Federal Register / Vol. 79, No. 230 / Monday, December 1, 2014 / Notices 71143 

1The applicant also requests that the order apply 

to an Issuer’s future appointment of any other entity 

controlling, controlled by, or under common 

control (as defined in Section 2(a)(9) of the Act) 

with the applicant as a trustee in connection with 

an Issuer’s ABS. The applicant represents that any 

other entity intending to rely on this relief will 

comply with the terms and conditions of the 

application. Any existing entity currently intending 

to rely on the requested order has been named as 

an applicant. 

Lakes populations and resources 

(including fisheries, aquaculture, and 

marine ecosystems). 

• Space Weather: Understanding, 

assessing, predicting, and mitigating the 

effects of space weather on 

technological systems (including 

satellites, power grids, communications, 

and navigation). 

• Transportation: Improving the 

safety and efficiency of all modes of 

transportation (including air, highway, 

railway, and marine). 

• Water Resources: Improving water 

resource management through better 

understanding and monitoring of the 

water cycle. 

• Weather: Improving weather 

information, forecasting, and warning. 

• Reference Measurements: 

Improving reference measurements—the 

underpinnings of all the SBAs—and the 

fundamental measurement systems and 

standards supporting them (such as 

geodesy, bathymetry, topography, and 

geolocation). 

OSTP invites you to submit public 

comments (limit 5 pages) on the 

technical feasibility of developing 

microsatellites that can be deployed at 

equal or lower cost compared to current 

satellites to meet the sustained missions 

of the civil Earth observation 

community. For the purposes of this 

study, OSTP considers microsatellites as 

having a mass of less than 100 kg. In 

your written response, please identify 

the number of each topic as you address 

it. 

OSTP welcomes public input on the 

following topics: 

1. Identify the measurement 

categories highlighted in the National 

Plan for Civil Earth Observations 

relevant to your mission; 

2. Technical near-term (1–5 years) 

capabilities of microsatellite system(s) 

related to Earth observations capabilities 

as defined above; 

3. Reliability, system lifetime, and 

maintainability; 

4. Launch requirements including 

planned launch options (rideshare, 

microsatellite launch companies, etc.), if 

they exist; 

5. Current technical limitations on 

microsatellites for operational Earth 

observing missions; and 

6. Broad estimates of development, 

launch and operational costs of specific 

systems. 

Ted Wackler, 

Deputy Chief of Staff and Assistant Director. 

[FR Doc. 2014–28178 Filed 11–28–14; 8:45 am] 

BILLING CODE 3270–F5–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Company Act Release No. 

31347; File No. 812–14331] 

MUFG Union Bank, N.A.; Notice of 

Application 

November 24, 2014. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice of an application under 

Section 6(c) of the Investment Company 

Act of 1940 (‘‘Act’’) for an exemption 

from certain requirements of Rule 3a– 

7(a)(4)(i) under the Act. 

SUMMARY: Summary of Application: 

Applicant requests an order that would 

permit an issuer of asset-backed 

securities (‘‘ABS’’) that is not registered 

as an investment company under the 

Act in reliance on Rule 3a–7 under the 

Act (an ‘‘Issuer’’) to appoint the 

applicant as a trustee in connection 

with the Issuer’s ABS when the 

applicant is affiliated with an 

underwriter for the Issuer’s ABS. 

Applicant: MUFG Union Bank, N.A. 

DATES: Filing Dates: The application was 

filed on July 11, 2014 and amended on 

October 3, 2014 and October 10, 2014. 

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 

applicant with a copy of the request, 

personally or by mail. Hearing requests 

should be received by the Commission 

by 5:30 p.m. on December 19, 2014 and 

should be accompanied by proof of 

service on the applicant, in the form of 

an affidavit or, for lawyers, a certificate 

of service. Pursuant to Rule 0–5 under 

the Act, hearing requests should state 

the nature of the writer’s interest, any 

facts bearing upon the desirability of a 

hearing on the matter, 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: The Commission: Brent J. 

