81 FR 3847 - The Guardian Insurance & Annuity Company, Inc., et al; Notice of Application
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 81, Issue 14 (January 22, 2016)
Federal Register Volume 81, Issue 14 (January 22, 2016)
| Page Range | 3847-3850 | |
| FR Document | 2016-01230 |
[Federal Register Volume 81, Number 14 (Friday, January 22, 2016)] [Notices] [Pages 3847-3850] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-01230] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. IC-31958; File No. 812-14449] The Guardian Insurance & Annuity Company, Inc., et al; Notice of Application January 15, 2016. AGENCY: Securities and Exchange Commission (``Commission''). ACTION: Notice of application for an order approving the substitution of certain securities pursuant to Section 26(c) of the Investment Company Act of 1940, as amended (the ``1940 Act''). ----------------------------------------------------------------------- APPLICANTS: The Guardian Insurance & Annuity Company (the ``Company''), The Guardian Separate Account K, The Guardian Separate Account M, The Guardian Separate Account N (each, a ``Life Account'') and The Guardian Separate Account R (the ``Annuity Account'' and together with the Life Accounts, the ``Accounts'') (together, the ``Applicants''). SUMMARY OF APPLICATION: The Applicants seek an order pursuant to Section 26(c) of the 1940 Act approving the substitution of shares issued by certain investment portfolios (the ``Existing Funds'') of registered investment companies with shares of certain investment portfolios (the ``Replacement Funds'') of registered investment companies, under certain variable life insurance policies and variable annuity contracts issued by the Company (the ``Contracts''), each funded through the Accounts. FILING DATE: The application was filed on April 24, 2015, and amended on September 4, 2015, and November 10, 2015. HEARING OR NOTIFICATION OF HEARING: An order granting the requested relief 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 February 9, 2016, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to Rule 0-5 under the 1940 Act, hearing requests should state the nature of the writer's interest, any facts bearing upon the desirability of a hearing on the matter, 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: Richard T. Potter, The Guardian Insurance & Annuity Company, Inc., 7 Hanover Square, New York, New York 10004. FOR FURTHER INFORMATION CONTACT: Elizabeth G. Miller, Senior Counsel, at (202) 551-8707, or Holly L. Hunter-Ceci, Branch Chief, at (202) 551- 6825 (Division of Investment Management, Chief Counsel's Office). 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. The Company is a stock life insurance company incorporated in the State of Delaware. The Company is wholly owned by The Guardian Life Insurance Company of America, a mutual life insurance company organized in the State of New York (``Guardian Life''). Guardian Life does not issue the Contracts and does not guarantee any benefits provided under the Contracts. 2. Each Account is a ``separate account'' as defined in Rule 0-1(e) under the 1940 Act and is registered with the Commission as a unit investment trust under the 1940 Act. The interests in each Account offered through the Contracts have been registered under the Securities Act of 1933 on Form N-4 for the variable annuity Contracts offered under the Annuity Account, and on Form N-6 for the variable life insurance Contracts offered under the Life Accounts. The application sets forth the registration statement file numbers for the Accounts. Each Account was established by the board of directors of the Company under the laws of the State of Delaware as follows: ------------------------------------------------------------------------ Separate account Date established ------------------------------------------------------------------------ The Guardian Separate Account K....... November 18, 1993. The Guardian Separate Account M....... February 27, 1997. The Guardian Separate Account N....... September 23, 1999. The Guardian Separate Account R....... March 12, 2003. ------------------------------------------------------------------------ 3. Each Account supports certain Contracts issued by the Company. Each Account consists of investment divisions, each corresponding to a registered open-end management investment company or series of a registered open-end management investment company in which the Account invests. The assets of each Account equal to its reserves and other liabilities are not chargeable with the Company's obligations except those under Contracts issued through such Account. Income, gains and losses, whether or not realized, of each Account are kept separate from other income, gains or losses of the Company and other separate accounts. The income and capital gains or capital losses of each investment division, whether realized or unrealized, are credited to or charged against the assets held in that division according to the terms of the applicable Contract, without regard to the income, capital gains or capital losses of the other investment divisions of the Company. 