J.P. Morgan Securities LLC, et al.; Notice of Application and Temporary Order, 3042-3044 [2013-00660]
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Federal Register / Vol. 78, No. 10 / Tuesday, January 15, 2013 / Notices
utilizes Forms G–124, Individual
Statement of Marital Relationship; G–
124a, Certification of Marriage
Information; G–237, Statement
Regarding Marital Status; G–238,
Statement of Residence; and G–238a,
Statement Regarding Divorce or
Annulment, to secure the needed
information. One response is requested
of each respondent. Completion is
required to obtain benefits. The RRB
proposes minor non-burden impacting
changes to the forms in the collection.
ESTIMATE OF ANNUAL RESPONDENT BURDEN
[The estimated annual respondent burden is as follows]
Annual
responses
Form No.
Time
(minutes)
Burden
(hours)
G–124 (in person) ........................................................................................................................
G–124 (by mail) ...........................................................................................................................
G–124a ........................................................................................................................................
G–237 (in person) ........................................................................................................................
G–237 (by mail) ...........................................................................................................................
G–238 (in person) ........................................................................................................................
G–238 (by mail) ...........................................................................................................................
G–238a ........................................................................................................................................
125
75
300
75
75
150
150
150
15
20
10
15
20
3
5
10
31
25
50
19
25
8
13
25
Total ......................................................................................................................................
1,100
........................
196
Additional Information or Comments:
To request more information or to
obtain a copy of the information
collection justification, forms, and/or
supporting material, contact Dana
Hickman at (312) 751–4981 or
Dana.Hickman@RRB.GOV. Comments
regarding the information collection
should be addressed to Charles
Mierzwa, Railroad Retirement Board,
844 North Rush Street, Chicago, Illinois
60611–2092 or emailed to
Charles.Mierzwa@RRB.GOV. Written
comments should be received within 60
days of this notice.
Charles Mierzwa,
Chief of Information Resources Management.
[FR Doc. 2013–00613 Filed 1–14–13; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–30347; 812–14094]
J.P. Morgan Securities LLC, et al.;
Notice of Application and Temporary
Order
January 9, 2013.
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:
Applicants
have received a temporary order
exempting them from section 9(a) of the
Act, with respect to an injunction
entered against J.P. Morgan Securities
LLC (‘‘JPMS’’), EMC Mortgage, LLC
(‘‘EMC’’), Bear Stearns Asset Backed
Securities I, LLC (‘‘BSABS’’), Structured
srobinson on DSK4SPTVN1PROD with
SUMMARY OF APPLICATION:
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Jkt 229001
Asset Mortgage Investments II, Inc.
(‘‘SAMI’’), SACO I Inc. (‘‘SACO’’) and
J.P. Morgan Acceptance Corporation I
(‘‘JPMAC’’) (together, the ‘‘Defendants’’)
on January 8, 2013, by the United States
District Court for the District of
Columbia (‘‘Injunction’’) until the
Commission takes final action on an
application for a permanent order.
Applicants also have applied for a
permanent order.
APPLICANTS: JPMS, EMC, BSABS, SAMI,
SACO, JPMAC, Bear Stearns Asset
Management Inc. (‘‘BSAM’’), Bear
Stearns Health Innoventures
Management, L.L.C. (‘‘BSHIM’’), BSCGP
Inc. (‘‘BSGCP’’), Constellation Growth
Capital LLC (‘‘Constellation’’),
Constellation Ventures Management II,
LLC (‘‘Constellation II’’), Highbridge
Capital Management, LLC
(‘‘Highbridge’’), JF International
Management Inc. (‘‘JFIMI’’), JPMorgan
Distribution Services, Inc. (‘‘JPMDS’’),
J.P. Morgan Institutional Investments,
Inc. (‘‘JPMII’’), J.P. Morgan Investment
Management Inc. (‘‘JPMIM’’), J.P.
Morgan Partners, LLC (‘‘JPMP’’), J.P.
Morgan Private Investments Inc.
