Federal Register / Vol. 60, No. 61 / Thursday, March 30, 1995 / Notices 16521

23Securities Exchange Act Release No. 30944

(July 28, 1992), 57 FR 33376.

24 15 U.S.C. 78s(b)(2) (1988).

25 17 CFR 200.30–3(a)(12) (1994).

1The NASD initially submitted the proposed rule

change on February 5, 1995. Amendment No. 1,

submitted on March 22, 1995, replaces the

proposed rule change in its entirety.

2NASD Manual, Rules of Fair Practice, Art. III,

Sec. 1 (CCH) ¶ 2151.05.

the position limits of 100,000 contracts

on either side of the market, with no

more than 60,000 of such contracts in a

series in the nearest month expiration

month, will serve to minimize potential

manipulation and market impact

concerns. Fifth, the risk to investors of

contra-party non-performance will be

minimized because the Index options

will be issued and guaranteed by the

Options Clearing Corportation just like

any other standardized option traded in

the United States.

Lastly, the Commission believes that

settling expiring S&P SmallCap 600

options (including full-value and

reduced-value Index LEAPS) based on

the opening prices of component

securities is reasonable and consistent

with the Act. As noted in other contexts,

valuing expiring index options for

exercise settlement purposes based on

opening prices rather than closing

prices may help reduce adverse effects

on the securities underlying options on

the Index.23

The Commission finds good cause for

approving Amendment No. 2 prior to

the thirtieth day after the date of

publication of notice of filing thereof in

the Federal Register. Specifically,

Amendment No. 2 provides that the

CBOE will monitor, semi-annually, the

Index and will notify staff of the

Commission in the event that certain

index component capitalization and

volume levels fall below designated

thresholds. The Commission believes

that this monitoring provision is not a

material change that raises regulatory

concerns not already addressed by the

proposal. Accordingly, the Commission

believes it is consistent with Sections

6(b)(5) and 19(b)(2) of the Act to

approve Amendment No. 2 to the

proposal on an accelerated basis.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning Amendment No.

2. Persons, making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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 the 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 inspection and copying in

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the CBOE. All submissions

should refer to File No. SR–CBOE–94–

43 and should be submitted by April 20,

1995.

V. Conclusion

For the reasons discussed above, the

Commission finds that the proposal is

consistent with the Act, and, in

particular, Section 6 of the Act.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,24 that the

proposed rule change (File No SR–

CBOE–94–43), as amended, is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.25

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–7841 Filed 3–29–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35533; File No. SR–NASD–

95–06]

Self-Regulatory Organizations; Notice

of Filing of Proposed rule Change by

National Association of Securities

Dealers, Inc. Relating to Interpretation

of the Board of Governors—

Forwarding of Proxy and Other

Material Under Article III, Section 1 of

the NASD Rules of Fair Practice

March 24, 1995.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on March 22, 1995,1

the National Association of Securities

Dealers, Inc. (‘‘NASD’’ or ‘‘Association’’)

filed with the Securities and Exchange

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

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the NASD.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The NASD is proposing to amend its

Interpretation of the board of

Governors—Forwarding of Proxy and

Other Material under Article III, Section

1 to the NASD Rules of Fair Practice.2

Below is the text of the proposed rule

change. Proposed new language is in

italics; proposed deletions are in

brackets.

NASD Rules of Fair Practice

Business Conduct of Members

* * * * *

Article III, Section 1

Interpretation of the Board of Governors

Forwarding of Proxy and Other Materials

Introduction

A member has an inherent duty in carrying

out high standards of commercial honor and

just and equitable principles of trade to

forward (i) all proxy material which is

properly furnished to it by the issuer of the

securities or a stockholder of such issuer, to

each beneficial owner of shares of that issue

(or the beneficial owner’s designated

investment adviser) which are held by the

member for the beneficial owner thereof and

(ii) all annual reports, information statements

and other material sent to stockholders,

which are properly furnished to it by the

issuer of the securities to each beneficial

owner of shares of that issue (or the

beneficial owner’s designated investment

adviser) which are held by the member for

the beneficial owner thereof. For the

assistance and guidance of members in

meeting their responsibilities, the Board of

Governors has promulgated this

interpretation. The provisions hereof shall be

followed by all members and failure to do so

shall constitute conduct inconsistent with

high standards of commercial honor and just

and equitable principles of trade in violation

of Article III, Section 1 of the Rules of Fair

Practice of the Association.

