Federal Register / Vol. 65, No. 93 / Friday, May 12, 2000 / Notices 30651

6The economic interest is derived solely from

approximately 9.9% of the voting stock and shares

of nonvoting convertible preferred stock of ONEOK.

The staff of the Commission issued a no-action

letter in 1997 on the proposition that ONEOK is not

a subsidiary of WRI and that WRI does not control

ONEOK. (See Western Resources, Inc., SEC NoAction Letter (Nov. 24, 1997).

Conectiv to finance its ongoing business

needs through the Authorization Period.

Any debt will bear interest at a rate

designed to approximate Conectiv’s cost

of money and will mature in 30 years

or less. Conectiv also requests

authorization for CEH to participate in

the Conectiv system money pool

(‘‘Money Pool’’). The total debt and

equity proposed to be issued by CEH,

either directly to Conectiv or through

the Money Pool, will not exceed $750

million, less the amount of any debt

issued by a CEH subsidiary directly to

Conectiv, as described below.

In addition, ACE–REIT, CAG and CDG

request authority to issue equity or longor short-term debt securities to CEH or

Conectiv through the Authorization

Period. Any debt issued will mature in

30 years or less and will bear interest at

a rate designed to approximate the

lender’s cost of money. Also, Applicants

request authority for CAG, CDG, and

ACE–REIT to participate in the Money

Pool. Applicants propose that the total

amount of debt and equity securities

issued, either directly to Conectiv or

through the Money Pool, by CDG will

not exceed $150 million and by ACE–

REIT and CAG will not exceed $100

million each.

Like Kind Exchange

Applicants anticipate that facilities

having approximately 127 MW of net

generating capacity owned by Delmarva

to be transferred to CDG, will be subject

to an obligation to transfer these assets

to a nonassociate in a like-kind

exchange (‘‘To Be Transferred Assets’’).

First, Conectiv Energy, Inc. (‘‘CEI’’),

which owns certain generating assets

currently under construction (‘‘New Hay

Road Facilities’’), would be transferred

to a third party intermediary. Then, the

To Be Transferred Assets would be sold

to the nonassociate in exchange for the

acquisition by CDG of either: (a) the

New Hay Road Facilities at a time when

the investment in the New Hay Road

Facilities equals or approximates the

value of the To Be Transferred Assets;

or (b) other suitable generation assets

(either, ‘‘To Be Acquired Assets’’). If

CDG is not an EWG at the time of the

acquisition of the To Be Acquired

Assets, Applicants request authority to

acquire those assets as utility assets.

Western Resources, Inc. 70–9665

Western Resources, Inc. (‘‘WRI’’), 818

Kansas Avenue, Topeka, Kansas 66612,

a Kansas utility company and a public

utility holding company claiming an

exemption under section 3(a) by rule 2

from all provisions of the Act, except

section 9(a)(2), has filed an application

under sections 9(a)(2) and 10 of the Act

in connection with the acquisition of a

utility subsidiary.

WRI conducts utility operations

through its KPL division and its

subsidiary, Kansas Gas and Electric

Company (‘‘KGE’’), which together

provided approximately 628,000

customers in 471 communities in the

state of Kansas with electricity. In

addition, WRI has a 45% economic

interest in ONEOK, Inc., an Oklahoma

corporation that distributes natural gas

to more than 1.4 million customers with

natural gas.6 Through various other

subsidiaries, WRI is engaged in owning

interests in power plants and projects

and providing monitored security alarm

and home paging services. For the year

ending December 31, 1999, WRI

reported consolidated revenues of

approximately $2.0 million and net

income of $12.5 million and had $8.0

billion in consolidated assets at the end

of that period.

One nonutility subsidiary company,

Westar Generating II Inc. (‘‘WG’’), is

engaged in constructing two General

Electric combustion turbine generators

(‘‘CTs’’). The CTs are expected to be

rated for a capacity of approximately 74

MW of net dependable capacity at peak

conditions and are expected to become

commercially operational at a KGE

generating facility on June 1, 2000. Once

the construction is complete and

operation begins, WG will qualify as a

public utility under section 2(a)(3) of

the Act. Accordingly, WRI has requested

authority to acquire WG as a public

utility company.

