[Federal Register Volume 65, Number 32 (Wednesday, February 16, 2000)]
[Notices]
[Pages 7899-7901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3657]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 24284, 812-11714]


American International Group, Inc. et al.; Notice of Application

February 10, 2000.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of an application under section 6(c) of the Investment 
Company Act of 1940 (the ``Act'') for an exemption from all provisions 
of the Act.

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APPLICANTS: American International Group, Inc. (``AIG''), AIG Financial 
Products Corp. (``AIGFP''), AIG Matched Funding Corp. (``AIGMF''), AIG-
FP Matched Funding Corp. (``AIGFPMF'').

SUMMARY OF APPLICATION: Applicants request an order to permit AIGMF and 
AIGFPMF and certain future wholly-owned subsidiaries of AIG 
(collectively, the ``Finance Subsidiaries'') to sell certain debt 
securities and use the proceeds to finance the business activities of 
AIGFP and companies controlled by AIGFP (together with AIGFP, 
``Controlled Companies'').

FILING DATES: The application was filed on July 26, 1999. Applicants 
have

[[Page 7900]]

agreed to file an amendment during the notice period, the substance of 
which is reflected in this notice.

HEARING OR NOTIFICATION OF HEARING: An order granting the requested 
relief will be issued unless the Commission orders a hearing. 
Interested persons may request a hearing by writing to the Commission's 
Secretary and serving applicants with a copy of the request, personally 
or by mail. Hearing requests should be received by the Commission by 
5:30 p.m. on March 6, 2000 and should be accompanied by proof of 
service on 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 may request notification of a hearing by writing to 
the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 5th Street, NW, Washington, DC 
20549-0609. Applicants, c/o AIG Financial Products Corp., 100 Nyala 
Farm, Westport, CT 06880.

FOR FURTHER INFORMATION CONTACT: Anu Dubey, Senior Counsel, at (202) 
942-0687, or Michael Mundt, 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 at the 
Commission's Public Reference Branch, 450 5th Street, NW, Washington DC 
20549-0102 (tel. 202-942-8090).

Applicants' Representations

    1. AIG, a Delaware corporation, is a holding company that, through 
its subsidiaries, is primarily engaged in a broad range of insurance 
and insurance-related activities and financial services in the U.S. and 
abroad. AIGFP is a wholly-owned subsidiary of AIG, and each of the 
other Controlled Companies, except Banque AIG, is an indirect wholly-
owned subsidiary of AIG. AIGFP currently complies with rule 3a-1 under 
the Act. Applicants state that AIGFP also is eligible to rely on 
section 3(c)(2) of the Act, because AIGFP is primarily engaged in the 
business of acting as a ``market intermediary,'' as defined in that 
section.
    2. The Finance Subsidiaries were or will be established to provide 
financing to the Controlled Companies. Each of AIGMF and AIGFPMF is a 
Delaware corporation and a wholly-owned subsidary of AIGFP and an 
indirect wholly-owned subsidiary of AIG. Each of the Finance 
Subsidiaries issues debt securities and lends the proceeds of these 
borrowings to the Controlled Companies to help finance their 
operations. Certain of the Controlled Companies rely on certain 
provisions of section 3(c) of the Act for exclusion from regulation 
under the Act (``Subject Controlled Companies''). Any other Controlled 
Company whose activities a Finance Subsidiary finances will meet the 
definition of ``company controlled by the parent company'' in rule 3a-5 
described below.
    3. All borrowings by the Finance Subsidiaries are unconditionally 
guaranteed by AIG as to the payment of, as applicable, principal, 
interest, premium, dividends, liquidation preference, and sinking fund 
payments. In the event of any default in payment of these amounts, the 
holders of the securities may institute legal proceedings directly 
against AIG without first proceeding against the Finance Subsidiaries. 
Furthermore, any convertible or exchangeable securities issued by a 
Finance Subsidiary shall be convertible or exchangeable only for 
securities issued by AIG or for debt securities or non-voting preferred 
stock issued by the Finance Subsidiary.
    4. Each Finance Subsidiary will invest in or loan at least 85% of 
any cash or cash equivalents raised by the Finance Subsidiary to the 
Controlled Companies as soon as practicable, but in no event later than 
six months after the Finance Subsidiary receives the cash or cash 
equivalents. If a Finance Subsidiary borrows amounts in excess of the 
amounts required by the Controlled Companies, the Finance Subsidiary 
will invest this excess in certain temporary investments pursuant to 
rule 3a-5 under the Act described below.

Applicants' Legal Analysis

    1. Applicants request an order under section 6(c) of the Act 
exempting the Finance Subsidiaries from all provisions of the Act. 
Applicants state that rule 3a-5 under the Act provides an exemption 
from the definition of investment company for certain companies 
organized primarily to finance the business operations of their parent 
companies or companies controlled by their parent companies.
    2. Rule 3a-5(b)(3)(i), in relevant part, defines a ``company 
controlled by the parent company'' to be a corporation, partnership, or 
joint venture that is not considered an investment company under 
section 3(a) of the Act, or that is excepted or exempted by order from 
the definition of investment company by section 3(b) or by the rules 
and regulations under section 3(a) of the Act. Applicants state that 
the Subject Controlled Companies may not qualify as ``compan[ies] 
controlled by the parent company'' under rule 3a-5(b)(3)(i) because 
they derive their non-investment company status from section 3(c)(2), 
3(c)(3), 3(c)(4), 3(c)(5), or 3(c)(6) of the Act.
    3. Applicants assert that none of the Subject Controlled Companies 
engages primarily in investment company activities. Applicants further 
state that if the Subject Controlled Companies were themselves to issue 
the debt obligations that are to be issued by the Finance Subsidiaries 
and use the proceeds for their own purposes, they would not be subject 
to regulation under the Act. AIG has chosen instead to use the Finance 
Subsidiaries as vehicles for this borrowing for reasons unrelated to 
the regulatory purposes of the Act.
    4. Section 6(c) of the Act provides that the Commission may exempt 
any person, security or transaction, or any class or classes of persons 
securities or transactions, from any provision or provisions of the Act 
when 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. Applicants state that 
for the reasons given above, their request for exemptive relief meets 
the standards of section 6(c) of the Act.

Applicants' Condition

    Applicants agree that the order granting the requested relief will 
be subject to the following condition:
    The applicants will comply with all of the provisions of rule 3a-5 
under the Act except that Subject Controlled Companies will not meet 
the portion of the definition of ``company controlled by a parent 
company'' in rule 3a-5(b)(3)(i) solely because they are excluded from 
the definition of investment company under section 3(c)(2), 3(c)(3), 
3(c)(4), 3(c)(5), or 3(c)(6) of the Act, provided that any such entity 
excluded from the definition of investment company
    (a) Under section 3(c)(5) of the Act will fall within section 
3(c)(5)(A) or section 3(c)(5)(B) solely by reason of its holding of 
accounts receivable of either its own customers or of the customers of 
other Controlled Companies, or by reason of loans made by it to such 
Controlled Companies or customers, and
    (b) Under section 3(c)(6) of the Act will not be engaged primarily, 
directly, or through majority-owned subsidiaries in one or more of the 
businesses described in section 3(c)(5) of the Act (except as ermitted 
in this condition).


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    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 00-3657 Filed 2-15-00; 8:45 am]
BILLING CODE 8010-01-M