[Federal Register Volume 77, Number 223 (Monday, November 19, 2012)]
[Notices]
[Pages 69511-69516]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-28006]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 30260; File No. 812-14037]
Columbia ETF Trust, et al.; Notice of Application
November 13, 2012.
AGENCY: Securities and Exchange Commission (``Commission'').
ACTION: Notice of an application for an order pursuant to sections 6(c)
and 17(b) of the Investment Company Act of 1940 (the ``Act'') for an
exemption from section 17(a) of the Act permitting certain
transactions.
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Summary of the Application: Applicants request an order (the ``Order'')
that would permit registered investment companies for which certain
direct or indirect wholly owned subsidiaries of Ameriprise Financial,
Inc. (``Ameriprise'') act as an investment adviser to engage in certain
primary and secondary market principal transactions in fixed income
instruments (the ``Transactions'') with Merrill Lynch, Pierce, Fenner
and Smith Incorporated (``MLPF&S'') and Bank of America, N.A.
(``BANA''), including an internal division of BANA (``BANA (Dealer
Unit)'') as well as affiliates of MLPF&S and BANA (each, a ``BAC
Trading Entity,'' together, the ``BAC Trading Entities'').
Applicants: Columbia Management Investment Advisers, LLC (``CMIA'') and
Columbia Wanger Asset Management, LLC (``CWAM'') (each, an ``Adviser'',
together, the ``Advisers'') and Columbia ETF Trust, Columbia ETF Trust
I, Columbia Funds Master Investment Trust, LLC, Columbia Funds Series
Trust, Columbia Funds Series Trust I, Columbia Funds Series Trust II,
Columbia Funds Variable Insurance Trust, Columbia Funds Variable
Insurance Trust I, Columbia Funds Variable Series Trust II, Columbia
Seligman Premium Technology Growth Fund, Inc., Tri-Continental
Corporation, Columbia Acorn Trust, Wanger Advisors Trust and Ameriprise
Certificate Company (each a ``Fund'', collectively, the ``Funds''),
Bank of America Corporation (``BAC''), BANA and MLPF&S.
DATES: Filing Dates: The application was filed on June 1, 2012, and
amended on
[[Page 69512]]
October 3, 2012. Applicants have agreed to file an amendment during the
notice period, the substance of which is reflected in this notice.
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 December 10, 2012, 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: Elizabeth M. Murphy, Secretary, Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants, c/
o Robert M. Kurucza, Esq. and Marco E. Adelfio, Esq., Goodwin Procter
LLP, 901 New York Avenue NW., Suite 9000, Washington, DC 20001; Scott
R. Plummer, Esq. and Paul B. Goucher, Esq., Ameriprise Financial, Inc.,
5228 Ameriprise Financial Center, Minneapolis, MN 55474; Glen A. Rae,
Esq., Bank of America, N.A., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Bank of America Tower, NY1-100-05-01, One Bryant Park,
5th Floor, New York, NY 10036; Brian D. McCabe, Esq., Ropes & Gray LLP,
Prudential Tower, 800 Boylston Street, Boston, MA 02199-3600; Steve
Chaiken, Esq., Bank of America, N.A., Merrill Lynch, Pierce, Fenner &
Smith Inc., 50 Rockefeller Plaza, New York, NY 10020 and Steve Chaiken,
Esq., Bank of America Corporation, Bank of America Corporate Center,
100 North Tryon Street, Charlotte, NC 28255.
FOR FURTHER INFORMATION CONTACT: Laura L. Solomon, Senior Counsel, at
(202) 551-6915, or Daniele Marchesani, Branch Chief, at (202) 551-6821
(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 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. Each Fund, except as explained below, is an open-end management
investment company registered under the Act and is organized as a
statutory trust, business trust, limited liability company or
corporation under the laws of Delaware, Maryland or Massachusetts or is
a series thereof. Columbia Seligman Premium Technology Growth Fund,
Inc. and Tri-Continental Corporation are closed-end registered
investment companies. Columbia ETF Trust and Columbia ETF Trust I are
exchange-traded funds and Ameriprise Certificate Company is a face-
amount certificate company. The Funds have a variety of investment
objectives, but each may to a greater or lesser degree invest a portion
of its assets in fixed-income instruments. The fixed-income instruments
in which the Funds may invest include, but are not limited to,
government securities, municipal securities, tender option bonds,
taxable and tax-exempt money market securities, repurchase agreements,
asset- and mortgage-backed securities, corporate bonds and other issues
and syndicated loans (including assignments thereof and participations
therein), each as the Funds' respective investment policies allow.
