Brighthouse Life Insurance Company, et al., 13772-13776 [2021-04934]
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Federal Register / Vol. 86, No. 45 / Wednesday, March 10, 2021 / Notices
All submissions should refer to File
Number SR–CBOE–2020–106. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
internet website (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the 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. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–CBOE–2020–106 and
should be submitted on or before March
31, 2021. Rebuttal comments should be
submitted by April 14, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–04911 Filed 3–9–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91254; File No. SR–Phlx–
2020–41]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Designation of a
Longer Period for Commission Action
on Proceedings To Determine Whether
To Approve or Disapprove a Proposed
Rule Change To List and Trade
Options on a Nasdaq-100 Volatility
Index
March 4, 2021.
On August 24, 2020, Nasdaq PHLX
LLC (‘‘Exchange’’ or ‘‘Phlx’’) filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to list and trade
options on a Nasdaq-100 Volatility
Index. The proposed rule change was
published for comment in the Federal
Register on September 8, 2020.3
On October 20, 2020, pursuant to
Section 19(b)(2) of the Exchange Act,4
the Commission designated a longer
period within which to approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether to
disapprove the proposed rule change.5
On December 4, 2020, the Commission
instituted proceedings under Section
19(b)(2)(B) of the Exchange Act 6 to
determine whether to approve or
disapprove the proposed rule change.7
Section 19(b)(2) of the Exchange Act 8
provides that, after initiating
disapproval proceedings, the
Commission shall issue an order
approving or disapproving the proposed
rule change not later than 180 days after
the date of publication of notice of filing
of the proposed rule change. The
Commission may extend the period for
issuing an order approving or
disapproving the proposed rule change
by not more than 60 days if the
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 89725
(September 1, 2020), 85 FR 55544 (‘‘Notice’’).
Comments on the proposed rule change can be
found on the Commission’s website at: https://
www.sec.gov/comments/sr-phlx-2020-41/
srphlx202041.htm.
4 15 U.S.C. 78s(b)(2).
5 See Securities Exchange Act Release No. 90226,
85 FR 67781 (October 26, 2020). The Commission
designated December 7, 2020 as the date by which
the Commission shall approve or disapprove, or
institute proceedings to determine whether to
disapprove, the proposed rule change.
6 15 U.S.C. 78s(b)(2)(B).
7 See Securities Exchange Act Release No. 90573,
85 FR 79552 (December 10, 2020).
8 15 U.S.C. 78s(b)(2).
2 17
29 17
CFR 200.30–3(a)(57).
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Commission determines that a longer
period is appropriate and publishes
reasons for such determination. The
proposed rule change was published for
notice and comment in the Federal
Register on September 8, 2020. March 7,
2021 is 180 days from that date, and
May 6, 2021 is 240 days from that date.
The Commission finds it appropriate
to designate a longer period within
which to issue an order approving or
disapproving the proposed rule change
so that it has sufficient time to consider
the proposed rule change. Accordingly,
the Commission, pursuant to Section
19(b)(2) of the Exchange Act,9
designates May 6, 2021 as the date by
which the Commission shall either
approve or disapprove the proposed
rule change (File No. SR–Phlx–2020–
41).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–04909 Filed 3–9–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34220; File No. 812–15140]
Brighthouse Life Insurance Company,
et al.
March 4, 2021.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
AGENCY:
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 ‘‘Act’’) and an order of
exemption pursuant to section 17(b) of
the Act from section 17(a) of the Act.
APPLICANTS: Brighthouse Life Insurance
Company (‘‘BLIC’’), Brighthouse Life
Insurance Company of NY (‘‘BLIC NY’’
and, together with BLIC, the
‘‘Companies’’), Brighthouse Fund UL for
Variable Life Insurance (‘‘Fund UL’’),
Brighthouse Separate Account A
(‘‘Separate Account A’’), Brighthouse
Separate Account Eleven for Variable
Annuities (‘‘Separate Account Eleven’’),
and Brighthouse Variable Annuity
Account B (‘‘Variable Account B,’’ and
together with Fund UL, Separate
Account A, and Separate Account
Eleven, the ‘‘Separate Accounts,’’ and
9 Id.
10 17
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Federal Register / Vol. 86, No. 45 / Wednesday, March 10, 2021 / Notices
collectively with the Companies, the
‘‘Section 26 Applicants’’); and
Brighthouse Funds Trust I (‘‘BFT I,’’ and
collectively with the Section 26
Applicants, the ‘‘Section 17 Applicants’’
or ‘‘Applicants’’).
SUMMARY OF APPLICATION: The Section
26 Applicants seek an order pursuant to
section 26(c) of the Act, approving the
proposed substitution (‘‘Substitution’’)
of Loomis Sayles Growth Portfolio (the
‘‘Replacement Fund’’), a series of BFT I,
for shares of ClearBridge Variable
Aggressive Growth Portfolio (the
‘‘Existing Fund’’), a series of Legg
Mason Partners Variable Equity Trust,
held by the Separate Accounts to fund
certain variable annuity insurance
contracts and variable life insurance
contracts (collectively, the ‘‘Contracts’’).
The Section 17 Applicants seek an order
pursuant to section 17(b) of the Act
exempting them from section 17(a) of
the Act to the extent necessary to permit
them to engage in certain in-kind
transactions in connection with the
Substitution (‘‘In-Kind Transactions’’).
FILING DATES: The application was filed
on July 6, 2020 and amended on
November 19, 2020, February 10, 2021,
and March 3, 2021.
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 emailing the
Commission’s Secretary at SecretarysOffice@sec.gov and serving applicants
with a copy of the request by email.
Hearing requests should be received by
the Commission by 5:30 p.m. on March
29, 2021, 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
emailing the Commission’s Secretary.