Fields, Secretary, U.S. Securities and 

Exchange Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

Applicant: MUFG Union Bank, N.A., 

445 S. Figueroa Street, Suite 1203, Los 

Angeles, CA 90071. 

FOR FURTHER INFORMATION CONTACT: 

Rochelle Kauffman Plesset, Senior 

Counsel, at (202) 551–6840, or Nadya 

Roytblat, Assistant Chief Counsel at 

(202) 551–0825 (Division of Investment 

Management, Chief Counsel’s Office). 

SUPPLEMENTARY INFORMATION: The 

following is a summary of the 

application. The complete application 

may be obtained via the Commission’s 

Web site by searching for the file 

number, or for an applicant using the 

Company name box, at http://

www.sec.gov/search/search.htm or by 

calling (202) 551–8090. 

Applicant’s Representations 

1. The applicant is a wholly-owned 

indirect subsidiary of Mitsubishi UFJ 

Financial Group, Inc. (MUFG).1 MUFG 

is a global financial services 

organization that offers a broad range of 

banking, trust, and securities services to 

individuals and entities around the 

world. The applicant is frequently 

selected to act as trustee in connection 

with ABS issued by Issuers. 

2. An ABS transaction typically 

involves the transfer of assets by a 

seller, usually by a ‘‘sponsor,’’ to a 

bankruptcy remote special purpose 

corporate or trust entity that is 

established for the sole purpose of 

holding the assets and issuing ABS to 

investors (an ‘‘ABS Transaction’’). 

Payments of interest and principle on 

the ABS depend primarily on the cash 

flow generated by the pool of assets 

owned by the Issuer. 

3. The parties to an ABS Transaction 

enter into several transaction 

agreements that provide for the holding 

of the assets by the Issuer and define the 

rights and responsibilities of the parties 

to the transaction (‘‘Transaction 

Documents’’). The operative Transaction 

Document governing the trustee is 

referred to herein as the ‘‘Agreement.’’ 

4. The sponsor of an ABS Transaction 

assembles the pool of assets by 

purchasing or funding them, describes 

them in the offering materials, and 

retains the underwriter to sell interests 

in the assets to investors. The sponsor 

determines the structure, drafts the 

documents, and prices the ABS 

Transaction. The sponsor selects the 

other parties to the ABS Transaction, 

including the underwriter, the servicer, 

and the trustee. 

5. The servicer, either directly or 

through subservicers, manages the 

assets held by the Issuer. The servicer 

typically collects the income from the 

assets and remits the income to the 


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71144 Federal Register / Vol. 79, No. 230 / Monday, December 1, 2014 / Notices 

trustee. The trustee uses the income, as 

instructed by the servicer and as 

provided by the Agreement, to pay 

interest and principal on the ABS, to 

fund reserve accounts and purchases of 

additional assets, and to make other 

payments including fees owed to the 

trustee and other parties to the ABS 

Transaction. 

6. The sponsor of an ABS Transaction 

selects the trustee and other participants 

in the transaction. In selecting a trustee, 

the sponsor generally seeks to obtain 

customary trust administrative and 

related services for the Issuer at minimal 

cost. In some instances, other parties to 

an ABS Transaction may provide 

recommendations to a sponsor about 

potential trustees. An underwriter for an 

ABS Transaction also may provide 

advice to the sponsor about trustee 

selection based on the underwriter’s 

knowledge of the pricing and expertise 

offered by a particular trustee in light of 

the contemplated transaction. 

7. If an underwriter affiliated with the 

applicant recommends a trustee to a 

sponsor, both the underwriter’s 

recommendation and any selection of 

the applicant by the sponsor will be 

based upon customary market 

considerations of pricing and expertise, 

among other things, and the selection 

will result from an arms-length 

negotiation between the sponsor and the 

applicant. The applicant will not price 

its services as trustee in a manner 

designed to facilitate its affiliate being 

named underwriter. 

