[Federal Register Volume 64, Number 134 (Wednesday, July 14, 1999)]
[Notices]
[Pages 38047-38052]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17882]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 23892; 813-166]


CIBC World Markets Corp., Notice of Application

July 7, 1999.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for an order under sections 6(b) and 6(e) 
of the Investment Company Act of 1940 (the ``Act'') granting an 
exemption from all provisions of the Act, except section 9, certain 
provisions of sections 17 and 30, sections 36 through 53, and the rules 
and regulations under those sections.

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SUMMARY OF APPLICATION: Applicant, CIBC World Markets Corp. (``CIBC 
WN''), requests an order to exempt certain entities formed for the 
benefit of key employees of CIBC WM and its affiliates from certain 
provisions of the Act, and to permit the funds to engage in certain 
joint transactions. Each entity will be an ``employees' securities 
company'' as defined in section 2(a)(13) of the Act.

FILING DATES: The application was filed on March 11, 1997 and amended 
on February 27, 1998, and August 7, 1998. Applicant has agreed to file 
an additional amendment, the substance of which is reflected in this 
notice, during the notice period.

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 August 2, 1999, 
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 requests, and the issues contested. Persons may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, N.W., Washington, D.C. 
20549-0609. Applicant, One World Financial Center, 200 Liberty Street, 
New York, NY 10281.

FOR FURTHER INFORMATION CONTACT: Mary T. Geffroy, Senior Counsel, at 
(202) 942-0553, or Christine Y. Greenlees, 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, N.W., Washington, 
D.C. 20549-0102 (tel. (202) 942-8090).

Applicant's Representations

    1. Applicant, a Delaware corporation and subsidiary of The Canadian 
Imperial Bank of Commerce, is a brokerage and investment banking 
firm.\1\ Applicant is registered as an investment adviser under the 
Investment Advisers Act of 1940 (``Advisers Act''). Applicant and its 
affiliates, as defined in rule 12b-2 under the Securities Exchange Act 
of 1934 (the ``Exchange Act''), are referred to in this notice 
collectively as the ``CIBC WM Group.''
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    \1\ Applicant was known as Oppenheimer & Co., Inc. until 
November 4, 1997, when the stock of its parent, Oppenheimer 
Holdings, was acquired by CIBC Wood Gundy Securities Corp., which 
was then merged into Oppenheimer & Co., Inc.
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    2. Applicant proposes to organize one or more limited partnerships, 
limited liability companies, or other entities under the laws of the 
state of Delaware or another state (each, a ``Partnership,'' and 
collectively, the ``Partnerships'') for the benefit of certain key 
employees. Each Partnership will be an ``employees' securities 
company'' within the meaning of section 2(a)(13) of the Act, and will 
operate as a closed-end management investment company. The goal of the 
Partnerships is to create investment opportunities that are competitive 
with those at other brokerage and investment banking firms for 
employees and to facilitate the recruitment of high caliber employees. 
Participation in a Partnership will be voluntary.
    3. It is currently anticipated that the initial Partnership will be 
a limited liability company and that an independent board of managers 
(``Independent Board'') will have overall responsibility for its 
operations. All of the members of the Independent Board will be 
individuals who are not ``interested persons'' (as defined in section 
2(a)(19) of the Act) of CIBC WM or any other entity in the CIBC WM 
Group (collectively, a ``CIBC WM Company''). Applicant proposes to use 
the independent board of managers structure so that the Partnerships 
will not be considered ``subsidiaries'' of a CIBC WM Company for bank 
regulatory purposes. Applicant states that the independent board of 
managers structure will not undermine the community of interest between 
the Partnerships and the CIBC WM Group. In the case of any General 
Partner that is an Independent Board, the Board members will not be 
eligible to purchase Interests (as defined below) in a Partnership. 
Subsequently established Partnerships will be structured in the same 
manner or, alternatively, a CIBC WM Company may act as general partner 
(or functional equivalent with respect to any Partnership organized as 
a limited liability company, business trust or other entity) of those 
Partnerships. As used in this notice, the term ``General Partner'' 
refers to the Independent Board or a CIBC WM Company which acts as 
general partner of a Partnership (or functional equivalent). The 
General Partner will be responsible for the overall management of each 
Partnership and will have the authority to make all decisions regarding 
the acquisition, management and disposition of Partnership investments, 
except that the General Partner may delegate certain of its 
responsibilities regarding the acquisition, management and disposition 
of Partnership investments to an Investment Adviser (as defined below); 
provided, further, that if the General Partner is an Independent Board, 
such Board will delegate all decisions regarding the acquisition, 
management and disposition of

