7012 Federal Register / Vol. 73, No. 25 / Wednesday, February 6, 2008 / Notices 

1Applicants request that the order also extend to 

any future series of the Trust, and any other existing 

or future registered open-end management 

investment companies and any series thereof that 

are part of the same group of investment companies, 

as defined in section 12(d)(1)(G)(ii) of the Act, as 

the Trust and are, or may in the future be, advised 

by Roszel Advisors or any other investment adviser 

controlling, controlled by, or under common 

control with Roszel Advisors (together with the 

existing series of the Trust, the ‘‘Portfolios’’). The 

Trust is the only registered investment company 

that currently intends to rely on the requested 

order. Any other entity that relies on the order in 

the future will comply with the terms and 

conditions of the application. 

2Any investment adviser to the Portfolios that 

meets the definition of section 2(a)(20)(A) of the Act 

is referred to as Roszel Advisors. Any investment 

adviser to the Portfolios that meets the definition 

in section 2(a)(20)(B) of the Act is referred to as the 

Subadviser. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

28139; 812–13436] 

MLIG Variable Insurance Trust and 

Roszel Advisors, LLC; Notice of 

Application 

January 31, 2008. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of application for an 

order under section 12(d)(1)(J) of the 

Investment Company Act of 1940 

(‘‘Act’’) for an exemption from sections 

12(d)(1)(A) and (B) of the Act, and 

under sections 6(c) and 17(b) of the Act 

for an exemption from section 17(a) of 

the Act. 

SUMMARY OF THE APPLICATION: 

Applicants request an order that would 

permit certain registered open-end 

management investment companies to 

acquire shares of other registered openend management investment companies 

and unit investment trusts that are 

within and outside the same group of 

investment companies. 

Applicants: MLIG Variable Insurance 

Trust (the ‘‘Trust’’) and Roszel Advisors, 

LLC (‘‘Roszel Advisors’’) (together, the 

‘‘Applicants’’). 

Filing Dates: The application was 

filed on October 9, 2007. Applicants 

have agreed to file an amendment 

during the notice period, the substance 

of which is reflected in this notice. 

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 

Commission’s Secretary 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 February 25, 2008, 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 who wish to be 

notified of a hearing may request 

notification by writing to the 

Commission’s Secretary. 

ADDRESSES: Secretary, Securities and 

Exchange Commission, 100 F Street, 

NE., Washington, DC 20549–1090; 

Applicants: c/o Barry G. Skolnick, 

Secretary, MLIG Variable Insurance 

Trust, 1700 Merrill Lynch Drive, 

Pennington, NJ 08534. 

FOR FURTHER INFORMATION CONTACT: 

Deepak T. Pai, Senior Counsel, at (202) 

551–6876, or Nadya Roytblat, Assistant 

Director, at (202) 551–6821 (Office of 

Investment Company Regulation, 

Division of Investment Management). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained for a fee at the 

Commission’s Public Reference Desk, 

100 F Street, NE., Washington, DC 

20549–0102 (telephone (202) 551–5850). 

Applicants’ Representations 

1. The Trust, organized as a Delaware 

statutory trust, is registered under the 

Act as an open-end management 

investment company. The Trust is 

currently comprised of twenty-four 

separate Portfolios (as defined below), 

each of which pursues a distinct 

investment objective(s).1 The shares of 

the Portfolios currently are offered and 

sold through registered separate 

accounts (‘‘Registered Separate 

Accounts’’) of Merrill Lynch Life 

Insurance Company and ML Life 

Insurance Company of New York, both 

insurance companies that are 

unaffiliated with Roszel Advisors. In the 

future, shares of the Portfolios may be 

offered and sold through Registered 

Separate Accounts of insurance 

companies that are affiliates of Roszel 

Advisors and may be offered and sold 

through unregistered separate accounts 

of insurance companies that either are 

or are not affiliates of Roszel Advisors 

(‘‘Unregistered Separate Accounts,’’ and 

together with the Registered Separate 

Accounts, the ‘‘Separate Accounts’’). 

