[Federal Register Volume 66, Number 249 (Friday, December 28, 2001)]
[Notices]
[Pages 67336-67338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31915]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25321; 812-12472]


Robert W. Baird & Co. Incorporated; Notice of Application

December 19, 2001.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application for permanent order of exemption under 
the Investment Company Act of 1940 (the ``Act'').

-----------------------------------------------------------------------

SUMMARY OF THE APPLICATION: Applicant seeks an order (``Amended 
Order'') that would amend a prior permanent order that exempts it from 
the provisions of section 9(a) of the Act to relieve it from any 
ineligibility resulting from applicant's employment of an individual 
who is subject to a securities-related injunction (``Prior Order'').\1\
---------------------------------------------------------------------------

    \1\ Robert W. Baird & Co. Incorporated, Investment Company Act 
Release No. 18457 (Dec. 24, 1991) (permanent order); see also Robert 
W. Baird & Co. Incorporated, Investment Company Act Release No. 
18424 (Nov. 27, 1991) (temporary order and notice of application for 
permanent order).

FILING DATES: The application was filed on March 13, 2001 and amended 
---------------------------------------------------------------------------
on December 17, 2001.

HEARING OR NOTIFICATION OF HEARING: An order granting the application 
will be

[[Page 67337]]

issued unless the Commission orders a hearing. Interested persons may 
request a hearing by writing to the Commission's Secretary and serving 
applicant with a copy of the request, personally or by mail. Hearing 
requests should be received by the Commission by 5:30 p.m. on January 
14, 2002, 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 
Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 5th Street, NW., Washington, DC 
20549-0609. Applicant, 777 East Wisconsin Avenue, Milwaukee, WI 53202.

FOR FURTHER INFORMATION CONTACT: Marilyn Mann, Senior Counsel, at (202) 
942-0582, 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 at the 
Commission's Public Reference Branch, 450 5th Street, NW., Washington, 
DC 20549-0102 (tel. 202-942-8090).

Applicant's Representations

    1. Robert W. Baird & Co. Incorporated (``Baird'') is a broker-
dealer registered under the Securities Exchange Act of 1934 (the 
``Exchange Act'') and an investment adviser registered under the 
Investment Advisers Act of 1940. Baird is an indirect majority-owned 
subsidiary of the Northwestern Mutual Life Insurance Company and acts 
as investment adviser, subadviser, depositor or principal underwriter 
to a number of registered investment companies.
    2. On December 24, 1991, the Commission issued the Prior Order 
under section 9(c) of the Act granting Baird an exemption from section 
9(a) of the Act to permit Baird to continue to serve or act in certain 
capacities for registered investment companies while employing George 
J. Gaspar, who is subject to a disqualification under section 9(a) of 
the Act. In 1985, Mr. Gaspar was permanently enjoined (the ``1985 
Injunction'') from future violations of certain federal securities 
laws.\2\
---------------------------------------------------------------------------

    \2\ See Securities & Exchange Commission v. George J. Gaspar & 
Eugene L. Hall, 1985 U.S. Dist. LEXIS 20698, Fed. Sec. L. Rep. (CCH) 
92,004 (Apr. 16, 1985). The court found that Mr. Gaspar had violated 
sections 10(b) and 14(e) of the Exchange Act and rule 10b-5 
thereunder and permanently enjoined him from future violations of 
these provisions. The alleged misconduct involved the communication 
of certain material, nonpublic information relating to the proposed 
acquisition of Clark Oil and Refining Corporation by a private 
placement organization.
---------------------------------------------------------------------------

    3. Baird currently employs Mr. Gaspar as a managing director of 
petroleum research. Mr. Gaspar's responsibilities include the 
publication of a newsletter reporting on the oil and gas industry and 
supervising a team of research analysts in the preparation of that 
newsletter and investment research reports on energy-related companies. 
Mr. Gaspar has no other direct supervisory or management 
responsibilities. In addition, at various times between 1981 and 1996, 
Mr. Gaspar served as a member of Baird's board of directors.\3\
---------------------------------------------------------------------------