[[Page 38048]]

Partnership investments to an Investment Adviser. The General Partner 
also may delegate administrative responsibilities to a CIBC WM Company 
or to an unaffiliated third party administrator.
    4. A. CIBC WM Company will serve as investment adviser to the 
Partnerships. The investment adviser will either be: (a) Registered as 
an investment adviser under the Advisers Act; (b) exempt from the 
registration requirements of the Advisers Act by virtue of section 
203(b)(3) of the Advisers Act; or (c) excluded from the definition of 
investment adviser under the Advisers Act because it is a bank or a 
bank holding company. The term ``Investment Adviser'' as used in this 
notice refers to a CIBC WM Company which acts as investment adviser to 
a Partnership. With respect to some or all Partnerships, the Investment 
Adviser may delegate certain of its responsibilities to one or more 
subadvisers, each of which will be a CIBC WM Company and registered 
under the Advisers Act is required under applicable law; provided, 
however, that if the Investment Adviser elects to enter into any side-
by-side investment with an unaffiliated entity, the Investment Adviser 
will be permitted to engage as sub-investment adviser the entity 
responsible for the management of such side-by-side investment.
    5. In the case of certain Partnerships, the General Partner will 
have the authority to terminate the agreement with the Investment 
Adviser on 120 days' prior written notice to the Investment Adviser. In 
the event that the General Partner terminates an agreement with an 
Investment Adviser, the General Partner will: (a) cause the Partnership 
to cease making new investment commitments; (b) cause the Partnership 
to dissolve; or (c) appoint a replacement investment adviser with the 
concurrent affirmative vote of at least a majority in interest of the 
Limited Partners (or functional equivalent with respect to any 
Partnership organized as a limited liability company, business trust or 
other entity). If the replacement investment adviser is not a CIBC WM 
Company, the Partnership will cease to rely upon the order granting the 
requested relief and the General Partner will cause the Partnership to 
register under the Act, unless it obtains such exemptive relief from 
the Act as may be necessary. Each limited partnership agreement or 
other organizational document of the Partnership (the ``Partnership 
Agreement'') will provide that, in the event the General Partner gives 
notice of termination to the Investment Adviser, the affirmative vote 
of at least a majority in interest of the Limited Partners will be 
effective to retain the Partnership's agreement with the Investment 
Adviser in full force and effect. Each Partnership Agreement also will 
provide that the Limited Partners may direct the Partnership to cease 
making new investment commitments upon the affirmative vote of a 
majority in interest of the Limited Partners.\2\
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    \2\ The duration of a particular Partnership will be set forth 
in its Partnership Agreement. Each Partnership may be dissolved 
prior to its expiration upon the occurrence of the following events: 
(i) the resignation, withdrawal, dissolution or bankruptcy of the 
General Partner (or, where applicable, the resignation of the 
members of the Independent Board), (ii) the insolvency or bankruptcy 
of the Partnership, (iii) the sale of all or substantially all of 
the Partnership's assets, (iv) the conversion of the Partnership to 
corporate form pursuant to the terms of the applicable Partnership 
Agreement, (v) a determination by the General Partner that it is in 
the best interests of the Limited Partners to dissolve the 
Partnership, or (vi) any other event requiring dissolution of the 
Partnership under applicable law. Upon dissolution of a Partnership, 
the Partnership's assets will be distributed in accordance with the 
applicable Partnership Agreement.
