
[Federal Register Volume 81, Number 38 (Friday, February 26, 2016)]
[Notices]
[Pages 9898-9900]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-04113]



[[Page 9898]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 4337/803-00222]


Brookfield Asset Management Private Institutional Capital Adviser 
US, LLC et al.; Notice of Application

February 22, 2016.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for an exemptive order under Section 206A 
of the Investment Advisers Act of 1940 (the ``Advisers Act'') and Rule 
206(4)-5(e).

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

SUMMARY: 

Applicants: Brookfield Asset Management Private Institutional Capital 
Adviser US, LLC and Brookfield Asset Management Private Institutional 
Capital Adviser (Canada), L.P. (``Applicants'').

Relevant Advisers Act Sections: Exemption requested under section 206A 
of the Advisers Act and rule 206(4)-5(e) from rule 206(4)-5(a)(1) under 
the Advisers Act.

Summary of Application: Applicants request that the Commission issue an 
order under section 206A of the Advisers Act and rule 206(4)-5(e) 
exempting them from rule 206(4)-5(a)(1) under the Advisers Act to 
permit Applicants to receive compensation for investment advisory 
services provided to government entities within the two-year period 
following a contribution by a covered associate of Applicant to an 
official of the government entities.

Filing Dates: The application was filed on January 29, 2014, and 
amended and restated applications were filed on February 26, 2014, 
August 13, 2014 and October 7, 2015.

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 March 18, 2016, and should be accompanied by proof of service 
on Applicants, in the form of an affidavit or, for lawyers, a 
certificate of service. Pursuant to rule 0-5 under the Advisers Act, 
hearing requests should state the nature of the writer's interest, any 
facts bearing upon the desirability of a hearing on the matter, the 
reason for the request, and the issues contested. Persons may request 
notification of a hearing by writing to the Commission's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street 
NE., Washington, DC 20549-1090. Applicants, Brookfield Asset Management 
Private Institutional Capital Adviser US, LLC et al., 250 Vesey Street, 
15th Floor, New York, NY 10281.

FOR FURTHER INFORMATION CONTACT: Aaron T. Gilbride, Senior Counsel or 
Sara P. Crovitz, Assistant Chief Counsel, at (202) 551-6825 (Division 
of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained via the 
Commission's Web site either at http://www.sec.gov/rules/iareleases.shtml or by searching for the file number, or for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.

