Federal Register / Vol. 65, No. 14 / Friday, January 21, 2000 / Notices 3509

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

2Letter from Sal Ricca, President and Chief

Operating Officer, GSCC (December 30, 1999).

3 15 U.S.C. 78q–1(b) and 78s(a).

4 17 CFR 240.17Ab2–1.

registered under the Act, if the SEC

deems it necessary or appropriate in the

public interest or for the protection of

investors.

3. CityFed acknowledges that it may

be deemed to fall within one of the Act’s

definitions of an investment company.

Accordingly, CityFed requests an

exemption under sections 6(c) and 6(e)

from all provisions of the Act, subject to

certain exceptions described below.

CityFed requests an exemption until the

earlier of one year from the date of the

requested order or such time as it would

no longer be required to register as an

investment company under the Act.

4. In determining whether to grant an

exemption for a transient investment

company, the SEC considers such

factors as whether the failure of the

company to become primarily engaged

in a non-investment business or

excepted business or liquidate within

one year was due to factors beyond its

control; whether the company’s officers

and employees during that period tried,

in good faith, to effect the company’s

investment of its assets in a noninvestment business or excepted

business or to cause the liquidation of

the company; and whether the company

invested in securities solely to preserve

the value of its assets. CityFed believes

that it meets these criteria.

5. CityFed believes that its failure to

become primarily engaged in a noninvestment business by February 12,

2000, is due to factors beyond its

control. CityFed asserts that the amount

required to resolve its currently

outstanding claims cannot be reasonably

estimated and could exceed its assets. If

CityFed is unable to resolve these

claims successfully, it states that it may

seek protection from the bankruptcy

courts or liquidate. CityFed also asserts

that it probably will not be in a position

to determine what course of action to

pursue until most, if not all, of its

contingent liabilities are resolved.

Additionally, CityFed states that its

circumstances are unlikely to change

over the requested one year period in

light of the number of claims currently

pending against it and because of the

existence of the Escrow Agreement.

Since the filing of its initial application

for exemptive relief under sections 6(c)

and 6(e) on October 19, 1990, CityFed

has invested in money market

instruments and money market mutual

funds solely to preserve the value of its

assets.

6. During the term of the proposed

exemption, CityFed states that it will

comply with sections 9, 17(a) and (d)

(subject to the exception below and the

modifications described in condition 3,

below), 17(e), 17(f), 36 through 45, and

47 through 51 of the Act and the rules

thereunder. With respect to section

17(d), CityFed represents that it

established a stock option plan when it

was an operating company. Although

the plan has been terminated, certain

former employees of City Federal have

existing rights under the plan. CityFed

believes that the plan may be deemed a

joint enterprise or other joint

arrangement or profit-sharing plan

within the meaning of section 17(d) and

rule 17d–1 thereunder. Because the plan

was adopted when CityFed was an

operating company and to the extent

there are existing rights under the plan,

CityFed seeks an exemption to the

extent necessary from section 17(d).

Applicant’s Conditions

CityFed agrees that the requested

exemption will be subject to the

following conditions:

1. CityFed will not purchase or

otherwise acquire any additional

securities other than securities that are

rated investment grade or higher by a

nationally recognized statistical rating

organization or, if unrated, deemed to be

of comparable quality under guidelines

approved by CityFed’s Board, subject to

two exceptions:

a. CityFed may make an equity

investment in issuers that are not

investment companies as defined in

section 3(a) of the Act (including issuers

that are not investment companies

because they are covered by a specific

exclusion from the definition of

investment company under section 3(c)

of the Act other than sections 3(c)(1)

and 3(c)(7)) in connection with the

possible acquisition of an operating

business as evidenced by a resolution

approved by CityFed’s Board; and

b. CityFed may invest in one or more

money market mutual funds that limit

their investments to ‘‘Eligible

Securities’’ within the meaning of rule

2a–7(a)(10) promulgated under the Act.

2. CityFed’s Form 10–KSB, Form 10–

QSB and annual reports to shareholders

will state that an exemptive order has

been granted pursuant to sections 6(c)

and 6(e) of the Act and that CityFed and

other persons, in their transactions and

relations with CityFed, are subject to

sections 9, 17(a), 17(d), 17(e), 17(f), 36

through 45, and 47 through 51 of the

Act, and the rules thereunder, as if

CityFed were a registered investment

company, except as permitted by the

order requested hereby.

