[Federal Register Volume 66, Number 118 (Tuesday, June 19, 2001)]
[Notices]
[Pages 32968-32970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-15362]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-25002; File No. 812-12482]


Aetna Life Insurance and Annuity Company, et. al.

June 13, 2001.

AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of Application for an order under section 6(c) of the 
Investment Company Act of 1940 (the ``1940 Act'' or the ``Act'') to 
amend a prior order of the Commission under section 6(c) of the 1940 
Act which granted exemptions from the provisions of sections 2(a)(32), 
22(c), and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder to the 
extent necessary to permit the recapture of credits applied to 
contributions made under certain deferred variable annuity contracts.

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    Applicants: Aetna Life Insurance and Annuity Company (``ALIAC'') 
and its Variable Annuity Account B (``V A B''), Aetna Insurance Company 
of America (``AICA'' and, together with ALIAC, ``Aetna''), Golden 
American Life Insurance Company (``Golden'') and its Separate Account B 
(``Account B''), First

[[Page 32969]]

Golden American Life Insurance Company of New York (``First Golden''), 
Reliastar Life Insurance Company of New York (``Reliastar'' and, 
together with Golden and First Golden, the ``Life Companies''), 
Directed Services, Inc., (``DSI''), and Washington Square Securities, 
Inc., (``WSS'') (collectively, the ``Applicants'').
    Summary of Application: Applicants seek an order under section 6(c) 
of the 1940 Act to amend a existing order (Investment Company Act 
Release No. 24649, dated September 20, 2000, File No. 812-12098) 
(``Existing Order``) to: (1) Add the Life Companies, Account B, DSI, 
and WSS (collectively, ``Additional Applicants'') as parties to the 
Existing Order, and (2) permit the Additional Applicants to recapture 
certain bonuses applied to purchase payments made under (a) certain 
deferred variable annuity contracts and certificates, including certain 
certificate data pages and endorsements, that Golden will issue through 
Account B (the ``Account B Contracts'') and under (b) contracts and 
certificates, including certain certificate data pages and 
endorsements, that the Life Companies may issue in the future through 
Account B, or through any other separate accounts, whether existing or 
created in the future, of the Life Companies (the ``Future Accounts,'') 
and together with Account B, the ``Accounts'') and that are 
substantially similar in all material respects to the deferred variable 
annuity contracts (``V A B Contracts'') covered by the Existing Order 
(collectively, the ``Future Contracts'' and together with the Account B 
Contracts, the ``Contracts''). Applicants also request that the order 
being sought extend to any National Association of Securities Dealers, 
Inc. (``NASD'') member broker-dealer controlling or controlled by, or 
under common control with any Additional Applicant, whether existing or 
created in the future, that serves as a distributor or principal 
underwriter of the Contracts offered through the Accounts (collectively 
``Affiliated Broker-Dealers'').
    Filing Date: The application was filed on March 21, 2001, and 
amended and restated on June 8, 2001.
    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 July 9, 
2001, 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 
SEC's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 5th 
Street, NW., Washington, DC 20549-0609. Applicants, in care of Aetna, 
151 Farmington Avenue, TS31, Hartford, Connecticut 06156, Attn: J. Neil 
McMurdie, Esq.

FOR FURTHER INFORMATION CONTACT: Alison Toledo, Attorney, or Lorna 
MacLeod, Branch Chief, Office of Insurance Products, Division of 
Investment Management, at (202) 942-0670.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application is available for a fee from the 
SEC's Public Reference Branch, 450 5th St., NW., Washington, DC 20549-
0102 (tel. (202) 942-8090).

