81_FR_50731 81 FR 50584 - New York Life Insurance and Annuity Corporation, et al; Notice of Application

81 FR 50584 - New York Life Insurance and Annuity Corporation, et al; Notice of Application

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 147 (August 1, 2016)

Page Range50584-50588
FR Document2016-18060

Federal Register, Volume 81 Issue 147 (Monday, August 1, 2016) 
[Federal Register Volume 81, Number 147 (Monday, August 1, 2016)]
[Notices]
[Pages 50584-50588]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-18060]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-32193; File No. 812-14589]


New York Life Insurance and Annuity Corporation, et al; Notice of 
Application

July 26, 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 (``Act'') and an order of exemption 
pursuant to section 17(b) of the Act from section 17(a) of the Act.

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    Applicants: New York Life Insurance and Annuity Corporation 
(``NYLIAC''); NYLIAC Variable Annuity Separate Account--I (``VA I''), 
NYLIAC Variable Annuity Separate Account--II (``VA-II''), NYLIAC 
Variable Annuity Separate Account--III (``VA-III''), NYLIAC Variable 
Annuity Separate Account--IV (``VA-IV''), NYLIAC Variable Universal 
Life Separate Account--I (``VUL I''), NYLIAC Corporate Sponsored 
Variable Universal Life Separate Account--I (``Corporate VUL I''), 
NYLIAC Private Placement Variable Universal Life Separate Account--I 
(``Private VUL I''), and NYLIAC Private Placement Variable Universal 
Life Separate Account--II (``Private VUL II'') (collectively, the 
``Separate Accounts'' and together with NYLIAC, the ``Section 26 
Applicants''); and MainStay VP Funds Trust (the ``Trust'' and, together 
with NYLIAC and the Separate Accounts, the ``Section 17 Applicants'').
    Summary of Application: The Section 26 Applicants seek an order 
pursuant to section 26(c) of the Act approving the substitution of 
shares of the Replacement Portfolio (defined below) for shares of the 
Existing Portfolio (defined below), held by the Separate Accounts to 
support certain variable annuity contracts and variable universal life 
insurance policies (the ``Contracts'') issued by NYLIAC (the 
``Substitution''). The Section 17 Applicants seek an order pursuant to 
section 17(b) of the Act exempting them from section 17(a) of the Act 
to the extent necessary to permit them to engage in certain in-kind 
transactions (``In-Kind Transactions'') in connection with the 
Substitution.
    Filing Dates: The application was filed on December 11, 2015, and 
amended on May 13, 2016, and July 25, 2016. 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 Secretary of 
the Commission and serving applicants with a copy of the request, 
personally or by mail. Hearing requests should be received by the 
Commission by 5:30 p.m. on August 22, 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 Act, 
hearing requests should state the nature of the requester'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 
Commission's Secretary.

ADDRESSES:  Secretary, U.S. Securities and Exchange Commission, 100 F 
Street NE., Washington, DC 20549-1090. Applicants, 51 Madison Avenue, 
New York, NY 10010.

FOR FURTHER INFORMATION CONTACT:  Christine Y. Greenlees, Senior 
Counsel, at (202) 551-6879, or David J. Marcinkus, Branch Chief, at 
(202) 551-6821 (Chief Counsel's Office, Division of Investment 
Management).

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 for an 
applicant using the Company name box, at http://www.sec.gov/search/search.htm or by calling (202) 551-8090.

Applicants' Representations

    1. NYLIAC is a Delaware stock life insurance company licensed to 
sell life, accident and health insurance, and annuities in the District 
of Columbia and all states. NYLIAC is an indirect wholly-owned 
subsidiary of New York Life Insurance Company, a mutual life insurance 
company (``New York Life'').
    2. NYLIAC serves as the depositor of the Separate Accounts, which 
are segregated asset accounts of NYLIAC established under Delaware law 
pursuant to resolutions of NYLIAC's Board of Directors to fund the 
Contracts.

[[Page 50585]]

