Federal Register / Vol. 62, No. 240 / Monday, December 15, 1997 / Notices 65725

Agreement to be subject to substantial

detriment compared with all other MLX

shareholders. MLX asserts that the

Pending Merger and Related

Transactions were designed to satisfy

Mr. Morton’s conditions regarding

control of MLX and to permit MLX to

retain its major assets, the NOLs. MLX

also states that the Pending Merger and

Related Transactions were approved by

MLX’s board of directors, including

MLX’s disinterested directors, and will

not be effective unless approved by a

vote of MLX’s shareholders. Further,

MLX contends that TCR Affiliates are

receiving no additional equity or any fee

as a result of the Pending Merger.

Finally, MLX asserts that the Pending

Merger will permit MLX to acquire a

suitable operating business that will

result in MLX no longer being subject to

the Act. Thus, MLX contends that the

terms of the Pending Merger are

reasonable and fair and do not involve

overreaching.

12. Section 17(d) and rule 17d–1

make it unlawful for any affiliated

person of a registered investment

company, acting as principal, to effect

any transaction in which the company

is a joint or joint and several participant

with the affiliated person unless the

transaction has been approved by order

of the SEC. MLX requests an exemption

pursuant to section 17(d) and rule

17d–1 to the extent necessary to permit

MLX (i) to operate and comply with its

stock option plans and agreements and

(ii) to consummate the Pending Merger

and Related Transactions.

13. MLX believes that compliance

with section 17(d) of the Act and the

rules under the Act would prohibit

operation of and compliance with the

1985 Plan, the 1995 Plan, and Mr.

Waggoner’s Option Agreement. MLX

states that these options were granted as

compensation to various executive

officers and key employees at different

times prior to the Wellman Transaction.

MLX asserts that inability to realize the

value of those options would be unfair

to the officers without the result being

necessary or appropriate in the public

interest.

14. MLX believes that the

participation of TCR Affiliates in the

Pending Merger and Related

Transactions will be on a basis less

advantageous than that of other MLX

shareholders. MLX contends that TCR

Affiliates will be giving up certain

benefits retained by other MLX

shareholders in order to induce Morton

to agree to the Pending Merger and

Related Transactions. MLX states that

under the Shareholder Agreement, TCR

Affiliates will be transferring their

voting rights to Mr. Morton in order to

give Mr. Morton voting control of MLX.

In addition, MLX asserts that the

Shareholders Agreement contains severe

restrictions on TCR Affiliates’ ability to

transfer their shares. Further, MLX

asserts that under the Voting

Agreement, TCR Affiliates have agreed

to vote their shares in MLX in favor of

the Recaptalization and Pending Merger.

MLX states that for the reasons stated

above under section 17(a), MLX meets

the standards of rule 17d–1. Thus, MLX

contends that no regulatory purpose

would be served by prohibiting MLX

from consummating the Pending Merger

and Related Transactions.

15. Section 17(f) provides that the

securities and similar investments of a

registered management investment

company must be placed in the custody

of a bank, a member of a national

securities exchange, or the company

itself in accordance with SEC rules.

MLX states that all assets invested

under the Program are in the custody of

qualified banks and the ability of the

banks to transfer money in and out is

subject to numerous restrictions and

checks and balances. Furthermore, MLX

states that those assets are insured up to

$5 million, an amount substantially in

excess of what would be required under

a fidelity bond obtained under section

17(g) of the Act. MLX also states that its

custodial arrangements are consistent

with the substantive requirements of

rule 17f–2 under the Act, except for

paragraph (f) thereof regarding the

requirement for MLX’s independent

accountants to conduct three actual

examinations. MLX also submits that its

financial statements are audited

annually by its independent

accountants.

