[Federal Register Volume 61, Number 105 (Thursday, May 30, 1996)]
[Notices]
[Pages 27112-27114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13546]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-21978; 812-10162]
Lord Abbett Global Fund, Inc., et al.; Notice of Application
May 23, 1996.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of Application for Exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANTS: Lord Abbett Global Fund, Inc. (the ``Fund''), Lord, Abbett
& Co. (``Lord Abbett''), and Dunedin Fund Managers Limited
(``Dunedin'').
RELEVANT ACT SECTIONS: Order requested under section 6(c) of the Act
for an exemption from section 15(a) of the Act.
SUMMARY OF APPLICATION: Applicants request an order that would permit
the implementation, without shareholder approval, of a new sub-advisory
agreement (the ``New Sub-Advisory Contract'') for a period of up to 120
days following the termination of the former sub-advisory contract on
March 19, 1996 (``Former Sub-Advisory Contract'') (the ``Interim
Period''). The order also would permit the sub-adviser to receive from
the Fund fees earned during the Interim Period after shareholders have
approved the New Sub-Advisory Contract.
FILING DATE: The application was filed on May 21, 1996.
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
applicants with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on June 17, 1996,
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 SEC's
Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicants: The Fund and Lord Abbett, 767 Fifth Avenue, New
York, New York 10153 and Dunedin, Dunedin House, 25 Ravelston Terrace,
Edinburgh EH4 3EX, Scotland.
FOR FURTHER INFORMATION CONTACT: Elaine M. Boggs, Staff Attorney, at
(202) 942-0572, or Alison E. Baur, Branch Chief, at (202) 942-0564
(Division of Investment Management, Office of Investment Company
Regulation).
[[Page 27113]]
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee at the
SEC's Public Reference Branch.
Applicants' Representations
1. The Fund is an open-end management investment company registered
under the Act and consists of two series, the Equity Series and the
Income Series. Lord Abbett, a registered investment adviser, serves as
investment adviser to the Fund and has engaged Dunedin to serve as sub-
adviser to both series pursuant to the Former Sub-Advisory Contract.
Dunedin is a Scottish corporation that is registered under the
Investment Adivisers Act of 1940 as an investment adviser and is a
wholly-owned subsidiary of DFM Holdings Limited (``DFM Holdings'').
2. Prior to March 19, 1996, 50.5% of the outstanding capital of DFM
Holdings was owned by the British Linen Bank Group, Limited, with the
remaining interests held by four investment trusts (the ``Vendors'').
On February 15, 1996, the Vendors entered into a sale and purchase
agreement (the ``Sale Agreement'') pursuant to which Edinburgh Fund
Managers Group plc (``Edinburgh'') agreed to acquire all of the
outstanding capital shares of DFM Holdings, contingent upon certain
events. All Dunedin clients were notified of the proposed sale on
February 16, 1996. Representatives of Edinburgh and Dunedin met with
representatives of Lord Abbett and the Fund on February 28, 1996 to
discuss the possible continuation of the advisory relationship between
Dunedin and the Fund. At that time, Edinburgh was told that Lord Abbett
would make a recommendation to the Fund's board of directors (the
``Board'') to be considered at a meeting of the Board to be held on
March 14, 1996.
3. On March 14, 1996, the Board approved the New Sub-Advisory
Contract with respect to the Equity Series. As the same time, the Board
determined that the Former Sub-Advisory Contract with respect to the
Income Series was no longer desirable and determined not to approve a
new contract. The Board also concluded that it was in the best
interests of the Equity Series and its shareholders to continue to
retain Dunedin as sub-adviser during the Interim Period in order to
minimize the disruption in advisory services to the Equity Series. The
Board also voted to recommend to shareholders of the Equity Series that
they approve the New Sub-Advisory Contract.
4. On March 18, 1996, a preliminary proxy statement was filed with
the SEC for a shareholder meeting to vote on the New Sub-Advisory
Contract. It is anticipated that the shareholder meeting will be held
on June 19, 1996. The terms and conditions of the New Sub-Advisory
Contract are identical to those of the Former Sub-Advisory Contract,
except that the dates of execution and commencement have changed, and
references to the Income Series has been eliminated. The Sale Agreement
was consummated on March 19, 1996, immediately after which the Former
Sub-Advisory Contract terminated.
