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Investment Company Act of 1940 —
Sections 6(c), 17(b), 12(d)(1)(J)
Neuberger Berman Investment Advisers LLC, et al.
September 28, 2016
RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF INVESTMENT MANAGEMENT
Your letter dated September 28, 2016 requests our assurance that we would not recommend enforcement action to the Securities and Exchange Commission (“Commission”) under the provisions of the Investment Company Act of 1940 (the “1940 Act”) and rules thereunder covered by three existing exemptive orders issued by the Commission (the “Existing Orders”),[1] against any person relying on the Existing Orders as if they extended to Neuberger Berman Investment Advisers LLC (“NBIA”),[2] any entity controlling, controlled by, or under common control with NBIA (each, an “NBIA Affiliate”), and existing or future entities that are advised by NBIA or by an NBIA Affiliate (each, an “NBIA Fund”), as detailed in your letter and summarized below.[3]
BACKGROUND
You state the following:
- Under their terms, the Existing Orders apply to Neuberger Berman Management LLC (“NBM”), entities controlling, controlled by, or under common control with NBM (each, an “NBM Affiliate”) and existing or future investment companies (or series thereof) that are advised by NBM or an NBM Affiliate (each, an “NBM Fund”).[4]
- In January 2016, NBM transferred to NBIA (at the time, Neuberger Berman Fixed Income LLC) the advisory services and all rights and obligations under its investment management agreements with the Funds.[5] NBM and NBIA were, and NBIA continues to be, indirect, wholly-owned subsidiaries of and controlled by Neuberger Berman Group LLC (“NB Group”).
- NBM was merged into Neuberger Berman LLC (“NB LLC”) on or about July 1, 2016, and thereafter ceased to exist (the “Merger”). NB LLC is also a wholly-owned subsidiary of and controlled by NB Group.
ANALYSIS
You acknowledge that after the Merger no person could have continued to rely on the Existing Orders under their terms, given that NBM ceased to exist. [6] Your letter requests that NBIA be allowed to step into the shoes of NBM for purposes of the Existing Orders given that, prior to the Merger, NBM and NBIA were both wholly-owned subsidiaries of and controlled by NB Group. You argue that in the event of an internal corporate reorganization where there is no change of control of the ultimate corporate parent involved, the ability to rely on the Existing Orders should not depend on the continued existence of a single named entity (NBM). We agree. CONCLUSION
Based on the facts and representations set forth in your letter, we would not recommend that the Commission take enforcement action under the provisions of the 1940 Act and the rules thereunder covered by the Existing Orders, against any person relying on the Existing Orders as if the reference to NBM therein were to NBIA. This response expresses our view on enforcement action only and does not express any legal or interpretive conclusion on the issues presented. Because our position is based upon all of the facts and representations in your letter, any different facts or representations may require a different conclusion. [7] Kieran G. Brown
Senior Counsel
[1] Your letter identifies the Existing Orders.
[2] This response confirms the no-action relief provided orally by the staff on June 29, 2016.
[3] Nothing in our response in intended to alter the terms and conditions of the Existing Orders in any other respect.
[4] Prior to the Merger, as defined below, the Existing Orders applied to NBIA, the Additional Advisers and the Funds (as the latter two terms are defined below), because NBIA and the Additional Advisers were under common control with NBM.
[5] The Funds include the open-end and closed-end registered investment companies, and each of their respective underlying series, if applicable, identified in your letter. In January 2016, some of the other investment advisers that are indirect wholly-owned subsidiaries of NB Group (the “Additional Advisers”) also transferred to NBIA the advisory services and all rights and obligations under their investment management agreements with certain Funds.
[6] One of the Existing Orders allows NBM’s successors to step in the shoes of NBM, but only if the successor is an entity that results from a reorganization into another jurisdiction or a change in the type of business organization. As your letter acknowledges, that is not the situation in the case of the Merger.
[7] The staff would not object if third parties rely on this no-action letter to the extent that they find themselves in substantially similar facts and circumstances under their existing exemptive orders under the 1940 Act.
Incoming Letter
The Incoming Letter is in Acrobat format.
http://www.sec.gov/divisions/investment/noaction/2016/neuberger-berman-092816-6c.htm
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