(‘‘JPMPI’’), OEP Co-Investors
Management II, Ltd. (‘‘OEP II’’), OEP CoInvestors Management III, Ltd. (‘‘OEP
III,’’ and together with OEP II, the ‘‘OEP
Entities’’), Security Capital Research &
Management Incorporated (‘‘Security
Capital’’), Sixty Wall Street GP
Corporation (‘‘Sixty Wall GP’’) and Sixty
Wall Street Management Company, LLC
(‘‘Sixty Wall Management’’) (each an
‘‘Applicant’’ and collectively, the
‘‘Applicants’’).1
1 Applicants request that any relief granted
pursuant to the application also apply to any other
company of which any Defendant is or may become
an affiliated person within the meaning of section
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Fmt 4703
Sfmt 4703
The application was filed
on November 16, 2012, and amended on
January 8, 2013.
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 February 4, 2013, 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: JPMS, BSABS, SAMI, SACO
and JPMAC, 383 Madison Avenue, New
York, NY 10179; EMC, 2780 Lake Vista
Drive, Lewisville, TX 75067; BSAM,
BSHIM, BSCGP, Constellation II, JPMII,
JPMIM, JPMP, JPMPI, Sixty Wall GP and
Sixty Wall Management, 270 Park
Avenue, New York, NY 10017;
Constellation and Highbridge, 40 West
57th Street, 32nd Floor, New York, NY
10019; JFIMI, 21st Floor, Chater House,
8 Connaught Road Central, Hong Kong;
JPMDS, 1111 Polaris Parkway,
Columbus, OH 43240; OEP Entities, 320
Park Avenue, 18th Floor, New York, NY
FILING DATE:
2(a)(3) of the Act (together with the Applicants, the
‘‘Covered Persons’’).
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10022; and Security Capital, 10 South
Dearborn Street, Suite 1400, Chicago, IL
60603.
FOR FURTHER INFORMATION CONTACT: Jaea
F. Hahn, Senior Counsel, at 202–551–
6870 or Janet M. Grossnickle, Assistant
Director, 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.
srobinson on DSK4SPTVN1PROD with
Applicants’ Representations
1. JPMS, a limited liability company
organized under the laws of Delaware,
is registered as a broker-dealer under the
Securities Exchange Act of 1934, as
amended (the ‘‘Exchange Act’’) and is
registered as an investment adviser
under the Investment Advisers Act of
1940, as amended (the ‘‘Advisers Act’’).
EMC and BSABS are each Delaware
limited liability companies; neither is
registered as a broker-dealer under the
Exchange Act or as an investment
adviser under the Advisers Act. SAMI,
SACO and JPMAC are each Delaware
corporations, none of which is
registered as a broker-dealer under the
Exchange Act or as an investment
adviser under the Advisers Act. The
Defendants do not currently serve as
investment adviser, sub-adviser, or
depositor of any registered investment
company, 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,’’ and the Applicants that do
serve in such capacities, ‘‘Fund
Servicing Applicants’’). ‘‘Funds’’ refers
to the registered investment companies
or ESCs for which a Covered Person
provides Fund Service Activities.
2. The ultimate parent of each
Defendant is J.P. Morgan Chase & Co.
(‘‘JPMC’’). JPMC is a financial services
holding company whose businesses
provide a broad range of financial
services to consumer and corporate
customers. JPMC is also the ultimate
parent of each of the Fund Servicing
Applicants, who, as majority-owned and
wholly-owned subsidiaries of the same
ultimate parent, are under common
control with the Defendants.
