18468 Federal Register / Vol. 63, No. 72 /Wednesday, April 15, 1998 / Notices

1Applicants also request relief for all future

portfolios of the Fund and for all future registered

open-end management investment companies

advised by Bernstein.

of the limits contained in section

12(d)(1)(A) of the Act.

4. The Trust and the Sponsor will

comply in all respects with the

requirements of rule 14a–3, except that

the Trust will not restrict its portfolio

investments to ‘‘eligible trust

securities.’’

5. No Trust Series will terminate

within thirty days of the termination of

any other Trust Series that holds shares

of one or more common Funds.

6. The prospectus of each Trust Series

and any sales literature or advertising

that mentions the existence of an inkind distribution option will disclose

that Unitholders who elect to receive

Fund shares will incur any applicable

rule 12b–1 fees.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–9884 Filed 4–14–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

23108; 812–10812]

Sanford C. Bernstein Fund, Inc., et al.;

Application

April 9, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for an

order under section 17(d) of the

Investment Company Act of 1940 (the

‘‘Act’’) and rule 17d–1.

SUMMARY OF APPLICATION: Applicants

request an order to permit certain

registered open-end management

investment companies to deposit their

uninvested cash balances in a joint

account to be used to enter into shortterm investments.

APPLICANTS: Sanford C. Bernstein Fund,

Inc. (the ‘‘Fund’’), and Sanford C.

Bernstein & Co., Inc. (‘‘Bernstein’’).

FILING DATES: The application was filed

on October 7, 1997 and amended on

April 2, 1998. Applicants have agreed to

file an amendment during the notice

period, the substance of which is

reflected in this notice.

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

Secretary and serving applicants with a

copy of the request, personally or by

mail. Hearing requests should be

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

May 4, 1998, 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 who wish to be notified of a

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW., Washington, DC 20549.

Applicants, 767 Fifth Avenue, New

York, NY 10153.

FOR FURTHER INFORMATION CONTACT:

Kathleen L. Knisely, Staff Attorney, at

(202) 942–0517, 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 at the SEC’s

Public Reference Branch, 450 Fifth

Street, NW., Washington, DC 20549 (tel.

202–942–8090).

Applicants’ Representations

1. The Fund, organized as a Maryland

corporation, is registered under the Act

as an open-end management investment

company. The Fund is a series company

and currently has eleven portfolios

(‘‘Portfolios’’).1

2. Bernstein, organized as a New York

corporation, is an investment adviser

registered under the Investment

Advisers Act of 1940. Bernstein serves

as the investment adviser to each

Portfolio.

3. Each of the Portfolios may have

uninvested cash balances available. The

amount of the cash balances, on any

given day is a function of a number of

factors, such as portfolio management

decisions, shareholder purchases and

redemptions, and settlement of trades

on dates other than predicted. Each

Portfolio is authorized by its investment

policies and restrictions to invest a

portion of its uninvested cash balances

in short-term liquid assets, including

commercial paper, repurchase

agreements, daily variable rate demand

notes, Treasury bills, United States

government agency certificates, term

bank deposits, certificates of deposits

and bankers acceptances (‘‘Short Term

Investments’’). The assets of the

Portfolios are held by a bank custodian,

which is not an affiliated person of

either the Fund or Bernstein.

4. Currently, Bernstein must purchase

Short Term Investments separately on

behalf of each Portfolio. Applicants

believe that the separate purchasing of

Short Term Investments results in

certain inefficiencies, increased costs,

and a limitation on the return.

Applicants propose that the Portfolios

deposit uninvested cash balances

available on each trading day into a

joint account (the ‘‘Joint Account’’) and

that the daily balance of the Joint

Account be invested in Short Term

Investments. The sole function of the

Joint Account will be to provide a

convenient means of aggregating what

otherwise would be one or more daily

transactions for each Portfolio necessary

to manage the Portfolio’s respective

daily uninvested cash balances.

5. Bernstein will not charge any

additional or separate fees for operating

or advising the Joint Account and will

have no monetary participation in the

Joint Account. Bernstein will be

responsible for investing Portfolio funds

held in the Joint Account, establishing

accounting and control procedures, and

ensuring equal treatment of the

Portfolios.

6. Any repurchase agreements entered

into through the Joint Accounts will

comply with the terms of Investment

Company Act Release No. 13005

(February 2, 1983). Applicants

acknowledge that they have a

continuing obligation to monitor the

SEC’s published statements on

repurchase agreements and other Short

Term Investments. Applicants represent

that each Portfolio will conform its

investments and adopt any appropriate

systems and standards to comply with

any future SEC guidelines with respect

to any type of Short Term Investments.

