[Federal Register Volume 67, Number 132 (Wednesday, July 10, 2002)]
[Notices]
[Pages 45771-45772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-17327]


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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 25648; 812-11930]


SunAmerica Asset Management Corp., et al.; Notice of Application

July 3, 2002.
AGENCY: Securities and Exchange Commission (``SEC'').

ACTION: Notice of application for an order under section 6(c) of the 
Investment Company Act of 1940 (the ``Act'') granting an exemption from 
section 12(d)(3) of the Act.

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SUMMARY OF APPLICATION: Applicants request an order to amend a prior 
order \1\ (``Prior Order'') that permits a portion of a portfolio of 
certain registered investment companies (``Unaffiliated Portion'') 
advised by a subadviser (``Unaffiliated Subadviser'') to engage in 
certain principal and brokerage transactions with an affiliated person 
of another subadviser to the same portfolio. The requested order would 
permit an Unaffiliated Portion that is advised by an Unaffiliated 
Subadviser to purchase securities issued by the other subadviser or an 
affiliated person of the other subadviser within the limits rule 12d3-1 
under the Act.
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    \1\ SunAmerican Asset Management Co., et al., Investment Company 
Act Release Nos. 23094 (Mar. 31, 1998) (notice) and 23161 (Apr. 29, 
1998) (order).
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    Applicants: SunAmerica Asset Management Corp. (``SAAMCo''); 
SunAmerica Style Select Series, Inc. (``Style Select'') and Seasons 
Series Trust (``Seasons'' and together with Style Select, the 
``Funds''); American Century Investment Management, Inc. (``American 
Century''); Berger Financial Group, LLC (``Berger''); Credit Suisse 
Asset Management, LLC (``CSAM''), Deutsche Asset Management, Inc. 
(``DAMI''); Dresdner RCM Global Investment LLC (``Dresdner''); Janus 
Capital Management LLC (``Janus''); Jennison Associates, LLC 
(``Jennison''); Marisco Capital Management, LLC (``Marisco''); 
Massachusetts Financial Services Company (``MFSC''); Morgan Stanley 
Investments L.P. (``Morgan Stanley''); State Street Research & 
Management Company (``State Street'') and T. Rowe Price Associates, 
Inc. (``T. Rowe Price'') (each of American Century, Berger, CSAM, DAMI, 
Dresdner, Janus, Marisco, Morgan Stanley, State Street, and T. Rowe 
Price, an ``Affiliated Subadviser'').

FILING DATES: The application was filed on January 6, 2000 and amended 
on June 4, 2002. In addition, a letter was submitted on July 2, 2002.
    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, personally or by mail. 
Hearing requests should be received by the SEC by 5:30 p.m. on July 29, 
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 may request 
notification of a hearing by writing to the SEC's Secretary.

ADDRESSES: Secretary, SEC, 450 Fifth Street, NW, Washington, DC 20549-
0609. Applicants: SAAMCo and the Funds, SunAmerica Center, 733 Third 
Avenue, New York, New York 10017-3204; American Century, American 
Century Tower, 4500 Main Street, Kansas City, Missouri 64111; Berger, 
210 University Blvd., Suite 800, Denver, Colorado 80206; CSAM, 466 
Lexington Ave., New York, New York 10017; DAMI, 280 Park Ave., New 
York, New York 10017; Dresdner, Four Embarcadero Center, San Francisco 
California 94111; Janus, 100 Fillmore Street, Denver, Colorado 80206-
4923; Jennison, 466 Lexington Ave., New York, New York 10017; Marisco, 
1200 17th Street, Suite 1300, Denver, Colorado 80202; MFSC, 500 
Boylston Street, Boston, Massachusetts 02116; Morgan Stanley, 1 Tower 
Bridge, West Conshoshoken Pennsylvania 19428-0868; State Street, One 
Financial Center, Boston, Massachusetts 02111-2690; and T. Rowe-Price, 
100 East Pratt Street, Baltimore, Maryland 21202.

