54536 Federal Register / Vol. 71, No. 179 / Friday, September 15, 2006 / Notices 

current net assets. An owner’s interest 

in the Credit amounts allocated to his or 

her 2006 New Contract within twelve 

months preceding the date of death is 

not vested. Applicants argue that until 

the right to recapture has expired and 

any Credit amount is vested, the 

Insurance Companies retain the right 

and interest in the Credit amount, 

although not in the earnings attributable 

to that amount. Therefore, when the 

Insurance Companies recapture any 

Credit, they are merely retrieving their 

own assets, and the owner has not been 

deprived of a proportionate share of the 

applicable Account’s assets because his 

or her interest in the Credit amount has 

not vested. 

5. Applicants submit that the 

recapture of Credit amounts within 

twelve months preceding the date of 

death is designed to provide the 

Insurance Companies with a measure of 

protection against anti-selection. The 

anti-selection risk is that an owner can 

collect a Credit shortly before death 

thereby leaving the Insurance 

Companies little time to recover the cost 

of the Credit. As noted earlier, the 

amounts recaptured equal the Credits 

provided by the Insurance Companies 

from their general account assets, and 

any gain would remain a part of the 

owner’s contract value. 

6. 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. 

7. The Insurance Companies’

recapture of the Credit might arguably 

be viewed as resulting in the 

redemption of redeemable securities for 

a price other than one based on the 

current net asset value of the Accounts. 

Applicants contend, however, that the 

recapture of the Credit does not violate 

Section 22(c) and Rule 22c–1. The 

recapture of the Credit does not involve 

either of the evils that Rule 22c–1 was 

intended to eliminate or reduce as far as 

reasonably practicable, namely: (i) The 

dilution of the value of outstanding 

redeemable securities of registered 

investment companies through their 

sale at a price below net asset value or 

redemption or repurchase at a price 

above it, and (ii) other unfair results, 

including speculative trading practices. 

8. Applicants assert that the proposed 

recapture of the Credit does not pose 

such a threat of dilution. To effect a 

recapture of a Credit, the Insurance 

Companies will redeem interests in an 

owner’s account at a price determined 

on the basis of the current net asset 

value of that account. The amount 

recaptured will equal the amount of the 

Credit that the Insurance Companies 

paid out of their general account assets. 

Although the owner will be entitled to 

retain any investment gain attributable 

to the Credit, the amount of that gain 

will be determined on the basis of the 

current net asset value of the Account. 

Therefore, no dilution will occur upon 

the recapture of the Credit. 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 Credit. 

9. For the foregoing reasons, 

Applicants submit that the provisions 

for recapture of any Credit applied 

within twelve months preceding the 

date of death that results in any death 

benefit payment under the 2006 New 

Contracts does not and will not violate 

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

of the 1940 Act and Rule 22c–1 

thereunder, and that the requested relief 

therefrom is consistent with the 

exemptive relief provided under the 

Existing Orders. 

Conclusion 

Applicants submit, based on the 

grounds summarized above, that their 

exemptive requests meet the standards 

set out in Section 6(c) of the 1940 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 1940, and that, 

therefore, an amended order should be 

granted. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

J. Lynn Taylor, 

Assistant Secretary. 

[FR Doc. E6–15298 Filed 9–14–06; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Pub. L. 94–409, that the 

Securities and Exchange Commission 

will hold the following meetings during 

the week of September 18, 2006: 

An Open Meeting will be held on 

Wednesday, September 20, 2006 at 10 a.m. in 

the Auditorium, Room LL–002 and Closed 

Meetings will be held on Wednesday, 

September 20, 2006 at 11 a.m., Thursday, 

September 21, 2006 at 2 p.m. and Friday, 

September 22, 2006 at 2:30 p.m. 

Commissioners, Counsels to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the Closed Meetings. Certain 

staff members who have an interest in 

the matters may also be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (7), (8), (9)(B) and 

(10) and 17 CFR 200.402(a)(3), (5), (7), 

(8), (9)(ii), and (10) permit consideration 

of the scheduled matters at the Closed 

Meetings. 

Commissioner Nazareth, as duty 

officer, voted to consider the items 

listed for the closed meetings in closed 

session. 

The subject matter of the Open 

Meeting scheduled for Wednesday, 

September 20, 2006 will be: 

The Commission will hear oral argument 

on an appeal by The Rockies Fund, Inc., a 

closed-end investment company, and its 

directors Stephen Calandrella, Charles 

Powell, and Clifford Thygesen (collectively 

‘‘Respondents’’). The matter is on remand to 

the Commission from the United States Court 

of Appeals for the District of Columbia 

Circuit. 

The Court of Appeals affirmed the 

Commission’s findings that Respondents 

violated antifraud provisions of the 

Securities Exchange Act of 1934 by filing 

quarterly and annual reports containing 

material misrepresentations between June 30, 

1994 and December 31, 1995; that the Fund 

violated provisions of the Exchange Act and 

Calandrella, Powell, and Thygesen aided and 

abetted and were a cause of reporting 

violations by filing reports that were not in 

compliance with Generally Accepted 

Accounting Principles and that contained 

material misrepresentations. The Court of 

Appeals directed the Commission on remand 

to reconsider the sanctions in light of its 

determination to vacate some of the 

violations found by the Commission. 

Among the issues likely to be argued 

are: 

1. Whether it is in the public interest 

to prohibit Calandrella, Powell, or 


jlentini on PROD1PC65 with NOTICES
Federal Register / Vol. 71, No. 179 / Friday, September 15, 2006 / Notices 54537 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 replaced the original filing in 

its entirety. 

4See Securities Exchange Act Release No. 53112 

(January 12, 2006), 71 FR 3579. 

