Federal Register / Vol. 65, No. 232 / Friday, December 1, 2000 / Notices 75321

1 Variable products include variable annuities

and life insurance products.

2These broker-dealers are American Express

Services Corporation (AESC), which is a wholly

owned subsidiary of TRS, the American Express

Financial Advisors Inc. and IDS Life Insurance

Company, both indirect wholly-owned subsidiaries

of American Express Company, (collectively, the

registered broker-dealers).

3This Arrangement will be available only for

Charge Card customers and not for customers of

TRS’s revolving credit card products. TRS will not

be extending credit to Cardmembers in the Program.

or (3) report of the matching program to

OMB and to Congress.

Stanley F. Mires,

Chief Counsel, Legislative.

[FR Doc. 00–30583 Filed 11–30–00; 8:45 am]

BILLING CODE 7710–12–U

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–43617; File No. 4–436]

Notice of Order Exempting American

Express Travel Related Services

Company, Inc., From Broker-Dealer

Registration

November 24, 2000.

On July 24, 2000, the Commission

issued an order (Exemptive Order)

pursuant to section 15(a) of the

Securities Exchange Act of 1934

exempting American Express Travel

Related Services Company, Inc. (TRS)

from broker-dealer registration. That

same day, TRS’s request for confidential

treatment was granted in a separate

order (Confidential Treatment Order)

until the earlier of (a) 120 days from the

date of the issuance of the Exemptive

Order; or (b) the date that any

information contained in the

application by TRS for exemption or the

Exemptive Order was made publicly

available by TRS. The Exemptive Order

is attached as Exhibit A. The

Confidential Treatment Order is

attached as Exhibit B.

Margaret H. McFarland,

Deputy Secretary.

Exhibit A

Securities and Exchange Commission

[FILE NO. 4–436]

July 24, 2000.

Order Exempting American Express Travel

Related Services Company, Inc., From

Broker-Dealer Registration

I. Background

American Express Travel Related Services

Company, Inc. (TRS), a wholly owned

subsidiary of American Express Company,

has requested an exemption, pursuant to

section 15(a)(2) of the Securities Exchange

Act of 1934 (the Act), from the broker-dealer

registration requirement of section 15(a)(1) of

the Act.

TRS offers individual customers

(Cardmembers) a variety of products and

services, including charge cards such as the

American Express Card, the American

Express Gold Card, and the American

Express Platinum Card (collectively, Charge

Cards). TRS states that Charge Cards are

primarily designed as a method of payment

or a bill paying mechanism and not as a

means of financing purchases of goods or

services.

TRS proposes to establish and operate a

processing arrangement (Arrangement or

Program) for its Cardmembers who invest or

who wish to invest in mutual funds and

variable products 1 distributed by three of

TRS’s affiliates that are registered brokerdealers.2 Under the Program, individual

Cardmembers may appoint TRS as a

processing agent to collect and promptly

remit to the appropriate registered brokerdealer their voluntary, periodic payments for

mutual fund shares or variable products.

A Cardmember must open a brokerage

account with one of the registered brokerdealers in order to participate in the

Program,3 and a Cardmember must advise the

broker-dealer of the amount he or she intends

to invest on a monthly basis, the specific

mutual funds or variable products that he or

she would like to purchase, and the

allocation of investment amounts to each

investment. The Cardmember may increase,

decrease, or suspend investment

contributions under the Arrangement at his

or her discretion.

Cardmembers participating in the Program

will send a single check to a TRS payment

processing center in Chicago, Illinois

(Processing Center) to cover both regular

Charge Card purchases and the purchase of

mutual fund shares or variable products. TRS

will promptly forward the designated part of

the payment to the appropriate broker-dealer.

With respect to mutual fund shares, the

Cardmembers will receive the price that is

computed by the registered broker-dealer

after receipt of the order.

The registered broker-dealers will be

responsible for all securities-related

activities, questions and services, including:

opening accounts, entering orders, executing

transactions, setting up and maintaining

customer files, and distributing order

confirmations and statements after each

payment is processed. The registered brokerdealers will also have the exclusive

responsibility for marketing and distributing

information about the availability of TRS’s

services to Cardmembers. The registered

broker-dealers will disclose to Cardmembers

that they, and not TRS, are offering the

mutual funds or variable products, and that

the intended investment amount is not

covered by the Securities Investor Protection

Corporation while it is in the possession of

TRS. TRS, its employees, and its other

unregistered affiliates will not market the

availability of the Program or the underlying

products and services offered by the

registered broker-dealers.

