[Federal Register Volume 77, Number 223 (Monday, November 19, 2012)]
[Notices]
[Pages 69517-69519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-28049]



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SECURITIES AND EXCHANGE COMMISSION

[Securities Exchange Act of 1934; Release No. 68224/November 14, 2012: 
Investment Company Act of 1940; Release No. 30261/November 14, 2012]


Order Granting Exmeptions From Specified Provisions of the 
Securities Exchange Act and the Investment Company Act and Certain 
Rules Thereunder; Order Under Section 17a and Section 36 of the 
Securities Exchange Act of 1934 Granting Exemptions From Specified 
Provisions of the Exchange Act and Certain Rules Thereunder; Order 
Under Section 6(C) and Section 38(A) of the Investment Company Act of 
1940 Granting Exemptions From Specified Provisions of the Investment 
Company Act and Certain Rules Thereunder

    Section 36 of the Securities Exchange Act of 1934 (the ``Exchange 
Act'') authorizes the Securities and Exchange Commission (the 
``Commission''), by rule, regulation or order, to exempt, either 
conditionally or unconditionally, any person, security or transaction, 
or any class or classes of persons, securities or transactions, from 
any provision or provisions of the Exchange Act or any rule or 
regulation thereunder, to the extent that such exemption is necessary 
or appropriate in the public interest, and is consistent with the 
protection of investors.
    Section 17A(c)(1) of the Exchange Act provides that the appropriate 
regulatory agency, by rule or by order, upon its own motion or upon 
application, may conditionally or unconditionally exempt any person or 
security or class of persons or securities from any provision of that 
section or any rule or regulation prescribed under Section 17A, if the 
appropriate regulatory agency finds that such exemption is in the 
public interest and consistent with the protection of investors and the 
purposes of this section, including the prompt and accurate clearance 
and settlement of securities transactions and the safeguarding of 
securities and funds.\1\
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    \1\ Section 3(a)(34)(B) of the Exchange Act defines 
``appropriate regulatory authority'' when used in the context of 
transfer agents as generally: (1) The Comptroller of the Currency, 
in the case of a national bank or a subsidiary of such bank; (2) the 
Board of Governors of the Federal Reserve System, in the case of a 
state member bank of the Federal Reserve System, a subsidiary 
thereof, a bank holding company or a subsidiary of a bank holding 
company; (3) the Federal Deposit Insurance Corporation, in the case 
of a bank insured by the Federal Deposit Insurance Corporation; and 
(4) the Commission, in the case of all other transfer agents. 
Section 17A(c)(1) also requires that the Commission not object to 
the use of exemptive authority in instances where an appropriate 
regulatory authority other than the Commission is providing 
exemptive relief.
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    Section 6(c) of the Investment Company Act of 1940 (the ``Company 
Act'') provides that the Commission may conditionally or 
unconditionally exempt any person, security or transaction, or any 
class or classes of persons, securities or transactions, from any 
provision or provisions of the Company Act, or any rule or regulation 
thereunder, if and to the extent that such exemption is necessary or 
appropriate in the public interest and consistent with the protection 
of investors and the purposes fairly intended by the policy and 
provisions of the Company Act. Section 38(a) of the Company Act 
provides that the Commission may make, issue, amend and rescind such 
rules and regulations and such orders as are necessary or appropriate 
to the exercise of the powers conferred upon the Commission under the 
Company Act. The necessity for prompt action of the Commission does not 
permit prior notice of the Commission's action.
    Hurricane Sandy made landfall along the mid-Atlantic Coast on 
October 29, 2012. The storm and subsequent flooding have displaced 
individuals and businesses and disrupted communications and 
transportation across the mid-Atlantic region. We are issuing this 
Order to address the needs of companies and individuals directly or 
indirectly affected by Hurricane Sandy that must comply with the 
requirements of the federal securities laws.

