Document ID: SEC-2006-1388-0001
Agency: sec
Document Type: Notice
Title: Investment Technology Group, Inc.; Notice of Application
Posted Date: 2006-10-27T04:00Z

[Federal Register: October 27, 2006 (Volume 71, Number 208)]
[Notices]               
[Page 63055-63056]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27oc06-108]                         

=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-27521; 812-13191]

 
Investment Technology Group, Inc.; Notice of Application

October 23, 2006.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for a permanent order under section 9(c) 
of the Investment Company Act of 1940 (the ``Act'').

-----------------------------------------------------------------------

SUMMARY: Applicant requests an exemption from section 9(a) of the Act 
with respect to a securities-related injunction entered in 1987.
    Applicant: Investment Technology Group, Inc. (``ITG'').
    Filing Dates: The application was filed on May 24, 2005 and amended 
on June 23, 2006.
    Hearing or Notification of 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 November 
17, 2006 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. An order granting the application will be 
issued unless the Commission orders a hearing.

ADDRESSES: Secretary, Securities and Exchange Commission, 100 F Street, 
NE., Washington, DC 20549-1090; Applicant, 380 Madison Avenue, 4th 
Floor, New York, NY 10017.

FOR FURTHER INFORMATION CONTACT: Emerson Davis, Sr., Senior Counsel, or 
Stacy L. Fuller, Branch Chief, at (202) 551-6821, Division of 
Investment Management, Office of Investment Company Regulation.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application is available for a fee from the 
Commission's Public Reference Branch, 100 F Street, NE., Washington, DC 
20549-1580 (202-551-8090).

Applicant's Representations

    1. ITG, a Delaware corporation, provides electronic execution, 
technology-based equity trading, and research services to a number of 
large institutional clients. ITG began operations in 1987 as a division 
of Jefferies & Company, Inc. (``Jefferies Broker-Dealer''), a broker-
dealer registered under the Securities Exchange Act of 1934 (``1934 
Act'') and a wholly owned subsidiary of Jefferies Group, Inc. 
(``Jefferies Group''). In 1991, ITG was incorporated separately as a 
wholly owned subsidiary of Jefferies Group. In 1994, ITG made an 
initial public offering of its common stock, with Jefferies Group 
continuing to own approximately 80% of ITG's outstanding common stock. 
In 1999, Jefferies Group transferred all of its assets and liabilities 
relating to its full-service brokerage and investment banking business, 
including Jefferies Broker-Dealer (and not including ITG, which 
remained as Jefferies Group's sole asset), to a new corporation (``New 
Jefferies Group''), and distributed shares of New Jefferies Group to 
Jefferies Group's shareholders. Jefferies Group then merged with and 
was renamed ITG. New Jefferies Group and ITG are not affiliated persons 
within the meaning of the Act. The Chairman of the Board, President and 
Chief Executive Officer of ITG, Mr. Raymond L. Killian, was an 
Executive Vice President of Jefferies Group at the time of, but was not 
involved in the conduct underlying, the 1987 Injunction, as defined 
below.
    2. On March 19, 1987, the United States District Court for the 
Southern District of New York entered a permanent injunction against 
Mr. Boyd L. Jefferies (``Mr. Jefferies''), Jefferies Broker-Dealer, and 
Jefferies Group, prohibiting them from violating, or aiding and 
abetting violations of, certain provisions of the 1934 Act (``1987 
Injunction'').\1\ The violations involved manipulating the market in 
certain securities and engaging in ``parking'' during the period 1985-
86. The Commission also instituted and settled administrative 
proceedings against Mr. Jefferies and Jefferies Broker-Dealer.\2\
---------------------------------------------------------------------------

    \1\ Securities and Exchange Commission v. Boyd L. Jefferies, et 
al., Litigation Release No. 11370 (March 19, 1987).
    \2\ In the Matter of Jefferies & Company, Inc. and Boyd L. 
Jefferies, Exchange Act Release No. 24231 (March 19, 1987).
---------------------------------------------------------------------------

Applicant's Legal Analysis

    1. Section 9(a) of the Act, in relevant part, prohibits any person 
who has been enjoined from engaging in or continuing any conduct or 
practice in connection with the purchase or sale of a security, and any 
other company of which the person is or hereafter becomes an affiliated 
person, from acting, among other things, as a principal underwriter or 
investment adviser for registered investment companies (``funds''). 
Applicant states that the 1987 Injunction prohibits it from serving 
funds in the manner described in section 9(a). Applicant further states 
that, although it has not served and does not serve in any such 
capacity with respect to any fund, as a financial services company, 
applicant in the future may determine to become an investment adviser 
or principal underwriter to funds, or an affiliated person of such an 
adviser or underwriter.
    2. Section 9(c) of the Act provides that the Commission shall grant 
an application for an exemption from the disqualification provisions of 
section 9(a) if it is established that these provisions, as applied to 
the applicant, are unduly or disproportionately severe or that the 
conduct of applicant has been such as not to make it against the public 
interest or the protection of investors to grant the application. 
Applicant seeks an order under section 9(c) with respect to the 1987 
Injunction.

[[Page 63056]]

Applicant acknowledges that any such order will not extend to New 
Jefferies Group, or any person of which New Jefferies Group is or 
becomes an affiliated person. Applicant states that Mr. Jefferies died 
in 2001.
    3. Applicant states that the prohibitions of section 9(a) as 
applied to it would be unduly and disproportionately severe. Applicant 
states that none of the persons involved in the conduct underlying the 
1987 Injunction was or is a director, officer, or employee of ITG. 
Applicant also states that it has not been the subject of any other 
injunction or any disciplinary proceeding brought by the Commission, 
any state securities regulator, or any self-regulatory organization. 
Applicant further states that New Jefferies Group has no ownership 
interest in ITG, ITG has no ownership interest in New Jefferies Group, 
and the two entities are independent enterprises.

    By the Commission.
Nancy M. Morris,
Secretary.
 [FR Doc. E6-17997 Filed 10-26-06; 8:45 am]

BILLING CODE 8011-01-P