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    6. Interests in the Partnerships (``Interests'') will be offered 
without registration in reliance on section 4(2) of the Securities Act 
of 1933 (the ``Securities Act'') or Regulation D under the Securities 
Act, and will be sold without a sales load or similar fee. Interests 
will be sold only to ``Limited Partners,'' which will be: (a) current 
or former key employees, officers, directors, partners and persons on 
retainer of the CIBC WM Group (``Eligible Employees''); (b) spouses, 
parents, children, spouses of children, brothers, sisters and 
grandchildren of Eligible Employees (``Qualified Family Members''); or 
(c) trusts or other investment vehicles established for the benefit of 
Eligible Employees or Qualified Family members (``Qualified Investment 
Vehicles'' and, collectively with Qualified Family Members, ``Qualified 
Participants''). Interests will not be transferable except with the 
express consent of the General Partner and then only to Eligible 
Employees or Qualified Participants.
    7. Prior to offering Interests to an Eligible Employee or Qualified 
Family Member, a CIBC WM Company must reasonably believe that the 
Eligible Employee or Qualified Family Member will be capable of 
understanding and evaluating the merits and risks of participation in 
the Partnership. Eligible Employees will be professionals engaged in 
various aspects of the investment banking or financial services 
business, or in related administrative, financial, accounting, legal or 
operational activities.
    8. Eligible Employees and Qualified Family Members must be 
``accredited investors'' meeting the income requirements set forth in 
rule 501(a)(6) of Regulation D under the Securities Act, except that a 
maximum of 35 Eligible Employees who are sophisticated investors but 
who do not meet the definition of an accredited investor may become 
Limited Partners of a Partnership if each such Eligible Employee falls 
into one of the following categories: (a) Eligible Employees who (i) 
have a graduate degree in business, law or accounting, (ii) have a 
minimum of five years of consulting, investment banking or similar 
business experience, and (iii) will have had reportable income from all 
sources (including any profit shares or bonus) in the calendar year 
immediately preceding the Eligible Employee's admission as a Limited 
Partner in excess of $120,000 and will have a reasonable expectation of 
reportable income of at least $150,000 in the years in which the 
Eligible Employee invests in a Partnership. In addition, an Eligible 
Employee in this category (a) will not be permitted to invest in any 
year more than 10% of his or her income from all sources for the 
immediately preceding year in the aggregate in the Partnership and in 
all other Partnerships in which he has previously invested; or (b) 
Eligible Employees who have primary responsibility for operating the 
Partnership. These responsibilities include identifying, investigating, 
structuring, negotiating, and monitoring investments for the 
Partnership, communicating with the Limited Partners, maintaining the 
books and records of the partnership, and making recommendations with 
respect to investment decisions by the Investment Adviser. Each 
Eligible Employee in this category (b) will: (i) be closely involved 
with and knowledgeable with respect to the Partnership's affairs, (ii) 
be an officer or employee of a CIBC WM Company, and (iii) have had 
reportable income from all sources (including any profit shares or 
bonus) in the calendar year immediately preceding the Eligible 
Employee's admission as a Limited Partner in excess of $120,000 and 
will have a reasonable expectation of reportable income of at least 
$150,000 in the years in which the Eligible Employee invests in the 
Partnership. Qualified Investment Vehicles must meet the standards for 
an ``accredited investor'' under rule 501(a) of Regulation D.
    9. The terms of each Partnership will be disclosed to the Eligible 
Employees

