SEC Division of Investment Management staff letter: K&L Gates LLP

308658444.2
Mark C. Amorosi
Practice Area Leader – Asset Management and Investment Funds mark.amorosi@klgates.com T +1 202 778 9351 F +1 202 778 9100 K&L GATES LLP 1601 K STREET NW WASHINGTON DC 20006 T +1 202 778 9000 F +1 202 778 9100 klgates.com By E-mail Deputy Director and Chief Counsel Division of Investment Management United States Securities and Exchange Commission 100 F Street, NE Washington, DC 20549 Re: Request for No-Action Relief from Section 17(f) of the Investment Company Act of 1940 and Rule 17f-2 Thereunder with respect to Custody of Loan Interests Dear Mr. Cellupica:
We are writing on behalf of an investment advisory client (“Adviser”) and certain of the registered management investment companies or series thereof for which it or one of its affiliates serves as investment adviser or sub-adviser (collectively, the “Funds”) to request assurances that the Division of Investment Management of the U.S. Securities and Exchange Commission (the “Commission” or “SEC”) will not recommend any enforcement action to the Commission under
Section 17(f) of the Investment Company Act of 1940, as amended (the “1940 Act”), and
paragraphs (b)-(f) of Rule 17f-2 thereunder against the Funds or their directors or officers if the Funds, each acting as self-custodian of its assets, maintain custody of loan interests pursuant to Rule 17f-2 in the manner, and subject to the conditions, described below, rather than in strict compliance with paragraphs (b)-(e) of Rule 17f-2 and do not comply with the requirement under paragraph (f) of Rule 17f-2. We believe that maintaining custody of such interests, as described herein, is consistent with the protections that Section 17(f) and Rule 17f-2 were intended to provide.
I. Factual Background Information
Adviser and certain of its affiliates are investment advisers that are registered with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). The Funds invest in, among other things, term or delayed draw corporate loans (“Loans”) that are originated, negotiated and structured by one or more primary lenders (“Primary Lenders”) typically consisting of banks, insurance companies or other financial institutions. One or more of the Primary Lenders or another financial institution administers the Loans on behalf of the lending syndicate (“Administrative Agent”). The terms of the Loans typically are set forth in a Credit Agreement between the borrower, which typically is an operating company (the “Borrower”), the Administrative Agent and the Primary Lenders. The Credit Agreement sets forth the terms of the Borrower’s obligation on the Loan. It also typically limits or conditions the ability of the Primary