[Federal Register Volume 85, Number 224 (Thursday, November 19, 2020)]
[Notices]
[Pages 73838-73841]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-25492]



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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 34094; File No. 812-15150]


NB Crossroads Private Markets Access Fund LLC and Neuberger 
Berman Investment Advisers LLC

AGENCY: Securities and Exchange Commission (the ``Commission'').

ACTION: Notice.

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    Notice of an application for an order pursuant to section 6(c) of 
the Investment Company Act of 1940 (the ``1940 Act'') for an exemption 
from sections 18(a)(2), 18(c), and 18(i) of the 1940 Act, pursuant to 
section 6(c) and 23(c) of the 1940 Act for certain exemptions from rule 
23c-3 under the 1940 Act, and for an order pursuant to section 17(d) of 
the 1940 Act and rule 17d-1 thereunder.

SUMMARY OF APPLICATION:  Applicants request an order to permit certain 
registered closed-end management investment companies to issue multiple 
classes of interests (``Shares'') with varying sales loads and asset-
based service and/or distribution fees and to impose early withdrawal 
charges.

Applicants:  NB Crossroads Private Markets Access Fund LLC (``Initial 
Fund'') and Neuberger Berman Investment Advisers LLC (``Adviser'').

Filing Dates: The application was filed on August 7, 2020.

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 emailing the Commission's 
Secretary at Secretarys-Office@sec.gov and serving applicants with a 
copy of the request by email. Hearing requests should be received by 
the Commission by 5:30 p.m. on December 7, 2020, and should be 
accompanied by proof of service on the applicants, in the form of an 
affidavit or, for lawyers, a certificate of service. Pursuant to rule 
0-5 under the 1940 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 who wish to be notified of a hearing may request notification 
by emailing the Commission's Secretary at Secretarys-Office@sec.gov.

ADDRESSES: The Commission: Secretarys-Office@sec.gov. Applicants: Corey 
Issing, Neuberger Berman Investment Advisers LLC, corey.issing@nb.com.

FOR FURTHER INFORMATION CONTACT: Jennifer O. Palmer, Senior Counsel, at 
(303) 844-1012, or David J. Marcinkus, Branch Chief, 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 by searching the 
Commission's website, at http://www.sec.gov/search/search.htm, using 
the application's file number or the applicant's name, or by calling 
the Commission at (202) 551-8090.

Applicants' Representations

    1. The Initial Fund is a newly organized Delaware limited liability 
company that is registered under the 1940 Act as a closed-end 
management investment company and classified as a non-diversified 
investment company. The Initial Fund's investment objective is to seek 
to provide attractive, long-term capital appreciation by investing 
primarily in an actively managed portfolio of private equity 
investments.
    2. The Adviser, a Delaware organized limited liability company, is 
registered as an investment adviser under the 1940 Act. The Adviser 
serves as investment adviser to the Initial Fund. The Adviser is an 
indirect, wholly-owned subsidiary of Neuberger Berman Group.
    3. The applicants seek an order to permit the Initial Fund to offer 
investors multiple classes of Shares with varying sales loads and 
asset-based service and/or distribution fees and to impose early 
withdrawal charges.
    4. Applicants request that the order also apply to any other 
registered closed-end management investment company that conducts a 
continuous offering of its shares, existing now or in the future, for 
which the Adviser, its successors,\1\ or any entity controlling, 
controlled by, or under common control with the Adviser, or its 
successors, acts as investment adviser, and which provides periodic 
liquidity with respect to its Shares through tender offers conducted in 
compliance with either rule 23c-3 under the 1940 Act or rule 13e-4 
under the Securities Exchange Act of 1934 (the ``1934 Act'') (each such 
closed-end management investment company a ``Future Fund'' and, 
together with the Initial Fund, each a ``Fund,'' and collectively the 
``Funds'').\2\
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    \1\ A successor in interest is limited to an entity that results 
from a reorganization into another jurisdiction or a change in the 
type of business organization.
    \2\ The Initial Fund and any Future Fund relying on the 
requested relief will do so in compliance 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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    5. The Initial Fund's initial Registration Statement filed on Form 
N-2 seeks to register two initial classes of Shares, Class A Shares and 
Institutional Class Shares, each with its own fee and expense 
structure. If the Initial Fund's initial Registration Statement is 
declared effective prior to receipt of the requested relief, the 
Initial Fund will only offer one class of Shares, Institutional Class 
Shares, until receipt of the requested relief. Shares will be offered 
on a continuous basis pursuant to a registration statement under the 
Securities Act of 1933 at their net asset value per share. The Initial 
Fund, as a closed-end management investment company, does not intend to 
continuously redeem Shares as does an open-end management investment 
company. Shares of the Initial Fund will not be listed on any 
securities exchange and will not trade on an over-the-counter system. 
Applicants do not expect that any secondary market will ever develop 
for the Shares.
    6. If the requested relief is granted, the Initial Fund intends to 
offer multiple classes of Shares, such as the Institutional Class 
Shares (the ``Initial Class Shares'') and Class A Shares (the ``New 
Class Shares''), or any other classes. Because of the different 
distribution fees, shareholder services fees, and any other class 
expenses that may be attributable to the different classes, the net 
income attributable to, and any dividends payable on, each class of 
Shares may differ from each other from time to time.
    7. Applicants state that, from time to time, the Board of a Fund 
may create and offer additional classes of Shares, or may vary the 
characteristics described of the Initial Class and New Class Shares, 
including without limitation, in the following respects: (1) The amount 
of fees permitted by a distribution and service plan as to such class; 
(2) voting rights with respect to a distribution and service plan as to 
such class; (3) different class designations; (4) the impact of any 
class expenses directly attributable to a particular class of Shares 
allocated on a class basis as described in the application; (5) 
differences in any dividends and net asset values per Share resulting 
from differences in fees under a distribution and service plan or in 
class expenses; (6) any early withdrawal charge or other sales load 
structure; and (7) any exchange or conversion features, as permitted 
under the 1940 Act.
    8. Applicants state that, in order to provide a limited degree of 
liquidity to

