
[Federal Register Volume 82, Number 126 (Monday, July 3, 2017)]
[Notices]
[Pages 30926-30931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-13893]



[[Page 30926]]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 32713; 813-00386]


The Boston Consulting Group, Inc. and Green Falcon Investors I, 
L.P.

June 27, 2017.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice.

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    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 and the rules and regulations 
thereunder, except sections 9, 17, 30, and 36 through 53 of the Act, 
and the rules and regulations thereunder (the ``Rules and 
Regulations''). With respect to sections 17(a), (d), (f), (g) and (j) 
and 30(a), (b), (e), and (h) of the Act, and the Rules and Regulations, 
and rule 38a-1 under the Act, the exemption is limited as set forth in 
the application.

Summary of Application: Applicants request an order to exempt certain 
limited partnerships and other entities formed for the benefit of 
eligible employees of The Boston Consulting Group, Inc. (``BCG'') and 
its affiliates from certain provisions of the Act. Each such entity 
will be an ``employees' securities company'' within the meaning of 
section 2(a)(13) of the Act.

Applicants: BCG and Green Falcon Investors I, L.P. (the ``Existing 
Fund'').

Filing Dates: The application was filed on September 16, 2016 and was 
amended on March 08, 2017.

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 July 24, 2017, 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: One Beacon Street, 
10th Floor, Boston, Massachusetts 02108.

FOR FURTHER INFORMATION CONTACT: Rachel Loko, Senior Counsel, at (202) 
551-6883 or Aaron Gilbride, Acting Branch Chief, at (202) 551-6906 
(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 for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. BCG, a Massachusetts corporation, is a management consulting 
firm. Any entity controlling, controlled by, or under common control 
with BCG is each a ``BCG Entity''.
    2. The Existing Fund is a Delaware limited partnership formed in 
2016 pursuant to a limited partnership agreement (the ``Existing Fund 
Agreement''). The applicants may in the future offer additional pooled 
investment vehicles substantially similar in all material respects 
(other than form of organization, investment objective and strategy, 
and other differences described in the application) to Eligible 
Investors (as defined below) (the ``Subsequent Funds'' and, together 
with the Existing Fund, the ``Investment Funds'').\1\ The applicants 
anticipate that each Subsequent Fund also will be structured as a 
limited partnership, although a Subsequent Fund could be structured as 
a domestic or offshore general partnership, limited liability company 
or corporation. The operating agreements of the Investment Funds are 
the ``Investment Fund Agreements.'' An Investment Fund may include a 
single vehicle designed to issue interests in series or having similar 
features to enable a single Investment Fund to function as if it were 
several successive Investment Funds for ease of administration. Each 
Investment Fund will be an employees' securities company within the 
meaning of section 2(a)(13) of the Act.
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    \1\ Each Investment Fund will operate either as a closed-end or 
open-end management investment company and a particular Investment 
Fund will operate as a ``diversified'' or ``non-diversified'' 
vehicle within the meaning of the Act.
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    3. The Existing Fund is organized to provide a benefit for Eligible 
Investors by providing the opportunity to participate in certain 
investment opportunities which would in all likelihood be unavailable 
to such investors acting individually. The Investment Funds will invest 
in certain investment opportunities that come to the attention of BCG 
or a BCG Entity. These opportunities may include investments in 
operating businesses, separate accounts with registered or unregistered 
investment advisers, investments in pooled investment vehicles such as 
registered investment companies, investment companies exempt from 
registration under the Act, commodity pools, and other securities 
investments (each particular investment being referred to herein as an 
``Investment''). Applicants submit that a substantial community of 
interest exists among BCG, the BCG Entities and the current and future 
members (``Members'') of the Existing Fund, given the purposes and 
operations of the Existing Fund and the nature of the Eligible 
Investors participating in such fund. BCG will ``control'' each 
Investment Fund within the meaning of section 2(a)(9) of the Act.
    4. Interests in an Investment Fund (``Interests'') will be offered 
and sold by the Investment Funds in reliance upon the exemption from 
registration under section 4(2) of the Securities Act of 1933 (the 
``Securities Act'') or pursuant to Regulation D or Regulation S 
promulgated under the Securities Act. Interests in any Investment Fund 
(other than short-term paper) will be offered only to BCG, BCG 
Entities, or Eligible Investors. ``Eligible Investors'' means persons 
who at the time of investment are: (a) Current or former employees, 
partners, principals, officers and directors of BCG or a BCG Entity 
(including people involved in administration, marketing, and operations 
of BCG or a BCG Entity) (``Eligible Employees''), (b) the immediate 
family members of Eligible Employees, which are parents, children, 
spouses of children, spouses, and siblings, including step or adoptive 
relationships (``Immediate Family Members''),\2\ and (c) trusts or 
other entities or arrangements the sole beneficiaries of which consist 
of Eligible Employees or their Immediate Family Members, or the 
settlors and the trustees of which consist of Eligible Employees or 
Eligible Employees together with Immediate Family Members (``Eligible 
Investment Vehicles''). To qualify as an Eligible Investor with respect 
to an

