3900 Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Notices

the Security is listed on the New York

Stock Exchange, Inc. (‘‘NYSE’’). The

Security commenced trading on the

NYSE at the opening of business on

December 14, 1994 and concurrently

therewith the Security was suspended

from trading on the Amex.

In making the decision to withdraw

the Security from listing on the Amex,

the Company considered the direct and

indirect costs and expenses attendant in

maintaining the dual listing of its

Security on the NYSE and on the Amex.

The Company does not see any

particular advantage in the dual trading

of the Security and believes that dual

listing would fragment the market for

the Security.

Any interested person may, on or

before February 2, 1995, 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 Amex 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.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–1232 Filed 1–18–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20831; 34–35225; 812–9028]

MACC Private Equities Inc., et al.;

Notice of Application

January 12, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application for

Exemption under the Investment

Company Act of 1940 (the ‘‘Investment

Company Act’’) and the Securities

Exchange Act of 1934 (the ‘‘Exchange

Act’’).

APPLICANTS: MACC Private Equities Inc.

(‘‘Private Equities’’), MorAmerica

Capital Corporation (‘‘MorAmerica

Capital’’), and InvestAmerica

Investment Advisors, Inc.

(‘‘InvestAmerica’’).

RELEVANT ACT SECTIONS: Order requested

under sections 17(d) and 57(a)(4) of the

Investment Company Act and rule 17d–

1 thereunder authorizing certain joint

transactions, under section 57(c) of the

Act for an exemption from sections

57(a) (1), (2), and (3) of the Act, and

under section 6(c) of the Act for an

exemption from sections 12(d), 18(a),

and 61(a) of the Act. Order also

requested under section 12(h) of the

Exchange Act for an exemption from

section 13(a) of the Exchange Act.

SUMMARY OF APPLICATION: Applicants

request an order to permit Private

Equities to engage in certain

transactions with its wholly-owned

subsidiary, MorAmerica Capital. The

order also would permit modified asset

coverage requirements for Private

Equities and MorAmerica Capital, and

permit Private Equities and MorAmerica

Capital to co-invest with certain

affiliated entities. In addition, the order

would permit Private Equities and

MorAmerica Capital to file certain

Exchange Act reports on a consolidated

basis.

FILING DATE: The application was filed

on May 31, 1994 and amended on

August 8, 1994, and November 9, 1994.

Applicants have agreed to file an

additional amendment, the substance of

which is incorporated herein, during the

notice period.

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

copy of the request, personally or by

mail. Hearing requests should be

received by the SEC by 5:30 p.m. on

February 6, 1995, 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 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.

Applicants, Suite 310, 101 Second

Street S.E., Cedar Rapids, Iowa 52401.

FOR FURTHER INFORMATION CONTACT:

Elaine M. Boggs, Staff Attorney, at (202)

942–0576, or Robert A. Robertson,

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 at the SEC’s

Public Reference Branch.

Applicants’ Representations

1. Private Equities and its whollyowned subsidiary, MorAmerica Capital,

intend to register under the Investment

Company Act as business development

companies (‘‘BDCs’’). The investment

objective of Private Equities is long-term

capital appreciation through venture

capital investments in small companies

(‘‘Portfolio Companies’’). MorAmerica

Capital is licensed to operate as a small

business investment company (‘‘SBIC’’)

under the Small Business Investment

Act of 1958. Applicants chose a two-tier

structure so that Private Equities could

hold certain assets that a SBIC is not

permitted to hold.

2. Private Equities has been formed

pursuant to a plan of reorganization (the

‘‘Plan’’) for the MorAmerica Financial

Corporation (‘‘MFC‘‘) and Morris Plan

Liquidation Company (‘‘Morris Plan’’).

Under the Plan, Private Equities will be

the successor by merger to MFC, Morris

Plan, and certain affiliates. In addition

to cash and miscellaneous assets, many

of which are being held for sale, Private

Equities’ primary asset will be all of the

issued and outstanding common stock

of MorAmerica Capital.

