55572 Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Notices 

(2) Devote the appropriate resources 

and personnel to support such alternate 

net capital treatment and supervision on 

a consolidated basis, including any 

additional conditions the Commission 

may find to be necessary or appropriate 

in the public interest or for the 

protection of investors. 

In addition, Barclays Capital stated in 

its letter that, based on a pro-forma net 

capital computation, it would have in 

excess of $6.5 billion in Tentative Net 

Capital, as defined. 

In order to facilitate both a smooth 

transition of the Lehman assets and 

liabilities to Barclays Capital and 

continued oversight of this business, the 

Commission believes some additional 

conditions are necessary, as follows: 

(1) Until such time as the Commission 

determines otherwise, Barclays Capital 

must maintain at least $6 billion in 

Tentative Net Capital; 

(2) Until such time as the Commission 

determines otherwise, the basic market 

risk and credit risk computations for the 

positions Barclays Capital acquires from 

Lehman must be done using the 

modeling infrastructure used by 

Lehman prior to the transfer of 

Lehman’s assets and liabilities to 

Barclays Capital; and 

(3) Until such time as the Commission 

determines otherwise, the basic market 

risk and credit risk computations must 

be supervised by individuals who fully 

understand the operation of Lehman’s 

models (including the inputs and 

techniques unique to Lehman’s models) 

and the securities that Lehman has been 

permitted to model, and that have at 

least one year of experience working 

with Lehman’s models. According to 

Barclays Capital’s letter, it has agreed to 

acquire substantially all personnel of 

Lehman, such that it should have 

employees that meet these requirements 

on its staff to continue to meet this 

condition for the exemption. 

Barclays Capital will need to maintain 

Tentative Net Capital of at least $6 

billion. By increasing its Tentative Net 

Capital to at least $6 billion, Barclays 

Capital will significantly improve its 

financial position. In addition, the 

movement of these accounts from 

Lehman to Barclays Capital will further 

protect customers by providing for a 

seamless transfer of customers’ accounts 

from Lehman to a financially sound 

broker-dealer. Further, this temporary 

relief is specific to the business Barclays 

Capital purchases from Lehman, using 

models already reviewed and approved 

by the Commission, and the 

computations will be performed by 

persons familiar to Lehman’s models 

and processes. This relief will extend 

only until the Commission acts on 

Barclays Capital’s application to 

compute market and credit risk capital 

charges pursuant to Appendix E, which 

Barclays Capital has agreed to submit 

within 180 days of the bankruptcy 

court’s approval of Barclays Capital’s 

acquisition of Lehman’s assets. As such, 

because of the special nature of Barclays 

Capital’s business, its financial position, 

and the safeguards it has established for 

the protection of customers’ funds and 

securities, the Commission finds that 

approval of this request, subject to the 

fulfillment by Barclays Capital and its 

ultimate holding company Barclays 

Group of these representations and 

conditions, is appropriate in the public 

interest or for the protection of 

investors. 

Accordingly, 

It is ordered, under paragraph (b)(3) of 

Rule 15c3–1 (17 CFR 240.15c3–1) under 

the Exchange Act, that Barclays Capital 

may calculate capital charges for the 

positions it purchases from Lehman 

Brothers Inc. using the market risk 

standards of Appendix E to compute a 

deduction for market risk on some or all 

of the positions, instead of the 

provisions of paragraphs (c)(2)(vi) and 

(c)(2)(vii) of Rule 15c3–1, and using the 

credit risk standards of Appendix E to 

compute a deduction for credit risk on 

the credit exposures arising from 

transactions in derivatives instruments, 

instead of the provision of paragraph 

(c)(2)(iv) of Rule 15c3–1, subject to the 

fulfillment by Barclays Capital and 

Barclays Group of the representations 

and conditions set forth above. 

By the Commission. 

