Federal Register / Vol. 61, No. 119 / Wednesday, June 19, 1996 / Notices 31193

information is necessary for the proper

performance of the functions of the

agency, including whether the

information shall have practical utility;

(b) the accuracy of the agency’s estimate

of the burden of the proposed collection

of information; (c) ways to enhance the

quality, utility, and clarity of the

information to be collected; and (d)

ways to minimize the burden of the

collection of information on

respondents, including through the use

of automated collection techniques or

other forms of information technology.

Consideration will be given to

comments and suggestions submitted in

writing within 60 days of this

publication.

Direct your written comments to

Michael E. Bartell, Associate Executive

Director, Office of Information

Technology, Securities and Exchange

Commission, 450 5th Street, N.W.

Washington, DC 20549.

Dated: June 11, 1996.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–15450 Filed 6–18–96; 8:45 am]

BILLING CODE 8010–01–M

Submission for OMB Review;

Comment Request

Upon Written Request, Copies Available

From: Securities and Exchange

Commission, Office of Filings and

Information Services, Washington, DC

20549

Extension:

Rule 17a–11

SEC File No. 270–94

OMB Control No. 3235–0085

Notice is hereby given that pursuant

to the Paperwork Reduction Act of 1995

(44 U.S.C. 3501 et seq.), the Securities

and Exchange Commission

(‘‘Commission’’) has submitted to the

Office of Management and Budget

requests for approval of extension on

the following rule:

Rule 17a–11 requires broker-dealers to

give notice when certain specified

events occur. Specifically, the rule

requires broker-dealers to send notice

promptly (but within 24 hours) after the

broker-dealer’s aggregate indebtedness

is in excess of 1,200 percent of its net

capital, its net capital is less than 5

percent of aggregate debt items or its

total net capital is less than 120 percent

of the broker-dealer’s required

minimum net capital. In addition,

broker-dealers are required to give

notice if they fail to make and keep

current books and records required by

Rule 17a–3 or if they discover any

material inadequacy as defined in Rule

17a–5(g).

The notice required by the rule alerts

the Commission and self-regulatory

organizations (‘‘SROs’’), which have

oversight responsibility over brokerdealers, to those firms having financial

or operational problems.

Because broker-dealers are required to

file pursuant to Rule 17a–11 only when

certain specified events occur, it is

difficult to develop a meaningful figure

for the cost of compliance with Rule

17a–11. It is anticipated that

approximately 650 broker-dealers will

spend 1 hour per year complying with

Rule 17a–11. The total cost is estimated

to be approximately 650 hours. With

respect to those broker-dealers that must

give notice under Rule 17a–11, the cost

is approximately $10 per response for a

total annual expense for all brokerdealers of $6,500.

General comments regarding the

estimated burden hours should be

directed to the Desk Officer for the

Securities and Exchange Commission at

the address below. Any comments

concerning the accuracy of the

estimated average burden hours for

compliance with Commission rules and

forms should be directed to Michael E.

Bartell, Associate Executive Director,

Office of Information Technology,

Securities and Exchange Commission,

450 Fifth Street, N.W., Washington, D.C.

20549 and Desk Officer for the

Securities and Exchange Commission,

Office of Information and Regulatory

Affairs, Office of Management and

Budget, Room 3208, New Executive

Office Building, Washington, D.C.

20503.

Dated: June 11, 1996.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 96–15574 Filed 6–18–96; 8:45 am]

BILLING CODE 8010–01–M

[Rel. No. IC–22014; No. 812–9968]

Fortis Benefits Insurance Company, et

al.; Notice of Application for an Order

Pursuant to the Investment Company

Act of 1940

June 13, 1996.

AGENCY: Securities and Exchange

Commission (‘‘Commission’’).

ACTION: Notice of application for an

order pursuant to the Investment

Company Act of 1940 (the ‘‘1940 Act’’).

