Federal Register / Vol. 62, No. 26 / Friday, February 7, 1997 / Notices 5867

3By order dated March 30, 1989 (HCAR No.

24851), the Commission authorized GPU to issue up

to 20,000 shares of Common Stock under this plan.

Under the 1989 Plan, which was approved by

GPU’s shareholders, each outside director receives

a portion of his or her annual compensation in the

form of 300 shares of Common Stock.

4This authorization would be in addition to the

current authorization to issue up to 20,000 shares,

and the New Plan would not alter the automatic

award of 300 shares annually to outside directors

under the 1989 Plan.

1Other investment options include series of

registered investment companies managed, advised,

or sponsored by applicants. These investment

companies are not included in the definition of

Variable Product Fund and are not covered by this

application.

Notes and Bonds; (vii) for the

declarants’ respective working capital

requirements; and (viii) for other general

corporate purposes.

GPU, Inc. (70–8983)

GPU, Inc., (‘‘GPU’’) 100 Interspace

Parkway, Parsippany, New Jersey 07054,

a registered holding company, has filed

a declaration under sections 6(a), 7, and

12(e) of the Act, and rules 54 and 62

thereunder.

GPU proposes to issue up to an

additional 200,000 shares of its common

stock (‘‘Common Stock’’), under a new

deferred unit stock plan (‘‘New Plan’’)

for payment of a portion of outside

directors’ compensation.

GPU currently has in effect a

retirement plan for outside directors

which provides that each outside

director who completes 54 months of

service prior to retirement is entitled to

receive one-twelfth of the sum of the

director’s annual retainer and the cash

value of the last award under GPU’s

restricted stock plan for outside

directors (‘‘1989 Plan’’).3 Benefits are

payable commencing at the later of age

60 or retirement over a period equal to

the number of months of service.

GPU desires to align the interests of

its directors more closely with those of

its stock holders by paying a greater

portion of the outside directors’

compensation in the form of Common

Stock. Accordingly, GPU proposes to

cease further accrual of service under

the 1989 Plan and provide for the

issuance of Common Stock to outside

directors under the New Plan.

GPU requests authorization to issue

up to an additional 200,000 shares of

Common Stock under the New Plan

from time to time through December 31,

2007.4 Under the New Plan, each

outside director would receive an

annual grant of units (one unit

represents a share of Common Stock)

based on a multiple (initially

anticipated to be 1.5, but which may be

changed from time to time) of the

amount of annual cash retainer paid to

each outside director. This amount will

be set by the board of directors, and may

be increased or decreased by board

resolution. The number of units granted

each year will thus vary based on (i) the

price of the Common Stock, (ii) the

amount of the annual cash retainer and

(iii) the multiplier used. Units would

vest upon the outside director’s

retirement from the board, provided the

outside director has completed at least

54 months of service as an outside

director, or death. Units which have not

vested at the time of an outside

director’s retirement would be forfeited.

GPU intends to request that its

stockholders approve the New Plan at

the 1997 annual meeting, and

accordingly requests authorization to

solicit proxies from its shareholders at

this meeting. The related proxy

materials are expected to be mailed

before March 31, 1997. Subject to

shareholder approval, the New Plan

would be effective as of July 1, 1997.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3031 Filed 2–6–97; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Rel. No. 22488;

812–10504]

Nationwide Financial Services, Inc., et

al.; Notice of Application

February 3, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (‘‘Act’’).

APPLICANTS: Nationwide Financial

Services, Inc. (the ‘‘Company’’),

Nationwide Life Insurance Company

(‘‘NLIC’’), and Nationwide Life and

Annuity Insurance Company

(collectively with NLIC, ‘‘Nationwide

Life’’).

RELEVANT ACT SECTIONS: Exemption

requested under sections 6(c) and 17(b)

of the Act from section 17(a).

SUMMARY OF APPLICATION: Applicants

seek an order that would permit the

Company to sell securities of which it

is the issuer to registered investment

companies that are affiliated persons of

certain registered investment companies

funded by the separate accounts of

Nationwide Life.

FILING DATES: The application was filed

on January 17, 1997, and amended on

January 31, 1997.

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 by writing to the SEC’s

Secretary and serving applicants with a

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

February 24, 1997, 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 such notification

by writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicants, One Nationwide Plaza,

Columbus, Ohio 43215.

FOR FURTHER INFORMATION CONTACT:

Courtney S. Thornton, Senior Counsel,

at (202) 942–0583, or Mercer E. Bullard,

Branch Chief, at (202) 942–0564

(Division of Investment Management,

Office of Investment Company

Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee from the SEC’s

Public Reference Branch.

