Van Eck VIP Trust, et al.; Notice of Application, 29394-29396 [2012-11930]
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29394
Federal Register / Vol. 77, No. 96 / Thursday, May 17, 2012 / Notices
SECURITIES AND EXCHANGE
COMMISSION
Submission for OMB Review;
Comment Request
Upon written request, copies available
from: Securities and Exchange
Commission, Office of Investor
Education and Advocacy,
Washington, DC 20549–0213.
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Extension:
Rule 15g–5; OMB Control No. 3235–0394;
SEC File No. 270–348.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission
(Commission) has submitted to the
Office of Management and Budget a
request for approval of extension of the
previously approved collection of
information provided for in the
following rule: Rule 15g–5—Disclosure
of compensation of associated persons
in connection with penny stock
transactions (17 CRF 240.15g–5) under
the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.).
Rule 15g–5 requires brokers and
dealers to disclose to customers the
amount of compensation to be received
by their sales agents in connection with
penny stock transactions. The purpose
of the rule is to increase the level of
disclosure to investors concerning
penny stocks generally and specific
penny stock transactions.
The Commission estimates that
approximately 209 broker-dealers will
spend an average of 87 hours annually
to comply with the rule. Thus, the total
compliance burden is approximately
18,183 burden-hours per year.
Rule 15g–5 contains record retention
requirements. Compliance with the rule
is mandatory.
The Commission may not conduct or
sponsor collection of information unless
it displays a currently valid control
number. No person shall be subject to
any penalty for failing to comply with
a collection of information subject to the
PRA that does not display a valid Office
of Management and Budget (OMB)
control number.
Background documentation for this
information collection may be viewed at
the following Web site,
www.reginfo.gov. Comments should be
directed to: (i) Desk Officer for the
Securities and Exchange Commission,
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Room 10102, New Executive
Office Building, Washington, DC 20503
or by sending an email to:
Shagufta_Ahmed@omb.eop.gov; and (ii)
Thomas Bayer, Director/Chief
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Information Officer, Securities and
Exchange Commission, c/o Remi PavlikSimon, 6432 General Green Way,
Alexandria, VA 22312 or send an email
to PRA_Mailbox@sec.gov. Comments
must be submitted within 30 days of
this notice.
Dated: May 11, 2012.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–11929 Filed 5–16–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30063; 812–13846]
Van Eck VIP Trust, et al.; Notice of
Application
May 10, 2012.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application to
amend a prior order under section
12(d)(1)(J) of the Investment Company
Act of 1940 (‘‘Act’’) for an exemption
from sections 12(d)(1)(A) and (C) of the
Act.
AGENCY:
Van Eck VIP Trust (f/k/a
Van Eck Worldwide Insurance Trust)
(‘‘VIP’’), Van Eck Funds, Market Vectors
ETF Trust (each, a ‘‘Trust’’ and
collectively, the ‘‘Trusts’’), and Van Eck
Associates Corporation (the ‘‘Adviser’’).
SUMMARY OF THE APPLICATION:
Applicants previously obtained an order
(‘‘Prior Order’’) permitting certain
registered open-end management
investment companies to acquire shares
of other registered open-end
management investment companies and
unit investment trusts that are within
and outside the same group of
investment companies in excess of the
limits imposed by sections 12(d)(1)(A)
and 12(d)(1)(B) of the Act.1 Applicants
request an order (‘‘Order’’) that would
amend the Prior Order by also
permitting such registered open-end
management investment companies to
acquire shares of registered closed-end
investment companies and business
development companies as defined by
section 2(a)(48) of the Act (‘‘business
development companies,’’ and,
collectively with registered closed-end
APPLICANTS:
1 In the Matter of Van Eck Worldwide Insurance
Trust, et al., Investment Company Act Release Nos.
27820 (May 9, 2007) (notice) and 27849 (June 1,
2007) (order). Van Eck Funds, Inc. was a party to
the application for the Prior Order but is not among
the applicants for the Application (as defined
below) because Van Eck Funds, Inc. was
deregistered on June 25, 2008 (under the name Van
Eck Funds II, Inc.).