FOR FURTHER INFORMATION CONTACT: Elaine M. Boggs, Special Counsel, at 
(202) 942-0572, or Nadya B. Roytblat, Assistant Director, 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 
SEC's Public Reference Branch, 450 5th Street, NW., Washington, DC 
20549-0102 (tel. (202) 942-8090).

Applicants' Representations

    1. The Funds are open-end management investment companies 
registered under the Act. Style Select consists of twelve separate 
portfolios (the ``Style Select Portfolios''), each of which is advised 
by SAAMCo and several investment subadvisers. Seasons consists of 
nineteen separate portfolios, sixteen of which are advised by SAAMCo 
and several investment subadvisers (the ``Seasons Portfolios,'' 
collectively with the Style Select Portfolios, the ``Portfolios'').
    2. SAAMCo is an investment adviser registered under the Investment 
Advisers Act of 1940 (the ``Advisers Act''). SAAMCo selects the 
subadvisers for the Style Select and Seasons Portfolios (the 
``Subadvisers''), provides various administrative services, and 
supervises the Portfolios' daily business affairs, subject to oversight 
by the board of directors or trustees of each Fund.

[[Page 45772]]

SAAMCo also directly advises portions of five Style Select Portfolios 
and nine of the Seasons Portfolios.\2\ Subadvisers for the Style Select 
and Seasons Portfolios include American Century, Berger, CSAM, DAMI, 
Dresdner, Janus, Marisco, Morgan Stanley, State Street, and T. Rowe 
Price.
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    \2\ The terms ``Unaffiliated Subadviser'' and ``Unaffiliated 
Portion'' include SAAMCo and the discrete portion of a Portfolio 
directly advised by SAAMCo, respectively, provided that SAAMCo 
manages its portion of the Portfolio independently of the portions 
managed by the other Subadvisers to the Portfolio, and SAAMCo does 
not control or influence any other Subadviser's investment 
decisions.
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    3. Applicants request relief to permit an Unaffiliated Portion of a 
Portfolio that is managed by an Unaffiliated Subadviser to acquire 
equity or debt securities issued by a Subadviser to another portion of 
the Portfolio (the Subadviser, an ``Affiliated Subadviser,'' the 
portion, ``Affiliated Portion''), or an affiliated person of the 
Affiliated Subadviser engaged in securities-related activities 
(``Affiliated Issuer''), within the limits of rule 12d3-1 under the 
Act. The requested relief would apply only where an Affiliated Issuer 
is deemed to be an affiliated person or an affiliated person of an 
affiliated person of an Unaffiliated Portion solely because an 
Affiliated Subadviser is the Subadviser to another portion of the same 
Portfolio.
    4. Applicants state that the advisory contract with each of the 
Subadvisers to the Portfolios assigns the Subadviser responsibility to 
manage a discrete portion of the respective Portfolio. Each Subadviser 
is responsible for making independent investment and brokerage 
allocation decisions based on its own research and credit evaluations. 
SAAMCo does not dictate or influence investment or brokerage allocation 
decisions, or have the contractual right to do so, with respect to the 
Portfolios (except for those portions directly advised by SAAMCo). Each 
Subadviser to a Portfolio is compensated based on a percentage of the 
value of assets allocated to that Subadviser. For two Style Select 
Portfolios, SAAMCo also pays from its own resources, an additional 
$100,000 to the Subadviser for each Portfolio with the highest total 
return for its portion of the Portfolio for each calendar year.