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Investment Fund, each Eligible Employee and Immediate Family Member 
must, if purchasing an Interest from an Investment Fund or from a 
Member, be an ``accredited investor'' as that term is defined in Rule 
501(a)(5) or Rule 501(a)(6) of Regulation D under the Securities Act 
except that a maximum of 35 Eligible Employees who are sophisticated 
investors but who are not accredited investors may become investors in 
an Investment Fund if each of them falls into one of the following 
categories: (i) An Eligible Employee who (a) has a graduate degree in 
business, law or accounting, (b) has a minimum of five years of 
consulting, investment management, investment banking, legal or similar 
business experience, and (c) had reportable income from all sources 
(including any profit shares or bonus) of $100,000 in each of the two 
most recent years immediately preceding the Eligible Employee's 
admission as an investor of the Investment Fund and has a reasonable 
expectation of income from all sources of at least $140,000 in each 
year in which the Eligible Employee will be committed to make 
investments in the Investment Fund; or (ii) Eligible Employees who are 
``knowledgeable employees'' as defined in Rule 3c-5 under the 1940 Act, 
of the Investment Fund (with the Investment Fund treated as though it 
were a ``covered company'' for purposes of the rule).\3\
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    \2\ In order to ensure that a close nexus between the Eligible 
Investors and BCG is maintained, the terms of each governing 
document for an Investment Fund will provide that any Immediate 
Family Member participating in such Investment Fund (either through 
direct beneficial ownership of an interest or as an indirect 
beneficial owner through an Eligible Investment Vehicle) cannot, in 
any event, be more than two generations removed from an Eligible 
Employee.
    \3\ An Eligible Employee described in clause (i) above will only 
be permitted to invest in an Investment Fund if such individual 
represents and warrants that he or she will not commit in any year 
more than 10% of his or her income from all sources for the 
immediately preceding year, in the aggregate, in an Investment Fund 
and in all other Investment Funds in which that investor has 
previously invested.
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    BCG or any BCG Entity that acquires Interests in an Investment Fund 
will be an accredited investor. An Eligible Investment Vehicle may 
purchase an Interest from an Investment Fund or from a Member only if 
either (i) the investment vehicle is an ``accredited investor'', as 
defined in Rule 501(a) of Regulation D under the Securities Act or (ii) 
the Eligible Employee is a settlor \4\ and principal investment 
decision-maker with respect to the investment vehicle. Eligible 
Investment Vehicles that are not accredited investors will be counted 
in accordance with Regulation D toward the 35 non-accredited investor 
limit discussed above. Prior to offering Interests to an Eligible 
Employee or Immediate Family Member, the General Partner must 
reasonably believe that the Eligible Employee or Immediate Family 
Member is a sophisticated investor capable of understanding and 
evaluating the risks of participating in the Investment Fund without 
the benefit of regulatory safeguards. The General Partner may impose 
more restrictive standards for Eligible Investors in its discretion. 
The beneficial owners of an Eligible Investment Vehicle will be persons 
eligible to hold interests in employees' securities companies as 
defined in section 2(a)(13) of the Act.
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    \4\ If an Eligible Investment Vehicle is an entity or 
arrangement other than a trust, (a) the reference to ``settlor'' 
shall be construed to mean a person who created the vehicle or 
arrangement, alone or together with others, and also 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 of a trust.
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    5. An Investment Fund will be managed by its general partner 
(``General Partner''). The General Partner of the Existing Fund is a 
limited liability company. The General Partner will be wholly owned by 
