Teachers Insurance and Annuity Association of America, et al., 26572-26574 [2021-10159]
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26572
Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Notices
All submissions should refer to File
Number SR–BX–2021–012. 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–BX–2021–012 and should
be submitted on or before June 4, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.33
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–10176 Filed 5–13–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Investment Company Act Release No.
34267; File No. 812–15143]
Teachers Insurance and Annuity
Association of America, et al.
May 10, 2021.
Securities and Exchange
Commission (‘‘Commission’’).
ACTION: Notice.
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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’’).
33 17
CFR 200.30–3(a)(12).
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Teachers Insurance and
Annuity Association of America
(‘‘TIAA’’) and TIAA Separate Account
VA–3 (the ‘‘Separate Account,’’ and
together with TIAA, the ‘‘Applicants’’).
SUMMARY OF APPLICATION: The
Applicants seek an order pursuant to
section 26(c) of the Act, approving the
proposed substitution (‘‘Substitution’’)
of Vanguard Institutional Index Fund
(‘‘Replacement Fund’’) for shares of
Vanguard 500 Index Fund (‘‘Original
Fund’’) held by the Separate Account to
fund certain variable annuity insurance
contracts (collectively, the ‘‘Contracts’’).
FILING DATES: The application was filed
on July 13, 2020 and amended on
November 13, 2020, February 26, 2021,
and April 22, 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 June 4,
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:
Aneal Krishnamurthy,
aneal.krishnamurthy@tiaa.org.
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:
Applicants’ Representations
1. TIAA is a stock life insurance
company organized under the laws of
the state of New York. TIAA is the
depositor and sponsor of the Separate
Account.
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2. The Separate Account is registered
with the Commission under the Act as
a unit investment trust. The Separate
Account is divided into subaccounts
and each sub account invests in a single
underlying mutual fund, such as the
Original Fund (all such underlying
fund, ‘‘investment options’’).
3. The Original Fund and the
Replacement Fund are each registered
under the 1940 Act as an open-end,
management investment company and
its securities are registered under the
1933 Act. The Original Fund and the
Replacement Fund are each advised by
The Vanguard Group, Inc., which is not
an affiliate of the Applicants.
4. The Contracts are registered under
the Securities Act of 1933, as amended
(the ‘‘1933 Act’’). The Contracts allow
Contract owners to allocate Contract
value to one or more of the investment
options available in the Separate
Account.
5. 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.
6. The Applicants propose to replace
shares of the Admiral share class of the
Original Fund in the Separate Account
with shares of the Institutional Plus
share class of the Replacement Fund.
7. The Applicants state they are
seeking the Substitution because the
Original Fund, thought it provides a
relatively low ‘‘Admiral’’ share class,
does not have an institutional share
class which TIAA’s clients are
demanding. 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.
8. The Applicants state that the
Substitution will be described in a
supplement to the prospectuses
(‘‘Supplement’’) for the Contract filed
with the Commission and delivered to
all affected Contract owners at least 30
days before the Substitution Date. The
Supplement 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
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Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Notices
that would otherwise be applicable
under the terms of the Contracts.
9. The 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.
10. 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. The
confirmation statement will include a
statement that reiterates the free transfer
rights disclosed in the Supplement.
11. The Substitution will be effected
at the relative net asset value in
conformity with section 22(c) of the Act
and rule 22c–1 thereunder. The
Substitution will be effected by TIAA,
on behalf of the Separate Account, by
redeeming its Original Fund shares in
cash on the Substitution Date and
simultaneously purchasing shares of the
Replacement Fund for the exact amount
of the redemption proceeds.
12. TIAA or an affiliate will pay all
expenses incurred in connection with
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. 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.
13. The 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 Applicants also state that
the benefits offered by the guarantees
under the Contracts will be the same
immediately before and after the
Substitution. The 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 Applicants cannot
predict. The Applicants further note
that, at the time of the Substitution, the
Contracts will offer a comparable variety
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of investment options with as broad a
range of risk/return characteristics.
14. The Applicants state that TIAA
will not receive, for three years from the
date of the Substitution, any direct or
indirect benefits from the Replacement
Fund, advisors, their underwriters or
their respective affiliates in connection
with the assets attributable to the
Contracts affected by the Substitution at
a higher rate than it had received from
the Original Fund, advisors,
underwriters or their respective
affiliates, including, without limitation,
12b–l distribution, shareholder service,
administrative or other service fees,
revenue sharing or other arrangements.
