Wells Fargo Bank, N.A., et al.; Notice of Application and Temporary Order, 78052-78054 [2011-32169]
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78052
Federal Register / Vol. 76, No. 241 / Thursday, December 15, 2011 / Notices
destroyed when superseded or obsolete
in accordance with NRRS 1, Item 100B.
The Criminal Matter Records are
maintained in Agency files and
destroyed in accordance with Items A
and B of National Archives and Records
Administration Disposition
Authorization N1–255–07–2 after its
approval by the Archivist of the United
States.
The Traffic Management Records are
maintained in Agency files and
destroyed in accordance with Item C of
National Archives and Records
Administration Disposition
Authorization N1–255–07–2 after its
approval by the Archivist of the United
States.
SYSTEM MANAGER(S) AND ADDRESS:
Deputy Assistant Administrator of the
Office of Protective Services, Location 1.
Subsystem Managers: The Chief of
Security/Protective Services at each
subsystem location at locations 1
through 9 and locations 11, 12, and 14.
Locations are as set forth in
Appendix A.
NOTIFICATION PROCEDURE:
Information may be obtained from the
cognizant system or subsystem manager
listed above. Requests must contain the
following identifying data concerning
the requestor: First, middle, and last
name; date of birth; Social Security
Number; period and place of
employment with NASA, if applicable.
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RECORD ACCESS PROCEDURES:
Personnel Security Records compiled
solely for the purpose of determining
suitability, eligibility, or qualifications
for Federal civilian employment,
Federal contracts, or access to classified
information have been exempted by the
Administrator under 5 U.S.C. 552a(k)(5)
from the access provisions of the Act.
Personal Identity Records: Requests
from individuals should be addressed to
the same address as stated in the
Notification section above.
Emergency Data Records: Requests
from individuals should be addressed to
the same address as stated in the
Notification section above.
Criminal Matter Records compiled for
civil or criminal law enforcement
purposes have been exempted by the
Administrator under 5 U.S.C. 552a(k)(2)
from the access provision of the Act.
Traffic Management Records: Requests
from individuals should be addressed to
the same address as stated in the
Notification section above.
CONTESTING RECORD PROCEDURES:
For Personnel Security Records and
Criminal Matters Records, see Record
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Access Procedures, above. For Personal
Identity Records, Emergency Data
Records, and Traffic Management
Records, the NASA rules for access to
records and for contesting contents and
appealing initial determinations by the
individual concerned appear at 14 CFR
part 1212.
RECORD SOURCE CATEGORIES:
Information is obtained from a variety
of sources including the employee,
contractor, or applicant via use of the
Standard Form (SF) SF–85, SF–85P, or
SF–86 and personal interviews;
employers’ and former employers’
records; FBI criminal history records
and other databases; financial
institutions and credit reports; medical
records and health care providers;
educational institutions; interviews of
witnesses such as neighbors, friends,
coworkers, business associates, teachers,
landlords, or family members; tax
records; and other public records.
Security violation information is
obtained from a variety of sources, such
as guard reports, security inspections,
witnesses, supervisor’s reports, audit
reports.
EXEMPTIONS CLAIMED FOR THE SYSTEM:
Personnel Security Records compiled
solely for the purpose of determining
suitability, eligibility, or qualifications
for Federal civilian employment,
Federal contracts, or access to classified
information, but only to the extent that
the disclosure of such material would
reveal the identity of a confidential
source, are exempt from the following
sections of the Privacy Act of 1974, 5
U.S.C. 552a(c)(3) relating to access to
the disclosure accounting; (d) relating to
access to the records; (e)(1) relating to
the type of information maintained in
the records; (e)(4)(G), (H) and (I) relating
to publishing in the annual system
notice information as to agency
procedures for access and correction
and information as to the categories of
sources of records; and (f) relating to
developing agency rules for gaining
access and making corrections. The
determination to exempt the Personnel
Security Records portion of the Security
Records System has been made by the
Administrator of NASA in accordance
with 5 U.S.C. 552a(k)(5) and Subpart 5
of the NASA regulations appearing in 14
CFR part 1212.
