[Federal Register Volume 69, Number 206 (Tuesday, October 26, 2004)]
[Notices]
[Pages 62488-62493]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2842]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-26641; 812-13089]


Strong Capital Management, Inc., et al., Notice of Application 
and Temporary Order

October 20, 2004.
AGENCY: Securities and Exchange Commission (the ``Commission'').

ACTION: Temporary order and notice of application for relief under 
section 9(c)

[[Page 62489]]

of the Investment Company Act of 1940 (the ``1940 Act'').

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SUMMARY: Applicants have received a temporary order exempting them from 
section 9(a) of the 1940 Act, with respect to injunctions contained in 
a consent order entered by the Supreme Court of the State of New York 
(``New York Supreme Court'') on October 20, 2004, until the earlier of 
October 20, 2006, or the date the Commission takes final action on the 
application for a permanent order. Applicants also have requested a 
permanent order.
    Applicants:
    Strong Capital Management, Inc. (``SCM'') and Strong Investments, 
Inc. (``SII,'' and together, the ``Applicants'').
    Filing Date:
    The application was filed on May 24, 2004.
    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 the 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 November 15, 2004, 
and should be accompanied by proof of service on the 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, 100 Heritage Reserve, Menomonee Falls, 
Wisconsin 53051.

FOR FURTHER INFORMATION CONTACT: Todd F. Kuehl, Branch Chief, 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 temporary order and a 
summary of the application. The complete application may be obtained 
for a fee by contacting the Commission's Public Reference Branch, 450 
Fifth Street, NW., Washington, DC 20549-0102 (tel. 202-942-8090).

Applicants' Representations

    1. SCM, a Wisconsin corporation and a wholly owned subsidiary of 
Strong Financial Corporation (``SFC''), is registered as an investment 
adviser under the Investment Advisers Act of 1940. Richard S. Strong 
(``Mr. Strong''), a resident of Brookfield, Wisconsin, co-founded SCM 
in 1974. Mr. Strong beneficially owns more than 25% of the outstanding 
voting securities of SFC. SCM has approximately 1,000 employees, and 
serves as investment adviser to 27 registered open-end management 
investment companies, consisting of 71 portfolios (the ``Strong 
Funds''). SCM also serves as subadviser to four other registered open-
end management investment companies (the ``Sub-Advised Funds''). SII, a 
Wisconsin corporation and a wholly owned subsidiary of SFC, is 
registered as a broker-dealer under the Securities Exchange Act of 
1934. SII serves as principal underwriter to the Strong Funds.
    2. On May 20, 2004, the Attorney General of the State of New York 
(``NYAG'') filed an action in the New York Supreme Court against Mr. 
Strong, the Applicants, and certain other persons (together, ``Strong 
Entities'') relating to market timing abuses involving the Strong Funds 
(the ``Complaint''). The Complaint alleges misconduct and fraudulent 
and deceptive acts and practices related to, among other matters: (1) 
SCM's express agreement to allow Canary Capital Partners hedge funds to 
market time certain Strong Funds and to trade improperly, while at the 
same time implementing procedures and policies to prevent other 
investors from market timing the Strong Funds; (2) the frequent and 
undisclosed trading of certain Strong Funds by Mr. Strong on behalf of 
himself, his family and his friends; (3) SCM's failure to disclose to 
