Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices 8115 

amount may be adjusted to reflect 

certain corporate transactions or events 

that affect the applicant’s stock. Grants 

to Non-Employee Directors are limited 

to those described in condition 8 below. 

8. In each fiscal year, a Non-Employee 

Director will be granted 750 Restricted 

Stock Units of Adams and 400 

Restricted Stock Units of Petroleum, as 

applicable, which amounts may be 

adjusted to reflect certain corporate 

transactions. At the effective date of any 

Non-Employee Director’s initial election 

to the Board of an Applicant, such NonEmployee Director will be granted 750 

Restricted Stock Units of Adams and 

400 Restricted Stock Units of Petroleum, 

as applicable, which amounts may be 

adjusted to reflect certain corporate 

transactions. Non-Employee Directors 

will also receive dividend equivalents 

in respect of such Restricted Stock Units 

equal to the amount or value of any cash 

or other dividends or distributions 

payable on an equivalent number of 

shares of common stock. The Restricted 

Stock Units and related dividend 

equivalents will vest (and become nonforfeitable) and be paid (in the form of 

shares of common stock) one year from 

the date of grant. In addition, NonEmployee Directors may elect each year, 

not later than December 31 of the year 

preceding the year as to which the 

annual grant of Restricted Stock Units is 

to be applicable, to defer to a fixed date 

or pursuant to a specified schedule 

payment of all or any portion of the 

annual grant of Restricted Stock Units. 

Any modification of the deferral 

election may be made only upon 

satisfaction of any conditions that the 

relevant Committee may impose. NonEmployee Directors may also elect each 

year, not later than December 31 of the 

year preceding the year as to which 

deferral of fees is to be applicable, to 

defer to a fixed date or pursuant to a 

specified schedule all or any portion of 

the cash retainer to be paid for Board or 

other service related to Board activities 

in the following calendar year through 

the issuance of Deferred Stock Units, 

valued at the Fair Market Value of the 

relevant Applicant’s stock on the date 

when each payment of such retainer 

amount would otherwise be made in 

cash. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–03026 Filed 2–12–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–31451; File No. 812–14359] 

Pacific Life Insurance Company, et al; 

Notice of Application 

February 9, 2015. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order approving the substitution of 

certain securities pursuant to Section 

26(c) of the Investment Company Act of 

1940, as amended (the ‘‘1940 Act’’). 

Applicants: Pacific Life Insurance 

Company (‘‘Pacific Life’’), Pacific Life’s 

Separate Account A (‘‘Separate Account 

A’’), Pacific Life’s Pacific Select Variable 

Annuity Separate Account (‘‘Select VA 

Account’’ and, together with Separate 

Account A, the ‘‘Pacific Life Separate 

Accounts’’), Pacific Life & Annuity 

Company (‘‘PL&A’’), and PL&A’s 

Separate Account A (‘‘PL&A Separate 

Account A’’). Pacific Life, PL&A, and 

the Separate Accounts are referred to 

collectively as the ‘‘Applicants.’’ The 

Pacific Life Separate Accounts and 

PL&A Separate Account A are referred 

to individually as a ‘‘Separate Account’’ 

and collectively as the ‘‘Separate 

Accounts.’’ Pacific Life and PL&A are 

referred to herein individually as an 

‘‘Insurer’’ and collectively as the 

‘‘Insurers.’’ 

SUMMARY: Summary of Application: 

Each Insurer, on behalf of itself and its 

Separate Account(s), seeks an order 

pursuant to Section 26(c) of the 1940 

Act, approving the substitution of 

Service Shares of the Janus Aspen 

Balanced Portfolio, a series of Janus 

Aspen Series (the ‘‘Replacement 

Portfolio’’), for the Advisor Class shares 

of the PIMCO Global Multi-Asset 

Managed Allocation Portfolio, a series of 

the PIMCO Variable Insurance Trust 

(the ‘‘Replaced Portfolio’’) (the 

‘‘Proposed Substitution’’), under certain 

variable annuity contracts issued by the 

Insurers (collectively, the ‘‘Contracts’’). 

