curities so listed are fully comparable to "margin securities" for purposes of Rule 12d3-1 under the 1940 Act. 2. As a further condition to the relief requested and to assure the quality and liquidity of Applicants' investments, Applicants will acquire only those equity securities (or in the case of convertible debt, debt convertible into equity securities) of foreign securities companies which meet certain additional quality standards. These additional standards are collectively equal or superior to the standards applicable to an OTC margin stock. By limiting investments to equity securities listed on certain major foreign stock exchanges that in terms of quality and liquidity are comparable to the largest of the U.S. national securities exchanges, and by imposing certain additional quality standards on the securities themselves, the proposed conditions exceed the quality standards applicable to a "margin security." 3. Applicants will purchase only those equity securities of foreign securities companies (or debt convertible into such securities) that meet the quality standards outlined below: (1) Daily quotations for both bid and asked prices for the stock are continuously available to the general public; (2) The stock has been publicly traded for at least six months; (3) The issuer or a predecessor in interest has been in existence for at least three years; (4) The issuer has at least $10 million of capital, surplus, and undivided profits; (5) The issuer is required by exchange or governmental regulation publicly to file (i) reports of any important financial or structural corporate changes, (ii) semi-annual profit and loss statements, and (iii) annual reports of independently audited assets and liabilities, profits and losses, and changes in financial position; (6) The issuer must have a minimum market capitalization of $20 million; and (7) The equity securities must have (i) an average daily trading volume of at least 500 shares and (ii) an average daily trading volume equal in value to at least $25,000. Applicants' Conclusions of Law: 1. Rule 12d3-1 under the 1940 Act in effect limits an investment company's ability to invest in securities of foreign securities companies. This lim itation results from the requirement in Rule 12d3-1 that an eligible security of a securities company be a "margin security." Applicants will comply with all requirements of Rule 12d3-1 except with respect to the "margin security” requirement. The conditions proposed in this application are as rigorous, and in certain respects more rigorous, than the standards applicable to a "margin security." 2. The primary concerns addressed by Section 12(d)(3) entrepreneurial risk of investing in securities-related businesses structured as partnerships and potential conflicts of interests between an investment company's shareholders and its investment adviser, underwriters or other brokers are not relevant in Applicants' context. Applicants do not intend to purchase any general partnership interest in securities-related businesses. Since Applicants' own shares are sold by its investment advisors or affiliates, the concern that Applicants might purchase shares in a broker-dealer for selling the investment company's shares is not relevant. 3. The proposed conditions will assure that, in terms of breadth of market, availability of investment information, and character and permanence of the issuer, the securities in which Applicants propose to invest will be fully comparable, and in many respects superior in quality, to securities that fall within the definition of “margin securities." Further, the relief requested would allow them to invest in securities of foreign issuers that derive more than 15% of their revenue from securities-related activities. Many foreign issuers are integrated companies, engaged in both fiancial and non-financial services, or provide both securities-related and other financial services. Rule 12d3-1 was designed to give investment companies greater flexibility with respect to investments in securities-related businesses, that, absent exemptive relief, are prohibited under Section 12(d)(3) of the Act. Since securities of foreign securities companies are generally not traded in the United States, they are not within the technical definition of a "margin security." Investment companies with international securities portfolios, therefore, are prevented from investing in securities issued by foreign companies engaged in securities-related activities. In many instances, these types of companies comprise a substantial portion of a country's financial sector because many foreign countries permit banks and other financial institutions to engage in securities-related activities. For the Commission, by the Division of Investment Management, under delegated authority. Jonathan G. Katz Secretary INVESTMENT COMPANY ACT OF 1940 THE EQUITABLE LIFE ASSURANCE Notice is hereby given that The Equitable Life Assurance Society of the United States ("Equitable"), 787 Seventh Avenue, New York, NY 10019, and Norman C. Francis (“Francis"), 7325 Palmetto Street, New Orleans, LA 70125 (collectively, the "Applicants") have filed an application ("Application") requesting an order of the Commission pursuant to Section 9(c) of the Investment Company Act of 1940, as amended (the "Act"). The requested order would