Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Notices 6645

requirements under the Act, among

others, on condition that they comply

with all but certain designated

provisions of the Act and meet the other

requirements of the rule. The rule sets

forth several information collection

requirements.

Rule 6e–2 provides a separate account

with an exemption from the registration

provisions of section 8 of the Act if the

account files with the Commission Form

N–6EI–1, a notification of claim of

exemption.

The rule also exempts a separate

account from a number of other sections

of the Act, provided that the separate

account makes certain disclosure in its

registration statements, reports to

contractholders, proxy solicitations, and

submissions to state regulatory

authorities, as prescribed by the rule.

Paragraph (b)(9) of Rule 6e–2 provides

an exemption from the requirements of

section 17(f) of the Act and imposes a

reporting burden and certain other

conditions. Section 17(f) requires that

every registered management company

meet various custody requirements for

its securities and similar investments.

Paragraph (b)(9) applies only to

management accounts that offer life

insurance contracts subject to Rule 6e–

2.

Since 1997, there have been no filings

under paragraph (b)(9) of Rule 6e–2 by

management accounts. Further, all

variable life separate accounts that have

filed post-effective amendments to their

registration statements during this

period have been structured as unit

investment trusts and thus have not

been subject to the requirements of

paragraph (b)(9) of the rule. Therefore,

since 1997, there has been no cost or

burden to the industry regarding the

information collection requirements of

paragraph (b)(9) of Rule 6e–2.

Written comments are invited on: (a)

whether the proposed collection of

information is necessary for the proper

performance of the functions of the

agency, including whether the

information shall have practical utility;

(b) the accuracy of the agency’s estimate

of the burden of the proposed collection

of information; (c) ways to enhance the

quality, utility, and clarity of the

information to be collected; and (d)

ways to minimize the burden of the

collection of information on

respondents, including through the use

of automated collection techniques or

other forms of information technology.

Consideration will be given to

comments and suggestions submitted in

writing within 60 days of this

publication.

Direct your written comments to

Michael E. Bartell, Associate Executive

Director, Office of Information

Technology, Securities and Exchange

Commission, 450 Fifth Street, N.W.

Washington, D.C. 20549.

Dated: February 3, 2000.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–3032 Filed 2–9–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

24278; 812–11562]

First American Investment Funds, Inc.,

et al.; Notice of Application

February 4, 2000.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of an application under

sections 6(c), 10(f), and 17(b) of the

Investment Company Act of 1940

(‘‘Act’’) for an exemption from sections

10(f) and 17(a)(1) of the Act.

SUMMARY OF THE APPLICATION: The

requested order would permit certain

registered management investment

companies to purchase certain securities

from an affiliated underwriter and

through group orders placed with an

underwriting syndicate that includes

the affiliated underwriter.

APPLICANT: First American Investment

Funds, Inc. (‘‘FAIF’’); Minnesota

Municipal Income Portfolio, Inc.;

Minnesota Municipal Term Trust, Inc.;

Minnesota Municipal Term Trust, Inc.-

II.; U.S. Bank National Association

(‘‘U.S. Bank’’); and U.S. Bancorp Piper

Jaffray Inc. (‘‘Piper Jaffray’’).

FILING DATES: The application was filed

on April 2, 1999 and was amended on

December 22, 1999. Applicants have

agreed to file an additional amendment,

the substance of which is incorporated

in this notice, during the notice period.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the Commission orders a

hearing. Interested persons may request

a hearing by writing to the

Commission’s Secretary and serving

applicants with a copy of the request,

personally or by mail. Hearing requests

should be received by the Commission

by 5:30 p.m. on February 29, 2000 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 may request

notification by writing to the

Commission’s Secretary.

ADDRESSES: Secretary, Securities and

Exchange Commission, 450 Fifth Street,

NW., Washington, DC 20549-0609.

Applicants, c/o James D. Alt, Esq.,

Dorsey & Whitney LLP, 220 South Sixth

Street, Minneapolis, MN 55402.

FOR FURTHER INFORMATION CONTACT:

Rachel H. Graham, Senior Counsel, at

(202) 942–0583, or Nadya B. Roytblat,

Assistant Director, 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

Commission’s Public Reference Branch,

450 Fifth Street, N.W., Washington, D.C.

20549–0102 (telephone (202) 942–8090).