4. The Contracts are flexible premium or modified scheduled premium variable life insurance policies and variable annuity contracts. For so long as a variable life insurance Contract remains in force or a variable annuity Contract has not yet been annuitized, a Contract owner may transfer all or part of their accumulation values among the variable investment options under the [[Page 3848]] Contracts, subject to certain limits as described in the applicable Contract prospectus, or to a fixed or indexed account in the case of some of the Contracts. The terms and conditions, including charges and expenses, applicable to each Contract are described in the prospectus relating to such Contract. 5. The Applicants state that under the Contracts, the Company reserves the right, subject to Commission approval and compliance with applicable law, to substitute shares of one registered open-end management investment company available as a variable investment option for shares of another registered open-end management investment company. 6. The Applicants propose the substitution of shares of Existing Funds currently held by the Life Accounts and the Annuity Account to support variable life insurance policies and variable annuity contracts issued by the Company for shares of the Replacement Funds (``Substitutions''): ------------------------------------------------------------------------ Substitution Existing fund Replacement fund ------------------------------------------------------------------------ 1......................... Pioneer Disciplined AB VPS Growth and Value VCT Portfolio-- Income Portfolio-- Class II Shares. Class B Shares. 2......................... Columbia Variable Janus Aspen Series-- Portfolio--Seligman Global Technology Global Technology Portfolio--Service Fund--Class 2 Shares. Shares. 3......................... Dreyfus Variable Putnam VT Investors Investment Fund: Fund--Class IB Appreciation Shares. Portfolio--Service Class Shares. 4......................... AB VPS International Templeton Foreign VIP Value Portfolio-- Fund--Class 2 Class B Shares. Shares. ------------------------------------------------------------------------ 7. Applicants represent that under the proposed Substitutions, each Existing Fund's shares will be redeemed for cash, and the cash from the redemption will be used to purchase shares of the respective Replacement Fund. 8. The Applicants represent that the proposed Substitutions and the selection of the Replacement Funds were not motivated by any financial consideration paid or to be paid to the Company or its affiliates by the respective Replacement Fund, its adviser or underwriter, or their affiliates. 9. The Applicants represent that each proposed Substitution is appropriate given the substantial similarity between the stated investment objectives and principal investment strategies of each Existing Fund as compared to each corresponding Replacement Fund, which would offer Contract owners continuity of their investment strategies and risks. The Applicants state that the proposed Substitutions are expected to provide competitive long-term returns as compared to the Existing Funds. Additional information for each Existing Fund and the corresponding Replacement Fund, including investment objectives, principal investment strategies, principal risks, and performance can be found in the application. 10. The Applicants represent that the proposed Substitutions will be described to the applicable prospectuses for the Contracts filed with the Commission or in other supplemental disclosure documents for the Contracts (collectively, the ``Supplements''). The Supplements will: (a) Give Contract owners notice of the Company's intention to take the necessary actions to substitute shares of the Existing Funds on the Substitution Date (defined herein); (b) advise Contract owners of their pre- and post-Substitution transfer rights; (c) instruct Contract owners how to submit transfer requests in light of the proposed Substitutions; and (d) advise Contract owners that any Contract value remaining in an Existing Fund Subaccount on the Substitution Date will be transferred to a subaccount investing in the corresponding Replacement Fund, and that the Substitutions will take place at relative net asset value. From the date of the Supplements (which will be at least 30 days prior to the Substitution Date) until the Substitution Date, Contract owners will have a pre-Substitution transfer right, the specifics of which will be determined by whether they have selected an optional living benefit rider, as discussed in more detail in the application.