Applicant’s Conditions

Applicant agrees that any order will

be subject to the following conditions:

1. During the period of time MLX is

exempted from registration under the

Act, MLX 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 MLX’s board of directors,

except that MLX may make equity

investments in issuers that are not

investment companies, as defined in

section 3(a) of the Act (unless an issuer

is covered by a specific exclusion from

the definition of investment company

under section 3(c) other than sections

3(c)(1) and 3(c)(7)), in the following

circumstances: (a) in connection with

the consideration of the possible

acquisition of an operating business as

evidenced by a resolution approved by

MLX’s board of directors, and (b) in

connection with the acquisition of

majority-owned subsidiaries.

2. MLX will allocate and utilize its

accumulated cash and short-term

securities for the purpose of funding

cash requirements for its existing

businesses or far acquiring one or more

new businesses.

3. While any order is in effect, MLX’s

10–K, 10–Q, and annual reports to

shareholders will state that an

exemptive order has been granted under

sections 6(c) and 6(e) of the Act and that

MLX and other persons, in their

transactions and relations with MLX,

are subject to sections 9, 17(a) (except as

discussed in the application), 17(d)

(except as discussed in the application),

17(e), 17(f) (except as discussed in the

application), and 36 through 53 of the

Act as if MLX were a registered

investment company.

4. MLX will obtain an amended order

from the SEC prior to any material

modification of MLX’s custodial

arrangement in a manner not described

in the application.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–32651 Filed 12–12–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IA–1684/803–124]

Thomson Technical Data Corporation;

Notice of Application

December 9, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

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

APPLICANT: Thomson Technical Data

Corporation (‘‘Technical Data’’).

RELEVANT ADVISERS ACT SECTIONS:

Exemption requested under section

203A(c) from section 203A(a).

SUMMARY OF APPLICATION: Applicant

requests an order to permit it to register

with the SEC as an investment adviser.

Filing Dates: The application was

filed on September 25, 1997 and

amended on October 8, 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
65726 Federal Register / Vol. 62, No. 240 / Monday, December 15, 1997 / Notices

1Applicant states that, because certain of its

publications relate to the futures markets, applicant

is registered with the Commodity Futures Trading

Commission as a commodity trading adviser.

2 15 U.S.C. 80b–3a(a)(1).

3 15 U.S.C. 80b–3a(a)(2). 4 15 U.S.C. 80b–3a(c).

Secretary and serving applicant with a

copy of the request, personally or by

mail. Hearing requests should be

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

January 5, 1998, and should be

accompanied by proof of service on

applicant, 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 may request notification of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 5th

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

Applicant, Thomson Technical Data

Corporation, 22 Pittsburgh Street,

Boston, Massachusetts 02210.

FOR FURTHER INFORMATION CONTACT:

Robert J. Leonard, Attorney, at (202)

942–0646, or Jennifer S. Choi, Special

Counsel, at (202) 942–0716 (Division of

Investment Management, Task Force on

Investment Adviser Regulation).

SUPPLEMENTARY INFORMATION: The

following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant is a Delaware

corporation and an indirect, whollyowned subsidiary of Thomson

Corporation. Applicant publishes

various market analyses through the

Dow Jones Markets communication

network and affords clients the

opportunity to contact its analysts by

telephone to discuss the published

information.

2. Applicant’s publications include:

comprehensive technical, fundamental

and statistical analysis of the world’s

major government bond and

international money and deposit

markets; real-time commentary, trading

recommendations and yield curve

analysis to global participants in the

U.S. Treasury market; comprehensive

coverage of the mortgage-backed and

asset-backed securities markets; and

technical and fundamental analysis and

trading recommendations for Canadian

government bonds, money markets and

the Canadian Dollar.

3. Applicant also provides real-time

analysis and commentary on financial,

political and social events that affect the

capital markets of Latin America,

Eastern and Central Europe Asia and

Japan.1

4. Applicant’s services are provided to

clients on a subscription basis, with

rates dependent on the nature and

quantity of specific services subscribed

to by the client. Applicant has

approximately 15,000 subscribers,

located in over sixty countries. Almost

all of applicant’s subscribers are

connected with major financial

institutions or regulatory bodies, such as

Federal Reserve Banks. The largest

portion of applicant’s client base in the

institutional trading desks and sales

staff of national and international

broker-dealers. The second largest

segment of applicant’s client base

consists of commercial banks.

