Medallion Financial Corp.; Notice of Application, 38344-38347 [2012-15638]
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38344
Federal Register / Vol. 77, No. 124 / Wednesday, June 27, 2012 / Notices
Vice President, Product Information,
United States Postal Service, 475
L’Enfant Plaza SW., Washington, DC
20260.
Vice President, Delivery and Post
Office Operations, United States Postal
Service, 475 L’Enfant Plaza SW.,
Washington, DC 20260.
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USPS 810.200
SYSTEM NAME:
CATAGORIES OF INDIVIDUALS COVERED BY THE
SYSTEM:
[CHANGE TO READ]
This system contains records relating
to customers who contact customer
service by online and offline channels.
This includes customers making
inquiries via email, 1–800–ASK–USPS,
other toll-free contact centers, or the
Business Service Network (BSN), as
well as customers with product-specific
service or support issues.
SYSTEM MANAGER(S) AND ADDRESS:
www.usps.com Ordering, Payment,
and Fulfillment.
SYSTEM MANAGER(S) AND ADDRESS:
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[INSERT NEW TEXT]
Chief Financial Officer and Executive
Vice President, United States Postal
Service, 475 L’Enfant Plaza SW.,
Washington, DC 20260.
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USPS 820.100
[CHANGE TO READ]
Vice President, Consumer and
Industry Affairs, United States Postal
Service, 475 L’Enfant Plaza SW.,
Washington, DC 20260.
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NOTIFICATION PROCEDURE:
USPS 840.000
SYSTEM NAME:
Customer Mailing and Delivery
Instructions.
CATEGORIES OF RECORDS IN THE SYSTEM
SYSTEM NAME:
Mailer Services—Applications and
Approvals.
[CORRECT NUMBERING TO READ 1
THROUGH 3]
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SYSTEM MANAGER(S) AND ADDRESS:
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SYSTEM MANAGER(S) AND ADDRESS:
Mail Management and Tracking
Activity.
[CHANGE TO READ]
For SOA and pandering
advertisement prohibitory orders: Vice
President, Pricing, United States Postal
Service, 475 L’Enfant Plaza SW.,
Washington, DC 20260.
For other delivery records: Vice
President, Delivery and Post Office
Operations, United States Postal
Service, 475 L’Enfant Plaza SW.,
Washington, DC 20260.
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SYSTEM MANAGER(S) AND ADDRESS:
USPS 850.000
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SYSTEM NAME:
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[INSERT NEW TEXT]
Vice President, Mail Entry and
Payment Technology, United States
Postal Service, 475 L’Enfant Plaza SW.,
Washington, DC 20260.
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USPS 820.200
SYSTEM NAME:
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[INSERT NEW TEXT]
Vice President, Mail Entry and
Payment Technology, United States
Postal Service, 475 L’Enfant Plaza SW.,
Washington, DC 20260.
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Customer Service and
Correspondence.
srobinson on DSK4SPTVN1PROD with NOTICES
SYSTEM LOCATION:
[CHANGE TO READ]
USPS Consumer and Industry Affairs,
Headquarters; Integrated Business
Solutions Services Centers; the National
Customer Support Center (NCSC);
districts, Post Offices, contractor sites;
and detached mailing units at customer
sites.
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SYSTEM LOCATION:
[CHANGE TO READ]
USPS Mail Recovery Center.
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USPS 870.200
SYSTEM NAME:
Postage Meter and PC Postage
Customer Data and Transaction Records.
CATEGORIES OF RECORDS IN THE SYSTEM:
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Stanley F. Mires,
Attorney, Legal Policy & Legislative Advice.
[FR Doc. 2012–15606 Filed 6–26–12; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30121; 812–13666]
Medallion Financial Corp.; Notice of
Application
Fmt 4703
Securities and Exchange
Commission (the ‘‘Commission’’).
ACTION: Notice of an application for an
order under section 61(a)(3)(B) of the
Investment Company Act of 1940 (the
‘‘Act’’).
AGENCY:
Auction Files.
[CHANGE TO READ]
Vice President, Supply Management,
United States Postal Service, 475
L’Enfant Plaza SW., Washington, DC
20260.
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SYSTEM NAME:
[CHANGE TO READ]
Customers wanting to know if
information about them is maintained in
this system of records must address
inquires in writing to: Manager,
Payment Technology, United States
Postal Service, 475 L’Enfant Plaza SW.,
Washington, DC 20260.
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June 21, 2012.
SYSTEM MANAGER(S) AND ADDRESS:
USPS 830.000
3. Transactional information: Post
Office where mail is entered; type
(credit card, ACH, check, etc.), amount,
and date of postage purchases;
ascending and descending register
values; amount of unused postage
refunded; contact telephone number;
package identification code, Customized
Postage image data; declared value of
contents and cost of insurance for
insured packages; destination five-digit
ZIP Code, date, and rate category of each
indicium created; and transaction
documents.
4. Financial information: Credit and/
or debit card number, type, expiration
date, and transaction number; check and
electronic fund transfer information;
ACH information.
