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. . m¡';...~ ~.'il :~¡¡;;. iii,)l:i' ~tl ,',.,,;;;1 iI ur Ref. No. 97-39-CC ~ PULIO . N AMO BanN.V.; . VAll, AliIL MN AMO Asset Management 

(USA) Inc.;

ABN AMO Asset Management 

REPONSE OF TH OFFICE OF CID COUNSEL (Far East) Limted DIVSION OF INTM MANAGEM File No. 132-3 

Y Ol,ir letter dated March 7, 1997 requests our assurace that we wil not recommend 

enforcement action to thy Commission if neither ABN AMO Ban N. V. (" ABN AMO 

Ban"), nor cert of its afiltes, register under the Investment Advisers Act of 1940 (the
 

"Advisers Act"), if they share cert personnel with, and provide cert services to, ABN 

AMO Asset Management (USA) Inc. ("AA"), a registered investment adviser. In 

addition, you seek our assurace that we wil not recommend enforcement action to the
 

Commission if ABN AMO Ban or its unregistered afilates provide investment advisory 

services to their clients who are not residents of the United States solely in accordace with 

the laws of The Netherlands (or other applicable foreign law) without also complying with 

the provisions of the Advisers Act, except as provided in your letter. 

Background 

You state that ABN AMO Ban is a "universal ban" incorporated under the laws of 

The Netherlands. As a universal ban, it is engaged in.both the securities and commercial 

bang businesses, providig a wide varety of fmancial services diectly and through its 

subsidiares. ABN AMO Ban operates in the United States through its braches and 

agencies, and through severa subsidiares, includig AA.1 AA commenced 

operations in 1994 for the purpose of providing portolio management and investment 

supervisory services to U.S. institutional and individual clients, including clients of ABN 

AMO Ban and its afilates. 

You state that ABN AMO Asset Management (Far East) Limted ("Far East")2 is an 

investment adviser organ under the laws of Hong Kong. Far East provides investment
 

, management services to non-U.S. investors with respect to investments in the Far East, and 

also serves as sub-adviser to mutual funds registered under the laws of The Netherlands, 

which are not offered to U.S. persons. 

1 ABN AMO Ban Holdig N. V., which is incorporated under the laws of The 

Netherlands, owns in excess of 99 % of the outstading voting securities of ABN AMO 

Ban. ABN AMO Ban wholly owns ABN AMO North America, Inc. ("AAA"), 

which in turn wholly owns AA. 

') 2 Far East is an indirect, wholly owned subsidiar of ABN AMO Ban. 
2
 

You state that LaSale Street Capita Management, lid. ("LSCM"),3 is registered as 

an investment adviser under the Advisers Act. LSCM provides investment management' 

services to U.S. and non-U.S. clients, and serves as investment adviser to the Rembradt 

Funds, a U.S. registered investment company. 

Proposal 

In addition to using its own employees, AA proposes to utie the services of 

cert personnel ("Shared Personnel") of ABN AMO Ban, Far East, LSCM or a 

Parcipatig Afilate. "Parcipatig Afilte" is defmed in your letter to include any 

unregistered (and otherwise non-U.S. regulated) afilate of AA, except ABN AMO 

Ban, that provides advice to the U.S. clients of AA,4 through or on behal of AA, 

or has access to any inormation concerng securities recommendations for AA's clients 

prior to the effective dissemiation of such recommendations. Shared Personnel may provide 

portfolio management and other, non~investment advisory services to U.S. clients of AA, 

as well as to other afiltes of ABN AMO Ban. Shared Personnel wil be priary 

employed by, and under the supervision of ABN AMO Ban, Far East, LSCM or a 

Paricipating Affilate, and wil have their priar place of work in the offces of one of
 

these entities. 

You represent that those Shared Personnel who provide advisory services to clients ii of AA.s You state that responsibilty of AA wil be treated as "associated persons 


for the management of specifc portions of a client's portolio wil be assigned to a portolio 

manager employed by AA, or to a portolio manager priary employed by one of its 

afilates, based upon the client's wishes and nees and the relative expertse among the 

portolio managers. You represent that AA wil enter into approprite argements with 

ABN AMO Ban, Far East, LSCM and any other Paricipatig Afate to assure 

compliance with the representations set forth in your letter. 

3 LSCM is wholly owned by AAA. 

4 The sta'looks to the defmition of U.S. person in pargrph 902(0) of Regulation S
 

under the Securities Act of 1933 for guidace in interpretig the meag of U.S. client in 

this response. Cf. Goodwin, Procter & Hoar (pub. avai. Feb. 28, 1997) (lookig to 

pargrph 902(0) of Regulation S for guidace in interpreting the meag of U.S. person for 

purposes of the Investment Company Act of 1940). 

5 Section 202(a)(17) of the Advisers Act defmes "person associated with an investment
 

adviser" as "any parner, offcer, or diector of such investment adviser (or any person
 

pedorming simar functions), or any person directly or indirtly controllg or controlled 

by such investment adviser, includig any employee of such investment adviser, II except 

personS associated with an investment adviser whose functions ar clerica or minsterial.
 
3 

You state that advisory personnel of AA and the Parcipatig Affilates may rely 

in par on reseach provided by brokerage reseach units of ABN AMO Ban and its 

afilates ("Brokerage Reseach Unitsii).6 You represent that the operations of Brokerage 

Reseach Units are completely distict from the reseach operations of the advisory 

personnel, and that Brokerage Reseach Units wil not have access to any inormation 

concerng the portolios of AA's U.S. clients, or the securities recommended to, or 

purchased or sold for, the accounts of AA's U.S. clients. 

You represent that there wil be a "Chiese Wal" between the Brokerage Reseach 

Units and the Shared Personnel and other AA personneL. You state that in those 

geogrphic locations where both Brokerage Reseach Units and Shared Personnel or AA 

personnel wil have offces, they wil be physicay separted. The Brokerage Reseach Units 

wil not have access to AA'sfIles, and the Brokerage Reseach Units wil not have
 

knowledge of the portolios of AA's clients or inormation concerng AA's 

investment decisions and recommendations. In addition,' the Shared Personnel and other 

AA personnel wil not be provided access to the fIles of the Brokerage Reseach Units' 

analysts and other employees. The Brokerage Reseach Units wil not prepare research 

reports or other inormation specifcaly for use by or on behal of U.S. clients of AA. 

You state that any contact between the Brokerage Reseach Units and the Shared Personnel 

and AA personnel wil be exclusively on an ar's-lengt basis comparble to the terms 

on which the Shared Personnel and AA have contact with unafilated entities that 

provide reseach. You. state that Brokerage Reseach Units wil not be considered to be
 

Parcipating Afilates, and their employees wil not be treated as "associated persons" of 

AA solely becuse they provide reseach to AA in, the maner described in your 

7 letter. 

AA proposes to make argements with ABN AMO Ban and its afilates
 

(includig ABN AMO Chicago Corporation ("Chicago".), a U.S. registered investment
 

adviser and broker-deaer), 8 through which such entities may act as custodis for client
 

accounts, and provide data processing, related recordkeeing' and other admstrtive 

'services. Al reports prepared for AA clients wil be reviewed by AA or Shared 

6 The reseach wil consist of statistica and factual inormation'regardig currencies, 

industres, and companes, advice regardig ecnomic trnds, and remmendations on 

spifc companes and securities. You rereent that ths reseach is only par of the 

inormation that AA wil use in makg investment decisions and remmendations. You
 

state that sources of AA's inormation wil include (1) reseach provided by advisory 

personnel, and (2) seconda reseach and analytica inormation reeived directly from 

brokers and other fmancial or other economic institutions not afilated with AA. 

7We do not express any view with regard to whether a Brokerage Reseach Unit would 

be required te register separtely under the Advisers Act. 

8 Chicago is an indirect, wholly owned subsidiar of ABN AMRO Ban. 
4
 

Personnel acting on its behal, and wil be trasmitted by AA on AA's letterhead. 

Cert employees of ABN AMO Ban wil be responsible for maitag, or wil have 

access to, records of AA. You represent that these employees wil be treated as II of AA.9 You also represent that any written agreement "advisory representatives 


between AA and ABN AMO Ban or its afilates wil provide that any records 

,maitaed on behal of AA wil be maitaed in accordace with the requirements of 

Rule 204-2 under the Advisers Act, that such recrds are the exc1usivepropert of AA, 

and the sta of the Commission wil be entitled to have access to such records. 

AA also proposes to execute and clea securities trsactions through ABN 

AMRa Ban and other broker-deaer afiltes. You represent that al such trsactions wil 

be executed on an "ar's-lengthll basis. Subject to applicable U.S. laws, trdes for AA's 

clients may be combined with trdes on behal of other clients of ABN AMO Ban and its 

afilates; You represent that ABN AMO Ban employees, and employees of afilates'of 

ABN AMO Ban who place trdes on behal of AA's clients wil be treated as

II associated persons II of AA.10 

Analysis 

Section 203(a) of the Advisers Act requires the registrtion of any investment adviser 

that uses the U. S. mais or any meas or instrumentaties of interstate eommerce in 

connection with its busi,ess as an investment adviser, unless the adviser is exempt from 

registration under Section 203(b) or excluded from registrtion with the Commssion pursuant 

9 Rule 204-2(a)(12)(A) underthe Advisers Act defmes"advisory representative" as any 

parner, offcer or diector of an investment adviser; any employee who makes any
 

recommendation, who parcipates in the determtion of which recmmendation shal be 

made, or whose functions or duties relate to the determtion of which remmendation 

shal be made; any employee who, in connection with his duties, obtas any inormation 

concerng which securities ar being, recmmended prior to the effective dissemiation of 

such recmmendations or of the inormation concerng such remmendations; and any of 

the following persons who obta inormation concerng securities recommendations being
 

made by such investment adviser prior to the effective dissemiation of such 

recommendations or of the inormation concerng such reommendations: (1) any person in 

a control relationship to the investment adviser, (2) any afilted person of such controllg 

person and (3) any afilated person of such afilted person.
 

10 You have not asked for, and we do not express, any view with regard to argements 

contemplated by AA and its afilates for custody or the execution of securities trsactions. 

Nor do we express any view with regard to argements contemplated for the combination of 

trades on behal of clients of AA and clients of ABN AMa Ban and its affilates. 
5
 

11 to Section 203A of the Advisers Act. 