Applicant’s other clients include money

managers, other brokerage houses and

regulators. Less than one-tenth of one

percent of applicant’s clients are

individual investors.

5. Applicant maintains its principal

office and place of business in

Massachusetts. Applicant is registered

as an investment adviser in

Massachusetts and New York. Applicant

was registered as an investment adviser

with the SEC until July 8, 1997.

Applicant’s Legal Analysis

1. On October 11, 1996, the National

Securities Markets Improvement Act of

1996 was enacted. Title III of the Act,

the Investment Advisers Supervision

Coordination Act (‘‘Coordination Act’’),

added new section 203A to the Advisers

Act. Under section 203A(a)(1),2 an

investment adviser that is regulated or

required to be regulated as an

investment adviser in the state in which

it maintains its principal office and

place of business is prohibited from

registering with the SEC unless the

investment adviser (i) has assets under

management of not less than $25

million or (ii) is an adviser to an

investment company registered under

the Investment Company Act of 1940

(‘‘Investment Company Act’’) Section

203A(a)(2) defines the phrase ‘‘assets

under management’’ as the ‘‘securities

portfolios with respect to which an

investment adviser provides continuous

and regular supervisory or management

services.’’ 3

2. Applicant states that the

Coordination Act was designed to

optimize the distribution of regulatory

resources and ease the burden of

duplicative or inconsistent regulation by

dividing advisers into two broad

categories: those whose activities are

deemed to be national in scope, who are

to be regulated primarily by the SEC,

and those whose activities are of a more

local nature, who are to be regulated

primarily by the states.

3. Section 203A(c) of the Advisers Act

authorizes the SEC to permit an

investment adviser to register with the

SEC if prohibiting registration would be

‘‘unfair, a burden on interstate

commerce, or otherwise inconsistent

with the purposes of [section 203A).’’ 4

4. Applicant states that it does not

qualify for SEC registration. Applicant

states that it has no assets under

management, does not act as an

investment adviser to a registered

investment company, and does not

qualify for any exemption under rule

203A–2. Applicant also maintains its

principal office and place of business in

Massachusetts, which regulates its

investment adviser activities.

5. Applicant states that it would be

inconsistent with the purposes of the

Coordination Act to prohibit applicant

from registering with the SEC because it

provides services to institutional clients

whose activities affect billions of dollars

in assets and have a significant effect on

national securities markets. Applicant

believes that it exerts an influence on

the national markets similar to that

exerted by both nationally recognized

statistical rating organizations

(‘‘NRSROs’’) and pension consultants.

6. Applicant states that almost all of

its clients are institutional traders, sales

people, bankers and money managers

who collectively move billions of

dollars of assets through the fixedincome, foreign exchange and capital

markets. Applicant states that

institutional trading desks of national

and international broker-dealers and

money managers that subscribe to

applicant’s real-time analyses,

commentary and trading

recommendation publications use this

information to assist them in evaluating

instruments and market conditions

when making purchase and sale

decisions and determining trading

strategies. Applicant believes that

purchases, sales, and implementations

of trading strategies result in billions of

dollars of fixed-income and foreign

exchange transactions moving through

the national markets. Applicant also

asserts that its clients, such as the

Federal Reserve Banks and other federal

and state regulatory bodies, exert their

own special influence on the national

markets.

7. Applicant states that the SEC

exempted from the prohibition on

federal registration NRSROs recognizing

that, although NRSROs only provide

impersonal advisory services and do not

manage any assets, these advisers’
Federal Register / Vol. 62, No. 240 / Monday, December 15, 1997 / Notices 65727

5Rules Implementing Amendments to the

Investment Advisers Act of 1940, Investment

Advisers Act Release No. 1601 (Dec. 20, 1996), 62

FR 68480 at Section II.D.1 (release proposing rules

to implement amendments to the Advisers Act).