Criminal Matter Records to the extent
they constitute investigatory material
compiled for law enforcement purposes
are exempt from the following sections
of the Privacy Act of 1974, 5 U.S.C.
552a(c)(3) relating to access to the
disclosure accounting; (d) relating to
access to the records; (e)(1) relating to
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the type of information maintained in
the records; (e)(4)(G), (H) and (I) relating
to publishing in the annual system
notice information as to agency
procedures for access and correction
and information as to the categories of
sources of records; and (f) relating to
developing agency rules for gaining
access and making corrections. The
determination to exempt the Criminal
Matter Records portion of the Security
Records System has been made by the
Administrator of NASA in accordance
with 5 U.S.C. 552a(k)(2) and subpart 5
of the NASA regulations appearing in 14
CFR part 1212.
Records subject to the provisions of 5
U.S.C. 552(b)(1) required by Executive
Order to be kept secret in the interest of
national defense or foreign policy are
exempt from the following sections of
the Privacy Act of 1974, 5 U.S.C.
552a:(c)(3) relating to access to the
disclosure accounting; (d) relating to the
access to the records; (e)(1) relating to
the type of information maintained in
the records; (e)(4)(G), (H) and (I) relating
to publishing in the annual system
notice information as to agency
procedures for access and correction
and information as to the categories of
sources of records; and (f) relating to
developing agency rules for gaining
access and making corrections. The
determination to exempt this portion of
the Security Records System has been
made by the Administrator of NASA in
accordance with 5 U.S.C. 552a(k)(1) and
subpart 5 of the NASA regulations
appearing in 14 CFR part 1212.
[FR Doc. 2011–32120 Filed 12–14–11; 8:45 am]
BILLING CODE P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–29881; 812–13987]
Wells Fargo Bank, N.A., et al.; Notice
of Application and Temporary Order
December 9, 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 Wells Fargo Bank, N.A.
(‘‘Wells Fargo Bank’’) on December 9,
2011 by the United States District Court
for the District of New Jersey
(‘‘Injunction’’) until the Commission
SUMMARY:
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Federal Register / Vol. 76, No. 241 / Thursday, December 15, 2011 / Notices
takes final action on an application for
a permanent order. Applicants also have
applied for a permanent order.
Applicants: Wells Fargo Bank, First
International Advisors, LLC (‘‘First
International’’), Metropolitan West
Capital Management, LLC
(‘‘Metropolitan West’’), Golden Capital
Management, LLC (‘‘Golden Capital’’),
Alternative Strategies Brokerage
Services, Inc. (‘‘Alternative Strategies
Brokerage’’), Alternative Strategies
Group, Inc. (‘‘Alternative Strategies’’),
Wells Fargo Funds Management, LLC
(‘‘WF Funds Management’’), Wells
Capital Management Incorporated
(‘‘Wells Capital Management’’),
Peregrine Capital Management, Inc.
(‘‘Peregrine’’), Galliard Capital
Management, Inc. (‘‘Galliard’’), Nelson
Capital Management (‘‘Nelson’’), and
Wells Fargo Funds Distributor, LLC
(‘‘WF Funds Distributor’’) (each an
‘‘Applicant’’ and collectively, the
‘‘Applicants’’).1
Filing Date: The application was filed
on December 8, 2011 and two
amendments were filed on December 9,
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 January 3, 2012, 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: Wells Fargo Bank, 101
North Phillips Avenue, Sioux Falls, SD
57104; First International, 30 Fenchurch
Street, London, England, UK EC3M
3BD; Metropolitan West, 610 Newport
Center Drive, Suite 1000, Newport
Beach, CA 92660; Golden Capital, 5
Resource Square, Suite 400, 10715
David Taylor Drive, Charlotte, NC
28262; Alternative Strategies Brokerage,
401 South Tryon Street, Charlotte, NC
1 Applicants request that any relief granted
pursuant to the application also apply to any
existing company of which Wells Fargo Bank is or
may become an affiliated person within the
meaning of section 2(a)(3) of the Act (together with
the Applicants, the ‘‘Covered Persons’’).
