UBS AG, et al.; Notice of Application and Temporary Order, 13276-13278 [E9-6655]
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Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Notices
contracts to certain employees of Texas
institutions of higher education
participating in the Texas Optional
Retirement Program. There are
approximately 100 registrants governed
by Rule 6c–7. The burden of compliance
with Rule 6c–7, in connection with the
registrants obtaining from a purchaser,
prior to or at the time of purchase, a
signed document acknowledging the
restrictions on redeemability imposed
by Texas law, is estimated to be
approximately 3 minutes of professional
time per response for each of
approximately 3000 purchasers
annually (at an estimated $63 per
hour),1 for a total annual burden of 150
hours (at a total annual cost of $9,450).
The estimate of average burden hours
is made solely for the purposes of the
Paperwork Reduction Act, and is not
derived from a comprehensive or even
a representative survey or study of the
costs of Commission rules or forms. The
Commission does not include in the
estimate of average burden hours the
time preparing registration statements
and sales literature disclosure regarding
the restrictions on redeemability
imposed by Texas law. The estimate of
burden hours for completing the
relevant registration statements are
reported on the separate PRA
submissions for those statements. (See
the separate PRA submissions for Form
N–3 (17 CFR 274.11b) and Form N–4 (17
CFR 274.11c).)
The Commission requests written
comments on: (a) Whether the proposed
collection of information is necessary
for the proper performance of the
functions of the agency, including
whether the information will have
practical utility; (b) the accuracy of the
agency’s estimate of the burden of the
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication.
Please direct your written comments
to Charles Boucher, Director/CIO,
Securities and Exchange Commission,
C/O Shirley Martinson, 6432 General
Green Way, Alexandria, VA 22312; or
1 $63/hour figure for a Compliance Clerk is from
SIFMA’s Office Salaries in the Securities Industry
2008, modified by Commission staff to account for
an 1800-hour work-year and multiplied by 2.93 to
account for bonuses, firm size, employee benefits
and overhead.
VerDate Nov<24>2008
20:28 Mar 25, 2009
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send an e-mail to:
PRA_Mailbox@sec.gov.
Dated: March 20, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–6723 Filed 3–25–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC—28652; 812–13645]
UBS AG, et al.; Notice of Application
and Temporary Order
March 19, 2009.
AGENCY: Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Temporary order and notice of
application for a permanent order under
section 9(c) of the Investment Company
Act of 1940 (‘‘Act’’).
Summary of Application: Applicants
have received a temporary order
exempting them from section 9(a) of the
Act, with respect to an injunction
entered against UBS AG on March 19,
2009 by the United States District Court
for the District of Columbia
(‘‘Injunction’’) until the Commission
takes final action on an application for
a permanent order. Applicants also have
applied for a permanent order.
Applicants: UBS AG; UBS Financial
Services Inc. (‘‘UBSFS’’); UBS Fund
Advisor, L.L.C. (‘‘UBSFA’’); UBS
Willow Management, L.L.C. (‘‘UBS
Willow’’), UBS Eucalyptus
Management, L.L.C., UBS Tamarack
Management, L.L.C., UBS Juniper
Management, L.L.C., and UBS Enso
Management, L.L.C. (collectively,
‘‘UBSFA Advisers’’); UBS Global Asset
Management (Americas) Inc. (‘‘UBS
Global AM Americas’’); UBS Global
Asset Management (US) Inc. (‘‘UBS
Global AM US’’); and UBS IB CoInvestment 2001 GP Limited (‘‘ESC GP’’)
(collectively, ‘‘Applicants’’).1
Filing Dates: The application was
filed on March 19, 2009. Applicants
have agreed to file an amendment
during the notice period, the substance
of which is reflected in this notice.
Hearing or Notification of Hearing: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
1 Applicants request that any relief granted
pursuant to the application also apply to any other
company of which UBS AG is or may become an
affiliated person (together with the Applicants, the
‘‘Covered Persons’’).
