70850 Federal Register / Vol. 65, No. 229 / Tuesday, November 28, 2000 / Notices

1Three of the Acquired Funds did not obtain

sufficient votes to approve their respective

Reorganization. On November 13, 2000, the Boards

of these three Acquired Funds voted to approve the

Reorganizations, pursuant to authority granted in

the Funds’ Declarations of Trust.

1 15 U.S.C. 78k–1.

2 17 CFR 240.11Aa3–2.

3On July 28, 2000, the Commission approved a

national market system plan for the purpose of

creating and operating an intermarket options

market linkage proposed by the American Stock

Exchange LLC (‘‘Amex’’), the Chicago Board

Options Exchange, Inc. (‘‘CBOE’’), and the

International Securities Exchange LLC (‘‘ISE’’). See

Securities Exchange Act Release No. 43086 (July 28,

2000), 65 FR 48023 (August 4, 2000).

imposed in connection with the

Reorganization. 5. The Boards, including a majority of

the Independent Trustees, determined

that participation in the Reorganization

is in the best interests of each Fund, and

that the interests of existing

shareholders of each Fund will not be

diluted as a result of the Reorganization.

In assessing the Reorganization, the

Boards considered a number of factors,

including: (a) The terms and conditions

of the Reorganization; (b) the potential

administrative benefits and savings that

may be achieved from the simplified

structure; (c) the tax-free nature of the

reorganization; (d) the compatibility of

the investment objectives, policies and

restrictions among the Funds; and (e)

the greater likelihood of asset growth

that potentially may result from a more

familiar structure and the greater

economies of scale that can be achieved

from such asset growth, including

without limitation lower management

fees that take effect at certain asset level

breakpoints. The Funds will bear the

expenses associated with the

Reorganization, as determined by the

Board of each Fund.

6. The consummation of the

Reorganization is subject to various

conditions, including: (a) The approval

of the Reorganization by the

shareholders of each Acquired Fund; (b)

completion of all filings with, and

receipt of all necessary approvals from,

the Commission; and (c) delivery of

legal opinions regarding the federal tax

consequences of the Reorganization.

The Reorganization Plan for an

Acquired Fund may be terminated at

any time prior to the Closing Date if the

Board of either that Acquired Fund or

the Acquiring Fund determines in good

faith that the Reorganization is not in

the best interests of the shareholders.

Applicants agree not to make any

changes to the Reorganization Plan that

materially affect the application without

prior approval of the Commission staff. 7. A prospectus/proxy statement was

filed with the Commission on June 26,

2000, and was mailed to the Acquired

Fund shareholders beginning the week

of August 28, 2000. The shareholders of

the Acquired Funds considered and

approved the Reorganization on October

31, 2000.1

Applicants’ Legal Analysis

1. Section 17(a) of the Act generally

prohibits an affiliated person of a

registered investment company, or an

affiliated person of such a person, acting

as principal, from selling any security

to, or purchasing any security from, the

company. Section 2(a)(3) of the Act

defines an ‘‘affiliated person’’ of another

person to include: (a) Any person

directly or indirectly owning,

controlling, or holding with power to

vote 5% or more of the outstanding

voting securities of the other person; (b)

any person 5% or more of whose

securities are directly or indirectly

owned, controlled, or held with power

to vote by the other person; (c) any

person directly or indirectly controlling,

controlled by or under common control

with the other person, and (d) if the

other person is an investment company,

any investment adviser of that company.

Applicants state that the Funds may be

deemed affiliated persons and, thus, the

Reorganization may be prohibited by

section 17(a).

2. Rule 17a–8 under the Act exempts

from the prohibitions of section 17(a)

mergers, consolidations, or purchases or

sales of substantially all of the assets of

registered investment companies that

are affiliated persons, or affiliated

persons of an affiliated person, solely by

reason of having a common investment

adviser, common directors, and/or

common officers, provided that certain

conditions set forth in the rule are

satisfied. Applicants state that they may

not rely on rule 17a–8 because the

Funds may be deemed to be affiliated

for reasons other than those set forth in

the rule. Applicants state that more than

5% of the outstanding shares of certain

Funds is held beneficially or of record

by either NBMI, Neuberger Berman, or

individual Neuberger Berman officers

and/or directors of affiliated entities of

such individuals. Applicants also state

that certain third parties are the record

owners of 5% or more of each of two

Funds. Under section 2(a)(3)(A) of the

Act, NBMI, Neuberger Berman and these

individuals/entities could be deemed

‘‘affiliated persons’’ of the Funds whose

shares they own. Applicants further

state that certain Funds may be deemed

affiliated persons of affiliated persons of

one another because each owns 5% or

more of the outstanding voting

securities of the same Master Fund.

