
[Federal Register Volume 79, Number 84 (Thursday, May 1, 2014)]
[Notices]
[Pages 24763-24765]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-09927]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 31029; 812-14144]


Steben Select Multi-Strategy Fund and Steben & Company, Inc.; 
Notice of Application

April 25, 2014.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from sections 18(c) 
and 18(i) of the Act and for an order pursuant to

[[Page 24764]]

section 17(d) of the Act and rule 17d-1 under the Act.

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SUMMARY OF APPLICATION: Applicants request an order to permit certain 
registered closed-end management investment companies to issue multiple 
classes of shares of beneficial interest (``Shares'') and to impose 
asset-based service and/or distribution fees and contingent deferred 
sales loads (``CDSCs'').

Applicants: Steben Select Multi-Strategy Fund (the ``Fund'') and Steben 
& Company, Inc. (the ``Adviser'').

DATES:  Filing Dates: The application was filed on April 5, 2013, and 
amended on March 21, 2014 and April 17, 2014.

Hearing or Notification of Hearing: An order granting the requested 
relief 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 20, 2014, 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, c/o Francine J. 
Rosenberger, Esq., Steben & Company, Inc., 9711 Washingtonian 
Boulevard, Suite 400, Gaithersburg, MD 20878.

FOR FURTHER INFORMATION CONTACT: Mark N. Zaruba, Senior Counsel, at 
(202) 551-6878 or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(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 Web site by searching for the file number, or an applicant 
using the Company name box, at http://www.sec.gov/search/search.htm or 
by calling (202) 551-8090.

Applicants' Representations

    1. The Fund is a continuously offered non-diversified closed-end 
management investment company registered under the Act and organized as 
a Delaware statutory trust. The Fund operates as a feeder fund in a 
master-feeder structure and invests substantially all of its assets in 
the Steben Select Multi-Strategy Master Fund (the ``Master Fund''). The 
Master Fund invests in non-traditional or ``alternative'' strategies 
which may include investment funds commonly referred to as ``hedge 
funds.''
    2. The Adviser, a Maryland corporation, is registered as an 
investment adviser under the Investment Advisers Act of 1940 and will 
serve as investment adviser to the Fund. A broker-dealer registered 
under the Securities Exchange Act of 1934 (``1934 Act'') will act as 
the principal underwriter for the distribution of Shares \1\ of the 
Fund (the ``Distributor''). The Adviser, which is a registered broker-
dealer, may serve as the Distributor or the Distributor may be an 
affiliated person, as defined in section 2(a)(3) of the Act, of the 
Adviser.
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    \1\ ``Shares'' includes any other equivalent designation of a 
proportionate ownership interest of the Fund (or any other 
registered closed-end management investment company relying on the 
requested order).
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    3. The Fund continuously offers its Shares to the public under the 
Securities Act of 1933, as amended. Shares of the Fund are not listed 
on any securities exchange and do not trade on an over-the-counter 
system such as Nasdaq. Applicants do not expect that any secondary 
market will develop for the Shares.
    4. The Fund currently offers a single class of Shares at net asset 
value per share plus a servicing fee.\2\ The Fund proposes to offer 
multiple classes of Shares at net asset value per share that may (but 
would not necessarily) be subject to a front-end sales load, an annual 
asset-based service and/or distribution fee, a minimum purchase 
requirement and/or an Early Withdrawal Fee (defined below), in each 
case as set forth in the Fund's prospectus.
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    \2\ Before relying on the relief requested in the application, 
the Fund will convert the servicing fee currently charged to holders 
of its current class of Shares to an asset-based service and/or 
distribution fee that complies with rule 12b-1 under the Act.
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    5. In order to provide a limited degree of liquidity to 
shareholders, the Fund may from time to time offer to repurchase Shares 
at their then current net asset value in accordance with rule 13e-4 
under the 1934 Act pursuant to written tenders by shareholders. 
Repurchases will be made at such times, in such amounts and on such 
terms as may be determined by the Fund's board of trustees (``Board''), 
in its sole discretion.\3\ The Adviser expects to ordinarily recommend 
that the Board authorize the Fund to offer to repurchase Shares from 
shareholders quarterly.
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    \3\ Shares will be subject to an early withdrawal fee at a rate 
of 2% of the aggregate net asset value of the shareholder's Shares 
repurchased by the Fund (the ``Early Withdrawal Fee'') if the 
interval between the date of purchase of the Shares and the 
valuation date with respect to the repurchase of those Shares is 
less than one year. The Early Withdrawal Fee will apply equally to 
all shareholders of the Fund, regardless of class, consistent with 
section 18 of the Act and rule 18f-3 under the Act. To the extent 
the Fund determines to waive, impose scheduled variations of, or 
eliminate the Early Withdrawal Fee, it will do so consistently with 
the requirements of rule 22d-1 under the Act and apply uniformly to 
all shareholders of the Fund.
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    6. Applicants request that the order also apply to any other 
continuously offered registered closed-end management investment 
company existing now or in the future for which the Adviser or any 
entity controlling, controlled by, or under common control with the 
Adviser acts as investment adviser, and which provides periodic 
liquidity with respect to its Shares through tender offers conducted in 
compliance with rule 13e-4 under the 1934 Act.\4\
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    \4\ The Fund and any other investment company relying on the 
requested relief will do so in a manner consistent with the terms 
and conditions of the application. Applicants represent that any 
person presently intending to rely on the requested relief is listed 
as an applicant.
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    7. Applicants represent that any asset-based service and/or 
distribution fees will comply with the provisions of rule 2830(d) of 
the Conduct Rules of the National Association of Securities Dealers, 
Inc. (``NASD Conduct Rule 2830'') as if that rule applied to the 
Fund.\5\ Applicants also represent that the Fund will disclose in its 
prospectus, the fees, expenses and other characteristics of each class 
of Shares offered for sale by the prospectus as is required for open-
end multiple class funds under Form N-1A. As is required for open-end 
funds, the Fund will disclose its expenses in shareholder reports, and 
disclose any arrangements that result in breakpoints in or elimination 
of sales loads in its prospectus.\6\ The Fund will also comply with any 
requirements that may be adopted by the Commission or FINRA regarding 
disclosure at the point of sale

