Federal Register / Vol. 87, No. 99 / Monday, May 23, 2022 / Notices 31275 

30 15 U.S.C. 78s(b)(3)(A)(ii). 

31 17 CFR 240.19b–4(f)(2). 32 17 CFR 200.30–3(a)(12). 

1 If the Time-Limited Exemption expires by its 

terms prior to the issuance of the permanent order, 

the Time-Limited Exemption will be omitted from 

the permanent order. 

19(b)(3)(A)(ii) of the Act,30 and Rule 

19b–4(f)(2) 31 thereunder. At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

PEARL–2022–21 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–PEARL–2022–21. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

internet website (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE, 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number SR–PEARL–2022–21 and 

should be submitted on or before June 

13, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.32

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–10962 Filed 5–20–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–34587; File No. 812–15337] 

Allianz Global Investors U.S. LLC, et 

al.; Notice of Application and 

Temporary Order 

May 17, 2022. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Temporary order and notice of 

application for a permanent order under 

section 9(c) of the Investment Company 

Act of 1940 (‘‘Act’’). 

SUMMARY OF APPLICATION: Applicants 

have applied for an order exempting 

them from section 9(a) of the Act with 

respect to a guilty plea entered on May 

17, 2022 (‘‘Guilty Plea’’) by Allianz 

Global Investors U.S. LLC (the 

‘‘Pleading Entity’’) in the United States 

District Court for the Southern District 

of New York (the ‘‘District Court’’) in 

connection with a plea agreement (‘‘Plea 

Agreement’’) between the Pleading 

Entity and the United States Department 

of Justice (‘‘DOJ’’). The Pleading Entity 

has requested a time-limited exemption 

for the sole purpose of providing the 

Pleading Entity with adequate time to 

transition certain U.S. registered fund 

advisory relationships to other service 

providers (the ‘‘Time-Limited 

Exemption’’). Upon the expiration of the 

Time-Limited Exemption, the Pleading 

Entity will be disqualified from 

engaging in the fund servicing activities 

identified in section 9(a) of the Act in 

accordance with the terms thereof. The 

PIMCO Applicants and the Allianz Life 

Applicants (each as defined below and, 

collectively, the ‘‘Continuing Fund 

Servicing Applicants’’) have requested a 

temporary exemption from section 9(a) 

until the Commission takes final action 

on an application for a permanent order 

(the ‘‘Permanent Order’’). The 

temporary order (as set forth herein, the 

‘‘Temporary Order’’ and, together with 

the Permanent Order, the ‘‘Orders’’) 

provides a Time-Limited Exemption to 

the Pleading Entity and a temporary 

exemption to the Continuing Fund 

Servicing Applicants and other Covered 

Persons (defined below) pending 

Commission action on the Permanent 

Order. The Permanent Order, if granted, 

would: (1) If the order is issued prior to 

the date that the Time-Limited 

Exemption would expire by its terms, 

reference the Time-Limited Exemption, 

subject to expiration at the end of its 

term,1 and (2) provide a permanent 

exemption to the Continuing Fund 

Servicing Applicants and other Covered 

Persons. 

APPLICANTS: The Pleading Entity, 

Allianz Investment Management LLC 

(‘‘AIM’’), Allianz Life Financial 

Services, LLC (‘‘ALFS’’), Allianz Life 

Insurance Company of North America 

(‘‘ALICONA’’), Allianz Life Insurance 

Company of New York (‘‘ALICONY’’), 

Pacific Investment Management 

Company LLC (‘‘PIMCO LLC’’), PIMCO 

Investments LLC (‘‘PIMCO Investments’’ 

and, collectively with the Pleading 

Entity, AIM, ALFS, ALICONA, 

ALICONY and PIMCO, the ‘‘Fund 

Servicing Providers’’), and, solely for 

the purposes of making certain 

representations and committing to 

certain undertakings as set forth in the 

application, Allianz SE (‘‘Allianz SE’’ 

and together with its wholly owned 

subsidiaries and affiliated entities, 

‘‘Allianz’’). The term ‘‘Continuing Fund 

Service Applicants’’ refers to, 

collectively, AIM, ALFS, ALICONA, 

ALICONY, PIMCO and PIMCO 

Investments. The term ‘‘Applicants’’ 

refers to, collectively, Allianz SE, the 

Pleading Entity, and the Continuing 

Fund Servicing Applicants. 

FILING DATE: The application was filed 

on May 17, 2022. 

HEARING OR NOTIFICATION OF HEARING: An 

order granting the requested relief will 

be issued unless the Commission orders 

a hearing. Interested persons may 

request a hearing by emailing the 

Commission’s Secretary at SecretarysOffice@sec.gov and serving applicants 

with a copy of the request, by email. 

