Federal Register / Vol. 82, No. 204 / Tuesday, October 24, 2017 / Notices 49255 

20 17 CFR 200.30–3(a)(12). 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549 on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of the 

filing also will be available for 

inspection and copying at the principal 

office of the Exchange. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR– 

NYSEArca–2017–119 and should be 

submitted on or before November 14, 

2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–22973 Filed 10–23–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Investment Advisers Act Release No. 4797; 

File No. 803–00238] 

Stephens Inc. 

October 18, 2017. 

AGENCY: Securities and Exchange 

Commission (‘‘Commission’’). 

ACTION: Notice. 

Notice of application for an exemptive 

order under Section 206A of the 

Investment Advisers Act of 1940 (the 

‘‘Act’’) and Rule 206(4)–5(e). 

APPLICANT: Stephens Inc. (‘‘Applicant’’ 

or ‘‘Adviser’’). 

RELEVANT SECTIONS OF THE ACT: 

Exemption requested under section 

206A of the Act and rule 206(4)–5(e) 

from rule 206(4)–5(a)(1) under the Act. 

SUMMARY OF APPLICATION: Applicant 

requests that the Commission issue an 

order under section 206A of the Act and 

rule 206(4)–5(e) exempting it from rule 

206(4)–5(a)(1) under the Act to permit 

Applicant to receive compensation from 

certain government entities for 

investment advisory services provided 

to the government entities within the 

two-year period following a 

contribution by a covered associate of 

the Applicant to an official of the 

government entities. 

FILING DATES: The application was filed 

on December 20, 2016, and an amended 

and restated application was filed on 

June 21, 2017. 

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 November 13, 2017, and 

should be accompanied by proof of 

service on 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 may request notification of a 

hearing by writing to the Commission’s 

Secretary. 

ADDRESSES: Secretary, Securities and 

Exchange Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

Applicant: Stephens Inc., 111 Center 

Street, Little Rock, AR 72201. 

FOR FURTHER INFORMATION CONTACT: 

Rachel Loko, Senior Counsel, or Holly 

Hunter-Ceci, Assistant Chief Counsel, at 

(202) 551- 6825 (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 at http://www.sec.gov/rules/ 

iareleases.shtml or by calling (202) 551– 

8090. 

Applicant’s Representations 

1. Applicant is a financial services 

firm established in Little Rock, Arkansas 

and registered with the Commission as 

an investment adviser under the Act. 

Applicant provides discretionary 

investment advisory services to a wide 

variety of investors. 

2. The individual who made the 

campaign contribution that triggered the 

two-year compensation ban (the 

‘‘Contribution’’) is J. Bradford Eichler 

(the ‘‘Contributor’’). The Contributor is 

an Executive Vice President of the 

Applicant and is the head of Investment 

Banking for the firm. The Contributor’s 

role focuses on oversight of the 

Adviser’s corporate finance division. 

Applicant submits that, because the 

Contributor is and at the time of the 

contribution was, an executive officer of 

the Adviser, he is, and at all relevant 

times was, a covered associate. 

3. Three of the Adviser’s clients are 

government entities of the City of Little 

Rock (the ‘‘Clients’’). Client A and 

Client B are city pension funds and 

Client C is a fund maintained by the city 

for certain expenses. The Clients are 

government entities as defined in Rule 

206(4)–5(f)(5)(i). 

4. The recipient of the Contribution 

was Capi Peck (the ‘‘Official’’), who, at 

the time of the Contribution, was 

seeking the office of director on the 

Little Rock Board of Directors. The 

Board of Directors appoints a board 

member of Client A, appoints a city 

official with authority to hire an 

investment manager for Client B and has 

ultimate investment authority over 

Client C. Due to her position as a 

director, the Official is an ‘‘official’’ of 

the Clients as defined in Rule 206(4)– 

5(f)(6)(ii). As of the date of the 

application, the Official has not 

participated in the appointment of 

anyone with authority on Client A or 

Client B’s decision to select an 

investment adviser, nor has she 

participated in a decision affecting 

Client C’s investment with the Adviser. 

5. The Contribution that triggered rule 

206(4)–5’s prohibition on compensation 

under rule 206(4)–5(a)(1) was made 

online on October 17, 2016 for the 

amount of $1,000. Applicant submits 

that the Contribution was not motivated 

by any desire to influence the award of 

investment advisory business. 

