UBS AG, et al.; Notice of Application and Temporary Order, 12372-12374 [2013-04013]
Download as PDF
<![CDATA[
sroberts on DSK5SPTVN1PROD with NOTICES
12372
Federal Register / Vol. 78, No. 36 / Friday, February 22, 2013 / Notices
those institutions, what additional
agents or toxins, other categories of
experiments, and/or other domains
within the life sciences were considered
for potential oversight? What impact has
the expanded oversight had on the
conduct and administration of the
institution’s life sciences research?
14. The USG recognizes that there
will be situations where a PI is
conducting potential DURC at multiple
institutions. Should each institution
have oversight of these projects and if
DURC is being conducted at their
institution, develop and implement risk
mitigation plans? Or should the PI’s
primary institution have this
responsibility? (Refer to ‘‘Note’’
following Section 7.2.K)
15. The proposed Policy requires
institutions that would be subject to the
proposed Policy by virtue of Federal
funding, to apply the proposed Policy to
non-Federally funded research. Under
the proposal, institutions would submit
information about DURC reviews and
risk mitigation plans on non-Federally
funded projects to the National
Institutes of Health (which may in turn
refer the results and plans to the
appropriate Federal agency based upon
the nature of the research). Applying the
DURC policy to Federally and nonFederally funded research promotes
more meaningful oversight of DURC at
the institutional level and fosters
uniform approaches to the responsible
conduct and communication of all
research that may raise DURC concerns
at an institution. Is this approach
feasible? If not, what is the best
mechanism for structuring oversight for
non-Federally funded research?
16. The proposed Policy requires
institutions to maintain records of
DURC reviews, risk mitigation plans,
and personnel training for three years.
However, grant cycles are often longer
than three years and DURC
communications may arise even after
funding has ended. This could result in
situations where important records (e.g.,
the risk mitigation plan) are not
available at the institution for certain
DURC projects. Should the recordkeeping requirements for this proposed
Policy be longer to allow access to
records over (and beyond) the lifetime
of a DURC project? What is an
appropriate amount of time that
institutions should be required to retain
such records?
Availability of the Proposed Policy
The proposed Policy is available on
the U.S. Department of Health and
Human Services Science Safety Security
(S3) Web site: https://www.phe.gov/s3/
dualuse/Pages/default.aspx.
VerDate Mar<15>2010
16:18 Feb 21, 2013
Jkt 229001
Comment Submission
Comments may be submitted
electronically to: durcpolicy@ostp.gov.
Comments may also be mailed to: Dr.
Franca R. Jones, Assistant Director—
Chemical and Biological
Countermeasures, Office of Science and
Technology Policy, Eisenhower
Executive Office Building, 1650
Pennsylvania Avenue Washington, DC
20504. In your response, please provide
the following information:
Date
Name/Email/Phone Number
Affiliation/Organization
City, State
General Comments
Comments to Specific Questions (1–
16) Listed in Supplementary
Information as Follows:
Comment to Question 1
Comment to Question 2
Comment to Question 3
Comment to Question 4
Comment to Question 5
Comment to Question 6
Comment to Question 7
Comment to Question 8
Comment to Question 9
Comment to Question 10
Comment to Question 11
Comment to Question 12
Comment to Question 13
Comment to Question 14
Comment to Question 15
Comment to Question 16
You will receive an electronic
confirmation acknowledging receipt of
your response, but will not receive
individualized feedback on any
suggestions. No basis for claims against
the U.S. Government shall arise as a
result of a response to this request for
comment or from the Government’s use
of such information.
Ted Wackler,
Deputy Chief of Staff.