    3. Each Separate Account meets the definition of ``separate 
account'' as defined in section 2(a)(37) of the Act. Each Separate 
Account, except for Private VUL I and Private VUL II, is registered 
under the Act as a unit investment trust. Private VUL I and Private VUL 
II are exempt from registration under the Act pursuant to sections 
3(c)(1) and 3(c)(7) of the Act.
    4. Interests under the Contracts, except for Contracts issued 
through Private VUL I and Private VUL II, are registered under the 
Securities Act of 1933, as amended (the ``1933 Act''). Contracts issued 
through Private VUL I and Private VUL II are sold without registration 
under the 1933 Act in reliance on the private offering exemption of 
section 4(2) of the 1933 Act and Regulation D thereunder.
    5. Each Separate Account is divided into subaccounts (each a 
``Subaccount,'' collectively, the ``Subaccounts''). Each Subaccount 
invests in the securities of a single portfolio of an underlying mutual 
fund (``Portfolio''). Contract owners and participants in group 
Contracts (each a ``Contract Owner'' and collectively, the ``Contract 
Owners'') may allocate some or all of their Contract value to one or 
more Subaccounts that are available as investment options under the 
Contracts.
    6. Under the Contracts, NYLIAC reserves the right to substitute, 
for the shares of a Portfolio held in any Subaccount, the shares of 
another Portfolio. The prospectuses or offering documents, as 
applicable, for the Contracts include appropriate disclosure of this 
reservation of right.
    7. The Trust is organized as a Delaware statutory trust and is 
registered with the Commission as an open-end management investment 
company under the Act. The Trust currently consists of 31 series 
(``Series''). Each Series may offer three classes of shares, namely the 
Initial Class, Service Class and Service 2 Class. For each Series 
offering Service Class and Service 2 Class shares, the Trust has 
adopted a Distribution and Service Plan for the Service Class and 
Service 2 Class shares pursuant to Rule 12b-1 under the Act. The 
Replacement Portfolio (defined below) is a Series of the Trust.
    8. New York Life Investment Management LLC (the ``Manager''), an 
indirect wholly-owned subsidiary of New York Life, serves as the 
investment manager of each of the Series of the Trust. The Manager is a 
Delaware limited liability company registered as an investment adviser 
under the Investment Advisers Act of 1940.
    9. The Trust and the Manager may rely on an order from the 
Commission that permits the Manager, subject to certain conditions, 
including approval of the Trust's board of trustees (``Board''), 
including a majority of trustees who are not ``interested persons,'' as 
defined in section 2(a)(19) of the Act, and without the approval of 
shareholders, to: (i) Select certain wholly-owned and non-affiliated 
investment sub-advisers (each, a ``Subadvisor'' and collectively, the 
``Subadvisors'') to manage all or a portion of the assets of each 
Series pursuant to an investment sub-advisory agreement with each 
Subadvisor; and (ii) materially amend sub-advisory agreements with the 
Subadvisors.\1\
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    \1\ See The MainStay Funds, et al., Investment Company Act Rel. 
Nos. 31597 (May 11, 2015) (notice) and 31663 (Jun. 8, 2015) (order) 
(``Manager of Managers Order'').
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    10. NYLIAC, on behalf of itself and its Separate Accounts, proposes 
to exercise its contractual right to substitute shares of one Portfolio 
for that of another by replacing the shares of the Royce Micro-Cap 
Portfolio (Investment Class) (the ``Existing Portfolio'') \2\ that are 
held in Subaccounts of its Separate Accounts with shares of the 
MainStay VP Small Cap Core Portfolio (Initial Class or Service Class) 
(the ``Replacement Portfolio'').
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    \2\ The Existing Portfolio is a series of Royce Capital Fund, a 
Delaware statutory trust registered with the Commission as an open-
end management investment company under the Act and its shares are 
registered under the 1933 Act.
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    11. Applicants state that the proposed Substitution is part of an 
ongoing effort by NYLIAC to make its Contracts more attractive to 
existing and prospective Contract Owners. The Section 26 Applicants 
believe the proposed Substitution will help to accomplish these goals 
for several reasons. The Section 26 Applicants believe, based on its 
estimates for the current year, the total annual operating expenses for 
the Replacement Portfolio will be lower than those of the Existing 
Portfolio, which the Section 26 Applicants believe will appeal to both 
existing and prospective Contract Owners. In addition, subject to 
shareholder approval of the manager of managers arrangement, Applicants 
state that the Proposed Substitution will result in more investment 
options under the Contracts having the improved portfolio manager 
selection afforded by the Manager of Managers Order, which the Section 
26 Applicants believe will appeal to both existing and prospective 
Contract Owners. Finally, Applicants state that the proposed 
Substitution is designed to provide Contract Owners with the ability to 
continue their investment in a similar investment option without 
interruptions and at no additional cost to them. In this regard, NYLIAC 
or an affiliate will bear all expenses and transaction costs incurred 
in connection with the proposed Substitution and related filings and 
notices, including legal, accounting, brokerage, and other fees and 
expenses.
    12. The proposed Substitution will be described in supplements to 
the applicable prospectuses for the Contracts filed with the Commission 
or in other supplemental disclosure documents (collectively, 
``Supplements'') and delivered to all affected Contract Owners at least 
30 days before the date the proposed Substitution is effected (the 
``Effective Date''). The Supplements will give Contract Owners notice 
of NYLIAC's intent to substitute shares of the Existing Portfolio as 
described in the application on the Effective Date. The Supplements 
also will advise Contract Owners that for at least thirty (30) days 
before the Effective Date, Contract Owners are permitted to transfer 
all of or a portion of their Contract value out of any Subaccount 
investing in the Existing Portfolio (``Existing Portfolio Subaccount'') 
to any other available Subaccounts offered under their Contracts 
without the transfer being counted as a transfer for purposes of 
transfer limitations and fees that would otherwise be applicable under 
the terms of the Contracts.
    13. In addition, each Supplement will (a) instruct Contract Owners 
how to submit transfer requests in light of the proposed Substitution; 
(b) advise Contract Owners that any Contract value remaining in the 
Existing Portfolio Subaccount on the Effective Date will be transferred 
to the Subaccount investing in the Replacement Portfolio (``Replacement 
Portfolio Subaccount''), and that the proposed Substitution will take 
place at relative net asset value; (c) inform Contract Owners that for 
at least thirty (30) days following the Effective Date, NYLIAC will 
permit Contract Owners to make transfers of Contract value out of the 
Replacement Portfolio Subaccount to any other available Subaccounts 
offered under their Contracts without the transfer being counted as a 
transfer for purposes of transfer limitations and fees that would 
otherwise be applicable under the terms of the Contracts; and (d) 
inform Contract Owners that, except as described in the market timing 
limitations section of the relevant prospectus, NYLIAC will not 
exercise any rights reserved by it under the Contracts to impose 
additional restrictions on transfers out of the Replacement Portfolio 
Subaccount for at

[[Page 50586]]

least thirty (30) days after the Effective Date.
    14. NYLIAC will send Contract Owners the prospectus for the 
Replacement Portfolio in accordance with applicable legal requirements 
and at least 30 days prior to the Effective Date. The prospectus for 
the Replacement Portfolio will disclose the existence, substance and 
effect of the Manager of Managers Order, and will disclose that the 
Replacement Portfolio may not rely on the Manager of Managers Order 
without first obtaining shareholder approval. The Replacement Portfolio 
will not rely on the Manager of Managers Order unless such action is 
approved by a majority of the Replacement Portfolio's outstanding 
voting securities, as defined in the Act, at a meeting whose record 
date is after the proposed Substitution has been effected.
    15. In addition to the Supplement distributed to Contract Owners, 
within five (5) business days after the Effective Date, Contract Owners 
will be sent a written confirmation of the completed proposed 
Substitution in accordance with rule 10b-10 under the Securities 
Exchange Act of 1934, as amended. The confirmation statement will 
include or be accompanied by a statement that reiterates the free 
transfer rights disclosed in the Supplement.
    16. The proposed Substitution will take place at the Existing and 
Replacement Portfolios' relative per share net asset values determined 
on the Effective Date in accordance with section 22 of the Act and rule 
22c-1 under the Act. Accordingly, applicants state that the proposed 
Substitution will have no negative financial impact on any Contract 
Owner. The proposed Substitution will be effected by having the 
Existing Portfolio Subaccount redeem its Existing Portfolio shares in 
cash and/or in-kind on the Effective Date at net asset value per share 
and purchase shares of the Replacement Portfolio at net asset value per 
share calculated on the same date.
    17. NYLIAC or an affiliate will pay all expenses and transaction 
costs incurred in connection with the proposed Substitution and related 
filings and notices, including legal, accounting, brokerage, and other 
fees and expenses. Applicants state that no costs of the proposed 
Substitution will be borne directly or indirectly by Contract Owners. 
Applicants state that Contract Owners will not incur any fees or 
charges as a result of the proposed Substitution, nor will their rights 
or the obligations of NYLIAC under the Contracts be altered in any way. 
Applicants state that the proposed Substitution will not cause the fees 
and charges under the Contracts currently being paid by Contract Owners 
to be greater after the proposed Substitution than before the proposed 
Substitution.
    18. The Section 26 Applicants further agree that the Manager will 
enter into a written contract with the Replacement Portfolio whereby 
during the two years following the Effective Date the annual net 
operating expenses of the Replacement Portfolio will not exceed the 
annual net operating expenses of the Existing Portfolio for the fiscal 
year ended December 31, 2015. The Section 26 Applicants further agree 
that separate account charges for any Contract owner on the Effective 
Date will not be increased at any time during the two year period 
following the Effective Date.
Legal Analysis:
    1. The Section 26 Applicants request that the Commission issue an 
order pursuant to section 26(c) of the Act approving the proposed 
Substitution. Section 26(c) of the Act prohibits any depositor or 
trustee of a unit investment trust that invests exclusively in the 
securities of a single issuer from substituting the securities of 
another issuer without the approval of the Commission. 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 Act.
    2. Applicants submit that the proposed Substitution meets the 
standards set forth in section 26(c) and that, if implemented, the 
Substitution would not raise any of the concerns underlying that 
provision. Applicants state that the investment objectives of the 
Existing Portfolio and the Replacement Portfolio are identical, and the 
principal investment strategies and principal risks of the Existing 
Portfolio and the Replacement Portfolio are substantially similar. The 
Applicants also state that the total annual operating expenses and the 
aggregate management fees and 12b-1 fees, if any, of each class of the 
Replacement Portfolio are expected to be lower than the respective 
total annual operating expenses and management fees of the Existing 
Portfolio.
    3. Applicants also assert that the proposed Substitution is 
consistent with the principles and purposes of section 26(c) and does 
not entail any of the abuses that section 26(c) is designed to prevent. 
Applicants state that the proposed Substitution will not result in the 
type of costly forced redemptions that section 26(c) was intended to 
guard against and is consistent with the protection of investors and 
the purposes fairly intended by the Act.
    4. The Section 17 Applicants request that the Commission issue an 
order pursuant to section 17(b) of the Act exempting them from section 
17(a) of the Act to the extent necessary to permit them to carry out 
the In-Kind Transactions.
    5. Section 17(a)(1) of the Act prohibits any affiliated person of a 
registered investment company, or an affiliated person of an affiliated 
person, acting as principal, from knowingly selling any security or 
other property to such registered investment company. Section 17(a)(2) 
of the Act prohibits any of the persons described above, acting as 
principal, from knowingly purchasing any security or other property 
from such registered investment company.
    6. Section 17(b) of the Act provides that the Commission may, upon 
application, issue an order exempting any proposed transaction from the 
provisions of section 17(a) if evidence establishes that: (1) 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; (2) the proposed transaction is 
consistent with the policy of each registered investment company 
concerned, as recited in its registration statement and reports filed 
under the Act; and (3) the proposed transaction is consistent with the 
general purposes of the Act.
    7. The Existing Portfolio and the Replacement Portfolio may be 
deemed to be affiliated persons of one another, or affiliated persons 
of an affiliated person. Shares held by a separate account of an 
insurance company are legally owned by the insurance company. 
Currently, NYLIAC, through its Separate Accounts, owns more than 25% of 
the shares of the Existing Portfolio, and therefore may be deemed to be 
a control person of the Existing Portfolio. In addition, the Manager, 
as investment adviser to the Replacement Portfolio, may be deemed to be 
a control person thereof. Because NYLIAC and the Manager are under 
common control, entities that they control likewise may be deemed to be 
under common control, and thus affiliated persons of each other, 
notwithstanding the fact that the Contract Owners may be considered the 
beneficial owners of those shares held in the Separate Accounts.
    8. The Existing Portfolio and the Replacement Portfolio also may be 
deemed to be affiliated persons of affiliated persons. Regardless of 
whether NYLIAC can be considered to control the Existing and 
Replacement Portfolios,

