[Federal Register Volume 67, Number 25 (Wednesday, February 6, 2002)]
[Notices]
[Pages 5624-5626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-2794]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-25406; 812-12764]


Credit Suisse First Boston Corporation, et al.; Notice of 
Application

January 30, 2002.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Temporary order and notice of application under section 9(c) of 
the Investment Company Act of 1940 (``Act'').

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

    Summary of Application: Applicants have received a temporary order 
exempting them and other entities of which Credit Suisse First Boston 
Corporation (``CSFB'') is or becomes an affiliated person from section 
9(a) of the Act, with respect to a securities-related injunction 
entered into on January 29, 2002, until the Commission takes final 
action on an application for a permanent order. Applicants also have 
requested a permanent order.
    Applicants: CSFB, Credit Suisse Asset Management, LLC (``CSAM 
Americas''), Credit Suisse Asset Management Securities, Inc. (``CSAM 
Securities''), Credit Suisse Asset Management Limited (``CSAM 
London''), and Credit Suisse First Boston, Inc. (``CSFBI'').
    Filing Date: The application was filed on January 30, 2002.
    Hearing or Notification of Hearing: An order granting the 
application 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 February 25, 2002, 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 who wish to be notified of a hearing may request 
notification by writing to the Commission's Secretary.

ADDRESSES: Secretary, Commission, 450 Fifth Street, NW, Washington, DC 
20549-0609. Applicants, CSFB and CSFBI, Eleven Madison Avenue, New 
York, NY 10010-3629; CSAM Americas and CSAM Securities, 466 Lexington 
Avenue, New York, NY 10017-3147; CSAM London, Beaufort House, 15 St. 
Botolph Street, London (England), United Kingdom EC3A 7JJ.

FOR FURTHER INFORMATION, CONTACT: John L. Sullivan, Senior Counsel, at 
(202) 942-0681, or Michael W. Mundt, Senior Special Counsel, 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 Fifth Street, NW, Washington, 
DC 20549-0102 (tel. 202-942-8090).

Applicants' Representations

    1. CSFB, a Massachusetts corporation, is a full service investment 
banking firm and is registered as a broker-dealer under the Securities 
Exchange Act of 1934 (``Exchange Act'') and as an investment adviser 
under the

[[Page 5625]]

Investment Advisers Act of 1940 (``Advisers Act''). CSAM Americas, a 
Delaware limited liability company, is registered as an investment 
adviser under the Advisers Act. CSAM Securities, a New York 
corporation, is registered as a broker-dealer under the Exchange Act. 
CSAM London, a corporation organized under the laws of England and 
Wales, is registered as an investment adviser under the Advisers Act. 
CSFB, CSAM Americas, and CSAM Securities are indirect wholly owned 
subsidiaries of CSFBI, which is an indirect wholly owned subsidiary of 
Credit Suisse Group (``Group'') that functions as the holding company 
for most of the Group's US investment banking and asset management 
operations. CSAM London and CSFB are indirect subsidiaries of Credit 
Suisse First Boston. CSAM Americas and CSAM London currently serve as 
investment advisers (in some case, as subadvisers) to a number of 
registered open-end and closed-end management investment companies, and 
CSAM Securities currently serves as principal underwriter to a number 
of registered open-end management investment companies (together, such 
investment companies are ``Funds'').\1\
---------------------------------------------------------------------------

    \1\ Applicants request that any relief granted pursuant to the 
application also apply to any other entity of which CSFB is or 
hereafter becomes an affiliated person (together with the 
applicants, the ``Covered Persons'').
---------------------------------------------------------------------------

    2. On January 29, 2002, the U.S. District Court for the District of 
Columbia entered a Final Judgment of Permanent Injunction and Other 
Relief (``Final Judgment'') in a matter brought by the Commission.\2\ 
The Commission alleged that CSFB allocated ``hot'' initial public 
offerings (``IPOs'') to customers willing to pay higher than normal 
commissions to CSFB and violated section 17(a) of the Exchange Act, 
rule 17a-3 under the Exchange Act, and Conduct Rules 2110 and 2330 of 
the National Association of Securities Dealers, Inc. (``NASD''). The 
Final Judgment, among other things, enjoined CSFB, directly or through 
its officers, directors, agents, and employees, from violating section 
17(a), rule 17a-3, and NASD Conduct Rules 2110 and 3220. Additionally, 
the Final Judgment ordered CSFB to pay disgorgement of $70 million, pay 
a civil penalty of $30 million, and comply with certain undertakings, 
including an undertaking to adopt and implement certain policies and 
procedures relating to the allocation of IPO shares.
---------------------------------------------------------------------------

    \2\ Securities and Exchange Commission v. Credit Suisse First 
Boston Corporation, Final Judgment of Permanent Injunction and Other 
Relief as to Credit Suisse First Boston Corporation, 02 Civ. 00090 
(RWR) (D.D.C., Jan. 29, 2002).
---------------------------------------------------------------------------