ADDRESSES: The Commission:
Secretarys-Office@sec.gov. Applicants:
Ms. Michele Abate, mabate1@
brighthousefinancial.com.
FOR FURTHER INFORMATION CONTACT:
Harry Eisenstein, Senior Special
Counsel, at (202) 551–6764 or Kaitlin C.
Bottock, Branch Chief at (202) 551–6825
(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
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website by searching for the file
number, or for an Applicant using the
Company name box, at https://
www.sec.gov.search/search.htm, or by
calling (202) 551–8090.
Applicants’ Representations
1. BLIC is a stock life insurance
company organized under the laws of
the state of Delaware and is an indirect,
wholly owned subsidiary of Brighthouse
Financial, Inc., a publicly owned
company. BLIC is the depositor and
sponsor of Fund UL, Separate Account
A and Separate Account Eleven.
2. BLIC NY is a stock life insurance
company organized under the laws of
the state of New York and is a wholly
owned subsidiary of BLIC. BLIC NY is
the depositor and sponsor of Separate
Account B.
3. The Separate Accounts are
registered with the Commission under
the Act as unit investment trusts for the
purpose of funding the Contracts. Each
Separate Account is divided into
subaccounts that reflect the investment
performance of registered investment
companies, such as BFT I, or series of
BFT I (‘‘investment options’’).
4. BFT I is a Delaware statutory trust
registered under the 1940 Act as an
open-end, management investment
company with multiple series, and its
securities are registered under the 1933
Act.
5. The Contracts are individual
variable annuity and variable life
insurance contracts. Each Contract is
registered under the Securities Act of
1933, as amended (the ‘‘1933 Act’’). The
Contracts allow Contract owners to
allocate premium and Contract value
among the subaccounts investing in a
number of investment options, which
are advised and/or sub-advised by
investment managers that are affiliated
and unaffiliated with the Section 17
Applicants.
6. As set forth under each Contract, as
well as in the prospectus for each
Contract, the Companies reserve the
right to substitute shares of the
underlying fund for shares of another
underlying fund.
7. The Companies, on their own
behalf and on behalf of their Separate
Accounts, propose to exercise their
contractual rights to substitute Class A
and Class B shares of the Replacement
Fund for Class I and Class II shares of
the Existing Fund, respectively.1
8. The Section 26 Applicants state
that the Substitution is part of an
ongoing effort by the Companies to
1 The Replacement Fund is a series of BFT I and
is advised by Brighthouse Investment Advisers
(‘‘BIA’’), an affiliate of the Companies.
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make their Contracts more attractive to
existing and prospective Contract
owners. Additional information for the
Existing Fund and the Replacement
Fund, including investment objectives,
principal investment strategies,
principal risks, and performance, as
well as the fees and expenses of the
Existing Fund and the Replacement
Fund, can be found in the application.
9. The Section 26 Applicants state
that the Substitution will be described
in supplements to the applicable
prospectuses (‘‘Supplements’’) for the
Contracts filed with the Commission
and delivered to all affected Contract
owners at least 30 days before the
Substitution Date. Each Supplement,
among other things, will advise Contract
owners that, for a period beginning 30
days before the Substitution Date
through at least 30 days following the
Substitution Date, Contract owners are
permitted to make at least one transfer
of Contract value from the subaccount
investing in the Existing Fund or the
Replacement Fund to any other
available investment option 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 disclose
the existence and effect of the MultiManager Order (defined below) on
which the Replacement Fund relies.2
10. The Section 26 Applicants will
send the Supplements to all affected
Contract owners. Prospective purchasers
and new purchasers of Contracts will be
provided with a Contract prospectus
and the Supplement, as well as the
prospectus and any supplements for the
Replacement Fund.
11. In addition to the Supplement
distributed to Contract owners, within
five business days after the Substitution
Date, affected Contract owners will be
sent a written confirmation of the
completed Substitution in accordance
with Rule 10b–10 under the Securities
Exchange Act of 1934. The confirmation
statement will include or be
accompanied by a statement that
reiterates the free transfer rights
disclosed in the Supplement. The
Companies also will send each Contract
2 Pursuant to exemptive orders issued to N ew
England Funds Trust I, et al., Investment Company
Act Release. No. 22796 (Aug. 29, 1997) (notice);
Investment Company Act Release. No.22824 (Sept.
17, 1997) (order); and Investment Company Act
Release. No.23829 (May 10, 1999) (notice);
Investment Company Act Release. No. (June 4,
1999) (amended order) (the ‘‘Multi-Manager
Order’’), BIA is authorized to enter into and amend
sub- advisory agreements with sub-advisers who are
not affiliated with BIA without shareholder
approval under certain conditions.
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Federal Register / Vol. 86, No. 45 / Wednesday, March 10, 2021 / Notices
owner a current prospectus for the
Replacement Fund to the extent that
they have not previously received a
copy.
12. The Substitution will be effected
at the relative net asset value (‘‘NAV’’)
in conformity with section 22(c) of the
Act and rule 22c–1 thereunder. The
Substitution will be effected by having
each subaccount investing in the
Existing Fund redeem its Existing Fund
shares in cash and/or in-kind (as
described herein) on the Substitution
Date at NAV per share and purchase
shares of the Replacement Fund at NAV
per share calculated on the same date.
13. The Companies or an affiliate will
pay all expenses and transaction costs
reasonably related to the Substitution.
No costs of the Substitution will be
borne directly or indirectly by Contract
owners. Contract owners will not incur
any fees or charges as a result of the
Substitution, nor will their rights or the
obligations of the Companies under the
Contracts be altered in any way. The
Substitution will not cause the fees and
charges under the Contracts currently
being paid by Contract owners to be
greater after the Substitution than before
the Substitution. The charges for
optional living benefit riders may
change from time to time and any such
changes would be unrelated to the
Substitution. In addition, the
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 Contract
owners as a result of the Substitution.