3. InvestAmerica is the investment

adviser for both Private Equities and

MorAmerica Capital. The principals of

InvestAmerica are the founders and

principals of InvestAmerica Venture

Group, Inc. (‘‘Venture Group’’)

(collectively with InvestAmerica, the

‘‘InvestAmerica Companies’’). The

Venture Group manages the Iowa

Venture Capital Fund L.P. (the ‘‘Iowa

Fund’’), which is a venture capital fund

that is exempt from the Investment

Company Act pursuant to section 3(c)(1)

of the Act. The Iowa Fund is not

presently making any new investments

but is making distributions to partners

as investments mature or are sold. The

Iowa Fund and MorAmerica Capital

presently are co-invested in the

securities of five Portfolio Companies.

4. The requested order would permit

Private Equities and MorAmerica

Capital to operate effectively as one

company. Specifically, the requested

relief would permit MorAmerica Capital

and Private Equities to (a) engage in

transactions with each other, (b) engage

in transactions with Portfolio

Companies that would not otherwise be

prohibited if MorAmerica Capital and

Private Equities were one company, and

(c) allow MorAmerica Capital to have

the maximum amount of borrowing

permitted by the Small Business

Investment Act of 1958 and the

Investment Company Act. The order

also would permit MorAmerica Capital

and/or Private Equities to co-invest with
Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Notices 3901

certain affiliated companies. In

addition, the order would permit Private

Equities and MorAmerica Capital to file

certain reports required by the Exchange

Act on a consolidated basis.

Applicants’ Legal Analysis

Capital Structure

1. Section 12(d) of the Investment

Company Act

a. Section 12(d)(1) of the Investment

Company Act, made applicable to BDC’s

by section 60, limits the amount of

securities a registered investment

company may hold of other investment

companies. Rule 60a–1 exempts a BDC’s

acquisition of the securities of a whollyowned SBIC from sections 12(d)(1) (A)

and (C). Thus, the transfer of assets from

Private Equities to MorAmerica Capital

is exempt from these provisions. Section

12(d)(1), however, also applies to the

activities of MorAmerica Capital, and

loans made by Private Equities to

MorAmerica Capital may violate section

12(d)(1) if such loans were considered

purchases by MorAmerica Capital of the

securities of Private Equities.

Accordingly, applicants request an

exemption from section 12(d)(1) to

permit MorAmerica Capital’s

acquisition of those securities of Private

Equities representing indebtedness.

2. Sections 57(a) (1), (2), and (3)

a. Sections 57(a) (1), (2), and (3) of the

Investment Company Act prohibit

certain affiliated persons of a BDC from

engaging in certain transactions with the

BDC. Such affiliated persons include,

with limited exceptions not relevant

here, entities which control, are

controlled by, or under common control

with the BDC. Because Private Equities

is the sole equity holder of MorAmerica

Capital, Private Equities and

MorAmerica Capital are affiliated

persons of each other. Thus, applicants

request an exemption from sections

57(a) (1), (2), and (3) for any transaction

solely between Private Equities and

MorAmerica Capital.

b. In addition, Private Equities and/or

MorAmerica Capital may wish to invest

in certain Portfolio Companies that may

be considered affiliates of the other

investing company as a result of the

other’s ownership of five percent or

more of the Portfolio Company’s stock.

Applicants will not in all instances be

able to rely on rule 57b–1, which

exempts from section 57(a) transactions

between BDC’s and specific downstream

affiliates. Thus, applicants request an

order to exempt any transaction from

section 57(a) involving Private Equities

and/or MorAmerica Capital and any

Portfolio Company affiliated with either

or both, but only to the extent that any

such transaction would not be

prohibited if MorAmerica Capital and

Private Equities were not separate

companies.

3. Sections 18 and 61 of the Investment

Company Act

a. Section 18(a) of the Investment

Company Act prohibits a registered

closed-end investment company from

issuing any class of senior security

unless the company complies with the

asset coverage requirements set forth in

the section. ‘‘Asset coverage’’ is defined

in section 18(h) to mean the ratio which

the value of the total assets of an issuer,

less all liabilities not represented by

senior securities, bears to the aggregate

amount of senior securities of such

issuer. Section 61 makes section 18,

with certain modifications, applicable to

a BDC. Private Equities may be required

to comply with the asset coverage

requirements of section 18 on a

consolidated basis because it may be an

indirect issuer of senior securities with

respect to MorAmerica Capital’s

indebtedness. Accordingly, applicants

request relief exempting Private Equities

and MorAmerica Capital from section

18(a) and 61(a) to permit the following

transactions: (a) Private Equities and

MorAmerica Capital to issue and sell to

banks, insurance companies, and other

financial institutions their secured or

unsecured promissory notes, or other

evidences of indebtedness in

consideration of any loan, or any

extension or renewal thereof made by

private arrangement; (b) MorAmerica

Capital to obtain financing that the

Small Business Administration permits

for SBIC’s; (c) MorAmerica Capital to

borrow from Private Equities and

Private Equities to borrow from

MorAmerica Capital; and (d) Private

Equities to guarantee any borrowings by

MorAmerica Capital.

