Federal Register / Vol. 60, No. 100 / Wednesday, May 24, 1995 / Notices 27581

20 Id. 78o–3(b)(6).

21 Market 2000: An Examination of Current

Equity Market Developments, Division of Market

Regulation, United States Securities and Exchange

Commission (Jan. 1994).

22 Id. at IV–7.

23 Id. at 19 and IV–7.

24The NASD has represented that SelectNet usage

has grown from a daily average of 3,000

transactions and 6 million shares in the first half

of 1991 to over 10,550 transactions and more than

12.6 million shares in the first quarter of 1995. 25 17 CFR 200.30–3(a)(12).

open market, and, in general, to protect

investors and the public interest.20

A. Non-member Viewing Access

In its Market 2000 report,21 the

Commission’s Division of Market

Regulation (‘‘Division’’) expressed

concern that the limited transparency of

SelectNet orders often conceals from the

broader market the best trading interest

in a security and, in turn, impedes

competition and price discovery.22 The

Division, therefore, recommended that

the NASD consider ways to enhance

SelectNet transparency.23 The

Commission believes that this proposal

is a positive response to the Division’s

recommendation in Market 2000.

The NASD’s proposal to provide nonmembers viewing access to orders

broadcast through SelectNet will help

achieve more efficient and effective

market operations by increasing

transparency of market information.

Increased transparency, in turn, will

facilitate more efficient price discovery

and enhance price competition among

all market participants. This change to

SelectNet will allow non-members to

obtain with relative ease and low cost

important pricing information about

Nasdaq securities. Moreover, investors

will be better able to assess the overall

supply and demand for a particular

Nasdaq security and, thus, effect

transactions in a more cost-effective

manner. They will now be able to view,

although not participate directly in, an

important system for trading Nasdaq

securities.24

In response to the NASD’s proposal,

the NYSE and Amex raised broad policy

concerns about the operation of

SelectNet in the context of the Quote

Rule. The NYSE and Amex argued that

orders broadcast through SelectNet

constitute quotations for purposes of the

Quote Rule and, therefore, should be

reflected in market maker quotations.

The Commission believes that this

issue reaches beyond the broadcast of

SelectNet orders to non-members. For

example, it raises question about

whether the widespread dissemination

of orders through broker-dealer trading

systems, such as Instinet, constitute

quotations for purposes of the Quote

Rule. Thus, the Commission believes

that this issue is beyond the scope of

this proposal and that the policy issue

raised by the NYSE and Amex deserve

continued examination. Moreover, the

Commission believes that this proposal

is a meaningful advance in the effort to

enhance transparency in the Nasdaq

market and, therefore, should not await

further debate of this issue.

B. The Anonymous Display of All

Broadcast Orders

As noted above, the NASD will not

identify the origin of SelectNet orders

when pricing information is made

available through Nasdaq or vendor

facilities. One commenter opposed this

feature for the reasons described above.

The Commission currently believes

the NASD’s proposal incorporating

anonymity in the display of orders

broadcast through SelectNet is

consistent with the goals of the Act. The

Commission believes requiring

anonymity will promote just and

equitable principles of trade by

removing a mechanism for a participant

to induce market movement simply by

associating its name with a particular

order.

In addition, the Commission finds

that the rule change does not impose

any burden on competition not

necessary or appropriate in furtherance

of the purposes of the Act. While the

imposition of the anonymity

requirement may alter certain existing

trading practices, the Commission

believes that the proposal furthers the

purposes of the Act by enhancing

SelectNet transparency for nonmembers. The Commission believes that

expanded dissemination of SelectNet

information will better inform public

investors regarding the prices at which

investors and dealers are willing to

transact business in a particular

security.

VI. Conclusion

For the reasons stated above, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act, that the

proposed rule change SR–NASD–94–9

be, and hereby is, approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.25

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–12698 Filed 5–23–95; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

21081; 811–0407]

SBM Company; Notice of Application

May 17, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

deregistration under the Investment

Company Act of 1940 (‘‘Act’’).

APPLICANT: SBM Company.

RELEVANT ACT SECTION: Section 8(f).

SUMMARY OF APPLICATION: Applicant

requests an amended order eliminating

prior conditions, thus permitting

applicant to sell substantially all of its

assets, including a subsidiary that is a

registered investment company, to

another company.