Hearing requests should be received by 

the Commission by 5:30 p.m. on June 


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2The terms ‘‘Fund’’ and ‘‘Funds’’ as used herein 

refer to any registered investment company (‘‘RIC’’), 

employees’ securities company (‘‘ESC’’) or 

investment company that has elected to be treated 

as a business development company under the Act 

(‘‘BDC’’) for which a Covered Person (as defined 

below) currently provides Fund Servicing Activities 

(also defined below), or, subject to the terms and 

conditions of the Temporary and Permanent Orders, 

may in the future provide Fund Servicing 

Activities. 

3Covered Persons may, if the Temporary and 

Permanent Orders are granted, in the future act in 

any of the capacities contemplated by section 9(a) 

of the Act. Any existing or future entities that may 

rely on the Temporary and Permanent Orders in the 

future will comply with the terms and conditions 

of this Application. For the avoidance of doubt, a 

Covered Person shall not include the Pleading 

Entity itself and any direct or indirect subsidiaries 

of the Pleading Entity. 

4The Statement of Facts states that, in addition 

to the Affected Funds, AGI US also engaged in a 

scheme to defraud the sole investor in a UCITS 

fund. 

13, 2022 and should be accompanied by 

proof of service on the applicants, in the 

form of an affidavit, or for lawyers, a 

certificate of service. Pursuant to rule 0– 

5 under the Act, hearing requests should 

state the nature of the writer’s interest, 

any facts bearing upon the desirability 

of a hearing on the matter, the reason for 

the request, and the issues contested. 

Persons who wish to be notified of a 

hearing may request notification by 

emailing the Commission’s Secretary at 

Secretarys-Office@sec.gov. 

ADDRESSES: The Commission: 

Secretarys-Office@sec.gov. Applicants: 

John Viggiano, john.viggiano@

allianzgi.com; Erik T. Nelson, 

erik.nelson@allianzlife.com; Paul G. 

Cellupica, paul.cellupica@pimco.com; 

Frederick Wertheim, WertheimF@

sullcrom.com; and Wendy M. Goldberg, 

GoldbergW@sullcrom.com. 

FOR FURTHER INFORMATION CONTACT: Asaf 

Barouk, Attorney-Adviser, at (202) 551– 

4029, Kyle R. Ahlgren, Acting Branch 

Chief, at (202) 551–6857 or Marc 

Mehrespand, Branch Chief, at (202) 

551–8453 (Division of Investment 

Management, Chief Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a temporary order and a 

summary of the application. For 

Applicants’ representations, legal 

analysis, and conditions, please refer to 

the application, dated May 17, 2022, 

which may be obtained via the 

Commission’s website by searching for 

the file number at the top of this 

document, or for an Applicant using the 

Company name search field, on the 

SEC’s EDGAR system. The SEC’s 

EDGAR system may be searched at 

https://www.sec.gov/edgar/searchedgar/ 

legacy/companysearch.html. You may 

also call the SEC’s Public Reference 

Room at (202) 551–8090. 

Applicants’ Representations 

1. The Pleading Entity is a limited 

liability company formed under 

Delaware law and registered with the 

Commission as an investment adviser 

under the Investment Advisers Act of 

1940 (the ‘‘Advisers Act’’). The Pleading 

Entity advised and sub-advised Fund 2

assets of approximately $297.2 million 

and $29.0 billion, respectively, as of 

March 31, 2022. The Pleading Entity is 

a wholly owned subsidiary of Allianz 

Global Investors U.S. Holdings LLC, 

which in turn is a wholly owned 

subsidiary of Allianz SE, the ultimate 

parent company of Allianz. 

2. ALICONA is a stock life insurance 

company formed under Minnesota law 

offering fixed index annuities, 

individual life insurance and registered 

index-linked annuities. ALICONA 

serves as depositor for certain variable 

insurance separate account Funds and is 

a wholly owned subsidiary of Allianz of 

America, Inc., a holding company that 

is ultimately owned by Allianz SE. 

3. AIM, a wholly owned subsidiary of 

ALICONA, is a limited liability 

company formed under Minnesota law 

and registered with the Commission as 

an investment adviser under the 

Advisers Act. AIM advises Fund assets 

of approximately $18.6 billion as of 

March 31, 2022. 

4. ALFS, a wholly owned subsidiary 

of ALICONA, is a limited liability 

company formed under Minnesota law 

and registered as a broker-dealer under 

the Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’). ALFS is a member of 

the Financial Industry Regulatory 

Authority (‘‘FINRA’’) and serves as 

principal underwriter to certain Funds. 

5. ALICONY, a wholly owned 

subsidiary of ALICONA, is a stock life 

insurance company formed under New 

York law offering registered indexlinked annuities. Collectively, 

ALICONY, ALICONA, AIM, and ALFS, 

are referred to in the application and 

herein as the ‘‘Allianz Life Applicants’’. 

