[Federal Register Volume 63, Number 117 (Thursday, June 18, 1998)]
[Notices]
[Pages 33421-33422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-16259]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-23249; 812-10904]
New York Life Capital Corporation; Notice of Application
June 12, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application under section 6(c) of the Investment
Company Act of 1940 (the ``Act'') for an exemption from all provisions
of the Act.
-----------------------------------------------------------------------
SUMMARY OF APPLICATION: Applicant, New York Life Capital Corporation,
requests an order that would permit it to sell certain debt securities
and use the proceeds to finance the business activities of its parent
company and certain companies controlled by the parent company.
FILING DATES: The application was filed on December 18, 1997, and
amended on April 28, 1998, and June 4, 1998.
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 July 8, 1998 and
should be accompanied by proof of service on the 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 may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicant, 51 Madison Avenue, New York, New York 10010.
FOR FURTHER INFORMATION CONTACT:
Edward P. Macdonald, 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 St., N.W., Washington,
D.C. 20549 (tel. 202-942-8090).
Applicant's Representations
1. Applicant is a Delaware corporation and a wholly-owned indirect
subsidiary of New York Life Insurance Company (``New York Life''). New
York Life is a mutual insurance company organized under the laws of the
State of New York. New York Life, directly and through its
subsidiaries, provides various financial services including the sale of
group pension products, health insurance, annuities, brokerage
services, investment advisory services, mutual funds, and variable life
and annuity insurance products. New York Life is exempt from regulation
under the Act by section 3(c)(3) of the Act.
2. Applicant was formed in 1995 for the purpose of financing the
business operations of New York Life and its subsidiaries (``Controlled
Companies''). Applicant's primary function to borrow funds through the
sale of short-term, medium-term, and long-term debt securities as well
as non-voting preferred stock, and to lend the proceeds from these
offerings to New York Life and its Controlled Companies to help finance
their operations. Certain of the Controlled Companies are exempt from
regulations under the Act by certain provisions of section 3(c) of the
Act. None of the Controlled Companies to which applicant may lend will
be relying on sections 3(c)(1) or 3(c)(7) of the Act.
3. All of applicant's debt securities and non-voting preferred
stock issued to or held by the public will be unconditionally
guaranteed by New York Life as to the payment of, as applicable,
principal, interest, premium, dividends, liquidation preference and
sinking fund payments. In the event of any default in payment of these
amounts, the public holders of the securities may institute legal
proceedings directly against New York Life without first proceeding
against applicant. Furthermore, any convertible or exchangeable
securities issued by applicant shall be convertible or exchangeable
only for securities issued by New York Life or for applicant's debt
securities or non-voting preferred stock.
4. Applicant will invest in or loan at least 85% of any cash or
cash equivalents raised by applicant to New York Life and its
Controlled Companies as soon as practicable, but in no event later than
six months after applicant receives the cash or cash equivalents. If
applicant borrows amounts in excess of the amounts required by New York
Life and its Controlled Companies, applicant will invest this excess in
certain temporary investments pursuant to rule 3a-5 under the Act
discussed below.
Applicant's Legal Analysis
1. Applicant requests an order under section 6(c) of the Act
exempting it from all provisions of the Act. Applicant states that rule
3a-5 under the Act provides an exemption from the definition of
investment company for certain companies organized primarily to finance
the business operations of their parent companies or companies
controlled by their parent companies.
2. Rule 3a-5(b)(2) provides that a ``parent company'' is a company
that derives its non-investment company status from section 3(a) of the
Act, the rules under section 3(a) of the Act, or section 3(b) of the
Act. Rule 3a-5(b)(3)(i) in relevant part defines a ``company controlled
by the parent company'' to be a corporation, partnership, or joint
venture that is not considered an investment company under section 3(a)
of the Act, the rules under section 3(a) of the Act, or section 3(b) of
the Act.
3. Applicant states that New York Life may not qualify as a
``parent company'' under rule 3a-5(b)(2) because it derives its non-
investment company status from section 3(c)(3) of the Act. Applicant
also states that certain Controlled Companies that may receive loans
from applicant, may not qualify as a ``company controlled by the parent
company'' under rule 3a-5(b)(3)(i) because these Companies derive their
non-investment company status from sections 3(c)(2), 3(c)(3), 3(c)(5),
or 3(c)(6) of the Act.
4. Applicant asserts that neither New York Life nor these
Controlled Companies engage primarily in investment company activities.
If New York Life, or any of its Controlled Companies, were itself to
issue the debt obligations that are to be issued by applicant and use
the proceeds for its own purposes or advance them to its subsidiaries,
neither New York Life nor any of its Controlled Companies would be
subject to regulation under the Act. New York Life has chosen instead
to use applicant as a vehicle for this borrowing for reasons unrelated
to the regulatory purposes of the Act.
5. Section 6(c) of the Act provides that the SEC may exempt any
person,
[[Page 33422]]
security or transaction, or any class or classes of persons, securities
or transactions, from any provision or provisions of the Act when 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. Applicant states that
for the reasons given above its request for exemptive relief meets the
standards of section 6(c).
Applicant's Condition
Applicant agrees that the order granting the requested relief will
be subject to the following condition:
1. Applicant will comply with all of the provisions of rule 3a-5
under the Act, except: (a) New York Life will not meet the portion of
the definition of parent company in rule 3a-5(b)(2)(i) solely because
it is excluded from the definition of investment company under section
3(c)(3) of the Act; and (b) Controlled Companies will not meet the
portion of the definition of ``company controlled by the parent
company'' in rule 3a-5(b)(3)(i) solely because they are excluded from
the definition of investment company by sections 3(c)(2), 3(c)(3),
3(c)(5), or 3(c)(6) of the Act, provided that any such entity excluded
from the definition of investment company under section 3(c)(5) of the
Act will fall within section 3(c)(5)(A) or section 3(c)(5)(B) solely by
reason of its holdings of accounts receivable of either their own
customers or of the customers of other New York Life Controlled
Companies, or by reason of loans made by it to such New York Life
Controlled Companies or customers, provided further, that any such
entity excluded from the definition of investment company pursuant to
section 3(c)(6) of the Act will not be engaged primarily, directly or
through majority-owned subsidiaries, in one or more of the businesses
described in section 3(c)(5) of the Act (except as permitted in this
condition).
For the SEC, by the Division of Investment Management, pursuant
to delegated authority.
Jonathan G. Katz,
Secretary.
[FR Doc. 98-16259 Filed 6-17-98; 8:45 am]
BILLING CODE 8010-01-M