Thus, each of the Acquired Funds might

be deemed to be an affiliated person of

an affiliated person of an Acquiring

Fund for reasons other than those set

forth in rule 17a–8.

3. Section 17(b) of the Act provides,

in relevant part, that the Commission

may exempt a transaction from the

provisions of section 17(a) if the

evidence establishes that 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 that the proposed

transaction is consistent with the policy

of each registered investment company

concerned and with the general

purposes of the Act.

4. Applicants request an order under

section 17(b) of the Act exempting them

from section 17(a) of the Act to the

extent necessary to permit applicants to

complete the proposed Reorganization.

Applicants submit that the

Reorganization satisfies the standards of

section 17(b) of the Act. Applicants state

that the terms of the proposed

Reorganization are fair and reasonable

and do not involve overreaching.

Applicants also state that the Boards,

including all of the Independent

Trustees, found that participation in the

Reorganization is in the best interests of

each Fund and that interests of the

existing shareholders will not be diluted

as a result of the Reorganization.

Applicants further state that the

Reorganization will be based on the

Funds’ relative NAVs.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–30245 Filed 11–27–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43574, File No. 4–429]

Joint Industry Plan; Order Approving

an Amendment To the Options

Intermarket Linkage Plan to Add the

Pacific Exchange, Inc. as a Participant

November 16, 2000.

I. Introduction

On September 20, 2000, the Pacific

Exchange, Inc. (‘‘PCX’’ or ‘‘Exchange’’)

submitted to the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) in accordance with

section 11A of the Securities Exchange

Act of 1934 (‘‘Act’’)1 and Rule 11Aa3–

2 thereunder,2 a proposed amendment

to the Options Intermarket Linkage Plan

(‘‘Linkage Plan’’)3 to become a

Federal Register / Vol. 65, No. 229 / Tuesday, November 28, 2000 / Notices 70851

4See Securities Exchange Act Release No. 43310

(September 20, 2000), 65 FR 58583. 5On September 20, 2000, the Commission

approved the Phlx as a participant to the Linkage

Plan on a temporary basis. See Securities Exchange

Act Release No. 43311 (September 20, 2000), 65 FR

58584 (September 29, 2000). The Commission notes

that it is concurrently approving a proposed

amendment approving the Phlx as a participant to

the Linkage Plan on a permanent basis. See

Securities Exchange Act Release No. 43573

(November 16, 2000).

6The Linkage Plan defines as ‘‘eligible exchange’’

as a national securities exchange registered with the

Commission pursuant to Section 6(a) of the Act, 15

U.S.C. 78f(a), that is a participant in the Options

Clearing Corporation and a party to the Options

Price Reporting Authority Plan for Reporting of

Consolidated Options Last Sale Reports and

Quotation Information.

7 15 U.S.C. 78k–1(a)(1)(D).

8 17 CFR 240.11Aa3–2.

9 15 U.S.C. 78k–1.

10 15 U.S.C. 78k–1(a)(3)(B).

11 17 CFR 240.11Aa3–2.

12 17 CFR 200.30–3(a)(29).

1 15 U.S.C. 78k–1.

2 17 CFR 240.11Aa3–2.

3On July 28, 2000, the Commission approved a

national market system plan for the purpose of

creating and operating an intermarket options

market linkage proposed by the American Stock

Exchange LLC (‘‘Amex’’), the Chicago Board

Options Exchange, Inc. (‘‘CBOE’’), and the

International Securities Exchange LLC (‘‘ISE’’). See

Securities Exchange Act Release No. 43086 (July 28,

2000), 65 FR 48023 (August 4, 2000).

4See Securities Exchange Act Release No. 43311

(September 20, 2000), 65 FR 58584.

5On September 20, 2000, the Commission

approved the PCX as a participant to the Linkage

Plan on a temporary basis. See Securities Exchange

Act Release No. 43310 (September 20, 2000), 65 FR

58583 (September 29, 2000). The Commission notes

that it is concurrently approving a proposed

amendment approving the PCX as a participant to

the Linkage Plan on a permanent basis. See

Securities Exchange Act Release No. 43574

(November 16, 2000).

6The Linkage Plan defines an ‘‘eligible exchange’’

as national securities exchange registered with the

Commission pursuant to Section 6(a) of the Act, 15

U.S.C. 78f(a), that is a participant in the Options

Clearing Corporation and a party to the Options

Price Reporting Authority Plan for Reporting of

Consolidated Last Sale Reports and Quotation

Information.

participant to the Linkage Plan. Notice

of filing and an order granting

temporary effectiveness of the proposal

through January 18, 2001 was published

in the Federal Register on September

29, 2000.4 The Commission did not

receive any comments on the proposal.