Moreover, TRS represents that its

Processing Center has elaborate security and

internal control safeguards. TRS has adopted

a number of safeguards and procedures to

ensure the adequate protection of

Cardmembers’ funds designated for

remittance to the respective broker-dealers,

including: (i) automation of the payment

processing procedures; (ii) electronic

surveillance and human supervision of all

sensitive areas of the processing center at all

times; (iii) background checks of all

personnel in special processing areas to

assure that such persons are not statutorily

disqualified as that term is defined under the

securities laws; and (iv) accessibility to TRS’s

books and records for the Commission and

other appropriate regulatory authorities. TRS

notes that not a single check has been stolen

in the Processing Center’s seventeen years of

operation.

In addition, to guarantee the safety of

investors’ funds from the time of receipt by

TRS until remittance to the registered brokerdealers, TRS will obtain a surety bond from

an unaffiliated insurance company with a

Best rating of A or better. The bond will be

increased as necessary so that it equals or

exceeds the amount of the funds TRS collects

and remits to the registered broker-dealers

under this proposal at all times.

TRS will not receive a referral fee from the

registered broker-dealers nor will it receive

any compensation that is based upon the

total dollar amount invested by a

Cardmember. Instead, IRS will charge the

registered broker-dealers a fee designed to

offset the expenses it incurs for providing

this service.

TRS represents that its Cardmembers have

used a similar processing arrangement to

purchase fixed annuity products offered by

AESC and that over the past ten years, $1.65

billion in payments for fixed annuity

products have been processed without a

single investor complaint. TRS indicates that

its Cardmembers have requested this service

for several years because it would give them

an additional choice in how they can invest

and gain access to the securities markets.

TRS represents that approximately twenty

percent of persons who call AESC’s service

representatives to inquire about investmentrelated issues also make unsolicited requests

to invest in connection with paying the

balance due on their Charge Cards. Moreover,

according to TRS, in a survey of

Cardmembers making fixed annuity

payments through the Charge Cards,

approximately 63% identified ease of

payment and convenience as key reasons for

using this payment method.

II. Discussion

Section 3(a)(4) of the Act defines a

‘‘broker’’ as ‘‘any person engaged in the

business of effecting transactions in

securities for the account of others.’’ An

entity meets this definition if it participates

in a meaningful way in any of the key phases

of a securities transaction. One factor used to

determine if an entity’s participation is

meaningful is whether it controls investors’

funds. IRS proposes to collect and remit

funds to the broker-dealers as agent for its

Cardmembers. In other words, TRS will

control Cardmembers’ funds from the time of

receipt until time of remittance to the brokerdealers. The Commission believes that this

75322 Federal Register / Vol. 65, No. 232 / Friday, December 1, 2000 / Notices

4TRS remains subject to all other applicable

provisions of the federal securities laws, including

without limitation Section 10(b) of the Act and Rule

10b–5 thereunder. 5 17 CFR 200.81(b).

proposed activity encompasses a level of

control sufficient to constitute ‘‘effecting

transactions in securities.’’ Because TRS

would conduct this activity on an ongoing

basis, the Commission would deem TRS to be

‘‘in the business.’’ Therefore, TRS’s proposal

would require TRS to register as a brokerdealer with the Commission.

Section 15(a)(2) of the Act authorizes the

Commission to exempt any broker or dealer

or class of brokers or dealers, either

conditionally or unconditionally, from the

registration requirements of section 15(a)(1)

of the Act, if the Commission deems the

exemption consistent with the public interest

and the protection of investors. The

Commission believes that granting TRS’s

request for exemption meets this standard.

The Commission finds that granting this

exemptive order is consistent with the

protection of investors. The registered brokerdealers will have exclusive responsibility for

opening accounts, entering orders, executing

transactions, transferring investment monies

to the appropriate mutual fund companies,

and distributing transaction confirmations

and account statements. TRS employees and

unregistered affiliates will be strictly

prohibited from recommending, endorsing,

responding to questions about, or engaging in

any negotiations involving brokerage

accounts or related securities-transactions.

TRS will guarantee the safety of investors’

funds by obtaining a surety bond, automating

the processing procedures, and surveilling all

sensitive areas at all times. Moreover, TRS

will provide accessibility to its books and

records for the Commission and other

appropriate regulatory authorities.

The Commission also finds that the

requested exemption is consistent with the

public interest. The Arrangement will allow

many investors to invest through a payment

process with which they are already familiar.

TRS states that its proposal is in direct

response to requests from Cardmembers for

this type of service.

It Is Therefore Ordered, pursuant to section

15(a)(2) of the Act, that the application by

TRS for exemption from the registration

requirements of Section 15(a)(1) of the Act

be, and hereby is, granted effective forthwith.

This exemption is conditioned on the

representations made by TRS, as outlined

above, and on TRS not engaging in the

business of buying and selling securities

other than as described herein.

