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Code · REGISTER · 2007-08-28 · U.S. Securities and Exchange Commission (the “Commission”) · Notices

Notices. Notice of application for an order under the Investment Company Act of 1940, as amended (the “Act”)

24,139 words·~110 min read·/register/2007/08/28/07-4195·

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BILLING CODE 7590-01-M SECURITIES AND EXCHANGE COMMISSION [Release No. IC-27933; File No. 812-13267] Hartford Life Insurance Company, et al.; Notice of Application August 22, 2007. AGENCY: U.S. Securities and Exchange Commission (the “Commission”). ACTION: Notice of application for an order under the Investment Company Act of 1940, as amended (the “Act”). APPLICANTS: Hartford Life Insurance Company (“Hartford Life”), Hartford Life Insurance Company Separate Account DC-I (“Account DC-I”), Hartford Life Insurance Company Separate Account Two (“Account Two”), Hartford Life Insurance Company Separate Account Eleven (“Account Eleven”) (together with Account DC-I and Account Two, the “Registered Accounts”), and Hartford Securities Distribution Company, Inc.
(“HSD”). SUMMARY: Applicants request an order of the Commission pursuant to section 11(a) of the Act approving the terms of the proposed offers of exchange described in this application. Applicants propose to make the following exchange offers:
(1)Group variable annuity contracts issued by Hartford Life offering interests in Account Eleven (the “New Contracts”) for certain group variable annuity contracts issued by Hartford Life (the “Modified Old Contracts”) offering interests in both Account DC-I and Account Two as well as certain other separate accounts not registered as investment companies under the Act;
(2)interests in Account DC-I and Account Two, as originally offered to contract owners, (“Original Old Contracts”) for interests in the Unregistered DC Accounts under Modified Old Contracts;
(3)New Contracts for certain group variable annuity contracts issued by Hartford Life (“457 Contracts”) offering interests in Hartford Life Insurance Company Separate Account 457 (“Account 457”); and
(4)Original Old Contracts offering interests in Account DC-I and Account Two for 457 Contracts offering interests in Account 457. DATES: The application was filed on March 2, 2006, and amended on August 21, 2007. 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 September 17, 2007, and should be accompanied by proof of service on the 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, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. Applicants, 200 Hopmeadow Street, Simsbury, Connecticut 06089; copies to David S. Goldstein, Sutherland Asbill & Brennan LLP, 1275 Pennsylvania Avenue, NW., Washington, DC 20004-2415. FOR FURTHER INFORMATION CONTACT: Michael L. Kosoff, Staff Attorney, at
(202)551-6754, or Harry Eisenstein, Branch Chief, at
(202)551-6795, Office of Insurance Products, Division of Investment Management. SUPPLEMENTARY INFORMATION: The following is a summary of the Application. The complete Application is available for a fee from the SEC's Public Reference Branch, 100 F Street, NE., Washington, DC 20549 ((202) 551-8090). Applicants' Representations 1. Hartford Life is a stock life insurance company originally incorporated under the laws of the Commonwealth of Massachusetts on June 5, 1902, and subsequently re-domiciled to the state of Connecticut. Hartford Life is engaged in the business of writing individual and group life insurance and annuity contracts in the District of Columbia and all States. As of December 31, 2006, Hartford Life had assets of approximately $214 billion. For purposes of the Act, Hartford Life is the depositor and sponsor of Account DC-I, Account Two and Account Eleven, as those terms have been interpreted by the Commission with respect to variable annuity separate accounts registered under the Act as unit investment trusts. 2. Hartford Life established Account DC-I on or about March 31, 1988, Account Two on June 2, 1986 and Account Eleven on December 1, 2000, as segregated asset accounts under Connecticut law. Under Connecticut law, the assets of Account DC-I and Account Two, including assets attributable to the Original Old Contracts and the Modified Old Contracts, are owned by Hartford Life, but are held separately from all other assets of Hartford Life for the benefit of the owners of, and the persons entitled to payment under, variable annuity contracts issued by Hartford Life through Account DC-I and Account Two, including the Original Old Contracts and Modified Old Contracts. Likewise, the assets of Account Eleven, including assets attributable to the New Contracts, are owned by Hartford Life, but are held separately from all other assets of Hartford Life for the benefit of the owners of, and the persons entitled to payment under variable annuity contracts issued by Hartford Life through Account Eleven, including the New Contracts. Consequently, assets in each Account are not chargeable with liabilities arising out of any other business that Hartford Life may conduct. Income, gains and loses, realized and unrealized, from the assets of each Account are credited to or charged against that Account without regard to the income, gains or loses arising out of any other business that Hartford Life may conduct. Each Registered Account is a “separate account” as defined by Rule 0-1(e) under the Act, and is registered with the Commission as a unit investment trust. 3. The assets of Account DC-I and Account Two support Original Old Contracts as well as Modified Old Contracts. Hartford Life issued the Original Old Contracts to, among other parties,
(a)Sponsors of non-qualified deferred compensation plans established by certain tax-exempt organizations (“tax-exempt plan sponsors”) pursuant to section 457(b) and section 457(e)(1)(B) of the Internal Revenue Code of 1986, as amended (the “IRC”), as well as
(b)trustees of trusts created to hold assets for non-qualified deferred compensation plans established by state and municipal governments, or instrumentalities thereof, pursuant to section 457(b) and section 457(e)(1)(A) of the IRC (“government plan trustees”). Interests in Account DC-I and Account Two offered through Original Old Contracts have been registered under the Securities Act of 1933 (the “1933 Act”) on Form N-4. 1 1 *See* 1933 Act File Nos. 33-19944, 33-19946, 33-19947 and 33-19949. 4. The New Contracts will be issued through Account Eleven. Hartford Life currently issues other group variable annuity contracts similar to the New Contracts through Account Eleven to a variety of applicants including tax-exempt plan sponsors, government plan trustees, retirement plans qualified under sections 401(a) and 403(a) of the IRC, and annuity purchase plans adopted by public school systems and certain tax-exempt organizations pursuant to section 403(b) of the IRC. Interests in Account Eleven offered through such group variable annuity contracts have been registered under the 1933 Act on Form N-4. 2 Likewise, interests in Account Eleven to be issued through the New Contracts will be registered under the 1933 Act on a Form N-4 registration statement to be filed shortly with the Commission. 2 *See* 1933 Act File No. 333-72042. 5. HSD is a Connecticut corporation registered with the Commission as a broker-dealer under the Securities Exchange Act of 1934 and is a member of the Financial Industry Regulatory Authority, Inc. HSD is the principal underwriter for the Original Old Contracts, Modified Old Contracts, 457 Contracts and New Contracts and for other Hartford Life variable annuity contracts. HSD is an affiliated person of Hartford Life. 6. Hartford Life established Separate Account DC-III, Separate Account DC-IV, Separate Account DC-V and Separate Account DC-VI, as segregated asset accounts under Connecticut law (“Unregistered DC Accounts”). Each of the Unregistered DC Accounts is divided into several sub-accounts. Hartford Life added endorsements to the Original Old Contracts to make available to owners of such contracts one or more sub-accounts of the Unregistered DC Accounts as investment options. The Modified Old Contracts are those Original Old Contracts issued to tax-exempt plan sponsors to which the endorsements were added. 7. Under Connecticut law, the assets of each Unregistered DC Account attributable to Modified Old Contracts are owned by Hartford Life, but are held separately from all other assets of Hartford Life for the benefit of the owners of, and the persons entitled to payment under the Modified Old Contracts. Consequently, such assets in each Unregistered DC Account are not chargeable with liabilities arising out of any other business that Hartford Life may conduct. Income, gains and loses, realized and unrealized, from the assets of each Unregistered DC Account are credited to or charged against that Account without regard to the income, gains or loses arising out of any other business that Hartford Life may conduct. Hartford Life has not registered any Unregistered DC Account as an investment company under the Act in reliance upon the exclusion from the definition of investment company found in section 3(c)(11) of the Act. 8. Hartford Life established Account 457 on December 1, 1998, as a segregated asset account under Connecticut law. Under Connecticut law, the assets of Account 457, including assets attributable to the 457 Contracts, are owned by Hartford Life, but are held separately from all other assets of Hartford Life for the benefit of the owners of, and the persons entitled to payment under variable annuity contracts issued by Hartford Life through Account 457, including the 457 Contracts. Consequently, such assets in Account 457 are not chargeable with liabilities arising out of any other business that Hartford Life may conduct. Income, gains and loses, realized and unrealized, from the assets of Account 457 are credited to or charged against the separate account without regard to the income, gains or loses arising out of any other business that Hartford Life may conduct. Hartford Life has not registered Account 457 as an investment company under the Act in reliance upon the exclusion from the definition of investment company found in section 3(c)(11) of the Act. 9. Hartford Life has not registered interests in the Unregistered DC Accounts offered through Modified Old Contracts as securities under the 1933 Act in reliance upon the exemption from registration found in section 3(a)(2) of the 1933 Act. Likewise, Hartford life has not registered interests in Account 457 offered through the 457 Contracts as securities under the 1933 Act. Description of the Contracts 10. During the accumulation period, the Original Old Contracts, Modified Old Contracts, 457 Contracts, and New Contracts (together, the “Contracts”) each provides for the allocation of purchase payments and transfer of Contract values between and among various sub-accounts of the separate account through which each is issued. Each sub-account invests in shares of a particular open-end management investment company (a “mutual fund”) which serves as an investment option under the Contract. The Contracts also offer a “fixed” interest investment option supported by Hartford Life's general account. During the annuity payment period, the Contracts all provide a variety of settlement or annuity payment options on a variable basis, fixed basis, or both. Owners of Contracts may withdraw some or all of their Contract's value at any time during the accumulation period or apply such values to the “purchase” of a settlement or annuity payment option. The Contracts incorporate many other features, including “death benefits” payable upon the death of a plan participant (or beneficiary) and certain fees and charges. 