Interpretation

Section 1. No member shall give a proxy

to vote stock which is registered in its name,

except as required or permitted under the

provisions of Section 2 or 3 hereof, unless

such member is the beneficial owner of such

stock.

Section 2. Whenever an issuer or

stockholder of such issuer soliciting proxies

shall timely furnish to a member:

(a)[1] sufficient copies of all soliciting

material which such person is sending to

registered holders, and

(b)[2] satisfactory assurance that he will

reimburse such member for all out-of-pocket

expenses, including reasonable clerical

expenses incurred by such member in

connection with such solicitation, such

member shall transmit promptly to each

beneficial owner of stock of such issuer (or

the beneficial owner’s designated investment

adviser) which is in its possession or control

and registered in a name other than the name

of the beneficial owner all such material

furnished. Such material shall include a

signed proxy indicating the number of shares

held for such beneficial owner and bearing a

symbol identifying the proxy with proxy
16522 Federal Register / Vol. 60, No. 61 / Thursday, March 30, 1995 / Notices

3For purposes of this interpretation, the term

‘‘ERISA’’ is an acronym for the Employee

Retirement Income Security Act of 1974.

4Securities Exchange Act Release No. 34596

(Aug. 25, 1994), 59 FR 45050 (Aug. 31, 1994)

(‘‘Release 34–34596’’).

5NYSE Rule 450(1) is comparable to the proposed

rule change. See 2 NYSE Guide, Rules of Board,

Rule 450 (CCH) ¶ 2450.

records maintained by the member, and a

letter informing the beneficial owner (or the

beneficial owner’s designated investment

adviser) of the time limit and necessity for

completing the proxy form and forwarding it

to the person soliciting proxies prior to the

expiration of the time limit in order for the

shares to be represented at the meeting. A

member shall furnish a copy of the symbols

to the person soliciting the proxies and shall

also retain a copy thereof pursuant to the

provisions of rule 17a–4 of the General Rules

and Regulations under the Securities

Exchange Act of 1934, 17 C.F.R. 240.17a–4.

Notwithstanding the provisions of this

section, a member may give a proxy to vote

any stock pursuant to the rules of any

national securities exchange to which the

member is also responsible provided that the

records of the member clearly indicate which

procedure it is following.

This section shall not apply to beneficial

owners residing outside of the United States

of America though members may voluntarily

comply with the provisions hereof in respect

to such persons if they do desire.

Section 3. A member may give a proxy to

vote any stock registered in its name if such

member holds such stock as executor,

administrator, guardian, trustee, or in a

similar representative or fiduciary capacity

with authority to vote.

A member which has in its possession or

within its control stock registered in the

name of another member and which desires

to transmit signed proxies pursuant to the

provisions of Section 2, shall obtain the

requisite number of signed proxies from such

holder of record.

Notwithstanding the foregoing,

(a) any member designated by a named

ERISA Plan fiduciary as the investment

manager of stock held as assets of the ERISA

Plan may vote the proxies in accordance with

the ERISA Plan fiduciary responsibilities if

the ERISA Plan expressly grants discretion to

the investment manager to manage, acquire,

or dispose of any plan asset and has not

expressly reserved the proxy voting right for

the named ERISA Plan fiduciary;3 and

(b) any person registered as an investment

adviser under the Investment Advisers Act of

1940 who exercises investment discretion

pursuant to an advisory contract for the

beneficial owner and has been designated in

writing by the beneficial owner to vote the

proxies for stock which is in the possession

or control of the member, may vote such

proxies.

Section 4. A member when so requested by

an issuer and upon being furnished with:

(a)[1] sufficient copies of annual reports,

information statements or other material sent

to stockholders, and

(b)[2] satisfactory assurance that it will be

reimbursed by such issuer for all out-ofpocket expenses, including reasonable

clerical expenses, shall transmit promptly to

each beneficial owner (or the beneficial

owner’s designated investment adviser) of

stock of such issuer which is in its

possession and control and registered in a

name other than the name of the beneficial

owner all such material furnished.

This section shall not apply to beneficial

owners residing outside of the United States

of America though members may voluntarily

comply with the provisions hereof in respect

to such persons if they so desire.