APPLICANTS: Fortis Benefits Insurance

Company (‘‘Fortis Benefits’’), Variable

Account C of Fortis Benefits Insurance

Company (‘‘Fortis Benefits Account’’)

and Fortis Investors, Inc. (‘‘Investors’’).

RELEVANT 1940 ACT SECTIONS: Order

requested pursuant to Section 6(c) of the

1940 Act granting exemptions from the

provisions of Sections 2(a)(32), 22(c),

27(a)(3), 27(c)(1) and 27(d) thereof, and

Rules 22c–1, 6e–3(T)(b)(12), 6e–

3(T)(b)(13) and 6e–3(T)(d)(1)(ii)

thereunder.

SUMMARY OF APPLICATION: Applicants

seek exemptive relief to the extent

necessary to permit them to issue

flexible premium surviorship variable

life insurance policies (‘‘Policies’’) that

enable Fortis Benefits to: (1) credit the

Policy owner’s account with ‘‘premium

based bonuses’’ and ‘‘Policy value

bonuses’’; (2) include in the surrender

charge of the Policies any premium tax

charge not previously recovered; and (3)

deduct sales charges in a manner that

may result in such deductions taken in

one period being considered to be

higher than those taken in a prior

period.

FILING DATE: The application was filed

on January 30, 1996, and amended on

June 11, 1996.

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

the Commission and serving Applicants

with a copy of the request, personally or

by mail. Hearing requests must be

received by the Commission by 5:30

p.m. on July 8, 1996, and must 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, 450 5th Street,

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

Applicants, c/o Douglas R. Lowe, Esq.,

Fortis Benefits Insurance Company, 500

Bielenberg Drive, Woodbury, Minnesota

55125.

FOR FURTHER INFORMATION CONTACT:

Kevin M. Kirchoff, Senior Counsel, or

Patrice M. Pitts, Special Counsel, Office

of Insurance Products (Division of

Investment Management), at (202) 942–

0670.

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. Fortis Benefits, a Minnesota

corporation, is qualified to sell life

insurance in the District of Columbia

and in all states except New York. It is
31194 Federal Register / Vol. 61, No. 119 / Wednesday, June 19, 1996 / Notices

an indirect, wholly-owned subsidiary of

Fortis, Inc., which is itself indirectly

owned by N.V. AMEV (50 percent) and

by Compaignie Financiere et de

Reassurance de Group AG (50 percent).

2. Fortis Benefits established the

Fortis Benefits Account under the laws

of the State of Minneota as a segregated

investment account for the purpose of

funding variable life insurance policies,

including the Policies. The Fortis

Benefits Account is registered as a unit

investment trust under the 1940 Act,

and currently consists of twelve

subaccounts (‘‘Subaccounts’’), each of

which invests exclusively in shares of a

corresponding portfolio of Fortis Series

Fund, Inc., a registered management

investment company.

3. Investors, an indirect whollyowned subsidiary of Fortis, Inc., is the

principal underwriter for the Policies.

Investors is registered as a broker-dealer

under the Securities Exchange Act of

1934, and is a member of the National

Association of Securities Dealers, Inc.

4. The Policies are last survivor

flexible premium variable life insurance

policies. Under the Policy a death

benefit is payable upon the death of the

second to die of two insured persons

named in the application for the Policy.

The Policy permits the Policy owner to

select between, and change from time to

time, two death benefit options. Under

one of these options (‘‘Option B’’), but

not the other, the amount at work

earning a return for the Policy owner

(the ‘‘Policy value’’) is added to the

Policy’s ‘‘face amount’’ of insurance

coverage for purposes of computing the

death benefit. The Policy owner also

may change the face amount from time

to time, subject to certain restrictions.

5. The Policy owner may allocate the

Policy value to one or more of the

Subaccounts and/or to the general

account of Fortis Benefits.