BCG and will be managed by BCG through its executive committee and/or 
such other committee to be formed for such purpose (``Investment 
Committee''). The Investment Committee will be comprised of senior 
professionals of BCG. The chief function of the Investment Committee 
will be to review and select Investments for an Investment Fund (or a 
series thereof) from time to time. The General Partner will register as 
an investment adviser under the Investment Advisers Act of 1940 (the 
``Advisers Act''), if such registration is required under the Advisers 
Act and the rules thereunder.
    6. Administration of each Investment Fund will be vested in the 
General Partner. The General Partner may determine to delegate 
administrative activities to a third-party administrator. If a third-
party administrator is retained by the General Partner, the 
administrator will not recommend Investments or exercise investment 
discretion. The only functions of the administrator will be 
ministerial.
    7. The specific investment objectives and strategies for an 
Investment Fund will be set forth in an informative memorandum relating 
to the Interests being offered, and in the relevant Investment Fund 
Agreement, and each Eligible Investor will receive a copy of the 
informative memorandum and Investment Fund Agreement before making an 
investment in the Investment Fund. The terms of an Investment Fund will 
be disclosed to each Eligible Investor at the time the investor is 
invited to participate in the Investment Fund.
    8. The value of the Members' capital accounts will be determined at 
such times as the General Partner deems appropriate or necessary; 
however, such valuation will be done at least annually at the 
Investment Fund's fiscal year-end. The General Partner will value the 
assets held by an Investment Fund at the current market price (closing 
price) in the case of marketable securities. All other securities or 
assets will be valued by the General Partner in good faith at fair 
value.
    9. Each Investment Fund will generally bear its own expenses. BCG 
or a BCG Entity, as applicable, may be reimbursed by an Investment Fund 
for reasonable and necessary out-of-pocket costs directly associated 
with the organization and operation of the Investment Fund, including 
administrative expenses. There will be no allocation of any of BCG's 
operating expenses to the Investment Funds. Some of the investment 
opportunities available to an Investment Fund may involve parties for 
which BCG was, is or will be retained to act as management consultants, 
and BCG may be paid by such parties for management consulting services 
and for related disbursements and charges. These amounts paid to BCG 
will not be paid by an Investment Fund itself but by the entities in 
which an Investment Fund invests or their sponsors. No management fee 
or other compensation will be paid by an Investment Fund or the Members 
to the Investment Committee, any member of the Investment Committee, or 
the General Partner. Also, no fee of any kind will be charged in 
connection with the sale of Interests in an Investment Fund.
    10. Within 120 days after the end of its fiscal year, or as soon as 
practicable thereafter, each Investment Fund will send its Members an 
annual report regarding its operations. The annual report of the 
Investment Fund will contain financial statements audited by an 
independent accounting firm. For purposes of this requirement, 
``audit'' has the meaning defined in rule 1-02(d) of Regulation S-X. 
The Investment Fund will maintain a file containing any financial 
statements and other information received from the issuers of the 
Investments held by the Investment Fund, and will make such file 
available for inspection by its Members in accordance with its 
Investment Fund Agreement. Each Investment Fund, within 90 days or as 
soon as practicable after the end of each fiscal year of the Investment 
Fund, will transmit a report to each Member setting out information 
with respect to that Member's distributive share of income, gains, 
losses, credits and other items for U.S. federal income tax purposes, 
resulting from the operation of the Investment Fund during that year.
    11. Members will not be entitled to redeem their Interests in a 
closed-end

