Securities Exchange Act of 1934 and Investment Company Act of 1940; Order Under Section 17a and Section 36 of the Securities Exchange Act of 1934 Granting Exemptions From Specified Provisions of the Exchange Act and Certain Rules Thereunder; Order Under Section 6(c) and Section 38(a) of the Investment Company Act of 1940 Granting Exemptions From Specified Provisions of the Company Act and Certain Rules Thereunder, 55432-55435 [05-18761]
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55432
Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices
II. Requested Authority
Black Hills, therefore, requests the
Commission to permit it:
1. To extend Black Hills’ time for
certain filings with the Commission,
from October 1, 2005, through February
8, 2006, the effective date of the Act’s
repeal (describing accounting systems
and cost allocation methodologies);
2. To extend the time for Black Hills’
full implementation of Black Hills
Service, from December 28, 2005,
through February 8, 2006, the effective
date of the Act’s repeal (accounting
systems and cost allocation
methodologies); and
3. To extend the time for Black Hills’
conversions of non-exempt marketbased rate affiliate transactions to costbased transactions from December 28,
2005, through February 8, 2006, the
effective date of the Act’s repeal.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18817 Filed 9–20–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release Nos. 52444/September 15, 2005
and 27067/September 15, 2005]
Securities Exchange Act of 1934 and
Investment Company Act of 1940;
Order Under Section 17a and Section
36 of the Securities Exchange Act of
1934 Granting Exemptions From
Specified Provisions of the Exchange
Act and Certain Rules Thereunder;
Order Under Section 6(c) and Section
38(a) of the Investment Company Act
of 1940 Granting Exemptions From
Specified Provisions of the Company
Act and Certain Rules Thereunder
Section 36 of the Securities Exchange
Act of 1934 (the ‘‘Exchange Act’’)
authorizes the Securities and Exchange
Commission (the ‘‘Commission’’), by
rule, regulation, or order, to exempt,
either conditionally or unconditionally,
any person, security, or transaction, or
any class or classes of persons,
securities, or transactions, from any
provision or provisions of the Exchange
Act or any rule or regulation thereunder,
to the extent that such exemption is
necessary or appropriate in the public
interest, and is consistent with the
protection of investors.
Section 17A(c)(1) of the Exchange Act
provides that the appropriate regulatory
agency, by rule or by order, upon its
own motion or upon application, may
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14:40 Sep 20, 2005
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conditionally or unconditionally
exempt any person or security or class
of person or securities from any
provision of that section or any rule or
regulation prescribed under Section
17A, if the appropriate regulatory
agency finds that such exemption is in
the public interest and consistent with
the protection of investors and the
purposes of this section, including the
prompt and accurate clearance and
settlement of securities transactions and
the safeguarding of securities and
funds.1
Section 6(c) of the Investment
Company Act of 1940 (the ‘‘Company
Act’’) provides that the Commission
may exempt any person, security, or
transaction, or any class or classes of
persons, securities or transactions, from
any provision of the Company Act, or
any rule or regulation thereunder, if and
to the extent that such exemption is
necessary or appropriate in the public
interest and consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the Company Act. Section
38(a) of the Company Act provides that
the Commission may make, issue,
amend and rescind such rules and
regulations and such orders as are
necessary or appropriate to the exercise
of the powers conferred upon the
Commission under the Act.
Hurricane Katrina made landfall along
the Gulf Coast on August 29, 2005,
causing catastrophic damage to portions
of Alabama, Louisiana and Mississippi.
The storm and subsequent flooding
displaced individuals and businesses
and disrupted communications across
the Gulf Coast region. We are issuing
this Order to address the needs of
companies and individuals located
within the areas affected by Hurricane
Katrina that must comply with the
requirements of the federal securities
laws.
I. Filing Requirements for Registrants
and Other Persons
The lack of communications, facilities
and available staff and professional
advisors as a result of Hurricane Katrina
could hamper the efforts of public
1 Section 3(a)(34) defines ‘‘appropriate regulatory
authority’’ when used in the context of transfer
agents as generally (1) the Comptroller of the
Currency, in the case of a national bank or a bank
or a subsidiary of such bank; (2) the Board of
Governors of the Federal Reserve System or
subsidiary thereof, a bank holding company or a
subsidiary of a bank holding company; (3) the
Federal Deposit Insurance Corporation; and (4) the
Commission in the case of all other transfer agents.
Section 17A(c)(1) also requires that the Commission
not object to the use of exemptive authority in
instances where an appropriate regulatory authority
other than the Commission is providing exemptive
relief.
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companies and other persons in the
affected areas in their compliance with
filing deadlines. At the same time,
investors have an interest in the timely
availability of required information
about these companies and the activities
of persons required to file schedules and
reports with respect to these companies.
While the Commission believes that the
relief from filing requirements provided
by this Order is both necessary in the
public interest and consistent with the
protection of investors, we remind
public companies and other persons
who are the subjects of this Order to
continue to evaluate their obligations to
make materially accurate and complete
disclosures in accordance with the antifraud provisions of the federal securities
laws.
Accordingly, it is ordered, pursuant to
Section 36 of the Exchange Act, that a
registrant (as defined in Exchange Act
Rule 12b–2) subject to the reporting
requirements of Exchange Act Section
13(a) or 15(d), and any person required
to make any filings with respect to such
a registrant, is exempt from any
requirement to file or furnish materials
with the Commission under Exchange
Act Sections 13(a), 13(d), 13(g), 14(a),
14(c), 15(d) and 16(a), Regulations 13A,
13D, 13G, 14A, 14C and 15D, and Rule
16a–3, as applicable, for the period from
and including August 29, 2005 to
October 14, 2005, where the conditions
below are satisfied.