[FR Doc. 2013–04127 Filed 2–21–13; 8:45 am]
BILLING CODE 3270–F3–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–30383; 812–14105]
UBS AG, et al.; Notice of Application
and Temporary Order
February 15, 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:
Summary of Application: Applicants
have received a temporary order
PO 00000
Frm 00083
Fmt 4703
Sfmt 4703
exempting them from section 9(a) of the
Act, with respect to a guilty plea entered
on December 19, 2012, by UBS
Securities Japan Co., Ltd. (the ‘‘Settling
Firm’’) in the U.S. District Court for the
District of Connecticut (‘‘District Court’’)
in connection with a plea agreement
between the Settling Firm and the U.S.
Department of Justice (‘‘DOJ’’), until the
Commission takes final action on an
application for a permanent order.
Applicants have requested a permanent
order.
Applicants: UBS AG; UBS IB CoInvestment 2001 GP Limited (‘‘ESC
GP’’); UBS Financial Services Inc.
(‘‘UBSFS’’); UBS Alternative and
Quantitative Investments LLC (‘‘UBS
Alternative’’); UBS Willow
Management, L.L.C. (‘‘UBS Willow’’),
UBS Eucalyptus Management, L.L.C.
(‘‘UBS Eucalyptus’’) and UBS Juniper
Management, L.L.C. (‘‘UBS Juniper’’)
(UBS Willow, UBS Eucalyptus, and UBS
Juniper are referred to collectively as
‘‘UBS Alternative Managers’’); UBS
Global Asset Management (Americas)
Inc. (‘‘UBS Global AM Americas’’); UBS
Global Asset Management (US) Inc.
(‘‘UBS Global AM US’’); and the Settling
Firm (each an ‘‘Applicant’’ and
collectively, the ‘‘Applicants’’).1
Filing Date: The application was filed
on December 19, 2012, and amended on
January 31, 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 March 12, 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: UBS AG, ESC–GP, and the
Settling Firm, c/o UBS Investment Bank,
677 Washington Boulevard, Stamford,
CT 06901; UBSFS, 1200 Harbor
1 Applicants request that any relief granted
pursuant to the application also apply to any
existing or future company of which the Settling
Firm 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’’).
E:\FR\FM\22FEN1.SGM
22FEN1
Federal Register / Vol. 78, No. 36 / Friday, February 22, 2013 / Notices
Boulevard, Weehawken, NJ 07086; UBS
Alternative, 677 Washington Boulevard,
Stamford, CT 06901; UBS Willow, UBS
Eucalyptus, and UBS Juniper, 299 Park
Avenue, 29th Floor, New York, NY
10171; UBS Global AM Americas, One
North Wacker Drive, Chicago, IL 60606
and UBS Global AM US, 1285 Avenue
of the Americas, 12th Floor, New York,
NY 10019.
FOR FURTHER INFORMATION CONTACT:
Steven I. Amchan, Senior Counsel, at
(202) 551–6826 or Jennifer L. Sawin,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Office of Investment Company
Regulation).
The
following is a temporary order and a
summary of the application. The
complete application may be obtained
via the Commission’s Web site by
searching for the file number, or an
applicant using the Company name box,
at https://www.sec.gov/search/
search.htm or by calling (202) 551–
8090.
SUPPLEMENTARY INFORMATION:
sroberts on DSK5SPTVN1PROD with NOTICES
Applicants’ Representations
1. UBS AG, a company organized
under the laws of Switzerland, is a
Swiss-based global financial services
firm. UBS AG and its subsidiaries
provide global wealth management,
securities and retail and commercial
banking services. Each of the other
Applicants is either a direct or indirect
majority-owned or wholly-owned
subsidiary of UBS AG. UBSFS is a
corporation organized under the laws of
Delaware and provides a wide range of
wealth management services, including
financial planning and wealth
management consulting, asset-based and
advisory services and transaction-based
services, to clients in the United States
and throughout the world. UBSFS, UBS
Alternative, UBS Alternative Managers,2
and UBS Global AM Americas are
investment advisers registered under the
Investment Advisers Act of 1940, and
all but UBSFS currently serve as
investment advisers to registered
management investment companies
(‘‘Funds’’). UBSFS and UBS Global AM
US are registered as broker-dealers
under the Securities and Exchange Act
of 1934 (‘‘Exchange Act’’). UBSFS is the
co-principal underwriter to various
registered unit investment trusts. UBS
Global AM US serves as principal
underwriter to various open-end Funds.