DATES: Filing Date: The application was 

filed on September 19, 2014, and 

amended on February 5, 2015. 

Hearing or Notification of Hearing: An 

order granting the requested relief 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 March 4, 2015, and 

should be accompanied by proof of 

service on applicants, in the form of an 

affidavit or, for lawyers, a certificate of 

service. Pursuant to Rule 0–5 under the 

Act, hearing requests should state the 

nature of the writer’s interest, any facts 

bearing upon the desirability of a 

hearing on the matter, the reason for the 

request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

writing to the Commission’s Secretary. 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F Street 

NE., Washington, DC 20549–1090; 

Applicants: Brandon J. Cage, CLU 

Assistant Vice President, Counsel, 

Pacific Life Insurance Company, 700 

Newport Center Drive, Newport Beach, 

CA 92660; Richard T. Choi, Esq., 

Carlton Fields Jorden Burt, P.A., 1025 

Thomas Jefferson St. NW., Suite 400 

East, Washington, DC 20007. 

FOR FURTHER INFORMATION CONTACT: 

Laura L. Solomon, Senior Counsel, at 

(202) 551–6915, or Nadya Roytblat, 

Assistant Chief Counsel, at (202) 551– 

6825 (Chief Counsel’s Office, Division of 

Investment Management). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. The Insurers, on their own behalf 

and on behalf of their respective 

Separate Accounts, propose to 

substitute Service Shares of the 

Replacement Portfolio for Advisor Class 

shares of the Replaced Portfolio held by 

the Separate Account to fund the 

Contracts. Each Separate Account is 

divided into subaccounts (each a 

‘‘Subaccount,’’ collectively, the 

‘‘Subaccounts’’). Each Subaccount 

invests in the securities of a single 

portfolio of an underlying mutual fund 

(‘‘Portfolio’’). Contract owners (each a 

‘‘Contract Owner’’ and collectively, the 

‘‘Contract Owners’’) may allocate some 

or all of their Contract value to one or 

more Subaccounts that are available as 

investment options under the Contracts. 

2. Pacific Life is the depositor and 

sponsor of the Pacific Life Separate 

Accounts. PL&A is the depositor and 

sponsor of PL&A Separate Account A. 

3. Each of the Separate Accounts is a 

‘‘separate account’’ as defined by 

Section 2(a)(37) of the 1940 Act and 

each is registered under the 1940 Act as 

a unit investment trust for the purpose 

of funding the Contracts. Security 

interests under the Contracts have been 


tkelley on DSK3SPTVN1PROD with NOTICES
8116 Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices 

1As of the date of filing of the amended 

application, Applicants are aware of no material 

change to the fee and expense information provided 

in the following table. 

registered under the Securities Act of 

1933. The application sets forth the 

registration statement file numbers for 

the Contracts and the Separate 

Accounts. 

4. Each Insurer, on behalf of itself and 

its Separate Account(s), proposes to 

replace the Advisor Class shares of the 

Replaced Portfolio that are held in 

Subaccounts of its Separate Account(s) 

with Service Shares of the Replacement 

Portfolio. 

5. The Applicants state that the 

Proposed Substitution involves moving 

assets attributable to the Contracts from 

the Replaced Portfolio managed by 

Pacific Investment Management 

Company, LLC (‘‘PIMCO’’) to a 

Replacement Portfolio managed by 

Janus Capital Management LLC (‘‘Janus 

Capital’’) (each of Janus Capital and 

PIMCO, an ‘‘Investment Adviser’’ and 

collectively, the ‘‘Investment 

Advisers’’). Each Investment Adviser is 

responsible for the day-to-day 

management of the assets of the 

Replaced or Replacement Portfolio, as 

the case may be. Neither the Replaced 

nor Replacement Portfolio employs a 

sub-adviser and neither Portfolio 

operates under a manager-of-managers 

arrangement that, among other things, 

would permit the Investment Adviser to 

engage a new or additional sub-adviser 

without the approval of the Portfolio’s 

shareholders. The Applicants state that 

the Investment Advisers are not 

affiliates of the Insurers. 