Conditions
(a) With respect to registrants, the
address of the registrant’s principal
executive offices listed on the cover
page of the most recent periodic report
filed by the registrant on Form 10–Q,
10–QSB, 10–K, or 10–KSB is within one
of the counties or parishes designated as
of this date to be within the
Presidentially Declared Disaster Areas
where Individual Assistance has been
authorized by the Federal Emergency
Management Agency as a result of
Hurricane Katrina (the ‘‘Presidential
Disaster Areas’’), which include the
Louisiana parishes of: Acadia,
Ascension, Assumption, Calcasieu,
Cameron, East Baton Rouge, East
Feliciana, Iberia, Iberville, Jefferson,
Jefferson Davis, Lafayette, Lafourche,
Livingston, Orleans, Pointe Coupee,
Plaquemines, St. Bernard, St. Charles,
St. Helena, St. James, St. John, St. Mary,
St. Martin, St. Tammany, Tangipahoa,
Terrebonne, Vermilion, Washington,
West Baton Rouge, and West Feliciana;
the Mississippi counties of: Adams,
Amite, Attala, Claiborne, Choctaw,
Clarke, Copiah, Covington, Forrest,
Franklin, George, Greene, Hancock,
Harrison, Hinds, Jackson, Jasper,
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Jefferson, Jefferson Davis, Jones,
Kemper, Lamar, Lauderdale, Lawrence,
Leake, Lincoln, Lowndes, Madison,
Marion, Neshoba, Newton, Noxubee,
Oktibbeha, Pearl River, Perry, Pike,
Rankin, Scott, Simpson, Smith, Stone,
Walthall, Warren, Wayne, Wilkinson,
Winston, and Yazoo; and the Alabama
counties of Baldwin, Clarke, Choctaw,
Mobile, Pickens, Greene, Hale, Sumter,
Tuscaloosa, and Washington.
(b) With respect to persons other than
registrants, the address listed on the
most recently filed schedule or form
that the person had filed, or the address
that the person would be required to list
on any covered schedule or form
required to be filed during the time
period covered by this Order, is within
one of the Presidential Disaster Areas;
and
(c) The registrant or person files with
the Commission any report, schedule or
form required to be filed during the
period from and including August 29,
2005 to October 14, 2005 on or before
October 17, 2005.
II. Furnishing of Proxy and Information
Statements
The conditions in the areas affected
by Hurricane Katrina, including
displacement of hundreds of thousands
of individuals and the destruction of
property, have prevented and will
continue to prevent the delivery of mail
to the region. In light of these
conditions, we believe that relief is
warranted for those seeking to comply
with our rules imposing requirements to
furnish materials to security holders
when mail delivery is not possible.
Accordingly, it is ordered, pursuant to
Section 36 of the Exchange Act, that a
registrant or any other person is exempt
from the requirements to furnish proxy
statements, annual reports and other
soliciting materials, as applicable (the
‘‘Soliciting Materials’’), under Exchange
Act Rules 14a–3 and 14a–12, and the
requirements to furnish information
statements and annual reports, as
applicable (the ‘‘Information
Materials’’), under Exchange Act Rules
14c–2 and 14c–3, where the conditions
below are satisfied.
Conditions
(a) The registrant’s security holder has
a mailing address located within a zip
code where, as a result of Hurricane
Katrina, the United States Postal Service
has suspended mail service of the type
or class customarily used by the
registrant;
(b) The registrant or other person
making a solicitation has followed
normal procedure when furnishing the
Soliciting Materials to the security
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14:40 Sep 20, 2005
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holder in order to ensure that the
Soliciting Materials preceded or
accompanied the proxy, as required by
the rules applicable to the particular
form of Soliciting Materials, or, in the
case of Information Materials, the
registrant has followed normal
procedure when furnishing the
Information Materials to the security
holder in accordance with the rules
applicable to Information Materials; and
(c) If requested by the security holder,
the registrant or other person provides
the Soliciting Materials or Information
Materials by a means reasonably
designed to furnish the Soliciting
Materials or Information Materials to the
security holder.
*
*
*
*
*
Any registrant or other person unable
to meet a deadline (including any
shareholder who is unable to meet a
deadline applicable to a shareholder
proposal) or a delivery obligation as a
result of Hurricane Katrina, or in need
of other assistance related to their
public filings, should contact the
Division of Corporation Finance at (202)
551–3500 or at cfhotline@sec.gov. The
Division will consider any requests on
a case-by-case basis.
III. Relief Relating Specifically to
Registered Investment Companies
Regarding Transmittal of Annual and
Semi-Annual Reports to Shareholders
Required by the Company Act and the
Rules Thereunder
For reasons similar to those cited in
Section II, we believe that relief is
warranted for the transmittal by
registered investment companies of
annual and semi-annual reports to
shareholders.
Accordingly, it is ordered, pursuant to
Sections 6(c) and 38(a) of the Company
Act that, for 90 calendar days beginning
on August 29, 2005, a registered
management investment company is
exempt from the requirements of
Section 30(e) of the Company Act and
Rule 30e–1 thereunder to transmit
annual and semi-annual reports to
shareholders;
And, for 90 calendar days beginning
on August 29, 2005, a registered unit
investment trust is exempt from the
requirements of Section 30(e) of the
Company Act and Rule 30e–2
thereunder to transmit annual and semiannual reports to shareholders,
Provided that:
(a) The shareholder or unitholder’s
mailing address for transmittal as listed
in the records of the registered
investment company has a zip code for
which the United States Postal Service
has suspended mail service, as a result
of Hurricane Katrina, of the type or class
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55433
customarily used by the investment
company for transmittal of reports; and
(b) The registered investment
company or other person promptly
transmits the reports (i) if requested by
the shareholder or unitholder, or (ii) at
the earlier of the end of the 90-day
period or the resumption of the
applicable mail service.
