Federal Register / Vol. 75, No. 93 / Friday, May 14, 2010 / Notices 27377 

11Because the Postal Service’s filings are 

pursuant to Commission orders, the filing 

requirements of subpart B shall, to the extent 

necessary, be waived. 

requests that web-based linking 

agreements providing links to merchant 

websites be treated as price categories 

rather than separate products pending 

review in a rulemaking on the form and 

content of rules for nonpostal services. 

Id. at 5. The Postal Service asserts that 

designating the linking agreements as 

price categories pending further review 

removes uncertainty as to whether a 

section 3642 proceeding to add new 

products to the MCS would be required 

for any new web-based linking 

agreements. Id. 

The nonpostal service described in 

Order No. 154 as Non-Sale Lease 

Agreements (Non-Government) includes 

leasing of parking facilities, office space, 

antenna towers, advertising, storage, 

and retail lobby space. Order No. 154 at 

66. Non-sale dispositions of real 

property are sometimes structured as a 

‘‘license’’ of real property. Notice at 9– 

10. The FedEx Drop Boxes arrangement 

identified in Order No. 154 as a separate 

nonpostal service also involves the 

licensing or rental of real property. Id. 

at 10. 

The Postal Service notes that the 

Commission did not specifically address 

the rental of personal property in Order 

No. 154 and proposes to include the 

rental of equipment such as forklifts 

within this group. The Postal Service 

further notes that for years it has rented 

personal property such as exercise and 

audio visual equipment as part of its 

training facilities operations, but 

charges are accounted for as part of the 

training operations, and the Postal 

Service does not recommend including 

them in this description. Id. The Postal 

Service proposes to retitle this group of 

activities ‘‘Leasing, Licensing and Other 

Non-Sale Disposal of Tangible 

Property.’’ Id. 

III. Notice of Filings 

The Commission establishes Docket 

No. MC2010–24 for consideration of the 

Postal Service’s proposed language for 

nonpostal products attached to this 

order to be included in the MCS. 

As noted above, the MCS language 

recognized by the Postal Service is 

attached to this order. Part 3020 of the 

Commission’s rules provides for 

establishing product lists. Subpart A of 

the current MCS rules includes 

provisions for nonpostal products. 39 

CFR 3020.13(a)(6) and (b)(5). Subpart B 

provides for changes to the product lists 

initiated by the Postal Service. The 

Commission will treat the Postal 

Service’s filings as a unified request to 

modify the product lists.11

Under section 3020.34 of the rules, 

upon review of these Postal Service 

filings together with comments of 

interested parties, the Commission may 

approve the requests, institute further 

proceedings, permit the Postal Service 

an opportunity to modify its request, or 

take other appropriate action. Pursuant 

to 39 U.S.C. 404(e)(5) and 39 CFR 

3020.33, the Commission provides 

interested persons an opportunity to 

express views and offer comments on 

the planned modifications and whether 

they are consistent with the policies of 

39 U.S.C. 3642. 

Comments on the proposed nonpostal 

services MCS language filed by the 

Postal Service are due no later than June 

4, 2010. Reply comments, if any, are due 

June 18, 2010. 

Pursuant to 39 U.S.C. 505, Emmett 

Rand Costich is appointed to serve as 

officer of the Commission (Public 

Representative) to represent the 

interests of the general public in the 

above-captioned docket. 

IV. Ordering Paragraphs 

It is ordered: 

1. Docket No. MC2010–24 is 

established to consider the Postal 

Service’s proposed nonpostal product 

Mail Classification Schedule language 

filed with its notices of March 10, 2009 

and April 26, 2010, together with the 

nonpostal service Mail Classification 

Schedule language for four nonpostal 

services filed November 7, 2008 referred 

to in the body of this order. 

2. Docket No. MC2009–20 is closed. 

3. Comments are due no later than 

June 4, 2010. 

4. Reply comments are due no later 

than June 18, 2010. 

5. The Commission appoints Emmett 

Rand Costich as Public Representative 

to represent the interests of the general 

public in this proceeding. 

6. The Secretary shall arrange for 

publication of this order in the Federal 

Register. 

By the Commission. 

Shoshana M. Grove, 

Secretary. 

