Federal Register / Vol. 74, No. 51 / Wednesday, March 18, 2009 / Notices 11619 

1Applicants request that any relief granted 

pursuant to the application also apply to any other 

company of which ETCM is or hereafter becomes 

an affiliated person within the meaning of section 

2(a)(3) of the Act (together with the Applicants, the 

‘‘Covered Persons’’). 

subadviser or depositor to a Fund, or 

principal underwriter for any open-end 

Fund or UIT and that the conduct 

occurred prior to Citigroup’s acquisition 

of the parent company of ATDS when 

the Fund Servicing Applicants were not 

affiliated persons of ATDS. Applicants 

also state that none of the current or 

former directors, officers, or employees 

of the Fund Servicing Applicants had 

any involvement in the conduct alleged 

in the Complaint. Applicants further 

state that the personnel at ATDS who 

allegedly participated in the conduct 

giving rise to the Injunction have had no 

and will not have any future 

involvement in providing advisory, 

subadvisory or depository services to 

Funds, or principal underwriting 

services to open-end Funds or UITs and 

are no longer employed by ATDS. 

5. Applicants state that the inability of 

the Fund Servicing Applicants to 

continue to serve as investment adviser, 

depositor or principal underwriter to 

the Funds would result in potentially 

severe financial hardships for the Funds 

and their shareholders. Applicants have 

distributed, or will distribute as soon as 

reasonably practical, written materials, 

including an offer to meet in person to 

discuss the materials, to the board of 

directors of each Fund, including the 

directors who are not ‘‘interested 

persons,’’ as defined in section 2(a)(19) 

of the Act, of such Fund, and their 

independent legal counsel as defined in 

rule 0–1(a)(6) under the Act, if any, 

regarding the Judgment, any impact on 

the Funds, and the application. 

Applicants state they will provide the 

Funds with all information concerning 

the Judgment and the application that is 

necessary for the Funds to fulfill their 

disclosure and other obligations under 

the Federal securities laws. 

6. Applicants also state that, if the 

Fund Servicing Applicants were barred 

from serving as investment adviser, 

depositor or principal underwriter to 

the Funds, the effect on their businesses 

and employees would be severe. 

Applicants state that the Fund Servicing 

Applicants have committed substantial 

resources to establish an expertise in 

providing services covered by section 

9(a) of the Act to Funds. Applicants 

further state that prohibiting the Fund 

Servicing Applicants from providing 

advisory and distribution services 

would not only adversely affect their 

businesses, but would also adversely 

affect approximately 50 employees that 

are involved in those activities. 

Applicants also state that disqualifying 

the ESC Advisers from continuing to 

provide investment advisory services to 

ESCs is not in the public interest or in 

furtherance of the protection of 

investors. Because the ESCs have been 

formed for the benefit of certain eligible 

employees, officers, directors and 

persons on retainer of Citigroup and its 

affiliates, it would not be consistent 

with the purposes of the ESC provisions 

of the Act or the ESC Order to require 

another entity not affiliated with the 

ESC Advisers to manage the ESCs. In 

addition, the employees of Citigroup 

and its affiliates subscribed for interests 

in the ESCs with the expectation that 

the ESCs would be managed by an 

affiliate of Citigroup. 

7. Applicants previously have 

received exemptions under section 9(c) 

as the result of conduct that triggered 

section 9(a) as described in greater 

detail in the application. 

Applicants’ Condition 

Applicants agree that any order 

granting the requested relief will be 

subject to the following condition: 

Any temporary exemption granted 

pursuant to the application shall be without 

prejudice to, and shall not limit the 

Commission’s rights in any manner with 

respect to, any Commission investigation of, 

or administrative proceedings involving or 

against, Covered Persons, including without 

limitation, the consideration by the 

Commission of a permanent exemption from 

section 9(a) of the Act requested pursuant to 

the application or the revocation or removal 

of any temporary exemptions granted under 

the Act in connection with the application. 

Temporary Order 

The Commission has considered the 

matter and finds that Applicants have 

made the necessary showing to justify 

granting a temporary exemption. 

Accordingly, 

it is hereby ordered, pursuant to 

section 9(c) of the Act, that the 

Applicants and any other Covered 

Persons are granted a temporary 

exemption from the provisions of 

section 9(a), solely with respect to the 

Injunction, subject to the condition in 

the application, from March 11, 2009, 

until the Commission takes final action 

on their application for a permanent 

order. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–5790 Filed 3–17–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–28645; 812–13639] 

E*TRADE Capital Markets LLC, et al.; 

Notice of Application and Temporary 

Order 

March 12, 2009. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Temporary order and notice of 

application for a permanent order under 

section 9(c) of the Investment Company 

Act of 1940 (‘‘Act’’). 