*
*
*
*
*
Registered investment companies
experiencing difficulties in complying
with their obligations after the 90calendar-day period, or in need of
additional information or assistance
regarding issues arising under the
Company Act, should contact the
Division of Investment Management,
Office of Chief Counsel, at (202) 551–
6825 or imocc@sec.gov or use the
contact information provided at the end
of Section II of the Order.
IV. Transfer Agent Compliance With
Sections 17A and 17(f) of the Exchange
Act
Exchange Act Section 17A and
Section 17(f), as well as the rules
promulgated under Sections 17A and
17(f), contain requirements for
registered transfer agents relating to,
among other things, processing
securities transfers, safekeeping of
investor and issuer funds and securities,
and maintaining records of investor
ownership. Following the events of
Hurricane Katrina, registered transfer
agents located in the affected region
may have difficulty complying with
some or all of their obligations as
registered transfer agents. In addition,
transfer agents located outside the
affected region in many cases may be
unable to conduct business with entities
or securityholders inside the region,
thereby making it difficult to process
securities transactions and corporate
actions in conformance with Section
17A, Section 17(f) and the rules
thereunder.
While the national clearance and
settlement system continues to operate
well in light of this emergency, the
Commission recognizes that securities
transfers and payments to and from
securityholders in the affected region
may present compliance issues for many
transfer agents. Therefore, the
Commission is using its authority under
Section 17A and Section 36 of the
Exchange Act to relax temporarily
certain regulatory provisions in order to
provide transfer agents with flexibility
in coping with the situation.2 The
2 This order temporarily exempts transfer agents
from the requirements of (1) Section 17A of the
Exchange Act and Rules 17Ad–1 through 17Ad–21T
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21SEN1
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Federal Register / Vol. 70, No. 182 / Wednesday, September 21, 2005 / Notices
Commission finds the following
exemption to be in the public interest
and consistent with the protection of
investors and the purpose of Section
17A of the Exchange Act, including the
prompt and accurate clearance and
settlement of securities transactions and
the safeguarding of securities and funds.
Accordingly, it is ordered, pursuant to
Sections 17A and 36 of the Exchange
Act, that any registered transfer agent
located in the Presidential Disaster
Areas that is unable to comply with
Section 17A and Section 17(f) of the
Exchange Act and the rules promulgated
thereunder, as applicable, is hereby
temporarily exempted from complying
with such provisions for the period from
and including August 29, 2005 to
October 17, 2005, where the conditions
below are satisfied.
Conditions
(a) Books and Records Maintained at
Affected Locations. A registered transfer
agent that maintained books and records
at locations inside the Presidential
Disaster Areas must notify the
Commission in writing by October 17,
2005, if such transfer agent knows or
believes that the books and records it is
required to maintain pursuant to
Section 17A and the rules thereunder
were lost, destroyed, or materially
damaged. To the extent feasible, the
transfer agent should include as much
information as possible as to the type of
books and records that were maintained,
the names of the issuers for whom such
books and records were maintained, and
the extent of the loss of, or damage to,
such books and records.
(b) Securityholder Funds and
Securities. A transfer agent registered
with the Commission and holding
securityholder or issuer funds or
securities must notify the Commission
in writing by October 17, 2005, if such
transfer agent knows or believes that
funds or securities belonging to either
issuers or securityholders were lost,
destroyed, stolen, or unaccountable for
any reason. To the extent possible, the
transfer agent should include
information regarding the dollar amount
of any such funds and the number of
such securities.
Transfer agents that have custody or
possession of any securityholder or
issuer funds or securities shall use all
reasonable means available to ensure
that all such securities are held in
safekeeping and are handled, in light of
all facts and circumstances, in a manner
reasonably free from risk of theft, loss,
or destruction and that all funds are
thereunder and (2) Section 17(f) of the Exchange
Act and Rules 17f–1 and 17f–2 thereunder.
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14:40 Sep 20, 2005
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protected against misuse. To the extent
possible, all securityholder or issuer
funds that remain in the custody of the
transfer agent shall be maintained in a
separate bank account held for the
exclusive benefit of securityholders
until such funds are properly remitted.
The notifications required under (a)
and (b) above shall be sent to: Securities
and Exchange Commission, Office of
Filings and Information Services, 100 F
Street, NE., Washington, DC 20549.
It is further ordered, pursuant to
Sections 17A and 36 of the Exchange
Act, that any registered transfer agent
that is residing outside the Presidential
Disaster Areas and is unable to comply
with any provision of Section 17A or
any provision of any rule thereunder
due to an inability to conduct business
with persons (entities or individuals)
inside the Presidential Disaster Areas or
an inability to remit funds or securities
to securityholders residing in the
Presidential Disaster Areas is hereby
temporarily exempted from compliance
with such provisions with respect to
those specific transactions for the period
from and including August 29, 2005, to
October 17, 2005, on the condition that
such transfer agent must make and keep
a record of the extent of and the reason
for noncompliance and retain those
records for a period of no less than three
years. As a further condition to this
exemption, to the extent the transfer
agent has not already done so, registered
transfer agents shall maintain in a
separate bank account held for the
exclusive benefit of securityholders all
securityholder funds to be remitted to
securityholders until such funds are
properly remitted to the securityholders.