Applicants’ Representations

1. FAIF is an open-end management

investment company registered under

the Act. FAIF offers its shares in several

series, including the Minnesota

Intermediate Tax Free Fund and the

Minnesota Tax Free Fund. Minnesota

Municipal Income Portfolio, Inc.,

Minnesota Municipal Term Trust, Inc.,

and Minnesota Municipal Term Trust,

Inc.-II are closed-end management

investment companies registered under

the Act. The two named series of FAIF,

together with the three closed-end

investment companies, collectively are

referred to in this notice as the ‘‘Funds.’’

The Funds invest primarily in debt

securities of the State of Minnesota, its

political subdivisions, authorities,

agencies, instrumentalities and

corporations, the interest on which is

exempt from federal and Minnesota

personal income taxes (‘‘Minnesota TaxExcempt Securities’’).

2. U.S. Bank, which is exempt from

registration as an investment adviser

under the Investment Advisers Act of

1940 (‘‘Advisers Act’’) pursuant to

section 202(a)(11) of the Advisers Act,

serves as investment adviser to each

Fund. U.S. Bank is a wholly-owned

subsidiary of U.S. Bancorp.

3. Piper Jaffray, a registered brokerdealer and investment banking firm, is

a wholly-owned indirect subsidiary of

U.S. Bancorp. Applicants state that

Piper Jaffray is one of the leading

underwriters of most types of Minnesota

Tax-Exempt Securities based on both

dollar volume and number of new

issues. In 1998, Piper Jaffray served as

underwriter of approximately $2.4

billion in principal amount of

Minnesota Tax-Exempt Securities.

According to applicants, this amount

6646 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Notices

1A group order is an order that is allocated to all

members of an underwriting syndicate in

proportion to their relative participations.

2Each Fund that currently intends to rely on the

requested order is named as an applicant. Any

Future Fund that relies on the requested relief will

do so only in compliance with the terms and

conditions of the application.

3 In a designated order, the purchaser designates

one or more syndicate members to receive the credit

for sale. In a member order, the purchaser places

an order directly with a member of the syndicate

that retains that portion of the commission not

retained by the manager.

represented approximately 46% of the

total dollar amount, and approximately

24% of the total number, of new issues

of Minnesota Tax-Exempt Securities

during that year.

4. Applicants request relief under

section 10(f) from section 10(f) and

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

section 17(a)(1) to permit the Funds to

purchase Minnesota Tax-Exempt

Securities from Piper Jaffray, when

Piper Jaffray is the sole underwriter of

these securities or these securities are

unavailable from other members of an

underwriting syndicate. Applicants also

request relief under these sections to

permit the Funds to purchase Minnesota

Tax-Exempt Securities through group

orders placed with an underwriting

syndicate of which Piper Jaffray is a

member. 1 The requested order would

not permit transactions between Piper

Jaffray and the Funds in other securities

or in Minnesota Tax-Exempt Securities

sold in the secondary market.

5. Applicants request that any relief

granted pursuant to the application also

apply to all current and future series of

FAIF and to any other registered

management investment companies

organized in the future that are advised

or subadvised by U.S. Bank (or a person

controlling, controlled by, or under

common control with U.S. Bank) and

that invest primarily in Minnesota TaxExempt Securities (collectively, ‘‘Future

Funds’’).2

Applicants’ Legal Analysis

1. Section 10(f) of the Act, in relevant

part, prohibits a registered investment

company from purchasing securities

from an underwriting syndicate in

which an affiliated person of the

company’s investment adviser acts as a

principal underwriter. Under section

2(a)(3) of the Act, Piper Jaffray is an

affiliated person of U.S. Bank because

both entities are under the control of

U.S. Bancorp.

2. Section 10(f) further provides that

the Commission, by rule or order, may

exempt any transaction or class of

transactions from section 10(f) to the

exempt that the exemption is consistent

with the protection of investors. Rule

10f–3 under the Act permits a registered

investment company to make purchases

otherwise prohibited by section 10(f)

under certain conditions. Under the

rule, the company may not purchase the

securities being offered directly or

indirectly from its affiliated

underwriter, and purchases of

municipal securities may not be

designated as group sales or otherwise

allocated to the account of the affiliated

underwriter.

3. Section 17(a)(1) of the Act, in

relevant part, prohibits an affiliated

person of a registered investment

company, or an affiliated person of such

person, acting as principal, from selling

securities to the investment company.

Under section 17(b) of the Act, the

Commission will exempt a transaction

from the provisions of section 17(a) if it

finds that the terms of the proposed

transaction are fair and reasonable and

do not involve overreaching on the part

of any person concerned, and that the

proposed transaction is consistent with

the policy of the registered investment

company and the general purposes of

the Act. Section 6(c) of the Act, in

relevant part, permits the Commission

to exempt any transaction or class of

transactions from any provision of the

Act if, and to the extent that, the

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.