The sta has stated that it wil not recommend enforcement action to the 'Commission
 

if a foreign investment advisory afilate of a registered investment adviser does not register
 

under the Advisers Act if: (1) the registered and unregistered entities are separtely 

organed (i.e., two distict entities); (2) the registered adviser is staed with personnel 

(whether located in the United States or abroad) who ar capable of providig investment 

advice; (3) al persons who provide advice to U.S clients or have access to any inormation 

concerng securities to be recommended to U. S. clients prior to the effective dissemiation 

of the recommendations are deemed to be "associated persons"12 of the registrt; and (4)
 

the Commssion has access to trdig and other records of the afilte involved in, or having 

access to, U.S. advisory activities, and to the afilate's personnel, to the extent necssar to 

monitor and poli~ conduct that may har U.S. clients or markets.13 

In your letter, you make a series of representations designed to address the concerns 

of the sta. These representations, which are restated below, are substatiy simar to 

representations made to the sta in prior requests for relief.14 You state that under Dutch 

law, however, ABN AMO Ban is unable to make cert of the representations that were 

made in previous letters with respect to: (1) providing the Commission staf with access to 

11 Section 203A of the Advisers Act, which wil be effective July 8, 1997, provides that 

no investment adviser that is regulated or reuired to be regulated in the state in which it 

maitas its pricipal offce and place of business shal i:gister with the Commssion, unless
 

the adviser has assets under management of not less than $25 mion (or such higher amount 

as the Commission by rule deems appropriate), or is an adviser to an investment company 

registered under the Investment Company Act of 1940. You represent that the afiltes of
 

ABN AMO Ban identifed in your letter as U.S. registered investment advisers wil 

contiue to be registere with the Commission afer the effective date of Section 203A, 

provided that such advisers contiue to fal withi the defmition of "investment adviser"
 

under Section 202(a)(1l) of the Advisers Act. Telephone converstion between Brenda C. 

Fox and Edward G. Eisert, May, 7, 1997. 

12 See Section 202(a)(17) of the Advisers Act. A registere investment adviser may be 

subject to sanctions by the Commssion for faig resonably to supervise the activities of its 

associated persons who are subject to its supervision and who commit violations of the 

federa securities laws. See,~, Sections 203 
 (e) (5) and 204A of the Advisers Act. 

13 Murry Johnstone Holdigs Limited (pub. avai. Oct. 7, 1994). 

14 Id. See also Kleinwort Benson Investment Management Limited (pub. avai. Dec. 15,
 

1993); Mercury Asset 
 Management pIc (pub. avai. Apr. 16, 1993); The National Mutual 

.Group (pub. avai. Mar. 8, 1993); and Uniao de Bancos de Brasilerios S.A. (pub. avai. July 

28, 1992).
 
6
 

, sta trding records of the type required by Rule 204-2(a)(12) ("Sta Tradig Records")l5 

for its advisory representatives with respect to U. S. clients and for al persons deemed to be 

"associated persons" by AA; and (2) the avaibilty of personnel for questionig by the 

staf. 

More specifcay, you state that under Dutch law,16 the keeper of a "databasell which 

contas inormation on individuals, such as employees of ABN AMO Ban, is prohibited 

from releasing personal data contaed in the database to thid paries except in cert
 

lited circumstaces, none of which would include a Commission investigation or
 

inspection.17 In addition, you state that under Dutch law, an employer caot require an 

employee to cooperate with a Commission investigation if it would require the employee' to 

appea in the United States. You note that an employee's faiure to comply with the 

reasonable instrctions of his employer could lead to that employee's termation, but that
 

ABN AMO Ban caot force its employees to appea before the Commssion 
 in The 

Netherlands or the United States. Becuse of this restriction, you believe ABN AMO Ban 

is unable to represent that it wil make its employees avaible for testiony or other 

questionig by the Commission at such ,place as the Commssion may designate in the United 

States. 

You state that to address the concerns of the sta in a maner that is consistent with 

Dutch law, ABN AMO Ban represents that it wil: (1) make a good faith effort to obta 

from al of ABN AMO Ban's "advisory representatives" with respect to U.S. clients of 

AA and al persons deemed to be "associated persons" by AA ("Covered Persons"), 

a written authorition to provide Sta Tradig Records to the Commssion; (2) with respect
 

to Covered Persons for which an authorition is not in effect, make avaible to the
 

Commssion copies of a Covere Person's Sta Tradig Records which do not include the 

Covered Person's name and any other inormation which would identi the Covered Person
 

15 Rule 204-2(a)(12) under the Advisers Act generay reuirs investment advisers to
 

maita a recrd of every trsaction in a security in which the investment adviser or any
 

advisory representative of such investment adviser has, or by reon of such trsaction
 

acquirs, any diect or indiect beneficia ownership, excet: (1) trsactions effected in any
 

account over which neither the investment adviser nor any advisory representative of the 

investment adviser has any dit or indit inuence or contrl; and (2) trsactions in
 

securities which ar diect obligations of the United States.
 

16 You represent that your understadig of Dutch law is based upon advice of Dutch
 

counsel to ABN AMO Ban, without any independent investigation. You further tepresent 

that these restrctions relate only to the asset management operations of ABN AMO Ban in The Netherlands. .
 

17 You state that personal data caot be released unless it is furnshed: (1) as a direct 

result of the purpose for which the data is maitaed; (2) with the specifc consent of the 

employee (which may be withdrawn); or (3) as reuired by the laws of The Netherlands. 
7
 

(IIRedcted Sta Tradig Records"); and (3) assist the Commission in enlsting the assistace 

of the appropriate Dutch regulatory authorities if the Commission determines that it requires 18 inormation not included in the Redcted Sta Trading Records. 


You note that'the United States and The Netherlands are paries to an Agreement on 

Mutual Admistrtive Assistace in the Exchange of Information in Securities Matters dated 

December 11, 1989 (the "Agreementll). You believe that the terms of the Agreement should 

provide additional assurace to the Commission that its regulatory concerns wil be 

addressed. You state that under Dutch law, the Securities Board of The Netherlads (the 

Stichting Toezicht Effectenverkeer, or IISTE") is empowered to request personal data in 

connection with an investigation made withi the context of the Agreement. You believe that 

under the Agreement, the Commission should b~ able to obta inormation contaed in Sta 

Tradig Records maitaed by ABN AMOBan with the assistace of Dutch regulatory 

authorities. 

ABN AMO Ban also represents that it wil condition the employment of al newly 

employed Covered Persons, and persons who are newly assigned to positions that would 

require them to be deemed Covered Persons, on an undertg to cooperate with 

Commission investigations, includig appeag for testimony before, or other questionig 

19 by, the Commission at such place as the Commission may designate in the United States. 


In addition, ABN AMO Ban represents that it wil tae al appropriate legal actions to 

compel compliance by such personnel with these undertgs and wil pursue àl avaiable
 

legal remedes agaist any person who fais to comply with the undertg. " 

You also represent that under Dutch law, an employee of ABN AMO Ban may be 

questioned by the STE, and that under the Agreement, the Commission may parcipate in an 

investigation by the STE in the Netherlads. An employee of ABN AMO Ban that fais to 

cooperate with an STE investigation may be subject to sactions and may 'be reported to the 

approprite Dutch law enforcement authority. 

You state that your proposa is designed to give AA's clients the benefits of the 

specia expertse of its afiltes' portolio managers whie at the same tie, permt the 

Commssion to monitor and police conduct that may har U.S. clients or markets. It is your 

view that the undertgs and reresentations made by ABN AMO Ban and the 

Parcipatig Aftes in your letter wil enable AA to serve clients effciently and 

effectively, and wil also addrss the Commission's regulatory concerns by providig the 

sta with suffcient access to the relevant ,aspects of the business of ABN AMO Ban and 

its afilates. 

18 See Representation C.S. below. 

19 See Representation C.6. below.
 
8 

On the basis of the facts and representations in your letter, and without necessary 

agreeing with your legal analysis, we would not recommend that the Commission tae any 

enforcement action agaist ABN AMO Ban or its Parcipatig Afilates if they do not 

register under the Advisers Act and if they' share cert personnel with, and provide cert 

services to, AA, under the conditions described in your letter. 

You note that the Division has determed that the substative provisions 'of the 

Advisers Act generay should not govern the relationship between an investment adviser 

located outside the United States and its foreign clients, provided that these activities do not 

involve conduct, or give rise to effects, withi the United States.20 We would not 

recommend enforcement action agaist ABN AMO Ban and its unregistered (and 

otherwise non-U. S. regulated) afilates if they provide investment advisory services to their 

clients who are not U.S. residents solely in accordace with applicable foreign law except as 

specifed in your letter, provided that the unregistered entities' activities do not involve 

conduct or effects, 
 in the United States. 

The positions expressed in this response are based on the facts and representations in 

your letter, which because of their importce are restated below. 

A. Representations of AA.21
 

AA represents that: 

1. it wil promptly, upon recipt of an admstrtive subpoena, demand or a
 

request for volunta cooperation made durig a routie or specia inspection 

or otherwise, provide to the Commssion or to the sta of the Commssion any 

and al of the books and records that it is requir to kee under the Advisers 

Act and those kept under foreign law, and, to the extent withi its control and 

to the extent it may lawfully do so, make avaible for testiony before or 

other questionig by the Commssion or the sta of the Commssion any and 

al personnel (other than clerica or misteri personnel) identied by the 

Commssion, the sta of the Commssion, AA, any Parcipatig Afilte
 

or ABN AMO Ban as having accss to or having ben involved in providig 

advice to U.S. clients, or related trsactions, at such place as the Commssion 

may designate in the United States or, at the Commssion's option, in the 

countr where the records are kept or such personnel reside. AA wil 

authori al personnel described in the precedg sentence to testi about al
 

20 See notes 13 and 14, supra. 

21 You indicate that AA may be merged into Chicago. In such event, Chicago 

would succee to the business of AA and would be bound by the representations made in
 

your letter. 
9
 

advice provided to U.S. clients and related trsactions (except with respect to
 

the identity of non-U.S. clients). Subject to the foregoing, AA wil not 

(except with respect to the identity of non-U.S. clients) contest the valdity of
 

an admistrative subpoena for testiony or documents under any law or '
 

regulations other than those of the United States;' 

2. it wil, to the extent that any books and records identifed above are not kept
 

in English, cause such books and records to be trslated into, English upon
 

reasonable advance request by the Commission or its sta;
 

3. it wil deem as an "associated person" each Parcipating Afilate, and each
 

employee of each Parcipatig Afilate and ABN AMa Ban, who: (a) 

provides advice (includig reseach) to AA's U.S. clients; or (b) has 

access to any inormation concerng which securities are being recommended
 

to AA's U.S. clients prior to the effective dissemiation of such 

recommendations; and 

4. (a) any communications with U.S. clients (includig any recommendations or
 

reports) wil be through AA, not ABN AMO Ban or the Parcipating 

Affiltes, and AA wil require the Shared Personnel to make clea in any
 

communications between the Shared Personnel and AA's clients that such 

communications are from AA, not ABN AMO Ban or any Paricipatig 

Afilate; (b) when deag with clients or potential clients of AA, the 

Shared Personnel wil make it clea that they are actig in their capacity as 

representatives of AA, not ABN AMO Ban or any Parcipatig 

Afilte; and (c) AA wil disclose to its clients in its Form ADV that ABN
 

AMO Ban and the Paricipatig Afiltes may recmmend to their clients, 

or invest on behal of their clients in, securities that ar the subject of 

recommendations to, or discretionar trdig on behal of, AA's clients.
 

