18006 Federal Register / Vol. 74, No. 74 / Monday, April 20, 2009 / Notices 

2 During the restriction period (i.e., prior to the 

lapse of the forfeiture restrictions), the Restricted 

Stock may not be sold, transferred, hypothecated, 

margined, or otherwise encumbered by the 

Participant. 

Applicant’s Representations 

1. The Company is an internally 

managed, non-diversified, closed-end 

investment company that has elected to 

be regulated as a business development 

company (‘‘BDC’’) under the Act. The 

Company is currently permitted to issue 

shares of Restricted Stock under the 

terms of its Plan in reliance on the Prior 

Order. Applicant seeks to amend the 

Prior Order in order to permit the 

Company, pursuant to the Plan, to: 

Withhold shares of the Company’s 

common stock or purchase shares of the 

Company’s common stock from 

employees or non-employee directors 

(‘‘Participants’’) to satisfy tax 

withholding obligations related to the 

vesting of Restricted Stock or the 

exercise of stock options that were or 

will be granted pursuant to the Plan. In 

addition, the Company seeks to amend 

the Prior Order to permit Participants to 

pay the exercise price of options that 

were or will be granted to them 

pursuant to the Plan with shares of the 

Company’s common stock already held 

by them. The Company will continue to 

comply with all of the terms and 

conditions of the Prior Order. 

2. The Plan authorizes the issuance to 

Participants of shares of Restricted 

Stock and options to purchase shares of 

the Company’s common stock, subject 

to certain forfeiture restrictions. On the 

date Restricted Stock vests, shares of the 

Restricted Stock are released to the 

Participant and are available for sale or 

transfer and the value of the vesting 

shares is deemed to be compensation for 

an employee of the Company.2 As 

discussed more fully in the application, 

certain exercises of options result in a 

Participant being deemed to have 

received compensation in the amount 

by which the fair market value of the 

shares of the Company’s common stock, 

determined as of the date of exercise, 

exceeds the exercise price. Applicant 

states that any compensation income 

recognized by an employee generally is 

subject to federal withholding for 

income and employment tax purposes. 

Accordingly, arrangements must be 

made to satisfy the necessary 

withholding tax obligations. 

3. The Company’s stockholders 

approved the terms and provisions of 

the Plan on May 7, 2008. The Plan 

explicitly permits the Company to 

withhold shares of the Company’s 

common stock or purchase shares of the 

Company’s common stock from the 

Participants to satisfy tax withholding 

obligations related to the vesting of 

Restricted Stock or the exercise of 

options granted pursuant to the Plan. 

The Plan further provides that 

Participants may pay the exercise price 

of options to purchase shares of the 

Company’s stock with shares of the 

Company’s stock already held by such 

Participants. 

Applicant’s Legal Analysis 

1. Section 23(c) of the Act generally 

prohibits a registered closed-end 

investment company from purchasing 

any securities of which it is the issuer 

except in the open market, pursuant to 

tender offers or under other 

circumstances as the Commission may 

permit to ensure that the purchase is 

made on a basis that does unfairly 

discriminate against any holders of the 

class or classes of securities to be 

purchased. The applicant states that the 

withholding or purchase of shares of 

Restricted Stock and common stock in 

payment of applicable withholding tax 

obligations or of common stock in 

payment for the exercise price of a stock 

option might be deemed to be purchases 

by the Company of its own securities 

within the meaning of section 23(c) and 

therefore prohibited by the Act. 

2. Section 23(c)(3) provides that the 

Commission may issue an order that 

would permit a closed-end investment 

company to repurchase its shares in 

circumstances in which the repurchase 

is made in a manner or on a basis that 

does not unfairly discriminate against 

any holders of the class or classes of 

securities to be purchased. Applicant 

believes that the requested relief meets 

the standards of section 23(c)(3). 