grant Equitable, certain of its subsidiaries (Equico Securities, Inc.; Equitable Capital Management Corporation; Wood, Struthers & Winthrop Management Corporation; and any affected future subsidiary (collectively, "The Equitable Subsidiaries")), and Francis a permanent exemption from the prohibitions of Sections 9(a)(2) and (3) of the Act, to the extent that these prohibitions are applicable to the Applicants by virtue of an injunction entered against Francis in 1979. Applicants request relief only to the extent necessary for Francis to serve as a director of Equitable. The Application states that Equitable is a New York mutual life insurance company, a registered broker-dealer (under the Securities Exchange Act of 1934), and a registered investment adviser (under the Investment Advisers Act of 1940). Equitable is investment adviser, principal underwriter and depositor for investment companies and separate accounts (collectively, the "Accounts") that are registered under the Investment Company Act. The Equitable Subsidiaries are also, or may in the future be, investment advisers, principal underwriters and/or depositors of entities registered under the Act. Francis is the President of Xavier University of Louisiana, New Orleans, Louisiana. The Application states that Francis served as a director of Equitable from January 1, 1988 to July 7, 1988. On February 7, 1979, the Commission filed a civil action against The Starr Broadcasting Group, Inc. ("SBG"), a national bank, and nine individuals who served or had served as SBG's board of directors, including Francis, who had been a nonofficer director of SBG.1 Francis, without admitting or denying the allegations in the Commission's complaint, consented to the entry of an injunction against him. The order, which was entered on September 4, 1979, permanently enjoined Francis, while serving as an officer or director of any publicly held reporting company, from causing such company to file reports with the Commission which contravene applicable reporting requirements of the Securities Exchange Act of 1934 and from obtaining or extending credit in contravention of the margin rules of the Commission and the Federal Reserve Board. Section 9(a)(2) of the Act applies to persons who, from engaging in or continuing any conduct or by reason of misconduct, have been enjoined practice in connection, with the purchase or sale of any security. Section 9(a) prohibits these persons from serving or acting as an employee, officer, director, member of an advisory board, investment adviser, or depositor of, or principal underwriter for, a registered investment company. Section 9(a)(3) extends these prohibitions to companies whose affiliated persons are subject to the prohibitions of Section 9(a)(2). Section 9(c) of the Act authorizes the Commission to grant exemptions from the prohibitions of Section 9(a), either unconditionally or on an appropriate temporary or other conditional basis. Applications for exemption must establish that the prohibitions of Section 9(a) are unduly or disproportionately severe as applied to the applicant, or that the applicant's conduct has been such as not to make it against the public interest or the protection of investors to grant the applica tion. Because of the injunction entered against Francis, the provisions of Section 9(a) would preclude his service as a director of Equitable unless the relief requested pursuant to Section 9(c) of the Act in the Application is granted. The Applicants submit that the prohibitions of Section 9(a) of the Act would be unduly and disproportionately se 1SEC v. The Starr Broadcasting Group, Inc., Civil Action No. 79-0357 (D.D.C.). vere as applied to them, and that Francis' conduct has been such as to make it not against the public interest or the protection of investors to grant an exemption from its provisions. necessary to permit Francis to serve as a director of Equitable. Applicants represent that they acknowledge, understand, and agree that the Commission's issu In support of these contentions, Applicants sub- ance of the order requested by the Application mit that: 1. Over eight years have passed since the entry of the injunction against Francis. In that time, Francis has never been the subject of any other enforcement action by any regulatory body and has not, to his knowledge, been the subject of any governmental investigation involving violations of any laws. 2. At the time of the entry of the injunction, the Commission acknowledged that Francis did not benefit from the matters complained of and did not prepare the reports that gave rise to the injunction.2 3. By its terms, the injunction does not bar Francis from acting as an affiliated person of an investment adviser, depositor or principal underwriter. shall not prejudice nor limit the Commission's rights in any manner with respect to any investigation, enforcement action, or proceeding under Section 9(b) of the Act, based, in whole or in part, upon conduct other than that giving rise to the Application. * * * * * * Notice is further given that any interested person may, not later than January 13, 1989, at 5:30 p.m., submit to the Commission in writing a request for a hearing on the Application, accompanied by a statement as to the nature of his or her interest, the reasons for such request, and the issues, if any, of fact or law proposed to be controverted. Any such request should be addressed to: Secretary, Securities and Exchange Commission, Washington, D.C. 20549. A copy of such request shall be served personally or by mail upon Appli 4. Francis has fully complied with the terms of cants at the addresses stated above. Proof of such the injunction. 