[FR Doc. 2010–11512 Filed 5–13–10; 8:45 am] 

BILLING CODE 7710–FW–S 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–29265 ; File No. 812–13710] 

Jackson National Life Insurance 

Company of New York, et al. 

May 10, 2010. 

AGENCY: The Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order under Section 6(c) of the 

Investment Company Act of 1940 (the 

‘‘Act’’) granting 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 permit the recapture of 

contract enhancements applied to 

purchase payments made under certain 

deferred variable annuity contracts. 

Applicants: Jackson National Life 

Insurance Company of New York (‘‘JNL 

New York’’), JNLNY Separate Account I 

(the ‘‘JNLNY Separate Account’’), and 

Jackson National Life Distributors LLC 

(‘‘Distributor,’’ and collectively 

‘‘Applicants’’). 

Summary of Application: Applicants 

seek an order under Section 6(c) of the 

Act to exempt certain transactions 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, under 

specified circumstances, of certain 

contract enhancements applied to 

purchase payments made under the 

deferred variable annuity contracts 

described herein that JNL New York has 

issued and will issue through the 

JNLNY Separate Account (the 

‘‘Contracts’’) as well as other contracts 

that JNL New York may issue in the 

future through its existing or future 

separate accounts (‘‘Other Accounts’’) 

that are substantially similar in all 

material respects to the Contracts 

(‘‘Future Contracts’’). Applicants also 

request that the order being sought 

extend to any other Financial Industry 

Regulatory Authority (‘‘FINRA’’) member 

broker-dealer controlling or controlled 

by, or under common control with JNL 

New York, whether existing or created 

in the future, that serves as distributor 

or principal underwriter for the 

Contracts or Future Contracts 

(‘‘Affiliated Broker-Dealers’’) and any 

successors in interest to the Applicants. 

DATES: Filing Date: The application was 

filed on October 23, 2009, and amended 

on January 13, 2010, and April 22, 2010. 

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 Secretary of 


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the Commission and serving Applicants 

with a copy of the request, personally or 

by mail. Hearing requests should be 

received by the Commission by 5:30 

p.m. on June 2, 2010, 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 Secretary of 

the Commission. 

ADDRESSES: Secretary, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090. 

Applicants: c/o Jackson National Life 

Insurance Company of New York, 1 

Corporate Way, Lansing, Michigan 

48951, Attn: Anthony L. Dowling, Esq. 

FOR FURTHER INFORMATION CONTACT: 

Ellen J. Sazzman, Senior Counsel, at 

(202) 551–6762, or Harry Eisenstein, 

Branch Chief, at (202) 551–6795, Office 

of Insurance Products, Division of 

Investment Management. 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

Application. The complete Application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or an applicant using the 

Company name box at http:// 

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicants’ Representations 

1. JNL New York is a stock life 

insurance company organized under the 

laws of the state of New York in July 

1995. Its legal domicile and principal 

address is 2900 Westchester Avenue, 

Purchase, New York 10577. JNL New 

York is admitted to conduct life 

insurance and annuity business in 

Delaware, Michigan, and New York. JNL 

New York is ultimately a wholly-owned 

subsidiary of Prudential plc (London, 

England). 

2. The JNLNY Separate Account was 

established by JNL New York on 

September 12, 1997, pursuant to the 

provisions of New York law and the 

authority granted under a resolution of 

JNL New York’s Board of Directors. JNL 

New York is the depositor of the JNLNY 

Separate Account. The JNLNY Separate 

Account meets the definition of a 

‘‘separate account’’ under the Federal 

securities laws and is registered with 

the Commission as a unit investment 

trust under the Act (File Nos. 811– 

8401). The JNLNY Separate Account 

will fund the variable benefits available 

under the Contracts. The registration 

statement relating to the offering of the 

Contracts was filed under the Securities 

Act of 1933 (the ‘‘1933 Act’’) (File Nos. 

333–163323). 

3. The Distributor is a wholly owned 

subsidiary of Jackson National Life 

Insurance Company, JNL New York’s 

parent company, and serves as the 

distributor of the Contracts. The 

Distributor is registered with the 

Commission as a broker-dealer under 

the Securities Exchange Act of 1934 (the 

‘‘1934 Act’’) and is a member of FINRA. 

The Distributor enters into selling group 

agreements with affiliated and 

unaffiliated broker-dealers. The 

Contracts are sold by licensed insurance 

agents, where the Contracts may be 

lawfully sold, who are registered 

representatives of broker-dealers that are 

registered under the 1934 Act and are 

members of FINRA. 