the boards of directors of the Strong Funds (each, a ``Board,'' and 
together, the ``Boards'') and regulators the agreement relating to the 
Canary hedge funds and Mr. Strong's involvement in frequent trading; 
and (4) SII's facilitation of the violations of SCM by allowing the 
Canary hedge funds to execute frequent trades in the Strong Funds. The 
Applicants and the other Strong Entities have executed a consent to 
entry of the judgment by the New York Supreme Court (``Judgment''). The 
Judgment contains, among other things, permanent injunctions against 
Mr. Strong, the Applicants and the other Strong Entities 
(``Injunctions'').
    3. On May 20, 2004, Mr. Strong, the Applicants and the other Strong 
Entities also submitted offers of settlement and consented to the entry 
by the Commission of an Order Instituting Administrative and Cease-and-
Desist Proceedings, Making Findings, and Imposing Remedial Sanctions 
and Cease-and-Desist Orders Pursuant to Sections 15(b)(4), 15(b)(6), 
15B(c)(4), 17A(c)(3) and 17A(c)(4)(C) of the Securities Exchange Act of 
1934, sections 203(e), 203(f) and 203(k) of the Investment Advisers Act 
of 1940, and sections 9(b) and 9(f) of the Investment Company Act of 
1940 relating to the same activities (``Commission Order'').\1\ Under 
the Commission Order, the Strong Funds will operate in accordance with 
the following governance policies and practices:
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    \1\ In the Matter of Strong Capital Management, Inc., et al., 
Administrative Proceeding File No. 3-11498, Investment Advisers Act 
Release No. 2239 (May 20, 2004).
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    a. No more than 25 percent of the members of each Board will be 
persons who either (a) were directors, officers or employees of SCM at 
any point during the preceding 10 years or (b) are interested persons, 
as defined in the 1940 Act, of the Strong Fund or of SCM. In the event 
that a Board fails to meet this requirement at any time due to the 
death, resignation, retirement or removal of any independent director, 
the independent directors will take such steps as may be necessary to 
bring the Board in compliance within a reasonable period of time.
    b. No chairman of a Board will either (a) have been a director, 
officer or employee of SCM at any point during the preceding 10 years 
or (b) be an interested person, as defined in the 1940 Act, of a Strong 
Fund or of SCM or any fund advised by SCM.
    c. Any person who acts as counsel to the independent directors of 
any Strong Fund will be an ``independent legal counsel'' as defined by 
rule 0-1 under the 1940 Act.
    d. The Boards will maintain separate committees primarily dedicated 
to the oversight of the investment operations of particular categories 
of the Strong Funds. Persons who either (a) were directors, officers or 
employees of SCM at any point during the preceding 10 years or (b) are 
interested persons, as defined in the 1940 Act, of the Strong Funds or 
of SCM will not comprise a majority of, or serve as chairman of, any 
such committee. Each such committee will, among its duties, identify 
any compliance issues that are unique to the category of the Strong 
Funds under its review and work with the appropriate Board committees 
(e.g., the Audit and Pricing Committee) to ensure that any such issues 
are properly addressed.
    e. No action will be taken by a Board or by any committee thereof 
unless such action is approved by a majority of the members of the 
Board or of such committee, as the case may be, who are neither (i) 
persons who were directors,