6. Applicants state that under the 

Contracts, the Insurers reserve the right 

to substitute, for the shares of a Portfolio 

held in any Subaccount, the shares of 

another Portfolio, shares of another 

investment company or series of another 

investment company, or another 

investment vehicle. The prospectuses 

for the Contracts include appropriate 

disclosure of this reservation of right. 

7. The Applicants represent that the 

investment objectives of the Replaced 

and Replacement Portfolio are similar. 

The investment objective of the 

Replaced Portfolio is total return which 

exceeds that of a blend of 60% MSCI 

World Index/40% Barclays U.S. 

Aggregate Index, whereas that of the 

Replacement Portfolio is long-term 

capital growth, consistent with 

preservation of capital and balanced by 

current income. The investment 

objectives of both Portfolios include a 

growth component as well as an income 

component. Additionally, the 

Applicants state that the principal 

investment strategies of the Replaced 

and Replacement Portfolios are similar. 

The principal investment strategies of 

both Portfolios include investment in a 

combination of equity and debt 

securities. The Replaced Portfolio will 

typically invest 50 to 70% (20% 

minimum under normal circumstances) 

of its total assets in equity-related 

investment securities and may invest up 

to 30% of its total assets in fixed income 

securities denominated in foreign 

securities (or beyond this limit in U.S. 

dollar-denominated securities of foreign 

issuers), 15% of its total assets in fixed 

income securities that are economically 

tied to emerging market countries, and 

up to 10% of its total assets in fixed 

income securities in high yield 

securities (i.e., ‘‘junk’’ bonds). The 

Replacement Portfolio normally invests 

35–65% of its assets in equity securities 

and the remaining assets in debt 

securities and cash equivalents, with 

normally 25% of its assets invested in 

fixed-income senior securities. In 

addition, both Portfolios may invest in 

securities of non-U.S. issuers. 

Investment in ‘‘junk’’ bonds is not a 

principal investment strategy of the 

Replacement Portfolio though it may 

invest in such bonds. The principal 

investment strategies of the Replaced 

Portfolio include investments of up to 

5% of its total assets in real estate 

investment trusts or REITS, whereas the 

same is not true for the Replacement 

Portfolio though it may invest in REITs. 

The principal investment strategies of 

the Replaced Portfolio include entering 

into forward commitments, the making 

of short sales of securities or 

maintaining a short position, none of 

which is a principal investment strategy 

of the Replacement Portfolio, though it 

may engage in short sales and invest in 

securities on a forward commitment 

basis. The principal investment 

strategies of the Replacement Portfolio 

include investments in mortgage-backed 

and mortgage-related securities. 

Similarly, mortgage-backed securities 

are included among the types of fixedincome securities that constitute a 

principal investment strategy of the 

Replaced Portfolio. A comparison of the 

investing strategies, risks, and 

performance of the Replaced and 

Replacement Portfolios is included in 

the application. 

8. The following table compares the 

fees and expenses of the Replaced 

Portfolio (Advisor Class shares) and the 

Replacement Portfolio (Service Shares) 

as of the year ended December 31, 2013. 

As shown below, the management fee of 

the Replacement Portfolio is lower than 

that of the Replaced Portfolio. The 

management fees of the Replaced 

Portfolio and the Replacement Portfolio 

are not subject to breakpoints. In 

addition, as shown in the table below, 

the 12b–1 fee of the Service Shares of 

the Replacement Portfolio is the same as 

the 12b–1 fee of the Advisor Class 

shares of the Replaced Portfolio. In both 

cases, the 12b–1 fee is the current 

maximum permitted under the relevant 

plan. Furthermore, as shown in the table 

below, the annual operating expenses of 

the Replacement Portfolio are lower 

than those of the Replaced Portfolio.1

PROPOSED SUBSTITUTION

Replaced portfolio Replacement portfolio 

PIMCO global 

multi-asset managed 

allocation 

portfolio 

Janus Aspen balanced 

portfolio 

Advisor Class/Service Shares: 