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investment companies, ‘‘Closed-End
Funds’’) that are within and outside the
same group of investment companies in
excess of the limits imposed by sections
12(d)(1)(A) and 12(d)(1)(C) of the Act.
The application was filed
on November 16, 2010, and amended on
May 10, 2011, November 18, 2011,
March 15, 2012, and May 7, 2012.
FILING DATES:
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 June 4, 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.
HEARING OR NOTIFICATION OF HEARING:
Elizabeth M. Murphy,
Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE.,
Washington, DC 20549–1090;
Applicants, 335 Madison Avenue 19th
Floor, New York, New York 10017.
ADDRESSES:
Jill
Ehrlich, Senior Counsel, at (202) 551–
6819, or David P. Bartels, Branch Chief,
at (202) 551–6821 (Division of
Investment Management, Office of
Investment Company Regulation).
FOR FURTHER INFORMATION CONTACT:
The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or for an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
SUPPLEMENTARY INFORMATION:
Applicants’ Representations
1. Each Trust is registered under the
Act as an open-end management
investment company. The shares of each
series of VIP currently are offered and
sold through registered separate
accounts of insurance companies that
are not affiliates of the Adviser
(‘‘Registered Separate Accounts’’) and
unregistered separate accounts of
insurance companies that are not
affiliates of the Adviser (‘‘Unregistered
Separate Accounts’’ and, together with
the Registered Separate Accounts, the
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Federal Register / Vol. 77, No. 96 / Thursday, May 17, 2012 / Notices
‘‘Separate Accounts’’).2 The Adviser is
registered with the Commission as an
investment adviser under the
Investment Advisers Act of 1940 and is
the investment adviser for each of the
Funds (as defined below).
2. The Prior Order permits certain
series of the Trusts (‘‘Funds’’) to operate
as funds of funds (‘‘Funds of Funds’’)
that will invest in other Funds that are
part of the same ‘‘group of investment
companies’’ (as defined in section
12(d)(1)(G) of the Act) as the Fund of
Funds and also in other registered openend management investment companies
and unit investment trusts that are not
part of the same group of investment
companies (as defined in section
12(d)(1)(G) of the Act) as the Fund of
Funds.3 Applicants request an Order
under section 12(d)(1)(J) that would
amend the Prior Order by also
permitting the Funds of Funds to invest
in excess of the limits imposed by
sections 12(d)(1)(A) and 12(d)(1)(C) of
the Act in securities issued by ClosedEnd Funds that may or may not be part
of the same group of investment
companies 4 as the Fund of Funds.5
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Applicants’ Legal Analysis
1. Section 12(d)(1)(A) of the Act
prohibits a registered investment
company from acquiring shares of an
investment company if the securities
represent more than 3% of the total
outstanding voting stock of the acquired
company, more than 5% of the total
2 Capitalized terms not otherwise defined in this
notice have the same meaning ascribed to them in
the application for the Order (‘‘Application’’). To
ensure that the Closed-End Funds are covered by
the terms and conditions of the Prior Order, as
amended by the Application, applicants have
proposed modifying the terms ‘‘Affiliated
Underlying Funds,’’ ‘‘Unaffiliated Underlying
Funds’’ and ‘‘Unaffiliated Funds’’ to include
relevant Closed-End Funds.
3 Each Fund of Funds will comply with the terms
and conditions of the Prior Order, as amended by
the Application. All entities that currently intend
to rely on the requested Order have been named as
applicants and any other entity that relies on the
Order in the future will comply with the terms and
conditions of the Application. Applicants request
that the relief also apply to any other existing or
future registered open-end management investment
company that is part of the same group of
investment companies, as defined in section
12(d)(1)(G) of the Act, as the Funds.
4 For purposes of the Application, the term
‘‘group of investment companies’’ means any two
or more registered investment companies, including
closed-end investment companies, that hold
themselves out to investors as related companies for
purposes of investment and investor services.