[[Page 50587]]

NYLIAC may be deemed to be an affiliated person thereof because it, 
through its Separate Accounts, owns of record 5% or more of the 
outstanding shares of such Portfolios. In addition, NYLIAC may be 
deemed an affiliated person of the Replacement Portfolio because its 
affiliate, the Manager, may be deemed to control the Replacement 
Portfolio by virtue of serving as its investment adviser. As a result 
of these relationships, the Existing Portfolio may be deemed to be an 
affiliated person of an affiliated person (NYLIAC or the Separate 
Accounts) of the Replacement Portfolio, and vice versa.
    9. The proposed In-Kind Transactions, therefore, could be seen as 
the indirect purchase of shares of the Replacement Portfolio with 
portfolio securities of the Existing Portfolio and conversely the 
indirect sale of portfolio securities of the Existing Portfolio for 
shares of the Replacement Portfolio. The proposed In-Kind Transactions 
also could be categorized as a purchase of shares of the Replacement 
Portfolio by the Existing Portfolio, acting as principal, and a sale of 
portfolio securities by the Existing Portfolio, acting as principal, to 
the Replacement Portfolio. In addition, the proposed In-Kind 
Transactions could be viewed as a purchase of securities from the 
Existing Portfolio and a sale of securities to the Replacement 
Portfolio by NYLIAC (or the Separate Accounts), acting as principal. If 
characterized in this manner, the proposed In-Kind Transactions may be 
deemed to contravene Section 17(a) due to the affiliated status of 
these entities.
    10. The Section 17 Applicants submit that the terms of the proposed 
In-Kind Transactions, including the consideration to be paid and 
received, are reasonable, fair, and do not involve overreaching 
because: (1) The proposed In-Kind Transactions will not adversely 
affect or dilute the interests of Contract Owners; and (2) the proposed 
In-Kind Transactions will comply with the conditions set forth in rule 
17a-7 and the Act, other than the requirement relating to cash 
consideration. Even though the proposed In-Kind Transactions will not 
comply with the cash consideration requirement of paragraph (a) of Rule 
17a-7, the terms of the proposed In-Kind Transactions will offer to the 
Existing and Replacement Portfolios the same degree of protection from 
overreaching that Rule 17a-7 generally provides in connection with the 
purchase and sale of securities under that Rule in the ordinary course 
of business. In particular, the Section 17 Applicants cannot effect the 
proposed In-Kind Transactions at a price that is disadvantageous to 
either the Existing Portfolio or the Replacement Portfolio, and the 
proposed In-Kind Transactions will not occur absent an exemptive order 
from the Commission.
    11. The Section 17 Applicants also submit that the proposed In-Kind 
Transactions are, or will be, consistent with the policies of the 
Existing Portfolio and the Replacement Portfolio as stated in their 
respective registration statements and reports filed with the 
Commission. Finally, the Section 17 Applicants submit that the proposed 
In-Kind Transactions are consistent with the general purposes of the 
Act.

Applicants' Conditions

    The Section 26 Applicants agree that any order granting the 
requested relief will be subject to the following conditions:
    1. The proposed Substitution will not be effected unless NYLIAC 
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 Substitution 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 Substitution.
    2. NYLIAC or its affiliates will pay all expenses and transaction 
costs of the proposed Substitution, 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 Substitution.
    3. The proposed Substitution will be effected at the relative net 
asset values of the respective shares in conformity with section 22(c) 
of the Act and rule 22c-1 thereunder without the imposition of any 
transfer or similar charges by the Section 26 Applicants. The proposed 
Substitution will be effected without change in the amount or value of 
any Contracts held by affected Contract Owners.
    4. The proposed Substitution will in no way alter the tax treatment 
of affected Contract Owners in connection with their Contracts, and no 
tax liability will arise for affected Contract Owners as a result of 
the proposed Substitution.
    5. The rights or obligations of the Section 26 Applicants under the 
Contracts of affected Contract Owners will not be altered in any way. 
The proposed Substitution will not adversely affect any riders under 
the Contracts since the Replacement Portfolio 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 Portfolio (before the Effective Date) or the Replacement 
Portfolio (after the Effective Date) to any other available investment 
option under the Contract without charge for a period beginning at 
least 30 days before the Effective Date through at least 30 days 
following the Effective Date. Except as described in any market timing/
short-term trading provisions of the relevant prospectus, NYLIAC 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 Effective Date through at least 
30 days following the Effective Date.
    7. All affected Contract Owners will be notified, at least 30 days 
before the Effective Date about: (a) The intended substitution of the 
Existing Portfolio with the Replacement Portfolio; (b) the intended 
Effective Date; and (c) information with respect to transfers as set 
forth in Condition 6 above. In addition, NYLIAC will deliver to all 
affected Contract Owners, at least 30 days before the Effective Date, a 
prospectus for the Replacement Portfolio.
    8. NYLIAC will deliver to each affected Contract Owner within five 
(5) business days of the Effective Date a written confirmation which 
will include: (a) A confirmation that the Proposed Substitution was 
carried out as previously notified; (b) a restatement of the 
information set forth in the Supplements; and (c) before and after 
account values.
    9. The Section 26 Applicants will cause the Manager to enter into a 
written contract with the Replacement Portfolio, whereby, during the 
two (2) years following the Effective Date, the annual net operating 
expenses of the Replacement Portfolio will not exceed the annual net 
operating expenses of the Existing Portfolio for the fiscal year ended 
December 31, 2015. The Section 26 Applicants further agree that 
separate account charges for any Contract owner on the Effective Date 
will not be increased at any time during the two year period following 
the Effective Date.
    10. The Replacement Portfolio will not rely on the Manager of 
Managers Order unless such action is approved by a majority of the 
Replacement Portfolio's outstanding voting securities,