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Investment Fund. A Member will be permitted to transfer his or her 
Interest only with the express consent of the General Partner, which 
may be withheld in the discretion of the General Partner, and then only 
to BCG, a BCG Entity or an Eligible Investor. A Member will not be 
subject to removal except for good cause as determined by the General 
Partner, or if the General Partner, in its discretion, deems such 
withdrawal to be in the best interest of the Investment Fund. The 
Interests of a Member who is no longer eligible to own interests in an 
employees' securities company as defined in section 2(a)(13) of the Act 
will be repurchased, subject to the minimum payment provisions 
described below. The General Partner does not currently intend to 
require any Member to withdraw.\5\ Upon withdrawal or sale of a 
Member's Interest, the Investment Fund or purchaser will at a minimum 
pay to the Member the lesser of: (a) The amount of such Member's 
capital contributions plus interest (calculated at a rate determined by 
the General Partner to be reasonably comparable to interest earned by 
the Investment Fund on temporary investments) less prior distributions; 
and (b) the fair market value of the Interest as determined at the time 
of such withdrawal or sale in good faith by the General Partner. If a 
Member ceases to be a partner or employee of BCG or any BCG Entity, 
such Member may continue to be a Member of the Investment Fund, 
although with the consent of the General Partner such Member may be 
permitted to reduce the unfunded portion of his or her Capital 
Commitment (as defined below), assign his or her Interest to other 
Eligible Investors and/or be paid for his or her Interest as described 
above. The terms of any purchase will apply equally to any Immediate 
Family Member of, or Eligible Investment Vehicle related to, an 
Eligible Employee.
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    \5\ The following circumstances, among others, could warrant the 
withdrawal of a Member or sale of a Member's Interests to another 
Eligible Investor: If a Member who is an Eligible Employee ceases to 
be a partner or employee of BCG (including as a result of such 
Eligible Employee's death, disability, termination, retirement or 
withdrawal), an Immediate Family Member's or Eligible Investment 
Vehicle's related Eligible Employee ceases to be a partner or 
employee of BCG (including as a result of such Eligible employee's 
death, disability, termination, retirement or withdrawal), adverse 
tax consequences were to inure to the Investment Fund, the General 
Partner or any Member were a particular Member to remain, or a 
situation in which the continued membership of the Member would 
violate applicable law or regulations.
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    12. Each Member will commit to contribute a fixed amount of capital 
to an Investment Fund (``Capital Commitment'').\6\ The terms and 
conditions relating to Capital Commitments and Capital Contributions 
will be fully disclosed to Eligible Investors prior to the acceptance 
of their subscription documents. To provide flexibility in connection 
with an Investment Fund's obligation to contribute capital to fund an 
Investment, and the associated obligation of the Members to make 
capital contributions with respect to their Capital Commitments, an 
Investment Fund Agreement may provide that the Investment Fund may 
engage in borrowings in connection with such funding of Investments. 
Any borrowings by an Investment Fund with respect to the funding of 
Investments will be non-recourse to the Members,\7\ but may be secured 
by a pledge of the Members' respective capital accounts and unfunded 
Capital Commitments. An Investment Fund will not borrow from any person 
that is not a BCG Entity if the borrowing would cause any person not 
named in section 2(a)(13) of the Act to own any outstanding securities 
of the Investment Fund (other than short-term paper). If BCG or a BCG 
Entity makes a loan to an Investment Fund, it (as lender) will be 
entitled to receive interest, provided that the rate will be no less 
favorable to the borrower than the rate that could be obtained on an 
arm's length basis. An Investment Fund will not lend any funds to BCG 
or a BCG Entity. If BCG or a BCG Entity extends a loan to an Eligible 
Investor in respect of any Investment Fund, the loan will be made at an 
interest rate no less favorable than that which could be obtained on an 
arm's length basis. Loans will not be extended or arranged if otherwise 
prohibited by law, including the Sarbanes-Oxley Act of 2002.
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    \6\ Eligible Investors may be offered the opportunity to borrow 
funds from BCG to acquire Interests and/or to fund Capital 
Contributions. Any such loans will be interest-bearing and may be on 
a recourse or non-recourse basis, and may be secured by a pledge of 
equity in a BCG Entity, including the Interests.
    \7\ This excludes indebtedness incurred specifically on behalf 
of a Member where the Member has agreed to guarantee the loan or to 
act as co-obligor on the loan.
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    13. An Investment Fund will not acquire any security issued by a 
registered investment company if immediately after the acquisition the 
Investment Fund would own more than 3% of the total 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, the disposition 
of the proceeds of any sales of the company's securities, 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) 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 applicants from all provisions of the Act, except 
sections 9, 17, 30, 36 through 53, and the Rules and Regulations. With 
respect to sections 17(a), (d), (f), (g) and (j) and 30(a), (b), (e) 
and (h) of the Act and the Rules and Regulations, and rule 38a-1 under 
the Act, applicants request a limited exemption as set forth in the 
application.
    3. Section 17(a) of the Act 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 (a) permit a BCG 
Entity (or any affiliated person of such BCG Entity), or any affiliated 
person (as defined in section 2(a)(3) of the Act) of an Investment Fund 
(``First-Tier Affiliates'') or affiliated persons of such persons 
(``Second-Tier Affiliates,'' and together with First-Tier Affiliates, 
``Affiliates''), acting as principal, to engage in any transaction 
directly or