4. The Contracts require a minimum 

initial premium payment of $5,000 or 

$10,000 under most circumstances 

depending on the contract ($2,000 for a 

qualified plan contract). Subsequent 

payments may be made at any time 

during the accumulation phase but 

before the contract anniversary after the 

owner’s 85th birthday. Each subsequent 

payment must be at least $500 ($50 

under an automatic payment plan). 

Prior approval of JNL New York is 

required for aggregate premium 

payments of over $1,000,000. 

5. The Contracts permit owners to 

accumulate contract values on a fixed 

basis through allocations to one fixed 

account (the ‘‘Fixed Account’’). The 

Contracts also permit owners to 

accumulate contract values on a variable 

basis, through allocations to one or more 

of the sub-accounts, also referred to as 

investment divisions, of the JNLNY 

Separate Account (the ‘‘Investment 

Divisions,’’ and collectively with the 

Fixed Account, the ‘‘Allocation 

Options’’). Under most Contracts, 98 

Investment Divisions currently are 

expected to be offered through the 

JNLNY Separate Account but additional 

Investment Divisions may be offered in 

the future and some could be eliminated 

or combined with other Investment 

Divisions in the future. Similarly, 

Future Contracts may offer additional or 

different Investment Divisions. Any 

changes to the Investment Divisions 

offered will be effected in compliance 

with the terms of the Contracts and with 

applicable state and federal laws. Each 

Investment Division will invest in 

shares of a corresponding series 

(‘‘Series’’) of JNL Series Trust (‘‘Trust’’) or 

JNL Variable Fund LLC (‘‘Fund’’) 

(collectively the ‘‘Trust and Fund’’). Not 

all Investment Divisions may be 

available under every Contract. The 

Trust and Fund are open-end 

management investment companies 

registered under the Act and their 

shares are registered under the 1933 

Act. Jackson National Asset 

Management, LLC (‘‘JNAM’’) serves as 

the investment adviser for all of the 

Series of the Trust and Fund. JNAM has 

retained sub-advisers for each Series. 

6. Transfers among the Investment 

Divisions are permitted. The first 15 

transfers in a contract year are free; 

subsequent transfers cost $25. Certain 

transfers to and from the Fixed Account 

are also permitted during the Contracts’ 

accumulation phase, but are subject to 

certain adjustments and limitations. 

Dollar cost averaging and rebalancing 

transfers are offered at no charge and do 

not count against the 15 free transfers 

permitted each year. 

7. If the owner dies during the 

accumulation phase of the Contracts, 

the beneficiary named by the owner is 

paid a death benefit by JNL New York. 

The Contracts’ base death benefit, which 

applies unless an optional death benefit 

has been elected, is a payment to the 

beneficiary of the greater of: (i) Contract 

value on the date JNL New York 

receives proof of death and completed 

claim forms from the beneficiary or (ii) 

the total premiums paid under that 

Contract minus any prior withdrawals 

(including any withdrawal charges, 

recapture charges or other charges or 

adjustments applicable to such 

withdrawals). 

8. The owner may also be offered 

certain optional endorsements (for 

various fees) that can change the death 

benefit paid to the beneficiary. The 

owner of a Contract may be offered the 

following two optional death benefits 

that would replace the base death 

benefit: (i) A Highest Anniversary Value 

Death Benefit which is the greatest of 

the contract value on the date JNL New 

York receives proof of death and 

completed claim forms from the 

beneficiary; or total net premiums since 

the contract was issued; or the greatest 

contract value on any contract 

anniversary prior to the owner’s 81st 

birthday, adjusted for any withdrawals 

subsequent to that contract anniversary 

(including any applicable withdrawal 

charges, recapture charges, and other 

charges or adjustments for such 

withdrawals), plus any premium paid 

subsequent to that contract anniversary; 

and (ii) a death benefit available only in 

conjunction with the purchase of a 

particular Guaranteed Minimum 

Withdrawal Benefit (‘‘GMWB’’) marketed 

under the name of LifeGuard Freedom 

6 GMWB. 

9. The Contracts offer fixed and 

variable versions of the following four 

types of annuity payment or ‘‘income 

payment’’: Life income, joint and 


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survivor, life annuity with at least 120 

or 240 monthly payments guaranteed to 

be paid (although not guaranteed as to 

amount if variable), and income for a 

specified period of 5 to 30 years. JNL 

New York may also offer other income 

payment options. The Contracts may 

also offer various GMWB optional 

endorsements. 