6. The Policy may be fully

surrendered at any time for its

‘‘surrender value,’’ and, generally after

the first Policy year, the Policy owner

may make a partial withdrawal of

surrender value once a year. The Policy

owner also may take out Policy loans

and has considerable flexibility to vary

the frequency and amount of premium

payments.

7. The Policy generally is guaranteed

not to lapse until 10 years, 20 years, or

the Policy anniversary following the

younger insured’s age 85 (subject to

certain limitations if the younger

insured is age 65 or more at issue or if

either insured is in a substandard

mortality risk class), if certain minimum

premium payments are made.

8. Unless prohibited by applicable

state insurance law, Fortis Benefits

intends to pay a premium based bonus

on the last day of the 7th and each

subsequent Policy year. The amount of

the bonus is a percentage of the lesser

of (a) or (b) (below), the result divided

by the number of years that the Policy

has been in force, where, as of the date

of the credit:

(a) is the sum of all premiums paid

under the Policy less any withdrawals

and loans taken out by the Policy

owner; and

(b) is the sum of all ‘‘Maximum Bonus

Premiums’’ to date.

For this purpose, a Maximum Bonus

Premium generally is the hypothetical

estimated monthly premium payment

that would keep the Policy in force to

the younger insured’s age 85, without

regard to substandard risks or riders. A

face amount increase or decrease

requested by the Policy owner will

cause an increase or decrease,

respectively, in the size of future

Maximum Bonus Premiums.

9. The applicable percentage depends

on the age of the younger insured at

issue and the number of years the Policy

has been in force. The current

percentages and durations are as

follows:

Age of younger insured at issue

End of policy year

0–6 7 8 9+

Percentages

18–50 ......................... 0 2 4 4

51–60 ......................... 0 2 4 7

61–70 ......................... 0 5 7 10

71–85 ......................... 0 5 5 5

Premium based bonuses at the

foregoing rates are not guaranteed, and

Fortis Benefits reserves the right to

reduce them, subject to guaranteed

minimum rates. The guaranteed rates

are as follows, and are guaranteed only

to the extent allowed by state insurance

law:

Age of younger insured at issue

End of policy year

0–6 7 8 9+

Percentages

18–50 ......................... 0 2 4 4

51–60 ......................... 0 2 4 7

61–70 ......................... 0 2 4 7

71–85 ......................... 0 2 4 5

No further premium based bonuses

are credited to a Policy subsequent to

the time that the younger insured

reaches age 100.

10. All premium based bonuses will

be allocated among the general account

and the Subaccounts on a pro rata basis:

i.e., in proportion to the amount of

Policy value in each, exclusive of

amounts transferred to the general

account as a result of Policy loans. This

is referred to hereinafter as the

‘‘unloaded policy value.’’ Following

such allocation, these amounts will be

credited with investment performance,

and otherwise will be treated the same

as any other amounts of Policy value.

11. Unless prohibited in a state by

applicable insurance law, each Policy

will be credited with an increase in

Policy value in the form of a ‘‘Policy

value bonus’’ paid by Fortis Benefits on

each monthly Policy anniversary. The

Policy value bonus is computed as a

percentage of the unloaned policy value

after the ‘‘Monthly Deduction,’’

described below. The percentage

depends on the face amount ‘‘band,’’ the

death benefit option in effect, the

amount of surrender value, and the

length of time the Policy has been in

force as of the date of the bonus. The

percentages, expressed as annual rates,

are as follows:

ANNUAL RATE OF POLICY VALUE BONUSES AS A PERCENT OF UNLOANED POLICY VALUE 1

Surrender value on date of monthly bonus

Band 1 & 2 Band 3 Band 4

Policy

years 1–19

Years 20

and later

Policy

years 1–19

Years 20

and later

Policy

years 1–19

Years 20

and later

$0–$9,999 ..................................................................................... .00 .35 .00 .35 .00 .35

$10,000–$49,000 .......................................................................... .00 .35 .05 .40 .05 .40

$50,000–$99,000 .......................................................................... .05 .40 .10 .45 .10 .45