Applicants’ Legal Analysis

1. Section 17(d) of the Act and rule

17f–1 under the Act prohibit an

affiliated person of a registered

investment company, or an affiliated

person of such a person, from

participating in any joint enterprise or

arrangement in which the investment

company is a participant, unless the

SEC has issued an order authorizing the

arrangement.

2. Applicants believe that each

Portfolio, by participating in the Joint

Account, and Bernstein, by managing

the Joint Account, could be deemed to

be a ‘‘joint participant’’ in a transaction.

In addition, the Joint Account could be

deemed to be a ‘‘joint enterprise or other

joint arrangement’’ within the meaning

of rule 17d–1 under the Act.
Federal Register / Vol. 63, No. 72 /Wednesday, April 15, 1998 / Notices 18469

3. Applicants believe that the

participating Portfolios may earn a

higher return on investments through

the Joint Account relative to rates they

could earn individually because under

certain market conditions, it is possible

to negotiate a rate of return on large

Short Term Investments which is greater

than the rate of return which can be

negotiated for smaller Short Term

Investments. Applicants also contend

that the Joint Account may reduce the

potential for error by reducing the

number of trade tickets which must be

processed by the Fund’s custodian bank

and the Fund’s accounting department.

4. Applicants believe each Portfolio

will participate in the Joint Account on

the same basis as every other Portfolio

in conformity with its investment

objectives, policies, and restrictions.

Applicants state that a Portfolio’s

investment in the Joint Account will not

be subject to the claims of creditors,

whether brought in bankruptcy,

insolvency, or other legal proceeding.

Applicants also state that each

Portfolio’s investment in any Short

Term Investment purchased by the Joint

Account will be limited to its interest in

the Short Term Investment.

6. For the reasons set forth above,

applicants believe that granting the

requested order is consistent with the

provisions, policies, and purposes of the

Act, and that the Portfolios’

participation in the Joint Account will

not be on a basis different from or less

advantageous than that of any other

participating Portfolio.

Applicants’ Conditions

Applicants agree that the requested

order shall be subject to the following

conditions:

1. The Joint Account will be

established on behalf of the Portfolios

with the custodian as a separate cash

account into which the Portfolios may

deposit daily all or a portion of their

uninvested cash balances. The Joint

Account will not be distinguishable

from any other accounts maintained by

the Portfolios with the custodian except

that monies from the various Portfolios

will be deposited in the Joint Account

on a commingled basis. The Joint

Account will not have any separate

existence with the indicia of a separate

legal entity. The sole function of the

Joint Account will be to provide a

convenient and productive way of

aggregating individual transactions that

would otherwise require daily

management and investment by each

Portfolio of its uninvested cash

balances.

2. Cash in the Joint Account will be

invested in one or more of the following

Short Term Investments, as determined

by Bernstein: (a) Commercial paper,

repurchase agreements ‘‘collateralized

fully’’ (as that term is defined in rule

2a–7 under the Act), Treasury bills,

United States government agency

certificates, term bank deposits,

certificates of deposit and bankers’

acceptances, in each case having

remaining maturities of 60 days or less

as calculated in accordance with rule

2a–7 under the Act; and (b) daily

variable rate demand notes with

demand features providing for

maturities of 30 days or less. Any Short

Term Investment must be an ‘‘Eligible

Security’’ within the meaning of rule

2a–7 under the Act. No Portfolio will be

permitted to invest in the Joint Account

unless the Short Term Investments in

the Joint Account will comply with the

investment policies and guidelines of

that Portfolio.

3. All assets held by the Joint Account

will be valued on an amortized cost

basis to the extent permitted by

applicable SEC releases, letters, or

orders.

4. Each Portfolio valuing its net assets

based on amortized cost in reliance

upon rule 2a–7 under the Act will use

the average maturity of the

instrument(s) in the Joint Account

(determined on a dollar-weighted basis)

for the purpose of computing its average

portfolio maturity with respect to the

portion of its assets held in the Joint

Account on that day.