4. Applicants assert that the supply of

newly-issued Minnesota Tax-Exempt

Securities has remained relatively stable

over the past several years, while the

demand for these securities has been

increasing. Applicants state that, in

their experience, group orders generally

are given priority over designated orders

and member orders in underwritings of

Minnesota Tax-Exempt Securities.3 Due

to the priority given to group orders, the

Funds may not be able to purchase

Minnesota Tax-Exempt Securities

through designated orders or member

orders in an offering that is

oversubscribed. Applicants assert that

the Funds therefore may be precluded

from making purchases in any

oversubscribed offering where Piper

Jaffray is a member of the underwriting

syndicate. As noted above, applicants

assert that Piper Jaffray is one of the

leading underwriters of most types of

Minnesota Tax-Exempt Securities.

5. Applicants assert that the Funds are

largely dependent upon the new issue

market for Minnesota Tax-Exempt

Securities in order to meet their

portfolio needs. According to

applicants, the availability of Minnesota

Tax-Exempt Securities in the secondary

market is unpredictable because, among

other reasons, a substantial portion of

these securities are held to maturity by

their original purchasers. Applicants

also assert that prices may be higher in

the secondary market because of dealer

markups and, because secondary market

purchases are often made at a discount

to par, a portion of the return on the

securities purchased may be treated as

taxable income.

6. Applicants state that permitting the

Funds to buy Minnesota Tax-Exempt

Securities directly from Piper Jaffray

when the securities are unavailable from

another underwriter, or through group

orders when Piper Jaffray is a member

of the underwriting syndicate for the

securities, would benefit the

shareholders of the Funds by providing

the Funds with adequate access to the

new issue market for Minnesota TaxExempt Securities. Applicants assert

that, as a condition to the requested

relief, the Funds, together with all other

persons for whom U.S. Bank and its

affiliates have investment discretion

(collectively, ‘‘Related Purchasers’’)

would be prohibited from purchasing a

majority or more of any class of an issue

of Minnesota Tax-Exempt Securities

when Piper Jaffray is an underwriter of

the securities. This condition would

operate in addition to the requirement

in rule 10f–3(b)(7)(i) that the aggregate

amount of securities of any class of

Minnesota Tax-Exempt Securities

purchased by the Funds, together with

all other investment companies advised

by U.S. Bank, may not exceed 25% of

the principal amount of the offering of

that class. According to applicants,

these two requirements would protect

the Funds against the dumping of

unmarketable securities.

7. Applicants note that, as a further

condition to the requested relief, the

aggregate value of Minnesota TaxExempt Securities held by a fund and

acquired pursuant to the order may not

exceed 50% of the Fund’s total net

assets. According to applicants, this

condition should ensure that no Fund is

operated primarily as a vehicle for

purchasing securities in transactions

permitted by the order. Applicants state

that the order also would be

conditioned on certain procedural

safeguards designed to protect the

independence of U.S. Bank in making

investment decisions on behalf of the

Funds and to ensure appropriate

oversight of all transactions effected in

reliance on the order. Applicants further

state that the requested order meets the

standards for relief set forth in sections

6(c), 10(f), and 17(b) of the Act.

Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Notices 6647

Applicant’s Conditions

Applicants agree that the order will be

subject to the following conditions:

1. Transactions effected pursuant to

the order will be effected in accordance

with all of the provisions of rule 10f–3,

other than paragraph (b)(8). At least a

majority of any class of an issue of

Minnesota Tax-Exempt Securities

purchased pursuant to the order must be

purchased by persons who are not

Related Purchasers. If the aggregate

number of securities the Related

Purchasers wish to acquire exceeds the

permitted amount, the securities

acquired will be allocated to each

Related Purchaser in the proportion that

the number of securities that such

Related Purchaser wishes to acquire

bears to the total number of securities

that all Related Purchasers wish to

acquire.

2. Purchases of Minnesota TaxExempt Securities directly from Piper

Jaffray or from a syndicate manager of

an underwriting syndicate of which

Piper Jaffray is a member when the

purchases are designated as group sales

may be effected only in Minnesota TaxExempt Securities that, at the time of

purchase, have one of the following

investment grade ratings from at least

one nationally recognized statistical

rating organization: (i) One of the two

highest investment grade ratings in the

case of securities with remaining

maturities of one year or less, or (ii) one

of the three highest investment grade

ratings in the case of securities with

remaining maturities greater than one

year.