5. Among other things, the Board was advised at its March 14th
meeting the fact that it is anticipated that most of Dunedin's
investment personnel will continue to work for Dunedin after the
acquisition and that Edinburgh, has substantial experience in the
provision of advisory and management services to U.K. institutions. The
Board was also advised that the advisory and other services to be
provided to the Equity Series under the New Sub-Advisory Contract would
be of a scope and quality equivalent to the scope and quality of
services provided to the Equity Series by Dunedin pursuant to the
Former Sub-Advisory Contract. At a subsequent meeting held on April 17,
1996, the Board concluded that it would be appropriate for Dunedin to
receive compensation for its services during the Interim Period.
6. The Fund and Dunedin propose to enter into a separate agreement
providing that amounts otherwise payable to Dunedin under the New Sub-
Advisory Contract will be held by an unaffiliated escrow agent pending
shareholder consideration of the New Sub-Advisory Contract. Amounts in
the account will be paid to Dunedin only upon shareholder approval and
in accordance with the requested order.
Applicants' Legal Analysis
1. Applicants seek an exemption pursuant to section 6(c) from
section 15(a) of the Act to permit the implementation, without
shareholder approval, of the New Sub-Advisory Contract during the
Interim Period. Applicants also request relief so that Dunedin may
receive all fees earned under the New Sub-Advisory Contract during the
Interim Period if and to the extent they are approved by the
shareholders of the Equity Series.
2. Section 15(a) prohibits an investment adviser from providing
investment advisory services to a registered investment company except
under a written contract that has been approved by a majority of the
voting securities of such investment company. Section 15(a) further
requires that such written contract provide for its automatic
termination in the event of an assignment. Section 2(a)(4) defines
``assignment'' to include any direct or indirect transfer of a contract
by the assignor. The consummation of the Sale Agreement resulted in an
``assignment,'' within the meaning of section 2(a)(4), of the Former
Sub-Advisory Contract, thereby resulting in the termination of the
Former Sub-Advisory Contract, according to its terms.
3. Section 6(c) provides, in relevant part, that the SEC may,
conditionally or unconditionally, by order, exempt any person or class
of persons from any provision of the Act or from any rule thereunder,
if such exemption is necessary or appropriate in the public interest,
consistent with the protection of investors, and consistent with the
purposes fairly intended by the policy and provisions of the Act.
Applicants submit that the requested relief meets this standard.
4. Applicants state that they will take all appropriate actions to
prevent any diminution in the scope or quality of services provided to
the Equity Series. Applicants state that obtaining shareholder approval
prior to the consummation of the Sales Agreement was not possible
because the Fund did not have sufficient advance notice of the
acquisition, the terms and timing of which were wholly determined by
the Vendors in response to a number of factors substantially unrelated
to the Fund or Lord Abbett. In addition, applicants state that the
terms of the New Sub-Advisory Contract are substantially similar to
that of the Former Sub-Advisory Contract. Applicants believe that to
deprive Dunedin of advisor fees under the New Sub-Advisory Contract
during the Interim Period for no reason other than the fact that the
acquisition (over which Dunedin had no direct control) resulted in an
assignment of the Former Sub-Advisory Contract would be an unduly harsh
and unreasonable penalty.
Applicants' Condition
Applicants agree as conditions to the issuance of the requested
exemptive order that:
1. The New Sub-Advisory Contract will have the same terms and
conditions as the Former Sub-Advisory Contract, except that the dates
of execution and commencement have changed, and references to the
Income Series have been eliminated.
2. Fees earned by Dunedin during the Interim Period under the New
Sub-Advisory Contract will be maintained in an interest bearing escrow
account, and the amounts in such account (including
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interest earned on such amounts) will be paid (a) to Dunedin only upon
approval of the shareholders of the Equity Series or (b) in the absence
of such approval, to the Fund.
3. The fund will hold a special meeting of shareholders to vote on
the approval or disapproval of the New Sub-Advisory Contract, on or
before the 120th day following March 19, 1996. It is expected that the
special meeting will be held June 19, 1996, but it will be held no
later than July 17, 1996.
4. Dunedin or Edinburg will bear the costs of preparing and filing
this application and the costs of a special meeting relating to the
solicitation of the approvals of the Fund's shareholders of the New
Sub-Advisory Contract necessitated by the acquisition.
5. Dunedin will take all appropriate actions to ensure that the
scope and quality of advisory and other services provided to the Equity
Series under the New Sub-Advisory Contract will be at least equivalent,
in the judgment of the Board, including the independent directors, to
the scope and quality of services previously provided. In the event of
any material change in personnel providing services pursuant to the New
Sub-Advisory Contract, Dunedin will apprise and consult the Board to
assure that the Board, including the independent directors, are
satisfied that the services provided by Dunedin will not be diminished
in scope and quality.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 96-13546 Filed 5-29-96; 8:45 am]
BILLING CODE 8010-01-M