Sfmt 4703
Summary of Application: Applicant,
Medallion Financial Corp., requests an
order approving a proposal to grant
certain stock options to directors who
are not also employees or officers of the
Applicant (the ‘‘Eligible Directors’’)
under its Amended and Restated 2006
Non-Employee Director Stock Option
Plan (the ‘‘Amended Director Plan’’).
DATES: Filing Dates: The application was
filed on June 12, 2009, and amended on
June 28, 2010, May 12, 2011, and June
18, 2012.
Hearing or Notification of Hearing: An
order granting the application will be
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Federal Register / Vol. 77, No. 124 / Wednesday, June 27, 2012 / Notices
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
Applicant with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on July 16, 2012, and
should be accompanied by proof of
service on Applicant, 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
Commission, 100 F Street, NE.,
Washington, DC 20549–1090;
Applicant, 437 Madison Avenue, 38th
Floor, New York, New York, 10022.
FOR FURTHER INFORMATION CONTACT:
Lewis B. Reich, Senior Counsel, at (202)
551–6919, or Jennifer L. Sawin, 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 an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
srobinson on DSK4SPTVN1PROD with NOTICES
Applicant’s Representations
1. Applicant, a Delaware corporation,
is a business development company
(‘‘BDC’’) within the meaning of section
2(a)(48) of the Act.1 Applicant is a
specialty finance company that has a
leading position in originating,
acquiring and servicing loans that
finance taxicab medallions and various
types of commercial businesses.
Applicant operates its businesses
through four wholly-owned
subsidiaries, Medallion Funding LLC,
Medallion Capital, Inc., Freshstart
Venture Capital Corp., and Medallion
Bank.2 Applicant is managed by its
1 Section 2(a)(48) defines a BDC to be any closedend investment company that operates for the
purpose of making investments in securities
described in sections 55(a)(1) through 55(a)(3) of the
Act and makes available significant managerial
assistance with respect to the issuers of such
securities.
2 The Applicant also conducts business through
its asset-based lending division, Medallion Business
Credit, an originator of loans to small businesses for
the purpose of financing inventory and receivables,
which prior to merging into Applicant on December
31, 2007, was a wholly owned investment company
subsidiary.
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executive officers under the supervision
of its board of directors (‘‘Board’’).
Applicant’s investment decisions are
made by its executive officers under
authority delegated by the Board.
Applicant does not have an external
investment adviser within the meaning
of section 2(a)(20) of the Act.
2. Applicant requests an order under
section 61(a)(3)(B) of the Act approving
its proposal to grant certain stock
options under the Amended Director
Plan to its Eligible Directors.3 The
Amended Director Plan amends the
Applicant’s 2006 Non-Employee
Director Stock Option Plan (the ‘‘2006
Director Plan’’) by increasing the
maximum number of shares of
Applicant’s common stock (‘‘Common
Stock’’) available for issuance from
100,000 under the 2006 Director Plan to
200,000 under the Amended Director
Plan. Applicant has a nine member
Board. Six of the seven current Eligible
Directors on the Board are not
‘‘interested persons’’ (as defined in
section 2(a)(19) of the Act) of the
Applicant. The Board approved the
Amended Director Plan at a meeting
held on April 16, 2009, and Applicant’s
stockholders approved the Amended
Director Plan at the annual meeting of
stockholders held on June 5, 2009. The
Amended Director Plan will become
effective on the date on which the
Commission issues an order on the
application (the ‘‘Approval Date’’).4
3. Applicant’s Eligible Directors are
eligible to receive options under the
Amended Director Plan. Under the
3 The Eligible Directors receive a $38,500 per year
retainer payment, $3,850 for each Board meeting
attended, $1100 for each telephonic Board meeting,
from $1,650 to $3,850 for each committee meeting
attended, and reimbursement for related expenses.
The Eligible Directors also receive $1,485 for each
board meeting attended for one of the whollyowned subsidiaries (other than Medallion Bank).
4 Applicant previously obtained similar relief for
its 1996 Amended and Restated Non-Employee
Director Stock Option Plan and its 2006 Director
Plan. (See Medallion Financial Corp., Investment
Company Act Rel. Nos. 22350 (Nov. 25, 1996)
(notice) and 22417 (Dec. 23, 1996) (order), as
amended by Medallion Financial Corp., Investment
Company Act Rel. Nos. 24342 (Mar. 17, 2000)
(notice) and 24390 (Apr. 12, 2000) (order) and
Medallion Financial Corp., Investment Company
Act Release Nos. 27917 (July 30, 2007) (notice) and
27955 (Aug. 28, 2007) (order).) The 1996 Director
Plan expired on May 21, 2006, and was replaced
by the 2006 Director Plan. Applicant also obtained
relief for its 2009 Employee Restricted Stock Plan,
permitting it to issue restricted stock (i.e., stock
that, at the time of issuance, is subject to certain
forfeiture restrictions and thus is restricted as to its
transferability until such forfeiture restrictions have
lapsed) (the ‘‘Restricted Stock’’) to its employees.
