Pacific Life Insurance Company, et al; Notice of Application, 8115-8119 [2015-02992]
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Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices
tkelley on DSK3SPTVN1PROD with NOTICES
amount may be adjusted to reflect
certain corporate transactions or events
that affect the applicant’s stock. Grants
to Non-Employee Directors are limited
to those described in condition 8 below.
8. In each fiscal year, a Non-Employee
Director will be granted 750 Restricted
Stock Units of Adams and 400
Restricted Stock Units of Petroleum, as
applicable, which amounts may be
adjusted to reflect certain corporate
transactions. At the effective date of any
Non-Employee Director’s initial election
to the Board of an Applicant, such NonEmployee Director will be granted 750
Restricted Stock Units of Adams and
400 Restricted Stock Units of Petroleum,
as applicable, which amounts may be
adjusted to reflect certain corporate
transactions. Non-Employee Directors
will also receive dividend equivalents
in respect of such Restricted Stock Units
equal to the amount or value of any cash
or other dividends or distributions
payable on an equivalent number of
shares of common stock. The Restricted
Stock Units and related dividend
equivalents will vest (and become nonforfeitable) and be paid (in the form of
shares of common stock) one year from
the date of grant. In addition, NonEmployee Directors may elect each year,
not later than December 31 of the year
preceding the year as to which the
annual grant of Restricted Stock Units is
to be applicable, to defer to a fixed date
or pursuant to a specified schedule
payment of all or any portion of the
annual grant of Restricted Stock Units.
Any modification of the deferral
election may be made only upon
satisfaction of any conditions that the
relevant Committee may impose. NonEmployee Directors may also elect each
year, not later than December 31 of the
year preceding the year as to which
deferral of fees is to be applicable, to
defer to a fixed date or pursuant to a
specified schedule all or any portion of
the cash retainer to be paid for Board or
other service related to Board activities
in the following calendar year through
the issuance of Deferred Stock Units,
valued at the Fair Market Value of the
relevant Applicant’s stock on the date
when each payment of such retainer
amount would otherwise be made in
cash.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015–03026 Filed 2–12–15; 8:45 am]
BILLING CODE 8011–01–P
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. IC–31451; File No. 812–14359]
Pacific Life Insurance Company, et al;
Notice of Application
February 9, 2015.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice of application for an
order approving the substitution of
certain securities pursuant to Section
26(c) of the Investment Company Act of
1940, as amended (the ‘‘1940 Act’’).
AGENCY:
Applicants: Pacific Life Insurance
Company (‘‘Pacific Life’’), Pacific Life’s
Separate Account A (‘‘Separate Account
A’’), Pacific Life’s Pacific Select Variable
Annuity Separate Account (‘‘Select VA
Account’’ and, together with Separate
Account A, the ‘‘Pacific Life Separate
Accounts’’), Pacific Life & Annuity
Company (‘‘PL&A’’), and PL&A’s
Separate Account A (‘‘PL&A Separate
Account A’’). Pacific Life, PL&A, and
the Separate Accounts are referred to
collectively as the ‘‘Applicants.’’ The
Pacific Life Separate Accounts and
PL&A Separate Account A are referred
to individually as a ‘‘Separate Account’’
and collectively as the ‘‘Separate
Accounts.’’ Pacific Life and PL&A are
referred to herein individually as an
‘‘Insurer’’ and collectively as the
‘‘Insurers.’’
SUMMARY: Summary of Application:
Each Insurer, on behalf of itself and its
Separate Account(s), seeks an order
pursuant to Section 26(c) of the 1940
Act, approving the substitution of
Service Shares of the Janus Aspen
Balanced Portfolio, a series of Janus
Aspen Series (the ‘‘Replacement
Portfolio’’), for the Advisor Class shares
of the PIMCO Global Multi-Asset
Managed Allocation Portfolio, a series of
the PIMCO Variable Insurance Trust
(the ‘‘Replaced Portfolio’’) (the
‘‘Proposed Substitution’’), under certain
variable annuity contracts issued by the
Insurers (collectively, the ‘‘Contracts’’).
DATES: Filing Date: The application was
filed on September 19, 2014, and
amended on February 5, 2015.
Hearing or Notification of Hearing: An
order granting the requested relief will
be issued unless the Commission orders
a hearing. Interested persons may
request a hearing by writing to the
Commission’s Secretary and serving
applicants with a copy of the request,
personally or by mail. Hearing requests
should be received by the Commission
by 5:30 p.m. on March 4, 2015, and
should be accompanied by proof of
service on applicants, in the form of an
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affidavit or, for lawyers, a certificate of
service. Pursuant to Rule 0–5 under the
Act, hearing requests should state the
nature of the writer’s interest, any facts
bearing upon the desirability of a
hearing on the matter, 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;
Applicants: Brandon J. Cage, CLU
Assistant Vice President, Counsel,
Pacific Life Insurance Company, 700
Newport Center Drive, Newport Beach,
CA 92660; Richard T. Choi, Esq.,
Carlton Fields Jorden Burt, P.A., 1025
Thomas Jefferson St. NW., Suite 400
East, Washington, DC 20007.
FOR FURTHER INFORMATION CONTACT:
Laura L. Solomon, Senior Counsel, at
(202) 551–6915, or Nadya Roytblat,
Assistant Chief Counsel, at (202) 551–
6825 (Chief Counsel’s Office, Division of
Investment Management).
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. The Insurers, on their own behalf
and on behalf of their respective
Separate Accounts, propose to
substitute Service Shares of the
Replacement Portfolio for Advisor Class
shares of the Replaced Portfolio held by
the Separate Account to fund the
Contracts. Each Separate Account is
divided into subaccounts (each a
‘‘Subaccount,’’ collectively, the
‘‘Subaccounts’’). Each Subaccount
invests in the securities of a single
portfolio of an underlying mutual fund
(‘‘Portfolio’’). Contract owners (each a
‘‘Contract Owner’’ and collectively, the
‘‘Contract Owners’’) may allocate some
or all of their Contract value to one or
more Subaccounts that are available as
investment options under the Contracts.
2. Pacific Life is the depositor and
sponsor of the Pacific Life Separate
Accounts. PL&A is the depositor and
sponsor of PL&A Separate Account A.