Applicant represents that the 

Contributor does live in Little Rock and 

has a longstanding friendship with the 

Official. The Contributor has known the 

Official for approximately 30 years and 

known her ex-husband and business 

partner for approximately 35 years. The 

Contributor and the official’s exhusband also have a shared interest in 

competitive swimming. The Contributor 

lived with them for a long time during 

college, worked at their restaurant and 

has maintained close relationships. His 

decision to make the Contribution was 

spontaneous and motivated by his 

longstanding friendship with the 

Official. Applicant submits that 

although the Contributor and the 

Official are friends, they have not 

discussed the Adviser’s advisory 

business or the potential investments by 

the Clients. The Contributor did not 

seek or coordinate any other 

contribution for the Official. Applicant 

represents that the Contributor did not 

have any intention to seek, and no 

action was taken by the Contributor or 

the Applicant to obtain, any direct or 

indirect influence from the Official or 

any other person. 

6. The Adviser has been doing 

business with Little Rock, its home city, 


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49256 Federal Register / Vol. 82, No. 204 / Tuesday, October 24, 2017 / Notices 

since its founding in 1933. The 

investments were all made before the 

date of the Contribution and before the 

Official took office. The Clients current 

accounts were initiated between 2006 

and 2014. Applicant represents that 

none of the Clients have materially 

increased the amounts of assets 

managed by the Adviser, initiated new 

investment mandates, or opened new 

accounts with the Adviser since the 

Contribution was made. Neither the 

Contributor nor anyone whom he 

supervises was in any way involved in 

soliciting the Clients with respect to any 

business. 

7. The Adviser became aware of the 

Contribution on November 16, 2016 

when the Contributor remembered that, 

pursuant to the Adviser’s pay-to-play 

policy (the ‘‘Policy’’), he was required to 

obtain pre-approval for his political 

contributions and, at his initiative, 

contacted the Adviser’s general counsel 

to inform him about the Contribution. 

The Contributor requested a refund of 

the full $1,000 that day and received the 

refund on November 18, 2016. The 

Adviser established an escrow account 

on December 5, 2016 into which it has 

been depositing an amount equal to the 

compensation received with respect to 

the Clients’ investments since the date 

of the Contribution, October 17, 2016. 

Applicant submits that all management 

fees earned with respect to Clients’ 

investments since the date of the 

Contribution have been placed in 

escrow and will continue to be placed 

in escrow pending the outcome of this 

application. 

8. The Policy was adopted on March 

3, 2011. The Applicant submits that all 

contributions by the Adviser’s managing 

members, executive officers and other 

‘‘covered associates,’’ as well as those 

who could in the future become covered 

associates, to any person who was at the 

time of the contribution an incumbent, 

candidate or successful candidate for an 

elective office of a government entity 

must be precleared. There is no de 

minimis exception from the preclearance requirement. Under the 

existing Policy, the Adviser circulated 

reminders of the need to preclear. 

Employees subject to the Policy must 

certify quarterly their contributions. In 

addition, annual employee audit 

questionnaires ask about the employee’s 

political contributions, the Adviser does 

internet searches for contributions and 

verifies the results of the quarterly 

certifications with its preclearance 

records. 

Applicant’s Legal Analysis 

1. Rule 206(4)–5(a)(1) under the Act 

prohibits a registered investment 

adviser from providing investment 

advisory services for compensation to a 

government entity within two years 

after a contribution to an official of a 

government entity is made by the 

investment adviser or any covered 

associate of the investment adviser. 

Each of the Clients is a ‘‘government 

entity,’’ as defined in rule 206(4)–5(f)(5), 

the Contributor is a ‘‘covered associate’’ 

as defined in rule 206(4)–5(f)(2), and the 

Official is an ‘‘official’’ as defined in 

rule 206(4)–5(f)(6). 

2. Section 206A of the Act authorizes 

the Commission to ‘‘conditionally or 

unconditionally exempt any person or 

transaction . . . from any provision or 

provisions of [the Act] or of any rule or 

regulation 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 Act].’’ 