3. Notwithstanding sections 17(a) and

17(d) of the Act, an affiliated person (as

defined in section 2(a)(3) of the Act) of

CityFed may engage in a transaction that

otherwise would be prohibited by these

sections with CityFed:

a. If such proposed transaction is first

approved by a bankruptcy court on the

basis that (i) the terms thereof, including

the consideration to be paid or received,

are reasonable and fair to CityFed, and

(ii) the participation of CityFed in the

proposed transaction will not be on a

basis less advantageous to CityFed than

that of other participants; and

b. In connection with each such

transaction, CityFed shall inform the

bankruptcy court of (i) the identity of all

of its affiliated persons who are parties

to, or have a direct or indirect financial

interest in, the transaction; (ii) the

nature of the affiliation; and (iii) the

financial interests of such persons in the

transaction.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–1473 Filed 1–20–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release 34–42335; File No. 600–23]

Self-Regulatory Organizations;

Government Securities Clearing

Corporation; Notice of Filing and Order

Extending Temporary Registration as a

Clearing Agency

January 12, 2000.

Notice is hereby given that on

December 30, 1999, the Government

Securities Clearing Corporation

(‘‘GSCC’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

an application pursuant to Section 19(a)

of the Securities Exchange Act of 1934

(‘‘Act’’) 1 requesting that the

Commission grant GSCC full registration

as a clearing agency or in the alternative

extend GSCC temporary registration as a

clearing agency until such time as the

Commission is able to grant GSCC

permanent registration.2 The

Commission is publishing this notice

and order to solicit comments from

interested persons and to extend GSCC’s

temporary registration as a clearing

agency through July 31, 2000.

On May 24, 1988, pursuant to

Sections 17A(b) and 19(a) of the Act 3

and Rule 17Ab2–1 promulgated

thereunder,4 the Commission granted

GSCC registration as a clearing agency

on a temporary basis for a period of

3510 Federal Register / Vol. 65, No. 14 / Friday, January 21, 2000 / Notices

5Securities Exchange Act Release No. 25740 (May

24, 1988), 53 FR 19639.

6Securities Exchange Act Release Nos. 29067

(April 11, 1991), 56 FR 15652; 32385 (June 3, 1993),

58 FR 32405; 35787 (May 31, 1995), 60 FR 30324;

36508 (November 27, 1995), 60 FR 61719; 37983

(November 25, 1996), 61 FR 64183; 38698 (May 30,

1997), 62 FR 30911; 39696 (February 24, 1998), 63

FR 10253; 41104 (February 24, 1999), 64 FR 10510;

and 41805 (August 27, 1999), 64 FR 48682.

7 17 CFR 200.30–3(a)(16).

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

2 17 CFR 240.19b–4.

3See Letter from John Ramsay, Vice President,

Deputy General Counsel, NASD Regulation, to

Katherine A. England, Assistant Director, Division

of Market Regulation (‘‘Division’’), Commission,

dated May 13, 1998 (‘‘Amendment No. 1’’).

4See Exchange Act Release No. 40074 (June 4,

1998), 63 FR 32690 (June 15, 1998).

5See Letter from Donald Phillips, President,

Morningstar, Inc., to Jonathan G. Katz, Secretary,

Commission, dated July 6, 1998 (‘‘Morningstar

Letter’’); Letter from Lawrence H. Kaplan,

Chairman, Investment Company Committee,

Securities Industry Association, to Margaret H.

McFarland, Deputy Secretary, Commission, dated

July 1, 1998 (‘‘SIA Letter’’); Letter from Henry H.

Hopkins, Managing Director and Chief Legal

Counsel, T. Rowe Price Associates, Inc., to Jonathan

G. Katz, Secretary, Commission, dated July 6, 1998

(‘‘T. Rowe Price Letter’’); Letter from Joseph P.

Savage, Assistant Counsel, Investment Company

Institute, to Jonathan G. Katz, Secretary,

Commission, dated July 6, 1998 (‘‘ICI Letter’’).

6See Letter to Katherine A. England, Assistant

Director, Division, Commission, from Thomas M.

Selman, Vice President, Investment Companies/

Corporate Financing, NASD Regulation, dated April

19, 1999 (‘‘Amendment No. 2’’).