UBS AG and ESC GP provide
investment advisory services to
employees’ securities companies
2 UBS Alternative is also managing member of the
UBS Alternative Managers.
VerDate Mar<15>2010
16:18 Feb 21, 2013
Jkt 229001
(‘‘ESCs’’), as defined in section 2(a)(13)
of the Act, which provide investment
opportunities for highly compensated
key employees, officer, directors and
current consultants of UBS AG and its
affiliates. Applicants (other than the
Settling Firm) collectively serve as
investment adviser to Funds and ESCs,
principal underwriter to open-end
Funds, and co-principal underwriter to
registered unit investment trusts (such
activities, collectively, ‘‘Fund Service
Activities’’).
2. On December 19, 2012, the Fraud
Section of the Criminal Division of the
DOJ filed a one-count criminal
information (the ‘‘Information’’) in the
District Court charging wire fraud, in
violation of Title 18, United States
Code, Sections 1343 and 2. The
Information charges that between
approximately 2006 and at least 2009,
the Settling Firm engaged in a scheme
to defraud counterparties to interest rate
derivatives trades executed on its behalf
by secretly manipulating benchmark
interest rates to which the profitability
of those trades was tied. The
Information charges that, in furtherance
of this scheme, on or about February 25,
2009, the Settling Firm committed wire
fraud in violation of Title 18, United
States Code, Sections 1343 and 2 by
transmitting, or causing the
transmission of: (i) An electronic chat
between a derivatives trader employed
by the Settling Firm and a broker
employed at an interdealer brokerage
firm; (ii) a subsequent submission for
the London InterBank Offered Rate for
Japanese Yen (‘‘Yen LIBOR’’) to
Thomson Reuters; and (iii) a subsequent
publication of a Yen LIBOR rate through
international and interstate wires.
3. Pursuant to a plea agreement (the
‘‘Plea Agreement’’), the Settling Firm
entered a plea of guilty (the ‘‘Guilty
Plea’’) on December 19, 2012, in the
District Court. In the Plea Agreement,
the Settling Firm agreed to a fine of
$100 million and other remedies.
Applicants expect that the District Court
will enter a judgment against the
Settling Firm (the ‘‘Judgment’’) that will
require remedies that are materially the
same as set forth in the Plea Agreement.
In addition, UBS AG has entered into a
non-prosecution agreement with DOJ,
dated December 18, 2012 (the ‘‘NonProsecution Agreement’’), relating to
submissions of the Yen LIBOR and other
benchmark interest rates. In the NonProsecution Agreement, UBS AG has
agreed to, among other things: (i)
Provide full cooperation with DOJ and
any other law enforcement or
government agency designated by DOJ
until the conclusion of all investigations
and prosecutions arising out of the
PO 00000
Frm 00084
Fmt 4703
Sfmt 4703
12373
conduct described in the NonProsecution Agreement; (ii) strengthen
its internal controls as required by
certain other U.S. and non-U.S.
regulatory agencies that have addressed
the misconduct described in the NonProsecution Agreement; and (iii) the
payment of $500 million, which
includes amounts incurred by the
Settling Firm for criminal penalties
arising from the Judgment. The
individuals at the Settling Firm and any
other Covered Person who were
identified by the Settling Firm, UBS AG
or any U.S. or non-U.S. regulatory or
enforcement agencies as being
responsible for the conduct underlying
the Plea Agreement (including the
conduct described in any of the Exhibits
thereto) (the ‘‘Conduct’’) have either
resigned or have been terminated.
