[Federal Register Volume 63, Number 117 (Thursday, June 18, 1998)]
[Notices]
[Pages 33421-33422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16259]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-23249; 812-10904]


New York Life Capital Corporation; Notice of Application

June 12, 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 all provisions 
of the Act.

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SUMMARY OF APPLICATION: Applicant, New York Life Capital Corporation, 
requests an order that would permit it to sell certain debt securities 
and use the proceeds to finance the business activities of its parent 
company and certain companies controlled by the parent company.

FILING DATES: The application was filed on December 18, 1997, and 
amended on April 28, 1998, and June 4, 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 July 8, 1998 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, 51 Madison Avenue, New York, New York 10010.

FOR FURTHER INFORMATION CONTACT:

Edward P. Macdonald, 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, 450 Fifth St., N.W., Washington, 
D.C. 20549 (tel. 202-942-8090).

Applicant's Representations

    1. Applicant is a Delaware corporation and a wholly-owned indirect 
subsidiary of New York Life Insurance Company (``New York Life''). New 
York Life is a mutual insurance company organized under the laws of the 
State of New York. New York Life, directly and through its 
subsidiaries, provides various financial services including the sale of 
group pension products, health insurance, annuities, brokerage 
services, investment advisory services, mutual funds, and variable life 
and annuity insurance products. New York Life is exempt from regulation 
under the Act by section 3(c)(3) of the Act.
    2. Applicant was formed in 1995 for the purpose of financing the 
business operations of New York Life and its subsidiaries (``Controlled 
Companies''). Applicant's primary function to borrow funds through the 
sale of short-term, medium-term, and long-term debt securities as well 
as non-voting preferred stock, and to lend the proceeds from these 
offerings to New York Life and its Controlled Companies to help finance 
their operations. Certain of the Controlled Companies are exempt from 
regulations under the Act by certain provisions of section 3(c) of the 
Act. None of the Controlled Companies to which applicant may lend will 
be relying on sections 3(c)(1) or 3(c)(7) of the Act.
    3. All of applicant's debt securities and non-voting preferred 
stock issued to or held by the public will be unconditionally 
guaranteed by New York Life as to the payment of, as applicable, 
principal, interest, premium, dividends, liquidation preference and 
sinking fund payments. In the event of any default in payment of these 
amounts, the public holders of the securities may institute legal 
proceedings directly against New York Life without first proceeding 
against applicant. Furthermore, any convertible or exchangeable 
securities issued by applicant shall be convertible or exchangeable 
only for securities issued by New York Life or for applicant's debt 
securities or non-voting preferred stock.
    4. Applicant will invest in or loan at least 85% of any cash or 
cash equivalents raised by applicant to New York Life and its 
Controlled Companies as soon as practicable, but in no event later than 
six months after applicant receives the cash or cash equivalents. If 
applicant borrows amounts in excess of the amounts required by New York 
Life and its Controlled Companies, applicant will invest this excess in 
certain temporary investments pursuant to rule 3a-5 under the Act 
discussed below.

Applicant's Legal Analysis

    1. Applicant requests an order under section 6(c) of the Act 
exempting it from all provisions of the Act. Applicant states that rule 
3a-5 under the Act provides an exemption from the definition of 
investment company for certain companies organized primarily to finance 
the business operations of their parent companies or companies 
controlled by their parent companies.
    2. Rule 3a-5(b)(2) provides that a ``parent company'' is a company 
that derives its non-investment company status from section 3(a) of the 
Act, the rules under section 3(a) of the Act, or section 3(b) of the 
Act. Rule 3a-5(b)(3)(i) in relevant part defines a ``company controlled 
by the parent company'' to be a corporation, partnership, or joint 
venture that is not considered an investment company under section 3(a) 
of the Act, the rules under section 3(a) of the Act, or section 3(b) of 
the Act.
    3. Applicant states that New York Life may not qualify as a 
``parent company'' under rule 3a-5(b)(2) because it derives its non-
investment company status from section 3(c)(3) of the Act. Applicant 
also states that certain Controlled Companies that may receive loans 
from applicant, may not qualify as a ``company controlled by the parent 
company'' under rule 3a-5(b)(3)(i) because these Companies derive their 
non-investment company status from sections 3(c)(2), 3(c)(3), 3(c)(5), 
or 3(c)(6) of the Act.
    4. Applicant asserts that neither New York Life nor these 
Controlled Companies engage primarily in investment company activities. 
If New York Life, or any of its Controlled Companies, were itself to 
issue the debt obligations that are to be issued by applicant and use 
the proceeds for its own purposes or advance them to its subsidiaries, 
neither New York Life nor any of its Controlled Companies would be 
subject to regulation under the Act. New York Life has chosen instead 
to use applicant as a vehicle for this borrowing for reasons unrelated 
to the regulatory purposes of the Act.
    5. Section 6(c) of the Act provides that the SEC may exempt any 
person,

[[Page 33422]]

security or transaction, or any class or classes of persons, securities 
or transactions, from any provision or provisions of the Act when the 
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. Applicant states that 
for the reasons given above its request for exemptive relief meets the 
standards of section 6(c).

Applicant's Condition

    Applicant agrees that the order granting the requested relief will 
be subject to the following condition:
    1. Applicant will comply with all of the provisions of rule 3a-5 
under the Act, except: (a) New York Life will not meet the portion of 
the definition of parent company in rule 3a-5(b)(2)(i) solely because 
it is excluded from the definition of investment company under section 
3(c)(3) of the Act; and (b) Controlled Companies will not meet the 
portion of the definition of ``company controlled by the parent 
company'' in rule 3a-5(b)(3)(i) solely because they are excluded from 
the definition of investment company by sections 3(c)(2), 3(c)(3), 
3(c)(5), or 3(c)(6) of the Act, provided that any such entity excluded 
from the definition of investment company under section 3(c)(5) of the 
Act will fall within section 3(c)(5)(A) or section 3(c)(5)(B) solely by 
reason of its holdings of accounts receivable of either their own 
customers or of the customers of other New York Life Controlled 
Companies, or by reason of loans made by it to such New York Life 
Controlled Companies or customers, provided further, that any such 
entity excluded from the definition of investment company pursuant to 
section 3(c)(6) of the Act will not be engaged primarily, directly or 
through majority-owned subsidiaries, in one or more of the businesses 
described in section 3(c)(5) of the Act (except as permitted in this 
condition).

    For the SEC, by the Division of Investment Management, pursuant 
to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 98-16259 Filed 6-17-98; 8:45 am]
BILLING CODE 8010-01-M