11. The Original Old Contracts, Modified Old Contracts and New Contracts do not impose any fees or charges in connection with purchase payments. The tables below describe the fees and charges deducted from separate account assets on an ongoing basis during both the accumulation and annuity payment periods, and the fees and charges payable by a Contract owner upon the withdrawal or surrender of Contract value during the accumulation period. The tables also indicate the annual rate of interest guaranteed for the “fixed” option under each Contract and identify the number of sub-accounts available as investment options under the Contract, along with the minimum and maximum total annual operating expenses for the mutual funds in which such sub-accounts invest as of December 31, 2006. The letter designation in the left-hand column represents different Contract variations. Original Old Contracts [Account DC-I and Account Two] Type of contract Number of mutual funds M&E risk and administrative charge (payout period) (% of average daily sub-account assets) M&E risk and administrative charge (pay-in period) (% of average daily sub-account assets) Minimum guaranteed annual interest rate CDSC (% of amount surrendered) Minimum total annual portfolio expenses (% of average daily net asset value) Maximum total annual portfolio expenses (% of average daily net asset value) A 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 B 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 C 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 D 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 E 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 F 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 G 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 H 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 I 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 J 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 K 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 L 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 M 10 1.25 0.75 to 0.90 4 12 YR 0.34 0.91 N 10 1.25 0.75 to 0.90 4 12 YR 0.34 0.91 O 10 1.25 0.75 to 0.90 3 7 YR 0.34 0.91 P 10 1.25 0.75 to 0.90 4 7 YR 0.34 0.91 Q 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 Modified Old Contracts [Account DC-I, Account Two and Unregistered DC Accounts] Type of contract Number of mutual funds M&E risk and administrative charge (payout period) (% of average daily sub-account assets) M&E risk and administrative charge (pay-in period) (% of average daily sub-account assets) Minimum guaranteed annual interest rate CDSC (% of amount surrendered) Minimum total annual portfolio expenses (% of average daily net asset value) Maximum total annual portfolio expenses (% of average daily net asset value) A 23 1.25 0.75 to 0.90 4 N/A 0.34 1.73 B 24 1.25 0.75 to 0.90 4 N/A 0.34 1.73 C 24 1.25 0.75 to 0.90 4 N/A 0.34 1.73 D 24 1.25 0.75 to 0.90 4 N/A 0.34 1.73 E 25 1.25 0.75 to 0.90 4 N/A 0.34 1.73 F 25 1.25 0.75 to 0.90 4 N/A 0.34 1.73 G 25 1.25 0.75 to 0.90 4 N/A 0.34 1.73 H 25 1.25 0.75 to 0.90 4 N/A 0.34 1.73 I 26 1.25 0.75 to 0.90 4 N/A 0.34 1.73 J 26 1.25 0.75 to 0.90 4 N/A 0.34 1.73 K 26 1.25 0.75 to 0.90 4 N/A 0.34 1.73 L 27 1.25 0.75 to 0.90 4 N/A 0.34 1.73 M 23 1.25 0.75 to 0.90 4 12 YR 0.34 1.73 N 26 1.25 0.75 to 0.90 4 12 YR 0.34 1.73 O 23 1.25 0.75 to 0.90 3 7 YR 0.34 1.73 P 23 1.25 0.75 to 0.90 4 7 YR 0.34 1.73 Q 24 1.25 0.75 to 0.90 4 N/A 0.34 1.73 New Contracts [Account Eleven] Type of contract Number of mutual funds M&E risk and administrative charge (payout period) (% of average daily sub-account assets) M&E risk and administrative charge (pay-in period) (% of average daily sub-account assets) Minimum guaranteed annual interest rate CDSC (% of amount surrendered) Minimum total annual portfolio expenses (% of average daily net asset value) Maximum total annual portfolio expenses (% of average daily net asset value) New Contract 48 0.70 0.70 4 N/A 0.34 1.49 12. Hartford Life does not assess a CDSC under Modified Old Contracts A, B, C, D, E, F, G, H, I, J, K, L and Q and corresponding Original Old Contracts A, B, C, D, E, F, G, H, I, J, K, L and Q. Under Modified Old Contracts M, N, O and P and corresponding Original Old Contracts M, N, O and P, a contingent deferred sales charge (“CDSC”) may be assessed against the amount withdrawn or surrendered by a Contract owner. However, those who will be moved to the Original Old Contracts or from the Modified Old Contracts will not be subject to a CDSC. 13. As the tables indicate, the mortality and expense risk and administrative charge during the accumulation period under the New Contracts is less than that imposed under the Original Old Contracts and the Modified Old Contracts. The mortality and expense risk and administrative charge during the annuity payment period under the New Contracts is substantially less than that imposed under the Original Old Contracts and the Modified Old Contracts. 14. Hartford Life may deduct a charge corresponding to any applicable state or municipal premium taxes under each Contract. Hartford Life may deduct the charge for premium taxes at the time of payment of such taxes to the appropriate taxing authority, surrender of the Contract, upon payment of a death benefit or upon the commencement of annuity payments to a participant (or beneficiary). 15. Under the Original Old Contracts and the Modified Old Contracts, Hartford Life reserves the right to deduct a $5 fee for each transfer of Contract value between or among sub-accounts in a Contract year. Under New Contracts, Hartford Life reserves the right to deduct a $5 fee for each transfer in excess of twelve transfers of Contract value within a participant account by a participant between or among the sub-accounts in any participant account year. Currently, the Company does not assess a transfer fee under any Contract. 16. The sub-accounts of Account Eleven offered by the New Contracts invest in all of the mutual funds in which the sub-accounts of Account DC-I and Account Two offered by the Original Old Contracts and the Modified Old Contracts invest, and many of the mutual funds (or variable insurance fund counterpart) in which sub-accounts of the Unregistered DC Accounts offered by the Modified Old Contracts invest. In most cases, where a particular mutual fund available under a Modified Old Contract (or its variable insurance fund counterpart) is not available as an investment option under the New Contract, a mutual fund with substantially identical or closely comparable investment objectives and principal strategies would be available under the New Contract. In all but four cases, these alternative mutual funds had the same or lower total expenses during their most recent fiscal year. Notwithstanding this, for each sub-account available under the New Contract that has a counterpart under an Original Old Contract or a Modified Old Contract, the annual mortality and expense risk and administrative charge when combined with the annual expense ratio of the mutual in which such sub-account invests, is less under the New Contract than under either the Original Old Contract or the Modified Old Contract. 17. The Original Old Contracts, 457 Contracts and New Contracts do not impose any fees or charges in connection with purchase payments. The tables below describe the fees and charges deducted from separate account assets on an ongoing basis during both the accumulation and annuity payment periods, and the fees and charges payable by a Contract owner upon the withdrawal or surrender of Contract value during the accumulation period. The tables also indicate the annual rate of interest guaranteed for the “fixed” option under each Contract and identify the number of sub-accounts available as investment options under the Contract, along with the minimum and maximum total annual operating expenses for the mutual funds in which such sub-accounts invest as of December 31, 2006. The letter designation in the left-hand column represents different Contract variations, with type A corresponding to type U and type B corresponding to type V, etc. 457 Contracts [Account 457] Type of contract Number of mutual funds M&E risk and administrative charge (payout period) (% of average daily sub-account assets) M&E risk and administrative charge (pay-in period) (% of average daily sub-account assets) Minimum guaranteed annual interest rate CDSC (% of amount surrendered) Minimum total annual portfolio expenses (% of average daily net asset value) Maximum total annual portfolio expenses (% of average daily net asset value) A 27 1.25 0.75 to 0.90 4 N/A 0.34 1.73 B 24 1.25 0.75 to 0.90 4 12 YR 0.34 1.73 C 47 1.25 0.75 to 0.90 4 12 YR 0.34 1.73 D 47 1.25 0.75 to 0.90 4 7 YR 0.34 1.73 E 51 1.25 0.45 4 N/A 0.34 1.73 F 47 1.25 0.75 to 0.90 4 N/A 0.34 1.73 Original Old Contracts [Account DC-I and Account Two] Type of contract Number of mutual funds M&E risk and administrative charge (payout period) (% of average daily sub-account assets) M&E risk and administrative charge (pay-in period) (% of average daily sub-account assets) Minimum guaranteed annual interest rate CDSC (% of amount surrendered) Minimum total annual portfolio expenses (% of average daily net asset value) Maximum total annual portfolio expenses (% of average daily net asset value) U 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 V 10 1.25 0.75 to 0.90 4 12 YR 0.34 0.91 W 10 1.25 0.75 to 0.90 4 12 YR 0.34 0.91 X 10 1.25 0.75 to 0.90 4 7 YR 0.34 0.91 Y 10 1.25 0.45 4 N/A 0.34 0.91 Z 10 1.25 0.75 to 0.90 4 N/A 0.34 0.91 New Contracts [Account Eleven] Type of contract Number of mutual funds M&E risk and administrative charge (payout period) (% of average daily sub-account assets) M&E risk and administrative charge (pay-in period) (% of average daily sub-account assets) Minimum guaranteed annual interest rate CDSC (% of amount surrendered) Minimum total annual portfolio expenses (% of average daily net asset value) Maximum total annual portfolio expenses (% of average daily net asset value) New Contract 48 0.70 0.70 4 N/A 0.34 1.49 18. Hartford Life does not assess a CDSC under Original Old Contracts U, Y and Z and 457 Contracts A, E and F. Likewise, Hartford Life does not assess a CDSC under the New Contract. Under the Original Old Contracts V, W and X, and the 457 Contracts B, C and D, a CDSC may be assessed against the amount withdrawn or surrendered by a Contract owner. However, those who will be moved to the Original Old Contracts or from the Modified Old Contracts will not be subject to a CDSC. 19. As the tables indicate, with two exceptions, the mortality and expense risk and administrative charge during the accumulation period under the New Contracts is less than that imposed under the Original Old Contracts and the 457 Contracts. The mortality and expense risk and administrative charge during the annuity payment period under the New Contracts is substantially less than that imposed under the Original Old Contracts and the 457 Contracts. 20. Hartford Life may deduct a charge corresponding to any applicable state or municipal premium taxes under each Contract. Hartford Life may deduct the charge for premium taxes at the time of payment of such taxes to the appropriate taxing authority, surrender of the Contract, upon payment of a death benefit or upon the commencement of annuity payments to a participant (or beneficiary). 21. Under the Original Old Contracts and the 457 Contracts, Hartford Life reserves the right to deduct a $5 fee for each transfer Contract value between or among sub-accounts in a Contract year. Under New Contracts, Hartford Life reserves the right to deduct a $5 fee for each transfer in excess of twelve transfers of Contract value within a participant account by a participant between or among the sub-accounts in any participant account year. Currently, the Company does not assess a transfer fee under any Contract. 22. The sub-accounts of Account Eleven offered by the New Contracts invest in all but a few of the mutual funds (or variable insurance fund counterparts) in which the sub-accounts of Account 457 invest. In most cases, where a particular mutual fund available under a 457 Contract (or its variable insurance fund counterpart) is not available as an investment option under the New Contract, a mutual fund with substantially identical or closely comparable investment objectives and principal strategies would be available under the New Contract. In all but five cases, these alternative mutual funds had the same or lower total expenses during their most recent fiscal year. In all but four cases, these alternative mutual funds have the same investment adviser as the fund they would “replace.” Notwithstanding this, with two exceptions, for each sub-account available under the New Contract that has a counterpart under an Original Old Contract or a 457 Contract, the annual mortality and expense risk and administrative charge when combined with the annual expense ratio of the mutual fund in which such sub-account invests, is less under the New Contract than under either the Original Old Contract or the 457 Contract. 23. As explained in more detail immediately below, this Application relates to Modified Old Contracts and 457 Contracts sold to tax-exempt plan sponsors. In each case, a tax-exempt plan sponsor purchased a Contract to fund its obligations to participants in a non-qualified deferred compensation plan established by it pursuant to IRC sections 457(b) and 457(e)(1)(B). 3 Also, in each case, the plan participants are employees, past employees, or beneficiaries of employees or past employees of the tax-exempt plan sponsor. 3 In contrast, issuers may rely on section 3(a)(2) of the 1933 Act in connection with the offer and sale of unregistered securities to government plan trustees, because non-qualified deferred compensation plans established by state and municipal governments, or instrumentalities thereof, pursuant to IRC sections 457(b) and 457(e)(1)(A) come within the definition of a “governmental plan” in section 3(a)(2)(C) of the 1933 Act. *See Mass Mutual Life Insurance Company, et al* ., (Aug. 10, 1998). 