[[Page 38049]]

at the time they are offered the right to subscribe for Interests in 
the Partnerships, at which time the Eligible Employees will be 
furnished with a copy of the Partnership Agreement. The Partnership 
Agreement will set forth in full the terms applicable to a Limited 
Partner's investment in the Partnership.
    10. A CIBC WM Company may purchase Interests, which it may offer to 
new Eligible Employees joining the CIBC WM Group after the closing of 
the Partnership or which it may award to Eligible Employees as a bonus 
or similar compensation. A CIBC WM Company will acquire these Interests 
in the same manner of payment, at the same time, and at the same price 
as Interests purchased by the Limited Partners. A CIBC WM Company may 
sell the Interests it has so acquired to any Eligible Employee or 
Qualified Participant at any time during the life of the Partnership at 
a price no greater than the net asset value of the Interests on the 
previous appraisal date as defined in the Partnership Agreement after 
the date of sale.
    11. If a Limited Partner terminates employment with a CIBC WM 
Company or is in bankruptcy, the Interests may be acquired by a CIBC WM 
Company, or by any Eligible Employee or Qualified Participant 
designated by a CIBC WM Company. If a CIBC WM Company does not exercise 
the right to acquire the Interest, it will continue to be held by the 
Limited Partner. In addition, in the event of a Limited Partner's 
death, total disability or adjudication of incompetence, the Limited 
Partner or a representative of the Limited Partner may have the right, 
during an established time period following the occurrence of any of 
those events, to tender the Limited Partner's Interest to a CIBC WM 
Company or any Eligible Employee or Qualified Participant designated by 
a CIBC WM Company for mandatory purchase (subject to applicable banking 
regulations) by a CIBC WM Company or any Eligible Employee or Qualified 
Participant designated by a CIBC WM Company.
    12. If an investment program provides for vesting, an Eligible 
Employee's Interest at the beginning of the program will be treated as 
``unvested,'' and ``vesting'' will occur either: (a) through the 
passage of time; or (b) upon the occurrence of a specified event. The 
termination of an Eligible Employee's employment will not affect the 
Eligible Employee's rights with respect to the vested portion of the 
Interest, unless certain specified events disclosed in the relevant 
Partnership Agreement occur, including the termination of employment 
for cause. The portion of an Eligible Employee's Interest that is 
``unvested'' at the time of the Eligible Employee's termination of 
employment, and the portion that is vested in the event the specified 
events disclosed in the relevant Partnership Agreement occur, may be 
subject to repurchase by a CIBC WM Company or reallocation to other 
Limited Partners in the relevant Partnership.
    13. Upon repurchase or reallocation of a former Eligible Employee's 
unvested or vested Interest, a CIBC WM Company will, at a minimum, pay 
the Eligible Employee the lesser of: (a) the amount actually paid by 
the Eligible Employee; or (b) the fair market value of the Interest, as 
determined in good faith by a CIBC WM Company. The terms of any 
repurchase or cancellation will apply equally to any Qualified 
Participant of an Eligible Employee.
    14. An Investment Adviser may be paid an advisory fee for its 
services to a particular Partnership, which may be determined as a 
percentage of assets under management or aggregate commitments. In 
addition, an Investment Adviser may be entitled to a performance-based 
fee based on the Partnership's net gains (``carried interest'').\3\ In 
the case of a Partnership in which the General Partner is an 
Independent Board, the Board members may receive compensation for their 
services from either the Partnership or a CIBC WM Company.
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    \3\ Any ``carried interest'' charged by a registered investment 
adviser will be structured to comply with section 205 of the 
Advisers Act.
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    15. It is anticipated that a CIBC WM Company may contribute capital 
to each Partnership in an amount equal to at least 1% of the aggregate 
amount of capital contributed by the Limited Partners. A CIBC WM 
Company also may undertake to contribute additional capital to a 
Partnership, which may be in an amount representing some multiple of 
the aggregate amount of capital contributed by the Limited Partners. 
With respect to a specified portion of the capital contribution of a 
CIBC WM Company (``Non-Allocable Portion''), a CIBC WM Company may 
receive, instead of a pro rata allocation of profits and losses, a 
cumulative return. The cumulative return may be equal to its Applicable 
Rate (as defined below) with respect to, and expenses incurred in 
connection with, the Non-Allocable Portion (the ``Return''), or some 
other reasonable return which may be less than its pro rata allocation 
of profits. The Return generally will be allocable annually out of 
Partnership profits and will be payable to a CIBC WM Company when 
profits are realized by the Partnership, or to the extent not 
previously paid, upon the liquidation of the Partnership.
    16. A CIBC WM Company may lend money to a Partnership at an 
interest rate that is the lowest rate that applicant determines is 
permissible under applicable banking regulations (the ``Applicable 
Rate''), provided that the Applicable Rate will be no less favorable 
than the rate obtainable on an arm's length basis. A CIBC WM Company 
may, in its sole discretion, adopt the method for determining the 
calculation of the Applicable Rate. Any indebtedness of the Partnership 
will be the debt of the Partnership and without recourse to the Limited 
Partners. Applicant states that the Partnership will retain the right 
to require the payment of any unfunded capital contributions from the 
Limited Partners for any appropriate Partnership purpose, including the 
payment of Partnership indebtedness, and will be permitted to assign 
this right to any lender to the Partnership.
    17. Partnerships may co-invest with or through investment vehicles 
sponsored and/or managed by a CIBC WM Company or by unaffiliated 
entities.
    18. A Partnership will not purchase or otherwise acquire any 
security issued by a registered investment company if, immediately 
after the purchase or acquisition, the Partnership will own in the 
aggregate more than 3% of the total outstanding voting stock of the 
registered investment company.
    19. As soon as practicable after the end of the fiscal year of each 
Partnership, each Partnership will send audited annual financial 
statements to its Limited Partners. In addition, each Partnership will 
send a report to its Limited Partners setting forth tax information 
necessary for the preparation of tax returns.