[[Page 50588]]

as defined in the Act, at a meeting whose record date is after the 
Proposed Substitution has been effected.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
 Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-18060 Filed 7-29-16; 8:45 am]
 BILLING CODE 8011-01-P

50584 Federal Register / Vol. 81, No. 147 / Monday, August 1, 2016 / Notices to determine whether the proposed rule For the Commission, by the Division of them to engage in certain in-kind should be approved or disapproved. Trading and Markets, pursuant to delegated transactions (‘‘In-Kind Transactions’’) in authority.7 connection with the Substitution. IV. Solicitation of Comments Robert W. Errett, Filing Dates: The application was Deputy Secretary. filed on December 11, 2015, and Interested persons are invited to submit written data, views, and [FR Doc. 2016–18055 Filed 7–29–16; 8:45 am] amended on May 13, 2016, and July 25, BILLING CODE 8011–01–P 2016. Applicants have agreed to file an arguments concerning the foregoing, amendment during the notice period, including whether the proposed rule the substance of which is reflected in change is consistent with the Act. SECURITIES AND EXCHANGE this notice. Comments may be submitted by any of COMMISSION Hearing or Notification of Hearing: An the following methods: order granting the application will be [Release No. IC–32193; File No. 812–14589] Electronic Comments issued unless the Commission orders a New York Life Insurance and Annuity hearing. Interested persons may request • Use the Commission’s Internet Corporation, et al; Notice of a hearing by writing to the Secretary of comment form (http://www.sec.gov/ Application the Commission and serving applicants rules/sro.shtml); or with a copy of the request, personally or July 26, 2016. by mail. Hearing requests should be • Send an email to rule-comments@ AGENCY: Securities and Exchange sec.gov. Please include File Number SR– received by the Commission by 5:30 Commission (‘‘Commission’’). p.m. on August 22, 2016, and should be Phlx–2016–78 on the subject line. ACTION: Notice of application for an accompanied by proof of service on Paper Comments order approving the substitution of applicants in the form of an affidavit or, certain securities pursuant to section for lawyers, a certificate of service. • Send paper comments in triplicate 26(c) of the Investment Company Act of Pursuant to rule 0–5 under the Act, to Secretary, Securities and Exchange 1940, as amended (‘‘Act’’) and an order hearing requests should state the nature Commission, 100 F Street NE., of exemption pursuant to section 17(b) of the requester’s interest, any facts Washington, DC 20549–1090. of the Act from section 17(a) of the Act. bearing upon the desirability of a All submissions should refer to File Applicants: New York Life Insurance hearing on the matter, the reason for the and Annuity Corporation (‘‘NYLIAC’’); request, and the issues contested. Number SR–Phlx–2016–78. This file NYLIAC Variable Annuity Separate Persons who wish to be notified of a number should be included on the Account—I (‘‘VA I’’), NYLIAC Variable hearing may request notification by subject line if email is used. To help the Annuity Separate Account—II (‘‘VA– writing to Commission’s Secretary. Commission process and review your II’’), NYLIAC Variable Annuity Separate ADDRESSES: Secretary, U.S. Securities comments more efficiently, please use Account—III (‘‘VA–III’’), NYLIAC and Exchange Commission, 100 F Street only one method. The Commission will Variable Annuity Separate Account—IV NE., Washington, DC 20549–1090. post all comments on the Commission’s (‘‘VA–IV’’), NYLIAC Variable Universal Applicants, 51 Madison Avenue, New Internet Web site (http://www.sec.gov/ York, NY 10010. rules/sro.shtml). Copies of the Life Separate Account—I (‘‘VUL I’’), NYLIAC Corporate Sponsored Variable FOR FURTHER INFORMATION CONTACT: submission, all subsequent Universal Life Separate Account—I Christine Y. Greenlees, Senior Counsel, amendments, all written statements (‘‘Corporate VUL I’’), NYLIAC Private at (202) 551–6879, or David J. with respect to the proposed rule Marcinkus, Branch Chief, at (202) 551– Placement Variable Universal Life change that are filed with the 6821 (Chief Counsel’s Office, Division of Separate Account—I (‘‘Private VUL I’’), Commission, and all written Investment Management). and NYLIAC Private Placement Variable communications relating to the Universal Life Separate Account—II SUPPLEMENTARY INFORMATION: The proposed rule change between the (‘‘Private VUL II’’) (collectively, the following is a summary of the Commission and any person, other than ‘‘Separate Accounts’’ and together with application. The complete application those that may be withheld from the NYLIAC, the ‘‘Section 26 Applicants’’); may be obtained via the Commission’s public in accordance with the and MainStay VP Funds Trust (the Web site by searching for the file provisions of 5 U.S.C. 552, will be ‘‘Trust’’ and, together with NYLIAC and number, or for an applicant using the available for Web site viewing and the Separate Accounts, the ‘‘Section 17 Company name box, at http:// printing in the Commission’s Public Applicants’’). www.sec.gov/search/search.htm or by Reference Room, 100 F Street NE., Summary of Application: The Section calling (202) 551–8090. Washington, DC 20549–1090, on official 26 Applicants seek an order pursuant to business days between the hours of section 26(c) of the Act approving the Applicants’ Representations 10:00 a.m. and 3:00 p.m. Copies of the substitution of shares of the 1. NYLIAC is a Delaware stock life filing also will be available for Replacement Portfolio (defined below) insurance company licensed to sell life, inspection and copying at the principal for shares of the Existing Portfolio accident and health insurance, and office of the Exchange. All comments (defined below), held by the Separate annuities in the District of Columbia received will be posted without change; Accounts to support certain variable and all states. NYLIAC is an indirect the Commission does not edit personal annuity contracts and variable universal wholly-owned subsidiary of New York sradovich on DSK3GMQ082PROD with NOTICES identifying information from life insurance policies (the ‘‘Contracts’’) Life Insurance Company, a mutual life submissions. You should submit only issued by NYLIAC (the ‘‘Substitution’’). insurance company (‘‘New York Life’’). The Section 17 Applicants seek an order 2. NYLIAC serves as the depositor of information that you wish to make pursuant to section 17(b) of the Act the Separate Accounts, which are available publicly. All submissions exempting them from section 17(a) of segregated asset accounts of NYLIAC should refer to File Number SR–Phlx– established under Delaware law the Act to the extent necessary to permit 2016–78 and should be submitted on or pursuant to resolutions of NYLIAC’s before August 22, 2016. 7 17 CFR 200.30–3(a)(12). Board of Directors to fund the Contracts. VerDate Sep<11>2014 20:16 Jul 29, 2016 Jkt 238001 PO 00000 Frm 00125 Fmt 4703 Sfmt 4703 E:\FR\FM\01AUN1.SGM 01AUN1