14. The Section 26 Applicants state
that the Contract value for each Contract
owner impacted by the Substitution will
not change as a result of the
Substitution. In addition, the Section 26
Applicants also state that the benefits
offered by the guarantees under the
Contracts will be the same immediately
before and after the Substitution. The
Section 26 Applicants further state that
the effect Substitution may have on the
value of the benefits offered by the
Contract guarantees would depend,
among other things, on the relative
future performance of the Existing Fund
and the Replacement Fund, which the
Section 26 Applicants cannot predict.
The Section 26 Applicants further note
that, at the time of the Substitution, the
Contracts will offer a comparable variety
of investment options with as broad a
range of risk/return characteristics.
15. The Section 26 Applicants
represent that, for a period of two years
following the date the Substitution is
effected (the ‘‘Substitution Date’’), BLIC,
BLIC NY or an affiliate (other than BFT
I) will reimburse, on the last day of each
fiscal quarter, the Contract owners
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whose subaccounts invest in the
Replacement Fund to the extent the
annual net operating expenses (taking
into account fee waivers and expense
reimbursements) of each share class of
the Replacement Fund for such period
exceed, on an annualized basis, the
annual net operating expenses of the
corresponding share class of the
Existing Fund for fiscal year 2019.
Further, any amounts waived or
reimbursed by BIA will not be subject
to recoupment rights. In addition, the
Section 26 Applicants will not increase
separate account charges for any
Contract owner on the Substitution Date
at any time during the two-year period
following the Substitution Date.
Legal Analysis—Section 26(c) of the Act
1. The Section 26 Applicants request
that the Commission issue an order
pursuant to section 26(c) of the Act
approving the Substitution. Section
26(c) prohibits any depositor or trustee
of a unit investment trust that invests
exclusively in the securities of a single
issuer from substituting the securities of
another issuer without the approval of
the Commission. Section 26(c) provides
that such approval shall be granted by
order from the Commission if the
evidence establishes that the
substitution is consistent with the
protection of investors and the purposes
of the Act.
2. The Section 26 Applicants submit
that the Substitution is consistent with
the protection of investors and the
purposes fairly intended by the policy
and provisions of the Act. In particular,
the Section 26 Applicants point to the
following: (a) The Contracts permit the
Substitution, subject to Commission
approval and compliance with
applicable laws, upon appropriate
notice; (b) the prospectuses or
statements of additional information for
the Contracts contain appropriate
disclosure of these rights; (c) the
Substitution will be described in the
Supplements delivered to all affected
Contract owners at least 30 days before
the Substitution Date; (d) the
Supplements also will advise Contract
owners that, for a period beginning at
least 30 days before the Substitution
Date through at least 30 days following
the Substitution Date, Contract owners
are permitted to make at least one
transfer of Contract value from the
subaccount investing in the Existing
Fund to any other available subaccounts
offered under their Contract without any
transfer charge or limitation and
without the transfer being counted as a
transfer for purposes of transfer
limitations and fees that would
otherwise be applicable under the terms
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of the Contracts; (e) the Replacement
Fund and the Existing Fund have
similar or substantially similar
investment objectives, principal
investment strategies, and principal
risks; and (f) the total net operating
expenses of the Replacement Fund will
be the same or lower than those of the
Existing Fund for at least two years
following the Substitution Date. The
Section 26 Applicants assert that, based
on the terms noted above, and subject to
the conditions set forth below, the
Substitution does not raise the concerns
underlying section 26(c).
Legal Analysis—Section 17(a) of the Act
1. The Section 17 Applicants request
an order under section 17(b) exempting
them from the provisions of section
17(a) to the extent necessary to permit
the Section 17 Applicants to carry out
the Substitution. The Section 17
Applicants state that because the
Substitution may be effected, in whole
or in part, by means of in-kind
redemptions and purchases, the
Substitution may be deemed to involve
one or more purchases or sales of
securities or property between affiliated
persons.
2. Section 17(a)(1) of the Act, in
relevant part, prohibits any affiliated
person of a registered investment
company, or any affiliated person of
such person, acting as principal, from
knowingly selling any security or other
property to that company. Section
17(a)(2) of the Act generally prohibits
the persons described above, acting as
principals, from knowingly purchasing
any security or other property from the
registered investment company.
‘‘Affiliated person’’ is defined in section
2(a)(3) of the Act.3
3. To effect the Substitution, the
Companies will redeem shares of the
Existing Fund either in-kind or in cash,
and use the proceeds of such
redemptions to purchase shares of the
Replacement Fund. Thus, the proposed
transactions may involve a transfer of
portfolio securities by the Existing Fund
to the Companies. Immediately
3 Section 2(a)(3) defines affiliated person as ‘‘(A)
any person directly or indirectly owning,
controlling, or holding with power to vote, 5 per
centum or more of the outstanding voting securities
of such other person; (B) any person 5 per centum
or more of whose outstanding voting securities are
directly or indirectly owned, controlled, or held
with power to vote, by such other person; (C) any
person directly or indirectly controlling, controlled
by, or under common control with, such other
person; (D) any officer, director, partner, copartner,
or employee of such other person; (E) if such other
person is an investment company, any investment
adviser thereof or any member of an advisory board
thereof; and (F) if such other person is an
unincorporated investment company not having a
board of directors, the depositor thereof.’’
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thereafter, the Companies would
purchase shares of the Replacement
Fund with the portfolio securities and/
or cash received from the Existing Fund.
This aspect of the Substitution may be
considered to involve one or more sales
by the Companies of securities or other
property to the Replacement Fund.
Based on the affiliations detailed in the
application, these In-Kind Transactions
may be prohibited by section 17(a)(1)
and (2) of the Act.
