Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Notices 36175

1SEC v. Jury Matt Hansen, et al., Final Judgment

of Permanent Injunction and Equitable Relief as to

The Toronto-Dominion Bank and the TorontoDominion Bank Trust Company, 89 Civ. 5242 (RO)

(S.D.N.Y. Sept. 12, 1989).

2SEC v. Jury Matt Hansen, et al., Stipulation &

Order, 89 Civic. 5242 (RO) (S.D.N.Y. filed July 29,

1996).

annualized cost burden of rule 12b–1 to

the fund industry is $60,000 (4 funds

requiring a proxy × $15,000 per proxy).

The collections of information

required by rule 12b–1 are necessary to

obtain the benefits of the rule. Notices

to the Commission will not be kept

confidential. An agency may not

conduct or sponsor, and a person is not

required to respond to, a collection of

information unless it displays a

currently valid control number.

Please direct general comments

regarding the information above to: (i)

Desk Officer for the Securities and

Exchange Commission, Office of

Information and Regulatory Affairs,

Office of Management and Budget, New

Executive Office Building, Washington,

DC 20503; and (ii) Michael Bartell,

Associate Executive Director, Office of

Information Technology, Securities and

Exchange Commission, 450 Fifth Street,

NW., Washington, DC 20549. Comments

must be submitted to OMB within 30

days of this notice.

Dated: May 30, 2000.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14245 Filed 6–06–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

24486; 812–12122]

The Toronto Dominion Bank et al.;

Temporary and Notice of Application

May 31, 2000.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Temporary order and notice of

application for permanent order under

section 9(c) of the Investment Company

Act of 1940 (the ‘‘Act’’).

SUMMARY: Applicants have received a

temporary order exempting them from

section 9(a) of the Act, with respect to

a securities-related injunction entered

into in 1989, until the Commission takes

final action on the application for a

permanent order or, if earlier, July 31,

2000. Applicants also have requested a

permanent order.

Applicants: The Toronto Dominion

Bank ‘‘TD Bank’’, TD Investment

Managewment Inc. (‘‘TDIM’’), TD

Securities (USA) Inc., TD Waterhouse

Asset Management, Inc. (‘‘WAM’’), TD

Waterhouse Investor Services, Inc., and

CT Investment Counsel (U.S.), Inc.

Filing Date: The application was filed

on May 31, 2000.

Hearing or Notification of Hearing:

Interested persons may request a

hearing by writing to the Commission’s

Secretary and serving applicants with a

copy of the request, personally or by

mail. Hearing requests should be

received by the Commission by 5:30

p.m. on June 26, 2000 and should be

accompanied by proof of service on

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 Commission’s Secretary.

An order granting the application will

be issued unless the Commission orders

a hearing or extends the temporary

exemption.

ADDRESSES:

Secretary, Securities and Exchange

Commission, 450 Fifth Street NW,

Washington, DC 20549–0609

TD Bank, P.O. Box 1, Toronto Dominion

Centre, Toronto, Ontario, Canada

M5K 1A2

TDIM, 10th Floor, TD Tower, 55 King

Street West, Toronto, Ontario, Canada

M5K 1A2:

TD Securities (USA) Inc., 31 West 52nd

Street, New York, NY 10019;

WAM and TD Waterhouse Investor

Services, Inc., 100 Wall Street, New

York, NY 10005; and

CT Investment Counsel (U.S.), Inc., 110

Yong Street, 10th Floor, Toronto,

Ontario, Canada M5C 1T4.

FOR FURTHER INFORMATION CONTACT:

Nadya B. Roytbalt, Assistant Director, at

(202) 942–0610, Division of Investment

Management, Office of Investment

Company Regulation.

SUPPLEMENTARY INFORMATION: The

following is a temporary order and a

summary of the application. The

complete application is available for a

fee from the Commission’s Public

Reference Branch, 450 Fifth Street NW,

Washington, DC 20549–0102; tel: (202)

942–8090.

Applicant’s Representations

1. TD Bank is the fifth largest

chartered bank in Canada. Directly and

through its subsidiaries, TD Bank

provides a range of financial services to

individuals, corporate and commercial

enterprises, financial institutions and

governments.

