Beverly Hills Bancorp Inc.; Notice of Application, 30656-30659 [2014-12231]
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30656
Federal Register / Vol. 79, No. 102 / Wednesday, May 28, 2014 / Notices
Interested parties are encouraged to
send comments to the OMB, Office of
Information and Regulatory Affairs at
the address shown in the ADDRESSES
section within 30 days of publication of
this notice in the Federal Register. In
order to help ensure appropriate
consideration, comments should
mention OMB Control Number 1218–
0003. The OMB is particularly
interested in comments that:
• Evaluate whether the proposed
collection of information is necessary
for the proper performance of the
functions of the agency, including
whether the information will have
practical utility;
• Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used;
• Enhance the quality, utility, and
clarity of the information to be
collected; and
• Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
e.g., permitting electronic submission of
responses.
Agency: DOL–OSHA.
Title of Collection: Gear Certification
Standard.
OMB Control Number: 1218–0003.
Affected Public: Private Sector—
businesses or other for-profits.
Total Estimated Number of
Respondents: 1,111.
Total Estimated Number of
Responses: 6,357.
Total Estimated Annual Time Burden:
184 hours.
Total Estimated Annual Other Costs
Burden: $2,878,090.
Dated: May 20, 2014.
Michel Smyth,
Departmental Clearance Officer.
[FR Doc. 2014–12192 Filed 5–27–14; 8:45 am]
BILLING CODE 4510–26–P
emcdonald on DSK67QTVN1PROD with NOTICES
NUCLEAR REGULATORY
COMMISSION
[Docket No. NRC–2013–0256]
Agency Information Collection
Activities: Submission for the Office of
Management and Budget (OMB)
Review; Comment Request
Nuclear Regulatory
Commission.
AGENCY:
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Notice of the OMB review of
information collection and solicitation
of public comment.
ACTION:
The U.S. Nuclear Regulatory
Commission (NRC) has recently
submitted to OMB for review the
following proposal for the collection of
information under the provisions of the
Paperwork Reduction Act of 1995 (44
U.S.C. Chapter 35). The NRC hereby
informs potential respondents that an
agency may not conduct or sponsor, and
that a person is not required to respond
to, a collection of information unless it
displays a currently valid OMB control
number. The NRC published a Federal
Register notice with a 60-day comment
period on this information collection on
December 5, 2013.
1. Type of submission, new, revision,
or extension: New.
2. The title of the information
collection: NRC Nuclear Education
Grantee Survey.
3. Current OMB approval number:
3150–XXXX.
4. The form number if applicable: Not
applicable.
5. How often the collection is
required: Once every 5 years.
6. Who will be required or asked to
report: NRC Grantees.
7. An estimate of the number of
annual responses: 60.
8. The estimated number of annual
respondents: 60.
9. An estimate of the total number of
hours needed annually to complete the
requirement or request: 45 hours.
10. Abstract: The NRC seeks to
conduct a survey of grantees funded
between 2007 and 2011, under NRC’s
Nuclear Education Grants. The survey
will allow the NRC to collect
information that is not otherwise
available from all grantees to assess the
impact of these funds on grantee
programs, their faculty, and their
students.
The public may examine and have
copied for a fee publicly-available
documents, including the final
supporting statement, at the NRC’s
Public Document Room, Room O–1F21,
One White Flint North, 11555 Rockville
Pike, Rockville, Maryland 20852. The
OMB clearance requests are available at
the NRC’s Web site: https://www.nrc.gov/
public-involve/doc-comment/omb/. The
document will be available on the
NRC’s home page site for 60 days after
the signature date of this notice.
Comments and questions should be
directed to the OMB reviewer listed
below by June 27, 2014. Comments
received after this date will be
considered if it is practical to do so, but
assurance of consideration cannot be
SUMMARY:
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given to comments received after this
date.
Danielle Y. Jones, Desk Officer, Office of
Information and Regulatory Affairs
(3150–XXXX), NEOB–10202, Office of
Management and Budget,
Washington, DC 20503.
Comments can also be emailed to
Danielle_Y_Jones@omb.eop.gov or
submitted by telephone at 202–395–
1741.
The Acting NRC Clearance Officer is
Kristen Benney, telephone: 301–415–
6355.
Dated at Rockville, Maryland, this 20th day
of May, 2014.
For the Nuclear Regulatory Commission.
Kristen Benney,
Acting NRC Clearance Officer, Office of
Information Services.
[FR Doc. 2014–12344 Filed 5–27–14; 8:45 am]
BILLING CODE 7590–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31054; 812–14280]
Beverly Hills Bancorp Inc.; Notice of
Application
May 21, 2014.
Securities and Exchange
Commission (the ‘‘Commission’’).