2. CMIA and CWAM, the Advisers, are direct or indirect wholly-owned
subsidiaries of Ameriprise, a Delaware corporation. Each Adviser is
registered as an investment adviser under the Investment Advisers Act
of 1940 (the ``Advisers Act''). The Advisers act as investment advisers
to the Funds and, in certain cases, have oversight over one or more
affiliated or unaffiliated sub-advisers engaged by certain Funds.\1\
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\1\ Certain of the Funds have (or may, in the future, have) sub-
advisers that provide sub-advisory services (each, a ``Sub-
Adviser,'' collectively, the ``Sub-Advisers''). Applicants request
the order cover any such Sub-Advisers, provided that any Sub-Adviser
that relies on the order complies with the conditions of the order
as though it were an Adviser, unless otherwise stated.
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3. BANA is a national banking association and a wholly owned
indirect subsidiary of BAC. BANA (Dealer Unit) is an internal division
of BANA, which is exempt from registering as a broker-dealer pursuant
to the Securities Exchange Act of 1934 (``1934 Act''). MLPF&S, a
Delaware corporation, is also a wholly owned indirect subsidiary of BAC
that is registered as a broker-dealer with the Commission under the
1934 Act. Each of BANA and MLPF&S as well as the affiliates of MLPF&S
and BANA listed in Schedule C to the application (each, a ``BAC Trading
Entity,'' and, collectively, the ``BAC Trading Entities'') act as
dealers and/or underwriters of fixed-income instruments. The BAC
Trading Entities listed in Schedule C are registered broker-dealers or
entities exempt from registration.
4. On April 30, 2010, BANA sold a portion of the asset management
business of its wholly owned subsidiary Columbia Management Group, LLC
(``CMG'') to Ameriprise (the ``Columbia Sale''), including the
management of some of the Funds. The Columbia Sale also included CMG's
own subsidiary, Columbia Wanger Asset Management, L.P. (now CWAM), the
investment adviser to certain Funds. After the Columbia Sale,
RiverSource Investments, LLC changed its name to Columbia Management
Investment Advisers, LLC (CMIA). CMIA became the investment adviser for
all Funds, including legacy RiverSource Funds and the former long-term
Columbia Funds, other than those advised by CWAM.
5. Following the Columbia Sale the Advisers are not under the
control (within the meaning of section 2(a)(9) of the Act) of BAC and
are not under common control with the BAC Trading Entities. However,
certain fiduciary accounts maintained by BANA's trust department
(``BANA (US Trust)'') \2\ for the principals or beneficiaries of such
accounts are invested in the Fund's securities (``fiduciary account
investments''). BANA (US Trust) has discretionary authority over, but
no pecuniary interest in, such investments.\3\ Because of these
investments, there may be affiliations between the BAC Trading Entities
and the Funds.
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\2\ BANA (US Trust) includes Bank of America, U.S. Trust Private
Wealth Management, including U.S. Trust Company of Delaware, the
Retirement and Philanthropic Services unit, and the Merrill Lynch
Trust Company division and any successors. The term ``successor'' is
limited to an entity that results from a reorganization into another
jurisdiction, a change in the type of business organization or a
combination, consolidation or reorganization of any of the entities
covered by the Order, including any such combination, consolidation
or reorganization effected through the use of a ``shell'' entity
controlled by any of the entities covered by the Order, provided
that such combination, consolidation or reorganization does not
result in a change of direct or indirect control of such entities.
\3\ Applicants note that there may be some instances in which
BAC or an entity, including a division thereof, controlled by BAC
(each, a ``BAC Affiliate,'' collectively, the ``BAC Affiliates'')
might be deemed to own, control or hold with power to vote less than
five percent of the outstanding voting securities of a Fund
otherwise than through fiduciary account investments (a ``<5%
holding''). References to potential affiliations arising ``solely by
reason of'' fiduciary account investments above certain levels may
include situations where fiduciary account investments exceed such
levels only when added to a <5% holding.