5. The Accounts have not been the subject of any enforcement action by any regulatory body. 6. Equitable has not been the subject of any enforcement action under the Federal securities laws. 7. The allegations of the complaint do not relate to the activities of Equitable or of the Accounts, or to any of Francis' activities in relation to Equitable or to the Accounts. Francis was not affiliated with Equitable at the time the activities alleged in the complaint took place. 8. When Francis was elected a director of Equitable neither he nor Equitable was aware of the need for an exemption under Section 9(a) of the Act. Based upon the foregoing, Applicants request that the Commission, pursuant to Section 9(c) of the Act, grant the Applicants a permanent exemption from the provisions of Section 9(a) to the extent applicable as a result of the injunction entered against Francis in 1979 and to the extent service (by affidavit or, in the case of an attorney, by certificate) shall be filed contemporaneously with the request. As provided by Rule 0-5 of the Rules and Regulations promulgated under the Act, an order disposing of the Application herein will be issued as of course following said date unless the Commission orders a hearing upon request or upon the Commission's own motion. Persons who request a hearing, or advice as to whether a hearing is ordered, will receive any notices and orders issued in this matter, including the date of the hearing (if ordered) and any postponement thereof. By the Commission. Jonathan G. Katz Secretary INVESTMENT COMPANY ACT OF 1940 Release No. IC-16693/December 14, 1988 811-3900 Oppenheimer Challenger Fund; Application for Deregistration 2 The Commission's litigation release states that the principal allegation against Francis in the complaint was that, while he did not benefit from the alleged transactions and while he did not personally prepare the reports of SBG filed with the Commission, he had a responsibility as a director to be sure that such reports complied with applicable federal securities laws. Action: Notice of Application for Deregistration under the Investment Company Act of 1940 (the "1940 Act"). 1986. In connection with the reorganization to a business trust, Articles of Transfer were filed January 31, 1986 with the Maryland State Depart Applicant: Oppenheimer Challenger Fund ("Ap- ment of Assessments and Taxation. Applicant plicant") Relevant 1940 Act Sections: Deregistration under Section 8(f). Summary of Application: Applicant seeks an order declaring that it has ceased to be an investment company subject to the 1940 Act. Filing Date: The application on Form N-8f was filed on October 11, 1988, and an amendment was filed on December 12, 1988. Hearing or Notification of Hearing: If no hearing is ordered, the application will be granted. Any interested person may request a hearing on the application, or ask to be notified if a hearing is ordered. Any requests must be received by the SEC by 5:30 p.m. on January 9, 1989. Request a hearing in writing, giving the nature of your interest, the reason for the request, and the issues you contest. Serve the Applicants with the request, either personally or by mail, and also send it to the Secretary of the SEC, along with proof of service by affidavit, or, for lawyers, by certificate. Request notification of the date of a hearing by writing to the Secretary of the SEC. Addresses: Secretary, SEC, 450 5th Street, N.W., Washington, D.C. 20549; Applicant: Oppenheimer Challenger Fund: Two World Trade Center, New York, New York 10048-0669. For Further Information Contact: Bibb L. Strench, Staff Attorney, (202) 272-2856 or Karen L. Skidmore, Branch Chief, (202) 272-3023, Of fice of Investment Company Regulation. Supplementary Information: The following is a summary of the application; proper terms are those defined in the application. The complete application is available for a fee from either the SEC's Public Reference Branch in person, or the SEC's commercial copier (800) 231-3282 (in Maryland (301) 258-4300). Applicants' Representations: 1. Applicant, a Massachusetts business trust, is registered under the 1940 Act as a open-end, nondiversified management investment company. Applicant initially organized as a Maryland corporation on September 1, 1983 under the name "Oppenheimer Retirement Fund, Inc." and reorganized to a Massachusetts business trust pursuant to a Declaration of Trust dated January 7, filed its Articles of Dissolution in Maryland on April 6, 1987. 2. On November 7, 1983, Applicant filed a Notification of Registration pursuant to Section 8(b) of the 1940 Act on Form N-8A and filed a registration statement under the 1940 Act on Form N-1A. The registration statement became effective on January 5, 1984. Applicant also registered under the Securities Act of 1933 an indefinite number of shares of common stock. Applicant's initial public offering commenced January 5, 1984. 