(See Medallion Financial Corp., Investment
Company Act Rel. Nos. 29201 (Apr. 1, 2010)
(notice) and 29258 (Apr. 26, 2010) (order)) and that
plan was subsequently approved by the Applicant’s
stockholders at the annual meeting of stockholders
held on June 11, 2010.
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38345
Amended Director Plan, a maximum of
200,000 shares of Applicant’s Common
Stock, in the aggregate, may be issued to
Eligible Directors and there is no limit
on the number of shares of Applicant’s
Common Stock that may be issued to
any one Eligible Director. The Amended
Director Plan also provides that (i) at
each annual shareholders’ meeting after
the Approval Date, each Eligible
Director elected or re-elected at that
meeting to a three-year term will
automatically be granted options to
purchase 9,000 shares of Applicant’s
Common Stock; and (ii) upon the
election, reelection or appointment of
an Eligible Director to the Board other
than at the annual shareholders’
meeting, that Eligible Director will be
granted an option to purchase that
number of shares of Common Stock
determined by multiplying 9,000 by a
fraction, the numerator of which is
equal to the number of whole months
remaining in the new director’s term
and the denominator of which is 36.
The options issued under the Amended
Director Plan will vest and become
exercisable with respect to one-third of
the number of shares covered by such
option on each of the first three
anniversaries of the date of the grant.
4. Under the terms of the Amended
Director Plan, the exercise price of an
option will be the ‘‘Fair Market Value’’
of the Common Stock, which is the
closing price of the Common Stock as
reported in the Wall Street Journal,
Northeast Edition, as quoted on the
NASDAQ Global Select Market, the
successor to the NASDAQ National
Market, on the date of grant, or if no
such market value exists, the fair market
value of a share (which may not be less
than the current net asset value per
share), as determined by a committee
consisting of directors of the Applicant
who are not eligible to participate in the
2006 Director Plan or the Amended
Director Plan pursuant to a reasonable
method adopted in good faith for such
purpose. Options granted under the
Amended Director Plan will expire ten
years from the date of grant and may not
be transferred other than by will or the
laws of descent and distribution. Any
Eligible Director holding exercisable
options under the Amended Director
Plan who ceases to be an Eligible
Director for any reason, other than
permanent disability, death or removal
for cause, may exercise the rights the
director had under the options on the
date the director ceased to be an Eligible
Director for a period of up to three
months following that date. No
additional options held by the director
will become exercisable after the three
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srobinson on DSK4SPTVN1PROD with NOTICES
38346
Federal Register / Vol. 77, No. 124 / Wednesday, June 27, 2012 / Notices
month period. In the event of removal
of an Eligible Director for cause, all
outstanding options held by such
director shall terminate as of the date of
the director’s removal. Upon the
permanent disability or death of an
Eligible Director, those entitled to do so
under the director’s will or the laws of
descent and distribution will have the
right, at any time within twelve months
after the date of permanent disability or
death, to exercise in whole or in part
any rights which were available to the
director at the time of the director’s
permanent disability or death.
5. Applicant’s officers and employees,
including employee directors, are
eligible or have been eligible to receive
options under Applicant’s 2006
Employee Stock Option Plan (the ‘‘2006
Employee Plan’’), which replaced the
Amended and Restated 1996 Stock
Option Plan (the ‘‘1996 Employee
Plan’’), which expired on May 21, 2006.
Applicant’s employees are also eligible
to receive grants of restricted stock
under its 2009 Employee Restricted
Stock Plan (the ‘‘Restricted Stock
Plan’’).5 Eligible Directors are not
eligible to receive stock options or
Restricted Stock under the 2006
Employee Plan, the 1996 Employee Plan
or under the Restricted Stock Plan.
Eligible Directors are eligible or have
been eligible to participate in the
Applicant’s 2006 Director Plan under
which no shares of the Applicant’s
Common Stock remain for issuance.
Under the Amended Director Plan, the
Restricted Stock Plan and the 2006
Employee Plan, an aggregate of
1,800,000 shares of the Applicant’s
Common Stock have been reserved for
issuance to the Applicant’s directors,
officers and employees (800,000 shares
are reserved for issuance under the 2006
Employee Plan, 800,000 shares under
the Restricted Stock Plan and 200,000
shares under the Amended Director
Plan). The remaining 156,155 shares of
the Applicant’s Common Stock subject
to issuance to officers and employees
under the 2006 Employee Plan represent
0.73% of the 21,451,243 shares of the
Applicant’s Common Stock outstanding
as of June 15, 2012. The remaining
627,392 shares of the Applicant’s
Common Stock subject to issuance to
officers and employees under the
Restricted Stock Plan represent 2.93%
of the Applicant’s Common Stock
outstanding as of June 15, 2012. The
200,000 shares that would be available
for issuance under the Amended
Director Plan would comprise 0.93% of
the Applicant’s Common Stock
outstanding as of June 15, 2012. The
Applicant has no restricted stock,
warrants, options or rights to purchase
its outstanding voting securities other
than those granted or to be granted to its
directors, officers and employees
pursuant to the Restricted Stock Plan,
Amended Director Plan, the 2006
Director Plan, the 1996 Employee Plan
and the 2006 Employee Plan.