ACTION: Notice of application for an
order under sections 6(c) and 6(e) of the
Investment Company Act of 1940
(‘‘Act’’) for an exemption from all
provisions of the Act, except sections 9,
17(a), 17(d), 17(e), 17(f), 36 through 45,
and 47 through 51 of the Act and the
rules thereunder, modified as discussed
in the application.
AGENCY:
Summary of Application: The
requested order would exempt the
applicant, Beverly Hills Bancorp Inc.
(‘‘BHBC’’), from certain provisions of
the Act until the earlier of one year from
the date of the requested order or such
time as BHBC would no longer be
required to register as an investment
company under the Act. The requested
exemption would extend an exemption
granted until May 24, 2014.1
Filing Dates: The application was
filed on February 18, 2014 and amended
on April 29, 2014.
Hearing or Notification of Hearing: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
1 Beverly Hills Bancorp Inc., Investment
Company Act Release Nos. 30497 (April 30, 2013)
(notice) and 30541 (May 24, 2013) (order) (‘‘Prior
Order’’).
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a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on June 13, 2014 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: Secretary, U.S. Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
Applicant, Post Office Box 8280,
Calabasas, CA 91372.
FOR FURTHER INFORMATION CONTACT:
Emerson S. Davis, Senior Counsel, at
(202) 551–6876, or Mary Kay Frech,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Exemptive Applications Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicant’s Representations
1. BHBC is a bank holding company
that conducted its banking and lending
operations through its wholly-owned
subsidiary First Bank of Beverly Hills, a
California banking corporation (the
‘‘Bank’’). From its incorporation in 1996
until April 24, 2009, the Bank was the
source of substantially all of BHBC’s
revenues and income. The Bank
sustained substantial losses in its real
estate loan and mortgage-backed
securities portfolios, and as of December
31, 2008, it no longer met applicable
regulatory capital requirements. As a
result, on February 13, 2009, the Federal
Deposit Insurance Corporation (‘‘FDIC’’)
and the California Department of
Financial Institutions (the ‘‘CDFI’’)
issued an order requiring the Bank to
increase its regulatory capital within 60
days. Because the Bank was unable to
increase its regulatory capital within the
specified time period, on April 24, 2009,
the CDFI closed the Bank and the FDIC
was appointed as the Bank’s receiver.
2. BHBC has one class of common
stock outstanding, which it voluntarily
delisted from the NASDAQ Global
Select Market on February 12, 2009. On
February 19, 2009, BHBC deregistered
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its common stock under Section 12(g) of
the Securities Exchange Act of 1934, as
amended (the ‘‘Exchange Act’’), and on
March 13, 2009, its reporting obligations
under Section 15(d) of the Exchange Act
were suspended. As such, BHBC is no
longer subject to the reporting
requirements of the Exchange Act and
its common stock is solely traded on the
over the counter markets under the
‘‘Other OTC’’ category. As of January 27,
2014, BHBC had 78 holders of record.
3. As of December 31, 2013, on a
consolidated basis, for financial
reporting purposes BHBC has assets of
$8.5 million, liabilities of $40.9 million,
and a stockholders’ equity of negative
$32.4 million. On a non-consolidated
basis, BHBC’s assets total approximately
$7.1 million. BHBC currently has
invested the assets in Permitted
Securities (as defined below) since the
Prior Order.
4. BHBC has several direct or indirect
wholly owned subsidiaries, none of
which has any ongoing business or
operations. As of January 27, 2014, the
following assets were held by BHBC
subsidiaries: (i) Wilshire Acquisitions
Corporation (‘‘Wilshire Asquisitions’’)
has assets with a book value of $174,052
consisting of accrued interest and
prepaid expenses related to a subsidiary
trust; (ii) WFC Inc. has assets with a
book value of $220,487 consisting of
approximately 13 small consumer and
residential mortgage loans, cash, and
prepaid expenses; and (iii) BH
Commercial Capital I, Inc. has assets
with a book value of $1,084,799
consisting of two secured commercial
real estate loans (collectively, the
‘‘Subsidiary Assets’’). In addition, BHBC
also either directly or indirectly owns
the common securities of three
subsidiary trusts that were formed in
connection with offerings of trust
preferred securities in which the trust
subsidiaries issued their common
securities to BHBC or Wilshire
Acquisitions and their preferred
securities to third party investors. The
subsidiary trusts then loaned all the
proceeds of the sale of trust preferred
securities to BHBC or Wilshire
Acquisitions in exchange for junior
subordinated debentures (the
‘‘Subordinated Debentures’’). The
subsidiary trusts have no assets other
than the Subordinated Debentures.