4. Section 17(b) of the Act, in relevant
part, provides that, notwithstanding
subsection (a), any person may file with
the Commission an application for an
order exempting a proposed transaction
from one or more provisions of section
17(a). Pursuant to section 17(b), the
Commission shall grant such
application and issue such order of
exemption if evidence establishes that:
The terms of the proposed transaction,
including the consideration to be paid
or received, are reasonable and fair and
do not involve overreaching on the part
of any person concerned; the proposed
transaction is consistent with the policy
of each registered investment company
concerned, as recited in its registration
statement and reports filed under the
Act; and the proposed transaction is
consistent with the general purposes of
the Act.
5. Accordingly, the Section 17
Applicants seek relief under section
17(b) from section 17(a) for the In-Kind
Transactions. The Section 17 Applicants
submit that the In-Kind Transactions
satisfy the standards for an order under
section 17(b) because: (i) The terms of
the In-Kind Transactions, including the
consideration to be paid and received,
are reasonable and fair and do not
involve overreaching on the part of any
person concerned because the In-Kind
Transactions will comply with rule 17a–
7 under the Act, other than the
requirement relating to cash
consideration; 4 (ii) the In-Kind
Transactions will be consistent with the
policies of the Existing Fund and
4 Rule 17a–7 is a conditional exemption from
section 17(a) of the Act that permits purchase and
sale transactions among affiliated investment
companies, or between an investment company and
a person that is affiliated solely by reason of having
a common (or affiliated) investment adviser,
common directors, and/or common officers. In the
adopting release to the original Rule 17a–7, the
Commission stated that the purpose of the rule was
to ‘‘eliminate filing and processing applications
under circumstances where there appears to be no
likelihood that the statutory finding for a specific
exemption under Section 17(b) of the Act could not
be made’’ and that the conditions of the rule ‘‘are
designed to limit the exemption to those situations
where the Commission, upon the basis of its
experience, considers that there is no likelihood of
overreaching of the investment companies
participating in the transaction.’’ Inv. Co. Act Rel.
No. 4697 (Sep. 8, 1966) at 2–4.
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Replacement Fund as stated in their
respective registration statements and
reports filed with the Commission; and
(iii) the In-Kind Transactions are
consistent with the general purposes of
the Act because they do not raise any
investor protection concerns.
Applicants’ Conditions
The Section 26 Applicants agree that
any order granting the requested relief
will be subject to the following
conditions:
1. The Substitution will not be
effected unless the Companies
determine that: (i) The Contracts allow
the substitution of shares of registered
open-end investment companies in the
manner contemplated by the
application; (ii) the Substitution can be
consummated as described in the
application under applicable insurance
laws; and (iii) any regulatory
requirements in each jurisdiction where
the Contracts are qualified for sale have
been complied with to the extent
necessary to complete the Substitution.
2. The Companies or their affiliates
will pay all expenses and transaction
costs of the 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 Substitution. The
Substitution will not cause the fees and
charges under the Contracts currently
being paid by the Contract owners to be
greater after the Substitution than before
the Substitution. The combined current
management fee and Rule 12b–1 fee of
each share class of the Replacement
Fund involved in the Substitution at all
asset levels will be no higher than that
of the corresponding share class of the
Existing Fund at corresponding asset
levels.
3. The Substitution will be effected at
the relative NAVs of the respective
shares in conformity with section 22(c)
of the Act and Rule 22c–1 thereunder
without the imposition of any transfer
or similar charges by the Section 26
Applicants. The Substitution will be
effected without change in the amount
or value of any Contracts held by
affected Contract owners.
4. The 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 Substitution.
5. The obligations of the Companies
and the rights of affected Contract
owners under the Contracts will not be
altered in any way.
6. Affected Contract owners will be
permitted to make at least one transfer
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13775
of Contract value from the subaccount
investing in the Existing Fund (before
the Substitution Date) or the
Replacement Fund (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 Companies will not
exercise any right they may have under
the Contracts 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: (i) The
intended Substitution of the Existing
Fund with the Replacement Fund; (ii)
the intended Substitution Date; and (iii)
information with respect to transfers as
set forth in Condition 6 above. In
addition, the Companies will deliver to
all affected Contract owners, at least 30
days before the Substitution Date, a
prospectus for the Replacement Fund.
8. The Companies will deliver to each
affected Contract owner within five
business days of the Substitution Date,
a written confirmation which will
include: (i) A confirmation that the
Substitution was carried out as
previously notified; (ii) a restatement of
the information set forth in the
Supplement; and (iii) before and after
account values.
9. For a period of two years following
the Substitution Date, for Contract
owners who were Contract owners as of
the Substitution Date, BLIC, BLIC NY or
an affiliate thereof (other than BFT I)
will reimburse, on the last day of each
fiscal quarter, the Contract owners
whose subaccounts invest in the
Replacement Fund to the extent the
annual net operating expenses (taking
into account fee waivers and expense
reimbursements) of each share class of
the Replacement Fund for such period
exceed, on an annualized basis, the
annual net operating expenses of the
corresponding share class of the
Existing Fund for fiscal year 2019.
Further, separate account charges for
any Contract owner on the Substitution
Date will not be increased at any time
during the two-year period following
the Substitution Date. Any amounts
waived or reimbursed by BIA will not
be subject to recoupment rights.
E:\FR\FM\10MRN1.SGM
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13776
Federal Register / Vol. 86, No. 45 / Wednesday, March 10, 2021 / Notices
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
[FR Doc. 2021–04934 Filed 3–9–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
1. Purpose
[Release No. 34–91259; File No. SR–CBOE–
2021–014]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Relating To Amend Its
Fees Schedule
March 4, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
25, 2021, Cboe Exchange, Inc. (the
‘‘Exchange’’ or ‘‘Cboe Options’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe Exchange, Inc. (the ‘‘Exchange’’
or ‘‘Cboe Options’’) proposes to amend
its fees schedule. The text of the
proposed rule change is provided in
Exhibit 5.