Management Fee ............................................................................................................. 0.95% 0.55% 

12b–1 Fee ........................................................................................................................ 0.25% 0.25% 

Other Expenses ................................................................................................................ 0.01% 0.04% 

Acquired Fund Fees ......................................................................................................... 0.52% N/A 

Total Gross Expenses ...................................................................................................... 1.73% 0.84% 

Expense Waiver/Reimbursement ..................................................................................... 0.46 0.00


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices 8117 

PROPOSED SUBSTITUTION—Continued 

Replaced portfolio Replacement portfolio 

PIMCO global 

multi-asset managed 

allocation 

portfolio 

Janus Aspen balanced 

portfolio 

Total Net Expenses ................................................................................................... 1.27% 0.84% 

9. The Applicants state that the 

performance for the Replacement 

Portfolio is substantially better than that 

of the Replaced Portfolio for all periods 

shown. 

10. The Applicants state that the 

Proposed Substitution is part of an 

ongoing effort by the Insurers to make 

their Contracts more attractive to 

existing and prospective Contract 

Owners. The Applicants assert the 

Proposed Substitution will help to 

accomplish these goals for the following 

reasons: (1) The total annual operating 

expenses for the Replacement Portfolio 

(which does not include any expense 

waivers or reimbursements) are 

significantly lower than those of the 

Replaced Portfolio (even after taking 

into account fee waivers or expense 

reimbursements); (2) the historical 

performance of the Replacement 

Portfolio is generally much better than 

that of the Replaced Portfolio; (3) the 

Subaccounts that invest in the 

Replacement Portfolio are included 

among the currently allowable 

investment options under the optional 

living benefit riders offered under the 

Contracts; (4) Contract Owners will find 

the stable management of the 

Replacement Portfolio, whose coportfolio managers have managed the 

Portfolio since 2005, attractive, relative 

to the Replaced Portfolio; and (5) the 

Proposed Substitution will simplify the 

Subaccount offerings under the 

Contracts. 

11. The Applicants represent that the 

Proposed Substitution will be described 

in supplements to the applicable 

prospectuses for the Contracts filed with 

the Commission or in other 

supplemental disclosure documents, 

(collectively, ‘‘Supplements’’) and 

delivered to all affected Contract 

Owners at least 30 days before the date 

the Proposed Substitution is effected 

(the ‘‘Substitution Date’’). Each 

Supplement will give the relevant 

Contract Owners notice of the 

applicable Insurer’s intent to take the 

necessary actions, including seeking the 

order requested by the application, to 

substitute shares of the Replaced 

Portfolio as described in the application 

on the Substitution Date. Each 

Supplement also will advise Contract 

Owners that from the date of the 

Supplement until the Substitution Date, 

Contract Owners are permitted to 

transfer all of or a portion of their 

Contract value out of any Subaccount 

investing in the Replaced Portfolio 

(‘‘Replaced Portfolio Subaccount’’) to 

any other available Subaccounts offered 

under their Contracts without the 

transfer being counted as a transfer for 

purposes of transfer limitations and fees 

that would otherwise be applicable 

under the terms of the Contracts. In 

addition, each Supplement will (a) 

instruct Contract Owners how to submit 

transfer requests in light of the Proposed 

Substitution; (b) advise Contract Owners 

that any Contract value remaining in the 

Replaced Portfolio Subaccount on the 

Substitution Date will be transferred to 

a Subaccount investing in the 

Replacement Portfolio (‘‘Replacement 

Portfolio Subaccount’’), and that the 

Proposed Substitution will take place at 

relative net asset value; (c) inform 

Contract Owners that for at least thirty 

(30) days following the Substitution 

Date, the applicable Insurer will permit 

Contract Owners to make transfers of 

Contract value out of the Replacement 

Portfolio Subaccount to any other 

available Subaccounts offered under 

their Contracts without the transfer 

being counted as a transfer for purposes 

of transfer limitations that would 

otherwise be applicable under the terms 

of the Contracts; and (d) inform Contract 

Owners that, except as described in the 

market timing limitations section of the 

relevant prospectus, the applicable 

Insurer will not exercise any rights 

reserved by it under the Contracts to 

impose additional restrictions on 

transfers out of the Replacement 

Portfolio Subaccount for at least thirty 

(30) days after the Substitution Date. 