WRI’s costs associated with the

acquisition of WG will be equal to that

of the equipment and construction costs

incurred by WG, which is expected to

be approximately $63 million. The CTs

will be connected to KGE at its

generating facility directly through a

new buss to be tied to a grid located at

the facility. Initially, WG intends to sell

all capacity and energy generated by the

CTs to WRI at a cost-based rate under a

power purchase agreement between

WRI and WG.

In addition, WRI intends to claim an

exemption as an intrastate holding

company under section 3(a) of the Act

and rule 2 with regards to the

ownership of WR as a public utility

company.

For the Commission by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–11961 Filed 5–11–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IC–2443; File No. 812–11858]

Valley Forge Life Insurance Company,

et al.

May 5, 2000.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of Application for an

Order under Section 6(c) of the

Investment Company Act of 1940 (the

‘‘1940 Act’’ or ‘‘Act’’( granting

exemptions from the provisions of

Sections 2(a)(32), 22(c), and 27(i)(2)(A)

of the 1940 Act and Rule 22c–1

thereunder, to permit the recapture of

immediate interest payments applied to

purchase payments made under certain

deferred variable annuity contracts.

SUMMARY OF APPLICATION: Applicants

seek an order under Section 6(c) of the

1940 Act to the extent necessary to

permit, under specified circumstances,

the recapture of immediate interest

payments applied to purchase payments

made under deferred variable annuity

contracts (the ‘‘Contracts’’) that Valley

Forge Life Insurance Company (‘‘Valley

Forge’’) will issue through Valley Forge

Life Insurance Company Variable

Annuity Separate Account (‘‘VFL

Separate Account’’), as well as other

contracts that Valley Forge may issue in

the future through VFL Separate

Account or any other future separate

accounts of Valley Forge ‘‘Future

Accounts’’) that are substantially similar

in all material respects to the Contracts

(the ‘‘Future Contracts’’). Applicants

also request that the order being sought

extend to any other National

Association of Securities Dealers, Inc.

(‘‘NASD’’) member broker-dealer

controlling or controlled by, or under

common control with, Valley Forge,

whether existing or created in the

future, that serves as a distributor or

principal underwriter of the Contracts

or Future Contracts offered through VFL

Separate Account or any Future

Accounts (‘‘Valley Forge BrokerDealers(s)’’).

APPLICANTS: Valley Forge Life, VFL

Separate Account, the Future Accounts

and CNA Investor Services, Inc.

(collectively, ‘‘Applicants’’).

30652 Federal Register / Vol. 65, No. 93 / Friday, May 12, 2000 / Notices

FILING DATE: The application was filed

on November 17, 1999 and amended on

April 3, 2000.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing on the application by writing to

the SEC’s Secretary and serving

Applicants with a copy of the request,

in person or by mail. Hearing requests

must be received by the SEC by 5:30

p.m. on May 30, 2000, and should be

accompanied by proof of service on the

Applicants, in the form of an affidavit

or, for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons who wish to be notified of a

hearing may request notification by

writing to the Secretary of the SEC.

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 Fifth Street,

N.W., Washington, D.C. 20549–0609.

Applicants, c/o Jonathan Kantor, Esq.,

Valley Forge Life Insurance Company,

CNA Plaza, 43 South, Chicago, Illinois

60685.

FOR FURTHER INFORMATION CONTACT:

Joyce M. Pickholz, Senior Counsel, or

Keith E. Carpenter, Branch Chief, Office

of Insurance Products, Division of

Investment Management, at (202) 942–

0670.

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application is

available for a free from the SEC’s

Public Reference Branch, 450 Fifth

Street, N.W., Washington, D.C. 20549–

0102 (tel. (202) 942–8090).

Applicants’ Representations

1. Valley Forge is a wholly-owned

subsidiary of Continental Assurance

Company. Continental Assurance

Company is a wholly-owned subsidiary

for Continental Casualty Company,

which is wholly-owned by CNA

Financial Corporation. Loews

Corporation owns approximately 86%

of the outstanding common stock of

CNA Financial Corporation. VFL

Separate Account was established on

February 12, 1996 by resolutions of the

Board of Directors of Valley Forge.

Valley Forge serves as depositor of VFL

Separate Account. Valley Forge may in

the future establish one or more Future

Accounts for which it will serve as

depositor.

