27120 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices

2. Applicants request an exemption

from section 12(d)(1) because the Public

Funds in the aggregate will own 100%

of the stock of the Foreign Securities

Fund, thus any one Public Fund’s

investment in the Foreign Securities

Fund may represent more than 5% of

the Public Fund’s total assets.

Applicants believe that the requested

exemption will not implicate any of the

abuses that section 12(d)(1) was

intended to prevent. For example, the

concern that the Public Funds might

exercise undue influence over the

management of the Foreign Securities

Fund is not present because all of the

Funds are advised by the Advisers.

Moreover, because the Advisers will be

paid no advisory fee by the Foreign

Securities Fund and because the

Advisers are under common control,

there will be no incentive for any Public

Fund to assert undue control over the

Foreign Securities Fund. Furthermore,

the concern that large redemptions

could disrupt the orderly management

of the Foreign Securities Fund will not

be a problem because the Advisers will

be in a position to anticipate

redemption needs, and the costs

associated with large redemptions of

Foreign Securities Fund shares would

be mitigated by the ability of the Fund

to redeem its shares in kind. In addition,

the Foreign Securities Fund will not

cause investors in the Public Funds to

incur two layers of costs. The Foreign

Securities Fund will pay no advisory

fee, and its shares will not be subject to

any sales load or rule 12b–1 fee.

3. Applicants also request an

exemption from section 17(a) of the Act,

which prohibits certain purchases and

sales of securities between investment

companies and their affiliated persons,

as defined in section 2(a)(3) of the Act.

VKACAM is an affiliated person of each

of the Public Funds its advises, and

Advisory Corp, is an affiliated person of

the Foreign Securities Fund and of each

Public Fund it advises. In addition, each

of Advisory Corp. and VKACAM is an

affiliated person of the other by reason

of being under common control. To the

extent that the Funds may be deemed to

be under common control, each Fund

would be an affiliated person of each

other Fund. Accordingly, purchases or

sales of securities between the Foreign

Securities Fund and a Public Fund may

violate section 17(a).

4. Sections 6(c) and 17(b) of the Act

set forth the standards for exempting a

series of transactions from section 17(a).

Under section 17(b), the terms of any

such transaction must be reasonable and

fair and must not involve overreaching

on the part of any person, the

transaction must be consistent with the

policy of each investment company

concerned, and the transaction must be

consistent with the general purposes of

the Act. In addition, under section 6(c),

the exemption must be necessary or

appropriate in the public interest,

consistent with the protection of

investors, and consistent with the

purposes fairly intended by the policy

and provisions of the Act.

5. Applicants believe that the

proposed transactions meet the

standards for relief under sections 6(c)

and 17(b). Applicants contend that the

terms of the transactions between the

Foreign Securities Fund and the Public

Funds are reasonable and fair and do

not involve overreaching. The

consideration paid and received for the

purchase and redemption of Foreign

Securities Fund shares will be based on

the net asset value of the Foreign

Securities Fund. The Foreign Securities

Fund will not pay an advisory fee, and

there will be no sales load or other

charge associated with distribution of its

shares. Applicants believe that the

transactions are consistent with the

policies of the Public Funds and the

Foreign Securities Fund. The Public

Funds’ investments in the Foreign

Securities Fund, and the Foreign

Securities Fund’s issuance of shares,

will be in accordance with each Fund’s

investment restrictions and policies.

Applicants also believe that the

transactions are consistent with the

general purposes of the Act. Section

17(a) was intended to prohibit affiliated

persons from furthering their own

interests by, for example, selling

property to an investment company at

less than fair value. Applicants believe

that their proposal does not present

those concerns.

Applicants’ Conditions

Applicants agree that the following

conditions will govern transactions

under the requested order:

1. The Public Funds and the Foreign

Securities Fund will be part of the same

‘‘group of investment companies,’’ as

defined in rule 11a–3 under the Act.

2. The Foreign Securities Fund shall

not acquire securities of any other

investment company in excess of the

limits contained in section 12(d)(1)(A)

of the Act.

3. A majority of the trustees of the

Public Funds will not be ‘‘interested

persons’’ (as defined in section 2(a)(19)

of the Act).