FILING DATE: The application was filed

on April 5, 1995.

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

June 12, 1995, and should be

accompanied by proof of service on

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 who wish to be notified of a

hearing may request such notification

by writing to the SEC’s Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth

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

Applicant, 8400 Normandale Lake

Boulevard, Suite 1150, Minneapolis,

Minnesota 55437.

FOR FURTHER INFORMATION CONTACT:

James J. Dwyer, Staff Attorney, at (202)

942–0581, 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 from the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant, a Minnesota

corporation, is a financial holding

company that also acts as investment

adviser, transfer agent, and dividend

disbursing agent for certain mutual

funds. Applicant’s wholly-owned

subsidiaries are State Bond and
27582 Federal Register / Vol. 60, No. 100 / Wednesday, May 24, 1995 / Notices

1State Bond and Mortgage Company, Investment

Company Act Release Nos. 17826 (Oct. 29, 1990)

(notice) and 17965 (Jan. 29, 1991) (order).

2Section 8(f) provides that ‘‘[w]henever the

[SEC], on its own motion or upon application, finds

that a registered investment company has ceased to

be an investment company, it shall so declare by

order and upon the taking effect of such order the

registration of such company shall cease to be in

effect. If necessary for the protection of investors,

an order under this subsection may be made upon

appropriate conditions.’’ Sections 3(c)(3) and 3(c)(6)

provide in relevant part that a person is not an

investment company if it is an insurance company

or a company that primarily is engaged, directly or

through majority-owned subsidiaries, in the

insurance company business.

Mortgage Life Insurance Company

(‘‘SBM Life’’), a Minnesota insurance

company, and SBM Financial Services,

Inc., a registered broker-dealer. SBM

Certificate Company (the ‘‘Certificate

Company’’), a registered face-amount

certificate company, is a wholly-owned

subsidiary of SBM Life.

2. In 1990, the Certificate Company

was formed for the purpose of acquiring

all of the assets and assuming all of the

liabilities of applicant’s face-amount

certificate business in order to permit

applicant to deregister as an investment

company. On January 29, 1991, the SEC

issued an order (the ‘‘Existing Order’’) 1

under section 8(f) of the Act declaring

that applicant had ceased to be an

investment company because, among

other things, it primarily was engaged,

through wholly-owned subsidiaries, in

businesses that are excepted from the

definition of an investment company

under sections 3(c)(3) and 3(c)(6) of the

Act.2 The Existing Order was issued

subject to the following conditions: (i)

applicant will not issue any additional

face-amount certificates; (ii) applicant

will maintain 100% ownership of the

Certificate Company so long as any faceamount certificates that applicant issued

(the ‘‘Certificates’’) are outstanding and

the Certificate Company is a registered

investment company; (iii) applicant will

require the Certificate Company to

maintain reserves for the Certificates as

required by section 28 and comply with

all other applicable provisions of the

Act so long as any Certificates are

outstanding and the Certificate

Company is a registered investment

company; and (iv) until released from

such obligation by the Certificate

holders or such obligations are paid in

accordance with their terms upon

maturity or surrender, applicant will

remain liable to the Certificate holders

for all amounts due them under the

Certificates.

3. Since the time the Certificate

Company assumed applicant’s faceamount certificate business, applicant

represents that the Certificate Company

has conducted such business in

accordance with applicable federal law,

including maintaining deposits of

qualified assets with an independent

custodian and making all payments

required by the terms of the Certificates.

During 1994, however, the Certificate

Company and SBM Life experienced

significant capital pressures as a result

of increasing interest rates and the fact

that a large portion of the investment

portfolios of both companies was

invested in mortgage pass-through

securities and collateralized mortgage

obligations. The market value and cash

flows of these securities were adversely

affected by rapid increases in interest

rates during 1994. The capital position

of these companies also was adversely

affected by the adoption of FASB 115,

which requires that certain debt

securities be reflected at market value

rather than at amortized cost. As a result

of the Minnesota Department of

Commerce’s annual examination of the

Certificate Company, the Minnesota

Department, in a letter dated November

9, 1994, recommended an increase in

the capital of the Certificate Company.

