Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices 12165 

assure that purchases of securities in 

Affiliated Underwritings are in the best 

interests of shareholders. 

7. Each Underlying Fund shall 

maintain and preserve permanently in 

an easily accessible place a written copy 

of the procedures described in the 

preceding condition, and any 

modifications to such procedures, and 

shall maintain and preserve for a period 

not less than six years from the end of 

the fiscal year in which any purchase in 

an Affiliated Underwriting occurred, the 

first two years in an easily accessible 

place, a written record of each purchase 

of securities in Affiliated Underwritings 

once an investment by an Unrelated 

Fund of Funds in the securities of an 

Underlying Fund exceeds the limit in 

section 12(d)(1)(A)(i) of the Act, setting 

forth from whom the securities were 

acquired, the identity of the 

underwriting syndicate’s members, the 

terms of the purchase, and the 

information or materials upon which 

the Board’s determinations were made. 

8. Before investing in shares of an 

Underlying Fund in excess of the limits 

in section 12(d)(1)(A), each Unrelated 

Fund of Funds and Underlying Fund 

will execute a Participation Agreement 

stating, without limitation, that their 

boards of directors or trustees and their 

investment advisers understand the 

terms and conditions of the order and 

agree to fulfill their responsibilities 

under the order. At the time of its 

investment in shares of an Underlying 

Fund in excess of the limit in section 

12(d)(1)(A)(i), an Unrelated Fund of 

Funds will notify the Underlying Fund 

of the investment. At such time, the 

Unrelated Fund of Funds will also 

transmit to the Underlying Fund a list 

of the names of each Unrelated Fund of 

Funds Affiliate and Underwriting 

Affiliate. The Unrelated Fund of Funds 

will notify the Underlying Fund of any 

changes to the list of the names as soon 

as reasonably practicable after a change 

occurs. The Underlying Fund and the 

Unrelated Fund of Funds will maintain 

and preserve a copy of the order, the 

Participation Agreement, and the list 

with any updated information for the 

duration of the investment and for a 

period of not less than six years 

thereafter, the first two years in an 

easily accessible place. 

9. Prior to approving any advisory 

contract under section 15 of the Act, the 

board of directors or trustees of each 

Unrelated Fund of Funds, including a 

majority of the Independent Trustees, 

will find that the advisory fees charged 

under such advisory contracts are based 

on services provided that will be in 

addition to, rather than duplicative of, 

the services provided under the 

advisory contract(s) of any Underlying 

Fund in which the Unrelated Fund of 

Funds may invest. These findings and 

their basis will be recorded fully in the 

minute books of the appropriate 

Unrelated Fund of Funds. 

10. An Unrelated Fund of Funds 

Adviser will waive fees otherwise 

payable to it by the Unrelated Fund of 

Funds in an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Underlying Fund under rule 12b–1 

under the Act) received from an 

Underlying Fund by the Unrelated Fund 

of Funds Adviser, or an affiliated person 

of the Unrelated Fund of Funds Adviser, 

other than any advisory fees paid to the 

Unrelated Fund of Funds Adviser or its 

affiliated person by the Underlying 

Fund, in connection with the 

investment by the Unrelated Fund of 

Funds in the Underlying Fund. Any 

Unrelated Fund of Funds Subadviser 

will waive fees otherwise payable to the 

Unrelated Fund of Funds Subadviser, 

directly or indirectly, by the Unrelated 

Fund of Funds in an amount at least 

equal to any compensation received 

from any Underlying Fund by the 

Unrelated Fund of Funds Subadviser, or 

an affiliated person of the Unrelated 

Fund of Funds Subadviser, other than 

any advisory fees paid to the Unrelated 

Fund of Funds Subadviser or its 

affiliated person by the Underlying 

Fund, in connection with the 

investment by the Unrelated Fund of 

Funds in the Underlying Fund made at 

the direction of the Unrelated Fund of 

Funds Subadviser. In the event that the 

Unrelated Fund of Funds Subadviser 

waives fees, the benefit of the waiver 

will be passed through to the Unrelated 

Fund of Funds. 

11. With respect to registered separate 

accounts that invest in an Unrelated 

Fund of Funds, no sales load will be 

charged at the Unrelated Fund of Funds 

level or at the Underlying Fund level. 

