Document ID: SEC-2009-0808-0001
Agency: sec
Document Type: Notice
Title: Applications and Temporary Orders: RBC Capital Markets Corp., et al.
Posted Date: 2009-06-15T04:00Z

[Federal Register: June 15, 2009 (Volume 74, Number 113)]
[Notices]               
[Page 28290-28291]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jn09-136]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-28762; File No. 812-13663]

 
RBC Capital Markets Corporation, et al.; Notice of Application 
and Temporary Order

June 9, 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 RBC Capital Markets Corporation (``RBC'') on 
June 9, 2009 by the United States District Court for the Southern 
District of New York (``Injunction''), until the Commission takes final 
action on an application for a permanent order. Applicants also have 
applied for a permanent order.

APPLICANTS: RBC, Voyageur Asset Management Inc. (``Voyageur''), 
Tamarack Distributors Inc. (``Tamarack''), and Sky Investment Counsel 
Inc. (``Sky'') (collectively, other than RBC, the ``Fund Servicing 
Applicants'' and together with RBC, 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 RBC is or may 
become an affiliated person (together with the Applicants, the 
``Covered Persons'').

FILING DATE: The application was filed on June 3, 2009. Applicants have 
agreed to file an amendment during the notice period, the substance of 
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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 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 July 6, 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: RBC, One Liberty 
Plaza, 165 Broadway, New York, NY 10006; Voyageur and Tamarack, 100 
South Fifth Street, Suite 2300, Minneapolis, MN 55402; and Sky, 1 
Adelaide Street East, Suite 2310, Toronto, ON, Canada M5C 2V9.

FOR FURTHER INFORMATION CONTACT: Jaea F. Hahn, Senior Counsel, at (202) 
551-6870, 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 
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. RBC is a full service investment banking firm engaged in 
securities underwriting, sales and trading, investment banking, 
financial advisory services and investment research services. RBC is 
registered with the Commission as a broker-dealer under the Securities 
Exchange Act of 1934, as amended (``Exchange Act'') and as an 
investment adviser under the Investment Advisers Act of 1940, as 
amended (``Advisers Act''). RBC is an indirect, wholly owned subsidiary 
of Royal Bank of Canada (``Royal Bank''), a Canada-based global 
financial services firm.
    2. Voyaguer and Sky are registered as investment advisers under the 
Advisers Act and provide investment advisory or subadvisory services to 
registered investment companies (``Funds''). Voyageur is an indirect, 
wholly owned subsidiary of Royal Bank. Royal Bank indirectly owns a 
controlling interest in Sky. Tamarack is a broker-dealer registered 
under the Exchange Act and serves as principal underwriter to open-end 
Funds. None of the Applicants serve as depositor to any Fund.
    3. On June 9, 2009, the United States District Court for the 
Southern District of New York entered a judgment against RBC 
(``Judgment'') in a matter brought by the Commission.\2\ The Commission 
alleged in the complaint (``Complaint'') that RBC violated section 
15(c) of the Exchange Act by misrepresenting to many of its customers 
that auction rate securities were safe, highly liquid investments that 
were substitutes for cash or money market funds. The Complaint further 
alleges that on February 11, 2008, RBC determined not to place bids in 
most of its auctions, as it had historically done, resulting in failed 
auctions. Without admitting or denying the allegations in the 
Complaint, except as to jurisdiction, RBC consented to 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. RBC Capital Markets 
Corporation, Judgment as to Defendant RBC Capital Markets 
Corporation, 09-cv-5172 (S.D.N.Y., June 9, 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

[[Page 28291]]

common control with, the other person. Applicants state that RBC 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 standards 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 or subadviser to any Fund or in the capacity of 
principal underwriter for any open-end Fund. Applicants also state that 
none of the current or former directors, officers, or employees of the 
Fund Servicing Applicants had any knowledge of, or had any involvement 
in, the conduct alleged in the Complaint. Applicants further state that 
the personnel at RBC who were involved in the violations alleged in the 
Complaint have had no involvement in providing investment advisory, 
subadvisory or principal underwriting services to Funds and will not 
have any future involvement in such activities.
    5. Applicants state that the inability to continue to provide 
investment advisory and subadvisory services to Funds and principal 
underwriting services to open-end Funds 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 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. Applicants further state that 
prohibiting them from providing such services would not only adversely 
affect their businesses, but would also adversely affect approximately 
35 employees who are involved in those activities.
    7. Applicants have not previously received an exemption under 
section 9(c) as the result of conduct that triggered section 9(a).

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 
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 June 
9, 2009, until the Commission takes final action on their application 
for a permanent order.

    By the Commission.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E9-13980 Filed 6-12-09; 8:45 am]

BILLING CODE 8010-01-P