*
*
*
*
*
The Commission encourages
registered transfer agents and the issuers
for whom they act to inform affected
securityholders whom they should
contact concerning their accounts, their
access to funds or securities, and other
shareholder concerns. If feasible, issuers
and their transfer agents should
consider placing a notice on their
websites or providing toll free numbers
to respond to inquiries.
Transfer agents experiencing
difficulties in complying with
obligations after October 17, 2005, or in
need of additional information, should
contact the Division of Market
Regulation, Office of Interpretation and
Guidance, at (202) 551–5760 or
marketreg@sec.gov or use the contact
information provided at the end of
Section II of the Order.
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V. Independence—Bookkeeping or
Other Services Related to the
Accounting Records or Financial
Statements of the Audit Client
The conditions in the areas affected
by Hurricane Katrina, including
displacement of hundreds of thousands
of individuals, the destruction of
property and loss or destruction of
corporate records, may require massive
and extraordinary efforts to reconstruct
lost or destroyed accounting records.
The Commission understands that in
this unique situation an audit client
may look to its auditor for assistance in
reconstruction of its accounting records
because of the auditor’s knowledge of
the client’s financial systems and
records. Under Section 10A(g)(1) of the
Exchange Act and Rule 2–01(c)(4)(i) of
Regulation S–X, auditors are prohibited
from providing bookkeeping or other
services relating to the accounting
records of the audit client, and in Rule
2–01(c)(4)(i) of Regulation S–X, these
prohibited services are described as
including ‘‘maintaining or preparing the
audit client’s accounting records’’ or
‘‘preparing or originating source data
underlying the audit client’s financial
statements.’’ In light of the conditions in
areas affected by Hurricane Katrina,
however, we believe that limited relief
from these prohibitions is warranted for
those registrants and other persons that
are required to comply with the
independence requirements of the
federal securities laws and the
Commission’s rules and regulations
thereunder and that are affected by
those conditions.
Accordingly, it is ordered, pursuant to
Section 36 of the Exchange Act, that
independent certified public
accountants engaged to provide audit
services to registrants and other persons
required to comply with the
independence requirements of the
federal securities laws and the
Commission’s rules and regulations
thereunder are exempt from the
requirements of Section 10A(g)(1) of the
Exchange Act and Rule 2–01(c)(4)(i) of
Regulation S–X, where the conditions
below are satisfied.
Conditions
(a) With respect to audit clients that
are registrants, the address of the
registrant’s principal executive offices
listed on the cover page of the most
recent periodic report filed by the
registrant on Form 10–Q, 10–QSB, 10–
K, or 10–KSB is within one of the
Presidential Disaster Areas;
(b) With respect to audit clients other
than registrants, the address listed on
the most recently filed schedule or form
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that the audit client had filed, or the
address that the audit client would be
required to list on any covered schedule
or form required to be filed, is within
one of the Presidential Disaster Areas;
(c) Services provided by the auditor
are limited to reconstruction of
previously existing accounting records
that were lost or destroyed as a result of
Hurricane Katrina and such services
cease as soon as the client’s lost or
destroyed records are reconstructed, its
financial systems are fully operational
and the client can effect an orderly and
efficient transition to management or
other service provider; and
(d) With respect to issuers, the
services provided by the issuer’s auditor
pursuant to this Order are subject to preapproval by the issuer’s audit committee
as required by Rule 2–01(c)(7) of
Regulation S–X.
*
*
*
*
*
Auditors or audit clients with
questions about this section of the Order
or with other questions relating to
auditor independence are encouraged to
call the Office of the Chief Accountant
directly at (202) 551–5300 or use the
contact information provided at the end
of Section II of the Order.
By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18761 Filed 9–20–05; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52446; File Nos. SR–DTC–
2005–04, SR–FICC–2005–10, and SR–
NSCC–2005–05]
Self-Regulatory Organizations; The
Depository Trust Company, Fixed
Income Clearing Corporation, and
National Securities Clearing
Corporation; Order Approving
Proposed Rule Change To Establish a
Fine for Members Failing To Conduct
Connectivity Testing
September 15, 2005.
I. Introduction
On May 13, 2005, May 3, 2005, and
on May 4, 2005, respectively, The
Depository Trust Company (‘‘DTC’’), the
Fixed Income Clearing Corporation
(‘‘FICC’’), and the National Securities
Clearing Corporation (‘‘NSCC’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) proposed
rule changes SR–DTC–2005–04, SR–
FICC–2005–10, and SR–NSCC–2005–05
pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
14:40 Sep 20, 2005
II. Description
DTC, FICC, and NSCC are imposing a
fine on any member that is required to
conduct connectivity testing for
business continuity purposes and fails
to do so.
In the aftermath of September 11,
2001, and in conjunction with a
financial industry white paper, DTC,
FICC, and NSCC require connectivity
testing each year for critical (‘‘Top
Tier’’) members.3 The criteria used by
DTC, FICC, and NSCC to identify their
respective Top Tier members were
revenues, clearing fund contributions,
settlement amounts, and trading
volumes. Connectivity testing for the
Top Tier members was initiated on
January 1, 2004. Due to the critical
importance of being able to assess
whether a Top Tier member has
sufficient operational capabilities, DTC,
FICC, and NSCC have determined that
they need the ability to fine any Top
Tier member that does not test.4
1 15
U.S.C. 78s(b)(1).
Exchange Act Release No. 52403 (July
15, 2005), 70 FR 42122.