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indirectly with any Investment Fund or any company controlled by such 
Investment Fund; and (b) permit an Investment Fund to invest in or 
engage in any transaction with any BCG Entity, acting as principal, (i) 
in which such Investment Fund, any company controlled by such 
Investment Fund or any BCG Entity has invested or will invest, or (ii) 
with which such Investment Fund, any company controlled by such 
Investment Fund or any BCG Entity is or will become otherwise 
affiliated. The transactions to which any Investment Fund is a party 
will be effected only after a determination by the General Partner that 
the requirements of Conditions 1, 2 and 3 in ``Conditions'' (set forth 
below) have been satisfied. Applicants, on behalf of the Investment 
Funds, represent that any transactions otherwise subject to section 
17(a) of the Act, for which exemptive relief has not been requested, 
would require approval of the Commission.
    4. Applicants submit that the exemptions sought from section 17(a) 
are consistent with the purposes of the Act and the protection of 
investors. Applicants state that the Members will be informed in an 
Investment Fund's offering materials of the possible extent of the 
dealings by such Investment Fund and any portfolio company with BCG, 
any BCG Entity or any affiliated person thereof. Applicants also state 
that, as experienced professionals acting on behalf of financial 
services businesses, the Members will be able to evaluate the risks 
associated with such dealings. Applicants assert that the community of 
interest among the General Partner, the Members, BCG and the BCG 
Entities will serve to reduce the risk of abuse in transactions 
involving an Investment Fund and BCG, any BCG Entity or any affiliated 
person thereof.
    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 registered investment 
company unless authorized by the Commission. Applicants request an 
exemption from section 17(d) and rule 17d-1 to the extent necessary to 
permit an Investment Fund to engage in transactions in which an 
Affiliate participates as a joint or a joint and several participants 
with such Investment Fund.
    6. Joint transactions in which an Investment Fund could participate 
might include the following: (a) A joint investment by one or more 
Investment Funds in a security in which BCG or a BCG Entity, or another 
Investment Fund, is a joint participant or plans to become a 
participant; (b) a joint investment by one or more Investment Funds in 
another Investment Fund; and (c) a joint investment by one or more 
Investment Funds in a security in which an Affiliate is an investor or 
plans to become an investor, including situations in which an Affiliate 
has a partnership or other interest in, or compensation arrangements 
with, such issuer, sponsor or offeror.
    7. Applicants assert that compliance with section 17(d) and rule 
17d-1 would cause an Investment Fund to forego investment opportunities 
simply because a Member, BCG, a BCG Entity or other affiliated persons 
of the Investment Fund, BCG or the BCG Entities also had, or 
contemplated making, a similar investment. In addition, because 
attractive investment opportunities of the types considered by an 
Investment Fund 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 an Investment Fund may be unable to take 
advantage except as a co-participant with other persons, including 
Affiliates. Applicants believe that the flexibility to structure co- 
and joint investments in the manner described above will not involve 
abuses of the type section 17(d) and rule 17d-1 were designed to 
prevent. Applicants acknowledge that any transactions subject to 
section 17(d) and rule 17d-1 for which exemptive relief has not been 
requested in the application would require specific approval by the 
Commission.
    8. Section 17(f) of the Act designates the entities that may act as 
investment company custodians, and rule 17f-2 under the Act allows an 
investment company to act as self-custodian. Applicants request an 
exemption to permit the following exceptions from the requirements of 
rule 17f-2: (i) Compliance with paragraph (b) of the rule may be 
achieved through safekeeping in the locked files of BCG or a BCG 
partner; (ii) for the purposes of the rule, (A) employees of BCG or a 
BCG Entity will be deemed employees of the Investment Funds, (B) 
officers and members of the Managing Member and members of the 
Investment Committee will be deemed to be officers of such Investment 
Funds, and (C) officers and members of the Managing Member and members 
of the Investment Committee will be deemed to be the board of directors 
of such Investment Funds; and (iii) instead of the verification 
procedure under paragraph (f) of the rule, verification will be 
effected quarterly by two employees, each of whom shall have sufficient 
knowledge, sophistication and experience in business matters to perform 
such examination. Applicants expect that most of the Investments will 
be evidenced by partnership agreements or similar documents. Such 
instruments are most suitably kept in BCG's files, where they can be 
referred to as necessary. Applicants will comply with all other 
provisions of rule 17f-2.
    9. 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 of a registered investment 
company (``disinterested directors'') take certain actions and give 
certain approvals relating to fidelity bonding. Applicants request an 
exemption from the requirement, contained in rule 17g-1, that a 
majority of the ``directors'' of the Investment Funds who are not 
``interested persons'' of the respective Investment Funds (as defined 
in the Act) take certain actions and make certain approvals concerning 
bonding and request instead that such actions and approvals be taken by 
the Managing Members, regardless of whether any of them is deemed to be 
an interested person of the Investment Funds. Each Managing Member will 
be an interested person of the Investment Funds.
    10. The Investment Funds 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 relating to the 
provisions of notices to the board of directors. Applicants also 
request an exemption from the requirements of rule 17g-1(j)(3) that the 
Investment Funds have a majority of disinterested directors, that those 
disinterested directors select and nominate any other disinterested 
directors, and that any legal counsel for those disinterested directors 
be independent legal counsel. Applicants believe that the filing 
requirements of rule 17g-1 are burdensome and unnecessary as applied to 
the Investment Funds. The General Partner will maintain the materials 
otherwise required to be filed with the Commission by rule 17g-1(g) and 
the applicants agree that all such material will be subject to 
examination by the Commission and its staff. The General Partner will 
designate a person to maintain the records otherwise required to be 
filed with the Commission under paragraph (g) of the rule. The

