SEC Division of Investment Management staff letter: Tudor Employee Investment Fund LLC and Tudor Investment Corporation

Investment Company Act of 1940 — Section 6(b), Rule 6b-1 Tudor Employee Investment Fund LLC and Tudor Investment Corporation

April 28, 2015

RESPONSE OF THE OFFICE OF CHIEF COUNSEL DIVISION OF INVESTMENT MANAGEMENT

IM Reference No. 20147281755 File No. 813-00359

Your letter dated April 23, 2015 requests our assurance that we would not recommend enforcement action to the Securities and Exchange Commission ("Commission") under certain provisions of the Investment Company Act of 1940 ("1940 Act"), against any person covered by, and relying on, an exemptive order issued on September 29, 2010 [1] (such order, the "Order," and each such person, a "Covered Person"), in the circumstances described below. Covered Persons include Tudor Employee Investment Fund LLC ("Investment Fund"), Tudor Investment Corporation ("Tudor"), and any future pooled investment vehicle ("Subsequent Fund," and together with the Investment Fund, the "Funds") formed for the benefit of eligible employees of Tudor and its affiliates, as defined in rule 12b-2 under the Securities Exchange Act of 1934 (Tudor and such affiliates, each a "Tudor Group Entity," and the employees, "Eligible Employees"). [2]

BACKGROUND

Pursuant to the Order, the Investment Fund currently operates, and each Subsequent Fund will operate, as a non diversified closed-end management investment company that meets the definition of "employees' securities company" in section 2(a)(13) of the 1940 Act ("ESC"). You state that a Tudor Group Entity acts, or in the case of the Subsequent Funds, will act, as the general partner or managing member ("Manager") and as the investment adviser ("Investment Adviser") of each Fund. You also state that a Tudor Group Entity may act as investment adviser to certain affiliated or non affiliated private investment funds in which a Fund may invest ("Underlying Funds").

The Order was granted on the basis of the representations, and subject to the conditions, set forth in the amended application filed on September 1, 2010 (the "Application"). One of the representations in the Application ("Representation") was as follows:

Neither the Manager nor any Investment Adviser will receive any management fees from a Fund for its management activities on behalf of such Fund. An Investment Adviser may receive compensation for acting as an investment adviser to an Underlying Fund, but will waive any such compensation it receives directly related to a Fund's investment in such Underlying Fund.

ANALYSIS

You state that, because the portfolio managers of an Investment Adviser to an Underlying Fund must be compensated for their investment advisory services, from time to time Tudor establishes limits on the amounts of management fee free assets that may be invested in the Underlying Fund. You state that once these limits have been reached, additional investments in an Underlying Fund would be available to the Funds only if the above-referenced waiver provided for in the Application ("Waiver") is eliminated. [3] You represent that Eligible Employees generally have expressed a desire to obtain additional exposure to the Underlying Funds managed by Tudor.

Your letter requests assurance that we would not recommend enforcement action to the Commission under the Relevant Provisions against a Covered Person if, notwithstanding the Representation, an Investment Adviser does not waive management fees or other compensation that it receives for acting as an investment adviser to an Underlying Fund and which is directly related to a Fund's investment in such Underlying Fund. [4] You state that all of the other representations and conditions in the Application will be met. You note that similar recent exemptive orders granted to ESCs generally do not provide for such waivers.

You also represent as follows:

each investor in the Investment Fund will receive a supplement to the Investment Fund's offering memorandum, together with a cover letter (collectively, the "Notice"), explaining the elimination of the Waiver, the resulting consequences for the Investment Fund's investors, and the opportunity to redeem the investor's interest in the Investment Fund prior to the elimination of the Waiver (detailed below), and setting forth the procedure for such redemption;

the investor will have no fewer than 20 calendar days after receiving the Notice to submit a request to redeem any or all of the investor's interest in the Investment Fund, without penalty, prior to the effective date of the elimination of the Waiver ("Redemption Period"); [5]

Tudor and the Investment Fund will make a good faith effort to ensure that, absent exceptional circumstances, each investor will receive 95% of his or her redemption amount within 10 business days after the redemption date and the remainder within 45 business days after the redemption date; and

you do not expect any negative consequences from the redemptions for investors that choose to remain in the Investment Fund.