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6. Applicants state that, because of consolidation in the financial
services
[[Page 69513]]
industry, a few major broker-dealers account for a large percentage of
the market share in connection with trading in various asset classes,
including fixed income instruments. Applicants state that the decline
in the number of broker-dealers and banks trading in the fixed-income
instruments in which the Funds seek to invest and the increasing
significance of the few remaining institutions demonstrate the
importance to the Funds of their relationships with such entities,
including the BAC Trading Entities. Applicants further represent that
the BAC Trading Entities were the top-ranked underwriters in the
following categories of fixed-income instruments in 2011: Investment
grade-credit; U.S. leveraged loans; residential mortgage-backed
securities; asset-backed securities; and U.S. commercial paper.
Applicants also represent that the BAC Trading Entities were the second
or third-ranked dealers or underwriters in 2011 in the following
categories of fixed-income instruments: high-yield corporate credit;
investment grade-credit; collateralized mortgage obligations; asset-
backed securities; and municipal securities. As described more fully in
the application, BAC Trading Entities had similar levels of market
share in 2009 and 2010 and were a significant trading partner of the
legacy RiverSource funds prior to the Columbia Sale.
7. Applicants assert that prohibiting the Funds from engaging in
the Transactions with the BAC Trading Entities would become
increasingly detrimental to the ongoing interests of Fund shareholders
by limiting the Funds' access to important trading counterparties that
have very significant market shares in many of the types of instruments
that the Funds purchase. Applicants submit that prohibiting the Funds
from engaging in Transactions with the BAC Trading Entities
unnecessarily reduces the opportunities available to the Funds to
obtain competitive pricing and execution and to access the markets for
particular fixed-income instruments that are available from only a few
dealers. Applicants assert that precluding a Fund from trading with a
BAC Trading Entity may harm the Fund by, among other things, preventing
it from obtaining the best pricing, terms and quality of services
otherwise available in the market.
8. Applicants, therefore, request the Order, pursuant to sections
6(c) and 17(b) of the Act exempting Transactions entered into in the
ordinary course of business by a Fund with BAC Trading Entities, under
the circumstances described in the application, from the provisions of
section 17(a) of the Act.\4\ The ``Transactions'' that are the subject
of the Order include primary and secondary market transactions in
fixed-income instruments executed on a principal basis between a Fund
and a BAC Trading Entity.
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\4\ Applicants are not seeking relief from the provisions of
sections 10(f), 17(e) or 17(d) of the Act or rule 17d-1 thereunder.
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The Order would be available only where the BAC Trading Entity is
deemed to be a first-tier or a second-tier affiliate of a Fund solely
by reason of fiduciary account investments in the voting securities of
an Owned Fund, as defined below. In particular, the Order would be
available only in circumstances in which the BAC Trading Entity might
be deemed to be (i) An affiliated person (``first-tier affiliate''), in
the case of BANA (Dealer Unit), or an affiliated person of a first-tier
affiliate (a ``second-tier affiliate'') of a Fund solely by reason of
BANA (US Trust), being deemed to own, control or hold with power to
vote through fiduciary account investments five percent or more of the
Fund's total outstanding voting securities (each, a ``5% Fund''); (ii)
a first-tier affiliate of a Fund solely by reason of BANA (US Trust)
being deemed to beneficially own through the fiduciary account
investments more than twenty-five percent of the Fund's total
outstanding voting securities or, by virtue of such fiduciary account
investments, to control the Fund (each, a ``25% Fund,'' together with
the 5% Funds, the ``Owned Funds''); and/or (iii) a second-tier
affiliate of any Fund other than an Owned Fund (each, an ``Other
Fund'') solely by reason of BANA (US Trust) being considered to own,
control or hold with power to vote a 5% Fund's securities as described
in (i) or being deemed to beneficially own a 25% Fund's securities as
described in (ii), through fiduciary account investments.