$100,000 or more ......................................................................... .10 .45 .15 .50 .20 .55

1 If the Option B death benefit is in effect under the Policy, .30 percent of the applicable unloaned Policy value is added to the otherwise applicable bonus, regardless of the band or Policy year of the Policy, provided that the surrender value on the date of the bonus is at least $10,000.
Federal Register / Vol. 61, No. 119 / Wednesday, June 19, 1996 / Notices 31195

12. There are four face amount bands

for the Policies. Policies with a

minimum face amount of $5,000,000 are

band 4 Policies; Policies with a

minimum face amount of $1,000,000 but

less than $5,000,000 are band 3 Policies;

Policies with a minimum face amount of

$500,000 but less than $1,000,000 are

band 2 Policies and Policies with a

minimum face amount of less than

$500,000 are band 1 Policies. For

purposes of calculating the Policy value

bonus percentage, the average face

amount of the Policy from issuance to

the point of the bonus payment will be

used to determine the Policy band.

Policy value bonuses at the foregoing

rates are guaranteed, to the extent such

guarantees are allowed by the state in

which the Policy is issued, except that

after the 19th Policy year, Fortis

Benefits reserves the right, in its sole

discretion, to reduce the otherwise

applicable bonus by an amount equal to

up to .35 percent of the unloaned policy

value. All Policy value bonuses will be

allocated among the general account

and the subaccounts on a pro-rata basis.

These amounts will be credited with

investment performance and otherwise

will be treated the same as any other

amounts of Policy value.

13. Fortis Benefits has designed

premium based bonuses and Policy

value bonuses and their method of

operation so as to address certain state

regulatory concerns. All sales

illustrations used by Fortis Benefits

specifically will disclose the rates of any

premium based bonuses and Policy

value advances that are assumed by any

illustrations.

14. A premium tax charge in the

amount of 2.2 percent of all premium

payments is assessed through monthly

and daily deductions from Policy value

under the Policy. Any portion of such

amount that is not recovered by Fortis

Benefits pursuant to the monthly and

daily deductions may be deducted as

part of the surrender charge.

15. A sales charge in the amount of 9

percent of all premium payments is also

assessed through the monthly and daily

deductions from Policy value under the

Policy. Any amount of this sales charge

that is not recovered by Fortis Benefits

through these monthly and daily

deductions may be deducted as a

contingent deferred sales charge that

would be assessed as part of the

surrender charge.

16. The monthly deduction under the

Policy for premium tax and sales

charges totals $4.00 per month

(deducted as part of the ‘‘Monthly

Deduction’’ referred to below), and the

daily deduction for these purposes is at

an aggregate annual rate of .35 percent

of the value of the Policy’s net assets in

the Fortis Benefits Account. These

deductions will be waived to the extent

that the cumulative amount of all such

deductions, plus any premium tax or

sales charges that may in the future be

deducted from premiums would exceed

11.2 percent (9 percent for sales charges

and 2.2 percent for premium tax

charges) of all premium payments made

to date. This maximum may be slightly

less in any state that limits premium tax

charges to less than 2.2 percent.

17. Fortis Benefits reserves the right to

increase the premium tax charge to not

more than 3 percent, in which the case

the 11.2 percent maximum for the

monthly and daily deductions would be

increased by a corresponding amount

up to a maximum of 12 percent. Fortis

Benefits also reserves the right to deduct

a premium tax charge or a sales charge

directly from premium payments. The

maximum amount of such deductions

from premium payments will be 7.5

percent (a maximum of 2.5 percent for

premium tax charges and 5 percent for

sales charges), in which case the 11.2

percent maximum referred to above for

monthly and daily deductions would be

decreased by at least a corresponding

amount.

18. A monthly charge for Policy

issuance expenses at the rate set out

below is imposed and deducted as part

of the Monthly Deduction for the first

ten Policy years following issuance of

the Policy.