In addition, the Applicants state that the
Substitution is not motivated by any
financial consideration paid or to be
paid to the Insurance Company or its
affiliates by the Replacement Fund, its
investment advisor or underwriter, or
their affiliates.
Legal Analysis
1. The 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 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
Applicants point to the following: (a)
The Contracts permit the Substitution,
as permitted by applicable law and the
New York Insurance Department; (b) the
prospectus 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 the
transfer being counted as a transfer for
purposes of transfer limitations and fees
that would otherwise be applicable
PO 00000
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26573
under the terms of the Contracts; (e) the
Replacement Fund and the Existing
Fund have substantially similar
investment objectives, principal
investment strategies, and principal
risks; and (f) the net operating expenses
of the Replacement Fund are lower than
those of the Existing Fund. The
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).
Applicants’ Conditions
The Applicants agree that any order
granting the requested relief will be
subject to the following conditions:
1. The Substitution will not be
effected unless TIAA determines that:
(a) The Contracts allow the substitution
of shares of registered open-end
investment companies in the manner
contemplated by the application; (b) the
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 Substitution.
2. TIAA or its 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 affected Contract owners
to effect the Substitution. The proposed
Substitution will not cause the Contract
fees and charges currently being paid by
Contract owners to be greater after the
proposed Substitution than before the
proposed Substitution.
3. The Substitution will be effected at
the relative net asset values 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
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. Affected Contract owners will be
permitted to make at least one transfer
of Contract value from the sub-account
investing in the Original Fund (before
the Substitution Date) or the
Replacement Fund (after the
Substitution Date) to any other available
investment option under the Contract
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26574
Federal Register / Vol. 86, No. 92 / Friday, May 14, 2021 / Notices
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 Applicants will not
exercise any right they may have under
the Contracts to impose restrictions on
transfers between the sub-accounts
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.
6. All affected Contract owners will be
notified via the Supplement 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 5
above. In addition, the Applicants will
deliver to all affected Contract owners,
at least 30 days before the Substitution
Date, a prospectus for the Replacement
Fund.
7. The Companies will deliver to each
affected Contract owner within five
business days of the Substitution Date,
a written confirmation which will
include: (a) A confirmation that the
Substitution was carried out as
previously notified; (b) a restatement of
the information set forth in the
Supplement; and (c) the values of the
Contract owners’ positions in the
Original Fund before the Substitution
and the Replacement Fund after the
Substitution.
8. Applicants and their affiliates will
not receive, for three years from the
Substitution Date, any direct or indirect
benefits from the Replacement Fund,
their investment advisors or
underwriters (or their affiliates) in
connection with assets attributable to
Contracts affected by the Substitution at
a higher rate than they had received
from the Original Fund, its investment
advisors or underwriters (or their
affiliates), including without limitation
12b–1 fees, shareholder service,
administrative or other service fees,
revenue sharing, or other arrangements.
9. The obligations of the TIAA and the
rights of affected Contract owners under
the Contracts will not be altered in any
way.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
SECURITIES AND EXCHANGE
COMMISSION
the most significant aspects of such
statements.
[Release No. 34–91802; File No. SR–
CboeEDGA–2021–011]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Self-Regulatory Organizations; Cboe
EDGA Exchange, Inc.; Notice of Filing
of a Proposed Rule Change Relating to
the Exchange’s Process for ReOpening Securities Listed on Other
National Securities Exchanges
Following the Resumption of Trading
After a Halt, Suspension, or Pause
During the Early Trading Session, PreOpening Session, or Post-Closing
Session
May 10, 2021.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 26,
2021, Cboe EDGA Exchange, Inc.
(‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(‘‘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
The Exchange proposes a rule change
to amend the Exchange’s process for reopening securities listed on other
national securities exchanges following
the resumption of trading after a halt,
suspension, or pause during the Early
Trading Session, Pre-Opening Session,
or Post-Closing Session.