12. The Proposed Substitution will be 

effected at the relative net asset values 

of the respective shares in conformity 

with Section 22(c) of the 1940 Act and 

Rule 22c–1 thereunder without the 

imposition of any transfer or similar 

charges by Applicants. The Proposed 

Substitution will be effected without 

change in the amount or value of any 

Contracts held by affected Contract 

Owners. Accordingly, the Applicants 

submit that the Proposed Substitution 

will have no negative financial impact 

on any Contract Owner. 

13. The Proposed Substitution will be 

effected by having the Replaced 

Portfolio Subaccount redeem its 

Replaced Portfolio shares in cash on the 

Substitution Date at net asset value per 

share and purchase shares of the 

Replacement Portfolio at net asset value 

per share calculated on the same date. 

14. The Insurers or an affiliate thereof 

will pay all expenses and transaction 

costs reasonably related to the Proposed 

Substitution, including all legal, 

accounting, and brokerage expenses 

relating to the Proposed Substitution, 

the above described disclosure 

documents, and the application. No 

costs of the Proposed Substitution will 

be borne directly or indirectly by 

Contract Owners. Affected Contract 

Owners will not incur any fees or 

charges as a result of the Proposed 

Substitution, nor will their rights or the 

obligations of the Insurers under the 

Contracts be altered in any way. The 

Proposed Substitution will not cause the 

fees and charges under the Contracts 

currently being paid by Contract 

Owners to be greater after the Proposed 

Substitution than before the Proposed 

Substitution. In addition, no transfer 

charges will apply in connection with 

the Proposed Substitution. 

15. The Applicants represent that they 

will not receive, for three years from the 

date of the Proposed Substitution, any 

direct or indirect benefits from the 

Replacement Portfolio, its adviser or 

underwriter (or their affiliates), in 

connection with assets attributable to 

contracts affected by the Proposed 

Substitution, at a higher rate than they 

had received from the Replaced 

Portfolio, its adviser or underwriter (or 

their affiliates), including without 

limitation 12b–1 fees, shareholder 

service, administrative, or other service 

fees, revenue sharing, or other 

arrangements; and the Proposed 

Substitution and the selection of the 

Replacement Portfolio were not 

motivated by any financial 

consideration paid or to be paid to the 

Insurer or its affiliates by the 


tkelley on DSK3SPTVN1PROD with NOTICES
8118 Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices 

Replacement Portfolio, its adviser or 

underwriter, or their affiliates. 

Legal Analysis 

1. Applicants request that the 

Commission issue an order pursuant to 

Section 26(c) of the 1940 Act approving 

the Proposed Substitution. Section 26(c) 

of the 1940 Act makes it unlawful for 

any depositor or trustee of a registered 

unit investment trust holding the 

security of a single issuer to substitute 

another security for such security unless 

the Commission approves the 

substitution. Section 26(c) requires the 

Commission to issue such an order 

approving the substitution if the 

evidence establishes that the 

substitution is consistent with the 

protection of investors and the purposes 

fairly intended by the policy and 

provisions of the 1940 Act. 

2. The Applicants submit that the 

terms and conditions of the Proposed 

Substitution meet the standards set forth 

in Section 26(c) and assert that the 

substitution of the Replaced Portfolio 

with the Replacement Portfolio is 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the l940 Act. As described in the 

application, the total annual operating 

expenses for the Replacement Portfolio 

are lower than those of the Replaced 

Portfolio. Applicants assert that the 

Replacement Portfolio has similar 

investment objectives and investment 

strategies as the Replaced Portfolio, and 

the principal risks of the Replaced 

Portfolio and the Replacement Portfolio 

are similar. 