3. Each of the Separate Accounts is a
‘‘separate account’’ as defined by
Section 2(a)(37) of the 1940 Act and
each is registered under the 1940 Act as
a unit investment trust for the purpose
of funding the Contracts. Security
interests under the Contracts have been
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Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices
registered under the Securities Act of
1933. The application sets forth the
registration statement file numbers for
the Contracts and the Separate
Accounts.
4. Each Insurer, on behalf of itself and
its Separate Account(s), proposes to
replace the Advisor Class shares of the
Replaced Portfolio that are held in
Subaccounts of its Separate Account(s)
with Service Shares of the Replacement
Portfolio.
5. The Applicants state that the
Proposed Substitution involves moving
assets attributable to the Contracts from
the Replaced Portfolio managed by
Pacific Investment Management
Company, LLC (‘‘PIMCO’’) to a
Replacement Portfolio managed by
Janus Capital Management LLC (‘‘Janus
Capital’’) (each of Janus Capital and
PIMCO, an ‘‘Investment Adviser’’ and
collectively, the ‘‘Investment
Advisers’’). Each Investment Adviser is
responsible for the day-to-day
management of the assets of the
Replaced or Replacement Portfolio, as
the case may be. Neither the Replaced
nor Replacement Portfolio employs a
sub-adviser and neither Portfolio
operates under a manager-of-managers
arrangement that, among other things,
would permit the Investment Adviser to
engage a new or additional sub-adviser
without the approval of the Portfolio’s
shareholders. The Applicants state that
the Investment Advisers are not
affiliates of the Insurers.
6. Applicants state that under the
Contracts, the Insurers reserve the right
to substitute, for the shares of a Portfolio
held in any Subaccount, the shares of
another Portfolio, shares of another
investment company or series of another
investment company, or another
investment vehicle. The prospectuses
for the Contracts include appropriate
disclosure of this reservation of right.
7. The Applicants represent that the
investment objectives of the Replaced
and Replacement Portfolio are similar.
The investment objective of the
Replaced Portfolio is total return which
exceeds that of a blend of 60% MSCI
World Index/40% Barclays U.S.
Aggregate Index, whereas that of the
Replacement Portfolio is long-term
capital growth, consistent with
preservation of capital and balanced by
current income. The investment
objectives of both Portfolios include a
growth component as well as an income
component. Additionally, the
Applicants state that the principal
investment strategies of the Replaced
and Replacement Portfolios are similar.
The principal investment strategies of
both Portfolios include investment in a
combination of equity and debt
securities. The Replaced Portfolio will
typically invest 50 to 70% (20%
minimum under normal circumstances)
of its total assets in equity-related
investment securities and may invest up
to 30% of its total assets in fixed income
securities denominated in foreign
securities (or beyond this limit in U.S.
dollar-denominated securities of foreign
issuers), 15% of its total assets in fixed
income securities that are economically
tied to emerging market countries, and
up to 10% of its total assets in fixed
income securities in high yield
securities (i.e., ‘‘junk’’ bonds). The
Replacement Portfolio normally invests
35–65% of its assets in equity securities
and the remaining assets in debt
securities and cash equivalents, with
normally 25% of its assets invested in
fixed-income senior securities. In
addition, both Portfolios may invest in
securities of non-U.S. issuers.
Investment in ‘‘junk’’ bonds is not a
principal investment strategy of the
Replacement Portfolio though it may
invest in such bonds. The principal
investment strategies of the Replaced
Portfolio include investments of up to
5% of its total assets in real estate
investment trusts or REITS, whereas the
same is not true for the Replacement
Portfolio though it may invest in REITs.
The principal investment strategies of
the Replaced Portfolio include entering
into forward commitments, the making
of short sales of securities or
maintaining a short position, none of
which is a principal investment strategy
of the Replacement Portfolio, though it
may engage in short sales and invest in
securities on a forward commitment
basis. The principal investment
strategies of the Replacement Portfolio
include investments in mortgage-backed
and mortgage-related securities.
Similarly, mortgage-backed securities
are included among the types of fixedincome securities that constitute a
principal investment strategy of the
Replaced Portfolio. A comparison of the
investing strategies, risks, and
performance of the Replaced and
Replacement Portfolios is included in
the application.
8. The following table compares the
fees and expenses of the Replaced
Portfolio (Advisor Class shares) and the
Replacement Portfolio (Service Shares)
as of the year ended December 31, 2013.
As shown below, the management fee of
the Replacement Portfolio is lower than
that of the Replaced Portfolio. The
management fees of the Replaced
Portfolio and the Replacement Portfolio
are not subject to breakpoints. In
addition, as shown in the table below,
the 12b–1 fee of the Service Shares of
the Replacement Portfolio is the same as
the 12b–1 fee of the Advisor Class
shares of the Replaced Portfolio. In both
cases, the 12b–1 fee is the current
maximum permitted under the relevant
plan. Furthermore, as shown in the table
below, the annual operating expenses of
the Replacement Portfolio are lower
than those of the Replaced Portfolio.1
PROPOSED SUBSTITUTION
Replacement portfolio
PIMCO global
multi-asset managed
allocation
portfolio
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Replaced portfolio
Janus Aspen balanced
portfolio
Advisor Class/Service Shares:
Management Fee .............................................................................................................
12b–1 Fee ........................................................................................................................
Other Expenses ................................................................................................................
Acquired Fund Fees .........................................................................................................
Total Gross Expenses ......................................................................................................
Expense Waiver/Reimbursement .....................................................................................
1 As of the date of filing of the amended
application, Applicants are aware of no material
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0.95%
0.25%
0.01%
0.52%
1.73%
0.46
change to the fee and expense information provided
in the following table.
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0.55%
0.25%
0.04%
N/A
0.84%
0.00
Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices
8117
PROPOSED SUBSTITUTION—Continued
Replaced portfolio
Replacement portfolio
PIMCO global
multi-asset managed
allocation
portfolio
Janus Aspen balanced
portfolio
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Total Net Expenses ...................................................................................................
9. The Applicants state that the
performance for the Replacement
Portfolio is substantially better than that
of the Replaced Portfolio for all periods
shown.