24. Taken together, IRC sections 457(b) and 457(e)(1)(B) permit a tax-exempt employer to enter into an agreement with one or more of its employees pursuant to which compensation otherwise payable to the employee is withheld by the employer and paid to the employee at a future time. By this mechanism, the employee defers receipt of the compensation for federal income tax purposes until such time as the employer actually pays the compensation to the employee. Typically, deferred compensation agreements between tax-exempt employers and their employees provide for the employer to pay the deferred amount plus interest at a specified rate to the employee at specific date in the future or, subject to certain limitations, within a specified period time after the employee requests payment. In lieu of paying interest on the deferred amount, the agreement may call for payment of the deferred amount plus or minus the performance of a specified measure, such as a securities index or a mutual fund. Under sections 457(b) and 457(e)(1)(B), the employer is fully responsible for making the payments required by the deferred compensation agreement. In this regard, the deferred compensation agreements are, in effect, promissory notes issued by the employer, and the employees to whom the deferred compensation is owed are general creditors of the employer. Employees having deferred compensation agreements with a tax-exempt employer are not preferred creditors of the employer and have no security interest in the deferred amounts held by the employer. 25. Tax-exempt plan sponsors are not required to invest the compensation deferred by their employees pursuant to deferred compensation agreements. They are free to bear the risk that they will not have sufficient assets to make payment of the deferred amounts plus earnings (or minus losses) owed to employees under the deferred compensation agreements. Many tax-exempt employers, however, choose to invest the deferred amounts in a manner that will ensure that they can make payment under deferred compensation agreements which they have entered into. The Original Old Contracts, Modified Old Contracts and the 457 Contracts were designed as investment vehicles for this purpose and the tax-exempt plan sponsors use their Original Old Contract, Modified Old Contract or 457 Contract to fund their obligations to their employees (or employees' beneficiaries) or to past employees (or beneficiaries of past employees) under the sponsors' non-qualified deferred compensation plans. 26. Consistent with the foregoing, the Modified Old Contracts and the 457 Contracts provide the owner with all the rights and privileges of ownership and do not reserve any such rights and privileges to the employees with whom the employer has deferred compensation agreements ( *i.e.* , the participants in the non-qualified deferred compensation plan). 27. During the period from the early 1980s through April 2001, Hartford Life issued the Original Old Contracts to both tax-exempt plan sponsors and government plan trustees. Beginning in May 1992, Hartford Life began offering endorsements to the Original Old Contracts to make available to owners of such Contracts sub-accounts of one or more of the Unregistered DC Accounts as investment options. At that time and thereafter, Hartford Life intended only to issue the Unregistered DC Account endorsements to Original Old Contracts held by government plan trustees and not to Contracts held by tax-exempt plan sponsors. Unfortunately, Hartford Life inadvertently issued endorsements offering the sub-accounts of one or more of the Unregistered DC Accounts as investment options to certain tax-exempt plan sponsors in connection with their Original Old Contracts. In most cases, tax-exempt plan sponsors holding Modified Old Contracts have (usually pursuant to participant instructions) invested some or all of their tax-exempt plan's assets in one or more sub-accounts of the Unregistered DC Accounts. As of the date of this Application, seventy-one Modified Old Contracts held by tax-exempt plan sponsors have Contract value allocated to sub-accounts of one or more of the Unregistered DC Accounts. 28. Unfortunately, issuers, such as insurance companies and their separate accounts, may not rely on the exemption from registration provisions of the 1933 Act provided by section 3(a)(2) of the 1933 Act when offering and selling securities to tax-exempt plan sponsors as funding vehicles for such sponsors' non-qualified deferred compensation plans established pursuant to IRC sections 457(b) and 457(e)(1)(B). As a result, through the seventy-one Modified Old Contracts, Separate Account DC-III, Separate Account DC-IV, Separate Account DC-V and Separate Account DC-VI issued interests to the tax-exempt plan sponsors holding such Contracts that should have been registered under the 1933 Act, but were not. 29. In addition, from the time Hartford Life invested the first purchase payment under a Modified Original Contract held by a tax-exempt plan sponsor in an Unregistered DC Account, that Account has failed to meet the requirements for relying on section 3(c)(11) of the Act. This is because reliance on section 3(c)(11) requires, among other things, that the assets of the separate account be derived solely from: • Contributions from pension and profit sharing plans meeting the requirements of IRC section 401, or the requirements for the deduction of the employer's contribution under IRC section 404(a)(2); • Contributions under government plans in connection with which interests, participations, or securities are exempted from the registration provisions of the 1933 Act by section 3(a)(2)(C) thereof; and • Advances made by the insurance company in connection with the operation of the separate account. Some of each Unregistered DC Account's assets were derived from contributions from tax-exempt plans rather than the specified pension and profit-sharing plans or government plans. As a result, each of the Unregistered DC Accounts should have been registered as an investment company under the Act, but was not. 30. Applicant's state that in order to restore the ability of the Unregistered DC Accounts to rely on section 3(c)(11) of the Act, as well as to mitigate any potential liability under the 1933 Act and the Act, Hartford Life proposes to remove from each Unregistered DC Account all assets attributable to purchase payments under Modified Old Contracts held by tax-exempt plan sponsors via the rescission offer described below. 31. From August 11, 2001 through November 15, 2003, Hartford Life inadvertently issued fourteen 457 Contracts to tax-exempt plan sponsors that owned Original Old Contracts or Modified Old Contracts. The 457 Contracts were new contracts and not endorsements to either an Original Old Contract or a Modified Old Contract. During the period that Hartford Life issued the 457 Contracts, it was undergoing a conversion from one electronic data processing system used to administer its group variable annuity contracts business to a new and better system. Among other things, the conversion involved the replacement of most Original Old Contracts and Modified Old Contracts held by government plan trustees with 457 Contracts. The replacement of Original Old Contracts and Modified Old Contracts with 457 Contracts entailed the transfer of Contract value from sub-accounts of Account DC-I, Account Two, and one or more of the Unregistered DC Accounts, to corresponding sub-accounts of Account 457. The replacement of Original Old Contracts and Modified Old Contracts with the 457 Contracts also entailed the investment of subsequent purchase payments in sub-accounts of Account 457 rather than sub-accounts of Account DC-I, Account Two, and one or more of the Unregistered DC Accounts. 32. Hartford Life did not intend to permit, in connection with the system conversion, tax-exempt plan sponsors to replace their Original Old Contracts or Modified Old Contracts with 457 Contracts. Nevertheless, during the period when approximately 1,000 government plan trustees replaced their Old Original Contracts and Modified Old Contracts with 457 Contracts, fourteen tax-exempt plan sponsors did likewise. As in the case of interests in the Unregistered DC Accounts made available to tax-exempt plan sponsors under Modified Old Contracts, Account 457 issued interests to tax-exempt plan sponsors through 457 Contracts that should have been registered as securities under the 1933 Act but were not. Similarly, from the time Hartford Life invested the first purchase payment under a 457 Contract held by a tax-exempt plan sponsor in Account 457, that Account has failed to meet the requirements for relying on section 3(c)(11) of the Act. As a result, Account 457 should have been registered as an investment company under the Act, but was not. 33. Applicants believe that in order to restore the ability of Account 457 to rely on section 3(c)(11) of the Act, as well as to mitigate any potential liability under the 1933 Act and the Act, Hartford Life proposes to remove from the Account 457 all assets attributable to purchase payments under the 457 Contracts held by tax-exempt plan sponsors via the rescission offer described below. Proposed Rescission Offers 34. Hartford Life believes that it must take all action reasonably practicable to mitigate or reverse any adverse consequences to tax-exempt plan sponsors and their participants arising from investment in the Unregistered DC Accounts under Modified Old Contracts. Therefore, Hartford Life proposes to offer each affected tax-exempt plan sponsor the opportunity to
(1)Exchange its Modified Old Contract for a New Contract, or
(2)surrender the endorsement attached to the Modified Old Contracts and either
(a)exchange its interests in the Unregistered DC Accounts for interests in Account DC-I and/or Account Two by transferring all contract value from the sub-accounts of the Unregistered DC Accounts to the sub-accounts of Account DC-I and/or Account Two, or
(b)exchange its interests in the Unregistered DC Accounts for interests in Account DC-I and/or Account two by accepting a new contract value equal to the contract value as of a stated reinstatement date plus interest invested in Account DC-I and/or Account two, as described below. The second option would have the effect, more or less, of “restoring” the Original Old Contract. Alternatively, each tax-exempt plan sponsor may elect to surrender its Modified Old Contract. Expressed in more detail, the options are: • To exchange their Modified Old Contract for a New Contract (“Option 1”); • To transfer contract values under their Modified Old Contract that are invested in Separate Account DC-III, Separate Account DC-IV, Separate Account DC-V and Separate Account DC-VI to corresponding or sponsor-designated investment options under their Modified Old Contract in Account DC-I and/or Account Two or, if it would result in a greater contract value, to “reinstate” all contract values as they were under their Original Old Contract at the time contract values were first invested in Separate Account DC-III, Separate Account DC-IV, Separate Account DC-V or Separate Account DC-VI (the “Option 2 reinstatement date”) and crediting such contract values with interest for the period from the Option 2 reinstatement date until the date a plan sponsor elects Option 2 at an annual rate of 3%, as described below (“Option 2”); or • To surrender their Modified Old Contract for its full contract value without the imposition of any surrender or withdrawal charges (“Option 3”). If a sponsor does not elect one of the foregoing options, Hartford Life would consider Option 1 as the default option. 35. Hartford Life would credit interest under Option 2 in a manner that makes appropriate adjustments to take into account purchase payments and withdrawals made after the Option 2 reinstatement date by crediting interest each month at a rate of 0.247% (the monthly equivalent of an annual rate of 3%) on the amount equal to the total contract value under a Modified Old Contract as of the Option 2 reinstatement date, and for each subsequent month until the date on which the sponsor elects an Option: • Plus purchase payments allocated to the contract during the prior month; • Less withdrawals from the contract during the prior month. Purchase payments made under the contract and withdrawals from the contract would be treated as if each occurred in the middle of the month and will be credited with interest for one-half of the month in which the transaction occurs. 36. As in the case of the Modified Old Contracts, Hartford Life believes that it must take all action reasonably practicable to mitigate or reverse any adverse consequences to tax-exempt plan sponsors and their participants arising from investment in Account 457 under the 457 Contracts. Therefore, Hartford Life proposes to offer each affected tax-exempt plan sponsor the opportunity to