3. Applicants also maintain that the 

Proposed Substitution is part of an 

ongoing effort by the Insurers to make 

their contracts more attractive to 

existing and prospective Contract 

Owners. The rights of affected Contract 

Owners and the obligations of the 

Insurers under the Contracts will not be 

altered by the Proposed Substitution. 

Affected Contract Owners will not incur 

any additional tax liability or any 

additional fees and expenses as a result 

of the Proposed Substitution. 

4. The prospectuses for the Contracts 

disclose that the Insurers reserve the 

right, subject to Commission approval 

and compliance with applicable law, to 

substitute, for the shares of a Portfolio 

held in any Subaccount, the shares of 

another Portfolio, shares of another 

investment company or series of another 

investment company, or another 

investment vehicle. 

5. Applicants also assert that the 

Proposed Substitution does not entail 

any of the abuses that Section 26(c) was 

designed to prevent. Applicants note 

that the purpose of Section 26(c) is to 

protect the expectation of investors in a 

unit investment trust that the trust will 

accumulate shares of a particular issuer 

by preventing unscrutinized 

substitutions that might, in effect, force 

shareholders dissatisfied with the 

substituted security to redeem their 

shares, possibly incurring either a loss 

of the sales load deducted from initial 

premium payments, an additional sales 

load upon reinvestment of the 

redemption proceeds, or both. The 

Proposed Substitution will offer 

Contract Owners the opportunity to 

transfer amounts out of the affected 

subaccounts into any of the remaining 

subaccounts without cost or other 

disadvantage. The Proposed 

Substitution, therefore, will not result in 

the type of costly forced redemptions 

that Section 26(c) was designed to 

prevent. 

Applicants’ Conditions 

Applicants agree that any order 

granting the requested relief will be 

subject to the following conditions: 

1. The Proposed Substitution will not 

be effected unless the Insurers 

determine that: (a) The Contracts allow 

the substitution of shares of registered 

open-end investment companies in the 

manner contemplated by the 

application; (b) the Proposed 

Substitution can be consummated as 

described in the application under 

applicable insurance laws; and (c) any 

regulatory requirements in each 

jurisdiction where the Contracts are 

qualified for sale have been complied 

with to the extent necessary to complete 

the Proposed Substitution. 

2. The Insurers or their affiliates will 

pay all expenses and transaction costs of 

the Proposed Substitution, including 

legal and accounting expenses, any 

applicable brokerage expenses and other 

fees and expenses. No fees or charges 

will be assessed to the Contract Owners 

to effect the Proposed Substitution. 

3. The Proposed Substitution will be 

effected at the relative net asset values 

of the respective shares in conformity 

with Section 22(c) of the 1940 Act and 

Rule 22c–1 thereunder without the 

imposition of any transfer or similar 

charges by Applicants. The Proposed 

Substitution will be effected without 

change in the amount or value of any 

Contracts held by affected Contract 

Owners. 

4. The Proposed Substitution will in 

no way alter the tax treatment of 

affected Contract Owners in connection 

with their Contracts, and no tax liability 

will arise for affected Contract Owners 

as a result of the Proposed Substitution. 

5. The rights or obligations of the 

Insurers under the Contracts of affected 

Contract Owners will not be altered in 

any way. The Proposed Substitution 

will not adversely affect any riders 

under the Contracts since the 

Replacement Portfolio is an allowable 

investment option for use with such 

riders. 