4. Sections 57 (a)(4) and (d) of the

Investment Company Act and Rule 17d–

1 Thereunder

a. Sections 57 (a)(4) and (d) of the

Investment Company Act prohibit

certain affiliated persons specified in

section 57 (b) and (e), respectively, from

participating in joint transactions with a

BDC in contravention of rules and

regulations prescribed by the SEC. Rule

17d–1 under the Act applies to

transactions prohibited under sections

57 (a)(4) and (d) through section 57(i).

Rule 17d–1 prohibits affiliated persons

of a registered investment company

from entering into joint transactions

with the investment company unless the

SEC has granted an order permitting

such transaction.

b. Applicants request an order under

sections 57 (a)(4) and (d) and rule 17d–

1 to permit Private Equities or

MorAmerica Capital to invest in

Portfolio Companies in which the other

is or proposes to be an investor, but only

to the extent that such transaction

would not be prohibited if MorAmerica

Capital were deemed to be part of

Private Equities and not a separate

company.

Co-Investing

1. Section 57(a)(4) of the Investment

Company Act and Rule 17d–1

Thereunder

a. Applicants request an order to

permit Private Equities and/or

MorAmerica Capital to co-invest with

companies managed by InvestAmerica

and the Venture Group, including the

Iowa Fund (‘‘Managed Affiliates’’) now

or in the future. Because InvestAmerica

and the Venture Group are under

common control, a Managed Affiliate

also would be under common control

with Private Equities and MorAmerica

Capital. Thus, a Managed Affiliate

would be affiliated with Private Equities

and MorAmerica Capital under section

2(a)(3) of the Investment Company Act.

Accordingly, applicants and the

Managed Affiliates, absent an exemptive

order, would be prohibited under

section 57(a)(4) of the Investment

Company Act from engaging in coinvestment transactions.

Consolidated Reporting

1. Section 54 of the Investment

Company Act and Section 12 of the

Exchange Act

a. Section 54 of the Investment

Company Act provides that a closed-end

company may elect BDC treatment

under the Investment Company Act, if

the company has either a class of equity

securities registered under section 12 of

the Exchange Act or has filed a

registration statement pursuant to

section 12 of the Exchange Act for a

class of its equity securities. Section

12(g) of the Exchange Act requires

certain issuers to register under the

Exchange Act. Private Equities will have

securities registered under section 12 of

the Exchange Act. In order to elect BDC

treatment, MorAmerica Capital must

register its securities under the

Exchange Act, even though it is not

required to do so by section 12(g) of the

Exchange Act.

b. By filing a registration statement

under section 12 of the Exchange Act,

absent an exemption, MorAmerica

Capital would be required by section

13(a) of the Exchange Act to file

periodically with the SEC, even though
3902 Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Notices

MorAmerica Capital will have only one

equity holder. Accordingly, applicants

request an order under the Exchange

Act exempting MorAmerica Capital

from the reporting requirements of

section 13(a) of the Exchange Act to

permit it to file consolidated reports

with Private Equities.

Standards for Relief

1. Section 6(c) of the Investment

Company Act permits the SEC to

exempt any person or transaction from

any provision of the Act, if such

exemption is necessary or appropriate

in the public interest and consistent

with the protection of investors and the

purposes fairly intended by the policy

of the Act. Applicants state that the

operation of Private Equities as a BDC

with a wholly-owned SBIC subsidiary is

intended to permit Private Equities to

expand the scope of its operations

beyond that which would be permitted

to it as an SBIC. Applicants further state

that the requested exemptions would

permit Private Equities and MorAmerica

Capital to operate effectively as one

company even though they will be

divided into two legal entities.

Accordingly, applicants believe that the

requested exemptions from sections

12(d), 18(a), and 61(a) meet the section

6(c) standards.