(1)Exchange its 457 Contract for a New Contract,
(2)exchange its 457 Contract for its Original Old Contract and transfer all contract value from sub-accounts of Account 457 under its 457 Contract to sub-accounts of Account DC-I and/or Account Two, or
(3)exchange its 457 Contract for its Original Old Contract with contract value equal to the contract value under the Original Old Contract at the time it was first invested in
(a)an Unregistered DC Account, or
(b)Account 457, plus interest, as described below. The second option would have the effect, more or less, of reinstating the Original Old Contract. Alternatively, each tax-exempt plan sponsor may elect to surrender its 457 Contract. Expressed in more detail, the options are: • To exchange their 457 Contract for a New Contract (“Option 1”); • To exchange their 457 Contract for (or “reinstate”) their Original Old Contract by having their 457 Contract values transferred to corresponding or sponsor-designated investment options under their Original Old Contract in Account DC-I and/or Account Two or, if it would result in a greater contract value, to “reinstate” all contract values under their Original Old Contract by reinstating such values as they were at the time that contract values were first invested in Separate Account DC-III, Separate Account DC-IV, Separate Account DC-V, Separate Account DC-VI, or Account 457 (the “Option 2 reinstatement date”) and crediting such contract values with interest for the period from the Option 2 reinstatement date until the date a plan sponsor elects Option 2 at an annual rate of 3%, as described below (“Option 2”); or • To surrender their 457 Contract for its full contract value without the imposition of any surrender or withdrawal charges (“Option 3”). If a sponsor does not elect one of the foregoing options, Hartford Life would consider Option 1 as the default option. 37. Hartford Life would credit interest under Option 2 in a manner that makes appropriate adjustments to take into account purchase payments and withdrawals made under the 457 Contracts (or under the Modified Old Contracts and the 457 Contracts) after the Option 2 reinstatement date by crediting interest each month at a rate of 0.247% (the monthly equivalent of an annual rate of 3%) on the amount equal to the contract value as of the Option 2 reinstatement date, and for each subsequent month until the date on which the sponsor elects an Option: • Plus purchase payments made during the prior month; • Less withdrawals of contract value from during the prior month. Purchase payments and withdrawals would be treated as if each occurred in the middle of the month and will be credited with interest for one-half of the month in which the transaction occurs. 38. Hartford Life proposes to make each of the above offers to essentially “rescind” the Modified Old Contracts and 457 Contracts issued to tax-exempt plan sponsors and put each tax-exempt plan sponsor and plan (including plan participants) in at least as favorable a position as each would have been had no Modified Old Contract or 457 Contract been issued. Unlike many conventional rescission offers, Hartford Life would not offer an option whereby the tax-exempt plan sponsor could elect to retain its current investment ( *i.e.* , a Modified Old Contract or 457 Contract). In this regard, Hartford Life's goal is to remove from the Unregistered DC Accounts all of the assets represented by Modified Old Contracts held by tax-exempt plan sponsors and from Account 457 all of the assets represented by 457 Contracts held by tax-exempt plan sponsors. Hartford Life believes that the offers described in this Application are necessary to restore the status of each Unregistered DC Account and Account 457 as a separate account excluded from the definition of an investment company pursuant to section 3(c)(11) of the Act. Similarly, Hartford Life believes that the offers described in this Application are necessary to mitigate any potential liability to itself, the Unregistered DC Accounts and Account 457 that may arise under the 1933 Act and/or the Act as a result of the events described above. 39. Hartford Life proposes to make the exchange offers through a supplement to the prospectuses for the New Contracts to be included with such prospectuses in the Form N-4 registration statement for the New Contracts and Separate Account Eleven. Hartford Life intends to use two such supplements: One to make an exchange offer to tax-exempt plan sponsors that currently own Modified Old Contracts, and another to make an exchange offer to tax-exempt plan sponsors that own 457 Contracts (including such tax-exempt plan sponsors that previously owned Modified Old Contracts). The supplements will notify tax-exempt plan sponsors of the exchange offer being made to them and explain the terms of the offer in detail. Among other matters, each supplement will describe the following: • The purpose of the exchange offer; • The material terms of the exchange offer, such as the expiration date and the specifics of each option a tax-exempt sponsor may elect; • The material differences between the Contract held by the tax-exempt plan sponsor and the New Contract or Original Old Contract, as applicable, including but not limited to, fees and charges, number of sub-accounts available under each Contract and the mutual funds in which each invests, and the minimum and maximum total annual operating expenses for such funds; • Procedures for electing an exchange offer option; and • The advantages and disadvantages of each of the exchange offer options. 40. Each supplement will clearly disclose the fact that Option 1 will apply in the event the tax-exempt plan sponsor fails to elect another option by the expiration date. If an election form is incomplete, Hartford Life will contact the tax-exempt plan sponsor by telephone and facsimile for instructions. Included in either the supplement or an accompanying letter will be each tax-exempt plan sponsor's Option 2 reinstatement date and Option 2 reinstatement value. Also included with the accompanying letter will be information identifying each mutual fund available under the Modified Old Contracts or the 457 Contracts that is not available under the New Contract along with an explanation that if a tax-exempt plan sponsor does not provide instructions as to reallocating contract value in sub-accounts invested in such funds, then such contract value will be allocated under the New Contract by default to a sub-account investing in a money market mutual fund. In addition, the letter will also identify each fund offered under the New Contract that is a variable insurance product “clone” of a fund available under the Modified Old Contracts or the 457 Contracts. 41. Tax-exempt plan sponsors and their plans will not incur any fees or charges in connection with any of the proposed exchange offer options. Hartford Life will bear all costs associated with administering the exchange offers. In addition, tax-exempt plan sponsors that elect an exchange offer option or have Option 1 imposed on them by default, will not thereby subject their plans to any adverse tax consequences. Hartford Life will not compensate any broker-dealer or agent in connection with the proposed exchange offers. 42. Under each Option 1, the exchange of Modified Old Contracts for New Contracts or 457 Contracts for New Contracts would occur at the relative net asset value of the Contracts with no change in aggregate contract value, the number or size of annuity payments being made under a Contract, or the amount or value of death benefits available under a Contract. Hartford Life would waive any CDSC otherwise applicable upon the exchange of a Modified Old Contract or a 457 Contract for a New Contract. 43. Upon exchange of a Modified Old Contract or 457 Contract for a New Contract, Hartford Life would transfer contract value from each sub-account under a Modified Old Contract or a 457 Contract (“old sub-account”) to a sub-account under the New Contract that invests in the same underlying mutual fund as the old sub-account (“corresponding new sub-account”). If there is no corresponding new sub-account for one or more old sub-accounts under the Modified Old Contract or 457 Contract, Hartford Life would transfer Contract value from the old sub-accounts under the Modified Old Contract or 457 Contract to sub-accounts under the New Contract upon the direction of the tax-exempt plan sponsor. If the tax-exempt plan sponsor does not provide such direction, Hartford Life would transfer contract value from old sub-accounts under the Modified Old Contract or 457 Contract to a sub-account under the New Contract that invests in a money market mutual fund. 44. Under Option 2 relating to the Modified Old Contract offers, the transfer of contract value from sub-accounts of the Unregistered DC Accounts to sub-accounts of Account DC-I and/or Account Two would occur at the relative net asset value of the Contracts with no change in aggregate contract value, the number or size of annuity payments being made under a Contract, or the amount of death benefits available under a Contract. Hartford Life also would waive any CDSC remaining under the Modified Old Contract in the future. Under Option 2 relating to the 457 Contract offers, the exchange of 457 Contracts for reinstated Original Old Contracts and the related transfer of contract value from sub-accounts of Account 457 to sub-accounts of Account DC-I and/or Account Two under Original Old Contracts would occur at the relative net asset value of the Contracts with no change in aggregate contract value, the number or size of annuity payments being made under a Contract, or the amount of death benefits available under a Contract. Hartford Life would waive any CDSC otherwise applicable upon the exchange of 457 Contracts for reinstated Original Old Contracts and the related transfer of contract value from sub-accounts of Account 457 to sub-accounts of Account DC-I and/or Account Two. Likewise, Hartford Life would waive any CDSC under the reinstated Original Old Contract that would otherwise apply in the future. 45. Under Option 2 relating to both the Modified Old Contract offers and the 457 Contract offers, Hartford Life would transfer contract value from each sub-account under a Modified Old Contract or 457 Contract to a sub-account of Account DC-I and/or Account Two that invests in the same underlying mutual fund as the sub-account from which such value was transferred. If there is no corresponding sub-account for one or more sub-accounts under the Modified Old Contract or 457 Contract, Hartford Life would transfer contract value from the sub-accounts under the Modified Old Contract or 457 Contract to sub-accounts of Account DC-I and/or Account Two upon the direction of the tax-exempt plan sponsor. If the tax-exempt plan sponsor does not provide such direction, Hartford Life would transfer contract value from sub-accounts under the Modified Old Contract or 457 Contract to a sub-account of Account DC-I and/or Account Two that invests in a money market mutual fund. 46. Alternatively, under Option 2 relating to both the Modified Old Contract offers and the 457 Contract offers, Hartford Life would reinstate contract value under the Original Old Contract at the amount existing in sub-accounts of Account DC-I and/or Account Two immediately before the tax-exempt plan sponsor first invested contract value in one of the Unregistered DC Accounts or Account 457 and credit such contract value with interest at an annual effective rate of 3% for the period from that date until the date of the tax-exempt plan sponsor's election of Option 2. As described above, adjustments would be made to reflect subsequent purchase payments and withdrawals made since the reinstatement date. With regard to Option 2, Hartford Life would only implement the interest rate alternative if a tax-exempt plan sponsor elects Option 2 and the interest rate alternative would result in a greater reinstated contract value for the tax-exempt plan sponsor than the primary Option 2 alternative. 47. Under the interest rate alternative for Option 2, Hartford Life would waive any CDSC otherwise applicable upon the exchange of a 457 Contract for a reinstated Original Old Contract and would waive any CDSC under the reinstated Original Old Contract that would otherwise apply in the future. 48. Under Options 1 and 2, for Contracts pursuant to which Hartford Life maintains individual participant accounts, exercise of the exchange offer options would not alter the value of such accounts, the number or size of annuity payments being made in connection with such accounts, or the amount of death benefits available in connection with such accounts. 49. For the reasons set forth below, Applicants believe the proposed exchanges will benefit the tax-exempt plan sponsors and their plans. Except for:
