[Federal Register Volume 75, Number 150 (Thursday, August 5, 2010)]
[Notices]
[Pages 47318-47320]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-19244]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 29374; File No. 812-13807]
GE Asset Management Incorporated and GE Investment Distributors,
Inc.; Notice of Application and Temporary Order
July 30, 2010.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Temporary order and notice of application for a permanent order
under section 9(c) of the Investment Company Act of 1940 (``Act'').
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Summary of Application: Applicants have received a temporary order
exempting them from section 9(a) of the Act, with respect to an
injunction entered against General Electric Company (``GE''), Ionics,
Inc. (``Ionics''), and Amersham plc (``Amersham'') on July 30, 2010, by
the United States District Court for the District of Columbia
(``Injunction''), until the Commission takes final action on an
application for a permanent order. Applicants also have applied for a
permanent order.
Applicants: GE Asset Management Incorporated (``GEAM'') and GE
Investment Distributors, Inc. (``GEID'',
[[Page 47319]]
collectively with GEAM, the ``Applicants'').\1\
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\1\ Applicants request that any relief granted pursuant to the
application also apply to any other company of which GE, Ionics, or
Amersham is or may become an affiliated person (together with the
Applicants, the ``Covered Persons'').
DATES: Filing Dates: The application was filed on July 27, 2010, and
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amended on July 30, 2010.
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 to the Commission's Secretary
and serving Applicants with a copy of the request, personally or by
mail. Hearing requests should be received by the Commission by 5:30
p.m. on August 24, 2010, 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 Commission's Secretary.
ADDRESSES: Secretary, U.S. Securities and Exchange Commission, 100 F
Street, NE., Washington, DC 20549-1090; Applicants: 3001 Summer Street,
Stamford, CT 06904-7900.
FOR FURTHER INFORMATION CONTACT: Courtney S. Thornton, Senior Counsel,
at (202) 551-6812, or Mary Kay Frech, Branch Chief, at (202) 551-6821,
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a temporary order and a
summary of the application. The complete application may be obtained
via the Commission's Web site by searching for the file number, or an
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling (202) 551-8090.
Applicants' Representations
1. GE is a large diversified technology, media, and financial
services company. GEAM, a Delaware corporation, is a direct, wholly-
owned subsidiary of GE. GEAM is registered as an investment adviser
under the Investment Advisers Act of 1940 and serves as investment
adviser to a number of registered investment companies (``Funds''),
including employees' securities companies (``ESCs'').\2\ GEID is,
through GEAM, an indirect, wholly-owned subsidiary of GE. GEID is
registered as a broker-dealer under the Securities Exchange Act of 1934
and is a member of the Financial Industry Regulatory Authority, Inc.
GEID serves as principal underwriter to a number of Funds.
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\2\ The ESCs, as defined in section 2(a)(13) of the Act, are
open-end management investment companies registered under the Act
and provide investment opportunities for certain employees,
officers, and directors of GEAM and its affiliates, and other
eligible participants.
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2. On July 30, 2010, the United States District Court for the
District of Columbia entered a final judgment, which included the
Injunction, against GE, Ionics, and Amersham (``Judgment'') in a matter
brought by the Commission.\3\ The Commission alleged in the complaint
(``Complaint'') that, from 2000 to 2003, four current subsidiaries of
GE, including Ionics and Amersham, which were both acquired by GE after
the conduct at issue in the Complaint, authorized and made payments in
the form of cash, medical equipment, and services to Iraqi government
ministries through agents on sales of products to Iraq under the United
Nations Oil for Food Program. Without admitting or denying the
allegations in the Complaint, except as to jurisdiction, GE, Ionics,
and Amersham consented to the entry of the Judgment that included,
among other things, the entry of the Injunction. In addition, the
Judgment ordered GE, on behalf of itself, Ionics, and Amersham, to pay
disgorgement in the amount of approximately $18.4 million, plus
prejudgment interest of approximately $4 million, and a civil penalty
of $1 million.
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\3\ Securities and Exchange Commission v. General Electric
Company, Final Judgment as to General Electric Company, 1:10-cv-1258
(RWR) (D.D.C. July 30, 2010).