3 The Federal Reserve, Office of the Comptroller
of the Currency, and the Commission issued
‘‘Interagency Paper on Sound Practices to
Strengthen the Resilience of the U.S. Financial
System.’’ [68 FR 17809 (April 11, 2003)]. This
document provided guidelines that required core
clearing and settlement organizations, such as DTC,
FICC, and NSCC, and others in the financial
industry to manage business continuity capabilities.
DTC, FICC, and NSCC developed their testing of
Top Tier firms based on the guidelines outlined in
the white paper.
4 Pursuant to DTC Rule 2, ‘‘Participants and
Pledgees,’’ participants must furnish, upon DTC’s
request, information sufficient to demonstrate
operational capability. In addition, DTC Rule 21,
‘‘Disciplinary Sanctions,’’ allows DTC to impose
fines on participants for any error, delay or other
conduct detrimental to the operations of DTC.
Pursuant to GSD Rule 3, ‘‘Responsibility,
Operational Capability, and Other Membership
Standards of Comparison-Only Members and
Netting Members,’’ the GSD may require members
to fulfill operational testing requirements as the
GSD may at any time deem necessary. Pursuant to
MBSD Rule 1, Section 3 of Article III, all MBSD
applicants and members agree to fulfill operational
testing requirements and related reporting
requirements that may be imposed to ensure the
continuing operational capability of the applicant.
Pursuant to NSCC Rule 15, ‘‘Financial
Responsibility and Operational Capability,’’
members must furnish to NSCC adequate
assurances of their financial responsibility and
operational capability as NSCC may at any time
deem necessary. In addition, NSCC Rule 48,
‘‘Disciplinary Procedures,’’ allows NSCC to impose
a fine on participants for any error, delay, or other
2 Securities
BILLING CODE 8010–01–P
VerDate Aug<31>2005
(‘‘Act’’).1 On June 7, 2005, NSCC
amended its proposed rule change.
Notice of the proposals, as amended,
was published in the Federal Register
on July 21, 2005.2 No comment letters
were received. For the reasons
discussed below, the Commission is
approving the proposed rule changes.
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55435
Currently, each member of DTC, FICC,
and NSCC that is designated as Top Tier
is advised of this status and is provided
with information on the testing
requirements. Under DTC, FICC, and
NSCC’s current procedures, if testing is
not completed by a Top Tier member by
the end of June, a reminder notice is
sent to the member. Thereafter, another
reminder notice is sent in October and,
if necessary, again in December.
The reminder notice sent in December
will advise that if testing is not
completed by December 31, a fine of
$10,000 will be imposed. These fines
will be collected from members in
January of the following year. The
Membership and Risk Management
Committee will be notified of all
members that were fined for failing to
complete connectivity testing.
In the event that any member fails to
complete connectivity testing for two
successive years, the fine that will be
imposed at that time will be $20,000.
Failure to complete testing for more
than two successive years will result in
disciplinary action, including potential
termination of membership.
III. Discussion
Section 17A(b)(3)(F) of the Act
requires that the rules of a clearing
agency be designed to assure the
safeguarding of securities and funds
which are in the custody or control of
the clearing agency or for which it is
responsible.5 The Commission finds
that DTC, FICC, and NSCC’s proposed
rule changes are consistent with this
requirement because the
implementation of the fines should help
DTC, FICC, and NSCC to enforce
compliance with their connectivity
testing rules for business continuity
purposes and as a result should better
enable them to ensure the safeguarding
of securities and funds which are in
their custody or control.
IV. Conclusion
On the basis of the foregoing, the
Commission finds that the proposed
rule changes are consistent with the
requirements of the Act and in
particular Section 17A of the Act and
the rules and regulations thereunder.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule changes (File Nos. SR–
DTC–2005–04, SR–FICC–2005–10, and
SR–NSCC–2005–05) be and hereby are
approved.
conduct that is determined to be detrimental to the
operations of NSCC.
5 15 U.S.C. 78q–1(b)(3)(F).
E:\FR\FM\21SEN1.SGM
21SEN1
]]>Agencies
[Federal Register Volume 70, Number 182 (Wednesday, September 21, 2005)]
[Notices]
[Pages 55432-55435]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18761]
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SECURITIES AND EXCHANGE COMMISSION
[Release Nos. 52444/September 15, 2005 and 27067/September 15, 2005]
Securities Exchange Act of 1934 and Investment Company Act of
1940; Order Under Section 17a and Section 36 of the Securities Exchange
Act of 1934 Granting Exemptions From Specified Provisions of the
Exchange Act and Certain Rules Thereunder; Order Under Section 6(c) and
Section 38(a) of the Investment Company Act of 1940 Granting Exemptions
From Specified Provisions of the Company Act and Certain Rules
Thereunder
Section 36 of the Securities Exchange Act of 1934 (the ``Exchange
Act'') authorizes the Securities and Exchange Commission (the
``Commission''), by rule, regulation, or order, to exempt, either
conditionally or unconditionally, any person, security, or transaction,
or any class or classes of persons, securities, or transactions, from
any provision or provisions of the Exchange Act or any rule or
regulation thereunder, to the extent that such exemption is necessary
or appropriate in the public interest, and is consistent with the
protection of investors.