6. The amount of voting securities of
the Applicant that would, on the
Approval Date, result from the grant of
all restricted stock issued or issuable
under the Restricted Stock Plan is
800,000 shares, from the exercise of all
options issued or issuable to the
Applicant’s directors under the
Amended Director Plan is 200,000
shares, from the exercise of all options
issued or issuable to the Applicant’s
officers and employees under the 2006
Employee Plan is 800,000 shares, and
from the exercise of all options issued
or issuable to the Applicant’s officers
and employees under the 1996
Employee Plan is 331,214 shares, which
is approximately 3.73%, 0.93%,6 3.73%,
and 1.54%, respectively, of the
21,451,243 shares of the Applicant’s
Common Stock outstanding on June 15,
2012. This totals 2,131,214 shares in the
aggregate, or approximately 9.94% of
the 21,451,243 shares of the Applicant’s
Common Stock outstanding on June 15,
2012. No options remain issued,
issuable or exercisable under the 1996
Director Plan.
5 As of June 15, 2012, grants of 172,608 shares of
Restricted Stock have been made under the
Restricted Stock Plan.
6 The increase of 100,000 shares under the
Amended Director Plan represents 0.47% of the
Applicant’s outstanding Common Stock.
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Applicant’s Legal Analysis
1. Section 63(3) of the Act permits a
BDC to sell its common stock at a price
below current net asset value upon the
exercise of any option issued in
accordance with section 61(a)(3).
Section 61(a)(3)(B) provides, in
pertinent part, that a BDC may issue to
its non-employee directors options to
purchase its voting securities pursuant
to an executive compensation plan,
provided that: (a) The options expire by
their terms within ten years; (b) the
exercise price of the options is not less
than the current market value of the
underlying securities at the date of the
issuance of the options, or if no market
exists, the current net asset value of the
voting securities; (c) the proposal to
issue the options is authorized by the
BDC’s shareholders, and is approved by
order of the Commission upon
application; (d) the options are not
transferable except for disposition by
gift, will or intestacy; (e) no investment
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adviser of the BDC receives any
compensation described in section
205(a)(1) of the Investment Advisers Act
of 1940, except to the extent permitted
by clause (b)(1) or (b)(2) of that section;
and (f) the BDC does not have a profitsharing plan as described in section
57(n) of the Act.
2. In addition, section 61(a)(3)
provides that the amount of the BDC’s
voting securities that would result from
the exercise of all outstanding warrants,
options, and rights at the time of
issuance may not exceed 25% of the
BDC’s outstanding voting securities,
except that if the amount of voting
securities that would result from the
exercise of all outstanding warrants,
options, and rights issued to the BDC’s
directors, officers, and employees
pursuant to any executive compensation
plan would exceed 15% of the BDC’s
outstanding voting securities, then the
total amount of voting securities that
would result from the exercise of all
outstanding warrants, options, and
rights at the time of issuance will not
exceed 20% of the outstanding voting
securities of the BDC.
3. Applicant represents that its
proposal to grant certain stock options
to Eligible Directors under the Amended
Director Plan meets all the requirements
of section 61(a)(3). Applicant states that
the Board is actively involved in the
oversight of Applicant’s affairs and that
it relies extensively on the judgment
and experience of its Board. In addition
to their duties as Board members
generally, Applicant states that the
Eligible Directors provide guidance and
advice on financial and operational
issues, credit and loan policies, asset
valuation and strategic direction, as well
as serving on committees. Applicant
believes that the availability of options
under the Amended Director Plan will
provide significant at-risk incentives to
Eligible Directors to remain on the
Board and devote their best efforts to
ensure Applicant’s success. Applicant
states that the options will provide a
means for the Eligible Directors to
increase their ownership interests in
Applicant, thereby ensuring close
identification of their interests with
those of Applicant and its stockholders.
Applicant asserts that by providing
incentives such as options, Applicant
will be better able to maintain
continuity in the Board’s membership
and to attract and retain the highly
experienced, successful and motivated
business and professional people who
are critical to Applicant’s success as a
BDC.
4. Applicant states that the amount of
voting securities that would on the
Approval Date result from the grant of
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all restricted stock issued or issuable
under the Restricted Stock Plan and the
exercise of all outstanding options
issued or issuable to the directors,
officers, and employees under the
Amended Director Plan, the 2006
Employee Plan and the 1996 Employee
Plan would be 2,131,214 shares of
Applicant’s Common Stock, or
approximately 9.94% of Applicant’s
shares of Common Stock outstanding on
June 15, 2012, which is below the
percentage limitations in the Act.
