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[SIDLEY AUSTIN LOGO] SIDLEY AUSTIN LLP | BEIJING GENEVA SAN FRANCISCO
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(312) 853 7036 FAX | FRANKFURT NEW YORK WASHINGTON, DC
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| FOUNDED 1866
November 29, 2006
Mr. Owen Pinkerton
Senior Counsel
Ms. Amanda McManus
Attorney-Advisor
United States Securities and
Exchange Commission
100 "F" Street, N.W.
Washington, D.C. 20549
Re: Man-AHL 130, LLC (the "Man-AHL")
Registration Statement Amendment No. 5
File No. 333-126172
Dear Mr. Pinkerton:
We thank the Staff for its September 21, 2006 comment letter with
respect to Man-AHL's Registration Statement Amendment No. 4. We have repeated
below verbatim -- for your convenience of reference -- the Staff's comments
which are followed by our responses. Page references herein refer to pages in
the EDGAR version of Man-AHL's Registration Statement Amendment No. 5 filed on
the date hereof and correspond to the clean courtesy copies filed supplementally
with the Staff.
General
1. The staff of the Division of Investment Management has no
further comments on the status of Man-AHL 130 LLC ("Man-AHL") as
an investment company under the Investment Company Act of 1940
("1940 Act"); however, this should not be construed as a
statement by the staff that Man-AHL is not an investment
company. Man-AHL remains responsible for monitoring the extent
to which the company is investing, reinvesting or trading in
securities and the effect such activities may have on the status
of Man-AHL as an investment company under section 3(a)(1) of the
1940 Act.
Thank you. Man Investments (USA) Corp., the Managing Member of
Man-AHL, is mindful of its responsibility to monitor Man-AHL's securities
trading activities and the possible implications such trading activities may
have with respect to Section 3(a)(1) of the 1940 Act and in light of the related
correspondence with the staff of the Division of Investment Management.
Monitoring the possible "inadvertent investment company" status of commodity
pools is a
Sidley Austin LLP is a limited liability partnership practicing in
affiliation with other Sidley Austin partnerships
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November 29, 2006
Page 2
process with which the industry is quite familiar given the precedent of
"principal protected" products in the public commodity pool space.
2. We note new cover page disclosure that the managing member has
committed to purchase $15,000,000 of Class A Units and in any
event "anticipates" purchasing in excess of the minimum number
of Class A Units necessary for the offering of those units to
proceed. Please revise throughout for consistency regarding
whether the managing member "will" or "may" make such a
commitment. In addition, please provide us with your analysis as
to why you do not believe an offer and sale of the units to the
managing member has already been made or, if such offer and sale
has been made, the exemption from registration you are relying
upon in connection with the offer and sale.
We have revised the prospectus to provide that the Managing Member
will make as its principal capital contribution to Man-AHL the difference
between $15 million and the amount of Class A Units purchased by investors, not
affiliated with the Man Group, as of March 31, 2007, subject to the requirement
that the Managing Member contribute to and maintain an interest in Man-AHL an
amount of not less than the greater of $25,000 and 1% of the net asset value of
Man-AHL.
Managing member (or "sponsor") contributions to publicly-offered
commodity pools are required under the North American Securities Administrators
Association Guidelines for Public Commodity Pools (the "NASAA Guidelines") and
are required by many States to be disclosed in the prospectuses and/or operating
agreements for such pools. The Managing Member will effect its Managing Member
contribution through the purchase of Class A Units.
A managing member's contribution was contemplated by the Managing
Member prior to the organization of Man-AHL, the amount of which was initially,
and remains, undetermined. (See Article IV of Man-AHL's operating agreement at
page A-6 of Man-AHL's Registration Statement filed June 28, 2005.) Thus we do
not believe that Man-AHL has made an offer and sale of securities to its
Managing Member. Rather, we believe that the Managing Member is simply stating a
promise to prospective investors to acquire, once available, securities in a
minimum amount to assure adequate capitalization of Man-AHL to operate as
described in the Prospectus and to align the Managing Member's interests with
those of unaffiliated investors (which is the point of the NASAA requirement).