(1)The number of sub-accounts available and the particular mutual funds in which such sub-accounts invest; and
(2)small variations in the fees and charges, the Original Old Contracts, Modified Old Contracts, 457 Contracts and New Contracts are substantially the same in most material respects. In particular, all four types of Contracts offer the same surrender, withdrawal, dollar cost averaging, general account investment option, death benefit and annuity payment option features. Therefore, except as described below in connection with mutual fund investment options and fee and charge variations, the tax-exempt plan sponsors and their plans should be in at least as favorable a position after electing an exchange offer option (or defaulting into Option 1) as they were before the proposed exchange offers. Moreover, for tax-exempt plan sponsors that elect a New Contract, they and their plans should be better off than they would have been had they continued to hold their Modified Old Contract or 457 Contract. 50. The mortality and expense risk and administrative charge under the New Contracts is lower than the mortality and expense risk and administrative charges assessed under the Modified Old Contracts and, with one exception, lower than the mortality and expense risk and administrative charges assessed under the 457 Contracts. 4 Under Modified Old Contracts and 457 Contracts, Hartford Life assesses a mortality and expense risk charge during the accumulation period at annual rates ranging from .75% to .90% of average daily sub-account net assets. (The rate for any Modified Old Contract or 457 Contract may also be a function of reductions due either to experience rating or reductions negotiated by the tax-exempt plan sponsor with Hartford Life.) Under Modified Old Contracts and 457 Contracts, the mortality and expense risk charge during the annuity payment period is at an annual rate of 1.25% of average daily sub-account net assets. Under New Contracts, the mortality and expense risk and administrative charge is a flat annual rate of 0.70% of average daily sub-account net assets during both the accumulation period and the annuity payment period. 5 Reductions in the mortality and expense risk and administrative charge charges due to experience rating and negotiated rates are available under the New Contracts on the same basis as the same are available under the Modified Old Contracts and the 457 Contracts. 4 The exception is the type E 457 Contract, which has a charge of 0.45% of average daily sub-account net assets. The rate for type E Contracts was the result of experience ratings or negotiation, or both. There are two type E 457 Contracts outstanding. 5 However, to preserve prior experience ratings and/or negotiated rates, any New Contract issued to a holder of a type E 457 Contract will have a mortality and expense risk and administrative charge of 0.45% of average daily sub-account net assets. 51. The vast majority of underlying mutual funds available under the New Contracts have total operating expenses that are lower (in many cases, substantially lower) than the total operating expenses of the corresponding underlying mutual funds available under the Modified Old Contracts and the 457 Contracts. Most significantly, as a result of the lower mortality and expense risk and administrative charge rates under the New Contracts, for any sub-account of Account Eleven available under the New Contracts, the aggregate of such charges on an annual basis and the total annual expenses of the mutual fund in which that sub-account invests, will be less than the same aggregate for the corresponding sub-account of either Account DC-I or Account Two available under the Modified Old Contracts or the corresponding sub-account of Account 457 available under the 457 Contracts. 52. If a tax-exempt plan sponsor elects Option 1 under either the Modified Old Contract exchange offer or the 457 Contract exchange offer, it will have available as investment options for itself and participants in its plan, 48 sub-accounts offering an indirect investment in 48 mutual funds. This array of mutual funds represents the most attractive line-up of funds offered by Hartford Life to government plan trustees, tax-exempt plan sponsors and other retirement plan sponsors in its latest and most attractive group variable annuity contracts. In the event that a tax-exempt plan sponsor elects Option 2 under an offer, the sponsor and its plan (including plan participants) would be in the same position vis-a-vis available sub-account investment options as they would have been had no 457 Contracts or Modified Old Contracts been issued. 53. Under Options 1 and 2 relating to the Modified Old Contract offers, a tax-exempt plan sponsor would replace interests in one or more of the Unregistered DC Accounts that are not registered as securities under the 1933 Act with interests in Account DC-I, Account Two or Account Eleven which would be registered as securities under the 1933 Act. Likewise, under Options 1 and 2 relating to the 457 Contract offers, a tax-exempt plan sponsor would replace interests in Account 457 that are not registered as securities under the 1933 Act with interests in Account DC-I, Account Two or Account Eleven which would be registered as securities under the 1933 Act. As a result, such tax-exempt plan sponsors would, among other things, receive prospectuses and other disclosure documents at regular intervals in a prescribed format and otherwise obtain the protections of the 1933 Act and rules and regulations thereunder. Similarly, such tax-exempt plan sponsors would be exchanging interests in one or more of the Unregistered DC Accounts or Account 457 which are not registered as investment companies under the Act, for interests in Account DC-I, Account Two or Account Eleven which are each registered as an investment company under the Act and thereby obtain for themselves and the participants in their plans the considerable protections of the Act. Applicants' Legal Analysis 1. Section 11(a) of the Act makes it unlawful for any registered open-end investment company, or any principal underwriter for such an investment company, to make an offer to the holder of a security of such investment company, or of any other open-end investment company, to exchange his or her security for a security in the same or another such company on any basis other than the relative net asset values of the respective securities, unless the terms of the offer have first been submitted to and approved by the Commission or are in accordance with Commission rules adopted under section 11. Section 11(c) of the Act provides the provisions of section 11(a) are applicable to any offer of exchange of the securities of a registered unit investment trust for the securities of any other investment company regardless of the basis of the exchange. As a result, the Commission must approve any such offer unless the offer satisfies an applicable rule adopted under section 11. 2. Applicants state that the primary purpose of section 11 of the Act is to prevent “switching”—the practice of inducing security holders of one investment company to exchange their securities for those of a different investment company “solely for the purpose of exacting additional selling charges.” In the 1930s prior to adoption of the Act, Congress found evidence of widespread “switching” operations. The legislative history of section 11 makes it clear that the potential for harm to investors perceived in switching was its use to extract additional sales charges from those investors. Accordingly, applications under section 11(a) and orders granting those applications appropriately have focused on sales loads or sales load differentials and administrative fees to be imposed for effecting a proposed exchange and have ignored other fees and charges, such as the respective advisory fee charges of the exchanged and acquired securities. 3. The Applicant states that section 11(c) of the Act requires Commission approval (by order or by rule) of any exchange, regardless of its basis, involving securities issued by a unit investment trust, because Congress found investors in unit investment trusts to be particularly vulnerable to switching operations. As noted by the Commission, “In order to earn another sales commission, a [unit investment trust] sponsor would often pressure unitholders into exchanging their units for those of another of the sponsor's trusts.” 4. The Commission adopted Rule 11a-2 under Section 11 of the Act in 1983. By its terms, the Rule permits certain offers of exchange of one variable annuity contract for another or interests in one registered separate account through which variable annuity contracts are issued for interests in another registered separate account. More specifically, Rule 11a-2 permits exchange offers involving variable annuity contracts provided that the only variance from a relative net asset value exchange is an administrative fee disclosed in the registration statement of the offering separate account and/or a sales load or sales load differential calculated according to methods prescribed in the rule. 5. Under Option 1 of the Modified Old Contract offers, a tax-exempt plan sponsor that exchanges a Modified Old Contract for a New Contract would effect a transfer of assets held in Account DC-I, Account Two and/or the Unregistered DC Accounts to Account Eleven. Likewise, under Option 1 of the 457 Contract offers, a tax-exempt plan sponsor that exchanges a 457 Contract for a New Contract would effect a transfer of assets from Account 457 to Account Eleven. Along with the transfer of assets to Account Eleven, such a tax-exempt plan sponsor would receive an interest in Account Eleven equal to the contract value in its New Contract. 6. Election of Option 2 of the Modified Old Contract offers by a tax-exempt plan sponsor would result in a transfer of assets representing contract value under the sponsor's Modified Old Contract from one or more of the Unregistered Accounts to Account DC-I and/or Account Two. Likewise, election of Option 2 of the 457 Contract offers by a tax-exempt plan sponsor would result in a transfer of assets representing contract value under the sponsor's 457 Contract from Account 457 to Account DC-I and/or Account Two. Along with the transfer of assets to Account DC-I and/or Account Two, such a tax-exempt plan sponsor would receive an interest in Account DC-I and/or Account Two equal to the contract value in its New Contract. 7. Account DC-I, Account Two and Account Eleven is each registered with the Commission under the Act as a unit investment trust. Each of the Unregistered Accounts and Account 457, not currently being able to rely on the section 3(c)(11) exclusion from the definition of an investment company, are investment companies; though not registered as such under the Act. Accordingly, Hartford Life's proposed offer to exchange interests in each for interests held by the tax-exempt plan sponsors in the Unregistered Accounts or Account 457, would constitute an offer to exchange securities of a registered unit investment trust for securities of another investment company. Thus, unless the terms of each proposed offer are consistent with those permitted by a Commission rule, Applicants may only make the proposed offers pursuant to a Commission order under section 11(a) approving the terms of the offers. 8. Applicants assert that the terms of the exchange offers proposed in this application are such that the offers would not involve any of the practices section 11 of the Act was designed to prevent and are otherwise fair and equitable to the tax-exempt plan sponsors and their plans (including plan participants) because: • Tax-exempt plan sponsors would receive full disclosure of all material aspects of the proposed exchange offers including: ○ Complete discussion of each Option available; ○ A complete discussion of their rights in connection with the offers; and ○ Prospectuses for New Contracts and Original Old Contracts; • No charges (including any CDSC) would be imposed in connection with the proposed exchange offers and therefore the exchanges would be made on the basis of the relative net asset value; • Tax-exempt plan sponsors and their plans (including plan participants) would not be subject to a CDSC or any other sales charge under the New Contracts or Original Old Contracts; • In all material respects, the New Contracts would be at least as favorable, if not more favorable, to tax-exempt plan sponsors and their plans (including plan participants) as either the 457 Contracts or the Modified Old Contracts; • Most of the mutual funds available to tax-exempt plan sponsors and their plans (including plan participants) as investment options under Modified Old Contracts and 457 Contracts would be available under the New Contracts (or their variable insurance fund counterparts would be available), and to the extent that some funds, or their variable insurance fund counterparts, are not available under the New Contracts, alternative mutual funds with substantially the same or similar investment objectives and strategies would be available as investment options; • Tax-exempt plan sponsors that do not elect another Option, may elect to surrender their Modified Old Contract or 457 Contract without the imposition of any surrender or withdrawal charge; and • Based on their review of existing federal income tax laws and regulations, Applicants believe that tax-exempt plan sponsors and their plans (including plan participants) would not suffer any adverse tax consequences as a result of electing any Option in connection with the proposed exchange offers. 