2. Roszel Advisors is a Delaware 

limited liability company that is 

registered as an investment adviser 

under the Investment Advisers Act of 

1940 (‘‘Advisers Act’’). Roszel Advisors 

is a wholly-owned indirect subsidiary of 

Merrill Lynch & Co., Inc. Pursuant to an 

investment management agreement and 

subject to the authority of the Trust’s 

board of trustees, Roszel Advisors serves 

as the Trusts’ investment adviser and 

conducts the business and affairs of the 

Trust. Roszel Advisors has engaged at 

least one subadviser for each Portfolio 

(each a ‘‘Subadviser’’) to act as that 

Portfolio’s investment adviser to 

provide day-to-day portfolio 

management. Each Subadviser is and 

any future Subadviser will be registered 

under the Advisers Act.2

3. Applicants request relief to permit: 

(a) The Portfolios to acquire shares of 

registered open-end management 

investment companies that are not part 

of the same group of investment 

companies, as defined in Section 

12(A)(i)(G)(ii) of the Act, as the 

Portfolios (the ‘‘Unaffiliated Underlying 

Funds’’); (b) the Portfolios to acquire 

shares of unit investment trusts 

(‘‘UITs’’) that are not part of the same 

group of investment companies as the 

Portfolios (‘‘Unaffiliated Underlying 

Trusts’’); (c) the Unaffiliated Underlying 

Funds and Trusts (collectively, the 

‘‘Unaffiliated Funds’’) to sell their 

shares to the Portfolios; (d) the 

Portfolios to acquire shares of other 

registered open-end investment 

companies in the same group of 

investment companies as the Portfolios 

(the ‘‘Affiliated Funds,’’ and together 

with the Unaffiliated Funds, the 

‘‘Underlying Funds’’) and (e) the 

Affiliated Funds to sell their shares to 

the Portfolios. Unaffiliated Underlying 

Trusts or Unaffiliated Underlying Funds 

may be registered under the Act as 

either UITs or open-end management 

investment companies and that have 

obtained exemptions from the 

Commission necessary to permit their 

shares to be listed and traded on a 

national securities exchange at 

negotiated prices (‘‘ETFs’’). Currently, 

the Portfolios invest in various types of 

securities that are not issued by 

registered investment companies and 

other financial instruments. Applicants 

are seeking to provide the Portfolios 

with the ability to invest in Underlying 

Funds for broader diversification and 

the ability to gain exposure to types of 

securities in which they would 

otherwise be unable to invest because of 

inadequate trade size or lack of 

liquidity. 

Applicants’ Legal Analysis 

A. Section 12(d)(1) 

1. Section 12(d)(1)(A) of the Act 

prohibits a registered investment 

company from acquiring shares of an 

investment company if the securities 

represent more than 3% of the total 

outstanding voting stock of the acquired 

company, more than 5% of the total 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 73, No. 25 / Wednesday, February 6, 2008 / Notices 7013 

3An Unaffiliated Fund, including an ETF, would 

retain its right to reject any initial investment by a 

Portfolio in excess of the limit in section 

12(d)(1)(A)(i) of the Act by declining to execute the 

Participation Agreement with the Portfolio. 

assets of the acquiring company, or, 

together with the securities of any other 

investment companies, more than 10% 

of the total assets of the acquiring 

company. Section 12(d)(1)(B) of the Act 

prohibits a registered open-end 

investment company, its principal 

underwriter and any broker or dealer 

from selling the shares of the investment 

company to another investment 

company if the sale will cause the 

acquiring company to own more than 

3% of the acquired company’s voting 

stock, or if the sale will cause more than 

10% of the acquired company’s voting 

stock to be owned by investment 

companies generally. 

2. Section 12(d)(1)(J) of the Act 

provides that the Commission may 

exempt any person, security, or 

transaction, or any class or classes of 

persons, securities or transactions, from 

any provision of section 12(d)(1) if the 

exemption is consistent with the public 

interest and the protection of investors. 

Applicants seek an exemption under 

section 12(d)(1)(J) of the Act from the 

limitations of sections 12(d)(1)(A) and 

(B) to the extent necessary to permit the 

Portfolios to acquire shares of the 

Underlying Funds in excess of the limits 

set forth in section 12(d)(1)(A) of the Act 

and to permit the Underlying Funds, 

their principal underwriters and any 

broker or dealer to sell their shares to 

the Portfolios in excess of the limits set 

forth in section 12(d)(1)(B) of the Act. 

3. Applicants state that the proposed 

arrangement will not give rise to the 

policy concerns underlying sections 

12(d)(1)(A) and (B) which include 

concerns about undue influence by a 

fund of funds or its affiliated persons 

over underlying funds, excessive 

layering of fees, and overly complex 

fund structures. Accordingly, 

Applicants believe that the requested 

exemptions are consistent with the 

public interest and the protection of 

investors. 