Applicant's Representations

    1. Brookfield Asset Management Private Institutional Capital 
Adviser US, LLC (``Brookfield US'') and Brookfield Asset Management 
Private Institutional Capital Adviser (Canada), L.P. (``Brookfield 
Canada'' and, together with Brookfield US, the ``Applicants''), are 
affiliated asset management companies registered with the Commission as 
investment advisers under the Advisers Act and are indirectly wholly-
owned by Brookfield Asset Management, Inc., a public company. 
Brookfield US advises, among other private funds, Brookfield Strategic 
Real Estate Partners B L.P. (``Fund A''), a private fund that is part 
of Brookfield's Real Estate Platform, and Brookfield Canada advises, 
among other private funds, Brookfield Infrastructure Fund II-B, L.P. 
(``Fund B''), a private fund that is part of Brookfield's 
Infrastructure Platform. Fund A and Fund B are collectively referred to 
as the ``Funds.'' Both Funds are excluded from the definition of 
``investment company'' by Section 3(c)(7) of the Investment Company Act 
of 1940. Certain public pension plans that are government entities of 
New York City (the ``Clients'') are invested in the Funds. The 
investment decisions for the Clients are made by the respective boards 
of trustees, which range from seven to 15 members, and include certain 
elected officials sitting ex officio; appointees of elected officials; 
and representatives of employee groups that participate in the system. 
Either the Mayor of New York City or one or more of the Mayor's 
appointees sit on each board.
    2. On January 13, 2013, Richard B. Clark, a Senior Managing 
Partner, Global Head of Brookfield's Real Estate Platform, Brookfield 
Property Group, and Non-Executive Chairman of the Board of Brookfield 
Office Properties (``BPO''), a non-investment adviser commercial real 
estate corporation that owns, manages, and develops real estate and is 
affiliated with the Applicants and Brookfield (the ``Contributor''), 
made a $400 campaign contribution (the ``Contribution'') to the 
campaign of Christine Quinn (the ``Official''), a New York City 
Councilwoman who was Council Speaker. The Contribution was given in 
connection with a fundraiser for the Official's campaign on January 13, 
2013, which the Contributor attended. At the time of the Contribution, 
the Official was a candidate for New York City Mayor.
    3. Applicants represent that the amount of the Contribution, 
profile of the candidate, and characteristics of the campaign fall 
generally within the pattern of the Contributor's other political 
donations.
    4. Applicants represent that the Contributor has confirmed that he 
has not, at any time, had any contact with the Official concerning 
campaign contributions, nor has the Contributor told any prospective or 
existing investor (including the Clients) about the Contribution.
    5. Applicants represent that the Contributor's role with the 
Clients was limited to making substantive presentations to the Clients' 
representatives and consultants about the Real Estate Platform 
Brookfield US manages. Applicants represent that the Contributor had no 
contact with any representative of the Clients outside of such 
presentation and no contact with any member of the board of trustees 
which oversees the investment decisions of the Clients.
    6. Applicants represent that the Clients made their investment in 
Fund A on May 23, 2012, approximately eight months prior to the 
Contributor making the Contribution. The Clients invested in Fund B on 
July 8, 2013. Applicants represent that the Contributor was not 
involved in any contacts with the Clients, their representatives or the 
New York City Comptroller's office in relation to their investment in 
Fund B.
    7. Applicants represent that the Contributor did not solicit any 
other persons to make contributions to the Official's campaign and did 
not arrange any introductions to potential supporters.
    8. Applicants represent that the Contribution was discovered by the 
Contributor following completion of his annual certification regarding 
compliance with the Applicants'

[[Page 9899]]

Compliance Manual (which includes a policy and procedure designed to 
ensure compliance with laws, rules and regulations regarding pay-to-
play practices). Applicants represent that the Contributor immediately 
notified the Chief Compliance Officer and obtained a full refund within 
days after the Contribution was discovered. Applicants represent that 
Brookfield US established an escrow account for Fund A in which all 
management fees attributable to the Clients' investment in Fund A 
dating back to January 13, 2013, the date of the Contribution, are 
segregated. Applicants represent that at the time of the Clients' 
investment in Fund B, Brookfield Canada established an escrow account 
for Fund B in which all management fees attributable to Clients' 
investment in Fund B are segregated. Applicants represent that they 
also notified the Clients that if the Commission does not grant the 
exemption, the Applicants will refund the management fees related to 
the Clients' investments during the two-year period to the Funds, and 
when carried interest is realized, the portion attributable to the 
Clients' investments during the two-year time-out period will be 
calculated and refunded to the Funds.
    9. Applicants represent that at no time did any of Applicant's 
other employees have any knowledge that the Contribution had been made 
prior to its discovery by the Applicants' Chief Compliance Officer on 
February 22, 2013.
    10. Applicants represent that they had adopted and implemented 
compliance procedures meeting the requirements of rule 206(4)-5. 
Applicants represent that their compliance procedures prohibit 
contributions by covered associates to state or local candidates or 
officials. Applicants represent that their compliance procedures apply 
to all of Applicants' covered associates, and those who may become 
covered associates. Applicant represents that all employees are 
required to certify their compliance on a periodic basis.