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personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on April 13, 2009, and
should be accompanied by proof of
service on applicants, in the form of an
affidavit or, for lawyers, a certificate of
service. Hearing requests should state
the nature of the writer’s interest, the
reason for the request, and the issues
contested. Persons who wish to be
notified of a hearing may request
notification by writing to the
Commission’s Secretary.
ADDRESSES: Secretary, U.S. Securities
and Exchange Commission, 100 F
Street, NE., Washington, DC 20549–
1090; Applicants: UBS AG and ESC GP,
c/o UBS Investment Bank, 677
Washington Boulevard, Stamford, CT
06901; UBSFS, 1200 Harbor Boulevard,
Weehawken, NJ 07086; UBSFA and
UBSFA Advisers, 51 West 52nd Street,
23rd Floor, New York, NY 10019; UBS
Global AM US, 51 West 52nd Street,
16th Floor, New York, NY 10019; UBS
Global AM Americas, One North
Wacker Drive, Chicago, IL 60606.
FOR FURTHER INFORMATION CONTACT: John
Yoder, Senior Counsel, at 202–551–
6878, or Marilyn Mann, Branch Chief, at
202–551–6821 (Division of Investment
Management, Office of Investment
Company Regulation).
SUPPLEMENTARY INFORMATION: The
following is a temporary order and
summary of the application. The
complete application may be obtained
for a fee at the Commission’s Public
Reference Room, 100 F Street, NE.,
Washington, DC 20549–1520 (tel. 202–
551–5850).
Applicants’ Representations
1. UBS AG is a company established
under the laws of Switzerland that
directly or through its subsidiaries
provides global wealth management,
securities and retail and commercial
banking services. Each of the Applicants
is either directly or indirectly controlled
by UBS AG. UBS AG and ESC GP
provide investment advisory services to
employees’ securities companies
(‘‘ESCs’’), as defined in section 2(a)(13)
of the Act, which provide investment
opportunities for highly compensated
key employees, officers, directors and
current consultants of UBS AG and its
affiliates. UBSFS, UBSFA, UBSFA
Advisers and UBS Global AM Americas
are registered as investment advisers
under the Investment Advisers Act of
1940 (‘‘Advisers Act’’) and currently
serve as investment advisers to
registered management investment
companies (‘‘Funds’’). UBSFS is
registered as a broker-dealer under the
Securities Exchange Act of 1934
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Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Notices
(‘‘Exchange Act’’) and acts as depositor
and principal underwriter to various
registered unit investment trusts
(‘‘UITs’’). UBS Global AM US is
registered as a broker-dealer under the
Exchange Act and as an investment
adviser under the Advisers Act and
serves as principal underwriter to
various open-end Funds.
2. On March 19, 2009, the United
States District Court for the District of
Columbia entered a judgment, which
included the Injunction, against UBS
AG (‘‘Judgment’’) in a matter brought by
the Commission.2 The Commission
alleged in the complaint (‘‘Complaint’’)
that UBS AG violated section 15(a) of
the Exchange Act and section 203(a) of
the Advisers Act by acting as an
unregistered broker-dealer and
investment adviser. The Complaint
alleged that UBS AG, largely through
individuals known as client advisers,
used United States jurisdictional means
to provide cross-border brokerage and
investment advisory services to
thousands of United States clients. The
Complaint further alleged that this
cross-border business was serviced
primarily from Switzerland. The
Complaint further alleged that at all
times UBS AG was aware that it could
provide these services to United States
cross-border clients only through an
entity registered with the Commission
as a broker-dealer or investment adviser.
Without admitting or denying any of the
allegations in the Complaint, except as
to jurisdiction, UBS AG consented to
the entry of the Injunction, the payment
of disgorgement and certain
undertakings to take various remedial
actions.
Applicants’ Legal Analysis
1. Section 9(a)(2) of the Act, in
relevant part, prohibits a person who
has been enjoined from engaging in or
continuing any conduct or practice in
connection with the purchase or sale of
a security, or in connection with
activities as an underwriter, broker or
dealer, from acting, among other things,
as an investment adviser or depositor of
any registered investment company or a
principal underwriter for any registered
open-end investment company,
registered unit investment trust, or
registered face-amount certificate
company. Section 9(a)(3) of the Act
makes the prohibition in section 9(a)(2)
applicable to a company, any affiliated
person of which has been disqualified
under the provisions of section 9(a)(2).
