[Federal Register Volume 62, Number 71 (Monday, April 14, 1997)]
[Notices]
[Pages 18157-18159]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9459]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IC-22604; 812-10378]


Arnhold and S. Bleichroeder, Inc.; Notice of Application for 
Permanent Order

April 7, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for Permanent Order of Exemption under 
the Investment Company Act of 1940 (the ``Act'').

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APPLICANT: Arnhold and S. Bleichroeder, Inc. (``A&SB'').

RELEVANT ACT SECTIONS: Order requested under section 9(c) of the Act 
granting an exemption from section 9(a).

SUMMARY OF APPLICATION: A&SB has requested an order under section 9(c) 
of the Act exempting it from section 9(a) to the extent necessary to 
permit A&SB to employ an individual who is subject to a securities-
related injunction.

FILING DATES: The application was filed on October 2, 1996, and was 
amended on February 6, 1997, and April 1, 1997.

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 A&SB 
with a copy of the request, personally or by mail. Hearing requests 
should be received by the SEC by 5:30 p.m. on April 28, 1997, and 
should be accompanied by proof of service on A&SB, 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, N.W., Washington, D.C. 
20549. A&SB, 45 Broadway, New York, New York 10006.

FOR FURTHER INFORMATION CONTACT: Brian T. Hourihan, Senior Counsel, at 
(202) 942-0526, or Mercer E. Bullard, Branch Chief, 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 SEC's Public Reference Branch.

[[Page 18158]]

Applicant's Representations

    1. A&SB, a New York corporation, is a registered broker-dealer and 
parent to Arnhold and S. Bleichroeder Advisers (``A&SB Advisers''), a 
registered investment adviser. A&SB serves as the principal underwriter 
to, and A&SB Advisers serves as the investment adviser to, First Eagle 
Fund of America, Inc. and First Eagle International Fund, Inc., both 
registered open-end investment companies (the ``Funds'').
    2. A&SB proposes to employ Geoffrey W. Collier (``Mr. Collier'') as 
senior vice president in its institutional equity department. Mr. 
Collier's primary responsibility at A&SB will be to work with its 
institutional equity businesses. He will coordinate the effort among 
A&SB's institutional sales, research and sales trading areas, and 
evaluate and make recommendations with respect to staff, products and 
process. Mr. Collier will report directly to Mr. John P. Arnhold (``Mr. 
Arnhold''), Co-President and Director of A&SB. He will work with Mr. 
Arnhold on personnel issues and strategic planning but will not have 
unilateral decision-making authority in these areas. He will not be 
responsible for proprietary trading, market-making, underwriting, or 
corporate finance activities or have supervision over employees' 
personal trading activities.
    3. Mr. Collier is subject to a securities-related injunction, as 
described below. On July 20, 1988, in an action instituted by the SEC, 
Mr. Collier consented to the entry of a final judgment and order of 
permanent injunction (the ``Injunction'') by the United States District 
Court for the Central District of California. \1\ The court permanently 
enjoined Mr. Collier from violating section 10(b) of the Securities 
Exchange Act of 1934 (the ``Exchange Act'') and rule 10b-5 thereunder. 
The SEC's complaint alleged that Mr. Collier, between August and 
November 1986, violated section 10(b) and rule 10b-5 with respect to 
several trades in the securities of Cadbury-Schweppes, PLC and 
Associated Engineering, PLC (the ``United Kingdom Corporations''). At 
that time, Mr. Collier was a managing director of Morgan Grenfell 
Securities, Ltd. (``Morgan Grenfell'') in charge of securities trading. 
The complaint alleged that Mr. Collier, through his position at Morgan 
Grenfell, learned that Morgan Grenfell was assisting two U.S. 
corporations in an attempt to acquire the United Kingdom Corporations 
in two unrelated transactions. The complaint further alleged that Mr. 
Collier made use of this material non-public information to cause an 
off-shore corporation that he controlled to purchase shares of the 
United Kingdom Corporations' stock. Mr. Collier was also charged in the 
United Kingdom in connection with the same activities. Applicants 
represent that no foreign regulatory authority has ever made any 
finding set forth in section 9(b)(4) of the Act, with respect to Mr. 
Collier. A&SB requests exemptive relief to permit it to employ Mr. 
Collier.
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    \1\ SEC Litigation Release No. 11817 (July 26, 1988).
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Applicant's Legal Analysis