In the event the Staff nevertheless believes that an offer and sale by Man-AHL
to its promoter may have been made, such an offer and sale would be related to a
pre-organization subscription, akin to a general partner's general liability
contribution to a limited partnership, and exempt from registration under
Section 4(2) of the Securities Act of 1933. Such an offer and sale of securities
would have been negotiated privately by the Managing Member and Man-AHL. The
Managing Member would take "restricted securities" within the meaning of
Securities Act Rule 144(a)(3), and any such offer and sale of securities to the
promoter responsible for founding the issuer under such circumstances
axiomatically would not involve any public offering and would therefore be
exempt from registration under Section 4(2).
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November 29, 2006
Page 3
3. In light of the apparent intention of the managing member to
immediately purchase sufficient units to allow the pool to
commence operations, please advise us as to why the offering
remains a minimum/maximum offering instead of a best-efforts, no
minimum offering. Specifically, it appears that the escrow
provisions will not be available for any purchasers in the
offering, and the disclosure of such escrow provisions may imply
otherwise. Please revise your disclosure in all locations where
the escrow provisions are discussed to make clear that investors
will not have the benefit of the escrow protections in light of
the managing members' commitment/intention to purchase a
sufficient number of units to allow the pool to commence trading
immediately. Alternatively, revise to state that the offering is
not a minimum/maximum offering, but instead a no minimum
offering.
We have revised the disclosure to provide for a brief offering
period prior to the commencement of Man-AHL's trading operations (assuming the
Staff will permit the Registration Statement to become effective in the near
future). With respect to Class A Units, we have revised the disclosures to
remove references to minimum sales requirements and to state that Units will be
issued on a date certain. However, subscription proceeds received during the
initial offering period will nevertheless be held in an escrow account pending
release to Man-AHL's account at the end of the initial offering period, as
stated in the prospectus. With respect to Class B Units--for tax-exempt
investors--a minimum of 10,000 Class B Units must be sold before any Class B
Units will be issued. Class B Units will be offered for an initial offering
period, ending on June 30, 2007, subject to extension, in the Managing Member's
discretion, until September 30, 2007, or earlier termination (if the minimum
amount of Units are sold). Subscription proceeds received in respect of Class B
Units will be held in escrow pending release to Man-AHL. Notwithstanding the
sale of 10,000 Class B Units during the initial offering period and any
extension, the Managing Member may, in its discretion, determine not to issue
any Class B Units if less than 100 investors have subscribed for Class B Units,
to terminate the offering of the Class B Units and to return subscription funds
to the subscribers for Class B Units as is now described in the prospectus.
Summary, page 1
The Offering, page 3
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November 29, 2006
Page 4
4. We note your new disclosure in the first paragraph under this
heading that the managing member will leave its investment in
Man-AHL "for at least a year and thereafter will withdraw such
assets only if sufficient assets exist for Man-AHL 130 to
continue trading." Please provide more details regarding the
mechanisms related to the potential "withdraw" described,
including whether it will occur via your standard redemption
policy. We note that redemptions are capped at 15 percent per
month. Please discuss whether redemptions from the managing
member may have the effect of limiting the ability of other
investors to affect redemptions in light of this cap.
The disclosure has been revised to provide that the Managing Member
will withdraw its investment only if the amount withdrawn is offset, dollar for
dollar, by additional subscriptions for Units, subject to the Managing Member
maintaining at least the minimum investment required by the NASAA Guidelines.
The Managing Member will redeem its Class A Units on the same terms as other
Unitholders, as described in the revised disclosure. The Managing Member's
redemptions will not limit the ability of other investors to withdraw any more
than any other Unitholder's redemption request limits other investors' ability
to withdraw. The Managing Member's liquidity is thus the same as other investors
with the exception that it is limited in its ability to withdraw if Man-AHL is
not particularly successful in raising capital.
5. Please discuss what factors the managing member will take into
account in determining whether sufficient assets remain to
continue trading. In addition, indicate whether investors will
be notified and, if so, in what manner, if the managing owner
determines to dispose of its investment in the pool.