Applicants’ Legal Analysis
1. Section 9(a)(1) of the Act provides,
in pertinent part, that a person may not
serve or act as an investment adviser or
depositor of any registered investment
company or a principal underwriter for
any registered open-end investment
company or registered unit investment
trust, if such person within ten years
has been convicted of any felony or
misdemeanor arising out of such
person’s conduct, as, among other
things, a broker or dealer. Section
2(a)(10) of the Act defines the term
‘‘convicted’’ to include a plea of guilty.
Section 9(a)(3) of the Act extends the
prohibitions of section 9(a)(1) to a
company any affiliated person of which
has been disqualified under the
provisions of section 9(a)(1). 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 Settling Firm is an affiliated
person of each of the other Applicants
within the meaning of section 2(a)(3).
Applicants state that the guilty plea
would result in a disqualification of
each Applicant for ten years under
section 9(a) of the Act because the
Settling Fund would become the subject
of a conviction described in 9(a)(1).
2. Section 9(c) of the Act provides that
the Commission shall grant an
application for exemption from the
disqualification provisions of section
9(a) if it is established that these
provisions, as applied to Applicants, are
unduly or disproportionately severe or
that the Applicants’ conduct has been
such as not to make it against the public
interest or the protection of investors to
grant the exemption. Applicants have
filed an application pursuant to section
9(c) seeking temporary and permanent
E:\FR\FM\22FEN1.SGM
22FEN1
sroberts on DSK5SPTVN1PROD with NOTICES
12374
Federal Register / Vol. 78, No. 36 / Friday, February 22, 2013 / Notices
orders exempting the Applicants and
the other Covered Persons from the
disqualification provisions of section
9(a) of the Act. On December 19, 2012,
Applicants received a temporary
conditional order from the Commission
exempting them from section 9(a) of the
Act with respect to the Guilty Plea from
December 19, 2012, until the
Commission takes final action on an
application for a permanent order or, if
earlier, February 15, 2013.
3. Applicants believe they meet the
standard for exemption specified in
section 9(c). Applicants state that the
prohibitions of section 9(a) as applied to
them would be unduly and
disproportionately severe and that the
conduct of Applicants has been such as
not to make it against the public interest
or the protection of investors to grant
the exemption from section 9(a).
4. Applicants assert that the Conduct
did not involve any of the Applicants’
Fund Service Activities, and that the
Settling Firm does not serve in any of
the capacities described in section 9(a)
of the Act. Additionally, Applicants
assert that the Conduct did not involve
any Fund or ESC with respect to which
the Applicants provided Fund Service
Activities, or the assets of any such
Fund or ESC. Applicants further assert
that (i) none of the current or former
directors, officers or employees of the
Applicants (other than certain personnel
of the Settling Firm and UBS AG who
were not involved in any of the
Applicants’ Fund Service Activities)
had any knowledge of, or had any
involvement in, the Conduct; (ii) no
former employee of the Settling Firm or
any other Covered Person who
previously has been or who
subsequently may be identified by the
Settling Firm, UBS AG or any U.S. or
non-U.S. regulatory or enforcement
agencies as having been responsible for
the Conduct will be an officer, director,
or employee of any Applicant or any
other Covered Person; (iii) those
identified employees have had no, and
will not have any future, involvement in
the Covered Persons’ activities in any
capacity described in section 9(a) of the
Act; and (iv) because the personnel of
the Applicants (other than certain
personnel of the Settling Firm and UBS
AG who were not involved in any of the
Applicants’ Fund Service Activities) did
not have any involvement in the
Conduct, shareholders of those RICs and
ESCs were not affected any differently
than if those RICs and ESCs had
received services from any other nonaffiliated investment adviser or
principal underwriter. Applicants have
agreed that neither they nor any of the
other Covered Persons will employ any
VerDate Mar<15>2010
16:18 Feb 21, 2013
Jkt 229001
of the former employees of the Settling
Firm or any other Covered Person who
previously have been or who
subsequently may be identified by the
Settling Firm, UBS AG or any U.S. or
non-U.S. regulatory or enforcement
agency as having been responsible for
the Conduct in any capacity without
first making a further application to the
Commission pursuant to section 9(c).