4. Applicants state that the proposed 

arrangement will not result in undue 

influence by the Portfolios or their 

affiliated persons over the Underlying 

Funds. The concern about undue 

influence does not arise in connection 

with the Portfolios’ investment in the 

Affiliated Funds, since they are part of 

the same group of investment 

companies. Applicants further propose 

condition 1 which provides that: (a) 

Roszel Advisors and any person 

controlling, controlled by or under 

common control with Roszel Advisors, 

any investment company and any issuer 

that would be an investment company 

but for section 3(c)(1) or section 3(c)(7) 

of the Act advised or sponsored by 

Roszel Advisors or any person 

controlling, controlled by or under 

common control with Roszel Advisors 

(collectively, the ‘‘Group’’), and (b) any 

Subadviser to the Portfolios and any 

person controlling, controlled by or 

under common control with the 

Subadviser, and any investment 

company or issuer that would be an 

investment company but for section 

3(c)(1) or 3(c)(7) of the Act (or portion 

of such investment company or issuer) 

advised by the Subadviser or any person 

and any person controlling, controlled 

by or under common control with the 

Subadviser (collectively, the 

‘‘Subadviser Group’’) will not control 

(individually or in the aggregate) an 

Unaffiliated Fund within the meaning of 

section 2(a)(9) of the Act. 

5. Applicants further state that 

condition 2 precludes the Portfolios or 

Roszel Advisors, any Subadviser, 

promoter or principal underwriter of the 

Portfolios, as well as any person 

controlling, controlled by or under 

common control with any of those 

entities (each, a ‘‘Portfolio Affiliate’’) 

from taking advantage of an Unaffiliated 

Fund, with respect to transactions 

between the Portfolios or a Portfolio 

Affiliate and the Unaffiliated Fund or 

the Unaffiliated Fund’s investment 

adviser(s), sponsor, promoter, and 

principal underwriter and any person 

controlling, controlled by or under 

common control with any of those 

entities (each, an ‘‘Unaffiliated Fund 

Affiliate’’). No Portfolio or Portfolio 

Affiliate (except to the extent it is acting 

in its capacity as an investment adviser 

to an Unaffiliated Underlying Fund or 

sponsor to an Unaffiliated Underlying 

Trust) will cause an Unaffiliated Fund 

to purchase a security in an offering of 

securities during the existence of any 

underwriting or selling syndicate of 

which a principal underwriter is an 

officer, director, trustee, advisory board 

member, investment adviser, 

Subadviser, or employee of the 

Portfolio, or a person of which any such 

officer, director, trustee, investment 

adviser, Subadviser, member of an 

advisory board, or employee is an 

affiliated person (each, an 

‘‘Underwriting Affiliate,’’ except any 

person whose relationship to the 

Unaffiliated Fund is covered by section 

10(f) of the Act is not an Underwriting 

Affiliate). An offering of securities 

during the existence of any 

underwriting or selling syndicate of 

which a principal underwriter is an 

Underwriting Affiliate is an ‘‘Affiliated 

Underwriting.’’

6. To further assure that an 

Unaffiliated Underlying Fund 

understands the implications of an 

investment by a Portfolio under the 

requested order, prior to the Portfolios’

investment in the shares of an 

Unaffiliated Underlying Fund in excess 

of the limit in section 12(d)(1)(A)(i) of 

the Act, the Portfolio and the 

Unaffiliated Underlying Fund will 

execute an agreement stating, without 

limitation, that their boards of directors 

or trustees (‘‘Boards’’) and their 

investment advisers understand the 

terms and conditions of the order and 

agree to fulfill their responsibilities 

under the order (‘‘Participation 

Agreement’’). Applicants note that an 

Unaffiliated Fund (other than an ETF 

whose shares are purchased by a 

Portfolio in the secondary market) will 

retain its right at all times to reject any 

investment by the Portfolio.3

7. Applicants do not believe that the 

proposed arrangement will involve 

excessive layering of fees. To assure that 

the investment advisory or management 

fees are not duplicative, Applicants 

state that, prior to the approval of any 

investment advisory or management 

contract under section 15 of the Act, the 

Board of each Portfolio, including a 

majority of the Disinterested Trustees 

will find that the management or 

advisory fees charged under the 

Portfolio’s advisory contract are based 

on services provided that are in addition 

to, rather than duplicative of, services 

provided pursuant to any Underlying 

Fund’s advisory contract(s). Applicants 

further state that Roszel Advisors will 

waive fees otherwise payable to them by 

a Portfolio in an amount at least equal 

to any compensation (including fees 

received pursuant to any plan adopted 

by an Unaffiliated Underlying Fund 

pursuant to rule 12b–1 under the Act) 