In March 1995, SBM Life invested $1.5

million cash into the Certificate

Company to satisfy concerns of the

Minnesota Department. After extensive

efforts to raise up to $15–20 million of

additional capital, it was decided that

the sale of control of applicant or of its

operating assets was necessary.

4. Consequently, applicant intends to

sell substantially all of its assets,

including the stock of SBM Life and the

Certificate Company, to ARM Financial

Group, Inc. (‘‘ARM’’), a Delaware

corporation. Approximately 86% of the

outstanding voting shares of ARM is

owned by an investment fund

sponsored by Morgan Stanley & Co. The

balance of ARM is owned chiefly by

ARM’s executives, certain employees,

managers, and independent directors.

ARM has committed to contribute up to

$20 million to the capital of SBM Life

and the Certificate Company, up to $2.5

million of which is expected to be used

to strengthen the capital of the

Certificate Company. ARM intends that

its subsidiary, ARM Capital Advisors,

will manage the assets transferred from

the Certificate Company. Following the

sale, applicant intends to liquidate and

dissolve in accordance with Minnesota

law.

Applicant’s Legal Analysis

1. Applicant requests that the Existing

Order be amended to remove all of the

conditions thereto to permit the sale of

assets to ARM. The requested

amendment is necessary to assure that

the proposed sale of applicant’s assets

does not conflict with the Existing

Order. Applicant believes that the

proposed sale will afford additional

protection to Certificate holders and is

in the best interests of these investors.

ARM, relative to applicant, has greater

and more ready access to capital by

reason of its financial and operating

characteristics, as well as its affiliation

with Morgan Stanley.

2. Applicant believes that the Act is

not intended to limit the power of an

entity to engage in fundamental

corporate acts such as a sale of assets

and dissolution. Applicant asserts that

the conditions to the Existing Order did

not contemplate the proposed sale, nor,

in the view of applicant, could the

conditions reasonably have been

intended to inhibit such sale. The

conditions may afford Certificate

holders additional safeguards while

applicant is a going concern, but have

no continuing utility once applicant

ceases to conduct business.

3. Applicant notes that the Certificate

Company is a registered investment

company that has operated as a standalone entity for more than four years.

The Certificates and their holders will

continue to be protected following the

proposed sale by all applicable

provisions of the Act, including the

maintenance of deposits of qualified

assets and the capital requirements of

section 28 of the Act. Applicant

contends that nothing contemplated by

its proposal will result in any failure to

comply with the Act.

4. Applicant also represents that

substantially all existing Certificate

holders have renewed their Certificates

at least once since the Certificate

Company assumed the liabilities of such

Certificates from applicant in 1991. In

so doing, these holders received and

had an opportunity to review the then

current prospectus relating to the

Certificates prior to the date of renewal.

The prospectus primarily describes the

Certificate Company and its business,

and disclaims applicant as a potential

source of capital strength to the

Certificate Company. Accordingly,

applicant believes that the vast majority

of the Certificate holders have made

their decision to renew their Certificates

largely in reliance on the financial

strength and other operating

characteristics of the Certificate

Company, and not on applicant’s

continuing liability with respect to the

Certificates.

5. Applicant, moreover, states that

Certificate holders may surrender their

Certificates to the Certificate Company

for payment at any time before or after

the proposed sale. Applicant states its

proposed dissolution will not affect the

obligations created by the Certificates,
Federal Register / Vol. 60, No. 100 / Wednesday, May 24, 1995 / Notices 27583

1Sentry Life Insurance Company, et al.,

Investment Company Act Release Nos. 20576 (Sep.

26, 1994) (notice) and 20654 (Oct. 25, 1994) (order).

which obligations were expressly

assumed by the Certificate Company.

For the reasons discussed above,

applicant believes that an amended

order is appropriate.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–12695 Filed 5–23–95; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Release No.

21080; 811–3902]

Sentry Investors Variable Account II;

Notice of Application

May 17, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

deregistration under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: Sentry Investors Variable

Account II.

RELEVANT ACT SECTION: Section 8(f).

SUMMARY OF APPLICATION: Applicant

requests an order declaring it has ceased

to be an investment company.

FILING DATE: The application was filed

on March 29, 1995.

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

June 12, 1995, 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 NW., Washington, D.C. 20549.

