Securities and Exchange Commission (the “SEC”).
Notice of Application for Exemption under the Investment Advisers Act of 1940 (“Advisers Act”).
Applicant: Longview Management Group LLC (“Longview”).
Relevant Advisers Act Sections: Exemption requested under section 202(a)(11)(F) from section 202(a)(11) of the Advisers Act.
SUMMARY OF APPLICATION:
Applicant requests an order declaring it to be a person not within the intent of section 202(a)(11), which defines the term “investment adviser.”
The application was filed on August 6, 1999 and amended on November 5, 2001 and December 19, 2001.
Hearing or Notification of Hearing: An order granting the application will be issued unless the SEC orders a hearing. Interested persons may request a hearing by writing to the SEC's Secretary and serving applicant with a copy of the request, personally or by mail. Hearing requests should be received by the SEC by 5:30 p.m. on January 30, 2002, and should be accompanied by proof of service on applicant, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons may request notification of a hearing by writing to the SEC's Secretary.
Secretary, SEC, 450 5th Street, NW., Washington, DC 20549-0609. Applicant, Longview Management Group LLC, 222 North LaSalle Street, Suite 2000, Chicago, IL 60601.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Don L. Evans, Staff Attorney, at (202) 942-0529 or Jennifer L. Sawin, Assistant Director, at (202) 942-0719 (Division of Investment Management, Office of Investment Adviser Regulation).End Further Info End Preamble Start Supplemental Information
The following is a summary of the application. The complete application may be obtained for a fee at the SEC's Public Reference Branch, 450 5th Street, NW., Washington, DC 20549-0102, (202) 942-8090.
1. Applicant was organized in 1998 and is an investment adviser registered under the Advisers Act. Applicant is a “family office” for the members of the extended Crown family and was created to conduct the investment affairs and manage the assets of the Crown family. Applicant's sole equity holder is the Edward Memorial Trust, the ultimate beneficiaries of which solely are members of the Crown family.
2. Applicant represents that, although it employs a small number of non-Crown family members to assist in its day-to-day operations, most of its officers, employees and portfolio managers are Crown family members. Crown family members are solely responsible for key decisions, such as asset allocation and security selection, over Longview accounts.
3. Applicant performs advisory and portfolio management services for Crown family members and for individual accounts, trusts, corporations, partnerships and other entities that are beneficially owned by or for the benefit of the various members of the Crown Family and which are operated by members of the family (“Crown Family Investment Entities”).
4. Applicant also provides portfolio management services to three types of charitable entities: (1) charitable entities created solely by the Crown family and administered under the sole discretion of the Crown family, (2) a charitable entity created by the Crown family but under the control of an independent board of directors, which includes members of the Crown family, and (3) a charitable entity which was formed and funded by friends of Henry Crown after his death and which is managed by Applicant.
5. Applicant also provides advisory and portfolio management services for the assets of a small number of individuals who are not members of the Crown family. Applicant provides advisory and portfolio management services to the families of two longtime Crown family employees. The two employees are now deceased and the assets were placed under Longview's management prior to their deaths. Applicant also manages the assets of two individuals that the Crown family has allowed to invest, along with family members, in a Crown Family Investment Entity that holds a diversified basket of marketable securities. These two individuals are a long-time former employee of Henry Crown & Company with over 40 years of service to the Crown family, and a long-time Crown family attorney with over 50 years of Start Printed Page 1252service to the family. Applicant states that the number of investments by these individuals has declined over time and is no longer permitted. In addition, Applicant manages certain investment vehicles (e.g., limited liability companies or limited partnerships) (each such entity an “Investment Vehicle”) that the Crown family uses to purchase an asset such as an operating entity. On occasion, the Crown family has permitted a non-Crown family member to participate in the Investment Vehicle. The total amount of non-Crown family member assets to which Applicant provides services is less than 1.34% of the total assets managed by Applicant.
6. Applicant does not hold itself out to the public as an investment adviser and states that it is not listed in the phone book or any other directory as an investment adviser. Applicant does not engage in any advertising, attend investment management-related conferences as a vendor, or conduct any marketing activities.
7. Applicant states that it does provide, as a part of the comprehensive services it provides to Crown family members, a limited amount of certain administrative services to its clients, through a contract with Henry Crown & Company LLC (“HC&Co.”).
8. Applicant represents that the fees charged for its investment advisory services are far below market prices for such services because they are intended to cover Applicant's costs for providing such services and not to serve as a profit center for the Crown family. Applicant states that it uses the fees it receives to pay for the administrative services HC&Co. provides through its contract with Applicant.
9. Applicant has no public clients in the sense of retail or institutional investors and has no plans, now or in the future, to solicit or accept clients from the retail public.
Applicant's Legal Analysis
1. Section 202(a)(11) of the Advisers Act defines “investment adviser” to mean “any person who, for compensation, engages in the business of advising others . . . as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. . . .”
2. Section 202(a)(11)(F) of the Advisers Act authorizes the SEC to exclude from the definition of “investment adviser” persons that are not within the intent of section 202(a)(11).
3. Section 203(a) of the Advisers Act requires investment advisers to register with the SEC. Section 203(b) of the Advisers Act provides exemptions from this registration requirement. Applicant asserts that it has determined it does not qualify for any of the exemptions provided by section 203(b). Applicant states that it is not prohibited from registering with the SEC under section 203A(a) of the Advisers Act.
4. Applicant asserts that there is no public interest in requiring it to be registered under the Advisers Act. Applicant states that it is a private organization that was formed to be the “family office” for the Crown family. Applicant represents that all of its clients have a close relationship with the Crown family in that they are all either immediate members of the Crown family, a Crown Family Investment Entity or a limited number of close, long-time family associates and their descendants, as well as the senior executives of Longview and certain operating companies. Applicant states that it was organized to provide a “family office” for the Crown family, and that is, and will be, the sole purpose for its existence.
5. Applicant requests exemptive relief from section 203(a) of the Advisers Act and requests that the SEC issue an order under section 202(a)(11)(F) declaring it to be a person not within the intent of section 202(a)(11).
1. Non-Crown family members to whom Longview provides investment advice, including through investments in Crown Family Investment Entities, are limited to their current investments.
2. No new non-Crown family member may make an investment in a Crown Family Investment Entity or in an Investment Vehicle to which Longview provides investment advice.
3. Longview will not enter into any new advisory relationships with a non-Crown family member.Start Signature
For the SEC, by the Division of Investment Management, under delegated authority.
Margaret H. McFarland,
[FR Doc. 02-525 Filed 1-8-02; 8:45 am]
BILLING CODE 8010-01-P