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shareholders, the Initial Fund may from time to time offer to 
repurchase Shares at their then current NAV pursuant to written tenders 
by shareholders in accordance with rule 13e-4 under the 1934 Act. Any 
other investment company that intends to rely on the requested relief 
will provide periodic liquidity to shareholders in accordance with 
either rule 23c-3 under the 1940 Act or rule 13e-4 under the 1934 Act.
    9. Applicants represent that any asset-based distribution and 
servicing fee of a Fund will comply with the provisions of Rule 2341 of 
the Rules of the Financial Industry Regulatory Authority (``FINRA Rule 
2341'').\3\ Applicants also represent that each 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 if it were an open-
end management investment company, each Fund will disclose fund 
expenses borne by shareholders during the reporting period in 
shareholder reports \4\ and describe in its prospectus any arrangements 
that result in breakpoints in, or elimination of, sales loads.\5\ In 
addition, applicants will comply with applicable enhanced fee 
disclosure requirements for fund of funds, including registered funds 
of hedge and private equity funds.\6\
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    \3\ Any references to FINRA Rule 2341 include any successor or 
replacement rule that may be adopted by FINRA.
    \4\ Shareholder Reports and Quarterly Portfolio Disclosure of 
Registered Management Investment Companies, Investment Company Act 
Release No. 26372 (Feb. 27, 2004) (adopting release).
    \5\ Disclosure of Breakpoint Discounts by Mutual Funds, 
Investment Company Act Release No. 26464 (June 7, 2004) (adopting 
release).
    \6\ Fund of Funds Investments, Investment Company Act Release 
Nos. 26198 (Oct. 1, 2003) (proposing release) and 27399 (June 20, 
2006) (adopting release). See also rules 12d1-1, et seq. under the 
1940 Act.
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    10. Each Fund and its distributor (the ``Distributor'') will also 
comply with any requirements that may be adopted by the Commission or 
FINRA regarding disclosure at the point of sale 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 apply to the Fund and the Distributor. Each 
Fund or the Distributor will contractually require that any other 
distributor of the Fund's Shares comply with such requirements in 
connection with the distribution of Shares of the Fund.
    11. All expenses incurred by a Fund will be allocated among its 
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 the expenses associated with the 
distribution and service plan of that class (if any), shareholder 
services fees attributable to a particular class (including transfer 
agency fees, if any), and any other incremental expenses of that class. 
Expenses of a Fund allocated to a particular class of the Fund's Shares 
will be borne on a pro rata basis by each outstanding Share of that 
class. Applicants state that each Fund will comply with the provisions 
of rule 18f-3 under the 1940 Act as if it were an open-end management 
investment company.
    12. Applicants state that any privilege or feature offered by a 
Fund will comply with rule 11a-1, rule 11a-3, and rule 18f-3 as if the 
Fund were an open-end management investment company.
    13. Applicants seek relief to the extent necessary for each Fund to 
impose an early withdrawal charge on shares submitted for repurchase 
that have been held less than a specified period. Applicants state that 
each Fund may grant waivers of the early withdrawal charges on 
repurchases for certain categories of shareholders or transactions 
established from time to time. Applicants state that each Fund will 
apply the early withdrawal charge (and any waivers or scheduled 
variations of the early withdrawal charge) uniformly to all 
shareholders in a given class and consistently with the requirements of 
rule 22d-1 under the 1940 Act as if the Fund were an open-end 
management investment company.
    14. Applicants state that a Fund operating as an interval fund 
pursuant to rule 23c-3 under the 1940 Act may offer its shareholders an 
exchange feature under which the shareholders of the Fund may, in 
connection with the Fund's periodic repurchase offers, exchange their 
Shares of the Fund for shares of the same class of (i) registered open-
end management investment companies or (ii) other registered closed-end 
investment companies that comply with rule 23c-3 under the 1940 Act and 
continuously offer their shares at net asset value, that are in the 
Fund's group of investment companies (collectively, the ``Other 
Funds''). Shares of a Fund operating pursuant to rule 23c-3 that are 
exchanged for shares of Other Funds will be included as part of the 
repurchase offer amount for such Fund as specified in rule 23c-3 under 
the 1940 Act. Any exchange option will comply with rule 11a-3 under the 
1940 Act, as if the Fund were an open-end management investment company 
subject to rule 11a-3. In complying with rule 11a-3 under the 1940 Act, 
each Fund will treat an early withdrawal charge as if it were a 
contingent deferred sales load (a ``CDSL'').\7\
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    \7\ A CDSL, assessed by an open-end fund pursuant to Rule 6c-10 
under the 1940 Act, is a distribution-related charge payable to the 
distributor. Pursuant to the requested order, the early withdrawal 
charge will likewise be a distribution-related charge payable to the 
distributor.
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    15. Applicants state that, if a Fund charges a repurchase fee, 
Shares of the Fund will be subject to a repurchase fee at a rate of no 
greater than two percent of the shareholder's repurchase proceeds 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.\8\ Repurchase fees, if charged, will equally apply to 
all classes of Shares of the Fund, consistent with section 18 of the 
1940 Act and rule 18f-3 thereunder. To the extent a Fund determines to 
waive, impose scheduled variations of, or eliminate a repurchase fee, 
it will do so consistently with the requirements of rule 22d-1 under 
the 1940 Act as if the repurchase fee were a CDSL and as if the Fund 
were a registered open-end management investment company. In addition, 
the Fund's waiver of, scheduled variation in, or elimination of the 
repurchase fee will apply uniformly to all shareholders of the Fund 
regardless of class.
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    \8\ Unlike a distribution-related charge, the repurchase fee is 
payable to the Fund to compensate long-term shareholders for the 
expenses related to shorter-term investors, in light of the Fund's 
generally longer-term investment horizons and investment operations.
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Applicants' Legal Analysis