4. Advisory Corp. will not charge any

advisory fee for managing the Foreign

Securities Fund.

5. Any sales charges or service fees

charged with respect to securities of the

Public Funds, when aggregated with any

sales charges or service fees paid by the

Public Funds with respect to securities

of the Foreign Securities Fund, shall not

exceed the limits set forth in Article III,

section 26, of the Rules of Fair Practice

of the National Association of Securities

Dealers, Inc.

6. Applicants agree to provide the

following information, in electronic

format, to the Chief Financial Analyst of

the SEC’s Division of Investment

Management: monthly average total

assets for each Public Fund’s portfolio

and the Foreign Securities Fund’s

portfolio; monthly purchases and

redemptions (other than by exchange)

for each Public Fund’s portfolio and the

Foreign Securities Fund’s portfolio;

annual expense ratios for each Public

Fund’s portfolio and the Foreign

Securities Fund’s portfolio; and a

description of any vote taken by the

shareholders of the Foreign Securities

Fund, including a statement of the

percentage of votes cast for and against

the proposal by the Public Funds and by

the other shareholders of the Foreign

Securities Fund, if any. Such

information will be provided as soon as

reasonably practicable following each

fiscal year-end of each of the Public

Funds (unless the Chief Financial

Analyst shall notify applicants in

writing that such information need no

longer be submitted).

For the SEC, by the Division of Investment

Management, under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–13456 Filed 5–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–21975; File No. 812–9696]

Washington National Insurance

Company, et al.

May 22, 1996.

AGENCY: Securities and Exchange

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

ACTION: Notice of Application for an

Order under the Investment Company

Act of 1940 (the ‘‘1940 Act’’).

APPLICANTS: Washington National

Insurance Company (‘‘Washington

National’’) and Separate Account I of

Washington National Insurance

Company (the ‘‘Separate Account’’).

RELEVANT 1940 ACT SECTIONS: Order

requested under Section 6(c) granting

exemptions from the provisions of

Sections 26(a)(2)(C) and 27(c)(2).

SUMMARY OF APPLICATION: Applicants

seek an order exempting Washington

National and the Separate Account,

which will be reorganized from a

managed separate account to a separate
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices 27121

account organized as a unit investment

trust (the ‘‘Continuing Separate

Account’’), from the provisions of

Sections 26(a)(2)(C) and 27(c)(2) of the

1940 Act, to the extent necessary to

permit Washington National to deduct a

mortality risk charge from the

Continuing Separate Account.

FILING DATE: The application was filed

July 27, 1995, and amended on

November 15, 1995, February 8, 1996,

and April 26, 1996.

HEARING OF 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

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 17, 1996, 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 requester’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, SEC, 450 5th

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

Applicants, Craig R. Edwards, Esq.,

Washington National Insurance

Company, 300 Tower Parkway,

Lincolnshire, Illinois 60069–3665.

FOR FURTHER INFORMATION CONTACT:

Mark C. Amorosi, Attorney, or Wendy

Finck Friedlander, Deputy Chief, at

(202) 942–0670, Office of Insurance

Products (Division of Investment

Management).

SUPPLEMENTARY INFORMATION: Following

is a summary of the application; the

complete application is available for a

fee from the Public Reference Branch of

the Commission.

Applicants’ Representations

1. Washington National, the sponsor

and depositor of the Separate Account,

is a stock life insurance company

organized under the laws of Illinois.

Washington National is a wholly-owned

subsidiary of Washington National

Corporation, a holding company

incorporated in Delaware in 1968 that

acquired Washington National in 1968.

2. The Separate Account was

established by Washington National as a

separate investment account to fund

Washington National’s tax-qualified and

non-tax-qualified retirement benefits

offered through group and individual

variable annuity contracts (the

‘‘Contracts’’). The Separate Account

meets the definition of a ‘‘separate

account’’ under the 1940 Act and is

registered under the 1940 Act as an

open-end management investment

company. The Separate Account is

divided into three sub-accounts (the

‘‘Sub-Accounts’’), the Bond SubAccount, the Short-Term Portfolio SubAccount and the Stock Sub-Account.

Washington National is the investment

adviser for the Separate Account.

