Securities and Exchange Commission (“Commission”).
Notice of application for a permanent order under section 9(c) of the Investment Company Act of 1940 (the “Act”).
Applicant requests an exemption from section 9(a) of the Act with respect to a securities-related injunction entered in 1987.
Applicant: Investment Technology Group, Inc. (“ITG”).
Filing Dates: The application was filed on May 24, 2005 and amended on June 23, 2006.
Hearing or Notification of 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 November 17, 2006 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. An order granting the application will be issued unless the Commission orders a hearing.
Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090; Applicant, 380 Madison Avenue, 4th Floor, New York, NY 10017.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Emerson Davis, Sr., Senior Counsel, or Stacy L. Fuller, Branch Chief, at (202) 551-6821, 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 is available for a fee from the Commission's Public Reference Branch, 100 F Street, NE., Washington, DC 20549-1580 (202-551-8090).
1. ITG, a Delaware corporation, provides electronic execution, technology-based equity trading, and research services to a number of large institutional clients. ITG began operations in 1987 as a division of Jefferies & Company, Inc. (“Jefferies Broker-Dealer”), a broker-dealer registered under the Securities Exchange Act of 1934 (“1934 Act”) and a wholly owned subsidiary of Jefferies Group, Inc. (“Jefferies Group”). In 1991, ITG was incorporated separately as a wholly owned subsidiary of Jefferies Group. In 1994, ITG made an initial public offering of its common stock, with Jefferies Group continuing to own approximately 80% of ITG's outstanding common stock. In 1999, Jefferies Group transferred all of its assets and liabilities relating to its full-service brokerage and investment banking business, including Jefferies Broker-Dealer (and not including ITG, which remained as Jefferies Group's sole asset), to a new corporation (“New Jefferies Group”), and distributed shares of New Jefferies Group to Jefferies Group's shareholders. Jefferies Group then merged with and was renamed ITG. New Jefferies Group and ITG are not affiliated persons within the meaning of the Act. The Chairman of the Board, President and Chief Executive Officer of ITG, Mr. Raymond L. Killian, was an Executive Vice President of Jefferies Group at the time of, but was not involved in the conduct underlying, the 1987 Injunction, as defined below.
2. On March 19, 1987, the United States District Court for the Southern District of New York entered a permanent injunction against Mr. Boyd L. Jefferies (“Mr. Jefferies”), Jefferies Broker-Dealer, and Jefferies Group, prohibiting them from violating, or aiding and abetting violations of, certain provisions of the 1934 Act (“1987 Injunction”). The violations involved manipulating the market in certain securities and engaging in “parking” during the period 1985-86. The Commission also instituted and settled administrative proceedings against Mr. Jefferies and Jefferies Broker-Dealer.
Applicant's Legal Analysis
1. Section 9(a) of the Act, in relevant part, prohibits any person who has been enjoined from engaging in or continuing any conduct or practice in connection with the purchase or sale of a security, and any other company of which the person is or hereafter becomes an affiliated person, from acting, among other things, as a principal underwriter or investment adviser for registered investment companies (“funds”). Applicant states that the 1987 Injunction prohibits it from serving funds in the manner described in section 9(a). Applicant further states that, although it has not served and does not serve in any such capacity with respect to any fund, as a financial services company, applicant in the future may determine to become an investment adviser or principal underwriter to funds, or an affiliated person of such an adviser or underwriter.
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 applicant, are unduly or disproportionately severe or that the conduct of applicant has been such as not to make it against the public interest or the protection of investors to grant the application. Applicant seeks an order under section 9(c) with respect to the 1987 Injunction. Start Printed Page 63056Applicant acknowledges that any such order will not extend to New Jefferies Group, or any person of which New Jefferies Group is or becomes an affiliated person. Applicant states that Mr. Jefferies died in 2001.
3. Applicant states that the prohibitions of section 9(a) as applied to it would be unduly and disproportionately severe. Applicant states that none of the persons involved in the conduct underlying the 1987 Injunction was or is a director, officer, or employee of ITG. Applicant also states that it has not been the subject of any other injunction or any disciplinary proceeding brought by the Commission, any state securities regulator, or any self-regulatory organization. Applicant further states that New Jefferies Group has no ownership interest in ITG, ITG has no ownership interest in New Jefferies Group, and the two entities are independent enterprises.Start Signature
By the Commission.
Nancy M. Morris,
1. Securities and Exchange Commission v. Boyd L. Jefferies, et al., Litigation Release No. 11370 (March 19, 1987).Back to Citation
2. In the Matter of Jefferies & Company, Inc. and Boyd L. Jefferies, Exchange Act Release No. 24231 (March 19, 1987).Back to Citation
[FR Doc. E6-17997 Filed 10-26-06; 8:45 am]
BILLING CODE 8011-01-P