B. Representations of Paricipatig Afates.
 

Each Parcipatig Afilate represents that: 

1. any advice given to U.S. clients of AA, by or on behal of AA, wil 

be given only through AA or through employees who AA deems to be 

"associated persons"; 

2. it wil provide to AA, and AA's ,Form ADV wil disclose, the names
 

and other inormation required by Form ADV for al 
 II associated persons" of 

AA who are employees of Paricipating Afiltes as described in AA's 

representations; 
10
 

3., staf trdig records required by Rule 204-2(a)(12) under the Advisers Act wil
 

be maitaed for al of its II advisory representatives" with respect to U. S. 

clients ofAA and for al persons deemed to' be "associated persons" by
 

AA who are employees of Parcipating Afilates; 

4. it wil keep books and records of the tye described in Rules 204-2(a)(1), (2),
 

(4), (5) and (6) and 204-2(c) under the Advisers Act for al trsactions. With


respect to trsactions involving AA's U.S. clients and al related 

trasactions, it wil also reta records of the tye described in Rules 204­

2(a)(3) and (7) under the Advisers Act. Al of the books and recrds 

described above wil be maitaed and preserved in an easily accessible place 

in the countr where such records are kept for a period of not less than five 

yeas from the end of the fiscal yea durig which the last entry was made on
 

such book or record; 

5. it wil, to the extent that any books and records identied above are not kept
 

in English, cause such books and records to be trslated into English upon
 

reasonable advance request by the Commssion or its sta; 

6. it wil promptly, upon receipt of an adminstrtive subpoena, demand or a
 

request for volunta cooperation made durig a routie or special inspection 

or otherwise, provide to the Commission or to the sta of the Commssion any 

and al of the books and records described above, and, to the extent withi its 

control and to the extent it may lawfully do so, make avaiable for testiony 

before, or other questionig by, the Commission or the sta of the 

Commission any and al personnel (other than clerica or minsteri personnel) 

identifed by the Commission, the sta of the Commssion, AA or itself as 

having access to or having been involved in providig advice to be used for or 

on behal ofAA's U.S. clients or related trsactions, at such place as the 

Commssion may designate in the Unite States or, at the Commssion's 

option, in the countr where the rerds are kept or such personnel reside. It 

wil authori al personnel describe in the preg sentence to testi about 

al advice used for or on behal of AA's U.S. clients and related 

trasactions (except with respect to the identity of non-U.S. clients). Subject 

to the foregoing, it wil not (excet with respect to the identity of non-U.S.
 

clients) contest the valdity of admstrtive subpoenas for testiony or 

documents under any law or regulations other than those of the United States; 

and 

7. it wil submit to the jurisdiction of U.S. federa courts for actions arsing
 

under the U.S. securities laws in connection with investment advisory activities 

for U. S. clients of AA. It wil designate and appoint an agent for service
 

of process upon whom may be served al process, pleadings and other papers 

in (a) any investigation or adminstrative proceeing conducted by the 
11
 

Commission; and 
 (b) any civil suit or action brought agaist AA or itself or to which AA or it has been joined as a defendat or respondent, in 

connection with the investment advisory activities and related securities 

activities arsing out of or relating to any investment advisory services 

provided to U.S. clients of AA or any related trasaction. It wil appoint 

a successor agent if it or any person discharges the agent, or the agent is 

unwilg or unable to accept service on its behal at any tie until six yeas 

have elapsed from the date of AA's last investment advisory activity. It 

wil not have access to or provide advice ,to be used for or on behal of U. S. 

clients of AA until documents effectig the appointment of an agent have
 

been fIled by it with the Commission in a form that is reasonably acceptable to 

the sta.
 

C. Representations of ABN AMO Ban.,
 

ABN AMO Ban represents that: 

1. any, 
 advice given to U.S. clients of AA, by or on behal of AA, wil 

be given only through AA or through employees who AA deems to be

II associated persons II; 

2. it wil provide toAA, and AA's Form ADV wil disclose, the names
 

and other inormation required by Form ADV for al "associated persons" of 

AA as described in AA's representations; 

3. it wil keep books and records of the tye described in Rules 204-2(a)(1), (2),
 

(4), (5) and (6) and 204-2(c) under the Advisers Act for al trsactions. With


respet to trsactions involving AA's U.S. clients and al related 

trsactions, it wil also reta recrds of the type described in Rules 204­

2(a)(3) and (7) under the Advisers Act. Al of the books and records 

describe in the preg sentence wil be maitaed and preserved in an
 

easily accssible place in the countr where such reords ar kept for a period 

of not less th five yeas from the end of the fisca yea durig which the last 

entr was made on such book ,or recrd; . 

4. it wil, to the extent it may lawfully do so, promptly, upon recipt of an
 

admistrtive subpoena, demand or a reuest for volunta cooperation made
 

durig a routie or specia inspection or otherwise, provide to the Commssion 

or to the sta of the Commssion any and al of the books and records
 

described in Section C.3, at such place as the Commission may designate in 

the United States or, at the Commission's option, in the countr where the 

recrds are kept. To the extent legaly permissible, it wil not (except with 

respect to the identity of non-U.S. clients) contest the valdity of adminstrative 

subpoenas for any document described in Section C.3. under any laws or 
12 

regulations other than those of the United States; 

5. it wil maita Sta Tradig Records of the tye required by Rule 204­

2(a)(12) under the Advisers Act for al of its "advisory representatives" with
 

respect to U.S. clients of AA and for al persons deemed to be II associated
 II by AA (for purposes of this Section C.5., such persons are persons 

collectively referred to as "Covered Persons"), and it wil: (a) make a good 

faith effort to obta from al Covered Persons written authoritions (each an 

"Authorition") to provide their own Sta Tradig Records to the 

Commission or the sta of the Commission upon receipt of an admistrative 

,subpoena, demand or request for volunta cooperation durig a routie or
 

special inspection or otherwise; and (b) wil make avaiable, upon receipt of an 

admistrative subpoena, demand or request for volunta cooperation durig a
 

routine or special insption or otherwise of the Commssion or the sta of the 

Commission, copies of redcted Sta Tradig Records (as specifed below, 

"Redcted Sta Tradig Records" of those Covered Persons for whom a duly
 

signed Authorition is not in effect. If the Commssion or the sta of the 

Commission requires access to the inormation that has not been included in 

Redcted Staf Tradig Records, it wil assist the Commission and the staf of 

the Commission, to the extent it may lawfully do so, in enlsting the assistace 

of the appropriate Netherlands regulatory authorities in obtag access to the 

inormation not inCluded in such Redcted Sta Tradig Records, and wil 

respond to any lawful request for such inormation that is made by such 

Netherlads regulatory authority. "Redcted Sta Tradig Records" meas a 

copy of any Covered Person's Sta Tradig Records which does not include
 

such Covered Person's name and other inormation which would identi such
 

Covered Person. It wil maita a key or codig system by which the identity
 

of Covere Persons for whom Redcted Tradig Records have been produced
 

ca be determined;
 

6. it,wil make avaible in The Netherlads for questionig by the sta of the
 

Coinssion, to the extent it may lawfully do so, any and al personnel (other 

than clerica or misteri personnel) identied by the Coinssion, the sta 

of the Coinssion, AA or itself as having accss to or having been 

involved in providig advice to be used for or on behal of AA's U.S. 

clients or related trsactions. It wil authori al personnel described in the
 

precg sentence to testi about al advice used for or on behal of AA's 

U.S. clients and related trasactions (except with respect to the identity of nonU.S. clients). To the extent legaly permissible, it wil not (except with
 

respect to the identity of non-U. S. clients) contest the valdity of adminstrative 

subpoenas for testiony or documents under any laws or regulations other than 

those of the United States. It wil condition the employment of (a) al of its 

"advisory representatives" with respect to U. S. clients of AA, and (b) al 

persons deemed to be "associated persons" by AA to be newly employed 
13 

by ABN AMO Ban, or to be newly assignedto positions that would require 

them to be deemed to be "advisory representatives II with respect to U. S. 

clients of AA, or "associated persons" by AA, to the extent it may 

lawfully do so, on an undertg to cooperate with Commission
 

investigations, includig appeag for testiony before, or other questionig 

by, the Commission or the sta of the Commssion at such place as the 

Commission may designate in the United States; 

7. it wil tae al appropriate legal actions to compel compliance by al personnel
 

described in Section C.6. above with the undertgs referred to in Section C.6., 

above, and wil pursue al avaiable legal remedies agaist any such person that fais 

to comply with such undertgs; 

8. it wil, to the extent that any books and records identifed in this Section C.
 

are not kept in English, cause such books and records to be trslated into
 

English upon reasonable advance request by the Commission or its sta; and
 

9. it wil submit to the jurisdiction of U.S. federa courts for actions arsing
 

under the U. S. securities laws in connection with investment advisory activities 

for U.S. clients of AA. It wil designate and appoint an agent for service
 

of process upon whom may be served al process, pleadings and other papers 

in (a) any investigation or adminstrtive proceeg conducted by the 

Commission; and (b) any civil suit or action brought agaist AA or itself '
 

or to which AA or it has been joined as a defendat or respondent, in 

connection with the investment advisory activities and related securities 

activities arsing out of or relatig to any investment advisory services
 

provided to U. S. clients of AA or any related trsaction. It wil also 

appoint a successor agent if it or any person discharges the agent, or the agent 

is unwilg or unable to accept service on its behal at any time unti six yeas 

have elapsed from the date of AA's last investment advisory activity. It 

wil not have accss to or provide advice to be used for or 
 on behal of U.S.
 

clients of AA unti documents effectig the appointment of an agent have
 

been fIled by it with the Commssion in a form that is resonably acctable to 

the sta.
 
14
 

Conclusion 

Because these positions are based upon the facts and representations in your letter, 

you should note that any dierent facts or representations may require a diferent' conclusion. 

Further, this response expresses the Division's position on enforcement action only, and does 

not purport to express any legal conclusions on the questions presented.
 

~c~ 

Brenda C. Fox 

Attorney 
SCH U LT E ROTH & ZABEL LLP 

900 THIRD AVENUE
 

R A. ABRAHAMS 

Ki !PTlSTE 

LE~ M. BLIWISE 

MARK A. NEPORENT 

PETER A. NUSSBAUM 

JAMES M. PECK 

NEW YORK, N.Y. 10022 FLORIDA OFFICE 

PHILLIPS POINT, WEST TOWER 

STEPHANIE R. BRESLOW 

DAVID M. BRODSKY 

MARTIN L. PERSCHETZ 

GREGORY P. PRESSMAN (212) 756-2000 SUITE 1002: 

777 SOUTH FLAGLER DRIVE 

BROOKS R. BURDETTE FREDERIC L. RAGUCCI WEST PALM BEACH. FLORIDA 33401 

BONNIE L. DIXON KURT F, ROSELL FACSIMILE NUMBER: 1561' 659-9800 

EDWARD G, EISERT ROBERT ROSENBERG 12121593- 5955 

HOWARD B, EPSTEIN PAUL N. ROTH 

MICHAEL J, FEINMAN 

MICHAEL S, FELDBERG 

WILLIAM A. RUSKIN 

JEFFREY S. SABIN CABLE: OLYMPUS NEWYORK 

STEVEN J. FREDMAN FREDERICK P. SCHAFFER 

STUART D, FREEDMAN STEPHEN J. SCHULTE WRITER'S DIRECT NUMBER: 

SUSAN C. FRUNZI DANIEL S, SHAPIRO 

KENNETH S. GERSTEIN CHAYE ZUCKERMAN SHAPOT 

ALAN R. GLICKMAN HOWARD F. SHARFSTEIN 

HOWARD O. GODNICK 

LAWRENCE S. GOLDBERG 

JOSEPH R. SIMONE 

IRWIN J. SUGARMAN (212) 756-2579 

FRED R. GREEN SHLOMO C. TWERSKI 

MARCY RESSLER HARRIS JANET C. WALDEN 

DANIEL J. KRAMER ALAN S, WALDEN BERG 

BURTON LEHMAN PAUL N. WATTERSON, JR. 

