
[Federal Register Volume 76, Number 110 (Wednesday, June 8, 2011)]
[Notices]
[Pages 33376-33377]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-14063]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29689; 812-13851]


Altegris Advisors, L.L.C. and Northern Lights Fund Trust; Notice 
of Application

June 1, 2011.
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

-----------------------------------------------------------------------

    Summary of Application: Applicants request an order that would 
permit them to enter into and materially amend subadvisory agreements 
without shareholder approval.
    Applicants: Altegris Advisors, L.L.C. (the ``Adviser'') and 
Northern Lights Fund Trust (the ``Trust'').
DATES: Filing Dates: The application was filed on December 8, 2010, and 
amended on April 12, 2011, and May 19, 2011.
    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 June 27, 2011, 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 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: Adviser, 1200 
Prospect Street, Suite 550, La Jolla, CA 92037; Trust: 4020 South 147th 
Street, Omaha, NE 68137.

FOR FURTHER INFORMATION CONTACT: Lewis B. Reich, Senior Counsel, at 
(202) 551-6919, or Jennifer L. Sawin, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's 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.
    Applicants' Representations:
    1. The Trust, a Delaware statutory trust, is registered under the 
Act as an open-end management investment company and comprises 
approximately ninety series, including the Altegris Managed Futures 
Strategy Fund (the ``MF Fund'') and the Altegris Macro Strategy Fund 
(the ``MS Fund''). The MF Fund currently employs one unaffiliated 
investment subadviser (a ``Subadviser'') and the MS Fund employs one 
Subadviser.\1\ The Adviser is a Delaware limited liability company 
registered as an investment adviser under the Investment Advisers Act 
of 1940 (``Advisers Act'') and serves as the investment adviser to the 
MF Fund and the MS Fund pursuant to investment advisory agreements 
(``Advisory Agreements'') with the Trust. The Adviser will also serve 
as the investment adviser to the other Funds. The Advisory Agreements 
were approved by the Trust's board of trustees (together with the board 
of directors or trustees of any other Fund, 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 or the Adviser 
(``Independent Trustees'') and by the initial shareholder of the MF 
Fund and the MS Fund.
---------------------------------------------------------------------------

    \1\ Applicants also request relief with respect to existing and 
future series of the Trust and any other existing or future 
registered open-end management investment company or series thereof 
that: (a) Is advised by the Adviser; (b) uses the manager of 
managers structure (``Manager of Managers Structure'') described in 
the application; and (c) complies with the terms and conditions of 
the application (together with the MF Fund and the MS Fund, the 
``Funds'' and each, individually, a ``Fund.'') The only existing 
registered open-end management investment company that currently 
intends to rely on the requested order is named as an applicant. The 
MF Fund and the MS Fund are the only Funds that currently intend to 
rely on the requested order. If the name of any Fund contains the 
name of a Subadviser, the name of the Adviser will precede the name 
of the Subadviser.
---------------------------------------------------------------------------

    2. Under the terms of the Advisory Agreements, the Adviser is 
responsible for the overall management of the business affairs of the 
MF Fund and the MS Fund and selecting those Funds' investments in 
accordance with the Funds' respective investment objectives, policies 
and restrictions. For the investment management services that it 
provides to those Funds, the Adviser receives the fee specified in the 
Advisory Agreements. The Advisory Agreements also permit the Adviser to 
retain one or more subadvisers for the purpose of managing the 
investments of the MF Fund and the MS Fund. Pursuant to this authority, 
the Adviser has entered into investment subadvisory agreements with one 
Subadviser to provide investment advisory services to the MF Fund and 
with another Subadviser to provide investment advisory service to the 
MS Fund (such agreements with Subadvisers, ``Subadvisory Agreements''). 
Each Subadviser is and each future Subadviser will be registered as an 
investment adviser under the Advisers Act. The Adviser will supervise, 
evaluate and allocate assets to the Subadvisers, and make 
recommendations to the Board about their hiring, retention or release, 
at all times subject to the authority of the Board. The Adviser will 
compensate each Subadviser out of the fees paid to the Adviser under 
the Advisory Agreement.
    3. Applicants request an order to permit the Adviser, subject to 
Board approval, to enter into and materially amend Subadvisory 
Agreements without obtaining shareholder approval. The requested relief 
will not extend to any subadviser that is an affiliated person, as 
defined in section 2(a)(3) of the Act, of the Trust, a Fund or the 
Adviser, other than by reason of serving