10. JNL New York will add an 

additional amount to the owner’s 

contract value (a ‘‘Contract 

Enhancement’’) for the initial premium 

payment, and for each subsequent 

premium payment received prior to the 

first contract anniversary following the 

owner’s 85th birthday. Premium 

payments will not be accepted on or 

after the first contract anniversary 

following the owner’s 85th birthday. If 

the owner is age 85 at issue, premium 

payments will not be accepted on or 

after the first contract anniversary. All 

Contract Enhancements are paid from 

JNL New York’s general account assets. 

The Contract Enhancement is equal to 

6% of the premium payment. 

11. JNL New York will recapture all 

or a portion of any Contract 

Enhancements by imposing a recapture 

charge whenever an owner: (i) Makes a 

total withdrawal within the recapture 

charge period (nine Completed Years 

after a premium payment) or a partial 

withdrawal of corresponding premiums 

within the recapture charge period in 

excess of those permitted under the 

Contracts’ free withdrawal provision, 

unless the withdrawal is made for 

certain health-related emergencies 

specified in the Contracts; or (ii) returns 

the Contract during the free-look period. 

12. The amount of the recapture 

charge varies, depending upon when the 

charge is imposed, based on Completed 

Years since receipt of the related 

premium, as follows: 

CONTRACT ENHANCEMENT RECAPTURE CHARGE (AS A PERCENTAGE OF PREMIUM PAYMENTS) 

Completed Years 

Since Receipt 

of Premium.

0–1 1–2 2–3 3–4 4–5 5–6 6–7 7–8 8–9 9+ 

Recapture 

Charge.

6% 5.50% 4.50% 4% 3.50% 3% 2% 1% .50% 0% 

13. A ‘‘Completed Year’’ is the 

succeeding twelve months from the date 

on which JNL New York receives a 

premium payment. Completed Years 

specify the years from the date of receipt 

of the premium and do not refer to 

contract years. If the premium receipt 

date is on the issue date of the Contract 

then Completed Year 0–1 does not 

include the first contract anniversary. 

The first contract anniversary begins 

Completed Year 1–2 and each 

successive Completed Year begins with 

the contract anniversary of the 

preceding contract year. If the premium 

receipt date is other than the issue date 

or a subsequent contract anniversary, 

there is no correlation of the contract 

anniversary date and Completed Years. 

For example, if the issue date is January 

15, 2010 and a premium payment is 

received on February 28, 2010, then, 

although the first contract anniversary is 

January 15, 2011, the end of Competed 

Year 0–1 for that premium payment 

would be February 27, 2011, and 

February 28, 2011 begins Completed 

Year 1–2. 

14. The recapture charge percentage 

will be applied to the corresponding 

premium reflected in the amount 

withdrawn that remains subject to a 

recapture charge. The amount 

recaptured will be taken from the 

Investment Divisions and the Fixed 

Account in the proportion their 

respective values bear to the contract 

value. The dollar amount recaptured 

will never exceed the dollar amount of 

the Contract Enhancement added to the 

contract. 

15. JNL New York does not assess the 

recapture charge on any payments paid 

out as: Death benefits; income 

payments; withdrawals of earnings; 

withdrawals taken under the free 

withdrawal provision, which allows for 

free withdrawals up to 10% of 

remaining premium, less earnings; or 

withdrawals necessary to satisfy the 

required minimum distribution of the 

Internal Revenue Code (if the 

withdrawal requested exceeds the 

required minimum distribution, the 

recapture charge will not be waived on 

the required minimum distribution). 