8. The trustee’s role in an ABS 

Transaction is specifically defined by 

the Agreement, and under the 

Agreement the trustee is not expected or 

required to perform discretionary 

functions. The responsibilities of the 

trustee as set forth in the Agreement are 

narrowly circumscribed and limited to 

those expressly accepted by the trustee. 

The trustee negotiates the provisions 

applicable to it directly with the 

sponsor and is then appointed by, and 

enters into the Agreement with, the 

Issuer. 

9. The trustee usually becomes 

involved in an ABS Transaction after 

the substantive economic terms have 

been negotiated between the sponsor 

and the underwriters. The trustee does 

not monitor any service performed by, 

or obligation of, an underwriter, 

whether or not the underwriter is 

affiliated with the trustee. In the 

unlikely event that the applicant, in 

acting as trustee to an Issuer for which 

an affiliate acts as underwriter, becomes 

obligated to enforce any of the affiliated 

underwriter’s obligations to the Issuer, 

the applicant will resign as trustee for 

the Issuer consistent with the 

requirements of Rule 3a–7(a)(4)(i). In 

such an event, the applicant will incur 

the costs associated with the Issuer’s 

procurement of a successor trustee. 

10. The sponsor selects one or more 

underwriters to purchase the Issuer’s 

ABS and resell them or to privately 

place them with buyers obtained by the 

underwriter. The sponsor enters into an 

underwriting agreement with the 

underwriter that sets forth the 

responsibilities of the underwriter with 

respect to the distribution of the ABS 

and includes representations and 

warranties regarding, among other 

things, the underwriter and the quality 

of the Issuer’s assets. The obligations of 

the underwriter under the underwriting 

agreement are enforceable against the 

underwriter only by the sponsor. 

11. The underwriter may assist the 

sponsor in the organization of an Issuer 

by providing advice, based on its 

expertise in ABS Transactions, on the 

structuring and marketing of the ABS. 

This advice may relate to the risk 

tolerance of investors, the type of 

collateral, the predictability of the 

payment stream, the process by which 

payments are allocated and downstreamed to investors, the way that 

credit losses may affect the trust and the 

return to investors, whether the 

collateral represents a fixed set of 

specific assets or accounts, and the use 

of forms of credit enhancements to 

transform the risk-return profile of the 

underlying collateral. Any involvement 

of an underwriter in the organization of 

an Issuer that occurs is limited to 

helping determine the assets to be 

pooled, helping establish the terms of 

the ABS to be underwritten, and 

providing the sponsor with a warehouse 

line of credit with which to purchase 

the pool assets. 

12. An underwriter may provide 

advice to a sponsor regarding the 

sponsor’s selection of a trustee for the 

Issuer. However, an underwriter’s role 

in structuring a transaction would not 

extend to determining the obligations of 

a trustee, and the underwriter is not a 

party to the Agreement or to any of the 

Transaction Documents. Except for 

arrangements involving credit or credit 

enhancement for an Issuer or 

remarketing agent activities, the 

underwriter typically has no role in the 

operation of the Issuer after its issuance 

of securities. The applicant represents 

that although an underwriter typically 

may provide credit or credit 

enhancement for an Issuer or engage in 

remarketing agent activities, an 

underwriter affiliated with the applicant 

will not provide or engage in such 

activities. 

Applicant’s Legal Analysis 

1. Rule 3a–7 excludes from the 

definition of investment company under 

Section 3(a) of the Act an Issuer that 

meets the conditions of the rule. One of 

Rule 3a–7’s conditions, set forth in 

paragraph (a)(4)(i), requires that the 

Issuer appoint a trustee that is not 

affiliated with the Issuer or with any 

person involved in the organization or 

operation of the Issuer (the 

‘‘Independent Trustee Requirement’’). 

Rule 3a–7(a)(4)(i) therefore prohibits an 

Issuer from appointing a trustee that is 

affiliated with an underwriter. 

2. Section 6(c) 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 the 

Act, or from any rule thereunder, if and 

to the extent 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. 