5. BHBC’s liabilities consist
principally of $25.8 million of the
Subordinated Debentures issued to its
two direct trust subsidiaries and $10.3
million of Subordinated Debentures
issued to its indirect trust subsidiary,
plus accrued interest of approximately
$4.9 million and accrued expenses of
$1.0 million. In the aggregate, interest in
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an approximate amount of $900,000
accrues on a yearly basis pursuant to
these three series of Subordinated
Debentures. BHBC states that there is no
public market for the Subordinated
Debentures or the trust preferred
securities. Under the terms of the
Subordinated Debentures, BHBC may
defer interest payments for up to 20
consecutive quarters.2 On January 29,
2009, BHBC elected to exercise this
right and had been able to defer
payments on the debentures unitl March
6, 2014. BHBC was not in default under
the Subordinated Debentures through
the deferral periods, however, BHBC is
now in default under the debentures.
6. In March 2014, BHBC was
contacted by the holders of some of the
debentures, and entered into
negotiations with those holders
regarding payment of the debentures.
On April 10, 2014, a former director of
BHBC filed an action against BHBC
seeking a temporary restraining order
preventing BHBC from making
payments on the debentures in light of
BHBC’s indemnification obligations to
its directors. The temporary restraining
order was granted. Subsequently, on
April 15, 2014, BHBC filed a voluntary
petition for relief under chapter 11 of
the United States Bankruptcy Code.
BHBC continues to operate its business
as a debtor in possession pursuant to
sections 1107(a) and 1108 of the
Bankruptcy Code.
7. BHBC may be subject to contingent
liabilities of uncertain amounts related
to claims associated with its former
operations, as well as regulatory and
stockholder claims in connection with
the failure of the Bank. In addition,
current and former directors and officers
of the Bank are subject to two pending
actions (the ‘‘Actions’’) in connection
with the failure of the Bank. These are:
(a) An administrative action brought by
the FDIC in 2011 against two former
officers (one of whom has settled)
seeking certain administrative sanctions
and penalties; and (b) a lawsuit brought
by the FDIC in April, 2012 against the
Bank’s former directors (including all
four current members of the board of
directors of BHBC) and several former
officers of the Bank for negligence, gross
negligence, and breach of fiduciary duty
in connection with their activities with
the Bank. The latter action seeks $100.6
million in damages related to losses
allegedly incurred by the Bank on
certain loans.
2 During the period when interest payments are
being deferred, interest continues to accrue,
compounding quarterly, at an annual rate equal to
the interest in effect for such period and must be
paid at the end of the deferral period.
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8. BHBC states that it is subject to
indemnification and expense
obligations in connection with various
actions brought against its current and
former directors, officers, employees or
agents. As a result, BHBC is
indemnifying these directors and
officers in connection with the Actions.
The potential amount of the
indemnification claim is unknown.
9. Since the Bank was placed into
receivership, BHBC has had no active
business or operations. Within several
months of the receivership, BHBC
terminated all employees, and since that
time has paid two consultants on an
hourly basis primarily for
administrative and accounting services.
BHBC does not maintain an office and
is managed by its four member board of
directors, which has considered various
alternatives, including liquidation and
acquisition of an operating business,
while preserving its assets. BHBC states
that because of its financial condition
and contingent liabilities, pursuing
these courses of action has not been
feasible.
Applicant’s Legal Analysis
1. Section 3(a)(1)(A) of the Act defines
an investment company as any issuer
who ‘‘is or holds itself out as being
engaged primarily . . . in the business of
investing, reinvesting or trading in
securities.’’ Section 3(a)(1)(C) of the Act
further defines an investment company
as an issuer who is engaged in the
business of investing in securities that
have a value in excess of 40% of the
issuer’s total assets (excluding
government securities and cash).
2. Section 6(c) of the Act provides that
the Commission may exempt any person
from any provision of the Act if such
exemption is necessary or appropriate
in the public interest and consistent
with the protection of investors and the
purposes fairly intended by the policy
and provisions of the Act. Section 6(e)
provides that, in connection with any
order exempting an investment
company from any provision of section
7, certain provisions of the Act, as
specified by the Commission, shall
apply to the company and other persons
dealing with the company, as if such
company were a registered investment
company.
3. BHBC acknowledges that it may be
deemed to fall within one of the Act’s
definitions of an investment company.
Accordingly, BHBC requests an order of
the Commission pursuant to sections
6(c) and 6(e) of the Act exempting it
from all provisions of the Act, subject to
certain exceptions described below.
BHBC requests an exemption until the
earlier of one year from the date of the
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requested order or such time as it would
no longer be required to register as an
investment company under the Act.
During the term of the proposed
exemption, BHBC states that it will
comply with sections 9, 17(a), 17(d),
17(e), 17(f), 36 through 45, and 47
through 51 of the Act and the rules
thereunder, subject to certain
modifications described in the
application.
