Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices 1933

1Prior to 1996, the Company advanced certain

expenses incurred by the former officers and

Continued

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

February 3, 1997, 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 of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, D.C. 20549.

Applicant, 3435 Stelzer Road,

Columbus, Ohio 43219.

FOR FURTHER INFORMATION CONTACT:

Kathleen L. Knisely, Staff Attorney, at

(202) 942–0517, or Alison E. Baur,

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.

Applicant’s Representations

1. Applicant is an open-end

diversified management investment

company organized as a Delaware

business trust. Applicant is comprised

of a single series, the National

Municipal Bond Fund.

2. On January 21, 1994, applicant

filed a Notification of Registration on

Form N–8A pursuant to section 8(a)

under the Act and a registration

statement on Form N–1A pursuant to

section 8(b) of the Act. No registration

statement was filed under the Securities

Act of 1933.

3. On April 23–24, 1996, at the regular

Board of Trustees meeting, the Board of

Trustees approved, effective upon the

withdrawal of the investment of the

Feeder Fund from the applicant, the

termination of the applicant’s

investment advisory and other service

agreements. The board also authorized

the taking of all actions necessary to

effect the deregistration of applicant.

4. Prior to July 1, 1996, the National

Municipal Bond Fund of Pacific

Horizon Funds, Inc. (the ‘‘Feeder

Fund’’) invested all of its investable

assets in applicant’s National Municipal

Bond Fund. The Feeder Fund was the

sole interest holder of applicant’s

National Municipal Bond Fund. On July

1, 1996, applicant’s sole interest holder

gave notice that it wanted to redeem its

entire holdings, and on the same day

complete redemption distributions were

paid to the interest holder based on net

asset value. Such distributions

effectively liquidated applicant.

5. Bank of America National Trust

and Savings Association, applicant’s

investment adviser, has undertaken to

pay applicant’s expenses in connection

with the liquidation.

6. Applicant has no security holders,

liabilities or assets. Applicant is not a

party to any litigation or administrative

proceeding. Applicant is not now

engaged, nor does it propose to engage,

in any business activities other than

those necessary for the winding up of its

affairs.

7. Applicant intends to file the

necessary documentation with the State

of Delaware to effect its dissolution as

a Delaware business trust.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–805 Filed 1–13–97; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

22443; 812–10452]

United Financial Group, Inc.; Notice of

Application

January 7, 1997.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

exemption under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: United Financial Group, Inc.

(the ‘‘Company’’).

RELEVANT ACT SECTION: Order requested

under sections 6(c) and 6(e) of the Act

granting an exemption from all

provisions of the Act.

SUMMARY OF APPLICATION: Applicant

requests an order that would exempt it

from all provisions of the Act until

December 30, 1997. The requested relief

would extend an exemption originally

granted until December 30, 1990, and

extended by subsequent orders until

December 30, 1991, December 30, 1992,

December 30, 1993, December 30, 1994,

December 30, 1995, and December 30,

1996.

FILING DATE: The application was filed

on December 5, 1996.

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 applicant with a

copy of the request, personally or by

mail. Hearing requests should be

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

February 3, 1997, and should be

accompanied by proof of service on the

applicant, 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 of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, N.W., Washington, D.C. 20549.

Applicant, 5847 San Felipe, Suite 2600,

Houston, Texas 77057.

FOR FURTHER INFORMATION CONTACT:

Diane L. Titus, Paralegal Specialist, at

(202) 942–0584, or Mary Kay Frech,

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.

Applicant’s Representations

1. The Company was a savings and

loan holding company whose primary

asset and source of income was the

United Savings Association of Texas

(‘‘USAT’’). As a result of the recession

in Texas beginning in 1986, USAT’s

financial condition deteriorated, and on

December 30, 1988 it was placed into

receivership. The assets of USAT were

sold to an unaffiliated third party and

the Company received no consideration

for the loss of its primary subsidiary,

thereby generating a substantial tax loss.

In light of this tax loss, the Company

determined not to liquidate, but instead

to acquire an operating business.

