Federal Register / Vol. 62, No. 25 / Thursday, February 6, 1997 / Notices 5661

period of less than 30 days. Applicants

state that, to protect further the

Underlying Portfolios and Other

Portfolios from unexpected large

redemptions, the Direct Funds generally

will be designed for intermediate and

long-term investors.

10. Applicants state that an additional

concern underlying section 12(d)(1) is

that the popularity of fund of funds

could lead to the creation of more

complex vehicles that would not serve

any meaningful purpose. Applicants

submit that these concerns are

addressed by the fact that no Underlying

Portfolio or Other Portfolio can acquire

securities of any other investment

company in excess of the limits

contained in section 12(d)(1)(A), except

to the extent that such Underlying

Portfolio or Other Portfolio (a) receives

securities of another investment

company as a dividend or as a result of

a plan of reorganization of a company

(other than a plan devised for the

purpose of evading section 12(d)(1) of

the Act); or (b) acquires (or is deemed

to have acquired) securities of another

investment company pursuant to

exemptive relief from the SEC

permitting such Underlying Portfolio or

Other Portfolio to (i) acquire securities

of one or more affiliated investment

companies for short-term cash

management purposes; or (II) engage in

interfund borrowing and lending

transactions.

11. Section 12(d)(1)(J) provides that

the SEC may exempt persons or

transactions from any provision of

section 12(d)(1) if and to the extent such

exemption is consistent with the public

interest and the protection of investors.

Applicants assert that the Direct Funds

will provide a simple answer to investor

demand for a diversified, professionally

managed fund and funds, and that the

structure of the Direct Funds is

consistent with the public interest and

the protection of investors.

12. Section 17(a) generally prohibits

an affiliated person of a registered

investment company from selling

securities to, or purchasing securities

from, the company. Applicants submit

that the Direct Funds and Underlying

Portfolios may be deemed to be

affiliated persons of one another by

virtue of being under common control of

their adviser, or because Direct Funds

own 5% or more of the shares of an

Underlying Portfolio. Applicants state

that sales by the Underlying Portfolios

of their shares to the Direct Funds could

be deemed to be principal transactions

between affiliated persons under section

17(a)

13. Section 6(c) of the Act provides

that the SEC may exempt persons or

transactions from any provision of the

Act if 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 Act. Applicants believe that relief

under section 6(c) is appropriate for the

reasons discussed above.

14. Section 17(b) provides that the

SEC shall exempt a proposed

transaction from section 17(a) if

evidence establishes that (a) the terms of

the proposed transaction, including the

consideration to be paid or received, are

reasonable and fair and do not involve

overreaching; (b) the proposed

transaction is consistent with the

policies of the registered investment

company involved; and (c) the proposed

transaction is consistent with the

general purposes of the Act. Applicants

request an exemption under sections

6(c) and 17(b) to allow the transactions

described above.

15. Applicants believe that the terms

of the proposed arrangement are

reasonable and fair and do not involve

overreaching because the consideration

paid for the sale and redemption of

shares of Underlying Portfolios will be

based on the net asset values of the

Underlying Portfolios. Applicants note

the investment of assets of the Direct

Funds in shares of the Underlying

Portfolios and the issuance of shares of

the Underlying Portfolios to the Direct

Funds will be effected in accordance

with the investment restrictions of the

Direct Funds and will be consistent

with the policies as set forth in the

registration statement of the Direct

Funds. Applicants also believe that the

proposed arrangement is consistent with

the general purposes of the Act.

Applicants’ Conditions

Applicants agree that the order

granting the requested relief shall be

subject to the following conditions:

1. All Underlying Portfolios will be

part of the same ‘‘group of investment

companies,’’ as defined in section

12(d)(1)(G)(ii) of the Act, as the Direct

Funds.

