Document ID: SEC-2005-0003-0001
Agency: sec
Document Type: Notice
Title: Securities Exchange Act of 1934 and Investment Company Act of 1940: Specified provisions exemption due to hurricane Katrina
Posted Date: 2005-09-21T04:00Z

[Federal Register: September 21, 2005 (Volume 70, Number 182)]
[Notices]               
[Page 55432-55435]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21se05-129]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release Nos. 52444/September 15, 2005 and 27067/September 15, 2005]

 
Securities Exchange Act of 1934 and Investment Company Act of 
1940; Order Under Section 17a and Section 36 of the Securities Exchange 
Act of 1934 Granting Exemptions From Specified Provisions of the 
Exchange Act and Certain Rules Thereunder; Order Under Section 6(c) and 
Section 38(a) of the Investment Company Act of 1940 Granting Exemptions 
From Specified Provisions of the Company Act and Certain Rules 
Thereunder

    Section 36 of the Securities Exchange Act of 1934 (the ``Exchange 
Act'') authorizes the Securities and Exchange Commission (the 
``Commission''), by rule, regulation, or order, to exempt, either 
conditionally or unconditionally, any person, security, or transaction, 
or any class or classes of persons, securities, or transactions, from 
any provision or provisions of the Exchange Act or any rule or 
regulation thereunder, to the extent that such exemption is necessary 
or appropriate in the public interest, and is consistent with the 
protection of investors.
    Section 17A(c)(1) of the Exchange Act provides that the appropriate 
regulatory agency, by rule or by order, upon its own motion or upon 
application, may conditionally or unconditionally exempt any person or 
security or class of person or securities from any provision of that 
section or any rule or regulation prescribed under Section 17A, if the 
appropriate regulatory agency finds that such exemption is in the 
public interest and consistent with the protection of investors and the 
purposes of this section, including the prompt and accurate clearance 
and settlement of securities transactions and the safeguarding of 
securities and funds.\1\
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    \1\ Section 3(a)(34) defines ``appropriate regulatory 
authority'' when used in the context of transfer agents as generally 
(1) the Comptroller of the Currency, in the case of a national bank 
or a bank or a subsidiary of such bank; (2) the Board of Governors 
of the Federal Reserve System or subsidiary thereof, a bank holding 
company or a subsidiary of a bank holding company; (3) the Federal 
Deposit Insurance Corporation; and (4) the Commission in the case of 
all other transfer agents. Section 17A(c)(1) also requires that the 
Commission not object to the use of exemptive authority in instances 
where an appropriate regulatory authority other than the Commission 
is providing exemptive relief.
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    Section 6(c) of the Investment Company Act of 1940 (the ``Company 
Act'') provides that the Commission may exempt any person, security, or 
transaction, or any class or classes of persons, securities or 
transactions, from any provision of the Company Act, or 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 Company Act. Section 38(a) of the Company Act 
provides that the Commission may make, issue, amend and rescind such 
rules and regulations and such orders as are necessary or appropriate 
to the exercise of the powers conferred upon the Commission under the 
Act.
    Hurricane Katrina made landfall along the Gulf Coast on August 29, 
2005, causing catastrophic damage to portions of Alabama, Louisiana and 
Mississippi. The storm and subsequent flooding displaced individuals 
and businesses and disrupted communications across the Gulf Coast 
region. We are issuing this Order to address the needs of companies and 
individuals located within the areas affected by Hurricane Katrina that 
must comply with the requirements of the federal securities laws.

I. Filing Requirements for Registrants and Other Persons

    The lack of communications, facilities and available staff and 
professional advisors as a result of Hurricane Katrina could hamper the 
efforts of public companies and other persons in the affected areas in 
their compliance with filing deadlines. At the same time, investors 
have an interest in the timely availability of required information 
about these companies and the activities of persons required to file 
schedules and reports with respect to these companies. While the 
Commission believes that the relief from filing requirements provided 
by this Order is both necessary in the public interest and consistent 
with the protection of investors, we remind public companies and other 
persons who are the subjects of this Order to continue to evaluate 
their obligations to make materially accurate and complete disclosures 
in accordance with the anti-fraud provisions of the federal securities 
laws.
    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act, that a registrant (as defined in Exchange Act Rule 12b-2) subject 
to the reporting requirements of Exchange Act Section 13(a) or 15(d), 
and any person required to make any filings with respect to such a 
registrant, is exempt from any requirement to file or furnish materials 
with the Commission under Exchange Act Sections 13(a), 13(d), 13(g), 
14(a), 14(c), 15(d) and 16(a), Regulations 13A, 13D, 13G, 14A, 14C and 
15D, and Rule 16a-3, as applicable, for the period from and including 
August 29, 2005 to October 14, 2005, where the conditions below are 
satisfied.