3. Applicant states that these 

purchases will be made on a basis 

which does not unfairly discriminate 

against the stockholders of the Company 

because all purchases of the Company’s 

stock will be at the closing price of the 

common stock on the NASDAQ (or any 

other primary exchange on which the 

shares are traded) on the relevant date 

(i.e., the public market price on the date 

the Restricted Stock vests or the date of 

the exercise of any options). Applicant 

further states that no transactions will 

be conducted pursuant to the requested 

order on days where there are no 

reported market transactions involving 

the Company’s shares. Applicant 

submits that because all transactions 

would take place at the public market 

price, the transactions would not be 

significantly different than could be 

achieved by any stockholder selling in 

a market transaction. 

4. Applicant submits that the 

proposed purchases do not raise 

concerns about preferential treatment of 

the Company’s insiders because the 

Plan is a bona fide compensation plan 

of the type that is common among 

corporations generally. Further, the 

vesting schedule is determined at the 

time of the initial grant of the Restricted 

Stock while the option exercise price is 

determined at the time of the initial 

grant of the options. Applicant 

represents that that all purchases will be 

made only as permitted by the Plan, 

which was approved by the Company’s 

stockholders. Applicant argues that 

granting the requested relief would be 

consistent with precedent and the 

Commission’s recognition of the 

important role that equity compensation 

can play in attracting and retaining 

qualified personnel with respect to 

certain types of investment companies, 

including BDCs. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–8965 Filed 4–17–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Securities Act of 1933 Release No. 9025; 

Securities Exchange Act of 1934 Release 

No. 59759] 

Order Approving Increase to Public 

Company Accounting Oversight Board 

Annual Accounting Support Fee for 

Calendar Year 2009 

April 13, 2009. 

The Sarbanes-Oxley Act of 2002 (the 

‘‘Act’’) established the Public Company 

Accounting Oversight Board (‘‘PCAOB’’) 

to oversee the audits of public 

companies and related matters, to 

protect investors, and to further the 

public interest in the preparation of 

informative, accurate and independent 

audit reports. The PCAOB is to 

accomplish these goals through 

registration of public accounting firms 

and standard setting, inspection, and 

disciplinary programs. Section 109 of 

the Act provides that the PCAOB shall 

establish a reasonable annual 

accounting support fee, as may be 

necessary or appropriate to establish 

and maintain the PCAOB. Section 

109(h) amends Section 13(b)(2) of the 

Securities Exchange Act of 1934 to 

require issuers to pay the allocable share 

of a reasonable annual accounting 

support fee or fees, determined in 

accordance with Section 109 of the Act. 

Under Section 109(f), the aggregate 


rmajette on PRODPC74 with NOTICES
Federal Register / Vol. 74, No. 74 / Monday, April 20, 2009 / Notices 18007 

1 17 CFR 202.11. See Release No. 33–8724 (July 

18, 2006) [71 FR 41998 (July 24, 2006)]. 

2See Release No. 33–8989 (December 17, 2008) 

[73 FR 78861 (December 23, 2008)]. 

3See 17 CFR 202.11(d)(3), which provides that, 

‘‘In addition to amounts needed to fund 

disbursements during the budget year, a budget may 

reflect receipts in amounts needed to fund expend 

expected disbursements during a period not to 

exceed the first five months of the fiscal year 

immediately following the budget year (the working 

capital reserve), provided such amounts shall be 

disbursed only as specified in the following year’s 

budget or in a supplemental budget approved by the 

Commission.’’ 

4See 17 CFR 202.11(i). 

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

2 17 CFR 240.19b–4. 

annual accounting support fee shall not 

exceed the PCAOB’s aggregate 

‘‘recoverable budget expenses,’’ which 

may include operating, capital and 

accrued items. Section 109(b) of the Act 

directs the PCAOB to establish a budget 

for each fiscal year in accordance with 

the PCAOB’s internal procedures, 

subject to approval by the Securities and 

Exchange Commission (the 

‘‘Commission’’). 