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/edga/),
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
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
[FR Doc. 2021–10159 Filed 5–13–21; 8:45 am]
1 15
BILLING CODE 8011–01–P
2 17
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PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Purpose
The purpose of the proposed rule
change is to amend the Exchange’s
process for re-opening securities listed
on other national securities exchanges
following the resumption of trading
after a halt, suspension, or pause during
the Early Trading Session,3 Pre-Opening
Session,4 or Post-Closing Session.5
EDGA Rule 11.7 describes the
Exchange’s opening process for
securities listed on other national
securities exchanges, including the
process for re-opening such securities
following the resumption of trading
after a halt, suspension, or pause. On
November 5, 2020, the Exchange filed a
proposed rule change to amend its reopening process pursuant to EDGA Rule
11.7 for securities listed on the New
York Stock Exchange LLC (‘‘NYSE’’)
following the resumption of trading
after a halt, suspension, or pause during
the Early Trading Session, Pre-Opening
Session, or Post-Closing Session.6 That
filing was approved by the Commission
on December 28, 2020.7 The Exchange
now proposes to further amend EDGA
Rule 11.7 to adopt a harmonized reopening process for securities listed on
NYSE (‘‘Tape A’’), securities listed on
exchanges other than The Nasdaq Stock
Market LLC (‘‘Nasdaq’’) and NYSE
(‘‘Tape B’’); and securities listed on
Nasdaq (‘‘Tape C’’) following the
resumption of trading after a halt,
suspension, or pause during the Early
Trading Session, Pre-Opening Session,
or Post-Closing Session. The Exchange
believes that the proposed harmonized
process for Tape A, B, and C securities
would simplify its procedures and
provide a more effective re-opening
process for securities that resume
trading outside of Regular Trading
3 The term ‘‘Early Trading Session’’ means the
time between 7:00 a.m. and 8:00 a.m. Eastern Time.
See EDGA Rule 1.5(ii).
4 The term ‘‘Pre-Opening Session’’ means the time
between 8:00 a.m. and 9:30 a.m. Eastern Time. See
EDGA Rule 1.5(s).
5 The term ‘‘Post-Closing Session’’ means the time
between 4:00 p.m. and 8:00 p.m. Eastern Time. See
EDGA Rule 1.5(r).
6 See Securities Exchange Act Release No. 90419
(November 13, 2020), 85 FR 73829 (November 19,
2020) (SR–CboeEDGA–2020–029).
7 See Securities Exchange Act Release No. 90804
(December 28, 2020), 86 FR 158 (January 4, 2021)
(Approval Order).
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]]>Agencies
[Federal Register Volume 86, Number 92 (Friday, May 14, 2021)]
[Notices]
[Pages 26572-26574]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-10159]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 34267; File No. 812-15143]
Teachers Insurance and Annuity Association of America, et al.
May 10, 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'').
Applicants: Teachers Insurance and Annuity Association of America
(``TIAA'') and TIAA Separate Account VA-3 (the ``Separate Account,''
and together with TIAA, the ``Applicants'').
Summary of Application: The Applicants seek an order pursuant to
section 26(c) of the Act, approving the proposed substitution
(``Substitution'') of Vanguard Institutional Index Fund (``Replacement
Fund'') for shares of Vanguard 500 Index Fund (``Original Fund'') held
by the Separate Account to fund certain variable annuity insurance
contracts (collectively, the ``Contracts'').
Filing Dates: The application was filed on July 13, 2020 and amended on
November 13, 2020, February 26, 2021, and April 22, 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 June 4, 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: Aneal
Krishnamurthy, [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. TIAA is a stock life insurance company organized under the laws
of the state of New York. TIAA is the depositor and sponsor of the
Separate Account.
2. The Separate Account is registered with the Commission under the
Act as a unit investment trust. The Separate Account is divided into
subaccounts and each sub account invests in a single underlying mutual
fund, such as the Original Fund (all such underlying fund, ``investment
options'').
3. The Original Fund and the Replacement Fund are each registered
under the 1940 Act as an open-end, management investment company and
its securities are registered under the 1933 Act. The Original Fund and
the Replacement Fund are each advised by The Vanguard Group, Inc.,
which is not an affiliate of the Applicants.
4. The Contracts are registered under the Securities Act of 1933,
as amended (the ``1933 Act''). The Contracts allow Contract owners to
allocate Contract value to one or more of the investment options
available in the Separate Account.
5. 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.
6. The Applicants propose to replace shares of the Admiral share
class of the Original Fund in the Separate Account with shares of the
Institutional Plus share class of the Replacement Fund.
