SEC Company Response from RiverNorth (OPP) — Sep 23, 2019
RiverNorth/DoubleLine Strategic Opportunity Fund, Inc. (OPP, OPP-PA, OPP-PB, OPP-PC) (CIK 0001678130)
Date: Sept. 23, 2019 · CIK: 0001678130 · Accession: 0001398344-19-017049
AI Filing Summary & Sentiment
File numbers found in text: 333-230320, 811-23166
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CORRESP
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filename1.htm
September 23, 2019
Via EDGAR Correspondence
Filing
Jay Williamson, Esq.
Division of Investment Management
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549
Re: RiverNorth/DoubleLine Strategic Opportunity Fund, Inc.
(the “Fund”)
File
Nos. 333-230320, 811-23166
Dear Mr. Williamson:
We received comments provided by telephone
conference on April 16, 2019 regarding the Registration Statement on Form N-2 for the above captioned Fund. This letter serves
to respond to those comments.
General
1. We note you are registering securities to be offered on a delayed or continuous basis pursuant
to Rule 415 under the Securities Act of 1933 and appear to be relying on the Nuveen Virginia Premium Income Municipal Fund No-Action
Letter (October 6, 2006). In that letter, the subject fund represented that it files with the Securities and Exchange Commission
(the “Commission”) all information required of it under the Securities Exchange Act of 1934 and the Investment Company
Act of 1940 (the “1940 Act”) and had filed all such reports on a timely basis over the last twelve calendar months.
Please make that representation to us in your letter. If you are unable to make that representation, please tell us why relying
on the letter would be appropriate.
Response: The Fund represents that
it files with the Commission all information required of it under the Securities Exchange Act of 1934 and the Investment Company
Act of 1940 and has filed all such reports on a timely basis over the last twelve calendar months.
2. The disclosure indicates that the Fund’s charter provides for a shareholder vote in 2021
to convert the Fund to an open-end fund within twelve months of such approval. Your shelf registration statement registers preferred
stock and subscription rights to purchase preferred stock. These securities would be inconsistent with Section 18 of the 1940 Act
if and when the Fund converted to an open-end fund. Briefly explain to us your plan with respect to preferred stock and rights
to purchase preferred stock in connection with such “Contingent Conversion Feature.”
Response: The Fund will not issue
shares of preferred stock or subscription rights to purchase preferred stock having terms that would be inconsistent with Section
18 of the 1940 Act. If the Fund seeks to issue shares of preferred stock prior to the potential conversion date, the terms would
provide, for example, that such shares shall be redeemable on or prior to such date. In addition, the Fund notes that shareholders
may not vote in favor of the conversion and, in such case, the Fund could seek to issue preferred stock following such vote without
the need for such terms.
Prospectus Cover Page
3. Items 1 and 2 of Form N-2 set out the disclosure requirements for prospectus cover pages and
permit you to “include other information if it does not, by its nature, quantity, or manner of presentation impede understanding
of the required information.” You have three pages of ‘cover pages’ that includes detailed information –
such as “Contingent Conversion Feature” that is repeated in the Summary and is not traditionally considered cover page
material. Please revise as appropriate.
Response: The Fund does not believe
the additional disclosures included on the cover page (including the disclosure relating to the Contingent Conversion Feature)
impede understanding of the information required by Items 1 and 2 of Form N-2. Nonetheless, certain disclosures on the cover page
that are repeated elsewhere in the Prospectus have been removed and replaced with a cross-reference to such other sections of the
Prospectus.
4. In Release No. 33-10506, the Commission adopted new Rule 30e-3 (Enabling Optional Internet Availability
of Shareholder Reports) and amended certain form requirements. Please review the Release and Item 1.1.l to Form N-2 and revise,
if appropriate.
Response: The Cover Page of the Prospectus
has been revised to include the disclosure under Item 1.1.l of Form N-2.
Prospectus Summary
5. The General Instructions to Form N-2 state that the purpose of the prospectus is to provide
essential information in a way that helps investors make informed decisions. The General Instructions further require the prospectus
to be clear, concise, and understandable. The Summary’s “Risk Considerations” starts on page 13 and end on page
45. Similar information is then presented under “Risks” between pages 59 and 93. The length and complexity of your
risk disclosure may distract potential investors from essential information, including information related to fees, investment
strategies and types, and risks. Please review your disclosure and revise as appropriate, consistent with the sound disclosure
principles set forth in the General Instructions.