Washington National has contracted

with NBD Bank, an Illinois banking

corporation, to act as sub-adviser for

and to manage the investments of the

Stock Sub-Account.

3. Applicants state that the Contracts

are designed to provide retirement

benefits under a variety of retirement

programs. Although payments under

outstanding Contracts continue to be

received, Washington National no

longer offers the Contracts for sale.

Purchase payments under a Contract

may be allocated to the fixed account or

the variable account. The Contract also

provides for, among other things: (a) a

variety of annuity payout options

beginning on the annuity

commencement date; (b) surrender of

the Contract prior to its maturity date

for a cash payment representing all or

part of the Contract’s value; and (c) a

death benefit payable if the annuitant

dies before the maturity date.

4. Washington National Equity

Company (‘‘WNEC’’), formerly a

registered broker-dealer which was a

wholly-owned subsidiary of Washington

National, served as the underwriter for

the Separate Account. Applicants state

that WNEC is no longer in existence.

5. Various fees and charges are

deducted under the Contracts. A daily

mortality risk charge (the ‘‘annuity rate

guarantee charge’’) equal to an effective

annual rate of 0.80% of the average net

assets of the Separate Account is

deducted to compensate Washington

National for bearing certain mortality

risks under the Contracts. The mortality

risk arises from Washington National’s

obligation to make annuity payments

regardless of the mortality experience of

persons receiving such payments.

Washington National states that the

mortality risk charge may not be

increased under the Contract. If the

deductions are insufficient to cover the

actual cost of the mortality risk,

Washington National will bear the loss.

Conversely, if the deductions prove

more than sufficient, the excess will be

a profit to Washington National.

6. Applicants state that currently an

investment management charge is made

daily from the Separate Account to

Washington National which is equal on

an annual basis to 0.50% of the average

net assets of the Separate Account.

Washington National pays NBD Bank,

the sub-adviser for the Stock SubAccount, a fee of 0.40% of the average

net assets of the Stock Sub-Account.

7. A daily asset-based financial

accounting service charge equal to an

effective annual rate of 0.35% of the

average net assets of the Separate

Account is deducted to reimburse

Washington National for providing

financial accounting services to the

Separate Account, including

preparation and maintenance of all

accounting, bookkeeping, financial and

other statements for the conduct of the

business and operations of the Separate

Account. Applicants state that this

charge is guaranteed not to increase and

is designed to cover the actual expenses

incurred in providing these services.

Washington National does not expect or

intend to profit from the charge which

will be deducted in reliance on Rule

26a–1.

8. An annual contract maintenance

charge of $30 is deducted from the

Contract value on each Contract

anniversary or on the date of full

withdrawal or election of a settlement

option if that date is not the Contract

anniversary. The charge is deducted on

a pro rata basis from the Contract value

of each Sub-Account and the fixed

account. The charge is not guaranteed,

may be changed in the future and may

be deducted more frequently than

annually. Applicants represent that this

charge will be deducted in reliance on

Rule 26a-1 and is not greater than the

cost of the bookkeeping and other

administrative services to be provided

for one year.

9. The Separate Account currently

pays all taxes, interest, brokerage fees

and commissions, fees and expenses of

legal counsel and independent auditors,

custodian fees and expenses, expenses

associated with meetings of the Contract

owners, expenses incurred in the

preparation, printing and distribution of

reports and prospectuses by the

Separate Account to its current owners,

fees of and expenses incurred by

directors of the Separate Account who

are not Washington National’s directors,

officers or employees, fees and expenses

associated with the approval,

qualification or registration of the

Contracts, extraordinary expenses if

permitted by applicable laws and

regulations, and all other fees and

expenses incurred by or on behalf of the

Separate Account which are not borne

by Washington National (collectively,

‘‘Separate Account Expenses’’). During

1995, charges for the Separate Account

Expenses were made against the assets

of each Sub-Account of the Separate

Account at an annual rate of 0.20%.
27122 Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices

10. Although Washington National

currently pays premium taxes,

Washington National reserves the right

to deduct premium taxes from purchase

payments or to charge them against the

Contracts to which they are attributable

in the future. Premium taxes currently

range up to 3.5%.