ISAAC B. LUSTGARTEN PAUL E. WEBER 

JOHN G. McGOLDRICK MARC WEINGARTEN 

MICHAEL C. MULITZ ANDRE WEISS 

ROBERT 5, NASH WILLIAM 0, ZABEL 

CONFIDENTIAL TREATMENT REQUESTED 

March 7, 1997 

Jack W. Murhy, Esq. 

Chief Counsel 

Division of Investment Management 

Securities and Exchange Commission 

450 Fifth Street, N.W. 

Washington, D.C. 20549 

Re: Investment Advisers Act of 1940. Sections 203 and 208
 

Dear Mr. Murhy: 

We are wrting to you on behalf of our clients, ABN AMRO Ban N. V. '(IABN' 

AMa Ban"), ABN AMRO Asset Management (USA) Inc. ("AA") and ABN AMRa 

Asset Management (Far East) Limited ("AAFE") to request your concurrence with our 

opinion that neither ABN AMRO Ban nor the Paricipating Affliates, as defined below, will be 

required to register under the Investment Advisers Act of 1940, as amended (the "AdvisersAct"), 

if they share certain personnel with, and provide certain services as described below to, AAAM, 

an investment adviser that is registered under the Advisers Act, under the circumstances 

described below. In addition; we seek assurance that the staff of the Securities and Exchange 

Commission (the "Commissionll) wil not recommend enforcement action against ABN AMRa 

Bank or any of its unregistered (and otherwise non-U.S. regulated) affiliates if 
 they provide 

investment advisory services to their clients who are not residents of 
 the U.S. solely in 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 2
 

accordance with the securities laws of 
 The Netherlands (or other applicable foreign law) without 

also complying with the provisions of 
 the Advisers Act, except as provided below. 

1. Background.
 

A. ABN AMRa Bank.
 

ABN AMRO Ban, incorporated under the law of The Netherlands with executive 

offces in Amsterdam, is the largest ban in The Netherlands and one of 
 the largest banks in the 

world. ABN AMRa Bank is a subsidiar. of ABN AMRO Bank Holding N.V. ("ABN AMRO 

Holding"), also incorporated under the law of 
 The Netherlands with executive offces in, 

Amsterdam. ABN AMRO Holding conducts no operations other than through ABN AMRa 

Bank. 

ABN AMRO Ban comprises a global financial services organization with offices, 

throughout the world and is a "universal ban", as defined under the law of The Netherlands, 

because it engages in the securties business as well as the commercial baning business. ' 

Through its subsidiaries, ABN AMRO Ban provides a wide range of customer financial 

services, including 
 baning, investment banng, investment advisory and custody, foreign 

exchange and ,underwiting, and insurance, and operates both in the United States and abroad. 

ABN AMROBan operates in the U.S. through ten branches and agencies and its 

. ' wholly owned subsidiar, ABNAMRO Nort America, Inc., a Delaware corporation ("AAA"). 

AANA wholly ownsAAAM, a Delaware corporation. AANA also wholly owns LaSalle 

, National CoI'oration, a Delaware corporation, which, in tu, wholly owns LaSalle National 

Bancorp, Inc., which itself wholly owns LaSalle Natiomi.l Ban, a national banng association

("LNBII). AANA also wholly owns LaSalle Street Capital Management, Ltd., a Delaware 

.. '
 corporation, and an investment 
 adviser that is registered under the Advisers Act ("LSCMII). 

B. AAM....
 

:A commenced business in Januar, 1994, and was organized for the purose 

of providing: (i) portfolio management services to U.S. institutional clients (including clients of 

ABN AMRO Holding owns in excess of99% of 
 the outstanding voting securities of ABN AMRO Bank. 

.. , LNB, as a national banking association, is e?,cluded from the definition of "investmentadviser" under the 

Advisers Act. LNB is subject to regulation by the Offce of the Comptroller of the Currency. 

... AAAM may be merged into the ABN AMRO Chicago Corporation, a Delaware corporation ("AACC") and 

an indirect, wholly-owned subsidiary of ABN AMRO Bank, which is registered as an investment adviser 

under the Advisers Act and as a broker-dealer under the Securities Exchange Act of i 934, as amended (the 

"Exchange Act"). In such event, AACC would succeed to the business of AAAM and AACC would be 

bound by the representations of AAAM set forth herein. 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 3
 

affliated banks (e.g., European American Ban (IlEAB")), such as corporations, charitable 

foundations and endowment funds, educational institutions, and pension (or other retirement) 

plans sponsored by governents, corporations and unions, and registered investment companies; 

(ii) portfolio management services to U.S. individuals, including persons who may maintain 

accounts at the U.S. branches and agencies of ABN AMRO Ban and at U.S. affliated banks, 

e.g., EAB, and non-U.S. individuals who may maintain accounts at the U.S. branches and 

agencies of ABN AMRO Ban and at U.S. affliated bans; and (iii) investment supervisory 

services for its clients. The portfolio management services provided wil be primarily 

discretionar, although non-discretionar services also may be provided. As more fully
 

discussed below, in providing services to its clients, AAM may obtain certain services from its 

affiliates, including ABN AMRa Ban and LSCM~ and may effect certain transactions through 

ABN AMRO Ban and its affiiates. AAM has been capitalized with more than $1;000,000. 

The portfolio management services ofAAAMrelate to 
 U.S. and non-U.S; issuers, 

securities and investments. 

AAM is in the process of registering with the Securities Board of The 

Netherlands, Stichting Toezicht Effectenverkeer (the IlSTEIl), and, if 
 necessar, wil either fie an application with the Securities 
 and Futures Commission in Hong Kong (the IlSFCIl) for exempt 

investment adviser status or register with the SFC. The regulations applicable to AAMunder 

the laws of 
 the Netherlands are described in greater detail below. AAM'intends to register in 

each other jurisdiction in which the natue of its activities may require such registration in the future. ' 

The management and the proposed operations of AAAM are discussed in more 

detail below in Sections III and iv. 

II. Advisory Operations of ABN AMRa Ban and Subsidiaries.
 

A. General.
 

i. Advisory Operations.
 

ABN AMO Ban staed its international fud management operations circa 

1930. As of 
 December 31, 1996, ABN,AMOBan managed directly and though its 

subsidiaries approximately $50 bilion. Asset management operations may be grouped into two 

categories: (i) services provided directly by ABN AMRO Ban through its ban subsidiares, 

branches 'and agencies located throughout the world to institutional 
 and individual clients; and 

(ii) services provided by investment management subsidiaries, including LSCM, to institutional 

(including mutual funds) and individual clients. , 

The subsidiaries referred to in subsection (ii) above act as advisers or sub-advisers 

to more than 50 mutual funds which are not registered under the Investment Company Act of 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 4
 

1940, as amended (the "Company Act"), and which are not offered or sold to U.S. persons. 

LSCM, and one of ABN AMRa Bank's other registered investment adviser subsidiaries, advise 

the Rembrandt FundsCI, a diversified, open-end management company, registered under the 

Company Act. 

ABN AMRO Bank and its subsidiaries are managed by a Managing Board which 

is comprised of nine members, eight of whom have functional responsibilities with respect to the 

six divisions into which ABN AMRO Ban and its subsidiares are organized, including: (i) the 

Domestic Division; (ii) the International Division; and (iii) the Division Investment Banng & 

Global Clients (the "IB&GC Division"). The advisory operations of ABN AMRO Ban and its 

subsidiaries are under the jurisdiction of the .latter two divisions. 

All of ABN AMRO Ban's operations in North America, including those 

conducted by AAM and LSCM, are organized within the International Division. The asset 

management operations are supervised by an individual'who is Chairman ofthe Board of 

AAAM. 

ABN AMRa Ban's non-U:S. asset management operations are organzed within 

the International Division or theIB&GC Division. From a product point of 
 view all asset 

management operations are supervised by the Directorate General Asset Management & Trust 

(the "General AM&T Directorate"). 

In order to enable AA and LSCM to utilze the knowledge and expertise of 

their coùnterpars in the International Division and the IB&GC Division; the manager of 
 North 

American asset management operations fuctionally reports to the Director of the GeneralAM&T Directorate, as do the managers of 
 the non-U.S. asset management operations. As a 

result of this' organizational matrix, AA and LSCM fuctionally are under the supervision of 

the General AM&T Directorate. 

AA proposes to utilze the advisory services of certn personnel who will be 

primarly employed by ABNAMRO Ban; AAE and LSCM and will have their primar 

place of work at the offces of one of the foregoing entities. In addition, ABN,AMRO Ban 
 will ,: 

provide certain other servces to AA, as more fully described below. 

2. Regulatory Supervision Under Netherlands Law.
 

The ban regulatory system in The Netherlands is a comprehensive system based ' 

on the provisions of the Act on the Supervision of 
 the Credit System 1992 (Wet Toezicht 

Kredietwezen 1992) ("ASCS 1992"). De Nederlandsche Ban N.V., the Dutch Central Ban 

C'DNB"), through directives issued pursuant to statutory authority, regulates the activities of 

, ABN AMRO Ban on behalf of the Netherlands Minister of 
 Finance. DNB regulations focus on ' 

the solvency, liquidity and administrative organization ) monetary supervision and supervision of
 .' of ABN AMRO Bank. 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 5
 

Under the terms of 
 the ASCS 1992 ABN AMRO Bank is a universal bank, i.e., 

the bank is engaged in the securities business as well as the commercial banking business. The 

securities activities of ABN AMRO Ban are regulated under the Act on the Supervision of 

Investment Institutions (Wet Toezicht Beleggingsinstellngen 1990) ("ASH 1990") and under the 

Act on the Supervision of 
 Securities Trade (Wet Toezicht Effectenverkeer, 1995) ("ASST 

1995"). 

The activities of the investment institutions that are part of the ABN AMRO 

group in The Netherlands are governed by ASH 1990. 

ASH 1990 regulates mutual fuds and collective investment fuds (individually, 

an llInvestment Institution" and collectively, "Investment Institutions") which solicit or obtain in 

'or from The Netherlands moneys or other goods beyond a restricted circle in exchange for units 

in an Investment Institution. Supervision ofInvestment Institutions is cared out by DNB. An 

Investment Institution which falls within the scope of the Act is required to have a license, unless 

an exemption applies. Licenses are issued 
 by DNB upon application and only if the Investment' 

Institution has proved that it meets certain requirements.' Once a license has been obtained, an 

Investment Institution must send certain financial information to investors on a monthly basis. 