Section 2(a)(3) of the Act defines
2 Securities and Exchange Commission v. UBS
AG, Judgment as to UBS AG, 1:09–CV–00316
(D.D.C.) (entered March 19, 2009).
VerDate Nov<24>2008
20:28 Mar 25, 2009
Jkt 217001
‘‘affiliated person’’ to include, among
others, any person directly or indirectly
controlling, controlled by, or under
common control, with the other person.
Applicants state that UBS AG is an
affiliated person of each of the other
Applicants within the meaning of
section 2(a)(3). Applicants state that, as
a result of the Injunction, they would be
subject to the prohibitions of section
9(a).
2. Section 9(c) of the Act provides that
the Commission shall grant an
application for exemption from the
disqualification provisions of section
9(a) of the Act if it is established that
these provisions, as applied to
Applicants, are unduly or
disproportionately severe or that the
conduct of the Applicants has been such
as not to make it against the public
interest or the protection of investors to
grant the exemption. Applicants have
filed an application pursuant to section
9(c) seeking a temporary and permanent
order exempting the Applicants and the
other Covered Persons from the
disqualification provisions of section
9(a).
3. Applicants believe that they meet
the standards for exemption specified in
section 9(c). Applicants state that the
prohibitions of section 9(a) as applied to
them would be unduly and
disproportionately severe and that the
conduct of Applicants has been such as
not to make it against the public interest
or the protection of investors to grant
the requested exemption from section
9(a).
4. Applicants state that the alleged
conduct giving rise to the Injunction did
not involve any of the Applicants acting
in the capacity of investment adviser,
sub-adviser or depositor to any
registered investment company or ESC,
or in the capacity of principal
underwriter for any open-end Fund or
UIT (‘‘Fund Service Activities’’).
Applicants note that none of the current
or former directors, officers, or
employees of the Applicants (other than
UBS AG) had any knowledge of, or had
any involvement in, the conduct alleged
in the Complaint. Applicants further
state that the personnel at UBS AG who
were involved in the violations alleged
in the Complaint have had no and will
not have any future involvement in
Fund Service Activities.
5. Applicants state that the inability of
the Applicants to engage in Fund
Service Activities would result in
potentially severe financial hardships
for the registered investment companies
they serve and the registered investment
companies’ shareholders or unitholders.
Applicants state that they will distribute
written materials, including an offer to
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13277
meet in person to discuss the materials,
to the boards of directors of the Funds
(the ‘‘Boards’’), including the directors
who are not ‘‘interested persons,’’ as
defined in section 2(a)(19) of the Act, of
the Funds, and their independent legal
counsel as defined in rule 0–1(a)(6)
under the Act, if any, regarding the
Injunction, any impact on the Funds,
and the application. Applicants state
that they will provide the Boards with
all information concerning the
Injunction and the application that is
necessary for the Funds to fulfill their
disclosure and other obligations under
the federal securities laws.
6. Applicants also state that, if they
were barred from providing Fund
Service Activities to registered
investment companies and ESCs, the
effect on their businesses and
employees would be severe. Applicants
state that they have committed
substantial resources to establishing an
expertise in providing Fund Service
Activities. Applicants further state that
prohibiting them from providing Fund
Service Activities would not only
adversely affect their businesses, but
would also adversely affect over 425
employees that are involved in those
activities. Applicants also state that
disqualifying UBS AG and ESC GP from
continuing to provide investment
advisory services to ESCs is not in the
public interest or in furtherance of the
protection of investors. Because the
ESCs have been formed for the benefit
of key employees, officers, directors and
current consultants of UBS AG and its
affiliates, it would not be consistent
with the purposes of the ESC provisions
of the Act to require another entity not
affiliated with UBS AG to manage the
ESCs. In addition, participants in the
ESCs have subscribed for interests in the
ESCs with the expectation that the ESCs
would be managed by an affiliate of
UBS AG.