\1\ --------------------------------------------------------------------------- \1\ Certain Contract owners have selected a Contract rider that provides a living benefit rider. The terms of the living benefit riders offered by the Company limit the available investment options to identified allocation models consisting of a specified selection of registered open-end management investment companies available as variable investment options under the applicable Contract. Each allocation model sets forth a specific allocation percentage for each variable investment option within the model. For Contract owners who have selected a living benefit rider, all transfers, including the transfers contemplated by condition 6 of this Notice, are limited to transfers of the entire Contract value to one of the other allocation models available under the applicable living benefit rider. On the Substitution Date, assets in a living benefit rider allocation model that are held in an Existing Fund Subaccount will be transferred to the applicable Replacement Fund Subaccount. --------------------------------------------------------------------------- 11. The Supplement will also inform Contract owners that, except as described in the market timing limitations section or limitations imposed by any living benefit riders of the relevant prospectus or disclosure document, the Company will not exercise any rights reserved by it under the Contracts to impose additional restrictions on transfers out of a Replacement Fund Subaccount from the date of the Supplements (which will be at least 30 days prior to the Substitution Date) until at least 30 days after the Substitution Date. 12. The Company will send affected Contract owners a written confirmation of the completed proposed Substitutions in accordance with Rule 10b-10 under the Securities Exchange Act of 1934. The Company will deliver to each affected Contract owner within five business days of the date of the proposed Substitutions (the ``Substitution Date'') a written confirmation which will include: (a) A confirmation that the proposed Substitutions were carried out as previously notified; (b) a restatement of the information set forth in the Supplements; and (c) before and after account values. The confirmation statement will also include or be accompanied by a statement that reiterates the free transfer rights disclosed in the Supplements. The Company will also send each Contract owner a current prospectus for each Replacement Fund involved in the proposed Substitutions to the extent that such Contract owners have not previously received a copy. 13. Each Substitution will take place at the relative net asset value determined on the Substitution Date pursuant to Section 22(c) of the 1940 Act and Rule 22c-1 thereunder, with no change in the amount of any Contract owner's Contract value or death benefit or in the dollar value of his or her investments in any of the subaccounts. The rights or obligations of the Company under the Contracts will not be altered in any way. The proposed Substitutions will take place with no change to the Contract owner's Contract value, cash value and accumulation value. [[Page 3849]] 14. Applicants will effectuate the Substitutions after the issuance of the requested order by the Commission. As of the Substitution Date, shares of the Existing Fund will be redeemed for cash. The Company, on behalf of the Accounts, will simultaneously place a redemption request with the Existing Fund and a purchase order with the Replacement Fund so that the purchase of the Replacement Fund shares will be for the exact amount of the redemption proceeds. 15. The Company or its affiliates will pay all expenses and transaction costs of the proposed Substitutions, including legal and accounting expenses, any applicable brokerage expenses and other fees and expenses. No fees or charges will be assessed to the Contract owners to effect the proposed Substitutions. The proposed Substitutions will not result in an increase in Contract fees and expenses, including mortality and expense risk fees and administration and distribution fees charged by the Separate Accounts. The proposed Substitutions will not result in adverse tax consequences to Contract owners and will not alter any tax benefits associated with the Contracts. No costs of the proposed Substitutions will be borne directly or indirectly by Contract owners. 16. Applicants will not receive, for three years from the Substitution Date any direct or indirect benefits from the applicable Replacement Fund, its adviser or underwriter (or their affiliates), in connection with assets attributable to Contracts affected by the proposed Substitutions, at a higher rate than they had received from the Existing Fund, its adviser or underwriter (or their affiliates), including without limitation 12b-1 fees, shareholder service, administrative or other service fees, revenue sharing, or other arrangements. Legal Analysis 1. Applicants request that the Commission issue an order pursuant to Section 26(c) of the 1940 Act approving the proposed Substitution by the Company of shares of each Replacement Fund for shares of the corresponding Existing Fund. Section 26(c) of the 1940 Act requires the depositor of a registered unit investment trust holding securities of a single issuer to receive Commission approval before substituting the securities held by the trust. Section 26(c) provides that such approval shall be granted by order of the Commission if the evidence establishes that the substitution is consistent with the protection of investors and the purposes of the 1940 Act. 2. The Applicants submit that the proposed Substitutions meet the standards set forth in Section 26(c) and that, if implemented, the Substitutions would not raise any of the concerns that Congress intended to address when the 1940 Act was amended to include this provision. As described in the application, Applicants represent that each Replacement Fund and its corresponding Existing Fund have substantially similar investment objectives and principal investment strategies, which would offer Contract owners continuity of their investment strategies and risks, and that Existing Funds will have lower net operating expenses immediately after the proposed Substitutions. 