The text of the proposed rule change
is also available on the Exchange’s
website (https://www.cboe.com/
AboutCBOE/CBOELegal
RegulatoryHome.aspx), at the
Exchange’s Office of the Secretary, and
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate Sep<11>2014
17:22 Mar 09, 2021
Jkt 253001
The Exchange proposes to amend its
COVID–19 Test Fee which it recently
adopted in connection with the COVID–
19 pandemic. By way of background, on
March 16, 2020, the Exchange
suspended open outcry trading to help
prevent the spread of COVID–19 3 and
was operating in an all-electronic
configuration until June 15, 2020. On
June 15, 2020, the Exchange reopened
its trading floor, but with a modified
configuration of trading crowds in order
to implement social distancing and
other measures consistent with local
and state health and safety guidelines to
help protect the safety and welfare of
individuals accessing the trading floor.
In order to further protect the safety and
welfare of individuals accessing the
trading floor during the COVID–19
pandemic, the Exchange determined to
implement on-site COVID–19 testing for
all trading floor personnel, beginning
November 16, 2020. The Exchange has
contracted with an independent health
care provider who conducts the tests,
which the Exchange currently conducts
twice each week. The Exchange
currently assesses a fee of $150 per test,
per Trading Permit Holder (‘‘TPH’’) or
associated person of a TPH 4 that is
tested, which is the same amount the
Exchange is charged by the independent
health care provider conducting the
tests (i.e., the Exchange passes through
its costs). The COVID–19 Test Fee
allows the Exchange to offset the costs
incurred with on-site testing.
The Exchange wishes to amend the
language in the Fees Schedule to
provide generally that the Exchange will
pass through the cost the Exchange is
charged for each test, instead of
specifying the exact amount (currently
$150) in the Fees Schedule. In adopting
the COVID–19 Test Fee, the Exchange
represented that the proposed fee is a
3 On March 11, 2020, the World Health
Organization characterized COVID–19 as a
pandemic and to slow the spread of the disease,
federal and state officials implemented socialdistancing measures, placed significant limitations
on large gatherings, limited travel, and closed nonessential businesses.
4 For example, a TPH may have personnel other
than Nominees on the floor that need to access the
trading floor. Such persons will also be subject to
testing requirements and will be assessed the
proposed fee.
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
pass-through of the costs to the
Exchange and that the Exchange will
not generate any revenue in excess of
those costs.5 Although the Exchange is
currently still subject to the $150 rate
(which it will continue to pass through),
the proposed change provides flexibility
should the rate change in the future. For
example, if the independent health care
provider lowers the rate they charge the
Exchange for each test (e.g., lowers from
$150 to $100), the Exchange can charge
$100 per test, per TPH and associated
person of a TPH, without having to
submit an additional rule filing. The
Exchange represents that it will
continue to ensure it does not generate
any revenue in excess of its costs
associated with the tests. The Exchange
also does not anticipate the cost
exceeding the current rate of $150.
The Exchange next proposes to
provide that in certain limited
circumstances, the Exchange will waive
the costs of the test in its entirety,
regardless of the cost to the Exchange.
Particularly, the Exchange proposes to
provide that it will not assess any fees,
regardless of the cost to the Exchange,
when test results are not received from
the independent health care provider
that conducts the tests in a timely
manner. The Exchange notes the testing
process is rolling and intended to
capture any potential positive COVID
cases. Accordingly, the Exchange does
not believe it’s appropriate or equitable
to assess the fee if results are delivered
past the time such results can no longer
be utilized by the Exchange for its
intended purpose.
2. Statutory Basis
The Exchange believes the proposed
rule change is consistent with the
Securities Exchange Act of 1934 (the
‘‘Act’’) and the rules and regulations
thereunder applicable to the Exchange
and, in particular, the requirements of
Section 6(b) of the Act.6 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 7 requirements that the rules of
an exchange be designed to prevent
fraudulent and manipulative acts and
practices, to promote just and equitable
principles of trade, to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to
and perfect the mechanism of a free and
5 See Securities Exchange Release No. 90504
(November 24, 2020) 85 FR 77295 (December 1,
2020) (SR–CBOE–2020–111).
6 15 U.S.C. 78f(b).
7 15 U.S.C. 78f(b)(5).
E:\FR\FM\10MRN1.SGM
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]]>Agencies
[Federal Register Volume 86, Number 45 (Wednesday, March 10, 2021)]
[Notices]
[Pages 13772-13776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-04934]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34220; File No. 812-15140]
Brighthouse Life Insurance Company, et al.
March 4, 2021.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice.
-----------------------------------------------------------------------
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 ``Act'') and an order of exemption
pursuant to section 17(b) of the Act from section 17(a) of the Act.
Applicants: Brighthouse Life Insurance Company (``BLIC''), Brighthouse
Life Insurance Company of NY (``BLIC NY'' and, together with BLIC, the
``Companies''), Brighthouse Fund UL for Variable Life Insurance (``Fund
UL''), Brighthouse Separate Account A (``Separate Account A''),
Brighthouse Separate Account Eleven for Variable Annuities (``Separate
Account Eleven''), and Brighthouse Variable Annuity Account B
(``Variable Account B,'' and together with Fund UL, Separate Account A,
and Separate Account Eleven, the ``Separate Accounts,'' and
[[Page 13773]]
collectively with the Companies, the ``Section 26 Applicants''); and
Brighthouse Funds Trust I (``BFT I,'' and collectively with the Section
26 Applicants, the ``Section 17 Applicants'' or ``Applicants'').
Summary of Application: The Section 26 Applicants seek an order
pursuant to section 26(c) of the Act, approving the proposed
substitution (``Substitution'') of Loomis Sayles Growth Portfolio (the
``Replacement Fund''), a series of BFT I, for shares of ClearBridge
Variable Aggressive Growth Portfolio (the ``Existing Fund''), a series
of Legg Mason Partners Variable Equity Trust, held by the Separate
Accounts to fund certain variable annuity insurance contracts and
variable life insurance contracts (collectively, the ``Contracts'').