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28288; Alternative Strategies, 401 South
Tryon Street, TH3, Charlotte, NC 28288;
WF Funds Management and WF Funds
Distributor, 525 Market Street, 12th
Floor, San Francisco, CA 94105; Wells
Capital Management, 525 Market Street,
10th Floor, San Francisco, CA 94105;
Peregrine, 800 LaSalle Avenue, Suite
1850, Minneapolis, MN 55402; Galliard,
800 LaSalle Avenue, Suite 1100,
Minneapolis, MN 55402; and Nelson,
1860 Embarcadero Road, #140, Palo
Alto, CA 94303.
FOR FURTHER INFORMATION CONTACT: Jean
E. Minarick, Senior Counsel, at (202)
551–6811 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
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.sec.gov/search/
search.htm, or by calling (202) 551–
8090.
Applicants’ Representations
1. Wells Fargo Bank is a national
banking association. On March 20, 2010,
Wachovia Bank, N.A. (‘‘Wachovia
Bank’’) merged with and into Wells
Fargo Bank. Wells Fargo Bank is
registered as an investment adviser
under the Investment Advisers Act of
1940, as amended (the ‘‘Advisers Act’’)
and serves as an investment adviser to
a Fund (as defined below). No existing
company of which Wells Fargo Bank is
an affiliated person (other than the
Applicants) currently serves as
investment adviser, sub-adviser, or
depositor of any registered investment
company or business development
company (‘‘BDC’’) or principal
underwriter for any registered open-end
investment company, registered unit
investment trust (‘‘UIT’’), or registered
face amount certificate company, or
investment adviser of any employees’
securities company, as defined in
section 2(a)(13) of the Act (‘‘ESC’’)
(‘‘Fund Service Activities’’). ‘‘Funds’’
refers to the registered investment
companies, BDCs or ESCs for which a
Covered Person provides Fund Service
Activities. Wells Fargo & Company
(‘‘Wells Fargo’’) directly owns 37.51%
of Wells Fargo Bank and indirectly
owns the remainder. Through its direct
and indirect subsidiaries, Wells Fargo, a
registered financial holding company
and bank holding company under the
Bank Holding Company Act of 1956, as
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Fmt 4703
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78053
amended, offers banking, brokerage,
advisory and other financial services to
institutional and individual customers
worldwide. Wells Fargo also is the
ultimate parent of the other Applicants,
who, as direct or indirect subsidiaries of
the same ultimate parent, are under
common control with Wells Fargo Bank.
2. First International, Metropolitan
West, Golden Capital, Alternative
Strategies, WF Funds Management,
Wells Capital Management, Peregrine,
Galliard and Nelson are registered as
investment advisers under the Advisers
Act and serve as investment advisers or
sub-advisers to various Funds.
Alternative Strategies Brokerage and WF
Funds Distributor are registered as
broker-dealers under the Securities
Exchange Act of 1934, as amended and
each serves as principal underwriter to
various Funds.
3. On December 9, 2011, the United
States District Court for the District of
New Jersey entered a judgment, which
included the Injunction, against Wells
Fargo Bank (‘‘Judgment’’) in a matter
brought by the Commission.2 The
Commission alleged in the complaint
(‘‘Complaint’’) that from at least 1997
through at least 2005, Wachovia Bank
engaged in fraudulent practices and
made misrepresentations and omissions
in connection with bidding on and sale
of municipal reinvestment instruments.
The Complaint alleged that these
fraudulent practices,
misrepresentations, and omissions
affected the prices of certain
reinvestment instruments, deprived
certain municipalities of a presumption
that their reinvestment instruments
were purchased at fair market value,
and/or jeopardized the tax-exempt
status of certain securities. Based on the
alleged misconduct described above, the
Complaint alleged that Wachovia Bank
violated section 17(a) of the Securities
Act of 1933. Without admitting or
denying any of the allegations in the
Complaint (other than those relating to
the jurisdiction of the District Court
over it and the subject matter, solely for
purposes of this action), Wells Fargo
Bank consented to the entry of the
Injunction and other relief, including
disgorgement and civil monetary
penalties.