Applicant asserts that, given the
relatively small amount of Common
Stock issuable to Eligible Directors upon
their exercise of options under the
Amended Director Plan, the exercise of
such options would not, absent
extraordinary circumstances, have a
substantial dilutive effect on the net
asset value of Applicant’s Common
Stock.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Kevin M. O’Neill,
Deputy Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–67229; File No. SR–
NASDAQ–2012–058]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing of Proposed Rule Change
Relating to the Listing and Trading of
Alpha Index-Linked Securities
June 21, 2012.
srobinson on DSK4SPTVN1PROD with NOTICES
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 11,
2012, The NASDAQ Stock Market LLC
(‘‘NASDAQ’’ or ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by NASDAQ. 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
NASDAQ proposes to adopt Nasdaq
Rule 5712, Alpha Index-Linked
Securities, providing for the listing,
trading and delisting of securities linked
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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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. The text of
these statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2012–15638 Filed 6–26–12; 8:45 am]
1 15
to the performance of certain specified
NASDAQ OMX Alpha Indexes as set
forth below.
The text of the proposed rule change
is available on the Exchange’s Web site
at https://nasdaq.cchwallstreet.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
1. Purpose
The purpose of this proposed rule
change is to provide for the listing and
trading on NASDAQ of Equity IndexLinked Securities (as defined in
Exchange Rule 5710) linked, on an
unleveraged basis, to the following
Alpha Indexes owned and maintained
by NASDAQ OMX Group Inc.: GOOG
vs. SPY (GOOSY) and AAPL vs. SPY
(AVSPY) (together, the ‘‘Specified
Alpha Indexes’’). These Alpha Indexes
are relative performance based equity
indexes maintained by The NASDAQ
OMX Group.3
Currently, Nasdaq Rule 5710 provides
for the listing and trading of Equity
Index-Linked Securities. In particular,
Nasdaq Rule 5710(k)(i)(A) provides for
the listing and trading pursuant to
Commission Rule 19b–4(e) of Equity
Index-Linked Securities with respect to
3 The Commission has previously approved the
listing and trading of options on certain Alpha
Indexes (‘‘Alpha Index Options’’) on NASDAQ
OMX PHLX (‘‘PHLX’’). See Securities Exchange Act
Release No. 63860 (February 7, 2011), 76 FR 7888
(February 11, 2011) (SR–Phlx–2010–176),
approving options on the following Alpha Indexes:
AAPL/SPY, AMZN/SPY, CSCO/SPY, F/SPY, GE/
SPY, GOOG/SPY, HPQ/SPY, IBM/SPY, INTC/SPY,
KO/SPY, MRK/SPY, MSFT/SPY, ORCL/SPY, PFE/
SPY, RIMM/SPY, T/SPY, TGT/SPY, VZ/SPY and
WMT/SPY. The Commission subsequently
approved options on the following Alpha Indexes
in which the Target Component, as well as the
Benchmark Component, is an ETF share: DIA/SPY,
EEM/SPY, EWJ/SPY, EWZ/SPY, FXI/SPY, GLD/
SPY, IWM/SPY, QQQ/SPY, SLV/SPY, TLT/SPY,
XLE/SPY and XLF/SPY. See Securities Exchange
Act Release No. 65149 (August 17, 2011), 76 FR
52729 (August 23, 2011) (SR–Phlx–2011–89).
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38347
which the underlying indexes have at
least 10 component securities and either
(1) have been reviewed and approved
for the trading of options or other
derivatives by the Commission under
Section 19(b)(2) of the Act and rules
thereunder and the conditions set forth
in the Commission’s approval order,
including comprehensive surveillance
sharing agreements for non-U.S. stocks,
continue to be satisfied, or (2) meet
specific index criteria set forth in Rule
5710(k)(i)(A)(2). NASDAQ Alpha
Indexes do not contain at least 10
component securities and therefore do
not meet these requirements, even if
they have been reviewed and approved
for the trading of options by the
Commission under Section 19(b)(2) of
the Act, and therefore are ineligible for
listing and trading pursuant to Rule
5710(k)(i)(A).
This proposed rule change would
therefore add new Exchange Rule 5712
which provides that NASDAQ will
consider for listing and trading Equity
Index-Linked Securities that are linked
to the Specified Alpha Indexes and that
meet the criteria specified therein (the
‘‘Alpha Index-Linked Securities’’).
Alpha Index Calculation
The Alpha Indexes measure relative
total returns of one stock or one
exchange-traded fund (‘‘ETF’’) share
versus another ETF share (each such
combination of two components is
referred to as an ‘‘Alpha Pair’’).4 The
first component identified in an Alpha
Pair (the ‘‘Target Component’’) is
measured against the second component
identified in the Alpha Pair (the
‘‘Benchmark Component’’).
In order to calculate an Alpha Index,
NASDAQ measures the total return
performance of the Target Component
relative to the total return performance
of the Benchmark Component, based
upon prices of transactions on the
primary listing exchange of the
Benchmark Component and the Target
Component. The value of each Alpha
Index was initially set at 100.00.5
To calculate any Alpha Index,
NASDAQ first calculates a daily total
return for both the Target Component
4 As noted above, the Commission has previously
approved 31 Alpha Indexes for options trading. The
NASDAQ OMX Group currently maintains and
calculates three additional Alpha Indexes, for a
total of 34, and may develop additional Alpha
Indexes in the future. At this time, the Exchange
proposes to list and trade only those Alpha IndexLinked Securities that are linked to the Specified
Alpha Indexes identified herein. The Exchange may
in the future request Commission approval to list
and trade Alpha Index-Linked Securities based
upon other Alpha Indexes.