16. The contract value will reflect any 

gains or losses attributable to a Contract 

Enhancement described above. For 

purposes of determining the recapture 

charge and withdrawal charge, 

withdrawals will be allocated first to 

earnings, if any (which may be 

withdrawn free of any recapture charge 

and withdrawal charge), second to 

premium on a first-in, first-out basis, so 

that all withdrawals are allocated to 

premium to which the lowest (if any) 

withdrawal charges and recapture 

charges apply, and third to Contract 

Enhancements. For all purposes, other 

than for tax purposes, earnings are 

defined to be the excess, if any, of the 

contract value over the sum of 

remaining Contract Enhancements (the 

total Contract Enhancements, reduced 

by withdrawals of Contract 

Enhancements) and remaining 

premiums (the total premium, reduced 

by withdrawals that incur withdrawal 

charges and/or recapture charges, and 

withdrawals of premiums that are no 

longer subject to withdrawal charges 

and/or recapture charges). Contract 

Enhancements and any gains or losses 

attributable to a Contract Enhancement 

will be considered earnings under the 

Contract for tax purposes. 

17. The Contracts have a ‘‘free-look’’ 

period of twenty days after the owner 

receives the Contract. Contract value, 

less the full amount of any Contract 

Enhancement(s) is returned upon 

exercise of free look rights by an owner. 

Therefore, 100% of the Contract 

Enhancement will be recaptured under 

all circumstances if an owner returns 

the Contract during the free-look period, 

but any gain or loss on investments of 

the Contract Enhancement would be 

retained by the owner. The dollar 

amount recaptured will never exceed 

the dollar amount of the Contract 

Enhancement added to the contract. A 

withdrawal charge will not be assessed 

upon exercise of free look rights. 

18. In addition to the Contract 

Enhancement recapture charges, the 

Contracts may have additional charges 

including a withdrawal charge that 

applies to total withdrawals and partial 

withdrawals in excess of amounts 

permitted to be withdrawn under the 

Contract’s free withdrawal provision. 

The withdrawal charges shown in the 

table below apply to the Contracts. The 

amount of the withdrawal charge 

depends upon the when the charge is 

imposed based on the Completed Years 

since the receipt of the related premium, 

as follows: 


emcdonald on DSK2BSOYB1PROD with NOTICES
27380 Federal Register / Vol. 75, No. 93 / Friday, May 14, 2010 / Notices 

WITHDRAWAL CHARGE (AS A PERCENTAGE OF PREMIUM PAYMENTS) 

Completed Years 

Since Receipt 

of Premium.

0–1 1–2 2–3 3–4 4–5 5–6 6–7 7–8 8–9 9+ 

Withdrawal 

Charge.

4.0% 3.5% 3.5% 3% 2.5% 2% 2% 2% 1% 0 

19. JNL New York does not assess the 

withdrawal charge on any payments 

paid out as: Death benefits; income 

payments (the income date, which is the 

date income payments commence, 

cannot be sooner than 13 months from 

the issue date); cancellation of the 

Contract upon exercise of free look 

rights by an owner; withdrawals of 

earnings; withdrawals taken under the 

free withdrawal provision, which allows 

for free withdrawals up to 10% of 

remaining premium, less earnings; and 

withdrawals necessary to satisfy the 

required minimum distribution of the 

Internal Revenue Code (if the 

withdrawal requested exceeds the 

required minimum distribution, the 

withdrawal charge will not be waived 

on the required minimum distribution). 

Applicants’ Legal Analysis 

1. Applicants state that Section 6(c) of 

the Act authorizes the Commission to 

exempt any person, security or 

transaction, or any class or 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 the exemptions requested 

below with respect to the Contracts and 

any Future Contracts funded by the 

JNLNY Separate Account or Other 

Accounts that are issued by JNL New 

York and underwritten or distributed by 

the Distributor or Affiliated BrokerDealers. Applicants undertake that 

Future Contracts funded by the JNLNY 

Separate Account or Other Accounts, in 

the future, will be substantially similar 

in all material respects to the Contracts. 

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. Section 27 of the Act regulates and 

imposes certain restrictions on the sales 

of periodic payment plan certificates 

issued by any registered investment 

company. Applicants state that 

Subsection (i) of Section 27 of the Act 

provides that Section 27 does not apply 

to any registered separate account 

funding variable insurance contracts, or 

to the sponsoring insurance company 

and principal underwriter of such 

account, except as provided in 

paragraph (2) of the subsection. 

Paragraph (2) provides that it shall be 

unlawful for such a separate account or 

sponsoring insurance company to sell a 

contract funded by the registered 

separate account unless such contract is 

a redeemable security. Section 2(a)(32) 

defines ‘‘redeemable security’’ as any 

security, other than short-term paper, 

under the terms of which the holder, 

upon presentation to the issuer, is 

entitled to receive approximately his 

proportionate share of the issuer’s 

current net assets, or the cash equivalent 

thereof. 

