Document ID: SEC-2009-0247-0001
Agency: sec
Document Type: Notice
Title: Application and Temporary Order: Wachovia Securities, LLC, et al.
Posted Date: 2009-02-24T05:00Z

[Federal Register: February 24, 2009 (Volume 74, Number 35)]
[Notices]               
[Page 8294-8296]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24fe09-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-28618; 812-13632]

 
Wachovia Securities, LLC, et al.; Notice of Application and 
Temporary Order

February 18, 2009.
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 Wachovia Securities, LLC (``Wachovia 
Securities'') on February 17, 2009 by the United States District Court 
for the Northern District of Illinois (``Injunction''), until the 
Commission takes final action on an application for a permanent order. 
Applicants also have applied for a permanent order.

Applicants: Wachovia Securities, Evergreen Investment Management 
Company, LLC (``Evergreen Investment Management''), Tattersall Advisory 
Group, Inc. (``Tattersall''), First International Advisors, LLC 
(``First International''), Metropolitan West Capital Management, LLC 
(``Metropolitan West''), J.L. Kaplan Associates, LLC (``J.L. Kaplan''), 
Golden Capital Management, LLC (``Golden Capital''), Evergreen 
Investment Services, Inc. (``Evergreen Investment Services''), 
Prudential Investment Management, Inc. (``PIM, Inc.''), Prudential 
Investments LLC (``PI LLC''), The Prudential Insurance Company of 
America (``Prudential Insurance''), Jennison Associates LLC 
(``Jennison''), Prudential Bache Asset Management, Inc. (``Bache''), 
Quantitative Management Associates LLC (``QMA LLC''), Pruco Securities, 
LLC (``Pruco''), AST Investment Services, Inc. (``AST Investment''), 
Prudential Annuities Distributors, Inc. (``PAD''), Prudential 
Investment Management Services LLC (``PIMS LLC''), Pruco Life Insurance 
Company (``Pruco Life''), Pruco Life Insurance Company of New Jersey 
(``Pruco Life NJ''), Prudential Annuities Life Assurance Corporation 
(``PALAC''), Prudential Retirement Insurance and Annuity Company 
(``PRIAC''), Wells Fargo Funds Management, LLC (``WF Funds 
Management''), Wells Capital Management Incorporated (``Wells Capital 
Management''), Peregrine Capital Management, Inc. (``Peregrine''), 
Galliard Capital Management, Inc. (``Galliard''), Wells Fargo Private 
Investment Advisors, LLC d/b/a Nelson Capital Management (``Nelson''), 
Wells Fargo Funds Distributor, LLC (``WF Funds Distributor''), Lowry 
Hill Investment Advisors, Inc. (``Lowry Hill''), and Wells Fargo 
Alternative Asset Management, LLC (``WFAAM'') (collectively, other than 
Wachovia Securities, the ``Fund Servicing Applicants'' and together 
with Wachovia Securities, 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 Wachovia 
Securities is or may become an affiliated person (together with the 
Applicants, the ``Covered Persons'').

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DATES: Filing Date: The application was filed on February 18, 2009.

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 March 16, 2009, 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: Wachovia 
Securities, One North Jefferson Avenue, St. Louis, MO 63103; Evergreen 
Investment Management, J.L. Kaplan and Evergreen Investment Services, 
200 Berkeley Street, Boston, MA 02116; Tattersall, 6802 Paragon Place, 
Suite 200, Richmond, VA 23230; First International, 3 Bishopsgate, 
London, England UK EC2N3AB; Metropolitan West, 610 Newport Center 
Drive, Suite 1000, Newport Beach, CA 92660; Golden Capital, 5 Resource 
Square, Suite 150, 10715 David Taylor Drive, Charlotte, NC 28262; PIM, 
Inc. and QMA LLC, 100 Mulberry Street, Gateway Center Two, Newark, NJ 
07102; PI LLC and PIMS LLC, 100 Mulberry Street, Gateway Center Three, 
Newark, NJ 07102; Prudential Insurance and Pruco, 751 Broad Street, 
Newark, NJ 07102; Jennison, 466 Lexington Avenue, New York, NY 10017; 
Bache, One New York Plaza, 13th Floor, New York, NY 10292; AST 
Investment, PAD and PALAC, One Corporate Drive, Shelton, CT 06484; 
Pruco Life and Pruco Life NJ, 213 Washington Street, Newark, NJ 07102; 
PRIAC, 280 Trumbull Street, Hartford, CT 06103-3509; WF Funds 
Management and WF Funds Distributor, 525 Market Street, 12th Floor, San 
Francisco, CA 94105; Wells Capital Management, 525 Market Street, 10th 
Floor, San Francisco, CA 94105; Peregrine, 800 LaSalle Avenue, Suite 
1850, Minneapolis, MN 55402; Galliard, 800 LaSalle Avenue, Suite 2060, 
Minneapolis, MN 55402; Nelson, 1860 Embarcadero Road, 140, 
Palo Alto, CA 94303; Lowry Hill, 90 South Seventh Street, Suite 5300, 
Minneapolis, MN 55402; and WFAAM, 333 Market Street, 29th Floor, 
MAC A0119-291, San Francisco, CA 94105.