3. The Contracts will offer Contract owners the opportunity to make at least one transfer of Contract value from the subaccount investing in the Existing Fund (for at least 30 days before the Substitution Date), or the Replacement Fund (for at least 30 days after the Substitution Date) to any other available investment option under the Contract without any cost or limitation other than those disclosed in the applicable prospectuses previously provided to Contract owners. Applicants' Conditions Applicants agree that any order granting the requested relief will be subject to the following conditions: 1. The proposed Substitutions will not be effected unless the Company determines that: (a) The Contracts allow the substitution of shares of registered open-end investment companies in the manner contemplated by the application; (b) the proposed Substitutions can be consummated as described in the application under applicable insurance laws; and (c) any regulatory requirements in each jurisdiction where the Contracts are qualified for sale have been complied with to the extent necessary to complete the proposed Substitutions. 2. The Company or its affiliates will pay all expenses and transaction costs of the Substitutions, including legal and accounting expenses, any applicable brokerage expenses and other fees and expenses. No fees or charges will be assessed to the Contract owners to effect the proposed Substitutions. 3. The proposed Substitutions will be effected at the relative net asset values of the respective shares in conformity with Section 22(c) of the 1940 Act and Rule 22c-1 thereunder without the imposition of any transfer or similar charges by Applicants. The proposed Substitutions will be effected without change in the amount or value of any Contracts held by affected Contract owners. 4. The proposed Substitutions will in no way alter the tax treatment of affected Contract owners in connection with their Contracts, and no tax liability will arise for Contract owners as a result of the proposed Substitutions. 5. The rights or obligations of the Company under the Contracts of affected Contract owners will not be altered in any way. The proposed Substitutions will not adversely affect any riders under the Contracts since each Replacement Fund is an allowable investment option for use with such riders. 6. Affected Contract owners will be permitted to make at least one transfer of Contract value from the subaccount investing in the Existing Fund (before the Substitution Date) or the Replacement Fund (after the Substitution Date) to any other available investment option under the Contract without charge for a period beginning at least 30 days before the Substitution Date through at least 30 days following the Substitution Date. Except as described in any market timing/short- term trading provisions of the relevant prospectus, the Company will not exercise any right it may have under the Contract to impose restrictions on transfers between the subaccounts under the Contracts, including limitations on the future number of transfers, for a period beginning at least 30 days before the Substitution Date through at least 30 days following the Substitution Date. 7. All affected Contract owners will be notified, at least 30 days before the Substitution Date about: (a) The intended substitution of the Existing Funds with the Replacement Funds; (b) The intended Substitution Date; and (c) information with respect to transfers as set forth in Condition 6 above. In addition, the Company will deliver to all affected Contract owners, at least 30 days before the Substitution Date, a prospectus for each applicable Replacement Fund. 8. The Company will deliver to each affected Contract owner within five (5) business days of the Substitution Date a written confirmation which will include: (a) A confirmation that the proposed Substitutions were carried out as previously notified; (b) a restatement of the information set forth in the Supplements; and (c) before and after account values. 9. Applicants will not receive, for three years from the Substitution Date, any direct or indirect benefits from the applicable Replacement Fund, its adviser or underwriter (or their [[Page 3850]] affiliates), in connection with assets attributable to Contracts affected by the proposed Substitutions, at a higher rate than they had received from the Existing Fund, its adviser or underwriter (or their affiliates), including without limitation 12b-1 fees, shareholder service, administrative or other service fees, revenue sharing, or other arrangements. For the Commission, by the Division of Investment Management, under delegated authority. Robert W. Errett, Deputy Secretary. [FR Doc. 2016-01230 Filed 1-21-16; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 81, No. 14 / Friday, January 22, 2016 / Notices 3847
communications relating to the investment companies with shares of guarantee any benefits provided under
proposed rule change between the certain investment portfolios (the the Contracts.
