[Federal Register Volume 61, Number 49 (Tuesday, March 12, 1996)]
[Notices]
[Pages 10042-10043]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-5841]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21811; File No. 812-9864]
The Northwestern Mutual Life Insurance Company
March 6, 1996.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``1940 Act'').
-----------------------------------------------------------------------
APPLICANT: The Northwestern Mutual Life Insurance Company (``NML'').
RELEVANT 1940 ACT SECTIONS AND RULES: Order requested under Section
6(c) for exemptions from Section 9(a).
SUMMARY OF THE APPLICATION: Applicant seeks an order exempting itself
and its affiliates, in their capacities as investment advisers,
principal underwriters and depositors, from the disqualification
provisions of Section 9(a) with respect to NML's separate accounts
organized as unit investment trusts (``UITS'') that derive assets from
the sale of variable annuity contracts. The exemptions, subject to
certain conditions, would apply to NML's (and its affiliates')
officers, directors and employees who do not participate directly in
the management or administration of the separate accounts or their
underlying management investment companies, or in the sale of their
variable annuity contracts.
FILING DATES: The application was filed on November 29, 1995.
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 the Commission's Secretary and
serving Applicant with a copy of the request, personally or by mail.
Hearing requests should be received by the Commission by 5:30 p.m. on
April 1, 1996, 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 Commission's Secretary.
ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. Applicant, The Northwestern
Mutual Life Insurance Company, 720 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202, Attention John M. Bremer, Senior Vice President,
Secretary and General Counsel.
FOR FURTHER INFORMATION CONTACT:
Joseph G. Mari, Senior Special Counsel, or Wendy Friedlander, Deputy
Chief, at (202) 942-0670, Office of Insurance Products, Division of
Investment Management.
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the Commission's Public Reference Branch.
Applicant's Representations
1. NML is a Wisconsin life insurance company that is authorized to
sell life insurance and annuities in all 50 states and the District of
Columbia. NML is a co-depositor of NML Variable Annuity Account B, its
separate account that funds variable annuity contracts (the ``Separate
Account'').
2. The Separate Account is organized as a UIT and is registered
under the Securities Act of 1933 and the 1940 Act. The Separate Account
funds benefits under individual variable annuity contracts. The assets
of the Separate Account are invested exclusively in shares of
Northwestern Mutual Series Fund, Inc., a registered open-end management
investment company (the ``Fund'').
3. Northwestern Mutual Investment Services, Inc. (``NMIS''), an
indirect wholly-owned subsidiary of NML, is the principal underwriter
of the Separate Account. NMIS is registered as a broker-dealer under
the Securities Exchange Act of 1934 (the ``1934 Act'') and as an
investment adviser under the Investment Advisers Act of 1940.
Applicant's Legal Analysis
1. Section 9(a) automatically disqualifies a company from serving
as an investment adviser, depositor or principal underwriter to a
registered investment company if the company or an affiliate has an
employee, officer or director who has been convicted of a securities-
related offense or enjoined by a court from serving in a securities-
related position.
2. Rules 6e-2 and 6e-3(T) under the 1940 Act provide certain
exemptions from the automatic disqualification provisions of Section
9(a). Rules 6e-2 and 6e-3(T) restrict the applicability of Section 9(a)
to persons who participate directly in the management or administration
of the separate account and the underlying fund, or in the sale of the
variable life contracts funded by the separate account.
3. There is no rule affording similar relief regarding insurance
company separate accounts funding variable annuity contracts, such as
the Separate Account.
4. NML has approximately 2,931 non-officer employees and 4,852
insurance agents who are registered representatives of NMIS, in
addition to its officer and directors. Section 9(a) applies to NML, as
depositor and principal underwriter of the Separate Account, and to its
affiliates, as investment advisers and principal underwriters, of
registered investment companies.
5. Section 9(a) would automatically disqualify NML and its
affiliates from serving as depositor, principal underwriter or
investment adviser if any one of their employees became disqualified
under Section 9(a), even if the employee worked in one of NML's
businesses not regulated under the 1940 Act and did not participate in
the management or administration of the Separate Account or the Fund,
or in the sale of the variable annuity contracts.
6. NML seeks an order limiting the automatic disqualification
provisions of Section 9(a) with respect to the Separate Account to the
same extent available under Rules 6e-2 and 6e-3(T) to separate accounts
funding variable life insurance contracts. NML asserts that the
intended focus of Section 9(a) is on the operation of investment
companies and not on ancillary businesses unrelated to investment
company operations and management. NML states that its requested relief
is consistent with the purpose of Section 9(a).
7. Currently, whenever any officer, trustee or employee of NML
becomes subject to the automatic disqualification provisions of Section
9(a), NML must apply for a Commission order pursuant to Section 9(c) of
the 1940 Act to exempt the person and NML from those disqualification
provisions. The requirements to submit such applications could place an
undue burden on both NML and the Commission without any public benefit
if the individual does not participate in the management or
administration of the Separate Account, the Fund or MNIS.
8. Additionally, NML currently maintains, and will continue to
maintain, monitoring procedures to identify any insurance agent, or
officer, director, or employee who does not function as an insurance
agent or registered representative, subject to statutory
disqualification.
[[Page 10043]]
Conditions for Relief
NML agrees that if the requested exemption are granted, NML will
maintain a list of its officers, directors and employees who
participate directly in the management or administration of any
variable annuity separate account of NML and any registered investment
company underlying NML's variable annuity separate accounts. NML also
will maintain a list of its agents who, as registered representatives
of NMIS, offer and sell variable annuity contracts. These lists will be
maintained at NML's home office and will be available to the staff of
the Commission. The individuals named on the lists will continue to be
subject to the automatic disqualification provisions of Section 9(a).
Applicant submits, for the reasons stated herein, that the
requested exemptions from Section 9(a) of the 1940 Act meet the
standards set out in Section 6(c) of the 1940 Act. Applicant asserts
that the exemptions requested are necessary and appropriate in the
public interest and consistent with the protection of investors and the
policies and provisions of the 1940 Act.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-5841 Filed 3-11-96; 8:45 am]
BILLING CODE 8010-01-M