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3. BSAM is registered as an
investment adviser under the Advisers
Act and serves as investment adviser or
sub-adviser to various Funds, including
as a general partner that provides
investment advisory services to various
ESCs, which provide investment
opportunities for highly compensated
key employees, officer, directors and
current consultants of JPMC and its
affiliates.2 BSHIM, BSCGP,
Constellation II and the OEP Entities
also serve as general partners that
provide investment advisory services to
various ESCs. Constellation serves as a
sub-adviser to various ESCs. Highbridge,
JFIMI, JPMIM, JPMPI, and Security
Capital are registered as investment
advisers under the Advisers Act and
serve as investment advisers or subadvisers to various Funds. JPMP, Sixty
Wall GP, Sixty Wall Management are
registered as investment advisers under
the Advisers Act and serve as
investment advisers or sub-advisers to
ESCs. JPMDS is registered as a brokerdealer under the Exchange Act and
serves as principal underwriter to
various Funds. JPMII is registered as a
broker-dealer under the Exchange Act
and serves as placement agent to various
Funds.3
4. On January 8, 2013, the United
States District Court for the District of
Columbia entered a judgment, which
included the Injunction, against the
Defendants (‘‘Judgment’’) in a matter
brought by the Commission.4 The
Commission alleged in the complaint
(‘‘Complaint’’) that the Defendants
violated Sections 17(a)(2) and (3) of the
Securities Act of 1933 in connection
with alleged false and misleading
disclosures involving offerings of
certain residential mortgage-backed
securities (‘‘RMBS’’). 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), the Defendants
2 Every Applicant that is a general partner that
provides investment advisory services to one or
more ESCs believes, for purposes of the application,
that it is performing a function that falls within the
definition of ‘‘investment adviser’’ in section
2(a)(20) of the Act.
3 JPMII serves as placement agent to JPMorgan
Institutional Trust (‘‘Trust’’) with respect to three of
its series. The Trust is an open-end investment
company registered under the Act, but its shares are
not registered under the Securities Act of 1933, as
amended. JPMII believes, for purposes of the
application, that it is performing a function that
falls within the definition of principal underwriter
in section 2(a)(29) of the Act.
4 U.S. Securities and Exchange Commission v. J.P.
Morgan Securities LLC, EMC Mortgage, LLC, Bear
Stearns Asset Backed Securities I, LLC, Structured
Asset Mortgage Investments II, Inc., SACO I Inc.,
and J.P. Morgan Acceptance Corporation I, Case No.
1:12–cv–01862–RLW (D.D.C. Jan. 8, 2013).
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
3043
consented to the entry of the Injunction
and other relief, including
disgorgement, prejudgment interest, 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
a security, or in connection with
activities as an underwriter, broker or
dealer, from acting, among other things,
as an investment adviser or depositor of
any registered investment company or a
principal underwriter for any registered
open-end investment company,
registered UIT, or registered faceamount 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 the Defendants are
affiliated persons 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
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Federal Register / Vol. 78, No. 10 / Tuesday, January 15, 2013 / Notices
srobinson on DSK4SPTVN1PROD with
engaging in Fund Service Activities.
Applicants also state to the best of their
knowledge (i) none of the current
directors, officers, or employees of the
Applicants (other than the Defendants)
that are involved in providing Fund
Service Activities (or any other persons
in such roles during the time period
covered by the Complaint) participated
in the conduct alleged in the Complaint
to have constituted the violations that
provide a basis for the Injunction; and
(ii) the personnel at the Defendants who
participated in the conduct alleged in
the Complaint to have constituted the
violations that provide a basis for the
Injunction have had no, and will not
have any, involvement in providing
Fund Service Activities to the Funds on
behalf of the Applicants or other
Covered Persons.
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 or unitholders. Applicants
state that they will distribute written
materials, including an offer to meet in
person to discuss the materials, to the
boards of directors of the Funds
(excluding for this purpose the ESCs)
(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,5 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 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
5 Applicants state that several Funds may have
owned certain series of the RMBS which are the
subject of the Injunction. Applicants further state
that these RMBS were acquired from unaffiliated
parties, generally in secondary market transactions.
To the extent that any of these Funds suffered
losses from their investment in the RMBS, the
Funds will be able to participate in the Fair Fund
to the extent available to any other investor.
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would also adversely affect
approximately 940 employees that are
involved in those activities. Applicants
also state that disqualifying certain
Applicants from continuing to provide
investment advisory services to ESCs is
not in the public interest or in
furtherance of the protection of
investors. Because the ESCs have been
formed for the benefit of key employees,
officers and directors of JPMC and its
affiliates, it would not be consistent
with the purposes of the ESC provisions
of the Act or the terms and conditions
of the ESC orders to require another
entity not affiliated with JPMC to
manage the ESCs. In addition,
participating employees of JPMC and its
affiliates likely subscribed for interests
in the ESCs with the expectation that
the ESCs would be managed by an
affiliate of JPMC.