Applicants’ Representations

1. The Company is an entity that

recently has been formed to hold all the

outstanding shares of Nationwide Life,

an Ohio domiciled life insurance

company, and other companies within

the Nationwide Insurance Enterprise, a

group of insurance and financial

services organizations that includes

Nationwide Corporation (‘‘Nationwide

Corp.’’). Nationwide Corp. will own all

the Class B shares of the Company and,

as a result, will have voting control of

the Company.

2. Nationwide Life, a provider of longterm savings and retirement products to

domestic retail and institutional

customers, offers several variable

annuity and variable life insurance

products. Certain of these products

permit a customer to choose among

multiple investment options, including

shares of registered open-end

management investment companies (the

‘‘Variable Product Funds’’).1 At present,

the Variable Product Funds include

funds managed by investment advisers

such as Mellon Equity Associates,

Strong Capital Management, Inc.,

Fidelity Management & Research

Company, Neuberger & Berman
5868 Federal Register / Vol. 62, No. 26 / Friday, February 7, 1997 / Notices

2To be treated as insurance products for tax

purposes, the Separate Accounts must be

adequately diversified in accordance with section

817(h) of the Internal Revenue Code of 1986. An

investment in a registered investment company will

satisfy this requirement only if shares of the fund

are not available to the general public, but may be

acquired only through the ownership of an

insurance policy or an interest in a pension plan

contract.

Management Incorporated,

Oppenheimer Management Corporation,

Van Eck Associates Corporation, Van

Kampen American Capital Asset

Management, Inc., and Warburg Pincus

Counsellors, Inc., each of whom is

independent of applicants (the

‘‘Independent Advisers’’). The

Independent Advisers also serve as

advisers or subadvisers to many other

registered investment companies, most

of which are offered to the general

public (the ‘‘Retail Funds’’).

3. The variable annuity and variable

life insurance products are funded by

the separate accounts of Nationwide

Life (the ‘‘Separate Accounts’’), each of

which has been established as a unit

investment trust registered under the

Act. Under Ohio law, Nationwide Life is

the owner of all assets held in the

Separate Accounts, although the

income, gains, and losses on assets in

the Separate Accounts are allocated to

the Accounts for the benefits of the

related variable contracts. Each Separate

Account is divided into multiple

subaccounts, and the assets of each

subaccount are invested in shares of a

specific Variable Product Fund.

Although the Variable Product Funds

initially are selected by Nationwide Life

(which may add or remove Funds from

time to time), investments in those

Funds are determined by Nationwide

Life policyholders, who select the

subaccounts and thereby the Variable

Product Funds in which to invest.

4. In order to allow Nationwide Life’s

variable policies to be treated as

insurance products for tax purposes, the

Variable Product Funds are held solely

by the Separate Accounts or by the

separate accounts of other insurance

companies.2 Although the Variable

Product Funds are available to other

insurance companies, the number of

potential participating companies is

limited. Thus, in many cases, the

Separate Accounts own, in the

aggregate, more than 25% of the voting

securities of a Variable Product Fund (a

‘‘Controlled Variable Product Fund’’). In

other cases, the Separate Accounts hold

less than 5% of the voting securities of

a Variable Product Fund (a ‘‘Remote

Variable Product Fund’’). Neither the

Retail Funds nor the Remote Variable

Product Funds are affiliated persons or

affiliated persons of affiliated persons of

the Company except to the extent they

share a common investment adviser

with the Controlled Variable Product

Funds.

5. The Company proposes to make a

number of securities offerings within

the next year and from time to time

thereafter (the ‘‘Offerings’’). The

Offerings will include Class A shares of

the Company’s common stock, 30 year

senior notes, and capital securities of a

trust established by the Company

(collectively, the ‘‘Securities’’). All

Offerings will have certain

characteristics in common: (a) The

Securities will be sold to registered

investment companies as part of the

offering to the public; (b) the Securities

will be registered under the Securities

Act of 1933 (the ‘‘Securities Act’’); (c) all

sales will be underwritten on a firm

commitment basis by members of the

National Association of Securities

Dealers (‘‘NASD’’); (d) there will be no

special arrangement to induce fund

managers to deviate from normal fund

investment policies, as stated in its

prospectus; and (e) registered

investment companies will invest in the

Offerings on the same terms as all other

public investors.

Applicants’ Legal Analysis

1. Applicants request an order to

permit the sale by the Company of

Securities to the Retail Funds and the

Remote Variable Product Funds in one

or more Offerings at various times in the

future. Section 17(a)(1) of the Act

prohibits an affiliated person of an

investment company, or an affiliated

person of an affiliated person, acting as

principal, from selling any security or

property to such company. Applicants

believe that the Company may be

deemed to be an affiliated person of

affiliated persons of the Retail Funds

and the Controlled Variable Product

Funds.