11. No sales charge is deducted from

purchase payments. However, certain

full or partial surrenders are subject to

a contingent deferred sales charge

(‘‘Withdrawal Charge’’). The

Withdrawal Charge covers expenses

relating to the sale of the Contracts. If

the proceeds received from the

Withdrawal Charge are not sufficient to

pay such expenses, then Washington

National will pay the excess out of its

general assets, which may include

proceeds derived from the annuity rate

guarantee charge.

The Withdrawal Charge is made at the

rate of 6% of the amount withdrawn

and is deducted from the amount

withdrawn. In calculating the

Withdrawal Charge, any amount which

the Contract owner withdraws will be

treated as a withdrawal of purchase

payments until the Contract owner has

withdrawn the total amount of all

purchase payments received within 72

months of the date of withdrawal. The

Withdrawal Charge applies to purchase

payments on a first-in, first-out basis.

The total Withdrawal Charge will never

exceed 6% of the total purchase

payments.

Washington National will not deduct

the Withdrawal Charge: (a) on the first

10% of the Contract value withdrawn

from a Contract during any Contract

year (determined as of the date of the

first withdrawal during the year); (b) on

purchase payments received more than

72 months prior to the date of

withdrawal; (c) if the amount

withdrawn is applied to (i) a settlement

option after the Contract has been in

effect for five or more years, or (ii)

settlement options 2, 5 or 6 (as defined

in the Contract) at any time; and (d) if

the annuitant dies.

12. Pursuant to an Asset Transfer

Agreement and Plan of Reorganization

(the ‘‘Reorganization Agreement’’) and

subject to approval by persons entitled

to vote in respect of the Separate

Account (‘‘Separate Account Voters’’),

the Separate Account will be

restructured as a unit investment trust

(the ‘‘Reorganization’’). Applicants state

that the unit investment trust will be

divided into three sub-accounts, each of

which will invest exclusively in shares

of a corresponding series of the Scudder

Variable Life Investment Fund (the

‘‘Fund’’) whose investment objective is

substantially the same as the current

investment objective of the relevant

Sub-Account of the Separate Account.

In connection with the Reorganization,

the assets of each Sub-Account of the

Separate Account will be transferred to

the corresponding portfolio of the Fund

in exchange for shares of the portfolio

of equal value. Applicants state that the

Reorganization is intended to counteract

the trend of net redemptions in the

Separate Account which limits

investment flexibility and threatens the

ability of the Separate Account to best

achieve its investment objectives.

Applicants also state that the

Reorganization will benefit Contract

owners by providing economies of scale

and simplifying record keeping.

13. The Fund was organized as a

Massachusetts business trust on March

15, 1985, for the purpose of serving as

the funding vehicle for variable annuity

contracts and variable life insurance

policies to be offered by the separate

accounts of certain life insurance

companies. The Fund has six separate

investment portfolios: the Bond

Portfolio, the Money Market Portfolio;

the Capital Growth Portfolio; the

Growth and Income Portfolio; the

Balanced Portfolio; and the

International Portfolio. Only the Bond

Portfolio, the Money Market Portfolio

and the Capital Growth Portfolio of the

Fund will be involved in the

Reorganization. Scudder Investor

Services, Inc. serves as the underwriter

for the Fund.

14. The Fund has adopted a plan for

financing distribution expenses

pursuant to Rule 12b–1 under the 1940

Act for a newly authorized class of

shares (‘‘Class B’’ shares). Applicants

state that the Continuing Separate

Account will, at the time of the

Reorganization and thereafter, invest

only in a class of the Fund’s shares for

which such a Rule 12b–1 plan has not

been adopted (‘‘Class A’’ shares).

15. Pursuant to an investment

advisory agreement with the Fund, and

subject to the supervision and approval

of the Fund’s Board of Trustees,

Scudder, Stevens & Clark, Inc. (the

‘‘Adviser’’) renders investment advisory

services to the Fund’s portfolios. Under

the investment advisory agreement, the

Adviser charges the Fund an investment

management fee with respect to the

Bond Portfolio at the annual rate of

0.475% of its average net assets, with

respect to the Money Market Portfolio at

the annual rate of 0.370% of its average

net assets, and with respect to the

Capital Growth Portfolio at the annual

rate of 0.475% of its average net assets.