Other sales charges and service fees, as 

defined in Rule 2830 of the NASD 

Conduct Rules, if any, will only be 

charged at the Unrelated Fund of Funds 

level or at the Underlying Fund level, 

not both. With respect to other 

investments in an Unrelated Fund of 

Funds, any sales charges and/or service 

fees charged with respect to shares of 

the Unrelated Fund of Funds will not 

exceed the limits applicable to a fund of 

funds as set forth in Rule 2830 of the 

NASD Conduct Rules. 

12. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

3(c)(1) or 3(c)(7) of the Act in excess of 

the limits contained in section 

12(d)(1)(A) of the Act, except to the 

extent that such Underlying Fund: (a) 

Acquires such securities in compliance 

with section 12(d)(1)(E) of the Act; (b) 

receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

the purpose of evading section 12(d)(1) 

of the Act); or (c) acquires (or is deemed 

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to (i) 

acquire securities of one or more 

investment companies for short-term 

cash management purposes, or (ii) 

engage in interfund borrowing and 

lending transactions. 

Other Investments by Related Funds of 

Funds 

13. The Applicants will comply with 

all provisions of rule 12d1–2 under the 

Act, except for paragraph (a)(2), to the 

extent that it restricts any Related Fund 

of Funds from investing in Other 

Investments as described in the 

application. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–6209 Filed 3–20–09; 8:45 am] 

BILLING CODE 

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 26, 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), (6), (7), 9(B) and (10) 

and 17 CFR 200.402(a)(5), (6), (7), 9(ii) 

and (10), permit consideration of the 

scheduled matters at the Closed 

Meeting. 

Commissioner Aguilar, as duty 

officer, voted to consider the items 

listed for the Closed Meeting in closed 

session. 


dwashington3 on PROD1PC60 with NOTICES
12166 Federal Register / Vol. 74, No. 54 / Monday, March 23, 2009 / Notices 

1Amendment No. 1 to SR–FINRA–2008–045 

replaced and superseded the original rule filing 

submitted to the Commission on September 8, 2008. 

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

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 59208 

(January 6, 2009), 74 FR 1738 (January 13, 2009) 

(SR–FINRA–2008–045) (notice). 

5See Securities Exchange Act Release No. 55495 

(March 20, 2007), 72 FR 14149 (March 26, 2007) 

(SR–NASD–2007–023) (notice). See also Securities 

Exchange Act Release No. 56145 (July 26, 2007), 72 

FR 42169 (August 1, 2007) (SR–NASD–2007–023) 

(approval order), as amended by Securities 

Exchange Act Release No. 56145A (May 30, 2008), 

73 FR 32377 (June 6, 2008). See also NASD, SEC 

No-Action Letter, 2007 SEC No-Act. LEXIS 540 

(July 27, 2007). 

The subject matter of the Closed 

Meeting scheduled for Thursday, March 

26, 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. 

Dated: March 19, 2009. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–6434 Filed 3–19–09; 4:15 pm] 

BILLING CODE 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59586; File No. SR–FINRA– 

2008–045] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Order Approving 

Proposed Rule Change, as Modified by 

Amendment No. 1 Thereto, To Amend 

the FINRA Rule 9520 Series Regarding 

Eligibility Procedures for Persons 

Subject to Certain Disqualifications 

March 17, 2009. 

I. Introduction 

The Financial Industry Regulatory 

Authority, Inc. (‘‘FINRA’’) (f/k/a 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’)) filed with the 

Securities and Exchange Commission 

(‘‘SEC’’ or ‘‘Commission’’) and amended 

on December 11, 2008,1 pursuant to 

Section 19(b)(1) of the Securities 

Exchange Act of 1934 (‘‘Act’’) 2 and Rule 

19b–4 thereunder,3 a proposed rule 

change relating to amendments to the 

FINRA Rule 9520 Series, which governs 

the eligibility procedures for persons 

subject to certain disqualifications, to 

comport with the amended definition of 

disqualification in the FINRA By-Laws. 

The proposed rule change was 

published for comment in the Federal 

Register on January 13, 2009.4 The 

Commission received no comments on 

the proposed rule change. This order 

approves the proposed rule change, as 

modified by Amendment No. 1. 

