[Federal Register Volume 64, Number 26 (Tuesday, February 9, 1999)]
[Notices]
[Pages 6402-6404]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-3099]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-23680; 812-11356]
Robertson Stephens Investment Trust; Notice of Application
February 4, 1999.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') for relief from section
2(a)(19) of the Act.
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SUMMARY OF APPLICATION: Applicant, a registered investment company,
requests an order under section 6(c) of the Act declaring that two of
its trustees, each of whom is affiliated with a registered broker-
dealer, will not be deemed ``interested persons'' of applicant until
June 1, 1999.
FILING DATE: The application was filed on October 15, 1998. Applicant
has 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 SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicant with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on February 24,
1999, and should be accompanied by proof of service on applicant 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
SEC's Secretary.
[[Page 6403]]
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicant: Andrew P. Pilara, Jr., President, Robertson Stephens
Investment Trust, 555 California Street, San Francisco, California
94104.
FOR FURTHER INFORMATION CONTACT: Timothy R. Kane, Senior Counsel, at
(202) 942-0615, or Mary Kay Frech, Branch Chief, at (202) 942-0564
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the SEC's Public Reference Branch, 450 Fifth Street, NW., Washington,
DC 20549 (tel. (202) 942-8090).
Applicant's Representations
1. Robertson Stephens Investment Trust (``Trust'') is a
Massachusetts business trust registered under the Act as an open-end
management investment company consisting of ten series. Nine series are
advised by Robertson, Stephens & Company Investment Management, L.P.,
and one series is advised by RS Investment Management, Inc., (the
`'Advisers''). The Advisers are registered under the Investment
Advisers Act of 1940. The Advisers are indirect subsidiaries of
BankAmerica Corporation (``BankAmerica'').
2. The Trust's board of trustees (``Board'') is composed of four
individuals, three of whom are ``interested persons'' within the
meaning of section 2(a)(19) of the Act. Two of the trustees--John W.
Glynn, Jr. and James K. Peterson--are interested persons solely because
each is affiliated with a broker-dealer registered under the Securities
Exchange Act of 1934 (``1934 Act'').
3. Mr. Glynn is a director of Sterling Payot Company
(``Sterling''), a private firm that advises senior executives and
entrepreneurs on financial and strategic matters. Sterling does not
engage in securities trading activity, make markets in securities, or
engage in agency transactions. Mr. Peterson is an employee of Mitchum,
Jones & Templeton, Inc. (``Mitchum''). Mitchum's business consists
primarily in placing private equity investments. Mr. Peterson is a
research analyst for Mitchum; he does not purchase, sell, or trade
securities for Mitchum.
4. Mr. Peterson became an employee of Mitchum in October 1998.
Prior to that time, Mr. Peterson was a disinterested trustee and Mr.
Glynn was able to rely on rule 2a19-1 under the Act (discussed below)
to be considered a disinterested trustee. Mr. Peterson also would have
been able, subject to the conditions set forth in rule 2a19-1, to
continue to serve as a disinterested trustee, but for the fact that the
rule provides that no more than a minority of the Trust's disinterested
trustees may rely on the rule (``minority requirement''). As a result
of the minority requirement, neither Mr. Glynn nor Mr. Peterson could
rely on the rule.
5. Applicant states that it has not yet reconstituted the Board for
several reasons. First, from the time Mr. Peterson became affiliated
with Mitchum until mid-November, 1998, BankAmerica had been attempting
to sell the Advisers' parent company. Applicant states that, until a
sale was completed, it would have been difficult to determine whether
any potential trustee would have been affiliated with the ultimate
purchaser and, therefore, an interested person of the Trust. Applicant
states that an agreement to sell the Advisers' parent company has been
reached and is expected to be implemented at the end of February,
1999.\1\ Applicant also believes that it would have been difficult to
attract new trustees with the experience and judgment appropriate to
the position in light of the uncertainty involving the Trust and its
advisory arrangements, and that any qualified candidate would have
deferred consideration for the position until after the uncertainty had
been resolved. Finally, applicant states that the alternative to
electing more disinterested trustees would have been resignations by
both Mr. Peterson and Mr. Glynn in order to meet the minority
requirement in rule 2a19-1. Applicant asserts that the Board believed
that losing both Mr. Peterson and Mr. Glynn would not have been in the
best interests of the Trust and its shareholders.
