Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Notices 28429

Commission’s designee; (b) all

agreements between reporting

institutions regarding registration in the

Program or other aspects of Rule 17f–1;

and (c) all confirmations or other

information received from the

Commission or its designee as a result

of inquiry.

Reporting institutions utilize these

records and reports (a) to report missing,

lost, stolen or counterfeit securities to

the data base, (b) to confirm inquiry of

the data base, and (c) to demonstrate

compliance with Rule 17f–1. The

Commission and the reporting

institutions’ examining authorities

utilize these records to monitor the

incidence of thefts and losses incurred

by reporting institutions and to

determine compliance with Rule 17f–1.

If such records were not retained by

reporting institutions, compliance with

Rule 17f–1 could not be monitored

effectively.

The Commission estimates that there

are 24,518 reporting institutions

(respondents) and, on average, each

respondent would need to retain 33

records annually, with each retention

requiring approximately 1 minute (33

minutes or .55 hours). The total

estimated annual burden is 13,484.9

hours (24,518×.55 hours =13,484.9).

Assuming an average hourly cost for

clerical work of $10, the average total

yearly record retention cost for each

respondent would be $5.50. Based on

these estimates, the total annual cost for

the estimated 24,518 reporting

institutions would be approximately

$134,849.

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

estimates 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 on or before July 21, 1998.

Please direct your written comments

to Michael E. Bartell, Associate

Executive Director, Office of

Information Technology, Securities and

Exchange Commission, 450 5th Street,

NW, Washington, DC 20549.

Dated: May 14, 1997.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–13725 Filed 5–21–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

Submission for OMB Review;

Comment Request

Upon Written Request, Copies Available

From: Securities and Exchange

Commission Office of Filings and

Information Services Washington, DC

20549

Extension:

Rule 15Ba2–1 and Form MSD, SEC File No.

270–88, OMB Control No. 3235–0083

Notice is hereby given that pursuant

to the Paperwork Reduction Act of 1995

(44 U.S.C. 3501 et seq.), the Securities

and Exchange Commission

(‘‘Commission’’) has submitted to the

Office of Management and Budget a

request for approval of extension on the

following:

Rule 15Ba2–1 under the Securities

Exchange Act of 1934 provides that an

application for registration with the

Commission by a bank municipal

securities dealer must be filed on Form

MSD.

The staff estimates that approximately

40 respondents will utilize this

application procedure annually, with a

total burden of 60 hours. The staff

estimates that the average number of

hours necessary to comply with the

requirements of Rule 15Ba2–1 is 1.5

hours. The average cost per hour is

approximately $40. Therefore, the total

cost of compliance for the respondents

is $2,400.

Providing the information on the

application is mandatory in order to

register with the Commission as a bank

municipal securities dealer. The

information contained in the

application will not be confidential. An

agency may not conduct or sponsor, and

a person is not required to respond to

a collection of information unless it

displays a currently valid control

number.

General comments regarding the

estimated burden hours should be

directed to the following persons: (i)

Desk Officer for the Securities and

Exchange Commission, Office of

Information and Regulatory Affairs,

Office of Management and Budget,

Room 3208, New Executive Office

Building, Washington, D.C. 20503; and

(ii) Michael E. Bartell, Associate

Executive Director, Office of

Information Technology, Securities and

Exchange Commission, 450 Fifth Street,

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

Comments must be submitted to OMB

within 30 days of this notice.

Dated: May 15, 1998.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–13726 Filed 5–21–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

23188]

Armada Funds, et al.; Notice of

Application

May 15, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

exemption under section 6(c) of the

Investment Company Act of 1940 (the

‘‘Act’’) from section 15(a) of the Act.