2. No Underlying Portfolio or Other

Portfolio will acquire securities of any

other investment company in excess of

the limits contained in section

12(d)(1)(A) of the Act, except to the

extent that such Underlying Portfolio or

Other Portfolio (a) receives securities of

another investment company as a

dividend or as a result of a plan of

reorganization of a company (other than

a plan devised for the purpose of

evading section 12(d)(1) of the Act); or

(b) acquires (or is deemed to have

acquired securities of another

investment company pursuant to

exemptive relief from the SEC

permitting such Underlying Portfolio or

Other Portfolio to (i) acquire securities

of one or more affiliated investment

companies for short-term cash

management purposes; or (ii) engage in

interfund borrowing and lending

transactions.

3. Any sales charges, distributionrelated fees, and service fees relating to

the shares of the Direct Funds, when

aggregated with any sales charges,

distribution-related fees, and service

fees paid by the Direct Funds relating to

its acquisition, holding, or disposition

of shares of the Underlying Portfolios

(and Other Portfolios), will not exceed

the limits set forth in rule 2830 of the

NASD Conduct Rules.

4. Before approving any advisory

contract under section 15 of the Act, the

boards of directors/trustees of the Direct

Funds, including a majority of the

directors/trustees who are not

‘‘interested persons,’’ as defined in

section 2(a)(19), will find that the

advisory fees charged under the contract

are based on services provided that are

in addition to, rather than duplicative

of, services provided under any

Underlying Portfolio or Other Portfolio

advisory contract. This finding, and the

basis upon which the finding was made,

will be recorded fully in the minute

books of the Direct Funds.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–2905 Filed 2–5–97; 8:45 am]

BILLING CODE 8010–01–M

Issuer Delisting; Notice of Application

to Withdraw From Listing and

Registration; (Magellan Health

Services, Inc., Common Stock, 25¢ Par

Value; 11.25% Series A Senior

Subordinated Notes due 2004) File No.

1–6639

January 31, 1997.

Magellan Health Services, Inc.

(‘‘Company’’) has filed an application

with the Securities and Exchange

Commission (‘‘Commission’’), pursuant

to Section 12(d) of the Securities

Exchange Act of 1934 (‘‘Act’’) and Rule

12d2–2(d) promulgated thereunder, to

withdraw the above specified securities

(‘‘Securities’’) from listing and

registration on the American Stock

Exchange, Inc. (‘‘Amex’’).

The reasons alleged in the application

for withdrawing the Securities from

listing and registration include the

following:
5662 Federal Register / Vol. 62, No. 25 / Thursday, February 6, 1997 / Notices

1 15 U.S.C. § 78s(b)(1).

2 17 CFR 240.19b–4.

3On January 29, 1997, the Exchange filed

Amendment No. 1 to its proposal. Amendment No.

1 is a technical amendment, correcting rule

language in Rule 1047, Commentary .03(c), which

was submitted as Exhibit B with the rule filing. See

Letter from Edith Hallahan, Phlx, to Janice Mitnick,

Division of Market Regulations, SEC, dated January

29, 1997.

According to the Company, it has

complied with Rule 18 of the AMEX by

filing with such Exchange a certified

copy of preambles and resolutions

adopted by the Company’s Board of

Directors authorizing the withdrawal of

its securities from listing on the AMEX

and by setting forth in detail to such

Exchange the reasons for such proposed

withdrawal, and the facts in support

thereof. The Securities began trading on

the New York Stock Exchange, Inc.

(‘‘NYSE’’) on December 31, 1996. In

making the decision to withdraw the

Securities from listing on the AMEX, the

Company considered the breadth of the

investment base, the trading liquidity,

and number of analysts covering the

stock. Additionally, the Company

wished to avoid the direct and indirect

costs and the division of the market

resulting from dual listing on the AMEX

and NYSE.

