[Federal Register Volume 64, Number 131 (Friday, July 9, 1999)]
[Notices]
[Pages 37175-37177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17460]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-23889; File No. 812-11662]


The Equitable Life Assurance Society of the United States, et al.

July 2, 1999.
AGENCY: Securities and Exchange Commission (the ``Commission'' or 
``SEC'').

ACTION: Notice of application for an order under section 6(c) of the 
Investment Company Act of 1940 (the ``1940 Act'' or the ``Act'') to 
amend a prior order of the Commission under section 6(c) of the 1940 
Act which granted exemptions from the provisions of sections 2(a)(32), 
22(c), and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder to permit 
the recapture of credits applied to contributions made under certain 
deferred variable annuity contracts.

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SUMMARY OF APPLICATION: Applicants seek an order under section 6(c) of 
the 1940 Act to amend a prior order under section 6(c) of the Act 
(``Prior Order'') that, to the extent necessary, permits, under 
specified circumstances, the recapture of credits equal to 3% of 
contributions made under deferred variable annuity contracts and 
certificates (the ``Contracts'') that Equitable issues through the 
Separate Accounts, as well as other contracts that Equitable may issue 
in the future through Future Accounts that are substantially similar in 
all material respects to the Contracts (the ``Future Contracts''). The 
Prior Order extends the relief to any other National Association of 
Securities Dealers, Inc. (``NASD'') member broker-dealer controlling or 
controlled by, or under common control with, Equitable, whether 
existing or created in the future, that serves as a distributor or 
principal underwriter for the Contracts or Future Contracts offered 
through the Separate Accounts or any Future Account (``Equitable 
Broker-Dealer(s)''). The application seeks to amend the Prior Order to 
permit the recapture of credits of up to 5% of contributions made under 
the Contracts or Future Contracts.

APPLICANTS: The Equitable Life Assurance Society of the United States 
(``Equitable Life''), The Equitable of Colorado, Inc. (``EOC,'' and 
together with Equitable Life, ``Equitable''), Separate Account No. 45 
of Equitable Life (``SA 45''), Separate Account No. 49 of Equitable 
Life (``SA 49''), Separate Account VA of EOC (``SA VA,'' and together 
with SA 45 and SA 49, the ``Separate Accounts''), and other separate 
account established by Equitable in the future to support certain 
deferred variable annuity contracts and certificates issued by 
Equitable (``Future Account''), EQ Financial Consultants, Inc. 
(``EQFC''), and Equitable Distributors, Inc. (``EDI'') (collectively, 
``Applicants'').

FILING DATE: The application was filed on June 15, 1999, and amended on 
July 2, 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 
Applicants with a copy of the request, in person or by mail. Hearing 
requests should be received by the SEC by 5:30 p.m. on July 27, 1999, 
and should be accompanied by proof of service on the Applicants, 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

[[Page 37176]]

notification by writing to the Secretary of the SEC.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 Fifth 
Street, NW Washington, DC 20549-0609. Applicants, c/o The Equitable 
Life Assurance Society of the United States, 1290 Avenue of the 
Americas, New York, New York 10104, Attn: Mary Joan Hoene, Esq.

FOR FURTHER INFORMATION CONTACT: Kevin P. McEnery, Senior Counsel, or 
Susan M. Olson, Branch Chief, Office of Insurance Products, Division of 
Investment Management, at (202) 942-0670.

SUPPLEMENTARY INFORMATION: The following is a summary of the 
application. The complete application is available for a fee from the 
SEC's Public Reference Branch, 450 Fifth St., N.W., Washington, D.C. 
20549-0102 (tel. (202) 942-8090).