10. The Applicants state that the
Proposed Substitution is part of an
ongoing effort by the Insurers to make
their Contracts more attractive to
existing and prospective Contract
Owners. The Applicants assert the
Proposed Substitution will help to
accomplish these goals for the following
reasons: (1) The total annual operating
expenses for the Replacement Portfolio
(which does not include any expense
waivers or reimbursements) are
significantly lower than those of the
Replaced Portfolio (even after taking
into account fee waivers or expense
reimbursements); (2) the historical
performance of the Replacement
Portfolio is generally much better than
that of the Replaced Portfolio; (3) the
Subaccounts that invest in the
Replacement Portfolio are included
among the currently allowable
investment options under the optional
living benefit riders offered under the
Contracts; (4) Contract Owners will find
the stable management of the
Replacement Portfolio, whose coportfolio managers have managed the
Portfolio since 2005, attractive, relative
to the Replaced Portfolio; and (5) the
Proposed Substitution will simplify the
Subaccount offerings under the
Contracts.
11. The Applicants represent that the
Proposed Substitution will be described
in supplements to the applicable
prospectuses for the Contracts filed with
the Commission or in other
supplemental disclosure documents,
(collectively, ‘‘Supplements’’) and
delivered to all affected Contract
Owners at least 30 days before the date
the Proposed Substitution is effected
(the ‘‘Substitution Date’’). Each
Supplement will give the relevant
Contract Owners notice of the
applicable Insurer’s intent to take the
necessary actions, including seeking the
order requested by the application, to
substitute shares of the Replaced
Portfolio as described in the application
on the Substitution Date. Each
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Supplement also will advise Contract
Owners that from the date of the
Supplement until the Substitution Date,
Contract Owners are permitted to
transfer all of or a portion of their
Contract value out of any Subaccount
investing in the Replaced Portfolio
(‘‘Replaced Portfolio Subaccount’’) to
any other available Subaccounts offered
under their Contracts without the
transfer being counted as a transfer for
purposes of transfer limitations and fees
that would otherwise be applicable
under the terms of the Contracts. In
addition, each Supplement will (a)
instruct Contract Owners how to submit
transfer requests in light of the Proposed
Substitution; (b) advise Contract Owners
that any Contract value remaining in the
Replaced Portfolio Subaccount on the
Substitution Date will be transferred to
a Subaccount investing in the
Replacement Portfolio (‘‘Replacement
Portfolio Subaccount’’), and that the
Proposed Substitution will take place at
relative net asset value; (c) inform
Contract Owners that for at least thirty
(30) days following the Substitution
Date, the applicable Insurer will permit
Contract Owners to make transfers of
Contract value out of the Replacement
Portfolio Subaccount to any other
available Subaccounts offered under
their Contracts without the transfer
being counted as a transfer for purposes
of transfer limitations that would
otherwise be applicable under the terms
of the Contracts; and (d) inform Contract
Owners that, except as described in the
market timing limitations section of the
relevant prospectus, the applicable
Insurer will not exercise any rights
reserved by it under the Contracts to
impose additional restrictions on
transfers out of the Replacement
Portfolio Subaccount for at least thirty
(30) days after the Substitution Date.
12. The Proposed Substitution will be
effected at the relative net asset values
of the respective shares in conformity
with Section 22(c) of the 1940 Act and
Rule 22c–1 thereunder without the
imposition of any transfer or similar
charges by Applicants. The Proposed
Substitution will be effected without
change in the amount or value of any
Contracts held by affected Contract
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1.27%
0.84%
Owners. Accordingly, the Applicants
submit that the Proposed Substitution
will have no negative financial impact
on any Contract Owner.
13. The Proposed Substitution will be
effected by having the Replaced
Portfolio Subaccount redeem its
Replaced Portfolio shares in cash on the
Substitution Date at net asset value per
share and purchase shares of the
Replacement Portfolio at net asset value
per share calculated on the same date.
14. The Insurers or an affiliate thereof
will pay all expenses and transaction
costs reasonably related to the Proposed
Substitution, including all legal,
accounting, and brokerage expenses
relating to the Proposed Substitution,
the above described disclosure
documents, and the application. No
costs of the Proposed Substitution will
be borne directly or indirectly by
Contract Owners. Affected Contract
Owners will not incur any fees or
charges as a result of the Proposed
Substitution, nor will their rights or the
obligations of the Insurers under the
Contracts be altered in any way. The
Proposed Substitution will not cause the
fees and charges under the Contracts
currently being paid by Contract
Owners to be greater after the Proposed
Substitution than before the Proposed
Substitution. In addition, no transfer
charges will apply in connection with
the Proposed Substitution.
15. The Applicants represent that they
will not receive, for three years from the
date of the Proposed Substitution, any
direct or indirect benefits from the
Replacement Portfolio, its adviser or
underwriter (or their affiliates), in
connection with assets attributable to
contracts affected by the Proposed
Substitution, at a higher rate than they
had received from the Replaced
Portfolio, its adviser or underwriter (or
their affiliates), including without
limitation 12b–1 fees, shareholder
service, administrative, or other service
fees, revenue sharing, or other
arrangements; and the Proposed
Substitution and the selection of the
Replacement Portfolio were not
motivated by any financial
consideration paid or to be paid to the
Insurer or its affiliates by the
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Replacement Portfolio, its adviser or
underwriter, or their affiliates.
Legal Analysis
1. Applicants request that the
Commission issue an order pursuant to
Section 26(c) of the 1940 Act approving
the Proposed Substitution. Section 26(c)
of the 1940 Act makes it unlawful for
any depositor or trustee of a registered
unit investment trust holding the
security of a single issuer to substitute
another security for such security unless
the Commission approves the
substitution. Section 26(c) requires the
Commission to issue such an order
approving the substitution if the
evidence establishes that the
substitution is consistent with the
protection of investors and the purposes
fairly intended by the policy and
provisions of the 1940 Act.
2. The Applicants submit that the
terms and conditions of the Proposed
Substitution meet the standards set forth
in Section 26(c) and assert that the
substitution of the Replaced Portfolio
with the Replacement Portfolio is
consistent with the protection of
investors and the purposes fairly
intended by the policy and provisions of
the l940 Act. As described in the
application, the total annual operating
expenses for the Replacement Portfolio
are lower than those of the Replaced
Portfolio. Applicants assert that the
Replacement Portfolio has similar
investment objectives and investment
strategies as the Replaced Portfolio, and
the principal risks of the Replaced
Portfolio and the Replacement Portfolio
are similar.
3. Applicants also maintain that the
Proposed Substitution is part of an
ongoing effort by the Insurers to make
their contracts more attractive to
existing and prospective Contract
Owners. The rights of affected Contract
Owners and the obligations of the
Insurers under the Contracts will not be
altered by the Proposed Substitution.