5 In Amendment No. 2, a partial amendment, the 

Exchange, among other things, revised proposed 

CBOE Rule 52.1 to require that the public customer 

priority overlay be activated whenever pro rata 

priority is in use; removed provisions relating to 

complex orders; revised the requirements for 

executing a facilitation or crossing transaction with 

priority over existing interest on the book; and 

made additional non-substantive changes to the 

proposed rule text. 

6As of August 3, 2006, CBOE traded two such 

products. See Amendment No. 2. 

7See Securities Exchange Act Release No. 47628 

(April 3, 2003), 68 FR 17697 (April 10, 2003) 

(approving SR–CBOE–00–55) (‘‘CBOEdirect 

Approval Order’’). However, at this time, CBOE 

does not trade options pursuant to Chapters 40–46. 

Thygesen from associating with or 

acting as an affiliated person of an 

investment company; 

2. Whether civil money penalties 

should be imposed against Calandrella, 

Powell or Thygesen, and if so, in what 

amount; and 

3. Whether cease-and-desist orders 

against Calandrella, Powell, or Thygesen 

are in the public interest. 

The subject matter of the Closed 

Meeting scheduled for Wednesday, 

September 20, 2006 will be: Post 

argument discussion. 

The subject matters of the Closed 

Meeting scheduled for Thursday, 

September 21, 2006 will be: 

Formal orders of investigation; 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings of an 

enforcement nature; 

Adjudicatory matters; and 

Regulatory matters regarding financial 

institutions. 

The subject matters of the Closed 

Meeting for Friday, September 22, 2006 

will be: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings of an 

enforcement nature; and a 

Matter relating to an enforcement 

proceeding. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: The Office of the Secretary at 

(202) 551–5400. 

Dated: September 12, 2006. 

Nancy M. Morris, 

Secretary. 

[FR Doc. 06–7728 Filed 9–13–06; 11:02 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 500–1] 

In the Matter of Indigenous Global 

Development Corporation; Order of 

Suspension of Trading 

September 13, 2006. 

It appears to the Securities and 

Exchange Commission that there is a 

lack of current and accurate information 

concerning the securities of Indigenous 

Global Development Corporation 

(‘‘IGDC’’) because it has not filed a 

periodic report since the quarter ending 

March 31, 2005. 

The Commission is of the opinion that 

the public interest and the protection of 

investors require a suspension of trading 

in the securities of the above-listed 

company. 

Therefore, it is ordered, pursuant to 

Section 12(k) of the Securities Exchange 

Act of 1934, that trading in the abovelisted company is suspended for the 

period from 9:30 a.m. EDT on 

September 13, 2006, through 11:59 p.m. 

EDT, on September 26, 2006. 

By the Commission. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 06–7725 Filed 9–13–06; 11:18 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54422; File No. SR–CBOE–

2004–21] 

Self-Regulatory Organizations; 

Chicago Board Options Exchange, 

Incorporated; Order Approving a 

Proposed Rule Change and Notice of 

Filing and Order Granting Accelerated 

Approval to Amendment No. 2 Thereto 

To Establish Rules for a Screen-Based 

Trading System for Non-Option 

Securities 

September 11, 2006. 

I. Introduction 

On April 14, 2004, the Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

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

of 1934 (‘‘Act’’)1 and Rule 19b–4 

thereunder,2 a proposal to adopt on a 

pilot basis rules governing the trading of 

non-option securities on an electronic 

platform known as ‘‘STOC.’’ The 

Exchange filed Amendment No. 1 with 

the Commission on January 11, 2006.3

The amended proposal was published 

for comment in the Federal Register on 

January 23, 2006.4 The Commission 

received no comments on the proposal. 

The Exchange filed Amendment No. 2 

with the Commission on August 3, 

2006.5 This notice and order requests 

comment on Amendment No. 2 and 

approves the proposal, as amended, on 

an accelerated basis. 

II. Description of the Proposal 

A. Overview of the STOC System 

CBOE currently trades a small number 

of non-option securities.6 These 

products are not traded on CBOE’s 

options trading platform, but rather on 

a stand-alone platform in an openoutcry environment pursuant to Chapter 

XXX (30) of CBOE’s rules. In 2003, the 

Commission approved Chapters XL (40) 

through XLVI (46) of CBOE’s rules, 

which established a purely screen-based 

trading platform for trading options on 

the Exchange called ‘‘CBOEdirect.’’ 7

Components of that system have been 

adapted to create CBOE’s Hybrid 

Trading System (currently in use for 

options trading), to facilitate the trading 

of single-stock futures by OneChicago, 

and to trade security futures products 

on the CBOE Futures Exchange. CBOE 

now proposes to use the CBOEdirect 

platform to trade non-option securities 

in a purely electronic environment that 

would replace its existing system. All 

products currently traded under Chapter 

30 would migrate to the new platform 

and trade pursuant to new Chapters 50–

55. The new platform is called ‘‘Stock 

Trading on CBOEdirect’’ (‘‘STOC’’ or 

‘‘STOC System’’). Like CBOEdirect, 

STOC would: (1) Be entirely screenbased; (2) utilize a DPM/LMM-driven 

model with optional supplemental 

liquidity provided by market makers; (3) 

utilize a configurable matching 

algorithm based on either price-time or 

pro rata priority, with optional priority 

overlays; and (4) integrate all quotes and 

orders entered into the system into the 

STOC book. 

B. Market Participants 

1. STOC Market Makers 

A STOC market maker is a member 

registered with the Exchange for the 

purpose of making transactions as a 

dealer in the STOC System. A STOC 

market maker may be either a STOC 

standard market maker, a STOC 

designated primary market maker 

(‘‘STOC DPM’’), or a STOC lead market 


jlentini on PROD1PC65 with NOTICES