Federal Register / Vol. 63, No. 14 /Thursday, January 22, 1998 / Notices 3363

1Although NST has retail as well as institutional

clients, applicant only has direct contact with

certain of NST’s institutional clients.

2 15 U.S.C. 80b–3a(a)(1).

3 15 U.S.C. 80b–3a(a)(2).

In making the decision to withdraw

its Security from listing on the PCX, the

Company considered the expense of

maintaining the dual-listing of its

Security on the PCX and the NYSE. The

Company does not see any particular

advantage in the dual-listing of its

Security, since trading in the Security

on the PCX has come to represent a very

small portion of the Company’s total

trading volume.

By letter dated December 5, 1997, the

PCX informed the Company that it had

no objection to the withdrawal of the

Company’s Security from listing on the

PCX.

By reason of Section 12(b) of the Act

and the rules thereunder, the Company

shall continue to be obligated to file

reports under Section 13 of the Act with

the Commission and the NYSE.

Any interested person may, on or

before February 5, 1998, submit by letter

to the Secretary of the Securities and

Exchange Commission, 450 Fifth Street,

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

bearing upon whether the application

has been made in accordance with the

rules of the Exchange and what terms,

if any, should be imposed by the

Commission for the protection of

investors. The Commission, based on

the information submitted to it, will

issue an order granting the application

after the date mentioned above, unless

the Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 98–1490 Filed 1–20–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Rel. No. IA–1694/803–128]

Nikko Research Center (America), Inc.;

Notice of Application

January 15, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Advisers Act of 1940 (‘‘Advisers Act’’).

APPLICANT: Nikko Research Center

(America), Inc.

RELEVANT ADVISERS ACT SECTIONS:

Exemption requested under section

203A(c) from section 203A(a).

SUMMARY OF APPLICATION: Applicant

requests an order to permit it to register

with the SEC as an investment adviser.

FILING DATES: The application was filed

on December 3, 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 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 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 may request notification of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 5th

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

Applicant, Nikko Research Center

(America), Inc., One World Financial

Center, Tower A, 200 Liberty Street,

New York, New York 10281.

FOR FURTHER INFORMATION CONTACT:

Kathy D. Ireland, Attorney, at (202) 942–

0530, or Jennifer S. Choi, Special

Counsel, at (202) 942–0716 (Division of

Investment Management, Task Force on

Investment Adviser 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.

Applicant’s Representations

1. Applicant is a corporation

organized under the laws of New York

and a wholly-owned subsidiary of the

Nikko Research Center, Ltd. (‘‘NRC’’), an

unregistered investment adviser located

in Japan, which is affiliated with the

Nikko Securities Co., Ltd. (‘‘NST’’), an

integrated financial services company

also located in Japan.

2. Applicant maintains its principal

place of business in New York and is

currently registered as an investment

adviser in New York. Applicant was

registered with the SEC as an

investment adviser until July 8, 1997.

3. Pursuant to separate service

agreements between applicant and NRC,

NST, and Nikko Securities Co.

International, Inc. (‘‘NSI’’), a registered

broker-dealer located in the United

States and an indirect wholly-owned

subsidiary of NST, applicant provides

NRC, NST, and NSI with reports

concerning national and international

political, economic, financial, and

investment matters to assist them with

the services that they provide to their

clients. Some of these reports may be

distributed directly by NSI and NST to

their institutional clients, and NST may

distribute such reports to certain retail

clients, all of whom are in Japan. NSI

does not have retail clients.

4. Applicant’s analysts, strategists,

and economists speak at seminars for

clients of NSI, all of which are U.S.

affiliates of Japanese-based banking

institutions. NSI mails seminar

materials directly to other institutional

clients.

5. Applicant’s analysts and

economists also periodically meet

directly with certain institutional clients

of NSI and NST, including U.S.

subsidiaries of Japanese regional banks,

insurance companies, and Japanese

banks and trust companies.1 The

foregoing are the only direct contacts

applicant has with clients of NSI and

NST. Applicant does not and will not

have any direct contacts with any

clients of NRC.

6. Applicant receives compensation

solely from NRC, NSI and NST in an

amount equivalent to its total annual

operational cost plus 3%.

Applicant’s Legal Analysis

1. On October 11, 1996, the National

Securities Markets Improvement Act of

1996 was enacted. Title III of the Act,

the Investment Advisers Supervision

Coordination Act, added new section

203A to the Advisers Act. Under section

203A(a)(1),2 an investment adviser that

is regulated or required to be regulated

as an investment adviser in the state in

which it maintains its principal office

and place of business is prohibited from

registering with the SEC unless the

investment adviser (i) has assets under

management of not less than $25

million or (ii) is an adviser to an

investment company registered under

the Investment Company Act of 1940

(‘‘Investment Company Act’’). Section

203A(a)(2) defines the phrase ‘‘assets

under management’’ as the ‘‘securities

portfolios with respect to which an

investment adviser provides continuous

and regular supervisory or management

services.’’3

2. Applicant submits that section

203A of the Advisers Act is intended to

streamline the registration and oversight

of investment advisers by reallocating

responsibilities between the SEC and

the states. Applicant notes that Congress

determined that the states should be

responsible for regulating investment

advisers ‘‘whose activities are likely to
3364 Federal Register / Vol. 63, No. 14 /Thursday, January 22, 1998 / Notices

4S. Rep. No. 293, 104th Cong., 2d Sess. 4 (1996).

5 15 U.S.C. 80b–3a(c).

6Applicant also notes that its services reach

certain institutional investors even more directly.