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.
By the Commission.
Kevin M. O’Neill,
Deputy Secretary.
Applicants’ Condition
Applicants: ETSpreads, LLC
(‘‘Adviser’’), Exchange Traded Spreads
Trust (‘‘Trust’’), and ALPS Distributors,
Inc. (‘‘Distributor’’).
SUMMARY: Summary of Application:
Applicants request an order that
permits: (a) Actively-managed series of
the Trust to issue shares (‘‘Shares’’)
redeemable in large aggregations only
(‘‘Creation Units’’); (b) secondary market
transactions in Shares to occur at
negotiated market prices; (c) certain
series to pay redemption proceeds,
under certain circumstances, more than
seven days after the tender of Shares for
redemption; (d) certain affiliated
persons of the series to deposit
securities into, and receive securities
from, the series in connection with the
purchase and redemption of Creation
Units; and (e) certain registered
management investment companies and
unit investment trusts outside of the
same group of investment companies as
the series to acquire Shares.
DATES: Filing Dates: The application was
filed on January 30, 2008, and amended
on July 30, 2008, April 28, 2011,
December 18, 2012, and January 9, 2013.
Hearing or Notification of Hearing: An
order granting the requested relief 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
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
January 8, 2013, until the Commission
takes final action on their application
for a permanent order.
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[FR Doc. 2013–00660 Filed 1–14–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
30346; 812–13486]
Exchange Traded Spreads Trust, et al.;
Notice of Application
January 9, 2013.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application for an
order under section 6(c) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from sections
2(a)(32), 5(a)(1), 22(d) and 22(e) of the
Act and rule 22c–1 under the Act, and
under section 12(d)(1)(J) for an
exemption from sections 12(d)(1)(A) and
(B) of the Act, and under sections 6(c)
and 17(b) of the Act for an exemption
from sections 17(a)(1) and (2) of the Act.
AGENCY:
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]]>Agencies
[Federal Register Volume 78, Number 10 (Tuesday, January 15, 2013)]
[Notices]
[Pages 3042-3044]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-00660]
=======================================================================
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-30347; 812-14094]
J.P. Morgan Securities LLC, et al.; Notice of Application and
Temporary Order
January 9, 2013.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Temporary order and notice of application for a permanent order
under section 9(c) of the Investment Company Act of 1940 (``Act'').
-----------------------------------------------------------------------
Summary of Application: Applicants have received a temporary order
exempting them from section 9(a) of the Act, with respect to an
injunction entered against J.P. Morgan Securities LLC (``JPMS''), EMC
Mortgage, LLC (``EMC''), Bear Stearns Asset Backed Securities I, LLC
(``BSABS''), Structured Asset Mortgage Investments II, Inc. (``SAMI''),
SACO I Inc. (``SACO'') and J.P. Morgan Acceptance Corporation I
(``JPMAC'') (together, the ``Defendants'') on January 8, 2013, by the
United States District Court for the District of Columbia
(``Injunction'') until the Commission takes final action on an
application for a permanent order. Applicants also have applied for a
permanent order.
Applicants: JPMS, EMC, BSABS, SAMI, SACO, JPMAC, Bear Stearns Asset
Management Inc. (``BSAM''), Bear Stearns Health Innoventures
Management, L.L.C. (``BSHIM''), BSCGP Inc. (``BSGCP''), Constellation
Growth Capital LLC (``Constellation''), Constellation Ventures
Management II, LLC (``Constellation II''), Highbridge Capital
Management, LLC (``Highbridge''), JF International Management Inc.
(``JFIMI''), JPMorgan Distribution Services, Inc. (``JPMDS''), J.P.
