BAC Home Loans Servicing, LP, et al.; Notice of Application and Temporary Order, 44055-44057 [2011-18505]
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Federal Register / Vol. 76, No. 141 / Friday, July 22, 2011 / Notices
3. Any responsive pleading by the
Postal Service to this Notice is due no
later than July 29, 2011.
4. The procedural schedule listed
below is hereby adopted.
5. Pursuant to 39 U.S.C. 505, Tracy N.
Ferguson is designated officer of the
Commission (Public Representative) to
represent the interests of the general
public.
6. The Secretary shall arrange for
publication of this notice and order and
44055
procedural schedule in the Federal
Register.
By the Commission.
Shoshana M. Grove,
Secretary.
PROCEDURAL SCHEDULE
July 14, 2011 .......................................................
July 25, 2011 .......................................................
July 29, 2011 .......................................................
August 12, 2011 ..................................................
August 18, 2011 ..................................................
September 7, 2011 .............................................
September 22, 2011 ...........................................
September 29, 2011 ...........................................
November 10, 2011 .............................................
BILLING CODE 7710–FW–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–29726; 812–13910]
BAC Home Loans Servicing, LP, et al.;
Notice of Application and Temporary
Order
July 18, 2011.
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’’).
AGENCY:
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 BAC Home Loans
Servicing, LP (‘‘HLS’’) on May 31, 2011
by the United States District Court for
the Central District of California (the
‘‘Injunction’’), until the Commission
takes final action on an application for
a permanent order. Applicants have
requested a permanent order.
APPLICANTS: HLS, BofA Advisors, LLC
(‘‘BofA Advisors’’), BofA Distributors,
Inc. (‘‘BofA Distributors’’), Bank of
America Capital Advisors LLC
(‘‘BACA’’), KECALP Inc. (‘‘KECALP’’),
Merrill Lynch Ventures, LLC
(‘‘Ventures’’) and Merrill Lynch Global
Private Equity Inc. (‘‘MLGPE’’)
(collectively, other than HLS, the ‘‘Fund
Servicing Applicants,’’ and, together
with HLS, the ‘‘Applicants’’).1
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SUMMARY:
1 Applicants request that any relief granted
pursuant to the application also apply to any other
19:45 Jul 21, 2011
Jkt 223001
Filing Date: The application was
filed on May 27, 2011 and amended it
on June 1, 2011.
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 August 12, 2011, 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, HLS, 6400 Legacy
Drive, Plano, TX 75024; BofA Advisors,
BofA Distributors and BACA, 100
Federal Street, Boston, MA 02110; and
KECALP, Ventures and MLGPE, 767
Fifth Avenue, 7th Floor, New York, NY
10153.
FOR FURTHER INFORMATION CONTACT: Jaea
F. Hahn, Senior Counsel, at (202) 551–
6870, or Daniele Marchesani, Branch
Chief, at (202) 551–6821 (Division of
Investment Management, Office of
Investment Company Regulation).
SUPPLEMENTARY INFORMATION: The
following is a temporary order and a
DATES:
[FR Doc. 2011–18589 Filed 7–21–11; 8:45 am]
VerDate Mar<15>2010
Filing of Appeal.
Deadline for the Postal Service to file an answer responding to the application for suspension.
Deadline for the Postal Service to file the administrative record in this appeal.
Deadline for notices to intervene (see 39 CFR 3001.111(b)).
Deadline for Petitioner’s Form 61 or initial brief in support of petition (see 39 CFR 3001.115(a)
and (b)).
Deadline for answering brief in support of the Postal Service (see 39 CFR 3001.115(c)).
Deadline for reply briefs in response to answering briefs (see 39 CFR 3001.115(d)).
Deadline for motions by any party requesting oral argument; the Commission will schedule
oral argument only when it is a necessary addition to the written filings (see 39 CFR
3001.116).