[[Page 62490]]

officers or employees of SCM at any point during the preceding 10 years 
nor (ii) interested persons, as defined in the 1940 Act, of the Strong 
Fund or of SCM. In the event that any action proposed to be taken by 
and approved by a vote of a majority of the independent Directors of a 
Strong Fund is not approved by the full Board, the Strong Fund will 
disclose such proposal and the related Board vote in its shareholder 
report for such period.
    f. Commencing in 2005 and not less than every fifth calendar year 
thereafter, each Strong Fund will hold a meeting of shareholders at 
which the Board will be elected.
    g. Each Strong Fund will designate a member of the independent 
administrative staff reporting to its Board as being responsible for 
assisting the Board and any of its committees in monitoring compliance 
by SCM with the federal securities laws, its fiduciary duties to fund 
shareholders and its Code of Ethics in all matters relevant to the 
operation of the investment company. The duties of this staff member 
will include reviewing all compliance reports furnished to the Board or 
its committees by SCM, attending meetings of SCM's Internal Compliance 
Controls Committee, serving as liaison between the Board and its 
committees and the Chief Compliance Officer of SCM, making such 
recommendations to the Board regarding SCM's compliance procedures as 
may appear advisable from time to time, and promptly reporting to the 
Board any material breach of fiduciary duty, breach of the Code of 
Ethics and/or violation of the federal securities laws of which he or 
she becomes aware in the course of carrying out his or her duties.
    In addition, under the Commission Order, in relevant part,
    a. SCM and SII shall retain, within 90 days of the date of entry of 
the Commission Order, the services of an Independent Compliance 
Consultant not unacceptable to the Commission and a majority of the 
independent directors of the Boards. The Independent Compliance 
Consultant's compensation and expenses shall be borne exclusively by 
SCM or its affiliates. SCM and SII shall require the Independent 
Compliance Consultant to conduct a comprehensive review of SCM's and 
SII's supervisory, compliance, and other policies and procedures 
designed to prevent and detect breaches of fiduciary duty, breaches of 
the Code of Ethics and federal securities law violations by SCM and SII 
and their employees. This review shall include, but shall not be 
limited to, a review of SCM's and SII's market timing controls across 
all areas of its business, a review of the Strong Funds' pricing 
practices that may make those funds vulnerable to market timing, and a 
review of the Strong Funds' utilization of short term trading fees and 
other controls for deterring excessive short term trading. SCM and SII 
shall cooperate fully with the Independent Compliance Consultant and 
shall provide the Independent Compliance Consultant with access to its 
files, books, records, and personnel as reasonably requested for the 
review.
    b. SCM and SII shall require that, at the conclusion of the review, 
which in no event shall be more than 120 days after the date of entry 
of the Commission Order, the Independent Compliance Consultant shall 
submit a report to SCM, SII, the Boards, and the Commission. The report 
shall address the issues described above, and shall include a 
description of the review performed, the conclusions reached, the 
Independent Compliance Consultant's recommendations for changes in or 
improvements to policies and procedures of SCM, SII, and the Strong 
Funds, and a procedure for implementing the recommended changes in or 
improvements to SCM's and SII's policies and procedures.
    c. SCM and SII shall adopt all recommendations with respect to SCM 
contained in the report of the Independent Compliance Consultant; 
provided, however, that within 150 days after the date of entry of the 
Commission Order, SCM and SII shall in writing advise the Independent 
Compliance Consultant, the Boards and the Commission of any 
recommendations that they consider to be unnecessary or inappropriate. 
With respect to any recommendation that SCM or SII consider unnecessary 
or inappropriate, SCM or SII need not adopt that recommendation at that 
time but shall propose in writing an alternative policy, procedure or 
system designed to achieve the same objective or purpose.
    d. As to any recommendation with respect to SCM's (or SII's) 
policies and procedures on which SCM (or SII) and the Independent 
Compliance Consultant do not agree, such parties shall attempt in good 
faith to reach an agreement within 180 days of the date of entry of the 
Commission Order. In the event SCM (or SII) and the Independent 
Compliance Consultant are unable to agree on an alternative proposal 
acceptable to the Commission, SCM (or SII) will abide by the 
determinations of the Independent Compliance Consultant.
    e. SCM and SII (i) shall not have the authority to terminate the 
Independent Compliance Consultant, without the prior written approval 
of a majority of the independent directors and the Commission; (ii) 
shall compensate the Independent Compliance Consultant, and persons 
engaged to assist the Independent Compliance Consultant, for services 
rendered pursuant to the Commission Order at their reasonable and 
customary rates; (iii) shall not be in and shall not have an attorney-
client relationship with the Independent Compliance Consultant and 
shall not seek to invoke the attorney-client or any other doctrine or 
privilege to prevent the Independent Compliance Consultant from 
transmitting any information, reports, or documents to the Boards or 
the Commission.
    f. SCM and SII shall require that the Independent Compliance 
Consultant, for the period of the engagement and for a period of two 
years from completion of the engagement, shall not enter into any 
employment, consultant, attorney-client, auditing or other professional 
relationship with Mr. Strong, SCM, SII, Strong Investor Services, Inc. 
(``SIS'') or any of their present or former affiliates, directors, 
officers, employees, or agents acting in their capacity as such. Any 
firm with which the Independent Compliance Consultant is affiliated in 
performance of his or her duties under the Commission Order shall not, 
without prior written consent of the independent directors and the 
Commission, enter into any employment, consultant, attorney-client, 
auditing or other professional relationship with Mr. Strong, SCM, SII, 
SIS or any of their present or former affiliates, directors, officers, 
employees, or agents acting in their capacity as such for the period of 
the engagement and for a period of two years after the engagement.
    g. SCM and SII have undertaken that, commencing in 2005, and at 
least once every other year thereafter, SCM and SII will undergo a 
compliance review by a third party, who is not an interested person, as 
defined in the 1940 Act, of SCM or SII. At the conclusion of the 
review, the third party shall issue a report of its findings and 
recommendations concerning SCM's and SII's supervisory, compliance, and 
other policies and procedures designed to prevent and detect breaches 
of fiduciary duty, breaches of the Code of Ethics and Federal 
securities law violations by SCM, SII and their employees in connection 
with their duties and activities on behalf of and related to the Strong 
Funds. Each such report shall be promptly delivered to SCM's Internal 
Compliance Controls