The Section 17 Applicants seek an order pursuant to section 17(b) of
the Act exempting them from section 17(a) of the Act to the extent
necessary to permit them to engage in certain in-kind transactions in
connection with the Substitution (``In-Kind Transactions'').
Filing Dates: The application was filed on July 6, 2020 and amended on
November 19, 2020, February 10, 2021, and March 3, 2021.
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 emailing the Commission's
Secretary at [email protected] and serving applicants with a
copy of the request by email. Hearing requests should be received by
the Commission by 5:30 p.m. on March 29, 2021, 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 emailing the Commission's Secretary.
ADDRESSES: The Commission: [email protected]. Applicants: Ms.
Michele Abate, [email protected].
FOR FURTHER INFORMATION CONTACT: Harry Eisenstein, Senior Special
Counsel, at (202) 551-6764 or Kaitlin C. Bottock, Branch Chief at (202)
551-6825 (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 website by searching for the file number, or for an
Applicant using the Company name box, at https://www.sec.gov.search/search.htm, or by calling (202) 551-8090.
Applicants' Representations
1. BLIC is a stock life insurance company organized under the laws
of the state of Delaware and is an indirect, wholly owned subsidiary of
Brighthouse Financial, Inc., a publicly owned company. BLIC is the
depositor and sponsor of Fund UL, Separate Account A and Separate
Account Eleven.
2. BLIC NY is a stock life insurance company organized under the
laws of the state of New York and is a wholly owned subsidiary of BLIC.
BLIC NY is the depositor and sponsor of Separate Account B.
3. The Separate Accounts are registered with the Commission under
the Act as unit investment trusts for the purpose of funding the
Contracts. Each Separate Account is divided into subaccounts that
reflect the investment performance of registered investment companies,
such as BFT I, or series of BFT I (``investment options'').
4. BFT I is a Delaware statutory trust registered under the 1940
Act as an open-end, management investment company with multiple series,
and its securities are registered under the 1933 Act.
5. The Contracts are individual variable annuity and variable life
insurance contracts. Each Contract is registered under the Securities
Act of 1933, as amended (the ``1933 Act''). The Contracts allow
Contract owners to allocate premium and Contract value among the
subaccounts investing in a number of investment options, which are
advised and/or sub-advised by investment managers that are affiliated
and unaffiliated with the Section 17 Applicants.
6. As set forth under each Contract, as well as in the prospectus
for each Contract, the Companies reserve the right to substitute shares
of the underlying fund for shares of another underlying fund.
7. The Companies, on their own behalf and on behalf of their
Separate Accounts, propose to exercise their contractual rights to
substitute Class A and Class B shares of the Replacement Fund for Class
I and Class II shares of the Existing Fund, respectively.\1\
---------------------------------------------------------------------------
\1\ The Replacement Fund is a series of BFT I and is advised by
Brighthouse Investment Advisers (``BIA''), an affiliate of the
Companies.
---------------------------------------------------------------------------
8. The Section 26 Applicants state that the Substitution is part of
an ongoing effort by the Companies to make their Contracts more
attractive to existing and prospective Contract owners. Additional
information for the Existing Fund and the Replacement Fund, including
investment objectives, principal investment strategies, principal
risks, and performance, as well as the fees and expenses of the
Existing Fund and the Replacement Fund, can be found in the
application.
9. The Section 26 Applicants state that the Substitution will be
described in supplements to the applicable prospectuses
(``Supplements'') for the Contracts filed with the Commission and
delivered to all affected Contract owners at least 30 days before the
Substitution Date. Each Supplement, among other things, will advise
Contract owners that, for a period beginning 30 days before the
Substitution Date through at least 30 days following the Substitution
Date, Contract owners are permitted to make at least one transfer of
Contract value from the subaccount investing in the Existing Fund or
the Replacement Fund to any other available investment option 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 disclose the existence and effect of the Multi-Manager
Order (defined below) on which the Replacement Fund relies.\2\
---------------------------------------------------------------------------
\2\ Pursuant to exemptive orders issued to N ew England Funds
Trust I, et al., Investment Company Act Release. No. 22796 (Aug. 29,
1997) (notice); Investment Company Act Release. No.22824 (Sept. 17,
1997) (order); and Investment Company Act Release. No.23829 (May 10,
1999) (notice); Investment Company Act Release. No. (June 4, 1999)
(amended order) (the ``Multi-Manager Order''), BIA is authorized to
enter into and amend sub- advisory agreements with sub-advisers who
are not affiliated with BIA without shareholder approval under
certain conditions.
---------------------------------------------------------------------------
10. The Section 26 Applicants will send the Supplements to all
affected Contract owners. Prospective purchasers and new purchasers of
Contracts will be provided with a Contract prospectus and the
Supplement, as well as the prospectus and any supplements for the
Replacement Fund.
11. In addition to the Supplement distributed to Contract owners,
within five business days after the Substitution Date, affected
Contract owners will be sent a written confirmation of the completed
Substitution in accordance with Rule 10b-10 under the Securities
Exchange Act of 1934. The confirmation statement will include or be
accompanied by a statement that reiterates the free transfer rights
disclosed in the Supplement. The Companies also will send each Contract
[[Page 13774]]
owner a current prospectus for the Replacement Fund to the extent that
they have not previously received a copy.