2. VFL Separate Account is a

segregated asset account of Valley Forge.

VFL Separate Account is registered with

the Commission as a unit investment

trust under the 1940 Act. VFL Separate

Account filed a Form N–8A Notification

of Registration under the 1940 Act on

February 20, 1996.

3. VFL Separate Account filed a Form

N–4 Registration Statement on August

18, 1999 under the Securities Act of

1933 (‘‘1993 Act’’) relating to the

Contracts. Valley Forge may in the

future issue Future Contracts through

VFL Separate Account or through

Future Accounts. That portion of the

assets of VFL Separate Account that is

equal to the reserves and other Contract

liabilities with respect to VFL Separate

Account is not chargeable with

liabilities arising out of any other

business of Valley Forge. Any income,

gains or losses, realized or unrealized,

from assets allocated to VFL Separate

Account is, in accordance with VFL

Separate Account’s Contracts, credited

to or charged against VFL Separate

Account, without regard to other

income, gains or losses of Valley Forge.

4. CNA Investor Services, Inc.

(‘‘CNAISI’’) is an affiliate of Valley

Forge and will be the principal

underwriter of VFL Separate Account

and distributor of the Contracts funded

through VFL Separate Account (the

‘‘VFL Separate Account Contracts’’).

CNAISI is registered with the

Commission as a broker-dealer under

the Securities Exchange Act of 1934 (the

‘‘1934 Act’’) and is a member of the

NASD. The VFL Separate Account

Contracts will be offered through

unaffiliated broker-dealers who have

entered into selling agreements with

CNAISI. CNAISI, or any successor

entity, may act as principal underwriter

for any Future Accounts and distributor

for any Future Contracts issued by

Valley Forge.

5. The Contract is a part of Valley

Forge’s line of annuity products. The

Contract is an individual deferred

variable and fixed annuity contract. The

Contract may be issued under a

qualified plan, specially sponsored

program or an individual retirement

annuity or as a non-tax qualified

contract. Purchase payments may be

made at any time during the

accumulation phase. The minimum

initial purchase payment is $10,000 for

non-tax qualified contracts and $2,000

for a qualified plan contract. Additional

purchase payments of at least $1,000

can be made ($100 under the electronic

fund transfer program). Unless Valley

Forge agrees otherwise, the maximum

total purchase payments it accepts is

$1,000,000.

6. The Contracts permit purchase

payments to be allocated to fixed

accounts of Valley Forge (‘‘Fixed

Accounts’’). The Fixed Accounts are not

registered with the Commission.

7. VFL Separate Account currently is

divided into 23 sub-accounts, each of

which will be available under the VFL

Separate Account Contracts. The subaccounts are referred to as ‘‘Investment

Options’’. Each Investment Option will

invest in shares of a corresponding

portfolio of certain underlying

investment companies (‘‘Funds’’). The

Investment Options and the Fixed

Accounts will comprise the initial

investment choices under the Contract.

The Funds are open-end, management

investment companies registered under

the 1940 Act, whose shares are

registered under the 1933 Act. Valley

Forge, at a later date, may determine to

create additional Investment Options of

VFL Separate Account to invest

additional underlying portfolios or other

investments as may now or in the future

be available. Similarly, Investment

Option(s) of VFL Separate Account may

be combined or eliminated from time to

time.

8. The Contract provides for

withdrawal options, annuity payment

options, as well as transfer privileges

among Investment Options, dollar cost

averaging, automatic transfer option,

death benefits and other features. The

Contract has charges consisting of: (i) an

annual asset-based product expense

charge of 1.40% assessed against the net

assets of each sub-account; (ii) a

withdrawal charge as a percentage of

purchase payments which starts at 7%

in the first year, and declines to 0%

after 8 years with a 10% free withdrawal

amount permitted under certain

circumstances; (iii) a $30 contract

maintenance charge for Contracts with

Contract value of less than $50,000

during the accumulation phase; and (iv)

a transfer fee of $25 for each transfer in

excess of 12 in a Contract year during

the accumulation period. The Funds

also incur management fees and

operating expenses which vary

depending upon with Funds are

selected.