[[Page 30930]]

Investment Funds will comply with all other requirements of rule 17g-1. 
The fidelity bond of the Investment Funds will cover the Investment 
Committee, the General Partner and all employees of BCG or any BCG 
Entity who have access to the securities or funds of the Investment 
Funds.
    11. Applicants request an exemption from the requirements, 
contained in section 17(j) of the Act and rule 17j-1 under the Act, 
that every registered investment company adopt a written code of ethics 
and every ``access person'' of such registered investment company 
report to the investment company with respect to transactions in any 
security in which such access person has, or by reason of the 
transaction acquires, any direct or indirect beneficial ownership in 
the security. Applicants request an exemption from the requirements in 
rule 17j-1, with the exception of rule 17j-1(b), because they are 
burdensome and unnecessary as applied to the Investment Funds and 
because the exemption is consistent with the policy of the Act. 
Requiring the Investment Funds to adopt a written code of ethics and 
requiring access persons to report each of their securities 
transactions would be time-consuming and expensive and would serve 
little purpose in light of, among other things, the community of 
interest among the Members of the Investment Fund and the General 
Partner by virtue of their common association with BCG or a BCG Entity. 
Accordingly, the requested exemption is consistent with the purposes of 
the Act because the dangers against which section 17(j) and rule 17j-1 
are intended to guard are not present in the case of the Investment 
Funds.
    12. Applicants request an exemption from the requirements in 
sections 30(a), 30(b), and 30(e) of the Act, and the Rules and 
Regulations 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 Investment Funds and would entail 
administrative and legal costs that outweigh any benefit to the 
Members. Applicants request exemptive relief to the extent necessary to 
permit the Investment Funds to report annually to their Members. 
Applicants also request an exemption from section 30(h) of the Act to 
the extent necessary to exempt the General Partner, any 10 percent 
shareholder, and any other person who may be deemed to be an officer, 
director, member of an advisory board, or otherwise subject to section 
30(h), from filing Forms 3, 4 and 5 under section 16 of the Securities 
Exchange Act of 1934 (``Exchange Act'') with respect to their ownership 
of Interests in the Investment Funds. Applicants assert that, because 
there is no trading market for Interests and the transfer of Interests 
is severely restricted, these filings are unnecessary for the 
protection of investors and burdensome to those required to make them.
    13. Rule 38a-1 requires investment companies to adopt, implement 
and periodically review written policies reasonably designed to prevent 
violation of the federal securities laws and to appoint a chief 
compliance officer. Each Investment Fund will comply with rule 38a-
1(a), (c) and (d), except that (i) the members of the Investment 
Committee of each Investment Fund will fulfill the responsibilities 
assigned to the board of directors under the rule, and (ii) because all 
members of the Investment Committee would be considered interested 
persons of the Investment Funds, approval by a majority of the 
disinterested board members required by rule 38a-1 will not be 
obtained. In addition, the Investment Funds will comply with the 
requirement in rule 38a-1(a)(4)(iv) that the chief compliance officer 
meet with the disinterested directors by having the chief compliance 
officer meet with the members of the Investment Committee. Applicants 
represent that each Investment Fund will adopt the written policies and 
procedures reasonably designed to prevent violations of the terms and 
conditions of the application, has appointed a chief compliance officer 
and is otherwise in compliance with the terms and conditions of the 
application.