4. BHBC requests exemptive relief to
the extent necessary to permit it to hold
certain types of instruments that may be
considered ‘‘securities’’, as defined in
section 2(a)(36) under the Act, such as
short-term U.S. government securities,
certificates of deposit and deposit
accounts with banks that are insured by
the FDIC, shares of registered money
market funds, and any instruments that
are eligible for investment by money
market funds consistent with rule 2a–7
under the Act (collectively, ‘‘Permitted
Securities’’) without being required to
register as an investment company
under the Act. BHBC requests this relief
in order to permit it to preserve the
value of its assets for the benefit of its
security holders, and submits that this
relief is necessary and appropriate for
the public interest.
5. In determining whether to grant
relief for a company in an extended
transition period, the following factors
are considered: (a) Whether the failure
of the company to become primarily
engaged in a non-investment business or
excepted business or to liquidate within
one year was due to factors beyond its
control; (b) whether the company’s
officers and employees during that
period tried, in good faith, to effect the
company’s investment of its assets in a
non-investment business or excepted
business or to cause the liquidation of
the company; and (c) whether the
company invested in securities solely to
preserve the value of its assets. BHBC
believes that it meets these criteria.
6. BHBC believes its failure to become
primarily engaged in a non-investment
business or to liquidate within a year
following the receivership of the Bank is
due to factors beyond its control. The
board of directors of BHBC has regularly
considered the feasibility of liquidating
or engaging in an operating noninvestment business and concluded that
it is currently not feasible to commence
or acquire a non-investment business or
liquidate as a result of BHBC’s negative
net worth and the uncertainties
associated with actual and potential
litigation and regulatory claims. BHBC
states that the contingent liabilities
make it impossible to liquidate BHBC
and distribute its assets to creditors and
make it imprudent to utilize any
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substantial part of its assets in an
operating business. BHBC states that
these circumstances are unlikely to
change over the requested one-year
period in light of the nature of the actual
and contingent liabilities. BHBC states
that it has invested its liquid assets
solely to preserve the value of its assets
and has invested solely in Permitted
Securities since the Prior Order. BHBC
does not believe its current ownership
of certain loans acquired prior to its
receivership is inconsistent with its
purpose of preserving the value of its
assets for the benefit of its security
holders. BHBC thus believes that the
public interest will be best served by
permitting it to continue to invest in
Permitted Securities while its liabilities
are resolved.
Applicant’s Conditions
Applicant agrees that the requested
order will be subject to the following
conditions:
1. BHBC will not purchase or
otherwise acquire any securities other
than Permitted Securities, except that
BHBC may acquire equity securities of
an issuer that is not an ‘‘investment
company’’ as defined in section 3(a) of
the Act or is relying on an exclusion
from the definition of ‘‘investment
company’’ under section 3(c) of the Act
other than section 3(c)(1) or 3(c)(7), in
connection with the acquisition of an
operating business as evidenced by a
resolution approved by BHBC’s board of
directors. BHBC may continue to hold
the Subsidiary Assets.
2. BHBC will not hold itself out as
being engaged in the business of
investing, reinvesting, owning, holding,
or trading in securities.
3. BHBC will not make any primary
or secondary public offerings of its
securities, and it will notify its
stockholders that an exemptive order
has been granted pursuant to sections
6(c) and 6(e) of the Act and that BHBC
and other persons, in their transactions
and relations with BHBC, are subject to
sections 9, 17(a), 17(d), 17(e), 17(f), 36
through 45, and 47 through 51 of the
Act, and the rules thereunder, as if
BHBC were a registered investment
company, except as permitted by the
order requested hereby.
4. Notwithstanding sections 17(a) and
17(d) of the Act, an affiliated person (as
defined in section 2(a)(3) of the Act) of
BHBC may engage in a transaction that
otherwise would be prohibited by these
sections with BHBC:
(a) If such proposed transaction is first
approved by a bankruptcy court on the
basis that (i) the terms thereof, including
the consideration to be paid or received,
are reasonable and fair to BHBC, and (ii)
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the participation of BHBC in the
proposed transaction will not be on a
basis less advantageous to BHBC than
that of other participants; and
(b) in connection with each such
transaction, BHBC shall inform the
bankruptcy court of: (i) The identity of
all of its affiliated persons who are
parties to, or have a direct or indirect
financial interest in, the transaction; (ii)
the nature of the affiliation; and (iii) the
financial interests of such persons in the
transaction.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2014–12231 Filed 5–27–14; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
31062; 812–14276]
Morgan Stanley Smith Barney LLC and
Morgan Stanley Global Investment
Solutions; Notice of Application
May 21, 2014.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of an application under
(a) section 6(c) of the Investment
Company Act of 1940 (‘‘Act’’) for an
exemption from sections 2(a)(32),
2(a)(35), 14(a), 19(b), 22(d) and
26(a)(2)(C) of the Act and rules 19b–1
and rule 22c–1 thereunder and (b)
sections 11(a) and 11(c) of the Act for
approval of certain exchange and
rollover privileges.
