[Federal Register Volume 63, Number 190 (Thursday, October 1, 1998)]
[Notices]
[Pages 52779-52780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-26279]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23465; 812-11034]
Williamsburg Investment Trust, et al.; Notice of Application
September 25, 1998.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application under sections 6(c) and 17(b) of the
Investment Company Act of 1940 (the ``Act'') for an exemption from
section 17(a) of the Act.
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SUMMARY OF APPLICATION: Applicants request an order to permit
portfolios of Williamsburg Investment Trust (the ``Trust'') not advised
by Davenport & Company LLC (``Davenport''), to engage in principal
transactions with Davenport, which is adviser to another portfolio of
the trust.
Applicants: The Trust, Davenport, and Lowe, Brockenbrough &
Tattersall, Inc. (``LB&T''), Flippin, Bruce & Porter, Inc. (``FBP''),
T. Leavell & Associates, Inc. (``T. Leavell'') and Tattersall Advisory
Group, Inc. (``Tattersall'') (the ``Unaffiliated Advisers'' and
together with Davenport, the ``Advisers'').
Filing Dates: The application was filed on February 27, 1998, and
amended on July 22, 1998. Applicants have agreed to file an 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 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 October 20, 1998, 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, Commission, 450 Fifth Street, N.W., Washington,
DC 20549. Applicants, 312 Walnut Street, 21st Floor, Cincinnati, Ohio
45202.
FOR FURTHER INFORMATION CONTACT:
Lawrence W. Pisto, Senior Counsel, at (202) 942-0527, or George J.
Zornada, Branch Chief at (202) 942-0564, Office of Investment Company
Regulation, Division of Investment Management.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
Commission's Public Reference Branch, 450 Fifth Street, N.W.,
Washington, DC 20549 (tel. (202) 942-8090).
Applicant's Representations
1. The Trust is registered under the Act as an open-end management
investment company and organized as a Massachusetts business trust. The
Trust operates as a series company and currently offers twelve series
(each, a ``Portfolio,'' and collectively, the ``Portfolios''). The
Advisers are investment advisers registered under the Investment
Advisers Act of 1940 (``Advisers Act''). Davenport is also registered
under the Securities Exchange Act of 1934 as a broker-dealer.
2. Each of the Advisors manages one or more of the Portfolios.\1\
The Advisers' agreements with the Trust neither require nor authorize
collaboration between the Advisers and each Adviser negotiates the
terms of its advisory contract individually. Each Adviser is
responsible for making independent investment and brokerage decisions
for each Portfolio that the Adviser manages and each Adviser acts, for
all practical purposes, as though it manages a separate investment
company. Each Adviser is compensated separately for its advisory
services to a Portfolio and the compensation is based on a
[[Page 52780]]
percentage of assets held in that Portfolio.
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\1\ The Portfolios and the investment adviser to each are as
follows: The Davenport Equity Fund, Davenport & Co. LLC; The
Jamestown Balanced Fund, LB&T; the Jamestown Equity Fund, LB&T; The
Jamestown Bond Fund, Tattersall; The Jamestown Short Term Bond Fund,
Tattersall; The Jamestown Tax Exempt Virginia Fund, LB&T; The
Jamestown International Equity Fund, LB&T; FBP Contarian Balanced
Fund, FBP; FBP Contatrian Equity Fund, FBP; The Alabama Tax Free
Bond Fund, T. Leavell; The Government Street Bond Fund, T. Leavell;
and The Government Street Equity Fund, T. Leavell.
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3. Applicants request relief to permit Portfolios that are not
advised by Davenport (``Unaffiliated Portfolios'') to engage in
principal securities transactions with Davenport, and any entity
controlling, controlled by, or under common control with Davenport.
Applicants also request relief for any future series of the Trust that
is an Unaffiliated Portfolio (``Future Portfolio''). Any Future
Portfolios that rely on the relief will comply with the terms and
conditions of the application.
Applicants' Legal Analysis
1. Section 17(a) of the Act generally prohibits sales or purchases
of securities between a registered investment company and an affiliated
person, or an affiliated person of an affiliated person, of the
company. Sections 2(a)(3)(C) and (E) define an ``affiliated person'' of
another person to be any person directly or indirectly controlling,
controlled by, or under common control with the person, and any
investment adviser of an investment company, respectively. Because the
Trust's officers and trustees oversee the management and policies of
each Portfolio, the Portfolios might be deemed to be under common
control and each Portfolio might be deemed to be an affiliated person
of each other Portfolio. Each investment adviser of a Portfolio may be
deemed to be an affiliated person of an affiliated person (``second-
tier affiliate'') of any of the Portfolios that it does not advise and
therefore prohibited by section 17(a) from engaging in principal
transactions with any of the Portfolios.
2. Applicants request an exemption from section 17(a) to permit
principal securities transactions entered into in the ordinary course
of business between the Unaffiliated Portfolios and Davenport and
entities controlling, controlled by, or under common control with
Davenport. The requested exemption would apply only where Davenport is
deemed to be a second-tier affiliate of an Unaffiliated Portfolio
solely because Davenport is the adviser to another Portfolio of the
Trust.
3. Section 17(b) of the Act provides that the Commission shall
exempt a transaction from section 17(a) if evidence establishes that
the terms of the transaction, including the consideration to be paid or
received, are reasonable and fair and do not involve overreaching on
the part of any person concerned, that the transaction is consistent
with the policy of each registered investment company concerned, and
that the transaction is consistent with the general purposes of the
Act. Section 6(c) of the Act provides that the Commission may exempt
any person or transaction from any provision of the Act, if the
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 Act. Applicants believe
that the proposed transactions meet the standards of sections 17(b) and
6(c) for the reasons stated below.
4. Applicants assert that section 17(a) is intended to prevent
persons who have the power to influence an investment company from
using that influence to their own pecuniary advantage. Applicants state
that there would be no conflict of interest inherent in an Unaffiliated
Adviser's decision to execute a portfolio transaction with Davenport,
and there is no danger of overreaching on the part of any person
concerned. Because each Unaffiliated Adviser is responsible for making
its investment decisions independently, and each Unaffiliated Adviser
would be dealing with Davenport as a competitor, the pecuniary
interests of the Unaffiliated Adviser are aligned with those of the
Unaffiliated Portfolio.
5. Applicants also state that the proposed transactions will be
consistent with the policies of each Unaffiliated Portfolio, because
each Unaffiliated Adviser is required to manage the Unaffiliated
Portfolio in accordance with the investment objectives and related
investment policies of the Unaffiliated Portfolio as described in its
registration statement. Applicants also assert that permitting the
transactions will be consistent with the general purposes of the Act
and in the public interest because the ability to engage in the
transactions will increase the likelihood of an Unaffiliated Portfolio
achieving best price and execution on its principal transactions while
giving rise to none of the abuses that section 17(a) was designed to
prevent.
Applicants' Conditions
Applicants agree that any order of the Commission granting the
requested relief will be subject to the following conditions:
1. Davenport (except by virtue of serving as Adviser) will not be
an affiliated person or a second-tier affiliate of any Unaffiliated
Adviser or any officer, trustee or employee of the Portfolio engaging
in the transaction.
2. Davenport will not directly or indirectly consult with any
Unaffiliated Adviser concerning allocation of principal or brokerage
transactions.
3. Davenport will not participate in any arrangement whereby the
amount of its advisory fees will be affected by the investment
performance of an Unaffiliated Portfolio.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonthan G. Katz,
Secretary.
[FR Doc. 98-26279 Filed 9-30-98; 8:45 am]
BILLING CODE 8010-01-M
