On February 19, 2020, the Securities and Exchange Commission (SEC) granted exemptive relief to the Blackstone Alternative Investment Fund (Fund) and its adviser, Blackstone Alternative Investment Advisors LLC (Adviser), which, subject to certain conditions, allows the Fund’s board of trustees to approve new sub-advisory agreements and make material amendments to existing sub-advisory agreements without complying with the in-person meeting requirement of Section 15(c) of the Investment Company Act of 1940 (1940 Act).

The Adviser’s multi-manager structure provides investors exposure to multiple strategies in one fund. Each sub-adviser’s contract must be entered into, materially amended and renewed in accordance with Section 15(c). In requesting relief, the Fund and Adviser noted that market conditions or investment opportunities may necessitate a change in sub-advisers in between quarterly board of trustees meetings.

The SEC granted the relief request, subject to the following conditions:

  • The independent trustees may approve any sub-adviser change at a non-in-person meeting in which the trustees participate by any means of communication that allows the trustees to each hear and be heard by the other trustees.
  • The materials provided to the board of trustees for the non-in-person meeting will include the same information the board would have received if the sub-adviser change would have occurred in person.
  • The notice of the non-in-person meeting will explain the need for considering the change to a sub-advisory agreement and will give trustees the opportunity to object to considering any change at a non-in-person meeting.
  • The Fund must disclose the ability to rely upon the exemptive relief in its registration statement.

In granting this exemptive relief, the SEC demonstrated its willingness to rely upon technology in lieu of the 1940 Act’s outdated requirements, noting that the current in-person obligation creates artificial impediments that hinder a board of trustees’ ability to respond to market conditions without the unnecessary burdens of an in-person meeting.