In addition, the Fund bears certain

expenses for clerical, accounting and

certain other services provided to the

Fund. In 1995, these other expenses

were deducted at an annual rate of

0.085%, 0.130% and 0.095% of the

average net assets of the Bond Portfolio,

the Money Market Portfolio and the

Capital Growth Portfolio, respectively.

16. Applicants state that Washington

National will assume all costs to be

incurred by the Separate Account in

effecting the Reorganization. In

exchange for the assets of each of the

Sub-Accounts of the Separate Account,

shares of the corresponding portfolio of

the Fund will be issued. Shares of the

Capital Growth Portfolio will be issued

in return for the assets of the Stock SubAccount, shares of the Bond Portfolio

will be issued for the assets of the Bond

Sub-Account, and shares of the Money

Market Portfolio will be issued for the

assets of the Short-Term Portfolio SubAccount.

17. The number of shares of each

portfolio to be issued in connection

with the Reorganization to the

respective corresponding sub-account of

the Continuing Separate Account will

be determined by dividing the value of

the net assets to be transferred from the

particular Sub-Account of the Separate

Account as of the business day

immediately preceding the effective

date of the Reorganization by the net

asset value per share of the

corresponding portfolio of the Fund.

18. Applicants state that, after the

Reorganization, the investment

management fee and the charge for

Separate Account Expenses will not be

deducted from the Continuing Separate

Account. Applicants state, however,

that the portfolios of the Fund in which

the sub-accounts of the Continuing

Separate Account will invest after the

Reorganization will deduct an

investment management fee and a

charge for operating expenses of each

portfolio of the Fund.

19. Applicants state that the

Reorganization will not have any

adverse economic impact on the

Contract owners’ interests under the

Contracts. Applicants state that the

overall level of fees and charges borne,

directly or indirectly, by Contract

owners will not be materially greater

(and generally should be lower)

immediately after the Reorganization

than immediately before it. The

investment management fee for each of

the three available portfolios of the

Fund is lower than the current rate

charged to any of the Sub-Accounts of

the Separate Account. Applicants state

that in 1995 the sum of the investment

management fee and the other operating

expenses deducted from each of the

three portfolios of the Fund (0.56% for

the Bond Portfolio, 0.50% for the Money
Federal Register / Vol. 61, No. 105 / Thursday, May 30, 1996 / Notices 27123

1 15 U.S.C. § 78s(b)(1).

2 17 CFR 240.19b–4.

3CVRs are unsecured obligations of an issuer that

provide for a possible cash payment upon maturity

depending upon the price performance of an

affiliate’s equity security.

4ELDS are intermediate-term (two to seven

years), non-convertible, hybrid securities, the value

of which is based, at least in part, on the value of

another issuer’s common stock or other equity

security. ELDS may pay periodic interest or may be

issued as zero-coupon instruments with no

payments to holders prior to maturity. Moreover,

ELDS may be subject to a ‘‘cap’’ on the maximum

principal amount to be repaid to holders upon

maturity and, additionally, may feature a ‘‘floor’’ on

the minimum principal amount to be repaid to

holders upon maturity.

5There are additional standards for several of

these securities. For example, ELDS relating to any

underlying U.S. security may not exceed five

percent of the total outstanding shares of such

underlying security.

Market Portfolio and 0.57% for the

Capital Growth Portfolio) is less than

the 0.70% sum of the investment

management fee and the deduction for

other expenses currently imposed

against the assets of the three

corresponding Sub-Accounts of the

Separate Account.

20. The application states that a

Special Meeting of Separate Account

Voters was held on March 12, 1996. The

proposed transactions were approved at

the Special Meeting by the vote of a

majority of the outstanding voting

securities with respect to each SubAccount of the Separate Account.

Applicants state that on September 22,

1995, a registration statement was filed

on Form N–14 in connection with the

Reorganization.

Applicants’ Legal Analysis

1. Section 6(c) of the 1940 Act

authorizes the Commission to grant an

exemption from any provision, rule or

regulation of the 1940 Act to the extent

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 1940 Act. Sections

26(a)(2)(C) and 27(c)(2) of the 1940 Act,

in relevant part, prohibit a registered

unit investment trust, its depositor or

principal underwriter, from selling

periodic payment plan certificates

unless the proceeds of all payments,

other than sales loads, are deposited

with a qualified bank and held under

arrangements which prohibit any

payment to the depositor or principal

underwriter except a reasonable fee, as

the Commission may prescribe, for

performing bookkeeping and other

administrative duties normally

performed by the bank itself.