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
2 U.S. Securities and Exchange Commission v.
Wells Fargo Bank, N.A., Case No. 2:11–cv–07135–
WJM–MF (D.N.J. Dec. 9, 2011).
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78054
Federal Register / Vol. 76, No. 241 / Thursday, December 15, 2011 / Notices
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
BDC or a principal underwriter for any
registered open-end investment
company, registered UIT, or registered
face-amount certificate company or as
investment adviser of an ESC. 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 Wells Fargo Bank
is an affiliated person of each of the
other Applicants within the meaning of
section 2(a)(3) of the Act. Applicants
state that, as a result of the Injunction,
they would be subject to the
prohibitions of section 9(a) of the Act.
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 the
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 them and other
Covered Persons from the
disqualification provisions of section
9(a).
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 the 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 alleged
conduct giving rise to the Injunction did
not involve any of the Applicants
engaging in Fund Service Activities.
Applicants also state (i) None of the
current or former directors, officers, or
employees of the Applicants (other than
Wells Fargo Bank) had any knowledge
of, or had any involvement in, the
conduct alleged in the Complaint to
have constituted the violations that
provided a basis for the Injunction; (ii)
the personnel at Wells Fargo Bank who
were involved in the conduct that
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constituted the violations that provided
a basis for the Injunction have had no,
and will not have any future,
involvement in providing Fund Service
Activities to the Funds on behalf of the
Applicants or other Covered Persons;
and (iii) because the personnel of the
Applicants (other than Wells Fargo
Bank) did not have any involvement in
the alleged misconduct, shareholders of
Funds that received Fund Service
Activities from the Applicants were not
affected any differently than if those
Funds had received services from any
other non-affiliated investment adviser,
depositor or principal underwriter.
5. Applicants state that the inability of
the Applicants to engage in Fund
Service Activities would result in
potentially severe financial hardships
for the Funds they serve and the Funds’
shareholders. 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 such
Funds, and their independent legal
counsel as defined in rule 0–1(a)(6)
under the Act, if any, describing the
circumstances that led to the Injunction,
any impact on the Funds, and the
application. Applicants state that they
will provide the Boards with the
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, BDCs and ESCs,
the effect on their businesses and
employees would be severe. Applicants
state that they have committed
substantial resources to establish 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 more than
1600 employees that are involved in
those activities.
7. Applicants state that Applicants
and certain other affiliated persons of
the Applicants have previously received
orders under section 9(c) of the Act, as
the result of conduct that triggered
section 9(a), 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:
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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 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
December 9, 2011, until the Commission
takes final action on their application
for a permanent order.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–32169 Filed 12–14–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
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 a Closed Meeting
on Monday, December 19, 2011 at 2
p.m.
Commissioners, Counsel to the
Commissioners, the Secretary to the
Commission, and recording secretaries
will attend the Closed Meeting. Certain
staff members who have an interest in
the matters also may be present.
The General Counsel of the
Commission, or his designee, has
certified that, in his opinion, one or
more of the exemptions set forth in 5
U.S.C. 552b(c)(3), (5), (7), 9(B) and (10)
and 17 CFR 200.402(a)(3), (5), (7), 9(ii)
and (10), permit consideration of the
scheduled matters at the Closed
Meeting.