12. The Substitution will be effected at the relative net asset
value (``NAV'') in conformity with section 22(c) of the Act and rule
22c-1 thereunder. The Substitution will be effected by having each
subaccount investing in the Existing Fund redeem its Existing Fund
shares in cash and/or in-kind (as described herein) on the Substitution
Date at NAV per share and purchase shares of the Replacement Fund at
NAV per share calculated on the same date.
13. The Companies or an affiliate will pay all expenses and
transaction costs reasonably related to the Substitution. No costs of
the Substitution will be borne directly or indirectly by Contract
owners. Contract owners will not incur any fees or charges as a result
of the Substitution, nor will their rights or the obligations of the
Companies under the Contracts be altered in any way. The Substitution
will not cause the fees and charges under the Contracts currently being
paid by Contract owners to be greater after the Substitution than
before the Substitution. The charges for optional living benefit riders
may change from time to time and any such changes would be unrelated to
the Substitution. In addition, the 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 Contract owners as a
result of the Substitution.
14. The Section 26 Applicants state that the Contract value for
each Contract owner impacted by the Substitution will not change as a
result of the Substitution. In addition, the Section 26 Applicants also
state that the benefits offered by the guarantees under the Contracts
will be the same immediately before and after the Substitution. The
Section 26 Applicants further state that the effect Substitution may
have on the value of the benefits offered by the Contract guarantees
would depend, among other things, on the relative future performance of
the Existing Fund and the Replacement Fund, which the Section 26
Applicants cannot predict. The Section 26 Applicants further note that,
at the time of the Substitution, the Contracts will offer a comparable
variety of investment options with as broad a range of risk/return
characteristics.
15. The Section 26 Applicants represent that, for a period of two
years following the date the Substitution is effected (the
``Substitution Date''), BLIC, BLIC NY or an affiliate (other than BFT
I) will reimburse, on the last day of each fiscal quarter, the Contract
owners whose subaccounts invest in the Replacement Fund to the extent
the annual net operating expenses (taking into account fee waivers and
expense reimbursements) of each share class of the Replacement Fund for
such period exceed, on an annualized basis, the annual net operating
expenses of the corresponding share class of the Existing Fund for
fiscal year 2019. Further, any amounts waived or reimbursed by BIA will
not be subject to recoupment rights. In addition, the Section 26
Applicants will not increase separate account charges for any Contract
owner on the Substitution Date at any time during the two-year period
following the Substitution Date.
Legal Analysis--Section 26(c) of the Act
1. The Section 26 Applicants request that the Commission issue an
order pursuant to section 26(c) of the Act approving the Substitution.
Section 26(c) prohibits any depositor or trustee of a unit investment
trust that invests exclusively in the securities of a single issuer
from substituting the securities of another issuer without the approval
of the Commission. Section 26(c) provides that such approval shall be
granted by order from the Commission if the evidence establishes that
the substitution is consistent with the protection of investors and the
purposes of the Act.
2. The Section 26 Applicants submit that the Substitution is
consistent with the protection of investors and the purposes fairly
intended by the policy and provisions of the Act. In particular, the
Section 26 Applicants point to the following: (a) The Contracts permit
the Substitution, subject to Commission approval and compliance with
applicable laws, upon appropriate notice; (b) the prospectuses or
statements of additional information for the Contracts contain
appropriate disclosure of these rights; (c) the Substitution will be
described in the Supplements delivered to all affected Contract owners
at least 30 days before the Substitution Date; (d) the Supplements also
will advise Contract owners that, for a period beginning at least 30
days before the Substitution Date through at least 30 days following
the Substitution Date, Contract owners are permitted to make at least
one transfer of Contract value from the subaccount investing in the
Existing Fund to any other available subaccounts offered under their
Contract without any transfer charge or limitation and 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; (e) the Replacement Fund and the Existing Fund have
similar or substantially similar investment objectives, principal
investment strategies, and principal risks; and (f) the total net
operating expenses of the Replacement Fund will be the same or lower
than those of the Existing Fund for at least two years following the
Substitution Date. The Section 26 Applicants assert that, based on the
terms noted above, and subject to the conditions set forth below, the
Substitution does not raise the concerns underlying section 26(c).
Legal Analysis--Section 17(a) of the Act
1. The Section 17 Applicants request an order under section 17(b)
exempting them from the provisions of section 17(a) to the extent
necessary to permit the Section 17 Applicants to carry out the
Substitution. The Section 17 Applicants state that because the
Substitution may be effected, in whole or in part, by means of in-kind
redemptions and purchases, the Substitution may be deemed to involve
one or more purchases or sales of securities or property between
affiliated persons.
2. Section 17(a)(1) of the Act, in relevant part, prohibits any
affiliated person of a registered investment company, or any affiliated
person of such person, acting as principal, from knowingly selling any
security or other property to that company. Section 17(a)(2) of the Act
generally prohibits the persons described above, acting as principals,
from knowingly purchasing any security or other property from the
registered investment company. ``Affiliated person'' is defined in
section 2(a)(3) of the Act.\3\
---------------------------------------------------------------------------
\3\ Section 2(a)(3) defines affiliated person as ``(A) any
person directly or indirectly owning, controlling, or holding with
power to vote, 5 per centum or more of the outstanding voting
securities of such other person; (B) any person 5 per centum or more
of whose outstanding voting securities are directly or indirectly
owned, controlled, or held with power to vote, by such other person;
(C) any person directly or indirectly controlling, controlled by, or
under common control with, such other person; (D) any officer,
director, partner, copartner, or employee of such other person; (E)
if such other person is an investment company, any investment
adviser thereof or any member of an advisory board thereof; and (F)
if such other person is an unincorporated investment company not
having a board of directors, the depositor thereof.''