FOR FURTHER INFORMATION CONTACT: Steven I. Amchan, Attorney Adviser, at 
(202) 551-6826, or Julia Kim Gilmer, 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 Room, 100 F Street, NE., 
Washington, DC 20549-1520 (tel. 202-551-5850).
    Applicants' Representations:
    1. Wells Fargo & Company (``Wells Fargo''), a financial holding 
company and bank holding company, offers banking, brokerage, advisory 
and other financial services to institutional and individual customers 
worldwide. On December 31, 2008, Wells Fargo acquired all of the 
outstanding voting shares of Wachovia Corporation. Wells Fargo 
indirectly owns 75% to 77% of Wachovia Securities Financial Holdings, 
LLC (``WSFH'') and Prudential Financial, Inc. (``Prudential'') 
indirectly owns 23% to 25% of WSFH.

[[Page 8295]]

Wachovia Securities is a wholly owned subsidiary of WSFH, and an 
affiliated person of each Fund Servicing Applicant within the meaning 
of section 2(a)(3) of the Act (by virtue of being under common control 
with the Fund Servicing Applicants). Wachovia Securities offers a wide 
array of financial advisory, brokerage, asset management and other 
financial services in more than 3,700 locations nationwide.
    2. Evergreen Investment Management, Tattersall, First 
International, Metropolitan West, J.L. Kaplan, Golden Capital, PIM, 
Inc., PI LLC, Jennison, Bache, QMA LLC, AST Investment, WF Funds 
Management, Wells Capital Management, Peregrine, Galliard, Nelson, 
Lowry Hill, and WFAAM are registered as investment advisers under the 
Investment Advisers Act of 1940, as amended (``Advisers Act'') and 
provide investment advisory or subadvisory services to registered 
investment companies (``Funds''). Evergreen Investment Services, Pruco, 
PAD, PIMS LLC, and WF Funds Distributor are broker-dealers registered 
under the Securities Exchange Act of 1934, as amended (``Exchange 
Act'') and serve as principal underwriters to open-end Funds and 
registered unit investment trusts (``UITs'', included in the term 
``Funds''). Prudential Insurance, Pruco Life, Pruco Life NJ, PALAC, and 
PRIAC serve as depositors to registered separate accounts, all of which 
are Funds (``Registered Separate Accounts'').
    3. On February 17, 2009, the United States District Court for the 
Northern District of Illinois entered a judgment against Wachovia 
Securities (``Judgment'') in a matter brought by the Commission.\2\ The 
Commission alleged in the complaint (``Complaint'') that Wachovia 
Securities violated section 15(c) of the Exchange Act by marketing 
auction rate securities as highly liquid investments comparable to cash 
or money market instruments and by selling auction rate securities to 
its customers without adequately disclosing the risks involved in 
purchasing such securities. Without admitting or denying the 
allegations in the Complaint, except as to jurisdiction, Wachovia 
Securities consented to the entry of the Judgment that included, among 
other things, the entry of the Injunction and other equitable relief 
including undertakings to take various remedial actions for the benefit 
of purchasers of certain auction rate securities.
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    \2\ Securities and Exchange Commission v. Wachovia Securities, 
LLC, Judgment on Consent Against Defendant Wachovia Securities, LLC, 
09 Civ. 00743 (N.D. Ill. February 17, 2009).
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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 
Wachovia Securities is an affiliated person of each of the other 
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 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 any of the Applicants acting in the capacity 
of investment adviser, subadviser or depositor to any Fund or in the 
capacity of principal underwriter for any open-end Fund, UIT, or 
registered face-amount certificate company. Applicants also state that 
none of the current or former directors, officers, or employees of the 
Fund Servicing Applicants had any responsibility for, or had any 
involvement in, the conduct alleged in the Complaint. Applicants 
further state that the personnel at Wachovia Securities who were 
involved in the violations alleged in the Complaint have had no and 
will not have any future involvement in providing investment advisory, 
subadvisory, depository or underwriting services to Funds.
    5. Applicants state that their inability to continue to provide 
investment advisory, subadvisory and underwriting services to Funds and 
serve as depositor to the Registered Separate Accounts would result in 
potential hardship for the Funds and 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 
Injunction 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 establish an expertise in providing advisory and 
distribution services to Funds, and depository services to the 
Registered Separate Accounts. Applicants further state that prohibiting 
them from providing such services would not only adversely affect their 
businesses, but would also adversely affect over 3700 employees who are 
involved in those activities.
    7. Applicants previously have received exemptions under section 
9(c) as the result of conduct that triggered section 9(a) as described 
in greater detail in the application.
    Applicants' Condition:

[[Page 8296]]

    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 
Applicants 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 
February 17, 2009, until the Commission takes final action on their 
application for a permanent order.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. E9-3841 Filed 2-23-09; 8:45 am]

BILLING CODE 8011-01-P