CONCLUSION

Based on the facts and representations set forth in your letter, we would not recommend that the Commission take enforcement action against a Covered Person under the Relevant Provisions if the Waiver is eliminated as described above. 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.

Kieran G. Brown Senior Counsel

[1] Tudor Employee Investment Fund LLC and Tudor Investment Corporation, Investment Company Act Release Nos. 29409 (September 3, 2010) (notice) and 29449 (September 29, 2010) (Order).

[2] The Order exempts Covered Persons from all provisions of the 1940 Act, except section 9 and sections 36 through 53, and the rules and regulations thereunder. With respect to sections 17 and 30 of the 1940 Act, and the rules and regulations thereunder, and rule 38a-1 under the 1940 Act, the exemption granted by the Order is limited as set forth in the Application (defined below). The provisions of the 1940 Act and the rules and regulations thereunder from which the Order grants relief, to the extent the Order grants relief from them, are hereinafter referred to as the "Relevant Provisions."

[3] You state that this same rationale would apply to Underlying Funds managed by other Tudor Group Entities for which you are also requesting our assurance.

[4] You state that, consistent with the Representation, none of the Manager, any Investment Adviser, a Tudor Group Entity, or any of their employees will receive any management fees or other compensation from a Fund for its management activities on behalf of such Fund.

[5] You represent that all restrictions on redemption will be waived during the Redemption Period. Further, you state that you do not expect that investors will be subject to significant adverse tax consequences if they redeem their interests during the Redemption Period because the Investment Fund is taxed as a partnership and investors are allocated their share of the Investment Fund's taxable income or loss on an annual basis.

Incoming Letter

The Incoming Letter is in Acrobat format.

http://www.sec.gov/divisions/investment/noaction/2015/tudor-emp-invest-fund-042815-6b1.htm

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Fried, Frank, Harris, Shriver &Jacobson LLP
One New York Plaza
New York, New York 10004-1980 RIEDFRAN
Tel: +1.212.859.8000
Fax: +1.212.859.4000 www.friedfrank.com
April23, 2015
Kieran G. Brown, Esq.
Senior Counsel
U.S. Securities and Exchange Commission

Division of Investment Management, Chief Counsel's Office

100 F Street NE

Washington, DC 20549

Re: Tudor Employee Investment Fund LLC and Tudor Investment Corporation Dear Mr. Brown:
The undersigned respectfully requests that the staff of the Division of Investment Management (the "Staff') of the U.S. Securities and Exchange Commission (the "Commission") advise that it will not recommend enforcement action under the provisions of the Investment Company Act of 1940, as amended (the "Act"), to the extent the Order (as defined below) granted relief from them ("Relevant Provisions"), against any person covered by, and relying on, the Order ("Covered Person"), in the circumstances described below. The undersigned makes this request on behalf of (i) Tudor Employee Investment Fund LLC (the "Investment Fund"), (ii) Tudor Investment Corporation ("Tudor" and together with the Investment Fund, "Applicants"), and (iii) future pooled investment vehicles formed for the benefit of eligible employees of Tudor and its affiliates ("Subsequent Funds" and collectively with the Investment Fund, the "Funds"). Tudor and its "affiliates," as defined in rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), are referred to collectively as the "Tudor Group" and each entity within the Tudor Group is referred to individually as a "Tudor Group Entity." Background The Applicants filed an application for exemptive relief on December 6, 2005, and most recently filed an amendment to the application on September 1, 201 0 (as amended, the "Application"). On September 29, 2010, Applicants received an exemptive order from the Commission.' The Order was issued under sections 6(b) and 6( e) of the Act. The Order conditionally exempts Applicants (and any Subsequent Funds) from all provisions of the Act, except section 9 and sections 36 through 53, and the rules and regulations thereunder. 2 The Investment Fund currently operates, and each Subsequent Fund will operate, as a non-diversified closed-end management investment company and an "employees' securities company" ("ESC") within the meaning of section 2(a)(13) ofthe Act. The Investment Fund currently is, and each Subsequent Fund will be, established to enable eligible employees of the Tudor Group, through their 1 Investment Company Act Release No. 29409 (September 3, 2010) (notice) and Investment Company Act Release No. 29449 (September 29, 2010) (the "Order"). 2 With respect to sections 17 and 30 of the Act, and the rules and regulations thereunder, and rule 38a-1 under the Act, the exemption granted by the Order, and the assurance we request, are limited as set forth in the Application. New York • Washington DC • London • Paris • Frankfurt • Hong Kong • Shanghai Fried, Frank, Harris, Shriver & Jacobson LLP is a Delaware Limited Liability Partnership