2. Section 57(c) permits the SEC to

grant an order permitting a transaction

otherwise prohibited by sections

57(a)(1), (2), and (3) if it finds that the

participation of such investment

company is consistent with the

provisions, policies, and purposes of the

Act and the extent to which such

participation is on a basis different from

or less advantageous than that of other

participants. Applicants believe that the

requested exemptions meet these

standards.

3. Section 57(i) of the Investment

Company Act provides that the rules

and regulations of the SEC under

sections 17 (a) and (d) applicable to

registered closed-end investment

companies shall apply to transactions

subject to sections 57(a) and (d) in the

absence of rules under sections 57(a)

and (d). No rules with respect to joint

transactions have been adopted under

sections 57(a) and (d). Rule 17d–1 under

the Act prohibits affiliated persons of a

registered investment company from

entering into joint transactions with the

investment company unless the SEC has

granted an order permitting the

transaction. Applicants believe that the

requested authorization under sections

57(a)(4) and (d) and rule 17d–1 is

appropriate.

4. Section 12(h) of the Exchange Act

provides that the SEC may exempt an

issuer from section 13 of the Exchange

Act if the SEC finds that by reason of the

number of public investors, amount of

trading interest in the securities, the

nature and extent of the activities of the

issuer, income or assets of the issuer, or

otherwise, that such action is not

inconsistent with the public interest or

the protection of investors. Private

Equities is the sole equity holder of

MorAmerica Capital and applicants

represent that there will be no trading

in MorAmerica securities. Further,

applicants state that the nature and

extent of MorAmerica Capital’s

activities are such that its activities will

be fully reported through consolidated

reporting in accordance with normal

accounting rules. Accordingly,

applicants believe that the requested

exemption meets the Exchange Act’s

section 12(h) standards.

Applicants’ Conditions

Applicants agree that the following

conditions will govern transactions

under the requested order:

Capital Structure Conditions

1. Private Equities will at all times

own and hold beneficially and of record

all of the outstanding capital stock of

MorAmerica Capital.

2. MorAmerica Capital will have the

same fundamental investment policies

as Private Equities, as set forth in

Private Equities’ registration statement;

MorAmerica Capital will not engage in

any other activities described in section

13(a) of the Investment Company Act,

except in each case as authorized by the

vote of a majority of the outstanding

voting securities of Private Equities.

3. No person shall serve or act as

investment adviser to MorAmerica

Capital unless the directors and

shareholders of Private Equities shall

have taken the action with respect

thereto also required to be taken by the

directors and shareholders of

MorAmerica Capital.

4. No person shall serve as a director

of MorAmerica Capital unless elected as

a director of Private Equities at its most

recent annual meeting, as contemplated

by section 16(a) of the Investment

Company Act. Vacancies on Private

Equities’ board of directors will be filled

in the manner provided for in section

16(a). Notwithstanding the foregoing,

the board of directors of MorAmerica

Capital will be elected by Private

Equities as the sole shareholder of

MorAmerica Capital, and such board

will be composed of the same persons

that serve as directors of Private

Equities.

5. Private Equities will not itself issue

or sell any senior security and Private

Equities will not cause or permit

MorAmerica Capital to issue or sell any

senior security of which Private Equities

or MorAmerica Capital is the issuer

except to the extent permitted by

section 18 (as modified for BDCs by

section 61) of the Investment Company

Act; provided that immediately after the

issuance or sale of any such notes or

evidences of indebtedness by either

Private Equities or MorAmerica Capital,

Private Equities and MorAmerica

Capital on a consolidated basis, and

Private Equities individually, shall have

the required asset coverage, except that,

in determining whether Private Equities

and MorAmerica Capital on a

consolidated basis have the asset

coverage required by section 61(a), any

borrowings by MorAmerica Capital from

Private Equities, for purposes of the

definition of ‘‘asset coverage’’ in section

18(h), shall be treated as indebtedness

not represented by senior securities.

6. Private Equities will acquire

securities of MorAmerica Capital

representing indebtedness only if, in

each case, the prior approval of the SBA

has been obtained. In addition, Private

Equities and MorAmerica Capital will

purchase and sell portfolio securities

between themselves only if, in each

case, the prior approval of the SBA has

been obtained.

Co-Investing Conditions

1. a. To the extent that Private

Equities and MorAmerica Capital are

considering new investments,

InvestAmerica will review investment

opportunities on their behalf, including

investments being considered on behalf

of the Managed Affiliates.