3. Applicants submit that the 

recapture of the Contract Enhancement 

in the circumstances set forth in its 

application would not deprive an owner 

of his or her proportionate share of the 

issuer’s current net assets. A Contract 

owner’s interest in the amount of the 

Contract Enhancement allocated to his 

or her contract value upon receipt of a 

premium payment is not fully vested 

until nine complete years following a 

premium payment. Until or unless the 

amount of any Contract Enhancement is 

vested, JNL New York retains the right 

and interest in the Contract 

Enhancement amount, although not in 

the earnings attributable to that amount. 

Thus, Applicants urge that when JNL 

New York recaptures any Contract 

Enhancement it is simply retrieving its 

own assets, and because a Contract 

owner’s interest in the Contract 

Enhancement is not vested, the Contract 

owner has not been deprived of a 

proportionate share of the JNLNY 

Separate Account’s assets, i.e., a share of 

the JNLNY Separate Account’s assets 

proportionate to the Contract owner’s 

contract value. 

4. In addition, Applicants represent 

that it would be patently unfair to allow 

a Contract owner exercising the freelook privilege to retain the Contract 

Enhancement amount under a Contract 

that has been returned for a refund after 

a period of only a few days. If JNL New 

York could not recapture the Contract 

Enhancement, individuals could 

purchase a Contract with no intention of 

retaining it and simply return it for a 

quick profit. Furthermore, Applicants 

state that the recapture of the Contract 

Enhancement relating to withdrawals 

and to income payments within the first 

nine years of a premium contribution is 

designed to protect JNL New York 

against Contract owners not holding the 

Contract for a sufficient time period. It 

provides JNL New York with sufficient 

time to recover the cost of the Contract 

Enhancement, and to avoid the financial 

detriment that would result from a 

shorter recapture period. 

5. Applicants represent that it is not 

administratively feasible to track the 

Contract Enhancement amount in the 

JNLNY Separate Account after the 

Contract Enhancement(s) is applied. 

Accordingly, the asset-based charges 

applicable to the JNLNY Separate 

Account will be assessed against the 

entire amounts held in the JNLNY 

Separate Account, including any 

Contract Enhancement amounts. As a 

result, the aggregate asset-based charges 

assessed will be higher than those that 

would be charged if the Contract 

owner’s contract value did not include 

any Contract Enhancement. 

6. Applicants submit that the 

provisions for recapture of any Contract 

Enhancement under the Contracts do 

not violate Sections 2(a)(32) and 

27(i)(2)(A) of the Act. Sections 26(e) and 

27(i) were added to the Act to 

implement the purposes of the National 

Securities Markets Improvement Act of 

1996 and Congressional intent. The 

application of a Contract Enhancement 

to premium payments made under the 

Contracts should not raise any questions 

as to compliance by JNL New York with 

the provisions of Section 27(i). 

However, to avoid any uncertainty as to 

full compliance with the Act, 

Applicants request an order providing 

exemption from Sections 2(a)(32) and 

27(i)(2)(A), to the extent deemed 

necessary, to permit the recapture of the 

Contract Enhancements, under the 

circumstances described herein and in 

the Application, without the loss of 

relief from Section 27 provided by 

Section 27(i). 

7. Applicants state that Section 22(c) 

of the Act authorizes the Commission to 

make rules and regulations applicable to 

registered investment companies and to 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 93 / Friday, May 14, 2010 / Notices 27381 

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

2 17 CFR 240.19b–4. 

3See Exchange Act Release No. 34–61439 

(January 28, 2010) 75 FR 5831 (February 4, 2010). 

principal underwriters of, and dealers 

in, the redeemable securities of any 

registered investment company to 

accomplish the same purposes as 

contemplated by Section 22(a). Rule 

22c–1 under the Act prohibits a 

registered investment company issuing 

any redeemable security, a person 

designated in such issuer’s prospectus 

as authorized to consummate 

transactions in any such security, and a 

principal underwriter of, or dealer in, 

such security, from selling, redeeming, 

or repurchasing any such security 

except at a price based on the current 

net asset value of such security which 

is next computed after receipt of a 

tender of such security for redemption 

or of an order to purchase or sell such 

security. 