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Applicants' Legal Analysis
1. Section 9(a)(2) of the Act, in relevant part, prohibits a person
who has been enjoined from, among other things, engaging in or
continuing any conduct or practice in connection with the purchase or
sale of a security, or in connection with activities as an underwriter,
broker or dealer, from acting, among other things, as an investment
adviser or depositor of any registered investment company or a
principal underwriter for any registered open-end investment company,
registered unit investment trust or registered face-amount certificate
company. Section 9(a)(3) of the Act makes the prohibition in section
9(a)(2) applicable to a company, any affiliated person of which has
been disqualified under the provisions of section 9(a)(2). Section
2(a)(3) of the Act defines ``affiliated person'' to include, among
others, any person directly or indirectly controlling, controlled by,
or under common control with, the other person. Applicants state that
each of GE, Ionics, and Amersham is an affiliated person of each of the
Applicants within the meaning of section 2(a)(3) of the Act. Applicants
state that the entry of the Injunction results in Applicants being
subject to the disqualification provisions of section 9(a) of the Act.
2. Section 9(c) of the Act provides that the Commission shall grant
an application for exemption from the disqualification provisions of
section 9(a) if it is established that these provisions, as applied to
the applicants, are unduly or disproportionately severe or that the
applicants' conduct has been such as not to make it against the public
interest or the protection of investors to grant the exemption.
Applicants have filed an application pursuant to section 9(c) seeking a
temporary and permanent order exempting them and other Covered Persons
from the disqualification provisions of section 9(a) of the Act.
3. Applicants believe they meet the standard for exemption
specified in section 9(c). Applicants state that the prohibitions of
section 9(a) as applied to them would be unduly and disproportionately
severe and that the conduct of the Applicants has been such as not to
make it against the public interest or the protection of investors to
grant the exemption from section 9(a).
4. Applicants state that the alleged conduct giving rise to the
Injunction did not involve either of the Applicants acting in the
capacity of investment adviser, subadviser or depositor for any Fund or
as principal underwriter for any Fund, and no such Funds bought or held
any securities issued by the Covered Persons during the period of
misconduct alleged in the Complaint, other than with respect to index
Funds and certain international Funds holding securities issued by
Amersham prior to its acquisition by GE. Applicants also state that
none of the current or former directors, officers, or employees of the
Applicants had any responsibility for, or involvement in, the violative
conduct alleged in the Complaint. Applicants further state that the
personnel at GE, Ionics, or Amersham who had any responsibility for, or
involvement in, the violations alleged in the Complaint have had no,
and will not have any future, involvement in providing investment
advisory, subadvisory, or underwriting services to the Funds.
5. Applicants state that their inability to continue to provide
investment advisory, subadvisory and underwriting services to the Funds
would result in potential hardship for the Funds and
[[Page 47320]]
their shareholders. Applicants state that they will, as soon as
reasonably practical, distribute written materials, including an offer
to meet in person to discuss the materials, to the boards of directors
of the Funds (``Boards'') for which the Applicants serve as investment
adviser, investment subadviser or principal underwriter, including the
directors who are not ``interested persons,'' as defined in section
2(a)(19) of the Act, of such Funds, and their independent legal counsel
as defined in rule 0-1(a)(6) under the Act, relating to the
circumstances that led to the Injunction, any impact on the Funds, and
the application. Applicants state they will provide the Boards with all
information concerning the Judgment and the application that is
necessary for the Funds to fulfill their disclosure and other
obligations under the federal securities laws.
6. Applicants also state that, if they were barred from providing
services to the Funds, the effect on their businesses and employees
would be severe. Applicants state that they have committed substantial
resources to establishing expertise in providing advisory and
distribution services to Funds. Applicants further state that
prohibiting them from providing such services would not only adversely
affect their businesses, but would also adversely affect about 500
employees who are involved in those activities.
7. In 2009, GEAM and GEID received an exemption under section 9(c)
as a result of conduct by GE that triggered section 9(a), as described
in greater detail in the application. A predecessor of one of the
Applicants previously received an exemption under section 9(c) as the
result of conduct that triggered section 9(a), as described in greater
detail in the application.
Applicants' Condition
Applicants agree that any order granting the requested relief will
be subject to the following condition:
Any temporary exemption granted pursuant to the application shall
be without prejudice to, and shall not limit the Commission's rights in
any manner with respect to, any Commission investigation of, or
administrative proceedings involving or against, Covered Persons,
including, without limitation, the consideration by the Commission of a
permanent exemption from section 9(a) of the Act requested pursuant to
the application or the revocation or removal of any temporary
exemptions granted under the Act in connection with the application.
Temporary Order
The Commission has considered the matter and finds that Applicants
have made the necessary showing to justify granting a temporary
exemption.
Accordingly,
It is hereby ordered, pursuant to section 9(c) of the Act, that
GEAM and GEID and any other Covered Persons are granted a temporary
exemption from the provisions of section 9(a), solely with respect to
the Injunction, subject to the condition in the application, from July
30, 2010, until the Commission takes final action on their application
for a permanent order.
By the Commission.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-19244 Filed 8-4-10; 8:45 am]
BILLING CODE 8010-01-P