6. PIMCO LLC is a limited liability 

company formed under Delaware law 

and registered with the Commission as 

an adviser under the Advisers Act. 

PIMCO LLC advised and sub-advised 

Fund assets of approximately $509.6 

billion and $46.5 billion, respectively, 

as of March 31, 2022. Allianz SE 

controls 100% of the voting equity of 

PIMCO LLC. 

7. PIMCO Investments, a wholly 

owned subsidiary of PIMCO LLC (and 

together, the ‘‘PIMCO Applicants’’), is a 

limited liability company formed under 

Delaware law and a registered brokerdealer under the Exchange Act. PIMCO 

Investments is a member of FINRA and 

serves as principal underwriter to 

certain Funds. 

8. Other than the Continuing Fund 

Servicing Applicants, no existing 

company of which the Pleading Entity 

is an ‘‘affiliated person’’ within the 

meaning of section 2(a)(3) of the Act 

(‘‘Affiliated Person’’) currently serves as 

an investment adviser (as defined in 

section 2(a)(20) of the Act) or depositor 

of any RIC, ESC, or BDC, or as principal 

underwriter (as defined in section 

2(a)(29) of the Act) for any registered 

open-end investment company (‘‘OpenEnd Fund’’), registered unit investment 

trust (‘‘UIT’’), or registered face-amount 

certificate company (‘‘FACC’’) (such 

activities performed on behalf of such 

persons, collectively ‘‘Fund Servicing 

Activities’’). Applicants request that any 

relief granted by the Commission to the 

Continuing Fund Servicing Applicants 

pursuant to the application also apply to 

any current or future subsidiary of a 

Continuing Fund Servicing Applicant of 

which the Pleading Entity is or may 

become an Affiliated Person (together 

with the Continuing Fund Servicing 

Applicants, the ‘‘Covered Persons’’) 

with respect to any activity 

contemplated by section 9(a) of the 

Act.3

9. On May 17, 2022, the DOJ filed a 

criminal information (the 

‘‘Information’’) in the District Court 

charging the Pleading Entity with one 

count of securities fraud in violation of 

sections 10(b) and 32 of the Exchange 

Act and rule 10b–5 thereunder. 

According to the Statement of Facts that 

served as the basis for the Plea 

Agreement (as summarized in the 

application, the ‘‘Statement of Facts’’), 

beginning in at least 2014 and 

continuing up to and including in or 

about March 2020, the Pleading Entity 

engaged in a scheme to defraud 

investors in a series of private 

investment funds (the ‘‘Affected 

Funds’’ 4) that pursued Allianz’s 

‘‘Structured Alpha’’ options trading 

strategy by making false and misleading 

statements to current and prospective 

investors that substantially understated 

how risky the Affected Funds were and 

overstated the level of independent risk 

oversight over the Funds (the 

‘‘Conduct’’). 

10. According to the Statement of 

Facts, the Pleading Entity carried out 

the scheme through, among others, the 

three portfolio managers with primary 

responsibility for managing the 

Structured Alpha Funds, specifically, 

Gregoire Tournant, Trevor Taylor, and 

Stephen Bond-Nelson (the ‘‘Individual 

Defendants’’). According to the 

Statement of Facts, the compliance and 


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risk management functions at the 

Pleading Entity failed to maintain 

adequate oversight of the team 

managing the Affected Funds, which 

allowed the portfolio managers to 

continue to manage the Affected Funds 

in a manner inconsistent with 

representations to investors. The control 

failures also facilitated the portfolio 

managers’ actions to deceive investors 

by hiding, and making affirmative 

misstatements about, risk over the 

course of years. The fraudulent scheme 

inflated the performance of the Affected 

Funds, which in turn increased the 

profits flowing to the Pleading Entity 

and its parent companies, and also 

increased the compensation of the 

Individual Defendants. The Affected 

Funds ultimately lost more than $7 

billion in value during the market 

dislocations caused by COVID–19, with 

investor victims losing over $3.2 billion 

in principal. 

11. Pursuant to the Plea Agreement, 

the Pleading Entity entered the Guilty 

Plea on May 17, 2022 in the District 

Court to the charge set out in the 

Information. Applicants expect that the 

District Court will enter a judgment 

against the Pleading Entity (the 

‘‘Judgment’’) that will require remedies 

that are materially the same as set forth 

in the Plea Agreement. The individuals 

referenced in the Information as 

responsible for the Conduct are no 

longer employed by the Pleading Entity 

or any of its affiliates. 

12. The Commission instituted a 

cease-and-desist order against the 

Pleading Entity on May 17, 2022 (the 

‘‘SEC Order’’) in connection with the 

Pleading Entity’s role in the Conduct. 