3. Rule 206(4)–5(e) provides that the 

Commission may conditionally or 

unconditionally grant an exemption to 

an investment adviser from the 

prohibition under rule 206(4)–5(a)(1) 

upon consideration of the factors listed 

below, among others: 

(1) Whether the 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; 

(2) Whether the investment adviser: 

(i) Before the contribution resulting in 

the prohibition was made, adopted and 

implemented policies and procedures 

reasonably designed to prevent 

violations of the rule; and (ii) prior to or 

at the time the contribution which 

resulted in such prohibition was made, 

had no actual knowledge of the 

contribution; and (iii) after learning of 

the contribution: (A) Has taken all 

available steps to cause the contributor 

involved in making the contribution 

which resulted in such prohibition to 

obtain a return of the contribution; and 

(B) has taken such other remedial or 

preventive measures as may be 

appropriate under the circumstances; 

(3) Whether, at the time of the 

contribution, the contributor was a 

covered associate or otherwise an 

employee of the investment adviser, or 

was seeking such employment; 

(4) The timing and amount of the 

contribution which resulted in the 

prohibition; 

(5) The nature of the election (e.g., 

federal, state or local); and 

(6) The contributor’s apparent intent 

or motive in making the contribution 

which resulted in the prohibition, as 

evidenced by the facts and 

circumstances surrounding such 

contribution. 

4. Applicant requests an order 

pursuant to section 206A and rule 

206(4)–5(e), exempting it from the twoyear prohibition on compensation 

imposed by rule 206(4)–5(a)(1) with 

respect to investment advisory services 

provided to the Clients within the twoyear period following the Contribution. 

5. Applicant submits that the 

exemption is 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 Act. Applicant 

further submits that the other factors set 

forth in rule 206(4)–5(e) similarly weigh 

in favor of granting an exemption to the 

Applicant to avoid consequences 

disproportionate to the violation. 

6. Applicant contends that given the 

nature of the Contribution, and the lack 

of any evidence that the Adviser or the 

Contributor intended to, or actually did, 

interfere with any client’s merit-based 

process for the selection or retention of 

advisory services, the Clients’ interests 

are best served by allowing the Adviser 

and its Clients to continue their 

relationship uninterrupted. Applicant 

states that causing the Adviser to serve 

without compensation for a two- year 

period could result in a financial loss of 

approximately $1 million or 1000 times 

the amount of the Contribution. 

Applicant suggests that the policy 

underlying rule 206(4)–5 is served by 

ensuring that no improper influence is 

exercised over investment decisions by 

governmental entities as a result of 

campaign contributions and not by 

withholding compensation as a result of 

unintentional violations. 

7. Applicant represents that the Policy 

was adopted and published in March 

2011, well before the Contribution was 

made. Applicant further represents that, 

at all times, the Policy has conformed to 

the requirements of rule 206(4)–5 and 

has been more rigorous than rule 

206(4)–5’s requirements as the Adviser 

does internet testing as part of its annual 

audit process and requires covered 

associates to certify their compliance 

with the Policy and disclose all 

contributions quarterly. 

8. Applicant asserts that at no time 

did any employee or covered associate 

of the Adviser other than the 

Contributor have any knowledge that 

the Contribution had been made before 

its discovery by the Adviser in 

November 2016 when the Contributor 

self-reported the Contribution to the 

Adviser. 

9. Applicant asserts that after learning 

of the Contribution, the Adviser caused 


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Federal Register / Vol. 82, No. 204 / Tuesday, October 24, 2017 / Notices 49257 

the Contributor to immediately obtain a 

full refund of the Contribution. 

Applicant submits that the Adviser 

reviewed its Policy and concluded that 

it was adequate for preventing 

impermissible contributions. 

10. Applicant states that after learning 

of the Contribution, it confirmed that 

the although the Contributor’s job 

would not ordinarily cause him to 

interact with the Clients, after learning 

of the Contribution, the Adviser, out of 

an abundance of caution, instructed him 

not to solicit or otherwise communicate 

with the Clients for two years following 

the date of the Contribution. 

11. Applicant asserts that the Clients’ 

decisions to invest with the Adviser 

occurred long before the Contribution 

was made, in October 2016. 

Furthermore, no investments were made 

in the month-long period between the 

date of the Contribution and the day it 

was refunded. Applicant states that, at 

the time of the Contribution and at the 

time of the investments by the Clients, 

the Official has not had any role in the 

Clients’ investment decisions. Applicant 

also submits that the apparent intent in 

making the Contribution was not to 

influence the selection or retention of 

the Adviser. Applicant represents that 

the Contributor and the Official have a 

long standing friendship as the 

Contributor worked at the Official’s 

restaurant and lived with the Official 

and her ex-husband when he was in 

college. Applicant finally states that it 

was because of that relationship, and 

not any desire to influence the award of 

investment advisory business that the 

Contributor made the Contribution to 

the Official’s campaign. 

