Wells Fargo Bank, N.A., et al.; Notice of Application and Temporary Order, 48918-48920 [2013-19409]

Download as PDF 48918 Federal Register / Vol. 78, No. 155 / Monday, August 12, 2013 / Notices relating to each pilot trading system operating pursuant to Rule 19b–5, and to make such records available for Commission inspection for a period of not less than five years, the first two years in an easily accessible place. The filing of a Form PILOT is mandatory for any SRO seeking a temporary exemption under Rule 19b–5 from the rule filing requirements of Section 19(b) of the Act in connection with the operation of a pilot trading system. It is also mandatory that an SRO operating a pilot trading system file with the Commission notices of material systems changes and quarterly transaction reports on Form PILOT. Information provided on Form PILOT is deemed confidential and shall be available only for examination by the Commission, other agencies of the federal government, and state securities authorities. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The public may view background documentation for this information collection at the following Web site, www.reginfo.gov. Comments should be directed to: (i) Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503, or by sending an email to: Shagufta_Ahmed@omb.eop.gov; and (ii) Thomas Bayer, Director/Chief Information Officer, Securities and Exchange Commission, c/o Remi PavlikSimon, 100 F Street NE., Washington, DC 20549 or send an email to: PRA_Mailbox@sec.gov. Comments must be submitted to OMB within 30 days of this notice. Dated: August 6, 2013. Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–19407 Filed 8–9–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION mstockstill on DSK4VPTVN1PROD with NOTICES [Investment Company Act Release No. 30644; 812–14176] Wells Fargo Bank, N.A., et al.; Notice of Application and Temporary Order August 6, 2013. Securities and Exchange Commission (‘‘Commission’’). ACTION: Temporary order and notice of application for a permanent order under AGENCY: VerDate Mar<15>2010 14:51 Aug 09, 2013 Jkt 229001 section 9(c) of the Investment Company Act of 1940 (‘‘Act’’). Applicants have received a temporary order exempting them from section 9(a) of the Act, with respect to an injunction effective July 15, 2013, entered against Wells Fargo Bank, N.A. (‘‘Wells Fargo Bank’’) by the United States District Court for the Northern District of California, until the Commission takes final action on an application for a permanent order. Applicants have requested a permanent order. APPLICANTS: Wells Fargo Bank, Alternative Strategies Brokerage Services, Inc. (‘‘Alternative Strategies Brokerage’’), Alternative Strategies Group, Inc. (‘‘Alternative Strategies’’), First International Advisors, LLC (‘‘First International’’), Galliard Capital Management, Inc. (‘‘Galliard’’), Golden Capital Management, LLC (‘‘Golden Capital’’), Metropolitan West Capital Management, LLC (‘‘Metropolitan West’’), Peregrine Capital Management, Inc. (‘‘Peregrine’’), Wells Capital Management Incorporated (‘‘Wells Capital Management’’), Wells Fargo Funds Distributor, LLC (‘‘WF Funds Distributor’’), and Wells Fargo Funds Management, LLC (‘‘WF Funds Management’’) (each an ‘‘Applicant’’ and collectively, the ‘‘Applicants’’).1 DATES: Filing Date: The application was filed on July 12, 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 September 3, 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: Wells Fargo Bank, 101 SUMMARY OF APPLICATION: 1 Applicants request that any relief granted pursuant to the application also apply to any other company of which Wells Fargo Bank is or may become an affiliated person within the meaning of section 2(a)(3) of the Act (together with the Applicants, the ‘‘Covered Persons’’). PO 00000 Frm 00064 Fmt 4703 Sfmt 4703 North Phillips Avenue, Sioux Falls, SD 57104; Alternative Strategies Brokerage and Alternative Strategies, 401 South Tryon Street, TH 3, 5th Floor, Charlotte, NC 28202; First International, 30 Fenchurch Street, London, England, UK EC3M 3BD; Galliard, 800 LaSalle Avenue, Suite 1100, Minneapolis, MN 55402; Golden Capital, 5 Resource Square, Suite 400, 10715 David Taylor Drive, Charlotte, NC 28262; Metropolitan West, 610 Newport Center Drive, Suite 1000, Newport Beach, CA 92660; Peregrine, 800 LaSalle Avenue, Suite 1850, Minneapolis, MN 55402; West Capital Management, 525 Market Street, 10th Floor, San Francisco, CA 94105; and WF Funds Distributor and WF Funds Management, 525 Market Street, 12th Floor, San Francisco, CA 94105. FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at (202) 551–6873 or Mary Kay Frech, Branch Chief, at (202) 551–6821 (Division of Investment Management, Office of Exemptive Applications). 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. Wells Fargo Bank is a national banking association wholly-owned, directly and indirectly, by Wells Fargo & Company (‘‘Wells Fargo’’). Through its direct and indirect subsidiaries, Wells Fargo, a registered financial holding company and bank holding company under the Bank Holding Company Act of 1956, as amended, offers banking, brokerage, advisory and other financial services to institutional and individual customers worldwide. Wells Fargo also is the ultimate parent of the other Applicants, who, as direct or indirect, majority-owned or whollyowned, subsidiaries of the same ultimate parent, are, or may be considered to be, under common control with Wells Fargo Bank. 2. Abbot Downing Investment Advisors and Wells Capital Management Singapore, each a separately identifiable department