Face amount

Monthly rate

per $1,000 of

face amount at

issue (or face

amount increase)

Band 1 ................................ 0.10

Band 2 ................................ 0.08

Band 3 ................................ 0.05

Band 4 ................................ 0.03

This charge will also be imposed for

the first ten Policy years following a face

amount increase. Any uncollected

charges are deducted, if at all, only as

part of the surrender charge, discussed

below. Applicants represent that this

charge will not exceed the amount

permitted by Rule 6e–3(T)(b)(13)(iii)(A).

19. A surrender charge may be

assessed on lapse or full surrender of a

Policy before the tenth Policy

anniversary (or the tenth anniversary of

a face amount increase requested by the

Policy owner). The surrender charge

equals any portion of the Policy

issuance expense charge, premium tax

charge and the sales charge that has not

yet been collected through the monthly

and daily deductions therefor (or, in the

case of premium tax or sales charges,

deducted from premiums, as described

above). No surrender charge is deducted

upon a partial withdrawal of Policy

value or a face amount decrease.

20. The entire surrender charge is

subject to an overall upper limit or

‘‘cap’’ as set forth in the table below.

Adjusted age at time of policy issuance or face amount

increase

Overall ‘‘cap’’

on surrender

charge (per

thousand dollars of face

amount or face

amount increase)

18–24 years ........................ 1.90

25–29 .................................. 3.30

30–34 .................................. 4.50

35–39 .................................. 6.00

40–44 .................................. 8.25

45–49 .................................. 10.75

50–54 .................................. 14.25

55–59 .................................. 19.00

60–64 .................................. 25.20

65–69 .................................. 33.60

70–85 .................................. 41.00

The ‘‘Adjusted Age’’ referred to in the

foregoing table is the age of the younger

insured plus 1⁄3 of the lesser of (a) the

difference in age between the younger

and older insured or (b) 20. If both

insureds are over age 80, the maximum

surrender charge is $33 per thousand.

The overall cap (and each amount of

increase therein) decreases at a constant

rate on the first and each subsequent

Policy anniversary (or anniversary of a

face amount increase, as the case may

be) until it is zero for surrenders and

lapses as of the tenth Policy anniversary

(or increase anniversary). There will be

no surrender charge on surrenders or

lapses as of the later of the tenth Policy

anniversary or the tenth anniversary of

any face amount increase.

21. The Monthly Deduction from

Policy value includes: (a) the abovedescribed monthly premium tax, sales

charges and Policy issue expense

deductions; (b) cost of insurance charge;

(c) a charge for any optional insurance

benefits added by rider; and (d) a

monthly administrative expense charge

of $6.00 per Policy. Fortis Benefits

reserves the right to raise the monthly

administrative expense charge to not

more than $7.50 per month, and to

impose an additional monthly

administrative expense charge of up to

$.13 per thousand dollars of face

amount then in force. Applicants

represent that the administrative

charges under the Policies will not

exceed the amount permitted by Rule

6e–3(T)(b)(13)(iii)(A). After the tenth

Policy year, the Monthly Deduction

under a Policy as to which the no-lapse
31196 Federal Register / Vol. 61, No. 119 / Wednesday, June 19, 1996 / Notices

guarantee is still in effect will also

include a charge for that guarantee.

22. A daily charge at an annual rate

of 1.00 percent of the average daily

value of the net assets in the Fortis

Benefits Account that are attributable to

the Policy is made for mortality and

expense risks assumed by Fortis

Benefits.

23. Fortis Benefits reserves the right to

deduct: (a) charges to defray its

administrative expenses in effecting

transfers of Policy value or partial

withdrawals; and (b) charges for any

federal income taxes that it may incur.

Applicants’ Request for Relief and

Legal Analysis

1. Section 6(c) of the 1940 Act, in

pertinent part, provides that the

Commission may, by order upon

application, conditionally or

unconditionally exempt any person,

security or transaction, or any classes

thereof from any provisions of the 1940

Act or rules 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 1940 Act.