12. Applicant submits that neither the 

Adviser nor the Contributor sought to 

interfere with the Clients’ merit-based 

selection process for advisory services, 

nor did they seek to negotiate higher 

fees or greater ancillary benefits than 

would be achieved in arms’ length 

transactions. Applicant further submits 

that there was no violation of the 

Adviser’s fiduciary duty to deal fairly or 

disclose material conflicts given the 

absence of any intent or action by the 

Adviser or the Contributor to influence 

the selection process. Applicant 

contends that in the case of the 

Contribution, the imposition of the twoyear prohibition on compensation does 

not achieve rule 206(4)–5’s purposes 

and would result in consequences 

disproportionate to the mistake that was 

made. 

Applicant’s Conditions 

The Applicant agrees that any order of 

the Commission granting the requested 

relief will be subject to the following 

conditions: 

1. The Contributor will be prohibited 

from discussing the business of the 

Adviser with any ‘‘government entity’’ 

client for which the Official is an 

‘‘official,’’ each as defined in Rule 

206(4)–5(f), until October 18, 2018. 

2. The Contributor will receive a 

written notification of this condition 

and will provide a quarterly certificate 

of compliance until October 18, 2018. 

Copies of the certifications will be 

maintained and preserved in an easily 

accessible place for a period of not less 

than five years, the first two years in an 

appropriate office of the Adviser, and be 

available for inspection by the staff of 

the Commission. 

3. The Adviser will conduct testing 

reasonably designed to prevent 

violations of the conditions of the Order 

and maintain records regarding such 

testing, which will be maintained and 

preserved in an easily accessible place 

for a period of not less than five years, 

the first two years in an appropriate 

office of the Adviser, and be available 

for inspection by the staff of the 

Commission. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–22955 Filed 10–23–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meetings 

TIME AND DATE: 2:00 p.m. on Thursday, 

October 26, 2017. 

PLACE: Closed Commission Hearing 

Room 10800. 

STATUS: This meeting will be closed to 

the public. 

MATTERS TO BE CONSIDERED: 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) 

and 17 CFR 200.402(a)(3), (a)(5), (a)(7), 

(a)(9)(ii) and (a)(10), permit 

consideration of the scheduled matters 

at the closed meeting. 

Chairman Clayton, as duty officer, 

voted to consider the items listed for the 

closed meeting in closed session. 

The subject matters of the closed 

meeting will be: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

CONTACT PERSON FOR MORE INFORMATION: 

For further information and to ascertain 

what, if any, matters have been added, 

deleted or postponed; please contact 

Brent J. Fields from the Office of the 

Secretary at (202) 551–5400. 

Dated: October 19, 2017. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2017–23123 Filed 10–20–17; 11:15 am] 

BILLING CODE 8011–01–P 

SELECTIVE SERVICE SYSTEM 

Forms Submitted to the Office of 

Management and Budget for Extension 

of Clearance 

AGENCY: Selective Service System. 

ACTION: Notice. 

The following forms have been 

submitted to the Office of Management 

and Budget (OMB) for extension of 

clearance in compliance with the 

Paperwork Reduction Act: 

SSS Forms 2, 3A, 3B and 3C 

Title: Selective Service System Change of 

Information, Correction/Change Form, and 

Registration Status Forms. 

Purpose: To insure the accuracy and 

completeness of the Selective Service System 

registration data. 

Respondents: Registrants are required to 

report changes or corrections in data 

submitted on the SSS Form 1. 

Frequency: When changes in a registrant’s 

name or address occur. 

Burden: A burden of two minutes or less 

on the individual respondent. 

Copies of the above identified forms 

can be obtained upon written request to 

the Selective Service System, Reports 

Clearance Officer, 1515 Wilson 

Boulevard, Arlington, Virginia 22209– 

2425. 

Written comments and 

recommendations for the proposed 

extension of clearance of the form 

should be sent within 60 days of the 

publication of this notice to the 

Selective Service System, Reports 

Clearance Officer, 1515 Wilson 

Boulevard, Arlington, Virginia 22209– 

2425. 

A copy of the comments should be 

sent to the Office of Information and 


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