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. E8–22503 Filed 9–24–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 28386; File No. 812–13576] 

The Reserve Fund, on Behalf of Two of 

Its Series, the Primary Fund and the 

U.S. Government Fund; Order 

Temporarily Suspending Redemption 

of Investment Company Shares and 

Postponing Payment for Investment 

Company Shares Which Have Been 

Submitted for Redemption for Which 

Payment Has Not Been Made Pursuant 

to Section 22(E)(3) of the Investment 

Company Act of 1940 

September 22, 2008. 

The Reserve Fund (the ‘‘Trust’’ or the 

‘‘Applicant’’), an open-end management 

investment company registered with the 

Commission under the Investment 

Company Act of 1940 (the ‘‘Act’’), has 

filed an application on behalf of two of 

its series, the Primary Fund and the U.S. 

Government Fund (the ‘‘Funds’’), for a 

temporary order pursuant to section 

22(e)(3) of the Act permitting (a) 

suspension of the right of redemption of 

their outstanding redeemable securities, 

and (b) postponement of payment for 

shares which have been submitted for 

redemption for which payment has not 

been made. 

Section 22(e) of the Act provides, in 

relevant part, that no registered 

investment company shall suspend the 

right of redemption, or postpone the 

date of payment upon redemption 

except ‘‘(3) for such * * * periods as 

the Commission may by order permit for 

the protection of security holders of the 

company.’’ 

Applicant represents that: (1) The 

board, including a majority of directors 

that are not interested persons of the 

Trust: (a) Determined, on September 17, 

2008, that a suspension of redemption is 

in the best interest of each Fund’s 

shareholders, and (b) determined, on 

September 17, 2008, that a 

postponement of payment for shares 

which have been submitted for 

redemption for which payment has not 

been made is in the best interest of each 

Fund’s shareholders, and (c) will create 

a plan for the orderly liquidation of each 

Fund’s assets to meet redemption 

requests and for the appropriate 

payments to each Fund’s shareholders, 

including those whose redemption 

orders have been received but not yet 

paid, which plan is subject to 

Commission supervision; (2) the Funds 

have suspended sales; and (3) the Funds 

will make and keep appropriate records 

surrounding these events. 

Based on the representations in the 

application, including those relating to 

the current extraordinary market 

conditions, the Commission finds that 

the temporary suspension of the right of 

redemption and postponement of 

payment for shares which have been 

submitted for redemption for which 

payment has not been made by the 

Funds is necessary for the protection of 

their security holders. 

Accordingly, it is ordered, pursuant to 

section 22(e)(3) of the Act, that the 

requested exemption from section 22(e) 

of the Act is granted until the markets 

are liquid to a degree that enables each 

Fund to liquidate portfolio securities 

without impairing the net asset value of 

each Fund, or the Commission, on its 

own initiative, rescinds the order 

granted herein. This order shall be in 

effect as of September 17, 2008. 

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Federal Register / Vol. 73, No. 187 / Thursday, September 25, 2008 / Notices 55573 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A). 

4 17 CFR 240.19b–4(f)(6). 

5Amex gave the Commission written notice of its 

intention to file the proposed rule change on 

September 19, 2008. The Commission reviewed the 

proposed rule change and gave Amex permission to 

file the proposed rule change on the same day. 

Amex asked the Commission to waive the 30-day 

operative delay. See Rule 19b–4(f)(6)(iii). 17 CFR 

240.19b–4(f)(6)(iii). 

6LBI also was an associate member organization. 

‘‘Associate’’ denotes that the member organization 

has no floor presence and only accesses the 

Exchange electronically. 

By the Commission. 

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–22547 Filed 9–24–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58606; File No. SR–Amex– 

2008–72] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of a Proposed Rule Change by the 

American Stock Exchange LLC 

Temporarily Suspending the 

Requirements of Its Rules Concerning 

the Approval of New Member 

Organizations in Order To Approve 

Barclays Capital Inc. Immediately and 

Provisionally as a New Member 

Organization 

September 19, 2008. 