Fried, Frank, Harris, Shriver &Jacobson LLP
Kieran G. Brown, Esq. - 2 - April23, 2015 investment in a Fund, to achieve long-term capital appreciation through investment in affiliated and non-affiliated private investment funds (each, an "Underlying Fund"), certain of which are advised by a Tudor Group Entity. The managing member and the investment adviser (the "Investment Adviser") of the Investment Fund is a Tudor Group Entity. One or more Tudor Group Entities will also serve as the general partner or managing member, as applicable (the "Manager"), and as the Investment Adviser of each Subsequent Fund. Request for No-Action Position The Application contains a number of representations, including one which provides:
Neither the Manager nor any Investment Adviser will receive any management fees from a Fund for its management activities on behalf of such Fund. An Investment Adviser may receive compensation for acting as an investment adviser to an Underlying Fund, but will waive any such compensation it receives directly related to a Fund's investment in such Underlying Funds. Applicants respectfully request that the Staff will not recommend enforcement action under the Relevant Provisions against a Covered Person if an Investment Adviser receives management fees and/or compensation for acting as an investment adviser to an Underlying Fund, including performance-based compensation (a "carried interest") based on the gains and losses of the investment program of an Underlying Fund's investment portfolio, without waiving any such compensation it receives directly related to a Fund's investment in such Underlying Fund. For the avoidance of doubt, none of the Manager, any Investment Adviser, a Tudor Group Entity, or any of their employees will receive any management fees or other compensation from a Fund for its management activities on behalf of such Fund. Rationale for Request Recent orders granted to ESCs and their managers for relief similar to that requested by Applicants in the Application provide that an ESC may pay its pro rata portion of a management fee and/or a carried interest when it invests in an entity organized or managed by the ESC's investment adviser (or the investment adviser's affiliates) in which unaffiliated third parties also are limited partners or otherwise hold interests. 3 In these cases, the ESC would pay a pro rata share of any fees charged to the unaffiliated limited partners or interest holders of such underlying funds. 4 Applicants assert that granting the relief requested would align the Order with more recent ESC orders. If the Staff issues the no action position requested, Covered Persons will comply with the terms and conditions of the Order as ifthe above-referenced representation read:
3 See, e.g., UBS AG, et al., Investment Company Act Release Nos. 31019 (April17, 2014) (notice) and 31042 (May 13, 2014) (order) ("If a Fund becomes a limited partner or otherwise holds an interest in an investment fund organized or managed by the UBS Group or a UBS Capital entity in which unaffiliated third parties also are limited partners or otherwise hold interests (a "Client Fund"), the Fund may be obligated to pay a pro rata share of any fees (including carried interest) charged to the unaffiliated limited partners or interest holders of such Client Fund."). 4 !d.