The SEC Order requires the Pleading 

Entity to cease and desist from 

committing or causing any violations 

and any future violations of section 

10(b) of the Exchange Act and rule 10b– 

5 thereunder, sections 206(1), 206(2) 

and 206(4) of the Advisers Act and rules 

206(4)–7 and 206(4)–8 thereunder. The 

SEC Order also imposed a civil money 

penalty and requires the Pleading Entity 

to pay disgorgement of $315.2 million 

plus prejudgment interest of $34 

million, which shall be deemed satisfied 

by forfeiture and restitution ordered by 

the settlement of parallel criminal 

charges entered into by the Pleading 

Entity in May 2022. In anticipation of 

the institution of those proceedings, the 

Pleading Entity submitted an Offer of 

Settlement consenting to the entry of 

such order, which the Commission has 

accepted. 

Applicants’ Legal Analysis 

1. Section 9(a)(1) of the Act provides, 

in pertinent part, that a person may not 

serve or act as an investment adviser or 

depositor of any registered investment 

company or as principal underwriter for 

any Open-End Fund, UIT, or FACC, if 

such person within ten years has been 

convicted of any felony or 

misdemeanor, including those arising 

out of such person’s conduct as a 

broker, dealer or bank. Section 2(a)(10) 

of the Act defines the term ‘‘convicted’’ 

to include a plea of guilty. Section 

9(a)(3) of the Act extends the 

prohibitions of section 9(a)(1) to a 

company, any affiliated person of which 

has been disqualified under the 

provisions of section 9(a)(1). Section 

2(a)(3) of the Act defines ‘‘affiliated 

person’’ to include, among others, any 

person directly or indirectly controlling, 

controlled by, or under common control 

with, the other person. Each Continuing 

Fund Servicing Applicant is an 

Affiliated Person of the Pleading Entity 

within the meaning of section 2(a)(3) of 

the Act. The Plea Agreement would 

therefore result in an immediate and 

automatic disqualification of the 

Pleading Entity and each Continuing 

Fund Servicing Applicant for ten years 

under section 9(a)(3) from acting in any 

of the capacities listed in section 9(a), 

by effect of a conviction described in 

section 9(a)(1). 

2. Section 9(c) of the Act provides 

that: ‘‘[t]he Commission shall by order 

grant [an] application [for relief from the 

prohibitions of subsection 9(a)], either 

unconditionally or on an appropriate 

temporary or other conditional basis, if 

it is established [i] that the prohibitions 

of subsection 9(a), as applied to such 

person, are unduly or 

disproportionately severe or [ii] that the 

conduct of such person has been such 

as not to make it against the public 

interest or the protection of investors to 

grant such application.’’ Applicants 

have filed an application pursuant to 

section 9(c) seeking a Temporary Order 

on behalf of all Applicants and a 

Permanent Order on behalf of the 

Continuing Fund Servicing Applicants 

only. The Permanent Order would 

exempt the Continuing Fund Servicing 

Applicants and other Covered Persons 

from the disqualification provisions of 

section 9(a) of the Act. The Covered 

Persons may, if the Orders are granted, 

in the future act in any of the capacities 

contemplated by section 9(a) of the Act 

subject to the applicable terms and 

conditions of the Orders. 

3. Applicants believe that the TimeLimited Exemption is consistent with 

the principle in section 9(c) that 

appropriate conditional, short-term 

relief is not against the public interest 

or the protection of investors. The TimeLimited Exemption is intended to 

provide the Pleading Entity with 

adequate time to transition its advisory 

relationships and other Fund Servicing 

Activities that it performs on behalf of 

Funds (the ‘‘the Pleading Entity Advised 

Funds’’) to other providers of such 

services. As a result of the section 9(a) 

disqualification and absent the TimeLimited Exemption, the Pleading Entity 

would be immediately unable as a 

matter of law to provide Fund Servicing 

Activities to the Pleading Entity 

Advised Funds. Applicants state that a 

disqualification of the Pleading Entity 

before the process of transitioning the 

Pleading Entity Advised Funds to 

replacement service providers is 

complete could leave them without 

critical advisory services for some 

period of time, which would be 

extremely disruptive to their investment 

programs and may result in substantial 

harm to such Funds and their investors. 

4. Applicants believe that the 

Continuing Fund Servicing Applicants 

meet the standards for exemption 

specified in section 9(c). Applicants 

assert that: (i) The scope of the 

misconduct was limited and did not 

involve any of the Continuing Fund 

Servicing Applicants acting as an 

investment adviser, depositor or 

principal underwriter for any Fund, or 

any Fund with respect to which the 

Continuing Fund Servicing Applicants 

engage in Fund Servicing Activities 

(‘‘Continuing Service Funds’’); (ii) 

application of the statutory bar would 

impose significant hardships on the 

Continuing Service Funds and their 

shareholders; (iii) the prohibitions of 

section 9(a), if applied to the Continuing 

Fund Servicing Applicants, would be 

unduly or disproportionately severe; 

and (iv) the Conduct did not constitute 

conduct that would make it against the 

public interest or protection of investors 

to grant the exemption from section 9(a) 

to the Continuing Fund Servicing 

Applicants. 