Multiple Classes of Shares

    1. Section 18(a)(2)(A) and (B) makes it unlawful for a registered 
closed-end management investment company to issue a senior security 
that is a stock unless (a) immediately after such issuance it will have 
an asset coverage of at least 200% and (b) provision is made to 
prohibit the declaration of any distribution upon its common stock, or 
the purchase of any such common stock, unless in every such case such 
senior security has at the time of the declaration of any such 
distribution, or at the time of any such purchase, an asset coverage of 
at least 200% after deducting the amount of such distribution or 
purchase price, as the case may be. Applicants state that the creation 
of multiple classes of Shares of the Funds may violate section 18(a)(2) 
because the Funds may not meet section 18(a)(2)'s requirements with 
respect to a

[[Page 73840]]

class of Shares that may be a senior security.
    2. Section 18(c) of the 1940 Act provides, in relevant part, that a 
registered closed-end management investment company may not issue or 
sell any senior security which is a stock if immediately thereafter the 
company will have outstanding more than one class of senior security 
that is a stock. Applicants state that the creation of multiple classes 
of Shares of a Fund may be prohibited by section 18(c), as a class may 
have priority over another class as to payment of dividends because 
shareholders of different classes would pay different fees and 
expenses.
    3. Section 18(i) of the 1940 Act generally 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 a Fund may violate section 18(i) of the 1940 Act because each 
class would be entitled to exclusive voting rights with respect to 
matters solely related to that class.
    4. Section 6(c) of the 1940 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 1940 
Act, or from any rule or regulation under the 1940 Act, 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 1940 Act. 
Applicants request an exemption under section 6(c) from sections 
18(a)(2), 18(c), and 18(i) to permit the Funds to issue multiple 
classes of Shares.
    5. Applicants submit that the proposed allocation of expenses 
relating to distribution and voting rights is equitable and will not 
discriminate against any group or class of shareholders. Applicants 
submit that the proposed arrangements would permit each 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 management investment company multiple class 
structure does not raise the concerns underlying section 18 of the 1940 
Act to any greater degree than open-end management investment 
companies' multiple class structures that are permitted by rule 18f-3 
under the 1940 Act. Applicants state that each Fund will comply with 
the provisions of rule 18f-3 as if it were an open-end management 
investment company.

