Document ID: SEC-2007-0806-0001
Agency: sec
Document Type: Notice
Title: Barclays Global Fund Advisors; Notice of Application
Posted Date: 2007-06-12T04:00Z

[Federal Register: June 12, 2007 (Volume 72, Number 112)]
[Notices]               
[Page 32338-32340]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12jn07-76]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-27851; 812-13391]

 
Barclays Global Fund Advisors; Notice of Application

June 6, 2007.
AGENCY: Securities and Exchange Commission (``Commission'').

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

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

    Summary of Application: Applicant has received a temporary order 
exempting it from section 9(a) of the Act, with respect to an 
injunction entered against Barclays Bank PLC (``Barclays'') on June 6, 
2007 by the United States District Court for the Southern District of 
New York (the ``District Court''), until the Commission takes final 
action on an application for a permanent order. Applicant also has 
applied for a permanent order.
    Applicants: Barclays Global Fund Advisors (``BGFA'' or the 
``Applicant'').\1\
---------------------------------------------------------------------------

    \1\ Applicant requests that any relief granted pursuant to the 
application also apply to any other company of which Barclays is or 
hereafter becomes an affiliated person (together with Applicant, 
``Covered Persons'').
---------------------------------------------------------------------------

    Filing Date: The application was filed on May 30, 2007. Applicant 
has agreed to file a final 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 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 July 2, 2007, and should be accompanied by proof of 
service on Applicant, 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, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090. Applicant, c/o Ira P. Shapiro, 
Esq., Barclays Global Fund Advisors, 45 Fremont Street, San Francisco, 
CA 94105.

FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel, 
at (202) 551-6812, or Mary Kay Frech, Branch Chief, at (202) 551-6821 
(Division of Investment Management, Office of Investment Company 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a temporary order and a 
summary of the application. The complete application may be obtained 
for a fee at the Commission's Public Reference Branch, 100 F Street, 
NE., Washington, DC 20549-0102 (tel. 202-551-5850).

Applicant's Representations

    1. BGFA, a California corporation registered under the Investment 
Advisers Act of 1940, serves as investment adviser to the series of 
iShares Trust, iShares, Inc. and Master Investment Portfolio (the 
``Advised Funds''), each a registered open-end management investment 
company. BGFA also serves as sub-adviser to

[[Page 32339]]

certain series of State Farm Variable Product Trust and American 
Century Capital Portfolios, Inc. (collectively with the Advised Funds, 
the ``Funds''), each a registered open-end management investment 
company. BGFA is a wholly-owned subsidiary of Barclays Global 
Investors, N.A. (``BGI''), a limited purpose trust company that 
provides investment management services for client accounts and certain 
unregistered investment vehicles and, through its subsidiaries, is one 
of the world's largest providers of exchange traded funds (``ETFs''). 
BGI is a majority-owned subsidiary of Barclays Bank PLC (``Barclays''), 
which is a major global financial services provider organized under the 
laws of England and Wales.
    2. On June 6, 2007, the District Court entered a final judgment 
against Barclays in a matter brought by the Commission (the ``Final 
Judgment'').\2\ The Commission alleged in the complaint (``Complaint'') 
that Barclays had violated section 17(a) of the Securities Act of 1933 
(``Securities Act''), section 10(b) of the Securities Exchange Act of 
1934 (``Exchange Act'') and rule 10b-5 under the Exchange Act by 
engaging in the purchase and sale of certain distressed debt securities 
while aware of material, non-public information concerning such 
distressed debt issuers.\3\ Without admitting or denying the 
allegations in the Complaint, Barclays consented to the entry of the 
Final Judgment. The Final Judgment permanently enjoins Barclays 
directly or through its officers, directors, agents and employees from 
violating section 10(b) of the Exchange Act and rule 10b-5 under the 
Exchange Act and section 17(a) of the Securities Act (the 
``Injunction'').\4\ Barclays also consented to the payment of 
disgorgement plus prejudgment interest in addition to civil penalties 
in an aggregate amount of approximately $10.9 million.
---------------------------------------------------------------------------

    \2\ United States Securities and Exchange Commission v. Barclays 
Bank PLC, et al., Final Judgment as to Barclays Bank PLC, 07-CV-
04472 (MGC) (S.D.N.Y., filed June 4, 2007).
    \3\ Steven J. Landzberg, a former director and proprietary 
trader for Barclays, was also alleged to have been involved in the 
conduct underlying the Complaint.
    \4\ The Final Judgment also enjoins Mr. Landzberg from violating 
section 10(b) of the Exchange Act and rule 10b-5 under the Exchange 
Act, and section 17(a) of the Securities Act and imposes civil 
penalties on Mr. Landzberg. The requested temporary and permanent 
orders will not apply to Mr. Landzberg or to any company of which 
Mr. Landzberg is or becomes an affiliated person.
---------------------------------------------------------------------------