Federal Register / Vol. 81, No. 147 / Monday, August 1, 2016 / Notices 50585 3. Each Separate Account meets the that permits the Manager, subject to option without interruptions and at no definition of ‘‘separate account’’ as certain conditions, including approval additional cost to them. In this regard, defined in section 2(a)(37) of the Act. of the Trust’s board of trustees NYLIAC or an affiliate will bear all Each Separate Account, except for (‘‘Board’’), including a majority of expenses and transaction costs incurred Private VUL I and Private VUL II, is trustees who are not ‘‘interested in connection with the proposed registered under the Act as a unit persons,’’ as defined in section 2(a)(19) Substitution and related filings and investment trust. Private VUL I and of the Act, and without the approval of notices, including legal, accounting, Private VUL II are exempt from shareholders, to: (i) Select certain brokerage, and other fees and expenses. registration under the Act pursuant to wholly-owned and non-affiliated 12. The proposed Substitution will be sections 3(c)(1) and 3(c)(7) of the Act. investment sub-advisers (each, a described in supplements to the 4. Interests under the Contracts, ‘‘Subadvisor’’ and collectively, the applicable prospectuses for the except for Contracts issued through ‘‘Subadvisors’’) to manage all or a Contracts filed with the Commission or Private VUL I and Private VUL II, are portion of the assets of each Series in other supplemental disclosure registered under the Securities Act of pursuant to an investment sub-advisory documents (collectively, 1933, as amended (the ‘‘1933 Act’’). agreement with each Subadvisor; and ‘‘Supplements’’) and delivered to all Contracts issued through Private VUL I (ii) materially amend sub-advisory affected Contract Owners at least 30 and Private VUL II are sold without agreements with the Subadvisors.1 days before the date the proposed registration under the 1933 Act in 10. NYLIAC, on behalf of itself and its Substitution is effected (the ‘‘Effective reliance on the private offering Separate Accounts, proposes to exercise Date’’). The Supplements will give exemption of section 4(2) of the 1933 its contractual right to substitute shares Contract Owners notice of NYLIAC’s Act and Regulation D thereunder. of one Portfolio for that of another by intent to substitute shares of the 5. Each Separate Account is divided replacing the shares of the Royce Micro- Existing Portfolio as described in the into subaccounts (each a ‘‘Subaccount,’’ Cap Portfolio (Investment Class) (the application on the Effective Date. The collectively, the ‘‘Subaccounts’’). Each ‘‘Existing Portfolio’’) 2 that are held in Supplements also will advise Contract Subaccount invests in the securities of Subaccounts of its Separate Accounts Owners that for at least thirty (30) days a single portfolio of an underlying with shares of the MainStay VP Small before the Effective Date, Contract mutual fund (‘‘Portfolio’’). Contract Cap Core Portfolio (Initial Class or Owners are permitted to transfer all of owners and participants in group Service Class) (the ‘‘Replacement or a portion of their Contract value out Contracts (each a ‘‘Contract Owner’’ and Portfolio’’). of any Subaccount investing in the collectively, the ‘‘Contract Owners’’) 11. Applicants state that the proposed Existing Portfolio (‘‘Existing Portfolio may allocate some or all of their Substitution is part of an ongoing effort Subaccount’’) to any other available Contract value to one or more by NYLIAC to make its Contracts more Subaccounts that are available as Subaccounts offered under their attractive to existing and prospective Contracts without the transfer being investment options under the Contracts. Contract Owners. The Section 26 6. Under the Contracts, NYLIAC counted as a transfer for purposes of Applicants believe the proposed transfer limitations and fees that would reserves the right to substitute, for the Substitution will help to accomplish shares of a Portfolio held in any otherwise be applicable under the terms these goals for several reasons. The of the Contracts. Subaccount, the shares of another Section 26 Applicants believe, based on Portfolio. The prospectuses or offering 13. In addition, each Supplement will its estimates for the current year, the (a) instruct Contract Owners how to documents, as applicable, for the total annual operating expenses for the Contracts include appropriate submit transfer requests in light of the Replacement Portfolio will be lower proposed Substitution; (b) advise disclosure of this reservation of right. than those of the Existing Portfolio, 7. The Trust is organized as a Contract Owners that any Contract value which the Section 26 Applicants believe remaining in the Existing Portfolio Delaware statutory trust and is will appeal to both existing and registered with the Commission as an Subaccount on the Effective Date will be prospective Contract Owners. In transferred to the Subaccount investing open-end management investment addition, subject to shareholder company under the Act. The Trust in the Replacement Portfolio approval of the manager of managers (‘‘Replacement Portfolio Subaccount’’), currently consists of 31 series arrangement, Applicants state that the (‘‘Series’’). Each Series may offer three and that the proposed Substitution will Proposed Substitution will result in take place at relative net asset value; (c) classes of shares, namely the Initial more investment options under the Class, Service Class and Service 2 Class. inform Contract Owners that for at least Contracts having the improved portfolio thirty (30) days following the Effective For each Series offering Service Class manager selection afforded by the and Service 2 Class shares, the Trust has Date, NYLIAC will permit Contract Manager of Managers Order, which the Owners to make transfers of Contract adopted a Distribution and Service Plan Section 26 Applicants believe will for the Service Class and Service 2 Class value out of the Replacement Portfolio appeal to both existing and prospective Subaccount to any other available shares pursuant to Rule 12b–1 under the Contract Owners. Finally, Applicants Act. The Replacement Portfolio (defined Subaccounts offered under their state that the proposed Substitution is Contracts without the transfer being below) is a Series of the Trust. designed to provide Contract Owners 8. New York Life Investment counted as a transfer for purposes of with the ability to continue their transfer limitations and fees that would Management LLC (the ‘‘Manager’’), an investment in a similar investment otherwise be applicable under the terms indirect wholly-owned subsidiary of of the Contracts; and (d) inform Contract sradovich on DSK3GMQ082PROD with NOTICES New York Life, serves as the investment 1 See The MainStay Funds, et al., Investment manager of each of the Series of the Company Act Rel. Nos. 31597 (May 11, 2015) Owners that, except as described in the Trust. The Manager is a Delaware (notice) and 31663 (Jun. 8, 2015) (order) (‘‘Manager market timing limitations section of the limited liability company registered as of Managers Order’’). relevant prospectus, NYLIAC will not 2 The Existing Portfolio is a series of Royce an investment adviser under the exercise any rights reserved by it under Capital Fund, a Delaware statutory trust registered Investment Advisers Act of 1940. with the Commission as an open-end management the Contracts to impose additional 9. The Trust and the Manager may investment company under the Act and its shares restrictions on transfers out of the rely on an order from the Commission are registered under the 1933 Act. Replacement Portfolio Subaccount for at VerDate Sep<11>2014 20:16 Jul 29, 2016 Jkt 238001 PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 E:\FR\FM\01AUN1.SGM 01AUN1