SUMMARY OF APPLICATION: Applicants 

have received a temporary order 

exempting them from section 9(a) of the 

Act, with respect to an injunction 

entered against E*TRADE Capital 

Markets LLC (‘‘ETCM’’) on March 11, 

2009, by the United States District Court 

for the Southern District of New York 

(‘‘Injunction’’) until the Commission 

takes final action on an application for 

a permanent order. Applicants also have 

applied for a permanent order. 

APPLICANTS: ETCM, E*TRADE Financial 

Corporation (‘‘ETFC’’), E*TRADE Asset 

Management, Inc. (‘‘E*TRADE Asset 

Management’’), E*TRADE Securities 

LLC (‘‘E*TRADE Securities’’) and 

Kobren Insight Management, Inc. 

(‘‘Kobren’’) (collectively, other than 

ETCM and ETFC, the ‘‘Fund Servicing 

Applicants,’’ and together, the 

‘‘Applicants’’).1

FILING DATES: The application was filed 

on March 4, 2009 and amended on 

March 12, 2009. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the application will be 

issued unless the Commission orders a 

hearing. Interested persons may request 

a hearing by writing to the 

Commission’s Secretary and serving 

applicants with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on April 6, 2009, 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 hearing may request 

notification by writing to the 

Commission’s Secretary. 


tjames on PRODPC61 with NOTICES
11620 Federal Register / Vol. 74, No. 51 / Wednesday, March 18, 2009 / Notices 

2Securities and Exchange Commission v. 

E*TRADE Capital Markets LLC. Final Consent 

Judgment as to E*TRADE Capital Markets LLC., 09 

Civ. 1976 (S.D.N.Y., filed March 11, 2009). 

ADDRESSES: Secretary, U.S. Securities 

and Exchange Commission, 100 F 

Street, NE., Washington, DC 20549– 

1090; Applicants: ETCM, 440 S. LaSalle 

Street, Suite 3030, Chicago, IL 60605; 

ETFC and E*TRADE Securities, 135 E. 

57th Street, New York, NY 10022; 

E*TRADE Asset Management, 4500 

Bohannon Drive, Menlo Park, CA 94025; 

and Kobren, 20 William Street, Suite 

200, Wellesley Hills, MA 02481. 

FOR FURTHER INFORMATION CONTACT: Jaea 

F. Hahn, Senior Counsel, at 202–551– 

6878 or Julia Kim Gilmer, Branch Chief, 

at 202–551–6821 (Division of 

Investment Management, Office of 

Investment Company Regulation). 

SUPPLEMENTARY INFORMATION: The 

following is a temporary order and 

summary of the application. The 

complete application may be obtained 

for a fee at the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington DC 20549–1520 (tel. 202– 

551–5850). 

Applicants’ Representations 

1. ETFC is a global financial services 

company organized under the laws of 

Delaware. Through its subsidiaries and 

affiliates, ETFC provides a wide range of 

financial services including an 

assortment of trading, investing, 

banking and lending products. ETCM is 

a wholly owned subsidiary of ETFC and 

is registered as a broker-dealer under the 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’). ETCM is primarily 

engaged in the business of over-thecounter market making activities. 

E*TRADE Asset Management and 

Kobren (together, the ‘‘Adviser 

Applicants’’) are each a wholly owned 

subsidiary of ETFC and registered as an 

investment adviser under the 

Investment Advisers Act of 1940. Each 

Adviser Applicant currently provides 

investment management and advisory 

services to registered investment 

companies (‘‘Funds’’). E*TRADE 

Securities is registered as a brokerdealer under the Exchange Act and acts 

as principal underwriter to various 

open-end Funds. 

2. On March 11, 2009, the United 

States District Court for the Southern 

District of New York entered a 

judgment, which included the 

Injunction, against ETCM (‘‘Judgment’’) 

in a matter brought by the Commission.2

The Commission alleged in the 

complaint (‘‘Complaint’’) that ETCM 

violated certain rules of the Chicago 

Stock Exchange by engaging in 

improper trades for its own proprietary 

accounts by trading ahead of, instead of 

matching customer orders, 

interpositioning and trading ahead of 

unexecuted open or cancelled orders. 

The Complaint also alleged that ETCM 

violated section 17(a) of the Exchange 

Act and rule 17a-3 thereunder by failing 

to make or keep a current blotter 

containing an itemized daily record of 

all purchases and sales of securities 

effected by ETCM for its proprietary 

accounts. Without admitting or denying 

any of the allegations in the Complaint, 

ETCM consented to the entry of the 

Injunction. 