received from an Unaffiliated Fund by 

Roszel Advisors, or an affiliated person 

of Roszel Advisors, other than any 

advisory fees paid to Roszel Advisors or 

an affiliated person of Roszel Advisors 

by the Unaffiliated Fund, in connection 

with the investment by the Portfolio in 

the Unaffiliated Fund. 

8. Applicants state that with respect 

to Registered Separate Accounts that 

invest in the Portfolios, no sales load 

will be charged at the Portfolios’ level 

or at the Underlying Fund level. Other 

sales charges and service fees, as 

defined in Rule 2830 of the Conduct 

Rules of the NASD (‘‘NASD Conduct 

Rule 2830’’), will only be charged at the 

Portfolio level or at the Underlying 


pwalker on PROD1PC71 with NOTICES
7014 Federal Register / Vol. 73, No. 25 / Wednesday, February 6, 2008 / Notices 

4Applicants represent that each Portfolio will 

represent in the Participation Agreement that no 

insurance company sponsoring a Registered 

Separate Account funding variable insurance 

contracts will be permitted to invest in the Portfolio 

unless the insurance company has certified to the 

Portfolio that the aggregate of all fees and charges 

associated with each contract that invests in the 

Portfolio, including fees and charges at the separate 

account, Portfolio, and Underlying Fund levels, will 

be reasonable in relation to the services rendered, 

the expenses expected to be incurred, and the risks 

assumed by the insurance company. 

5Applicants acknowledge that receipt of 

compensation by (a) an affiliated person of the 

Portfolios, or an affiliated person of such person, for 

the purchase by the Portfolios of shares of an 

Underlying Fund or (b) an affiliated person of an 

Underlying Fund, or an affiliated person of such 

person, for the sale by the Underlying Fund of its 

shares to the Portfolios is subject to section 17(e)(1) 

of the Act. The Participation Agreement also will 

include this acknowledgement. 

6Applicants note that the Portfolios generally 

would purchase and sell shares of an Underlying 

Fund that operates as an ETF through secondary 

market transactions at market prices rather than 

through principal transactions with the Underlying 

Fund at net asset value. Applicants would not rely 

on the requested relief from section 17(a) for such 

secondary market transactions. The Portfolios could 

seek to transact in ‘‘Creation Units’’ directly with 

an ETF pursuant to the requested section 17(a) 

relief. 

Fund level, not both.4 With respect to 

other investments in the Portfolios, any 

sales charges and/or service fees 

charged with respect to shares of the 

Portfolios will not exceed the limits 

applicable to a fund of funds set forth 

in NASD Conduct Rule 2830. 

9. Applicants state that the proposed 

arrangement will not create an overly 

complex fund structure because no 

Underlying Fund will acquire securities 

of any other investment company or 

company relying on section 3(c)(1) or 

3(c)(7) of the Act in excess of the limits 

contained in section 12(d)(1)(A) of the 

Act, except to the extent that such 

Underlying Fund: (a) Receives securities 

of another investment company as a 

dividend or as a result of a plan of 

reorganization of a company (other than 

a plan devised for the purpose of 

evading section 12(d)(1) of the Act); or 

(b) acquires (or is deemed to have 

acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to: (i) 

Acquire securities of one or more 

affiliated investment companies for 

short-term cash management purposes, 

or (ii) engage in interfund borrowing 

and lending transactions. Applicants 

also represent that the Portfolios’

prospectus and sales literature will 

contain clear, concise, ‘‘plain English’’

disclosure designed to inform investors 

about the unique characteristics of the 

proposed arrangement, including, but 

not limited to, the expense structure and 

the additional expenses of investing in 

Underlying Funds. 