2. Applicants request exemptions

from Sections 26(a)(2)(C) and 27(a)(2) of

the 1940 Act to the extent necessary to

permit the deduction of the 0.80%

mortality risk charge from the assets of

the Continuing Separate Account.

Applicants represent that the annuity

rate guarantee charge under the

Contracts is within the range of industry

practice for comparable annuity

contracts issued by other insurance

companies. This representation is based

upon Washington National’s analysis of

publicly available information about

such other contracts, taking into

consideration the particular annuity

features of the comparable contracts,

including such factors as current charge

levels, charge level or annuity rate

guarantees, the manner in which the

charges are imposed and the markets in

which the contracts have been offered.

Applicants state that Washington

National will maintain a memorandum,

available to the Commission upon

request, setting forth in detail the

products analyzed in the course of, and

the methodology and results of, its

review.

3. Applicants state that amounts

derived from the annuity rate guarantee

charge that exceed the expenses that the

deductions were designed to cover will

be offset by aggregate expenses of

Washington National, which will

include any distribution expenses not

reimbursed by the contingent deferred

sales charge. In such circumstances, a

portion of the annuity rate guarantee

charge could be viewed as providing for

a portion of the costs relating to

distribution of the Contracts.

4. Applicants state that there is

currently no distribution financing

arrangement for the Contracts because

no new Contracts are being distributed.

Nevertheless, Applicants represent that

there is a reasonable likelihood that the

distribution financing arrangement for

the Continuing Separate Account (to the

extent that such an arrangement may be

deemed to exist) will benefit the

Continuing Separate Account and the

Contract owners. Applicants state that

Washington National will maintain a

memorandum, available to the

Commission upon request, setting forth

in detail the basis for this conclusion.

5. Washington National represents

that the assets of the Continuing

Separate Account will be invested only

in a management investment company

which undertakes, in the event it should

adopt a plan for financing distribution

expenses pursuant to Rule 12b–1 under

the 1940 Act, to have such plan

formulated and approved by a board of

directors, the majority of whom are not

‘‘interested persons’’ of the management

investment company within the

meaning of Section 2(a)(19) of the 1940

Act.

Conclusion

For the reasons set forth above,

Applicants represent that the

exemptions requested are necessary and

appropriate in the public interest and

consistent with the protection of

investors and the purposes fairly

intended by the policy and provisions of

the 1940 Act.

For the Commission, by the Division of

Investment Management, pursuant to

delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–13457 Filed 5–29–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37238, File No. SR–NYSE–

96–06]

Self-Regulatory Organizations; New

York Stock Exchange, Inc.; Order

Granting Approval to Proposed Rule

Change Relating to Continued Listing

Standards for Specialized Securities

May 22, 1996.

On March 18, 1996, the New York

Stock Exchange, Inc. (‘‘NYSE’’ or

‘‘Exchange’’) submitted to the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

establish continued listing criteria for

certain specialized securities.

The proposed rule change was

published for comment in Securities

Exchange Act Release No. 37056 (Apr.

1, 1996), 61 FR 15547 (Apr. 8, 1996). No

comments were received on the

proposal.

Currently, the NYSE has listing

standards for certain specialized

securities: stock warrants, foreign

currency warrants and currency index

warrants, stock index warrants,

contingent value rights (‘‘CVRs’’) 3 other

securities, and equity-linked debt

securities (‘‘ELDS’’).4 The uniform

listing standards for specialized

securities require one million shares

outstanding, 400 holders, $4 million

aggregate market value and a minimum

life of one year.5

With this rule proposal, the Exchange

proposes to establish uniform continued

listing criteria for these specialized

securities in paragraphs 801 and 802 of

the Exchange’s Listed Company Manual

(‘‘Manual’’) to correspond to the initial

listing standards. The NYSE would

consider delisting these specialized

securities when the number of publiclyheld shares is less than 100,000, the