2. The Company’s efforts to acquire an

operating business have been

substantially hindered due to claims

asserted against it by the Federal

Deposit Insurance Corporation (the

‘‘FDIC’’) and the Office of Thrift

Supervision (the ‘‘OTS’’). The FDIC

asserted an approximately $534 million

claim against the Company in January

1989 for failure to maintain the net

worth of USAT (the ‘‘Net Worth Claim’’)

and an approximately $14 million claim

concerning certain tax refunds alleged

to have been received by the Company

(together with the Net Worth Claim, the

‘‘FDIC Claims’’). In addition, the FDIC

has asserted the existence of possible

other claims (the ‘‘Indemnified Claims’’)

against the Company and certain former

officers and directors of the Company

and USAT. The Company may have

indemnification obligations to these

former officers and directors.1 The FDIC
1934 Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices

directors, subject to a refund obligation if it was

determined they were not entitled to such

advances. In 1996, at the insistence of the FDIC and

OTS, the Company ceased making these advances.

2 Investment Company Act Release Nos. 17941

(Jan. 9, 1991) (notice) and 17989 (Feb. 7, 1991)

(order); Investment Company Act Release Nos.

18430 (Dec. 5, 1991) (notice) and 18466 (Dec. 31,

1991) (order); Investment Company Act Release

Nos. 19128 (Nov. 25, 1992) (notice) and 19175 (Dec.

22, 1992) (order); Investment Company Act Release

Nos. 19839 (Nov. 5, 1993) (notice) and 19916 (Dec.

1, 1993) (order); Investment Company Act Release

Nos. 20545 (Sept. 12, 1994) (notice) and 20608 (Oct.

7, 1994) (order); and Investment Company Act

Release Nos. 21416 (Oct. 12, 1995) (notice) and

21480 (Nov. 7, 1995) (order) (the ‘‘Prior Orders’’).

has not alleged a dollar amount for any

Indemnified Claims. Although the

Company disputes the FDIC Claims and

the Indemnified Claims, their existence

constitutes a large contingent liability

against the Company’s assets, thus

making it difficult for the Company to

acquire an operating business.

3. The OTS has asserted certain

claims not included within the scope of

the FDIC’s jurisdiction. The OTS is

investigating the possibility of certain

regulatory violations (the ‘‘OTS

Claims’’) by the Company and its

current and former officers and

directors. The Company has been in

negotiations with the OTS since

September, 1994 concerning possible

settlement of the OTS Claims. These

claims constitute a substantial

contingent liability against the

Company’s assets.

4. During 1989 and 1990, the

Company was in continuous

negotiations with the FDIC in an

attempt to reach a resolution of the FDIC

Claims and in early 1990 the Company

reached a tentative agreement. In

December 1990, however, the FDIC

rejected the Company’s settlement offer

and informed the Company that no

counter proposal would be offered. In

mid-1991, the Company again contacted

the FDIC to determine whether a

settlement could be reached. Beginning

in July 1991, the Company and the

FDIC’s representatives met to determine

if a possible solution could be reached.

In December 1991, the FDIC requested,

and the Company provided, an

agreement to toll the statute of

limitations. This tolling agreement was

subsequently extended numerous times,

and, as described below, the statute of

limitations has been tolled until the

terms of an Agreement and Release

entered into among the Company, the

FDIC, and others are effected or the

Agreement and Release is terminated.

5. The Company and certain of its

officers and directors also entered into

tolling agreements with the OTS

pursuant to which the OTS would have

until the end of the tolling period to

allege certain regulatory violations and

seek regulatory enforcement. In

connection with a Stipulation and

Consent entered into among the

Company, the OTS, and others, the

statute of limitations has been tolled

until the terms of the Stipulation are

effected or the Consent cancelled.

However, in 1996, the OTS brought

enforcement action against certain

officers and directors of the Company.

Such action is still in its preliminary

stage.

6. Effective December 1995, the

Company entered into a Stipulation and

Consent to Issuance of Consent Cease

and Desist Order for Affirmative Relief

with the OTS and a Settlement

Agreement and Release with the FDIC,

First Trust of California, National

Association, and Nu-West Florida, Inc.