Commissioner Paredes, as duty
officer, voted to consider the items
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]]>Agencies
[Federal Register Volume 76, Number 241 (Thursday, December 15, 2011)]
[Notices]
[Pages 78052-78054]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-32169]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-29881; 812-13987]
Wells Fargo Bank, N.A., et al.; Notice of Application and
Temporary Order
December 9, 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 Wells Fargo Bank, N.A. (``Wells Fargo
Bank'') on December 9, 2011 by the United States District Court for the
District of New Jersey (``Injunction'') until the Commission
[[Page 78053]]
takes final action on an application for a permanent order. Applicants
also have applied for a permanent order. Applicants: Wells Fargo Bank,
First International Advisors, LLC (``First International''),
Metropolitan West Capital Management, LLC (``Metropolitan West''),
Golden Capital Management, LLC (``Golden Capital''), Alternative
Strategies Brokerage Services, Inc. (``Alternative Strategies
Brokerage''), Alternative Strategies Group, Inc. (``Alternative
Strategies''), Wells Fargo Funds Management, LLC (``WF Funds
Management''), Wells Capital Management Incorporated (``Wells Capital
Management''), Peregrine Capital Management, Inc. (``Peregrine''),
Galliard Capital Management, Inc. (``Galliard''), Nelson Capital
Management (``Nelson''), and Wells Fargo Funds Distributor, LLC (``WF
Funds Distributor'') (each an ``Applicant'' and collectively, the
``Applicants'').\1\
---------------------------------------------------------------------------
\1\ Applicants request that any relief granted pursuant to the
application also apply to any existing company of which Wells Fargo
Bank is or may become an affiliated person within the meaning of
section 2(a)(3) of the Act (together with the Applicants, the
``Covered Persons'').
---------------------------------------------------------------------------
Filing Date: The application was filed on December 8, 2011 and two
amendments were filed on December 9, 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 January 3, 2012, 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: Wells Fargo Bank,
101 North Phillips Avenue, Sioux Falls, SD 57104; First International,
30 Fenchurch Street, London, England, UK EC3M 3BD; Metropolitan West,
610 Newport Center Drive, Suite 1000, Newport Beach, CA 92660; Golden
Capital, 5 Resource Square, Suite 400, 10715 David Taylor Drive,
Charlotte, NC 28262; Alternative Strategies Brokerage, 401 South Tryon
Street, Charlotte, NC 28288; Alternative Strategies, 401 South Tryon
Street, TH3, Charlotte, NC 28288; WF Funds Management and WF Funds
Distributor, 525 Market Street, 12th Floor, San Francisco, CA 94105;
Wells Capital Management, 525 Market Street, 10th Floor, San Francisco,
CA 94105; Peregrine, 800 LaSalle Avenue, Suite 1850, Minneapolis, MN
55402; Galliard, 800 LaSalle Avenue, Suite 1100, Minneapolis, MN 55402;
and Nelson, 1860 Embarcadero Road, 140, Palo Alto, CA 94303.
FOR FURTHER INFORMATION CONTACT: Jean E. Minarick, Senior Counsel, at
(202) 551-6811 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
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.sec.gov/search/search.htm, or by calling (202) 551-8090.
Applicants' Representations
1. Wells Fargo Bank is a national banking association. On March 20,
2010, Wachovia Bank, N.A. (``Wachovia Bank'') merged with and into
Wells Fargo Bank. Wells Fargo Bank is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended (the
``Advisers Act'') and serves as an investment adviser to a Fund (as
defined below). No existing company of which Wells Fargo Bank is an
affiliated person (other than the Applicants) currently serves as
investment adviser, sub-adviser, or depositor of any registered
investment company or business development company (``BDC'') or
principal underwriter for any registered open-end investment company,
registered unit investment trust (``UIT''), or registered face amount
certificate company, or investment adviser of any employees' securities
company, as defined in section 2(a)(13) of the Act (``ESC'') (``Fund
Service Activities''). ``Funds'' refers to the registered investment
companies, BDCs or ESCs for which a Covered Person provides Fund
Service Activities. Wells Fargo & Company (``Wells Fargo'') directly
owns 37.51% of Wells Fargo Bank and indirectly owns the remainder.
Through its direct and indirect subsidiaries, Wells Fargo, a registered
financial holding company and bank holding company under the Bank
Holding Company Act of 1956, as amended, offers banking, brokerage,
advisory and other financial services to institutional and individual
customers worldwide. Wells Fargo also is the ultimate parent of the
other Applicants, who, as direct or indirect subsidiaries of the same
ultimate parent, are under common control with Wells Fargo Bank.