Applicants' Legal Analysis

    1. Section 12(d)(3) of the Act generally prohibits a registered 
investment company from acquiring any security issued by any person who 
is a broker, dealer, investment adviser, or engaged in the business of 
underwriting (collectively, ``securities-related activities''). Rule 
12d3-1 under the Act exempts from the prohibition of section 12(d)(3) 
purchases of securities of an issuer engaged in securities-related 
activities if certain conditions are met. One of these conditions, set 
forth in rule 12d3-1(c), prohibits the acquisition of a security issued 
by the investment company's investment adviser, promoter, or principal 
underwriter, or any affiliated person of the investment adviser, 
promoter, or principal underwriter.
    2. Section 2(a)(3) of the Act defines an ``affiliated person'' of 
another person to include: (a) any person that directly or indirectly 
owns, controls, or holds with power to vote 5% or more of the 
outstanding voting securities of the other person; (b) any person 5% or 
more of whose outstanding voting securities are directly or indirectly 
owned, controlled, or held with power to vote by the other person; (c) 
any person directly or indirectly controlling, controlled by, or under 
common control with the other person; and (d) if the other person is an 
investment company, any investment adviser of that company.
    3. Applicants state that an Affiliated Issuer would be a Subadviser 
or an affiliated person of a Subadviser. As an investment adviser to a 
portion of a Portfolio, a Subadviser is deemed to be an investment 
adviser to the entire Portfolio. Thus, applicants state that a purchase 
by an Unaffiliated Portion of securities issued by an Affiliated Issuer 
would not meet rule 12d3-1(c) and that applicants are therefore unable 
to rely on the rule.
    4. Section 6(c) permits the SEC to exempt any person or transaction 
from any provision of the Act, if such exemption is necessary or 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policies of the 
Act. For the reasons stated below, applicants believe that the terms of 
the proposed transactions meet the standards of section 6(c).
    5. Applicants request an exemption under section 6(c) from section 
12(d)(3) to permit an Unaffiliated Portion to purchase securities 
issued by an Affiliated Issuer within the limits of rule 12d3-1. 
Applicants state that their proposal does not raise the conflicts of 
interest that rule 12d3-1(c) was designed to address because of the 
nature of the affiliation between an Unaffiliated Subadviser (and the 
Unaffiliated Portion) and an Affiliated Issuer. Applicants submit that 
each Subadviser acts independently of the other Subadvisers in managing 
the assets allocated to its portion of the Portfolio. Applicants also 
state that permitting an Unaffiliated Portion to purchase securities 
issued by an Affiliated Issuer will permit the Unaffiliated Portion to 
take advantage of advantageous investment opportunities.

Applicants' Conditions

    Applicants agree that the requested order amending the Prior Order 
will be subject to the following conditions:
    1. Each Portfolio that relies on the order will be advised by an 
Affiliated Subadviser and at least one Unaffiliated Subadviser and will 
be operated consistent with the manner described in the application.
    2. Each Portfolio will comply with rule 12d3-1, except paragraph 
(c) of that rule solely with respect to purchases by an Unaffiliated 
Portion of securities issued by an Affiliated Issuer that would be 
prohibited by rule 12d3-1(c) solely because the Affiliated Issuer is an 
Affiliated Subadviser, or an affiliated person of an Affiliated 
Subadviser, to an Affiliated Portion of the Portfolio.
    3. No Affiliated Subadviser will directly or indirectly consult 
with any Unaffiliated Subadviser concerning allocation of principal or 
brokerage transactions.
    4. No Affiliated Subadviser will participate in any arrangement 
whereby the amount of its subadvisory fees will be affected by the 
investment performance of any Unaffiliated Subadviser except that 
SAAMCo may pay from its own resources an amount to the Subadviser for 
each Portfolio with the highest total return for its portion of the 
Portfolio for each calendar year.
    5. No Affiliated Subadviser (except by virtue of serving as a 
Subadviser to a discrete portion of a Portfolio), Affiliated Issuer, or 
Affiliated Broker-Dealer will be an affiliated person, or a second-tier 
affiliate, of SAAMCo, any Unaffiliated Subadviser, or any principal 
underwriter, promoter, officer, trustee, or employee of the Portfolio.
    6. With respect to purchases of securities by an Affiliated Portion 
during the existence of any underwriting or selling syndicate, a 
principal underwriter of which is an Affiliated Broker-Dealer, the 
conditions of rule 10f-3 will be satisfied except that paragraph (b)(7) 
will not require the aggregation of purchases by the Affiliated Portion 
with purchases by an Unaffiliated Portion.

    For the Commission, by the Division of Investment Management, 
pursuant to delegated authority.
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 02-17327 Filed 7-9-02; 8:45 am]
BILLING CODE 8010-01-P