B. Section 17(a) 

1. Section 17(a) of the Act generally 

prohibits sales or purchases of securities 

between a registered investment 

company and any affiliated persons of 

the company. Section 2(a)(3) of the Act 

defines an ‘‘affiliated person’’ of another 

person to include (a) any person directly 

or indirectly owning, controlling, or 

holding with power to vote, 5% or more 

of the outstanding voting securities of 

the other person; (b) any person 5% or 

more of whose outstanding voting 

securities are directly or indirectly 

owned, controlled, or held with power 

to vote by the other person; and (c) any 

person directly or indirectly controlling, 

controlled by, or under common control 

with the other person. 

2. Applicants state that the Portfolios 

and the Affiliated Funds might be 

deemed to be under common control of 

Roszel Advisors and therefore affiliated 

persons of one another. Applicants also 

state that the Portfolios and the 

Underlying Funds might be deemed 

affiliated persons of one another if the 

Portfolios acquire 5% or more of an 

Underlying Fund’s outstanding voting 

securities. In light of these possible 

affiliations, section 17(a) could prevent 

an Underlying Fund from selling shares 

to and redeeming shares from the 

Portfolios. 

3. Section 17(b) of the Act authorizes 

the Commission to grant an order 

permitting a transaction otherwise 

prohibited by section 17(a) if it finds 

that (a) the terms of the proposed 

transaction are fair and reasonable and 

do not involve overreaching on the part 

of any person concerned; (b) the 

proposed transaction is consistent with 

the policies of each registered 

investment company involved; and (c) 

the proposed transaction is consistent 

with the general purposes of the Act. 

Section 6(c) of the Act permits the 

Commission to exempt any person or 

transactions from any provision of the 

Act if 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. 

4. Applicants believe that the 

proposed transactions satisfy the 

requirements for relief under sections 

17(b) and 6(c) of the Act, as the terms 

are fair and reasonable and do not 

involve overreaching.5 Applicants state 

that the terms upon which an 

Underlying Fund will sell its shares to 

or purchase its shares from the 

Portfolios will be based on the net asset 

value of each Underlying Fund.6

Applicants also state that the proposed 

transactions will be consistent with the 

policies of the Portfolios and 

Underlying Fund, and with the general 

purposes of the Act. 

Applicants’ Conditions 

Applicants agree that the order 

granting the requested relief shall be 

subject to the following conditions: 

1. The members of the Group will not 

control (individually or in the aggregate) 

an Unaffiliated Fund within the 

meaning of section 2(a)(9) of the Act. 

The members of the Subadviser Group 

will not control (individually or in the 

aggregate) an Unaffiliated Fund within 

the meaning of section 2(a)(9) of the Act. 

If, as a result of a decrease in the 

outstanding voting securities of an 

Unaffiliated Fund, the Group or a 

Subadviser Group, each in the aggregate, 

becomes a holder of more than 25% of 

the outstanding voting securities of the 

Unaffiliated Fund, then the Group or the 

Subadviser Group (except for any 

member of the Group or the Subadviser 

Group that is a Separate Account) will 

vote its shares of the Unaffiliated Fund 

in the same proportion as the vote of all 

other holders of the Unaffiliated Fund’s 

shares. This Condition 1 will not apply 

to a Subadviser Group with respect to 

an Unaffiliated Fund for which the 

Subadviser or a person controlling, 

controlled by, or under common control 

with the Subadviser acts as the 

investment adviser within the meaning 

section 2(a)(20)(A) of the Act (in the 

case of an Unaffiliated Underlying 

Fund) or as the sponsor (in the case of 

an Unaffiliated Trust). 

A Registered Separate Account will 

seek voting instructions from its 

contract holders and will vote its shares 

of an Unaffiliated Fund in accordance 

with the instructions received and will 

vote those shares for which no 

instructions were received in the same 

proportion as the shares for which 

instructions were received. An 

Unregistered Separate Account will 

either: (i) Vote its shares of the 

Unaffiliated Fund in the same 

proportion as the vote of all other 

holders of the Unaffiliated Fund’s 

shares; or (ii) seek voting instructions 

from its contract holders and vote its 

shares in accordance with the 

instructions received and vote those 

shares for which no instructions were 

received in the same proportion as the 

shares for which instructions were 

received. 

2. No Portfolio or Portfolio Affiliate 

will cause any existing or potential 


pwalker on PROD1PC71 with NOTICES
Federal Register / Vol. 73, No. 25 / Wednesday, February 6, 2008 / Notices 7015 

investment by the Portfolio in an 

Unaffiliated Fund to influence the terms 

of any services or transactions between 

the Portfolio or a Portfolio Affiliate and 

the Unaffiliated Fund or an Unaffiliated 

Fund Affiliate. 