SUMMARY OF APPLICATION: Applicants,

Armada Funds (the ‘‘Fund’’) and

National Asset Management Corporation

(the ‘‘Adviser’’), request an order

permitting the implementation, without

prior shareholder approval, of new

investment advisory agreements (the

‘‘New Agreements’’) between the Fund

and the Adviser in connection with a

change in control of the Adviser. The

order would cover a period beginning

on the date the requested order is issued

until the date the New Agreements are

approved or disapproved by the Fund’s

shareholders (but in no event later than

July 6, 1998) (‘‘Interim Period’’). The

order also would permit the Adviser to

receive all fees earned under the New

Agreement during the Interim Period

following shareholder approval.

FILING DATES: The application was filed

on April 3, 1998 and amended on May

13, 1998.

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

June 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
28430 Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Notices

1The Adviser has continued to serve as

investment adviser to the Fund since the

Transaction in a manner consistent with its

fiduciary duty to the Fund even though the Fund’s

shareholders have not approved the New

Agreements. Applicants acknowledge that the Fund

may be required to pay, with respect to the period

until receipt of the order, no more than the actual

out-of-pocket cost to the Adviser for providing

advisory services to the Fund.

hearing may request notification by

writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

Street, NW., Washington, DC 20549.

Fund, One Freedom Valley Drive, Oaks,

Pennsylvania 19456. Adviser, 101 South

Fifth Street, Louisville, Kentucky 40402.

FOR FURTHER INFORMATION CONTACT:

Shirley A. Bodden, Paralegal Specialist,

at (202) 942–0575, or Edward P.

Macdonald, Branch Chief, at (202) 942–

0564 (Office of Investment Company

Regulation, Division of Investment

Management).

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 is a Massachusetts

business trust registered under the Act

as an open-end management investment

company. The Adviser is an investment

adviser registered under the Investment

Advisers Act of 1940. The Adviser

manages three portfolios of the Fund

under two investment advisory

agreements with the Fund (‘‘Prior

Agreements’’).

2. On March 6, 1998, National City

Corporation (‘‘NCC’’) sold all of the

Adviser’s outstanding stock to the

Adviser’s principal management team

(the ‘‘Transaction’’). Applicants state

that the Transaction resulted in an

assignment of the Prior Agreements.

Applicants request an exemption: (i) To

permit the implementation, without

prior shareholder approval, of the New

Agreements; and (ii) to permit the

Adviser to receive from the Fund all

fees earned under the New Agreements

during the Interim Period if, and to the

extent, the New Agreements are

approved by the Fund’s shareholders.1

3. On March 6, 1998, the Fund’s board

of trustees (the ‘‘Board’’), including a

majority of the trustees who are not

interested persons of the Fund within

the meaning of section 2(a)(19) of the

Act (‘‘Independent Trustees’’), met inperson and approved the New

Agreements. The New Agreements are

identical in substance to the Prior

Agreements except for their effective

and termination dates and certain

escrow provisions as described below.

Proxy materials to vote on the New

Agreements are expected to be mailed to

the Fund’s shareholders on or about

May 18, 1998. The requisite shareholder

meetings are expected to take place on

or about June 29, 1998.

4. Applicants have entered into an

escrow arrangement with an unaffiliated

financial institution (‘‘Escrow Agent’’).

The fees payable to the Adviser under

the New Agreements during the Interim

Period will be paid into an interestbearing escrow account maintained by

the Escrow Agent. The amounts in the

escrow account (including interest

earned on such paid fees) will be paid

to the Adviser only if the Fund’s

shareholders approve the New

Agreements. If the Interim Period has

ended and the Fund’s shareholders have

failed to approve the New Agreements,

the Escrow Agent will pay to the Fund

the escrow amounts (including any

interest earned). Before the release of

any escrow amounts, the Independent

Trustees will be notified.