5. To assure that there will be no

opportunity for one Portfolio to use any

part of a balance of the Joint Account

credited to another Portfolio, no

Portfolio will be allowed to create a

negative balance in the Joint account for

any reason. Each Portfolio would be

permitted to draw down its entire

balance at any time, provided Bernstein

determines that such draw down would

have no significant adverse impact on

any other Portfolio participating in the

Joint Account. Each Portfolio’s decision

to invest in the Joint Account would be

solely at its option, and no Portfolio will

be obligated to invest in the Joint

Account or to maintain any minimum

balance in the Joint Account. In

addition, each Portfolio will retain the

sole rights of ownership of any of its

assets, including interest payable on

such assets, invested in the Joint

Account.

6. Bernstein will administer, manage,

and invest the cash balance in the Joint

Account in accordance with and as part

of its duties under existing, or any

future, investment advisory contracts

with the Fund and/or Portfolios.

Bernstein will not collect any additional

or separate fee for advising or managing

the Joint Account.

7. The administration of the Joint

Account will be within the fidelity bond

coverage maintained for the Portfolios

as required by section 17(g) of the Act

and rule 17g–1 under the Act.

8. The Fund’s board of directors

(‘‘Board’’) will adopt procedures for

each of the Portfolios pursuant to which

the Joint Account will operate, which

procedures will be reasonably designed

to provide that the requirements of this

application will be met. The Board will

make and approve such changes that it

deems necessary to ensure that such

procedures are followed. In addition,

the Board will evaluate annually the

Joint Account arrangements to

determine whether the Joint Account

has been operated in accordance with

the adopted procedures, and shall

continue the Fund’s continued

participation in the Joint Account only

if there is a reasonable likelihood that

the Joint Account would benefit the

Fund and its shareholders.

9. Each Portfolio’s investment in the

Joint Account will be documented daily

on the books of the Fund and on the

books of each Portfolio. Each Portfolio,

through Bernstein and/or its custodian,

will maintain records (in conformity

with section 31 of the Act and rules

thereunder) documenting for any given

day, the Portfolio’s aggregate investment

in the Joint Account and its pro rata

share of each investment made through

the Joint Account.

10. Each Portfolio will participate in

the Joint Account on the same basis as

every other Portfolio in conformity with

its respective fundamental investment

objectives, policies, and restrictions.

Any future registered open-end

management investment companies that

are advised by Bernstein and Portfolios

that participate in the Joint Account

would be required to do so on the same

terms and conditions as the existing

Fund and Portfolios.

11. Each investment made through the

Joint Account will satisfy the

investment criteria of each Portfolio

participating in the joint investment.

12. Not every Portfolio participating

in the Joint Account will necessarily

have its cash invested in every Short

Term Investment held in the Joint

Account. However, to the extent a

Portfolio’s cash is applied to particular

Short Term Investments made through

the Joint Account, the Portfolio will

participate in and own a proportionate

share of such investment, and the

income earned or accrued thereon,

based upon the percentage of such

investment purchased with monies

contributed by the Portfolio.
18470 Federal Register / Vol. 63, No. 72 /Wednesday, April 15, 1998 / Notices

1 15 U.S.C. 77a et seq.

2Pub. L. 96–477, 94 Stat. 2275 (October 21, 1980).

3Pub. L. 104–290, 110 Stat. 3416 (October 11,

1996).

4NASAA is an association of securities

administrators from each of the 50 states, the

District of Columbia, Puerto Rico, Mexico and

twelve Canadian Provinces and Territories.

13. Investments held in a Joint

Account generally will not be sold prior

to maturity except: (a) If Bernstein

believes that the investment no longer

presents minimal credit risk; (b) if, as a

result of credit downgrading or

otherwise, the investment no longer

satisfies the investment criteria of all

Portfolios participating in the

investment; or (c) if the counterparty

defaults. A Portfolio may, however, sell

its fractional portion of an investment in

the Joint Account prior to the maturity

of an investment in such account if the

cost of the transaction would not

aversely affect the other Portfolios

participating in the Joint Account. In no

case would an early termination by less

than all participating Portfolios be

permitted if it would reduce the

principal amount or yield received by

other Portfolios participating in the Joint

Account or otherwise adversely affect

the other participating Portfolios. Each

Portfolio participating in the Joint

Account will be deemed to have

consented to such sale and partition of

the investment in such account.

14. Short Term Investments held

through the Joint Account with a

remaining maturity of more than seven

days, as calculated pursuant to rule 2a–

7 under the Act, will be considered

illiquid and subject to the restriction

that the Portfolio may not invest more

than 15% (or such other percentage as

set forth by the SEC from time to time)

of its net assets in illiquid securities and

any similar restrictions set forth in the

Portfolio’s investment restrictions and

policies, if Bernstein cannot sell the

instrument, or the Portfolio’s fractional

interest in such instrument, pursuant to

the preceding condition.