5. Applicants further represent that
the inability of the Applicants (other
than the Settling Firm) to continue
providing Fund Service Activities
would result in potential hardships for
both the Funds and their shareholders.
Applicants state that they will distribute
written materials, including an offer to
meet in person to discuss the materials,
to the board of directors of each Fund,
including the directors who are not
‘‘interested persons,’’ as defined in
section 2(a)(19) of the Act, of such
Fund, and their independent legal
counsel as defined in rule 0–1(a)(6)
under the Act, if any, regarding the
Guilty Plea, any impact on the Funds,
and the application. The Applicants
will provide the Funds with all
information concerning the Plea
Agreement 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
(other than the Settling Firm) were
barred from providing Fund Service
Activities to Funds, the effect on their
businesses and employees would be
severe. The Applicants state that they
have committed substantial capital and
resources to establishing expertise in
advising and sub-advising Funds and in
support of their principal underwriting
business.
7. Applicants state that several
Applicants and certain of their affiliates
have previously received orders under
section 9(c), as described in greater
detail in the application.
Applicants’ Conditions
Applicants agree that any order
granted by the Commission pursuant to
the application will be subject to the
following conditions:
1. 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
PO 00000
Frm 00085
Fmt 4703
Sfmt 4703
exemptions granted under the Act in
connection with the application.
2. Neither the Applicants nor any of
the other Covered Persons will employ
any of the former employees of the
Settling Firm or any other Covered
Person who previously have been or
who subsequently may be identified by
the Settling Firm, UBS AG or any U.S.
or non-U.S. regulatory or enforcement
agency as having been responsible for
the Conduct in any capacity without
first making a further application to the
Commission pursuant to section 9(c).
Temporary Order
The Commission has considered the
matter and finds that 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 the
Applicants and the other Covered
Persons are granted a temporary
exemption from the provisions of
section 9(a), effective forthwith, solely
with respect to the Guilty Plea, subject
to the conditions in the application,
until the date the Commission takes
final action on their application for a
permanent order.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013–04013 Filed 2–21–13; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–68933; File No. SR–CBOE–
2013–020]
Regulatory Organizations; Chicago
Board Options Exchange,
Incorporated; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Renew an Existing
Pilot Program for an Additional
Fourteen Months
February 14, 2013.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
7, 2013, Chicago Board Options
Exchange, Incorporated (the ‘‘Exchange’’
or ‘‘CBOE’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
1 15
2 17
E:\FR\FM\22FEN1.SGM
U.S.C. 78s(b)(1).
CFR 240.19b–4.
22FEN1
]]>Agencies
[Federal Register Volume 78, Number 36 (Friday, February 22, 2013)]
[Notices]
[Pages 12372-12374]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04013]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-30383; 812-14105]
UBS AG, et al.; Notice of Application and Temporary Order
February 15, 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 a guilty
plea entered on December 19, 2012, by UBS Securities Japan Co., Ltd.
(the ``Settling Firm'') in the U.S. District Court for the District of
Connecticut (``District Court'') in connection with a plea agreement
between the Settling Firm and the U.S. Department of Justice (``DOJ''),
until the Commission takes final action on an application for a
permanent order. Applicants have requested a permanent order.
Applicants: UBS AG; UBS IB Co-Investment 2001 GP Limited (``ESC
GP''); UBS Financial Services Inc. (``UBSFS''); UBS Alternative and
Quantitative Investments LLC (``UBS Alternative''); UBS Willow
Management, L.L.C. (``UBS Willow''), UBS Eucalyptus Management, L.L.C.