Applicant's Legal Analysis

    1. Section 6(b) of the Act provides that the SEC will exempt 
employees' securities companies from the provisions of the Act to the 
extent that the exemption is consistent with the protection of 
investors. Section 6(b) further provides that the SEC will consider, in 
determining the provisions of the Act from which the company should be 
exempt, the company's form of organization and capital structure, the 
persons owning and controlling its securities, the price of the 
company's securities and the amount of any sales load, how the 
company's funds are invested, and the relationship between the company 
and the issuers of the securities in which it invests. Section

[[Page 38050]]

2(a)(13) defines an employees' securities company, in relevant part, as 
any investment company all of whose securities are beneficially owned 
by (i) current or former employees, or persons on retainer, of one or 
more affiliated employers, (ii) immediate family members of those 
persons or employers, or (iii) the employer or employers together with 
any of the persons in (i) or (ii).
    2. Section 7 of the Act generally prohibits investment companies 
that are not registered under section 8 from selling or redeeming their 
securities. Section 6(e) provides that, in connection with any order 
exempting an investment company from any provision of section 7, 
certain provisions of the Act, as specified by the SEC, will be 
applicable to the company and other persons dealing with the company as 
though that company was registered under the Act.
    3. Applicant requests an order under sections 6(b) and 6(e) of the 
Act exempting the Partnerships from all provisions of the Act, except 
section 9, certain provisions of sections 17 and 30, sections 36 
through 53, and the rules and regulations under those sections.
    4. Section 17(a) of the Act generally prohibits any affiliated 
person of a registered investment company, or any affiliated person of 
that person, acting as prinicpal, from knowingly selling to or 
purchasing any security or other property from that company. Applicant 
requests an exemption from section 17(a) to permit each Partnership to: 
(a) purchase portfolio investments from or sell portfolio securities to 
CIBC WM, or any other affiliated person of a Partnership, or an 
affiliated person of that person (``collectively, Affiliated 
Entities''), on a principal basis; (b) purchase interests or property 
in a company or other investment vehicle in which CIBC WM, or an 
Affiliated Entity, already owns securities, or, where such company or 
other investment vehicle is otherwise affiliated with CIBC WM or a 
Partnership; (c) sell, put or tender, or grant options in securities or 
interests in a company or other investment vehicle back to that entity, 
where that entity is affiliated with CIBC WM or an Affiliated Entity; 
(d) participate as a selling security holder in a public offering that 
is underwritten by CIBC WM or an Affiliated Entity or in which CIBC WM 
or an Affiliated Entity acts as a member of the underwriting or selling 
group; (e) invest in companies, partnerships or other investment 
vehicles offered, sponsored or managed by CIBC WM or an Affiliated 
Entity (collectively, ``CIBC WM Sponsored Vehicles''), or to purchase 
securities from CIBC WM Sponsored Vehicles; (f) invest in securities 
of, or lend money to, entities with which CIBC WM or an Affiliated 
Entity has performed investment banking or other services and from 
which they may have received fees; and (g) purchase securities that are 
underwritten by CIBC WM or an Affiliated Entity (including a member of 
a selling group) on terms at least as favorable to the Partnership as 
those offered to investors other than affiliated persons of CIBC WM.
    5. Applicant submits that an exemption from section 17(a) is 
consistent with the protection of investors. Applicant states that the 
Limited Partners will have been fully informed of the possible extent 
of the Partnership's investment with affiliated persons and will be 
able to evaluate the attendant risks. Applicant asserts that the 
community of interest among the Limited Partners and the CIBC WM Group 