Affected Contract Owners will not incur
any additional tax liability or any
additional fees and expenses as a result
of the Proposed Substitution.
4. The prospectuses for the Contracts
disclose that the Insurers reserve the
right, subject to Commission approval
and compliance with applicable law, to
substitute, for the shares of a Portfolio
held in any Subaccount, the shares of
another Portfolio, shares of another
investment company or series of another
investment company, or another
investment vehicle.
5. Applicants also assert that the
Proposed Substitution does not entail
any of the abuses that Section 26(c) was
designed to prevent. Applicants note
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that the purpose of Section 26(c) is to
protect the expectation of investors in a
unit investment trust that the trust will
accumulate shares of a particular issuer
by preventing unscrutinized
substitutions that might, in effect, force
shareholders dissatisfied with the
substituted security to redeem their
shares, possibly incurring either a loss
of the sales load deducted from initial
premium payments, an additional sales
load upon reinvestment of the
redemption proceeds, or both. The
Proposed Substitution will offer
Contract Owners the opportunity to
transfer amounts out of the affected
subaccounts into any of the remaining
subaccounts without cost or other
disadvantage. The Proposed
Substitution, therefore, will not result in
the type of costly forced redemptions
that Section 26(c) was designed to
prevent.
Applicants’ Conditions
Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. The Proposed Substitution will not
be effected unless the Insurers
determine that: (a) The Contracts allow
the substitution of shares of registered
open-end investment companies in the
manner contemplated by the
application; (b) the Proposed
Substitution can be consummated as
described in the application under
applicable insurance laws; and (c) any
regulatory requirements in each
jurisdiction where the Contracts are
qualified for sale have been complied
with to the extent necessary to complete
the Proposed Substitution.
2. The Insurers or their affiliates will
pay all expenses and transaction costs of
the Proposed Substitution, including
legal and accounting expenses, any
applicable brokerage expenses and other
fees and expenses. No fees or charges
will be assessed to the Contract Owners
to effect the Proposed Substitution.
3. The Proposed Substitution will be
effected at the relative net asset values
of the respective shares in conformity
with Section 22(c) of the 1940 Act and
Rule 22c–1 thereunder without the
imposition of any transfer or similar
charges by Applicants. The Proposed
Substitution will be effected without
change in the amount or value of any
Contracts held by affected Contract
Owners.
4. The Proposed Substitution will in
no way alter the tax treatment of
affected Contract Owners in connection
with their Contracts, and no tax liability
will arise for affected Contract Owners
as a result of the Proposed Substitution.
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5. The rights or obligations of the
Insurers under the Contracts of affected
Contract Owners will not be altered in
any way. The Proposed Substitution
will not adversely affect any riders
under the Contracts since the
Replacement Portfolio is an allowable
investment option for use with such
riders.
6. Affected Contract Owners will be
permitted to make at least one transfer
of Contract value from the subaccount
investing in the Replaced Portfolio
(before the Substitution Date) or the
Replacement Portfolio (after the
Substitution Date) to any other available
investment option under the Contract
without charge for a period beginning at
least 30 days before the Substitution
Date through at least 30 days following
the Substitution Date. Except as
described in any market timing/shortterm trading provisions of the relevant
prospectus, the Insurer will not exercise
any right it may have under the Contract
to impose restrictions on transfers
between the subaccounts under the
Contracts, including limitations on the
future number of transfers, for a period
beginning at least 30 days before the
Substitution Date through at least 30
days following the Substitution Date.
7. All affected Contract Owners will
be notified, at least 30 days before the
Substitution Date about: (a) The
intended substitution of the Replaced
Portfolio with the Replacement
Portfolio; (b) the intended Substitution
Date; and (c) information with respect to
transfers as set forth in Condition 6
above. In addition, Insurers will deliver
to all affected Contract Owners, at least
30 days before the Substitution Date, a
prospectus for the Replacement
Portfolio.
8. Insurers will deliver to each
affected Contract Owner within five (5)
business days of the Substitution Date a
written confirmation which will
include: (a) A confirmation that the
Proposed Substitution was carried out
as previously notified; (b) a restatement
of the information set forth in the
Supplements; and (c) before and after
account values.
9. Applicants will not receive, for
three years from the date of the
Proposed Substitution, any direct or
indirect benefits from the Replacement
Portfolio, its adviser or underwriter (or
their affiliates), in connection with
assets attributable to Contracts affected
by the Proposed Substitution, at a
higher rate than they had received from
the Replaced Portfolio, its adviser or
underwriter (or their affiliates),
including without limitation 12b–1 fees,
shareholder service, administrative or
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Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices
other service fees, revenue sharing, or
other arrangements.
For the Commission, by the Division of
Investment Management, under delegated
authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015–02992 Filed 2–12–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–74239; File No. S7–02–15]
Contract Standard for Contractor
Workforce Inclusion and Request for
Public Comment
Securities and Exchange
Commission.
ACTION: Notice of proposed contract
standard; notice of proposed
information collection; and request for
public comment.
AGENCY:
To implement section 342 of
the Dodd-Frank Wall Street Reform and
Consumer Protection Act of 2010 (the
‘‘Dodd-Frank Act’’ or ‘‘the Act’’), the
Securities and Exchange Commission
(the ‘‘Commission’’) is proposing to
include in its service contracts a
standard concerning workforce
inclusion of minorities and women.
DATES: Comments should be received on
or before: April 14, 2015.
ADDRESSES: Comments may be
submitted by any of the following
methods:
SUMMARY:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/other.shtml);
• Send an email to rulecomments@sec.gov. Please include File
No. S7–02–15 on the subject line; or
• Use the Federal eRulemaking Portal
(https://www.regulations.gov). Follow
instructions for submitting comments.
tkelley on DSK3SPTVN1PROD with NOTICES
Paper Comments
• Send paper comments to Brent J.
Fields, Secretary, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549–1090.
All submissions should refer to File No.
S7–02–15. This file number should be
included on the subject line if email is
used. To help us process and review
your comments more efficiently, please
use only one method. The Commission
will post all comments on the
Commission’s Internet Web site (https://
www.sec.gov/rules/other.shtml).
Comments will also be available for
Web site viewing and printing in the
VerDate Sep<11>2014
21:56 Feb 12, 2015
Jkt 235001
Commission’s Public Reference Room,
100 F Street NE., Washington, DC 20549
on official business days between the
hours of 10:00 a.m. and 3:00 p.m. All
comments received will be posted
without change; we do not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly.