within Wells Fargo Bank and each registered as an investment adviser under the Investment Advisers Act of 1940 (‘‘Advisers Act’’), serve as investment advisers to one or more Funds (as defined below). Alternative E:\FR\FM\12AUN1.SGM 12AUN1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 155 / Monday, August 12, 2013 / Notices Strategies, First International, Galliard, Golden Capital, Metropolitan West, Peregrine, Wells Capital Management, and WF Funds Management are registered as investment advisers under the Advisers Act and serve as investment advisers or sub-advisers to various Funds. Alternative Strategies Brokerage and WF Funds Distributor are registered as broker-dealers under the Securities Exchange Act of 1934, and each serves as principal underwriter to various Funds. ‘‘Fund’’ means any registered investment company, including a registered unit investment trust (‘‘UIT’’) or registered face amount certificate company, as well as any business development company (‘‘BDC’’) or employees’ securities company (‘‘ESC’’). ‘‘Fund Servicing Activities’’ means acting as an adviser, sub-adviser or depositor to Funds, or principal underwriter for any registered open-end investment company, UIT, registered face amount company or ESC. 3. On May 14, 2013, the United States District Court for the Northern District of California issued an order (the ‘‘Court Order’’) in a certified consumer class action under Section 17200 of the California Business and Professions Code relating to a Wells Fargo Bank bookkeeping device known as ‘‘high-tolow’’ posting.2 The plaintiffs in the class action alleged that Wells Fargo Bank, without adequate disclosure to account holders, posted debit card transactions received each day for payment beginning with the highest amount and ending with the lowest amount (i.e., high-to-low), which could have the effect of increasing the number of items posting into overdraft and, therefore, increased overdraft fees.3 While the plaintiffs’ challenge to the practice of high-to-low posting and to the adequacy of the bank’s disclosures was found to be preempted by the National Bank Act, Wells Fargo Bank was found liable under the California law for making misleading statements regarding the practice.4 The Court Order enjoined Wells Fargo Bank from making or disseminating, or permitting to be made or disseminated, any false or misleading representations relating to the posting order of debit-card purchases, checks, and ACH transactions in its customer bank accounts (the ‘‘Injunction’’). The Court Order set July 15, 2013, as the effective date of the Injunction. 2 Gutierrez v. Wells Fargo Bank, N.A., Case No. C 07–05923 WHA (N.D. Cal., May 14, 2013) (granting in part and denying in part motion for judgment following remand). 3 Id. 4 Id. at 3 (citing Gutierrez v. Wells Fargo Bank, N.A., 704 F.3d 712, 725–730 (9th Cir. 2012)). VerDate Mar<15>2010 14:51 Aug 09, 2013 Jkt 229001 Applicants’ Legal Analysis 1. Section 9(a)(2) of the Act, in relevant part, prohibits a person who has been enjoined from acting as a bank, or from engaging in or continuing any conduct or practice in connection with such activity, from acting, among other things, as an investment adviser or depositor of any registered investment company, or as a principal underwriter for any registered open-end investment company, UIT or registered face-amount certificate company. Section 9(a)(3) of the Act extends the prohibitions of section 9(a)(2) to a company any affiliated person of which has been disqualified under the provisions of section 9(a)(2). Section 2(a)(3) of the Act defines ‘‘affiliated person’’ to include, among others, any person directly or indirectly controlling, controlled by, or under common control with, the other person. Applicants state that Wells Fargo Bank is, or may be considered to be, under common control with and therefore an affiliated person of each of the other Applicants. Applicants state that the Injunction may result in Applicants being subject to the disqualification provisions of section 9(a) of the Act because Wells Fargo Bank is enjoined from engaging in or continuing certain conduct and/or practices in connection with its banking activity.5 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 orders exempting the Applicants and the other Covered Persons from the disqualification provisions of section 9(a) of the Act. On July 15, 2013, Applicants received a temporary conditional order from the Commission exempting them from section 9(a) of the Act with respect to the Injunction from July 15, 2013 until the Commission takes final action on an application for a permanent order or, if earlier, September 13, 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 5 Applicants believe that the conduct and/or practices covered by the Injunction could be deemed to be in connection with Wells Fargo Bank’s banking activity. PO 00000 Frm 00065 Fmt 4703 Sfmt 4703 48919 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 state that the conduct giving rise to the Injunction did not involve any of the Applicants acting in their capacity as investment adviser, sub-adviser, or principal underwriter for Funds. Applicants also state that the alleged conduct giving rise to the Injunction did not involve any Fund or the assets of any Fund for which they provided Fund Servicing Activities. Applicants further state that to the best of their reasonable knowledge: (i) none of the Applicants’ (other than certain of Wells Fargo Bank’s) current or former directors, officers or employees had any knowledge of, or had any involvement in, the conduct alleged in the Court Order that provided a basis for the Injunction; (ii) the personnel who were involved in the violations have had no involvement in, and will not have any future involvement in, providing advisory, sub-advisory, depository or underwriting services to Funds; and (iii) because the personnel of the Applicants involved in Fund Servicing Activities did not have any involvement in the alleged misconduct, shareholders of Funds that received investment advisory, depository and principal underwriting services from the Applicants were not affected any differently than if those Funds had received services from any other nonaffiliated investment adviser, depositor or principal underwriter. 