50586 Federal Register / Vol. 81, No. 147 / Monday, August 1, 2016 / Notices least thirty (30) days after the Effective Substitution will not cause the fees and protection of investors and the purposes Date. charges under the Contracts currently fairly intended by the Act. 14. NYLIAC will send Contract being paid by Contract Owners to be 4. The Section 17 Applicants request Owners the prospectus for the greater after the proposed Substitution that the Commission issue an order Replacement Portfolio in accordance than before the proposed Substitution. pursuant to section 17(b) of the Act with applicable legal requirements and 18. The Section 26 Applicants further exempting them from section 17(a) of at least 30 days prior to the Effective agree that the Manager will enter into a the Act to the extent necessary to permit Date. The prospectus for the written contract with the Replacement them to carry out the In-Kind Replacement Portfolio will disclose the Portfolio whereby during the two years Transactions. existence, substance and effect of the following the Effective Date the annual 5. Section 17(a)(1) of the Act prohibits Manager of Managers Order, and will net operating expenses of the any affiliated person of a registered disclose that the Replacement Portfolio Replacement Portfolio will not exceed investment company, or an affiliated may not rely on the Manager of the annual net operating expenses of the person of an affiliated person, acting as Managers Order without first obtaining Existing Portfolio for the fiscal year principal, from knowingly selling any shareholder approval. The Replacement ended December 31, 2015. The Section security or other property to such Portfolio will not rely on the Manager of 26 Applicants further agree that separate registered investment company. Section Managers Order unless such action is account charges for any Contract owner 17(a)(2) of the Act prohibits any of the approved by a majority of the on the Effective Date will not be persons described above, acting as Replacement Portfolio’s outstanding increased at any time during the two principal, from knowingly purchasing voting securities, as defined in the Act, year period following the Effective Date. any security or other property from such at a meeting whose record date is after registered investment company. Legal Analysis: 6. Section 17(b) of the Act provides the proposed Substitution has been effected. 1. The Section 26 Applicants request that the Commission may, upon 15. In addition to the Supplement that the Commission issue an order application, issue an order exempting distributed to Contract Owners, within pursuant to section 26(c) of the Act any proposed transaction from the five (5) business days after the Effective approving the proposed Substitution. provisions of section 17(a) if evidence Date, Contract Owners will be sent a Section 26(c) of the Act prohibits any establishes that: (1) The terms of the written confirmation of the completed depositor or trustee of a unit investment proposed transaction, including the proposed Substitution in accordance trust that invests exclusively in the consideration to be paid or received, are with rule 10b–10 under the Securities securities of a single issuer from reasonable and fair and do not involve Exchange Act of 1934, as amended. The substituting the securities of another overreaching on the part of any person confirmation statement will include or issuer without the approval of the concerned; (2) the proposed transaction be accompanied by a statement that Commission. Section 26(c) provides that is consistent with the policy of each reiterates the free transfer rights such approval shall be granted by order registered investment company disclosed in the Supplement. of the Commission if the evidence concerned, as recited in its registration 16. The proposed Substitution will establishes that the substitution is statement and reports filed under the take place at the Existing and consistent with the protection of Act; and (3) the proposed transaction is Replacement Portfolios’ relative per investors and the purposes of the Act. consistent with the general purposes of share net asset values determined on the 2. Applicants submit that the the Act. Effective Date in accordance with proposed Substitution meets the 7. The Existing Portfolio and the section 22 of the Act and rule 22c–1 standards set forth in section 26(c) and Replacement Portfolio may be deemed under the Act. Accordingly, applicants that, if implemented, the Substitution to be affiliated persons of one another, state that the proposed Substitution will would not raise any of the concerns or affiliated persons of an affiliated have no negative financial impact on underlying that provision. Applicants person. Shares held by a separate any Contract Owner. The proposed state that the investment objectives of account of an insurance company are Substitution will be effected by having the Existing Portfolio and the legally owned by the insurance the Existing Portfolio Subaccount Replacement Portfolio are identical, and company. Currently, NYLIAC, through redeem its Existing Portfolio shares in the principal investment strategies and its Separate Accounts, owns more than cash and/or in-kind on the Effective principal risks of the Existing Portfolio 25% of the shares of the Existing Date at net asset value per share and and the Replacement Portfolio are Portfolio, and therefore may be deemed purchase shares of the Replacement substantially similar. The Applicants to be a control person of the Existing Portfolio at net asset value per share also state that the total annual operating Portfolio. In addition, the Manager, as calculated on the same date. expenses and the aggregate management investment adviser to the Replacement 17. NYLIAC or an affiliate will pay all fees and 12b–1 fees, if any, of each class Portfolio, may be deemed to be a control expenses and transaction costs incurred of the Replacement Portfolio are person thereof. Because NYLIAC and in connection with the proposed expected to be lower than the respective the Manager are under common control, Substitution and related filings and total annual operating expenses and entities that they control likewise may notices, including legal, accounting, management fees of the Existing be deemed to be under common control, brokerage, and other fees and expenses. Portfolio. and thus affiliated persons of each Applicants state that no costs of the 3. Applicants also assert that the other, notwithstanding the fact that the proposed Substitution will be borne proposed Substitution is consistent with Contract Owners may be considered the directly or indirectly by Contract the principles and purposes of section sradovich on DSK3GMQ082PROD with NOTICES beneficial owners of those shares held Owners. Applicants state that Contract 26(c) and does not entail any of the in the Separate Accounts. Owners will not incur any fees or abuses that section 26(c) is designed to 8. The Existing Portfolio and the charges as a result of the proposed prevent. Applicants state that the Replacement Portfolio also may be Substitution, nor will their rights or the proposed Substitution will not result in deemed to be affiliated persons of obligations of NYLIAC under the the type of costly forced redemptions affiliated persons. Regardless of whether Contracts be altered in any way. that section 26(c) was intended to guard NYLIAC can be considered to control Applicants state that the proposed against and is consistent with the the Existing and Replacement Portfolios, VerDate Sep<11>2014 20:16 Jul 29, 2016 Jkt 238001 PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 E:\FR\FM\01AUN1.SGM 01AUN1

