[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

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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