7. Applicants state that UBS AG and
certain other Applicants have
previously received orders under
section 9(c), as described in greater
detail in the application.
Applicants’ Condition
Applicants agree that any order
granting the requested relief will be
subject to the following condition:
Any temporary exemption granted
pursuant to the application shall be
without prejudice to, and shall not limit
the Commission’s rights in any manner
with respect to, any Commission
investigation of, or administrative
proceedings involving or against,
Covered Persons, including without
limitation, the consideration by the
Commission of a permanent exemption
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Federal Register / Vol. 74, No. 57 / Thursday, March 26, 2009 / Notices
from section 9(a) of the Act requested
pursuant to the application or the
revocation or removal of any temporary
exemptions granted under the Act in
connection with the application.
Temporary Order:
The Commission has considered the
matter and finds that the Applicants
have made the necessary showing to
justify granting a temporary exemption.
Accordingly,
It is hereby ordered, pursuant to
section 9(c) of the Act, that Applicants
and any other Covered Persons are
granted a temporary exemption from the
provisions of section 9(a), solely with
respect to the Injunction, subject to the
condition in the application, from
March 19, 2009, until the Commission
takes final action on their application
for a permanent order.
By the Commission.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–6655 Filed 3–25–09; 8:45 am]
BILLING CODE
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59608; File No. SR–NYSE–
2009–31]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change by
New York Stock Exchange LLC
Amending the Listed Company Manual
Section 902.08 To Establish an Initial
Listing Fee and an Annual Listing Fee
for Securities Listed Under Section
102.03 and Traded on the NYSE Bonds
System
March 19, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on March
16, 2009, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the selfregulatory organization. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend the
Listed Company Manual (the ‘‘Manual’’)
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
20:28 Mar 25, 2009
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in Sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend the
Listed Company Manual (the ‘‘Manual’’)
Section 902.08 to establish an initial
listing fee and an annual listing fee for
all securities listed under Section
102.03 and traded on NYSE BondsSM
system (‘‘NYSE Bonds’’). Specifically,
the Exchange seeks to implement an
initial listing fee of $5,000 and an
annual listing fee of $5,000 for the
securities listed in Section 102.03 of the
Manual.
I. Background
Currently, the Exchange imposes a
$15,000 listing fee for bonds and other
fixed income debt securities that list on
the Exchange pursuant to Section
102.03 of the Manual. Specifically, the
Exchange charges the $15,000 listing fee
to non-NYSE issuers.
NYSE issuers, however, are not
charged any listing fee for these bonds
and other fixed income debt securities.
In November 2006, the Exchange filed a
proposed rule change establishing rules
for the trading of unlisted debt
securities on NYSE Bonds.4
Specifically, this filing established
NYSE Rules 1400 and 1401 in
connection with the NYSE Exemption
Request. As a result of the November
4 See Securities Exchange Release No. 54767
(November 16, 2006), 71 FR 67680 (November 22,
2006) (SR–NYSE–04–69).
2 15
VerDate Nov<24>2008
Section 902.08 to establish an initial
listing fee and an annual listing fee for
all securities listed under Section
102.03 and traded on NYSE BondsSM
system (‘‘NYSE Bonds’’). The text of the
proposed rule change is available on the
Exchange’s Web site (https://
www.nyse.com), at the Exchange’s
principal office, and at the
Commission’s Public Reference Room.
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2006 rule filing, NYSE issuers were
permitted to trade their unlisted bonds
on the Exchange. Non-NYSE issuers,
however, would not be permitted to
trade their bonds on NYSE Bonds unless
they were listed on the Exchange.