(‘‘Nu-West’’). Under these agreements,

the Company neither admits nor denies

liability under claims by the OTS. The

FDIC settlement is conditioned upon the

Company obtaining a final order of the

Delaware Bankruptcy Court, and

requires a minimum payment of

$9,450,000 to the FDIC, a minimum

payment of $1,360,000 to the trustee for

the 9% Secured Sinking Debentures (the

‘‘Debenture Trustee’’), and a minimum

payment of $190,000 to Nu-West be

made from the Company’s assets. The

Company is required to proceed with a

plan of reorganization or liquidation in

the Delaware Bankruptcy Court, and

payments would be made after the

Delaware Bankruptcy Court confirms a

final plan. Any assets of the Company

remaining after the payments and

expenditures described above, and

pursuant to the confirmed final plan of

bankruptcy, must be paid to the FDIC,

the Debenture Trustee, and Nu-West in

proportion to the minimum settlement

payments. The FDIC settlement also

provides that the Company may not,

except in limited circumstances, utilize

the benefits of tax losses carried forward

from 1988 and the prior years.

7. On June 30, 1996, the Company

held assets of approximately $11.859

million, comprised of approximately

$1.840 million in cash and cash

equivalents, $9.788 million in shortterm investments, $.083 million in other

investments, and $.148 million in other

assets. The Company’s common stock

currently is traded sporadically in the

over-the-counter market. The Company

does not employ any full-time

employees. The Company’s

administrative operations are handled

by contract bookkeepers, accountants,

and attorneys.

8. Rule 3a–2 under the Act provides

a one-year safe harbor to issuers that

meet the definition of an investment

company but intend to maintain that

status only transiently. The Company

relied on the safe harbor provided by

this rule from December 30, 1988 until

December 30, 1989. The expiration of

the safe harbor period necessitated the

filing of an application for exemption.

In 1990, the Company was granted

conditional relief from all provisions of

the Act until December 30, 1990. The

SEC extended this exemptive relief by

six subsequent orders, most recently

until December 30, 1996.2

9. As described in detail in the

applications for the Prior Orders, during

a portion of the period in which the

requested exemption will be effective, it

is possible that the Company will be

subject to the jurisdiction of the federal

bankruptcy courts. In this regard, the

Company has formulated a plan of

reorganization (the ‘‘Reorganization

Plan’’) to be implemented under

Chapter 11 of the Bankruptcy Code. The

Reorganization Plan would settle the

outstanding claims against the Company

and provide a structure for the possible

acquisition of a new operating business

or businesses. Because the bankruptcy

court is charged with protecting the

interests of the Company’s creditors and

equity interest holders, the Company

believes that it is not necessary for it to

comply with section 17(a) or 17(d) with

respect to transactions approved by the

bankruptcy court.

Applicant’s Legal Analysis

1. Section 3(a)(3) of the Act defines an

investment company as an issuer

engaged in the business of investing,

reinvesting, owning, holding, or trading

in securities, and owning investment

securities having a value exceeding 40%

of the value of such issuer’s total assets

(exclusive of government securities and

cash items). The Company

acknowledges that, based on its current

mix of assets, it may be deemed to be

an investment company under section

3(a)(3).

2. The Company requests, pursuant to

sections 6(c) and 6(e) of the Act, that the

SEC issue an order exempting the

Company from all provisions of the Act,

subject to certain exceptions, until

December 30, 1997. The requested order

would extend the exemption granted by

the Prior Orders.

3. In determining whether to grant

exemptive relief for a transient

investment company, the SEC considers

such factors as: (a) Whether the failure

of the company to become primarily

engaged in a non-investment business or

excepted business or liquidate within

one year was due to factors beyond its
Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices 1935

1 15 U.S.C. § 78s(b)(1). 2 15 U.S.C. § 78f(b).

control; (b) whether the company’s

officers and employees during that

period tried, in good faith, to effect the

company’s investment of its assets in a

non-investment business or excepted

business or to cause the liquidation of

the company; and (c) whether the

company invested in securities solely to

preserve the value of its assets. The

Company believes that it meets these

criteria.