Applicants' Legal Analysis

    1. Section 9(a)(2) of the Act, in relevant part, prohibits a person 
who has been enjoined from engaging in or continuing any conduct or 
practice in connection with the purchase or sale of a security from 
acting, among other things, as an investment adviser or depositor of 
any registered investment company or a principal underwriter for any 
registered open-end investment company, registered unit investment 
trust, or registered face-amount certificate company. Section 9(a)(3) 
of the Act makes the prohibition in section 9(a)(2) applicable to a 
company any affiliated person of which has been disqualified under the 
provisions of section 9(a)(2). Applicants state that, as a result of 
the Final Judgment, applicants may be subject to the prohibitions of 
section 9(a).
    2. Section 9(c) of the Act provides that the Commission shall grant 
an application for an exemption from the disqualification provisions of 
section 9(a) if it is established that these provisions, as applied to 
the applicants, are unduly or disproportionately severe or that the 
applicants' conduct has been such as not to make it against the public 
interest or the protection of investors to grant the application. 
Applicants have filed an application pursuant to section 9(c) of the 
Act seeking temporary and permanent orders exempting the Covered 
Persons from the provisions of section 9(a) of the Act.
    3. Applicants state that the prohibitions of section 9(a) as 
applied to the Covered Persons would be unduly and disproportionately 
severe and that the conduct of applicants has been such as not to make 
it against the public interest or the protection of investors to grant 
the exemption from section 9(a). Applicants state that the matters 
forming the basis of the Final Judgment did not involve any registered 
investment companies. Applicants state that no current or former 
employee of any of the applicants who is or was involved in providing 
advisory or underwriting services to registered investment companies 
advised or underwritten by the applicants was involved in the conduct 
resulting in the Final Judgment. CSFB also will adopt and implement 
certain policies and procedures, as required in the Final Judgment, 
regarding allocation of IPO shares.
    4. CSAM Americas, CSAM London, and CSAM Securities will distribute 
written materials, including an offer to meet in person to discuss the 
materials, to the boards of directors or trustees of the Funds 
regarding the Final Judgment and the reasons they believe relief 
pursuant to section 9(c) is appropriate. CSAM Americas, CSAM London, 
and CSAM Securities will provide the Funds with all information 
concerning the Final Judgment and the exemptive application necessary 
for those Funds to fulfill their disclosure and other obligations under 
the federal securities laws.
    5. Applicants assert that the inability of CSAM Americas and CSAM 
London to continue providing advisory services to the Funds and the 
inability of CSAM Securities to continue to serve as principal 
underwriter to Funds would result in potentially severe hardships for 
the Funds and their shareholders. Applicants also assert that if they 
were prohibited from providing services to registered investment 
companies, the effect on their businesses and employees would be 
severe.
    6. Applicants note that they have previously received exemptive 
orders pursuant to section 9(c) of the Act. In 1986, The First Boston 
Corporation (``FBC,'' a former name of CSFB) became subject to a 
permanent injunction arising out of a violation of section 10(b) of the 
Exchange Act and rule 10b-5 under the Exchange Act involving purchases 
for its own account of certain securities while in possession of 
material nonpublic information (``1986 Injunction'').\3\ The Commission 
issued orders under section 9(c) with respect to the 1986 
Injunction.\4\ In 1975, Credit Suisse (currently known as Credit Suisse 
First Boston) became subject to a permanent injunction arising out of 
violations of various provisions of the federal securities laws in 
connection with the distribution of unregistered gold-related 
securities (``1975 Injunction'').\5\ The Commission issued orders under 
section 9(c) with respect to the 1975 Injunction.\6\ Applicants do not 
believe that the existence of these prior

[[Page 5626]]

violations should preclude them from obtaining the requested relief.
---------------------------------------------------------------------------

    \3\ Securities and Exchange Commission v. The First Boston 
Corporation, Final Judgment of Permanent Injunction and Other Relief 
as to The First Boston Corporation, 86 Civ. 3524 (S.D.N.Y. May 5, 
1986).
    \4\ See, e.g., First Boston Asset Management Corporation, et 
al., Investment Company Act Release Nos. 15086 (May 5, 1986) (notice 
and temporary order) and 15221 (July 24, 1986) (permanent order).
    \5\ Securities and Exchange Commission v. American Institute 
Counselors, Inc., et al., Final Judgment of Permanent Injunction and 
Other Relief as to American Institute Counselors, Inc., et al., 75 
Civ. 1965 (D.D.C. Nov. 25, 1975).
    \6\ See, e.g., First Boston Corporation, Investment Company Act 
Release Nos. 12867 (Dec. 3, 1982) (notice and temporary order) and 
12928 (Dec. 27, 1982) (permanent order).
---------------------------------------------------------------------------

Applicants' Condition

    Applicants agree that the order granting the requested relief will 
be subject to the following condition:
    1. Any temporary exemption granted pursuant to the application 
shall be without prejudice to, and shall not limit the Commission's 
rights in any manner with respect to, any Commission investigation of, 
or administrative proceedings involving or against, applicants, 
including without limitation, the consideration by the Commission of a 
permanent exemption from section 9(a) of the Act requested pursuant to 
the application or the revocation or removal of any temporary 
exemptions granted under the Act in connection with the application.

Temporary Order

    The Commission has considered the matter and finds that applicants 
have made the necessary showing to justify granting of a temporary 
exemption.
    Accordingly, it is hereby ordered, under section 9(c), that the 
Covered Persons are granted a temporary exemption from the provisions 
of section 9(a), effective forthwith, solely with respect to the Final 
Judgment, subject to the condition in the application, until the 
Commission takes final action on an application for a permanent order.

    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-2794 Filed 2-5-02; 8:45 am]
BILLING CODE 8010-01-P