5. Applicants further represent that the inability of Applicants to continue providing Fund Servicing Activities would result in potentially severe financial 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 Injunction, any impact on the Funds, and the application. The Applicants will provide the Funds with all 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 assert that, if the Applicants were barred from engaging in Fund Servicing Activities, the effect E:\FR\FM\12AUN1.SGM 12AUN1 48920 Federal Register / Vol. 78, No. 155 / Monday, August 12, 2013 / Notices 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’ Condition Applicants agree that any order granted by the Commission pursuant to the application 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 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 Injunction, subject to the condition in the application, until the date the Commission takes final action on their application for a permanent order. By the Commission. Kevin M. O’Neill, Deputy Secretary. mstockstill on DSK4VPTVN1PROD with NOTICES [FR Doc. 2013–19409 Filed 8–9–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION of the most significant parts of such statements. [Release No. 34–70124; File No. SR– NYSEARCA–2013–78] A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE Arca Equities Rule 5.3(i)(1)(i) To Specify the Procedures To Be Followed if a Listed Derivative Securities Product or a Listed Structured Product Is Based on an Index or Portfolio of Securities and Such Index or Portfolio Is Modified or Replaced August 6, 2013. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on July 25, 2013, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. 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 The Exchange proposes to amend NYSE Arca Equities Rule 5.3(i)(1)(i) to specify the procedures to be followed if a listed Derivative Securities Product or a listed Structured Product is based on an index or portfolio of securities and such index or portfolio is modified or replaced. The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 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 self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those 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, 1 15 U.S.C.78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 2 15 VerDate Mar<15>2010 14:51 Aug 09, 2013 Jkt 229001 PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 1. Purpose The Exchange proposes to amend its rules to clarify Exchange policies with respect to changes in the index or portfolio on which a listed security is based. The proposed rule change is consistent with the policies currently applied under existing Exchange rules. In particular, the Exchange proposes to adopt specific procedures to be followed when a Derivative Securities Product 4 or a Structured Product 5 based on an index or portfolio of securities is listed on the Exchange and: (1) The value of such index or portfolio is no longer calculated or available and a new index or portfolio is substituted; or (2) such index or portfolio is replaced with a new index or portfolio from the same or a different index provider; or (3) the index or portfolio is significantly modified (including, but not limited to, a significant modification to the index methodology, a change in the index provider or a change in control of the index provider) (each of (1), (2) and (3), a ‘‘Material Index or Portfolio Change’’). It is the Exchange’s long-standing policy to require the issuer of any Derivative Securities Product or Structured Product to submit an executed Supplemental Listing Application and to obtain authorization from NYSE Regulation prior to the effective date of any change in the index or portfolio on which such security is based. Generally, NYSE Regulation requires at least two weeks to review and to approve a Supplemental Listing Application. The Exchange reminds issuers of this policy in an annual reminder letter sent to all listed issuers which summarizes important Exchange corporate governance and notice requirements. This current policy is appropriate in light of NYSE Arca Equities Rule 5.3(i)(1)(i)(N), which requires listed issuers to ‘‘provide 4 ‘‘Derivative Securities Products’’ are (i) investment company units listed under NYSE Arca Equities Rule 5.2(j)(3) Commentary .01(a)(A)(1) and (ii) securities defined in Section 2 of NYSE Arca Equities Rule 8. 5 Pursuant to NYSE Arca Equities Rule 5.1(b)(17), the term ‘‘Structured Products’’ means products that are derived from and/or based on a single security or securities, a basket of stocks, an index, a commodity, debt issuance and/or a foreign currency, among other things. Structured Products include index and equity linked notes, term notes and units generally consisting of a contract to purchase equity and/or debt securities at a specified time. E:\FR\FM\12AUN1.SGM 12AUN1