Section 17A(c)(1) of the Exchange Act provides that the appropriate
regulatory agency, by rule or by order, upon its own motion or upon
application, may conditionally or unconditionally exempt any person or
security or class of person or securities from any provision of that
section or any rule or regulation prescribed under Section 17A, if the
appropriate regulatory agency finds that such exemption is in the
public interest and consistent with the protection of investors and the
purposes of this section, including the prompt and accurate clearance
and settlement of securities transactions and the safeguarding of
securities and funds.\1\
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\1\ Section 3(a)(34) defines ``appropriate regulatory
authority'' when used in the context of transfer agents as generally
(1) the Comptroller of the Currency, in the case of a national bank
or a bank or a subsidiary of such bank; (2) the Board of Governors
of the Federal Reserve System or subsidiary thereof, a bank holding
company or a subsidiary of a bank holding company; (3) the Federal
Deposit Insurance Corporation; and (4) the Commission in the case of
all other transfer agents. Section 17A(c)(1) also requires that the
Commission not object to the use of exemptive authority in instances
where an appropriate regulatory authority other than the Commission
is providing exemptive relief.
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Section 6(c) of the Investment Company Act of 1940 (the ``Company
Act'') provides that the Commission may exempt any person, security, or
transaction, or any class or classes of persons, securities or
transactions, from any provision of the Company Act, or any rule or
regulation thereunder, if and to the extent that such exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Company Act. Section 38(a) of the Company Act
provides that the Commission may make, issue, amend and rescind such
rules and regulations and such orders as are necessary or appropriate
to the exercise of the powers conferred upon the Commission under the
Act.
Hurricane Katrina made landfall along the Gulf Coast on August 29,
2005, causing catastrophic damage to portions of Alabama, Louisiana and
Mississippi. The storm and subsequent flooding displaced individuals
and businesses and disrupted communications across the Gulf Coast
region. We are issuing this Order to address the needs of companies and
individuals located within the areas affected by Hurricane Katrina that
must comply with the requirements of the federal securities laws.
I. Filing Requirements for Registrants and Other Persons
The lack of communications, facilities and available staff and
professional advisors as a result of Hurricane Katrina could hamper the
efforts of public companies and other persons in the affected areas in
their compliance with filing deadlines. At the same time, investors
have an interest in the timely availability of required information
about these companies and the activities of persons required to file
schedules and reports with respect to these companies. While the
Commission believes that the relief from filing requirements provided
by this Order is both necessary in the public interest and consistent
with the protection of investors, we remind public companies and other
persons who are the subjects of this Order to continue to evaluate
their obligations to make materially accurate and complete disclosures
in accordance with the anti-fraud provisions of the federal securities
laws.
Accordingly, it is ordered, pursuant to Section 36 of the Exchange
Act, that a registrant (as defined in Exchange Act Rule 12b-2) subject
to the reporting requirements of Exchange Act Section 13(a) or 15(d),
and any person required to make any filings with respect to such a
registrant, is exempt from any requirement to file or furnish materials
with the Commission under Exchange Act Sections 13(a), 13(d), 13(g),
14(a), 14(c), 15(d) and 16(a), Regulations 13A, 13D, 13G, 14A, 14C and
15D, and Rule 16a-3, as applicable, for the period from and including
August 29, 2005 to October 14, 2005, where the conditions below are
satisfied.
Conditions
(a) With respect to registrants, the address of the registrant's
principal executive offices listed on the cover page of the most recent
periodic report filed by the registrant on Form 10-Q, 10-QSB, 10-K, or
10-KSB is within one of the counties or parishes designated as of this
date to be within the Presidentially Declared Disaster Areas where
Individual Assistance has been authorized by the Federal Emergency
Management Agency as a result of Hurricane Katrina (the ``Presidential
Disaster Areas''), which include the Louisiana parishes of: Acadia,
Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East
Feliciana, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette,
Lafourche, Livingston, Orleans, Pointe Coupee, Plaquemines, St.
Bernard, St. Charles, St. Helena, St. James, St. John, St. Mary, St.
Martin, St. Tammany, Tangipahoa, Terrebonne, Vermilion, Washington,
West Baton Rouge, and West Feliciana; the Mississippi counties of:
Adams, Amite, Attala, Claiborne, Choctaw, Clarke, Copiah, Covington,
Forrest, Franklin, George, Greene, Hancock, Harrison, Hinds, Jackson,
Jasper,
[[Page 55433]]
Jefferson, Jefferson Davis, Jones, Kemper, Lamar, Lauderdale, Lawrence,
Leake, Lincoln, Lowndes, Madison, Marion, Neshoba, Newton, Noxubee,
Oktibbeha, Pearl River, Perry, Pike, Rankin, Scott, Simpson, Smith,
Stone, Walthall, Warren, Wayne, Wilkinson, Winston, and Yazoo; and the
Alabama counties of Baldwin, Clarke, Choctaw, Mobile, Pickens, Greene,
Hale, Sumter, Tuscaloosa, and Washington.
(b) With respect to persons other than registrants, the address
listed on the most recently filed schedule or form that the person had
filed, or the address that the person would be required to list on any
covered schedule or form required to be filed during the time period
covered by this Order, is within one of the Presidential Disaster
Areas; and
(c) The registrant or person files with the Commission any report,
schedule or form required to be filed during the period from and
including August 29, 2005 to October 14, 2005 on or before October 17,
2005.
II. Furnishing of Proxy and Information Statements
The conditions in the areas affected by Hurricane Katrina,
including displacement of hundreds of thousands of individuals and the
destruction of property, have prevented and will continue to prevent
the delivery of mail to the region. In light of these conditions, we
believe that relief is warranted for those seeking to comply with our
rules imposing requirements to furnish materials to security holders
when mail delivery is not possible.
Accordingly, it is ordered, pursuant to Section 36 of the Exchange
Act, that a registrant or any other person is exempt from the
requirements to furnish proxy statements, annual reports and other
soliciting materials, as applicable (the ``Soliciting Materials''),
under Exchange Act Rules 14a-3 and 14a-12, and the requirements to
furnish information statements and annual reports, as applicable (the
``Information Materials''), under Exchange Act Rules 14c-2 and 14c-3,
where the conditions below are satisfied.