5 The total return measures performance (rate of
return) of price appreciation plus dividends over
any given evaluation period.
E:\FR\FM\27JNN1.SGM
27JNN1
]]>Agencies
[Federal Register Volume 77, Number 124 (Wednesday, June 27, 2012)]
[Notices]
[Pages 38344-38347]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-15638]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30121; 812-13666]
Medallion Financial Corp.; Notice of Application
June 21, 2012.
AGENCY: Securities and Exchange Commission (the ``Commission'').
ACTION: Notice of an application for an order under section 61(a)(3)(B)
of the Investment Company Act of 1940 (the ``Act'').
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Summary of Application: Applicant, Medallion Financial Corp.,
requests an order approving a proposal to grant certain stock options
to directors who are not also employees or officers of the Applicant
(the ``Eligible Directors'') under its Amended and Restated 2006 Non-
Employee Director Stock Option Plan (the ``Amended Director Plan'').
DATES: Filing Dates: The application was filed on June 12, 2009, and
amended on June 28, 2010, May 12, 2011, and June 18, 2012.
Hearing or Notification of Hearing: An order granting the
application will be
[[Page 38345]]
issued unless the Commission orders a hearing. Interested persons may
request a hearing by writing to the Commission's Secretary and serving
Applicant with a copy of the request, personally or by mail. Hearing
requests should be received by the Commission by 5:30 p.m. on July 16,
2012, and should be accompanied by proof of service on Applicant, 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
Commission, 100 F Street, NE., Washington, DC 20549-1090; Applicant,
437 Madison Avenue, 38th Floor, New York, New York, 10022.
FOR FURTHER INFORMATION CONTACT: Lewis B. Reich, Senior Counsel, at
(202) 551-6919, or Jennifer L. Sawin, 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 an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicant's Representations
1. Applicant, a Delaware corporation, is a business development
company (``BDC'') within the meaning of section 2(a)(48) of the Act.\1\
Applicant is a specialty finance company that has a leading position in
originating, acquiring and servicing loans that finance taxicab
medallions and various types of commercial businesses. Applicant
operates its businesses through four wholly-owned subsidiaries,
Medallion Funding LLC, Medallion Capital, Inc., Freshstart Venture
Capital Corp., and Medallion Bank.\2\ Applicant is managed by its
executive officers under the supervision of its board of directors
(``Board''). Applicant's investment decisions are made by its executive
officers under authority delegated by the Board. Applicant does not
have an external investment adviser within the meaning of section
2(a)(20) of the Act.
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\1\ Section 2(a)(48) defines a BDC to be any closed-end
investment company that operates for the purpose of making
investments in securities described in sections 55(a)(1) through
55(a)(3) of the Act and makes available significant managerial
assistance with respect to the issuers of such securities.
\2\ The Applicant also conducts business through its asset-based
lending division, Medallion Business Credit, an originator of loans
to small businesses for the purpose of financing inventory and
receivables, which prior to merging into Applicant on December 31,
2007, was a wholly owned investment company subsidiary.
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2. Applicant requests an order under section 61(a)(3)(B) of the Act
approving its proposal to grant certain stock options under the Amended
Director Plan to its Eligible Directors.\3\ The Amended Director Plan
amends the Applicant's 2006 Non-Employee Director Stock Option Plan
(the ``2006 Director Plan'') by increasing the maximum number of shares
of Applicant's common stock (``Common Stock'') available for issuance
from 100,000 under the 2006 Director Plan to 200,000 under the Amended
Director Plan. Applicant has a nine member Board. Six of the seven
current Eligible Directors on the Board are not ``interested persons''
(as defined in section 2(a)(19) of the Act) of the Applicant. The Board
approved the Amended Director Plan at a meeting held on April 16, 2009,
and Applicant's stockholders approved the Amended Director Plan at the
annual meeting of stockholders held on June 5, 2009. The Amended
Director Plan will become effective on the date on which the Commission
issues an order on the application (the ``Approval Date'').\4\
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\3\ The Eligible Directors receive a $38,500 per year retainer
payment, $3,850 for each Board meeting attended, $1100 for each
telephonic Board meeting, from $1,650 to $3,850 for each committee
meeting attended, and reimbursement for related expenses. The
Eligible Directors also receive $1,485 for each board meeting
attended for one of the wholly-owned subsidiaries (other than
Medallion Bank).
\4\ Applicant previously obtained similar relief for its 1996
Amended and Restated Non-Employee Director Stock Option Plan and its
2006 Director Plan. (See Medallion Financial Corp., Investment
Company Act Rel. Nos. 22350 (Nov. 25, 1996) (notice) and 22417 (Dec.
23, 1996) (order), as amended by Medallion Financial Corp.,
Investment Company Act Rel. Nos. 24342 (Mar. 17, 2000) (notice) and
24390 (Apr. 12, 2000) (order) and Medallion Financial Corp.,
Investment Company Act Release Nos. 27917 (July 30, 2007) (notice)
and 27955 (Aug. 28, 2007) (order).) The 1996 Director Plan expired
on May 21, 2006, and was replaced by the 2006 Director Plan.
