SEC Division of Investment Management staff letter: Glenwood Investment Corp.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON. D.C. 20549
SION OF

'v~ ,iT MANAGEMENT

August 10, 1994

David R. Sawyier, Esq.

Sidley & Austin
One First National Plaz
Chicago, Ilinois 60603

Re: Glenwood Investment Corp.
Dear Mr. Sawyier:

The Division ~f Corporation Finance has referred your letter, dated July 1, 1994, to this Offce for consideration. In your letter you "inform (the Division of Corporation

Finance) that Glenwoo~ has now determined to procee to produce a: very limited circulation 'Hedge Fund Directory. '" You then briefly describe the Hedge Fund Directory. You close by stating that you would "appreciate any input or comments you (the Division of Corporation Finance) may have, as Glenwoo. . . has no interest whatsoever at this point in inaugurating a program which is in violation of either the letter or the spirit of the relevant private placement exemptions." We are not aware of any prior requests submitted to this Office on behalf of Glenwood Investment Corp. to produce a Hedge Fund Directory. We decline to respond to your request for comments. First, if you 'seek comment on your transaction, you must submit your request in the form of a no-action or interpretive request. Such a request must contain adequate facts and legal analysis to enable us to consider the request. The request should not only give your opinion of the matter, but also the legal basis of that opinion. The request should discuss the reasons why you think the transaction warants resolution through the no-action or interpretive process. The request should discuss (and not merely cite) all relevant precedent, both pro and con. i Your request should also explain the extent to which the proposed transaction is beyond the scope of relief previously grated. Your letter should also compare recent precedent to the proposed transaction, and identify and discuss any differences between your proposal and the relevant precedent. See Investment Company Act Release No. 6330 (Jan. 25, 1971) (setting forth the appropriate procedure to be followed for no-action requests). Second, you state that Glenwood has determined to procee with its Hedge Fund Directory. As a matter of policy, the staff does not grant retroactive no-action relief. See, ~, Laifer, Inc. (pub. avaiL. Jan. 5, 1993).

i In this connection, you should note that the staff's position has been that whether an

offering is public under Section 3(c)(1) of the Investment Company Act of 1940 is a factual determination that the issuer is in the best position to make. See,~, Stas & Stripes GNMA Funding Corpration (pub. avaiL. Apr. 17, 1986). Further, we have taen the position that if an offer is public for purpses of the Securities Act of 1933, it would be public for purpses of Section 3(c)(1) of the Investment Company Act. See,~, Gerard Rizzuti (pub. avaiL. Jun. 7, 1983).

2
Finally, plea be advise that, absent no-action relief, your client may tae no comfort with respe to the staff's view of a hedge fund included in the Hedge Fund Directory continuing to rely on Section 3(c)(1) of the Investment Company Act, or of such fund's compliance W: any other provision of the federal securities laws. ~ Edward J. Rubenstein Senior Attorney Office of Chief Counsel \ '

SIDLEY & AUSTIN
A PARTNERSHIP INCLCDING PROFESSIONAL CORPORArIONS

ONE FIRT NATIONAL PLAZA

CHICAGO, lLors 60603
LOS ANGELES LONDON TELHONE 312: 853-7000
:t'" YORK TEL 25-4364 SINGAPORE
WASHIGTON, D.C. FAC"TMR 312: 853-7036 , TOKYO FOUNED 1866 WJl'S DIRCT N~ (312) 853-7261 July 1, 1994

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450 5th stree. N.W. == --:2~ë;
Washington, D~C 20549 ..0 . ,
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Ms. Cecilia Blye v ~ (~.1, ~ o ',-.1
Division of DKorate Finance

stop 3-3, Rcx 3033

Securities ai Exchange Commission

450 Fifth S~, N.W.
'
Washington, IlC. 20549

Re: Glenwood Investment COrD. ("Glenwood")
Dear Ms. Arm and Blye:
Following up on our discussions of some months ago, we

thought it ~priate to inform you that Glenwood has now

determined to proceed to produce a very limited circulation

"Hedge Fund -ictory." Glenwood's decision to do so has been

influenced tD a substantial extent by the recent proliferation of

similar dir~ries which are distributed on a much more public

basis than Gbmood intends for its product. However, due to the

uncertainty II the law in this area - i. e., at what point does /

inclusion in a directory preclude a hedge fund from relying on

the "private investment company" exemption of section 3 (c) 1 of the InvestmeD Company Act of 1940 - Glenwood has asked us, out of an abundam of caution, to inform the Commission of the

nature of Gle.od' s proposal; we also advised Glenwood that it

should do so in view of our previous discussions with the

Commission aD the subject.

G~od does not intend to publicly distribute its Hedge Fund Ditory in the manner of a "MA Hedge" publication. Rather, GleD8 proposes to establish a "members-only"

SIDL.EY & AUSTIN CHICAGO

Ms. Abigail Ars
Ms. Cecilia Blye

Securi ties and Exchange Commission

July 1, 1994

association of hedge fund investors - each of whom will be very

high net worth and sophisticated investors. These investors will

submit information to Glenwood regarding the hedge funds in which

they are invested, Glenwood will compile the information received

and circulate the compilation as a "Hedge Fund Directory" among.

the various hedge fund investors which are members of the

"Association." No hedge fund will provide any financial support

whatsoever ,to the proj ect, participation will be entirely

voluntary and pll persons who receive the publication will

persons who are suitable to themselves invest in

hedge funds - a very rarefied group df sophisticated investors.

Glenwood will còllect subscription payments from the investors,

who will undertake not themselves to reproduce or otherwise

distribute the Directory. The maximum circulation is not, given

the rigorous sta'ndards for membership in the "Association,"

expected to exceed several hundred persons, and Glenwood will

review each subscription application to confirm the prospective

subscriber's suitability.

necessarily be

We believe that the foregoing proposal is' consistent with the principles embodied in Section 3 (c),1 as well as in Rule 502 (c) under the Securities Act of 1933. Certainly, we have no

doubt that Glenwood's procedures are materially more consistent

with these provisions than the procedures of a number of other

previously brought

to the attention of the commission). We would, of course, very

much appreciate any input or comments you may have, as Glenwood having put off its Hedge Fund Directory project for over ten

hedge fund directory services (which we have

years due to 3 (c) 1 considerations - has no interest whatsoever at this point in inaugurating a program which is in violation of

either the letter or the spirit of the relevant private placement

exemptions.
Please do not hesitate to call me if you have any

questions at (312) 853-7261.

Very truly yours,

DavCl Sf;i
DRS / cd

DRS94D70.SEC (1/1/94 3:25pm)