Furthermore, ASH 1990 contains requirements concerning auditing and publication of annual 

accounts. 

ASST 1995, together with the decrees and regulations promulgated pursuant " 

thereto, provides a comprehensive framework for the conduct of the securities 
 'trade in or from 

The Netherlands (including portfolio management activities) and establishes a legal basis for .the 

supervision of the securities exchanges by the STE. 

AS,ST 1995 contains rules relating to the issuance of securties, regulates 

securities brokerage and portolio management activities, and provides a basis for supervision of 

securties "exchanges as well as provisions on insider trading- insecurties. Securties brokerage 

withn the meang of ASST 1995 covers the intermediation in securties and interest, curency 

and equity swap transactions, market-m~g activities, 
 the, acquirng and'placing of securties .. 

upon issuace thereof and the offering of an investment account (an account by means of which "" 

transactions in securties can be effected). Portolió management under ASST 1995 relates only 

to individual portfolio management on a contractual basis. Collective portfolio management 

activities are regulated by ASH 1990. 

The enforcement of the provisions of the Act (ASST 1995) is delegated to the 

STE, to which the Netherlands Minister of Finance has delegated certain of its powers under 

ASST 1995. 

To engage in activities in the securities business a license is required, which must 

be obtained from the STE. The STE shall, upon request, grant to members of a self-regulatory 

organization of a Securities Stock Exchange, such as ABN AMRO Bank, a license to engage in 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 6
 

securities activities within the scope of the regulations of such self regulatory organization, if the 

STE has received a notification from such self regulatory organization containing the information 

specified in article 9 of ASST 1995. As a credit institution registered and fully licensed under 

ASCS 1992, ABN AMRO Ban is exempt from the obligation to obtain a license from the STE 

for its securities business. Members of a self regulatory organization, such as ABN AMRO 

Bank, must comply with the rules of its self regulatory organization, instead of the decrees and 

regulations issued pursuant to ASST 1995. Both the self 
 regulatory organization of which ABN 

AMRO Ban is a member and the Securities Stock Exchange itself are supervised by the STE. 

ABN AMRO Ban is a member of the major Dutch Securities exchanges, such as 

the Amsterdam Stock Exchange and the European Options Exchange. 

After AAA is registered with the STE, AAAM wil be subject to regulation in 

accordance with the principles described above. ·
 

B. Asset Management & Trust
 

The asset management 
 activities of ABN AMRO Ban and its affiliates are 

organized within two Directorates within 
 the General AM&T Directorate: Global Asset . 

Management & Trust (the "Global AM&T Directorate") and Asset Management Netherlands (the 

"Asset Management Netherlands Directoratell). 

The Global AM&T Directorate coordinates 
 and has final responsibilty for 

worldwide asset l1ahagement operations. The Asset Management Netherlapds.Directorate is 

divided into varous groups which are responšible for Portfolio Management, Client Servicing 

and Fund Administration & Support. 

I. Portfolio Management. Portfolio management activity is organzed withn
 

the Asset Management Netherlands Directorate and is pedormed on behalf of 
 institutional and private clients and investment fuds. The pórtolios of 
 U.S. and non-U.S. clìents are managed 

, though ths Directorate. The selection of portfolio investments is the responsibilty of the 

EquitY Management and FI4edIncome Management Deparents. The portolio managers are ' 

responsible for and provide asset management services with -respect to the investment fuds and
 

each client portolio or pprton thereof allocated to them. Reseach is pedormed within each
 

deparent by investment professionals, who provide advice and assistace in making decisions 

as to the purchase/sale 'of individual investments and the composition of a client's'total portfolio 

or portion thereof managed by that deparent. The portfolio managers and other 
 investment ' 

We note that the U.S. and The Netherlands are parties to an Agreement on Mutual Administrative 

Assistance in the Exchange of Infonnation in Securities Matters, dated January i 2, i 990 (the "Agreement 

on Mutual Assistance"). ABN AMRO Bank believes that thetennsofthis Agreement provide an 

additiönallevel of assurance to the Commission that its regulatory concerns are addressed, 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 7
 

professionals within the Asset Management Netherlands Directorate are hereinafter referred to 

collectively, as "AMN Portfolio Managers". 

2. Client Servicing. Institutional Services is responsible for the management
 

and administration of institutional clients and determines, among other things, the appropriate 

asset allocation for clients and fuishes account information to clients. Institutional Services is 

also responsible for marketing and the contacts with pension fud consultants. Client Services 

Private Clients is responsible for the management and administration of private clients. 

3. Fund Administration & Support. Fund Administration & Support is
 

responsible for the management and administration of the Amsterdam-based investment funds 

and the associated investment companies. 

C. AAAMFE.
 

AAMFEis an investment adviser organized under Hong Kong law. It is 

registered with the SFC in Hong Kong and.must comply with local 
 law in conducting its 

business. Organizationally, AAFE, an indirect wholly owned subsidiar of ABN AMRO 

Bank, reports to the Director of the General AM&T Directorate. 

AAMFE provides investment management services with respect to'Investments 

primarily in the Far East to both private and institutiqnal ~on..U.S. investqrs and acts as a subadviser to investment advisers, organzed ,under the law of The Netherlands and wholly owned ' 

indirectly by ABN AMRO Ban, which manage mutual fuds registered under the law of The , 

Netherlands which are not offered to U.S. persons. 

The office of AAFE is located in Hong Kong where approximately seven 

investment personnel (whose fuctions include research) are based (collectively, the "AAFE 

Portfolio Managers"). The AAFE Portfolio Managers are employed by ABN'AMRO Ban 

or AAMFE, although their actìvities are supervised by AAFE. 

D. LSCM.
 

LSCM provides investment management services to U.S. and non-U.S. 

institutional and private clients, including clients ofLNa, LSCM also is the investment adviser 

to the Rembrandt FundstI, which offers a family of investment fuds to U.S. clients. The offices 

ofLSCM are located in Chicago, Ilinois where foureen investment personnel (whose functions 

include research) are based (collectively, the "LSCM Portfolio Managers"). 

LSCM is registered as an investment adviser under the Advisers Act and, 

accordingly, is subject to the Commission's regulation and supervision. 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 8
 

E. ABN AMRO Bank Asset Management Decision Making Process. 

Global strategy with regard to the asset and regional allocation of investments is 

formulated by the Global Investment Committee of ABN AMRO Bank (the "GIC") with the 

support of Regional Investment Committees (IRICs"). The GIC includes representatives of the 

principal operating units of ABN AMRO Ban involved in asset management, including 

economic research units, senior strategists, portfolio managers and marketing and sales units. 

The GIC meets at least quarerly. Each RIC, in tu, meets monthly and includes representatives
 

from the units which are involved in providing asset management services in the three primar 

global regions served, i.e., the North American Region, the European Region and the Far East 

Region. 

The GIC establishes general investment policies and guidelines with respect to 

international securities based upon macroeconomic analyses, interest rate and stock market trends. The recommendations of 
 the GIC relate only to geographic areas and,regional sectors; 

the GI C does not discuss specific securities held by, clients and does not make recommendations 

as to specific securities to be purchased or sold for the account of clients. Accordingly, the GIC 

does not have access to individual client portfolio information. 

Subsequent to each meeting of the GIC, all 
 portfolio managers are briefed on the 

impact of the broad strategy of the GIC on the individual requirements of paricular types of 

clients. Portfolio managers then make investment decisions and recommendations as to specific" 

securties based onthe investment 
 objectives and guidelines of each particular client consistent 

with the general policies of the GIC. . ' 

III. Current Affiliations Among AAAM. ABN AMRO Ban and its Affliates. 

A. Composition of the Board of AAM.
 

. Directors of AA may also serve' as directors or offcers of other entities withn 

ABN AMRO Ban's organzation; Such persons will devote such time and attention to the' 

management of the operations of AA as is necessar. None of such persons ,makes specific 

investment decisions or recommendations on behalf of any ABN AMRO Ban affliate or any 

client thereof, other than AA or LSCM. 

B. AAAM Relationship With Affiliates. 

AAAM plans to engage in certn transactions with or obtain certain services from 

its affiliates, as more fully discussed below. 

1. Supporting Services of Certain 
 PersonneL. AAM's portfolio managers 

wil devote substantially all of their business time and attention to the management of the 

portfolios of AAAM clients (collectively, the "AAAM Portfolio Managers"). Under AAAM's 
Jack W. Murphy, Esq.
 

March 7, 1997
 

Page 9
 

proposal (as described below), in providing advisory services to its clients, AAAM may also rely 

upon persons who primarily will be employees of ABN AMRO Bank, AAAMFE and LSCM. 

2. Books and Records. AAM may have arangements with ABN AMRO
 

Bank and its affiliates through which they may act as custodians for client accounts, provide data 

processing and related record services and provide other administrative services as agreed by the 

parties. 

AAAM also may obtain data processing and related record keeping services from 

ABN AMRO Chicago CC?rporatio.n ("AACC"), which is registered as an investment adviser 

under the Advisers Act and as a broker-dealer under the Securities Exchange Act of 1934, as 

amended. Under AAM's proposal (as described below), AACCmay provide AAM with 

additional administrative services as agreed to by.the paries. Also, under AAM's proposal (as 

described below), AAM may obtain similar services from.ABN AMRO Ban and its affiliates. 

3. Execution of 
 Transactions. Under AA's proposal (as described ' 

below), AAAM may execute 
 and clear securities transactions through ABN AMRO Bank and
 

other broker-dealer affliates.
 

iv. Proposed Activities.
 

A. Legal Framework.
 

1. The Staff 
 Report and Recent Developments. In the past, the staff (the 

"Staft') of 
 the Division ofInvestment Management (the "Division") has tclen the position that a , , *
 non-U.S. company need not register as an investment adviser, provided that it establishes a

registered subsidiar ttatmeets certin criteria, commonly known as the "Ells Rules". 

The Staff now acknowledges that the separate personnel requirement of the Ells
 

Rules may work to the detrment of clients of a U.S. registered investment adviser and has
 

The "Ells Rules" were derived from the Commission staffs response to a "no-action" request letter: 

Richard Ells (pub. avaiL. Sept. i 7, i 98 i). Under the Ells Rules, 
 a subsidiary wil be regarded by the staff 

as having a separate, independent existence and to be functioning independently of its parent only if it: (i) 

is adequately capitalized; (ii) has a buffer, such as a board of directors a majority of whose members are 

independent of the parent, between the subsidiar's 
 personnel and the parent; (ii) has employees, offcers 

and directors, who, if engaged in providing advice in the day-to-day business of 
 the subsidiary entity, are not otherwise engaged in an investment advisory business of 
 the parent; (iv) itself makes the decisions as to 

what investment advice is to be communicated to, or is to be used on behalf of, its clients and has and uses 

sources of investment information not limited to its parent; and (v) keeps its investment advice confidential 

until communicated to its clients. 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 10
 

recommended that the position taken in Richard Ellis be modified in order that a registered 

adviser may share advisory personnel with unregistered affiliates. * 

Indeed, the separate personnel requirement of the Ellis Rules would restrict 

AAAM's abilty to draw fully upon the expertise and talent of portfolio managers (whose 

functions may include research) employed by ABN AMRO Bank and its affliates. AAM's 

proposal, as described below, is designed to give the clients of AAAM the benefits of the, 

specialized expertise of portfolio managers of its affiiates while at the same time, in the event of 

any alleged violation of 
 U.S. securities law, permitting the Commission to seek enforcement 

action against ABN AMRO Ban, AAFE, and any other unregistered (and otherwise nOhU.S. regulated) affiiate 
 that provides advice-to the D.S: clients ofAAAM, through or on behalf 

of AAAM, or has access to any information concerning which securities are recommended for 

AA's clients prior to the effective dissemination of such recommendations (such entities, 

other than ABN AMRO Ban, collectively, the "Paricipating Affliates"). 