Expiration of the Commission’s 120-day decisional schedule (see 39 U.S.C. 404(d)(5)).
company of which HLS is an affiliated person or
may become an affiliated person in the future
(together with the Applicants, the ‘‘Covered
Persons’’).
PO 00000
Frm 00075
Fmt 4703
Sfmt 4703
summary of the application. The
complete application may be obtained
via the Commission’s Web site by
searching for the file number, or an
applicant using the Company name box,
at https://www.gov/search/search.htm or
by calling (202) 551–8090.
Applicants’ Representations
1. Each of the Applicants is a direct
or indirect wholly-owned subsidiary of
Bank of America Corporation (‘‘BAC’’).
HLS is an entity that services mortgage
loans and provides mortgage services,
including conducting foreclosures on
mortgages, on behalf of holders of
residential mortgages and mortgage loan
asset-backed certificates. HLS is not
registered as a broker-dealer under the
Securities Exchange Act of 1934 or as an
investment adviser under the
Investment Advisers Act of 1940 (the
‘‘Advisers Act’’).
2. BofA Advisors is a registered
investment adviser that serves as
investment adviser and subadviser to
certain money market funds registered
under the Act. BofA Distributors, a
limited purpose broker-dealer registered
with the Commission, serves as
principal underwriter of some of the
same money market funds. BACA is a
registered investment adviser that serves
as investment adviser to certain closedend investment companies also
registered under the Act.
3. KECALP, Ventures and MLGPE
each serves as investment adviser to
certain employees’ securities
corporations within the meaning of
section 2(a)(13) of the Act (‘‘ESCs’’). Of
these three ESC advisers, only KECALP
is registered as an investment adviser
under the Advisers Act.
4. On May 31, 2011, the United States
District Court for the Central District of
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44056
Federal Register / Vol. 76, No. 141 / Friday, July 22, 2011 / Notices
California entered the Injunction against
HLS, formerly Countrywide Home
Loans Servicing LP, in a matter brought
by The United States Department of
Justice (‘‘DOJ’’). The complaint filed by
DOJ (‘‘Complaint’’) alleged that,
between 2006 and 2009, HLS
wrongfully foreclosed without court
orders on approximately 160 properties
owned by servicemembers protected by
the Servicemembers Civil Relief Act
(‘‘SCRA’’). Additionally, the Complaint
alleged that HLS, from 2006 through
May 31, 2009, failed to consistently
determine the military status of
mortgage loan borrowers in foreclosure.
Denying any wrongdoing as alleged by
the United States or otherwise, HLS
consented to the entry of the Injunction
against violating the SCRA.
mstockstill on DSK4VPTVN1PROD with NOTICES
Applicants’ Legal Analysis
1. Section 9(a)(2) of the Act, in
relevant part, prohibits a person who
has been enjoined from acting as a bank,
or from engaging in or continuing any
conduct or practice in connection with
such activity, 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 (‘‘UIT’’) or registered face-amount
certificate company. Section 9(a)(3) of
the Act extends the prohibitions of
section 9(a)(2) 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 HLS is, or
may be considered to be, under common
control with and therefore an affiliated
person of each of the other Applicants.
Applicants state that the entry of the
Injunction may result in Applicants
being subject to the disqualification
provisions of section 9(a) of the Act
because HLS is permanently enjoined
from engaging in or continuing
particular conduct or practice in
connection with banking activity.2
2 See In the Matter of Bank of America, N.A., The
Office of the Comptroller of the Currency
Stipulation & Consent Order No. AA–EC–11–12
(Apr. 13, 2011) and In the Matter of Bank of
America Corporation, The Board of Governors of
the Federal Reserve Consent Order, No. 11–029–B–
HC (Apr. 13, 2011). Applicants state that the OCC
Order deemed certain loan servicing activity as
banking activity, and the loan servicing activity
specified in the Injunction is a subset of the loan
servicing activity deemed banking activity by the
OCC Order. Therefore, Applicants believe that HLS
is permanently enjoined from engaging in or
continuing particular conduct or practice in
connection with banking activity.