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 an Investment Fund is a 
party, otherwise prohibited by section 17(a) or section 17(d) and rule 
17d-1 (the ``Section 17 Transactions'') will be effected only if the 
Investment Committee determines that: (a) The terms of the Section 17 
Transaction, including the consideration to be paid or received, are 
fair and reasonable to Members of the Investment Fund and do not 
involve overreaching of the Investment 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 the Investment Fund, 
the Investment Fund's organizational documents and the Investment 
Fund's reports to its Members.
    In addition, the Investment Committee will record and preserve a 
description of such Section 17 Transactions, the findings of the 
Investment Committee, the information or materials upon which their 
findings are based and the basis therefor. All such records will be 
maintained for the life of the Investment 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 an Investment Fund from or to 
an entity affiliated with the Investment Fund by reason of a member of 
the Investment Committee (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 
Investment Fund's determination of whether or not to effect the 
purchase or sale.
    3. The Investment Committee 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 Investment Fund, or any 
affiliated person of such a person, promoter, or principal underwriter.
    4. The Investment Committee will not purchase for an Investment 
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 Investment 
Fund and the Co-Investor are participants, unless any such Co-Investor, 
prior to disposing of all or part of its investment: (a) Gives the 
Investment Fund holding such investment 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 Investment 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 an Investment Fund means any person who is: (a) An 
affiliated person of the Investment Fund; (b) BCG and any BCG Entity; 
(c) a current or former partner or key administrative employee of BCG 
or a BCG Entity; (d)

[[Page 30931]]

a company in which a member of the Investment Committee, BCG or a BCG 
Entity acts as an officer, director, or general partner, or has a 
similar capacity to control the sale or disposition of the company's 
securities; or (e) an investment vehicle offered, sponsored, or managed 
by BCG or an affiliated person of BCG.
    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 the benefit of any such 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; (d) when the investment is comprised of securities 
that are national market system (``NMS'') stocks pursuant to section 
11A(a)(2) of the Exchange 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 of securities; or (f) when the 
investment is comprised of securities that are government securities as 
defined in section 2(a)(16) of the Act.
    5. An Investment Fund will send, within 120 days after the end of 
its fiscal year, or as soon as practicable thereafter, to each Member 
who had an interest in the Investment Fund at any time during the 
fiscal year then ended, reports and information regarding the 
Investments, including financial statements for such Investment Fund 
audited by an independent accounting firm. The Investment Committee 
will make a valuation or have a valuation made of all of the assets of 
an Investment Fund as of each fiscal year end. In addition, within 90 
days after the end of each fiscal year of the Investment Fund or as 
soon as practicable thereafter, the Investment Fund shall send a report 
to each person who was a Member at any time during the fiscal year then 
ended, setting forth such tax information as shall be necessary for the 
preparation by the Member of his or her federal and state income tax 
returns and a report of the investment activities of the Investment 
Fund during such year.
    6. An Investment Fund will maintain and preserve, for the life of 
the Investment 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 the 
Investment Fund to be provided to its Members, and agrees 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.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-13893 Filed 6-30-17; 8:45 am]
 BILLING CODE P