Based upon the more flexible policies reflected in the Staff Report, the Staff, 

already has grated relief to a number of organizations which engage in multinational investment 

advisory activities, conditioned on various 
 'representations made to address the concerns of 
 the Staff:* As discussed below, Dutch 
 law materially restricts the abilty ofABN AMRO Ban to 

make certain of such representations in the same form. *** However, ABN AMRO Ban believes' 

that the representations which are set fort below in Sections V.C.5 and V.C6 address the 

concerns of the Staffin a maner which also is .in compliance with Dutch legal requirements. 

2. Dutch Legal Considerations. Dutch law materially restricts the abilty of
 

ABN AMRO Ban to provide access to Staff 
 Trading Records of 
 its ','advisory representatives"', 

with respect to U:S. clients of AA and for all persons deemed to be lIassociated persons" by 

AAM (collectively, "Covered Persons") and to make Covered Persons available for testimony 

before, or other questionig by, the Commssion or the, Sta. These restrctions relate: only to the 

asset management operations of ABN AMO Ban in The Netherlands. 

Under Dutch law, the keeper of a "database", such as ABN AMO Ban, which 

contains information on individuals, such as employees of ABN AMRO Ban, is prohibited from 

fuishing the "personal data" contaned in such database to thrd paries uness the .information " 

See SEC Divisipn of Investment Management. Protecting Investors: A Half Centtiy of Investment , ' 

Company Regulation. Chapter 5. The Reach of 
 the Investment Advisers Act of 1940 (May 1992) (the "Staff Report"). . .. Murray Johnstone Holdings Limited (pub. avaiL. Oct. 7, 1994), Kleinwort Benson Investment Management. 

Ltd. (pub. avaiL. Dec. 15, 1993), Mercury Asset Management pIc (pub. avaiL. April 16, 1993) and Uniao de 

Bancos de Brasileiros S.A. (pub. avaiL. July 28, 1992). 

... The discussion of Dutch law set forth herein is based solely upon the advice of Dutch counsel to ABN 

AMRa Bank, without any independent investigation. 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 11
 

is furnished: (i) as a "direct result" ofthe purpose for which the data is maintained; (ii) with the 

specific consent of the employee; or (ii) as required by the laws of The Netherlands. The 

exception provided by clause (i) above does not include the funishing of information to third 

parties on the sole basis that it is not "incompatible" with the specific purpose for which it is 

maintained. Since personal data is not maintained by ABN AMRO Ban regarding its 

employees for the purose of being fuished to the Commission, ABN AMRO Ban can not 

furnish such data to the Commission based upon this exception. With respect to the exception 

provided by clause (ii) above, any such consent, even if in writing, may be withdrawn at any 

time. Furthermore, ABN AMRO Ban could not, for instance, effectively condition the 

employment of an individual on an undertng to provide the Commission with access to such
 

person's Staff 
 Trading Records. However, tidèr Dutch law and the Agreement on Mutual
 

Assistance, ABN AMRO Ban is required to provide personal data regarding its'employees to
 

the STE and the Commission under the 
 circumstaces discussed below.
 

Under Dutch law, the STE is empowered to 
 request paries active in the securities 

industry to provide personal data in connection with an investigation made within the context of 

the Agreement on Mutual Assistace. Accordingly, ABN AMRO Ban would be required to ' 

provide the relevant Dutch, regulatory authorities with Staff Trading Records, in the context of a 

Commission investigation, upon a request therefor. Pursuant to the Agreement on 
 Mutual 

Assistace, the STE should cooperate, subject to the provisions of the Agreement on .Mutual 

Assistance, with the Coniission in obtaining and exchanging necessar .information in 

connection with a Commission investigation., Accordingly, subject to the 
 ,provisions of 
 the, 

Agreement on Mutual Assistace and with the assistace of.the appropriate Dutch regulatory 

authority, ,the Comtission should be able to obtain information included in Staff Trading 

Records that are maintained by ABNAMO Ban. 

Also, 'under Dutch law; upon request of an, employer, such as ABNAMRO Ban, an employee would generally be required to cooperate with a Commission investigation, if that ' 

did not require their appearance in the U.S. The available remedies for 
 an employee's failure to 

comply with the reasonable intrctions of ABN AMO Ban are dismissal and rescission of the 

employment contract. Neither of 
 these actions would result in ABN AMRO Ban 
 being able to 

,force the employee to appear before the Commssion in The Netherlands or in the U.S. 

However, any employee must cooperate with the STE. Under ths general obligation, the STE " 

may be allowed to question employees, but such employees canot be heard under oath. The 

Staff of 
 the Commission may paricipate in an investigation by the STE in The Netherlands., 

provided that such offcials follow the instructions of 
 the STE. Furermore, under Dutch law, 

an individual who fails to cooperate with the STE could be subject to sanctions and the STE
 

could report such person's failure to cooperate to the appropriate enforcement authority in The
 

Netherlands.
 

In order to address the concerns of the Staff in a manner which is consistent with 

Dutch law, ABN AMRO Ban is making representations with respect to providing access to 

Staff Trading Records with respect to Covered Persons and making Covered Persons available 
Jack W. Murphy', Esq.
 

March 7, 1997 

Page 12
 

for testimony before, or other questioning by, the Commission or the Staff. We understand that 

the Staff has conferred with the staff ofthe STE with respect to the operation of the Agreement 

on Mutual Assistace in such situations. The Agreement on Mutual Assistance provides a
 

~ measure of additional comfort to the Staff that its concerns have been addressed.
 

With respect to providing access to Staff 
 Trading Records, as more specifically 

set forth in Section V.C.5., below, ABN AMRO Ban is representing thatit wil make a good 

faith effort to obtain from all Covered Persons written authorizations to provide their own Staff 

Trading Records, and it wil make available to the Commission or the Staff of 
 the Commission, 

copies of redacted Staff Trading Records Redacted Trading Records") of
 ,(" those Covered 

Persons for whom a duly signed authorization is not in effect. (ABN AMO Ban wil maintain 

a key or coding system by which the identity of employees for whom Redacted Trading Records 

have been produced càn be determined.) ABN AMRO Ban also is representing that if the. 

Commission or the Staff determines' that it requires access to the information that has not been 

included in the Redacted Trading Records that it wil assist the Commission and the Sta in

enlisting the assistace ofthe appropriate Dutch regulatory authorities to obtain such 

information. 

With respectto makng employees available for questioning before the 

Commssion and the Staff, as more specifically set forth in Section V.C.6., below, ABN.AMO 

Ban wil condition the employment of all Covered Persons to be newly employed by it, or to be 

newly assigned to positions that would require them to be deemed to be Covered Persons, on an ,,' 

undertng to cooperate with Commission investigations, including appearg for testimony' " ' 

before, or other questioning 'by, the Commissiön'or the Staff at such place, as 
 the Commssion 

may designate in 
 the U.S.ABN AMO Banis.also representing that it wil tae all appropriate' 

legal actions to compel compliance by all such personnel with the aforesaid undertgs and 

will pursue all available legal remedies against any such person that fails to 
 comply with such 

undertngs. 

B. Supporting Servces óf Certin PersonneL.
 

AA proposes to utilze the services of cert of the AM Portolio Managers, 

the AAE Portolio Managers and the LSCM Portfolio Managers (collective1y;the 

"Advisory Personnel 
 ") to provide advisory services to its clients. The 
 Advisory Personnel will"

be priarly employed 
 by, and under the-supervision of, ABN AMO Ban, AAE or 

LSCM, and will have their primar place of work at the offices of one of the foregoing, entities. 

Advisory Personnel who provide advisory services to clients of AA as well 
 as to clients of 

other affliated entities are hereinafter referred to as, individually, a "Shared Adviserll, and 

collectively, IIShared Advisers". The Shared Advisers wil be physically located in the offces of 

ABN AMRO Ban in Amsterdam, AAMFE in Hong Kong, or LSCM in Chicago. Initially, 

AAAM also proposes to utilize the services of certin of the employees of certin affiliates, 

including LSCM, to service its clients and market the investment advisory services of AAAM, 

and in the future AAAM may similarly utilize the services of its own employees or the services 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 13
 

of certain portfolio managers of ABN AMRO Bank and AAAMFE (individually, a "Client 

Servicer" and, collectively, "Client Servicers"). 

Under the proposal, responsibility for the management of specific portions of a 

customer's portfolio willbe assigned to an AAM Portfoiio Manager or a Shared Adviser based 

upon the customer's wishes and needs and the relative expertise among the AAAM Portfolio 

Managers and the Shared Advisers. Thus, a Shared Adviser might 'be responsible for managing a 

portion of the investments of each account of AAAM because it may be more efficient to have 

Advisory Personnel who specialize in a paricular geographic region or industry make investment 

decisions for clients of AAM. A Shared Adviser might also be responsible for providing 

advice or recommendations as to the securities of companies in a region or with respect to an 

industry as to which such person has special.expertise. 

Although the person who would be primarily responsible for investment decisions 

might be a Shared Adviser who is primarily employed by, and under the supervision of, ABN 

AMRO Ban, AAFE, LSCM, or a Paricipating Affiliate generally, the Client Servicer for a 

particular AAAM client would be primarily employed by, and under the supervision of, either 

AAAM, ABN AMRO Ban, AAFE, LSCM or a Paricipating Affliate. In the future, in 

some cases, a Shared Adviser who is employed by, and under the supervision of, ABN AMRO 

Ban, AAMFE, LSCM or a Paricipating Affiliate might act as the Client Servicer for a 

paricular AA client. 

AA will 
 enter into appropriate arangements with ABN AMRO Ban, 

AAAMFE, LSCM and any. other Paricipating Affiliates to assure compliance with the ' 

understadings set forth herein and the availability of Shared Advisers and Client Servicers 'who 

are primarily employed by, and under the supervisi~n of, ABN AMO Ban, AAMFE or 

LSCM and any other Paricipating Affiliates; respectively. Shared Advisers, who wil be
 

primarily employed by and imderthe supervision of ABN AMRO Ban and AAFE, or II of AM. Paricipating Affliate will be treated as'''aSsociated persons 


C. Research.
 

, In addition to other sources, Advisory Personnel rely on brokerage research 

provided by unaffliated entities and by the brokerage research unts of ABN AMRO Ban and 

its affiliates (collectively, the "Brokerage Research Units"). . The research provided 
 by the Brokerage Research Units is only a par of 
 the total "mix" of 
 information which AA wil use 

in reaching its investment decisions and recommendations. , This, "mix" also is anticipated to 

include: (i) research provided by Advisory Personnel; and (ii) secondar research and analytical 

information received directly from brokers and.other financial or economic institutions not 

affiiated with AAAM. 