[[Page 24765]]

and in transaction confirmations about the costs and conflicts of 
interest arising out of the distribution of open-end investment company 
shares, and regarding prospectus disclosure of sales loads and revenue 
sharing arrangements as if those requirements applied to the Fund.\7\
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    \5\ All references to NASD Conduct Rule 2830 include any 
successor or replacement rule that may be adopted by the Financial 
Industry Regulatory Authority (``FINRA'').
    \6\ See Shareholder Reports and Quarterly Portfolio Disclosure 
of Registered Management Investment Companies, Investment Company 
Act Release No. 26372 (Feb. 27, 2004) (adopting release) (requiring 
open-end investment companies to disclose fund expenses in 
shareholder reports); and Disclosure of Breakpoint Discounts by 
Mutual Funds, Investment Company Act Release No. 26464 (June 7, 
2004) (adopting release) (requiring open-end investment companies to 
provide prospectus disclosure of certain sales load information).
    \7\ See, e.g., Confirmation Requirements and Point of Sale 
Disclosure Requirements for Transactions in Certain Mutual Funds and 
Other Securities, and Other Confirmation Requirement Amendments, and 
Amendments to the Registration Form for Mutual Funds, Investment 
Company Act Release No. 26341 (Jan. 29, 2004) (proposing release).
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    8. The Fund will allocate all expenses incurred by it among the 
various classes of Shares based on the net assets of the Fund 
attributable to each class, except that the net asset value and 
expenses of each class will reflect distribution fees, service fees, 
and any other incremental expenses of that class. Expenses of a Fund 
allocated to a particular class of Shares will be borne on a pro rata 
basis by each outstanding Share of that class. Applicants state that 
the Fund will comply with the provisions of rule 18f-3 under the Act as 
if it were an open-end investment company.
    9. In the event the Fund imposes a contingent deferred sales charge 
(``CDSC''), the applicants will comply with the provisions of rule 6c-
10 under the Act, as if that rule applied to closed-end management 
investment companies. With respect to any waiver of, scheduled 
variation in, or elimination of the CDSC, the Fund will comply with 
rule 22d-1 under the Act as if the Fund were an open-end investment 
company.

Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(c) of the Act provides, in relevant part, that a 
closed-end investment company may not issue or sell any senior security 
if, immediately thereafter, the company has outstanding more than one 
class of senior security. Applicants state that the creation of 
multiple classes of Shares of the Fund may be prohibited by section 
18(c).
    2. Section 18(i) of the Act provides that each share of stock 
issued by a registered management investment company will be a voting 
stock and have equal voting rights with every other outstanding voting 
stock. Applicants state that permitting multiple classes of Shares of 
the Fund may violate section 18(i) of the Act because each class would 
be entitled to exclusive voting rights with respect to matters solely 
related to that class.
    3. 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 provision of the Act, or from any 
rule under the Act, if and to the extent 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 request an exemption under section 
6(c) from sections 18(c) and 18(i) to permit the Fund to issue multiple 
classes of Shares.
    4. Applicants submit that the proposed allocation of expenses and 
voting rights among multiple classes is equitable and will not 
discriminate against any group or class of shareholders. Applicants 
submit that the proposed arrangements would permit the Fund to 
facilitate the distribution of its Shares and provide investors with a 
broader choice of shareholder options. Applicants assert that the 
proposed closed-end investment company multiple class structure does 
not raise the concerns underlying section 18 of the Act to any greater 
degree than open-end investment companies' multiple class structures 
that are permitted by rule 18f-3 under the Act. Applicants state that 
the Fund will comply with the provisions of rule 18f-3 as if it were an 
open-end investment company.

CDSCs

    1. Applicants believe that the requested relief meets the standards 
of section 6(c) of the Act. Rule 6c-10 under the Act permits open-end 
investment companies to impose CDSCs, subject to certain conditions. 
Applicants state that any CDSC imposed by the Fund will comply with 
rule 6c-10 under the Act as if the rule were applicable to closed-end 
investment companies. The Fund also will disclose CDSCs in accordance 
with the requirements of Form N-1A concerning CDSCs as if the Fund were 
an open-end investment company. Applicants further state that the Fund 
will apply the CDSC (and any waivers or scheduled variations of the 
CDSC) uniformly to all shareholders in a given class and consistently 
with the requirements of rule 22d-1 under the Act.

Asset-Based Service and/or Distribution Fees

    1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
an affiliated person of a registered investment company or an 
affiliated person of such person, acting as principal, from 
participating in or effecting any transaction in connection with any 
joint enterprise or joint arrangement in which the investment company 
participates unless the Commission issues an order permitting the 
transaction. In reviewing applications submitted under section 17(d) 
and rule 17d-1, the Commission considers whether the participation of 
the investment company in a joint enterprise or joint arrangement is 
consistent with the provisions, policies and purposes of the Act, and 
the extent to which the participation is on a basis different from or 
less advantageous than that of other participants.
    2. Rule 17d-3 under the Act provides an exemption from section 
17(d) and rule 17d-1 to permit open-end investment companies to enter 
into distribution arrangements pursuant to rule 12b-1 under the Act. 
Applicants request an order under section 17(d) and rule 17d-1 under 
the Act to permit the Fund to impose asset-based service and/or 
distribution fees. Applicants have agreed to comply with rules 12b-1 
and 17d-3 as if those rules applied to closed-end investment companies.

Applicants' Condition

    The Fund agrees that any order granting the requested relief will 
be subject to the following condition:
    Applicants will comply with the provisions of rules 6c-10, 12b-1, 
17d-3, 18f-3 and 22d-1 under the Act, as amended from time to time or 
replaced, as if those rules applied to closed-end management investment 
companies, and will comply with the NASD Conduct Rule 2830, as amended 
from time to time, as if that rule applied to all closed-end management 
investment companies.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-09927 Filed 4-30-14; 8:45 am]
BILLING CODE 8011-01-P