FOR FURTHER INFORMATION CONTACT:
Pamela A. Gibbs, Director, Office of
Minority and Women Inclusion, or
Audrey B. Little, Senior Counsel, Office
of Minority and Women Inclusion at
(202) 551–6046, Securities and
Exchange Commission, 100 F Street NE.,
Washington, DC 20549.
SUPPLEMENTARY INFORMATION: Section
342(a)(1)(A) of the Dodd-Frank Act
provides for certain agencies, including
the Securities and Exchange
Commission, to establish an Office of
Minority and Women Inclusion
(‘‘OMWI’’).1 Section 342(c)(1) provides
that the OMWI Director shall develop
and implement standards and
procedures to ensure the fair inclusion
and utilization of minorities, women,
and minority-owned and women-owned
businesses in all business and activities
of the agency, including in
procurement, insurance, and all types of
contracts. Section 342(c)(2) requires that
the OMWI Director include in the
procedures for evaluating contract
proposals and hiring service providers a
component that gives consideration to
the diversity of an applicant, to the
extent consistent with applicable laws.
In addition, section 342(c)(2) requires
that such procedures include a written
statement, in the form and content
prescribed by the OMWI Director, that
a contractor shall ensure, to the
maximum extent possible, the fair
inclusion of women and minorities in
the workforce of the contractor and, as
applicable, subcontractors.
Further, section 342(c)(3)(A) requires
the OMWI Director to establish
standards and procedures for
determining whether an agency
contractor or subcontractor ‘‘has failed
to make a good faith effort to include
minorities and women’’ in its
workforce. Section 342(c)(3)(B)(i)
provides that if the OMWI Director
determines that a contractor has failed
to make good faith efforts, the Director
shall recommend to the agency
administrator that the contract be
terminated. Upon receipt of such a
recommendation, section 342(c)(3)(B)(ii)
provides that the agency administrator
may terminate the contract, make a
1 12
PO 00000
U.S.C. 5452.
Frm 00065
Fmt 4703
Sfmt 4703
8119
referral to the Office of Federal Contract
Compliance Programs of the Department
of Labor, or take other appropriate
action.
Under section 342(c)(3)(A) of the
Dodd-Frank Act, the OMWI Director is
required to determine whether a
contractor or subcontractor has made
good faith efforts to include minorities
and women in its workforce. The
proposed Contract Standard would
require that a Commission contractor,
upon request from the OMWI Director,
provide documentation of the actions
undertaken (and as applicable, the
actions each covered subcontractor
under the contract has undertaken) that
demonstrate its good faith efforts to
ensure the fair inclusion of minorities
and women in its workforce. The
documentation requested may include,
but is not limited to: (1) The total
number of employees in the contractor’s
workforce, and the number of
employees by race, ethnicity, gender,
and job title or EEO–1 job category (e.g.,
EEO–1 Report(s)); (2) a list of covered
subcontract awards under the contract
that includes the dollar amount of each
subcontract, date of award, and the
subcontractor’s race, ethnicity, and/or
gender ownership status; (3) the
contractor’s plan to ensure the fair
inclusion of minorities and women in
its workforce, including outreach
efforts; and (4) for each covered
subcontractor, the information
requested in items 1 and 3 above. The
OMWI Director will consider the
information submitted in evaluating
whether the contractor or subcontractor
has complied with its contractual
obligation to make good faith efforts to
ensure the fair inclusion of minorities
and women in its workforce.
The Commission’s proposes to satisfy
section 342(c)(2) through the inclusion
of a contract standard concerning
workforce inclusion of minorities and
women (the ‘‘Contract Standard’’) in
solicitations and resulting contracts for
services with a dollar value of $100,000
or more. The proposed Contract
Standard is similar to the contract
clauses adopted by OMWIs of other
federal financial regulatory agencies.2
The Contract Standard requires the
service contractor, upon entering into a
contract with the Commission, to
confirm that it will ensure, to the
maximum extent possible and
consistent with applicable law, the fair
inclusion of minorities and women in
its workforce. In addition, the proposed
2 See Department of the Treasury Acquisition
Regulations; Contract Clause on Minority and
Women Inclusion in Contractor Workforce, 79 FR
15551, at https://www.gpo.gov/fdsys/pkg/FR-201403-20/pdf/2014-05846.pdf.
E:\FR\FM\13FEN1.SGM
13FEN1
]]>Agencies
[Federal Register Volume 80, Number 30 (Friday, February 13, 2015)]
[Notices]
[Pages 8115-8119]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-02992]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-31451; File No. 812-14359]
Pacific Life Insurance Company, et al; Notice of Application
February 9, 2015.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for an order approving the substitution
of certain securities pursuant to Section 26(c) of the Investment
Company Act of 1940, as amended (the ``1940 Act'').
-----------------------------------------------------------------------
Applicants: Pacific Life Insurance Company (``Pacific Life''),
Pacific Life's Separate Account A (``Separate Account A''), Pacific
Life's Pacific Select Variable Annuity Separate Account (``Select VA
Account'' and, together with Separate Account A, the ``Pacific Life
Separate Accounts''), Pacific Life & Annuity Company (``PL&A''), and
PL&A's Separate Account A (``PL&A Separate Account A''). Pacific Life,
PL&A, and the Separate Accounts are referred to collectively as the
``Applicants.'' The Pacific Life Separate Accounts and PL&A Separate
Account A are referred to individually as a ``Separate Account'' and
collectively as the ``Separate Accounts.'' Pacific Life and PL&A are
referred to herein individually as an ``Insurer'' and collectively as
the ``Insurers.''
SUMMARY: Summary of Application: Each Insurer, on behalf of itself and
its Separate Account(s), seeks an order pursuant to Section 26(c) of
the 1940 Act, approving the substitution of Service Shares of the Janus
Aspen Balanced Portfolio, a series of Janus Aspen Series (the
``Replacement Portfolio''), for the Advisor Class shares of the PIMCO
Global Multi-Asset Managed Allocation Portfolio, a series of the PIMCO
Variable Insurance Trust (the ``Replaced Portfolio'') (the ``Proposed
Substitution''), under certain variable annuity contracts issued by the
Insurers (collectively, the ``Contracts'').
DATES: Filing Date: The application was filed on September 19, 2014,
and amended on February 5, 2015.