9. Each time Valley Forge receives a

purchase payment from an owner

during the first Contract year, Valley

Forge will add an additional amount to

the Contract (‘‘Immediate Interest

Payment’’). The Immediate Interest

Payment will equal 3% of the purchase

payment. Valley Forge will fund the

Immediate Interest Payment from its

general account assets. Valley Forge will

allocate the Immediate Interest Payment

to the Fixed Accounts and/or

Investment Options in the same

proportion as the purchase payment.

Valley Forge will recapture Immediate

Interest Payments only under the

following circumstance: if the Contract

owner makes a withdrawal anytime

Federal Register / Vol. 65, No. 93 / Friday, May 12, 2000 / Notices 30653

1When an owner requests a withdrawal any time

during the first contract year, Valley Forge will

deduct the amount of the Immediate Interest

Payment in proportion to the amount of the

purchase payment withdrawn.

Example:

Purchase Payment: $100,000

Immediate Interest Payment: $3,000

Subsequent 1st Year Withdrawal: $10,000

Immediate Interest Payment Recaptured: $300

The withdrawal charge is assessed on the amount

of the purchase payment withdrawn ($10,000). The

resulting withdrawal charge is 7% of $10,000 which

reduces the amount available to $9,300. VFL would

then deduct the proportionate amount of the

Immediate Interest Payment to be recaptured ($300)

from the amount to be disbursed to the owner.

before the first day of the second

Contract year, including if the Owner

returns the Contract for a refund during

the free look period (except for

withdrawals pursuant to the systematic

withdrawal program not subject to the

withdrawal charge).

10. Applicants seek exemption

pursuant to Section 6(c) of the 1940 Act

from Sections (2)(a)(32), 22(c) and

27(i)(2)(A) of the 1940 Act and Rule

22c–1 thereunder to the extent

necessary to permit Valley Forge to

recapture an amount equal to any

Immediate Interest Payment in the event

that a Contract owner makes a

withdrawal of Contract value, including

the exercise of the free-look right, before

the first day of the second Contract year

(except for withdrawals pursuant to the

systematic withdrawal program not

subject to the withdrawal charge). The

dollar amount of Immediate Interest

Payments will be deducted pro-rata

from the amount withdrawn.1 Any

earnings that resulted from the

Immediate Interest Payments will not be

deducted. After the First Contract year,

the Immediate Interest Payment will

vest and can be withdrawn at any time.

Valley Forge reserves the right to limit

Immediate Interest Payments in the

future.

Applicants’ Legal Analysis

1. Section 6(c) of the 1940 Act

authorizes the Commission to exempt

any person, security or transaction, or

any class or classes of persons,

securities or transactions from the

provisions of the 1940 Act and the rules

promulgated thereunder, if and to the

extent that such exemption is necessary

or appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the 1940 Act. Applicants request that

the Commission, pursuant to Section

6(c) of the 1940 Act, grant the

exemptions summarized above with

respect to the Contracts and any Future

Contracts funded by VFL Separate

Account or Future Accounts, that are

issued by Valley Force and

underwritten or distributed by CNAISI

or Valley Forge Broker-Dealers.

Applicants undertake that Future

Contracts funded by VFL Separate

Account or any Future Accounts will be

substantially similar in all material

respects to the Contracts. Applicants

believe that the requested exemptions

are appropriate in the public interest

and consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the 1940 Act.

2. Applicants represent that it is not

administratively feasible to track the

Immediate Interest Payment amounts in

VFL Separate Account after the

Immediate Interest Payment is applied.

Accordingly, the asset-based charges

applicable to VFL Separate Account will

be assessed against the entire amounts

held in VFL Separate Account,

including the Immediate Interest

Payment amount, during the first

Contract year. As a result, during such

period, the aggregate asset-based charges

assessed against a Contract owner’s

Contract value will be higher than those

that would be charged if the Contract

owner’s Contract value did not include

the Immediate Interest Payment.

3. Subsection (i) of Section 27 of the

1940 Act provides that Section 27 does

not apply to any registered separate

account funding variable insurance

contracts, or to the sponsoring insurance

company and principal underwriter of

such account, except as provided in

paragraph (2) of the subsection.

Paragraph (2) provides that it shall be

unlawful for any registered separate

account funding variable insurance

contracts or a sponsoring insurance

company of such account to sell a

contract funded by the registered

separate account unless, among other

things, such contract is a redeemable

security. Section 2(a)(32) of the 1940

defines ‘‘redeemable security’’ as any

security, other than short-term paper,

under the terms of which the holder,

upon presentation to the issuer, is

entitled to receive approximately his

proportionate share of the issuer’s

current net assets, or the cash equivalent

thereof.