Federal Register / Vol. 81, No. 147 / Monday, August 1, 2016 / Notices 50587 NYLIAC may be deemed to be an Transactions at a price that is Contracts since the Replacement affiliated person thereof because it, disadvantageous to either the Existing Portfolio is an allowable investment through its Separate Accounts, owns of Portfolio or the Replacement Portfolio, option for use with such riders. record 5% or more of the outstanding and the proposed In-Kind Transactions 6. Affected Contract Owners will be shares of such Portfolios. In addition, will not occur absent an exemptive permitted to make at least one transfer NYLIAC may be deemed an affiliated order from the Commission. of Contract value from the Subaccount person of the Replacement Portfolio 11. The Section 17 Applicants also investing in the Existing Portfolio because its affiliate, the Manager, may submit that the proposed In-Kind (before the Effective Date) or the be deemed to control the Replacement Transactions are, or will be, consistent Replacement Portfolio (after the Portfolio by virtue of serving as its with the policies of the Existing Effective Date) to any other available investment adviser. As a result of these Portfolio and the Replacement Portfolio investment option under the Contract relationships, the Existing Portfolio may as stated in their respective registration without charge for a period beginning at be deemed to be an affiliated person of statements and reports filed with the least 30 days before the Effective Date an affiliated person (NYLIAC or the Commission. Finally, the Section 17 through at least 30 days following the Separate Accounts) of the Replacement Applicants submit that the proposed In- Effective Date. Except as described in Portfolio, and vice versa. Kind Transactions are consistent with any market timing/short-term trading 9. The proposed In-Kind the general purposes of the Act. provisions of the relevant prospectus, Transactions, therefore, could be seen as NYLIAC will not exercise any right it Applicants’ Conditions the indirect purchase of shares of the may have under the Contract to impose Replacement Portfolio with portfolio The Section 26 Applicants agree that restrictions on transfers between the securities of the Existing Portfolio and any order granting the requested relief Subaccounts under the Contracts, conversely the indirect sale of portfolio will be subject to the following including limitations on the future securities of the Existing Portfolio for conditions: number of transfers, for a period shares of the Replacement Portfolio. The 1. The proposed Substitution will not beginning at least 30 days before the proposed In-Kind Transactions also be effected unless NYLIAC determines Effective Date through at least 30 days could be categorized as a purchase of that: (a) The Contracts allow the following the Effective Date. shares of the Replacement Portfolio by substitution of shares of registered open- 7. All affected Contract Owners will the Existing Portfolio, acting as end investment companies in the be notified, at least 30 days before the principal, and a sale of portfolio manner contemplated by the Effective Date about: (a) The intended securities by the Existing Portfolio, application; (b) the proposed substitution of the Existing Portfolio acting as principal, to the Replacement Substitution can be consummated as with the Replacement Portfolio; (b) the Portfolio. In addition, the proposed In- described in the application under intended Effective Date; and (c) Kind Transactions could be viewed as a applicable insurance laws; and (c) any information with respect to transfers as purchase of securities from the Existing regulatory requirements in each set forth in Condition 6 above. In Portfolio and a sale of securities to the jurisdiction where the Contracts are addition, NYLIAC will deliver to all Replacement Portfolio by NYLIAC (or qualified for sale have been complied affected Contract Owners, at least 30 the Separate Accounts), acting as with to the extent necessary to complete days before the Effective Date, a principal. If characterized in this the proposed Substitution. prospectus for the Replacement manner, the proposed In-Kind 2. NYLIAC or its affiliates will pay all Portfolio. Transactions may be deemed to expenses and transaction costs of the 8. NYLIAC will deliver to each contravene Section 17(a) due to the proposed Substitution, including legal affected Contract Owner within five (5) affiliated status of these entities. and accounting expenses, any business days of the Effective Date a 10. The Section 17 Applicants submit applicable brokerage expenses and other written confirmation which will that the terms of the proposed In-Kind fees and expenses. No fees or charges include: (a) A confirmation that the Transactions, including the will be assessed to the Contract Owners Proposed Substitution was carried out consideration to be paid and received, to effect the proposed Substitution. as previously notified; (b) a restatement are reasonable, fair, and do not involve 3. The proposed Substitution will be of the information set forth in the overreaching because: (1) The proposed effected at the relative net asset values Supplements; and (c) before and after In-Kind Transactions will not adversely of the respective shares in conformity account values. affect or dilute the interests of Contract with section 22(c) of the Act and rule 9. The Section 26 Applicants will Owners; and (2) the proposed In-Kind 22c–1 thereunder without the cause the Manager to enter into a Transactions will comply with the imposition of any transfer or similar written contract with the Replacement conditions set forth in rule 17a–7 and charges by the Section 26 Applicants. Portfolio, whereby, during the two (2) the Act, other than the requirement The proposed Substitution will be years following the Effective Date, the relating to cash consideration. Even effected without change in the amount annual net operating expenses of the though the proposed In-Kind or value of any Contracts held by Replacement Portfolio will not exceed Transactions will not comply with the affected Contract Owners. the annual net operating expenses of the cash consideration requirement of 4. The proposed Substitution will in Existing Portfolio for the fiscal year paragraph (a) of Rule 17a–7, the terms no way alter the tax treatment of ended December 31, 2015. The Section of the proposed In-Kind Transactions affected Contract Owners in connection 26 Applicants further agree that separate will offer to the Existing and with their Contracts, and no tax liability account charges for any Contract owner sradovich on DSK3GMQ082PROD with NOTICES Replacement Portfolios the same degree will arise for affected Contract Owners on the Effective Date will not be of protection from overreaching that as a result of the proposed Substitution. increased at any time during the two Rule 17a–7 generally provides in 5. The rights or obligations of the year period following the Effective Date. connection with the purchase and sale Section 26 Applicants under the 10. The Replacement Portfolio will of securities under that Rule in the Contracts of affected Contract Owners not rely on the Manager of Managers ordinary course of business. In will not be altered in any way. The Order unless such action is approved by particular, the Section 17 Applicants proposed Substitution will not a majority of the Replacement cannot effect the proposed In-Kind adversely affect any riders under the Portfolio’s outstanding voting securities, VerDate Sep<11>2014 20:16 Jul 29, 2016 Jkt 238001 PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 E:\FR\FM\01AUN1.SGM 01AUN1