will provide the best protection against any risk of abuse.
    6. Section 17(d) of the Act and rule 17d-1 under the Act prohibit 
any affiliated person or principal underwriter of a registered 
investment company, or any affiliated person of that person or 
underwriter, acting as principal, from participating in any joint 
arrangement with the company unless authorized by the SEC. Rule 17d-1 
under the Act permits the SEC to approve a proposed joint transaction 
covered by the terms of section 17(d). In determining whether to 
approve a transaction, the SEC is to consider whether participation of 
the investment company in the arrangement is consistent with the 
provisions, policies, and purposes of the Act and the extent to which 
the company's participation is on a basis different from or less 
advantageous than that of other participants.
    7. Applicant requests relief to permit affiliated persons of each 
Partnership or affiliated persons of any of those persons, to 
participate in any joint arrangement in which the Partnership is a 
participant. Applicant submits that the flexibility to structure co-
investments and joint investments in the manner described in the 
application will not involve abuses of the type section 17(d) and rule 
17d-1 were designed to prevent. Applicant further states that the 
concern that permitting joint investments with CIBC WM or another CIBC 
WM affiliated person on the one hand, and a Partnership on the other, 
might lead to disadvantageous treatment of the Partnership will be 
mitigated by the fact that CIBC WM is acutely concerned with its 
relationship with the key employees who invest in the Partnerships. 
Applicant also asserts that, in light of CIBC WM's purpose of 
establishing the Partnerships to reward Eligible Employees and to 
attract highly qualified personnel to CIBC WM, it is unlikely that an 
affiliated co-investor will enter into a transaction with a Partnership 
with the intent of disadvantaging the Partnership. Applicant also 
states that any investment by a Partnership made concurrently with an 
affiliated co-investor will on the same terms as the investment by the 
affiliated co-investor.
    8. Section 17(f) of the Act designates the entities that may act as 
custodians of investment company assets. Rule 17f-1 imposes certain 
requirements when the custodian is a member of a national securities 
exchange. Applicant requests an exemption from section 17(f) and rule 
17f-1 to the extent necessary to permit a CIBC WM Company to act as 
custodian of Partnership assets without a written contract, as would be 
required by rule 17f-1(a). Applicant also requests an exemption from 
the requirement in rule 17f-1(b)(4) that an independent account 
periodically verify the assets held by the custodian. Applicant states 
that, because of the community of interest between the Partnerships and 
the CIBC WM Group and the existing requirement for an independent 
annual audit, compliance with these requirements would be unnecessarily 
burdensome and expensive. The Partnerships will comply with all other 
requirements of rule 17f-1.
    9. Section 17(g) of the Act and rule 17g-1 under the Act generally 
require the bonding of officers and employees of a registered 
investment company who have access to its securities or funds. Rule 
17g-1 requires that a majority of directors who are not interested 
persons take certain actions and give certain approvals relating to 
fidelity bonding. In the case of any Partnership for which a CIBC WM 
Company is the General Partner, applicant requests exemptive relief to 
permit the General Partner, applicant requests exemptive relief to 
permit the General Partner's board of directors or similar body (the 
``Board''), who may be deemed interested persons, to take actions and 
make determinations set forth in the rule. Applicant states that, 
because all of the members of the Board will be interested persons, 
applicant could not comply with rule 17g-1 without the requested 
relief. Specifically, each Partnership will comply with rule 17g-1 by 
having a majority of the directors of the Board take actions and make 
determinations as are set forth in rule 17g-1. Applicant states that 
each Partnership will comply