Exemptive Relief To Permit Deduction

of Remaining Premium Taxes in

Surrender Charge

2. Applicants request exemptions

from Sections 2(a)(32), 22(c), 27(c)(1)

and 27(d) of the 1940 Act and Rules 6e–

3(T)(b)(12), 6e–3(T)(b)(13) and 22c–1

thereunder to the extent necessary to

permit the amount of any premium tax

charges that have not been previously

collected by means of a deduction from

Policy value to be included in the

surrender charge.

3. Sections 2(a)(32), 27(c)(1) and 27(d)

of the 1940 Act prohibit Applicants

from selling interests under a Policy

unless they are redeemable securities,

entitling a Policy owner, upon

surrender, to receive approximately his

or her proportionate share of the Fortis

Benefits Account’s current net assets.

Section 27(c)(1) provides that no issuer

of a periodic payment plan certificate

shall sell such certificate unless the

certificate is a ‘‘redeemable security.’’

Section 2(a)(32) defines a ‘‘redeemable

security’’ as any security which entitles

the holder, upon its presentation to the

issuer, to receive approximately a

proportionate share of the issuer’s

current net asset value, or the cash

equivalent thereof. Section 27(d)

requires that the holder of a periodic

payment plan certificate be able to

surrender the certificate under certain

circumstances and recover certain

amounts of sales charges.

4. Rule 22c–1 prohibits Applicants

from redeeming interests under a Policy

except at a price based on the current

net asset value that is next computed

after receipt of the request for full or

partial redemption of interests under the

Policy.

5. Rule 6e–3(T)(b)(13) provides an

exemption from Section 27(d), and like

Rule 6e–3(T)(b)(12) provides

exemptions from Sections 22(c) and

27(c)(1) and Rule 22c–1 to the extent

necessary for the payment of a flexible

contract’s cash value to be regarded as

satisfying the requirements of those

provisions, if specified conditions are

satisfied. Applicants represent that the

Policy satisfies all of such conditions.

6. Applicants assert that contingent

deferred sales charges for premium

taxes were not contemplated at the time

the 1940 Act was enacted and are not

specifically contemplated by any of the

rule provisions referenced in the

preceding paragraph. Accordingly,

Sections 2(a)(32), 22(c), 27(c)(1) and

27(d) and Rules 22c–1, 6e–3(T)(b)(12)

and 6e–3(T)(b)(13) may be deemed to be

inconsistent with the deduction of a

contingent deferred charge for premium

taxes from the cash proceeds that are, in

effect, required by those provisions to be

paid to Policy owners under various

circumstances.

7. Applicants assert that the method

adopted under the Policy for deducting

all or part of the charges for premium

taxes on a basis other than from

premium payments is more favorable to

investors because more Policy value is

available to earn a return for the

investor. Applicants represent that:

(a) no premium tax charge will be

designed to yield a profit;

(b) the total amount charged for

premium taxes, including any amount

of premium tax charge that Fortis

Benefits may in the future decide to

deduct from premium payments, will be

no greater than if all such charges were

taken from premiums when paid; and

(c) the premium tax charges will not

take into account the ‘‘time value’’ of

money, which would increase the

charge to factor in the investment cost

to Fortis Benefits of deferring collection

of the charge.

Exemptive Relief From ‘‘Stair Step’’

Requirements

8. Applicants also request an

exemption from the ‘‘stair step’’

requirements of Section 27(a)(3) of the

1940 Act and Rules 6e–3(T)(b)(13)(ii)

and 6e–3(T)(d)(1)(ii) thereunder.

9. Section 27(a)(3) prohibits the sale

of the Policy if the sales load deducted

from any one of the first twelve monthly

payments thereon ‘‘exceeds

proportionately the amount deducted

from any other such payment, or the

amount deducted from any subsequent

payment exceeds proportionately the

amount deducted from any other

subsequent payment.’’