Fried, Frank, Harris, Shriver & Jacobson LLP
Kieran G. Brown, Esq. - 3 - April23, 2015
Neither the Manager nor any Investment Adviser will receive any management fees from a Fund for its management activities on behalf of such Fund. An Investment Adviser may receive compensation for acting as an investment adviser to an Underlying Fund, including performance-based compensation (a "carried interest") based on the gains and losses of the investment program of an Underlying Fund's investment portfolio, without waiving any such compensation, including compensation it receives directly related to a Fund's investment in an Underlying Fund. Applicants believe that granting the relief requested would also be in the best interest of the Funds and their investors. Those Underlying Funds which are managed by Tudor (the "Tudor Underlying Funds") are limited in their capacity to accept investments in non-fee paying classes of shares or interests. Such limits are established by Tudor to manage the cost of offering such fee-free classes. While Tudor views such fee-free classes as a tool to retain its employees, Tudor incurs a cost in offering them because Tudor compensates the portfolio managers of the Tudor Underlying Funds based on the profits they generate, irrespective of whether those profits are generated with respect to fee-free or fee-paying classes. To balance its interest in offering such fee-free classes against the cost of offering them, Tudor establishes limits on the fee-free classes that it determines to be reasonable from time to time. Once the Tudor Underlying Funds reach their capacity to accept investments in fee-free classes, additional investments by the Funds in the Tudor Underlying Funds would need to be made in fee-paying classes, which would only be available if the requested relief is granted. As a result, absent the requested relief, the Funds would be limited in their ability to make additional investments in the Tudor Underlying Funds. 5 Investors in the Funds, and Tudor employees and partners, have generally expressed a desire to obtain additional exposure to the Tudor Underlying Funds. Applicants note that if the relief were granted and the Funds were to make additional investments in the fee-paying classes of the Tudor Underlying Funds, investors in the Funds would still obtain exposure to the Tudor Underlying Funds on beneficial terms, as only those investments in excess of the Tudor Underlying Funds' fee-free capacity limits would be subject to a pro rata share of the fees applicable to third-party investors in the Tudor Underlying Funds. Applicants believe that this is fair and equitable, and, in fact is desirable for the Funds, their investors and for Tudor. Except as specified herein, Covered Persons will otherwise comply with all of the terms and conditions of the Order. If the Staff issues the no action position requested, each investor in the Investment Fund will receive a supplement to the Investment Fund's offering memorandum disclosing the fees that may be charged pursuant to the Staffs relief as
described above, together with a cover letter explaining the changes (the "Notice"). The Investment Fund's offering memorandum currently provides that investors may redeem their interests, on 65 days' notice, as of the last calendar day of each calendar quarter commencing on or following the calendar quarter immediately preceding the first anniversary of the acquisition of such units, subject to a fund level gate and the managing member's right to suspend redemptions. Notwithstanding the foregoing, all current investors in the Investment Fund will have an opportunity to redeem any or all of their interests in the Investment Fund, without penalty, prior to the effective date of the 5 Applicants note that the same rationale would also apply to Underlying Funds managed by other Tudor Group Entities.

Fried, Frank, Harris, Shriver & Jacobson LLP
Kieran G. Brown, Esq. - 4 - April23, 2015 changes. Applicants will include an explanation of the foregoing in the Notice. Investors will be able to redeem their interests by providing a written redemption request to the Investment Fund. Investors will have no fewer than 20 calendar days after receiving the Notice to submit their redemption request. All restrictions on redemptions will be waived during this period. The Notice will prominently disclose the time period during which investors may redeem their interests without penalty and describe the procedures for requesting the redemption. The Applicants will make a good faith effort to ensure that, absent exceptional circumstances, an investor will receive 95% of his or her redemption amount within 10 business days after the redemption date and the remainder within 45 business days after the redemption date. The Applicants do not expect any negative consequences from the redemptions for investors that choose to remain in the Investment Fund. Applicants note that the Investment Fund is taxed as a partnership and, as a result, the investors are allocated their share of the Investment Fund's taxable income or loss on an annual basis, which increases or decreases the investors' tax bases in their interests. Accordingly, it is not expected that investors would be subject to significant adverse tax consequences if they elected to redeem their interests. All subsequent offering documents for the Funds will disclose that such Funds will pay their pro rata share of the fees (including carried interest) that may be charged at the Underlying Fund level. Conclusion Under the circumstances, Applicants believe that the Staff may appropriately conclude that the requested relief is warranted. Accordingly, Applicants respectfully request that the Staff agree not to recommend enforcement action under the Act in the circumstances described. Applicants appreciate the Staffs consideration of this request. Please do not hesitate to contact the undersigned directly at (212) 859-8292 with any questions regarding this request. Respectfully submitted, ' /";' J ,1 /l ('\ I II. I 1./[; /) I /i ~ ' i / c;_ u , c\ ;J, /t (/ c ··J-~ ]:_ David S. Mitchell cc: Stephen N. Waldman, Esq.

Managing Director and Deputy General Counsel

Tudor Investment Corporation