Hearing or Notification of Hearing: An order granting the requested
relief will be issued unless the Commission orders a hearing.
Interested persons may request a hearing by writing to the Commission's
Secretary and serving applicants with a copy of the request, personally
or by mail. Hearing requests should be received by the Commission by
5:30 p.m. on March 4, 2015, and should be accompanied by proof of
service on applicants, in the form of an affidavit or, for lawyers, a
certificate of service. Pursuant to Rule 0-5 under the Act, hearing
requests should state the nature of the writer's interest, any facts
bearing upon the desirability of a hearing on the matter, 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; Applicants: Brandon J. Cage, CLU
Assistant Vice President, Counsel, Pacific Life Insurance Company, 700
Newport Center Drive, Newport Beach, CA 92660; Richard T. Choi, Esq.,
Carlton Fields Jorden Burt, P.A., 1025 Thomas Jefferson St. NW., Suite
400 East, Washington, DC 20007.
FOR FURTHER INFORMATION CONTACT: Laura L. Solomon, Senior Counsel, at
(202) 551-6915, or Nadya Roytblat, Assistant Chief Counsel, at (202)
551-6825 (Chief Counsel's Office, Division of Investment Management).
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. The Insurers, on their own behalf and on behalf of their
respective Separate Accounts, propose to substitute Service Shares of
the Replacement Portfolio for Advisor Class shares of the Replaced
Portfolio held by the Separate Account to fund the Contracts. Each
Separate Account is divided into subaccounts (each a ``Subaccount,''
collectively, the ``Subaccounts''). Each Subaccount invests in the
securities of a single portfolio of an underlying mutual fund
(``Portfolio''). Contract owners (each a ``Contract Owner'' and
collectively, the ``Contract Owners'') may allocate some or all of
their Contract value to one or more Subaccounts that are available as
investment options under the Contracts.
2. Pacific Life is the depositor and sponsor of the Pacific Life
Separate Accounts. PL&A is the depositor and sponsor of PL&A Separate
Account A.
3. Each of the Separate Accounts is a ``separate account'' as
defined by Section 2(a)(37) of the 1940 Act and each is registered
under the 1940 Act as a unit investment trust for the purpose of
funding the Contracts. Security interests under the Contracts have been
[[Page 8116]]
registered under the Securities Act of 1933. The application sets forth
the registration statement file numbers for the Contracts and the
Separate Accounts.
4. Each Insurer, on behalf of itself and its Separate Account(s),
proposes to replace the Advisor Class shares of the Replaced Portfolio
that are held in Subaccounts of its Separate Account(s) with Service
Shares of the Replacement Portfolio.
5. The Applicants state that the Proposed Substitution involves
moving assets attributable to the Contracts from the Replaced Portfolio
managed by Pacific Investment Management Company, LLC (``PIMCO'') to a
Replacement Portfolio managed by Janus Capital Management LLC (``Janus
Capital'') (each of Janus Capital and PIMCO, an ``Investment Adviser''
and collectively, the ``Investment Advisers''). Each Investment Adviser
is responsible for the day-to-day management of the assets of the
Replaced or Replacement Portfolio, as the case may be. Neither the
Replaced nor Replacement Portfolio employs a sub-adviser and neither
Portfolio operates under a manager-of-managers arrangement that, among
other things, would permit the Investment Adviser to engage a new or
additional sub-adviser without the approval of the Portfolio's
shareholders. The Applicants state that the Investment Advisers are not
affiliates of the Insurers.
6. Applicants state that under the Contracts, the Insurers reserve
the right to substitute, for the shares of a Portfolio held in any
Subaccount, the shares of another Portfolio, shares of another
investment company or series of another investment company, or another
investment vehicle. The prospectuses for the Contracts include
appropriate disclosure of this reservation of right.
7. The Applicants represent that the investment objectives of the
Replaced and Replacement Portfolio are similar. The investment
objective of the Replaced Portfolio is total return which exceeds that
of a blend of 60% MSCI World Index/40% Barclays U.S. Aggregate Index,
whereas that of the Replacement Portfolio is long-term capital growth,
consistent with preservation of capital and balanced by current income.
The investment objectives of both Portfolios include a growth component
as well as an income component. Additionally, the Applicants state that
the principal investment strategies of the Replaced and Replacement
Portfolios are similar. The principal investment strategies of both
Portfolios include investment in a combination of equity and debt
securities. The Replaced Portfolio will typically invest 50 to 70% (20%
minimum under normal circumstances) of its total assets in equity-
related investment securities and may invest up to 30% of its total
assets in fixed income securities denominated in foreign securities (or
beyond this limit in U.S. dollar-denominated securities of foreign
issuers), 15% of its total assets in fixed income securities that are
economically tied to emerging market countries, and up to 10% of its
total assets in fixed income securities in high yield securities (i.e.,
``junk'' bonds). The Replacement Portfolio normally invests 35-65% of
its assets in equity securities and the remaining assets in debt
securities and cash equivalents, with normally 25% of its assets
invested in fixed-income senior securities. In addition, both
Portfolios may invest in securities of non-U.S. issuers. Investment in
``junk'' bonds is not a principal investment strategy of the
Replacement Portfolio though it may invest in such bonds. The principal
investment strategies of the Replaced Portfolio include investments of
up to 5% of its total assets in real estate investment trusts or REITS,
whereas the same is not true for the Replacement Portfolio though it
may invest in REITs. The principal investment strategies of the
Replaced Portfolio include entering into forward commitments, the
making of short sales of securities or maintaining a short position,
none of which is a principal investment strategy of the Replacement
Portfolio, though it may engage in short sales and invest in securities
on a forward commitment basis. The principal investment strategies of
the Replacement Portfolio include investments in mortgage-backed and
mortgage-related securities. Similarly, mortgage-backed securities are
included among the types of fixed-income securities that constitute a
principal investment strategy of the Replaced Portfolio. A comparison
of the investing strategies, risks, and performance of the Replaced and
Replacement Portfolios is included in the application.
8. The following table compares the fees and expenses of the
Replaced Portfolio (Advisor Class shares) and the Replacement Portfolio
(Service Shares) as of the year ended December 31, 2013. As shown
below, the management fee of the Replacement Portfolio is lower than
that of the Replaced Portfolio. The management fees of the Replaced
Portfolio and the Replacement Portfolio are not subject to breakpoints.