    \3\ Currently, Baird does not expect that Mr. Gaspar will be 
attending any board meetings in any capacity. However, in the event 
that Mr. Gaspar rejoins the board of directors or attends meetings 
of the board of directors in another capacity, Baird will abide by 
the following procedures, which would replace conditions 6 and 7 to 
the Prior Order:
    a. Mr. Gaspar will not attend meetings of Baird's board of 
directors where the operations of any registered investment company 
for which Baird acts as investment adviser, subadviser, depositor, 
or principal underwriter are on the agenda.
    b. Mr. Gaspar will be excused from all meetings of Baird's board 
of directors where the operations of any registered investment 
company for which Baird acts as investment adviser, subadviser, 
depositor, or principal underwriter are proposed to be discussed 
prior to any such discussion.
---------------------------------------------------------------------------

    4. The Amended Order would amend the Prior Order by modifying 
certain conditions to remove certain requirements that apply to a 
number of other Baird employees (the ``Other Baird Personnel''). The 
Other Baird Personnel include portfolio managers, Baird employees 
working under Mr. Gaspar's supervision, and all senior employees of 
Baird and any investment companies for which Baird acts as investment 
adviser or subadviser.

Applicant's Legal Analysis

    1. Section 9(a)(2) of the Act, in pertinent part, disqualifies any 
person from acting in the capacity of employee, officer, director, 
member of an advisory board, investment adviser, or depositor for any 
registered investment company, or principal underwriter for any 
registered open-end company, registered unit investment trust, or 
registered face amount certificate company, if such person is, by 
reason of any misconduct, permanently or temporarily enjoined from 
acting as an underwriter, broker, dealer, or investment adviser, or as 
an affiliated person or employee of an investment company, or from 
engaging in or continuing any conduct or practice in connection with 
any such activity or in connection with the purchase or sale of any 
security. A company with an employee or other affiliated person 
ineligible to serve in any of these capacities under section 9(a)(2) is 
similarly ineligible by reason of section 9(a)(3) of the Act. As a 
result of the 1985 Injunction, Mr. Gaspar is subject to this bar, as is 
Baird, his employer.
    2. Section 9(c) of the Act provides that, upon application, the 
Commission shall grant an exemption from the disqualification 
provisions of section 9(a), either unconditionally or on an appropriate 
temporary or other conditional basis, if it is established that the 
prohibitions of section 9(a), as applied to an applicant, are unduly or 
disproportionately severe or that the conduct of such person has been 
such that it would not be against the public interest or protection of 
investors to grant such application.
    3. Applicant believes that the requested relief satisfies the 
standard for relief in section 9(c). The requested amendments to the 
Prior Order would remove notice and certification requirements with 
respect to the Other Baird Personnel that currently impose a 
significant administrative burden on Baird. Applicant believes that it 
would not be against the public interest or protection of investors to 
remove these requirements. Applicant states that since the entry of the 
1985 Injunction, Mr. Gaspar has not been subject to or involved in any 
disciplinary matters. In addition, applicant states that it has 
significantly expanded its legal and compliance activities, which 
reduces the likelihood of any activity that could give rise to a 
section 9 disqualification. Applicant believes that these factors 
demonstrate that it would not be against the public interest or the 
protection of investors to grant the Amended Order.

Applicant's Conditions

    Applicant agrees that any order amending the Prior Order will be 
subject to the following conditions:
    1. Mr. Gaspar will not be involved in Baird's business of serving 
as investment adviser, subadviser, depositor, or principal underwriter 
to registered investment companies. Applicant will develop procedures 
designed reasonably to assure compliance with this condition.
    2. Baird has taken the necessary steps to confirm that no other 
employee is subject to a statutory disqualification.
    3. Baird's general counsel has attested that he has reviewed 
Baird's compliance procedures designed to screen for and detect 
statutory disqualifications, reasonably believes such compliance

[[Page 67338]]

procedures have been fully implemented, and that such procedures are 
reasonable and appropriate to prevent persons subject to a statutory 
disqualification from becoming affiliated with Baird in the future.
    4. Baird's general counsel or chief executive officer will certify 
on an annual basis that Baird and Mr. Gaspar have complied with the 
conditions to the requested order.
    5. The certifications and procedures required by the conditions to 
the requested order will be maintained as part of the records of Baird 
and will be available for inspection by the Commission and its staff at 
any reasonable time.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-31915 Filed 12-27-01; 8:45 am]
BILLING CODE 8010-01-P