9. Applicants seek to have the Order cover (i) The Funds and any
investment company registered under the Act or series thereof, whether
now existing or organized in the future, that is managed, advised or
sub-advised by any Adviser or by any existing or future entity that is
controlling, controlled by or under common control with CMIA and/or
CWAM or controlled by Ameriprise and registered as an investment
adviser under the Advisers Act; (ii) the Advisers and/or any existing
or future investment adviser controlling, controlled by or under common
control with CMIA and/or CWAM or controlled by Ameriprise; and (iii)
the BAC Trading Entities and any successor entities; provided that any
entity that relies on the Order complies with the terms and conditions
of the Order as though it were an applicant.
10. Applicants request relief only for Transactions that would be
prohibited by section 17(a) because of affiliations, if any, arising
solely by reason of BANA (US Trust) being deemed to own, control or
hold with the power to vote voting securities of an Owned Fund through
fiduciary account investments. The relief would not be available where
a BAC Trading Entity is a first-tier affiliate or a second-tier
affiliate of a Fund for other reasons. The relief would not be
available for Transactions between a Fund and any trading entity under
common control with the Fund's Adviser. The relief would also not be
available for primary market Transactions in fixed-income instruments,
other than repurchase agreements and variable rate demand notes, of
which BAC (or any successor) or any entity controlled by BAC (or any
successor), including any BAC Trading Entity, is the primary obligor.
11. Neither BAC nor any BAC Affiliates control or will control
(within the meaning of section 2(a)(9) of the Act), directly or
indirectly, Ameriprise or the Advisers or any other non-Fund entity
under the control of Ameriprise (together, the ``Ameriprise
Affiliates''). Applicants state that only the fiduciary account
investments in the Owned Funds raise the affiliation issues addressed
by the requested relief. Additionally, Ameriprise has no beneficial
interest in, and will not control (within the meaning of section
2(a)(9) of the Act) directly or indirectly, BAC, the BAC Trading
Entities or any other BAC Affiliate.
12. The BAC Affiliates and the Ameriprise Affiliates are structured
as separate, independent businesses. Applicants state that the BAC
Affiliates will not have any involvement in the Advisers' investment
decisions or decisions to engage in Transactions pursuant to the Order,
and will not attempt to influence or control in any way the placing by
the Advisers of orders, other than in the normal course of sales
activities of the same nature that are being carried out during the
same time period with respect to unaffiliated institutional clients of
the BAC Trading Entity.
13. Applicants state that each Fund has adopted confidentiality
policies designed to limit the unnecessary flow of information about
Fund holdings and transactions. Applicants note there are effective,
existing separation and information barriers between the Advisers and
the Funds on the one hand
[[Page 69514]]
and the BAC Trading Entities on the other. Applicants assert that there
is substantial internal separation and independent operation of the BAC
Trading Entities from the other BAC Affiliates and of BANA (US Trust)
from BANA (Dealer Unit). BANA (US Trust) is subject to strict fiduciary
laws and regulations that require BANA (US Trust) to act solely in the
interests of the principals or beneficiaries of the accounts.
Applicants represent that there is not, and will not be, any express or
implied understanding between a BAC Trading Entity and Ameriprise or
any Adviser that an Adviser will cause a Fund to enter into
Transactions or give preference to the BAC Trading Entity in effecting
such Transactions between the Fund and the BAC Trading Entity.
14. Ameriprise and the Ameriprise Affiliates, including the
Advisers, will not adopt any compensation scheme any component of which
is based on the amount of business done by the Funds with a BAC Trading
Entity except to the extent such business might affect indirectly the
profits or losses of the Advisers. BAC and the BAC Affiliates,
including BANA (US Trust), will not adopt any compensation scheme any
component of which is based on a factor that compensates employees for
Transactions with the Funds differently than Transactions with
unaffiliated counterparties.
15. BANA (US Trust) undertakes to not to exercise any voting
authority with respect to shares that constitute five percent or more
of a Fund's total outstanding voting securities, including in
connection with the election of directors/trustees (the ``Non-Voting
Undertaking'').