VerDate Mar<15>2010
17:59 Jul 21, 2011
Jkt 223001
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) if it is established that these
provisions, as applied to Applicants, are
unduly or disproportionately severe or
that the Applicants’ conduct 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) of the Act. On June 1, 2011 the
Applicants received a temporary
conditional order from the Commission
exempting them from section 9(a) of the
Act with respect to the Injunction until
the Commission takes final action on an
application for a permanent order or, if
earlier, July 29, 2011.3
3. Applicants believe they meet the
standard 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 exemption from section 9(a).
4. Applicants state that the conduct
giving rise to the Injunction did not
involve any of the Applicants acting in
the capacity as investment adviser, subadviser, or principal underwriter (as
defined in section 2(a)(29) of the Act)
for any registered investment companies
(‘‘RIC’’) or ESCs (together, the ‘‘Funds’’).
Applicants state that to the best of their
knowledge none of the Applicants’
current directors, officers or employees
who is involved in providing services as
investment adviser, subadviser or
depositor for any Funds or principal
underwriter (as defined in section
2(a)(29) of the Act) for any registered
open-end company, UIT or registered
face amount certificate company
(collectively, the ‘‘Fund Servicing
Activities’’) (or any other persons in
such roles during the time period
covered by the Complaint) participated
in the conduct alleged in the Complaint
that constitutes the violations that
provide a basis for the Injunction.
Applicants also state that the alleged
conduct giving rise to the Injunction did
not involve any Fund for which an
Applicant provided Fund Servicing
Activities.
5. Applicants further represent that
the inability of Applicants (except for
3 Investment Company Act Release No. 29688
(June 1, 2011).
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Frm 00076
Fmt 4703
Sfmt 4703
HLS) to continue providing Fund
Servicing Activities would result in
potentially severe financial hardships
for both the Funds and their
shareholders. Applicants state that they
will distribute written materials,
including an offer to meet in person to
discuss the materials, to the board of
directors (the ‘‘Boards’’) of each Fund
(excluding the ESCs), including the
directors who are not ‘‘interested
persons,’’ as defined in section 2(a)(19)
of the Act, of such Fund, 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. The
Applicants will provide the Funds 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 assert that, if the
Applicants were barred from engaging
in Fund Servicing Activities, the effect
on their businesses and employees
would be severe. The Applicants state
that they have committed substantial
resources to establishing expertise in
providing Fund Servicing Activities.
7. Applicants also state that
disqualifying KECALP, Ventures and
MLGPE from continuing to provide
investment advisory services to their
ESCs is not in the public interest or in
furtherance of the protection of
investors and would frustrate the
expectations of eligible employees who
invest in the ESCs that the ESCs would
be managed by an affiliate of their
employer.
8. Applicants state that several
Applicants and certain of their affiliates
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 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 Applicants have
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Federal Register / Vol. 76, No. 141 / Friday, July 22, 2011 / Notices
to executive compensation matters as
required by Section 14A of the
Securities Exchange Act, which was
added by the Dodd-Frank Wall Street
Reform and Consumer Protection Act.
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information and to
ascertain what, if any, matters have been
added, deleted or postponed, please
contact:
The Office of the Secretary at (202)
551–5400.
By the Commission.
Elizabeth M. Murphy,
Secretary.
Dated: July 19, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–18505 Filed 7–21–11; 8:45 am]
[FR Doc. 2011–18681 Filed 7–20–11; 4:15 pm]
BILLING CODE 8011–01–P
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
SECURITIES AND EXCHANGE
COMMISSION
Sunshine Act Meeting.
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made the necessary showing to justify
granting a temporary exemption.
Accordingly,
It is hereby ordered, pursuant to
section 9(c) of the Act, that the
Applicants and the other Covered
Persons are granted a temporary
exemption from the provisions of
section 9(a), effective forthwith, solely
with respect to the Injunction, subject to
the condition in the application, until
the date the Commission takes final
action on their application for a
permanent order.