Conditions
(a) The registrant's security holder has a mailing address located
within a zip code where, as a result of Hurricane Katrina, the United
States Postal Service has suspended mail service of the type or class
customarily used by the registrant;
(b) The registrant or other person making a solicitation has
followed normal procedure when furnishing the Soliciting Materials to
the security holder in order to ensure that the Soliciting Materials
preceded or accompanied the proxy, as required by the rules applicable
to the particular form of Soliciting Materials, or, in the case of
Information Materials, the registrant has followed normal procedure
when furnishing the Information Materials to the security holder in
accordance with the rules applicable to Information Materials; and
(c) If requested by the security holder, the registrant or other
person provides the Soliciting Materials or Information Materials by a
means reasonably designed to furnish the Soliciting Materials or
Information Materials to the security holder.
* * * * *
Any registrant or other person unable to meet a deadline (including
any shareholder who is unable to meet a deadline applicable to a
shareholder proposal) or a delivery obligation as a result of Hurricane
Katrina, or in need of other assistance related to their public
filings, should contact the Division of Corporation Finance at (202)
551-3500 or at cfhotline@sec.gov. The Division will consider any
requests on a case-by-case basis.
III. Relief Relating Specifically to Registered Investment Companies
Regarding Transmittal of Annual and Semi-Annual Reports to Shareholders
Required by the Company Act and the Rules Thereunder
For reasons similar to those cited in Section II, we believe that
relief is warranted for the transmittal by registered investment
companies of annual and semi-annual reports to shareholders.
Accordingly, it is ordered, pursuant to Sections 6(c) and 38(a) of
the Company Act that, for 90 calendar days beginning on August 29,
2005, a registered management investment company is exempt from the
requirements of Section 30(e) of the Company Act and Rule 30e-1
thereunder to transmit annual and semi-annual reports to shareholders;
And, for 90 calendar days beginning on August 29, 2005, a
registered unit investment trust is exempt from the requirements of
Section 30(e) of the Company Act and Rule 30e-2 thereunder to transmit
annual and semi-annual reports to shareholders,
Provided that:
(a) The shareholder or unitholder's mailing address for transmittal
as listed in the records of the registered investment company has a zip
code for which the United States Postal Service has suspended mail
service, as a result of Hurricane Katrina, of the type or class
customarily used by the investment company for transmittal of reports;
and
(b) The registered investment company or other person promptly
transmits the reports (i) if requested by the shareholder or
unitholder, or (ii) at the earlier of the end of the 90-day period or
the resumption of the applicable mail service.
* * * * *
Registered investment companies experiencing difficulties in
complying with their obligations after the 90-calendar-day period, or
in need of additional information or assistance regarding issues
arising under the Company Act, should contact the Division of
Investment Management, Office of Chief Counsel, at (202) 551-6825 or
imocc@sec.gov or use the contact information provided at the end of
Section II of the Order.
IV. Transfer Agent Compliance With Sections 17A and 17(f) of the
Exchange Act
Exchange Act Section 17A and Section 17(f), as well as the rules
promulgated under Sections 17A and 17(f), contain requirements for
registered transfer agents relating to, among other things, processing
securities transfers, safekeeping of investor and issuer funds and
securities, and maintaining records of investor ownership. Following
the events of Hurricane Katrina, registered transfer agents located in
the affected region may have difficulty complying with some or all of
their obligations as registered transfer agents. In addition, transfer
agents located outside the affected region in many cases may be unable
to conduct business with entities or securityholders inside the region,
thereby making it difficult to process securities transactions and
corporate actions in conformance with Section 17A, Section 17(f) and
the rules thereunder.
While the national clearance and settlement system continues to
operate well in light of this emergency, the Commission recognizes that
securities transfers and payments to and from securityholders in the
affected region may present compliance issues for many transfer agents.
Therefore, the Commission is using its authority under Section 17A and
Section 36 of the Exchange Act to relax temporarily certain regulatory
provisions in order to provide transfer agents with flexibility in
coping with the situation.\2\ The
[[Page 55434]]
Commission finds the following exemption to be in the public interest
and consistent with the protection of investors and the purpose of
Section 17A of the Exchange Act, including the prompt and accurate
clearance and settlement of securities transactions and the
safeguarding of securities and funds.
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\2\ This order temporarily exempts transfer agents from the
requirements of (1) Section 17A of the Exchange Act and Rules 17Ad-1
through 17Ad-21T thereunder and (2) Section 17(f) of the Exchange
Act and Rules 17f-1 and 17f-2 thereunder.
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Accordingly, it is ordered, pursuant to Sections 17A and 36 of the
Exchange Act, that any registered transfer agent located in the
Presidential Disaster Areas that is unable to comply with Section 17A
and Section 17(f) of the Exchange Act and the rules promulgated
thereunder, as applicable, is hereby temporarily exempted from
complying with such provisions for the period from and including August
29, 2005 to October 17, 2005, where the conditions below are satisfied.
Conditions
(a) Books and Records Maintained at Affected Locations. A
registered transfer agent that maintained books and records at
locations inside the Presidential Disaster Areas must notify the
Commission in writing by October 17, 2005, if such transfer agent knows
or believes that the books and records it is required to maintain
pursuant to Section 17A and the rules thereunder were lost, destroyed,
or materially damaged. To the extent feasible, the transfer agent
should include as much information as possible as to the type of books
and records that were maintained, the names of the issuers for whom
such books and records were maintained, and the extent of the loss of,
or damage to, such books and records.