Any interested person may, on or

before February 24, 1997, submit by

letter to the Secretary of the Securities

and Exchange Commission, 450 Fifth

Street, N.W., Washington, D.C. 20549,

facts bearing upon whether the

application has been made in

accordance with the rules of the

exchanges and what terms, if any,

should be imposed by the Commission

for the protection of investors. The

Commission, based on the information

submitted to it, will issue an order

granting the application after the date

mentioned above, unless the

Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 97–2910 Filed 2–5–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38218; File No. SR–Phlx–

97–04]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 Thereto by the

Philadelphia Stock Exchange, Inc.

Relating to a 4:02 p.m. Closing Time

for Equity Options Trading

January 30, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 2 thereunder,

notice is hereby given that on January 8,

1997, the Philadelphia Stock Exchange,

Inc. (‘‘Phlx’’ or ‘‘Exchange’’) filed with

the Securities and Exchange

Commission (‘‘Commission’’) the

proposed rule change as described in

Items I, II and III below, which Items

have been prepared by the selfregulatory organization.3 The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to amend

Rule 101, Hours of Business, and Rule

1047, Trading Rotations, Halts and

Suspensions, to close equity options

trading at 4:02 p.m. Currently, equity

options trade until 4:10 p.m.

The text of the proposed rule change

is available at the Office of the

Secretary, Phlx, and at the Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

self-regulatory organization included

statements concerning the purpose of

and basis for the proposed rule change,

and discussed any comments it received

on the proposed rule change. The text

of these statements may be examined at

the places specified in Item IV below.

The self-regulatory organization has

prepared summaries, set froth in

Sections A, B, and C below, of the most

significant aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

Since 1978, equity options have

traded ten minutes longer than the

primary market. At that time, significant

delays in the reporting of stock prices

were common; therefore, the additional

ten minute period was necessary to

receive final stock prices. These delays

have now been reduced due to

technological advances. Currently, the

extra time period for options trading

after closing prices are reported in the

underlying equities results in equity

options trading without the pricing

benefit of continuing stock trading. The

additional ten minutes also results in

repeated automatic executions at

outdated equity options prices. Further,

not all market participants are able to

respond quickly to changes in equity

options prices between 4:00 and 4:10

p.m. In summary, the Exchange, in

balancing the benefits of an extended

trading session with the difficulties of

trading after the underlying stock has

closed, has determined that the benefits

do not outweigh the difficulties;

therefore, a 4:02 p.m. close for equity

options is appropriate.

The purpose of the rule change is to

reduce the amount of time equity

options trade after the close of the

primary market for the underlying

security. Under the proposal, there will

be a two minute time period for equity

options traders and investors to respond

to late reports of closing security prices

and, where warranted, to bring closing

equity option prices in line with stock

prices. The proposed changes to Rule

101 establish a 4:02 p.m. close for equity

options, and expressly except index

options. Reference to narrow-based

(industry) index options trading until

4:10 p.m. is being added to Rule 101,

and reference to broad-based index

options is replacing the listing of

specific such index options by name.

Broad-based index options will

continue to trade until 4:15 p.m. The

Exchange understands that other option

exchanges have proposed a 4:02 p.m.

close for certain index options as well

as for equity options; however, the

Exchange is not proposing to change the

closing time for its index options.

The proposed change to Rule 1047

merely substitutes reference to the

current close of 4:10 p.m. with the

proposed 4:02 p.m. close. The Exchange

notes that pursuant to Commentary .03

of this Rule, in unusual market

conditions, a closing rotation after the

4:02 p.m. close may be conducted in an

option, whether or not expiring, with

the approval of the Options Committee.

Further, the Exchange proposes to

amend the rule to begin the closing

rotation five minutes after the notice is

disseminated. Currently under Rule

1047, Commentary .03(b), the closing

rotation begins 10 minutes after the

notice is disseminated.

2. Statutory Basis

The proposed rule change is

consistent with Section 6 of the Act in

general, and in particular, with Section

6(b)(5), in that it is designed to promote

just and equitable principles of trade,

prevent fraudulent and manipulative

acts and practices, to foster cooperation

and coordination with persons engaged

in regulating, clearing, settling,

processing information with respect to,

and facilitating transactions in