Response: The Prospectus has been
revised to address this comment.
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Prospectus—Financial
Highlights
6. Briefly explain to us the primary drivers behind net realized and unrealized losses for the
periods ended December 31, 2018 and June 30, 2018.
Response: The primary drivers behind
the net realized and unrealized losses were the price declines in the closed-end fund portfolio (i.e., under the “Tactical
Closed-End Fund Income Strategy”), notably funds with exposure to below investment grade corporate credit, and the Fund’s
exposure to non-agency residential mortgage backed securities. Most of the unrealized loss occurred during the fourth quarter of
2018 due to a period of weakness in the risk capital markets.
7. We notice you provide an asset coverage metric in the financial highlights. Item 4.3 of Form
N-2 requires the presentation of a Senior Securities table which in some instances require information beyond what you presented
in the financial highlights. Please consider adding a separately captioned Senior Securities table or confirm intentions to revisit
the Item 4.3 disclosure requirement when contemplating an offering of securities.
Response: The additional information
required by Item 4.3 is not applicable to the Fund, as the Fund’s only senior security relates to the credit facility with
U.S. Bank. To the extent the Fund issues additional senior securities and such information becomes applicable, the Fund confirms
its intentions to revisit the Item 4.3. disclosures.
Prospectus—Use of Leverage
8. We note the statement in this section that provides that “[t]he Fund may be subject to
certain restrictions on investments imposed by lenders or by one or more rating agencies that may issue ratings for any senior
securities issued by the Fund. Borrowing covenants or rating agency guidelines may impose asset coverage or Fund composition requirements
that are more stringent than those imposed on the Fund by the 1940 Act.” We also note that you currently have a $75 million
credit facility with U.S. Bank. Please revise, using definitive language, the disclosure in this section to address the terms of
the credit facility relating to any such restrictions or requirements that materially affect the Fund, including covenants that
materially restrict your investment activities or materially prohibit future borrowings or accelerate repayment of existing borrowings.
Response: The Fund does not believe
it’s investment activities are materially restricted under its current borrowing arrangement. However, as such arrangements
are typically short-term in nature and the Fund could enter into different borrowing arrangements from time to time, the Fund believes
it is appropriate to retain the above-referenced disclosure. That said, the Prospectus has been revised to describe a covenant
under the current borrowing arrangement that could, depending on the circumstances, impose a borrowing restriction on the Fund
that is stricter than that permitted under the 1940 Act.
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Risks
9. In her October 25, 2018 address at the ICI Securities Law Developments Conference, Division
of Investment Management Director Dalia Blass shared several observations designed to assist issuers in writing clear and concise
disclosure that is useful to investors. With respect to risk disclosures, she observed that issuers are in the best position to
identify which risks are most important to investors, and that alphabetized risk disclosure can contribute to documents “in
which length trumps clarity and the story is buried.” Director Blass identified generic risk disclosures as another area
for improvement. Currently it appears as if your risk disclosure is alphabetized, generic, and contains an excessive level of detail
that makes it difficult for investors to determine what is important. Please substantially revise your risk disclosures, consistent
with Form N-2 requirements to provide clear, concise and understandable disclosure for investors.
Response: The Prospectus has been
revised to address the length of the risk disclosures and to eliminate duplicative risk disclosures.
Accounting
Comments
10. Please file the auditor’s consent with a subsequent pre-effective amendment to the registration
statement.
Response: The Fund will include a
consent from its auditor as requested.
11. We note that the “Financial Highlights” section in the Prospectus states that both
the Annual Report for the year ended June 30, 2018 and the Semi-Annual Report for the period ended December 31, 2018 are being
incorporated by reference into the Fund’s SAI whereas the “Financial Statements” section in the Statement of
Additional Information refers only to the Annual Report for the year ended June 30, 2018 as being incorporated by reference.
Please resolve the inconsistent statements.
Response: The Fund has revised the
registration statement as requested.
* * * * * * * *
We appreciate your
prompt attention to this Registration Statement. If you have any questions or comments or would like to discuss our responses to
your questions, please feel free to contact E. Roy Kim at (312) 845-3850 or the undersigned at (312) 845-3273
Very truly yours,
Chapman and Cutler LLP
By
/s/ Walter Draney
Walter Draney
cc: Marcus L. Collins, Esq.; RiverNorth
Capital Management, LLC.
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