Applicant’s Legal Analysis

1. Section 15(a) of the Act provides,

in pertinent part, that it shall be

unlawful for any person to serve or act

as an investment adviser of a registered

investment company, except pursuant

to a written contract that has been

approved by the vote of a majority of the

outstanding voting securities of such

registered investment company. Section

15(a) of the Act further requires that

such written contract provide for

automatic termination in the event of its

‘‘assignment.’’ Section 2(a)(4) of the Act

defines ‘‘assignment’’ to include any

direct or indirect transfer of a contract

by the assignor, or of a controlling block

of the assignor’s outstanding voting

securities by a security holder of the

assignor.

2. Applicants state that, upon

completion of the Transaction, control

of the Adviser was transferred to the

Adviser’s principal management team.

Accordingly, the Transaction resulted in

an assignment of the Prior Agreements

and thus their automatic termination.

3. Rule 15a–4 provides in pertinent

part, that if an investment advisory

contract with an investment company is

terminated by an assignment in which

the adviser does not directly or

indirectly receive a benefit, the adviser

may continue to act as such for the

company for 120 days under a written

contract that has not been approved by

the company’s shareholders, provided

that: (a) The new contract is approved

by that company’s board of directors

(including a majority of directors who

are not interested persons of the

company); (b) the compensation to be

paid under the new contract does not

exceed the compensation that would

have been paid under the contract most

recently approved by the company’s

shareholders; and (c) neither the adviser

or any controlling person of the adviser

‘‘directly or indirectly receives money

or other benefit’’ in connection with the

assignment. Applicants state that they

cannot rely on rule 15a–4 because of the

benefits the Adviser will receive from

the Transaction.

4. Section 6(c) provides that the SEC

may exempt any person, security, or

transaction from any provision of the

Act, if and to the extent that such

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. Applicants

submit that the requested relief meets

this standard.

5. Applicants submit that the timing

of the Transaction arose primarily out of

business considerations unrelated to the

Fund and did not reasonably present an

opportunity to secure prior approval of

the New Agreements by the Fund’s

shareholders. Applicants state that the

requested relief would permit the

continuity of investment management

for the Fund, without interruption,

during the period following the issuance

of the requested order.

6. Applicants submit that the scope

and quality of investment advisory

services provided to the Fund during

the Interim Period will not be

diminished. During the Interim Period,

the Adviser will operate under the New

Agreements, which will be

substantively the same as the Prior

Agreements, except for their effective

and termination dates and escrow

provisions. Applicants are not aware of

any material changes in the personnel

that will provide investment

management services during the Interim

Period. Accordingly, the Fund should

receive, during the Interim Period, the

same investment advisory services,

provided in the same manner, as the

Fund received before the Transaction.

7. Applicants assert that to deprive

the Adviser of fees during the Interim

Period would be a harsh result and an

unreasonable penalty to attach to the

Transaction and would serve no useful

purpose. Applicants submit that the fees

payable to the Adviser under the New

Agreements during the Interim Period

will be maintained in an interestbearing escrow account by the Escrow

Agent. Such fees will not be released by

the Escrow Agent to the Adviser

without notice to the Independent
Federal Register / Vol. 63, No. 99 / Friday, May 22, 1998 / Notices 28431

Trustees and appropriate certifications

that the New Agreements have been

approved by the Funds’ shareholders.

Applicants’ Conditions

Applicants agree as conditions to the

issuance of the exemptive order

requested by the application that:

1. The New Agreements will have the

same terms and conditions as the Prior

Agreements, except for their effective

and termination dates and escrow

provisions.

2. Fees earned by the Adviser in

respect of the New Agreements during

the Interim Period will be maintained in

an interest-bearing escrow account, and

amounts in the account (including

interest earned on such paid fees) will

be paid: (a) To the Adviser in

accordance with the New Agreements,

after the requisite shareholder approval

is obtained; or (b) to the Fund portfolio

which paid the fees, in the absence of

shareholder approval with respect to the

Fund portfolio.

3. The Fund will hold a meeting of

shareholders to vote on approval of the

New Agreements on or before the 120th

day following the termination of the

Prior Agreements (but in no event later

than July 6 1998).