2. First International, Metropolitan West, Golden Capital,
Alternative Strategies, WF Funds Management, Wells Capital Management,
Peregrine, Galliard and Nelson are registered as investment advisers
under the Advisers Act and serve as investment advisers or sub-advisers
to various Funds. Alternative Strategies Brokerage and WF Funds
Distributor are registered as broker-dealers under the Securities
Exchange Act of 1934, as amended and each serves as principal
underwriter to various Funds.
3. On December 9, 2011, the United States District Court for the
District of New Jersey entered a judgment, which included the
Injunction, against Wells Fargo Bank (``Judgment'') in a matter brought
by the Commission.\2\ The Commission alleged in the complaint
(``Complaint'') that from at least 1997 through at least 2005, Wachovia
Bank engaged in fraudulent practices and made misrepresentations and
omissions in connection with bidding on and sale of municipal
reinvestment instruments. The Complaint alleged that these fraudulent
practices, misrepresentations, and omissions affected the prices of
certain reinvestment instruments, deprived certain municipalities of a
presumption that their reinvestment instruments were purchased at fair
market value, and/or jeopardized the tax-exempt status of certain
securities. Based on the alleged misconduct described above, the
Complaint alleged that Wachovia Bank violated section 17(a) of the
Securities Act of 1933. Without admitting or denying any of the
allegations in the Complaint (other than those relating to the
jurisdiction of the District Court over it and the subject matter,
solely for purposes of this action), Wells Fargo Bank consented to the
entry of the Injunction and other relief, including disgorgement and
civil monetary penalties.
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\2\ U.S. Securities and Exchange Commission v. Wells Fargo Bank,
N.A., Case No. 2:11-cv-07135-WJM-MF (D.N.J. Dec. 9, 2011).
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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
[[Page 78054]]
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 BDC or a principal
underwriter for any registered open-end investment company, registered
UIT, or registered face-amount certificate company or as investment
adviser of an ESC. 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
Wells Fargo Bank is an affiliated person of each of the other
Applicants within the meaning of section 2(a)(3) of the Act. Applicants
state that, as a result of the Injunction, they would be subject to the
prohibitions of section 9(a) of the Act.
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 the 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 them and other
Covered Persons from the disqualification provisions of section 9(a).
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 the 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 alleged conduct giving rise to the
Injunction did not involve any of the Applicants engaging in Fund
Service Activities. Applicants also state (i) None of the current or
former directors, officers, or employees of the Applicants (other than
Wells Fargo Bank) had any knowledge of, or had any involvement in, the
conduct alleged in the Complaint to have constituted the violations
that provided a basis for the Injunction; (ii) the personnel at Wells
Fargo Bank who were involved in the conduct that constituted the
violations that provided a basis for the Injunction have had no, and
will not have any future, involvement in providing Fund Service
Activities to the Funds on behalf of the Applicants or other Covered
Persons; and (iii) because the personnel of the Applicants (other than
Wells Fargo Bank) did not have any involvement in the alleged
misconduct, shareholders of Funds that received Fund Service Activities
from the Applicants were not affected any differently than if those
Funds had received services from any other non-affiliated investment
adviser, depositor or principal underwriter.
5. Applicants state that the inability of the Applicants to engage
in Fund Service Activities would result in potentially severe financial
hardships for the Funds they serve and the Funds' shareholders.
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 such Funds, and their independent legal counsel as defined in
rule 0-1(a)(6) under the Act, if any, describing the circumstances that
led to the Injunction, any impact on the Funds, and the application.
Applicants state that they will provide the Boards with the 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, BDCs and
ESCs, the effect on their businesses and employees would be severe.
Applicants state that they have committed substantial resources to
establish 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 more than 1600 employees that are involved in
those activities.
7. Applicants state that Applicants and certain other affiliated
persons of the Applicants have previously received orders under section
9(c) of the Act, as the result of conduct that triggered section 9(a),
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 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
December 9, 2011, until the Commission takes final action on their
application for a permanent order.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-32169 Filed 12-14-11; 8:45 am]
BILLING CODE 8011-01-P