50588 Federal Register / Vol. 81, No. 147 / Monday, August 1, 2016 / Notices as defined in the Act, at a meeting SECURITIES AND EXCHANGE II. The Exchange’s Description of the whose record date is after the Proposed COMMISSION Proposal Substitution has been effected. [Release No. 34–78415; File No. SR– The Exchange proposes to list and For the Commission, by the Division of BatsBZX–2016–09] trade the Shares under BZX Rule Investment Management, under delegated 14.11(i), which governs the listing and authority. Self-Regulatory Organizations; Bats trading of Managed Fund Shares on the Robert W. Errett, BZX Exchange, Inc.; Order Granting Exchange. The Shares will be offered by Approval of a Proposed Rule Change, the Trust. According to the Exchange, Deputy Secretary. as Modified by Amendment No. 1, To the Trust is registered with the [FR Doc. 2016–18060 Filed 7–29–16; 8:45 am] List and Trade Shares of the Commission as an open-end investment BILLING CODE 8011–01–P Pointbreak Agriculture Commodity company.7 Pointbreak Advisers LLC Strategy Fund of the Pointbreak ETF will be the investment adviser Trust Under BZX Rule 14.11(i), (‘‘Adviser’’) 8 to the Fund.9 Brown SECURITIES AND EXCHANGE Managed Fund Shares Brothers Harriman & Co. will be the COMMISSION administrator, custodian, and transfer July 26, 2016. agent for the Trust and ALPS Sunshine Act Meeting I. Introduction Distributors, Inc. will serve as the On April 15, 2016, Bats BZX distributor for the Trust.10 Notice is hereby given, pursuant to the provisions of the Government in the Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) A. The Fund’s Investments Sunshine Act, Public Law 94–409, that filed with the Securities and Exchange According to the Exchange, the Fund the Securities and Exchange Commission (‘‘Commission’’), pursuant is an actively managed exchange-traded to Section 19(b)(1) of the Securities fund (‘‘ETF’’) that seeks to provide total Commission will hold an Open Meeting Exchange Act of 1934 (‘‘Exchange return that exceeds that of the Solactive on Wednesday, August 3, 2016 at 2:00 Act’’) 1 and Rule 19b–4 thereunder,2 a Agriculture Commodity Index p.m., in the Auditorium (L–002) at the proposed rule change to list and trade (‘‘Benchmark’’) over time. The Fund is Commission’s headquarters building, to shares (‘‘Shares’’) of the Pointbreak hear oral argument in an appeal from an not an index-tracking ETF and is not Agriculture Commodity Strategy Fund required to invest in the specific initial decision of an administrative law (‘‘Fund’’) of the Pointbreak ETF Trust judge by respondents Harding Advisory components of the Benchmark. (‘‘Trust’’) under BZX Rule 14.11(i). The However, the Exchange represents that LLC and Wing F. Chau. proposed rule change was published for the Fund will generally seek to maintain On January 12, 2015, the ALJ found comment in the Federal Register on that Respondents Harding Advisory May 3, 2016.3 7 The Exchange states that the Trust has filed a LLC, a registered investment adviser, On June 15, 2016, pursuant to Section registration statement on behalf of the Fund with and its principal, Wing F. Chau, 19(b)(2) of the Act,4 the Commission the Commission. See Registration Statement on designated a longer period within which Form N–1A for the Trust, dated March 8, 2016 (File violated antifraud provisions of the Nos. 333–205324 and 811–23068) (‘‘Registration securities laws. Specifically, the ALJ to approve the proposed rule change, Statement’’). The Exchange states that the found that Respondents had disapprove the proposed rule change, or Commission has issued an order granting certain misrepresented the standard of care institute proceedings to determine exemptive relief to the Trust under the Investment whether to disapprove the proposed Company Act of 1940 (‘‘1940 Act’’). See Investment Harding would follow in selecting assets Company Act Release No. 32064 (April 4, 2016) rule change.5 On July 19, 2016, the (File No. 812–14577). for various Harding-managed CDOs. For Exchange filed Amendment No. 1 to the 8 The Exchange states that, prior to listing on the these violations, the ALJ ordered proposed rule change.6 Exchange, the Adviser will be registered as a Harding and Chau to pay $1,003,216 in The Commission received no Commodity Pool Operator and will become a disgorgement and prejudgment interest, comments on the proposed rule change. member of the National Futures Association revoked Harding’s investment adviser (‘‘NFA’’). The Exchange also states that the Fund This order grants approval of the and its Subsidiary (as defined below) will be subject registration and ordered it to pay a $1.7 proposed rule change, as modified by to regulation by the Commodity Futures Trading million civil penalty, and barred Chau Amendment No. 1. Commission and NFA, as well as to additional from association with the securities disclosure, reporting, and recordkeeping rules imposed upon commodity pools. industry and ordered him to pay a 1 15 U.S.C. 78s(b)(1). 9 The Exchange states that the Adviser is not a $340,000 civil penalty. 2 17 CFR 240.19b–4. registered broker-dealer and is not affiliated with a 3 See Securities Exchange Act Release No. 77723 Respondent appealed and the broker-dealer. In the event that (a) the Adviser (April 27, 2016), 81 FR 26600 (‘‘Notice’’). becomes a broker-dealer or newly affiliated with a Division of Enforcement cross-appealed. 4 15 U.S.C. 78s(b)(2). broker-dealer, or (b) any new adviser or sub-adviser The issues likely to be considered at 5 See Securities Exchange Act Release No. 78079, is a broker-dealer or becomes affiliated with a oral argument include, among other 81 FR 40381 (June 21, 2016). The Commission broker-dealer, that adviser or sub-adviser will designated August 1, 2016 as the date by which the implement a fire wall with respect to its relevant things, whether Respondents violated Commission shall either approve or disapprove, or personnel or its broker-dealer affiliate, as the securities laws and, if so, what institute proceedings to determine whether to applicable, regarding access to information sanction, if any, are appropriate in the disapprove, the proposed rule change. concerning the composition of or changes to the public interest. 6 In Amendment No. 1, which replaced the portfolio, and will be subject to procedures original filing in its entirety, the Exchange: (1) designed to prevent the use and dissemination of For further information, please Clarified where price information can be obtained material non-public information regarding the contact Brent J. Fields from the Office of for certain investments of the Fund; (2) provided portfolio. sradovich on DSK3GMQ082PROD with NOTICES additional information regarding the creation and 10 Additional information regarding the Trust, the the Secretary at (202) 551–5400. redemption process; and (3) made other technical Fund, and the Shares, including investment Dated: July 27, 2016. amendments. Amendment No. 1 is available at strategies, risks, creation and redemption https://www.sec.gov/comments/sr-batsbzx-2016-09/ procedures, fees, portfolio holdings, disclosure Lynn M. Powalski, batsbzx201609-1.pdf. Because Amendment No. 1 policies, calculation of the NAV, distributions, and Deputy Secretary. does not materially alter the substance of the taxes, among other things, can be found in proposed rule change or raise unique or novel Amendment No. 1 and the Registration Statement, [FR Doc. 2016–18211 Filed 7–28–16; 11:15 am] regulatory issues, Amendment No. 1 is not subject as applicable. See Amendment No. 1, supra note 6; BILLING CODE 8011–01–P to notice and comment. Registration Statement, supra note 7. VerDate Sep<11>2014 20:16 Jul 29, 2016 Jkt 238001 PO 00000 Frm 00129 Fmt 4703 Sfmt 4703 E:\FR\FM\01AUN1.SGM 01AUN1


Document Created: 2016-07-30 06:26:10
Document Modified: 2016-07-30 06:26:10
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
ActionNotice 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 (``Act'') and an order of exemption pursuant to section 17(b) of the Act from section 17(a) of the Act.
DatesThe application was filed on December 11, 2015, and amended on May 13, 2016, and July 25, 2016. Applicants have agreed to file an amendment during the notice period, the substance of which is reflected in this notice.
ContactChristine Y. Greenlees, Senior Counsel, at (202) 551-6879, or David J. Marcinkus, Branch Chief, at (202) 551-6821 (Chief Counsel's Office, Division of Investment Management).
FR Citation81 FR 50584 
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