[[Page 38051]]

with all other requirements of rule 17g-1.
    10. Section 17(j) of the Act and paragraph (a) of rule 17j-1 under 
the Act prohibit certain enumerated persons from engaging in fraudulent 
or deceptive practices in connection with the purchase or sale of a 
security held or to be acquired by a registered investment company. 
Rule 17j-1 also requires that every registered investment company adopt 
a written code of ethics and that every access person of a registered 
investment company report personal securities transactions. Applicant 
requests an exemption from these provisions of rule 17j-1 because they 
are unnecessarily burdensome as applied to the Partnerships. Applicant 
will remain subject to rule 17j-1(a).
    11. Applicant requests an exemption from the requirements of 
sections 30(a), 30(b), and 30(e) of the Act, and the rules under those 
sections. These provisions require registered investment companies to 
prepare and file with the SEC and mail to their shareholders certain 
periodic reports and financial statements. Applicant contends that the 
forms prescribed by the SEC for periodic reports have little relevance 
to the Partnerships and would entail administrative and legal costs 
that outweigh any benefit to the Limited Partners. Applicant requests 
exemptive relief to the extent necessary to permit each Partnership to 
report annually to its Limited Partners. Applicant also requests an 
exemption from section 30(h) of the Act to the extent necessary to 
exempt the General Partner (including any of its members) of each 
Partnership from filing Forms 3, 4 and 5 under section 16(a) of the 
Exchange Act with respect to their ownership of Interests in the 
Partnership. Applicant asserts that, because there will be no trading 
market for the Interests and the transfer of Interests will be severely 
restricted, these filings are unnecessary for the protection of 
investors and burdensome to those required to make them.

Applicant's Conditions

    Applicant agrees that the order granting the requested relief will 
be subject to the following conditions:
    1. Each proposed transaction otherwise prohibited by section 17(a) 
or section 17(d) and rule 17d-1 (the ``Section 17 Transactions'') will 
be effected only if the Investment Adviser determines that: (a) the 
terms of the transaction, including the consideration to be paid or 
received, are fair and reasonable to the Limited Partners and do not 
involve overreaching of the Partnership or its Limited Partners on the 
part of any person concerned; and (b) the transaction is consistent 
with the interests of the Limited Partners, the Partnership's 
organizational documents, and the Partnership's reports to its Limited 
Partners. In addition, the Investment Adviser will record and preserve 
a description of the Section 17 Transactions, the Investment Adviser's 
findings, the information or materials upon which the Investment 
Adviser's findings are based, and the basis for those findings. These 
records will be maintained for the life of the Partnership and at least 
two years thereafter, and will be subject to examination by the SEC and 
its staff.\4\
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    \4\ Each Partnership will preserve the accounts, books and other 
documents required to be maintained in an easily accessible place 
for the first two years.
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    2. In connection with the Section 17 Transactions, the Investment 
Adviser will adopt, and periodically review and update, procedures 
designed to ensure that reasonable inquiry is made, prior to the 
consummation of the transaction, with respect to the possible 
involvement in the transaction of any affiliated person or promoter of 
or principal underwriter for the Partnerships, or any affiliated person 
of that person, promoter, or principal underwriter.
    3. The Investment Adviser will not invest the funds of any 
Partnerships in any investment in which an ``Affiliated Co-Investor'' 
(as defined below) has acquired or proposes to acquire the same class 
of securities of the same issuer, where the investment involves a joint 
enterprise or other joint arrangement within the meaning of rule 17d-1 
in which the Partnership and an Affiliated Co-Investor are 
participants, unless the Affiliated Co-Investor, prior to disposing of 
all or part of its investment: (a) gives the Investment Adviser 
sufficient, but not less than one day's, notice of its intent to 
dispose of its investment; and (b) refrains from disposing of its 
investment unless the Partnership has the opportunity to dispose of the 
Partnership's investment prior to, or concurrently with, on the same 
terms as, and pro rata with, the Affiliated Co-Investor. The term 
``Affiliated Co-Investor'' means any person who is: (i) an ``affiliated 
person'' (as that term is defined in the Act) of the Partnership; (ii) 
CIBC WM or a CIBC WM Company; (iii) an officer or director of CIBC WM 
or CIBC WM Company; (iv) a company, partnership, or other investment 
vehicle offered, sponsored, or managed by CIBC WM or a CIBC WM Company; 
(v) any entity with respect to which CIBC WM or a CIBC WM Company 
provides management, investment management or similar services as 
manager, investment manager, or general partner or in a similar 
capacity, for which it may receive compensation, including without 
limitation, management fees, performance fees, carried interests 
entitling it to share disproportionately in income and capital gains or 
similar compensation; or (vi) a company in which an officer, director, 
or member of the General Partner acts as an officer, director, or 
General Partner, or has a similar capacity to control the sale or other 
disposition of the company's securities. The restrictions contained in 
this condition, however, will not be deemed to limit or prevent the 
disposition of an investment by an Affiliated Co-Investor: (i) To its 
direct or indirect wholly-owned subsidiary, to any company (a 
``Parent'') of which the Affiliated Co-Investor is a direct or indirect 
wholly-owned subsidiary, or to a direct or indirect wholly-owned 
subsidiary of its Parent; (ii) to Qualified Family Members of the 
Affiliated Co-Investor or a trust established for any Affiliated Co-
Investor or any such family member; (iii) when the investment is 
comprised of securities that are listed on any exchange registered as a 
national securities exchange under section 6 of the Exchange Act; (iv) 
when the investment is comprised of securities that are national market 
system securities pursuant to section 11A(a)(2) of the Exchange Act and 
rule 11Aa2-1 under that Act; (v) when the securities are government 
securities as defined in section 2(a)(16) of the Act; (vi) when the 
investment is comprised of securities that are listed on or traded on 
any foreign securities exchange or board of trade that satisfies 
regulatory requirements under the law of the jurisdiction in which the 
foreign securities exchange or board of trade is organized similar to 
those that apply to a national securities exchange or a national market 
system for securities, or (vii) when any entity with respect to which 
CIBC WM or a CIBC WM Company provides management, investment 
management, or similar services as manager, investment manager, or 
general partner or in a similar capacity, if CIBC WM or such entity 
does not have the actual investment discretion over the sale or 
disposition of the entity's securities.
    4. Each Partnership and its General Partner and Investment Adviser 
will maintain and preserve, for the life of the Partnership and at 
least two years thereafter, the accounts, books, and