5. The Continuing Fund Servicing 

Applicants represent that the Conduct 

did not involve any of the Continuing 

Fund Servicing Applicants acting in the 

capacity as an investment adviser, 

depositor or principal underwriter for 

any Fund. Applicants represent that the 

Conduct similarly did not involve any 

Continuing Service Fund. Instead, 

Applicants state that the Conduct 

occurred entirely within the Pleading 

Entity and did not involve the 

Continuing Fund Servicing Applicants 

or any personnel of the Continuing 

Fund Servicing Applicants. As 

discussed above, the individuals 

referenced in the Information as 

responsible for the Conduct are no 


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longer employed by the Pleading Entity 

or any of its affiliates. 

6. Applicants acknowledge that the 

Pleading Entity had significant gaps and 

weaknesses in its controls as they 

related to the Affected Funds. 

Applicants acknowledge that the control 

functions were not designed to and did 

not function to ensure that risk was 

being monitored in line with what 

investors had been told. Applicants 

further acknowledge that the Pleading 

Entity’s internal audit department 

conducted an audit of the Pleading 

Entity and, although that audit 

identified red flags that, if pursued, 

might have led to identification of the 

fraud, no meaningful follow up was 

conducted. Applicants represent that 

Allianz and its affiliates have 

undertaken certain remedial measures, 

as described in more detail in the 

application. These remedial measures 

include compensating Structured Alpha 

investors, terminating employee 

wrongdoers, agreeing that the Pleading 

Entity will exit the business of 

providing Fund Servicing Activities, 

improving client communications, 

enhancing oversight of portfolio 

management teams, empowering the 

Allianz risk management functions, and 

implementing a new framework for data 

quality and processing. Applicants 

further represent that each of the 

Continuing Fund Servicing Applicants 

will review its control and risk 

management framework as it relates to 

Fund Servicing Activities, in light of 

applicable local legal requirements and 

the risks related to such Continuing 

Fund Servicing Applicant’s business, 

and consider what steps may be 

appropriate to enhance that framework 

to ensure that it is reasonably designed 

to prevent behavior similar to the 

Conduct from occurring at such 

Continuing Fund Servicing Applicant. 

The results of such review will be 

included in the report required by 

Condition 5 of the application (detailed 

below). 

7. Applicants assert that, in view of 

the fact that the Conduct was limited to 

the Pleading Entity and its personnel, it 

would be unduly and 

disproportionately severe to impose a 

section 9(a) disqualification on the 

Continuing Fund Servicing Applicants. 

Applicants assert that the conduct of the 

Continuing Fund Servicing Applicants 

has not been such as to make it against 

the public interest or the protection of 

investors to grant the exemption from 

section 9(a). Applicants further assert 

that neither the protection of investors 

nor the public interest would be served 

by permitting the section 9(a) 

disqualifications to apply to the 

Continuing Fund Servicing Applicants 

because those disqualifications would 

deprive the Continuing Service Funds of 

the advisory or sub-advisory and 

underwriting services that shareholders 

expected the Continuing Service Funds 

to receive when they decided to invest. 

Applicants also assert that the 

prohibitions of section 9(a) could 

operate to the financial detriment of the 

Continuing Service Funds and their 

shareholders, including by causing the 

Continuing Service Funds to spend time 

and resources to engage substitute 

advisers, subadvisers, and principal 

underwriters, which would be an 

unduly and disproportionately severe 

consequence given that the Conduct did 

not involve any of the Continuing Fund 

Servicing Applicants or their personnel. 

8. Applicants assert that if the 

Continuing Fund Servicing Applicants 

were barred under section 9(a) from 

providing investment advisory services 

to the Continuing Service Funds and 

were unable to obtain the requested 

exemption, the effect on their 

businesses and employees would be 

severe. Applicants state that the 

Continuing Fund Servicing Applicants 

have committed substantial capital and 

other resources to establishing expertise 

in advising and sub-advising Funds 

with a view to continuing and 

expanding this business, which 

Applicants consider strategically 

important. Similarly, Applicants 

represent that if ALFS and PIMCO 

Investments were barred under section 

9(a) from continuing to provide 

underwriting services to the Funds and 

were unable to obtain the requested 

exemption, the effect on its current 

business and employees would be 

significant. Applicants state that ALFS 

and PIMCO Investments have 

committed capital and other resources 

to establish expertise in underwriting 

the securities of the Continuing Service 

Funds and to establish distribution 

arrangements for Fund shares. 

Applicants further state that prohibiting 

the Continuing Fund Servicing 

Applicants from engaging in Fund 

Servicing Activities would not only 

adversely affect their business, but 

would also adversely affect their 

employees who are involved in these 

activities. 