4. The Adviser will bear the costs of

preparing and filing the application and

the costs relating to the solicitation of

shareholder approval of the New

Agreement necessitated by the

Transaction.

5. The Adviser will take all

appropriate steps so that the scope and

quality of advisory and other services

provided to the Fund during the Interim

Period will be at least equivalent, in the

judgment of the Board, including a

majority of the Independent Trustees, to

the scope and quality of services

previously provided. In the event of any

material change in the personnel

providing services pursuant to the New

Agreements, the Adviser will apprise

and consult with the Board to assure

that the Trustees, including a majority

of the Independent Trustees, are

satisfied that the services provided will

not be diminished in scope or quality.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 98–13647 Filed 5–21–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

23189; 812–10972]

General American Investors Company,

Inc.; Notice of Application

May 15, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for an

exemption under section 6(c) of the

Investment Company Act of 1940 (the

‘‘Act’’) from section 19(b) of the Act and

rule 19b–1 under the Act.

SUMMARY OF APPLICATION: Applicant,

General American Investors Company,

Inc., requests an order to permit it to

make periodic distributions of net longterm capital gains in any one taxable

year, so long as applicant maintains in

effect a distribution policy with respect

to its preferred stock calling for periodic

dividends in an amount equal to a

specified percentage of the liquidation

preference of the preferred stock.

FILING DATES: The application was filed

on January 16, 1998 and amended on

April 29, 1998.

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

June 9, 1998, and should be

accompanied by proof of service on

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 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.

Applicant: General American Investors

Company, Inc., 450 Lexington Avenue,

New York, New York 10017.

FOR FURTHER INFORMATION CONTACT:

Edward P. Macdonald, Branch Chief, at

(202) 942–0564 (Office of Investment

Company Regulation, Division of

Investment Management).

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).

Applicant’s Representations

1. Applicant is registered under the

Act as an internally-managed closedend management investment company

organized as a Delaware corporation.

Applicant’s board of directors has

authorized it to issue and sell

cumulative preferred stock. Applicant’s

investment objective is long term capital

appreciation.

2. Applicant wishes to institute a

dividend payment policy with respect

to its cumulative preferred stock, and

any future preferred stock, to be issued

by applicant calling for periodic

dividends in an amount equal to a

specified percentage of the liquidation

preference of applicant’s preferred stock

(‘‘Distribution Policy’’). The specified

percentage may be determined at the

time the preferred stock is initially

issued, pursuant to periodic

remarketings or auctions, or otherwise.

Under the requested relief, the periodic

payments may include long-term capital

gains so long as applicant maintains in

effect the Distribution Policy.

Applicant’s Legal Analysis

1. Section 19(b) of the Act provides

that a registered investment company

may not in contravention of such rules,

regulations, or orders as the SEC may

prescribe, distribute long-term capital

gains more often than once every twelve

months. Rule 19b–1 under the Act

limits the number of capital gains

distributions, as defined in section

851(b)(3)(C) of the Internal Revenue

Code of 1986, as amended (the ‘‘Code’’),

that applicant may make with respect to

any one taxable year to one, plus a

supplemental distribution made

pursuant to section 855 of the Code not

exceeding 10% of the total amount

distributed for the year, plus one

additional net long-term capital gains

distribution made in whole or in part to

avoid the excise tax under section 4982

of the Code.

2. Applicant argues that rule 19b–1

may prevent the normal operation of the

Distribution Policy whenever

applicant’s realized net long-term

capital gains in any year exceed the total

of the periodic distributions that under

rule 19b–1 may include capital gains. In

that situation, applicant asserts that rule

19b–1 effectively forces the

distributions that under rule 19b–1 may

not include these capital gains to be

treated as a return of capital to

stockholders, even though net long-term

capital gains would otherwise be

available. Applicant further states that

federal tax rules require that current

earnings and profits be allocated

proportionately among all distributions