Conditions

    (a) With respect to registrants, the address of the registrant's 
principal executive offices listed on the cover page of the most recent 
periodic report filed by the registrant on Form 10-Q, 10-QSB, 10-K, or 
10-KSB is within one of the counties or parishes designated as of this 
date to be within the Presidentially Declared Disaster Areas where 
Individual Assistance has been authorized by the Federal Emergency 
Management Agency as a result of Hurricane Katrina (the ``Presidential 
Disaster Areas''), which include the Louisiana parishes of: Acadia, 
Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East 
Feliciana, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, 
Lafourche, Livingston, Orleans, Pointe Coupee, Plaquemines, St. 
Bernard, St. Charles, St. Helena, St. James, St. John, St. Mary, St. 
Martin, St. Tammany, Tangipahoa, Terrebonne, Vermilion, Washington, 
West Baton Rouge, and West Feliciana; the Mississippi counties of: 
Adams, Amite, Attala, Claiborne, Choctaw, Clarke, Copiah, Covington, 
Forrest, Franklin, George, Greene, Hancock, Harrison, Hinds, Jackson, 
Jasper,

[[Page 55433]]

Jefferson, Jefferson Davis, Jones, Kemper, Lamar, Lauderdale, Lawrence, 
Leake, Lincoln, Lowndes, Madison, Marion, Neshoba, Newton, Noxubee, 
Oktibbeha, Pearl River, Perry, Pike, Rankin, Scott, Simpson, Smith, 
Stone, Walthall, Warren, Wayne, Wilkinson, Winston, and Yazoo; and the 
Alabama counties of Baldwin, Clarke, Choctaw, Mobile, Pickens, Greene, 
Hale, Sumter, Tuscaloosa, and Washington.
    (b) With respect to persons other than registrants, the address 
listed on the most recently filed schedule or form that the person had 
filed, or the address that the person would be required to list on any 
covered schedule or form required to be filed during the time period 
covered by this Order, is within one of the Presidential Disaster 
Areas; and
    (c) The registrant or person files with the Commission any report, 
schedule or form required to be filed during the period from and 
including August 29, 2005 to October 14, 2005 on or before October 17, 
2005.

II. Furnishing of Proxy and Information Statements

    The conditions in the areas affected by Hurricane Katrina, 
including displacement of hundreds of thousands of individuals and the 
destruction of property, have prevented and will continue to prevent 
the delivery of mail to the region. In light of these conditions, we 
believe that relief is warranted for those seeking to comply with our 
rules imposing requirements to furnish materials to security holders 
when mail delivery is not possible.
    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act, that a registrant or any other person is exempt from the 
requirements to furnish proxy statements, annual reports and other 
soliciting materials, as applicable (the ``Soliciting Materials''), 
under Exchange Act Rules 14a-3 and 14a-12, and the requirements to 
furnish information statements and annual reports, as applicable (the 
``Information Materials''), under Exchange Act Rules 14c-2 and 14c-3, 
where the conditions below are satisfied.

Conditions

    (a) The registrant's security holder has a mailing address located 
within a zip code where, as a result of Hurricane Katrina, the United 
States Postal Service has suspended mail service of the type or class 
customarily used by the registrant;
    (b) The registrant or other person making a solicitation has 
followed normal procedure when furnishing the Soliciting Materials to 
the security holder in order to ensure that the Soliciting Materials 
preceded or accompanied the proxy, as required by the rules applicable 
to the particular form of Soliciting Materials, or, in the case of 
Information Materials, the registrant has followed normal procedure 
when furnishing the Information Materials to the security holder in 
accordance with the rules applicable to Information Materials; and
    (c) If requested by the security holder, the registrant or other 
person provides the Soliciting Materials or Information Materials by a 
means reasonably designed to furnish the Soliciting Materials or 
Information Materials to the security holder.
* * * * *
    Any registrant or other person unable to meet a deadline (including 
any shareholder who is unable to meet a deadline applicable to a 
shareholder proposal) or a delivery obligation as a result of Hurricane 
Katrina, or in need of other assistance related to their public 
filings, should contact the Division of Corporation Finance at (202) 
551-3500 or at cfhotline@sec.gov. The Division will consider any 
requests on a case-by-case basis.

