, 
educational, professional, experience and related criteria or income 
levels described herein, and would be treated as ``Eligible 
Employees'' in respect of Interests received under such bonus 
grants.
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    9. The terms of an Employee Fund will be fully disclosed to each 
Eligible Employee at the time the Eligible Employee is invited to 
participate in the Employee Fund, and the Eligible Employee will be 
furnished with a copy of the operating agreement for the Employee Fund 
(the ``Employee Fund Agreement''). An Employee Fund will send its 
Members an audited financial statement as soon as practicable after the 
end of its fiscal year. In addition, as soon as practicable after the 
end of each fiscal year of each Employee Fund, the Manager of such 
Employee Fund will send a report to each Member of such Employee Fund 
setting forth the tax information necessary for the preparation by the 
Member of his, her or its federal and state income tax returns.
    10. Interests in the Employee Funds will be non-transferable except 
with the prior written consent of the Manager. No person or entity will 
be admitted into an Employee Fund unless the person or entity is an 
Eligible Employee, a Qualified Participant of an Eligible Employee, or 
a Bessemer entity. No sales load will be charged in connection with the 
sale of Interests.
    11. An Eligible Employee's Interest may be subject to repurchase or 
cancellation if the Eligible Employee's relationship with Bessemer 
terminates for any reason other than death, disability or normal 
retirement. Upon repurchase or cancellation, the Manager will pay to 
the Eligible Employee at least the lesser of (a) the net amount paid by 
the Eligible Employee to acquire the Interest (less prior 
distributions, plus a specified rate of return as determined by the 
Manager), or (b) the fair value of the Interest as determined in good 
faith at the time of repurchase or cancellation by the Manager. The 
terms of any repurchase or cancellation will apply equally to any 
Qualified Participant of an Eligible Employee.
    12. Subject to the terms of the applicable Employee Fund Agreement, 
an Employee Fund will be permitted to enter into transactions involving 
(a) A Bessemer entity, (b) a portfolio investment, (c) any Member or 
person or entity affiliated with a Member, (d) an investment fund or 
separate account, organized primarily for the benefit of investors who 
are not affiliated with Bessemer, over which a Bessemer entity 
exercises investment discretion (a ``Third Party Fund''), or (e) any 
partner or other investor of a Third Party Fund that is not affiliated 
with Bessemer (a ``Third Party Investor''). Prior to entering into any 
of these transactions, the Manager or its delegate must determine that 
the terms are fair to the Members.
    13. If the Manager or another Bessemer entity makes loans to an 
Other Employee Fund, the loans would bear interest at a rate no less 
favorable to the Employee Fund than the rate that could be obtained on 
an arm's length basis. An Employee 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 securities of the Employee Fund (other than short-
term paper). Any indebtedness of an Employee Fund will be non-recourse 
to the Members other than the Manager.
    14. An Employee Fund will not acquire any security issued by a 
registered investment company if, immediately after the acquisition, 
the Employee Fund will 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, 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

[[Page 25058]]