[[Page 33377]]

as a subadviser to one or more of the Funds (``Affiliated 
Subadviser'').
    Applicants' Legal Analysis:
    1. Section 15(a) of the Act provides, in relevant part, that it 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 the vote of a majority of the company's outstanding voting 
securities. Rule 18f-2 under the Act provides that each series or class 
of securities in a series investment company affected by a matter must 
approve that matter if the Act requires shareholder approval.
    2. 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.
    3. Applicants assert that the shareholders are relying on the 
Adviser's experience to select one or more Subadvisers best suited to 
achieve a Fund's investment objectives. Applicants assert that, from 
the perspective of the investor, the role of the Subadvisers is 
comparable to that of the individual portfolio managers employed by the 
Adviser. Applicants state that requiring shareholder approval of each 
Subadvisory Agreement would impose costs and unnecessary delays on the 
Funds, and may preclude the Adviser from acting promptly in a manner 
considered advisable by the Board. Applicants note that the Advisory 
Agreement and any Subadvisory Agreement with an Affiliated Subadviser 
will remain subject to section 15(a) of the Act and rule 18f-2 under 
the Act.
    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 requested order, 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 initial shareholder(s) before 
offering shares of that Fund to the public.
    2. Each Fund relying on the requested order will disclose in its 
prospectus the existence, substance, and effect of any order granted 
pursuant to this application. Each Fund will hold itself out to the 
public as utilizing the Manager of Managers Structure. The prospectus 
will prominently disclose that the Adviser has ultimate responsibility 
(subject to oversight by the Board) to oversee the Subadvisers and 
recommend their hiring, termination, and replacement.
    3. Within 90 days of the hiring of a new Subadviser, shareholders 
of the affected Fund will be furnished all information about the new 
Subadviser that would be included in a proxy statement. To meet this 
obligation, each Fund will provide shareholders within 90 days of the 
hiring of a new Subadviser an information statement meeting the 
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 
14A under the Securities Exchange Act of 1934.
    4. The Adviser will not enter into a subadvisory agreement with any 
Affiliated Subadviser without such 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 of new or additional 
Independent Trustees will be placed within the discretion of the then-
existing Independent Trustees.
    6. Whenever a subadviser change is proposed for a Fund with an 
Affiliated Subadviser, 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 Adviser or the Affiliated Subadviser derives an 
inappropriate advantage.
    7. The Adviser will provide general management services to each 
Fund, including overall supervisory responsibility for the general 
management and investment of each Fund's assets and, subject to review 
and approval of the Board, will: (a) Set each Fund's overall investment 
strategies; (b) evaluate, select and recommend Subadvisers to manage 
all or a part of each Fund's assets; (c) allocate and, when 
appropriate, reallocate each Fund's assets among one or more 
Subadvisers; (d) monitor and evaluate the performance of Subadvisers; 
and (e) implement procedures reasonably designed to ensure that the 
Subadvisers comply with each Fund's investment objective, policies and 
restrictions.
    8. No trustee or officer of the Trust or a Fund, or director, 
manager, or officer of the Adviser, will own directly or indirectly 
(other than through a pooled investment vehicle that is not controlled 
by such person), any interest in a Subadviser, except for (a) ownership 
of interests in the Adviser or any entity that controls, is controlled 
by, or is under common control with the Adviser or (b) ownership of 
less than 1% of the outstanding securities of any class of equity or 
debt of any publicly traded company that is either a Subadviser or an 
entity that controls, is controlled by, or is under common control with 
a Subadviser.
    9. 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.
Cathy H. Ahn,
Deputy Secretary.
[FR Doc. 2011-14063 Filed 6-7-11; 8:45 am]
BILLING CODE 8011-01-P


