Exemption Application under Investment Company Act (Form 40-APP)
File No. 811-24071
In the Matter of the Application of:
ELLINGTON CREDIT COMPANY; ELLINGTON CREDIT COMPANY MANAGEMENT LLC;
(203) 698-1200
APPLICATION FOR AN ORDER PURSUANT TO SECTIONS 17(d) AND 57(i) OF THE INVESTMENT COMPANY ACT OF 1940 AND RULE 17d-1 UNDER THE INVESTMENT COMPANY ACT OF 1940 PERMITTING CERTAIN JOINT TRANSACTIONS OTHERWISE PROHIBITED BY SECTIONS 17(d) AND 57(a)(4) OF AND RULE 17d-1 UNDER THE INVESTMENT COMPANY ACT OF 1940
All Communications, Notices and Orders to:
Telephone: (203) 698-1200
Copies to:
1
BEFORE THE
SECURITIES AND EXCHANGE COMMISSION
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IN THE MATTER OF ELLINGTON CREDIT COMPANY; ELLINGTON CREDIT COMPANY MANAGEMENT LLC; ELLINGTON GLOBAL ASSET MANAGEMENT, LLC; ELLINGTON FINANCIAL MANAGEMENT LLC; ELLINGTON MANAGEMENT GROUP, L.L.C; CC ELLINGTON STRUCTURED CREDIT FUND LTD.; CRESCENT II FUND, L.P.; CII CAYMAN HOLDINGS LTD.; CII HOLDCO INC.; ELLINGTON STRUCTURED CREDIT ERISA FUND, LTD.; ELLINGTON CREDIT OPPORTUNITIES, LTD.; ECO HOLDCO INC.; ELLINGTON ENHANCED INCOME MASTER FUND LTD.; EF CAYMAN HOLDINGS LTD.; EF HOLDCO INC.; EF CORPORATE HOLDINGS LLC; ELLINGTON FINANCIAL REIT CAYMAN LTD.; 53 FOREST AVENUE File No. 811-24071 |
: : : : : : : : |
APPLICATION FOR AN ORDER PURSUANT TO SECTIONS 17(d) AND 57(i) OF THE INVESTMENT COMPANY ACT OF 1940 AND RULE 17d-1 UNDER THE INVESTMENT COMPANY ACT OF 1940 PERMITTING CERTAIN JOINT TRANSACTIONS OTHERWISE PROHIBITED BY SECTIONS 17(d) AND 57(a)(4) OF AND RULE 17d-1 UNDER THE INVESTMENT COMPANY ACT OF 1940 |
2
I.SUMMARY OF APPLICATION
The following entities hereby request an order (the "Order") of the
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| · | Ellington |
| · | Each investment fund set forth on Schedule A hereto, which is an entity whose investment adviser is or will be an Adviser and that would be an investment company but for Section 3(c)(7) of the Act (collectively, the "Existing Affiliated Funds" and together with EARN, ECCM, EGAM, EFM, and EMG, the "Applicants").2 |
1 Unless otherwise indicated, all section and rule references herein are to the 1940 Act and rules promulgated thereunder.
2 All existing entities that currently intend to rely upon the requested Order have been named as Applicants. Any other existing or future entity that subsequently relies on the Order will comply with the terms and conditions of the Application.
3
The relief requested in this application for the Order (the "Application") would allow a
3 "
The term
In the case of a Wholly-Owned Investment Sub that does not have a chief compliance officer or a Board, the chief compliance officer and Board of the
4 "Affiliated Entity" means an entity not controlled by a
To the extent that an entity described in clause (b) is not advised by an Adviser, such entity shall be deemed to be an Adviser for purposes of the conditions.
5 "Co-Investment Transaction" means the acquisition or Disposition of securities of an issuer in a transaction effected in reliance on the Order or previously granted relief.