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 Employee Funds from all 
provisions of the Act, except section 9 and sections 36 through 53 of 
the Act, 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 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 
Bessemer entity or a Third Party Fund (or any affiliated person of any 
such entity or Third Party Fund), acting as principal, to engage in any 
transaction directly or indirectly with any Employee Fund or any 
company controlled by such Employee Fund; (b) any Employee Fund to 
invest in or engage in any transaction with any Bessemer entity (or any 
affiliated person of any such entity) or a Third Party Fund, acting as 
principal (i) in which such Employee Fund, any company controlled by 
such Employee Fund or any Bessemer entity or Third Party Fund has 
invested or will invest, or (ii) with which such Employee Fund, any 
company controlled by such Employee Fund or any Bessemer entity or 
Third Party Fund is or will become otherwise affiliated; and (c) any 
Third Party Investor, acting as principal, to engage in any transaction 
directly or indirectly with an Employee Fund and any company controlled 
by the Employee Fund.
    4. Applicants submit that an exemption from section 17(a) is 
consistent with the purposes of the Employee Funds and the protection 
of investors. Applicants state that the Participants in each Employee 
Fund will have been fully informed of the possible extent of such 
Employee Fund's dealings with Bessemer. Applicants also state that, as 
professionals employed in the investment, banking and financial 
services businesses, the Participants will be able to understand and 
evaluate the attendant risks. Applicants assert that the community of 
interest among the Participants in each Employee Fund and Bessemer is 
the best insurance against any 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 Employee Fund (including, without 
limitation, the Manager, Bessemer, other Bessemer entities and a Third 
Party Fund), or affiliated persons of any of these persons (including, 
without limitation, the Third Party Investors) to participate in, or 
effect any transaction in connection with, any joint enterprise or 
other joint arrangement or profit-sharing plan in which such Employee 
Fund or a company controlled by such Employee Fund is a participant.
    6. Applicants assert that compliance with section 17(d) would cause 
the Employee Fund to forego investment opportunities simply because a 
Participant in such Employee Fund or other affiliated person of such 
Employee Fund (or any affiliate of such a person) also had, or 
contemplated making, a similar investment. Applicants also submit that 
the types of investment opportunities considered by an Employee Fund 
often require each participant to make available funds in an amount 
that may be substantially greater than may be available to such 
Employee Fund alone. Applicants contend that, as a result, the only way 
in which an Employee Fund may be able to participate in such 
opportunities may be to co-invest with other persons, including its 
affiliates. 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. Side-by-side investments held by a Third Party Fund, or by a 
Bessemer entity pursuant to a contractual obligation to a Third Party 
Fund, will not be subject to condition 3 below. Applicants note that it 
is common for a Third Party Fund to require that Bessemer invest its 
own capital in Third Party Fund investments, and that such Bessemer 
investments be subject to substantially the same terms as those 
applicable to the Third Party Fund's investments. Applicants believe it 
is important that the interests of the Third Party Fund take priority 
over the interests of the Employee Funds, and that the activities of 
the Third Party Fund not be burdened or otherwise affected by 
activities of the Employee Funds. In addition, applicants assert that 
the relationship of an Employee Fund to a Third Party Fund is 
fundamentally different from such Employee Fund's relationship to 
Bessemer. Applicants contend that the focus of, and the rationale for, 
the protections contained in the requested relief are to protect the 
Employee Funds from any overreaching by Bessemer in the employer/
employee context, whereas the same concerns are not present with 
respect to the Employee Funds vis-[aacute]-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 Bessemer entity (including the 
Manager), acting as an agent or broker, to receive placement fees, 
advisory fees, or other compensation from an Employee Fund in 
connection with the purchase or sale by the Employee Fund 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 Bessemer entity will be deemed ``usual and 
customary'' only if (a) The Employee Fund is purchasing or selling 
securities alongside other unaffiliated third parties (including Third 
Party Funds) who are also similarly purchasing or selling securities, 
(b) the fees or other compensation that are being charged to the 
Employee Fund 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 Employee Fund does not exceed 50% of the total 
amount of securities being purchased or sold by the Employee Fund and 
the unaffiliated third parties (including Third Party Funds). 
Applicants assert that, because Bessemer does not wish to appear to be 
favoring the Employee Funds, compliance with section 17(e) would 
prevent an Employee Fund from participating in transactions where the 
Employee Fund is being charged lower fees than unaffiliated third 
parties. Applicants assert that the fees or other compensation paid by 
an Employee Fund to a Bessemer entity are those established at arm's 
length with unaffiliated third parties.