6. Affected Contract Owners will be 

permitted to make at least one transfer 

of Contract value from the subaccount 

investing in the Replaced Portfolio 

(before the Substitution Date) or the 

Replacement Portfolio (after the 

Substitution Date) to any other available 

investment option under the Contract 

without charge for a period beginning at 

least 30 days before the Substitution 

Date through at least 30 days following 

the Substitution Date. Except as 

described in any market timing/shortterm trading provisions of the relevant 

prospectus, the Insurer will not exercise 

any right it may have under the Contract 

to impose restrictions on transfers 

between the subaccounts under the 

Contracts, including limitations on the 

future number of transfers, for a period 

beginning at least 30 days before the 

Substitution Date through at least 30 

days following the Substitution Date. 

7. All affected Contract Owners will 

be notified, at least 30 days before the 

Substitution Date about: (a) The 

intended substitution of the Replaced 

Portfolio with the Replacement 

Portfolio; (b) the intended Substitution 

Date; and (c) information with respect to 

transfers as set forth in Condition 6 

above. In addition, Insurers will deliver 

to all affected Contract Owners, at least 

30 days before the Substitution Date, a 

prospectus for the Replacement 

Portfolio. 

8. Insurers will deliver to each 

affected Contract Owner within five (5) 

business days of the Substitution Date a 

written confirmation which will 

include: (a) A confirmation that the 

Proposed Substitution was carried out 

as previously notified; (b) a restatement 

of the information set forth in the 

Supplements; and (c) before and after 

account values. 

9. Applicants will not receive, for 

three years from the date of the 

Proposed Substitution, any direct or 

indirect benefits from the Replacement 

Portfolio, its adviser or underwriter (or 

their affiliates), in connection with 

assets attributable to Contracts affected 

by the Proposed Substitution, at a 

higher rate than they had received from 

the Replaced Portfolio, its adviser or 

underwriter (or their affiliates), 

including without limitation 12b–1 fees, 

shareholder service, administrative or 


tkelley on DSK3SPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 30 / Friday, February 13, 2015 / Notices 8119 

1 12 U.S.C. 5452. 

2See Department of the Treasury Acquisition 

Regulations; Contract Clause on Minority and 

Women Inclusion in Contractor Workforce, 79 FR 

15551, at http://www.gpo.gov/fdsys/pkg/FR-2014- 

03-20/pdf/2014-05846.pdf. 

other service fees, revenue sharing, or 

other arrangements. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2015–02992 Filed 2–12–15; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–74239; File No. S7–02–15] 

Contract Standard for Contractor 

Workforce Inclusion and Request for 

Public Comment 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Notice of proposed contract 

standard; notice of proposed 

information collection; and request for 

public comment. 

SUMMARY: To implement section 342 of 

the Dodd-Frank Wall Street Reform and 

Consumer Protection Act of 2010 (the 

‘‘Dodd-Frank Act’’ or ‘‘the Act’’), the 

Securities and Exchange Commission 

(the ‘‘Commission’’) is proposing to 

include in its service contracts a 

standard concerning workforce 

inclusion of minorities and women. 

DATES: Comments should be received on 

or before: April 14, 2015. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/other.shtml); 

• Send an email to rulecomments@sec.gov. Please include File 

No. S7–02–15 on the subject line; or 

• Use the Federal eRulemaking Portal 

(http://www.regulations.gov). Follow 

instructions for submitting comments. 

Paper Comments 

• Send paper comments to Brent J. 

Fields, Secretary, Securities and 

Exchange Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to File No. 

S7–02–15. This file number should be 

included on the subject line if email is 

used. To help us process and review 

your comments more efficiently, please 

use only one method. The Commission 

will post all comments on the 

Commission’s Internet Web site (http:// 

www.sec.gov/rules/other.shtml). 

Comments will also be available for 

Web site viewing and printing in the 

Commission’s Public Reference Room, 

100 F Street NE., Washington, DC 20549 

on official business days between the 

hours of 10:00 a.m. and 3:00 p.m. All 

comments received will be posted 

without change; we do not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

FOR FURTHER INFORMATION CONTACT: 

Pamela A. Gibbs, Director, Office of 

Minority and Women Inclusion, or 

Audrey B. Little, Senior Counsel, Office 

of Minority and Women Inclusion at 

(202) 551–6046, Securities and 

Exchange Commission, 100 F Street NE., 

Washington, DC 20549. 