2. Section 2(a)(3) of the Act defines an

affiliated person of another person to

include the investment adviser or

depositor of an investment company

and any person directly or indirectly

controlling, controlled by, or under

common control with such other

person. Section 2(a)(9) defines control

as the power to exercise a controlling

influence over the management or

policies of a company. Thus, an

investment company may be considered

to be controlled by its investment

adviser. Section 2(a)(9) further provides

that a person owning beneficially,

directly or indirectly through controlled

subsidiaries, more than 25% of the

voting securities of a company is

presumed to control such company.

3. The Company controls Nationwide

Life, a wholly-owned subsidiary of the

Company. Because a life insurance

company owns the assets of its separate

accounts under Ohio insurance law,

both the Company and Nationwide Life

are presumed to control (and thus be

affiliated persons of) any Variable

Product Fund of which Nationwide Life

owns more than 25% of the voting

securities (i.e., the Controlled Variable

Product Funds). The Retail Funds and

the Remote Variable Product Funds may

be deemed to be affiliated persons of the

Controlled Variable Product Funds

because they are under the common

control of common investment advisers.

As an affiliated person of the Controlled

Variable Product Funds, and therefore

an affiliated person of affiliated persons

of the Retail Funds and the Remote

Variable Product Funds, the Company

would be prohibited by section 17(a)(1)

from selling Securities to the Retail

Funds and the Remote Variable Product

Funds absent an exemption.

4. Section 17(b) of the Act provides

that the SEC may exempt a transaction

from the prohibitions of section 17(a) if

the terms of the proposed transaction

(including the consideration to be paid

or received) are reasonable and fair and

do not involve overreaching on the part

of any person concerned, and the

proposed transaction is consistent with

both the policy of each registered

investment company concerned and the

general purpose of the Act. Applicants

submit that the proposed sales of

Securities to the Retail Funds and the

Remote Variable Product Funds meet

the requirements for an exemption

under section 17(b). Applicants state

that the Retail Funds and the Remote

Variable Product Funds will purchase

the Securities on the same basis as all

other public investors and at the public

offering price stated in the prospectus.

This price will be determined by

negotiations between the Company and

the underwriters of the Offerings, who

will be subject to the NASD Rules of

Fair Practice. Applicants therefore do

not believe that the proposed

transactions will involve any

overreaching on the part of the

Company or any of its affiliated persons.

In addition, the Independent Advisers

will decide whether to purchase the

Securities for the Retail Funds and the

Remote Variable Product Funds, and

applicants will have no influence or

control over such decisions.

Accordingly, applicants assert that the

proposed transactions are consistent

with the general purposes of the Act.

5. Section 6(c) of the Act provides that

the SEC may conditionally or

unconditionally exempt any person,
Federal Register / Vol. 62, No. 26 / Friday, February 7, 1997 / Notices 5869

3Applicants seek relief under section 6(c) as well

as section 17(b) because section 17(b) could be

interpreted as giving the SEC power to exempt only

a single transaction from section 17(a), as opposed

to a class of transactions. See Keystone Custodian

Funds, Inc., 21 S.E.C. 295 (1945).

1Formerly Delta Government Options Corp.

2 15 U.S.C. 78s(a).

3 15 U.S.C. 78q–1.

4Letter from Robert C. Mendelson, Esq., Morgan,

Lewis and Bockius, to Jerry W. Carpenter, Assistant

Director, Division of Market Regulations,

Commission (January 16, 1997).

5 15 U.S.C. 78q–1(b)(2) and 78s(a).

6Securities Exchange Act Release No. 27611

(January 12, 1990), 55 FR 1890.

7Securities Exchange Act Release Nos. 31856

(February 11, 1993), 58 FR 9005 (extension until

January 12, 1995) and 35198 (January 6, 1995), 60

FR 3286 (extension until January 31, 1997).

8Supra note 6.

9Securities Exchange Act Release No. 36367

(October 13, 1995), 60 FR 54095.

10 15 U.S.C. 78q–1(b)(3).

11 15 U.S.C. 78q–1(b)(3)(C).

12 DCC also has recently or is in the process of

making several major changes to its operational

structure. For example, DCC was recently sold by

its original owner, Cawsl Corp., to three purchasers

led by Intercapital Group Ltd. In addition, DCC is

in the process of selecting a new facilities manager

and in automating several of its processes.