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\1\ On November 19, 1998, certain senior managers of the
Advisers (``Management Group'') signed an agreement to purchase the
Advisers' parent company from BankAmerica. On January 26, 1999, the
Board approved new advisory agreements and voted to recommend that
shareholders approve the agreements at a shareholders meeting
scheduled for February 26, 1999. Proxies for the shareholder meeting
were mailed on or about February 2, 1999. The new advisory
agreements will not be implemented until a majority of the Trust's
trustees who are not interested persons have approved the
agreements. Applicant further states that no member of the
Management Group has any material business or professional
relationship with Sterling or Mitchum or with the principal
executive officers or controlling persons of Sterling or Mitchum.
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6. Applicant seeks an order declaring Mr. Glynn and Mr. Peterson to
be disinterested persons until June 1, 1999. Applicant states that the
requested relief would allow it sufficient time to reconstitute the
Board.
Applicant's Legal Analysis
1. Section 2(a)(19)(A)(v) of the Act defines an ``interested
person'' of a registered investment company to include any broker-
dealer registered under the 1934 Act or any affiliated person of the
broker-dealer. Applicant states that Mr. Glynn and Mr. Peterson are
interested persons solely because they are affiliated persons of
registered broker-dealers.
2. Rule 2a19-1 under the Act provides, in relevant part, that a
director of a registered investment company will not be considered an
interested person solely because the director is an affiliated person
of a registered broker-dealer, provided that: (1) The broker-dealer
does not execute any portfolio transactions for the ``company
complex,'' as that term is defined in the rule, engage in any principal
transactions with the company complex, or distribute shares of the
company complex, for at least six months prior to the time the director
is to be considered disinterested and for the period during which the
director continues to be considered disinterested; (2) the company's
board of directors finds that the company and its shareholders will not
be adversely affected if the broker-dealer does not engage in
transactions for or with the company complex; and (3) no more than a
minority of the company's disinterested directors are affiliated with
broker-dealers. The Trust states that it may not rely on rule 2a19-1 in
determining Mr. Glynn's and Mr. Peterson's status because they would
represent two of the three disinterested trustees.
3. The Trust requests an order under section 6(c) of the Act
declaring that neither Mr. Glynn nor Mr. Peterson will be deemed an
interested person under section 2(a)(19) of the Act until June 1, 1999.
Section 6(c) of the Act provides, in part, that the SEC may exempt any
person from any provision of the Act or any rule under the Act if and
to the extent 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.
4. Applicant states that its request for relief meets this
standard. Applicant asserts that Mr. Glynn's relationship with Sterling
and Mr. Peterson's employment with Mitchum pose no potential conflict
of interest because all of the requirements of rule 2a19-1, other than
the minority requirement, will be met with respect to each. Even
[[Page 6404]]
though applicant believes that Messrs. Peterson and Glynn will not have
the types of conflicts of interest that section 2(a)(19) was designed
to address, they will constitute a majority of the disinterested
trustees. Applicant believes that any concerns raised by their being in
the majority can be addressed by requiring the approval of the third
disinterested trustee on any matter that requires approval of a
majority of the disinterested trustees.
Applicant's Conditions
Applicant agrees that any order granting the requested relief will
be subject to the following conditions:
1. All of the requirements of rule 2a19-1 will be met with respect
to each of Mr. Glynn and Mr. Peterson, except paragraph (a)(3) of the
rule.
2. The Trust will not consider any action requiring the approval of
disinterested trustees to be effective unless such action has been
approved by a majority of the disinterested trustees who serve as such
without reliance on rule 2a19-1 or the requested order.
3. The Trust may not rely on the requested relief beyond June 1,
1999.
For the Commission, by the Division of Investment Management,
under delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 99-3099 Filed 2-8-99; 8:45 am]
BILLING CODE 8010-01-M