6 "Adviser" means ECCM, EGAM, EFM, EMG and any other investment adviser controlling, controlled by, or under common control with ECCM, EGAM, EFM and/or EMG. The term "Adviser" also includes any internally-managed
7See, e.g.,
4
II. GENERAL DESCRIPTION OF THE APPLICANTS
| A. | EARN |
EARN was initially formed as a
EARN is managed by ECCM pursuant to an investment advisory agreement. EARN's investment objective is to generate attractive current yields and risk-adjusted total returns. EARN has a six-member board (the "Board"), of which four members are not "interested" persons of the Fund within the meaning of Section 2(a)(19) of the Act.8
| B. | ECCM |
ECCM is organized as a limited liability company under the laws of the
| C. | EGAM |
EGAM is organized as a limited liability company under the laws of the
| D. | EFM |
EFM is organized as a limited liability company under the laws of the
| E. | EMG |
EMG is organized as a limited liability company under the laws of the
8 The Board of each
5
| F. | The Existing Affiliated Funds |
III. ORDER REQUESTED
The Applicants request an Order of the Commission under Sections 17(d) and 57(i) of the 1940 Act and Rule 17d-1 thereunder to permit, subject to the terms and conditions set forth below in this Application (the "Conditions"), each
| A. | Applicable Law |
Section 17(d), in relevant part, prohibits an affiliated person, or an affiliated person of such affiliated person, of a registered investment company, acting as principal, from effecting any transaction in which the registered investment company is "a joint or a joint and several participant with such person" in contravention of such rules as the
Rule 17d-1 prohibits an affiliated person, or an affiliated person of such affiliated person, of a registered investment company, acting as principal, from participating in, or effecting any transaction in connection with, any "joint enterprise or other joint arrangement or profit-sharing plan"10 in which the fund is a participant without first obtaining an order from the
Section 57(a)(4), in relevant part, prohibits any person related to a business development company in the manner described in Section 57(b), acting as principal, from knowingly effecting any transaction in which the business development company is a joint or a joint and several participant with such persons in contravention of such rules as the Commission may prescribe for the purpose of limiting or preventing participation by the business development company on a basis less advantageous than that of such person. Section 57(i) provides that, until the
Rule 17d-1(b) provides, in relevant part, that in passing upon applications under the rule, the Commission will consider whether the participation of a registered investment company in a joint enterprise, joint arrangement or profit-sharing plan on the basis proposed is consistent with the provisions, policies and purposes of the 1940 Act and the extent to which such participation is on a basis different from or less advantageous than that of other participants.
9 In the future, the
10 Rule 17d-1(c) defines a "[j]oint enterprise or other joint arrangement or profit-sharing plan" to include, in relevant part, "any written or oral plan, contract, authorization or arrangement or any practice or understanding concerning an enterprise or undertaking whereby a registered investment company … and any affiliated person of or principal underwriter for such registered company, or any affiliated person of such a person or principal underwriter, have a joint or a joint and several participation, or share in the profits of such enterprise or undertaking …."
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| B. | Need for Relief |
I.
| C. | Conditions |
Applicants agree that any Order granting the requested relief will be subject to the following Conditions.
1. Same Terms. With respect to any Co-Investment Transaction, each
2. Existing Investments in the Issuer. Prior to a
11 Such a Board can also, consistent with applicable fund documents, facilitate this opportunity by delegating the authority to veto the selection of such person to a committee of the Board.
12 Section 57(o) defines the term "required majority," in relevant part, with respect to the approval of a proposed transaction, as both a majority of a BDC's directors who have no financial interest in the transaction and a majority of such directors who are not interested persons of the BDC. In the case of a
13 Section 57(f) provides for the approval by a Required Majority of certain transactions on the basis that, in relevant part: (i) the terms of the transaction, including the consideration to be paid or received, are reasonable and fair to the shareholders of the BDC and do not involve overreaching of the BDC or its shareholders on the part of any person concerned; (ii) the proposed transaction is consistent with the interests of the BDC's shareholders and the BDC's policy as recited in filings made by the BDC with the Commission and the BDC's reports to shareholders; and (iii) the BDC's directors record in their minutes and preserve in their records a description of the transaction, their findings, the information or materials upon which their findings were based, and the basis for their findings.