7. The Applicants state they are seeking the Substitution because
the Original Fund, thought it provides a relatively low ``Admiral''
share class, does not have an institutional share class which TIAA's
clients are demanding. 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.
8. The Applicants state that the Substitution will be described in
a supplement to the prospectuses (``Supplement'') for the Contract
filed with the Commission and delivered to all affected Contract owners
at least 30 days before the Substitution Date. The Supplement 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
[[Page 26573]]
that would otherwise be applicable under the terms of the Contracts.
9. The 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.
10. 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. The confirmation statement will include a statement that
reiterates the free transfer rights disclosed in the Supplement.
11. The Substitution will be effected at the relative net asset
value in conformity with section 22(c) of the Act and rule 22c-1
thereunder. The Substitution will be effected by TIAA, on behalf of the
Separate Account, by redeeming its Original Fund shares in cash on the
Substitution Date and simultaneously purchasing shares of the
Replacement Fund for the exact amount of the redemption proceeds.
12. TIAA or an affiliate will pay all expenses incurred in
connection with 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. 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.
13. The 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 Applicants also state that the benefits
offered by the guarantees under the Contracts will be the same
immediately before and after the Substitution. The 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 Applicants cannot predict. The 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.
14. The Applicants state that TIAA will not receive, for three
years from the date of the Substitution, any direct or indirect
benefits from the Replacement Fund, advisors, their underwriters or
their respective affiliates in connection with the assets attributable
to the Contracts affected by the Substitution at a higher rate than it
had received from the Original Fund, advisors, underwriters or their
respective affiliates, including, without limitation, 12b-l
distribution, shareholder service, administrative or other service
fees, revenue sharing or other arrangements. In addition, the
Applicants state that the Substitution is not motivated by any
financial consideration paid or to be paid to the Insurance Company or
its affiliates by the Replacement Fund, its investment advisor or
underwriter, or their affiliates.
Legal Analysis
1. The 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 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 Applicants point
to the following: (a) The Contracts permit the Substitution, as
permitted by applicable law and the New York Insurance Department; (b)
the prospectus 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 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
substantially similar investment objectives, principal investment
strategies, and principal risks; and (f) the net operating expenses of
the Replacement Fund are lower than those of the Existing Fund. The
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).
Applicants' Conditions
The Applicants agree that any order granting the requested relief
will be subject to the following conditions:
1. The Substitution will not be effected unless TIAA determines
that: (a) The Contracts allow the substitution of shares of registered
open-end investment companies in the manner contemplated by the
application; (b) the 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
Substitution.
2. TIAA or its 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 affected Contract owners to effect the
Substitution. The proposed Substitution will not cause the Contract
fees and charges currently being paid by Contract owners to be greater
after the proposed Substitution than before the proposed Substitution.
3. The Substitution will be effected at the relative net asset
values 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 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. Affected Contract owners will be permitted to make at least one
transfer of Contract value from the sub-account investing in the
Original Fund (before the Substitution Date) or the Replacement Fund
(after the Substitution Date) to any other available investment option
under the Contract
[[Page 26574]]
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 Applicants will not exercise
any right they may have under the Contracts to impose restrictions on
transfers between the sub-accounts 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.
6. All affected Contract owners will be notified via the Supplement
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 5 above. In addition, the
Applicants will deliver to all affected Contract owners, at least 30
days before the Substitution Date, a prospectus for the Replacement
Fund.
7. The Companies will deliver to each affected Contract owner
within five business days of the Substitution Date, a written
confirmation which will include: (a) A confirmation that the
Substitution was carried out as previously notified; (b) a restatement
of the information set forth in the Supplement; and (c) the values of
the Contract owners' positions in the Original Fund before the
Substitution and the Replacement Fund after the Substitution.
8. Applicants and their affiliates will not receive, for three
years from the Substitution Date, any direct or indirect benefits from
the Replacement Fund, their investment advisors or underwriters (or
their affiliates) in connection with assets attributable to Contracts
affected by the Substitution at a higher rate than they had received
from the Original Fund, its investment advisors or underwriters (or
their affiliates), including without limitation 12b-1 fees, shareholder
service, administrative or other service fees, revenue sharing, or
other arrangements.
9. The obligations of the TIAA and the rights of affected Contract
owners under the Contracts will not be altered in any way.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-10159 Filed 5-13-21; 8:45 am]
BILLING CODE 8011-01-P