8. Applicants state that it is possible 

that someone might view JNL New 

York’s recapture of the Contract 

Enhancements as resulting in the 

redemption of redeemable securities for 

a price other than one based on the 

current net asset value of the JNLNY 

Separate Account. Applicants contend, 

however, that the recapture of the 

Contract Enhancement does not violate 

Rule 22c–1. The recapture of some or all 

of the Contract Enhancement does not 

involve either of the evils that Section 

22(c) and Rule 22c–1 were intended to 

eliminate or reduce as far as reasonably 

practicable, namely: (i) The dilution of 

the value of outstanding redeemable 

securities of registered investment 

companies through their sale at a price 

below net asset value or repurchase at 

a price above it, and (ii) other unfair 

results, including speculative trading 

practices. To effect a recapture of a 

Contract Enhancement, JNL New York 

will redeem interests in a Contract 

owner’s contract value at a price 

determined on the basis of the current 

net asset value of the JNLNY Separate 

Account. The amount recaptured will be 

less than or equal to the amount of the 

Contract Enhancement that JNL New 

York paid out of its general account 

assets. Although Contract owners will 

be entitled to retain any investment 

gains attributable to the Contract 

Enhancement and to bear any 

investment losses attributable to the 

Contract Enhancement, the amount of 

such gains or losses will be determined 

on the basis of the current net asset 

values of the JNLNY Separate Account. 

Thus, no dilution will occur upon the 

recapture of the Contract Enhancement. 

Applicants also submit that the second 

harm that Rule 22c–1 was designed to 

address, namely, speculative trading 

practices calculated to take advantage of 

backward pricing, will not occur as a 

result of the recapture of the Contract 

Enhancement. Because neither of the 

harms that Rule 22c-1 was meant to 

address is found in the recapture of the 

Contract Enhancement, Rule 22c–1 

should not apply to any Contract 

Enhancement. However, to avoid any 

uncertainty as to full compliance with 

Rule 22c-1, Applicants request an order 

granting an exemption from the 

provisions of Rule 22c–1 to the extent 

deemed necessary to permit them to 

recapture the Contract Enhancement 

under the Contracts. 

9. Applicants submit that extending 

the requested relief to encompass Future 

Contracts and Other Accounts is 

appropriate in the public interest 

because it promotes competitiveness in 

the variable annuity market by 

eliminating the need to file redundant 

exemptive applications prior to 

introducing new variable annuity 

contracts. Investors would receive no 

benefit or additional protection by 

requiring Applicants to repeatedly seek 

exemptive relief that would present no 

issues under the Act not already 

addressed in the application. 

10. Applicants submit, for the reasons 

stated herein, that their exemptive 

request meets the standards set out in 

Section 6(c) of the Act, namely, that the 

exemptions requested 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 and that, 

therefore, the Commission should grant 

the requested order. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2010–11543 Filed 5–13–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62054; File No. SR– 

NYSEArca–2010–34] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Adopt Commentary 

.02 to Rule 5.32, Terms of FLEX 

Options, to Establish a Pilot Program 

To Permit FLEX Options to Trade With 

no Minimum Size Requirement 

May 6, 2010. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on April 29, 

2010, NYSE Arca, Inc. (‘‘NYSE Arca’’ or 

the ‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory 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 adopt 

Commentary .02 to Rule 5.32, Terms of 

FLEX Options, to establish a Pilot 

Program to permit FLEX Options to 

trade with no minimum size 

requirement. The text of the proposed 

rule change is attached as Exhibit 5 to 

the 19b–4 form. A copy of this filing is 

available on the Exchange’s Web site at 

http://www.nyse.com, at the Exchange’s 

principal office, at the Commission’s 

Public Reference Room, and on the 

Commission’s Web site at http:// 

www.sec.gov. 

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 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the filing is to adopt 

rules to establish a Pilot Program to 

eliminate minimum value sizes for both 

FLEX Equity options and FLEX Index 

options similar to a pilot approved for 

the Chicago Board Options Exchange 

(‘‘CBOE’’).3

Presently, the Exchange minimum 

value size requirements for an opening 

FLEX Equity transaction in any FLEX 

series in which there is no open interest 


emcdonald on DSK2BSOYB1PROD with NOTICES