Applicants’ Legal Analysis 

1. Section 9(a)(2) of the Act, in 

relevant part, prohibits a person who 

has been enjoined from engaging in or 

continuing any conduct or practice in 

connection with the purchase or sale of 

a security, or in connection with 

activities as broker or dealer, from 

acting, among other things, as an 

investment adviser or depositor of any 

registered investment company or a 

principal underwriter for any registered 

open-end investment company, 

registered unit investment trust, or 

registered face-amount certificate 

company. Section 9(a)(3) of the Act 

makes the prohibition in section 9(a)(2) 

applicable to a company, any affiliated 

person of which has been disqualified 

under the provisions of section 9(a)(2). 

Section 2(a)(3) of the Act defines 

‘‘affiliated person’’ to include, among 

others, any person directly or indirectly 

controlling, controlled by, or under 

common control, with the other person. 

Applicants state that ETCM is an 

affiliated person of each of the other 

Applicants within the meaning of 

section 2(a)(3). Applicants state that, as 

a result of the Injunction, they would be 

subject to the prohibitions of section 

9(a). 

2. Section 9(c) of the Act provides that 

the Commission shall grant an 

application for exemption from the 

disqualification provisions of section 

9(a) of the Act if it is established that 

these provisions, as applied to 

Applicants, are unduly or 

disproportionately severe or that the 

conduct of the Applicants has been such 

as not to make it against the public 

interest or the protection of investors to 

grant the exemption. Applicants have 

filed an application pursuant to section 

9(c) seeking a temporary and permanent 

order exempting the Applicants and the 

other Covered Persons from the 

disqualification provisions of section 

9(a). 

3. Applicants believe that they meet 

the standards for exemption specified in 

section 9(c). Applicants state that the 

prohibitions of section 9(a) as applied to 

them would be unduly and 

disproportionately severe and that the 

conduct of Applicants has been such as 

not to make it against the public interest 

or the protection of investors to grant 

the requested exemption from section 

9(a). 

4. Applicants state that the alleged 

conduct giving rise to the Injunction did 

not involve any of the Applicants acting 

in the capacity of investment adviser, 

subadviser or depositor or principal 

underwriter for any Fund. Applicants 

also state that none of the current or 

former directors, officers, or employees 

of ETFC and the Fund Servicing 

Applicants had any knowledge or 

involvement in the conduct alleged in 

the Complaint. Applicants further state 

that the personnel at ETCM who were 

involved in the violations alleged in the 

complaint have had no and will not 

have any future involvement in 

providing advisory, subadvisory, 

depository or underwriting services to 

Funds. 

5. Applicants state that the inability of 

the Adviser Applicants to provide 

investment advisory services and 

E*TRADE Securities to provide 

principal underwriter services to Funds 

would result in potentially severe 

financial hardships for the Funds and 

their shareholders. Applicants state that 

they will distribute written materials, 

including an offer to meet in person to 

discuss the materials, to the boards of 

trustees of the Funds (the ‘‘Boards’’), 

including the trustees who are not 

‘‘interested persons,’’ as defined in 

section 2(a)(19) of the Act, of such 

Funds, and their independent legal 

counsel as defined in rule 0–1(a)(6) 

under the Act, if any, of the 

circumstances that led to the Injunction, 

any impact on the Funds, and the 

application. Applicants state that they 

will provide the Boards with all 

information concerning the Injunction 

and the application that is necessary for 

the Funds to fulfill their disclosure and 

other obligations under the federal 

securities laws. 

6. Applicants also state that, if the 

Fund Servicing Applicants were barred 

from providing investment advisory 

services to the Funds, and underwriting 

services to open-end Funds and UITs, 

the effect on their businesses and 

employees would be severe. Applicants 

state that they have committed 

substantial resources to establishing 

advisory and underwriting expertise. 

Applicants further state that prohibiting 

them from providing advisory and 

underwriting services would not only 

adversely affect their businesses, but 


tjames on PRODPC61 with NOTICES
Federal Register / Vol. 74, No. 51 / Wednesday, March 18, 2009 / Notices 11621 

1Each Participant executed the proposed 

amendment. The Participants are the American 

Stock Exchange LLC (n/k/a NYSE Alternext U.S. 

LLC); Boston Stock Exchange, Inc. (n/k/a NASDAQ 

OMX BX, Inc.); Chicago Board Options Exchange, 

Incorporated; Chicago Stock Exchange, Inc.; 

Financial Industry Regulatory Authority, Inc., 

International Securities Exchange, LLC; The 

NASDAQ Stock Market LLC (‘‘Nasdaq’’); National 

Stock Exchange, Inc.; New York Stock Exchange 

LLC (‘‘NYSE’’); NYSE Arca, Inc.; and Philadelphia 

Stock Exchange, Inc. (n/k/a NASDAQ OMX PHLX, 

Inc.). 