As described above, applicant gives seminar

presentations for certain of NSI’s clients, and holds

individual meetings directly with certain clients of

NSI and NST, all which are institutional investors

with a national or international presence.

7Rules Implementing Amendments to the

Investment Advisers Act of 1940, Investment

Advisers Act Release No. 1633 at Section II.D.1.

(May 15, 1997) [62 FR 28112 (May 22, 1997)].

8 Id. at Section II.D.2.

9 Id. at Section II.F.1.

10Of applicant’s three clients, only NST has retail

clients, all of whom are outside the United States.

Applicant has no direct contacts with any of NST’s

retail clients.

1Applicants request that the relief apply to any

open-end registered investment company for which

the Manager or any entity controlling, controlled

by, or under common control with the Manager acts

as investment adviser. All existing investment

companies that currently intend to rely on the order

have been named as applicants, and any other

existing or future investment companies that

subsequently rely on the order will comply with the

terms and conditions in the application.

be concentrated in their home state,’’

but ‘‘[l]arger advisers, with national

businesses,’’ should be regulated by the

SEC and be ‘‘subject to national rules.’’4

3. Section 203A(c) of the Advisers Act

authorizes the SEC to permit an

investment adviser to register with the

SEC if prohibiting registration would be

‘‘unfair, a burden on interstate

commerce, or otherwise inconsistent

with the purpose of [section 203A].’’5

4. Applicant states that it does not

qualify for SEC registration under

section 203A. Applicant submits that it

does not have assets under management

or act as an investment adviser to an

investment company registered as such

under the Investment Company Act.

Applicant also states that it does not

satisfy any of the exemptions from the

prohibition on registration provided in

rule 203A–2 under the Advisers Act.

5. Applicant asserts that it would be

inconsistent with the purposes of

section 203A if it were prohibited from

registering with the SEC. Applicant

submits that its activities, like those of

the nationally recognized statistical

rating organizations (‘‘NRSROs’’) and

pension consultants, affect the national

and international securities markets.

6. Applicant states that its research

reports focus primarily on issues of

national and international scope and

significance. Applicant states that its

advisory services are provided to only

three clients for compensation, and that

those entities utilize applicant’s services

in connection with the delivery of

services to their own clients, many of

which are substantial institutional

investors, such as banks, insurance

companies, and trust companies located

throughout the world, that collectively

manage and/or invest billions of dollars

in both foreign and domestic securities.

Applicant asserts that, the significant

resources of these institutional

investors, which may utilize its research

and analyses in connection with their

own investment management activities,

substantially affect both national and

international securities markets.6

7. Applicant states that the SEC

exempted NRSROs from the prohibition

on SEC registration although they

typically do not have assets under

management or act as investment

advisers to registered investment

companies because their activities have

a significant effect on the national

securities markets and the operation of

federal securities laws.7

8. Applicant also states that the SEC

exempted certain pension consultants

from the prohibition on SEC registration

even though they may not have assets

under management or act as investment

advisers to registered investment

companies because they have a direct

effect on the management of billions of

dollars of plan assets, which in turn

affects the national markets.8

9. Applicant also submits that it

would be inconsistent with the

purposes of section 203A(b)(1)(A) if it

were subject to state regulation.

Applicant states that, pursuant to this

section, Congress preserved the states’

ability to regulate certain investment

adviser representatives of investment

advisers registered with the SEC if those

representatives provide services to retail

clients. Applicant submits that Congress

determined that the primary interest of

the states is to maintain oversight of

representatives with retail, and not

institutional, clientele because the

activities of these representatives

predominately affect local markets.

Applicant states that in defining the

term ‘‘investment adviser

representative’’ for purposes of section

203A(b), the SEC noted its belief that it

is consistent with the intent of Congress

to distinguish between retail and other

clients.9

10. Applicant states that it does not

provide investment advisory services

directly to retail clients. Applicant

submits that its three clients are

institutions whose activities are national

and international in scope. Further,

applicant states that the advisory

services that it provides to its clients are

primarily used by such clients in

connection with the services that they

provide to their own clients, which are

almost exclusively institutional.10

Applicant states that, because its

services are provided primarily to

institutions, it is not the sort of

investment adviser that Congress

intended to be subject to regulation by

and registration with the states.

11. Applicant believes that Congress

intended that national investment

advisers remain subject to SEC

oversight, in part to focus SEC

supervision and examination resources

on investment advisers involved in

interstate commerce. Applicant

contends that the national and

international nature of its activities

lends itself to supervision and

examination by one regulatory body.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–1491 Filed 1–21–98; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Investment Company Act Release No.

23000; 812–10876]

Saratoga Advantage Trust, et al.;

Notice of Application

January 14, 1998.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application under

section 6(c) of the Investment Company

Act of 1940 (the ‘‘Act’’) for an

exemption from section 15(a) of the Act

and rule 18f–2 under the Act, and from

certain disclosure requirements under

the Act.

SUMMARY OF APPLICATION: The order

would permit the investment adviser to

an open-end registered investment

company to enter into subadvisory

contracts with subadvisers without

receiving shareholder approval, and

grant relief from certain disclosure

requirements regarding advisory fees

paid to subadvisers.

APPLICANTS: Saratoga Capital

Management (the ‘‘Manager’’), and the

Saratoga Advantage Trust (the

‘‘Trust’’).1

FILING DATES: The application was filed

on November 24, 1997, and amended on

December 31, 1997. Applicants have

agreed to file an amendment during the

notice period, the substance of which is

included 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