[[Page 62491]]

Committee and to the Audit Committee of each Board.
    h. SCM undertakes to retain, within 30 days of the date of entry of 
the Commission Order, the services of an Independent Distribution 
Consultant not unacceptable to the Commission and the independent 
directors of the Strong Funds. The Independent Distribution 
Consultant's compensation and expenses shall be borne exclusively by 
SCM. SCM shall cooperate fully with the Independent Distribution 
Consultant and shall provide the Independent Distribution Consultant 
with access to its files, books, records, and personnel as reasonably 
requested for the review.
    i. SCM shall require that the Independent Distribution Consultant 
develop a Distribution Plan for the distribution of all of the 
disgorgement and penalties provided for in the Commission Order, and 
any interest or earnings thereon, according to a methodology developed 
in consultation with SCM and acceptable to the Commission and the 
independent directors of the investment company. The Distribution Plan 
shall provide for investors to receive, in order of priority, (i) their 
proportionate share of losses from market-timing, and (ii) a 
proportionate share of advisory fees paid by Strong Funds that suffered 
such losses during the period of such market timing.
    j. SCM shall require that the Independent Distribution Consultant 
submit a Distribution Plan to SCM and the Commission no more than 100 
days after the date of entry of the Order. The Distribution Plan 
developed by the Independent Distribution Consultant shall be binding 
unless, within 130 days after the date of entry of the Commission 
Order, SCM or the Commission advises, in writing, the Independent 
Distribution Consultant of any determination or calculation from the 
Distribution Plan that it considers to be inappropriate and states in 
writing the reasons for considering such determination or calculation 
inappropriate. With respect to any determination or calculation with 
which SCM or the Commission do not agree, such parties shall attempt in 
good faith to reach an agreement within 160 days of the date of entry 
of the Commission Order. In the event that Mr. Strong or SCM and the 
Commission are unable to agree on an alternative determination or 
calculation, the determinations and calculations of the Independent 
Distribution Consultant shall be binding.
    k. SCM shall require that, within 175 days of the date of entry of 
the Commission Order, the Independent Distribution Consultant submit 
the Distribution Plan for the administration and distribution of 
disgorgement and penalty funds pursuant to rule 1101 of the 
Commission's Rules of Practice. Following a Commission order approving 
a final plan of disgorgement, as provided in rule 1104 of the 
Commission's Rules of Practice, SCM shall require that the Independent 
Distribution Consultant, with SCM, take all necessary and appropriate 
steps to administer the final plan for distribution of disgorgement and 
penalty funds.
    l. SCM shall require that the Independent Distribution Consultant, 
for the period of the engagement and for a period of two years from 
completion of the engagement, not enter into any employment, 
consultant, attorney-client, auditing or other professional 
relationship with Mr. Strong, SCM, SII, and SIS, or any of their 
present or former affiliates, directors, officers, employees, or agents 
acting in their capacity as such. SCM shall require that any firm with 
which the Independent Distribution Consultant is affiliated in 
performance of his or her duties under the Commission Order not, 
without prior written consent of the independent Directors and the 
Commission, enter into any employment, consultant, attorney-client, 
auditing or other professional relationship with SCM or any of its 
present or former affiliates, directors, officers, employees, or agents 
acting in their capacity as such for the period of the engagement and 
for a period of two years after the engagement.
    m. SCM, SII and SIS have undertaken that, no later than twenty-four 
months after the date of entry of the Commission Order, their chief 
executive officers shall certify to the Commission in writing that SCM, 
SII and SIS, respectively, have fully adopted and complied in all 
material respects with the undertakings set forth in the above 
paragraphs or, in the event of material non-adoption or non-compliance, 
shall describe such material non-adoption and non-compliance. For good 
cause shown, the Commission may extend any of the procedural dates set 
forth in the above paragraphs.
    n. SCM and SII have undertaken to preserve for a period not less 
than six years from the end of the fiscal year last used, the first two 
years in an easily accessible place, any record of their compliance 
with the undertakings set forth in the above paragraphs.