AGENCY:
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Applicants: Morgan Stanley Smith
Barney LLC (‘‘MSSB’’) and Morgan
Stanley Global Investment Solutions
(‘‘MSGIS’’).1
Summary of Application: Applicants
request an order to permit certain unit
investment trusts to: (a) Impose sales
charges on a deferred basis and waive
the deferred sales charge in certain
cases; (b) offer unitholders certain
exchange and rollover options; (c)
publicly offer units without requiring
the Depositor to take for its own account
$100,000 worth of units; and (d)
1 Applicants also request relief for future unit
investment trusts (collectively, with MSGIS, the
‘‘Trusts’’) and series of the Trusts (‘‘Series’’) that are
sponsored by MSSB or any entity controlling,
controlled by or under common control with MSSB
(together with MSSB, the ‘‘Depositors’’). Any future
Trust or Series that relies on the requested order
will comply with the terms and conditions of the
application. All existing entities that currently
intend to rely on the requested order are named as
applicants.
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19:27 May 27, 2014
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distribute capital gains resulting from
the sale of portfolio securities within a
reasonable time after receipt.
Filing Dates: The application was
filed on February 11, 2014 and amended
on May 5, 2014.
Hearing or Notification of Hearing: An
order granting the application will be
issued unless the Commission orders a
hearing. Interested persons may request
a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on June 16, 2014, and
should be accompanied by proof of
service on the 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: Secretary, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549–1090;
Applicants, 2000 Westchester Avenue,
Purchase, NY 10577.
FOR FURTHER INFORMATION CONTACT:
Bruce R. MacNeil, Senior Counsel, at
(202) 551–6817, or Daniele Marchesani,
Branch Chief, at (202) 551–6821
(Division of Investment Management,
Chief Counsel’s Office).
SUPPLEMENTARY INFORMATION: The
following is a summary of the
application. The complete application
may be obtained via the Commission’s
Web site by searching for the file
number, or an applicant using the
Company name box, at https://
www.sec.gov/search/search.htm or by
calling (202) 551–8090.
Applicants’ Representations
1. MSGIS is a unit investment trust
(‘‘UIT’’) that will be registered under the
Act. Any future Trust will be a
registered UIT. MSSB, a Delaware
limited liability company, is registered
under the Securities Exchange Act of
1934 as a broker-dealer and is the
Depositor of MSGIS. Each Series will be
created by a trust indenture between the
Depositor and a banking institution or
trust company as trustee (‘‘Trustee’’).
2. The Depositor acquires a portfolio
of securities, which it deposits with the
Trustee in exchange for units of
fractional undivided interest in the
Series’ portfolio (‘‘Units’’). The Units are
offered to the public through the
Depositor and dealers at a price which,
during the initial offering period, is
based upon the aggregate market value
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30659
of the underlying securities, or, the
aggregate offering side evaluation of the
underlying securities if the underlying
securities are not listed on a securities
exchange, plus a front-end sales charge,
a deferred sales charge or both. The
maximum sales charge may be reduced
in compliance with rule 22d–1 under
the Act in certain circumstances, which
are disclosed in the Series’ prospectus.
3. The Depositor may, but is not
legally obligated to, maintain a
secondary market for Units of an
outstanding Series. Other broker-dealers
may or may not maintain a secondary
market for Units of a Series. If a
secondary market is maintained,
investors will be able to purchase Units
on the secondary market at the current
public offering price plus a front-end
sales charge. If such a market is not
maintained at any time for any Series,
holders of the Units (‘‘Unitholders’’) of
that Series may redeem their Units
through the Trustee.
A. Deferred Sales Charge and Waiver of
Deferred Sales Charge under Certain
Circumstances
1. Applicants request an order to the
extent necessary to permit one or more
Series to impose a sales charge on a
deferred basis (‘‘DSC’’). For each Series,
the Depositor would set a maximum
sales charge per Unit, a portion of which
may be collected ‘‘up front’’ (i.e., at the
time an investor purchases the Units).
The DSC would be collected
subsequently in installments
(‘‘Installment Payments’’) as described
in the application. The Depositor would
not add any amount for interest or any
similar or related charge to adjust for
such deferral.
2. When a Unitholder redeems or sells
Units, the Depositor intends to deduct
any unpaid DSC from the redemption or
sale proceeds. When calculating the
amount due, the Depositor will assume
that Units on which the DSC has been
paid in full are redeemed or sold first.
With respect to Units on which the DSC
has not been paid in full, the Depositor
will assume that the Units held for the
longest time are redeemed or sold first.
Applicants represent that the DSC
collected at the time of redemption or
sale, together with the Installment
Payments and any amount collected up
front, will not exceed the maximum
sales charge per Unit. Under certain
circumstances, the Depositor may waive
the collection of any unpaid DSC in
connection with redemptions or sales of
Units. These circumstances will be
disclosed in the prospectus for the
relevant Series and implemented in
accordance with rule 22d–1 under the
Act.
