[Federal Register Volume 62, Number 38 (Wednesday, February 26, 1997)]
[Notices]
[Pages 8807-8808]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-4750]
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SECURITIES AND EXCHANGE COMMISSION
[Rel. No. IC-22521; 813-152]
Partners Income Fund; Notice of Application
February 20, 1997.
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for exemption under the Investment
Company Act of 1940 (the ``Act'').
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APPLICANT: Partners Income Fund (the ``Initial Partnership'').
RELEVANT ACT SECTIONS: Order requested under section 6(b).
SUMMARY OF APPLICATION: Applicant requests an order that would amend a
prior order to permit the employer of certain employees' securities
companies to invest in those companies on terms no more favorable than
those available to eligible employees.
FILING DATES: The application was filed on August 6, 1996 and amended
on November 26, 1996.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
applicant with a copy of the request, personally or by mail. Hearing
requests should be received by the SEC by 5:30 p.m. on March 17, 1997
and should be accompanied by proof of service on the applicant, in the
form of an affidavit or, for lawyers, a certificate of service. Hearing
requests should state the nature of the writer's interest, the reason
for the request, and the issues contested. Persons may request
notification of a hearing by writing to the SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 5th Street, N.W., Washington, D.C.
20549. Applicant, c/o McKinsey & Company,
[[Page 8808]]
Inc., Park Avenue Plaza, 55 East 52nd Street, New York, New York 10022.
FOR FURTHER INFORMATION CONTACT: Mary T. Geffroy, Staff Attorney, at
(202) 942-0553, or Mercer E. Bullard, Branch Chief, at (202) 942-0564
(Division of Investment Management, Office of Investment Company
Regulation).
SUPPLEMENTARY INFORMATION: The following is a summary of the
application. The complete application may be obtained for a fee from
the SEC's Public Reference Branch.
Applicant's Representations
1. McKinsey & Co., Inc. (``McKinsey''), a New York corporation, is,
together with its majority owned subsidiaries, an internationally known
business consulting and management firm that, with its affiliated
companies, is engaged in various facets of the consulting business. The
Initial Partnership, a general partnership organized under the laws of
the State of New York, was organized by management group members of
McKinsey. The Initial Partnership and other existing and future
partnerships sponsored by McKinsey (collectively, the ``Partnerships'')
are, or will be, employees' securities companies within the meaning of
section 2(a)(13) of the Act and operate, or will operate, as closed-end
management investment companies.
2. In an order issued on September 14, 1992 (the ``Original
Order''), the SEC granted the Partnerships an exemption from all
provisions of the Act except sections 7, 8(a), (9), certain provisions
of section 17, sections 36 through 53, and the rules and regulations
relating to those sections.\1\ The Initial Partnership is currently the
only entity relying on the Original Order. Applicant requests that the
Original Order be amended to permit McKinsey to invest in a Partnership
on terms no more favorable than those on which Eligible Employees \2\
may invest. Applicant states that the purpose of the Partnerships,
their operation and the other relevant facts remain materially as
described in the original application (``Original Application'').
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\1\ See Investment Company Act Release No. 18897 and Investment
Advisers Act Release No. 1323 (August 17, 1992) (notice), and
Investment Company Act Release No. 18948 and Investment Advisers Act
Release No. 1335 (September 14, 1992) (order). The Original Order
also granted an exemption under section 206A of the Investment
Advisers Act from one disclosure requirement of Form ADV.
\2\ The Original Application stated that the opportunity to
become a partner in the Partnerships would be offered only to
``Eligible Employees'' of McKinsey. Eligible Employees were defined
as: (i) Directors, Principals and Administrative Shareholders, all
of whom are owners of common shares of McKinsey, (ii) ``retired''
Directors, Principals and Administrative Shareholders subject to
certain limitations, (iii) a very small number, not more than ten at
any one time (i.e., for all Partnerships in existence), of non-
management group members responsible for administering the
Partnerships and employee benefit plans for McKinsey, and (iv) a
very small number of other employees (i.e., for all Partnerships in
existence), determined to have the degree of sophistication, access
to the management of the partnerships and financial resources
comparable to the individuals in clause (i).
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3. Condition 2(a) of the notice of the Original Order states that
``the Partnership will not make any investment in which McKinsey is a
participant * * * other than (i) as general partnership in a
Partnership organized as a limited partnership, to the limited and pro
rata extent described in the application.'' \3\ Applicant believes that
this condition could be read as prohibiting McKinsey from investing at
all in general partnerships (such as the Initial Partnership) and
limiting McKinsey's ability to invest in limited partnerships to 1% of
capital accounts.
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\3\ The Original Application stated that the general partner in
a limited partnership generally must invest at least 1% of total
positive capital account balances in each Partnership organized as a
limited partnership (up to $500,000 per Partnership), and must
maintain this investment at a specified level for the life of each
such Partnership.
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4. Applicant explains that, at the time of the Original
Application, it was not contemplated that McKinsey would invest in the
Partnerships other than as stated in condition 2(a)(i). Applicant
states that McKinsey has now determined that, from time to time, it
will have excess funds available for investment, and would like to be
able to invest in the Initial Partnership and Subsequent Partnerships
on terms no more favorable than those available to other investors
therein. Applicant contends that investments by McKinsey in a
Partnership should promote the community of interests among the
employer and employee investors in the Partnership.
5. Applicant represents that McKinsey would invest in a Partnership
only where it had determined that the Partnership's investment
objective was consistent with its own investment plans for its funds. A
Partnership will permit McKinsey to invest in such Partnership only if
(1) The Fairness Determining Body \4\ of such Partnership determines,
at the time of each such investment by the McKinsey entity, that the
terms of such investment are no more favorable to the McKinsey entity
than to other investors and that such Partnership will be able to
invest such funds in accordance with the Partnership's investment
objective and policies without any material adverse effect on the other
partners in such Partnership, and such Partnership will refuse to
accept any such McKinsey investment to the extent such determination
cannot be made; (2) the McKinsey entity proposing to make the
investment sends a notice of the proposed investment and its
approximate amount to the partners of such Partnership a reasonable
time before the relevant deadline for partners or other Eligible
Employees to invest (or, if later, the deadline to cancel an investment
commitment already made); and (3) the McKinsey entity making the
investment commits not to redeem any portion of its investment in a
Partnership unless it has given reasonable (but not less than 7 days')
notice to the other partners in such Partnership prior to the date any
similar redemption notice from such other partners is due.
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\4\ The Original Application describes the Fairness Determining
Body as ``consisting of members of the Advisory Committee or
Management Committee [as such terms are defined in the Original
Application], as the case may be, of that Partnership.''
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6. Applicant requests an order amending the Original Order to
permit McKinsey to invest in a Partnership on terms no more favorable
than those available to the Eligible Employees and pursuant to the same
relief from the act and the rules and regulations thereunder as in the
Original Order, but subject to a modification of one condition. The
requested modification would be accomplished by deleting from condition
2(a) the phrase ``(i) as general partner in a Partnership organized as
a limited partnership, to the limited and pro rata extent described in
the application'' and replacing it with ``(i) to the extent McKinsey
may be a partner in a Partnership''.
Applicant's Condition
Applicant agrees to comply with all of the terms and conditions of
the Original Order except that condition 2(a) of the notice of the
Original Order is amended and restated to read: ``(i) to the extent
McKinsey may be a partner in a Partnership''.
For the SEC, by the Division of Investment Management, pursuant
to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-4750 Filed 2-25-97; 8:45 am]
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