I. Filing Requirements for Registrants and Other Persons

    The lack of communications, transportation, electricity, facilities 
and available staff and professional advisors as a result of Hurricane 
Sandy could hamper the efforts of public companies and other persons 
with filing obligations to meet their filing deadlines. At the same 
time, investors have an interest in the timely availability of required 
information about these companies and the activities of persons 
required to file schedules and reports with respect to these companies. 
While the Commission believes that the relief from filing requirements 
provided by this Order is both necessary in the public interest and 
consistent with the protection of investors, we remind public companies 
and other persons who are the subjects of this Order to continue to 
evaluate their obligations to make materially accurate and complete 
disclosures in accordance with the anti-fraud provisions of the federal 
securities laws.
    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act, that a registrant (as defined in Exchange Act Rule 12b-2) subject 
to the reporting requirements of Exchange Act Section 13(a) or 15(d), 
and any person required to make any filings with respect to such a 
registrant, is exempt from any requirement to file or furnish materials 
with the Commission under Exchange Act Sections 13(a), 13(d), 13(f), 
13(g), 14(a), 14(c), 15(d) and 16(a), Regulations 13A, 13D, 13G, 14A, 
14C and 15D, and Exchange Act Rules 13f-1 and 16a-3, as applicable, for 
the period from and including October 29, 2012 to November 20, 2012, 
where the conditions below are satisfied.

Conditions

    (a) The registrant or person other than a registrant is not able to 
meet a filing deadline due to Hurricane Sandy and its aftermath;
    (b) The registrant or person other than a registrant files with the 
Commission any report, schedule or form required to be filed during the 
period from and including October 29, 2012 to November 20, 2012, on or 
before November 21, 2012; and (c) In any such report, schedule or form 
filed pursuant to this Order, the registrant or person other than a 
registrant must disclose that it is relying on this Order and state the 
reasons why, in good faith, it could not file such report, schedule or 
form on a timely basis.

II. Furnishing of Proxy and Information Statements

    The conditions in the areas affected by Hurricane Sandy, including 
displacement of thousands of individuals and the destruction of 
property, have prevented and will continue to prevent the delivery of 
mail to the affected areas. In light of these conditions, we believe 
that relief is warranted for those seeking to comply with our rules 
imposing requirements to furnish materials to security holders when 
mail delivery is not possible.
    Accordingly, it is ordered, pursuant to Section 36 of the Exchange 
Act, that a registrant or any other person is exempt from the 
requirements to furnish proxy statements, annual reports and other 
soliciting materials, as applicable (the ``Soliciting Materials''), 
under Exchange Act Rules 14a-3 and 14a-12, and the requirements to 
furnish information statements and annual reports, as applicable (the 
``Information Materials''), under Exchange Act Rules 14c-2 and 14c-3, 
where the conditions below are satisfied.

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Conditions

    (a) The registrant's security holder has a mailing address located 
within a zip code where, as a result of Hurricane Sandy, the United 
States Postal Service has suspended mail service of the type or class 
customarily used by the registrant;
    (b) The registrant or other person making a solicitation has 
followed normal procedure when furnishing the Soliciting Materials to 
the security holder in order to ensure that the Soliciting Materials 
preceded or accompanied the proxy, as required by the rules applicable 
to the particular form of Soliciting Materials, or, in the case of 
Information Materials, the registrant has followed normal procedure 
when furnishing the Information Materials to the security holder in 
accordance with the rules applicable to Information Materials; and
    (c) If requested by the security holder, the registrant or other 
person provides the Soliciting Materials or Information Materials by a 
means reasonably designed to furnish the Soliciting Materials or 
Information Materials to the security holder.
    Any registrant or other person unable to meet a deadline (including 
any shareholder who is unable to meet a deadline applicable to a 
shareholder proposal) or a delivery obligation as a result of Hurricane 
Sandy, or in need of other assistance related to their public filings, 
should contact the Division of Corporation Finance at (202) 551-3500 or 
at https://tts.sec.gov/cgi-bin/corp_fin_interpretive. The Division 
will consider any requests on a case-by-case basis.