Commission and any person, other than ‘‘Replacement Funds’’) of registered 2. Each Account is a ‘‘separate
those that may be withheld from the investment companies, under certain account’’ as defined in Rule 0–1(e)
public in accordance with the variable life insurance policies and under the 1940 Act and is registered
provisions of 5 U.S.C. 552, will be variable annuity contracts issued by the with the Commission as a unit
available for Web site viewing and Company (the ‘‘Contracts’’), each investment trust under the 1940 Act.
printing in the Commission’s Public funded through the Accounts. The interests in each Account offered
Reference Room, 100 F Street NE., FILING DATE: The application was filed
through the Contracts have been
Washington, DC 20549, on official on April 24, 2015, and amended on registered under the Securities Act of
business days between the hours of September 4, 2015, and November 10, 1933 on Form N–4 for the variable
10:00 a.m. and 3:00 p.m. Copies of the 2015. annuity Contracts offered under the
filing also will be available for Annuity Account, and on Form N–6 for
HEARING OR NOTIFICATION OF HEARING: An the variable life insurance Contracts
inspection and copying at the principal
order granting the requested relief will offered under the Life Accounts. The
office of the Exchange. All comments
be issued unless the Commission orders application sets forth the registration
received will be posted without change;
a hearing. Interested persons may statement file numbers for the Accounts.
the Commission does not edit personal
request a hearing by writing to the Each Account was established by the
identifying information from
Commission’s Secretary and serving board of directors of the Company under
submissions. You should submit only
applicants with a copy of the request, the laws of the State of Delaware as
information that you wish to make
personally or by mail. Hearing requests follows:
available publicly. All submissions
should be received by the Commission
should refer to File Number SR–CBOE–
by 5:30 p.m. on February 9, 2016, and Separate account Date established
2016–002 and should be submitted on
should be accompanied by proof of
or before February 12, 2016. The Guardian Separate November 18,
service on applicants, in the form of an
For the Commission, by the Division of affidavit or, for lawyers, a certificate of Account K. 1993.
Trading and Markets, pursuant to delegated The Guardian Separate February 27, 1997.
service. Pursuant to Rule 0–5 under the
authority.19 Account M.
1940 Act, hearing requests should state The Guardian Separate September 23,
Robert W. Errett, the nature of the writer’s interest, any Account N. 1999.
Deputy Secretary. facts bearing upon the desirability of a The Guardian Separate March 12, 2003.
[FR Doc. 2016–01200 Filed 1–21–16; 8:45 am] hearing on the matter, the reason for the Account R.
BILLING CODE 8011–01–P request, and the issues contested.
Persons who wish to be notified of a 3. Each Account supports certain
hearing may request notification by Contracts issued by the Company. Each
SECURITIES AND EXCHANGE writing to the Commission’s Secretary. Account consists of investment
COMMISSION divisions, each corresponding to a
ADDRESSES: Secretary, U.S. Securities
[Release No. IC–31958; File No. 812–14449] and Exchange Commission, 100 F Street registered open-end management
NE., Washington, DC 20549–1090; investment company or series of a
The Guardian Insurance & Annuity Applicants: Richard T. Potter, The registered open-end management
Company, Inc., et al; Notice of Guardian Insurance & Annuity investment company in which the
Application Company, Inc., 7 Hanover Square, New Account invests. The assets of each
York, New York 10004. Account equal to its reserves and other
January 15, 2016. liabilities are not chargeable with the
AGENCY: Securities and Exchange FOR FURTHER INFORMATION CONTACT: Company’s obligations except those
Commission (‘‘Commission’’). Elizabeth G. Miller, Senior Counsel, at under Contracts issued through such
ACTION: Notice of application for an (202) 551–8707, or Holly L. Hunter-Ceci, Account. Income, gains and losses,
order approving the substitution of Branch Chief, at (202) 551–6825 whether or not realized, of each
certain securities pursuant to Section (Division of Investment Management, Account are kept separate from other
26(c) of the Investment Company Act of Chief Counsel’s Office). income, gains or losses of the Company
1940, as amended (the ‘‘1940 Act’’). SUPPLEMENTARY INFORMATION: The and other separate accounts. The
following is a summary of the income and capital gains or capital
APPLICANTS: The Guardian Insurance & application. The complete application losses of each investment division,
Annuity Company (the ‘‘Company’’), may be obtained via the Commission’s whether realized or unrealized, are
The Guardian Separate Account K, The Web site by searching for the file credited to or charged against the assets
Guardian Separate Account M, The number, or an applicant using the held in that division according to the
Guardian Separate Account N (each, a Company name box, at http://www.sec. terms of the applicable Contract,
‘‘Life Account’’) and The Guardian gov/search/search.htm or by calling without regard to the income, capital
Separate Account R (the ‘‘Annuity (202) 551–8090. gains or capital losses of the other
Account’’ and together with the Life investment divisions of the Company.