3. Applicant requests exemptive relief 

under Section 6(c) of the Act from Rule 

3a–7(a)(4)(i) under the Act to the extent 

necessary to permit an Issuer to appoint 

the applicant as a trustee to the Issuer 

when the applicant is affiliated with an 

underwriter involved in the 

organization of the Issuer. Applicant 

submits that the requested exemptive 

relief from the Independent Trustee 

Requirement is necessary and 

appropriate in the public interest and is 

consistent with the protection of 

investors and the purposes fairly 

intended by the policy and provisions of 

the Act due to changes in the banking 

industry, due to the timing and nature 

of the roles of the trustee and the 

underwriter in ABS Transactions, and 

because the requested relief is 

consistent with the policies and 

purposes underlying the Independent 

Trustee Requirement and Rule 3a–7 in 

general. 

4. Applicant states that when Rule 

3a–7 was proposed in 1992, virtually all 

trustees were unaffiliated with the other 

parties involved in an ABS Transaction. 

Applicant states that consolidation 

within the banking industry, as well as 

economic and other business factors, 

has resulted in a significant decrease in 

the number of bank trustees providing 

services to Issuers. Applicant also states 

that bank consolidation has been 

accompanied by the expansion of banks 

into investment banking, including the 

underwriting of ABS Transactions. 

Applicant further states that due to 

these banking industry changes, most 

trustees that provide services to Issuers, 


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Federal Register / Vol. 79, No. 230 / Monday, December 1, 2014 / Notices 71145 

including the applicant, have 

affiliations with underwriters to Issuers. 

Applicant states that, as a result, when 

an affiliate of the applicant is selected 

to underwrite ABS in an ABS 

Transaction, Rule 3a–7(a)(4)(i)’s 

Independent Trustee Requirement 

generally prevents applicant from 

serving as trustee for the Issuer. 

Applicant states that the Independent 

Trustee Requirement imposes an 

unnecessary regulatory limitation on 

trustee selection and causes market 

distortions by leading to the selection of 

trustees for reasons other than 

customary market considerations of 

pricing and expertise. This result is 

disadvantageous to the ABS market and 

to ABS investors. 

5. Applicant submits that due to the 

nature and timing of the roles of the 

trustee and the underwriter, applicant’s 

affiliation with an underwriter would 

not result in a conflict of interest or 

possibility of overreaching that could 

harm investors. Applicant states that the 

trustee’s role begins with the Issuer’s 

issuance of its securities, and the trustee 

performs its role over the life of the 

Issuer. Applicant states that, in contrast, 

the underwriter is chosen early in the 

ABS Transaction process, may help to 

structure the ABS Transaction, 

distributes the Issuer’s securities to 

investors, and generally has no role 

subsequent to the distribution of the 

Issuer’s securities. Applicant further 

states that an ABS trustee does not 

monitor the distribution of securities or 

any other activity performed by 

underwriters and there is no 

opportunity for a trustee and an 

affiliated underwriter to act in concert 

to benefit themselves at the expense of 

holders of the ABS either prior to or 

after the closing of the ABS Transaction. 

6. Applicant states that the trustee’s 

role is narrowly defined, and that the 

trustee is neither expected nor required 

to exercise discretion or judgment 

except after a default in the ABS 

transaction, which rarely occurs. 

Applicant states that the duties of a 

trustee after a default are limited to 

enforcing the terms of the Agreement for 

the benefit of debt holders as a ‘‘prudent 

person’’ would enforce such interests 

for his own benefit. Applicant further 

states that the trustee of the Issuer has 

virtually no discretion to pursue anyone 

in any regard other than preserving and 

realizing on the assets. In any event, 

Applicant states that any role taken by 

the Trustee in the event of a default 

would occur after the underwriter has 

terminated its role in the transaction. 