5 With respect to investments in business
development companies, applicants only seek an
exemption from section 12(d)(1)(A) of the Act, not
section 12(d)(1)(C). Applicants state that, for
purposes of the Application, investments in
business development companies do not present
any particular considerations or concerns that may
be different from those presented by investments in
registered closed-end investment companies.
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assets of the acquiring company, or,
together with the securities of any other
investment companies, more than 10%
of the value of the total assets of the
acquiring company. Section 12(d)(1)(C)
prohibits an investment company from
acquiring any security issued by a
registered closed-end investment
company if such acquisition would
result in the acquiring company, any
other investment companies having the
same investment adviser, and
companies controlled by such
investment companies, collectively,
owning more than 10% of the
outstanding voting stock of the
registered closed-end investment
company.
2. Section 12(d)(1)(J) of the Act
provides that the Commission may
exempt any person, security, or
transaction, or any class or classes of
persons, securities or transactions, from
any provision of section 12(d)(1) if the
exemption is consistent with the public
interest and the protection of investors.
3. Applicants state that the terms and
conditions of the Prior Order would
largely address the concerns underlying
section 12(d)(1) with respect to the
acquisition by a Fund of Funds of shares
of Closed-End Funds, which include
concerns about undue influence by a
fund of funds over underlying funds,
excessive layering of fees, and overly
complex fund structures. For example,
applicants state that, pursuant to
condition 8 of the Prior Order, as
amended, prior to an investment in
shares of a Closed-End Fund in excess
of the limit in section 12(d)(l)(A)(i), the
Fund of Funds and the Closed-End
Fund will execute a Participation
Agreement. Applicants also state that an
Unaffiliated Fund (including a ClosedEnd Fund) would retain its right to
reject any initial investment by a Fund
of Funds in excess of the limits in
section 12(d)(1)(A)(i) of the Act by
declining to execute the Participation
Agreement with the Fund of Funds. In
addition, applicants state that, subject
solely to the giving of notice to the Fund
of Funds and the passage of a reasonable
notice period, an Unaffiliated Fund
(including a Closed-End Fund) could
terminate a Participation Agreement
with the Fund of Funds.
4. Furthermore, applicants believe
that a Fund of Fund’s investments in
Closed-End Funds raise less potential
for a fund to exercise undue influence
over the management and operation of
an Underlying Fund through the threat
of large scale redemptions. Applicants
state that this concern is not applicable
to a Fund of Funds’ investments in
Closed-End Funds because Closed-End
Funds do not issue redeemable
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29395
securities. Rather, applicants state that
sales will only be effected through
transactions in the secondary market.6
Applicants state that, because these
sales would not require the Closed-End
Fund to alter its investments or deplete
its assets, a Fund of Funds should not
be able to influence the management or
operation of a Closed-End Fund through
threats of sales of shares.
5. However, applicants state that there
may be a greater opportunity for a Fund
of Funds to exercise influence over the
management and operations of a ClosedEnd Fund through voting power than is
the case with respect to open-end funds.
To address this concern, applicants
submit that, with respect to a Fund of
Funds’ investment in an Unaffiliated
Underlying Fund that is a Closed-End
Fund, (i) each member of the Group or
the Subadviser Group that is an
investment company or an issuer that
would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act
will vote its shares of the Closed-End
Fund in the manner prescribed by
section 12(d)(1)(E) of the Act and (ii)
each other member of the Group or the
Subadviser Group will vote its shares of
the Closed-End Fund in the same
proportion as the vote of all other
holders of the same type of such ClosedEnd Fund’s shares (except that any
member of the Group or Subadviser
Group that is a Separate Account will
instead be subject to the voting
procedures described in Condition 1
below). Applicants state that this would
preclude the Group and Subadviser
Group from influencing the
management or operation of a ClosedEnd Fund, including the outcome of a
shareholder proposal, through voting by
a Fund of Funds of shares.
6. Accordingly, applicants believe
that the requested exemption is
consistent with the public interest and
the protection of investors.