Section 5. For purposes of this

Interpretation, the term ‘‘designated

investment adviser’’ is a person registered

under the Investment Advisers Act of 1940

who exercises investment discretion pursuant

to an advisory contract for the beneficial

owner and is designated in writing by the

beneficial owner to receive proxy and related

materials and vote the proxy, and to receive

annual reports and other material sent to

stock holders. The written designation must

be signed by the beneficial owner; be

addressed to the member; and include the

name of the designated investment adviser.

Members who receive such a written

designation from a beneficial owner must

ensure that the designated investment

adviser is registered with the SEC pursuant

to the Investment Advisers Act of 1940 and

that the investment adviser is exercising

investment discretion over the customer’s

account pursuant to an advisory contract to

vote proxies and/or to receive proxy soliciting

material, annual reports and other material.

Members must keep records substantiating

this information. Beneficial owners have an

unqualified right at any time to rescind

designation of the investment adviser to

receive materials and to vote proxies. The

rescission must be in writing and submitted

to the member.

* * * * *

2. Procedures of the Self-Regulatory

Organization

(a) The proposed rule change was

approved by the NASD Board of

Governors at its meeting on January 16,

1995, which authorized the filing of the

rule change with the SEC. No other

action by the NASD is necessary for the

filing of the rule change. Article VII,

Section 1(a)(4) of the By-Laws permits

the Board of Governors to make

interpretations of the Rules of Fair

Practice without recourse to the

membership for approval.

(b) Questions regarding this rule filing

may be directed to John H. Pilcher,

General Counsel’s Office, at (202) 728–

8287.

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

NASD 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 these statements

may be examined at the places specified

in Item IV below. The NASD has

prepared summaries, set forth in

Sections (A), (B), and (C) below, of the

most significant aspects of such

statements.

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The NASD reviewed recent

amendments to New York Stock

Exchange (‘‘NYSE’’) rules,4 to allow a

beneficial owner of stock to designate a

registered investment adviser to vote

proxies and receive proxy and related

issuer material in lieu of the beneficial

owner. Upon review, the NASD believes

that providing beneficial owners with

the right to make this type of

designation benefits investors, and that

uniformity between NASD rules and

NYSE rules on this subject is

appropriate. The NASD also believes

that certain investment managers of

ERISA Plans in the over-the-counter

market shold be allowed to vote

proxies.5 The NASD, therefore, proposes

to amend the Board of Governors

Interpretation—Forwarding of Proxy

and Other Materials under Article III,

Section 1 of the NASD Rules of Fair

Practice (‘‘Interpretation’’) to make the

NASD rules on these subjects

substantially similar to NYSE rules.

Designated Registered Investment

Advisers

The rule change would allow a

benefical owner of any issuer’s stock to

inform an NASD member that is the

record holder of that stock that the

beneficial owner has authorized a

designated registered investment

adviser to receive and vote proxies and

to receive related issuer material in lieu

of the beneficial owner.

The rule change would provide that,

for purposes of the Interpretation, a

‘‘designated investment adviser’’ is a

person registered under the Investment

Advisers Act of 1940 who exercises

investment discretion pursuant to an

advisory contract for the beneficial

owner and has been designated in

writing by the beneficial owner to

receive and vote the proxy, and to

receive annual reports and other

material sent to stock holders. The

beneficial owner would be required to

sign a written designattion to the

member; such designation must be

addressed to the member; and such

designation must include the name of

the designated investment adviser. The

beneficial owner would have an
Federal Register / Vol. 60, No. 61 / Thursday, March 30, 1995 / Notices 16523

6Release 34–34596, supra n. 4, clarified that the

NYSE would provide certain additional guidance

regarding the NYSE rule changes under an NYSE

Information Memo. The NASD’s rule change would

contain substantially similar requirements as

described under Release 34–34596 and contained in

the NYSE Information Memo (See NYSE

Information Memo No. 94–41 (Sept. 7, 1994).

7ERISA defines the term ‘‘investment manager’’

to mean any fiduciary (other than a trustee or

named fiduciary, as defined in Section 1102(a)(2) of

Title 29): (A) Who has the power to manage,

acquire, or dispose of any asset of a plan; (B) who

is: (i) registered as an investment adviser under the

Investment Advisers Act of 1940; (ii) a bank, as

defined in that Act; or (iii) an insurance company

qualified to perform services described in

subparagraph (A) under the laws of more than one

State; and (C) has acknowledged in writing that he

is a fiduciary with respect to that plan. See 29

U.S.C. 1002 (38).