3. The Board of each Portfolio, 

including a majority of the Disinterested 

Trustees, will adopt procedures 

reasonably designed to assure that 

Roszel Advisors and any Subadviser are 

conducting the investment program of 

the Portfolio without taking into 

account any consideration received by 

the Portfolio or Portfolio Affiliate from 

an Unaffiliated Fund or an Unaffiliated 

Fund Affiliate in connection with any 

services or transactions. 

4. Once an investment by a Portfolio 

in the securities of an Unaffiliated 

Underlying Fund exceeds the limit of 

section 12(d)(1)(A)(i) of the Act, the 

Board of the Unaffiliated Underlying 

Fund, including a majority of the 

Disinterested Trustees, will determine 

that any consideration paid by the 

Unaffiliated Underlying Fund to the 

Portfolio or a Portfolio Affiliate in 

connection with any services or 

transactions: (a) Is fair and reasonable in 

relation to the nature and quality of the 

services and benefits received by the 

Unaffiliated Underlying Fund; (b) is 

within the range of consideration that 

the Unaffiliated Underlying Fund would 

be required to pay to another 

unaffiliated entity in connection with 

the same services or transactions; and 

(c) does not involve overreaching on the 

part of any person concerned. This 

condition does not apply with respect to 

any services or transactions between an 

Unaffiliated Underlying Fund and its 

investment adviser(s), or any person 

controlling, controlled by, or under 

common control with such investment 

adviser(s). 

5. No Portfolio or Portfolio Affiliate 

(except to the extent it is acting in its 

capacity as an investment adviser to an 

Unaffiliated Underlying Fund or 

sponsor to an Unaffiliated Underlying 

Trust) will cause an Unaffiliated Fund 

to purchase a security in any Affiliated 

Underwriting. 

6. The Board of an Unaffiliated 

Underlying Fund, including a majority 

of the Disinterested Trustees, will adopt 

procedures reasonably designed to 

monitor any purchases of securities by 

the Unaffiliated Underlying Fund in an 

Affiliated Underwriting once an 

investment by a Portfolio in the 

securities of the Unaffiliated Underlying 

Fund exceeds the limit of section 

12(d)(1)(A)(i) of the Act, including any 

purchases made directly from an 

Underwriting Affiliate. The Board of the 

Unaffiliated Underlying Fund will 

review these purchases periodically, but 

no less frequently than annually, to 

determine whether or not the purchases 

were influenced by the investment by 

the Portfolio in the Unaffiliated 

Underlying Fund. The Board of the 

Unaffiliated Underlying Fund will 

consider, among other things: (a) 

Whether or not the purchases were 

consistent with the investment 

objectives and policies of the 

Unaffiliated Underlying Fund; (b) how 

the performance of securities purchased 

in an Affiliated Underwriting compares 

to the performance of comparable 

securities purchased during a 

comparable period of time in 

underwritings other than Affiliated 

Underwritings or to a benchmark such 

as a comparable market index; and (c) 

whether or not the amount of securities 

purchased by the Unaffiliated 

Underlying Fund in Affiliated 

Underwritings and the amount 

purchased directly from an 

Underwriting Affiliate have changed 

significantly from prior years. The 

Board of an Unaffiliated Underlying 

Fund will take any appropriate actions 

based on its review, including, if 

appropriate, the institution of 

procedures designed to assure that 

purchases of securities in Affiliated 

Underwritings are in the best interests 

of shareholders. 

7. Each Unaffiliated Underlying Fund 

will maintain and preserve permanently 

in an easily accessible place a written 

copy of the procedures described in the 

preceding condition, and any 

modifications to such procedures, and 

will maintain and preserve for a period 

of not less than six years from the end 

of the fiscal year in which any purchase 

from an Affiliated Underwriting 

occurred, the first two years in an easily 

accessible place, a written record of 

each purchase of securities in an 

Affiliated Underwriting once an 

investment by a Portfolio in the 

securities of an Unaffiliated Underlying 

Fund exceeds the limit of section 

12(d)(1)(A)(i) of the Act, setting forth 

the: (a) Party from whom the securities 

were acquired, (b) identity of the 

underwriting syndicate’s members, (c) 

terms of the purchase, and (d) 

information or materials upon which 

the determinations of the Board of the 

Unaffiliated Underlying Fund were 

made. 

