[Federal Register Volume 64, Number 4 (Thursday, January 7, 1999)]
[Notices]
[Pages 1035-1036]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-292]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. IC-23629; 812-11446]
Bergstrom Capital Corporation; Notice of Application December 31,
1998
AGENCY: Securities and Exchange Commission (``SEC'').
ACTION: Notice of application for an order under section 6(c) of the
Investment Company Act of 1940 (the ``Act'') for relief from section
2(a)(19) of the Act.
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SUMMARY OF APPLICATION: Applicant, a registered investment company,
requests an order under section 6(c) of the Act declaring that one of
its directors, who also will be a director and officer of the parent
company of a registered broker-dealer, will not be deemed an
``interested person'' of applicant.
FILING DATE: The application was filed on December 28, 1998.
HEARING OR NOTIFICATION OF HEARING: An order granting the application
will be issued unless the SEC orders a hearing. Interested persons may
request a hearing by writing to the SEC's Secretary and serving
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 January 25,
1999, and should be accompanied by proof of service on applicant in the
form of an affidavit, or, for lawyers, a certificate of service.
Hearing requests should state the nature of the writer's interest, the
reason for the request, and the issues contested. Persons who wish to
be notified of a hearing may request notification by writing to the
SEC's Secretary.
ADDRESSES: Secretary, SEC, 450 Fifth Street, NW, Washington, DC 20549.
Applicant: 505 Madison Street, Suite 220, Seattle, Washington 98104-
1138.
FOR FURTHER INFORMATION CONTACT: Timothy R. Kane, Senior Counsel, at
(202) 942-0615 or Mary Kay Frech, 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, 450 Fifth Street, NW., Washington,
DC 20549 (tel. (202) 942-8090).
Applicant's Representations
1. Bergstrom Capital Corporation (``Fund'') is a Delaware
corporation registered under the Act as a closed-end management
investment company.
2. The Fund's board of directors is composed of five individuals,
two of whom are not ``interested persons'' within the meaning of
section 2(a)(19) of the Act (``Disinterested Directors'').
3. William H. Sperber, one of the two Disinterested Directors, is
also managing director, chief executive officer, and founder of The
Trust Company of Washington (``TCW''). TCW is in the process of
reorganization whereby it will become a wholly-owned subsidiary of
Manzanita Capital, Inc. (``Manzanita''). As part of the reorganization,
McAdams Wright Ragen, Inc. (``MWR''), a newly-formed company which is
registered as a broker-dealer under the Securities Exchange Act of 1934
(``1934 Act''), will become a wholly-owned subsidiary of Manzanita. MWR
will provide brokerage services to high net worth individuals and will
not provide brokerage services to institutional investors.
4. As a result of the reorganization, Mr. Sperber will become a
director and president of Manzanita. Mr. Sperber's responsibilities
will continue to be related to the operations of TCW. Mr. Sperber will
not become a director, officer, or employee of MWR, and will not be
involved in any way with the day-to-day management of MWR. The
reorganization is expected to be consummated on or about January 1,
1999.
Applicant's Legal Analysis
1. Section 2(a)(19)(A)(v) of the Act defines an ``interested
person'' of a registered investment company to include any broker-
dealer registered under the 1934 Act or any affiliated person of the
broker-dealer. Applicant states that Mr. Sperber may be deemed an
affiliated person of MWR because he will be a director, president, and
shareholder of Manzanita, an entity that controls MWR within the
meaning of section 2(a)(9) of the Act. Because Mr. Sperber may be
deemed an affiliated person of MWR, Mr. Sperber would be considered an
interested person of the Fund.
2. Rule 2a19-12 under the Act provides, in relevant part, that a
director of a registered investment company will not be considered an
interested person
[[Page 1036]]
solely because the director is an affiliated person of a registered
broker-dealer, provided that: (1) the broker-dealer does not execute
any portfolio transactions for the ``company complex,'' as that term is
defined in the rule, engage in any principal transactions with the
company complex, or distribute shares of the company complex, for at
least six months prior to the time the director is to be considered
independent and for the period during which the director continues to
be considered independent; (2) the company's board of directors finds
that the company and its shareholders will not be adversely affected if
the broker-dealer does not engage in transactions for or with the
company complex; and (3) no more than a minority of the company's
independent directors are affiliated with broker-dealers. The Fund
states that it may not rely on rule 2a19-1 in determining Mr. Sperber's
status because, as one of only two Disinterested Directors, Mr. Sperber
represents more than a minority of the Fund's Disinterested Directors.
3. The Fund requests an order under section 6(c) of the Act
declaring that Mr. Sperber will not be deemed an interested person
under section 2(a)(19) of the Act. Section 6(c) of the Act provides, in
part, that the SEC may exempt any person from any provision of the Act
or any rule under the Act if and to the extent the exemption is
necessary or appropriate in the public interest and consistent with the
protection of investors and the purposes fairly intended by the policy
and provisions of the Act.
4. Applicant states that its request for relief meets this
standard. Applicant asserts that Mr. Sperber's relationship with MWR
poses no potential conflict of interest because MWR has not and will
not engage in business of any kind with the Fund. Applicant further
states that Mr. Sperber will not be involved in the day-to-day
management of MWR. In addition, applicant notes that, if the requested
relief is granted, only 50% of the Fund's Disinterested Directors will
be affiliated with a broker-dealer.
Applicant's Condition
Applicant agrees that any order granting the requested relief will
be subject to the following condition:
1. The Fund will comply with all of the requirements of rule 2a19-1
with respect to Mr. Sperber, except paragraph (a)(3) of the rule.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-292 Filed 1-6-99; 8:45 am]
BILLING CODE 8010-01-M