    1. Section 9(a)(2) of the Act, in pertinent part, disqualifies any 
person from acting in the capacity of employee, officer, director, 
member of an advisory board, investment adviser, or depositor for any 
registered investment company, or principal underwriter for any 
registered open-end company, registered unit investment trust, or 
registered face amount company, if such person is, by reason of any 
misconduct, permanently or temporarily enjoined from acting as an 
underwriter, broker, dealer, or investment adviser, or as an affiliated 
person or employee of an investment company, or from engaging in or 
continuing any conduct or practice in connection with any such activity 
or in connection with the purchase or sale of any security. A company 
with an employee or other affiliated person ineligible to serve in any 
of these capacities under section 9(a)(2) is similarly ineligible by 
reason of section 9(a)(3) of the Act.
    2. Section 9(c) of the Act provides that, upon application, the SEC 
shall grant an exemption from the disqualification provisions of 
section 9(a), either unconditionally or on an appropriate temporary or 
other conditional basis, if it is established that the prohibitions of 
section 9(a), as applied to an applicant, are unduly or 
disproportionately severe or that the conduct of such person has been 
such that it would not be against the public interest or protection of 
investors to grant such application.
    3. A&SB believes that, absent relief, Mr. Collier's employment 
would cause it to become disqualified under section 9(a) of the Act 
from acting in any of the capacities specified in that section with 
respect to the Funds, and therefore requests an order granting the 
requested relief. A&SB states that it is requesting relief so that it 
and any of its affiliated persons will not be disqualified from acting 
in any of the capacities specified in section 9(a) by reason of 
employing Mr. Collier. A&SB represents that it has received all 
necessary approvals from all applicable self-regulatory organizations, 
including the New York Stock Exchange, with respect to the proposed 
employment of Mr. Collier. A&SB notes that it currently is not 
disqualified from acting in any of the capacities specified in section 
9(a) of the Act.
    4. In support of its request for exemptive relief, A&SB asserts 
that:
    (a) Neither A&SB nor any affiliated person of A&SB was the subject 
of the Injunction, and the facts and circumstances to which the 
Injunction relate did not involve any activities of A&SB or its 
affiliates.
    (b) The Funds were not in any way involved in any of the 
circumstances referred to in the Injunction.
    (c) As an employee of A&SB's institutional equities department, Mr. 
Collier will have no involvement with, or responsibility for, the 
Funds.
    (d) The allegations in the SEC's complaint against Mr. Collier and 
the terms of the Injunction and the circumstances to which they relate 
in no way involved any activities of a registered investment company. 
A&SB states that during Mr. Collier's tenure with Morgan Grenfell, he 
was not involved with the activities of any of Morgan Grenfell's 
investment companies other than on a purely arm's-length basis.
    (e) A&SB notes that over eight years have passed since the entry of 
the Injunction and Mr. Collier has not been subject to any similar 
actions, or sanctioned in any way by the SEC, any self-regulatory 
organization, or any state securities commission, nor are there any 
customer complaints, lawsuits, or regulatory actions pending against 
Mr. Collier.
    (f) The prohibitions of section 9(a) deprive Mr. Collier of the 
opportunity to serve as an employee of any company, such as A&SB, that 
serves as an investment adviser of or principal underwriter for any 
investment company, in circumstances in which he would have no 
involvement investment company operations.
    (g) The prohibitions of section 9(a) would be unduly and 
disproportionately severe as applied to A&SB because they would deprive 
it of Mr. Collier's services in an area totally unrelated to the 
activities of an investment company.

Applicant's Condition

    A&SB agrees that any order granted pursuant to the application will 
be subject to the condition that neither A&SB, nor any affiliated 
person of A&SB relying upon relief granted pursuant to the application, 
will employ Mr. Collier in any capacity directly related to the 
provision of investment

[[Page 18159]]

advisory services to, or acting as a depositor for, any registered 
investment company, or related to acting as a principal underwriter 
for, any registered open-end investment company, unit investment trust 
or registered face amount certificate company without first making 
further application to the SEC.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-9459 Filed 4-11-97; 8:45 am]
BILLING CODE 8010-01-M