E:\FR\FM\28MYN1.SGM
28MYN1
]]>Agencies
[Federal Register Volume 79, Number 102 (Wednesday, May 28, 2014)]
[Notices]
[Pages 30656-30659]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-12231]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 31054; 812-14280]
Beverly Hills Bancorp Inc.; Notice of Application
May 21, 2014.
AGENCY: Securities and Exchange Commission (the ``Commission'').
ACTION: Notice of application for an order under sections 6(c) and 6(e)
of the Investment Company Act of 1940 (``Act'') for an exemption from
all provisions of the Act, except sections 9, 17(a), 17(d), 17(e),
17(f), 36 through 45, and 47 through 51 of the Act and the rules
thereunder, modified as discussed in the application.
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Summary of Application: The requested order would exempt the
applicant, Beverly Hills Bancorp Inc. (``BHBC''), from certain
provisions of the Act until the earlier of one year from the date of
the requested order or such time as BHBC would no longer be required to
register as an investment company under the Act. The requested
exemption would extend an exemption granted until May 24, 2014.\1\
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\1\ Beverly Hills Bancorp Inc., Investment Company Act Release
Nos. 30497 (April 30, 2013) (notice) and 30541 (May 24, 2013)
(order) (``Prior Order'').
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Filing Dates: The application was filed on February 18, 2014 and
amended on April 29, 2014.
Hearing or Notification of Hearing: An order granting the
application will be issued unless the Commission orders a hearing.
Interested persons may request
[[Page 30657]]
a hearing by writing to the Commission's Secretary and serving
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the Commission by 5:30 p.m. on June 13,
2014 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: Secretary, U.S. Securities and Exchange Commission, 100 F
Street NE., Washington, DC 20549-1090. Applicant, Post Office Box 8280,
Calabasas, CA 91372.
FOR FURTHER INFORMATION CONTACT: Emerson S. Davis, Senior Counsel, at
(202) 551-6876, or Mary Kay Frech, Branch Chief, at (202) 551-6821
(Division of Investment Management, Exemptive Applications Office).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained via the
Commission's Web site by searching for the file number, or an applicant
using the Company name box, at https://www.sec.gov/search/search.htm or
by calling (202) 551-8090.
Applicant's Representations
1. BHBC is a bank holding company that conducted its banking and
lending operations through its wholly-owned subsidiary First Bank of
Beverly Hills, a California banking corporation (the ``Bank''). From
its incorporation in 1996 until April 24, 2009, the Bank was the source
of substantially all of BHBC's revenues and income. The Bank sustained
substantial losses in its real estate loan and mortgage-backed
securities portfolios, and as of December 31, 2008, it no longer met
applicable regulatory capital requirements. As a result, on February
13, 2009, the Federal Deposit Insurance Corporation (``FDIC'') and the
California Department of Financial Institutions (the ``CDFI'') issued
an order requiring the Bank to increase its regulatory capital within
60 days. Because the Bank was unable to increase its regulatory capital
within the specified time period, on April 24, 2009, the CDFI closed
the Bank and the FDIC was appointed as the Bank's receiver.
2. BHBC has one class of common stock outstanding, which it
voluntarily delisted from the NASDAQ Global Select Market on February
12, 2009. On February 19, 2009, BHBC deregistered its common stock
under Section 12(g) of the Securities Exchange Act of 1934, as amended
(the ``Exchange Act''), and on March 13, 2009, its reporting
obligations under Section 15(d) of the Exchange Act were suspended. As
such, BHBC is no longer subject to the reporting requirements of the
Exchange Act and its common stock is solely traded on the over the
counter markets under the ``Other OTC'' category. As of January 27,
2014, BHBC had 78 holders of record.
3. As of December 31, 2013, on a consolidated basis, for financial
reporting purposes BHBC has assets of $8.5 million, liabilities of
$40.9 million, and a stockholders' equity of negative $32.4 million. On
a non-consolidated basis, BHBC's assets total approximately $7.1
million. BHBC currently has invested the assets in Permitted Securities
(as defined below) since the Prior Order.