II. Proposed Amendments
The Exchange now proposes to amend
the listing fees for NYSE and non-NYSE
issuers. Under amended Section 902.08
of the Manual, the initial listing fee for
non-NYSE issuers of bonds and other
fixed income debt securities that list on
the Exchange pursuant to Section
102.03 of the Manual will be a flat fee
of $5,000. The annual listing fee for
these bonds and other fixed income debt
securities will also be $5,000.00. If an
NYSE issuer opts to have its bonds or
other fixed income debt securities listed
on the Exchange, the NYSE issuer will
be subject to the $5,000 initial listing fee
and $5,000 annual listing fee. These fees
will cover administrative and regulatory
costs incurred by the Exchange. If an
NYSE issuer does not choose to have its
bonds or other fixed income debt
securities listed on the Exchange, then
the NYSE issuer is exempt from paying
any listing fees but may still trade its
bonds on the Exchange.
Because revenue is needed to pay for
the operation and regulation of these
listings, the Exchange has determined
that the proposed $5,000 initial and
$5,000 annual listing fees provide an
attractive pricing strategy to its
customers and is sufficient for covering
the Exchange’s costs to provide its
services to the issuers.
U.S. Government issues are exempt
from securities registration under the
Securities and Exchange Act of 1934.
Because these U.S. Government issues
are not subject to the Acts’ listing
requirements, the Exchange is not
required to perform an administrative
and regulatory review of these listed
bonds. Accordingly, U.S. Government
issues will continue to list on the
Exchange free of charge, as set forth in
Section 902.08 of the Manual.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 5 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 6 in general and Section 6(b)(4) of
the Act 7 in particular, in that it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its members and
other persons using its facilities. The
5 15
U.S.C. 78f.
U.S.C. 78a
7 15 U.S.C. 78f(b)(4).
6 15
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]]>Agencies
[Federal Register Volume 74, Number 57 (Thursday, March 26, 2009)]
[Notices]
[Pages 13276-13278]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-6655]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC--28652; 812-13645]
UBS AG, et al.; Notice of Application and Temporary Order
March 19, 2009.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Temporary order and notice of application for a permanent order
under section 9(c) of the Investment Company Act of 1940 (``Act'').
-----------------------------------------------------------------------
Summary of Application: Applicants have received a temporary order
exempting them from section 9(a) of the Act, with respect to an
injunction entered against UBS AG on March 19, 2009 by the United
States District Court for the District of Columbia (``Injunction'')
until the Commission takes final action on an application for a
permanent order. Applicants also have applied for a permanent order.
Applicants: UBS AG; UBS Financial Services Inc. (``UBSFS''); UBS
Fund Advisor, L.L.C. (``UBSFA''); UBS Willow Management, L.L.C. (``UBS
Willow''), UBS Eucalyptus Management, L.L.C., UBS Tamarack Management,
L.L.C., UBS Juniper Management, L.L.C., and UBS Enso Management, L.L.C.
(collectively, ``UBSFA Advisers''); UBS Global Asset Management
(Americas) Inc. (``UBS Global AM Americas''); UBS Global Asset
Management (US) Inc. (``UBS Global AM US''); and UBS IB Co-Investment
2001 GP Limited (``ESC GP'') (collectively, ``Applicants'').\1\
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\1\ Applicants request that any relief granted pursuant to the
application also apply to any other company of which UBS AG is or
may become an affiliated person (together with the Applicants, the
``Covered Persons'').
---------------------------------------------------------------------------
Filing Dates: The application was filed on March 19, 2009.
Applicants have agreed to file an amendment during the notice period,
the substance of which is reflected in this notice.
Hearing or Notification of Hearing: An order granting the
application will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on April 13, 2009, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Hearing requests should state the nature of the
writer's interest, the reason for the request, and the issues
contested. Persons who wish to be notified of a hearing may request
notification by writing to the Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090; Applicants: UBS AG and ESC GP,
c/o UBS Investment Bank, 677 Washington Boulevard, Stamford, CT 06901;
UBSFS, 1200 Harbor Boulevard, Weehawken, NJ 07086; UBSFA and UBSFA
Advisers, 51 West 52nd Street, 23rd Floor, New York, NY 10019; UBS
Global AM US, 51 West 52nd Street, 16th Floor, New York, NY 10019; UBS
Global AM Americas, One North Wacker Drive, Chicago, IL 60606.
