Document ID: SEC-2010-1183-0001
Agency: sec
Document Type: Notice
Title: Application and Temporary Order: GE Asset Management Inc., and GE Investment Distributors, Inc
Posted Date: 2010-08-05T04:00Z

[Federal Register: August 5, 2010 (Volume 75, Number 150)]
[Notices]               
[Page 47318-47320]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05au10-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 29374; File No. 812-13807]

 
GE Asset Management Incorporated and GE Investment Distributors, 
Inc.; Notice of Application and Temporary Order

July 30, 2010.
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 (``Act'').

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Summary of Application: Applicants have received a temporary order 
exempting them from section 9(a) of the Act, with respect to an 
injunction entered against General Electric Company (``GE''), Ionics, 
Inc. (``Ionics''), and Amersham plc (``Amersham'') on July 30, 2010, by 
the United States District Court for the District of Columbia 
(``Injunction''), until the Commission takes final action on an 
application for a permanent order. Applicants also have applied for a 
permanent order.

Applicants: GE Asset Management Incorporated (``GEAM'') and GE 
Investment Distributors, Inc. (``GEID'',

[[Page 47319]]

collectively with GEAM, the ``Applicants'').\1\
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    \1\ Applicants request that any relief granted pursuant to the 
application also apply to any other company of which GE, Ionics, or 
Amersham is or may become an affiliated person (together with the 
Applicants, the ``Covered Persons'').

DATES: Filing Dates: The application was filed on July 27, 2010, and 
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amended on July 30, 2010.

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 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 August 24, 2010, 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.

ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F 
Street, NE., Washington, DC 20549-1090; Applicants: 3001 Summer Street, 
Stamford, CT 06904-7900.

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 
via the Commission's Web site by searching for the file number, or an 
applicant using the Company name box, at http://www.sec.gov/search/
search.htm, or by calling (202) 551-8090.

Applicants' Representations

    1. GE is a large diversified technology, media, and financial 
services company. GEAM, a Delaware corporation, is a direct, wholly-
owned subsidiary of GE. GEAM is registered as an investment adviser 
under the Investment Advisers Act of 1940 and serves as investment 
adviser to a number of registered investment companies (``Funds''), 
including employees' securities companies (``ESCs'').\2\ GEID is, 
through GEAM, an indirect, wholly-owned subsidiary of GE. GEID is 
registered as a broker-dealer under the Securities Exchange Act of 1934 
and is a member of the Financial Industry Regulatory Authority, Inc. 
GEID serves as principal underwriter to a number of Funds.
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    \2\ The ESCs, as defined in section 2(a)(13) of the Act, are 
open-end management investment companies registered under the Act 
and provide investment opportunities for certain employees, 
officers, and directors of GEAM and its affiliates, and other 
eligible participants.
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    2. On July 30, 2010, the United States District Court for the 
District of Columbia entered a final judgment, which included the 
Injunction, against GE, Ionics, and Amersham (``Judgment'') in a matter 
brought by the Commission.\3\ The Commission alleged in the complaint 
(``Complaint'') that, from 2000 to 2003, four current subsidiaries of 
GE, including Ionics and Amersham, which were both acquired by GE after 
the conduct at issue in the Complaint, authorized and made payments in 
the form of cash, medical equipment, and services to Iraqi government 
ministries through agents on sales of products to Iraq under the United 
Nations Oil for Food Program. Without admitting or denying the 
allegations in the Complaint, except as to jurisdiction, GE, Ionics, 
and Amersham consented to the entry of the Judgment that included, 
among other things, the entry of the Injunction. In addition, the 
Judgment ordered GE, on behalf of itself, Ionics, and Amersham, to pay 
disgorgement in the amount of approximately $18.4 million, plus 
prejudgment interest of approximately $4 million, and a civil penalty 
of $1 million.
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    \3\ Securities and Exchange Commission v. General Electric 
Company, Final Judgment as to General Electric Company, 1:10-cv-1258 
(RWR) (D.D.C. July 30, 2010).
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Applicants' Legal Analysis