III. Relief Relating Specifically to Registered Investment Companies 
Regarding Transmittal of Annual and Semi-Annual Reports to Shareholders 
Required by the Company Act and the Rules Thereunder

    For reasons similar to those cited in Section II, we believe that 
relief is warranted for the transmittal by registered investment 
companies of annual and semi-annual reports to shareholders.
    Accordingly, it is ordered, pursuant to Sections 6(c) and 38(a) of 
the Company Act that, for 90 calendar days beginning on August 29, 
2005, a registered management investment company is exempt from the 
requirements of Section 30(e) of the Company Act and Rule 30e-1 
thereunder to transmit annual and semi-annual reports to shareholders;
    And, for 90 calendar days beginning on August 29, 2005, a 
registered unit investment trust is exempt from the requirements of 
Section 30(e) of the Company Act and Rule 30e-2 thereunder to transmit 
annual and semi-annual reports to shareholders,
    Provided that: 
    (a) The shareholder or unitholder's mailing address for transmittal 
as listed in the records of the registered investment company has a zip 
code for which the United States Postal Service has suspended mail 
service, as a result of Hurricane Katrina, of the type or class 
customarily used by the investment company for transmittal of reports; 
and
    (b) The registered investment company or other person promptly 
transmits the reports (i) if requested by the shareholder or 
unitholder, or (ii) at the earlier of the end of the 90-day period or 
the resumption of the applicable mail service.
* * * * *
    Registered investment companies experiencing difficulties in 
complying with their obligations after the 90-calendar-day period, or 
in need of additional information or assistance regarding issues 
arising under the Company Act, should contact the Division of 
Investment Management, Office of Chief Counsel, at (202) 551-6825 or 
imocc@sec.gov or use the contact information provided at the end of 

Section II of the Order.

IV. Transfer Agent Compliance With Sections 17A and 17(f) of the 
Exchange Act

    Exchange Act Section 17A and Section 17(f), as well as the rules 
promulgated under Sections 17A and 17(f), contain requirements for 
registered transfer agents relating to, among other things, processing 
securities transfers, safekeeping of investor and issuer funds and 
securities, and maintaining records of investor ownership. Following 
the events of Hurricane Katrina, registered transfer agents located in 
the affected region may have difficulty complying with some or all of 
their obligations as registered transfer agents. In addition, transfer 
agents located outside the affected region in many cases may be unable 
to conduct business with entities or securityholders inside the region, 
thereby making it difficult to process securities transactions and 
corporate actions in conformance with Section 17A, Section 17(f) and 
the rules thereunder.
    While the national clearance and settlement system continues to 
operate well in light of this emergency, the Commission recognizes that 
securities transfers and payments to and from securityholders in the 
affected region may present compliance issues for many transfer agents. 
Therefore, the Commission is using its authority under Section 17A and 
Section 36 of the Exchange Act to relax temporarily certain regulatory 
provisions in order to provide transfer agents with flexibility in 
coping with the situation.\2\ The

[[Page 55434]]

Commission finds the following exemption to be in the public interest 
and consistent with the protection of investors and the purpose of 
Section 17A of the Exchange Act, including the prompt and accurate 
clearance and settlement of securities transactions and the 
safeguarding of securities and funds.
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    \2\ This order temporarily exempts transfer agents from the 
requirements of (1) Section 17A of the Exchange Act and Rules 17Ad-1 
through 17Ad-21T thereunder and (2) Section 17(f) of the Exchange 
Act and Rules 17f-1 and 17f-2 thereunder.
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    Accordingly, it is ordered, pursuant to Sections 17A and 36 of the 
Exchange Act, that any registered transfer agent located in the 
Presidential Disaster Areas that is unable to comply with Section 17A 
and Section 17(f) of the Exchange Act and the rules promulgated 
thereunder, as applicable, is hereby temporarily exempted from 
complying with such provisions for the period from and including August 
29, 2005 to October 17, 2005, where the conditions below are satisfied.