4. BHBC has several direct or indirect wholly owned subsidiaries,
none of which has any ongoing business or operations. As of January 27,
2014, the following assets were held by BHBC subsidiaries: (i) Wilshire
Acquisitions Corporation (``Wilshire Asquisitions'') has assets with a
book value of $174,052 consisting of accrued interest and prepaid
expenses related to a subsidiary trust; (ii) WFC Inc. has assets with a
book value of $220,487 consisting of approximately 13 small consumer
and residential mortgage loans, cash, and prepaid expenses; and (iii)
BH Commercial Capital I, Inc. has assets with a book value of
$1,084,799 consisting of two secured commercial real estate loans
(collectively, the ``Subsidiary Assets''). In addition, BHBC also
either directly or indirectly owns the common securities of three
subsidiary trusts that were formed in connection with offerings of
trust preferred securities in which the trust subsidiaries issued their
common securities to BHBC or Wilshire Acquisitions and their preferred
securities to third party investors. The subsidiary trusts then loaned
all the proceeds of the sale of trust preferred securities to BHBC or
Wilshire Acquisitions in exchange for junior subordinated debentures
(the ``Subordinated Debentures''). The subsidiary trusts have no assets
other than the Subordinated Debentures.
5. BHBC's liabilities consist principally of $25.8 million of the
Subordinated Debentures issued to its two direct trust subsidiaries and
$10.3 million of Subordinated Debentures issued to its indirect trust
subsidiary, plus accrued interest of approximately $4.9 million and
accrued expenses of $1.0 million. In the aggregate, interest in an
approximate amount of $900,000 accrues on a yearly basis pursuant to
these three series of Subordinated Debentures. BHBC states that there
is no public market for the Subordinated Debentures or the trust
preferred securities. Under the terms of the Subordinated Debentures,
BHBC may defer interest payments for up to 20 consecutive quarters.\2\
On January 29, 2009, BHBC elected to exercise this right and had been
able to defer payments on the debentures unitl March 6, 2014. BHBC was
not in default under the Subordinated Debentures through the deferral
periods, however, BHBC is now in default under the debentures.
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\2\ During the period when interest payments are being deferred,
interest continues to accrue, compounding quarterly, at an annual
rate equal to the interest in effect for such period and must be
paid at the end of the deferral period.
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6. In March 2014, BHBC was contacted by the holders of some of the
debentures, and entered into negotiations with those holders regarding
payment of the debentures. On April 10, 2014, a former director of BHBC
filed an action against BHBC seeking a temporary restraining order
preventing BHBC from making payments on the debentures in light of
BHBC's indemnification obligations to its directors. The temporary
restraining order was granted. Subsequently, on April 15, 2014, BHBC
filed a voluntary petition for relief under chapter 11 of the United
States Bankruptcy Code. BHBC continues to operate its business as a
debtor in possession pursuant to sections 1107(a) and 1108 of the
Bankruptcy Code.
7. BHBC may be subject to contingent liabilities of uncertain
amounts related to claims associated with its former operations, as
well as regulatory and stockholder claims in connection with the
failure of the Bank. In addition, current and former directors and
officers of the Bank are subject to two pending actions (the
``Actions'') in connection with the failure of the Bank. These are: (a)
An administrative action brought by the FDIC in 2011 against two former
officers (one of whom has settled) seeking certain administrative
sanctions and penalties; and (b) a lawsuit brought by the FDIC in
April, 2012 against the Bank's former directors (including all four
current members of the board of directors of BHBC) and several former
officers of the Bank for negligence, gross negligence, and breach of
fiduciary duty in connection with their activities with the Bank. The
latter action seeks $100.6 million in damages related to losses
allegedly incurred by the Bank on certain loans.
[[Page 30658]]
8. BHBC states that it is subject to indemnification and expense
obligations in connection with various actions brought against its
current and former directors, officers, employees or agents. As a
result, BHBC is indemnifying these directors and officers in connection
with the Actions. The potential amount of the indemnification claim is
unknown.
9. Since the Bank was placed into receivership, BHBC has had no
active business or operations. Within several months of the
receivership, BHBC terminated all employees, and since that time has
paid two consultants on an hourly basis primarily for administrative
and accounting services. BHBC does not maintain an office and is
managed by its four member board of directors, which has considered
various alternatives, including liquidation and acquisition of an
operating business, while preserving its assets. BHBC states that
because of its financial condition and contingent liabilities, pursuing
these courses of action has not been feasible.
Applicant's Legal Analysis
1. Section 3(a)(1)(A) of the Act defines an investment company as
any issuer who ``is or holds itself out as being engaged primarily . .
. in the business of investing, reinvesting or trading in securities.''
Section 3(a)(1)(C) of the Act further defines an investment company as
an issuer who is engaged in the business of investing in securities
that have a value in excess of 40% of the issuer's total assets
(excluding government securities and cash).
2. Section 6(c) of the Act provides that the Commission may exempt
any person from any provision of the Act if such exemption is necessary
or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Act. Section 6(e) provides that, in connection
with any order exempting an investment company from any provision of
section 7, certain provisions of the Act, as specified by the
Commission, shall apply to the company and other persons dealing with
the company, as if such company were a registered investment company.