Applicants' Representations

    1. Equitable Life is a stock life insurance company organized under 
the laws of the State of New York. SA 45 and SA 49 were established in 
August 1994 and June 1996. Equitable Life serves as depositor of SA 45 
and SA 49. Equitable Life may in the future establish one or more 
Future Accounts for which it will serve as depositor.
    2. EOC is a stock life insurance company organized under the laws 
of the State of Colorado. SA VA was established in December 1996, 
pursuant to authority granted under a resolution of EOC's Board of 
Directors. EOC serves as depositor of SA VA. EOC may in the future 
establish one or more Future Accounts for which it will serve as 
depositor.
    3. SA 45 and SA 49 are each a segregated asset account of Equitable 
Life, and SA VA is a segregated asset account of EOC. Each of the 
Separate Accounts is registered with the Commission as a unit 
investment trust series investment company under the Act. SA 45 filed a 
Form N-8A Notification of Registration under the 1940 Act on September 
6, 1994, and SA 49 filed a Form N-8A under the Act on June 7, 1996. SA 
VA filed a Form N-8A on February 16, 1999. Each of the Separate 
Accounts will fund the variable benefits available under the Contracts 
funded through it. Units of interest in the Separate Accounts under the 
Contracts they fund will be registered under the Securities Act of 1933 
(the ``1933 Act''). In that regard, SA 45 and SA 49 filed Form N-4 
Registration Statements on September 30, 1998, under the 1933 Act 
relating to the Contracts. SA VA filed a Form N-4 Registration 
Statement on February 16, 1999, under the 1933 Act relating to the 
Contracts. Equitable may in the future issue Future Contracts through 
the Separate Accounts or through Future Accounts. That portion of the 
respective assets of the Separate Accounts that is equal to the 
reserves and other Contract liabilities with respect to SA 45, SA 49 or 
SA VA is not chargeable with liabilities arising out of any other 
business of Equitable Life or EOC, as the case may be. Any income, 
gains or losses, realized or unrealized, from assets allocated to the 
Separate Accounts are, in accordance with the respective Separate 
Accounts' Contracts, credited to or charged against the Separate 
Accounts, without regard to other income, gains or losses of Equitable 
Life or EOC, as the case may be.
    4. EQFC is an indirect, wholly-owned subsidiary of Equitable Life 
and will be the principle underwriter of SA 45 and SA VA and 
distributor of the Contracts funded through SA 45 (the ``SA 45 
Contracts'') and through SA VA (the ``SA VA Contracts''). EQFC is 
registered with the Commission as a broker-dealer under the Securities 
Exchange Act of 1934 (the ``1934 Act'') and is a member of the NASD. 
The SA 45 Contracts and the SA VA Contracts will be offered through 
registered representatives of EQFC and its affiliates who are 
registered broker-dealers under the 1934 Act and NASD members. EQFC, or 
any successor entity, may act as principal underwriter for any Future 
Account and distributor for any Future Contracts issued by Equitable in 
the future. A successor entity also may act as principal underwriter 
for SA 45 and/or SA VA.
    5. EDI is an indirect, wholly-owned subsidiary of Equitable Life 
and will be the principal underwriter of SA 49 and SA VA and 
distributor of the Contracts funded through SA 49 (the ``SA 49 
Contracts'') and the SA VA Contracts. EDI is registered with the 
Commission as a broker-dealer under the 1934 Act and is a member of the 
NASD. The SA 49 and SA VA Contacts will be offered through registered 
representatives of EDI and its affiliates, as well as through 
unaffiliated broker-dealers who have entered into agreements with EDI. 
All of such affiliates and unaffiliated broker-dealers will be 
registered broker-dealers under the 1934 Act and NASD members. EDI, or 
any successor entity, may act as principal underwriter for any Future 
Account and distributor for any future Contracts issued by Equitable in 
the future. A successor entity also may act as principal underwriter 
for SA 49 or SA VA.
    6. On May 3, 1999, the Commission issued the Prior Order exempting 
certain transaction of Applicants from the provisions of Section 
2(a)(32), 22(c), and 27(i)(2)(A) of the 1940 Act, and Rule 22c-1 
thereunder.\1\ The Prior Order permits the recapture, under specified 
circumstances, of 3% credits applied to contributions made under the 
Contracts.
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    \1\ The Equitable Life Assurance Society of the United States, 
et al., Investment Company Act Release No. 23822 (File No. 812-
11388). Pursuant to Rule 0-4 under the 1940 Act, Applicants 
incorporated by reference in the application the statement of facts 
set out in the amended and restated application (``Prior 
Application'') for the Prior Order, to the extent necessary to 
support the application.
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    7. Equitable now desires the flexibility to increase the amount 
that it may subsequently recapture to up to 5% of contributions under 
the Contracts or Future Contracts.

Applicants' Legal Analysis

    1. Section 6(c) of the Act authorizes the Commission to exempt any 
person, security or transaction, or any class or classes of persons, 
securities or transactions from the provisions of the Act and the rules 
promulgated thereunder if and to the extent that such exemption is 
necessary or appropriate in the public interest and consistent with the 
protection of investors of the purposes fairly intended by the policy 
and provisions of the Act. Applicants request that the Commission amend 
the Prior Order to permit Applicants to rely on the exemption provided 
thereby from the provisions of sections 2(a)(32), 22(c) and 27(i)(2)(A) 
of the Act, and Rule 22c-1 thereunder, to recapture, under the same 
circumstances described in the Prior Application, credits to 
contributions of up to 5% for all Contracts and Future Contracts.
    2. Applicants submit that the relief requested hereby is identical 
to the relief granted in the Prior Order, except that it covers a 
higher credit.
    3. Applicants incorporate by reference the legal analysis set out 
in the Prior Application.
    4. Applicants assert that recapture of credits of up to 5% will not 
raise concerns under sections 2(a)(32), 22(c) and 27(i)(2)(A) of the 
Act, and Rule 22c-1 thereunder for the same reasons as those given in 
the Prior Application. Applicants submit that the credits of up to 5% 
will be recapturable under the same circumstances and on the same basis 
as the 3% credits described in the Prior Application, the only 
difference being the higher percentage amount. Accordingly, Applicants 
believe that the requested relief from the provisions of

[[Page 37177]]

Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act, and Rule 22c-1 
thereunder, is consistent with the exemptive relief provided under the 
Prior Order.
    5. In addition, Applicants state that the Commission has previously 
granted similar exemptive relief to permit the issuance of variable 
annuity contracts providing for recapturable bonus credits in amounts 
up to 5%.

Conclusion

    Applicants submit, based on the grounds summarized above, that 
their exemptive request meets the standards set out in Section 6(c) of 
the Act, namely that the exemptions requested are 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, and that, therefore, the Commission should grant 
the requested order.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-17460 Filed 7-8-99; 8:45 am]
BILLING CODE 8010-01-M