8. Prior to its investment in shares of 

an Unaffiliated Underlying Fund in 

excess of the limit in section 

12(d)(1)(A)(i) of the Act, the Portfolio 

and the Unaffiliated Underlying Fund 

will execute a Participation Agreement 

stating, without limitation, that their 

Boards and their investment advisers 

understand the terms and conditions of 

the order and agree to fulfill their 

responsibilities under the order. At the 

time of its investment in shares of an 

Unaffiliated Underlying Fund in excess 

of the limit in section 12(d)(1)(A)(i), the 

Portfolio will notify the Unaffiliated 

Underlying Fund of the investment. At 

such time, the Portfolio will also 

transmit to the Unaffiliated Underlying 

Fund a list of the names of each 

Portfolio Affiliate and Underwriting 

Affiliate. The Portfolio will notify the 

Unaffiliated Underlying Fund of any 

changes to the list as soon as reasonably 

practicable after a change occurs. The 

Unaffiliated Underlying Fund and the 

Portfolio will maintain and preserve a 

copy of the order, the Participation 

Agreement, and the list with any 

updated information for the duration of 

the investment and for a period of not 

less than six years thereafter, the first 

two years in an easily accessible place. 

9. Before approving any advisory 

contract under section 15 of the Act, the 

Board of each Portfolio, including a 

majority of the Disinterested Trustees, 

shall find that the advisory fees charged 

under the advisory contract are based on 

services provided that are in addition to, 

rather than duplicative of, services 

provided under the advisory contract(s) 

of any Underlying Fund in which the 

Portfolio may invest. Such finding, and 

the basis upon which the finding was 

made, will be recorded fully in the 

minute books of the appropriate 

Portfolio. 

10. Roszel Advisors will waive fees 

otherwise payable to it by a Portfolio in 

an amount at least equal to any 

compensation (including fees received 

pursuant to any plan adopted by an 

Unaffiliated Underlying Fund pursuant 

to rule 12b–1 under the Act) received 

from an Unaffiliated Fund by Roszel 

Advisors, or an affiliated person of 

Roszel Advisors, other than any 

advisory fees paid to Roszel Advisors or 

its affiliated person by the Unaffiliated 

Fund, in connection with the 

investment by the Portfolio in the 

Unaffiliated Fund. Any Subadviser will 

waive fees otherwise payable to the 

Subadviser, directly or indirectly, by the 

Portfolio in an amount at least equal to 

any compensation received by the 

Subadviser, or an affiliated person of the 

Subadviser, from an Unaffiliated Fund, 

other than any advisory fees paid to the 

Subadviser or its affiliated person by the 

Unaffiliated Underlying Fund, in 

connection with the investment by the 

Portfolio in the Unaffiliated Underlying 

Fund made at the direction of the 

Subadviser. In the event that the 

Subadviser waives fees, the benefit of 


pwalker on PROD1PC71 with NOTICES
7016 Federal Register / Vol. 73, No. 25 / Wednesday, February 6, 2008 / Notices 

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

2 17 CFR 240.19b–4. 

3Amendment No. 1 supersedes and replaces the 

original filing in its entirety. 

4See Securities Exchange Act Release No. 57011 

(December 20, 2007), 72 FR 73910. 

5See Amex Rule 958–ANTE, Commentary .01(c). 

Under the proposal, quoting and submitting orders 

from off the trading floor for less than an entire day 

would qualify as one day. 

6See Amex Rule 958–ANTE, Commentary .01(c). 

7 In approving the proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

8 15 U.S.C. 78f(b)(5). 

9 15 U.S.C. 78s(b)(2). 

10 17 CFR 200.30–3(a)(12). 

the waiver will be passed through to the 

Portfolio. 

11. With respect to Registered 

Separate Accounts that invest in a 

Portfolio, no sales load will be charged 

at the Portfolio level or at the 

Underlying Fund level. Other sales 

charges and service fees, as defined in 

NASD Conduct Rule 2830, if any, will 

only be charged at the Portfolio level or 

at the Underlying Fund level, not both. 

With respect to other investment in a 

Portfolio, any sales charges and/or 

service fees charged with respect to 

shares of the Portfolio will not exceed 

the limits applicable to a funds of funds 

set forth in NASD Conduct Rule 2830. 

