Form 40-APP Pekin Hardy Strauss,

As filed with the Securities and Exchange Commission on March 7, 2025

SEC File No. [_____]

UNITED STATES OF AMERICA

BEFORE THE

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

In the Matter of

PEKIN HARDY STRAUSS, INC.

APPLICATION FOR AN ORDER OF THE

COMMISSION PURSUANT TO SECTION 2(A)(9) OF THE INVESTMENT

COMPANY ACT OF 1940 DECLARING PRESUMPTION

CREATED BY THAT SECTION

REBUTTED BY EVIDENCE

Please direct all written or oral communications concerning this Application to:

Michael K. Renetzky, Esq.

Troutman Pepper Locke LLP

111 South Wacker Drive, Suite 4100

Chicago, IL 60606

(312) 443-1823

Email: [email protected]

Copy to:

Thomas V. Bohac, Esq.

Troutman Pepper Locke LLP

111 South Wacker Drive, Suite 4100

Chicago, IL 60606

(312) 443-0337

Email: [email protected]

This Application (including exhibits) consists of 10 pages.

The exhibit index appears on page 8.

UNITED STATES OF AMERICA

BEFORE THE

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Pekin Hardy Strauss, Inc. (“PHS”), an investment adviser registered with the U.S. Securities and Exchange Commission (the “Commission”), hereby applies for an Order of the Commission pursuant to Section 2(a)(9) of the Investment Company Act of 1940, as amended (the “Act”), declaring that the presumption under Section 2(a)(9) has been rebutted by evidence described in this Application. In particular, the requested Order would declare rebutted the presumption that Adam Strauss’ ownership of PHS decreasing to 25.5% and 19.5%, results in Adam Strauss no longer having “control” of PHS.

PHS serves as the investment manager for the Appleseed Fund (CIK number 0001199046) (the “Appleseed Fund”), a mutual fund registered under the Act. PHS is an employee-owned investment manager, with Joshua Strauss, Adam Strauss, and William Pekin currently owning 26.5% of PHS, and other employees owning less than 25% of the outstanding shares. Joshua Strauss and Adam Strauss each desire to sell a portion of their interests in PHS to William Pekin and Brandon Hardy, which would result in Joshua Strauss and Adam Strauss reducing their ownership of PHS to 25.5% and 19.5%, respectively (the “Proposed Ownership Change”).

As required by the Act, PHS’s investment management contract with the Appleseed Fund contains a provision that the contract will terminate if the contract is “assigned.” The term “assignment” is defined in the Act to include actual assignments of the contract. Additionally, the Act deems an assignment to occur when a controlling block of equity of the adviser is transferred. “Control” is defined in the Act to mean exercising a controlling influence over the management or policies of a company. It also includes a rebuttable presumption that an owner of an adviser that owns more than 25% of the equity of the adviser is presumed to control the adviser and an owner that owns less than 25% of the equity is presumed not to control the adviser. Finally, it provides that this presumption may be rebutted by evidence, but that the presumption continues unless an order is issued by the Commission determining that the presumption has been rebutted.

For the reasons set forth below, PHS believes, on the advice of counsel, that the Proposed Ownership Change would not result in Adam Strauss no longer having control of PHS, with the result that the Proposed Ownership Change would not constitute a change of control of PHS, and thus would not trigger an assignment of the investment management agreement with the Appleseed Fund. Accordingly, PHS respectfully requests that the Commission make a determination that the presumption that the Proposed Ownership Change would result in Adam Strauss no longer having “control” of PHS as such term is defined under the Act is rebutted.

Capitalization of PHS:

PHS is currently owned 100% by its employees as follows:

As currently situated, each of Joshua Strauss, Adam Strauss, and William Pekin would be presumed to control PHS pursuant to Section 2(a)(9) of the Act.

Under the Proposed Ownership Change, Adam Strauss would sell seven percent (7.0%) of his ownership in PHS and Joshua Strauss would sell one percent (1.0%) of his ownership in PHS to William Pekin and Brandon Hardy, thus resulting in a new proposed ownership structure, which would be as follows:

Management and Actual Control of PHS:

Currently Adam Strauss and Joshua Strauss serve as the Co-Chief Executive Officers of PHS and as members of the Board of Directors, and William Pekin and Brandon Hardy both serve as Senior Vice-Presidents and members of the Board of Directors. Following the Proposed Ownership Change, there will be no change in the officer or board roles of Adam Strauss, Joshua Strauss, William Pekin, or Brandon Hardy. Adam Strauss will continue to serve as co-Chief Executive Officer and as a director of PHS.

By this Application, PHS seeks a determination that the presumption created under Section 2(a)(9) of the Act that a person who owns beneficially, either directly or through one or more controlled companies, less than twenty-five percent (25%) of the voting securities of a company shall be presumed not to control such company be rebutted with respect to the Proposed Ownership Change.

If Adam Strauss is presumed to no longer control PHS, this change of control would result in the deemed assignment of PHS’s investment advisory agreement with the Appleseed Fund under Section 2(a)(4) of the Act, resulting in the automatic termination of such investment advisory contract. PHS desires to obviate the need for a special meeting of the shareholders of the Fund and to avoid the burden and expense of soliciting proxies merely for the purpose of approving an investment advisory contract that would be identical to the existing investment advisory contract which already has been approved by the Appleseed Fund’s board of directors and shareholders in accordance with Section 15(a) of the Act, even though there would be no change to the terms of the investment advisory contract or to the investment policies, personnel, operations, or the actual control of PHS as a result of the Proposed Ownership Change. Thus, PHS respectfully requests that the Commission grant the Order requested herein.