2. WAM, a Delaware corporation, is

an indirect wholly-owned subsidiary of

TD Bank and is an investment adviser

registered under the Investment

Advisers Act of 1940 (‘‘Advisers Act’’).

WAM was acquired by TD Bank in 1996

when TD Bank purchased its parent

company, Waterhouse Investor Services,

Inc. (‘‘Waterhouse’’). WAM serves as

investment adviser to three open-end

management investment companies

registered under the Act, consisting of

nine portfolios (‘‘WAM Funds’’), with

aggregate assets of approximately $12

billion. TDIM, a Canadian corporation

and a wholly-owned subsidiary of TD

Bank, was formed in 1999 and is

registered under the Advisers Act. TDIM

currently does not provide any services

to registered investment companies

(‘‘funds’’).

3. On September 12, 1989, the U.S.

District Court for the Southern District

of New York (‘‘District Court’’), entered

a Final Judgment of Permanent

Injunction and Other Equitable Relief in

a matter brought by the Commission

(‘‘1989 Injunction’’).1 The Commission

alleged that, in connection with certain

so-called ‘‘free riding’’ transactions by

certain securities clearance customers,

TD Bank violated the margin lending

requirements of Regulation U

promulgated by the Board of Governors

of the Federal Reserve Board, under

section 7(d) of the Securities Exchange

Act of 1934. In consenting to the 1989

Injunction, TD Bank undertook, among

other things, to implement and maintain

certain policies, procedures and training

programs designed to detect and prevent

future violations of the margin

regulations. Under the terms of the 1989

Injunction, TD Bank also hired an

independent outside consultant to

conduct an audit of TD Bank’s

compliance policies and procedures and

to report its findings to the Commission.

4. Applicants state that, in 1996, in

connection with the acquisition by TD

Bank of Waterhouse, at the request of

TD Bank, the Commission supported a

motion by TD Bank to the District Court

for the issuance of an order modifying

the 1989 Induction to enable

Waterhouse to continue to provide

securities clearance services. The

modification to the 1989 Injunction was

issued in 1996.2

5. Applicants also state that, at the

time of TD Bank’s acquisition of

Waterhouse in 1996, WAM already was

registered under the Advisers Act.

Applicants further state that, following

TD Bank’s acquisition of Waterhouse,

on November 27, 1996, WAM filed an

amended Form ADV that disclosed the

1989 Injunction. Applicants also state

that TDIM disclosed the 1989 Injunction

36176 Federal Register / Vol. 65, No. 110 / Wednesday, June 7, 2000 / Notices

on its initial Form ADV filed in

December 1999.

6. Applicants state that they did not

seek an order under section 9(c) around

the time of the 1989 Injunction because

TD Bank did not begin to engage in any

fund-related activities until 1996

following the acquisition of Waterhouse.

Applicants also state that they did not

become aware of the section 9(a)

violation until late December 1999.

7. Since the 1989 Injunction, several

of TD Bank’s subsidiaries—but not TD

Bank, WAM or TDIM—have been

involved in several administrative

proceedings with state securities law

administrators and self-regulatory

organizations. Applicants state that

none of these administrative

proceedings, all of which are listed in

the application, involved investment

advisory or fund-related activities.

Applicants’ Legal Analysis

1. Section 9(a) of the Act, in relevant

part, prohibits a person who has been

enjoined from engaging in or continuing

any conduct or practice in connection

with the purchase or sale of a security

from acting, among other things, as a

principal underwriter or investment

adviser for a registered investment

company. Applicants state that, as a

result of the 1989 Injunction, TD Bank

and its affiliates may be prohibited by

section 9(a) from serving as an

investment adviser to funds.

2. Section 9(c) of the Act provides that

the Commission shall grant an

application for an exemption from the

disqualification provisions of section

9(a) if it is established that these

provisions, as applied to the applicant,

are unduly or disproportionately severe

or that the conduct of applicant has

been such as not to make it against the

public interest or the protection of

investors to grant the application.