4. The Company believes that its

failure to become primarily engaged in

a non-investment business by December

30, 1996 is a result of factors beyond its

control. The existence of the FDIC

Claims and the OTS Claims has

precluded the Company from investing

its assets in a non-investment company

business. The magnitude of the FDIC

Claims and OTS Claims and the

potential threat that the FDIC and the

OTS would seek to enjoin any

utilization of the Company’s assets have

prevented the Company from investing

its assets in a non-investment company

business.

5. Pending the settlement of the FDIC

Claims and the OTS Claims, the

Company has limited its investments to

high quality marketable securities, cash

or cash equivalents. Thus, the Company

believes that it primarily invests in

securities solely to preserve the value of

its assets.

6. The Company believes that the

issuance of an order exempting it from

all provisions of the Act, subject to

certain exceptions, until December 10,

1997 would be in the public interest and

consistent with the protection of

investors and the purposes of the Act.

The Company believes that it would be

unfair to its stockholders to require it to

register as an investment company and

that such registration is not necessary

for the protection of its stockholders.

Applicant’s Conditions

The Company agrees that the

requested exemption will be subject to

the following conditions, each of which

will apply to the Company until it

acquires an operating business or

otherwise falls outside the definition of

an investment company:

1. During the period of time the

Company is exempted from registration

under the Act, it will not purchase or

otherwise acquire any securities other

than securities with a remaining

maturity of 397 days or less and that are

rated in one of the two highest rating

categories by a nationally recognized

statistical rating organization, as that

term is defined in rule 2a–7(a)(10) under

the Act.

2. The Company will continue to

comply with sections 9, 17(e), and 36 of

the Act.

3. The Company will continue to

comply with sections 17(a) and 17(d),

subject to the following exceptions:

(a) If the Company becomes subject to

the jurisdiction of the bankruptcy court,

the Company need not comply with

sections 17(a) or 17(d) with respect to

any transaction, including without

limitation the Reorganization Plan, that

is approved by the bankruptcy court;

and

(b) The Company would not be

required to comply with sections 17(a)

or 17(d) with respect to any transaction

or series of transactions that result in its

ceasing to fall within the definition of

an ‘‘investment company’’ provided that

(i) no cash payments are made to an

‘‘affiliated person’’ (as defined in the

Act) of the Company as part of such

transaction or series of transactions, and

(ii) no debt securities are issued to an

affiliated person of the Company as part

of such transaction or series of

transactions unless such debt securities

are expressly subordinated upon

liquidation to claims of the holders of

the Company’s debentures.

4. The Company will continue to

comply with sections 17(f) of the Act as

provided in rule 17f–2.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–804 Filed 1–13–97; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–38124; File No. SR–Amex–

96–48]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by American

Stock Exchange, Inc. Relating to a Fee

Change

January 6, 1997.

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

Securities Exchange Act of 1934,1 notice

is hereby given that on December 16,

1996, the American Stock Exchange,

Inc. (‘‘Amex’’ or ‘‘Exchange’’) filed with

the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed fee change as described in

Items I, II, and III below, which Items

have been prepared by the selfregulatory organization. The

Commission is publishing this notice to

solicit comments on the proposed fee

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Amex is issuing a one-time credit

against the Exchange’s monthly Floor

Facility Fee for those members who

were charged such fee for the months of

August through December, 1996

(amounting to $583.35 per member for

such period).

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

self-regulatory organization included

statements concerning the purpose of

and basis for the fee change and

discussed any comments it received on

the proposed fee change. The text of

these statements may be examined at

the places specified in Item IV below.

The self-regulatory organization has

prepared summaries, set forth in

sections A, B, and C below, of the most

significant aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

As the Exchange has had a rewarding

year from a financial perspective, it has

decided to issue a one-time credit

against its monthly Floor Facility Fee

for those members who were charged

such fee for the months of August

through December, 1996 (amounting to

$583.35 per member for such period).

2. Statutory Basis

The proposed fee change is consistent

with Section 6(b) of the Act 2 in general

and furthers the objectives of Section

6(b)(4) in particular in that it is intended

to assure the equitable allocation of

reasonable dues, fees, and other charges

among Exchange members, issuers, and

other persons using the Exchange’s

facilities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The fee change will impose no burden

on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments were solicited

or received with respect to the fee

change.