9. Applicants represent that: (1) None 

of the current or former directors, 

officers or employees of Continuing 

Fund Servicing Applicants engaged in 

the Conduct; (2) no current or former 

employee of the Pleading Entity or any 

Covered Person who previously has 

been or who subsequently may be 

identified by the Pleading Entity or any 

U.S. or non-U.S. regulatory or 

enforcement agencies as having been 

responsible for the Conduct will be an 

officer, director, or employee of any 

Covered Person; (3) the identified 

employees have had no, and will not 

have any, future involvement in the 

Covered Persons’ activities in any 

capacity described in section 9(a) of the 

Act; and (4) because the personnel of 

the Continuing Fund Servicing 

Applicants did not engage in the 

Conduct, shareholders of the Funds 

served by the Continuing Fund 

Servicing Applicants were not affected 

any differently than if those Funds had 

received services from any other nonaffiliated investment adviser. 

10. Applicants have also agreed that 

each of the Applicants and Covered 

Persons will adopt and implement 

policies and procedures reasonably 

designed to ensure that it will comply 

with the terms and conditions of the 

Orders granted under section 9(c). 

11. In addition, Applicants have 

agreed that each of the Applicants and 

Covered Persons will comply in all 

material respects with the material 

terms and conditions of the Plea 

Agreement and the SEC Order, and any 

other orders issued by, or settlements 

with, regulatory or enforcement 

agencies addressing the Conduct. 

12. As a result of the foregoing, the 

Continuing Fund Servicing Applicants 

submit that absent relief, the 

prohibitions of section 9(a) as applied to 

the Continuing Fund Servicing 

Applicants would be unduly or 

disproportionately severe, and that the 

Conduct did not constitute conduct that 

would make it against the public 

interest or protection of investors to 

grant the exemption to the Continuing 

Fund Servicing Applicants. 

13. To provide further assurance that 

the exemptive relief being requested in 

the application would be consistent 

with the public interest and the 

protection of the investors, the 

Applicants agree that they will, within 

two weeks from the date of the TimeLimited Exemption, as applicable, with 

respect to each of the Funds for which 

a Continuing Fund Servicing Applicant 

is the primary investment adviser, 

distribute to the boards of directors or 

trustees of the Funds (each, a ‘‘Fund 

Board’’) written materials describing the 

circumstances that led to the Plea 

Agreement, as well as any effects on the 

Funds and the application. The written 

materials will include an offer to 

discuss the materials at an in-person 

meeting with each Fund Board for 

which Fund Servicing Providers 

provide Fund Servicing Activities, 

including the directors who are not 

‘‘interested persons’’ of the Funds as 


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Federal Register / Vol. 87, No. 99 / Monday, May 23, 2022 / Notices 31279 

defined in section 2(a)(19) of the Act 

and their ‘‘independent legal counsel’’ 

as defined in rule 0–1(a)(6) under the 

Act. With respect to each of the Funds 

for which a Fund Servicing Provider is 

not the primary investment adviser, the 

relevant Fund Servicing Provider will 

provide such materials to the Fund’s 

primary investment adviser and offer to 

discuss the materials with such primary 

investment adviser. The Applicants 

undertake to provide the Fund Boards 

and the primary investment advisers, as 

relevant, with all information 

concerning the Plea Agreement and the 

application as necessary for those Funds 

to fulfill their disclosure and other 

obligations under the U.S. federal 

securities laws and will provide them a 

copy of the Judgment as entered by the 

District Court. 

Applicants’ Conditions 

Applicants agree that any order 

granted by the Commission pursuant to 

the application will be subject to the 

following conditions: 

1. Any temporary exemption granted 

pursuant to the application will be 

without prejudice to, and will not limit 

the Commission’s rights in any manner 

with respect to, any Commission 

investigation of, or administrative 

proceedings involving or against, 

Covered Persons, including, without 

limitation, the consideration by the 

Commission of a permanent exemption 

from section 9(a) of the Act requested 

pursuant to the application or the 

revocation or removal of any temporary 

exemptions granted under the Act in 

connection with the application. 

2. None of Allianz SE, the Applicants, 

the Covered Persons or any affiliate of 

any of the foregoing, will employ the 

former employees of the Pleading Entity 

or any other person who subsequently 

may be identified by the Pleading Entity 

or any U.S. or non-U.S. regulatory or 

enforcement agencies as having been 

responsible for the Conduct in any 

capacity without first making a further 

application to the Commission pursuant 

to section 9(c). 

3. Each of the Applicants and the 

Covered Persons will adopt and 

implement policies and procedures 

reasonably designed to ensure that it 

will comply with the terms and 

conditions of the Orders applicable to it 

within 60 days of the date of the 

Permanent Order, or with respect to 

condition four immediately below, such 

later date or dates as may be 

contemplated by the Plea Agreement, 

the SEC Order, or any other orders 

issued by regulatory or enforcement 

agencies addressing the Conduct, as and 

to the extent that the terms and 

conditions of such orders are applicable 

to it. 