As revised, the disclosure in the Summary, at page 3, now states
that the Managing Member believes that a capitalization of approximately $15
million is necessary for Man-AHL to achieve optimal exposure to the AHL
Diversified Program, although the AHL Diversified Program can be implemented on
behalf of a smaller account. As disclosed under "Use of Proceeds - The AHL
Diversified Program," Man-AHL (USA) Limited, Man-AHL's commodity trading
advisor, generally uses between 12% and 18% of account size to margin futures
positions. Given the small amounts necessary to margin futures positions and the
percentage of the account held in reserve available to support the trading,
moderate variations in account size below $15 million pose no threat to the
viability of implementing the AHL-Diversified Program on behalf of Man-AHL. As
disclosed under "Management of Man-AHL 130--The Managing Member, General," at
page 23, Man-AHL (USA) Limited can scale the AHL Diversified Program to
accommodate smaller account sizes, and, if necessary will reduce or eliminate
allocations to certain markets in order to do so. Because the Managing Member
will not withdraw any of its investment unless the withdrawn amount is replaced
by "new money," as discussed above under comment no. 4, and because of the size
of the non-margin reserve, adequate capitalization to continue trading is not an
issue if Man-AHL trades at moderate losses, even for a significant period of
time. Severe losses would trigger the Special Redemption described in Section
9.1 of Man-AHL's operating agreement.
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November 29, 2006
Page 5
As discussed above, and as disclosed in the Summary, at page 3, and
under "Management of Man-AHL 130--The Managing Member, General," at page 23, the
Managing Member's withdrawals are subject to the redemption terms applicable to
the Units generally and to the requirement that the Managing Member maintain the
minimum investment described in our response to comment No. 2 above. No
particular notice to investors of the Managing Member's withdrawals are
contemplated.
Breakeven Table, page 8
6. We refer to footnote (5) where you have combined the Sub-Fund
Management Fees, the Sub-Fund Performance Fees and the Sub-Fund
Transaction Costs. Please advise us as to why these estimated
expenses decreased substantially since your last amendment.
Specifically, in the aggregate, these expenses were 1.35% rather
than 0.80%. Please revise or advise.
To arrive at a break-even point, a fund manager must assume a
break-even year for the fund. To assume a profitable year would be misleading.
Sub-Fund performance fees are paid only after a Sub-Fund has recouped the
expenses of such Sub-Fund. Accordingly, we have assumed, for purposes of the
break-even analysis, break-even years for the Sub-Funds, and removing the
hypothetical estimated amount of Sub-Fund performance fees previously included
in the break-even analysis resulted in the decreased estimated expense figure
disclosed. We have revised footnote (5) as follows: "Estimated; Man-Glenwood
Funds investment estimated at 30% of Man-AHL assets. Sub-Fund Expenses include
the Sub-Fund Management Fees, Sub-Fund Performance Fees and Sub-Fund Transaction
Costs. However, this table assumes a "breakeven" year of trading for the
Sub-Funds such that each has returned sufficient profits to cover the costs of
such Sub-Fund, but not in excess of such costs. No Sub-Fund Performance Fee is
shown in this table because the Sub-Fund Performance Fees are charged only after
payment of the Sub-Fund Management Fees and Sub-Fund Transaction Costs. Because
each Sub-Fund charges its own Performance Fee, Sub-Fund Performance Fees may
still be charged in a year when the Sub-Funds as a group have a breakeven or
losing year."
Clearing Broker
7. Refer to the disclosure in the fifth paragraph under this
heading. Please describe the basis of the claims disclosed under
this heading.
We have added additional disclosure with respect to the claims in
the PAAF matter, as requested.
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November 29, 2006
Page 6
Financial Statements and Notes
MAN-AHL 130, LLC
8. Please advise us why you have presented interim financial
statements for a four month period ending July 31, 2006 instead
of a three month quarterly period, or revise accordingly.
The interim financial statements of Man-AHL included with Amendment
No. 5 are for the six month period ending September 30, 2006.
Man Investments (USA) Corp.
Report of Independent Auditors
9. Please revise the audit report to reflect the signature of the
auditor and indicate the city and state where the audit opinion
was issued.
We have done so.
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The staff of the National Futures Association has completed its
review of Man-AHL's disclosure document and has no further comments, and the
NASD has issued a no-objections letter in respect of the offering. If it would
be helpful or convenient for the Staff, we would be eager to confer with the
Staff either in person or by telephone, in an effort to resolve any outstanding
issues.
If the Staff has any questions or would like any further information
on this or related topics, please do not hesitate to call the undersigned
(312-853-7261) or Mr. James Biery (312-853-7557).
Again, we express our gratitude to the Staff for its patience in
reviewing this filing.
Sincerely,
/s/ David R. Sawyier
David R. Sawyier