Sunshine Act Meeting
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold an Open Meeting
on July 26, 2010 at 11 a.m., in the
Auditorium, Room L–002.
The subject matter of the Open
Meeting will be:
Item 1: The Commission will consider
whether to adopt Rule 13h–1 and Form
13H under Section 13(h) of the
Securities Exchange Act, to establish a
large trader reporting system to identify
market participants that conduct a
substantial amount of trading activity
and collect information on their trading.
Item 2: The Commission will consider
whether to adopt amendments to rules
and forms under the Securities Act of
1933 and Schedule 14A under the
Securities Exchange Act of 1934, to
replace references to credit ratings with
alternative criteria. These amendments
are in light of Section 939A of the DoddFrank Wall Street Reform and Consumer
Protection Act.
Item 3: The Commission will consider
whether to re-propose rules related to
shelf-eligibility for asset-backed
securities and request additional
comment on an outstanding proposal to
require asset-level information about
pool assets.
Item 4: The Commission will consider
whether to adopt rule and form
amendments under the Securities
Exchange Act of 1934 and the
Investment Company Act of 1940 to
require an institutional investment
manager that is subject to Section 13(f)
of the Securities Exchange Act to report
annually how it voted proxies relating
Notice is hereby given, pursuant to
the provisions of the Government in the
Sunshine Act, Public Law 94–409, that
the Securities and Exchange
Commission will hold an Open Meeting
on July 26, 2011 at 10 a.m., in the
Auditorium, Room L–002, to hear oral
argument in an appeal by International
Power Group, Ltd. (IPWG) from action
by the Depository Trust Company
(DTC).
DTC operates an automated,
centralized system for book-entry
movement of securities positions in the
accounts of its Participants, brokerdealers and other firms, with respect to
trades of Eligible Securities. DTC
provides two levels of services to its
Participants for Eligible Securies: (1) A
full range of depository services
including book-entry delivery and
settlement, and (2) custodial service.
IPWG is a Delaware corporation, the
common stock of which was accepted
by the DTC as an Eligible Security for
all purposes.
On September 30, 2009, DTC issued
an ‘‘Important Notice’’ that stated, ‘‘As
a result of [certain civil litigation], DTC
has suspended all services, except
Custody Services, for [the common
stock of IPWG].’’
IPWG challenges DTC’s issuance of
the Important Notice. Issues likely to be
considered at oral argument include
whether the Commission has
jurisdiction to hear IPWG’s challenge
pursuant to Securities Exchange Act
Section 19(f), and the extent to which
DTC is required to provide fair
procedures to issuers such as IPWG
pursuant to Securities Exchange Act
17A(b)(3)(H).
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17:59 Jul 21, 2011
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44057
At times, changes in Commission
priorities require alterations in the
scheduling of meeting items.
For further information, please
contact the Office of the Secretary at
(202) 551–5400.
Dated: July 19, 2011.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–18680 Filed 7–20–11; 4:15 pm]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–64909; File No. SR–NSX–
2011–07]
Self-Regulatory Organizations;
National Stock Exchange, Inc.; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change To Amend
NSX Rule 11.15 Consistent With the
Implementation of the Adoption of
Rule 15c3–5 Under the Act
July 18, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 14,
2011, National Stock Exchange, Inc.
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which items have
been prepared by the Exchange. 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
National Stock Exchange, Inc.
(‘‘NSX®’’ or ‘‘Exchange’’) is proposing to
amend NSX Rule 11.15 to make certain
changes consistent with the
implementation of the adoption of Rule
15c3–5 under the Act (the ‘‘Market
Access Rule’’).
The text of the proposed rule change
is available on the Exchange’s Web site
at https://www.nsx.com, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
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
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
22JYN1
]]>Agencies
[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Notices]
[Pages 44055-44057]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-18505]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-29726; 812-13910]
BAC Home Loans Servicing, LP, et al.; Notice of Application and
Temporary Order
July 18, 2011.