InvestAmerica will determine whether a

particular investment is eligible for

investment by Private Equities and/or

MorAmerica, as the case may be.

b. If InvestAmerica deems an

investment eligible for investment by

Private Equities and/or MorAmerica

Capital (the ‘‘Investing Company’’),

InvestAmerica will determine what it

considers to be an appropriate amount

that the Investing Company should

invest in the particular investment.

Where the aggregate amount

recommended for the Investing

Company and that sought by the

Managed Affiliates is greater than the

amount available for investment, the

amount available for purchase by the

Investing Company shall be determined

on a pro rata basis determined by

dividing the net assets of the Investing

Company by the sum of the net assets

of the Investing Company and each of

the Managed Affiliates seeking to make

the investment.
Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Notices 3903

c. Following the making of the

determinations referred to in (a) and (b),

InvestAmerica will distribute written

information concerning all eligible

investments to the Investing Company’s

non-interested directors. Such

information will include the name of

each Managed Affiliate that proposes to

make the investment and the amount of

each proposed investment.

d. Information regarding

InvestAmerica’s preliminary

determinations will be reviewed by the

Investing Company’s non-interested

directors. The Investing Company will

only make a joint investment with a

Managed Affiliate if a required majority

(as defined in section 57(o) of the

investment Company Act) (‘‘Required

Majority’’) of the Investing Company’s

non-interested directors conclude, prior

to the acquisition of the investment,

that:

i. the terms of the transaction,

including the consideration to be paid,

are reasonable and fair to the

shareholders of Private Equities and do

not involve overreaching of the

Investing Company or such

shareholders on the part of any person

concerned;

ii. the transaction is consistent with

the interests of the shareholders of

Private Equities and is consistent with

the Investing Company’s investment

objectives and policies as recited in

filings made by the Investing Company

under the Securities Act of 1933, as

amended, its registration statement and

reports filed under the Exchange Act, as

amended, and its reports to

shareholders;

iii. the investments by the Managed

Affiliates would not disadvantage the

Investing Company and that

participation by the Investing Company

would not be on a basis different from

or less advantageous than that of

Managed Affiliates; and

iv. the proposed investment by the

Investing Company will not benefit

InvestAmerica or any affiliated entity,

other than the Managed Affiliates

making the proposed joint investment,

except to the extent permitted pursuant

to sections 17(e) and 57(k) of the

Investment Company Act.

e. An Investing Company may decline

to participate in the co-investment, or

may purchase less than its full

allocation.

2. The Investing Company will not

make an investment for its portfolio if

a Managed Affiliate or InvestAmerica or

a person controlling, controlled by, or

under common control with

InvestAmerica is an existing investor in

such company; with the exception of

the five present co-investments of

MorAmerica Capital and the Iowa Fund.

3. All purchases of securities by the

Investing Company effected with a

Managed Affiliate as a joint participant

shall consist of the same class of

securities, including the same

registration rights (if any), and other

rights related thereto, at the same price

and on the same terms and conditions,

and the settlement dates will be the

same.

4. If one or more Managed Affiliates

elect to sell, exchange, or otherwise

dispose of a security that is also held by

the Investing Company, InvestAmerica

will notify the Investing Company of the

proposed disposition at the earliest

practical time and the Investing

Company will be given the opportunity

to participate in such sale on a

proportionate basis, at the same price

and on the same terms and conditions

as those applicable to Managed

Affiliates. InvestAmerica will formulate

a recommendation as to participation by

the Investing Company in such a

disposition, and provide a written

recommendation to the Investing

Company’s non-interested directors.

The Investing Company will participate

in such disposition to the extent that a

Required Majority of its non-interested

directors determine that it is in the

Investing Company’s best interest. The

Investing Company and each Managed

Affiliate will bear its own expenses

associated with the disposition of a

portfolio security.

5. If a Managed Affiliate desires to

make a ‘‘follow-on’’ investment (i.e., an

additional investment in the same

entity) in a particular portfolio company

whose securities are held by the

Investing Company or to exercise

warrants or other rights to purchase

securities of such an issuer,

InvestAmerica will notify the Investing

Company of the proposed transaction at

the earliest practical time.