Morgan Institutional Investments, Inc. (``JPMII''), J.P. Morgan
Investment Management Inc. (``JPMIM''), J.P. Morgan Partners, LLC
(``JPMP''), J.P. Morgan Private Investments Inc. (``JPMPI''), OEP Co-
Investors Management II, Ltd. (``OEP II''), OEP Co-Investors Management
III, Ltd. (``OEP III,'' and together with OEP II, the ``OEP
Entities''), Security Capital Research & Management Incorporated
(``Security Capital''), Sixty Wall Street GP Corporation (``Sixty Wall
GP'') and Sixty Wall Street Management Company, LLC (``Sixty Wall
Management'') (each an ``Applicant'' and collectively, the
``Applicants'').\1\
---------------------------------------------------------------------------
\1\ Applicants request that any relief granted pursuant to the
application also apply to any other company of which any Defendant
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 November 16, 2012, and
---------------------------------------------------------------------------
amended on January 8, 2013.
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 February 4, 2013, 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:
JPMS, BSABS, SAMI, SACO and JPMAC, 383 Madison Avenue, New York, NY
10179; EMC, 2780 Lake Vista Drive, Lewisville, TX 75067; BSAM, BSHIM,
BSCGP, Constellation II, JPMII, JPMIM, JPMP, JPMPI, Sixty Wall GP and
Sixty Wall Management, 270 Park Avenue, New York, NY 10017;
Constellation and Highbridge, 40 West 57th Street, 32nd Floor, New
York, NY 10019; JFIMI, 21st Floor, Chater House, 8 Connaught Road
Central, Hong Kong; JPMDS, 1111 Polaris Parkway, Columbus, OH 43240;
OEP Entities, 320 Park Avenue, 18th Floor, New York, NY
[[Page 3043]]
10022; and Security Capital, 10 South Dearborn Street, Suite 1400,
Chicago, IL 60603.
FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at 202-
551-6870 or Janet M. Grossnickle, Assistant Director, 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. JPMS, a limited liability company organized under the laws of
Delaware, is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the ``Exchange Act'') and is
registered as an investment adviser under the Investment Advisers Act
of 1940, as amended (the ``Advisers Act''). EMC and BSABS are each
Delaware limited liability companies; neither is registered as a
broker-dealer under the Exchange Act or as an investment adviser under
the Advisers Act. SAMI, SACO and JPMAC are each Delaware corporations,
none of which is registered as a broker-dealer under the Exchange Act
or as an investment adviser under the Advisers Act. The Defendants do
not currently serve as investment adviser, sub-adviser, or depositor of
any registered investment company, 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,'' and
the Applicants that do serve in such capacities, ``Fund Servicing
Applicants''). ``Funds'' refers to the registered investment companies
or ESCs for which a Covered Person provides Fund Service Activities.
2. The ultimate parent of each Defendant is J.P. Morgan Chase & Co.
(``JPMC''). JPMC is a financial services holding company whose
businesses provide a broad range of financial services to consumer and
corporate customers. JPMC is also the ultimate parent of each of the
Fund Servicing Applicants, who, as majority-owned and wholly-owned
subsidiaries of the same ultimate parent, are under common control with
the Defendants.
3. BSAM is registered as an investment adviser under the Advisers
Act and serves as investment adviser or sub-adviser to various Funds,
including as a general partner that provides investment advisory
services to various ESCs, which provide investment opportunities for
highly compensated key employees, officer, directors and current
consultants of JPMC and its affiliates.\2\ BSHIM, BSCGP, Constellation
II and the OEP Entities also serve as general partners that provide
investment advisory services to various ESCs. Constellation serves as a
sub-adviser to various ESCs. Highbridge, JFIMI, JPMIM, JPMPI, and
Security Capital are registered as investment advisers under the
Advisers Act and serve as investment advisers or sub-advisers to
various Funds. JPMP, Sixty Wall GP, Sixty Wall Management are
registered as investment advisers under the Advisers Act and serve as
investment advisers or sub-advisers to ESCs. JPMDS is registered as a
broker-dealer under the Exchange Act and serves as principal
underwriter to various Funds. JPMII is registered as a broker-dealer
under the Exchange Act and serves as placement agent to various
Funds.\3\
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\2\ Every Applicant that is a general partner that provides
investment advisory services to one or more ESCs believes, for
purposes of the application, that it is performing a function that
falls within the definition of ``investment adviser'' in section
2(a)(20) of the Act.