FOR FURTHER INFORMATION CONTACT: John Yoder, Senior Counsel, at 202-
551-6878, or Marilyn Mann, Branch Chief, at 202-551-6821 (Division of
Investment Management, Office of Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The following is a temporary order and
summary of the application. The complete application may be obtained
for a fee at the Commission's Public Reference Room, 100 F Street, NE.,
Washington, DC 20549-1520 (tel. 202-551-5850).
Applicants' Representations
1. UBS AG is a company established under the laws of Switzerland
that directly or through its subsidiaries provides global wealth
management, securities and retail and commercial banking services. Each
of the Applicants is either directly or indirectly controlled by UBS
AG. UBS AG and ESC GP provide investment advisory services to
employees' securities companies (``ESCs''), as defined in section
2(a)(13) of the Act, which provide investment opportunities for highly
compensated key employees, officers, directors and current consultants
of UBS AG and its affiliates. UBSFS, UBSFA, UBSFA Advisers and UBS
Global AM Americas are registered as investment advisers under the
Investment Advisers Act of 1940 (``Advisers Act'') and currently serve
as investment advisers to registered management investment companies
(``Funds''). UBSFS is registered as a broker-dealer under the
Securities Exchange Act of 1934
[[Page 13277]]
(``Exchange Act'') and acts as depositor and principal underwriter to
various registered unit investment trusts (``UITs''). UBS Global AM US
is registered as a broker-dealer under the Exchange Act and as an
investment adviser under the Advisers Act and serves as principal
underwriter to various open-end Funds.
2. On March 19, 2009, the United States District Court for the
District of Columbia entered a judgment, which included the Injunction,
against UBS AG (``Judgment'') in a matter brought by the Commission.\2\
The Commission alleged in the complaint (``Complaint'') that UBS AG
violated section 15(a) of the Exchange Act and section 203(a) of the
Advisers Act by acting as an unregistered broker-dealer and investment
adviser. The Complaint alleged that UBS AG, largely through individuals
known as client advisers, used United States jurisdictional means to
provide cross-border brokerage and investment advisory services to
thousands of United States clients. The Complaint further alleged that
this cross-border business was serviced primarily from Switzerland. The
Complaint further alleged that at all times UBS AG was aware that it
could provide these services to United States cross-border clients only
through an entity registered with the Commission as a broker-dealer or
investment adviser. Without admitting or denying any of the allegations
in the Complaint, except as to jurisdiction, UBS AG consented to the
entry of the Injunction, the payment of disgorgement and certain
undertakings to take various remedial actions.
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\2\ Securities and Exchange Commission v. UBS AG, Judgment as to
UBS AG, 1:09-CV-00316 (D.D.C.) (entered March 19, 2009).
---------------------------------------------------------------------------
Applicants' Legal Analysis
1. Section 9(a)(2) of the Act, in relevant part, prohibits a person
who has been enjoined from engaging in or continuing any conduct or
practice in connection with the purchase or sale of a security, or in
connection with activities as an underwriter, broker or dealer, from
acting, among other things, as an investment adviser or depositor of
any registered investment company or a principal underwriter for any
registered open-end investment company, registered unit investment
trust, or registered face-amount certificate company. Section 9(a)(3)
of the Act makes the prohibition in section 9(a)(2) applicable to a
company, any affiliated person of which has been disqualified under the
provisions of section 9(a)(2). Section 2(a)(3) of the Act defines
``affiliated person'' to include, among others, any person directly or
indirectly controlling, controlled by, or under common control, with
the other person. Applicants state that UBS AG is an affiliated person
of each of the other Applicants within the meaning of section 2(a)(3).
Applicants state that, as a result of the Injunction, they would be
subject to the prohibitions of section 9(a).
2. Section 9(c) of the Act provides that the Commission shall grant
an application for exemption from the disqualification provisions of
section 9(a) of the Act if it is established that these provisions, as
applied to Applicants, are unduly or disproportionately severe or that
the conduct of the Applicants has been such as not to make it against
the public interest or the protection of investors to grant the
exemption. Applicants have filed an application pursuant to section
9(c) seeking a temporary and permanent order exempting the Applicants
and the other Covered Persons from the disqualification provisions of
section 9(a).
