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Securities Act of 1933 – Section 6(b)
Securities Exchange Act of 1934 – Section 13(e) and Rule 0-11
Ironwood Multi-Strategy Fund LLC and Ironwood Institutional Multi-Strategy Fund LLC
Your letter of April 18, 2017 ("Incoming Letter") requests our assurance that we would not recommend enforcement action to the Securities and Exchange Commission (the "Commission") under Section 6(b) of the Securities Act of 1933 (the "Securities Act")[1] or Section 13(e) of the Securities Exchange Act of 1934 (the "Exchange Act")[2] and Rule 0-11 thereunder[3] against Ironwood Multi-Strategy Fund LLC ("Feeder Fund") or Ironwood Institutional Multi-Strategy Fund LLC ("Master Fund"), if Feeder Fund does not pay registration fees on shares it sells to the public or tender offer registration fees on shares it offers to repurchase from the public.
You state that Master Fund and Feeder Fund are registered closed-end investment companies that operate in a "master-feeder" structure. You represent that because Master Fund pays (a) registration fees on all of its shares sold, including shares sold to Feeder Fund, and (b) tender offer registration fees on all of its shares it offers to repurchase, including shares repurchased from Feeder Fund, requiring Feeder Fund to pay registration fees on shares it sells to the public and tender offer registration fees on shares it offers to repurchase from the public essentially results in "double counting" of registration fees and tender offer registration fees for shareholders of Feeder Fund. You further represent that (x) all shares sold by Feeder Fund have corresponding purchases of Master Fund shares by Feeder Fund and (y) all shares repurchased from the public by Feeder Fund have corresponding repurchases of Master Fund shares from Feeder Fund. You state that you believe this proposed fee arrangement is consistent with existing Division guidance relating to registration fees of open-end management investment companies operating in a master-feeder structure.[4]
Based on the facts and representations made in your letter, we would not recommend any enforcement action to the Commission under Section 6(b) of the Securities Act or Section 13(e) of the Exchange Act or Rule 0-11 thereunder against Feeder Fund or Master Fund if Feeder Fund does not pay registration fees on shares it sells to the public or tender offer registration fees on shares it offers to repurchase from the public.
This response is based upon all of the facts and representations made in your letter. You should note that any different facts or representations may require the Divisions to reach a different conclusion. This response expresses the Division's position on enforcement action only, and does not purport to express any legal conclusions on the questions presented.
Mark N. Zaruba
Senior Counsel
Chief Counsel's Office
April 19, 2017
[1] Section 6(b) of the Securities Act requires an issuer of securities to pay, at the time of filing of a registration statement, a prescribed fee based on the aggregate price of securities to be offered.
[2] Section 13(e)(1) of the Exchange Act, and the rules promulgated thereunder, address the repurchase of equity securities issued by a closed-end investment company that is registered under the Investment Company Act of 1940 (the "Investment Company Act"). Section 13(e)(3) of the Exchange Act requires a registered closed-end investment company to pay, at the time of filing of a repurchase notice required by Section 13(e)(1) or the rules promulgated thereunder, a prescribed fee based on the aggregate price of the securities to be repurchased.
[3] Rule 0-11under the Exchange Act requires an issuer repurchasing securities pursuant to Section 13(e)(1) of the Exchange Act to pay, at the time of filing of repurchase notice required by Section 13(e)(1) or the rules promulgated thereunder, a prescribed fee based on the aggregate price of the securities to be repurchased.
[4] In particular, you state the Division has granted no-action relief under Section 24(f) of the Investment Company Act that allows open-end funds operating in a master-feeder structure to avoid double counting of registration fees by disregarding share sales from master fund to feeder fund, so long as the corresponding feeder fund shares provided for their own fees. See American Council of Life Insurance, SEC No-Action Letter (pub. avail. June 20, 1995) and GMO Trust, SEC No-Action Letter (pub. avail. May 24, 2012). As you note, however, Section 24(f) of the Investment Company Act is not applicable to closed-end funds, which means that closed-end funds that operate in a master-feeder structure are not able to take advantage of existing Division guidance to avoid the double-counting of registration fees.
Incoming Letter
The Incoming Letter is in Acrobat format.
http://www.sec.gov/divisions/investment/noaction/2017/ironwood-042017-6b.html
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