4. Each of the Applicants and the 

Covered Persons will comply in all 

material respects with the material 

terms and conditions of the Plea 

Agreement, with the material terms of 

the SEC Order, and any other orders 

issued by, or settlements with, 

regulatory or enforcement agencies 

addressing the Conduct, in each case as 

and to the extent that such terms and 

conditions are applicable to it. In 

addition, within 30 days of each 

anniversary of the Permanent Order 

(until and including the third such 

anniversary), Allianz SE will submit a 

certification signed by its chief 

executive officer and its chief 

compliance officer, confirming that (i) 

the Pleading Entity has complied with 

the terms and conditions of the Plea 

Agreement in all material respects; and 

(ii) Allianz SE, the Pleading Entity and 

the Covered Persons have complied 

with the terms and conditions of the 

Orders applicable to them in all material 

respects. Each such certification will be 

submitted to the Chief Counsel of the 

Commission’s Division of Investment 

Management with a copy to the Chief 

Counsel of the Commission’s Division of 

Enforcement. 

5. Each Applicant will provide 

written notification to the Chief Counsel 

of the Commission’s Division of 

Investment Management with a copy to 

the Chief Counsel of the Commission’s 

Division of Enforcement of a material 

violation by such Applicant of the terms 

and conditions of the Orders applicable 

to it within 30 days of discovery of the 

material violation. In addition, within 

30 days of the first anniversary of the 

Permanent Order, the Continuing Fund 

Servicing Applicants will submit 

reports, signed by the chief executive 

officer of ALICONA (in the case of the 

Allianz Life Applicants) and the chief 

executive officer of PIMCO LLC (in the 

case of the PIMCO Applicants), to the 

Chief Counsel of the Commission’s 

Division of Investment Management, 

summarizing the results of the reviews 

described in Section V.F of the 

application, including a description of 

each specific step taken by each 

Continuing Fund Servicing Applicant to 

enhance its control and risk 

management framework since the date 

of the Permanent Order. 

6. The Pleading Entity commits to 

provide the staff of the Commission’s 

Division of Investment Management, no 

later than one week from the date of the 

Time-Limited Exemption, a written plan 

for the transitioning of the Pleading 

Entity Advised Funds to new subadvisers, and with respect to the Taiwan 

Fund, to a new adviser, which plan will 

include specific action items with 

associated timetables, and will 

contemplate the completion of the 

transition within a ten-week period with 

respect to the open-end Pleading Entity 

Advised Funds and within a four-month 

period with respect to the closed-end 

Pleading Entity Advised Funds. The 

Pleading Entity further commits that, 

during the pendency of the TimeLimited Exemption, the Pleading Entity 

will use its reasonable best efforts to 

assist each primary adviser, board of 

directors or trustees of each Pleading 

Entity Advised Fund (each such board, 

a ‘‘Pleading Entity Advised Fund 

Board’’) and/or fund administrator, as 

applicable, in (A) identifying a potential 

replacement sub-adviser or adviser, as 

applicable, (B) soliciting information 

from those firms, (C) conducting due 

diligence on such firms, (D) gathering 

information responsive to requirements 

of Section 15(c) of the Act, (E) 

negotiating an advisory contract, (F) 

drafting prospectus disclosure about the 

transition, (G) otherwise updating the 

Fund’s registration statement, (H) 

obtaining Pleading Entity Advised Fund 

Board approval consistent with the Act, 

and (I) with respect to the closed-end 

Funds, seeking shareholder approval of 

the new sub-adviser or adviser, as 

applicable. The Pleading Entity will 

report to the staff of the Commission’s 

Division of Investment Management on 

the progress of the transition and the 

actions being taken by the Pleading 

Entity to further such transition no less 

frequently than every two weeks. The 

Pleading Entity or one or more of its 

affiliates will bear all expenses 

associated with the transitions, and no 

Pleading Entity Advised Funds will 

directly or indirectly bear any expenses 

associated with such transitions, 

including any expenses associated with 

obtaining shareholder approval, if 

applicable. 

7. The Time-Limited Exemption will 

remain in place: (i) With respect to the 

open-end Pleading Entity Advised 

Funds for which the Pleading Entity 

serves as a sub-adviser, for a ten-week 

period from the date of the TimeLimited Exemption; and (ii) with 

respect to the closed-end Pleading 

Entity Advised Funds, for a four-month 

period from the date of the TimeLimited Exemption. 

Temporary Order 

The Commission has considered the 

matter and finds that Applicants have 

made the necessary showing to justify 

granting a temporary exemption. 

