FR 2024-30068

The Securities and Exchange Commission (SEC) has issued a notice regarding an application from the Coatue CTEK Fund and Coatue Management, L.L.C. The applicants are seeking exemptions that would allow certain registered closed-end investment companies to issue multiple classes of shares and impose asset-based distribution, service fees, and early withdrawal charges. The SEC is prepared to grant these exemptions unless a request for a hearing is made by January 7, 2025. Those interested in contesting the application are provided with instructions on how to request a hearing.

General Summary

The document outlines a formal application process wherein Coatue CTEK Fund and Coatue Management seek specific regulatory relief from the restrictions of the Investment Company Act of 1940. The application asks for permission to modify the structure of funds they manage, potentially altering how these funds charge fees and handle withdrawals.

Significant Issues or Concerns

Several concerns arise from the notice. Firstly, the legal references to sections and rules of the Investment Company Act of 1940 are complex and may not be immediately accessible or understandable to the general public. Secondly, while the document provides a process to request a hearing, the requirements might be daunting for those unfamiliar with legal procedures, such as the "proof of service" necessity and other legal formalities involved.

There's also a potential ambiguity regarding who qualifies as "interested persons" eligible to request a hearing. A clearer definition of the stakeholders who might be directly affected by these exemptions could help individuals determine their standing in the matter.

Broad Public Impact

The implications of this notice could be far-reaching for investors and the general public. By allowing funds to issue multiple share classes and impose different types of charges, the investment products become more complex. This complexity can lead to confusion among investors, especially those who aren't well-versed in the intricacies of investment management. Moreover, such changes could potentially alter the cost structure of investments, impacting the returns investors might expect.

Impact on Specific Stakeholders

For Coatue CTEK Fund and Coatue Management, the exemptions sought in this application could provide significant flexibility in fund management and product offerings. This could enhance their competitiveness by allowing them to tailor their investment offerings more closely to the needs of their clients.

On the flip side, investors in these funds—especially retail investors—may find themselves facing more complex investment choices with differing cost implications. This change might lead to increased scrutiny from consumer advocacy groups concerned about investor protections and the transparency of fees.

Overall, while the notice represents a standard regulatory process, it highlights critical considerations about the evolving landscape of investment fund management and the balancing act between innovation and consumer protection.