For the Commission, by the Division of

Investment Management, under delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–10026 Filed 4–14–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 33–7524, File No. S7–11–98]

Securities Uniformity; Annual

Conference on Uniformity of Securities

Laws

AGENCY: Securities and Exchange

Commission.

ACTION: Notice of conference; request for

comments.

SUMMARY: The Commission and the

North American Securities

Administrators Association, Inc. today

announced a request for comments on

the proposed agenda for their annual

conference to be held on May 4, 1998.

This meeting is intended to carry out

the policies and purposes of section

19(c) of the Securities Act of 1933,

which are to increase cooperation

between the Commission and state

securities regulatory authorities in order

to maximize the effectiveness and

efficiency of securities regulation.

DATES: The conference will be held on

May 4, 1998. Written comments must be

received on or before April 29, 1998 in

order to be considered by the conference

participants.

ADDRESSES: Please send three copies of

written comments by April 29, 1998 to

Jonathan G. Katz, Secretary, Securities

and Exchange Commission, 450 5th

Street, NW, Washington, DC 20549.

Comments also can be sent

electronically to the following E-mail

address: rule-comments@sec.gov.

Comment letters should refer to File No.

S7–11–98; if E-mail is used, please

include this file number on the subject

line. Anyone can inspect and copy the

comment letters at our Public Reference

Room, 450 5th Street, NW, Washington,

DC 20549. All electronic comment

letters will be posted on the

Commission’s internet web site (http://

www.sec.gov).

FOR FURTHER INFORMATION CONTACT: John

D. Reynolds, Office of Small Business

Review, Division of Corporation

Finance, Securities and Exchange

Commission, 450 5th Street, NW,

Washington, DC 20549, (202) 942–2950.

SUPPLEMENTARY INFORMATION:

I. Discussion

A dual system of federal-state

securities regulation has existed since

the adoption of the federal regulatory

structure in the Securities Act of 1933

(the ‘‘Securities Act’’).1 Issuers trying to

raise capital through securities offerings,

as well as participants in the secondary

trading markets, are responsible for

complying with the federal securities

laws as well as all applicable state laws

and regulations. It has long been

recognized that there is a need to

increase uniformity between federal and

state regulatory systems, and to improve

cooperation among those regulatory

bodies so that capital formation can be

made easier while investor protections

are retained.

Congress endorsed greater uniformity

in securities regulation with the

enactment of section 19(c) of the

Securities Act in the Small Business

Investment Incentive Act of 1980.2

Section 19(c) authorizes the

Commission to cooperate with any

association of state securities regulators

which can assist in carrying out the

declared policy and purpose of section

19(c). The policy of that section is that

there should be greater federal and state

cooperation in securities matters,

including:

• Maximum effectiveness of

regulation;

• Maximum uniformity in federal

and state standards;

• Minimum interference with the

business of capital formation; and

• Substantial reduction in costs and

paperwork to decrease the burdens of

raising investment capital, particularly

by small business, and reduce the costs

of the government programs involved.

In order to establish methods to

accomplish these goals, the Commission

is required to conduct an annual

conference. The 1998 meeting will be

the fifteenth conference.

During 1996, Congress again

examined the system of dual federal and

state securities regulation and the need

for regulatory changes to promote

capital formation, eliminate duplicative

regulation, decrease the cost of capital

and encourage competition, while at the

same time promoting investor

protection. These efforts resulted in

passage of The National Securities

Markets Improvement Act of 1996 3 (the

‘‘1996 Act’’). The 1996 Act contains

significant provisions that realign the

regulatory partnership between federal

and state regulators. The legislation

reallocates responsibility for regulation

of the nation’s securities markets

between the federal government and the

states in order to eliminate duplicative

costs and burdens and improve

efficiency, while preserving investor

protections.

II. 1998 Conference

The Commission and the North

American Securities Administrators

Association, Inc. (‘‘NASAA’’) 4 are

planning the 1998 Conference on

Federal-State Securities Regulation (the

‘‘Conference’’) to be held May 4, 1998 in

Washington, D.C. At the Conference,

Commission and NASAA

representatives will form into working

groups in the areas of corporation

finance, market regulation and

oversight, investment management, and