In addition, as shown in the table below, the 12b-1 fee of the Service
Shares of the Replacement Portfolio is the same as the 12b-1 fee of the
Advisor Class shares of the Replaced Portfolio. In both cases, the 12b-
1 fee is the current maximum permitted under the relevant plan.
Furthermore, as shown in the table below, the annual operating expenses
of the Replacement Portfolio are lower than those of the Replaced
Portfolio.\1\
---------------------------------------------------------------------------
\1\ As of the date of filing of the amended application,
Applicants are aware of no material change to the fee and expense
information provided in the following table.
Proposed Substitution
----------------------------------------------------------------------------------------------------------------
Replaced portfolio Replacement portfolio
-------------------------------------------------
PIMCO global multi-
asset managed Janus Aspen balanced
allocation portfolio portfolio
----------------------------------------------------------------------------------------------------------------
Advisor Class/Service Shares:
Management Fee............................................ 0.95% 0.55%
12b-1 Fee................................................. 0.25% 0.25%
Other Expenses............................................ 0.01% 0.04%
Acquired Fund Fees........................................ 0.52% N/A
Total Gross Expenses...................................... 1.73% 0.84%
Expense Waiver/Reimbursement.............................. 0.46 0.00
-------------------------------------------------
[[Page 8117]]
Total Net Expenses.................................... 1.27% 0.84%
----------------------------------------------------------------------------------------------------------------
9. The Applicants state that the performance for the Replacement
Portfolio is substantially better than that of the Replaced Portfolio
for all periods shown.
10. The Applicants state that the Proposed Substitution is part of
an ongoing effort by the Insurers to make their Contracts more
attractive to existing and prospective Contract Owners. The Applicants
assert the Proposed Substitution will help to accomplish these goals
for the following reasons: (1) The total annual operating expenses for
the Replacement Portfolio (which does not include any expense waivers
or reimbursements) are significantly lower than those of the Replaced
Portfolio (even after taking into account fee waivers or expense
reimbursements); (2) the historical performance of the Replacement
Portfolio is generally much better than that of the Replaced Portfolio;
(3) the Subaccounts that invest in the Replacement Portfolio are
included among the currently allowable investment options under the
optional living benefit riders offered under the Contracts; (4)
Contract Owners will find the stable management of the Replacement
Portfolio, whose co-portfolio managers have managed the Portfolio since
2005, attractive, relative to the Replaced Portfolio; and (5) the
Proposed Substitution will simplify the Subaccount offerings under the
Contracts.
11. The Applicants represent that the Proposed Substitution will be
described in supplements to the applicable prospectuses for the
Contracts filed with the Commission or in other supplemental disclosure
documents, (collectively, ``Supplements'') and delivered to all
affected Contract Owners at least 30 days before the date the Proposed
Substitution is effected (the ``Substitution Date''). Each Supplement
will give the relevant Contract Owners notice of the applicable
Insurer's intent to take the necessary actions, including seeking the
order requested by the application, to substitute shares of the
Replaced Portfolio as described in the application on the Substitution
Date. Each Supplement also will advise Contract Owners that from the
date of the Supplement until the Substitution Date, Contract Owners are
permitted to transfer all of or a portion of their Contract value out
of any Subaccount investing in the Replaced Portfolio (``Replaced
Portfolio Subaccount'') to any other available Subaccounts offered
under their Contracts without the transfer being counted as a transfer
for purposes of transfer limitations and fees that would otherwise be
applicable under the terms of the Contracts. In addition, each
Supplement will (a) instruct Contract Owners how to submit transfer
requests in light of the Proposed Substitution; (b) advise Contract
Owners that any Contract value remaining in the Replaced Portfolio
Subaccount on the Substitution Date will be transferred to a Subaccount
investing in the Replacement Portfolio (``Replacement Portfolio
Subaccount''), and that the Proposed Substitution will take place at
relative net asset value; (c) inform Contract Owners that for at least
thirty (30) days following the Substitution Date, the applicable
Insurer will permit Contract Owners to make transfers of Contract value
out of the Replacement Portfolio Subaccount to any other available
Subaccounts offered under their Contracts without the transfer being
counted as a transfer for purposes of transfer limitations that would
otherwise be applicable under the terms of the Contracts; and (d)
inform Contract Owners that, except as described in the market timing
limitations section of the relevant prospectus, the applicable Insurer
will not exercise any rights reserved by it under the Contracts to
impose additional restrictions on transfers out of the Replacement
Portfolio Subaccount for at least thirty (30) days after the
Substitution Date.
12. The Proposed Substitution will be effected at the relative net
asset values of the respective shares in conformity with Section 22(c)
of the 1940 Act and Rule 22c-1 thereunder without the imposition of any
transfer or similar charges by Applicants. The Proposed Substitution
will be effected without change in the amount or value of any Contracts
held by affected Contract Owners. Accordingly, the Applicants submit
that the Proposed Substitution will have no negative financial impact
on any Contract Owner.
13. The Proposed Substitution will be effected by having the
Replaced Portfolio Subaccount redeem its Replaced Portfolio shares in
cash on the Substitution Date at net asset value per share and purchase
shares of the Replacement Portfolio at net asset value per share
calculated on the same date.
14. The Insurers or an affiliate thereof will pay all expenses and
transaction costs reasonably related to the Proposed Substitution,
including all legal, accounting, and brokerage expenses relating to the
Proposed Substitution, the above described disclosure documents, and
the application. No costs of the Proposed Substitution will be borne
directly or indirectly by Contract Owners. Affected Contract Owners
will not incur any fees or charges as a result of the Proposed
Substitution, nor will their rights or the obligations of the Insurers
under the Contracts be altered in any way. The Proposed Substitution
will not cause the fees and charges under the Contracts currently being
paid by Contract Owners to be greater after the Proposed Substitution
than before the Proposed Substitution. In addition, no transfer charges
will apply in connection with the Proposed Substitution.
15. The Applicants represent that they will not receive, for three
years from the date of the Proposed Substitution, any direct or
indirect benefits from the Replacement Portfolio, its adviser or
underwriter (or their affiliates), in connection with assets
attributable to contracts affected by the Proposed Substitution, at a
higher rate than they had received from the Replaced Portfolio, its
adviser or underwriter (or their affiliates), including without
limitation 12b-1 fees, shareholder service, administrative, or other
service fees, revenue sharing, or other arrangements; and the Proposed
Substitution and the selection of the Replacement Portfolio were not
motivated by any financial consideration paid or to be paid to the
Insurer or its affiliates by the
[[Page 8118]]
Replacement Portfolio, its adviser or underwriter, or their affiliates.