Applicants' Legal Analysis

    1. Rule 206(4)-5(a)(1) under the Advisers Act prohibits a 
registered investment adviser from providing investment advisory 
services for compensation to a government entity within two years after 
a contribution to an official of the government entity is made by the 
investment adviser or any covered associate of the investment adviser. 
The Clients are each a ``government entity,'' as defined in rule 
206(4)-5(f)(5), the Contributor is a ``covered associate'' as defined 
in rule 206(4)-5(f)(2), and the Official is an ``official'' as defined 
in rule 206(4)-5(f)(6). Rule 206(4)-5(c) provides that when a 
government entity invests in a covered investment pool, the investment 
adviser to that covered investment pool is treated as providing 
advisory services directly to the government entity. The Funds are each 
a ``covered investment pool,'' as defined in rule 206(4)-5(f)(3)(ii).
    2. Section 206A of the Advisers Act grants the Commission the 
authority to ``conditionally or unconditionally exempt any person or 
transaction . . . from any provision or provisions of [the Advisers 
Act] or of any rule or regulation thereunder, if and to the extent that 
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 Advisers Act].''
    3. Rule 206(4)-5(e) provides that the Commission may exempt an 
investment adviser from the prohibition under rule 206(4)-5(a)(1) upon 
consideration of the factors listed below, among others:
    (1) Whether the 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 Advisers 
Act;
    (2) Whether the investment adviser: (i) Before the contribution 
resulting in the prohibition was made, adopted and implemented policies 
and procedures reasonably designed to prevent violations of the rule; 
and (ii) prior to or at the time the contribution which resulted in 
such prohibition was made, had no actual knowledge of the contribution; 
and (iii) after learning of the contribution: (A) Has taken all 
available steps to cause the contributor involved in making the 
contribution which resulted in such prohibition to obtain a return of 
the contribution; and (B) has taken such other remedial or preventive 
measures as may be appropriate under the circumstances;
    (3) Whether, at the time of the contribution, the contributor was a 
covered associate or otherwise an employee of the investment adviser, 
or was seeking such employment;
    (4) The timing and amount of the contribution which resulted in the 
prohibition;
    (5) The nature of the election (e.g., federal, state or local); and
    (6) The contributor's apparent intent or motive in making the 
contribution which resulted in the prohibition, as evidenced by the 
facts and circumstances surrounding such contribution.
    4. Applicants request an order pursuant to section 206A and rule 
206(4)-5(e), exempting them from the two-year prohibition on 
compensation imposed by rule 206(4)-5(a)(1) with respect to investment 
advisory services provided to the Clients within the two-year period 
following the Contribution.
    5. Applicants submit that the exemption is necessary and 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policy and 
provisions of the Advisers Act. Applicants further submit that the 
other factors set forth in rule 206(4)-5(e) similarly weigh in favor of 
granting an exemption to the Applicants to avoid consequences 
disproportionate to the violation.
    6. Applicants state that the relationship with the Clients pre-date 
the Contribution and that only the investment in Fund B (in which the 
Contributor did not play a role) was made subsequent to the 
Contribution. Applicants state that the Contribution was made eight 
months after the Clients' investment in Fund A. Applicants note that 
they established and maintain their relationships with the Clients on 
an arms'-length basis free from any improper influence as a result of 
the Contribution.
    7. Applicants state that at all relevant times they had policies 
which were fully compliant with rule 206(4)-5's requirements at the 
time of the Contribution. Applicants further state that at no time did 
Applicants or any employees of Applicants, other than the Contributor, 
have any knowledge that the Contribution had been made prior to its 
discovery by Applicants' Chief Compliance Officer in February 2013. 
After learning of the Contribution, Applicants and the Contributor took 
all available steps to obtain a return of the Contribution. Escrow 
accounts were set up for the Clients at both Funds and all fees charged 
to the Clients' capital accounts in the Funds since January 13, 2013 
were deposited by the Applicants in the accounts for immediate return 
to the Funds should an exemptive order not be granted.
    8. Applicants state that the Contributor's apparent intent in 
making the Contribution was not to influence the selection or retention 
of the Applicants. The amount of the Contribution, profile of the 
candidate, and characteristics of the campaign fall generally within 
the pattern of the Contributor's other political donations. Applicants 
further state, as discussed above, that the Contributor's involvement 
with the Clients has been limited to making substantive

[[Page 9900]]

presentations to the Clients' representatives and consultants about the 
Real Estate Platform Brookfield US manages. The Contributor has no 
contact with any representative of a Client outside of those 
presentations and no contact with any member of a Client's board.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-04113 Filed 2-25-16; 8:45 am]
BILLING CODE 8011-01-P