3. Applicants seek temporary and

permanent orders under section 9(c)

with respect to the 1989 Injunction to

permit TD Bank and its affiliates to

serve an investment advisers to funds,

including the WAM Funds, and in the

future to provide other services to funds

that might be prohibited by section 9(a).

As noted above, applicants state that

they did not seek an order under section

9(c) around the time of the 1989

Injunction because TD Bank did not

begin to engage in any fund-related

activities until 1996. Applicants also

state that they did not become aware of

the section 9(a) violation until late

December 1999.

4. TD Bank has undertaken to develop

procedures designed to prevent

violations of section 9(a) by it and its

affiliated persons. TD Bank’s general

counsel also has attested that he has

reviewed TD Bank’s compliance

policies and procedures relating to

compliance with section 9(a); that he

reasonably believes that the policies and

procedures have been fully

implemented; and that the policies and

procedures are designed reasonably to

prevent violations of section 9(a) by TD

bank and its affiliated persons.

5. Applicants state that the

prohibitions of section 9(a) as applied to

them would be unduly and

disproportionately severe. Applicants

assert that WAM’s inability to act as an

investment adviser to the WAM Funds

would result in the WAM Funds and

their shareholders facing potentially

severe hardships. Applicants state that,

at a special meeting of the boards of

directors of the WAM Funds on

February 10, 2000, the directors were

apprised, among other things, of the

circumstances surrounding the 1989

Injunction and the directors’ fiduciary

responsibilities in these circumstances.

The boards found that the alleged

misconduct underlying the 1989

Injunction does not adversely affect

WAM’s continuing ability to provide

investment advisory services to the

Funds or diminish the value of the

services already provided. The boards

unanimously voted to continue the

Funds’ current investment advisory

contracts with WAM.

6. Applicants assert that if WAM were

prohibited from providing services to

the WAM Funds, the effect on WAM’s

business and employees would be

severe. Applicants state that WAM has

committed substantial resources over

the past five years to establishing

expertise in advising registered

investment companies.

7. Applicants also assert that their

conduct has been such as not to make

it against the public interest or the

protection of investors to grant the

exemption from section 9(a). Applicants

note that over 10 years have passed

since the 1989 Injunction. Applicants

also note that the 1989 Injunction did

not in any way involve fund-related

activities. Applicants state that all of the

employees, including senior

management, involved in the matters

underlying the 1989 Injunction are no

longer employed at TB Bank or any of

its affiliates. Applicants further state

that since the 1989 Injunction, neither

TD Bank nor any affiliated person of TD

Bank has engaged in conduct that would

result in disqualification under section

9(a) of the Act.

Applicants’ Condition

Applicants agree that the requested

order is subject to the following

condition:

Any temporary exemption granted

pursuant to the application shall be

without prejudice to, and shall not limit

the Commission’s rights in any manner

with respect to, any Commission

investigation of, or administrative

proceedings involving or against,

applicants, including without

limitation, the consideration by the

Commission of a permanent exemption

from section 9(a) of the Act requested

pursuant to the application or the

revocation or removal of any temporary

exemptions granted under the Act in

connection with the application.

Temporary Order

The Division has considered the

matter and, without necessarily agreeing

with all of the facts represented or all of

the arguments asserted by applicants,

finds, in accordance with 17 CFR

200.30–5(a)(7), that it appears that: (i)

The prohibitions of section 9(a), as

applied to applicants, may be unduly or

disproportionately severe; (ii)

applicants’ conduct has been such as

not make it against the public interest or

the protection of investors to grant the

temporary exemption; and (iii) granting

the temporary exemption would protect

the interests of the investment

companies served by applicants by

allowing time for the orderly

consideration of the application for

permanent relief.

Accordingly, It is hereby ordered,

under section 9(c), that applicants are

granted a temporary exemption from the

provisions of section 9(a), effective

forthwith, solely with respect to the

1989 Injunction, subject to the condition

in the application, until the Commission

takes final action on the application for

a permanent order or, if earlier, July 31,

2000.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–14246 Filed 6–6–00 8:45 am]

BILLING CODE 8010–01–M