Legal Analysis
1. Applicants request that the Commission issue an order pursuant
to Section 26(c) of the 1940 Act approving the Proposed Substitution.
Section 26(c) of the 1940 Act makes it unlawful for any depositor or
trustee of a registered unit investment trust holding the security of a
single issuer to substitute another security for such security unless
the Commission approves the substitution. Section 26(c) requires the
Commission to issue such an order approving the substitution if the
evidence establishes that the substitution is consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the 1940 Act.
2. The Applicants submit that the terms and conditions of the
Proposed Substitution meet the standards set forth in Section 26(c) and
assert that the substitution of the Replaced Portfolio with the
Replacement Portfolio is consistent with the protection of investors
and the purposes fairly intended by the policy and provisions of the
l940 Act. As described in the application, the total annual operating
expenses for the Replacement Portfolio are lower than those of the
Replaced Portfolio. Applicants assert that the Replacement Portfolio
has similar investment objectives and investment strategies as the
Replaced Portfolio, and the principal risks of the Replaced Portfolio
and the Replacement Portfolio are similar.
3. Applicants also maintain that the Proposed Substitution is part
of an ongoing effort by the Insurers to make their contracts more
attractive to existing and prospective Contract Owners. The rights of
affected Contract Owners and the obligations of the Insurers under the
Contracts will not be altered by the Proposed Substitution. Affected
Contract Owners will not incur any additional tax liability or any
additional fees and expenses as a result of the Proposed Substitution.
4. The prospectuses for the Contracts disclose that the Insurers
reserve the right, subject to Commission approval and compliance with
applicable law, to substitute, for the shares of a Portfolio held in
any Subaccount, the shares of another Portfolio, shares of another
investment company or series of another investment company, or another
investment vehicle.
5. Applicants also assert that the Proposed Substitution does not
entail any of the abuses that Section 26(c) was designed to prevent.
Applicants note that the purpose of Section 26(c) is to protect the
expectation of investors in a unit investment trust that the trust will
accumulate shares of a particular issuer by preventing unscrutinized
substitutions that might, in effect, force shareholders dissatisfied
with the substituted security to redeem their shares, possibly
incurring either a loss of the sales load deducted from initial premium
payments, an additional sales load upon reinvestment of the redemption
proceeds, or both. The Proposed Substitution will offer Contract Owners
the opportunity to transfer amounts out of the affected subaccounts
into any of the remaining subaccounts without cost or other
disadvantage. The Proposed Substitution, therefore, will not result in
the type of costly forced redemptions that Section 26(c) was designed
to prevent.
Applicants' Conditions
Applicants agree that any order granting the requested relief will
be subject to the following conditions:
1. The Proposed Substitution will not be effected unless the
Insurers determine that: (a) The Contracts allow the substitution of
shares of registered open-end investment companies in the manner
contemplated by the application; (b) the Proposed Substitution can be
consummated as described in the application under applicable insurance
laws; and (c) any regulatory requirements in each jurisdiction where
the Contracts are qualified for sale have been complied with to the
extent necessary to complete the Proposed Substitution.
2. The Insurers or their affiliates will pay all expenses and
transaction costs of the Proposed Substitution, including legal and
accounting expenses, any applicable brokerage expenses and other fees
and expenses. No fees or charges will be assessed to the Contract
Owners to effect the Proposed Substitution.
3. The Proposed Substitution will be effected at the relative net
asset values of the respective shares in conformity with Section 22(c)
of the 1940 Act and Rule 22c-1 thereunder without the imposition of any
transfer or similar charges by Applicants. The Proposed Substitution
will be effected without change in the amount or value of any Contracts
held by affected Contract Owners.
4. The Proposed Substitution will in no way alter the tax treatment
of affected Contract Owners in connection with their Contracts, and no
tax liability will arise for affected Contract Owners as a result of
the Proposed Substitution.
5. The rights or obligations of the Insurers under the Contracts of
affected Contract Owners will not be altered in any way. The Proposed
Substitution will not adversely affect any riders under the Contracts
since the Replacement Portfolio is an allowable investment option for
use with such riders.
6. Affected Contract Owners will be permitted to make at least one
transfer of Contract value from the subaccount investing in the
Replaced Portfolio (before the Substitution Date) or the Replacement
Portfolio (after the Substitution Date) to any other available
investment option under the Contract without charge for a period
beginning at least 30 days before the Substitution Date through at
least 30 days following the Substitution Date. Except as described in
any market timing/short-term trading provisions of the relevant
prospectus, the Insurer will not exercise any right it may have under
the Contract to impose restrictions on transfers between the
subaccounts under the Contracts, including limitations on the future
number of transfers, for a period beginning at least 30 days before the
Substitution Date through at least 30 days following the Substitution
Date.
7. All affected Contract Owners will be notified, at least 30 days
before the Substitution Date about: (a) The intended substitution of
the Replaced Portfolio with the Replacement Portfolio; (b) the intended
Substitution Date; and (c) information with respect to transfers as set
forth in Condition 6 above. In addition, Insurers will deliver to all
affected Contract Owners, at least 30 days before the Substitution
Date, a prospectus for the Replacement Portfolio.
8. Insurers will deliver to each affected Contract Owner within
five (5) business days of the Substitution Date a written confirmation
which will include: (a) A confirmation that the Proposed Substitution
was carried out as previously notified; (b) a restatement of the
information set forth in the Supplements; and (c) before and after
account values.
9. Applicants will not receive, for three years from the date of
the Proposed Substitution, any direct or indirect benefits from the
Replacement Portfolio, its adviser or underwriter (or their
affiliates), in connection with assets attributable to Contracts
affected by the Proposed Substitution, at a higher rate than they had
received from the Replaced Portfolio, its adviser or underwriter (or
their affiliates), including without limitation 12b-1 fees, shareholder
service, administrative or
[[Page 8119]]
other service fees, revenue sharing, or other arrangements.
For the Commission, by the Division of Investment Management,
under delegated authority.
Brent J. Fields,
Secretary.
[FR Doc. 2015-02992 Filed 2-12-15; 8:45 am]
BILLING CODE 8011-01-P