10. Rule 6e–3(T)(b)(13)(ii) provides an

exemption from Section 27(a)(3),

‘‘provided that the proportionate

amount of sales load deducted from any

payment shall not exceed the

proportionate amount deducted from

any prior payment.’’ Rule 6e–

3(T)(d)(1)(ii)(A) provides, in pertinent

part, that, with respect to sales charges

deducted other than from premiums

(excluding asset-based sales charges),

Rule 6e–3(T)(b)(13)(ii) is deemed

satisfied if ‘‘the amount of sales load

deducted pursuant to any method * * *

does not exceed the proportionate

amount of sales load deducted prior

thereto pursuant to the same method.’’

Rule 6e–3(T)(d)(1)(ii)(B) provides

comparable relief for asset-based sales

charges, provided that ‘‘the percentage

of assets taken as sales load does not

exceed any of the percentages

previously taken pursuant to the same

method.’’

11. Applicants request an exemption

from these ‘‘stair step’’ requirements

because of the following three aspects of

the Policies. First, part of the $4.00

monthly charge deducted pursuant to

each Policy is a sales charge. While this

charge will not change from month-tomonth, it will vary from month-tomonth as a percentage of premiums paid

and as a percentage of the Policy value.

Applicants assert that assessing part of

the sales charge as a flat monthly

deduction rather than deducting it from

premium payments is beneficial to

Policy owners because: (a) a greater

amount is available to earn an

investment return; (b) deductions will

be more predictable than deducting the

entire sales charge through a daily

percentage charge; and (c) Policy

owners will have an enhanced ability to

plan based on expected amounts of sales

charge deductions.

12. Second, the monthly and/or daily

sales charge deductions may cease for

certain periods of time and

subsequently be resumed. These charges

are suspended when the maximum

amount of such charges, as a percentage

of premium payments, has been

reached. Such charges also will cease if

additional deductions would cause sales

charges to exceed permitted maximums,

as a percentage of premiums actually

paid. This creates a question regarding

compliance with the requirements in

Rule 6e–3(T)(d)(1)(ii) (A) and (B) that
Federal Register / Vol. 61, No. 119 / Wednesday, June 19, 1996 / Notices 31197

the proportionate or percentage amount

of sales charges deducted not exceed the

proportionate or percentage amount

previously deducted pursuant to the

same method.

13. Applicants assert that, if Section

27(a)(3) and the related provisions of

Rule 6e–3(T) were interpreted to

prevent the resumption of sales charge

deductions from contract assets once the

deduction of such charges has ceased

for any reason, the utility of policy

designs that deduct sales charges from

contract assets would be greatly

reduced. Applicants submit that

deducting part of the sales charges from

Policy value, rather than from premium

payments, is advantageous to Policy

owners because more assets are put to

work as Policy value with the potential

of earning a return for the Policy

owner’s benefit.

14. Third, Rule 6e–3(T)(c)(4) defines

‘‘sales load’’ for any contract period as

the excess of premium payments over

changes in ‘‘cash value’’ (other than

from investment performance) and

certain enumerated charges. Applicants

submit that because premium based

bonuses and Policy value bonuses affect

the Policy’s cash value in the contract

period during which they are credited,

such bonuses could be deemed to result

in sales charges that vary from one

contract period to the next, relative to

the amount of premium payments paid

in such periods. The stair step

provisions could apply to the extent that

the sales load, as a percentage of

premium payments made in a contract

period, were thereby deemed to be more

than that in a prior contract period.

Applicants submit that the Policy’s

charge structure complies with the spirit

and apparent purposes of Rule 6e–

3(T)(b)(13)(ii) and 6e–3(T)(d)(1)(ii).

15. The stair step issues under the

Policies result from the imposition of

deferred sales charges in the form of

monthly and/or daily deductions and,

in the case of Policies that are

surrendered or lapse before a certain

time, the surrender charge. The stair

step issues under the Policies do not

result from early deduction of front-end

charges. Although sales charges will be

deducted through several different types

of deductions, the rate of these charges

will not increase.