2 17 CFR 240.608. 

3 15 U.S.C. 78k–1. 

4See Securities Exchange Act Release Nos. 10787 

(May 10, 1974), 39 FR 17799 (order approving CTA 

Plan); 15009 (July 28, 1978), 43 FR 34851 (August 

7, 1978) (order temporarily approving CQ Plan); and 

16518 (January 22, 1980), 45 FR 6521 (order 

permanently approving CQ Plan). The most recent 

restatement of both Plans was in 1995. The CTA 

Plan, pursuant to which markets collect and 

disseminate last sale price information for nonNASDAQ listed securities, is a ‘‘transaction 

reporting plan’’ under Rule 601 under the Act, 17 

CFR 242.601, and a ‘‘national market system plan’’ 

under Rule 608 under the Act, 17 CFR 242.608. The 

CQ Plan, pursuant to which markets collect and 

disseminate bid/ask quotation information for listed 

securities, is a ‘‘national market system plan’’ under 

Rule 608 under the Act, 17 CFR 242.608. 

5See Securities Exchange Act Release No. 59230 

(January 12, 2008), 74 FR 3659 (‘‘Notice’’). 

would also adversely affect over 1,500 

employees that are involved in such 

services. 

7. None of the Applicants have 

previously received an order under 

section 9(c) of the Act. 

Applicants’ Condition 

Applicants agree that any order 

granting the requested relief will be 

subject to the following condition: 

Any temporary exemption granted 

pursuant to the application shall be 

without prejudice to, and shall not limit 

the Commission’s rights in any manner 

with respect to, any Commission 

investigation of, or administrative 

proceedings involving or against, 

Covered Persons, including without 

limitation, the consideration by the 

Commission of a permanent exemption 

from section 9(a) of the Act requested 

pursuant to the application or the 

revocation or removal of any temporary 

exemptions granted under the Act in 

connection with the application. 

Temporary Order 

The Commission has considered the 

matter and finds that the Applicants 

have made the necessary showing to 

justify granting a temporary exemption. 

Accordingly, 

It is hereby ordered, pursuant to 

section 9(c) of the Act, that Applicants 

and any other Covered Persons are 

granted a temporary exemption from the 

provisions of section 9(a), solely with 

respect to the Injunction, subject to the 

condition in the application, from 

March 11, 2009, until the Commission 

takes final action on their application 

for a permanent order. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–5785 Filed 3–17–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold a Closed Meeting 

on Thursday, March 19, 2009 at 2 p.m. 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the Closed Meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(5), (7), 9(B) and (10) and 

17 CFR 200.402(a)(5), (7), 9(ii) and (10), 

permit consideration of the scheduled 

matters at the Closed Meeting. 

Commissioner Walter, as duty officer, 

voted to consider the items listed for the 

Closed Meeting in closed session. 

The subject matter of the Closed 

Meeting scheduled for Thursday, March 

19, 2009 will be: 

Institution and settlement of injunctive 

actions; 

Institution and settlement of administrative 

proceedings of an enforcement nature; 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

March 12, 2009. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–5791 Filed 3–17–09; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold an Open Meeting 

on Wednesday, April 8, 2009 at 10 a.m., 

in the Auditorium, Room L–002. 

The subject matter of the Open 

Meeting will be: 

The Commission will consider 

whether to propose short sale price test 

rules. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact: 

The Office of the Secretary at (202) 

551–5400. 

Dated: March 13, 2009. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–5932 Filed 3–16–09; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59552; File No. SR–CTA/ 

CQ–2008–05] 

Consolidated Tape Association; Order 

Approving the Thirteenth Substantive 

Amendment to the Second 

Restatement of the Consolidated Tape 

Association Plan and the Ninth 

Substantive Amendment to the 

Restated Consolidated Quotation Plan 

March 10, 2009. 

I. Introduction 

On December 15, 2008, the 

Consolidated Tape Association (‘‘CTA’’) 

Plan and Consolidated Quotation 

(‘‘CQ’’) Plan participants 

(‘‘Participants’’) 1 filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) pursuant to Rule 608 2

under the Securities Exchange Act of 

1934 (‘‘Act’’) 3 a proposal to amend the 

CTA and CQ Plans (collectively, the 

‘‘Plans’’) 4 to provide that the 

Participants will pay the Network A 

Administrator a fixed annual fee 

(‘‘Annual Fixed Payment’’) in exchange 

for its performance of Network A 

administrator functions under the Plans. 

The proposed Amendments were 

published for comment in the Federal 

Register on January 21, 2008.5 No 

comment letters were received in 

response to the Notice. This order 

approves the Amendments. 


tjames on PRODPC61 with NOTICES