13 15 U.S.C. 78q–1(b).

security, or transaction, or any class or

classes of persons, securities, or

transactions, from any provisions of the

act, if and to the extent 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.3 Applicants

believe that the proposed transactions

are necessary or appropriate in the

public interest because they allow the

Retail Funds and the Remote Variable

Product Funds and their shareholders

the opportunity to participate in

investment opportunities that meet the

Funds’ investment objectives and avoid

a reduction in or possible loss of

investment opportunities. Applicants

also assert that the types of abuses the

Act was intended to prevent are

unlikely to occur in the proposed

transactions for the reasons discussed

above. Accordingly, applicants submit

that the proposed transactions meet the

requirements for an exemption under

section 6(c).

Applicants’ Conditions

Applicants agree that any order

granting the requested relief will be

subject to the following conditions:

1. The Retail Funds and the Remote

Variable Product Funds will purchase

Securities of the Company in an

Offering only if such Securities are part

of an issue registered under the

Securities Act that is being offered to

the public. All such purchases will be

effected at the public offering price

stated in the prospectus and in the same

manner as sales to the general public.

2. All Offerings will be underwritten

on a firm commitment basis by members

of the NASD.

3. No registered investment company

that is an affiliated person or an

affiliated person of an affiliated person

of the Company, other than by reason of

sharing a common investment adviser

with a Controlled Variable Product

Fund, will be permitted to purchase

Securities in an Offering, including

Securities issued pursuant to the

underwriters’ over-allotment option.

4. Applicants will not offer any

incentives to the investment advisers of

the Retail Funds or the Remote Variable

Product Funds to purchase Securities of

the Company, and will take no action to

induce fund managers to deviate from

the Funds’ stated investment policies.

5. No investment adviser to a Retail

Fund or a Remote Variable Product

Fund will be an affiliated person of

applicants other than by reason of being

an investment adviser to a Variable

Product Fund.

For the SEC, by the Division of Investment

Management, under delegated authority

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–3064 Filed 2–6–97; 8:45 am]

BILLING CODE 8010–01–M

[Release 34–38224; File No. 600–24]

Self-Regulatory Organizations; Delta

Clearing Corp.; Notice of Filing and

Order Approving Application for

Extension of Temporary Registration

as a Clearing Agency

January 31, 1997.

On January 17, 1997, Delta Clearing

Corp. (‘‘DCC’’) 1 filed with the Securities

and Exchange Commission

(‘‘Commission’’) a request pursuant to

Section 19(a) of the Securities Exchange

Act of 1934 (‘‘Act’’) 2 for extension of its

registration as a clearing agency under

Section 17A of the Act 3 for a period of

six months or for such longer period as

the Commission deems appropriate.4

The Commission is publishing the

notice and order to solicit comments

from interested persons and to grant

DCC’s request for an extension of its

temporary registration as a clearing

agency through July 31, 1997.

On January 12, 1990, the Commission

granted DCC’s application for

registration as a clearing agency

pursuant to Sections 17A(b)(2) and 19(a)

of the Act 5 on a temporary basis for a

period of thirty-six months.6 Since that

time, the Commission has extended

DCC’s temporary registration as a

clearing agency through January 31,

1997.7 DCC now requests that the

Commission grant an extension of its

original order granting DCC temporary

registration as a clearing agency subject

to the same terms and conditions for a

period of six months or for such longer

period as the Commission deems

appropriate.

As discussed in detail in the order

granting DCC’s initial temporary

registration as a clearing agency,8 one of

the primary reasons for DCC’s

registration is to enable it to provide for

the safe and efficient clearance and

settlement of transactions involving the

over-the-counter trading of options on

U.S. Treasury securities. Since the time,

the Commission has approved DCC’s

request to begin clearance and

settlement of repurchase agreement

transactions involving U.S. Treasury

securities as the underlying

instrument.9 Currently, repurchase

agreement transactions constitute the

majority of the transactions cleared by

DCC.

In light of DCC’s past performance,

the Commission believes that DCC has

the capacity to comply with the

statutory obligations set forth under

Section 17A(b)(3) of the Act,10 which

sets forth the prerequisites for

registration as a clearing agency.

However, the Commission believes that

DCC should continue to be registered on

a temporary basis. Currently, DCC has

an exemption from the fair

representation requirements of Section

17A(b)(3)(C) of the Act.11 The

Commission believes that this should be

resolved prior to DCC’s registration

becoming permanent. Further, DCC has

only recently begun providing clearance

services for repurchase agreement

transactions, which constitutes the vast

majority of its operations.12 The

Commission would like the opportunity

of observing DCC’s performance in this

area prior to a grant of permanent

registration as a clearing agency.

Comments received during DCC’s

temporary registration will be

considered in determining whether DCC

should receive permanent registration as

a clearing agency under Section 17A(b)

of the Act.13

Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submission

should file six copies thereof with the