6 Id. at Section II.D.2.

activities have a significant effect on the

national securities markets, thereby

making them appropriate candidates for

federal registration under the

conceptual framework established by

the Coordination Act.5

8. Applicant states that the SEC also

exempted from the prohibition on

Federal registration pension consultants

who provide investment advice to plans

with assets having an aggregate value of

at least $50 million. Applicant states

that, like NRSROs, pension consultants

do not exercise direct investment

discretion over client portfolios, but

their advice affects the management of

billions of dollars of assets.6 Applicant

states that the SEC concluded that it

would be inconsistent with the

purposes of the Coordination Act for

pension consultants to be regulated by

the states rather than the federal

government because of their effect on

national markets.

9. Applicant also asserts that the

states should have little or no interest in

regulating applicant, which has a

majority of institutional clients. Less

than one-tenth of one percent of

applicant’s clients are individual

investors. Applicant submits that the

primary interest of the states is not in

the protection of institutional clients.

10. Applicant states that, although the

Coordination Act generally preempts

state law with respect to SEC-registered

advisers and their supervised persons, it

does permit states to license, register or

otherwise qualify any ‘‘investment

adviser representative’’ who has a place

of business within the state. Applicant

asserts that the Commission, in defining

investment adviser representative,

determined that states should not

regulate either those supervised persons

who service a predominantly

institutional clientele or those who

render only impersonal services.

Applicant believes that, by expanding

the class of advisers who qualify for

federal registration and restricting the

class of supervised persons subject to

state control, the SEC effectuated

Congress’ intent to limit state regulation

to activities that have a primarily

localized effect and that institutional

advisory activities be regulated by the

federal government.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–32653 Filed 12–12–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39411; File No. SR–Amex–

97–40]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the American Stock Exchange, Inc.

Relating to Proposed Revisions to the

Exchange’s Policy Regarding the Use

of Wireless Data Communications

Devices

December 8, 1997.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on October 29, 1997,

the American Stock Exchange, Inc.

(‘‘Amex’’ 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 self-regulatory

organization. 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 is proposing to amend

its policy regarding the use of wireless

data communications devices on the

trading floor. The text of the proposed

rule change is available at the Office of

the Secretary, the Amex 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 forth 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

The Exchange has undertaken to build

an infrastructure (‘‘Infrastructure’’) to

support wireless data communications

on the Trading Floor by members and

Exchange staff. On September 26, 1996,

the Commission approved various rule

changes and a policy regarding the use

of wireless data communications

devices on the Trading Floor (the

‘‘Wireless Communications Policy’’).

The Exchange developed the Wireless

Communications Policy based upon a

design for the Infrastructure that called

for all wireless data transmissions to

pass through a gateway (‘‘Gateway’’).

This would have permitted the

Exchange to make a record of all

wireless communications and to

unilaterally ‘‘throttle’’ all, or selected,

member communications in the event

that such transmissions used a

disproportionate amount of the

available radio frequency or threatened

to exceed available radio frequency

capacity.

In late 1996, the Exchange reviewed

the design of the Infrastructure. During

this review, the Exchange determined

that there was no immediate need for

throttling and that it was unclear when

it might become necessary. The

Exchange concluded that since there

was no need for throttling, there was no

need for a Gateway and that, if and

when necessary, throttling could be

accomplished by the member firms

without a Gateway. As a result of this

review, the Exchange determined that

since the Gateway was unnecessary,

costly for both the Exchange and its

members, and difficult to develop and

implement, the Exchange would build

the Infrastructure without a Gateway.

The Exchange, accordingly, is now

proposing to modify the Wireless

Communications Policy to reflect the

redesign of the Infrastructure to

eliminate the Gateway.

As noted above, the Gateway would

have permitted the Exchange to record

all wireless communications. This

would have created a data base at the

Exchange that would have largely

duplicated records already maintained

by member firms pursuant to SEC and

Exchange rules. The elimination of the

Gateway will eliminate this duplicative

data base. The revised Wireless

Communications Policy, accordingly,

will state that members that have

developed wireless technology will be

responsible for maintaining such

records as may be required by Exchange