3. BHBC acknowledges that it may be deemed to fall within one of
the Act's definitions of an investment company. Accordingly, BHBC
requests an order of the Commission pursuant to sections 6(c) and 6(e)
of the Act exempting it from all provisions of the Act, subject to
certain exceptions described below. BHBC requests an exemption until
the earlier of one year from the date of the requested order or such
time as it would no longer be required to register as an investment
company under the Act. During the term of the proposed exemption, BHBC
states that it will comply with sections 9, 17(a), 17(d), 17(e), 17(f),
36 through 45, and 47 through 51 of the Act and the rules thereunder,
subject to certain modifications described in the application.
4. BHBC requests exemptive relief to the extent necessary to permit
it to hold certain types of instruments that may be considered
``securities'', as defined in section 2(a)(36) under the Act, such as
short-term U.S. government securities, certificates of deposit and
deposit accounts with banks that are insured by the FDIC, shares of
registered money market funds, and any instruments that are eligible
for investment by money market funds consistent with rule 2a-7 under
the Act (collectively, ``Permitted Securities'') without being required
to register as an investment company under the Act. BHBC requests this
relief in order to permit it to preserve the value of its assets for
the benefit of its security holders, and submits that this relief is
necessary and appropriate for the public interest.
5. In determining whether to grant relief for a company in an
extended transition period, the following factors are considered: (a)
Whether the failure of the company to become primarily engaged in a
non-investment business or excepted business or to liquidate within one
year was due to factors beyond its control; (b) whether the company's
officers and employees during that period tried, in good faith, to
effect the company's investment of its assets in a non-investment
business or excepted business or to cause the liquidation of the
company; and (c) whether the company invested in securities solely to
preserve the value of its assets. BHBC believes that it meets these
criteria.
6. BHBC believes its failure to become primarily engaged in a non-
investment business or to liquidate within a year following the
receivership of the Bank is due to factors beyond its control. The
board of directors of BHBC has regularly considered the feasibility of
liquidating or engaging in an operating non-investment business and
concluded that it is currently not feasible to commence or acquire a
non-investment business or liquidate as a result of BHBC's negative net
worth and the uncertainties associated with actual and potential
litigation and regulatory claims. BHBC states that the contingent
liabilities make it impossible to liquidate BHBC and distribute its
assets to creditors and make it imprudent to utilize any substantial
part of its assets in an operating business. BHBC states that these
circumstances are unlikely to change over the requested one-year period
in light of the nature of the actual and contingent liabilities. BHBC
states that it has invested its liquid assets solely to preserve the
value of its assets and has invested solely in Permitted Securities
since the Prior Order. BHBC does not believe its current ownership of
certain loans acquired prior to its receivership is inconsistent with
its purpose of preserving the value of its assets for the benefit of
its security holders. BHBC thus believes that the public interest will
be best served by permitting it to continue to invest in Permitted
Securities while its liabilities are resolved.
Applicant's Conditions
Applicant agrees that the requested order will be subject to the
following conditions:
1. BHBC will not purchase or otherwise acquire any securities other
than Permitted Securities, except that BHBC may acquire equity
securities of an issuer that is not an ``investment company'' as
defined in section 3(a) of the Act or is relying on an exclusion from
the definition of ``investment company'' under section 3(c) of the Act
other than section 3(c)(1) or 3(c)(7), in connection with the
acquisition of an operating business as evidenced by a resolution
approved by BHBC's board of directors. BHBC may continue to hold the
Subsidiary Assets.
2. BHBC will not hold itself out as being engaged in the business
of investing, reinvesting, owning, holding, or trading in securities.
3. BHBC will not make any primary or secondary public offerings of
its securities, and it will notify its stockholders that an exemptive
order has been granted pursuant to sections 6(c) and 6(e) of the Act
and that BHBC and other persons, in their transactions and relations
with BHBC, are subject to sections 9, 17(a), 17(d), 17(e), 17(f), 36
through 45, and 47 through 51 of the Act, and the rules thereunder, as
if BHBC were a registered investment company, except as permitted by
the order requested hereby.
4. Notwithstanding sections 17(a) and 17(d) of the Act, an
affiliated person (as defined in section 2(a)(3) of the Act) of BHBC
may engage in a transaction that otherwise would be prohibited by these
sections with BHBC:
(a) If such proposed transaction is first approved by a bankruptcy
court on the basis that (i) the terms thereof, including the
consideration to be paid or received, are reasonable and fair to BHBC,
and (ii)
[[Page 30659]]
the participation of BHBC in the proposed transaction will not be on a
basis less advantageous to BHBC than that of other participants; and
(b) in connection with each such transaction, BHBC shall inform the
bankruptcy court of: (i) The identity of all of its affiliated persons
who are parties to, or have a direct or indirect financial interest in,
the transaction; (ii) the nature of the affiliation; and (iii) the
financial interests of such persons in the transaction.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-12231 Filed 5-27-14; 8:45 am]
BILLING CODE 8011-01-P