Applicants’ Conditions
Applicants agree that the Order
granting the requested relief would be
subject to the same conditions as those
imposed by the Prior Order, except for
condition 1 to the Prior Order, which
would be revised as follows:
The members of the Group will not
control (individually or in the aggregate)
an Unaffiliated Underlying Fund within
6 Applicants note that a Fund of Funds would
purchase and sell shares of a Closed-End Fund
through secondary market transactions at market
prices rather than through principal transactions
with the Closed-End Fund at net asset value.
Applicants are not requesting section 17(a) relief to
acquire shares of Closed-End Funds and will not
rely on the section 17(a) relief granted in the Prior
Order for such purpose.
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29396
Federal Register / Vol. 77, No. 96 / Thursday, May 17, 2012 / Notices
the meaning of section 2(a)(9) of the Act.
The members of a Subadviser Group
will not control (individually or in the
aggregate) an Unaffiliated Underlying
Fund within the meaning of section
2(a)(9) of the Act. With respect to a
Fund of Funds’ investment in an
Unaffiliated Underlying Fund that is a
Closed-End Fund (i) each member of the
Group or the Subadviser Group that is
an investment company or an issuer that
would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act
will vote its shares of the Closed-End
Fund in the manner prescribed by
section 12(d)(1)(E) of the Act and (ii)
each other member of the Group or the
Subadviser Group will vote its shares of
the Closed-End Fund in the same
proportion as the vote of all other
holders of the same type of such ClosedEnd Fund’s shares (except that any
member of the Group or Subadviser
Group that is a Separate Account will
instead be subject to the voting
procedures described below). If, as a
result of a decrease in the outstanding
voting securities of any other
Unaffiliated Underlying Fund, the
Group or a Subadviser Group, each in
the aggregate, becomes a holder of more
than 25% of the outstanding voting
securities of such Unaffiliated
Underlying Fund, then the Group or the
Subadviser Group (except for any
member of the Group or Subadviser
Group that is a Separate Account) will
vote its shares of the Unaffiliated
Underlying Fund in the same
proportion as the vote of all other
holders of the Unaffiliated Underlying
Fund’s shares. This condition will not
apply to a Subadviser Group with
respect to an Unaffiliated Underlying
Fund for which the Fund of Funds
Subadviser or a person controlling,
controlled by or under common control
with the Fund of Funds Subadviser acts
as the investment adviser within the
meaning of section 2(a)(20)(A) of the Act
(in the case of an Unaffiliated Fund) or
the sponsor (in the case of an
Unaffiliated Trust).
A Registered Separate Account will
seek voting instructions from its
contract holders and will vote its shares
of an Unaffiliated Underlying Fund in
accordance with the instructions
received and will vote those shares for
which no instructions were received in
the same proportion as the shares for
which instructions were received. An
Unregistered Separate Account will
either (a) vote its shares of the
Unaffiliated Underlying Fund in the
same proportion as the vote of all other
holders of the Unaffiliated Underlying
Fund’s shares or (b) seek voting
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Jkt 226001
instructions from its contract holders
and vote its shares in accordance with
the instructions received and vote those
shares for which no instructions were
received in the same proportion as the
shares for which instructions were
received.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2012–11930 Filed 5–16–12; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–66969; File No. 4–546]
Joint Industry Plan; Notice of Filing
and Immediate Effectiveness of
Amendment to the Options Order
Protection and Locked/Crossed Market
Plan To Add the BOX Options
Exchange LLC as a Participant
May 11, 2012.
Pursuant to Section 11A(a)(3) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 608 thereunder,2
notice is hereby given that on May 4,
2012, BOX Options Exchange LLC
(‘‘BOX Options’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) an
amendment to the Options Order
Protection and Locked/Crossed Market
Plan (‘‘Plan’’).3 The amendment
proposes to add BOX Options as a
Participant 4 to the Plan. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
1 15
U.S.C. 78k–1(a)(3).
CFR 242.608.
