[Federal Register Volume 64, Number 124 (Tuesday, June 29, 1999)]
[Notices]
[Pages 34834-34835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16497]


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SECURITIES AND EXCHANGE COMMISSION

[Rel. No. IA-1805; File No. 803-134]


CSX Financial Management, Inc.; Notice of Application

June 23, 1999.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of Application for Exemption under the Investment 
Advisers Act of 1940 (``Advisers Act'').

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    Applicant: CSX Financial Management, Inc.
    Relevant Advisers Act Sections: Exemption requested under section 
202(a)(11)(F) from section 202(a)(11).
    Summary of Application: Applicant requests an order declaring it to 
be a person not within the intent of section 202(a)(11), which defines 
the term ``investment adviser.''
    Filing Dates: The application was filed on January 25, 1999 and 
amended on June 1, 1999.
    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 July 19, 
1999, and should be accompanied by proof of service or 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, NW, Washington, DC 20549-
0609. Applicant, CSX Financial Management, Inc., One James Center, 16th 
Floor, 901 East Cary Street, Richmond, Virginia 23219.

FOR FURTHER INFORMATION CONTACT: Karen L. Goldstein, Staff Attorney, at 
(202) 942-0646, Jennifer L. Sawin, Special Counsel, at (202) 942-0532 
(Division of Investment Management, Task Force on Investment Adviser 
Regulation).

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application may be obtained for a fee at the 
SEC's Public Reference Branch.

Applicant's Representations

    1. Applicant was organized as a Delaware corporation in 1989. Sea-
Land Service, Inc. (``Sea-Land''), a wholly-owned subsidiary of CSX 
Corporation (``CSX''), owns all of the outstanding stock of Applicant.
    2. Applicant serves as an investment adviser for CSX and certain 
CSX subsidiaries, now existing or to be formed in the future, of which 
CSX owns, directly or indirectly, more than 50% of the outstanding 
voting shares (such existing and future subsidiaries, together with 
CSX, the ``CSX Companies''). From time to time there are more than 15 
companies included within the CSX Companies.
    3. Since 1993, Applicant has been registered with the SEC as an 
investment adviser. Applicant has never provided advisory services to 
any other person or entity other than the CSX Companies.

Applicant's Legal Analysis

    1. Section 202(a) (11) of the Advisers Act defines the term 
``investment adviser'' to mean ``any person who, for compensation, 
engages in the business of advising others, either directly or through 
publications or writings, as to the value of securities or as to the 
advisability of investing in, purchasing, or selling securities, or 
who, for compensation and as a part of a regular business, issues or 
promulgates analyses or reports concerning securities. . .'' Section 
202(a) (11) (F) of the Advisers Act authorizes the SEC to exclude from 
the definition of ``investment adviser'' persons that are not within 
the intent of section 202(a)(11).
    2. Section 203(a) of the Advisers Act requires investment advisers 
to register with the SEC. Section 203(b) of the Advisers Act provides 
exemptions from this registration requirement. Applicant asserts that 
it does not appear to qualify for any of the exemptions provided by 
section 203(b).
    3. Applicant requests that the SEC declare it to be a person not 
within the intent of section 202(a) (11). Applicant submits that its 
advisory services to the CSX Companies should not be considered 
services to ``others''. Although Applicant is a corporation, and 
therefore a separate legal entity from the CSX Companies, Applicant 
describes its relationship to the CSX Companies as internal. 
Applicant's financial results are reported in CSX's financial 
statements, which reflect results for all the CSX Companies on a 
consolidated basis. Applicant states that CSX owns more than 50% of the 
outstanding voting shares of Applicant and of each CSX Company.
    4. Applicant submits that the protections of the Advisers Act may 
be considered unnecessary when an adviser and client, although separate 
legal entities, in reality, form a single economic entity. Applicant 
states that it exists solely to provide investment advisory services to 
the CSX Companies. Applicant represents that it has never provided, and 
does not intend to provide in the future, any investment advisory 
services to the general public or to any persons or entities other than 
the CSX Companies. Applicant states the CSX, the indirect parent of 
Applicant, views its investment in Applicant as a method of obtaining 
advisory services for the CSX Companies and not as a portfolio asset. 
Applicant asserts that there is no public interest in requiring it to 
be registered under the Advisers Act.
    5. Applicant states that it does not hold itself out to the public 
as an investment adviser. Applicant states that it is not listed in the 
phone book under ``investment advisory services.'' Applicant represents 
that it does not engage in any advertising, attend investment 
management conferences as a vendor, or conduct any marketing 
activities.

[[Page 34835]]

Applicant's Condition

    Applicant agrees that the requested order shall be subject to the 
condition that Applicant continues to provide investment advisory 
services only with respect to the assets of the CSX Companies and does 
not solicit public clients.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-16497 Filed 6-28-99; 8:45 am]
BILLING CODE 8010-01-M