III. Relief Relating Specifically to Registered Investment Companies 
Regarding Transmittal of Annual and Semi-Annual Reports to Investors 
Required by the Company Act and the Rules Thereunder

    For reasons similar to those cited in Section II, we believe that 
relief is warranted for the transmittal by registered management 
investment companies and registered unit investment trusts 
(collectively, ``registered investment companies'') of annual and semi-
annual reports to investors.
    Accordingly, it is ordered, pursuant to Sections 6(c) and 38(a) of 
the Company Act that, for the period from and including October 29, 
2012 to November 20, 2012, a registered investment company is exempt 
from the requirements of Section 30(e) of the Company Act and Rule 30e-
1 thereunder to transmit annual and semi-annual reports to investors 
affected by Hurricane Sandy; and
    For the period from and including October 29, 2012 to November 20, 
2012, a registered unit investment trust is exempt from the 
requirements of Section 30(e) of the Company Act and Rule 30e-2 
thereunder to transmit annual and semi-annual reports to unitholders 
affected by Hurricane Sandy,

Provided That

    (a) The affected investor's mailing address for transmittal as 
listed in the records of the registered investment company has a zip 
code for which the United States Postal Service has suspended mail 
service, as a result of Hurricane Sandy, of the type or class 
customarily used by the registered investment company for transmittal 
of reports; and
    (b) The registered investment company or other person promptly 
transmits the reports to affected investors: (i) If requested by the 
investor; or (ii) at the earlier of November 21, 2012 or the resumption 
of the applicable mail service.
    Registered investment companies experiencing difficulties in 
complying with their obligations after November 20, 2012, with the 
filing of Forms N-SAR or N-MFP, or in need of additional information or 
assistance regarding issues arising under the Company Act, should 
contact the Division of Investment Management, Office of Chief Counsel, 
at (202) 551-6865 or [email protected]. Registered investment advisers 
experiencing difficulties arising from Hurricane Sandy in complying 
with their obligations such as the filing of Form PF, or in need of 
additional information or assistance regarding issues arising under the 
Investment Advisers Act of 1940, should contact the Division of 
Investment Management, Office of Investment Adviser Regulation, at 
(202) 551-6999 or [email protected].

IV. Transfer Agent Compliance With Sections 17a and 17(F) of the 
Exchange Act

    Exchange Act Section 17A and Section 17(f), as well as the rules 
promulgated under Sections 17A and 17(f), contain requirements for 
registered transfer agents relating to, among other things, processing 
securities transfers, safekeeping of investor and issuer funds and 
securities, and maintaining records of investor ownership. Following 
the events of Hurricane Sandy, registered transfer agents located in 
the affected region may have difficulty complying with some or all of 
their obligations as registered transfer agents. In addition, 
registered transfer agents located outside the affected region in many 
cases may be unable to conduct business with entities or 
securityholders inside the region, thereby making it difficult to 
process securities transactions and corporate actions in conformance 
with Section 17A, Section 17(f) and the rules thereunder.
    While the national clearance and settlement system continues to 
operate well in light of this emergency, the Commission recognizes that 
securities transfers and payments to and from securityholders in the 
affected region may present compliance issues for many transfer agents. 
Therefore, the Commission is using its authority under Section 17A and 
Section 36 of the Exchange Act to relax temporarily certain regulatory 
provisions in order to provide transfer agents with flexibility in 
coping with the situation.\2\ The Commission finds the following 
exemption to be in the public interest and consistent with the 
protection of investors and the purpose of Section 17A of the Exchange 
Act, including the prompt and accurate clearance and settlement of 
securities transactions and the safeguarding of securities and funds.
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    \2\ This order temporarily exempts transfer agents from the 
requirements of (1) Section 17A of the Exchange Act and Rules 17Ad-1 
through 17Ad-20 thereunder and (2) Section 17(f) of the Exchange Act 
and Rules 17f-1 and 17f-2 thereunder.
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    Accordingly, it is ordered, pursuant to Sections 17A and 36 of the 
Exchange Act, that any registered transfer agent that is unable to 
comply with Section 17A and Section 17(f) of the Exchange Act and the 
rules promulgated thereunder, as applicable, due to Hurricane Sandy and 
its aftermath is hereby temporarily exempted from complying with such 
provisions for the period from and including October 29, 2012 to 
December 1, 2012, where the conditions below are satisfied.