3 On July 30, 2009, the Commission approved a
national market system plan relating to Options
Order Protection and Locked/Crossed Markets
proposed by Chicago Board Options Exchange,
Incorporated (‘‘CBOE’’), International Securities
Exchange, LLC (‘‘ISE’’), The NASDAQ Stock Market
LLC (‘‘Nasdaq’’), NASDAQ OMX BX, Inc. (‘‘BOX’’),
NASDAQ OMX PHLX, Inc. (‘‘Phlx’’), NYSE Amex,
LLC (‘‘NYSE Amex’’), and NYSE Arca, Inc. (‘‘NYSE
Arca’’). See Securities Exchange Act Release No.
60405 (July 30, 2009), 74 FR 39362 (August 6,
2009). See also Securities Exchange Act Release
Nos. 61546 (February 19, 2010), 75 FR 8762
(February 25, 2010) (adding BATS Exchange, Inc.
(‘‘BATS’’) as a Participant); 63119 (October 15,
2010), 75 FR 65536 (October 25, 2010) (adding C2
Options Exchange, Incorporated (‘‘C2’’) as a
Participant).
4 The term ‘‘Participant’’ is defined as an Eligible
Exchange whose participation in the Plan has
become effective pursuant to Section 3(c) of the
Plan.
2 17
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Frm 00084
Fmt 4703
Sfmt 4703
I. Description and Purpose of the
Amendment
The current Participants in the
Linkage Plan are C2, CBOE, BATS, ISE,
Nasdaq, BOX, Phlx, NYSE Amex, and
NYSE Arca. The proposed amendment
to the Plan would add BOX Options as
a Participant in the Plan. BOX Options
has submitted a signed copy of the Plan
to the Commission in accordance with
the procedures set forth in the Plan
regarding new Participants. Section 3(c)
of the Plan provides for the entry of new
Participants to the Plan. Specifically an
Eligible Exchange 5 may become a
Participant in the Plan by: (i) Executing
a copy of the Plan, as then in effect; (ii)
providing each current Participant with
a copy of such executed Plan; (iii)
effecting an amendment to the Plan, as
specified in Sections 3(c) and 4(b) of the
Plan.
Section 4(b) of the Plan puts forth the
process by which an Eligible Exchange
may effect an amendment to the Plan.
Specifically, an Eligible Exchange must:
(a) Execute a copy of the Plan with the
only change being the addition of the
new participant’s name in Section 3(a)
of the Plan; and (b) submit the executed
Plan to the Commission. The Plan then
provides that such an amendment will
be effective when the amendment is
approved by the Commission or
otherwise becomes effective pursuant to
Section 11A of the Act and Rule 608
thereunder.
II. Effectiveness of the Proposed
Linkage Plan Amendment
The foregoing proposed Plan
amendment has become effective
pursuant to Rule 608(b)(3)(iii) of the
Act 6 because it involves solely
technical or ministerial matters. At any
time within sixty days of the filing of
this amendment, the Commission may
summarily abrogate the amendment and
require that it be refiled pursuant to
paragraph (b)(1) of Rule 608,7 if it
appears to the Commission that such
5 Section 2(6) of the Plan defines an ‘‘Eligible
Exchange’’ as a national securities exchange
registered with the Commission pursuant to Section
6(a) of the Act, 15 U.S.C. 78f(a), that: (a) Is a
‘‘Participant Exchange’’ in the Options Clearing
Corporation (‘‘OCC’’) (as defined in OCC By-laws,
Section VII); (b) is a party to the Options Price
Reporting Authority (‘‘OPRA’’) Plan (as defined in
the OPRA Plan, Section 1); and (c) if the national
securities exchange chooses not to become part to
this Plan, is a participant in another plan approved
by the Commission providing for comparable
Trade-Through and Locked and Crossed Market
protection. BOX Options has represented that it has
met the requirements for being considered an
Eligible Exchange. See letter from Lisa J. Fall,
President, BOX Options, to Elizabeth Murphy,
Secretary, Commission, dated May 3, 2012.
6 17 CFR 242.608(b)(3)(iii).
7 17 CFR 242.608(b)(1).