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3. Related Expenses. Any expenses associated with acquiring, holding or disposing of any securities acquired in a Co-Investment Transaction, to the extent not borne by the Adviser(s), will be shared among the Participants in proportion to the relative amounts of the securities being acquired, held or disposed of, as the case may be.14
4. No Remuneration. Any transaction fee15 (including break-up, structuring, monitoring or commitment fees but excluding broker's fees contemplated by section 17(e) or 57(k) of the 1940 Act, as applicable), received by an Adviser and/or a Participant in connection with a Co-Investment Transaction will be distributed to the Participants on a pro rata basis based on the amounts they invested or committed, as the case may be, in such Co-Investment Transaction. If any transaction fee is to be held by an Adviser pending consummation of the transaction, the fee will be deposited into an account maintained by the Adviser at a bank or banks having the qualifications prescribed in section 26(a)(1) of the 1940 Act, and the account will eaa competitive rate of interest that will also be divided pro rata among the Participants based on the amount they invest in such Co-Investment Transaction. No Affiliated Entity,
5. Co-Investment Policies. Each Adviser (and each Affiliated Entity that is not advised by an Adviser) will adopt and implement policies and procedures reasonably designed to ensure that: (i) opportunities to participate in Co-Investment Transactions are allocated in a manner that is fair and equitable to every
6. Dispositions:
(a) Prior to any Disposition17 by an Affiliated Entity of a security acquired in a Co-Investment Transaction, the Adviser to each
14 Expenses of an individual Participant that are incurred solely by the Participant due to its unique circumstances (such as legal and compliance expenses) will be borne by such Participant.
15 Applicants are not requesting and the Commission is not providing any relief for transaction fees received in connection with any Co-Investment Transaction.
16 The Affiliated Entities may adopt shared Co-Investment Policies.
17 "Disposition" means the sale, exchange, transfer or other disposition of an interest in a security of an issuer.
8
(b) Prior to any Disposition by a
7. Board Oversight
| (a) |
| (b) | Prior to a |
| (c) | At least quarterly, each |
| (d) | Every year, each |
| (e) | The Adviser and the chief compliance officer will also notify the |
8. Recordkeeping. All information presented to the Board pursuant to the order will be kept for the life of the
18 "Tradable Security" means a security which trades: (i) on a national securities exchange (or designated offshore securities market as defined in Rule 902(b) under the Securities Act of 1933, as amended) and (ii) with sufficient volume and liquidity (findings which are to be made in good faith and documented by the Advisers to any Regulated Funds) to allow each
19 If a
9
9. In the event that the Commission adopts a rule under the 1940 Act allowing co-investments of the type described in this Application, any relief granted by the Order will expire on the effective date of that rule.
IV. STATEMENT IN SUPPORT OF RELIEF REQUESTED
Applicants submit that allowing the Co-Investment Transactions described by this Application is justified on the basis of (i) the potential benefits to the Regulated Funds and their respective shareholders and (ii) the protections found in the terms and conditions set forth in this Application.
| A. | Potential Benefits to the Regulated Funds and their Shareholders |
Section 57(a)(4) and Rule 17d-1 (as applicable) limit the ability of the Regulated Funds to participate in attractive co-investment opportunities under certain circumstances. If the relief is granted, the Regulated Funds should: (i) be able to participate in a larger number and greater variety of investments, thereby diversifying their portfolios and providing related risk-limiting benefits; (ii) be able to participate in larger financing opportunities, including those involving issuers with better credit quality, which otherwise might not be available to investors of a
| B. | Shareholder Protections |
Each Co-Investment Transaction would be subject to the terms and conditions of this Application. The Conditions are designed to address the concerns underlying Sections 17(d) and 57(a)(4) and Rule 17d-l by ensuring that participation by a
V. PRECEDENTS
The Commission has previously issued orders permitting certain investment companies subject to regulation under the 1940 Act and their affiliated persons to be able to participate in Co-Investment Transactions (the "Existing Orders").20 Similar to the Existing Orders, the Conditions described herein are designed to mitigate the possibility for overreaching and to promote fair and equitable treatment of the Regulated Funds. Accordingly, the Applicants submit that the scope of investor protections contemplated by the Conditions are consistent with those found in the Existing Orders.
20See, e.g.,
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VI. PROCEDURAL MATTERS
| A. | Communications |
Please address all communications concerning this Application, the Notice and the Order to:
Telephone: (203) 698-1200
Please address any questions, and a copy of any communications, concerning this Application, the Notice, and the Order to:
| B. | Authorizations |
The filing of this Application for the Order sought hereby and the taking of all acts reasonably necessary to obtain the relief requested herein was authorized by the Board of each
Pursuant to Rule 0-2(c), Applicants hereby state that each
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The Applicants have caused this Application to be duly signed on their behalf on the 7th day of May, 2025.
