[Federal Register Volume 63, Number 179 (Wednesday, September 16, 1998)]
[Notices]
[Pages 49617-49619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24814]
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SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 23431; 812-11054]
Equity Managers Trust, et al.; Notice of Application
September 10, 1998.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of an application under 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.
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SUMMARY OF THE APPLICATION: The order would permit a registered
investment company advised by Neuberger&Berman Management Incorporated
(``N&B Management'') to purchase certain securities of an investment
account managed by N&B Management.
APPLICANTS: Equity Managers Trust, Retirement Benefit Accumulation Plan
for Employees of PricewaterhouseCoopers, Savings Plan for Employees and
Partners of PricewaterhouseCoopers, Savings Plan for Employees of
PricewaterhouseCoopers, and Profit Sharing Plan for Partners of
PricewaterhouseCoopers (``Plans'').
FILING DATES: The application was filed on March 3, 1998, and amended
on September 8, 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 the
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 October 5, 1998
and should be accompanied by proof of service on the 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 may request
notification by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C.
20549. Applicants: Equity Managers Trust, 605 Third Avenue, New York,
New York 10158; Plans, 3109 Martin Luther King, Jr. Blvd., Tampa, FL,
33607.
FOR FURTHER INFORMATION CONTACT: Mary Kay Frech, Branch Chief, (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 Street, N.W., Washington,
D.C. 20549 (telephone (202) 942-8090).
Applicants' Representations
1. Neuberger&Berman Genesis Portfolio (``Portfolio'') is a series
of Equity Managers Trust. Equity Managers Trust is an open-end
management investment company organized as a New York common law trust
and registered under the Act. Neuberger&Berman Genesis Trust (``Fund'')
is a series of Neuberger&Berman Equity Trust (``N&B Equity Trust''), an
open-end management investment company
[[Page 49618]]
organized as a Delaware business trust and registered under the Act.
2. The Portfolio is a ``master fund'' in a master/feeder fund
structure. The Fund is a feeder fund that invests all of its assets in
the Portfolio. Beneficial interests in the Portfolio are issued solely
in private placement transactions to investment companies and other
institutional investors. The Fund's shares are publicly offered.
3. The Plans are employee benefit plans subject to the Employee
Retirement Income Security Act of 1974 for the employees and/or
partners of PricewaterhouseCoopers. Each Plan offers participants the
option to invest in a managed account with investment objectives,
policies and limitations substantially similar to those of the
Portfolio (``Account''). \1\ The Plans invest jointly in the Account,
which currently holds cash, shares of the Fund, and other securities.
As of June 30, 1998, the Plans, through the Account, own 13.8% of the
outstanding shares of the Fund, which amounts to 5.1% of the interests
in the Portfolio.
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\1\ The Account is an entry on the books of the Plans' custodian
and has no separate legal existence.
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4. N&B Management serves as investment adviser of the Portfolio,
administrator of the Fund and distributor of the Fund's shares.
Neuberger & Berman, LLC (``N&B'') serves as the Portfolio's sub-
adviser. The Portfolio's investment managers (``Portfolio Managers'')
also manage the Account on behalf of the Plans.
5. The Plans' trustees believe it would be in each Plan's best
interests to liquidate the securities held in the Account. Applicants
propose that the Portfolio be permitted to purchase the securities in
the Account that the Portfolio Managers deem desirable for investment
by the Portfolio, in exchange for cash (``Proposed Transaction'').\2\
The purchase price will be the securities' ``independent current market
price'' on the date of the transaction, determined in accordance with
rule 17a-7(b) under the Act. No brokerage commission, fee or other
remuneration will be paid by any party in connection with the Proposed
Transaction. Applicants state that the Proposed Transaction is
consistent with the investment objectives, policies and limitations of
the Portfolio, as recited in its registration statement and reports
filed under the Act. All of the securities in the Account that the
Portfolio proposes to purchase are listed on a national securities
exchange or are traded on the Nasdaq stock market, and the Portfolio
currently has positions in each of those securities.
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\2\ The term ``Proposed Transaction'' refers to either a single
purchase or a series of purchases.
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6. The Plans presently intend to invest the cash proceeds from the
Proposed Transaction in shares of the Fund. If the investment takes
place as proposed, the Account will be dissolved and units in the
Account will be exchanged for shares in the Fund most likely on a same-
day basis. Each Plan will have its own account on the books of the
Fund's transfer agent and the Plans will no longer retain a custodian
to hold their assets.