Applicant also obtained relief for its 2009 Employee Restricted
Stock Plan, permitting it to issue restricted stock (i.e., stock
that, at the time of issuance, is subject to certain forfeiture
restrictions and thus is restricted as to its transferability until
such forfeiture restrictions have lapsed) (the ``Restricted Stock'')
to its employees. (See Medallion Financial Corp., Investment Company
Act Rel. Nos. 29201 (Apr. 1, 2010) (notice) and 29258 (Apr. 26,
2010) (order)) and that plan was subsequently approved by the
Applicant's stockholders at the annual meeting of stockholders held
on June 11, 2010.
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3. Applicant's Eligible Directors are eligible to receive options
under the Amended Director Plan. Under the Amended Director Plan, a
maximum of 200,000 shares of Applicant's Common Stock, in the
aggregate, may be issued to Eligible Directors and there is no limit on
the number of shares of Applicant's Common Stock that may be issued to
any one Eligible Director. The Amended Director Plan also provides that
(i) at each annual shareholders' meeting after the Approval Date, each
Eligible Director elected or re-elected at that meeting to a three-year
term will automatically be granted options to purchase 9,000 shares of
Applicant's Common Stock; and (ii) upon the election, reelection or
appointment of an Eligible Director to the Board other than at the
annual shareholders' meeting, that Eligible Director will be granted an
option to purchase that number of shares of Common Stock determined by
multiplying 9,000 by a fraction, the numerator of which is equal to the
number of whole months remaining in the new director's term and the
denominator of which is 36. The options issued under the Amended
Director Plan will vest and become exercisable with respect to one-
third of the number of shares covered by such option on each of the
first three anniversaries of the date of the grant.
4. Under the terms of the Amended Director Plan, the exercise price
of an option will be the ``Fair Market Value'' of the Common Stock,
which is the closing price of the Common Stock as reported in the Wall
Street Journal, Northeast Edition, as quoted on the NASDAQ Global
Select Market, the successor to the NASDAQ National Market, on the date
of grant, or if no such market value exists, the fair market value of a
share (which may not be less than the current net asset value per
share), as determined by a committee consisting of directors of the
Applicant who are not eligible to participate in the 2006 Director Plan
or the Amended Director Plan pursuant to a reasonable method adopted in
good faith for such purpose. Options granted under the Amended Director
Plan will expire ten years from the date of grant and may not be
transferred other than by will or the laws of descent and distribution.
Any Eligible Director holding exercisable options under the Amended
Director Plan who ceases to be an Eligible Director for any reason,
other than permanent disability, death or removal for cause, may
exercise the rights the director had under the options on the date the
director ceased to be an Eligible Director for a period of up to three
months following that date. No additional options held by the director
will become exercisable after the three
[[Page 38346]]
month period. In the event of removal of an Eligible Director for
cause, all outstanding options held by such director shall terminate as
of the date of the director's removal. Upon the permanent disability or
death of an Eligible Director, those entitled to do so under the
director's will or the laws of descent and distribution will have the
right, at any time within twelve months after the date of permanent
disability or death, to exercise in whole or in part any rights which
were available to the director at the time of the director's permanent
disability or death.
5. Applicant's officers and employees, including employee
directors, are eligible or have been eligible to receive options under
Applicant's 2006 Employee Stock Option Plan (the ``2006 Employee
Plan''), which replaced the Amended and Restated 1996 Stock Option Plan
(the ``1996 Employee Plan''), which expired on May 21, 2006.