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ELLINGTON CREDIT COMPANY By: |
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| By: | /s/ |
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| Title: | Executive Vice President | |
| ELLINGTON CREDIT COMPANY MANAGEMENT LLC | ||
| By: | /s/ |
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| Title: | Executive Vice President | |
| ELLINGTON GLOBAL ASSET MANAGEMENT, LLC | ||
| By: | /s/ |
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| Title: | Executive Vice President | |
| ELLINGTON FINANCIAL MANAGEMENT, LLC | ||
| By: | /s/ |
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| Title: | Executive Vice President | |
| ELLINGTON |
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| By: | /s/ |
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| Title: | Executive Vice President | |
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CC ELLINGTON STRUCTURED CREDIT FUND LTD., ELLINGTON STRUCTURED CREDIT ERISA FUND, LTD., ELLINGTON ENHANCED INCOME MASTER FUND LTD., By: |
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| By: | /s/ |
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| Title: | Vice Chairman | |
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EF CAYMAN HOLDINGS LTD., EF HOLDCO INC., EF CORPORATE HOLDINGS LLC, ELLINGTON FINANCIAL REIT CAYMAN LTD., By: |
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| By: | /s/ |
|
| Title: | Executive Vice President | |
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CRESCENT II FUND, L.P., CII CAYMAN HOLDINGS LTD., CII HOLDCO INC., ELLINGTON CREDIT OPPORTUNITIES, LTD., ECO HOLDCO INC., ELLINGTON M CREDIT MASTER FUND LTD., ELLINGTON OPPORTUNITIES MAIN MASTER FUND LP, ELLINGTON PRIVATE OPPORTUNITIES MAIN MASTER FUND III LP, ELLINGTON PRIVATE OPPORTUNITIES AUXILIARY MASTER FUND III LP, ELLINGTON SPECIAL RELATIVE VALUE FUND LLC, ESRV CAYMAN HOLDINGS LTD., ELLINGTON STRATEGIC MORTGAGE INSTITUTIONAL FUND, L.P., ELLINGTON STRATEGIC MORTGAGE FUND, L.P., ELLINGTON EUROPEAN CREDIT OPPORTUNITIES LP, ELLINGTON SYSTEMATIC CREDIT MASTER FUND LTD, By: |
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| By: | /s/ |
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| Title: | Vice Chairman | |
14
Schedule A
Existing Affiliated Funds
15
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON CREDIT COMPANY By: |
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| By: | /s/ |
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| Title: | Chief Executive Officer | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
| ELLINGTON CREDIT COMPANY MANAGEMENT LLC | ||
| By: | /s/ |
|
| Title: | Executive Vice President | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
| ELLINGTON GLOBAL ASSET MANAGEMENT, LLC | ||
| By: | /s/ |
|
| Title: | Executive Vice President | |
16
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
| ELLINGTON FINANCIAL MANAGEMENT LLC | ||
| By: | /s/ |
|
| Title: | Executive Vice President | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
| ELLINGTON |
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| By: | /s/ |
|
| Title: | Executive Vice President | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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CC ELLINGTON STRUCTURED CREDIT FUND LTD. By: |
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| By: | /s/ |
|
| Title: | Vice Chairman | |
17
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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CRESCENT II FUND, L.P. By: |
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| By: | /s/ |
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| Title: | Vice Chairman | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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CII CAYMAN HOLDINGS LTD. By: |
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| By: | /s/ |
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| Title: | Vice Chairman | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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CII HOLDCO INC. By: |
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| By: | /s/ |
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| Title: | Vice Chairman | |
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VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON STRUCTURED CREDIT ERISA FUND, LTD. By: |
||
| By: | /s/ |
|
| Title: | Vice Chairman | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON CREDIT OPPORTUNITIES, LTD. By: |
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| By: | /s/ |
|
| Title: | Vice Chairman | |
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VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ECO HOLDCO INC. By: |
||
| By: | /s/ |
|
| Title: | Vice Chairman | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON ENHANCED INCOME MASTER FUND LTD. By: |
||
| By: | /s/ |
|
| Title: | Vice Chairman | |
20
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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EF CAYMAN HOLDINGS LTD. By: |
||
| By: | /s/ |
|
| Title: | Executive Vice President | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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EF HOLDCO INC. By: |