Accordingly, 


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31280 Federal Register / Vol. 87, No. 99 / Monday, May 23, 2022 / Notices 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The Exchange originally filed to amend the 

Price List on May 2, 2022 (SR–NYSE–2022–21). On 

May 11, 2002, SR–NYSE–2022–21 was withdrawn 

and replaced by this filing. 

5See Securities Exchange Act Release No. 51808 

(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) 

(S7–10–04) (Final Rule) (‘‘Regulation NMS’’). 

6See Securities Exchange Act Release No. 51808, 

84 FR 5202, 5253 (February 20, 2019) (File No. S7– 

05–18) (Transaction Fee Pilot for NMS Stocks Final 

Rule) (‘‘Transaction Fee Pilot’’). 

7See Cboe Global Markets, U.S. Equities Market 

Volume Summary, available at http://

markets.cboe.com/us/equities/market_share/. See 

generally https://www.sec.gov/fast-answers/ 

divisionsmarketregmrexchangesshtml.html. 

8See FINRA ATS Transparency Data, available at 

https://otctransparency.finra.org/otctransparency/ 

AtsIssueData. A list of alternative trading systems 

registered with the Commission is available at 

https://www.sec.gov/foia/docs/atslist.htm. 

9See Cboe Global Markets U.S. Equities Market 

Volume Summary, available at http://markets.

cboe.com/us/equities/market_share/. 

10See id. 

It is hereby ordered, pursuant to 

section 9(c) of the Act, that: (1) The 

Pleading Entity is granted a temporary 

exemption, limited in all respects to the 

Time-Limited Exemption, including as 

to its time-limited nature, from the 

provisions of section 9(a); and (2) the 

Continuing Fund Servicing Applicants 

and any other Covered Persons are 

granted a temporary exemption from the 

provisions of section 9(a), in each case 

effective as the date of the Guilty Plea, 

and in each case solely with respect to 

the Guilty Plea entered into pursuant to 

the Plea Agreement, subject to the 

representations and conditions in the 

application, until the Commission takes 

final action on their application (or, in 

the case of the Time-Limited 

Exemption, until it expires by its terms, 

if sooner). 

By the Commission. 

J. Matthew DeLesDernier,

Assistant Secretary. 

[FR Doc. 2022–10965 Filed 5–20–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94933; File No. SR–NYSE– 

2022–22] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend Its 

Price List 

May 17, 2022. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on May 11, 

2022, New York Stock Exchange LLC 

(‘‘NYSE’’ or the ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. 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

The Exchange proposes to amend its 

Price List to introduce a new adding 

credit for providing displayed liquidity 

to the Exchange in Tape B and C 

Securities. The Exchange proposes to 

implement the fee changes effective 

May 11, 2022.4 The proposed rule 

change is available on the Exchange’s 

website at www.nyse.com, at the 

principal office of the Exchange, 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, the 

self-regulatory organization 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 those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s

Statement of the Purpose of, and the

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The Exchange proposes a new adding

credit for providing displayed liquidity 

to the Exchange in Tape B and C 

Securities. 

The proposed changes respond to the 

current competitive environment where 

order flow providers have a choice of 

where to direct liquidity-providing 

orders by offering further incentives for 

member organizations to send 

additional displayed liquidity to the 

Exchange. 

The Exchange proposes to implement 

the fee changes effective May 11, 2022. 

Background 

Current Market and Competitive 

Environment 

The Exchange operates in a highly 

competitive market. The Commission 

has repeatedly expressed its preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 5

As the Commission itself has 

recognized, the market for trading 

services in NMS stocks has become 

‘‘more fragmented and competitive.’’ 6

Indeed, equity trading is currently 

dispersed across 16 exchanges,7 31 

alternative trading systems,8 and 

numerous broker-dealer internalizers 

and wholesalers. Based on publiclyavailable information, no single 

exchange has more than 20% of the 

market.9 Therefore, no exchange 

possesses significant pricing power in 

the execution of equity order flow. More 

specifically, the Exchange’s share of 

executed volume of equity trades in 

Tapes A, B and C securities is less than 

12%.10

The Exchange believes that the evershifting market share among the 

exchanges from month to month 

demonstrates that market participants 

can move order flow, or discontinue or 

reduce use of certain categories of 

products, in response to fee changes. 

With respect to non-marketable order 

flow that would provide displayed 

liquidity on an Exchange, member 

organizations can choose from any one 

of the 16 currently operating registered 

exchanges to route such order flow. 

Accordingly, competitive forces 

constrain exchange transaction fees that 

relate to orders that would provide 

liquidity on an exchange. 

In response to the competitive 

environment described above, the 

Exchange has established incentives for 

its member organizations who submit 

orders that provide liquidity on the 

Exchange. The proposed fee change is 

designed to attract additional order flow 

to the Exchange by incentivizing 

member organizations to submit 

additional displayed liquidity to the 

Exchange. 


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