9. Applicants believe that the terms of the exchange offers proposed in this application meet the standards established by the Commission for exchange offers to holders of group variable annuity contracts issued through separate accounts registered as unit investment trusts under the Act. The conditions of Rule 11a-2 reflect theses standards and the terms of the proposed exchange offers meet the conditions of the Rule. In fact, Applicants would be able to rely on Rule 11a-2 if the Unregistered DC Accounts and Account 457 were registered with the Commission as investment companies under the Act. Applicants submit that, in making exchange offers proposed herein, they should not be subject to conditions more stringent than those found in Rule 11a-2. 10. Applicants further submit that the specific terms of the process by which tax-exempt plan sponsors would elect an Option in response to the proposed offers, including the implementation of Option 1 as a default option in the event that a tax-exempt plan sponsor does not affirmatively elect any Option, would satisfy the standards of section 11. The Commission has broad authority to approve the terms of an exchange offer under Section 11 that is fair and does not result in switching or the other types of potential abuses at which Section 11 is directed. There are no statutory standards relating to requirements for, or the manner of obtaining, elections or approvals from parties in situations similar to those of the Applicants explained above when conducting an exchange subject to section 11. This is supported by Rule 11a-2 which sets forth a number of specific requirements under which exchanges offers involving variable annuity contracts (and interests in separate accounts through which such contracts are issued) are permissible. All of the applicable requirements of the Rule concern the basis of the exchange and/or the fees that may be imposed, but the Rule does not regulate the manner by which investors may elect an option under an exchange offer. Accordingly, the Commission may find, and in the past has found, that a default election in an exchange offer is permissible if the application sets forth facts that demonstrate that the offeror cannot permit an offeree to retain its current investment and that the overall terms of the offer are otherwise fair and equitable to investors. 11. Moreover, Applicants state that the Commission staff has consistently taken “no-action” positions under section 22(e) of the Act with respect to the analogous issue of forced redemptions of mutual fund shares when certain conditions were met. In these situations, a basic investment decision ( *i.e.* , the decision to redeem) was permitted to be made on behalf of investors on the basis of informed, implied consent. These letters, in effect, permit such forced redemptions on the basis of notice to shareholders and prospectus disclosure of those events which may trigger such a redemption ( *i.e.* , account falling below a certain value, failure to provide a taxpayer identification number, negative balances in other accounts, etc.) and the absence of any action by a shareholder to take an available alternative route within a specified time period. Applicants submit that the communications which will be made to tax-exempt plan sponsors with respect to their rights under all of the Options to provide for timely and extensive disclosure comparable to that which is required for these automatic redemptions of mutual fund shares. 12. Applicants believe that the legislative history of section 11 makes it clear that Congress believed the potential harm to investors from “switching” was its use to extract additional sales charges from those investors. Consequently, prior applications under section 11(a) (and orders granted in response to those applications) appropriately focused on sales loads or sales load differentials and administrative fees to be imposed in connection with a proposed exchange offer. In granting approval orders requested in prior section 11 applications involving the exchange of one variable annuity contract for another, or the exchange of interests in one registered separate account for another, the Commission staff has considered whether or not the consummation of the exchange would have inequitable results for contract owners, and has viewed the absence of duplication of sales loads and administrative fees in effecting the exchanges as persuasive evidence that the proposed exchange does not present the abuses section 11 of the Act designed to prevent. 13. Applicants state that in the event that the Commission does not issue an order under section 11 approving the proposed exchange offers, Hartford Life will be forced, at great expense, to register the Unregistered DC Accounts and Account 457 as investment companies under the Act and to register interests issued in such Accounts issued through Modified Old Contracts and the Tax-Exempt 457 Contracts as securities under the 1933 Act. Registration of the Unregistered DC Accounts and Account 457 as investment companies would be particularly burdensome because each would have to comply with the extensive regulatory regime imposed by the Act. Applicants submit that any benefit to the government plan trustees and their plans (including plan participants) from such registration could not justify the great expense and other considerable burdens attendant to such registration. Because the government plan trustees and their plans make up the overwhelming majority of investors in each Unregistered DC Account and Account 457, Applicants believe that the proposed exchange offers represent a far more efficient, reasonable and balanced response to the inadvertent issuance of the Modified Old Contracts and the 457 Contracts to tax-exempt plan sponsors. Conclusion Applicants submit that, for the reasons discussed above, the terms of the proposed exchange offers are such that the offers would not entail any of the practices section 11 was intended to prevent and are otherwise fair and equitable to the tax-exempt plan sponsors, their plans and participants in their plans. For these reasons, Applicants submit that the terms of the proposed offers are consistent with the protection of investors, the standards that the Commission has applied to prior applications for orders under section 11(a) of the Act, and the purposes fairly intended by the public policies underlying section 11 of the Act. For the Commission, by the Division of Investment Management, pursuant to delegated authority. Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16959 Filed 8-27-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56299; File No. SR-BSE-2007-42] Self-Regulatory Organizations; Boston Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Exchange Fees and Charges August 22, 2007. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on August 15, 2007, the Boston Stock Exchange, Inc. (“BSE” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. The Exchange filed the proposal pursuant to section 19(b)(3)(A)(ii) of the Act 3 and Rule 19b-4(f)(2) thereunder, 4 which renders the proposal effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 4 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Minimum Activity Charge (“MAC”) contained in the Fee Schedule for the Boston Options Exchange (“BOX”). The Exchange proposes to add a seventh category to its MAC table for classes with an Options Clearing Corporation Average Daily Volume (“OCC ADV”) of less than 2,000 contracts. In addition, the Exchange proposes to make a clerical correction to the BOX Fee Schedule to rectify an inadvertent omission from a previous rule filing. 5 The text of the proposed rule change is available at BSE, the Commission's Public Reference Room, and *http://www.bostonstock.com.* 5 *See* Securities Exchange Act Release No. 55197 (January 30, 2007), 72 FR 5772 (February 7, 2007) (SR-BSE-2007-02) (seeking to change the month in which the MAC reclassifications are calculated from January to July, among other proposed changes). II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the MAC which is contained in the Fee Schedule for BOX. The MAC is currently determined using six “categories” of options classes listed by BOX. The category for each class is determined by its total trading volume across all U.S. options exchanges as determined by Options Clearing Corporation data. The Exchange now proposes to change the OCC ADV of Category F from less than 5,000 contracts to an OCC ADV between 2,000 and 4,999 contracts. In addition, the Exchange proposes to establish a seventh category, Category G, for options with an OCC ADV of less than 2,000 contracts, which will charge a MAC of $90 per month. The purpose of establishing a seventh MAC category is to account for the effect that current market conditions have had on Market Maker participation in the less active options. In order to entice new and existing Market Makers to quote and trade in these less active classes, namely those trading with an OCC ADV of approximately 2,000 contracts or less, the Exchange believes it is necessary to adjust the Fee Schedule to better reflect the trading costs associated with those classes by applying a smaller MAC than what was previously charged for classes with an OCC ADV of less than 2,000 contracts. With a more stratified Fee Schedule, Market Makers will now have greater incentive to quote and trade in those relatively less active classes. Therefore, a modified MAC Category F and the reduced MAC for new Category G will encourage more Market Makers into these markets. The Exchange believes that the proposal should promote competition in the less actively traded classes. While the Exchange recognizes that the proposal may increase quote activity in such classes, the Exchange believes that the benefits to increased competition would outweigh any concerns relating to quote capacity. The Exchange further believes that it will not experience an adverse impact on quote capacity as a result of this proposal. In addition to refining the MAC Categories, the Exchange proposes to amend the BOX Fee Schedule to correct an inadvertent omission from a previous rule filing. The Exchange previously filed a proposed rule change to alter the month in which a class's OCC ADV category would be recalculated, from January to July. 6 The text of that proposed rule change did not include all of the necessary edits to the BOX Fee Schedule, and the Exchange now proposes to correct this omission. 6 *See id.* 2. Statutory Basis The Exchange believes that the proposal is consistent with the requirements of section 6(b) of the Act, 7 in general, and furthers the objectives of section 6(b)(4) of the Act, 8 in particular, which requires that an exchange provide for the equitable allocation of reasonable dues, fees, and other charges among its members and issuers and other persons using its facilities. 7 15 U.S.C. 78f(b). 8 15 U.S.C. 78f(b)(4). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange has neither solicited nor received comments on the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change has become effective pursuant to section 19(b)(3)(A)(ii) of the Act 9 and Rule 19b-4(f)(2) 10 thereunder, because it changes a fee imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 9 15 U.S.C. 78s(b)(3)(A)(ii). 10 17 CFR 240.19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File No. SR-BSE-2007-42 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File No. SR-BSE-2007-42. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing will also be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR- BSE-2007-42 and should be submitted on or before September 18, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16956 Filed 8-27-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56297; File No. SR-NASD-2007-041] Self-Regulatory Organizations; National Association of Securities Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.); Notice of Filing of Proposed Rule Change To Amend the Minimum Price-Improvement Standards Set Forth in NASD IM 2110-2, Trading Ahead of Customer Limit Order August 21, 2007. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on June 27, 2007, the National Association of Securities Dealers, Inc. (“NASD”) (n/k/a Financial Industry Regulatory Authority, Inc.) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by FINRA. 3 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 On July 26, 2007, the Commission approved a proposed rule change filed by NASD to amend NASD's Certificate of Incorporation to reflect its name change to Financial Industry Regulatory Authority Inc., or FINRA, in connection with the consolidation of the member firm regulatory functions of NASD and NYSE Regulation, Inc. *See* Securities Exchange Act Release No. 56146 (July 26, 2007), 72 FR 42190 (August 1, 2007) (SR-NASD-2007-053). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change FINRA proposes to amend the minimum price-improvement standards set forth in NASD Interpretive Material (“IM”) 2110-2, Trading Ahead of Customer Limit Order. The text of the proposed rule change is available on FINRA's Web site ( *http://www.finra.org* ), at FINRA, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose On February 26, 2007, the Commission approved SR-NASD-2005-146, 4 which expanded the scope of IM-2110-2 5 to apply to over-the-counter (“OTC”) equity securities. 6 The amendments relating to OTC equity securities are scheduled to become effective on November 26, 2007. 7 Among other changes, SR-NASD-2005-146 amended the minimum level of price-improvement that a member must provide to trade ahead of an unexecuted customer limit order (“price-improvement standards”) as follows. For customer limit orders priced greater than or equal to $1.00 that are at or inside the best inside market, the minimum amount of price improvement required is $0.01. For customer limit orders priced less than $1.00 that are at or inside the best inside market, the minimum amount of price improvement required is the lesser of $0.01 or one-half (1/2) of the current inside spread. For customer limit orders priced outside the best inside market, the member is required to execute the incoming order at a price at or inside the best inside market for the security. Lastly, for customer limit orders in securities for which there is no published inside market, the minimum amount of price improvement required is $0.01. 4 *See* Securities Exchange Act Release No. 55351 (February 26, 2007), 72 FR 9810 (March 5, 2007) (order approving SR-NASD-2005-146). 5 Currently, IM-2110-2 generally prohibits a member from trading for its own account in an exchange-listed security at a price that is equal to or better than an unexecuted customer limit order in that security, unless the member immediately thereafter executes the customer limit order at the price at which it traded for its own account or better. 6 *See* NASD Rule 6610(d) for definition of “OTC equity security.” 7 *See* Securities Exchange Act Release No. 56103 (July 19, 2007), 72 FR 40918 (July 25, 2007) (SR-NASD-2007-039). For example, if the best inside market for a security is $10 to $10.05 and a member is holding a customer limit order to buy priced at $10.01, the member would be permitted to buy at $10.02 or higher, without triggering the customer limit order. If the best inside market for a security is $.50 to $.51 and the member is holding a customer limit order to buy priced at $.50, the member would be permitted to buy at $.505 ($.50 + 1/2 ($.51-$.50)) or higher, without triggering the customer limit order. FINRA is proposing to revise the minimum price improvement standards to address three issues. First, because the minimum price improvement standard is determined based on the lesser of a specified amount ($.01) or 1/2 of the inside spread, the specified amount acts as an “upper limit” on the minimum price improvement requirement. FINRA is concerned that the specified amount or upper limits on the minimum price improvement requirement ( *i.e.* , $.01) is disproportionately high for securities trading below $.01 and should vary proportionately with the amount of the limit order price. To address this inconsistency, FINRA is proposing to add the following maximum upper limits for each price level: For customer limit orders priced less than $.01 but greater than or equal to $0.001, the minimum amount of price improvement required is the lesser of $0.001 or one-half ( 1/2 ) of the current inside spread. For customer limit orders priced less than $.001 but greater than or equal to $0.0001, the minimum amount of price improvement required is the lesser of $0.0001 or one-half ( 1/2 ) of the current inside spread. For customer limit orders priced less than $.0001 but greater than or equal to $0.00001, the minimum amount of price improvement required is the lesser of $0.00001 or one-half ( 1/2 ) of the current inside spread. 8 Lastly, for customer limit orders priced less than $.00001, the minimum amount of price improvement required is the lesser of $0.000001 or one-half ( 1/2 ) of the current inside spread. 9 FINRA believes these proposed requirements are better aligned with the value of the limit order and continue to require an appropriate amount of minimum price improvement over a customer limit order before a member can trade for its own account. 8 The proposed minimum price-improvement provisions in this proposed rule change do not supersede, alter or otherwise affect any of the minimum pricing increment restrictions under Rule 612 of Regulation NMS. Rule 612 of Regulation NMS prohibits market participants from displaying, ranking, or accepting bids or offers, orders, or indications of interest in any NMS stock priced in an increment smaller than $0.01 if the bid or offer, order, or indication of interest is priced equal to or greater than $1.00 per share. If the bid or offer, order, or indication of interest in any NMS stock is priced less than $1.00 per share, the minimum pricing increment is $0.0001. *See* Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496 (June 29, 2005) (File No. S7-10-04) (Regulation NMS Adopting Release). 9 For customer limit orders in securities for which there is no published inside market, the minimum amount of price improvement required would default to the same tiered minimum price improvement standards described herein. FINRA believes that the minimum price improvement requirement of $.01 for customer limit orders in securities for which there is no published inside market is disproportionately high for lower-priced securities and, therefore, the proposed tiered requirements are more appropriate. Second, the current minimum price improvement standard for limit orders priced over $1.00 is $.01 and applies uniformly to NMS stocks 10 and OTC equity securities. However, given that subpenny quoting and trading is permissible in OTC equity securities priced over $1.00 (and therefore subpenny spreads are possible), FINRA believes that the minimum price improvement standard should be adjusted to also include a measure based on the inside spread, consistent with the standards below $1.00. Accordingly, FINRA is proposing that for customer limit orders in OTC equity securities priced greater than or equal to $1.00, the minimum amount of price improvement required is the lesser of $0.01 or one-half ( 1/2 ) of the current inside spread. 11 10 *See* Rule 600(b)(47) of Regulation NMS for definition of “NMS stock.” 17 CFR 242.600(b)(47). 11 Other than the proposed distinction to address permissible subpenny quoting and trading in OTC equity securities priced over $1.00, the proposed price-improvement standards will apply uniformly to NMS stocks and OTC equity securities. *See supra* note 8. Finally, FINRA is proposing to change the minimum price improvement standard for limit orders priced outside the inside market. Although typically trades occur at or inside the best inside market, firms may trade proprietarily outside the best inside market for a variety of reasons, such as where there is little or no depth at the inside market or the inside market is manual or not easily accessible. Under the current requirements, such trades would trigger all limit orders priced outside the inside market, no matter how far outside the inside market the limit order is priced. For example, the best inside market for a security is $.50 to $.51. The member is displaying a quote to buy at $.49 and also is holding a customer limit order to buy priced at $.45. The member's quotation is accessed by another broker-dealer and the member buys at $.49. Under the current requirements, the member would be required to fill the customer's purchase order at $.45 because it had not purchased at the inside market of $.50. FINRA does not believe this is an appropriate result, and is therefore proposing that, where the limit order is priced outside the inside market for the security, the minimum amount of price improvement required must either meet the same tiered minimum price improvement standards set forth above or the member must trade at a price at or inside the best inside market for the security. FINRA believes this will continue to require an appropriate amount of price improvement for a member to trade ahead of a customer limit order, irrespective of whether the limit order is priced inside or outside the best inside market. As noted above, FINRA proposes to implement the proposed rule change on the final implementation date of SR-NASD-2005-146, November 26, 2007. 2. Statutory Basis FINRA believes that the proposed rule change is consistent with the provisions of section 15A(b)(6) of the Act, 12 which requires, among other things, that FINRA rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. FINRA believes that the proposed rule change better reflects trading in low-priced securities and the application of IM-2110-2. 12 15 U.S.C. 78 *o* -3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The original filing, SR-NASD-2005-146, which proposed the recently approved price-improvement standards, was subject to notice and comment. 13 No comments were received in response to the **Federal Register** publication of that filing. However, following Commission approval, several broker-dealers raised concerns regarding the application of the amended price-improvement standards, in particular for securities trading below $.01 and those trading outside the best inside market. One broker-dealer indicated that the inside market may not be a good reflection of trading in certain OTC equity securities. With respect to these low-priced OTC equity securities, the broker-dealer indicated that the amended price-improvements standards could result in a minimum price improvement that is significantly greater than the value of the security. In addition, certain broker-dealers indicated that, under the amended minimum price improvement standards, firms that trade proprietarily outside the best inside market would trigger all customer limit orders outside the best inside market. These broker-dealers recommended that FINRA revisit the amended price-improvement standards to better address trading in low-priced securities and trading outside the best inside market. 13 *See* Securities Exchange Act Release No. 54705 (November 3, 2006), 71 FR 65863 (November 9, 2006) (Notice of filing of SR-NASD-2005-146). III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)As the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve such proposed rule change, or
(B)Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml);* or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-NASD-2007-041 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASD-2007-041. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FINRA. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2007-041 and should be submitted on or before September 18, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 14 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16955 Filed 8-27-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56303; File No. SR-FICC-2007-08] Self-Regulatory Organizations; Fixed Income Clearing Corporation; Notice of Filing of Proposed Rule Change To Resume Interbank Clearing for the General Collateral Finance Repo Service August 22, 2007. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 notice is hereby given that on July 11, 2007, the Fixed Income Clearing Corporation (“FICC”) filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I, II, and III below, which items have been prepared by FICC. The Commission is publishing this notice to solicit comments on the proposed rule change from interested parties. 1 15 U.S.C. 78s(b)(1). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change FICC is seeking to resume interbank clearing for the General Collateral Finance (“GCF”) Repo service. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, FICC included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FICC has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of these statements. 2 2 The Commission has modified the text of the summaries prepared by FICC.