Applicants' Legal Analysis
1. Section 17(a) of the Act, among other things, prohibits an
affiliated person of a registered investment company, or any affiliated
person of such a person, acting as principal, from selling to or
purchasing from such registered company any security or other property
and from borrowing money or other property from such investment
company. Section 17(b) of the Act authorizes the Commission to exempt a
transaction from section 17(a) of the Act if evidence establishes that
the terms of the proposed transaction, including the consideration to
be paid or received, are reasonable and fair and do not involve
overreaching on the part of any person concerned and the proposed
transaction is consistent with the policy of each registered investment
company concerned and with the general purposes of the Act.
2. Section 6(c) of the Act, in relevant part, authorizes the
Commission to exempt any person or transaction, or any class or classes
of persons or transactions, from any provision or provisions of the
Act, if and to the extent that such 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.
3. Section 2(a)(3) of the Act defines ``affiliated person'' of
another person to include: (a) Any person directly or indirectly
owning, controlling, or holding with power to vote, 5% or more of the
outstanding voting securities of such other person; (b) any person 5%
or more of whose outstanding voting securities are directly or
indirectly owned by, controlled, or held with power to vote, by such
person; and (c) any person directly or indirectly controlling,
controlled by, or under common control with, such other person.
4. Section 2(a)(9) of the Act, in relevant part, defines
``control'' as ``the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely the
result of an official position with such company.'' Section 2(a)(9)
also provides that any person who owns beneficially, either directly or
through one or more controlled companies, more than 25% of the voting
securities of a company shall be presumed to control such company. Any
person who does not so own more than 25% of the voting securities of
any company shall be presumed not to control such company.
5. Applicants state that a BAC Trading Entity could be deemed to be
a first-tier affiliate or a second-tier affiliate of a 5% Fund insofar
as fiduciary account investments of five percent or more of an Owned
Fund's outstanding voting securities could cause BANA (US Trust) to be
viewed as owning, controlling or holding with power to vote ``voting
securities.'' Were BANA (US Trust) to be deemed a first-tier affiliate
of a 5% Fund, the BAC Trading Entities (except for BANA (Dealer Unit))
would then be deemed to be second-tier affiliates of the 5% Fund. BANA
(Dealer Unit), on the other hand, could be deemed to be a first-tier
affiliate of the 5% Fund. Additionally, a BAC Trading Entity could be
deemed a first-tier affiliate of a 25% Fund and a second-tier affiliate
of the Other Funds.\5\ Applicants submit that, due to the fiduciary
account investments, any Transaction involving a Fund and a BAC Trading
Entity that is a first-tier affiliate or a second-tier affiliate
thereof, would be subject to the prohibition of section 17(a) of the
Act.
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\5\ As discussed in the application, this conclusion could be
reached if, on account of the fiduciary account investments, BANA
(US Trust) ``beneficially owned'' greater than twenty-five percent
of the 25% Fund's total outstanding voting securities. The Owned
Fund could then be presumed to be under the control of BANA (US
Trust), and thus of BAC. As wholly owned subsidiaries of BAC, the
BAC Trading Entities may also be presumed to be under the control of
BAC. Accordingly, the 25% Fund and the BAC Trading Entities could be
presumed to be under the common control of BAC and thus first-tier
affiliates of each other. If the 25% Fund and the Other Funds are
deemed to be under the control of their respective Adviser(s), then
the 25% Fund and the Other Funds could be deemed to be first-tier
affiliates of each other by virtue of being under common control.
Therefore, if the BAC Trading Entities are deemed to be first-tier
affiliates of the 25% Fund, they could be deemed to be second-tier
affiliates of the Other Funds.
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6. Applicants submit that the primary purpose of section 17(a) is
to prevent a person with the power to control an investment company
from essentially engaging in self-dealing, to the detriment of the
investment company's shareholders. Applicants submit that the policies
which section 17(a) were meant to further are not implicated here
because BAC and BAC Trading Entities are not able to cause a Fund to
enter into a Transaction or otherwise influence portfolio decisions by
the Advisers on behalf of the Funds. Applicants state that, as a
result, no BAC Trading Entity is in a position to engage in self-
dealing or otherwise cause any of the relevant Funds to enter into
Transactions that are not in the best interests of its shareholders.