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

Securities Exchange Act of 1934, as 

amended (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on September 19, 2008, the American 

Stock Exchange LLC (‘‘Amex’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act,3 and Rule 

19b–4(f)(6) thereunder,4 which renders 

the proposal effective upon filing with 

the Commission.5 The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is proposing to 

temporarily suspend the requirements 

of Article IV, Section 2 of the Amex 

Constitution and related Amex rules 

concerning the approval of new member 

organizations in order to approve 

Barclays Capital Inc. (‘‘BCI’’) as a new 

associate member organization, subject 

to BCI complying with Exchange rules 

for a new member organization within 

60 days of the date that BCI is 

provisionally approved. 

The text of the proposed rule change 

is available on the Amex’s Web site at 

http://www.amex.com, the Office of the 

Secretary, the Amex and at the 

Commission’s Public Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Amex included statements concerning 

the purpose of, and basis for, the 

proposed rule change and discussed any 

comments it received on the proposed 

rule change. The text of these statements 

may be examined at the places specified 

in Item IV below. The Amex has 

prepared summaries, set forth in 

sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes this rule filing 

to temporarily suspend the 

requirements of Article IV, Section 2 of 

the Amex Constitution and related 

Amex rules concerning the approval of 

new member organizations in order to 

immediately approve as an Amex 

associate member organization BCI, 

which is the entity acquiring the assets 

of Lehman Brothers Inc. (‘‘LBI’’).6 The 

Exchange proposes this temporary 

suspension on an emergency basis to 

ensure that BCI will be able to 

expeditiously complete its proposed 

acquisition of certain LBI assets and 

begin operating former LBI business 

lines by September 22, 2008. This 

proposed temporary suspension is 

contingent upon BCI complying with all 

requirements of a new Amex member 

organization applicant within 60 days of 

the date that BCI is provisionally 

approved as an Amex member 

organization under this rule filing. 

a. Background 

(i) Lehman Files for Bankruptcy 

On September 15, 2008, Lehman 

Brothers Holding Inc. (‘‘Lehman’’), after 

a precipitous decline in its financial 

condition, filed for bankruptcy 

protection in the United States 

Bankruptcy Court for the Southern 

District of New York under Chapter 11 

of the U.S. bankruptcy code. Lehman is 

the parent holding company of LBI, 

which is a registered broker dealer and 

Amex member organization. Although 

LBI did not file for bankruptcy 

protection at that time, Lehman’s 

Chapter 11 status impacted the ability of 

LBI to continue operations. 

On September 17, 2008, Barclays 

Bank PLC (‘‘Barclays’’), a global 

financial services provider, announced 

that it had agreed to acquire the LBI 

investment banking and capital markets 

operations and supporting infrastructure 

for $1.75 billion (the ‘‘proposed 

acquisition’’). As part of the proposed 

acquisition, Barclays would be 

acquiring the LBI fixed income and 

equities sales, trading and research, and 

investment banking businesses (the 

‘‘LBI businesses’’). Barclays would also 

be acquiring approximately 10,000 LBI 

employees, the Lehman headquarters 

located at 745 Seventh Avenue in New 

York City, and two data centers located 

in New Jersey. The proposed acquisition 

is subject to a number of conditions, 

including approval by the United States 

Bankruptcy Court for the Southern 

District of New York and other 

regulatory approvals and antitrust 

review. Moreover, if the proposed 

acquisition is not completed by 

September 24, 2008, Barclays may 

terminate the agreement to acquire LBI 

businesses. 

(ii) Barclays Will Transfer LBI Assets to 

BCI 

On September 19, 2008, Barclays 

announced that certain LBI assets, 

including its employees and businesses, 

will be transferred to its wholly-owned 

subsidiary, BCI. BCI is a registered U.S. 

broker dealer and FINRA member, but 

not currently approved as an Amex 

member organization. 

The Exchange understands that LBI 

will likely file for some form of 

bankruptcy protection on Friday, 

September 19, 2008, and thus by the 

close of business on Friday, LBI will be 

in the control of a trustee. The Exchange 

further understands that, subject to 

approval by the bankruptcy court, as 

part of the bankruptcy proceeding, LBI 

assets will be sold to Barclays and 

transferred to BCI. Accordingly, as early 

as September 19, 2008, BCI may own 

and control the LBI businesses. 

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