Conditions

    (a) A registered transfer agent relying on this Order must notify 
the Commission in writing by November 19, 2012 of the following:
    (1) The transfer agent is relying on this Order;
    (2) A statement of the reasons why, in good faith, the transfer 
agent is unable to comply with Section 17A and Section 17(f) of the 
Exchange Act and the rules promulgated thereunder, as applicable;
    (3) If the transfer agent knows or believes that the books and 
records it is required to maintain pursuant to Section 17A and the 
rules thereunder were lost, destroyed or materially

[[Page 69519]]

damaged, information, to the extent reasonably available, as to the 
type of books and records that were maintained, the names of the 
issuers for whom such books and records were maintained, the extent of 
the loss of, or damage to, such books and records, and the steps taken 
to ameliorate any such loss or damage; and
    (4) If the transfer agent knows or believes that funds or 
securities belonging to either issuers or securityholders and within 
its possession were, for any reason, lost, destroyed, stolen or 
unaccounted for, information, to the extent reasonably available, 
regarding the dollar amount of any such funds and the number of such 
securities and the steps taken to ameliorate any such loss; and
    (b) Transfer agents that have custody or possession of any 
securityholder or issuer funds or securities shall use all reasonable 
means available to ensure that all such securities are held in 
safekeeping and are handled, in light of all facts and circumstances, 
in a manner reasonably free from risk of theft, loss, or destruction 
and that all funds are protected against misuse. To the extent 
possible, all securityholder or issuer funds that remain in the custody 
of the transfer agent shall be maintained in a separate bank account 
held for the exclusive benefit of securityholders until such funds are 
properly remitted.
    The notification required under (a) above shall be sent to: U.S. 
Securities and Exchange Commission, Division of Trading and Markets, 
100 F Street NE., Washington, DC 20549-7010.
    The Commission encourages registered transfer agents and the 
issuers for whom they act to inform affected securityholders whom they 
should contact concerning their accounts, their access to funds or 
securities, and other shareholder concerns. If feasible, issuers and 
their transfer agents should consider placing a notice on their Web 
sites or providing toll free numbers to respond to inquiries.
    Transfer agents experiencing difficulties in complying with 
obligations after December 1, 2012, or in need of additional 
information, should contact the Division of Trading and Markets at 
(202) 551-5777 or at [email protected].

V. Independence--Bookkeeping or Other Services Related to the 
Accounting Records or Financial Statements of the Audit Client

    The conditions in the areas affected by Hurricane Sandy, including 
displacement of individuals, the destruction of property and loss or 
destruction of corporate records, may require extraordinary efforts to 
reconstruct lost or destroyed accounting records. The Commission 
understands that in this unique situation an audit client may look to 
its auditor for assistance in reconstruction of its accounting records 
because of the auditor's knowledge of the client's financial systems 
and records. Under Section 10A(g)(1) of the Exchange Act and Rule 2-
01(c)(4)(i) of Regulation S-X, auditors are prohibited from providing 
bookkeeping or other services relating to the accounting records of the 
audit client, and in Rule 2-01(c)(4)(i) of Regulation S-X, these 
prohibited services are described as including ``maintaining or 
preparing the audit client's accounting records'' or ``preparing or 
originating source data underlying the audit client's financial 
statements.'' In light of the conditions in areas affected by Hurricane 
Sandy, however, we believe that limited relief from these prohibitions 
is warranted for those registrants and other persons that are required 
to comply with the independence requirements of the federal securities 
laws and the Commission's rules and regulations thereunder and that are 
affected by those conditions. Accordingly, It Is Ordered, pursuant to 
Section 36 of the Exchange Act, that independent certified public 
accountants engaged to provide audit services to registrants and other 
persons required to comply with the independence requirements of the 
federal securities laws and the Commission's rules and regulations 
thereunder are exempt from the requirements of Section 10A(g)(1) of the 
Exchange Act and Rule 2-01(c)(4)(i) of Regulation S-X, where the 
conditions below are satisfied.

Conditions

    (a) Services provided by the auditor are limited to reconstruction 
of previously existing accounting records that were lost or destroyed 
as a result of Hurricane Sandy and such services cease as soon as the 
audit client's lost or destroyed records are reconstructed, its 
financial systems are fully operational and the client can effect an 
orderly and efficient transition to management or other service 
provider; and
    (b) Services provided by the auditor to its audit client pursuant 
to this Order are subject to pre-approval by the audit client's audit 
committee as required by Rule 2-01(c)(7) of Regulation S-X.
    Auditors or audit clients with questions about this section of the 
Order or with other questions relating to auditor independence are 
encouraged to call the Office of the Chief Accountant directly at (202) 
551-5300.

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-28049 Filed 11-16-12; 8:45 am]
BILLING CODE 8011-01-P