Applicants' Legal Analysis

    1. Section 9(a)(2) of the 1940 Act, in pertinent 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 for a registered 
investment company or principal underwriter for any registered open-end 
investment company. Section 9(a)(3) of the 1940 Act extends the 
prohibitions of section 9(a)(2) 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 1940 Act defines an affiliated person to 
include, among others, any person directly or indirectly controlling, 
controlled by or under common control with, the other person. The 
Applicants state that, as a result of the Injunctions contained in the 
Judgment, the Applicants may be subject to the prohibitions of section 
9(a).
    2. The Applicants request a temporary and permanent order under 
section 9(c) of the 1940 Act exempting the Applicants from the 
disqualification provisions of section 9(a) of the 1940 Act with 
respect to the Injunctions to allow SCM to serve as investment adviser 
or sub-adviser to the Strong Funds, the Sub-Advised Funds and any other 
registered investment company, and SII to serve as principal 
underwriter to the Strong Funds and any other registered open-end 
investment company.\2\ Section 9(c) of the Act provides that the 
Commission shall grant an application for 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.
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    \2\ The Applicants request that the relief also extend to any 
successors or assigns of the Applicants, to the extent that such 
successors or assigns may be subject to the Judgment.
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    3. The Applicants state that the prohibitions of section 9(a) as 
applied to the Applicants would be unduly and disproportionately 
severe. The Applicants state that the Judgment provides for a series of 
actions to be taken by the Applicants regarding the Strong Funds in 
connection with the Applicants' continued relationships with the Strong 
Funds. In settling their proceedings against the Applicants, neither 
the NYAG nor the Commission sought to bar the Applicants from providing 
advisory and distribution services to the Strong Funds or other 
registered investment companies.
    4. The public interest and investor protection concerns underlying 
section

[[Page 62492]]