The research regularly produced by the Brokerage Research Units consists of 

statistical and other factual information on the U.S. dollar, non-U.S. currencies, U.S. and non­
Jack W. Murphy, Esq. 

March 7, 1997 

Page 14
 

U.S. industries and companies, advice regarding U.S. and non-U.S. economic factors and trends, 

and information, advice and recommendations on specific companies and securities. Such 

research is published externally and is provided in the ordinary course of business to Clients of 

the Brokerage Research Units, which consist largely of industry professionals, such as AAAM. 

Research obtained by AAAM from the Brokerage Research Units is not provided directly by 

AAAM to the U.S. clients of AAM and is not customized by the Brokerage Research Units for 

the U.S. clients of AAAM. 

The operations of the Brokerage Research Units are completely distinct from the 

research operations of the Advisory PersonneL. The operations of 
 the Brokerage Research Units 

and the entities which employ, or are primarly responsible for the supervision of, Advisory 

Personnel are supervised so as to ensure that the Brokerage Research Units will not have access 

to any information concernng the portfolios of 
 the U.S. clients of AAM or the securities 

recommended to, or purchased or sold for the accounts of, the U.S. clients of AAAM. 

There wil be a IIChinese Wallll between,the Brokerage Research Units and the 

Shared Advisers, the Client ServiCers-and'otherAAM personnel, and in those geographic 

locations where the Brokerage Research Units and Shared Advisers, Client Servicers and other 

AAAM personnel both wil have offces, they will be physically separated. The Brokerage 

Research Units wil not have access to AA's files; and the Brokerage 
 Research Units wil 
 not 

, ,have knowledge of the portfolios of AAM's clients or information concerning AA's 

investment decisions and recommendations. 'In addition, the Shared Advisers, Client Servicers 

and other AAM personnel will not be provided access, to the files 'of the Brokerage Research 

Units' analysts (id other employees. The Brokerage Research Units will not prepare research 

, reports or other informatìon specifically for use' by, or on behalf of, the U.S. clients ofAA. 

Although the Brokerage Research Units may have contact with the Shared
 

Advisers, the Client Servicers and other AA personnel" such contact is and wil be
 

maintained exclusively on an ar's-len.gt basis on terms which are comparable to the terms on
 

which the Shared Advisers, Client Services and other AA ,personnel have contact with 

unaffliated entities that provide brokerage research. 

AAM will be solely responsible for the conduct of its investment management 

, and advisory business, including the development and implementation of investment policy and 

strategy, and all investment decisions for the purchase and sale of securities for its clients' 

accounts and the timing thereof. The research prepared by the Brokerage Research Units is 

treated by the Advisory Personnel as if it were received from unaffliated entities. Accordingiy~ 

AAAM wil not necessarily follow the recommendations provided to it by the Brokerage 

Research Units.' Based upon 
 the foregoing, the Brokerage Research Units wil not be considered 

to be Participating Affiiates, and the e.rployees thereof 
 wil not be treated as "associated
 

persons" of AAAM, solely because they provide AAAM with research in the manner described 

) above.
 i 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 15
 

D. Books and Records.
 

As noted above, AAAM wil make arrangements with affiliates through which, 

affiiates may act as custodian for client accounts, provide data processing and related record 

services and provide other administrative services as agreed by the parties. 

Also, AAAM may obtain similar services from ABN AMRO Ban1e ABN AMRO 

Bank may prepare client reports, including quarerly or more frequent portfolio reports which 

detail the exact status of each client's portfolio, e.g., asset breakdown, performance data and a 

transaction review. Such portfolio reports may be supplemented with a written explanation of 

the investment strategies employed in connection with such portfolios. All reports to AAAM's 

clients wil be reviewed by AAAM (or Client Servicers acting on behalf of AAAM), transmitted 

by AAAM and printed on AAM's letterhead. 

Approximately 30 employees ,of ABN AMRO Ban wil be responsible for 

maintaining, or wil have access to, records of AAM. ,Such employees wil be treated 
 as 

"advisory representatives" of AAM. Any written 
 agreement between AAM and ABN AMRO 

Ban or its affiiates wil provide that any records maintained on behalf of AA will be ' 

maintained in accordance with the requirements of 
 Rule 204-2 under the Advisers Act, that such 

records are the exclusive property of AAA and that the staff of the Commission wil be entitled 

to have access to such records. 

E. Execution of 
 Transactions. 

Regional central trading units are being established at LSCM/ AA in Chicago 

and at ABN AMRO Ban in Amsterdam, and 
 may be established at AAMFE in Hong Kong' 

(individually, a "Central Trading Unit") to serve the Advisory Personnel within the Nort 

American Region, the European Region and 
 the Far East Region, respectively. Each Central 

Trading Unit wil have a central order collection and 
 processing fuction, and will pursue' 

accurate and optimal order execution of tranactions relating to' equities; bonds, other securties 

and foreign exchange. All orders will be collected, then executed and cleared either by in-house 

securities brokers and-broker-dealer afliates (on an "ar's-lengt" bais) or by unafliated 

brokers. It is the policy ofABN AMO Ban that all broker-dealer afliates be properly 

registered with the appropriate regulatory authorities and comply with applicable regulations in ' 

the respective jurisdictions in which they operate. 

In order to ensure that trades effected for AA's clients are executed on terms 

no less favorable than trades executedJor other clients of affliated entities, 
 subject to applicable 

U.S. laws (such as the Emplo'yee Retirement Income 
 Security Act of 1974, as amended, and the 

Company Act), trades for AAAM's clients generally wil be placed through the appropriate 

Central Trading Unit and could be combined with trades on behalf of other clients of ABN 

AMRO Bank and its affiliates. Individuals in the North American Central Trading Unit who 

place trades on behalf of AAAM may be jointly employed by AAAM and LSCM. ABN AMRO 
Jack W. Murphy, Esq.
 

March 7, 1997
 

Page 16
 

, Bank employees, and employees of other entities within ABN AMRO Bank's organization, who 

place trades on behalf of AAAM's clients wil be treated as "associated persons" of AAAM. 

V. Representations of AAAM. ABN AMRO Bank and Participating Affliates. 

In order to address the concerns of the Staff expressed in the Staff Report, such as 

the Commission's access to trading and other records of ABN AMRO Ban, the Paricipating 

Affiliates and their personnel, to the extent necessar to monitor and police conduct that may 

harm U.S. investors, AAM, ABN AMRO Ban and the Participating' Affiiates make the 

representations set forth below. 

A. Representations of AAAM.
 

AAAM has authorized us to state that it represents that: 

1. it wil promptly, upon receipt of an administrative subpoena, demand or a
 

request for voluntar cooperation made during a routine or special 

inspection or otherwise, provide to the Commission or to the Staff of the 

Commission any and all of the books and records that it is required to keep 

under the Advisers Act and those kept under foreign law, and, to the extent 

within its control and to the extent it may lawflly do so, make available for 

testimony before or other questioning by the Commission or the Staff of the 

Commission any and all personnel (other than 
 ,clerical or ministerial 

personnel) identified by the Commission, the Staff of the Commission, 

AA, any Paricipating Affiliate or ABN AMRO Ban as having access 

to or having bèen involved in providing 
 advice to U.S. clients, or related 

transactions, at such place as 'the Comiission may designate in the U.S. or, 

at t4e Commission's option, in the coUntr where the records are kept or 

such personnel reside. AA will authorize all personnel described in the 

, preceding sentence to testify about all'advice provided to U.S. clients and 

related tranactions (except with 
 ,respect to the identity of 
 non-U.S. clients). 

Subject to the foregoing,AA will not (except with respect to the identity 

of non-U.S. clients) contest the validity of an administrative subpoena for 

, testimony or documents under any law or regulations other than those' of the 

U.S.; 

2. it wil, to the extent that any books and records identified above are not kept, '
 

in English, cause such books and records to be translated into English upon ' 

reasonable advance request by the Commission or its Staff; 

3. it wil 
 deem as an "associated person" each Participating Affliate, and each 

employee of each Participating Affiliate an.d ABN AMRO Bank, who: (a) 

provides advice (including research) to AAAM's U.S. clients; or (b) has 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 17
 

access to any information concerning which securities are being 

recommended to AAAM's U.S. clients prior to the effective dissemination 

of such recommendations; and 

4. (a) any communications with U.S. clients (including any recommendations
 

or reports) wil be through AAM, not ABN AMRO Ban or the 

Paricipating Affiliates, and AAAM will require the Shared Advisers and 

Client Servicers to make clear in any communications between the Shared 

Advisers and Client Servicers and AAAM's clients that such 

communications are from AA, not ABN AMRO Bank or any 

Paricipating Affliate; (b) when dealing with clients or potential clients of 

AAAM, the Shared Advisers and Client Servicers wil make it clear that 

they are acting in their capacity as representatives of AAM, not ABN 

AMRO Ban or any Paricipating Affliate; and (c) AAM wil disclose to 

its clients in its Form ADV that ABN AMRO Ban and the Paricipating 

Affiiates may recommend to their clients, or invest on behalf of their clients, 

in, securties that are the subject of recommendations to, or discretionar 

trading on behalf of, AA's clients. 

B. Representations of 
 Paricipating Affiiates. 

Each Paricipating Affiliate has authorized l.S to state that they represent that: 

i. any advice given to U.s. clients of AAM,' by or on behalf of AAM,
 

wil be given only through AA or though employees who AAM 

deems to be lIassociated personsll; 

2. it wil provide to AA, and AA's Form ADV wil disclose, the
 

names and other inormation required by Form ADV for all "associated, 

persons" of AA who are employees of Paricipating Affliates as ' 

described in AA's representations; 

3. staff 
 trading records required by Rule 204-2(a)(12) will be maintained for' 

all of its "advisory representatives 
 II with respect to U.S. clients of AAM

and for all persons deemed to be "associated persons 
 II by AAM who are

employees of Paricipating Affiiates; 

4. it wil keep books and records of 
 the type described in Rules 204-2(a)(1), 

(2), (4), (5) and (6) and 204-2(c) for all transactions. With respect to 

transactions involving AAM's U.S. clients and all related transactions, it 

wil also retain records of 
 the type described in Rules 204-2(a)(3) and (7). 