Applicant's Legal Analysis

    1. Section 9(a)(2) of the Act, in relevant part, prohibits a person 
who has been enjoined from engaging in or continuing any conduct or 
practice in connection with the purchase or sale of a security from 
acting, among other things, as an investment adviser or depositor of 
any registered investment company or a principal underwriter for any 
registered open-end investment company, registered unit investment 
trust or registered face-amount certificate company. Section 9(a)(3) of 
the Act makes the prohibition in section 9(a)(2) applicable to a 
company, any affiliated person of which has been disqualified under the 
provisions of section 9(a)(2). ``Affiliated person'' is defined in 
section 2(a)(3) of the Act to include any person directly or indirectly 
controlling, controlled by, or under common control with, the other 
person. Applicant states that Barclays is an affiliated person of the 
Applicant within the meaning of section 2(a)(3) of the Act because 
Barclays controls the Applicant. Applicant states that, as a result of 
the Injunction, it would be subject to the prohibitions of section 
9(a).
    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) of the Act if it is established that these provisions, as 
applied to the applicants, are unduly or disproportionately severe or 
that the conduct of the applicants has been such as not to make it 
against the public interest or protection of investors to grant the 
exemption. Applicant has filed an application pursuant to section 9(c) 
seeking temporary and permanent orders exempting it from the 
disqualification provisions of section 9(a) of the Act.
    3. Applicant believes it meets the standards for exemption 
specified in section 9(c). Applicant states that the prohibitions of 
section 9(a) as applied to it would be unduly and disproportionately 
severe and 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 exemption from section 9(a).
    4. Applicant states that none of its current or former officers, 
directors or employees participated in any way in the conduct 
underlying the Injunction. Applicant further states that the conduct 
underlying the Injunction did not involve any Funds.
    5. Applicant states that the inability to continue providing 
advisory services to the Funds would result in potentially severe 
hardships for the Funds and their shareholders. Applicant also states 
that it has distributed, or will distribute as soon as reasonably 
practicable, written materials, including an offer to meet in person to 
discuss the materials, to the boards of directors or trustees of the 
Funds (the ``Boards''), including the directors or trustees who are not 
``interested persons,'' as defined in section 2(a)(19) of the Act, of 
the Funds and their independent legal counsel, as defined in rule 0-
1(a)(6) under the Act, regarding the circumstances of the Final 
Judgment, any impact on the Funds, and the filing of the application. 
Applicant will provide the Boards with all information concerning the 
Final Judgment and the application that is necessary for the Funds to 
fulfill their disclosure and other obligations under the federal 
securities laws.
    6. Applicant also asserts that, if it were barred from providing 
services to the Funds, the effect on its business and employees would 
be severe. Applicant states that it has committed substantial resources 
to establish an expertise in advising the Funds. Applicant has 
previously sought and received an exemption under section 9(c) of the 
Act on one occasion.\5\
---------------------------------------------------------------------------

    \5\ Wells Fargo Bank, N.A., et al., Investment Company Act 
Release Nos. 16311 (Mar. 11, 1988) (notice and temporary order) and 
16355 (Apr. 7, 1988) (permanent order).
---------------------------------------------------------------------------

Applicant's Condition

    Applicant agrees that any order granting the requested relief shall 
be subject to the following condition:
    Any temporary exemption granted pursuant to the application shall 
be without prejudice to, and shall not limit the Commission's rights in 
any manner with respect to, any Commission investigation of, or 
administrative proceedings involving or against, Covered Persons, 
including, without limitation, the consideration by the Commission of a 
permanent exemption from section 9(a) of the Act requested pursuant to 
the application or the revocation or removal of any temporary exemption 
granted under the Act in connection with the application.

Temporary Order

    The Commission has considered the matter and finds that Applicant 
has made the necessary showing to justify granting a temporary 
exemption.
    Accordingly, It is hereby ordered, pursuant to section 9(c) of the 
Act, that the Covered Persons are granted a temporary exemption from 
the provisions of section 9(a), effective forthwith, solely with 
respect to the Injunction, subject to the condition in the application, 
until the date the Commission takes final action on an application for 
a permanent order.

[[Page 32340]]

    By the Commission.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-11295 Filed 6-11-07; 8:45 am]

BILLING CODE 8010-01-P