\3\ JPMII serves as placement agent to JPMorgan Institutional
Trust (``Trust'') with respect to three of its series. The Trust is
an open-end investment company registered under the Act, but its
shares are not registered under the Securities Act of 1933, as
amended. JPMII believes, for purposes of the application, that it is
performing a function that falls within the definition of principal
underwriter in section 2(a)(29) of the Act.
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4. On January 8, 2013, the United States District Court for the
District of Columbia entered a judgment, which included the Injunction,
against the Defendants (``Judgment'') in a matter brought by the
Commission.\4\ The Commission alleged in the complaint (``Complaint'')
that the Defendants violated Sections 17(a)(2) and (3) of the
Securities Act of 1933 in connection with alleged false and misleading
disclosures involving offerings of certain residential mortgage-backed
securities (``RMBS''). 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), the Defendants consented to the
entry of the Injunction and other relief, including disgorgement,
prejudgment interest, and civil monetary penalties.
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\4\ U.S. Securities and Exchange Commission v. J.P. Morgan
Securities LLC, EMC Mortgage, LLC, Bear Stearns Asset Backed
Securities I, LLC, Structured Asset Mortgage Investments II, Inc.,
SACO I Inc., and J.P. Morgan Acceptance Corporation I, Case No.
1:12-cv-01862-RLW (D.D.C. Jan. 8, 2013).
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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 a security, or in
connection with activities as an underwriter, broker or dealer, from
acting, among other things, as an investment adviser or depositor of
any registered investment company or a principal underwriter for any
registered open-end investment company, registered 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 the
Defendants are affiliated persons 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
[[Page 3044]]
engaging in Fund Service Activities. Applicants also state to the best
of their knowledge (i) none of the current directors, officers, or
employees of the Applicants (other than the Defendants) that are
involved in providing Fund Service Activities (or any other persons in
such roles during the time period covered by the Complaint)
participated in the conduct alleged in the Complaint to have
constituted the violations that provide a basis for the Injunction; and
(ii) the personnel at the Defendants who participated in the conduct
alleged in the Complaint to have constituted the violations that
provide a basis for the Injunction have had no, and will not have any,
involvement in providing Fund Service Activities to the Funds on behalf
of the Applicants or other Covered Persons.
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 or
unitholders. Applicants state that they will distribute written
materials, including an offer to meet in person to discuss the
materials, to the boards of directors of the Funds (excluding for this
purpose the ESCs) (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,\5\ 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.
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\5\ Applicants state that several Funds may have owned certain
series of the RMBS which are the subject of the Injunction.
Applicants further state that these RMBS were acquired from
unaffiliated parties, generally in secondary market transactions. To
the extent that any of these Funds suffered losses from their
investment in the RMBS, the Funds will be able to participate in the
Fair Fund to the extent available to any other investor.
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6. Applicants also state that, if they were barred from providing
Fund Service Activities to registered investment companies and ESCs,
the effect on their businesses and employees would be severe.
Applicants state that they have committed substantial resources to
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 approximately 940 employees that are involved in
those activities. Applicants also state that disqualifying certain
Applicants from continuing to provide investment advisory services to
ESCs is not in the public interest or in furtherance of the protection
of investors. Because the ESCs have been formed for the benefit of key
employees, officers and directors of JPMC and its affiliates, it would
not be consistent with the purposes of the ESC provisions of the Act or
the terms and conditions of the ESC orders to require another entity
not affiliated with JPMC to manage the ESCs. In addition, participating
employees of JPMC and its affiliates likely subscribed for interests in
the ESCs with the expectation that the ESCs would be managed by an
affiliate of JPMC.
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
January 8, 2013, until the Commission takes final action on their
application for a permanent order.
By the Commission.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-00660 Filed 1-14-13; 8:45 am]
BILLING CODE 8011-01-P