InvestAmerica will formulate a

recommendation as to the proposed

participation by the Investing Company

in a follow-on investment, and provide

the recommendation to the Investing

Company’s non-interested directors

along with notice of the total amount of

the follow-on investment. The Investing

Company’s non-interested directors will

make their own determination with

respect to follow-on investments. To the

extent that the amount of a follow-on

investment available to a Managed

Affiliate and the Investing Company is

not based on the amount of their initial

investment, the relative amount of

investment by each Managed Affiliate

participating in a follow-on investment

and the Investing Company will be

based on a ratio derived by comparing

the remaining funds available for

investment by the Investing Company

and each such Managed Affiliate with

the total amount of the follow-on

investment. The Investing Company

will participate in such investment to

the extent that a Required Majority of its

non-interested directors determine that

it is in the Investing Company’s best

interest. The acquisition of follow-on

investments as permitted by this

condition will be subject to the other

conditions set forth in the application.

6. The Investing Company’s noninterested directors will review

quarterly all information concerning coinvestments made by the Investing

Company, including co-investments in

which one or more Managed Affiliates

declined to participate, so that they may

determine whether all investments

made during the preceding quarter,

including those investments they

declined, complied with the conditions

set forth above.

7. The Investing Company will

maintain the records required by section

57(f)(3) of the Investment Company Act

as if each of the transactions permitted

under these conditions were approved

by the Investing Company’s noninterested directors under section 57(f).

8. No non-interested director of the

Investing Companies will be a noninterested director of a Managed

Affiliate with which the Investing

Company co-invests.

Consolidated Reporting Conditions

1. Private Equities will (a) file with

the SEC on behalf of itself and

MorAmerica Capital, all information

and reports required to be filed with the

SEC under the Exchange Act and other

federal securities laws, including

financial statements prepared solely on

a consolidated basis as to Private

Equities and MorAmerica Capital, such

information and reports to be in

satisfaction of the separate filing

obligations of MorAmerica Capital; and

(b) provide to its shareholders such

information and reports required to be

disseminated to Private Equities’

shareholders, including financial

statements prepared solely on a

consolidated basis as to Private Equities

and MorAmerica Capital, such reports

to be in satisfaction of the separate filing

obligations of Private Equities.

Notwithstanding anything in this

condition, Private Equities will not be

relieved of any of its reporting

obligations including, but not limited to,

any consolidating statement setting

forth the individual statement of

MorAmerica Capital required by rule 6–

03(c) of Regulation S–X.
3904 Federal Register / Vol. 60, No. 12 / Thursday, January 19, 1995 / Notices

1Applicants represent that the Separate Accounts

will be unit investment trusts, and that, during the

Notice Period, the application will be amended to

reflect this representation.

2Applicants represent that, during the Notice

Period, the application will be amended to reflect

this representation.

3Applicants represent that, during the Notice

Period, the application will be amended to reflect

this representation.

2. Private Equities and MorAmerica

Capital may file on a consolidated basis

pursuant to the above condition only so

long as the amount of Private Equities’

total consolidated assets invested in

assets other than (a) securities issued by

MorAmerica Capital or (b) securities

similar to those in which MorAmerica

Capital invests, does not exceed 10%.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–1289 Filed 1–18–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20830; No. 812–9306]

Offitbank Variable Insurance Fund,

Inc., et al.

January 11, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’).

ACTION: Notice of Application for an

Order under the Investment Company

Act of 1940 (‘‘1940 Act’’).

APPLICANTS: Offitbank Variable

Insurance Fund, Inc. (‘‘Fund’’) and

Offitbank (collectively, ‘‘Applicants’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) of the 1940

Act for exemptions from Sections 9(a),

13(a), and 15(a) and 15 (b) of the 1940

Act and Rules 6e–2(b)(15) and 6e–

3(T)(b)(15) thereunder.

SUMMARY OF APPLICATION: Applicants

seek an order exempting themselves and

certain affiliated and unaffiliated life

insurance companies (‘‘Participating

Insurance Companies’’) and their

separate accounts (‘‘Separate

Accounts’’) to the extent necessary to

permit shares of any current or future

investment series of the Fund to be sold

to and held by Separate Accounts

funding variable annuity and variable

life insurance contracts issued by

Participating Insurance Companies.

FILING DATE: The application was filed

on October 24, 1994.