7. Applicants submit that the carefully circumscribed circumstances
under which the Transactions would be conducted, including in
particular the proposed conditions for the Order (set out below), amply
satisfy the statutory standards for relief. Applicants state that
compliance with the ``Structural Conditions'' set forth below is
intended to assure that the Advisers and the Funds continue to operate
independently of, and free of any undue influence by, BAC and the BAC
Trading Entities, which applicants assert is further buttressed by the
Non-Voting Undertaking. Moreover, neither BAC, nor any BAC Affiliate
will exercise, or attempt to exercise, control over any Fund.
8. Applicants state that compliance with the ``Transactional
Conditions'' set forth below is designed to assure that the terms of
the individual transactions are fair from the perspective of the Funds.
Applicants note that, at the outset, the conditions require each
[[Page 69515]]
Fund's Board of Directors, Board of Trustees or other governing body of
such Fund, as applicable (each, a ``Board''), including a majority of
its disinterested directors or trustees, as applicable (``Necessary
Majority''), to approve, and the Fund to implement, procedures
governing all Transactions pursuant to the Order. Applicants submit
that, pursuant to such procedures, the Transactions will be subject to
ongoing review by each Fund's chief compliance officer, and will be
reviewed by its Board, including a Necessary Majority, on a quarterly
basis. In addition, the Board must annually consider the level of
Transactions with BAC Trading Entities and whether continued reliance
on the Order is appropriate in light of the need of the Funds to have
the BAC Trading Entities available as trading counterparties. The
conditions also generally require price quotations from unaffiliated
dealers that are in a position to quote competitive prices to ensure
that the terms of the particular Transactions are fair and reasonable
and do not involve overreaching. For primary market Transactions, the
conditions generally require that the Funds purchase instruments at a
price that is not more than the price paid by each other purchaser, and
on the same terms as other purchasers, in that offering or in any
concurrent offering.
9. Applicants state that the Transactions described in the
Application satisfy the standards of sections 6(c) and 17(b).
Applicants submit that there is no danger of overreaching or self-
dealing by a BAC Trading Entity in connection with a Transaction, and
there will be no conflict of interest associated with an Adviser's or
Sub-Adviser's decision to engage in a Transaction with a BAC Trading
Entity on behalf of a Fund. Moreover, applicants state that the Order
is consistent with the policies of the Funds and the protection of
investors, as the Advisers and Sub-Advisers will manage the Funds in
accordance with the policies and investment objectives of the Funds and
without any influence by the BAC Trading Entities. Finally, applicants
state that permitting the Transactions will be appropriate in the
public interest and consistent with general purposes of the Act because
the ability to engage in Transactions increases the likelihood of a
Fund achieving the best pricing, terms and quality of service otherwise
available in the market in such transactions and results in none of the
abuses that the Act was designed to prevent.
Applicants' Conditions
Applicants agree that the Order granting the requested relief will
be subject to the following conditions:
A. Structural
(1) Neither BAC nor any BAC Affiliates will control any of the
Advisers or principal underwriters or promoters for the Funds, directly
or indirectly, within the meaning of section 2(a)(9) of the Act, and
neither BAC nor any BAC Affiliates will exercise, or attempt to
exercise, control over any Fund. The Order will remain in effect only
so long as Ameriprise, or another entity not controlling, controlled by
or under common control with BAC, primarily controls the Advisers. In
this regard, pursuant to the Non-Voting Undertaking, BANA (US Trust)
will not exercise any voting authority that it possesses with respect
to shares that constitute five percent or more of any Fund's total
outstanding voting securities. Instead, it will delegate to an
independent third party that is not affiliated with either BAC or any
BAC Affiliate the voting of such shares.
(2) Neither BAC nor any BAC Affiliates will directly or indirectly
consult with Ameriprise or any Ameriprise Affiliate, including the
Advisers, or any portfolio manager of the Advisers concerning purchase
or sale Transactions, or the selection of a broker or dealer for any
Transactions placed or to be placed on behalf of a Fund, or otherwise
seek to influence the choice of broker or dealer for any Transaction by
a Fund, other than in the normal course of sales activities of the same
nature that are being carried out during the same time period with
respect to unaffiliated institutional clients of the BAC Trading
Entity, or that existed between the BAC Trading Entity and the
Advisers, if any, prior to consummation of the Columbia Sale.
