[Federal Register Volume 62, Number 71 (Monday, April 14, 1997)]
[Notices]
[Pages 18157-18159]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9459]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-22604; 812-10378]
Arnhold and S. Bleichroeder, Inc.; Notice of Application for
Permanent Order
April 7, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for Permanent Order of Exemption under
the Investment Company Act of 1940 (the ``Act'').
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APPLICANT: Arnhold and S. Bleichroeder, Inc. (``A&SB'').
RELEVANT ACT SECTIONS: Order requested under section 9(c) of the Act
granting an exemption from section 9(a).
SUMMARY OF APPLICATION: A&SB has requested an order under section 9(c)
of the Act exempting it from section 9(a) to the extent necessary to
permit A&SB to employ an individual who is subject to a securities-
related injunction.
FILING DATES: The application was filed on October 2, 1996, and was
amended on February 6, 1997, and April 1, 1997.
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 A&SB
with a copy of the request, personally or by mail. Hearing requests
should be received by the SEC by 5:30 p.m. on April 28, 1997, and
should be accompanied by proof of service on A&SB, 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.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. A&SB, 45 Broadway, New York, New York 10006.
FOR FURTHER INFORMATION CONTACT: Brian T. Hourihan, Senior Counsel, at
(202) 942-0526, or Mercer E. Bullard, 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.
[[Page 18158]]
Applicant's Representations
1. A&SB, a New York corporation, is a registered broker-dealer and
parent to Arnhold and S. Bleichroeder Advisers (``A&SB Advisers''), a
registered investment adviser. A&SB serves as the principal underwriter
to, and A&SB Advisers serves as the investment adviser to, First Eagle
Fund of America, Inc. and First Eagle International Fund, Inc., both
registered open-end investment companies (the ``Funds'').
2. A&SB proposes to employ Geoffrey W. Collier (``Mr. Collier'') as
senior vice president in its institutional equity department. Mr.
Collier's primary responsibility at A&SB will be to work with its
institutional equity businesses. He will coordinate the effort among
A&SB's institutional sales, research and sales trading areas, and
evaluate and make recommendations with respect to staff, products and
process. Mr. Collier will report directly to Mr. John P. Arnhold (``Mr.
Arnhold''), Co-President and Director of A&SB. He will work with Mr.
Arnhold on personnel issues and strategic planning but will not have
unilateral decision-making authority in these areas. He will not be
responsible for proprietary trading, market-making, underwriting, or
corporate finance activities or have supervision over employees'
personal trading activities.
3. Mr. Collier is subject to a securities-related injunction, as
described below. On July 20, 1988, in an action instituted by the SEC,
Mr. Collier consented to the entry of a final judgment and order of
permanent injunction (the ``Injunction'') by the United States District
Court for the Central District of California. \1\ The court permanently
enjoined Mr. Collier from violating section 10(b) of the Securities
Exchange Act of 1934 (the ``Exchange Act'') and rule 10b-5 thereunder.
The SEC's complaint alleged that Mr. Collier, between August and
November 1986, violated section 10(b) and rule 10b-5 with respect to
several trades in the securities of Cadbury-Schweppes, PLC and
Associated Engineering, PLC (the ``United Kingdom Corporations''). At
that time, Mr. Collier was a managing director of Morgan Grenfell
Securities, Ltd. (``Morgan Grenfell'') in charge of securities trading.
The complaint alleged that Mr. Collier, through his position at Morgan
Grenfell, learned that Morgan Grenfell was assisting two U.S.
corporations in an attempt to acquire the United Kingdom Corporations
in two unrelated transactions. The complaint further alleged that Mr.
Collier made use of this material non-public information to cause an
off-shore corporation that he controlled to purchase shares of the
United Kingdom Corporations' stock. Mr. Collier was also charged in the
United Kingdom in connection with the same activities. Applicants
represent that no foreign regulatory authority has ever made any
finding set forth in section 9(b)(4) of the Act, with respect to Mr.
Collier. A&SB requests exemptive relief to permit it to employ Mr.
Collier.