[[Page 38052]]

other documents that constitute the record forming the basis for the 
audited financial statements that are to be provided to the Limited 
Partners, and each annual report of the Partnership required by the 
terms of the applicable Partnership Agreement to be sent to the Limited 
Partners, and agree that these records will be subject to examination 
by the SEC and its staff.\5\
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    \5\ Each Partnership will preserve the accounts, books and other 
documents required to be maintained in an easily accessible place 
for the first two years.
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    5. The General Partner will send or cause to be sent to each 
Limited Partner who had an interest in the Partnership, at any time 
during the fiscal year then ended, Partnership financial statements 
audited by the Partnership's independent accountants. At the end of 
each fiscal year,the General Partner will make or cause to be made a 
valuation made of all of the assets of the Partnership as of the fiscal 
year end in a manner consistent with customary practice with respect to 
the valuation of assets of the kind held by the Partnership. In 
addition, as soon as practicable after the end of each fiscal year of 
each Partnership, the General Partner will send or cause to be sent a 
report to each person who was a Limited Partner at any time during the 
fiscal year then ended, setting forth the tax information necessary for 
the preparation by the Limited Partners of their federal and state 
income tax returns, and a report of the investment activities of the 
Partnership during that year.
    6. In any case where purchases or sales are made by a Partnership 
from or to an entity affiliated with the Partnership by reason of a 5% 
or more investment in the entity by a CIBC WM Group director, officer, 
or employee, that individual will not participate in the Investment 
Adviser's determination of whether or not to effect the purchase or 
sale.

    For the SEC, by the Division of Investment Management, under 
delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-17882 Filed 7-13-99; 8:45 am]
BILLING CODE 8010-01-M