7. Applicant submits that the 

concerns underlying the Independent 

Trustee Requirement are not implicated 

if the trustee for an Issuer is 

independent of the sponsor, servicer, 

and credit enhancer for the Issuer, but 

is affiliated with an underwriter for the 

Issuer, because in that situation no 

single entity would act in all capacities 

in the issuance of the ABS and the 

operation of an Issuer. Applicant states 

that applicant would continue to act as 

an independent party safeguarding the 

assets of any Issuer regardless of an 

affiliation with an underwriter of the 

ABS. Applicant submits that the 

concern that affiliation could lead to a 

trustee monitoring the activities of an 

affiliate also is not implicated by a 

trustee’s affiliation with an underwriter, 

because, in practice, a trustee for an 

Issuer does not monitor the distribution 

of securities or any other activity 

performed by underwriters. Applicant 

further states that the requested relief 

would be consistent with the broader 

purpose of Rule 3a–7 of not hampering 

the growth and development of the ABS 

market, to the extent consistent with 

investor protection. 

8. Applicant states that the conditions 

set forth below provide additional 

protections against conflicts and 

overreaching. For example, the 

conditions ensure that the Applicant 

will continue to act as an independent 

party safeguarding the assets of an 

Issuer regardless of an affiliation with 

the underwriter of the ABS and would 

not allow the underwriter any greater 

access to the assets, or cash flows 

derived from the assets, of the Issuer 

than if there were no affiliation. 

Applicant’s Conditions 

The applicant agrees that any order 

granting the requested relief will be 

subject to the following conditions: 

1. The applicant will not be affiliated 

with any person involved in the 

organization or operation of the Issuer 

in an ABS Transaction other than the 

underwriter. 

2. The applicant’s relationship to an 

affiliated underwriter will be disclosed 

in writing to all parties involved in an 

ABS Transaction, including the rating 

agencies and the ABS holders. 

3. An underwriter affiliated with the 

applicant will not be involved in the 

operation of an Issuer, and its 

involvement in the organization of an 

Issuer will extend only to determining 

the assets to be pooled, assisting in 

establishing the terms of the ABS to be 

underwritten, and providing the 

sponsor with a warehouse line of credit 

with which to purchase the pool assets. 

4. An affiliated person of the 

applicant, including an affiliated 

underwriter, will not provide credit or 

credit enhancement to an Issuer if the 

applicant serves as trustee to the Issuer. 

5. An underwriter affiliated with the 

applicant will not engage in any 

remarketing agent activities, including 

involvement in any auction process in 

which ABS interest rates, yields, or 

dividends are reset at designated 

intervals in any ABS Transaction from 

which the applicant serves as trustee to 

the Issuer. 

6. All of an affiliated underwriter’s 

contractual obligations pursuant to the 

underwriting agreement will be 

enforceable by the sponsor. 

7. Consistent with the requirements of 

Rule 3a–7(a)(4)(i), the applicant will 

resign as trustee for the Issuer if 

applicant becomes obligated to enforce 

any of an affiliated underwriter’s 

obligations to the Issuer. 

8. The applicant will not price its 

services as trustee in a manner designed 

to facilitate its affiliate being named 

underwriter. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Kevin M. O’Neill, 

Deputy Secretary. 

[FR Doc. 2014–28174 Filed 11–28–14; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. IC–31344] 

Notice of Applications for 

Deregistration Under Section 8(f) of the 

Investment Company Act of 1940 

November 21, 2014. 

The following is a notice of 

applications for deregistration under 

section 8(f) of the Investment Company 

Act of 1940 for the month of November 

2014. A copy of each application may be 

obtained via the Commission’s Web site 

by searching for the file number, or for 

an applicant using the Company name 

box, at http://www.sec.gov/search/

search.htm or by calling (202) 551– 

8090. An order granting each 

application will be issued unless the 

SEC orders a hearing. Interested persons 

may request a hearing on any 

application by writing to the SEC’s 

Secretary at the address below and 

serving the relevant applicant with a 

copy of the request, personally or by 

mail. Hearing requests should be 

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

December 19, 2014, and should be 

accompanied by proof of service on 

applicants, in the form of an affidavit or, 

for lawyers, a certificate of service. 

Pursuant to Rule 0–5 under the Act, 


asabaliauskas on DSK5VPTVN1PROD with NOTICES