[Federal Register Volume 68, Number 11 (Thursday, January 16, 2003)]
[Notices]
[Pages 2376-2378]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-956]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-25887; 812-12917]


Robertson Stephens Inc., et al.; Notice of Application

January 10, 2003.
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'').

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SUMMARY OF APPLICATION: Applicants have received a temporary order 
exempting them and other entities of which Robertson Stephens, Inc. 
(``RS'') is or becomes an affiliated person from section 9(a) of the 
Act, with respect to a securities-related injunction entered on January 
10, 2003, until the Commission takes final action on an application for 
a permanent order. Applicants also have requested a permanent order.
    Applicants: RS, Colonial Management Associates, Inc., Columbia 
Management Co., Crabbe Huson Group, Inc., Fleet Investment Advisors, 
Inc., Liberty Advisory Services Corp., Liberty Asset Management 
Company, Liberty Wanger Asset Management, L.P., Newport Fund 
Management, Inc., and Stein Roe & Farnham Incorporated (together, the 
``Adviser Applicants''), and Liberty Funds Distributor, Inc. and 
Columbia Financial Center, Inc. (together, the ``Underwriter 
Applicants'').\1\
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    \1\ Applicants request that any relief granted pursuant to the 
application also apply to any other entity of which RS is or 
hereafter becomes an affiliated person (together with the 
applicants, the ``Covered Persons'').
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    Filing Date: The application was filed on January 10, 2003. In 
addition, a letter was submitted on January 10, 2003.
    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 4, 2003, and should be accompanied by proof of 
service on applicants, in the form of an

[[Page 2377]]

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: c/o FleetBoston Financial Corporation, 100 
Federal Street, Boston, MA 02210.

FOR FURTHER INFORMATION, CONTACT: Jaea F. Hahn, Senior Counsel, at 
(202) 942-0614, 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.RS, a Delaware 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 Investment Advisers Act of 1940. The ultimate parent company 
of RS is FleetBoston Financial Corporation, which is also the ultimate 
parent company of the Adviser Applicants, who serve as investment 
advisers to various registered investment companies (the ``Funds''), 
and of the Underwriter Applicants, who serve as principal underwriters 
to Funds.
    2. On January 10, 2003, 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 RS allocated ``hot'' initial public 
offerings (``IPOs'') to customers willing to pay a portion of their 
profits from those IPOs to RS and violated section 17(a) of the 
Exchange Act, and rule 17a-3 thereunder, and Conduct Rules 2110 and 
2330 of the National Association of Securities Dealers, Inc. 
(``NASD''). The Final Judgment, among other things, enjoined RS, 
directly or through its officers, directors, agents and employees, from 
violating section 17(a) of the Exchange Act, and rule 17a-3 thereunder, 
and NASD Conduct Rules 2110 and 3220. Additionally, the Final Judgment 
ordered RS to pay disgorgement of $23 million and pay a civil penalty 
of $5 million.
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    \2\ Securities and Exchange Commission v. Robertson Stephens, 
Inc., Final Judgment of Permanent Injunction and Other Relief 
Against Robertson Stephens, Inc., 03 Civ. 0027 (RL) (D.D.C., Jan. 
10, 2003).
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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). Section 2(a)(3) of the Act defines 
``affiliated person'' to include any person directly or indirectly 
controlling, controlled by, or under common control, with the other 
person. Because the applicants are all subsidiaries of the same 
ultimate parent company, applicants state that they are under common 
control, and as such are ``affiliated persons'' of RS within the 
meaning of section 2(a)(3) of the Act. 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 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 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 
officers or employees 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. Applicants also state that no 
applicant has ever previously applied for an exemption pursuant to 
section 9(c) of the Act.
    4. Applicants state that the inability of the Adviser Applicants to 
continue providing advisory services to Funds and the inability of the 
Underwriter Applicants to continue to serve as principal underwriter to 
Funds would result in potentially severe hardships for the Funds and 
their shareholders. Additionally, applicants assert that if they were 
barred from providing services to registered investment companies, the 
effect on their businesses and employees would be severe.
    5. The Adviser Applicants and the Underwriter Applicants 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 that they serve regarding the Final Judgment and the reasons they 
believe relief pursuant to section 9(c) is appropriate. The Adviser 
Applicants and Underwriter Applicants will provide the Funds with all 
information concerning the Final Judgment and the exemptive application 
necessary for the Funds to fulfill their disclosure and other 
obligations under the federal securities laws.

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, pursuant to section 9(c) of the Act, that the 
Covered

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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. 03-956 Filed 1-15-03; 8:45 am]
BILLING CODE 8010-01-U