This order approves the proposed

amendment on a permanent basis.

II. Discussion

The current participants to the

Linkage Plan are the Amex, CBOE, ISE,

PCX, and Philadelphia Stock Exchange,

Inc. (‘‘Phlx’’).5 The proposed

amendment to the Linkage Plan would

add the PCX as a participant to the

Linkage Plan on a permanent basis. The

PCX has submitted a signed copy of the

Linkage Plan to the Commission in

accordance with the procedures set

forth in the Linkage Plan regarding the

admission of new participants. Sections

4(c) and 5(c)(ii) of the Linkage Plan

provide for the admission of new

participants, in which eligible

exchanges 6 may become a party to the

plan by: (i) Executing a copy of the plan,

as then in effect; (ii) effecting an

amendment to the plan reflecting the

addition of the new participant’s name

and obtaining the Commission’s

approval of the plan as amended to

reflect the new participant; and (iii)

paying the applicable fee.

After careful review, the Commission

finds that the proposed Linkage Plan

amendment is consistent with the

requirements of the Act and the rules

and regulations thereunder.

Specifically, the Commission believes

that the proposed amendment, which

permits the PCX to become a participant

to the Linkage Plan, is consistent with

Congress’ goal, as set forth in section

11A(a)(1)(D) of the Act,7 in which

Congress found that the linking of all

markets for qualified securities through

communication and data processing

facilities will foster efficiency, enhance

competition, increase the information

available to brokers, dealers, and

investors, facilitate the offsetting of

investors’ orders, and contribute to best

execution of such orders. The

Commission believes the proposed

amendment to include PCX as a

participant in the Linkage Plan is also

consistent with Rule 11Aa3–2 8 under

the Act in that it will contribute to the

maintenance of fair and orderly markets

and remove impediments to and perfect

the mechanisms of a national market

system by allowing the linked markets

to more easily access better prices

available on the participant exchanges.

The Commission believes that it is

necessary and appropriate in the public

interest, for the maintenance of fair and

orderly markets, to remove impediments

to, and perfect mechanisms of, a

national market system to allow the PCX

to become a participant in the Linkage

Plan. The Commission finds, therefore,

that approving the proposed Linkage

Plan amendment is appropriate and

consistent with section 11A of the Act.9

III. Conclusion

It Is Therefore Ordered, pursuant to

section 11A(a)(3)(B) of the Act 10 and

Rule 11Aa3–2 thereunder,11 that the

proposed Linkage Plan amendment is

approved and the PCX is authorized to

act jointly with the other participants to

the Linkage Plan in planning,

developing, operating, or regulating the

intermarket linkage plan as a means of

facilitating a national market system.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

Jonathan G. Katz,

Secretary.

[FR Doc. 00–30192 Filed 11–27–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43573, File No. 4–429]

Joint Industry Plan; Order Approving

an Amendment to the Options

Intermarket Linkage Plan to Add the

Philadelphia Stock Exchange, Inc. as a

Participant

November 16, 2000.

I. Introduction

On September 20, 2000, the

Philadelphia Stock Exchange, Inc.

(‘‘Phlx’’ or ‘‘Exchange’’) submitted to the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) in accordance

with section 11A of the Securities

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

11Aa3–2 thereunder,2 a proposed

amendment to the Options Intermarket

Linkage Plan (‘‘Linkage Plan’’) 3 to

become a participant to the Linkage

Plan. Notice of filing and an order

granting temporary effectiveness of the

proposal through January 18, 2001 was

published in the Federal Register on

September 29, 2000.4 The Commission

did not receive any comments on the

proposal. This order approves the

proposed amendment on a permanent

basis.

II. Discussion

The current participants to the

Linkage Plan are the Amex, CBOE, ISE,

Pacific Exchange, Inc. (‘‘PCX’’), and

Phlx.5 The proposed amendment to the

Linkage Plan would add the Phlx as a

participant to the Linkage Plan on a

permanent basis. The Phlx has

submitted a singed copy of the Linkage

Plan to the Commission in accordance

with the procedures set forth in the

Linkage Plan regarding the admission of

new participants. Sections 4(c) and

5(C)(ii) of the Linkage Plan provide for

the admission of new participants, in

which eligible exchanges 6 may become

a party to the plan by: (i) Executing a

copy of the plan, as then in effect; (ii)

effecting an amendment to the plan

reflecting the addition of the new

participant’s name and obtaining the

Commissions approval of the plan as