Conditions

    (a) Books and Records Maintained at Affected Locations. A 
registered transfer agent that maintained books and records at 
locations inside the Presidential Disaster Areas must notify the 
Commission in writing by October 17, 2005, if such transfer agent knows 
or believes that the books and records it is required to maintain 
pursuant to Section 17A and the rules thereunder were lost, destroyed, 
or materially damaged. To the extent feasible, the transfer agent 
should include as much information as possible as to the type of books 
and records that were maintained, the names of the issuers for whom 
such books and records were maintained, and the extent of the loss of, 
or damage to, such books and records.
    (b) Securityholder Funds and Securities. A transfer agent 
registered with the Commission and holding securityholder or issuer 
funds or securities must notify the Commission in writing by October 
17, 2005, if such transfer agent knows or believes that funds or 
securities belonging to either issuers or securityholders were lost, 
destroyed, stolen, or unaccountable for any reason. To the extent 
possible, the transfer agent should include information regarding the 
dollar amount of any such funds and the number of such securities.
    Transfer agents that have custody or possession of any 
securityholder or issuer funds or securities shall use all reasonable 
means available to ensure that all such securities are held in 
safekeeping and are handled, in light of all facts and circumstances, 
in a manner reasonably free from risk of theft, loss, or destruction 
and that all funds are protected against misuse. To the extent 
possible, all securityholder or issuer funds that remain in the custody 
of the transfer agent shall be maintained in a separate bank account 
held for the exclusive benefit of securityholders until such funds are 
properly remitted.
    The notifications required under (a) and (b) above shall be sent 
to: Securities and Exchange Commission, Office of Filings and 
Information Services, 100 F Street, NE., Washington, DC 20549.
    It is further ordered, pursuant to Sections 17A and 36 of the 
Exchange Act, that any registered transfer agent that is residing 
outside the Presidential Disaster Areas and is unable to comply with 
any provision of Section 17A or any provision of any rule thereunder 
due to an inability to conduct business with persons (entities or 
individuals) inside the Presidential Disaster Areas or an inability to 
remit funds or securities to securityholders residing in the 
Presidential Disaster Areas is hereby temporarily exempted from 
compliance with such provisions with respect to those specific 
transactions for the period from and including August 29, 2005, to 
October 17, 2005, on the condition that such transfer agent must make 
and keep a record of the extent of and the reason for noncompliance and 
retain those records for a period of no less than three years. As a 
further condition to this exemption, to the extent the transfer agent 
has not already done so, registered transfer agents shall maintain in a 
separate bank account held for the exclusive benefit of securityholders 
all securityholder funds to be remitted to securityholders until such 
funds are properly remitted to the securityholders.
* * * * *
    The Commission encourages registered transfer agents and the 
issuers for whom they act to inform affected securityholders whom they 
should contact concerning their accounts, their access to funds or 
securities, and other shareholder concerns. If feasible, issuers and 
their transfer agents should consider placing a notice on their 
websites or providing toll free numbers to respond to inquiries.
    Transfer agents experiencing difficulties in complying with 
obligations after October 17, 2005, or in need of additional 
information, should contact the Division of Market Regulation, Office 
of Interpretation and Guidance, at (202) 551-5760 or marketreg@sec.gov 
or use the contact information provided at the end of Section II of the 
Order.

V. Independence--Bookkeeping or Other Services Related to the 
Accounting Records or Financial Statements of the Audit Client

    The conditions in the areas affected by Hurricane Katrina, 
including displacement of hundreds of thousands of individuals, the 
destruction of property and loss or destruction of corporate records, 
may require massive and extraordinary efforts to reconstruct lost or 
destroyed accounting records. The Commission understands that in this 
unique situation an audit client may look to its auditor for assistance 
in reconstruction of its accounting records because of the auditor's 
knowledge of the client's financial systems and records. Under Section 
10A(g)(1) of the Exchange Act and Rule 2-01(c)(4)(i) of Regulation S-X, 
auditors are prohibited from providing bookkeeping or other services 
relating to the accounting records of the audit client, and in Rule 2-
01(c)(4)(i) of Regulation S-X, these prohibited services are described 
as including ``maintaining or preparing the audit client's accounting 
records'' or ``preparing or originating source data underlying the 
audit client's financial statements.'' In light of the conditions in 
areas affected by Hurricane Katrina, however, we believe that limited 
relief from these prohibitions is warranted for those registrants and 
other persons that are required to comply with the independence 
requirements of the federal securities laws and the Commission's rules 
and regulations thereunder and that are affected by those conditions.
    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act, that independent certified public accountants engaged to provide 
audit services to registrants and other persons required to comply with 
the independence requirements of the federal securities laws and the 
Commission's rules and regulations thereunder are exempt from the 
requirements of Section 10A(g)(1) of the Exchange Act and Rule 2-
01(c)(4)(i) of Regulation S-X, where the conditions below are 
satisfied.

Conditions

    (a) With respect to audit clients that are registrants, the address 
of the registrant's principal executive offices listed on the cover 
page of the most recent periodic report filed by the registrant on Form 
10-Q, 10-QSB, 10-K, or 10-KSB is within one of the Presidential 
Disaster Areas;
    (b) With respect to audit clients other than registrants, the 
address listed on the most recently filed schedule or form

[[Page 55435]]

that the audit client had filed, or the address that the audit client 
would be required to list on any covered schedule or form required to 
be filed, is within one of the Presidential Disaster Areas;
    (c) Services provided by the auditor are limited to reconstruction 
of previously existing accounting records that were lost or destroyed 
as a result of Hurricane Katrina and such services cease as soon as the 
client's lost or destroyed records are reconstructed, its financial 
systems are fully operational and the client can effect an orderly and 
efficient transition to management or other service provider; and
    (d) With respect to issuers, the services provided by the issuer's 
auditor pursuant to this Order are subject to pre-approval by the 
issuer's audit committee as required by Rule 2-01(c)(7) of Regulation 
S-X.
* * * * *
    Auditors or audit clients with questions about this section of the 
Order or with other questions relating to auditor independence are 
encouraged to call the Office of the Chief Accountant directly at (202) 
551-5300 or use the contact information provided at the end of Section 
II of the Order.

    By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 05-18761 Filed 9-20-05; 8:45 am]

BILLING CODE 8010-01-P