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]]>Agencies
[Federal Register Volume 77, Number 96 (Thursday, May 17, 2012)]
[Notices]
[Pages 29394-29396]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-11930]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30063; 812-13846]
Van Eck VIP Trust, et al.; Notice of Application
May 10, 2012.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application to amend a prior order under section
12(d)(1)(J) of the Investment Company Act of 1940 (``Act'') for an
exemption from sections 12(d)(1)(A) and (C) of the Act.
-----------------------------------------------------------------------
Applicants: Van Eck VIP Trust (f/k/a Van Eck Worldwide Insurance Trust)
(``VIP''), Van Eck Funds, Market Vectors ETF Trust (each, a ``Trust''
and collectively, the ``Trusts''), and Van Eck Associates Corporation
(the ``Adviser'').
Summary of the Application: Applicants previously obtained an order
(``Prior Order'') permitting certain registered open-end management
investment companies to acquire shares of other registered open-end
management investment companies and unit investment trusts that are
within and outside the same group of investment companies in excess of
the limits imposed by sections 12(d)(1)(A) and 12(d)(1)(B) of the
Act.\1\ Applicants request an order (``Order'') that would amend the
Prior Order by also permitting such registered open-end management
investment companies to acquire shares of registered closed-end
investment companies and business development companies as defined by
section 2(a)(48) of the Act (``business development companies,'' and,
collectively with registered closed-end investment companies, ``Closed-
End Funds'') that are within and outside the same group of investment
companies in excess of the limits imposed by sections 12(d)(1)(A) and
12(d)(1)(C) of the Act.
---------------------------------------------------------------------------
\1\ In the Matter of Van Eck Worldwide Insurance Trust, et al.,
Investment Company Act Release Nos. 27820 (May 9, 2007) (notice) and
27849 (June 1, 2007) (order). Van Eck Funds, Inc. was a party to the
application for the Prior Order but is not among the applicants for
the Application (as defined below) because Van Eck Funds, Inc. was
deregistered on June 25, 2008 (under the name Van Eck Funds II,
Inc.).
Filing Dates: The application was filed on November 16, 2010, and
amended on May 10, 2011, November 18, 2011, March 15, 2012, and May 7,
---------------------------------------------------------------------------
2012.
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 June 4, 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: Elizabeth M. Murphy, Secretary, U.S. Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants,
335 Madison Avenue 19th Floor, New York, New York 10017.
FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202)
551-6819, or David P. Bartels, Branch Chief, at (202) 551-6821
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Applicants' Representations
1. Each Trust is registered under the Act as an open-end management
investment company. The shares of each series of VIP currently are
offered and sold through registered separate accounts of insurance
companies that are not affiliates of the Adviser (``Registered Separate
Accounts'') and unregistered separate accounts of insurance companies
that are not affiliates of the Adviser (``Unregistered Separate
Accounts'' and, together with the Registered Separate Accounts, the
[[Page 29395]]
``Separate Accounts'').\2\ The Adviser is registered with the
Commission as an investment adviser under the Investment Advisers Act
of 1940 and is the investment adviser for each of the Funds (as defined
below).
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\2\ Capitalized terms not otherwise defined in this notice have
the same meaning ascribed to them in the application for the Order
(``Application''). To ensure that the Closed-End Funds are covered
by the terms and conditions of the Prior Order, as amended by the
Application, applicants have proposed modifying the terms
``Affiliated Underlying Funds,'' ``Unaffiliated Underlying Funds''
and ``Unaffiliated Funds'' to include relevant Closed-End Funds.
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2. The Prior Order permits certain series of the Trusts (``Funds'')
to operate as funds of funds (``Funds of Funds'') that will invest in
other Funds that are part of the same ``group of investment companies''
(as defined in section 12(d)(1)(G) of the Act) as the Fund of Funds and
also in other registered open-end management investment companies and
unit investment trusts that are not part of the same group of
investment companies (as defined in section 12(d)(1)(G) of the Act) as
the Fund of Funds.\3\ Applicants request an Order under section
12(d)(1)(J) that would amend the Prior Order by also permitting the
Funds of Funds to invest in excess of the limits imposed by sections
12(d)(1)(A) and 12(d)(1)(C) of the Act in securities issued by Closed-
End Funds that may or may not be part of the same group of investment
companies \4\ as the Fund of Funds.\5\
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\3\ Each Fund of Funds will comply with the terms and conditions
of the Prior Order, as amended by the Application. All entities that
currently intend to rely on the requested Order have been named as
applicants and any other entity that relies on the Order in the
future will comply with the terms and conditions of the Application.