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: 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 BAC Home Loans Servicing, LP (``HLS'') on
May 31, 2011 by the United States District Court for the Central
District of California (the ``Injunction''), until the Commission takes
final action on an application for a permanent order. Applicants have
requested a permanent order.
Applicants: HLS, BofA Advisors, LLC (``BofA Advisors''), BofA
Distributors, Inc. (``BofA Distributors''), Bank of America Capital
Advisors LLC (``BACA''), KECALP Inc. (``KECALP''), Merrill Lynch
Ventures, LLC (``Ventures'') and Merrill Lynch Global Private Equity
Inc. (``MLGPE'') (collectively, other than HLS, the ``Fund Servicing
Applicants,'' and, together with HLS, the ``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 HLS is an
affiliated person or may become an affiliated person in the future
(together with the Applicants, the ``Covered Persons'').
DATES: Filing Date: The application was filed on May 27, 2011 and
---------------------------------------------------------------------------
amended it on June 1, 2011.
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 August 12, 2011, 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, HLS, 6400 Legacy
Drive, Plano, TX 75024; BofA Advisors, BofA Distributors and BACA, 100
Federal Street, Boston, MA 02110; and KECALP, Ventures and MLGPE, 767
Fifth Avenue, 7th Floor, New York, NY 10153.
FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at (202)
551-6870, or Daniele Marchesani, Branch Chief, at (202) 551-6821
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a temporary order and a
summary of the application. The complete application may be obtained
via the Commission's Web site by searching for the file number, or an
applicant using the Company name box, at https://www.gov/search/search.htm or by calling (202) 551-8090.
Applicants' Representations
1. Each of the Applicants is a direct or indirect wholly-owned
subsidiary of Bank of America Corporation (``BAC''). HLS is an entity
that services mortgage loans and provides mortgage services, including
conducting foreclosures on mortgages, on behalf of holders of
residential mortgages and mortgage loan asset-backed certificates. HLS
is not registered as a broker-dealer under the Securities Exchange Act
of 1934 or as an investment adviser under the Investment Advisers Act
of 1940 (the ``Advisers Act'').
2. BofA Advisors is a registered investment adviser that serves as
investment adviser and subadviser to certain money market funds
registered under the Act. BofA Distributors, a limited purpose broker-
dealer registered with the Commission, serves as principal underwriter
of some of the same money market funds. BACA is a registered investment
adviser that serves as investment adviser to certain closed-end
investment companies also registered under the Act.
3. KECALP, Ventures and MLGPE each serves as investment adviser to
certain employees' securities corporations within the meaning of
section 2(a)(13) of the Act (``ESCs''). Of these three ESC advisers,
only KECALP is registered as an investment adviser under the Advisers
Act.
4. On May 31, 2011, the United States District Court for the
Central District of
[[Page 44056]]
California entered the Injunction against HLS, formerly Countrywide
Home Loans Servicing LP, in a matter brought by The United States
Department of Justice (``DOJ''). The complaint filed by DOJ
(``Complaint'') alleged that, between 2006 and 2009, HLS wrongfully
foreclosed without court orders on approximately 160 properties owned
by servicemembers protected by the Servicemembers Civil Relief Act
(``SCRA''). Additionally, the Complaint alleged that HLS, from 2006
through May 31, 2009, failed to consistently determine the military
status of mortgage loan borrowers in foreclosure. Denying any
wrongdoing as alleged by the United States or otherwise, HLS consented
to the entry of the Injunction against violating the SCRA.