3. At a meeting on December 3, 1987, the Board of Trustees of the Applicant unanimously adopted and recommended to the shareholders of Applicant that they approve a series of transactions pursuant to a plan of reorganization whereby Oppenheimer OTC Fund ("OTC Fund") would acquire all of the assets of Applicant in exchange for shares of OTC Fund. Challenger and OTC have similar investment objectives and policies. In reaching the decision, the Board noted the disparity in net assets between the two funds, Applicant having approximately $2.6 million in net assets and OTC Fund having approximately $25.3 million in net assets. Because Applicant does not have the economies of scale enjoyed by a larger fund, its expenses had increased markedly in relation to average net assets. That situation was expected to worsen as the number of outstanding shares of Applicant diminished. Challenger's Board had determined that the reorganization would not result in a direct or indirect increase in the management fee, even though OTC has a Distribution Plan pursuant to Rule 12b-1 of the Act and Challenger does not. 4. On January 4, 1988, an OTC Fund prospectus and a proxy statement from Applicant, declared effective by the Commission on January 4, 1988, was mailed to shareholders of Applicant in connection with the solicitation by Applicant's Board of Trustees for purposes of voting on the proposed reorganization. On January 21, 1988, a Special Meeting of Shareholders of the Applicant was held at which a majority of shareholders approved the reorganization. 5. As of January 31, 1988, Applicant's aggregate net assets were $848,633. On that date, all of Applicants' net assets (including all portfolio se curities, were transferred OTC Fund pursuant to a reorganization in exchange for 55,763 shares of OTC Fund which resulted in OTC Fund adding to its gross assets all of the assets (net of any liability for portfolio securities purchased but not settled) of Applicant and Applicant's shareholders owning shares of OTC Fund. In essence, a shareholder of Applicant who voted his shares in favor of the reorganization elected to redeem his shares at net asset value per share and reinvest the proceeds in shares of OTC Fund at no sales charge and without recognition of taxable gain or loss. No gain or loss or taxable income was recognized by either Applicant or OTC Fund. The cost basis and holding period of the shares of each shareholder of Applicant carried over to the shares of OTC Fund which each shareholder acquired; and the holding period and cost basis of Applicant for its assets transferred to OTC Fund carried over to OTC Fund. No brokerage commissions were paid in the exchange. 6. The expenses associated with carrying out the reorganization totaled $1900, consisting of $500 for the deregistration of Applicant and $1400 in other fees, including legal, accounting, printing, transfer agency, filing and proxy solicitations. Applicant's liabilities, which consisted primarily of an anticipated tax obligation (see below), accrued but unpaid normal operating expenses (excluding the cost of any portfolio securities purchased but not yet settled), and the amount, if any, required to satisfy any properly submitted unpaid redemption requests were accrued or paid by Applicant in the ordinary course of business on or prior to the effectiveness of the reorganization. Failure to qualify as a RIC resulted in a $1200 tax liability (accrued and paid by Challenger), which was subsequently refunded as a result of Challenger's ordinary loss incurred during the same period. 7. As of the time of filing the application, Applicant had no securityholders. No assets have been retained by Applicant and no liabilities remain outstanding. Applicant is not a party to any litigation or administrative proceedings. It is not presently engaged in, nor does it propose to engage in, any business activities other than those necessary for the winding up of its affairs. tion as an investment company if this Order is granted. For the Commission, by the Division of Investment Management, under delegated authority. Jonathan G. Katz INVESTMENT COMPANY ACT OF 1940 Release No. IC-16694/December 15, 1988 811-3945 and 811-4785 In the Matter of PRINCIPAL PRESERVATION TAX-EXEMPT PRINCIPAL PRESERVATION TAX-EXEMPT 215 North Main Street ORDER DECLARING THAT APPLICANTS Principal Preservation Tax-Exempt Fund, Inc. On November 17, 1988, notices (Investment Company Act Release Nos. 16640 and 16641) were issued of the filing of the applications. On November 25, 1988, Applicants filed separate letters to correct certain typographical errors in their application. The notices gave interested persons an opportunity to request a hearing, and stated that an order disposing of each application would be issued as of course unless a hearing should be ordered. No request for a hearing has been filed, and the Commission has not ordered a hearing. The matter having been considered, it is found, on the basis of the information stated in the applications, that Applicants have ceased to be 8. Applicant is current on its required filings, investment companies. Accordingly, including its N-SAR filing. 9. Applicant will notify the proper Massachusetts authorities of its dissolution and deregistra IT IS ORDERED, pursuant to Section 8(f) of the 1940 Act, that each Applicant's registration under the 1940 Act shall forthwith cease to be in effect. |