(``UBS Eucalyptus'') and UBS Juniper Management, L.L.C. (``UBS
Juniper'') (UBS Willow, UBS Eucalyptus, and UBS Juniper are referred to
collectively as ``UBS Alternative Managers''); UBS Global Asset
Management (Americas) Inc. (``UBS Global AM Americas''); UBS Global
Asset Management (US) Inc. (``UBS Global AM US''); and the Settling
Firm (each an ``Applicant'' and collectively, the ``Applicants'').\1\
---------------------------------------------------------------------------
\1\ Applicants request that any relief granted pursuant to the
application also apply to any existing or future company of which
the Settling Firm is or may become an affiliated person within the
meaning of section 2(a)(3) of the Act (together with the Applicants,
the ``Covered Persons'').
---------------------------------------------------------------------------
Filing Date: The application was filed on December 19, 2012, and
amended on January 31, 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 March 12, 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:
UBS AG, ESC-GP, and the Settling Firm, c/o UBS Investment Bank, 677
Washington Boulevard, Stamford, CT 06901; UBSFS, 1200 Harbor
[[Page 12373]]
Boulevard, Weehawken, NJ 07086; UBS Alternative, 677 Washington
Boulevard, Stamford, CT 06901; UBS Willow, UBS Eucalyptus, and UBS
Juniper, 299 Park Avenue, 29th Floor, New York, NY 10171; UBS Global AM
Americas, One North Wacker Drive, Chicago, IL 60606 and UBS Global AM
US, 1285 Avenue of the Americas, 12th Floor, New York, NY 10019.
FOR FURTHER INFORMATION CONTACT: Steven I. Amchan, Senior Counsel, at
(202) 551-6826 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 temporary order and a
summary of the application. The complete application may be obtained
via the Commission's Web site by searching for the file number, or an
applicant using the Company name box, at https://www.sec.gov/search/search.htm or by calling (202) 551-8090.
Applicants' Representations
1. UBS AG, a company organized under the laws of Switzerland, is a
Swiss-based global financial services firm. UBS AG and its subsidiaries
provide global wealth management, securities and retail and commercial
banking services. Each of the other Applicants is either a direct or
indirect majority-owned or wholly-owned subsidiary of UBS AG. UBSFS is
a corporation organized under the laws of Delaware and provides a wide
range of wealth management services, including financial planning and
wealth management consulting, asset-based and advisory services and
transaction-based services, to clients in the United States and
throughout the world. UBSFS, UBS Alternative, UBS Alternative
Managers,\2\ and UBS Global AM Americas are investment advisers
registered under the Investment Advisers Act of 1940, and all but UBSFS
currently serve as investment advisers to registered management
investment companies (``Funds''). UBSFS and UBS Global AM US are
registered as broker-dealers under the Securities and Exchange Act of
1934 (``Exchange Act''). UBSFS is the co-principal underwriter to
various registered unit investment trusts. UBS Global AM US serves as
principal underwriter to various open-end Funds. UBS AG and ESC GP
provide investment advisory services to employees' securities companies
(``ESCs''), as defined in section 2(a)(13) of the Act, which provide
investment opportunities for highly compensated key employees, officer,
directors and current consultants of UBS AG and its affiliates.
Applicants (other than the Settling Firm) collectively serve as
investment adviser to Funds and ESCs, principal underwriter to open-end
Funds, and co-principal underwriter to registered unit investment
trusts (such activities, collectively, ``Fund Service Activities'').
---------------------------------------------------------------------------
\2\ UBS Alternative is also managing member of the UBS
Alternative Managers.