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| By: | /s/ |
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| Title: | Executive Vice President | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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EF CORPORATE HOLDINGS LLC By: |
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| By: | /s/ |
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| Title: | Executive Vice President | |
21
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON FINANCIAL REIT CAYMAN LTD. By: |
||
| By: | /s/ |
|
| Title: | Executive Vice President | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
|
By: |
||
| By: | /s/ |
|
| Title: | Executive Vice President | |
22
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON M CREDIT MASTER FUND LTD. By: |
||
| By: | /s/ |
|
| Title: | Vice Chairman | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON OPPORTUNITIES MAIN MASTER FUND LP By: |
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| By: | /s/ |
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| Title: | Vice Chairman | |
23
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON PRIVATE OPPORTUNITIES MAIN MASTER FUND III LP By: |
||
| By: | /s/ |
|
| Title: | Vice Chairman | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON PRIVATE OPPORTUNITIES AUXILIARY MASTER FUND III LP By: |
||
| By: | /s/ |
|
| Title: | Vice Chairman | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON SPECIAL RELATIVE VALUE FUND LLC By: |
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| By: | /s/ |
|
| Title: | Vice Chairman | |
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VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ESRV CAYMAN HOLDINGS LTD. By: |
||
| By: | /s/ |
|
| Title: | Vice Chairman | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON STRATEGIC MORTGAGE INSTITUTIONAL FUND, L.P. By: |
||
| By: | /s/ |
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| Title: | Vice Chairman | |
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VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON STRATEGIC MORTGAGE FUND, L.P. By: |
||
| By: | /s/ |
|
| Title: | Vice Chairman | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON EUROPEAN CREDIT OPPORTUNITIES LP By: |
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| By: | /s/ |
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| Title: | Vice Chairman | |
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VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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ELLINGTON SYSTEMATIC CREDIT MASTER FUND LTD By: |
||
| By: | /s/ |
|
| Title: | Vice Chairman | |
VERIFICATION
The undersigned states that he has duly executed the foregoing Application for and on behalf of
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By: |
||
| By: | /s/ |
|
| Title: | Vice Chairman | |
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Resolutions of the
Approval of Filing Section 17(d) Application for Co-Investment Relief
WHEREAS, the Board has reviewed the Company's Co-Investment Exemptive Application involving the Company and certain affiliates thereof as specified in the Co-Investment Exemptive Application, as presented at this meeting, for an order of the
NOW, THEREFORE, BE IT RESOLVED, that the Authorized Officers (as defined below), shall be, and each of them individually hereby is, authorized, empowered and directed, in the name and on behalf of the Company, to cause to be executed, delivered and filed with the
FURTHER RESOLVED, that the Authorized Officers shall be, and each of them individually hereby is, authorized, empowered and directed, in the name and on behalf of the Company, to cause to be made, executed, delivered and filed with the
FURTHER RESOLVED, that all acts and things previously done by any of the Authorized Officers, on or prior to the date hereof, in the name and on behalf of the Company in connection with the foregoing resolutions are in all respects authorized, ratified, approved, confirmed and adopted as the acts and deeds by and on behalf of the Company; and be it
FURTHER RESOLVED, that any officer of the Company be, and each of them hereby is, authorized, empowered and directed to certify and deliver copies of these resolutions to such governmental bodies, agencies, persons, firms or corporations as such officer may deem necessary and to identify by such officer's signature or certificate, or in such form as may be required, the documents and instruments presented to and approved herein and to furnish evidence of the approval, by an officer authorized to give such approval, of any document, instrument or provision or any addition, deletion or change in any document or instrument; and be it
FURTHER RESOLVED, that for purposes of the foregoing resolutions, the authorized officers of the Company shall be the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, the Executive Vice President, the General Counsel, the Associate General Counsel and the Portfolio Managers of the Company (collectively, the "Authorized Officers").
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