9(a) of the 1940 Act are addressed by the measures the Applicants are 
required to undertake under the Settlements to ensure that the 
Applicants maintain a high level of compliance, ethics and corporate 
governance. The Applicants further state that, if they are barred under 
section 9(a) from providing investment advisory and distribution 
services to the Strong Funds and investment sub-advisory services to 
the Sub-Advised Funds, and are unable to obtain the requested 
exemption, the effect on their businesses and employees will be 
dramatic. The Applicants have committed substantial resources to 
establishing their businesses of advising and distributing mutual 
funds. The Applicants state that prohibiting them from providing 
advisory and distribution services to the Strong Funds and the Sub-
Advised Funds would adversely affect not only the viability of the 
Applicants' businesses, but also the livelihoods of approximately 1,000 
employees of the Applicants. For these reasons, the Applicants believe 
the prohibitions of section 9(a) as applied to them would be unduly and 
disproportionately severe.
    5. The inability of the Applicants to continue providing advisory 
and distribution services to the Strong Funds, and to continue 
providing sub-advisory services to the Sub-Advised Funds, would also 
unnecessarily disrupt the Strong Funds and the Sub-Advised Funds, and 
operate to the detriment of the interests of those Funds and their 
shareholders. The Applicants believe that the policies and purposes 
that section 9(a) was intended to effect have been adequately addressed 
by the terms of the Commission Order and the Judgment, and through the 
continuing oversight of the Boards. The Boards have been actively 
working with the Applicants to address the matters that are the subject 
of these proceedings and to resolve them in the best interests of the 
Strong Funds and their shareholders. Application of the section 9(a) 
disqualifications would forestall the Boards' actions and 
responsibilities in this regard, as well as deprive shareholders of the 
Strong Funds and the Sub-Advised Funds of the investment advisory and 
other services provided by the Applicants--services which they selected 
in investing in the Strong Funds or the Sub-Advised Funds. The 
Applicants also believe that uncertainty resulting from a bar to the 
Applicants' serving the Strong Funds or the Sub-Advised Funds in an 
investment advisory, sub-advisory or distribution capacity might result 
in additional large redemptions of Fund shares and net outflows of cash 
to the detriment of remaining shareholders. This could adversely affect 
efforts to manage the Strong Funds' and the Sub-Advised Funds' assets 
in accordance with their stated principal investment strategies.
    6. The Applicants state that, throughout the regulatory 
investigations, the Boards have been briefed at regular and special 
meetings regarding the results of SCM's internal investigation into 
frequent trading by Mr. Strong, Canary and others, and the status of 
the ongoing regulatory investigations. The Boards also have been 
apprised of and have contributed to SCM's efforts to strengthen its 
compliance regime. The Boards were involved in the retention of an 
independent consultant, and have received and discussed his compliance 
recommendations. In addition, the independent directors developed the 
position of independent president of the Strong Funds to serve as the 
Boards' on-site representative at SCM. Among the independent 
president's responsibilities are the monitoring of compliance functions 
by SCM, the implementation of the independent consultant's 
recommendations, and the review of the Strong Funds' performance, fees 
and sales. At the Boards' meeting on April 30, 2004, the directors 
unanimously voted to renew each of the Strong Funds' advisory and 
distribution contracts for an additional one-year period. As part of 
this renewal, SCM agreed to implement certain fee and/or expense 
reductions and to fund a contingent settlement escrow account for the 
benefit of the Strong Funds' shareholders. In addition, SCM committed 
to keep the Boards apprised regarding its search for a strategic 
partner and its ongoing efforts to strengthen SCM's compliance systems 
and implement the independent consultant's recommendations. SCM has 
also been in contact with the investment advisers and the boards of 
directors/trustees of the Sub-Advised Funds regarding the regulatory 
investigations and related matters.
    7. The Applicants will, as soon as reasonably practicable, 
distribute written materials to and discuss the materials with, the 
Boards, including the directors who are not ``interested persons,'' as 
defined in section 2(a)(19) of the 1940 Act, of the Strong Funds and 
their independent legal counsel, as defined in rule 0-1(a)(6) under the 
1940 Act, regarding the Judgment, the Commission Order and the 
Wisconsin Order, their impact on the Strong Funds, and the application. 
Applicants will also distribute written materials to, and offer to 
discuss the materials with, the boards of directors/trustees of the 
Sub-Advised Funds, including the directors who are not ``interested 
persons,'' as defined in section 2(a)(19) of the 1940 Act, of the Sub-
Advised Funds and their independent legal counsel, as defined in rule 
0-1(a)(6) under the 1940 Act, of the Sub-Advised Funds regarding the 
Judgment, the Commission Order and the Wisconsin Order, their impact on 
the Sub-Advised Funds, and the application. Applicants also undertake 
to provide the Boards and the boards of directors/trustees of the Sub-
Advised Funds with all information concerning the Judgment, the 
Commission Order, the Wisconsin Order and the application that is 
necessary for the Strong Funds and the Sub-Advised Funds to fulfill 
their disclosure and other obligations under the federal securities 
laws.

Applicants' Conditions

    The Applicants agree that any order granted by the Commission 
pursuant to the application will be subject to the following 
conditions:
    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, the Applicants, 
including without limitation, the consideration by the Commission of a 
permanent exemption from section 9(a) of the 1940 Act requested 
pursuant to the application or the revocation or removal of any 
temporary exemptions granted under the 1940 Act in connection with the 
application.
    2. The Applicants will comply with the terms and undertakings set 
forth in the Commission Order.

Temporary Order

    The Commission has considered the matter and finds that the 
Applicants have made the necessary showing to justify granting the 
temporary exemption.
    Accordingly,
    It is hereby ordered, pursuant to section 9(c) of the 1940 Act, 
that the Applicants are granted a temporary exemption from the 
provisions of section 9(a) of the 1940 Act, effective forthwith, solely 
with respect to the Judgment, subject to the conditions in the 
application, until the date the Commission takes final action on their 
application for a permanent order or, if earlier, October 20, 2006.


[[Page 62493]]


    By the Commission.
Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E4-2842 Filed 10-25-04; 8:45 am]
BILLING CODE 8010-01-P