II. Description of the Proposed Rule 

Change 

In light of FINRA’s obligation to 

enforce the federal securities laws, and 

as part of the consolidation of the 

member firm regulatory functions of 

NASD and NYSE Regulation, Inc. and 

the formation of FINRA, FINRA adopted 

by Board and membership vote a 

revised By-Law definition of 

disqualification that is consistent with 

the federal securities laws, such that any 

person subject to a statutory 

disqualification under Section 3(a)(39) 

of the Act also is subject to 

disqualification under Article III, 

Section 4 of the FINRA By-Laws.5

Consequently, as further detailed in the 

proposed Regulatory Notice (filed with 

the Commission as Exhibit 2 to SR– 

FINRA–2008–045), FINRA’s revised 

definition of disqualification 

incorporates three additional categories 

of statutory disqualification, including 

willful violations of the federal 

securities or commodities laws, grounds 

for statutory disqualification that were 

enacted in the Sarbanes-Oxley Act, and 

associations with certain other persons 

subject to disqualification. 

Absent the proposed rule change, all 

persons subject to any of the added 

categories of disqualification would be 

required to obtain approval from FINRA 

to enter or remain in the securities 

industry. The proposed rule change 

would both amend the text of the 

FINRA Rule 9520 Series generally to 

reflect the amended definition of 

disqualification in the By-Laws, as well 

as include the proposed Regulatory 

Notice that outlines in detail the 

applicable eligibility procedures. The 

amended FINRA Rule 9520 Series 

would incorporate by reference the 

procedures set forth in the Regulatory 

Notice. As further detailed in the 

Regulatory Notice, the need for a 

member to file an application with 

FINRA for approval notwithstanding the 

disqualification would depend on (1) 

the type of the disqualification; (2) the 

date of the disqualification; and (3) 

whether the firm or individual is 

seeking admission, readmission or 

continuation in the securities industry. 

The proposed rule change would 

amend FINRA Rule 9522 to address the 

initiation of eligibility proceedings and 

the authority of FINRA’s Department of 

Member Regulation (‘‘Member 

Regulation’’) to approve applications 

relating to a disqualification, where the 

disqualification arises from findings or 

orders specified in Section 15(b)(4)(D), 

(E) or (H) of the Act or arises under 

Section 3(a)(39)(E) of the Act (i.e., the 

added categories of disqualification). 

Currently, FINRA Rule 9522(a)(1) 

provides, among other things, that if 

FINRA staff has reason to believe that a 

disqualification exists, FINRA staff will 

issue a written notice to the member or 

applicant for membership under NASD 

Rule 1013, specifying the grounds for 

such disqualification. The proposed 

amendments to FINRA Rule 9522(a)(1) 

provide that FINRA staff would issue 

such written notice with respect to the 

added categories of disqualification only 

when the member or applicant is 

required to file an application pursuant 

to the Regulatory Notice. Similarly, the 

proposed rule change would amend 

FINRA Rule 9522(b) to require a 

member to file an application with 

FINRA with respect to the added 

categories of disqualification only when 

instructed to submit one by the 

Regulatory Notice. 

Moreover, under the current rules, 

Member Regulation is responsible for 

evaluating applications for relief from a 

disqualification filed by a disqualified 

member or sponsoring member. In 

certain circumstances, Member 

Regulation is authorized to approve the 

application, while in other cases, 

Member Regulation must make a 

recommendation to either approve or 

deny the applications to the National 

Adjudicatory Council (‘‘NAC’’). The 

proposed amendments to FINRA Rule 

9522 would authorize Member 

Regulation to approve applications 

based on the added categories of 

disqualification. In the event Member 

Regulation does not approve these 

applications, the disqualified member or 

sponsoring member would have the 

right to have the matter decided by the 

NAC after a hearing and consideration 

by the Statutory Disqualification 

Committee under FINRA Rule 9524. 

In addition, if Member Regulation 

determines that an application relating 

to a disqualification that arises from 

findings or orders specified in Section 

15(b)(4)(D), (E), or (H) of the Act or 

arises under Section 3(a)(39)(E) of the 


dwashington3 on PROD1PC60 with NOTICES