Section 15(a)(4) of the Act provides:

It shall be unlawful for any person to serve or act as investment adviser of a registered investment company, except pursuant to a written contract, which contract, whether with such registered company or with an investment adviser of such registered company, has been approved by the vote of a majority of the outstanding voting securities of such registered company, and— … (4) provides, in substance, for its automatic termination in the event of its assignment.

The term “assignment” under Section 2(a)(4) of the Act “includes any direct or indirect transfer or hypothecation of a contract or chose in action by the assignor, or of a controlling block of the assignor’s outstanding voting securities by a security holder of the assignor….” While the term “controlling block” of the assignor’s outstanding voting securities by a security holder of the assignor is not defined under the Act, the term “control” is defined thereunder. Specifically, Section 2(a)(9) provides:

Control means the power to exercise a controlling influence over the management or policies of a company, unless such power is solely the result of an official position with such company. Any person who owns beneficially, either directly or through one or more controlled companies, more than 25 per centum of the voting securities of a company shall be presumed to control such company. Any person who does not so own more than 25 per centum of the voting securities of any company shall be presumed not to control such company. A natural person shall be presumed not to be a controlled person within the meaning of this title. Any such presumption may be rebutted by evidence, but except as hereinafter provided, shall continue until a determination to the contrary made by the Commission by order either on its own motion or on application by an interested person. If an application filed hereunder is not granted or denied by the Commission within sixty days after filing thereof, the determination sought by the application shall be deemed to have been temporarily granted pending final determination of the Commission thereon. The Commission, upon its own motion or upon application, may by order revoke or modify any order issued under this paragraph whenever it shall find that the determination embraced in such original order is no longer consistent with the facts.

Section 15(a)(4) was intended to prevent the trafficking in investment advisory contracts by ensuring that individuals entrusted with a fiduciary obligation to manage other people’s money did not assign that obligation, either directly or indirectly, without the consent of their clients. Moreover, the Commission has indicated that Section 15(a)(4) should not be rigidly and formalistically applied to transactions that do not “contain any of the abusive elements which Congress would have considered to be trafficking” in investment advisory contracts.¹

As defined above, Section 2(a)(9) of the Act establishes a rebuttable presumption that any person owning more than 25% of the voting securities of a company is considered to control such company. Conversely, Section 2(a)(9) of the Act also establishes a rebuttable presumption that any person owning less than 25% of the voting securities of a company is not considered to control such company. As such, the Proposed Ownership Change, would result in Adam Strauss reducing his ownership from 26.5% to 19.5%. This would trigger the rebuttable presumption that Adam Strauss would not control PHS after the Proposed Ownership Change.

Notwithstanding the presumed change of control arising from the sale of shares of PHS by Adam Strauss, PHS does not believe that a change of control has occurred in fact. PHS believes that the presumption is rebutted for two determinative reasons: (1) Adam Strauss continues to control PHS due to his continued role as co-Chief Executive Officer of PHS and (2) Adam Strauss continues to share control of PHS as a member of the Board of Directors, each in the same manner as prior to the Proposed Ownership Change. These two reasons are determinative precisely because they indicate nothing will in fact change from a control perspective. As a result of the executive leadership team remaining unchanged after the Proposed Ownership Change, the day-to-day control and influence over the activities of PHS would remain the same. Because the Board of Directors will remain unchanged after the Proposed Ownership Change, the control and influence over the management and policies of PHS would remain the same. Action by the Board of Directors will continue to require the consent of at least three of the directors. In addition, any vote of the shareholders of PHS will require the consent of at least two of the four key employee-owners (Adam Strauss, Joshua Strauss, William Pekin, and Brandon Hardy) – just as it does prior to the Proposed Ownership Change. As such, there will be no actual change in the control exercised by the ownership of PHS.

Ultimately, the absence of any change in the day-to-day control and influence over the management or policies of PHS, taken together with the relatively small decrease in ownership of Adam Strauss in PHS, provides determinative evidence that there will not be an actual change of control as a result of the Proposed Ownership Change.

Pursuant to Rule 0-2(f) under the Act, PHS states that its address is 227 West Monroe Street, Suite 3625, Chicago, Illinois 60606. PHS further states that all communications or questions should be directed to Michael K. Renetzky, Esq., Troutman Pepper Locke, LLP, 111 S. Wacker Drive, Suite 4100, Chicago, Illinois 60606, email: [email protected], with copy to Thomas V. Bohac, Esq., Troutman Pepper Locke, LLP, 111 S. Wacker Drive, Suite 4100, Chicago, Illinois 60606, email: [email protected].

Pursuant to Rule 0-2(c)(1) under the Act, PHS hereby states that the officer signing and filing this Application on behalf of PHS is fully authorized to do so, that under the provisions of the Applicant’s Articles of Incorporation and Bylaws, responsibility for the management of the affairs and business of PHS is vested in the board of directors, that by resolution duly adopted and attached to this Application and filed with the Commission on this day as Exhibit A, the board of directors of PHS has authorized any officer of PHS to prepare or cause to be prepared and to execute and file with the Commission this Application and any amendments thereto. PHS states that the authorization described above remains in effect as of the date hereof and is applicable to the individual who has signed the Application. PHS further states PHS has complied with all requirements for the execution and filing of this Application in the name and on behalf of PHS. The verification required by Rule 0-2(d) under the Act is attached as Exhibit B hereto.

PHS requests that the Commission issue an order without a hearing pursuant to Rule 0-5 under the Act.

IN WITNESS HEREOF, PHS hereby caused this Application to be duly executed this 5th day of March, 2025

PEKIN HARDY STRAUSS, INC.

Exhibit Index