3. Purchases of Minnesota TaxExempt Securities directly from Piper

Jaffray or from a syndicate manager of

an underwriting syndicate of which

Piper Jaffray is a member when the

purchases are designated as group sales

will be limited so that no such

transaction will be effected if, as a

result, the aggregate value of Minnesota

Tax-Exempt Securities held by a Fund

and acquired pursuant to the order

would exceed 50% of the total net assets

of that Fund.

4. Purchases of Minnesota TaxExempt Securities directly from Piper

Jaffray or from a syndicate manager of

an underwriting syndicate of which

Piper Jaffray is a member when the

purchases are designated as group sales

will be effected only when the

Minnesota Tax-Exempt Securities to be

acquired are otherwise unavailable for

purchase. If Piper Jaffray is the sole

underwriter of the securities, this

condition is automatically fulfilled

because there is no other potential

seller. When Piper Jaffray is a member

of an underwriting syndicate, U.S. Bank

will observe the following procedures to

determine when the securities are

unavailable from other members of the

syndicate. Initially, U.S. Bank will

determine the aggregate number of

securities that the Related Purchasers

wish to acquire. Next, U.S. Bank will

attempt to purchase as much of this

number as possible from members of the

syndicate other than Piper Jaffray. After

acquiring as many securities as possible

from such other members, U.S. Bank

will attempt to purchase from Piper

Jaffray the number of securities that the

Related Purchasers wish to acquire and

have been unable to obtain from such

other members. The securities acquired

from such other members will be

allocated first to the Funds to the extent

of the number of securities the Funds

wish to acquire, or the number of

securities the Funds are entitled to

acquire based upon the relative needs of

the Related Purchasers and the total

number of securities purchased from

such other members and from Piper

Jaffray, whichever is less.

5. When the Funds purchase

Minnesota Tax-Exempt Securities from

a syndicate manager of an underwriting

syndicate of which piper Jaffray is a

member, the Funds will not: (i) Submit

designated orders to a syndicate

manager that are allocated to Piper

Jaffray; (ii) submit group orders to a

syndicate manager that designate Piper

Jaffray to receive any portion of the

commission; or (iii) otherwise allocate

orders to Piper Jaffray.

6. The exemption will be valid only

so long as U.S. Bank and Piper Jaffray

operate as separate entities and

independent profit centers within the

holding company framework of U.S.

Bancorp, with separate officers and

employees, separate capitalizations, and

separate books and records. Employees

of Piper Jaffray will not participate with,

or seek to influence, U.S. Bank in its

investment decisions as investment

adviser to the Funds, other than in the

normal course of sales activities of the

same nature that are being carried out

simultaneously with respect to

unaffiliated clients of Piper Jaffray.

Senior executives of U.S. Bancorp with

responsibility for overseeing the

operations of various subsidiaries are

not precluded from exercising those

functions over U.S. Bank because they

oversee Piper Jaffray as well, provided

that such persons will not have any

involvement with respect to

transactions effected pursuant to the

exemption and will not attempt to

influence or control the purchase of

securities by the Funds from Piper

Jaffray or an underwriting syndicate of

which Piper Jaffray is a member.

7. U.S. Bank and Piper Jaffray will

adopt a set of guidelines for their

respective personnel to make certain

that transactions conducted pursuant to

the order comply with the conditions

set forth in the application and that the

parties maintain arm’s length

relationships. Compliance officers of

U.S. Bank and Piper Jaffray will

periodically monitor the activities of

their respective companies for

compliance with such guidelines and

with the conditions set forth in the

application.

8. The board of directors of each

Fund, including a majority of the

directors who are not interested persons

under section 2(a)(19) of the Act and

have no direct or indirect financial

interest in the transaction (other than

through ownership of Fund shares), will

review, no less frequently, each

purchase of Minnesota Tax-Exempt

Securities directly from Piper Jaffray or

from a syndicate manager of an

underwriting syndicate of which Piper

Jaffray is a member when the purchases

are designated as group sales since the

last review and will determine that the

terms of such transaction were

reasonable and fair to the shareholders

of the Fund and did not involve

overreaching of the Fund or its

shareholders on the part of any person

concerned. In considering whether the

price paid for the security was

reasonable and fair, the price of the

security will be analyzed with respect to

comparable transactions involving

similar securities being purchased or

sold during a comparable period of

time.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–3086 Filed 2–9–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42378; File No. SR–Amex–

99–39]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the American Stock Exchange LLC

Amending Certain Listing Standards

February 2, 2000.

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

Securities Exchange Act of 1934