(3) No officer, director or employee of an Owned Fund will directly
or indirectly seek to influence in any way the terms of any Transaction
covered by the Order, other than in the normal course of investment
activities of the same nature that are being carried out during the
same time period with respect to unaffiliated broker-dealers, or that
existed between the BAC Trading Entity and the Advisers, if any, prior
to consummation of the Columbia Sale.
(4) The Advisers and each BAC Trading Entity are structured as
separate organizations, with separate capitalization, separate books
and records, and separate officers and employees, and are physically
separated. Each BAC Trading Entity will adopt and implement policies
that prohibit the BAC Trading Entity from (a) linking any approval or
action relating to an Owned Fund to any action by any Fund or by an
Adviser relating to any Fund, or (b) using the fiduciary account
investments in an Owned Fund as a basis for seeking to persuade any
Fund or the Advisers to engage in business with the BAC Trading Entity.
The Funds have adopted policies designed to keep information about
their holdings and transactions on a confidential basis, prior to any
public disclosure, except in connection with the ordinary course of
business as permitted by the portfolio holdings disclosure policies
approved by the Funds' directors/trustees and involving communications
of the same nature as are being made during the same period to
unaffiliated trading partners of the Funds. Pursuant to these policies,
the Advisers will designate information regarding investment advisory
and portfolio execution matters relating to the Funds as information
that may not be communicated between the Owned Fund, on the one hand,
and the BAC Trading Entity, on the other hand, prior to any public
disclosure.
(5) Ameriprise and the Ameriprise Affiliates will not adopt any
compensation scheme any component of which is based on the amount of
business done by the Funds with a BAC Trading Entity except to the
extent such business might affect indirectly the profits or losses of
the Advisers. BAC and the BAC Affiliates will not adopt any
compensation scheme any component of which is based on a factor that
compensates employees for Transactions with the Funds differently than
Transactions with unaffiliated counterparties.
(6) The Advisers and the BAC Trading Entities, with the assistance
of their respective legal/compliance departments, will prepare
guidelines for their respective personnel to make certain that
Transactions effected pursuant to the Order comply with its conditions,
and that the Advisers and the BAC Trading Entities maintain an arms-
length relationship. The respective legal/compliance departments of the
Advisers and the BAC Trading Entities will monitor periodically the
activities of the Advisers and the BAC Trading Entities, respectively,
to make certain that the conditions of the Order are met.
B. Transactional
With respect to each Transaction entered into or effected pursuant
to the Order on behalf of a Fund:
(1) Each Fund's Board, including the Necessary Majority, shall
approve, and
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the Fund shall implement, procedures governing all Transactions
pursuant to the Order and the Fund's Board shall no less frequently
than quarterly review all Transactions conducted pursuant to the Order
and receive and review a report of those Transactions. Such report,
which will be prepared by the Advisers and reviewed and approved by the
Fund's Chief Compliance Officer, will indicate for each Transaction
that the conditions of the Order have been satisfied, and will include
a discussion of any significant changes in the volume, type or terms of
Transactions between the relevant Funds and the BAC Trading Entity, the
reasons for these changes, and a determination that such changes are
appropriate. In addition, the Board will annually consider (i) whether
the level of Transactions with BAC Trading Entities is appropriate and
(ii) whether continued reliance on the Order in any applicable category
of fixed-income instruments is appropriate in light of the need of the
Funds to have the BAC Trading Entities available as trading
counterparties, as evidenced by, among other things, the aggregate
market share of the BAC Trading Entities in each such category.
(2) For each Transaction, the Adviser or Sub-Adviser will adhere to
a ``best execution'' standard and will consider only the interests of
the Funds and will not take into account the impact of a Fund's
investment decision on the BAC Trading Entity. Before entering into any
such Transaction, the Adviser or Sub-Adviser will determine that the
Transaction is consistent with the investment objective(s) and policies
of the Fund and is in the best interests of the Fund and its
shareholders.