    1. Section 9(a)(2) of the Act, in relevant part, prohibits a person 
who has been enjoined from, among other things, engaging in or 
continuing any conduct or practice in connection with the purchase or 
sale of a security, or in connection with activities as an underwriter, 
broker or dealer, 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). Section 
2(a)(3) of the Act defines ``affiliated person'' to include, among 
others, any person directly or indirectly controlling, controlled by, 
or under common control with, the other person. Applicants state that 
each of GE, Ionics, and Amersham is an affiliated person of each of the 
Applicants within the meaning of section 2(a)(3) of the Act. Applicants 
state that the entry of the Injunction results in Applicants being 
subject to the disqualification provisions of section 9(a) of the Act.
    2. Section 9(c) of the Act provides that the Commission shall grant 
an application for exemption from the disqualification provisions of 
section 9(a) if it is established that these provisions, as applied to 
the applicants, are unduly or disproportionately severe or that the 
applicants' conduct has been such as not to make it against the public 
interest or the protection of investors to grant the exemption. 
Applicants have filed an application pursuant to section 9(c) seeking a 
temporary and permanent order exempting them and other Covered Persons 
from the disqualification provisions of section 9(a) of the Act.
    3. Applicants believe they meet the standard for exemption 
specified in section 9(c). Applicants state that the prohibitions of 
section 9(a) as applied to them would be unduly and disproportionately 
severe and that the conduct of the Applicants 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. Applicants state that the alleged conduct giving rise to the 
Injunction did not involve either of the Applicants acting in the 
capacity of investment adviser, subadviser or depositor for any Fund or 
as principal underwriter for any Fund, and no such Funds bought or held 
any securities issued by the Covered Persons during the period of 
misconduct alleged in the Complaint, other than with respect to index 
Funds and certain international Funds holding securities issued by 
Amersham prior to its acquisition by GE. Applicants also state that 
none of the current or former directors, officers, or employees of the 
Applicants had any responsibility for, or involvement in, the violative 
conduct alleged in the Complaint. Applicants further state that the 
personnel at GE, Ionics, or Amersham who had any responsibility for, or 
involvement in, the violations alleged in the Complaint have had no, 
and will not have any future, involvement in providing investment 
advisory, subadvisory, or underwriting services to the Funds.
    5. Applicants state that their inability to continue to provide 
investment advisory, subadvisory and underwriting services to the Funds 
would result in potential hardship for the Funds and

[[Page 47320]]

their shareholders. Applicants state that they will, as soon as 
reasonably practical, distribute written materials, including an offer 
to meet in person to discuss the materials, to the boards of directors 
of the Funds (``Boards'') for which the Applicants serve as investment 
adviser, investment subadviser or principal underwriter, including the 
directors who are not ``interested persons,'' as defined in section 
2(a)(19) of the Act, of such Funds, and their independent legal counsel 
as defined in rule 0-1(a)(6) under the Act, relating to the 
circumstances that led to the Injunction, any impact on the Funds, and 
the application. Applicants state they will provide the Boards with all 
information concerning the Judgment and the application that is 
necessary for the Funds to fulfill their disclosure and other 
obligations under the federal securities laws.
    6. Applicants also state that, if they were barred from providing 
services to the Funds, the effect on their businesses and employees 
would be severe. Applicants state that they have committed substantial 
resources to establishing expertise in providing advisory and 
distribution services to Funds. Applicants further state that 
prohibiting them from providing such services would not only adversely 
affect their businesses, but would also adversely affect about 500 
employees who are involved in those activities.
    7. In 2009, GEAM and GEID received an exemption under section 9(c) 
as a result of conduct by GE that triggered section 9(a), as described 
in greater detail in the application. A predecessor of one of the 
Applicants previously received an exemption under section 9(c) as the 
result of conduct that triggered section 9(a), as described in greater 
detail in the application.

Applicants' Condition

    Applicants agree that any order granting the requested relief will 
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 
exemptions granted under the Act in connection with the application.

Temporary Order

    The Commission has considered the matter and finds that Applicants 
have made the necessary showing to justify granting a temporary 
exemption.
    Accordingly,
    It is hereby ordered, pursuant to section 9(c) of the Act, that 
GEAM and GEID and any other Covered Persons are granted a temporary 
exemption from the provisions of section 9(a), solely with respect to 
the Injunction, subject to the condition in the application, from July 
30, 2010, until the Commission takes final action on their application 
for a permanent order.

    By the Commission.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19244 Filed 8-4-10; 8:45 am]
BILLING CODE 8010-01-P