All the books and records described above will be maintained and 

preserved in an easily accessible place in the country where such records 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 18
 

are kept for a period of not less than five years from the end of the fiscal 

year during which the last entry was made on such book or record; 

5. it wil, to the extent that any books and records identified above are not
 

kept in English, cause such books and records to be translated into English 

upon reasonable advance request by the Commission or its Staff; 

6. it will promptly, upon receipt of an administrative subpoena, demand or a
 

request for volunta cooperation made durng a routine or special 

inspection or otherwise, provide to the Commission or to the Staff of the 

Commission any and all of the books and records described above, and, to 

the extent within its control and to the extent it may lawflly do so, make 

available for testilUony before, or other questioning by, the Commission or 

the Staf of the Commission any and all personnel (other than clerical or 

ministerial personnel) identified by the Commission, the Staff 
 of the Commission, AAM or 
 itself as having access to or having been involved in providing advice to be used for or on behalf of AAM's U.S. clients or 

related transactions, at such place as the Commission may designate in the 

U.S. or, at the Commission's option, in the country, where the records are 

kept or such personnel reside. It wil authorize all personnel described in
 

the preceding sentence to testify about all advice to be used for or on ' 

behalf of AA's U.S. clients and related transactions 
 ,(except with respect to,the identity of 
 non-U.S. clients). Subject to the foregoing, it 

will not (except with respect to the identity of 
 non-U.S. clients) contest the 

validity of administrative subpoenas for testimony or document under any , 

laws or regulations other than those of 
 the U.S.; and 

7.	 it wil submit to the jurisdiction of U.S. federal cour for actions arising 

under the U.S. securties laws in connection with investment advisory 

activities for U.S. clients of AA. It will designate and appoint an 

agent for service of process upon whom may be served all process, 

pleadings or other papers in: (a) any investigation or administrative
 

proceeding conducted by the Commission; and (b) any civil suit or action 

,brought against AA and itself or to which AA or it has been 
 joined 

as a defendant or respondent, in connection with the investment advisory 

activities and related securties activities arsing out of or relating to any 

investment advisory services provided 
 to U.S. clients of AAAM or any 

related transaction. It wil also appoint a successor agent if it or any 

person discharges the agent, or the agent is unwillng or unable to accept 

service on its behalf at any time until six years have elapsed from the date 

of AAAM's last investment advisory activity. It wil not have access to or 

') provide advice to be used for or on behalf ofU~S. clients of AAAM until 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 19
 

documents effecting the appointment of an agent have been filed by it with 

the Commission in a form 
 that is reasonably acceptable to the Staff. 

C. Representations of ABN AMRO Bank
 

ABN AMRO Ban has authorized us to state that it represents that: 

1. any advice given to U.S. clients of AAM, by or on behalf of AAAM,
 

wil be given only through AAAM or through employees who AAAM 

deems to be "associated persons"; 

2. it wil provide to AA, and AAM's Form ADV wil 
 disclose, the 

names and other information required by Form ADV for all "associated 

II of AA as described in AAAM's representations;
 persons 

3. it wil keep books and records of 
 the type described in Rules 204-2(a)(1), 

(2), (4), (5) and (6) and 204-2(c) foran transactions. With respect to 

transactions involving AAM's U.S. clients and an related transactions, it 

win also retain records of 
 the type described in Rules 204-2(a)(3) and (7). 

An the books and records'described in the preceding sentence wil be 

maintained and preserved in an easily accessible place in the country 

where such records are kept for a period of not less than five years from 

the end of 
 the fiscal year during which the last entry was made on such 

book or record; 

4. it wil, to the'extent it may lawfny do so, promptly, upon receipt of an
 

, administrative subpoena, demand or a request for volurtary cooperation 

made during a routine or special inspection or otherwise; provide to the 

Commission or to the Staff of the Commission any and all of the books 

and records descnbed in Section C.3. at such place as the COmnission 

may designate in the U.S. or, at the Commission's option, in the countr 

where the records are kept. To the extent legally permissible, it wil1.not 

non-U.S. clients) contest the validity 

of administrative subpoenas for any document described in Section C.3. 

(except with respect to the identity of 


under any laws or regulations other thai those of 
 the U.S.; 

5. it wil maintain Sta Trading Records of the type required by Rule
 

204-2(a)(12) for an of 
 its "advisory representatives" with respect to U.S. 

clients of AAM and for all persons deemed to be "associated persons" by 

AAAM (for puroses of this Section C.5., such persons 
 are collectively 

referred to as "Covered Persons"), and it wil: (a) make a good faith effort 

to obtain from all Covered Persons written authorizations (each, an 

'''Authorization'') to provide their own Staff 
 Trading Records to the 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 20 " 

Commission or the Staff of the Commission upon receipt of an 

administrative subpoena, demand or a request for voluntary cooperation 

during a routine or special inspection or otherwise; and (b) wil make 

available, upon receipt of an administrative subpoena, demand or a request 

for voluntar cooperation during a routine or special inspection or 

otherwise of the Commission or the Staff of the Commission, copies of 

redacted Staff Trading Records (as specified below, IIRedacted Staff 

Trading Recordsll) of 
 those Covered Persons for whom a duly signed 

Authorization is not in effect. If the Commission or the Staff of the 

Commission determines that it requires access to the information that has 

not been included in Redacted Staff Trading Records, it wil assist the Commission and the 
 ,Staf of 
 the Cómmission, to the extent it may 

lawflly do so, in enlisting the assistance of 
 the appropriate Netherlands 

regulatory authorities in obtaining access to the information not included 

in such Redacted Staff 
 Trading Records, and wil respond to any lawfl
 

request for such infomiation that is made by such Netherlands regulatory authority. "Redacted Staff Trading Records" means a copy of any Covered Person's Staff Trading Records which does not include such 

Covered Person's name and other information which would identify such 

Covered Person. It wil maintain a key or coding system by which the 

identity of Covered Persons for whom Redacted Trading Records have 

been produced can be determined. 

6. it will make available in The Netherlands for questioning by the staff of
 

the Commission, to the extent it may lawflly do so, any and all personnel 

(other than clerical or ministerial personnel) identified by the Commission, 

the Staff of the Commssion, AAM or itself as having 
 access to or 

having been involved in providing advice,to be used for or on behalf of 

AA's U.S. clients or related transactions. It will authorize all 

personnel described in the preceding sentence to testify about all advice to 

be used for or on behalf of AA's U.S."clients and related transactions, 

(except with respect to the identity of 
 non-U.S. clients). To the extent 

legally permissible, it will not (except with respect to the identity of non: 

U.S. clients) contest the validity of administrative subpoenas for testimony 

or documents under any laws or regulations other than those of the U.S. It 

will condition the employment of all of its "advisory representatives" with 

respect to U.S. clients of AAM and for all persons deemed to be. 

"associated persons 
 II by AAAM to be newly employed by ABN AMRO

Ban, or to be newly assigned to positions that would require them to be 

II with respect to U.S. clients of deemed to be "advisory representatives 


AAAM or "associated persons" by AAAM, to the extent it may lawfully 

do so, on an undertaking to cooperate with Commission investigations, 
Jack W. Murphy, Esq. 

March 7, 1997 

Page 21
 

including appearing for testimony before, or other questioning by, the 

Commission or the Staff of the Commission at such place as the 

Commission may designate in the U.S. 

7. it will take all appropriate legal actions to compel compliance by all
 

personnel described in Section C.6. above with the undertakings referred 

in Section C.6., above, and will pursue all available legal remedies against 

any such person that fails to comply with such undertakings. 

8. it wil, to the extent that any books and records identified in this Section C.
 

are not kept in English, cause such books and records to be translated into 

English upon reasonable advance request by the Commission or its Staff; 

9. it wil subInit to the jursdiction of 
 U.S. federal courts for actions arising 

under the U.S. securities laws in connection with investment advisory 

activities for U.S. clients of AAM. It wil designate and appoint an 

agent for service of process upon whom may be served all process, 

pleadings or other papers in: (a) any investigation or administrative 

proceeding conducted by the Commission; and (b) any civil suit or action 

brought againstAA and itself or to which AAAM, or it has 
 been joined
 

as a defendant or respondent, in connection with the investment advisory , 

activities and related securities activities arsing out of or relating to any 

investment advisory services provided to U.S. clients of AA or any 

related transaction. Itwill also appoint a successor agent if it or any 

person discharges the agent, or the agent is unwillng or unable to accept 

service on its behalf at any time until six years have elapsed from the date 

of AA's last investment advisory activity. It wil not have accesS to or 

provide advice to be used for or on behalf of 
 U.S. clients of AAM until 

documents effecting the appointment of an agent have been fied by it with 

the Commission in a form that is reasonably acceptable to the Staff. 

VI. Conclusion.
 

In view of the Stas flexible approach towards extraterritorial application of 
 the 

Advisers Act, as expressed in the Staff 
 Report, Muray Johnstone Holdings Limited (pub. avaiL. 

Oct. 7, 1994), Kleinwort Benson Investment Management Ltd. (pub. avaiL. Dec. 15, 1993), 

Mercur Asset Management pIc (pub. avaiL. April 
 16, 1993) and Uniao de Bancos de Brasileiros 

S.A. (pub. avaiL. July 28, 1992) and in view of the undertakings described above, in particular 

that ABN AMRO Ban and the Participating Affiliates each undertkes to provide the 

Commission with access to the books and records described above, it is our view that ABN 

AMRO Ban, AAAM and each Paricipating Affiiate have created a workable approach that 

will enable AAAM to serve clients efficiently and effectively, and will also address the Stafrs 

regulatory concerns by providing the Staff of the Commission with reasonable access to the 
, Jack W. Murphy, Esq. 

March 7, 1997 

Page 22 

relevant aspects of ABN AMRO Bank's and AAAM's affiliate's businesses in accordance with * the representations set forth above. Therefore, it is our opinion that ABN AMRO Ban and the 

Participating Affiiates nee~ not register as investment advisers under the circumstances 

described in this letter. 

For the reasons set forth above, we respectfully request your concurence with our 

opinion that ABN AMRO Bank and the Paricipating Affliates are not required to register under 

the Advisers Act if AAAM proceeds as described above. In addition, we seek assurance that the 

Staff of the Commission will not recommend enforcement action against ABN AMRO Bank or 

any ofits unegistered (and otherwise non-U.S. regulated) affiliates if 
 they provide investment 

advisory services to their clients who are not residents of 
 the U.S.-solely in accordance with the 

securities laws of 
 The Netherlands (or other applicable foreign law) without also complying with 

the provisions of the Advisers Act, except as specified above, provided that such 
 activities do 'not. 

constitute conduct occurng within the terrtury of 
 the U.S. and do not have, and are not intended 

to have, substantial and foreseeable effects within the U.S. 

We would request the opportity to discuss these matters fuher with the Staff 
 in the event that the Division or the Commission proposes 
 to withhold all or any par of the noaction relief requested in ths letter. If you have any questions, or require any fuher' 

information, please contact the undersigned at (212) 756-2579. In accordance with Release No: 

3306269 (December 5, 1980) we have enclosed al original and seven'(7) copies of 
 this no-action 

letter request. ~m~ 

Edward G. Eisert 

We believe that the tenns of 
 the Agreement on Mutual Assistance between the U.S. and The Netherlands 

provides an additional 
 level of assurance to the Commission that its regulatory concerns are addressed.