[Federal Register Volume 63, Number 113 (Friday, June 12, 1998)]
[Notices]
[Pages 32259-32260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15706]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-23245; 812-11150]
1st Atlantic Guaranty Corporation; Notice of Application
June 8, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application pursuant to section 28(c) of the
Investment Company Act of 1940 (``Act'').
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SUMMARY OF APPLICATION: Applicant, 1st Atlantic Guaranty Corporation,
seeks an order pursuant to Section 28(c) of the Act approving certain
proposed custodial arrangements.
FILING DATES: The application was filed on May 22, 1998. Applicant has
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 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 June 30, 1998,
and should be accompanied by proof of service on 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 who wish to be
notified of a hearing may request notification by writing to the SEC's
Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW., Washington, DC 20549.
Applicant, 4847 Cordell Avenue, Suite 200, Bethesda, Maryland 20818,
Attn: John J. Lawbaugh.
FOR FURTHER INFORMATION CONTACT:
Edward P. Macdonald, Branch Chief, at (202) 942-0564 (Office of
Investment Company Regulation, Division of Investment Management).
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, 450 Fifth Street, NW, Washington, DC
20549 (tel. 202-942-8090).
Applicant's Representations
1. Applicant, a Maryland corporation, is a face-amount certificate
company registered under the Act. Applicant currently intends to offer
four face-amount certificates (``Certificates'') registered under the
Securities Act of 1933. In the future, applicant may offer additional
Certificates. The Certificates are unsecured debt instruments. To meet
its debt obligations, applicant is required to maintain a minimum
amount of reserves in ``qualified investments'' as defined in the Act
(``Reserves'').
2. Applicant proposes to enter into custodial arrangements with
regard to its Reserves with one or more banks that meet certain
requirements (``Custodians''). Applicant seeks an order approving the
proposed form of custody agreement (``Agreement'') to be entered into
by applicant with each Custodian. Under the requested order, applicant
would be able to select and change Custodians in its discretion.
3. Each Custodian will maintain the Reserves to ensure that
applicant meets its payment obligations under the terms and conditions
of any outstanding Certificate. If applicant were to default on any
obligation under a Certificate, each Custodian would be authorized to
cure the default by liquidating so much of the Reserves held by it as
necessary to discharge the obligation. In addition, each Custodian will
perform the duties and functions typically performed by a custodian,
such as securities registration and delivery, income collection,
periodic reporting, and other safekeeping and processing functions.
Applicant's Legal Analysis
1. Section 28(c) of the Act requires a registered face-amount
certificate company to maintain the Reserves with a custodian that
meets the requirements of section 26(a)(1) of the Act and in accordance
with such terms and conditions as the SEC shall prescribe and as
appropriate for the protection of investors. Under section 26(a)(1), a
custodian generally must be a bank that has at all times an aggregate
capital, surplus, and undivided profits of a specified minimum amount
which may not be less than $500,000.
2. Applicant requests an order under section 28(c) of the Act
approving the Agreement. Applicant states that the Agreement contains
provisions to maintain and safeguard the Reserves, including provisions
governing the (i) holding, segregation, registration, depositing, and
delivery of securities, (ii) the payment of monies and maintenance of
bank accounts, and (iii) the management of real estate and real estate
related investments, as well as establishing procedures to cure any
defaults by applicant on its obligations under the Certificates and
procedures for periodic reporting and inspection of the assets.\1\
Applicant represents that it will seek an amended order from the SEC
for any material changes in the substantive provisions of the
Agreement.
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\1\ Applicant states it will comply with rule 17f-4 under the
Act as if it were a registered management investment company if an
Agreement permits a Custodian to maintain any portion of the
Reserves in a securities depository.
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3. Applicant states that it may seek to terminate Custodians and
employ new
[[Page 32260]]
Custodians for the following reasons: (i) the availability of superior
or specialized services through other Custodians; (ii) dissatisfaction
with the quality of a Custodian's services; (iii) fee increases or the
availability of comparable services from other Custodians at more
competitive rates; (iv) changes in a Custodian's management, location,
financial condition, or methods of operation; (v) regulatory
developments or actions affecting the ability or qualification of a
Custodian to serve as such; or (vi) a determination by a Custodian to
cease offering its services.
4. Applicant will only enter into an Agreement approved by its
board of directors (``Board''), including a majority of directors who
are not interested persons within the meaning of Section 2(a)(19) of
the Act (``Disinterested Directors''). In addition, the continuance of
any Agreement would be subject to annual review by the Board, including
a majority of the Disinterested Directors, to determine whether the
quality of services provided by the Custodian remains satisfactory and
the fees are reasonably competitive. Applicant submits, for all the
reasons stated above, that its request is consistent with the
protection of investors.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-15706 Filed 6-11-98; 8:45 am]
BILLING CODE 8010-01-M