4. Applicants submit that the

Immediate Interest Payment recapture

provisions of the Contract would not

deprive a Contract owner of his or her

proportionate share of the issuer’s

current net assets. Applicants state that

a Contract owner’s interest in the

amount of the Immediate Interest

Payment allocated to his or her Contract

value upon receipt of purchase

payments in the first Contract year are

not vested until the first day of the

second Contract year. Until or unless

the amount of any Immediate Interest

Payment is vested, Applicants submit

that Valley Forge retains the right and

interest in the Immediate Interest

Payment amount, although not in the

earnings attributable to that moment.

Applicants argue that when Valley

Forge recaptures any Immediate Interest

Payment it is simply retrieving its own

assets, and because a Contract owner’s

interest in the Immediate Interest

Payment is not vested, the Contract

owner has not been deprived of a

proportionate share of VFL Separate

Account assets, i.e., a share of VFL

Separate Account’s assets proportionate

to the Contract owner’s Contract value

(including the Immediate Interest

Payment).

5. In addition, with respect to

Immediate Interest Payment recapture

upon the exercise of the free-look

privilege, Applicants state that it would

be patently unfair to allow a Contract

owner exercising that privilege to retain

the Immediate Interest Payment amount

under a Contract that has been returned

for a refund after a period of only a few

days. Applicants state that if Valley

Forge could not recapture the

Immediate Interest Payment,

individuals could purchase a Contract

with no intention of retaining it, and

simply return it for a quick profit.

6. Furthermore, Applicants state that

the recapture of the Immediate Interest

Payment, in the event of a withdrawal

before the first day of the second

Contract year, is designed to protect

Valley Forge against Contract owners

making large purchase payments in the

first Contract year without affording it

sufficient time to recover the cost of the

Immediate Interest Payment, to its

financial detriment. Again, the amounts

recaptured equal the Immediate Interest

Payment provided by Valley Forge from

its own general account assets and any

gain would remain as part of the

Contract owner’s Contract value.

7. Applicants represent that the

Immediate Interest Payment will be

attractive to and in the interest of

investors because it will permit Contract

owners to put 103% of their purchase

payments to work for them in the

selected Investment Options and Fixed

Accounts. Also, any earnings

attributable to the Immediate Interest

Payment will be retained by the

Contract owner, and the principal

30654 Federal Register / Vol. 65, No. 93 / Friday, May 12, 2000 / Notices

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 42178

(Nov. 24, 1999), 64 FR 68136.

amount of the Immediate Interest

Payment will be retained if a Contract

owner does not make a withdrawal of

Contract value (including the exercise of

the free-look right) before the first day

of the second Contract year.

8. Applicants state that Valley Forge’s

right to recapture Immediate Interest

Payments applied to purchase payments

in the event of a withdrawal before the

first day of the second Contract year, is

designed to protect Valley Forge against

Contract owners making large purchase

payments in the first Contract year

without affording it sufficient time to

cover the cost of the Immediate Interest

Payment, to its financial detriment.

With respect to funds paid upon the

return of Contracts within the free-look

period, the amount payable by Valley

Forge must be reduced by the allocated

Immediate Interest Payment. Otherwise,

Applicants state that purchasers could

apply for Contracts for the sole purpose

of exercising the free-look provision and

making a quick profit.

9. Applicants submit that the

provisions for recapture of any

applicable Immediate Interest Payment

under the Contracts or any Future

Contract as set forth in this Application

will not violate Sections 2(a)(32) and

27(i)(2)(A) of the 1940 Act.

Nevertheless, to avoid any uncertainties,

Applicants request an exemption from

those Sections, to the extent deemed

necessary, to permit the recapture of any

Immediate Interest Payment under the

circumstances described herein with

respect to the Contracts and any Future

Contracts, without the loss of the relief

from Section 27 provided by Section

27(i).