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\1\ SEC Litigation Release No. 11817 (July 26, 1988).
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Applicant's Legal Analysis
1. Section 9(a)(2) of the Act, in pertinent part, disqualifies any
person from acting in the capacity of employee, officer, director,
member of an advisory board, investment adviser, or depositor for any
registered investment company, or principal underwriter for any
registered open-end company, registered unit investment trust, or
registered face amount company, if such person is, by reason of any
misconduct, permanently or temporarily enjoined from acting as an
underwriter, broker, dealer, or investment adviser, or as an affiliated
person or employee of an investment company, or from engaging in or
continuing any conduct or practice in connection with any such activity
or in connection with the purchase or sale of any security. A company
with an employee or other affiliated person ineligible to serve in any
of these capacities under section 9(a)(2) is similarly ineligible by
reason of section 9(a)(3) of the Act.
2. Section 9(c) of the Act provides that, upon application, the SEC
shall grant an exemption from the disqualification provisions of
section 9(a), either unconditionally or on an appropriate temporary or
other conditional basis, if it is established that the prohibitions of
section 9(a), as applied to an applicant, are unduly or
disproportionately severe or that the conduct of such person has been
such that it would not be against the public interest or protection of
investors to grant such application.
3. A&SB believes that, absent relief, Mr. Collier's employment
would cause it to become disqualified under section 9(a) of the Act
from acting in any of the capacities specified in that section with
respect to the Funds, and therefore requests an order granting the
requested relief. A&SB states that it is requesting relief so that it
and any of its affiliated persons will not be disqualified from acting
in any of the capacities specified in section 9(a) by reason of
employing Mr. Collier. A&SB represents that it has received all
necessary approvals from all applicable self-regulatory organizations,
including the New York Stock Exchange, with respect to the proposed
employment of Mr. Collier. A&SB notes that it currently is not
disqualified from acting in any of the capacities specified in section
9(a) of the Act.
4. In support of its request for exemptive relief, A&SB asserts
that:
(a) Neither A&SB nor any affiliated person of A&SB was the subject
of the Injunction, and the facts and circumstances to which the
Injunction relate did not involve any activities of A&SB or its
affiliates.
(b) The Funds were not in any way involved in any of the
circumstances referred to in the Injunction.
(c) As an employee of A&SB's institutional equities department, Mr.
Collier will have no involvement with, or responsibility for, the
Funds.
(d) The allegations in the SEC's complaint against Mr. Collier and
the terms of the Injunction and the circumstances to which they relate
in no way involved any activities of a registered investment company.
A&SB states that during Mr. Collier's tenure with Morgan Grenfell, he
was not involved with the activities of any of Morgan Grenfell's
investment companies other than on a purely arm's-length basis.
(e) A&SB notes that over eight years have passed since the entry of
the Injunction and Mr. Collier has not been subject to any similar
actions, or sanctioned in any way by the SEC, any self-regulatory
organization, or any state securities commission, nor are there any
customer complaints, lawsuits, or regulatory actions pending against
Mr. Collier.
(f) The prohibitions of section 9(a) deprive Mr. Collier of the
opportunity to serve as an employee of any company, such as A&SB, that
serves as an investment adviser of or principal underwriter for any
investment company, in circumstances in which he would have no
involvement investment company operations.
(g) The prohibitions of section 9(a) would be unduly and
disproportionately severe as applied to A&SB because they would deprive
it of Mr. Collier's services in an area totally unrelated to the
activities of an investment company.
Applicant's Condition
A&SB agrees that any order granted pursuant to the application will
be subject to the condition that neither A&SB, nor any affiliated
person of A&SB relying upon relief granted pursuant to the application,
will employ Mr. Collier in any capacity directly related to the
provision of investment
[[Page 18159]]
advisory services to, or acting as a depositor for, any registered
investment company, or related to acting as a principal underwriter
for, any registered open-end investment company, unit investment trust
or registered face amount certificate company without first making
further application to the SEC.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-9459 Filed 4-11-97; 8:45 am]
BILLING CODE 8010-01-M