On July 18, 2006, the Commission 

amended its Rules of Practice related to 

its Informal and Other Procedures to 

add a rule to facilitate the Commission’s 

review and approval of PCAOB budgets 

and accounting support fees.1 This 

budget rule provides, among other 

things, a timetable for the preparation 

and submission of the PCAOB budget 

and for Commission actions related to 

each budget, a description of the 

information that should be included in 

each budget submission, limits on the 

PCAOB’s ability to incur expenses and 

obligations except as provided in the 

approved budget, procedures relating to 

supplemental budget requests, 

requirements for the PCAOB to furnish 

on a quarterly basis certain budgetrelated information, a list of definitions 

that apply to the rule and to general 

discussions of PCAOB budget matters, 

and the ability of the Commission to 

waive compliance with any provisions 

of the rule. 

On December 17, 2008, the 

Commission approved the PCAOB’s 

2009 budget of $157.6 million and 2009 

annual accounting support fee of $151.8 

million.2 Due to the development of 

certain unforeseen contingencies, on 

March 16, 2009 the PCAOB requested 

Commission approval to increase its 

2009 annual accounting support fee by 

$5.6 million, to $157.4 million. The 

primary reason for the requested 

increase relates to proposed legislation 

in Congress that would increase the 

PCAOB’s responsibilities over auditors 

of broker-dealers. 

Specifically, the PCAOB’s request 

would create an additional reserve for 

contingencies in addition to the five 

month working capital reserve provided 

for in the Commission’s budget rule.3

Therefore, the requested amount of the 

increase to the annual accounting 

support fee would result in the PCAOB 

being noncompliant with certain 

provisions of the Commission’s budget 

rule. The Commission’s budget rule 

provides that the Commission, in its 

discretion, may waive compliance with 

any provision of the rule,4 and the 

PCAOB has requested a waiver. In 

approving the PCAOB’s request to 

increase its 2009 annual accounting 

support fee, the Commission is hereby 

waiving paragraph (d)(3) of the budget 

rule with respect to the PCAOB’s 2009 

budget and annual accounting support 

fee. 

Pursuant to the budget rule, and as 

the PCAOB indicates in its request, the 

incremental monies collected by the 

PCAOB are to be held by the PCAOB 

until the Commission, through the 

approval of a supplemental budget, later 

approves disbursement of such monies. 

The procedures for submitting a 

supplemental budget request are 

provided in the budget rule. Prior to 

submission of any such supplemental 

budget request or to the implementation 

of any legislation that expands the 

PCAOB’s authority over the auditors of 

broker-dealers, the PCAOB shall consult 

with the Commission on a timely basis 

about the PCAOB’s plans for additional 

resources, program changes, or 

information technology developments 

and enhancements contemplated. 

The Commission has determined that 

the PCAOB’s increased annual 

accounting support fee is consistent 

with Section 109 of the Act. 

Accordingly, 

It is ordered, pursuant to Section 109 

of the Act, that the PCAOB’s increase to 

its annual accounting support fee for 

calendar year 2009 is approved. 

By the Commission. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. E9–8886 Filed 4–17–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59754; File No. SR–FINRA– 

2009–018] 

Self-Regulatory Organizations; 

Financial Industry Regulatory 

Authority, Inc.; Notice of Filing of 

Proposed Rule Change To Adopt IM– 

2830–1 (‘‘Breakpoint’’ Sales) in the 

Consolidated FINRA Rulebook 

April 13, 2009. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on March 26, 

2009, 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’’) the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

prepared by FINRA. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

FINRA is proposing to adopt NASD 

Interpretive Material 2830–1 (‘‘IM– 

2830–1’’) (‘‘Breakpoint’’ Sales) as a 

FINRA rule in the consolidated FINRA 

rulebook with minor changes. The 

proposed rule change would renumber 

NASD IM–2830–1 as FINRA Rule 2342 

in the consolidated FINRA rulebook. 

The text of the proposed rule change 

is available on FINRA’s Web site at 

http://www.finra.org, at the principal 

office of FINRA and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

FINRA included statements concerning 

the purpose of and basis for the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. FINRA has prepared 

summaries, set forth in sections A, B, 

and C below, of the most significant 

aspects of such statements. 


rmajette on PRODPC74 with NOTICES