Applicants' Legal Analysis
1. Section 9(a)(2) of the Act, in relevant part, prohibits a person
who has been enjoined from acting as a bank, or from engaging in or
continuing any conduct or practice in connection with such activity,
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 (``UIT'') or registered face-amount certificate company. Section
9(a)(3) of the Act extends the prohibitions of section 9(a)(2) 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 HLS is, or may be considered to
be, under common control with and therefore an affiliated person of
each of the other Applicants. Applicants state that the entry of the
Injunction may result in Applicants being subject to the
disqualification provisions of section 9(a) of the Act because HLS is
permanently enjoined from engaging in or continuing particular conduct
or practice in connection with banking activity.\2\
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\2\ See In the Matter of Bank of America, N.A., The Office of
the Comptroller of the Currency Stipulation & Consent Order No. AA-
EC-11-12 (Apr. 13, 2011) and In the Matter of Bank of America
Corporation, The Board of Governors of the Federal Reserve Consent
Order, No. 11-029-B-HC (Apr. 13, 2011). Applicants state that the
OCC Order deemed certain loan servicing activity as banking
activity, and the loan servicing activity specified in the
Injunction is a subset of the loan servicing activity deemed banking
activity by the OCC Order. Therefore, Applicants believe that HLS is
permanently enjoined from engaging in or continuing particular
conduct or practice in connection with banking activity.
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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) if it is established that these provisions, as applied to
Applicants, are unduly or disproportionately severe or that the
Applicants' conduct 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) of
the Act. On June 1, 2011 the Applicants received a temporary
conditional order from the Commission exempting them from section 9(a)
of the Act with respect to the Injunction until the Commission takes
final action on an application for a permanent order or, if earlier,
July 29, 2011.\3\
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\3\ Investment Company Act Release No. 29688 (June 1, 2011).
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3. Applicants believe they meet the standard 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 exemption from section 9(a).
4. Applicants state that the conduct giving rise to the Injunction
did not involve any of the Applicants acting in the capacity as
investment adviser, sub-adviser, or principal underwriter (as defined
in section 2(a)(29) of the Act) for any registered investment companies
(``RIC'') or ESCs (together, the ``Funds''). Applicants state that to
the best of their knowledge none of the Applicants' current directors,
officers or employees who is involved in providing services as
investment adviser, subadviser or depositor for any Funds or principal
underwriter (as defined in section 2(a)(29) of the Act) for any
registered open-end company, UIT or registered face amount certificate
company (collectively, the ``Fund Servicing Activities'') (or any other
persons in such roles during the time period covered by the Complaint)
participated in the conduct alleged in the Complaint that constitutes
the violations that provide a basis for the Injunction. Applicants also
state that the alleged conduct giving rise to the Injunction did not
involve any Fund for which an Applicant provided Fund Servicing
Activities.
5. Applicants further represent that the inability of Applicants
(except for HLS) to continue providing Fund Servicing Activities would
result in potentially severe financial hardships for both the Funds and
their shareholders. Applicants state that they will distribute written
materials, including an offer to meet in person to discuss the
materials, to the board of directors (the ``Boards'') of each Fund
(excluding the ESCs), including the directors who are not ``interested
persons,'' as defined in section 2(a)(19) of the Act, of such Fund, 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. The Applicants will provide the Funds 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 assert that, if the Applicants were barred from
engaging in Fund Servicing Activities, the effect on their businesses
and employees would be severe. The Applicants state that they have
committed substantial resources to establishing expertise in providing
Fund Servicing Activities.
7. Applicants also state that disqualifying KECALP, Ventures and
MLGPE from continuing to provide investment advisory services to their
ESCs is not in the public interest or in furtherance of the protection
of investors and would frustrate the expectations of eligible employees
who invest in the ESCs that the ESCs would be managed by an affiliate
of their employer.
8. Applicants state that several Applicants and certain of their
affiliates 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 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 Applicants
have
[[Page 44057]]
made the necessary showing to justify granting a temporary exemption.
Accordingly,
It is hereby ordered, pursuant to section 9(c) of the Act, that the
Applicants and the other Covered Persons are granted a temporary
exemption from the provisions of section 9(a), effective forthwith,
solely with respect to the Injunction, subject to the condition in the
application, until the date the Commission takes final action on their
application for a permanent order.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-18505 Filed 7-21-11; 8:45 am]
BILLING CODE 8011-01-P