Applicant's employees are also eligible to receive grants of restricted
stock under its 2009 Employee Restricted Stock Plan (the ``Restricted
Stock Plan'').\5\ Eligible Directors are not eligible to receive stock
options or Restricted Stock under the 2006 Employee Plan, the 1996
Employee Plan or under the Restricted Stock Plan. Eligible Directors
are eligible or have been eligible to participate in the Applicant's
2006 Director Plan under which no shares of the Applicant's Common
Stock remain for issuance. Under the Amended Director Plan, the
Restricted Stock Plan and the 2006 Employee Plan, an aggregate of
1,800,000 shares of the Applicant's Common Stock have been reserved for
issuance to the Applicant's directors, officers and employees (800,000
shares are reserved for issuance under the 2006 Employee Plan, 800,000
shares under the Restricted Stock Plan and 200,000 shares under the
Amended Director Plan). The remaining 156,155 shares of the Applicant's
Common Stock subject to issuance to officers and employees under the
2006 Employee Plan represent 0.73% of the 21,451,243 shares of the
Applicant's Common Stock outstanding as of June 15, 2012. The remaining
627,392 shares of the Applicant's Common Stock subject to issuance to
officers and employees under the Restricted Stock Plan represent 2.93%
of the Applicant's Common Stock outstanding as of June 15, 2012. The
200,000 shares that would be available for issuance under the Amended
Director Plan would comprise 0.93% of the Applicant's Common Stock
outstanding as of June 15, 2012. The Applicant has no restricted stock,
warrants, options or rights to purchase its outstanding voting
securities other than those granted or to be granted to its directors,
officers and employees pursuant to the Restricted Stock Plan, Amended
Director Plan, the 2006 Director Plan, the 1996 Employee Plan and the
2006 Employee Plan.
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\5\ As of June 15, 2012, grants of 172,608 shares of Restricted
Stock have been made under the Restricted Stock Plan. \\
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6. The amount of voting securities of the Applicant that would, on
the Approval Date, result from the grant of all restricted stock issued
or issuable under the Restricted Stock Plan is 800,000 shares, from the
exercise of all options issued or issuable to the Applicant's directors
under the Amended Director Plan is 200,000 shares, from the exercise of
all options issued or issuable to the Applicant's officers and
employees under the 2006 Employee Plan is 800,000 shares, and from the
exercise of all options issued or issuable to the Applicant's officers
and employees under the 1996 Employee Plan is 331,214 shares, which is
approximately 3.73%, 0.93%,\6\ 3.73%, and 1.54%, respectively, of the
21,451,243 shares of the Applicant's Common Stock outstanding on June
15, 2012. This totals 2,131,214 shares in the aggregate, or
approximately 9.94% of the 21,451,243 shares of the Applicant's Common
Stock outstanding on June 15, 2012. No options remain issued, issuable
or exercisable under the 1996 Director Plan.
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\6\ The increase of 100,000 shares under the Amended Director
Plan represents 0.47% of the Applicant's outstanding Common Stock.
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Applicant's Legal Analysis
1. Section 63(3) of the Act permits a BDC to sell its common stock
at a price below current net asset value upon the exercise of any
option issued in accordance with section 61(a)(3). Section 61(a)(3)(B)
provides, in pertinent part, that a BDC may issue to its non-employee
directors options to purchase its voting securities pursuant to an
executive compensation plan, provided that: (a) The options expire by
their terms within ten years; (b) the exercise price of the options is
not less than the current market value of the underlying securities at
the date of the issuance of the options, or if no market exists, the
current net asset value of the voting securities; (c) the proposal to
issue the options is authorized by the BDC's shareholders, and is
approved by order of the Commission upon application; (d) the options
are not transferable except for disposition by gift, will or intestacy;
(e) no investment adviser of the BDC receives any compensation
described in section 205(a)(1) of the Investment Advisers Act of 1940,
except to the extent permitted by clause (b)(1) or (b)(2) of that
section; and (f) the BDC does not have a profit-sharing plan as
described in section 57(n) of the Act.
2. In addition, section 61(a)(3) provides that the amount of the
BDC's voting securities that would result from the exercise of all
outstanding warrants, options, and rights at the time of issuance may
not exceed 25% of the BDC's outstanding voting securities, except that
if the amount of voting securities that would result from the exercise
of all outstanding warrants, options, and rights issued to the BDC's
directors, officers, and employees pursuant to any executive
compensation plan would exceed 15% of the BDC's outstanding voting
securities, then the total amount of voting securities that would
result from the exercise of all outstanding warrants, options, and
rights at the time of issuance will not exceed 20% of the outstanding
voting securities of the BDC.
3. Applicant represents that its proposal to grant certain stock
options to Eligible Directors under the Amended Director Plan meets all
the requirements of section 61(a)(3). Applicant states that the Board
is actively involved in the oversight of Applicant's affairs and that
it relies extensively on the judgment and experience of its Board. In
addition to their duties as Board members generally, Applicant states
that the Eligible Directors provide guidance and advice on financial
and operational issues, credit and loan policies, asset valuation and
strategic direction, as well as serving on committees. Applicant
believes that the availability of options under the Amended Director
Plan will provide significant at-risk incentives to Eligible Directors
to remain on the Board and devote their best efforts to ensure
Applicant's success. Applicant states that the options will provide a
means for the Eligible Directors to increase their ownership interests
in Applicant, thereby ensuring close identification of their interests
with those of Applicant and its stockholders. Applicant asserts that by
providing incentives such as options, Applicant will be better able to
maintain continuity in the Board's membership and to attract and retain
the highly experienced, successful and motivated business and
professional people who are critical to Applicant's success as a BDC.
4. Applicant states that the amount of voting securities that would
on the Approval Date result from the grant of
[[Page 38347]]
all restricted stock issued or issuable under the Restricted Stock Plan
and the exercise of all outstanding options issued or issuable to the
directors, officers, and employees under the Amended Director Plan, the
2006 Employee Plan and the 1996 Employee Plan would be 2,131,214 shares
of Applicant's Common Stock, or approximately 9.94% of Applicant's
shares of Common Stock outstanding on June 15, 2012, which is below the
percentage limitations in the Act. Applicant asserts that, given the
relatively small amount of Common Stock issuable to Eligible Directors
upon their exercise of options under the Amended Director Plan, the
exercise of such options would not, absent extraordinary circumstances,
have a substantial dilutive effect on the net asset value of
Applicant's Common Stock.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-15638 Filed 6-26-12; 8:45 am]
BILLING CODE 8011-01-P