7See Letter to Katherine A. England, Assistant

Director, Division, Commission, from Thomas M.

Selman, Vice President, Investment Companies/

Corporate Financing, NASD Regulation, dated

November 9, 1999 (‘‘Amendment No. 3’’).

three years.5 The Commission

subsequently has extended GSCC’s

registration through January 14, 2000.6

In the most recent extension of

GSCC’s temporary registration, the

Commission stated that it planned in

the near future to seek comment on

granting GSCC permanent registration as

a clearing agency. This extension of

GSCC’s temporary registration will

enable the Commission to do so within

the next few months.

Interested persons are invited to

submit written data, views, and

arguments with respect to whether the

Commission should grant GSCC

permanent registration as a clearing

agency. Persons making written

submissions should file six copies

thereof with the Secretary, Securities

and Exchange Commission, 450 Fifth

Street, N.W., Washington, D.C. 20549–

0609. Copies of the amended

application for registration and all

written comments will be available for

inspection at the Commission’s Public

Reference Room, 450 Fifth Street, N.W.,

Washington, D.C. 20549. All

submissions should refer to File No.

600–23 and should be submitted by

February 11, 2000.

IT IS THEREFORE ORDERED

pursuant to Sections 17A(b) and 19(a) of

the Act that GSCC’s temporary

registration as a clearing agency (File

No. 600–23) be and hereby is extended

through July 31, 2000.

For the Commission, by the Division

of Market Regulation, pursuant to

delegated authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–1478 Filed 1–20–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42340; File No. SR–NASD–

98–32]

Self-Regulatory Organizations;

National Association of Securities

Dealers, Inc.; Order Approving

Proposed Rule Change and Notice of

Filing and Order Granting Accelerated

Approval to Amendment Nos. 2 and 3

Thereto Relating to Filing

Requirements for Independently

Prepared Research Reports

January 13, 2000.

1. Introduction

On April 9, 1998, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’), through its

wholly owned subsidiary, NASD

Regulation, Inc. (‘‘NASD Regulation’’),

submitted to the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Exchange Act’’ or ‘‘Act’’) 1 and

Rule 19b–4 thereunder,2 a proposed rule

change to amend the Conduct Rules of

the NASD to exclude independently

prepared research reports from the filing

requirements of NASD Rule 2210.

NASD Regulation filed an amendment

to the proposed rule change on May 14,

1998, which was published in the

original notice in the Federal Register.3

The proposed rule change was

published for comment in the Federal

Register on June 15, 1998.4 The

Commission received four comments on

the proposal.5 NASD Regulation filed

amendments to the proposed rule

change on April 19, 1999,6 and

November 10, 1999.7 This order

approves the proposed rule change, as

amended.

II. Description

NASD Conduct Rule 2210 currently

requires that any ‘‘advertisement’’ or

‘‘sales literature’’ concerning a

registered investment company be filed

with NASD Regulation’s Advertising/

Investment Companies Regulation

Department (‘‘Department’’) and meet

the content standards of that rule, as

well as all applicable Commission rules.

The rule defines ‘‘sales literature’’ to

include a research report. Consequently,

Rule 2210 requires that NASD member

file all investment company research

reports, even when the report is

prepared by ‘‘independent research

firms’’ (i.e., those firms that are

independent of the investment

company, its affiliates, or any NASD

member, and whose services are not

procured by the investment company,

any of its affiliates, or any NASD

member).

NASD Regulation notes that as the

investment company industry has

grown in recent years so too has the

coverage of this industry by

independent research firms. Many of

these firms publish reports that analyze

a wide variety of investment companies

and provide information about the

investment companies, including each

investment company’s historical

performance, the investment company’s

fees and expenses, and a description

and narrative analysis of the investment

company’s investment strategies and

portfolio management style.

NASD states that members use these

independently prepared research

reports in a number of ways. Some

members may make the entire research

service available to customers at a

branch office. Members may also

distribute an independently prepared

research report concerning a particular

investment company as part of the

selling process.

NASD Regulation proposed the rule

change to clarify the meaning,

administration and enforcement of rule

2210 insofar as it applies to certain

types of independently prepared

research reports. The proposed rule

change would clarify that certain types

of independently prepared research

reports would not have to be filed with

the Department. The Department

intends to interpret the term

‘‘independent’’ in (G)(i) of the proposed