(3) Each Fund will (a) for so long as the Order is relied upon,
maintain and preserve in an easily accessible place a written copy of
the procedures and conditions (and any modifications thereto) that are
described herein, and (b) maintain and preserve for a period of not
less than six years from the end of the fiscal year in which any
Transaction in which the Adviser or Sub-Adviser knows that both a BAC
Trading Entity and a Fund directly or indirectly have an interest
occurs, the first two years in an easily accessible place, a written
record of each such Transaction setting forth a description of the
security purchased or sold by the Fund, a description of the BAC
Trading Entity's interest or role in the Transaction, the terms of the
Transaction, and the information or materials upon which the
determination was made that each such Transaction was made in
accordance with the procedures and conditions set forth herein.
(4) Except for Transactions involving repurchase agreements and
variable rate demand notes, before any secondary market principal
Transaction in fixed-income instruments is entered into between a Fund
and a BAC Trading Entity, the Adviser or Sub-Adviser must obtain a
competitive quotation for the same instruments (or in the case of
instruments for which quotations for the same instruments are not
available, a competitive quotation for Comparable Instruments) from at
least two unaffiliated dealers that are in a position to quote
favorable market prices, except that if, after reasonable efforts by
the Adviser or Sub-Adviser, quotations are unavailable from two such
dealers, only one other competitive quotation is required. For each
such Transaction, the Adviser or Sub-Adviser will determine, based upon
the quotations and such other relevant information reasonably available
to the Adviser or Sub-Adviser, as applicable (such as available
transaction prices and any other information regarding the value of the
instruments), that the price available from the BAC Trading Entity is
at least as favorable as that available from other sources.
(a) Repurchase Agreements. With respect to Transactions involving
repurchase agreements, a Fund will enter into such agreements only
where the Adviser or Sub-Adviser has determined, based upon information
reasonably available to the Adviser or Sub-Adviser, as applicable, that
the income to be earned from the repurchase agreement is at least equal
to that available from other sources. Before any repurchase agreements
are entered into pursuant to the Order, the Fund or the Adviser or Sub-
Adviser, as applicable, must obtain competitive quotations from at
least two unaffiliated dealers with respect to repurchase agreements
comparable to the type of repurchase agreement involved, except that
if, after reasonable efforts by the Adviser or Sub-Adviser, quotations
are unavailable from two such dealers, only one other competitive
quotation is required.
(b) Variable Rate Demand Notes. With respect to each Transaction
involving variable rate demand notes for which dealer quotes are not
ordinarily available, a Fund will only undertake purchases and sales
where the Adviser or Sub-Adviser has determined, based on relevant
information reasonably available to the Adviser or Sub-Adviser, as
applicable, that the income earned from the variable rate demand note
is at least equal to that of variable rate demand notes of comparable
quality that are available from other sources.
(5) With respect to instruments offered in a primary market
underwritten, or other primary market, Transaction, the Fund will
undertake such purchase from a BAC Trading Entity only where the
Adviser or Sub-Adviser has determined, based upon relevant information
reasonably available to the Adviser or Sub-Adviser, as applicable, that
the instruments will be purchased at a price that is not more than the
price paid by each other purchaser of the instruments from, as
relevant, the BAC Trading Entity or other members of an underwriting
syndicate in that offering or in any concurrent offering of
instruments, and on the same terms as such other purchasers (except in
the case of an offering conducted under the laws of a country other
than the United States, for any rights to purchase that are required by
law to be granted to existing holders of the issuer). If no information
regarding concurrent purchasers of the instruments is reasonably
available to the Adviser or Sub-Adviser, the Fund may undertake such
purchase from a BAC Trading Entity when the Adviser or Sub-Adviser has
determined, based upon information reasonably available to the Adviser
or Sub-Adviser, as applicable, that the yield on the instruments to be
purchased is at least equal to that available on Comparable Instruments
from other sources at that time.
(6) The commission, fee, spread, or other remuneration to be
received by the BAC Trading Entities must be reasonable and fair
compared to the commission, fee, spread, or other remuneration received
by others in connection with comparable transactions involving similar
instruments being purchased or sold during a comparable period of time.
For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-28006 Filed 11-16-12; 8:45 am]
BILLING CODE 8011-01-P