Applicants request that the relief also apply to any other existing
or future registered open-end management investment company that is
part of the same group of investment companies, as defined in
section 12(d)(1)(G) of the Act, as the Funds.
\4\ For purposes of the Application, the term ``group of
investment companies'' means any two or more registered investment
companies, including closed-end investment companies, that hold
themselves out to investors as related companies for purposes of
investment and investor services.
\5\ With respect to investments in business development
companies, applicants only seek an exemption from section
12(d)(1)(A) of the Act, not section 12(d)(1)(C). Applicants state
that, for purposes of the Application, investments in business
development companies do not present any particular considerations
or concerns that may be different from those presented by
investments in registered closed-end investment companies.
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Applicants' Legal Analysis
1. Section 12(d)(1)(A) of the Act prohibits a registered investment
company from acquiring shares of an investment company if the
securities represent more than 3% of the total outstanding voting stock
of the acquired company, more than 5% of the total assets of the
acquiring company, or, together with the securities of any other
investment companies, more than 10% of the value of the total assets of
the acquiring company. Section 12(d)(1)(C) prohibits an investment
company from acquiring any security issued by a registered closed-end
investment company if such acquisition would result in the acquiring
company, any other investment companies having the same investment
adviser, and companies controlled by such investment companies,
collectively, owning more than 10% of the outstanding voting stock of
the registered closed-end investment company.
2. Section 12(d)(1)(J) of the Act provides that the Commission may
exempt any person, security, or transaction, or any class or classes of
persons, securities or transactions, from any provision of section
12(d)(1) if the exemption is consistent with the public interest and
the protection of investors.
3. Applicants state that the terms and conditions of the Prior
Order would largely address the concerns underlying section 12(d)(1)
with respect to the acquisition by a Fund of Funds of shares of Closed-
End Funds, which include concerns about undue influence by a fund of
funds over underlying funds, excessive layering of fees, and overly
complex fund structures. For example, applicants state that, pursuant
to condition 8 of the Prior Order, as amended, prior to an investment
in shares of a Closed-End Fund in excess of the limit in section
12(d)(l)(A)(i), the Fund of Funds and the Closed-End Fund will execute
a Participation Agreement. Applicants also state that an Unaffiliated
Fund (including a Closed-End Fund) would retain its right to reject any
initial investment by a Fund of Funds in excess of the limits in
section 12(d)(1)(A)(i) of the Act by declining to execute the
Participation Agreement with the Fund of Funds. In addition, applicants
state that, subject solely to the giving of notice to the Fund of Funds
and the passage of a reasonable notice period, an Unaffiliated Fund
(including a Closed-End Fund) could terminate a Participation Agreement
with the Fund of Funds.
4. Furthermore, applicants believe that a Fund of Fund's
investments in Closed-End Funds raise less potential for a fund to
exercise undue influence over the management and operation of an
Underlying Fund through the threat of large scale redemptions.
Applicants state that this concern is not applicable to a Fund of
Funds' investments in Closed-End Funds because Closed-End Funds do not
issue redeemable securities. Rather, applicants state that sales will
only be effected through transactions in the secondary market.\6\
Applicants state that, because these sales would not require the
Closed-End Fund to alter its investments or deplete its assets, a Fund
of Funds should not be able to influence the management or operation of
a Closed-End Fund through threats of sales of shares.
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\6\ Applicants note that a Fund of Funds would purchase and sell
shares of a Closed-End Fund through secondary market transactions at
market prices rather than through principal transactions with the
Closed-End Fund at net asset value. Applicants are not requesting
section 17(a) relief to acquire shares of Closed-End Funds and will
not rely on the section 17(a) relief granted in the Prior Order for
such purpose.