(b) Securityholder Funds and Securities. A transfer agent
registered with the Commission and holding securityholder or issuer
funds or securities must notify the Commission in writing by October
17, 2005, if such transfer agent knows or believes that funds or
securities belonging to either issuers or securityholders were lost,
destroyed, stolen, or unaccountable for any reason. To the extent
possible, the transfer agent should include information regarding the
dollar amount of any such funds and the number of such securities.
Transfer agents that have custody or possession of any
securityholder or issuer funds or securities shall use all reasonable
means available to ensure that all such securities are held in
safekeeping and are handled, in light of all facts and circumstances,
in a manner reasonably free from risk of theft, loss, or destruction
and that all funds are protected against misuse. To the extent
possible, all securityholder or issuer funds that remain in the custody
of the transfer agent shall be maintained in a separate bank account
held for the exclusive benefit of securityholders until such funds are
properly remitted.
The notifications required under (a) and (b) above shall be sent
to: Securities and Exchange Commission, Office of Filings and
Information Services, 100 F Street, NE., Washington, DC 20549.
It is further ordered, pursuant to Sections 17A and 36 of the
Exchange Act, that any registered transfer agent that is residing
outside the Presidential Disaster Areas and is unable to comply with
any provision of Section 17A or any provision of any rule thereunder
due to an inability to conduct business with persons (entities or
individuals) inside the Presidential Disaster Areas or an inability to
remit funds or securities to securityholders residing in the
Presidential Disaster Areas is hereby temporarily exempted from
compliance with such provisions with respect to those specific
transactions for the period from and including August 29, 2005, to
October 17, 2005, on the condition that such transfer agent must make
and keep a record of the extent of and the reason for noncompliance and
retain those records for a period of no less than three years. As a
further condition to this exemption, to the extent the transfer agent
has not already done so, registered transfer agents shall maintain in a
separate bank account held for the exclusive benefit of securityholders
all securityholder funds to be remitted to securityholders until such
funds are properly remitted to the securityholders.
* * * * *
The Commission encourages registered transfer agents and the
issuers for whom they act to inform affected securityholders whom they
should contact concerning their accounts, their access to funds or
securities, and other shareholder concerns. If feasible, issuers and
their transfer agents should consider placing a notice on their
websites or providing toll free numbers to respond to inquiries.
Transfer agents experiencing difficulties in complying with
obligations after October 17, 2005, or in need of additional
information, should contact the Division of Market Regulation, Office
of Interpretation and Guidance, at (202) 551-5760 or marketreg@sec.gov
or use the contact information provided at the end of Section II of the
Order.
V. Independence--Bookkeeping or Other Services Related to the
Accounting Records or Financial Statements of the Audit Client
The conditions in the areas affected by Hurricane Katrina,
including displacement of hundreds of thousands of individuals, the
destruction of property and loss or destruction of corporate records,
may require massive and extraordinary efforts to reconstruct lost or
destroyed accounting records. The Commission understands that in this
unique situation an audit client may look to its auditor for assistance
in reconstruction of its accounting records because of the auditor's
knowledge of the client's financial systems and records. Under Section
10A(g)(1) of the Exchange Act and Rule 2-01(c)(4)(i) of Regulation S-X,
auditors are prohibited from providing bookkeeping or other services
relating to the accounting records of the audit client, and in Rule 2-
01(c)(4)(i) of Regulation S-X, these prohibited services are described
as including ``maintaining or preparing the audit client's accounting
records'' or ``preparing or originating source data underlying the
audit client's financial statements.'' In light of the conditions in
areas affected by Hurricane Katrina, however, we believe that limited
relief from these prohibitions is warranted for those registrants and
other persons that are required to comply with the independence
requirements of the federal securities laws and the Commission's rules
and regulations thereunder and that are affected by those conditions.
Accordingly, it is ordered, pursuant to Section 36 of the Exchange
Act, that independent certified public accountants engaged to provide
audit services to registrants and other persons required to comply with
the independence requirements of the federal securities laws and the
Commission's rules and regulations thereunder are exempt from the
requirements of Section 10A(g)(1) of the Exchange Act and Rule 2-
01(c)(4)(i) of Regulation S-X, where the conditions below are
satisfied.
Conditions
(a) With respect to audit clients that are registrants, the address
of the registrant's principal executive offices listed on the cover
page of the most recent periodic report filed by the registrant on Form
10-Q, 10-QSB, 10-K, or 10-KSB is within one of the Presidential
Disaster Areas;
(b) With respect to audit clients other than registrants, the
address listed on the most recently filed schedule or form
[[Page 55435]]
that the audit client had filed, or the address that the audit client
would be required to list on any covered schedule or form required to
be filed, is within one of the Presidential Disaster Areas;
(c) Services provided by the auditor are limited to reconstruction
of previously existing accounting records that were lost or destroyed
as a result of Hurricane Katrina and such services cease as soon as the
client's lost or destroyed records are reconstructed, its financial
systems are fully operational and the client can effect an orderly and
efficient transition to management or other service provider; and
(d) With respect to issuers, the services provided by the issuer's
auditor pursuant to this Order are subject to pre-approval by the
issuer's audit committee as required by Rule 2-01(c)(7) of Regulation
S-X.
* * * * *
Auditors or audit clients with questions about this section of the
Order or with other questions relating to auditor independence are
encouraged to call the Office of the Chief Accountant directly at (202)
551-5300 or use the contact information provided at the end of Section
II of the Order.
By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 05-18761 Filed 9-20-05; 8:45 am]
BILLING CODE 8010-01-P