Agencies

[Federal Register Volume 78, Number 155 (Monday, August 12, 2013)]
[Notices]
[Pages 48918-48920]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-19409]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30644; 812-14176]


Wells Fargo Bank, N.A., et al.; Notice of Application and 
Temporary Order

August 6, 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'').

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Summary of Application: Applicants have received a temporary order 
exempting them from section 9(a) of the Act, with respect to an 
injunction effective July 15, 2013, entered against Wells Fargo Bank, 
N.A. (``Wells Fargo Bank'') by the United States District Court for the 
Northern District of California, until the Commission takes final 
action on an application for a permanent order. Applicants have 
requested a permanent order.

Applicants: Wells Fargo Bank, Alternative Strategies Brokerage 
Services, Inc. (``Alternative Strategies Brokerage''), Alternative 
Strategies Group, Inc. (``Alternative Strategies''), First 
International Advisors, LLC (``First International''), Galliard Capital 
Management, Inc. (``Galliard''), Golden Capital Management, LLC 
(``Golden Capital''), Metropolitan West Capital Management, LLC 
(``Metropolitan West''), Peregrine Capital Management, Inc. 
(``Peregrine''), Wells Capital Management Incorporated (``Wells Capital 
Management''), Wells Fargo Funds Distributor, LLC (``WF Funds 
Distributor''), and Wells Fargo Funds Management, LLC (``WF Funds 
Management'') (each an ``Applicant'' and collectively, the 
``Applicants'').\1\
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    \1\ Applicants request that any relief granted pursuant to the 
application also apply to any other company of which Wells Fargo 
Bank is or may become an affiliated person within the meaning of 
section 2(a)(3) of the Act (together with the Applicants, the 
``Covered Persons'').