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5. However, applicants state that there may be a greater
opportunity for a Fund of Funds to exercise influence over the
management and operations of a Closed-End Fund through voting power
than is the case with respect to open-end funds. To address this
concern, applicants submit that, with respect to a Fund of Funds'
investment in an Unaffiliated Underlying Fund that is a Closed-End
Fund, (i) each member of the Group or the Subadviser Group that is an
investment company or an issuer that would be an investment company but
for section 3(c)(1) or 3(c)(7) of the Act will vote its shares of the
Closed-End Fund in the manner prescribed by section 12(d)(1)(E) of the
Act and (ii) each other member of the Group or the Subadviser Group
will vote its shares of the Closed-End Fund in the same proportion as
the vote of all other holders of the same type of such Closed-End
Fund's shares (except that any member of the Group or Subadviser Group
that is a Separate Account will instead be subject to the voting
procedures described in Condition 1 below). Applicants state that this
would preclude the Group and Subadviser Group from influencing the
management or operation of a Closed-End Fund, including the outcome of
a shareholder proposal, through voting by a Fund of Funds of shares.
6. Accordingly, applicants believe that the requested exemption is
consistent with the public interest and the protection of investors.
Applicants' Conditions
Applicants agree that the Order granting the requested relief would
be subject to the same conditions as those imposed by the Prior Order,
except for condition 1 to the Prior Order, which would be revised as
follows:
The members of the Group will not control (individually or in the
aggregate) an Unaffiliated Underlying Fund within
[[Page 29396]]
the meaning of section 2(a)(9) of the Act. The members of a Subadviser
Group will not control (individually or in the aggregate) an
Unaffiliated Underlying Fund within the meaning of section 2(a)(9) of
the Act. With respect to a Fund of Funds' investment in an Unaffiliated
Underlying Fund that is a Closed-End Fund (i) each member of the Group
or the Subadviser Group that is an investment company or an issuer that
would be an investment company but for section 3(c)(1) or 3(c)(7) of
the Act will vote its shares of the Closed-End Fund in the manner
prescribed by section 12(d)(1)(E) of the Act and (ii) each other member
of the Group or the Subadviser Group will vote its shares of the
Closed-End Fund in the same proportion as the vote of all other holders
of the same type of such Closed-End Fund's shares (except that any
member of the Group or Subadviser Group that is a Separate Account will
instead be subject to the voting procedures described below). If, as a
result of a decrease in the outstanding voting securities of any other
Unaffiliated Underlying Fund, the Group or a Subadviser Group, each in
the aggregate, becomes a holder of more than 25% of the outstanding
voting securities of such Unaffiliated Underlying Fund, then the Group
or the Subadviser Group (except for any member of the Group or
Subadviser Group that is a Separate Account) will vote its shares of
the Unaffiliated Underlying Fund in the same proportion as the vote of
all other holders of the Unaffiliated Underlying Fund's shares. This
condition will not apply to a Subadviser Group with respect to an
Unaffiliated Underlying Fund for which the Fund of Funds Subadviser or
a person controlling, controlled by or under common control with the
Fund of Funds Subadviser acts as the investment adviser within the
meaning of section 2(a)(20)(A) of the Act (in the case of an
Unaffiliated Fund) or the sponsor (in the case of an Unaffiliated
Trust).
A Registered Separate Account will seek voting instructions from
its contract holders and will vote its shares of an Unaffiliated
Underlying Fund in accordance with the instructions received and will
vote those shares for which no instructions were received in the same
proportion as the shares for which instructions were received. An
Unregistered Separate Account will either (a) vote its shares of the
Unaffiliated Underlying Fund in the same proportion as the vote of all
other holders of the Unaffiliated Underlying Fund's shares or (b) seek
voting instructions from its contract holders and vote its shares in
accordance with the instructions received and vote those shares for
which no instructions were received in the same proportion as the
shares for which instructions were received.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-11930 Filed 5-16-12; 8:45 am]
BILLING CODE 8011-01-P