Accounts, the ‘‘Accounts’’) (together, Applicants’ Representations 4. The Contracts are flexible premium
the ‘‘Applicants’’). 1. The Company is a stock life or modified scheduled premium
mstockstill on DSK4VPTVN1PROD with NOTICES
SUMMARY OF APPLICATION: The insurance company incorporated in the variable life insurance policies and
Applicants seek an order pursuant to State of Delaware. The Company is variable annuity contracts. For so long
Section 26(c) of the 1940 Act approving wholly owned by The Guardian Life as a variable life insurance Contract
the substitution of shares issued by Insurance Company of America, a remains in force or a variable annuity
certain investment portfolios (the mutual life insurance company Contract has not yet been annuitized, a
‘‘Existing Funds’’) of registered organized in the State of New York Contract owner may transfer all or part
(‘‘Guardian Life’’). Guardian Life does of their accumulation values among the
19 17 CFR 200.30–3(a)(12). not issue the Contracts and does not variable investment options under the
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![3850 Federal Register / Vol. 81, No. 14 / Friday, January 22, 2016 / Notices
affiliates), in connection with assets list of items for which the Exchange A. Self-Regulatory Organization’s
attributable to Contracts affected by the may impose summary fines. In addition Statement of the Purpose of, and
proposed Substitutions, at a higher rate to adding several rule violations for Statutory Basis for, the Proposed Rule
than they had received from the Existing which the Exchange may impose Change
Fund, its adviser or underwriter (or summary fines, OCX is also proposing
1. Purpose
their affiliates), including without to add a summary fine schedule for each
limitation 12b-1 fees, shareholder rule violation. The summary fine OCX Rule 717 (Summary Imposition of
service, administrative or other service schedule informs market participants of Fines)
fees, revenue sharing, or other the fines for each rule violation based OCX Rule 717 lays out the Exchange’s
arrangements. on the number of offenses within a summary fine authority. Currently, the
For the Commission, by the Division of rolling twelve month period. OCX Rule describes that the Chief Regulatory
Investment Management, under delegated developed this summary fine schedule Officer may summarily impose a fine
authority. with input from the CFTC staff, and against a Member for failing (i) to make
Robert W. Errett, many of the summary fines are in line timely payments of original or variation
Deputy Secretary. with summary fines for similar margin, options premiums, fees, cost,
[FR Doc. 2016–01230 Filed 1–21–16; 8:45 am] violations at other security futures charges or fines to the Exchange or the
BILLING CODE 8011–01–P exchanges.2 OneChicago is also making Clearinghouse; (ii) to make timely and
minor technical changes to OCX Rule accurate submissions to the Exchange of
717 to support the foregoing notices, reports or other information
SECURITIES AND EXCHANGE amendments to the rule. required by the Rules of the Exchange;
COMMISSION OneChicago is concurrently issuing and (iii) to keep any books and records
[Release No. 34–76920; File No. SR–OC– NTM 2015–48. The NTM informs required by the Rules of the Exchange.
2015–03] market participants that OneChicago is Additionally, in its current form, the
amending OCX Rule 717. Additionally, Rule describes what requirements the
Self-Regulatory Organizations; the NTM lists the violations for which Exchange must follow when issuing a
OneChicago, LLC; Notice of Filing of summary fines may be imposed. Then, summary fine pursuant to Rule 717. The
Proposed Rule Change Relating to the in order to provide market participants Exchange must provide notice of any
Summary Imposition of Fines with more clarity regarding the rule summary fine imposed, and the notice
violations, guidance is provided must contain the violations of the Rules
January 15, 2016.