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 SEC’s

Secretary and serving Applicants 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 6, 1995, 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 requester’s interest, the reason for

the request and the issues contested.

Persons may request notification of a

hearing by writing to the Secretary of

the SEC.

ADDRESSES: Secretary, SEC, 450 5th

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

Applicants: Stephen Brent Wells,

Offitbank Variable Insurance Fund, Inc.,

237 Park Avenue, Suite 910, New York,

New York 10017.

FOR FURTHER INFORMATION CONTACT:

Pamela K. Ellis, Attorney, at (202) 942–

0554, Office of Insurance Products

(Division of Investment Management).

SUPPLEMENTARY INFORMATION: Following

is a summary of the application. The

complete application is available for a

fee from the SEC’s Public Reference

Branch.

Applicants’ Representations

1. The Fund is a Maryland

corporation registered under the 1940

Act as an open-end management

investment company.

2. The Fund’s common stock is

divided into separate series, each series

representing an interest in a separate

investment portfolio (‘‘Existing

Portfolios’’). The Board of Directors of

the Fund is authorized to classify or

reclassify any unissued shares of the

portfolios (‘‘New Portfolios’’) (together

with Existing Portfolios, ‘‘Portfolios’’).

3. The Portfolios will serve as

investment vehicles for various types of

variable annuity and variable life

insurance contracts (‘‘Variable

Contracts’’). Portfolio shares will be

offered to Separate Accounts of certain

affiliated and unaffiliated Participating

Insurance Companies which enter into

participation agreements (‘‘Participation

Agreements’’) with the Portfolios and

the Fund.1

4. Offitbank serves as investment

adviser to each of the Existing

Portfolios. Offit Funds Distributor, Inc.

(‘‘Offit’’) serves of the distributor for the

Existing Portfolios. Offitbank is a New

York state chartered trust company and

is exempt from registration as an

investment advisor or as a broker

dealer.2 Offit is a wholly-owned

subsidiary of Furman Selz Incorporated,

an unaffiliated, privately-held

corporation.3

Applicants’ Legal Analysis

1. Applicants request that the

Commission issue an order under

Section (6)(c) of the 1940 Act granting

exemptive relief from Sections 9(a),

13(a), 15(a) and 15(b) of the 1940 Act

and Rules 6e–2(b)(15) and 6e–

3(T)(b)(15). Exemptive relief is sought

by Applicants and affiliated and

unaffiliated Participating Insurance

Companies and their Separate Accounts

to the extent necessary to permit mixed

and shared funding, as defined below.

2. Rule 6e–2(b)(15) provides partial

exemptive relief from Sections 9(a),

13(a), 15(a) and 15(b) of the 1940 Act to

separate accounts registered under the

1940 Act as unit investment trusts to the

extent necessary to offer and sell

scheduled premium variable life

insurance contracts. The relief provided

by the rule also extends to a separate

account’s investment adviser, principal

underwriter, and sponsor or depositor.

3. The exemptions granted by Rule

6e–2(b)(15) are available only to a

management investment company

underlying a separate account

(‘‘underlying fund’’) that offers its

shares exclusively to variable life

insurance separate accounts of a life

insurer, or of any other affiliated life

insurance company, issuing scheduled

premium variable life insurance

contracts. The relief granted by Rule 6e–

2(b)(15) is not available to the separate

account issuing scheduled premium

variable life insurance contracts if the

underlying fund also offers its shares to

a separate account issuing variable

annuity or flexible premium variable

life insurance contracts. The use of a

common underlying fund as an

investment vehicle for both variable

annuity contracts and scheduled or

flexible premium variable life insurance

contracts is referred to herein as ‘‘mixed

funding.’’

4. Additionally, the relief granted by

Rule 6e–2(b)(15) is not available to

separate accounts issuing scheduled

premium variable life insurance

contracts if the underlying fund also

offers its shares to unaffiliated life

insurance company separate accounts

funding variable contracts. The use of a

common fund as an underlying

investment vehicle for separate accounts

of unaffiliated insurance companies is

referred to herein as ‘‘shared funding.’’

5. Rule 6e–3(T)(b)(15) provides partial

exemptions from Sections 9(a), 13(a),

15(a) and 15(b) of the 1940 Act to

separate accounts registered as unit

investment trusts that offer flexible

premium variable life insurance

contracts. The exemptive relief extends

to a separate account’s investment