[[Page 25059]]

    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 Employee Fund to comply with the fund governance 
standards defined in rule 0-1(a)(7) under the Act (the ``Fund 
Governance Standards''). Applicants request an exemption from rule 17e-
1 to the extent necessary to permit each Employee Fund to comply with 
paragraph (b) of the rule and without having to satisfy the Fund 
Governance Standards as required by paragraph (c) of the rule without 
the necessity of having a majority of the directors or managers of the 
Manager who are not interested persons take such actions and make such 
approvals as are set forth in rule 17e-1. Applicants state that because 
all the directors or managers of the Manager will be affiliated 
persons, without the relief requested, an Employee Fund could not 
comply with rule 17e-1. Applicants state that each Employee Fund will 
comply with rule 17e-1 by having a majority of the board of directors 
or managers of the Manager, or a committee of Bessemer employees to 
whom the Manager may delegate its functions (such as the trust 
committee of the Bessemer trust department or an advisory board 
established for the Employee Fund), take such actions and make such 
approvals as are set forth in rule 17e-1. Applicants state that each 
Employee Fund 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 Bessemer 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 annual audit, compliance with this 
requirement would be unnecessary. Each Employee Fund 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) An 
Employee Fund's investments may be kept in the locked files of a 
Bessemer entity; (b) for purposes of paragraph (d) of the rule, (i) 
Employees of Bessemer will be deemed to be employees of the Employee 
Funds, (ii) officers or managers of the Manager of an Employee Fund 
will be deemed to be officers of the Employee Fund, and (iii) the 
Manager of an Employee Fund, its board of directors or managers, or a 
committee of Bessemer employees to whom the Manager may delegate its 
functions will be deemed to be the board of directors of such Employee 
Fund; and (c) in place of the verification procedure under paragraph 
(f) of the rule, verification will be effected quarterly by two 
employees of Bessemer. Applicants expect that many of the Employee 
Funds' 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 a 
Bessemer entity, 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. The rule also requires that the board of directors of 
any investment company relying on the rule satisfy the Fund Governance 
Standards. Applicants request relief to permit the Manager's board of 
directors or managers, who may be deemed interested persons, to take 
actions and make determinations as set forth in the rule. Applicants 
state that, because all the members of a board of managers or directors 
of a Manager will be affiliated persons, an Employee Fund could not 
comply with rule 17g-1 without the requested relief. Specifically, each 
Employee Fund will comply with rule 17g-1 by having a majority of the 
members of the board of directors or managers of the Manager, its board 
of directors or managers, or a committee of Bessemer employees to whom 
the Manager may delegate its functions 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 
paragraph (j)(3) of rule 17g-1 relating to compliance with the Fund 
Governance Standards. Applicants state that each Employee Fund 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 Employee 
Funds.
    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 an 
Employee Fund and would entail administrative and legal costs that 
outweigh any benefit to the Participants in such Employee Fund. 
Applicants request exemptive relief to the extent necessary to permit 
each Employee Fund to report annually to the Participants in such 
Employee Fund. Applicants also request an exemption from section 30(h) 
of the Act to the extent necessary to exempt the Manager of each 
Employee Fund, members of the Manager, or any board of managers or 
directors or committee of Bessemer employees to whom the Manager may 
delegate its functions, and any other persons who may be deemed to be 
members of an advisory board of such Employee Fund from filing Forms 3, 
4, and 5 under section 16(a) of the 1934 Act with respect to their 
ownership of Interests in such Employee 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.
    15. Rule 38a-1 requires investment companies to adopt, implement 
and

[[Page 25060]]