---------------------------------------------------------------------------
3. To effect the Substitution, the Companies will redeem shares of
the Existing Fund either in-kind or in cash, and use the proceeds of
such redemptions to purchase shares of the Replacement Fund. Thus, the
proposed transactions may involve a transfer of portfolio securities by
the Existing Fund to the Companies. Immediately
[[Page 13775]]
thereafter, the Companies would purchase shares of the Replacement Fund
with the portfolio securities and/or cash received from the Existing
Fund. This aspect of the Substitution may be considered to involve one
or more sales by the Companies of securities or other property to the
Replacement Fund. Based on the affiliations detailed in the
application, these In-Kind Transactions may be prohibited by section
17(a)(1) and (2) of the Act.
4. Section 17(b) of the Act, in relevant part, provides that,
notwithstanding subsection (a), any person may file with the Commission
an application for an order exempting a proposed transaction from one
or more provisions of section 17(a). Pursuant to section 17(b), the
Commission shall grant such application and issue such order of
exemption if evidence establishes that: The terms of the proposed
transaction, including the consideration to be paid or received, are
reasonable and fair and do not involve overreaching on the part of any
person concerned; the proposed transaction is consistent with the
policy of each registered investment company concerned, as recited in
its registration statement and reports filed under the Act; and the
proposed transaction is consistent with the general purposes of the
Act.
5. Accordingly, the Section 17 Applicants seek relief under section
17(b) from section 17(a) for the In-Kind Transactions. The Section 17
Applicants submit that the In-Kind Transactions satisfy the standards
for an order under section 17(b) because: (i) The terms of the In-Kind
Transactions, including the consideration to be paid and received, are
reasonable and fair and do not involve overreaching on the part of any
person concerned because the In-Kind Transactions will comply with rule
17a-7 under the Act, other than the requirement relating to cash
consideration; \4\ (ii) the In-Kind Transactions will be consistent
with the policies of the Existing Fund and Replacement Fund as stated
in their respective registration statements and reports filed with the
Commission; and (iii) the In-Kind Transactions are consistent with the
general purposes of the Act because they do not raise any investor
protection concerns.
---------------------------------------------------------------------------
\4\ Rule 17a-7 is a conditional exemption from section 17(a) of
the Act that permits purchase and sale transactions among affiliated
investment companies, or between an investment company and a person
that is affiliated solely by reason of having a common (or
affiliated) investment adviser, common directors, and/or common
officers. In the adopting release to the original Rule 17a-7, the
Commission stated that the purpose of the rule was to ``eliminate
filing and processing applications under circumstances where there
appears to be no likelihood that the statutory finding for a
specific exemption under Section 17(b) of the Act could not be
made'' and that the conditions of the rule ``are designed to limit
the exemption to those situations where the Commission, upon the
basis of its experience, considers that there is no likelihood of
overreaching of the investment companies participating in the
transaction.'' Inv. Co. Act Rel. No. 4697 (Sep. 8, 1966) at 2-4.
---------------------------------------------------------------------------
Applicants' Conditions
The Section 26 Applicants agree that any order granting the
requested relief will be subject to the following conditions:
1. The Substitution will not be effected unless the Companies
determine that: (i) The Contracts allow the substitution of shares of
registered open-end investment companies in the manner contemplated by
the application; (ii) the Substitution can be consummated as described
in the application under applicable insurance laws; and (iii) any
regulatory requirements in each jurisdiction where the Contracts are
qualified for sale have been complied with to the extent necessary to
complete the Substitution.
2. The Companies or their affiliates will pay all expenses and
transaction costs of the 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 Substitution. The Substitution will not cause the fees and
charges under the Contracts currently being paid by the Contract owners
to be greater after the Substitution than before the Substitution. The
combined current management fee and Rule 12b-1 fee of each share class
of the Replacement Fund involved in the Substitution at all asset
levels will be no higher than that of the corresponding share class of
the Existing Fund at corresponding asset levels.
3. The Substitution will be effected at the relative NAVs of the
respective shares in conformity with section 22(c) of the Act and Rule
22c-1 thereunder without the imposition of any transfer or similar
charges by the Section 26 Applicants. The Substitution will be effected
without change in the amount or value of any Contracts held by affected
Contract owners.
4. The 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
Substitution.
5. The obligations of the Companies and the rights of affected
Contract owners under the Contracts will not be altered in any way.
6. Affected Contract owners will be permitted to make at least one
transfer of Contract value from the subaccount investing in the
Existing Fund (before the Substitution Date) or the Replacement Fund
(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 Companies will
not exercise any right they may have under the Contracts 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: (i) The intended Substitution of
the Existing Fund with the Replacement Fund; (ii) the intended
Substitution Date; and (iii) information with respect to transfers as
set forth in Condition 6 above. In addition, the Companies will deliver
to all affected Contract owners, at least 30 days before the
Substitution Date, a prospectus for the Replacement Fund.
8. The Companies will deliver to each affected Contract owner
within five business days of the Substitution Date, a written
confirmation which will include: (i) A confirmation that the
Substitution was carried out as previously notified; (ii) a restatement
of the information set forth in the Supplement; and (iii) before and
after account values.
9. For a period of two years following the Substitution Date, for
Contract owners who were Contract owners as of the Substitution Date,
BLIC, BLIC NY or an affiliate thereof (other than BFT I) will
reimburse, on the last day of each fiscal quarter, the Contract owners
whose subaccounts invest in the Replacement Fund to the extent the
annual net operating expenses (taking into account fee waivers and
expense reimbursements) of each share class of the Replacement Fund for
such period exceed, on an annualized basis, the annual net operating
expenses of the corresponding share class of the Existing Fund for
fiscal year 2019. Further, separate account charges for any Contract
owner on the Substitution Date will not be increased at any time during
the two-year period following the Substitution Date. Any amounts waived
or reimbursed by BIA will not be subject to recoupment rights.
[[Page 13776]]
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-04934 Filed 3-9-21; 8:45 am]
BILLING CODE 8011-01-P