3. Applicants believe that they meet the standards for exemption
specified in section 9(c). Applicants state that the prohibitions of
section 9(a) as applied to them would be unduly and disproportionately
severe and that the conduct of Applicants has been such as not to make
it against the public interest or the protection of investors to grant
the requested exemption from section 9(a).
4. Applicants state that the alleged conduct giving rise to the
Injunction did not involve any of the Applicants acting in the capacity
of investment adviser, sub-adviser or depositor to any registered
investment company or ESC, or in the capacity of principal underwriter
for any open-end Fund or UIT (``Fund Service Activities''). Applicants
note that none of the current or former directors, officers, or
employees of the Applicants (other than UBS AG) had any knowledge of,
or had any involvement in, the conduct alleged in the Complaint.
Applicants further state that the personnel at UBS AG who were involved
in the violations alleged in the Complaint have had no and will not
have any future involvement in Fund Service Activities.
5. Applicants state that the inability of the Applicants to engage
in Fund Service Activities would result in potentially severe financial
hardships for the registered investment companies they serve and the
registered investment companies' shareholders or unitholders.
Applicants state that they will distribute written materials, including
an offer to meet in person to discuss the materials, to the boards of
directors of the Funds (the ``Boards''), including the directors who
are not ``interested persons,'' as defined in section 2(a)(19) of the
Act, of the Funds, and their independent legal counsel as defined in
rule 0-1(a)(6) under the Act, if any, regarding the Injunction, any
impact on the Funds, and the application. Applicants state that they
will provide the Boards with all information concerning the Injunction
and the application that is necessary for the Funds to fulfill their
disclosure and other obligations under the federal securities laws.
6. Applicants also state that, if they were barred from providing
Fund Service Activities to registered investment companies and ESCs,
the effect on their businesses and employees would be severe.
Applicants state that they have committed substantial resources to
establishing an expertise in providing Fund Service Activities.
Applicants further state that prohibiting them from providing Fund
Service Activities would not only adversely affect their businesses,
but would also adversely affect over 425 employees that are involved in
those activities. Applicants also state that disqualifying UBS AG and
ESC GP from continuing to provide investment advisory services to ESCs
is not in the public interest or in furtherance of the protection of
investors. Because the ESCs have been formed for the benefit of key
employees, officers, directors and current consultants of UBS AG and
its affiliates, it would not be consistent with the purposes of the ESC
provisions of the Act to require another entity not affiliated with UBS
AG to manage the ESCs. In addition, participants in the ESCs have
subscribed for interests in the ESCs with the expectation that the ESCs
would be managed by an affiliate of UBS AG.
7. Applicants state that UBS AG and certain other Applicants have
previously received orders under section 9(c), as described in greater
detail in the application.
Applicants' Condition
Applicants agree that any order granting the requested relief will
be subject to the following condition:
Any temporary exemption granted pursuant to the application shall
be without prejudice to, and shall not limit the Commission's rights in
any manner with respect to, any Commission investigation of, or
administrative proceedings involving or against, Covered Persons,
including without limitation, the consideration by the Commission of a
permanent exemption
[[Page 13278]]
from section 9(a) of the Act requested pursuant to the application or
the revocation or removal of any temporary exemptions granted under the
Act in connection with the application.
Temporary Order:
The Commission has considered the matter and finds that the
Applicants have made the necessary showing to justify granting a
temporary exemption.
Accordingly,
It is hereby ordered, pursuant to section 9(c) of the Act, that
Applicants and any other Covered Persons are granted a temporary
exemption from the provisions of section 9(a), solely with respect to
the Injunction, subject to the condition in the application, from March
19, 2009, until the Commission takes final action on their application
for a permanent order.
By the Commission.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-6655 Filed 3-25-09; 8:45 am]
BILLING CODE