Applicant, c/o Sentry Investors Life

Insurance Company, 1800 North Point

Drive, Stevens Point, Wisconsin 54481.

FOR FURTHER INFORMATION CONTACT:

Sarah A. Wagman, Staff Attorney, at

(202) 942–0654, 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 from the SEC’s

Public Reference Branch.

Applicant’s Representations

1. Applicant is a life insurance

separate account established pursuant to

Massachusetts insurance law to fund

certain individual flexible purchase

payment deferred variable annuity

contracts (the ‘‘Contracts’’). On

November 10, 1983, applicant registered

under the Act as a unit investment trust.

On the same date, applicant filed a

registration statement on Form S–6 to

register the Contracts as securities under

the Securities Act of 1933. The

registration statement became effective

on July 23, 1984. Sentry Investors Life

Insurance Company is applicant’s

depositor (the ‘‘Depositor’’), and Sentry

Equity Services, Inc. is applicant’s

principal underwriter.

2. On November 1, 1994, applicant

transferred all of its assets and liabilities

to Sentry Variable Account II (the

‘‘Sentry Account’’), an existing

registered separate account, pursuant to

an assumption reinsurance agreement.

The agreement provided that Sentry Life

Insurance Company would assume legal

ownership of applicant’s assets, as well

as responsibility for satisfying all

liabilities and obligations arising under

the Contracts. The transaction was

effected pursuant to an SEC order.1 The

transfer of applicant’s assets and

liabilities to the Sentry Account was

achieved by combining each of

applicant’s subaccounts with the

identical subaccounts of the Sentry

Account. The share transfer was made at

the relative net asset values of the

subaccounts in conformance with

section 22(c) of the Act and rule 22c–1

thereunder. No charges or other

deductions were made with respect to

the Contracts. As a result of the

transaction, applicant’s Contract owners

received certificates reflecting the new

depositor and the new separate account

supporting their Contracts. The net asset

value of the subaccount units acquired

in the transaction was identical to the

net asset value of the subaccount units

supporting applicant’s Contracts before

the transfer.

3. The transaction was approved by

the Depositor’s board of directors, and

by the board of directors of Sentry Life

Insurance Company, the Sentry

Account’s depositor. Applicant also

obtained approvals from state insurance

authorities of those states in which

applicant’s Contract owners reside.

4. Immediately prior to the merger,

applicant had 70 Contract owners. At

the time of filing the application,

applicant has no remaining Contract

holders. All of applicant’s Contract

holders had the assets underlying their

contracts transferred to the Sentry

Account.

5. Sentry Life Insurance Company

bore all direct and indirect costs

incurred in connection with the merger.

6. Applicant has no remaining assets,

outstanding debts, or liabilities.

Applicant is current with all of its

filings under the Act, including all Form

N–SAR filings. Applicant is not a party

to any litigation or administrative

proceeding. Applicant is not now

engaged, nor does it intend to engage, in

any business activities other than those

necessary for the winding-up of its

affairs.

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–12694 Filed 5–23–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21082; File No. 812–9280]

T. Rowe Price Equity Series, Inc. et al.

May 17, 1995.

AGENCY: Securities and Exchange

Commission (the ‘‘SEC’’ or

‘‘Commission’’).

ACTION: Notice of application for

exemption under the Investment

Company Act of 1940 (the ‘‘1940 Act’’

or ‘‘Act’’).

APPLICANTS: T. Rowe Price Equity

Series, Inc., T. Rowe Price International

Series, Inc. and T. Rowe Price Fixed

Income Series, Inc. (the ‘‘Fund(s)’’) and

T. Rowe Price Associates, Inc. and Rowe

Price-Fleming International, Inc. (the

‘‘Adviser(s)’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) of the Act

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

15(a) and 15(b) of the Act and Rules 6e–

2(b)(15) and 6e–3(T)(b)(15) thereunder.

SUMMARY OF APPLICATION: Applicants

seek an order of exemption to the extent

necessary to permit shares of the Funds

to be issued to and held by registered

and unregistered variable annuity and

variable life insurance separate accounts

of both affiliated and unaffiliated life

insurance companies.

FILING DATE: The application was filed

on October 11, 1994 and amended on

May 4, 1995.

HEARING OR NOTIFICATION HEARING: An

order granting the application will be