It Is Further Ordered, pursuant to section

36 of the Act, that TRS shall be exempt, with

respect only to the services relating to the

Arrangement described above, from the

reporting and other requirements specifically

imposed by the Act and the rules and

regulations thereunder, on a broker or a

dealer that is not registered with the

Commission.4

By the Commission.

Jonathan G. Katz,

Secretary.

Exhibit B

Securities and Exchange Commission

[FILE NO. 4–436]

July 24, 2000

Order Granting Confidential Treatment for

the Exemption of American Express Travel

Related Services Company, Inc., From

Broker-Dealer Registration

The Commission has issued an order

(Exemptive Order) pursuant to section 15(a)

of the Securities Exchange Act of 1934

exempting American Express Travel Related

Services Company, Inc. (TRS) from brokerdealer registration. The Exemptive Order is

attached as Exhibit A.

In a letter dated May 31, 2000, TRS

requested confidential treatment pursuant to

Rule 81(b) of the Commission’s Regulation

Concerning Information and Requests,5 for

120 days from the issuance of any written

response by the staff. TRS represents that

their request for an exemption and the

Commission’s response to such request

includes sensitive, proprietary, and

confidential information, which is not

available to the public from any other source.

The Division of Market Regulation has

determined that the request for confidential

treatment is reasonable and appropriate.

Therefore, the request for confidential

treatment has been granted until the earlier

of (a) 120 days from the date of issuance of

the Exemptive Order; or (b) the date that any

information contained in the application by

TRS for exemption or the Exemptive Order

is made publicly available by TRS.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 00–30662 Filed 11–30–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 35–27281]

Filings Under the Public Utility Holding

Company Act of 1935, as Amended

(‘‘Act’’)

November 22, 2000.

Notice is hereby given that the

following filing(s) has/have been made

with the Commission pursuant to

provisions of the Act and rules

promulgated under the Act. All

interested persons are referred to the

application(s) and/or declaration(s) for

complete statements of the proposed

transaction(s) summarized below. The

application(s) and/or declaration(s) and

any amendment(s) is/are available for

public inspection through the

Commission’s Branch of Public

Reference.

Interested persons wishing to

comment or request a hearing on the

application(s) and/or declaration(s)

should submit their views in writing by

December 18, 2000, to the Secretary,

Securities and Exchange Commission,

Washington, DC 20549–0609, and serve

a copy on the relevant applicant(s) and/

or declarant(s) at the address(es)

specified below. Proof of service (by

affidavit or, in the case of an attorney at

law, by certificate) should be filed with

the request. Any request for hearing

should identify specifically the issues of

facts or law that are disputed. A person

who so requests will be notified of any

hearing, if ordered, and will receive a

copy of any notice or order issued in the

matter. After December 18, 2000, the

application(s) and/or declaration(s), as

filed or as amended, may be granted

and/or permitted to become effective.

Northeast Utilities, et al. (70–9755)

Northeast Utilities (‘‘NU’’), 174 Brush

Hill Avenue, West Springfield,

Massachusetts 01090–0010, a registered

holding company, its service company

subsidiary, Northeast Utilities Service

Company (‘‘Service’’), P.O. Box 270,

Hartford, Connecticut 06141–0270, and

its public utility subsidiary companies,

Western Massachusetts Electric

Company (‘‘WMECO’’), 174 Brush Hill

Avenue, West Springfield,

Massachusetts, 01090–0010; The

Connecticut Light and Power Company

(‘‘CL&P’’), Northeast Nuclear Energy

Company (‘‘NNECO’’) and Yankee

Energy System, Inc. (‘‘YES’’), all located

at 107 Selden Street, Berlin, Connecticut

06037; Yankee Gas Services Company

(‘‘Yankee Gas’’), 599 Research Parkway,

Meriden, Connecticut 06450; Holyoke

Water Power Company (‘‘HWP’’), Canal

Street, Holyoke, Massachusetts 01040;

and Public Street Company of New

Hampshire (‘‘PSNH’’) and North

Atlantic Energy Corporation (‘‘NAEC’’),

both located at 1000 Elm Street,

Manchester, New Hampshire 03015;

(together, ‘‘Applicants’’) have filed an

application-declaration under sections

6(a), 7, 9(a), 10, 12(b), 13, 32 and 33 of

the Act and rules 43, 45, 52, 90 and 91

under the Act.

By order dated December 28, 1994

(HCAR No. 26207) and Supplemental

Orders dated November 20, 1996 (HCAR

26612), February 11, 1997 (HCAR

26665), March 25, 1997 (HCAR 26692),

May 29, 1997 (HCAR 26721), January

16, 1998 (HCAR 26816), May 13, 1999

(HCAR 27022), November 17, 1999

(HCAR 27103) and November 13, 2000

(HCAR No. 27275) (collectively, the

‘‘Prior Orders’’), the Commission

authorized through December 31, 2000

(‘‘Authorization Period’’), among other