---------------------------------------------------------------------------
2. On December 19, 2012, the Fraud Section of the Criminal Division
of the DOJ filed a one-count criminal information (the ``Information'')
in the District Court charging wire fraud, in violation of Title 18,
United States Code, Sections 1343 and 2. The Information charges that
between approximately 2006 and at least 2009, the Settling Firm engaged
in a scheme to defraud counterparties to interest rate derivatives
trades executed on its behalf by secretly manipulating benchmark
interest rates to which the profitability of those trades was tied. The
Information charges that, in furtherance of this scheme, on or about
February 25, 2009, the Settling Firm committed wire fraud in violation
of Title 18, United States Code, Sections 1343 and 2 by transmitting,
or causing the transmission of: (i) An electronic chat between a
derivatives trader employed by the Settling Firm and a broker employed
at an interdealer brokerage firm; (ii) a subsequent submission for the
London InterBank Offered Rate for Japanese Yen (``Yen LIBOR'') to
Thomson Reuters; and (iii) a subsequent publication of a Yen LIBOR rate
through international and interstate wires.
3. Pursuant to a plea agreement (the ``Plea Agreement''), the
Settling Firm entered a plea of guilty (the ``Guilty Plea'') on
December 19, 2012, in the District Court. In the Plea Agreement, the
Settling Firm agreed to a fine of $100 million and other remedies.
Applicants expect that the District Court will enter a judgment against
the Settling Firm (the ``Judgment'') that will require remedies that
are materially the same as set forth in the Plea Agreement. In
addition, UBS AG has entered into a non-prosecution agreement with DOJ,
dated December 18, 2012 (the ``Non-Prosecution Agreement''), relating
to submissions of the Yen LIBOR and other benchmark interest rates. In
the Non-Prosecution Agreement, UBS AG has agreed to, among other
things: (i) Provide full cooperation with DOJ and any other law
enforcement or government agency designated by DOJ until the conclusion
of all investigations and prosecutions arising out of the conduct
described in the Non-Prosecution Agreement; (ii) strengthen its
internal controls as required by certain other U.S. and non-U.S.
regulatory agencies that have addressed the misconduct described in the
Non-Prosecution Agreement; and (iii) the payment of $500 million, which
includes amounts incurred by the Settling Firm for criminal penalties
arising from the Judgment. The individuals at the Settling Firm and any
other Covered Person who were identified by the Settling Firm, UBS AG
or any U.S. or non-U.S. regulatory or enforcement agencies as being
responsible for the conduct underlying the Plea Agreement (including
the conduct described in any of the Exhibits thereto) (the ``Conduct'')
have either resigned or have been terminated.
Applicants' Legal Analysis
1. Section 9(a)(1) of the Act provides, in pertinent part, that a
person may not serve or act as an investment adviser or depositor of
any registered investment company or a principal underwriter for any
registered open-end investment company or registered unit investment
trust, if such person within ten years has been convicted of any felony
or misdemeanor arising out of such person's conduct, as, among other
things, a broker or dealer. Section 2(a)(10) of the Act defines the
term ``convicted'' to include a plea of guilty. Section 9(a)(3) of the
Act extends the prohibitions of section 9(a)(1) to a company any
affiliated person of which has been disqualified under the provisions
of section 9(a)(1). 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 Settling Firm is an affiliated person
of each of the other Applicants within the meaning of section 2(a)(3).
Applicants state that the guilty plea would result in a
disqualification of each Applicant for ten years under section 9(a) of
the Act because the Settling Fund would become the subject of a
conviction described in 9(a)(1).
2. Section 9(c) of the Act provides that the Commission shall grant
an application for exemption from the disqualification provisions of
section 9(a) if it is established that these provisions, as applied to
Applicants, are unduly or disproportionately severe or that the
Applicants' conduct has been such as not to make it against the public
interest or the protection of investors to grant the exemption.
Applicants have filed an application pursuant to section 9(c) seeking
temporary and permanent
[[Page 12374]]
orders exempting the Applicants and the other Covered Persons from the
disqualification provisions of section 9(a) of the Act. On December 19,
2012, Applicants received a temporary conditional order from the
Commission exempting them from section 9(a) of the Act with respect to
the Guilty Plea from December 19, 2012, until the Commission takes
final action on an application for a permanent order or, if earlier,
February 15, 2013.