regarding what activity or omission the of the Exchange for which the fine was
Pursuant to Section 19(b)(7) of the
Exchange would consider to constitute imposed, the violation date, and the
Securities Exchange Act of 1934 (the
a violation of the listed rules. amount of the fine. Furthermore, the
‘‘Act’’),1 notice is hereby given that on
Finally, OneChicago is also amending Rule describes the requirements for the
December 30, 2015, OneChicago, LLC
OCX Rule 705 (Review of Investigative Member or Access Person to pay the
(‘‘OneChicago,’’ ‘‘OCX,’’ or the
Reports). OCX Rule 705 describes the fine or to appeal the fine pursuant to
‘‘Exchange’’) filed with the Securities
and Exchange Commission (‘‘SEC’’ or process by which the OneChicago Chief OCX Rule 716. Finally, Rule 717 then
‘‘Commission’’) the proposed rule Regulatory Officer (‘‘CRO’’) will review sets the maximum fine for each
change described in Items I, II, and III investigation reports conducted by the violation at $5,000, and explains that
below, which Items have been prepared Compliance Department. OneChicago the summary imposition of fines does
by the self-regulatory organization. The proposes to amend OCX Rule 705 to not preclude the Exchange from
Commission is publishing this notice to allow the CRO to authorize the bringing any other action against the
solicit comments on the proposed rule summary imposition of fines as a result fined market participant.
change from interested persons. of an investigation. OneChicago is now proposing to make
OneChicago has also filed this rule certain amendments to this Rule 717.
The text of the proposed rule change Namely, OCX is proposing to add to
change with the Commodity Futures is attached as Exhibit 4 to the filing
Trading Commission (‘‘CFTC’’). Rule 717 a list of items for which
submitted by the Exchange but is not summary fines may be imposed. The
OneChicago filed a written certification attached to the published notice of the
with the CFTC under Section 5c(c) of items added generally relate to
filing. violations of reporting, audit trail,
the Commodity Exchange Act (‘‘CEA’’)
on December 29, 2015. II. Self-Regulatory Organization’s recordkeeping, and other Exchange
Statement of the Purpose of, and Rules. The list of items which
I. Self-Regulatory Organization’s Statutory Basis for, the Proposed Rule OneChicago proposes to add to Rule 717
Description of the Proposed Rule Change and their associated proposed summary
Change fines as described below:
OneChicago is proposing to amend In its filing with the Commission, • Failure to make timely payments of
OCX Rule 717 (Summary Imposition of OneChicago included statements fees, costs, or charges to the Exchange
Fines) and concurrently issue Notice to concerning the purpose of and basis for or Clearinghouse. The proposed
Members (‘‘NTM’’) 2015–48. OCX Rule the proposed rule change and discussed summary fines for this rule violation are
717 lays out OneChicago’s summary any comments it received on the a warning letter for the first offense,
fine procedure. Specifically, OCX Rule proposed rule change. The text of these $1,000 fine for the second offense,
statements may be examined at the
mstockstill on DSK4VPTVN1PROD with NOTICES
717 lists the violations for which the $2,500 fine for the third offense, and
Exchange may impose summary fines, places specified in Item IV below. The $5,000 for all subsequent offenses
as well as the process the Exchange self-regulatory organization has within a rolling twelve month period.
must follow to impose such fines. prepared summaries, set forth in • Failure to make timely and accurate
OneChicago proposes to amend Rule sections A, B, and C below, of the most submissions to the Exchange of notices,
717 to add several rule violations to the significant aspects of such statements. reports or other information required by
the Rules of the Exchange. The
1 15 U.S.C. 78s(b)(7). 2 See, e.g., CFE Rule 714(f). proposed summary fines for this rule
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Document Created: 2016-01-22 01:17:07
Document Modified: 2016-01-22 01:17:07
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| Action | Notice of application for an order approving the substitution of certain securities pursuant to Section 26(c) of the Investment Company Act of 1940, as amended (the ``1940 Act''). | |
| Dates | The application was filed on April 24, 2015, and amended on September 4, 2015, and November 10, 2015. | |
| Contact | Elizabeth G. Miller, Senior Counsel, at (202) 551-8707, or Holly L. Hunter-Ceci, Branch Chief, at (202) 551- 6825 (Division of Investment Management, Chief Counsel's Office). | |
| FR Citation | 81 FR 3847 |
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