[Federal Register Volume 69, Number 239 (Tuesday, December 14, 2004)]
[Notices]
[Pages 74543-74544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-27311]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-26690; 812-13139]


AIG Annuity Life Insurance Company, et al.; Temporary Order and 
Notice of Application

December 8, 2004.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Temporary order and notice of application for a permanent order 
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 from section 9(a) of the Act, with respect to an 
injunction entered against American International Group, Inc. (``AIG'') 
on or about December 7, 2004 by the United States District Court for 
the District of Columbia (the ``Injunction''), until the Commission 
takes final action on an application for a permanent order. Applicants 
also have applied for a permanent order.

APPLICANTS:  AIG Annuity Life Insurance Corporation (``AIG Annuity''), 
AIG Equity Sales Corp. (``AIG Equity''), AIG Global Investment Corp. 
(``AIGGIC''), AIG Life Insurance Company (``AIG Life''), AIG SunAmerica 
Asset Management Corp. (``SunAmerica Asset Management''), AIG 
SunAmerica Capital Services, Inc. (``SunAmerica Capital''), AIG 
SunAmerica Life Assurance Company (``SunAmerica Life''), American 
General Distributors, Inc. (``AM Distributors''), American General 
Equity Services Corp. (``AM Equity''), American General Life Insurance 
Company (``AM Life''), American International Life Assurance Company of 
New York (``AILAC''), Brazos Capital Management, L.P. (``Brazos''), 
First SunAmerica Life Insurance Company (``First SunAmerica''), The 
United States Life Insurance Company in the City of New York (``US 
Life''), and The Variable Annuity Life Insurance Company 
(``VALIC'').\1\
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    \1\ Applicants request that any relief granted pursuant to the 
application also apply to any other company of which AIG is or 
hereafter becomes an affiliated person (together with AIG and the 
Applicants, the ``Covered Persons'').

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FILING DATE: The application was filed on December 1, 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 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 January 3, 2005, 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: Ernest T. Patrikis, American International 
Group, Inc., 70 Pine Street, New York, New York 10270.

FOR FURTHER INFORMATION CONTACT: Janis F. Kerns, Senior Counsel, or 
Todd F. Kuehl, Branch Chief, 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 at the Commission's Public Reference Branch, 450 Fifth 
Street, NW., Washington, DC 20549-0102 (tel. (202) 942-8090).

Applicants' Representation

    1. The Applicants, except Brazos, are wholly-owned subsidiaries of 
AIG. Brazos is a majority-owned subsidiary of AIG. AIG, through its 
subsidiaries, offers property and casualty and life insurance products 
to commercial, institutional and individual customers worldwide. AIG's 
global businesses also include retirement services, financial services 
and asset management. AIGGIC, SunAmerica Asset Management, Brazos, and 
VALIC are investment advisers registered under the Investment Advisers 
Act of 1940 and serve as investment adviser or sub-adviser to certain 
registered investment companies (``Funds''). AIG Annuity, AIG Equity, 
AIG Life, SunAmerica Capital, SunAmerica Life, AM Distributors, AM 
Equity, AM Life, AILAC, First SunAmerica, US Life and VALIC are broker-
dealers registered under the Securities Exchange Act of 1934 
(``Exchange Act'') serving as a principal underwriter, or are a 
depositor, for open-end Funds and unit investment trusts.
    2. On or about December 7, 2004, the United States District Court 
for the District of Columbia entered the Injunction against AIG in a 
matter brought by the Commission.\2\ The Commission alleged in the 
complaint (``Complaint'') that AIG violated section 10(b) of the 
Exchange Act and rule 10b-5 promulgated thereunder and section 17(a) of 
the Securities Act of 1933 and aided and abetted violations of sections 
13(a) and 13(b)(2)(A) of the Exchange Act and rules 12b-20, and 13a-13 
thereunder in connection with certain transactions between subsidiaries 
of The PNC Financial Services Group, Inc. (``PNC'') and certain 
subsidiaries of AIG, and similar transaction marketed by certain 
subsidiaries of AIG to other publicly traded companies. Without 
admitting or denying any of the allegations in the Complaint, except as 
to jurisdiction, AIG consented to the entry of the Injunction as well 
as the payment of disgorgement, penalties and prejudgment interest.
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    \2\ Securities and Exchange Commission v. American International 
Group, Inc., Civil Action No. 1:04CV02070 (D.D.C., filed November 
30, 2004).
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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. Applicants state that AIG is an affiliated person of each of 
the Applicants within the meaning of section 2(a)(3) of the Act. 
Applicants state that, as a result of the

[[Page 74544]]

Injunction, they 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 them from the 
provisions of section 9(a) of the Act.
    3. Applicants believe that they meet the standards for exemption 
specified in section 9(c). Applicants state that the prohibitions of 
section 9(a) as applied to them 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 none of their current or former officers, 
directors or employees who are engaged in the provision of investment 
advisory or underwriting services to the Funds participated in any way 
in the conduct described in the Complaint. Applicants also state that 
although some of the Funds advised by the Applicants held PNC 
securities in their portfolios during the time discussed in the 
Complaint, as far as Applicants are aware none of the officers, 
portfolio managers or any other investment personnel employed by the 
Applicants had any knowledge of any non-public information relating to, 
or had any involvement in, the conduct alleged in the Complaint. 
Applicants state that they are entirely separate from AIG's businesses 
that were involved in the conduct described in the Complaint. 
Applicants further state that they have adopted policies and procedures 
designed to protect the Applicants' clients, including the Funds' 
shareholders, from any conflict of interest that may arise between the 
Applicants' portfolio managers and AIG's other businesses referenced in 
the Complaint. 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. The Applicants state 
that they have committed substantial resources to support their 
advisory, sub-advisory and underwriting activities. Applicants state 
that they have not previously received any orders under section 9(c) of 
the Act.
    4. Applicants state that their inability to continue providing 
advisory services to the Funds and the inability to continue to serve 
as depositor or principal underwriter to the Funds would result in 
potential hardships for the Funds and their shareholders. The 
Applicants also state that they will distribute written materials, 
including an offer to meet in person to discuss the materials, to the 
boards of directors (``Boards'') of the Funds for which the Applicants 
serve as investment adviser or principal underwriter, including the 
directors who are not ``interested persons,'' as defined in section 
2(a)(19) of the Act, of such Funds and their independent legal counsel, 
regarding the Injunction, any impact on the Funds and this application. 
The Applicants will provide such Funds' Boards with all information 
concerning the Injunction and this application necessary for the Funds 
to fulfill their disclosure and other obligations under the federal 
securities laws.

Applicant's Condition

    Applicants agree that the order granting the requested relief will 
be subject to the following condition:
    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, Covered Persons, 
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 a temporary 
exemption.
    Accordingly, It is hereby ordered, pursuant to section 9(C) of the 
Act, that the Covered Persons are granted a temporary exemption from 
the provisions of section 9(a), effective forthwith, solely with 
respect to the Injunction, subject to the condition in the application, 
until the Commission takes final action on an application for a 
permanent order.

    By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 04-27311 Filed 12-13-04; 8:45 am]
BILLING CODE 8010-01-M