8 15 U.S.C. 78o–3.

unqualified right at any time to rescind

designation of the investment adviser to

receive materials and to vote proxies.

The rescission would have to be in

writing and submitted to the member.

The rule change would require that a

member who receives a written

designation from a beneficial owner

ensure that the beneficial owner’s

designated investment adviser is

registered under the Investment

Advisers Act of 1940; is exercising

investment discretion pursuant to an

advisory contract for the beneficial

owner; and is designated in writing by

the beneficial owner to receive and vote

proxies for stock which is in the

possession of the member. Members

would be required to keep records

substantiating this information.6

ERISA Investment Managers

The rule change would provide that

any member designated by a named

ERISA Plan fiduciary as the investment

manager 7 of stock held as assets of the

ERISA Plan may vote the proxies in

accordance with the ERISA Plan

fiduciary responsibilities of the ERISA

Plan expressly grants discretion to the

investment manager to manage, acquire,

or dispose of any plan asset, and has not

expressly reserved the proxy voting

right for the named ERISA Plan

fiduciary.

The NASD believes that the proposed

rule change is consistent with the

provisions of Section 15A(b)(6) of the

Act 8 in that the rule change will benefit

investors by: (i) Providing investor with

the ability to designate their registered

investment advisers to receive and vote

their proxies and to receive other

material; (ii) providing authority to

certain investment managers of ERISA

Plans to receive and vote proxies and

(iii) providing desired uniformity

between NASDA rules and NYSE rules

on such proxy procedures.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD does not believe that the

proposed rule change will result in any

burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act, as amended.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants, or Others

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may designate up to

90 days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding or

(ii) as to which the self-regulatory

organization consents, the Commission

will:

A. By order approve such proposed

rule change, or

B. institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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 inspection and copying in

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to SR–NASD–

95–06 and should be submitted by April

20, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority, 17 CFR 200.30–3(a)(12).

[FR Doc. 95–7837 Filed 3–29–95; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–20967; 811–4355]

Kidder, Peabody Tax-Free Income

Fund; Notice of Application

March 24, 1995.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of application for

deregistration under the Investment

Company Act of 1940 (the ‘‘Act’’).

APPLICANT: Kidder, Peabody Tax-Free

Income Fund.

RELEVANT ACT SECTION: Section 8(f).

SUMMARY OF APPLICATION: Applicant

requests an order declaring that it has

ceased to be an investment company.

FILING DATE: The application was filed

on March 7, 1995.

HEARING OR NOTIFICATION OF HEARING: An

order granting the application will be

issued unless the SEC orders a hearing.

Interested persons may request a

hearing by writing to the SEC’s

Secretary and serving applicant with a

copy of the request, personally or by

mail. Hearing requests should be

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

April 18, 1995 and should be

accompanied by proof of service on

applicant, in the form of an affidavit or,

for lawyers, a certificate of service.

Hearing requests should state the nature

of the writer’s interest, the reason for the

request, and the issues contested.

Persons may request notification of a

hearing by writing to the SEC’s

Secretary.

ADDRESSES: Secretary, SEC, 450 5th

Street NW., Washington, D.C. 20549.

Applicant, 60 Broad Street, New York,

New York 10004.

FOR FURTHER INFORMATION CONTACT:

Deepak T. Pai, Staff Attorney, at (202)

942–0574, or Robert A. Robertson,

Branch Chief, at (202) 942–0564

(Division of Investment Management,

Office of Investment Company

Regulation).

SUPPLEMENTARY INFORMATION:

The following is a summary of the

application. The complete application

may be obtained for a fee at the SEC’s

Public Reference Branch.

Applicant’s Representations:

1. Applicant is an open-end

management investment company

organized as a Massachusetts business

trust. On July 19, 1985, applicant filed

a notification of registration pursuant to

section 8(b) of the Act and a registration

statement pursuant to the Securities Act

of 1933. The registration statement

became effective on November 22, 1985,

and applicant commenced the initial

public offering of its National Tax-Free