Early Withdrawal Charges

    1. Section 23(c) of the 1940 Act provides, in relevant part, that 
no registered closed-end management investment company shall purchase 
securities of which it is the issuer, except: (a) On a securities 
exchange or other open market; (b) pursuant to tenders, after 
reasonable opportunity to submit tenders given to all holders of 
securities of the class to be purchased; or (c) under other 
circumstances as the Commission may permit by rules and regulations or 
orders for the protection of investors.
    2. Rule 23c-3 under the 1940 Act permits an interval fund to make 
repurchase offers of between five and twenty-five percent of its 
outstanding shares at net asset value at periodic intervals pursuant to 
a fundamental policy of the interval fund. Rule 23c-3(b)(1) under the 
1940 Act permits an interval fund to deduct from repurchase proceeds 
only a repurchase fee, not to exceed two percent of the proceeds, that 
is paid to the interval fund and is reasonably intended to compensate 
the fund for expenses directly related to the repurchase.
    3. Section 23(c)(3) of the 1940 Act provides that the Commission 
may issue an order that would permit a closed-end management investment 
company to repurchase its shares in circumstances in which the 
repurchase is made in a manner or on a basis that does not unfairly 
discriminate against any holders of the class or classes of securities 
to be purchased.
    4. Applicants request relief under section 6(c), discussed above, 
and section 23(c)(3) from rule 23c-3 to the extent necessary for each 
Fund to impose early withdrawal charges on shares of the Fund submitted 
for repurchase that have been held for less than a specified period.
    5. Applicants state that the early withdrawal charges they intend 
to impose are functionally similar to CDSLs imposed by open-end 
management investment companies under rule 6c-10 under the 1940 Act. 
Rule 6c-10 permits open-end management investment companies to impose 
CDSLs, subject to certain conditions. Applicants note that rule 6c-10 
is grounded in policy considerations supporting the employment of CDSLs 
where there are adequate safeguards for the investor. Applicants state 
that these same policy considerations support imposition of early 
withdrawal charges in the interval fund context, and are a solid basis 
for the Commission to grant exemptive relief to permit interval funds 
to impose early withdrawal charges. In addition, applicants state that 
early withdrawal charges may be necessary for the Fund's Distributor to 
recover distribution costs from shareholders who exit their investments 
early. Applicants represent that any early withdrawal charge imposed by 
a Fund will comply with rule 6c-10 under the 1940 Act as if the rule 
were applicable to closed-end management investment companies. Each 
Fund will disclose early withdrawal charges in accordance with the 
requirements of Form N-1A concerning CDSLs.

Asset-Based Service and/or Distribution Fees

    1. Section 17(d) of the 1940 Act and rule 17d-1 thereunder 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 other 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 1940 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 1940 Act provides an exemption from section 
17(d) and rule 17d-1 to permit open-end management investment companies 
to enter into distribution arrangements pursuant to rule 12b-1 under 
the 1940 Act. Applicants request an order pursuant to section 17(d) of 
the 1940 Act and rule 17d-1 thereunder to the extent necessary to 
permit each Fund to impose asset-based service and/or distribution fees 
(in a manner similar to rule 12b-1 fees for an open-end management 
investment company). Applicants have agreed to comply with rules 12b-1 
and 17d-3 as if those rules apply to closed-end management investment 
companies, which they believe will resolve any concerns that might 
arise in connection with a Fund financing the distribution of its 
Shares through asset-based service and/or distribution fees.
    For the reasons stated above, applicants submit that the exemptions 
requested under section 6(c) are necessary and appropriate in the 
public interest and are consistent with the

[[Page 73841]]

protection of investors and the purposes fairly intended by the policy 
and provisions of the 1940 Act. Applicants further submit that the 
relief requested pursuant to section 23(c)(3) will be consistent with 
the protection of investors and will insure that applicants do not 
unfairly discriminate against any holders of the class of securities to 
be purchased. Finally, applicants state that the Funds' imposition of 
asset-based service and/or distribution fees is consistent with the 
provisions, policies, and purposes of the 1940 Act and does not involve 
participation on a basis different from or less advantageous than that 
of other participants.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
be subject to the following condition:
    Each Fund relying on the requested order will comply with the 
provisions of rules 6c-10, 12b-1, 17d-3, 18f-3, 22d-1 and, where 
applicable, 11a-3 under the 1940 Act, as amended from time to time or 
replaced, as if those rules applied to closed-end management investment 
companies, and will comply with FINRA Rule 2341, as amended from time 
to time, as if that rule applies to all closed-end management 
investment companies.

    For the Commission, by the Division of Investment Management, 
under delegated authority.

    Dated: November 13, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-25492 Filed 11-18-20; 8:45 am]
BILLING CODE 8011-01-P