SUPPLEMENTARY INFORMATION: Section 

342(a)(1)(A) of the Dodd-Frank Act 

provides for certain agencies, including 

the Securities and Exchange 

Commission, to establish an Office of 

Minority and Women Inclusion 

(‘‘OMWI’’).1 Section 342(c)(1) provides 

that the OMWI Director shall develop 

and implement standards and 

procedures to ensure the fair inclusion 

and utilization of minorities, women, 

and minority-owned and women-owned 

businesses in all business and activities 

of the agency, including in 

procurement, insurance, and all types of 

contracts. Section 342(c)(2) requires that 

the OMWI Director include in the 

procedures for evaluating contract 

proposals and hiring service providers a 

component that gives consideration to 

the diversity of an applicant, to the 

extent consistent with applicable laws. 

In addition, section 342(c)(2) requires 

that such procedures include a written 

statement, in the form and content 

prescribed by the OMWI Director, that 

a contractor shall ensure, to the 

maximum extent possible, the fair 

inclusion of women and minorities in 

the workforce of the contractor and, as 

applicable, subcontractors. 

Further, section 342(c)(3)(A) requires 

the OMWI Director to establish 

standards and procedures for 

determining whether an agency 

contractor or subcontractor ‘‘has failed 

to make a good faith effort to include 

minorities and women’’ in its 

workforce. Section 342(c)(3)(B)(i) 

provides that if the OMWI Director 

determines that a contractor has failed 

to make good faith efforts, the Director 

shall recommend to the agency 

administrator that the contract be 

terminated. Upon receipt of such a 

recommendation, section 342(c)(3)(B)(ii) 

provides that the agency administrator 

may terminate the contract, make a 

referral to the Office of Federal Contract 

Compliance Programs of the Department 

of Labor, or take other appropriate 

action. 

Under section 342(c)(3)(A) of the 

Dodd-Frank Act, the OMWI Director is 

required to determine whether a 

contractor or subcontractor has made 

good faith efforts to include minorities 

and women in its workforce. The 

proposed Contract Standard would 

require that a Commission contractor, 

upon request from the OMWI Director, 

provide documentation of the actions 

undertaken (and as applicable, the 

actions each covered subcontractor 

under the contract has undertaken) that 

demonstrate its good faith efforts to 

ensure the fair inclusion of minorities 

and women in its workforce. The 

documentation requested may include, 

but is not limited to: (1) The total 

number of employees in the contractor’s 

workforce, and the number of 

employees by race, ethnicity, gender, 

and job title or EEO–1 job category (e.g., 

EEO–1 Report(s)); (2) a list of covered 

subcontract awards under the contract 

that includes the dollar amount of each 

subcontract, date of award, and the 

subcontractor’s race, ethnicity, and/or 

gender ownership status; (3) the 

contractor’s plan to ensure the fair 

inclusion of minorities and women in 

its workforce, including outreach 

efforts; and (4) for each covered 

subcontractor, the information 

requested in items 1 and 3 above. The 

OMWI Director will consider the 

information submitted in evaluating 

whether the contractor or subcontractor 

has complied with its contractual 

obligation to make good faith efforts to 

ensure the fair inclusion of minorities 

and women in its workforce. 

The Commission’s proposes to satisfy 

section 342(c)(2) through the inclusion 

of a contract standard concerning 

workforce inclusion of minorities and 

women (the ‘‘Contract Standard’’) in 

solicitations and resulting contracts for 

services with a dollar value of $100,000 

or more. The proposed Contract 

Standard is similar to the contract 

clauses adopted by OMWIs of other 

federal financial regulatory agencies.2

The Contract Standard requires the 

service contractor, upon entering into a 

contract with the Commission, to 

confirm that it will ensure, to the 

maximum extent possible and 

consistent with applicable law, the fair 

inclusion of minorities and women in 

its workforce. In addition, the proposed 


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