Securities and Exchange Commission (“Commission”).
Notice of application for permanent order of exemption under the Investment Company Act of 1940 (the “Act”).
SUMMARY OF THE APPLICATION:
Applicant seeks an order (“Amended Order”) that would amend a prior permanent order that exempts it from the provisions of section 9(a) of the Act to relieve it from any ineligibility resulting from applicant's employment of an individual who is subject to a securities-related injunction (“Prior Order”).
The application was filed on March 13, 2001 and amended on December 17, 2001.
HEARING OR NOTIFICATION OF HEARING:
An order granting the application will be Start Printed Page 67337issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicant 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 14, 2002, and should be accompanied by proof of service on applicant, 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.
Secretary, Commission, 450 5th Street, NW., Washington, DC 20549-0609. Applicant, 777 East Wisconsin Avenue, Milwaukee, WI 53202.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Marilyn Mann, Senior Counsel, at (202) 942-0582, or Mary Kay Frech, Branch Chief, at (202) 942-0564 (Division of Investment Management, Office of Investment Company Regulation).End Further Info End Preamble Start Supplemental 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 5th Street, NW., Washington, DC 20549-0102 (tel. 202-942-8090).
1. Robert W. Baird & Co. Incorporated (“Baird”) is a broker-dealer registered under the Securities Exchange Act of 1934 (the “Exchange Act”) and an investment adviser registered under the Investment Advisers Act of 1940. Baird is an indirect majority-owned subsidiary of the Northwestern Mutual Life Insurance Company and acts as investment adviser, subadviser, depositor or principal underwriter to a number of registered investment companies.
2. On December 24, 1991, the Commission issued the Prior Order under section 9(c) of the Act granting Baird an exemption from section 9(a) of the Act to permit Baird to continue to serve or act in certain capacities for registered investment companies while employing George J. Gaspar, who is subject to a disqualification under section 9(a) of the Act. In 1985, Mr. Gaspar was permanently enjoined (the “1985 Injunction”) from future violations of certain federal securities laws.
3. Baird currently employs Mr. Gaspar as a managing director of petroleum research. Mr. Gaspar's responsibilities include the publication of a newsletter reporting on the oil and gas industry and supervising a team of research analysts in the preparation of that newsletter and investment research reports on energy-related companies. Mr. Gaspar has no other direct supervisory or management responsibilities. In addition, at various times between 1981 and 1996, Mr. Gaspar served as a member of Baird's board of directors.
4. The Amended Order would amend the Prior Order by modifying certain conditions to remove certain requirements that apply to a number of other Baird employees (the “Other Baird Personnel”). The Other Baird Personnel include portfolio managers, Baird employees working under Mr. Gaspar's supervision, and all senior employees of Baird and any investment companies for which Baird acts as investment adviser or subadviser.
Applicant's Legal Analysis
1. Section 9(a)(2) of the Act, in pertinent part, disqualifies any person from acting in the capacity of employee, officer, director, member of an advisory board, investment adviser, or depositor for any registered investment company, or principal underwriter for any registered open-end company, registered unit investment trust, or registered face amount certificate company, if such person is, by reason of any misconduct, permanently or temporarily enjoined from acting as an underwriter, broker, dealer, or investment adviser, or as an affiliated person or employee of an investment company, or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any security. A company with an employee or other affiliated person ineligible to serve in any of these capacities under section 9(a)(2) is similarly ineligible by reason of section 9(a)(3) of the Act. As a result of the 1985 Injunction, Mr. Gaspar is subject to this bar, as is Baird, his employer.
2. Section 9(c) of the Act provides that, upon application, the Commission shall grant an exemption from the disqualification provisions of section 9(a), either unconditionally or on an appropriate temporary or other conditional basis, if it is established that the prohibitions of section 9(a), as applied to an applicant, are unduly or disproportionately severe or that the conduct of such person has been such that it would not be against the public interest or protection of investors to grant such application.
3. Applicant believes that the requested relief satisfies the standard for relief in section 9(c). The requested amendments to the Prior Order would remove notice and certification requirements with respect to the Other Baird Personnel that currently impose a significant administrative burden on Baird. Applicant believes that it would not be against the public interest or protection of investors to remove these requirements. Applicant states that since the entry of the 1985 Injunction, Mr. Gaspar has not been subject to or involved in any disciplinary matters. In addition, applicant states that it has significantly expanded its legal and compliance activities, which reduces the likelihood of any activity that could give rise to a section 9 disqualification. Applicant believes that these factors demonstrate that it would not be against the public interest or the protection of investors to grant the Amended Order.
Applicant agrees that any order amending the Prior Order will be subject to the following conditions:
1. Mr. Gaspar will not be involved in Baird's business of serving as investment adviser, subadviser, depositor, or principal underwriter to registered investment companies. Applicant will develop procedures designed reasonably to assure compliance with this condition.
2. Baird has taken the necessary steps to confirm that no other employee is subject to a statutory disqualification.
3. Baird's general counsel has attested that he has reviewed Baird's compliance procedures designed to screen for and detect statutory disqualifications, reasonably believes such compliance Start Printed Page 67338procedures have been fully implemented, and that such procedures are reasonable and appropriate to prevent persons subject to a statutory disqualification from becoming affiliated with Baird in the future.
4. Baird's general counsel or chief executive officer will certify on an annual basis that Baird and Mr. Gaspar have complied with the conditions to the requested order.
5. The certifications and procedures required by the conditions to the requested order will be maintained as part of the records of Baird and will be available for inspection by the Commission and its staff at any reasonable time.Start Signature
For the Commission, by the Division of Investment Management, pursuant to delegated authority.
Margaret H. McFarland,
1. Robert W. Baird & Co. Incorporated, Investment Company Act Release No. 18457 (Dec. 24, 1991) (permanent order); see also Robert W. Baird & Co. Incorporated, Investment Company Act Release No. 18424 (Nov. 27, 1991) (temporary order and notice of application for permanent order).Back to Citation
2. See Securities & Exchange Commission v. George J. Gaspar & Eugene L. Hall, 1985 U.S. Dist. LEXIS 20698, Fed. Sec. L. Rep. (CCH) 92,004 (Apr. 16, 1985). The court found that Mr. Gaspar had violated sections 10(b) and 14(e) of the Exchange Act and rule 10b-5 thereunder and permanently enjoined him from future violations of these provisions. The alleged misconduct involved the communication of certain material, nonpublic information relating to the proposed acquisition of Clark Oil and Refining Corporation by a private placement organization.Back to Citation
3. Currently, Baird does not expect that Mr. Gaspar will be attending any board meetings in any capacity. However, in the event that Mr. Gaspar rejoins the board of directors or attends meetings of the board of directors in another capacity, Baird will abide by the following procedures, which would replace conditions 6 and 7 to the Prior Order:
a. Mr. Gaspar will not attend meetings of Baird's board of directors where the operations of any registered investment company for which Baird acts as investment adviser, subadviser, depositor, or principal underwriter are on the agenda.
b. Mr. Gaspar will be excused from all meetings of Baird's board of directors where the operations of any registered investment company for which Baird acts as investment adviser, subadviser, depositor, or principal underwriter are proposed to be discussed prior to any such discussion.Back to Citation
[FR Doc. 01-31915 Filed 12-27-01; 8:45 am]
BILLING CODE 8010-01-P