10. Section 22(c) of the 1940 Act

authorizes the Commission to make

rules and regulations applicable to

registered investment companies and to

principal underwriters of, and dealers

in, the redeemable securities of any

registered investment company, to

accomplish the same purposes as

contemplated by Section 22(a). Rule

22c–1 thereunder prohibits a registered

investment company issuing any

redeemable security, a person

designated in such issuer’s prospectus

as authorized to consummate

transactions in any such security, and a

principal underwriter of, or dealer in,

such security, from selling, redeeming,

or repurchasing any such security

except at a price based on the current

net asset value of such security which

is next computed after receipt of a

tender of such security for redemption

or of an order to purchase or sell such

security.

11. Arguably, Valley Forge’s recapture

of the Immediate Interest Payment

might be viewed as resulting in the

redemption of redeemable securities for

a price other than one based on the

current net asset value of VFL Separate

Account. Applicants contend, however,

that the recapture of the Immediate

Interest Payment is not violative of

Section 22(c) and Rule 22c–1.

Applicants argue that the recapture does

not involve either of the evils that Rule

22c–1 was intended to eliminate or

reduce, as far as reasonably practicable,

namely: (1) the dilution of the value of

outstanding redeemable securities of

registered investment companies

through their sale at a price below net

asset value or their redemption or

repurchase at a price above it, and (ii)

other unfair results including

speculative trading practices. To effect a

recapture of an Immediate Interest

Payment, Valley Forge will redeem

interests in a Contract owner’s Contract

value at a price determined on the basis

of current net asset value of VFL

Separate Account. The amount

recaptured will equal the amount of the

Immediate Interest Payment that Valley

Forge paid out of its general account

assets. Although Contract owners will

be entitled to retain any investment gain

attributable to the Immediate Interest

Payment, the amount of such gain will

be determined on the basis of the

current net asset value of VFL Separate

Account. Thus, no dilution will occur

upon the recapture of the Immediate

Interest Payment. Applicants also

submit that the second harm that Rule

22c–1 was designed to address, namely,

speculative trading practices calculated

to take advantage of backward pricing,

will not occur as a result of the

recapture of the Immediate Interest

Payment. However, to avoid any

uncertainty as to full compliance with

the Act, Applicants request an

exemption from the provisions of

Section 22(c) and Rule 22c–1 to the

extent deemed necessary to permit them

to recapture the Immediate Interest

Payment under the Contracts and Future

Contracts.

Conclusion

Applicants submit that their request

for an order is appropriate in the public

interest. Applicants state that such an

order would promote competitiveness

in the variable annuity market by

eliminating the need to file redundant

exemptive applications, thereby

reducing administrative expenses and

maximizing the efficient use of

Applicants’ resources. Applicants argue

that investors would not receive any

benefit or additional protection by

requiring Applicants to repeatedly seek

exemptive relief that would present no

issue under the Act that has not already

been addressed in the Application

described herein. Applicants submit

that having Applicants file additional

applications would impair Applicants’

ability effectively to take advantage of

business opportunities as they arise.

Further, Applicants state that if

Applicants were required repeatedly to

seek exemptive relief with respect to the

same issues addressed in the

application described herein, investors

would not receive any benefit or

additional protection thereby.

Applicants submit, based on the

grounds summarized above, that their

exemptive request meets the standards

set out in Section 6(c) of the Act,

namely, that the exemptions requested

are necessary or appropriate in the

public interest and consistent with the

protection of investors and the purposes

fairly intended by the policy and

provisions of the Act, and that,

therefore, the Commission should grant

the requested order.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–11960 Filed 5–11–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42759; File No. SR–PCX–

99–39]

Self-Regulatory Organizations; Order

Approving Proposed Rule Change and

Amendment Nos. 1 and 2 and Notice of

Filing and Order Granting Accelerated

Approval to Amendment Nos. 3, 4, 5,

6 and 7 to the Proposed Rule Change

by the Pacific Exchange, Inc. Creating

PCX Equities, Inc.

May 5, 2000.

I. Introduction

On October 7, 1999, the Pacific

Exchange, Inc. (‘‘PCX’’ or ‘‘Exchange’’),

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’),

pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934 (‘‘Act’’

or ‘‘Exchange Act’’),1 and Rule 19b–4

thereunder,2 a proposed rule change to

create PCX Equities, Inc. (‘‘PCX

Equities’’). The proposed rule change

was published for comment in the

Federal Register on December 6, 1999. 3