Conclusion

For the reasons summarized 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. 96–15509 Filed 6–18–96; 8:45 am]

BILLING CODE 8010–01–M

Issuer Delisting; Notice of Application

to Withdraw From Listing and

Registration (Medicore, Inc., Common

Stock, $.01 Par Value); File No. 1–9167

June 12, 1996.

Medicore, Inc. (‘‘Company’’) has filed

an application with the Securities and

Exchange Commission (‘‘Commission’’),

pursuant to Section 12(d) of the

Securities Exchange Act of 1934 (‘‘Act’’)

and Rule 12d2–2(d) promulgated

thereunder, to withdraw the above

specified security (‘‘Security’’) from

listing and registration on the American

Stock Exchange, Inc. (‘‘Amex’’).

The reasons alleged in the application

for withdrawing the Security from

listing and registration include the

following:

According to the Company, its Board

of Directors unanimously approved

resolutions on May 6, 1996 to withdraw

the Security from listing on the Amex

and instead, to list the Security on the

National Association of Securities

Dealers Automated Quotations National

Market System (‘‘Nasdaq/NMS’’).

The decision of the Board followed a

thorough study of the matter and was

based upon the belief that listing the

Security on the Nasdaq/NMS will be

more beneficial to the Company’s

stockholders than the present listing on

the Amex because:

The Board of Directors has

determined as per the resolutions dated

May 6, 1996 of which this withdrawal

statement is a part, to withdraw its

security from listing on the Amex to

provide its Security with what the

Board believes to be a broader base of

trading and greater liquidity, all to the

benefit of its shareholders and investors.

The Company has had good relations

with the Amex and its staff, but believes

in its evaluation of its trading market

over the years and discussions with

other investment banking firms, that it

is in the best interest of the Company

and its shareholders to withdraw its

listing of its Security from the Amex

and list the Security on the Nasdaq

National Market. It is the opinion of the

Board that the Company will be

provided with greater visibility and that

its Security with a broader base of

trading and more liquidity for

shareholders and investors in the

decentralized market place of the

Nasdaq National Market.

Over the years, the Company has held

discussions with the staff of the Amex

and the specialist dealing with the

Company’s Security as to the depth of

trading, volume, block transactions and

pricing, resulting in ultimately a new

specialist being appointed for trading

the Company’s Security. The Board,

after full evaluation, has determined

that the Nasdaq National Market, a

major trading market with very

significant national and international

corporations having listed their

securities for trading on the Nasdaq

National Market, will provide a more

liquid, efficient and broader market for

the Company’s securities. Further, the

Board, based on discussions with other

broker/dealers over the years, is of the

opinion that the Company will have

more broker-dealers involved with it

and its securities, with greater exposure

in the financial community and such

will, to the extent necessary, facilitate

further capital formation. All of the

above factors will certainly be beneficial

to the Company’s shareholders and

investors.

Any interested person may, on or

before July 3, 1996 submit by letter to

the Secretary of the Securities and

Exchange Commission, 450 Fifth Street

NW., Washington, DC 20549, facts

bearing upon whether the application

has been made in accordance with the

rules of the exchanges and what terms,

if any, should be imposed by the

Commission for the protection of

investors. The Commission, based on

the information submitted to it, will

issue an order granting the application

after the date mentioned above, unless

the Commission determines to order a

hearing on the matter.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 96–15449 Filed 6–18–96; 8:45 am]

BILLING CODE 8010–01–M

[Investment Company Act Rel. No. 22016;

812–10058]

Sirrom Capital Corporation; Notice of

Application

June 13, 1996.

AGENCY: Securities and Exchange

Commission (‘‘SEC’’).

ACTION: Notice of Application under the

Investment Company Act of 1940 (the

‘‘Act’’).