12. No Underlying Fund will acquire 

securities of any other investment 

company or company relying on section 

3(c)(1) or 3(c)(7) of the Act in excess of 

the limits contained in section 

12(d)(1)(A) of the Act, except to the 

extent that such Underlying Fund: (a) 

Receives securities of another 

investment company as a dividend or as 

a result of a plan of reorganization of a 

company (other than a plan devised for 

the purpose of evading section 12(d)(1) 

of the Act); or (b) acquires (or is deemed 

to have acquired) securities of another 

investment company pursuant to 

exemptive relief from the Commission 

permitting such Underlying Fund to: (i) 

Acquire securities of one or more 

affiliated investment companies for 

short-term cash management purposes, 

or (ii) engage in interfund borrowing 

and lending transactions. 

For the Commission, by the Division of 

Investment Management, pursuant to 

delegated authority. 

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–2120 Filed 2–5–08; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–57248; File No. SR–Amex–

2007–25] 

Self-Regulatory Organizations; 

American Stock Exchange, LLC; Order 

Approving a Proposed Rule Change, 

as Modified by Amendment No. 1, to 

Allow Register Options Traders to 

Submit Electronic Quotations and 

Orders From Off the Amex’s Trading 

Floor on a Limited Basis 

January 31, 2008. 

I. Introduction 

On February 27, 2007, the American 

Stock Exchange LLC (‘‘Amex’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to section 

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

of 1934 (‘‘Act’’),1 and Rule 19b–4 

thereunder,2 a proposal to amend its 

rules to allow registered options traders 

to submit electronic quotations and 

orders from off the Amex’s trading floor 

on a limited basis. The Amex filed 

Amendment No. 1 to the proposal on 

December 13, 2007.3 The proposed rule 

change, as modified by Amendment No. 

1, was published for comment in the 

Federal Register on December 28, 

2007.4 The Commission received no 

comments regarding the proposed rule 

change, as amended. This order 

approves the proposed rule change, as 

modified by Amendment No. 1. 

II. Description of the Proposal 

The Amex proposes to amend Amex 

Rule 958–ANTE, ‘‘Options Transactions 

of Registered Options Traders and 

Supplemental Registered Options 

Traders and Remote Registered Options 

Traders,’’ to allow registered options 

traders to submit electronic quotations 

and orders from off the Amex’s trading 

floor on a temporary basis for a 

maximum of 20 days during a calendar 

year.5 According to the Amex, the 

proposal is designed to accommodate 

registered options traders when they are 

temporarily unable to be present on the 

Amex’s physical trading floor. For 

purposes of the ‘‘in-person’’

requirements set forth in Amex Rule 

958–ANTE, a registered options trader’s 

transactions through this limited remote 

quoting program will be deemed to 

occur on the floor. 

A registered options trader must 

notify the Amex’s Division of 

Regulation and Compliance 

immediately following the day or days 

during which he or she submits quotes 

from off the floor.6 The Amex notes that 

it has an independent means to monitor 

when a register options trader is off the 

floor because all members must scan in. 

The Amex states that it will use its 

existing surveillance procedures to 

monitor registered options traders’

temporary off-floor trading. In addition, 

the Amex represents that it will be able 

to monitor for compliance with the 

Amex’s trading rules and the federal 

securities laws and the rules and 

regulations thereunder. 

III. Discussion 

The Commission finds that the 

proposed rule change, as amended, is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.7 In particular, the 

Commission finds that the proposal is 

consistent with section 6(b)(5) of the 

Act,8 which requires, among other 

things, that the rules of a national 

securities exchange be designed to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. 

The Commission believes that the 

proposal is designed to provide 

registered options traders with the 

flexibility to trade from off the Amex’s 

floor on a limited basis when they are 

temporarily unable to be present on the 

floor. The Commission notes that the 

Amex has stated that it will use its 

existing surveillance procedures to 

monitor the off-floor trading permitted 

under the proposal, and that the Amex 

has represented that it will be able to 

monitor for compliance with the Amex’s 

trading rules and the federal securities 

laws and the rules and regulations 

thereunder. 

IV. Conclusion 

It is therefore ordered, pursuant to 

section 19(b)(2) of the Act,9 that the 

proposed rule change (SR–Amex–2007–

25), as modified by Amendment No. 1, 

is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E8–2139 Filed 2–5–08; 8:45 am] 

BILLING CODE 8011–01–P 


pwalker on PROD1PC71 with NOTICES