3. Applicants believe they meet the standard for exemption
specified in section 9(c). Applicants state that the prohibitions of
section 9(a) as applied to them would be unduly and disproportionately
severe and that the conduct of Applicants has been such as not to make
it against the public interest or the protection of investors to grant
the exemption from section 9(a).
4. Applicants assert that the Conduct did not involve any of the
Applicants' Fund Service Activities, and that the Settling Firm does
not serve in any of the capacities described in section 9(a) of the
Act. Additionally, Applicants assert that the Conduct did not involve
any Fund or ESC with respect to which the Applicants provided Fund
Service Activities, or the assets of any such Fund or ESC. Applicants
further assert that (i) none of the current or former directors,
officers or employees of the Applicants (other than certain personnel
of the Settling Firm and UBS AG who were not involved in any of the
Applicants' Fund Service Activities) had any knowledge of, or had any
involvement in, the Conduct; (ii) no former employee of the Settling
Firm or any other Covered Person who previously has been or who
subsequently may be identified by the Settling Firm, UBS AG or any U.S.
or non-U.S. regulatory or enforcement agencies as having been
responsible for the Conduct will be an officer, director, or employee
of any Applicant or any other Covered Person; (iii) those identified
employees have had no, and will not have any future, involvement in the
Covered Persons' activities in any capacity described in section 9(a)
of the Act; and (iv) because the personnel of the Applicants (other
than certain personnel of the Settling Firm and UBS AG who were not
involved in any of the Applicants' Fund Service Activities) did not
have any involvement in the Conduct, shareholders of those RICs and
ESCs were not affected any differently than if those RICs and ESCs had
received services from any other non-affiliated investment adviser or
principal underwriter. Applicants have agreed that neither they nor any
of the other Covered Persons will employ any of the former employees of
the Settling Firm or any other Covered Person who previously have been
or who subsequently may be identified by the Settling Firm, UBS AG or
any U.S. or non-U.S. regulatory or enforcement agency as having been
responsible for the Conduct in any capacity without first making a
further application to the Commission pursuant to section 9(c).
5. Applicants further represent that the inability of the
Applicants (other than the Settling Firm) to continue providing Fund
Service Activities would result in potential hardships for both the
Funds and their shareholders. Applicants state that they will
distribute written materials, including an offer to meet in person to
discuss the materials, to the board of directors of each Fund,
including the directors who are not ``interested persons,'' as defined
in section 2(a)(19) of the Act, of such Fund, and their independent
legal counsel as defined in rule 0-1(a)(6) under the Act, if any,
regarding the Guilty Plea, any impact on the Funds, and the
application. The Applicants will provide the Funds with all information
concerning the Plea Agreement 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 (other than the Settling
Firm) were barred from providing Fund Service Activities to Funds, the
effect on their businesses and employees would be severe. The
Applicants state that they have committed substantial capital and
resources to establishing expertise in advising and sub-advising Funds
and in support of their principal underwriting business.
7. Applicants state that several Applicants and certain of their
affiliates have previously received orders under section 9(c), as
described in greater detail in the application.
Applicants' Conditions
Applicants agree that any order granted by the Commission pursuant
to the application will be subject to the following conditions:
1. 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.
2. Neither the Applicants nor any of the other Covered Persons will
employ any of the former employees of the Settling Firm or any other
Covered Person who previously have been or who subsequently may be
identified by the Settling Firm, UBS AG or any U.S. or non-U.S.
regulatory or enforcement agency as having been responsible for the
Conduct in any capacity without first making a further application to
the Commission pursuant to section 9(c).
Temporary Order
The Commission has considered the matter and finds that 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 the
Applicants and the other Covered Persons are granted a temporary
exemption from the provisions of section 9(a), effective forthwith,
solely with respect to the Guilty Plea, subject to the conditions in
the application, until the date the Commission takes final action on
their application for a permanent order.
By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-04013 Filed 2-21-13; 8:45 am]
BILLING CODE 8011-01-P