periodically review written policies reasonably designed to prevent 
violation of the federal securities law and to appoint a chief 
compliance officer. Each Employee Fund will comply will rule 38a-1(a), 
(c) and (d), except that (a) Because the Employee Fund does not have a 
board of directors, the board of managers or directors of the Manager 
of each Employee Fund will fulfill the responsibilities assigned to the 
Employee Fund's board of directors under the rule, (b) since the board 
of managers or directors 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 board of 
managers or directors of the Manager does not have any independent 
members, the Employee Funds 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 board of managers or directors 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 otherwise prohibited by section 17(a) 
or section 17(d) and rule 17d-1 to which an Employee Fund is a party 
(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 such Employee Fund and do not involve overreaching of such 
Employee Fund or its Members on the part of any person concerned, and
    (b) The Section 17 Transaction is consistent with the interests of 
the Members of such Employee Fund, such Employee Fund's organizational 
documents and such Employee Fund's reports to its Members.
    In addition, the Manager of each Employee Fund 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 for the findings. All records relating to an 
investment program will be maintained until the termination of such 
investment program and for at least six years thereafter, and will be 
subject to examination by the Commission and its staff.\4\
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    \4\ Each Employee Fund will preserve the accounts, books and 
other documents required to be maintained in an easily accessible 
place for the first two years.
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    2. In connection with the Section 17 Transactions, the Manager of 
each Employee Fund 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 such Employee Fund, or any 
affiliated person of such a person, promoter or principal underwriter.
    3. The Manager of each Employee Fund will not invest the funds of 
such Employee Fund in any investment in which a ``Co-Investor'' (as 
defined below) has acquired or proposes to acquire the same class of 
securities of the same issuer and where the investment transaction 
involves a joint enterprise or other joint arrangement within the 
meaning of rule 17d-1 in which such Employee Fund and the Co-Investor 
are participants unless any such Co-Investor agrees to, prior to 
disposing of all or part of its investment, (a) give such Manager 
sufficient, but not less than one day's, notice of its intent to 
dispose of its investment, and (b) refrain from disposing of its 
investment unless such Employee Fund has the opportunity to dispose of 
such Employee Fund's investment prior to or concurrently with, and on 
the same terms as, and pro rata with, the Co-Investor. The term ``Co-
Investor'' with respect to any Employee Fund means any person who is: 
(a) An ``affiliated person'' (as such term is defined in section 
2(a)(3) of the Act) of such Employee Fund (other than a Third Party 
Fund); (b) Bessemer; (c) an officer or director of Bessemer; or (d) an 
entity (other than a Third Party Fund) in which the Manager of such 
Employee Fund acts as a manager or has a similar capacity to control 
the sale or disposition of the entity's securities. The restrictions 
contained in this condition 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 such 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 such Co-Investor or a trust or other 
investment vehicle established for any such immediate family member; 
(c) when the investment is comprised of securities that are listed on 
any exchange registered as a national securities exchange under section 
6 of the 1934 Act; (d) when the investment is comprised of securities 
that are NMS stocks pursuant to section 11A(a)(2) of the 1934 Act and 
rule 600(a) of Regulation NMS thereunder; (e) when the investment is 
comprised of securities that are listed on, 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; or (f) when the investment is comprised of 
securities that are government securities as defined in section 
2(a)(16) of the Act or other securities that meet the definition of 
``Eligible Security'' in rule 2a-7 under the Act.
    4. Each Employee Fund and the Manager will maintain and preserve, 
for the life of such Employee Fund and for at least six years 
thereafter, such accounts, books, and other documents as constitute the 
record forming the basis for the audited financial statements that are 
to be provided to the Participants in such Employee Fund, and each 
annual report of such Employee Fund required to be sent to such 
Participants, and agree that all such records will be subject to 
examination by the Commission and its staff.\5\
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    \5\ Each Employee Fund will preserve the accounts, books and 
other documents required to be maintained in an easily accessible 
place for the first two years.
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    5. The Manager of each Employee Fund will send to each Participant 
in such Employee Fund who had an interest in such Employee Fund, at any 
time during the fiscal year then ended, Employee Fund financial 
statements audited by such Employee Fund's independent accountants. At 
the end of each fiscal year, the Manager will make a valuation or have 
a valuation made of all of the assets of the Employee Fund 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 Employee 
Fund. In addition, within 90 days after the end of each fiscal year of 
each Employee Fund, or as soon as practicable after the end of each 
fiscal year of each Employee Fund, the Manager of such Employee Fund 
will send a report to each person who was a Participant in such 
Employee Fund at any time during the fiscal year

[[Page 25061]]

then ended, setting forth such tax information as shall be necessary 
for the preparation by the Participant of that Participant's federal 
and state income tax returns, and a report of the investment activities 
of the Employee Fund during that fiscal year.
    6. If an Employee Fund makes purchases or sales from or to an 
entity affiliated with the Employee Fund by reason of an officer, 
director or employee of Bessemer (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 Employee Fund's determination of whether or not to effect the 
purchase or sale.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-9910 Filed 5-5-08; 8:45 am]

BILLING CODE 8010-01-P