7. On October 23, 1997, the board of trustees of Equity Manager
Trust (``Board'') including all of the independent trustees, voted to
approved the terms of the Proposed Transaction. The Board reviewed,
among other factors, the securities to be purchased, the method by
which they would be valued, the size of the Portfolio's current
position in each stock under consideration, the size of the Portfolio's
position in the stock (if the transaction were consummated), and
information on the total market capitalization and average weekly
trading volume of each stock. The Board concluded that the Proposed
Transaction is in the best interests of the Portfolio and its interest
holders.
8. The Proposed Transaction also has been authorized by each Plan's
trustees, who are independent of N&B and its affiliates, and the
trustees have agreed in principal to invest the cash proceeds in shares
of the Fund. N&B provided the Plans' trustees with a current prospectus
of the Fund and a written statement disclosing the fees to be received
by N&B Management, the terms of the Proposed Transaction, and other
relevant factors.
9. Applicants intend to structure the Proposed Transaction as an
exchange of securities for cash, rather than having the Plan exchange
the assets in the Account for shares of the Fund, because of the
master-feeder structure of the Portfolio and the Fund. In addition, the
Plans intend to rely on a Department of Labor exemption, which has been
interpreted as providing exemptive relief only with respect to cash
transactions.
10. Applicants believe that the Proposed Transaction will benefit
the Portfolio's interest holders and the Plans' participants.
Applicants submit that an increase in the Portfolio's assets from the
Proposed Transaction will enable the Portfolio to realize economies of
scale that should reduce its operating expenses. The Proposed
Transaction will also allow applicants to avoid the brokerage
commissions that applicants otherwise would incur if the Plans sold the
stocks in the Account on the open market and the Portfolio, as it
received cash from the Plans' investment in the Fund, bought investment
securities on the open market.
Applicants' Legal Analysis
1. Section 17(a) of the Act generally prohibits an affiliated
person of a registered investment company, or an affiliated person of
such a person, acting as principal, from selling any security to, or
purchasing any security from the company. Section 2(a)(3) of the Act
defines an ``affiliated person'' of another person to include (a) any
person that owns 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, controlled, or held
with power to vote by such other person, (c) any person directly or
indirectly controlling, controlled by or under common control with,
such other person, and (d) if such other person is an investment
company, any investment adviser of the company.
2. Applicants believe that the Portfolio and the Plans may be
deemed to be affiliated persons because they share a common investment
adviser. Applicants also believe that the Portfolio and the Plans may
be deemed to be affiliated persons because the Plans (through the
Account) own 13.8% of the outstanding shares of the Fund, which amounts
to 5.1% of the interests in the Portfolio. As a result, applicants
believe that the Portfolio's purchase of securities from the Plans is
prohibited by section 17(a) of the Act.
3. Rule 17a-7 exempts certain purchase and sale transactions
otherwise prohibited by section 17(a) if an affiliation exists solely
by reason of having a common investment adviser, common directors, and/
or common officers, provided that certain requirements are met. The
relief provided by rule 17a-7 is not available for the Proposed
Transaction because the Plans' ownership (through the Account and the
Fund) of 5.1% of the Portfolio may create an affiliation ``not solely
by reason of'' having a common investment adviser, common directors,
and/or common officers.
4. Section 17(b) of the Act provides that the SEC may exempt a
transaction from the provisions of section 17(a) if the terms of the
Proposed Transaction, including the consideration to be paid, 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
[[Page 49619]]
concerned and with the general purposes of the Act. Section 6(c)
authorizes the Commission to exempt persons or transactions from the
provisions of the Act to the extent that such exemptions are
appropriate in the public interest and consistent with the protection
of investors and the purposes fairly intended by the policies and
provisions of the Act.
5. Applicants submit, for the reasons discussed below, that their
request satisfies these standards. Applicants believe that compliance
with rule 17a-7(a)-(f) will ensure that the Proposed Transaction is
effected on terms that are fair and reasonable and do not involve
overreaching. Applicants believe that because the Proposed Transaction
involves a purchase of readily marketable securities for cash and
because the Proposed Transaction has been reviewed and approved by the
Board, there is no danger that any affiliated person will benefit at
the expense of the Portfolio and its interest holders.
Applicants' Condition
Applicants agree that the order granting the requested relief will
be subject to the following condition:
The proposed Transaction will comply with the terms of rule 17a-
7(a) through (f).
For the SEC, by the Division of Investment Management, under
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-24814 Filed 9-15-98; 8:45 am]
BILLING CODE 8010-01-M