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DATES: Filing Date: The application was filed on July 12, 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 September 3, 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: 
Wells Fargo Bank, 101 North Phillips Avenue, Sioux Falls, SD 57104; 
Alternative Strategies Brokerage and Alternative Strategies, 401 South 
Tryon Street, TH 3, 5th Floor, Charlotte, NC 28202; First 
International, 30 Fenchurch Street, London, England, UK EC3M 3BD; 
Galliard, 800 LaSalle Avenue, Suite 1100, Minneapolis, MN 55402; Golden 
Capital, 5 Resource Square, Suite 400, 10715 David Taylor Drive, 
Charlotte, NC 28262; Metropolitan West, 610 Newport Center Drive, Suite 
1000, Newport Beach, CA 92660; Peregrine, 800 LaSalle Avenue, Suite 
1850, Minneapolis, MN 55402; West Capital Management, 525 Market 
Street, 10th Floor, San Francisco, CA 94105; and WF Funds Distributor 
and WF Funds Management, 525 Market Street, 12th Floor, San Francisco, 
CA 94105.

FOR FURTHER INFORMATION CONTACT: Laura J. Riegel, Senior Counsel, at 
(202) 551-6873 or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Office of Exemptive Applications).

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. Wells Fargo Bank is a national banking association wholly-owned, 
directly and indirectly, by Wells Fargo & Company (``Wells Fargo''). 
Through its direct and indirect subsidiaries, Wells Fargo, a registered 
financial holding company and bank holding company under the Bank 
Holding Company Act of 1956, as amended, offers banking, brokerage, 
advisory and other financial services to institutional and individual 
customers worldwide. Wells Fargo also is the ultimate parent of the 
other Applicants, who, as direct or indirect, majority-owned or wholly-
owned, subsidiaries of the same ultimate parent, are, or may be 
considered to be, under common control with Wells Fargo Bank.
    2. Abbot Downing Investment Advisors and Wells Capital Management 
Singapore, each a separately identifiable department within Wells Fargo 
Bank and each registered as an investment adviser under the Investment 
Advisers Act of 1940 (``Advisers Act''), serve as investment advisers 
to one or more Funds (as defined below). Alternative

[[Page 48919]]