Applicants' Representations

    1. Golden is a stock life insurance company originally incorporated 
under the laws of Minnesota on January 2, 1973 and later redomiciled in 
Delaware. Like ALIAC and AICA, Golden is an indirect wholly-owned 
subsidiary of ING Groep. N.V. (``ING''), a global financial services 
holding company based in The Netherlands. Golden is the depositor for 
Account B, which was established on July 14, 1988 pursuant to authority 
granted under a resolution of Golden's Board of Directors. Golden also 
serves as depositor for several currently existing Future Accounts. 
Golden may establish one or more additional Future Accounts for which 
it will serve as depositor.
    2. First Golden is a stock life insurance company organized under 
the laws of the State of New York in 1996. First Golden is a wholly-
owned subsidiary of Golden and an indirect wholly-owned subsidiary of 
ING. First Golden serves as depositor for several currently existing 
Future Accounts. First Golden may establish one or more additional 
Future Accounts for which it will serve as depositor.
    3. Reliastar is a stock life insurance company organized under the 
laws of the State of New York in 1917. Reliastar is an indirect wholly-
owned subsidiary of ING. Reliastar serves as depositor for several 
currently existing Future Accounts. Reliastar may establish one or more 
additional Future Accounts for which it will serve as depositor.
    4. Account B is a segregated asset account of Golden. Account B is 
registered with the Commission under the Act as a unit investment 
trust. Account B will fund the variable benefits available under the 
Account B Contracts. Units of interest in Account B under the Account B 
Contracts it funds will be registered under the Securities Act of 1933 
(the ``1933 Act''). Golden may issue Future Contracts through Account 
B. The Life Companies also may issue Future Contracts through Future 
Accounts of the Life Companies.
    5. That portion of the assets of Account B that is equal to the 
reserves and other Account B Contract liabilities with respect to 
Account B is not chargeable with liabilities arising out of any other 
business of Golden. Any income, gains or losses, realized or 
unrealized, from assets allocated to Account B are, in accordance with 
the Account B Contracts, credited to or charged against Account B, 
without regard to other income, gains or losses of Golden. The same 
will be true of any Future Account of the Life Companies.
    6. DSI is the principal underwriter of Account B. DSI is registered 
with the Commission as a broker-dealer under the Securities Exchange 
Act of 1934, as amended (the ``1934 Act''), and is a member of the 
NASD. DSI, acting as principal underwriter, may enter into arrangements 
with one or more registered broker-dealers (that may or may not be 
affiliated with DSI) to offer and sell Contracts. A successor 
Affiliated Broker-Dealer may enter into similar arrangements for the 
Contracts. DSI may act as principal underwriter for Future Accounts of 
the Life Companies and as distributor for Future Contracts. A successor 
Affiliated Broker-Dealer also may act as principal underwriter for the 
Accounts and as distributor for any of the Contracts.
    7. WSS is registered with the Commission as a broker-dealer under 
the 1934 Act and is a member of the NASD. WSS, acting as principal 
underwriter, may enter into arrangements with one or more registered 
broker-dealers (that may or may not be affiliated with WSS) to offer 
and sell Future Contracts. A successor Affiliated Broker-Dealer may 
enter into similar arrangements for Future Contracts. WSS may act as 
principal underwriter for Future Accounts of the Life Companies and as 
distributor for Future Contracts. A successor Affiliated Broker-Dealer 
also may act as principal underwriter for Future Accounts of the Life 
Companies and as distributor for Future Contracts.
    8. On September 20, 2000, the Commission issued the Existing Order

[[Page 32970]]

exempting certain transactions of Aetna, V A B, and Future Accounts of 
Aetna from the provisions of Sections 2(a)(32), 22(c) and 27(i)(2)(A) 
of the Act and Rule 22c-1 thereunder to the extent necessary to permit 
Aetna to recapture, under specified circumstances, certain bonuses 
applied to purchase payments made under the V A B Contracts described 
in the application for the Existing Order (``Prior Application'') 
(Investment Company Act Release No. 24629, dated Aug. 20, 2000, File 
No. 812-12098).
    9. But for the depositor and issuing separate account, the Account 
B Contracts are identical to the V A B Contracts described in the Prior 
Application. Future Contracts will be substantially similar in all 
material respects to the V A B Contracts covered in the Existing Order.
    10. Additional Applicants will recapture bonuses under the 
Contracts under the same circumstances covered by the Existing Order. 
The Existing Order grants exemptions from Sections 2(a)(32), 22(c) and 
27(i)(2)(A) of the Act and Rule 22c-1 thereunder to the extent 
necessary to permit Aetna to recapture bonuses in the following three 
instances: (i) Aetna will recapture all bonuses if the Contract owner 
returns the Contract for a refund during the 10-day (or longer, if 
required) ``free look'' period; (ii) the amount of any account value, 
step-up value or roll-up value death benefit will not include any bonus 
credited to a Contract owner's account after or within 12 months of the 
date of death; and (iii) Aetna will recapture the bonus according to 
the forfeiture schedules described in the Prior Application if the 
Contract owner withdraws Year 1 Payment(s) during the first seven 
account years.

Applicant's Legal Analysis

    1. Section 6(c) of the Act authorizes the Commission to exempt any 
person, security or transaction, or any class of classes of persons, 
securities or transactions from the provisions of the Act and the rules 
promulgated thereunder if and to the extent that 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 
and provisions of the Act. Applicants request that the Commission, 
pursuant to Section 6(c) of the Act, grant exemptions summarized above 
with respect to Account B and any Future Account that the Life 
Companies have established or may establish in the future, in 
connection with the issuance of Contracts that are substantially 
similar in all material respects to the VA B Contracts described in the 
Prior Application and that are underwritten or distributed by DSI, WSS, 
or Affiliated Broker-Dealers. Applicants believe that the requested 
exemptions are appropriate in the public interest and consistent with 
the protection of investors and the purposes fairly intended by the 
policy and provisions of the Act.
    2. Applicants submit that the recapture of bonuses by Additional 
Applicants will not raise concerns under sections 2(a)(32), 22(c) and 
27(i)(2)(A) of the Act, and Rule 22c-1 thereunder for the same reasons 
given in support of the Existing Order. The bonuses will be 
recapturable under the same circumstances and on the same basis as 
described in the Prior Application.

Conclusion

    Applicants submit, based on the grounds summarized above, that 
their exemptive request meets the standards set out in Section 6(c) of 
the Act, namely, that the exemptions requested are necessary or 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policy and 
provisions of the Act, and that, therefore, the Commission should grant 
the requested order.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-15362 Filed 6-18-01; 8:45 am]
BILLING CODE 8010-01-M