Strategies, First International, Galliard, Golden Capital, Metropolitan 
West, Peregrine, Wells Capital Management, and WF Funds Management are 
registered as investment advisers under the Advisers Act and serve as 
investment advisers or sub-advisers to various Funds. Alternative 
Strategies Brokerage and WF Funds Distributor are registered as broker-
dealers under the Securities Exchange Act of 1934, and each serves as 
principal underwriter to various Funds. ``Fund'' means any registered 
investment company, including a registered unit investment trust 
(``UIT'') or registered face amount certificate company, as well as any 
business development company (``BDC'') or employees' securities company 
(``ESC''). ``Fund Servicing Activities'' means acting as an adviser, 
sub-adviser or depositor to Funds, or principal underwriter for any 
registered open-end investment company, UIT, registered face amount 
company or ESC.
    3. On May 14, 2013, the United States District Court for the 
Northern District of California issued an order (the ``Court Order'') 
in a certified consumer class action under Section 17200 of the 
California Business and Professions Code relating to a Wells Fargo Bank 
bookkeeping device known as ``high-to-low'' posting.\2\ The plaintiffs 
in the class action alleged that Wells Fargo Bank, without adequate 
disclosure to account holders, posted debit card transactions received 
each day for payment beginning with the highest amount and ending with 
the lowest amount (i.e., high-to-low), which could have the effect of 
increasing the number of items posting into overdraft and, therefore, 
increased overdraft fees.\3\ While the plaintiffs' challenge to the 
practice of high-to-low posting and to the adequacy of the bank's 
disclosures was found to be preempted by the National Bank Act, Wells 
Fargo Bank was found liable under the California law for making 
misleading statements regarding the practice.\4\ The Court Order 
enjoined Wells Fargo Bank from making or disseminating, or permitting 
to be made or disseminated, any false or misleading representations 
relating to the posting order of debit-card purchases, checks, and ACH 
transactions in its customer bank accounts (the ``Injunction''). The 
Court Order set July 15, 2013, as the effective date of the Injunction.
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    \2\ Gutierrez v. Wells Fargo Bank, N.A., Case No. C 07-05923 WHA 
(N.D. Cal., May 14, 2013) (granting in part and denying in part 
motion for judgment following remand).
    \3\ Id.
    \4\ Id. at 3 (citing Gutierrez v. Wells Fargo Bank, N.A., 704 
F.3d 712, 725-730 (9th Cir. 2012)).
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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 acting as a bank, or from engaging in or 
continuing any conduct or practice in connection with such activity, 
from acting, among other things, as an investment adviser or depositor 
of any registered investment company, or as a principal underwriter for 
any registered open-end investment company, UIT or registered face-
amount certificate company. Section 9(a)(3) of the Act extends the 
prohibitions of section 9(a)(2) to a company any affiliated person of 
which has been disqualified under the provisions of section 9(a)(2). 
Section 2(a)(3) of the Act defines ``affiliated person'' to include, 
among others, any person directly or indirectly controlling, controlled 
by, or under common control with, the other person. Applicants state 
that Wells Fargo Bank is, or may be considered to be, under common 
control with and therefore an affiliated person of each of the other 
Applicants. Applicants state that the Injunction may result in 
Applicants being subject to the disqualification provisions of section 
9(a) of the Act because Wells Fargo Bank is enjoined from engaging in 
or continuing certain conduct and/or practices in connection with its 
banking activity.\5\
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    \5\ Applicants believe that the conduct and/or practices covered 
by the Injunction could be deemed to be in connection with Wells 
Fargo Bank's banking activity.
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    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 orders exempting the Applicants and the other 
Covered Persons from the disqualification provisions of section 9(a) of 
the Act. On July 15, 2013, Applicants received a temporary conditional 
order from the Commission exempting them from section 9(a) of the Act 
with respect to the Injunction from July 15, 2013 until the Commission 
takes final action on an application for a permanent order or, if 
earlier, September 13, 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 state that the conduct giving rise to the Injunction 
did not involve any of the Applicants acting in their capacity as 
investment adviser, sub-adviser, or principal underwriter for Funds. 
Applicants also state that the alleged conduct giving rise to the 
Injunction did not involve any Fund or the assets of any Fund for which 
they provided Fund Servicing Activities. Applicants further state that 
to the best of their reasonable knowledge: (i) none of the Applicants' 
(other than certain of Wells Fargo Bank's) current or former directors, 
officers or employees had any knowledge of, or had any involvement in, 
the conduct alleged in the Court Order that provided a basis for the 
Injunction; (ii) the personnel who were involved in the violations have 
had no involvement in, and will not have any future involvement in, 
providing advisory, sub-advisory, depository or underwriting services 
to Funds; and (iii) because the personnel of the Applicants involved in 
Fund Servicing Activities did not have any involvement in the alleged 
misconduct, shareholders of Funds that received investment advisory, 
depository and principal underwriting services from the Applicants were 
not affected any differently than if those Funds had received services 
from any other non-affiliated investment adviser, depositor or 
principal underwriter.
    5. Applicants further represent that the inability of Applicants to 
continue providing Fund Servicing Activities would result in 
potentially severe financial 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 
Injunction, any impact on the Funds, and the application. The 
Applicants will provide the Funds with all 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 assert that, if the Applicants were barred from 
engaging in Fund Servicing Activities, the effect

[[Page 48920]]

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' Condition

    Applicants agree that any order granted by the Commission pursuant 
to the application 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 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 Injunction, subject to the condition in the 
application, until the date the Commission takes final action on their 
application for a permanent order.

    By the Commission.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-19409 Filed 8-9-13; 8:45 am]
BILLING CODE 8011-01-P
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