(A)Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Background The GCF Repo service allows FICC Government Securities Division (“GSD”) dealer members to trade general collateral repos throughout the day with inter-dealer broker netting members (“brokers”) on a blind basis without requiring intraday, trade-for-trade settlement on a delivery-versus-payment
(DVP)basis. Standardized, generic CUSIP numbers have been established exclusively for GCF Repo processing and are used to specify the acceptable type of underlying Fedwire book-entry eligible collateral, which includes Treasuries, Agencies, and certain mortgage-backed securities. The GCF Repo service was developed as part of a collaborative effort among FICC's predecessor, the Government Securities Clearing Corporation (“GSCC”), its two clearing banks, The Bank of New York (“BNY”) and The Chase Manhattan Bank, now JP Morgan Chase Bank, National Association (“Chase”), and industry representatives. 3 GSCC introduced the GCF Repo service on an intraclearing bank basis in 1998. 4 Under the intrabank service, dealer members could engage in GCF Repo transactions only with other dealers that clear at the same clearing bank. 3 BNY and Chase remain the two clearing banks approved by FICC to provide GCF Repo settlement services. In the future, other banks that FICC in its sole discretion determines to meet its operational requirements may be approved to provide GCF Repo settlement services. 4 Securities Exchange Act Release No. 40623 (October 30, 1998), 63 FR 59831 (November 5, 1998) (SR-GSCC-98-02). In 1999, GSCC expanded the GCF Repo service to permit dealer members to engage in GCF Repo trading on an interclearing bank basis, which allowed dealers using different clearing banks to enter into GCF Repo transactions on a blind brokered basis. 5 Because dealer members that participate in the GCF Repo service do not all clear at the same clearing bank, expanding the service to be interclearing bank necessitated the establishment of a mechanism to permit after-hours movements of securities between the two clearing banks because GSCC would probably have unbalanced net GCF securities and unbalanced net cash positions within each clearing bank. (In other words, it was probable that at the end of GCF Repo processing each business day, the dealers in one clearing bank would be net funds borrowers while the dealers at the other clearing bank would be net funds lenders.) To address this issue, GSCC and its clearing banks established a legal mechanism by which securities would “move” across the clearing banks without the use of the securities Fedwire. 6 At the end of the day after the GCF Repo net results were produced, securities were pledged using a tri-party-like mechanism, and the interbank cash component was moved through Fedwire. In the morning, the pledges were unwound with the funds being returned to the net funds lenders and the securities being returned to the net funds borrowers. 5 Securities Exchange Act Release No. 41303 (April 16, 1999), 64 FR 20346 (April 26, 1999) (SR-GSCC-99-01). 6 Movements of cash did not present the same need because the cash Fedwire is open later than the securities Fedwire. However, as use of the service increased, certain payment systems' risk issues from the interbank funds settlements arose. In 2003, FICC shifted the service back to intrabank status to enable it to study the risk issues presented and to devise a satisfactory solution to those issues in order that it could bring the service back to interbank status. 7 7 Securities Exchange Act Release No. 48006 (June 10, 2003), 68 FR 35745 (June 16, 2003) (SR-FICC-2003-04). 2. Proposal FICC is now seeking to return the GCF Repo service to interbank status. The proposed rule change would address the risk issues raised by the interbank funds movement by placing a security interest on a dealer's “net free equity” (“NFE”) at the clearing bank to collateralize its GCF Repo cash obligation to FICC on an intraday basis 8 and by making changes with respect to the morning “unwind” period. No changes are being proposed with respect to the after-hours movement of securities occurring the previous day, which was used when the interbank service was first introduced. 8 NFE is a methodology that clearing banks use to determine whether an account holder, such as a dealer, has sufficient collateral to enter a specific transaction. NFE allows the clearing bank to place a limit on its customers' activity by calculating a value on the customers' balances at the bank. Bank customers have the ability to monitor their NFE balance throughout the day. Specifically, the interbank funds payment would not move during the GCF morning unwind process. In lieu of making funds payments, each interbank dealer (“Interbank Pledging Member”) at the GCF net funds borrower bank would grant to FICC a security interest in its NFE-Related Collateral 9 in an amount equal to its pro rated share of the total interbank funds debit (“Prorated Interbank Cash Amount”). FICC's lien on this collateral would be pari passu to any lien created by the dealer in favor of the relevant GCF clearing bank. 9 “NFE-Related Collateral” is the total amount of collateral that a dealer has at its clearing bank. FICC would in turn grant to the other clearing bank that was due to receive the funds a security interest in the NFE-Related Collateral to support the debit in the FICC account. The debit in the FICC account (“Interbank Cash Amount Debit”) would occur because the dealers that are due to receive funds in the morning must receive those funds in return for their release of collateral. The clearing banks would agree to manage the collateral value of the NFE-Related Collateral as they do today. The debit in the FICC account at the clearing bank referred to in the previous paragraph would be satisfied during the end of day GCF settlement process. Specifically, that day's new activity would yield a new interbank funds amount that would move at end of day; however, this new interbank funds amount would be netted with the amount that would have been due in the morning, thus further reducing the interbank funds movement. The NFE security interest would be released when the interbank funds movement is made at end of day. As described above, on an intraday basis, FICC would have a security interest in the dealers' NFE-Related Collateral. In the unlikely event of an intraday GCF participant default, FICC would need to have the NFE-Related Collateral liquidated and have use of the proceeds. FICC would enter into an agreement with each of the clearing banks whereby each bank would agree to liquidate the NFE-Related Collateral both for itself as well as on behalf of FICC. FICC and each bank would agree to share pro rata in the liquidation proceeds. Due the fact that the liquidation of the NFE-Related Collateral might take longer than one day, GSD's typical collateral liquidation timeframe, to be completed due to the nature of the various assets that may be part of a particular dealer's NFE-Related Collateral, FICC would establish standby liquidity facilities or other financing arrangements with each of the clearing banks to be invoked as needed in the event of the default of an interbank pledging member. FICC is also proposing to impose a collateral premium (“GCF Premium Charge”) on the GCF portion of the Clearing Fund deposits of all GCF participants to further protect FICC in the event of an intraday default of a GCF participant. FICC would require GCF participants to submit a quarterly “snapshot” of their holdings by asset type to enable FICC Risk Management staff to determine the appropriate Clearing Fund premium. GCF participants that do not submit this required information by the deadlines established by FICC would be subject to a fine and an increased Clearing Fund premium. Because the NFE-Related Collateral is held at the clearing banks and because the clearing banks monitor the activity of their dealer customers, FICC would have the right, using its sole discretion, to cease to act for a member that is a GCF Repo participant in the event that a clearing bank ceases to extend credit to such member. The proposal results in the need for the following specific GSD rule changes. 1. The new terms referred to above (GCF Premium Charge, Interbank Cash Amount Debit, Interbank Pledging Member, NFE-Related Collateral, and Prorated Interbank Cash Amount) would be added to Rule 1 (Definitions). A new term, “NFE-Related Account,” which is referred to in the definition of “NFE-Related Collateral,” would also be added. 2. Section 3 (Collateral Allocation) of Rule 20 (Special Provisions for GCF Repo Transactions), which governs the GCF Repo collateral allocation process, would be amended to reflect the new process that would occur on the morning of the unwind (to be referred to as the morning of “Day 2” in the Rules). 3. Section 3 of Rule 20 would be further amended to provide for the following:
(a)The granting of the security interest in the NFE-Related Collateral to FICC by the dealers;
(b)The granting of authority for FICC to provide instructions to the clearing banks regarding the NFE-Related Collateral by the dealers;
(c)The granting of the security interest in the NFE-Related Collateral to the clearing banks by FICC; and
(d)FICC's right to enter into agreements with the clearing banks regarding the collateral management of the NFE-Related Collateral, the liquidation of the NFE-Related Collateral, and the standby liquidity facilities or other financing arrangements. 4. Rule 4 (Clearing Fund, Watch List, and Loss Allocation) would be amended to provide for the Clearing Fund premium that would be imposed on GCF Repo participants. Rule 3 (Ongoing Membership Requirements) would be amended to include the quarterly NFE reporting requirement which, if not followed timely by the members, would result in fines and Clearing Fund premium consequences. 5. Rules 21 (Restrictions on Access to Services) and 22 (Insolvency of a Member) would be amended to provide that FICC may, in its sole discretion, cease to act for a member in the event that the member's clearing bank has ceased to extend credit to the member. 6. The schedule of GCF time frames would be amended to reflect technical changes. 3. Statutory Basis FICC believes that the proposed rule change is consistent with the requirements of section 17A of the Act 10 and the rules and regulations thereunder applicable to FICC because it should allow GCF Repo participants to expand their use of the GCF Repo service to include repos done with dealers that clear at a different clearing bank in a manner that will support the prompt and accurate clearance and settlement of securities transactions. 10 15 U.S.C. 78q-1.
(B)Self-Regulatory Organization's Statement on Burden on Competition FICC does not believe that the proposed rule change would have any impact or impose any burden on competition.
(C)Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments have not been solicited with respect to the proposed rule change, and none have been received. FICC will notify the Commission of any written comments it receives. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within thirty-five days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)As the Commission may designate up to ninety days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will:
(A)By order approve such proposed rule change, or
(B)institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as amended, is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov* . Please include File Number SR-FICC-2007-08 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-FICC-2007-08. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Section, 100 F. Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of FICC and on FICC's Web site at *http://www.ficc.com/gov/gov.docs.jsp?NS-query* . All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-FICC-2007-08 and should be submitted on or before September 18, 2007. For the Commission by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16958 Filed 8-27-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56295; File No. SR-NYSEArca-2007-82] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Amending Fees for the Entry of Mid-Point Passive Liquidity or Primary Sweep Orders August 21, 2007. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on August 3, 2007, NYSE Arca, Inc. (“NYSE Arca” or the “Exchange”), through its wholly owned subsidiary NYSE Arca Equities, Inc. (“NYSE Arca Equities”), filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the Exchange. On August 20, 2007, the Exchange submitted Amendment No. 1 to the proposed rule change. 3 The Exchange filed the proposed rule change pursuant to section 19(b)(3)(A) of the Act 4 and Rule 19b-4(f)(2) thereunder, 5 which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 replaced and superseded the original filing in its entirety. 4 15 U.S.C. 78s(b)(3)(A). 5 17 CFR 240.19b-4(f)(2). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the section of its Schedule of Fees and Charges for Exchange Services (the “Fee Schedule”) as it applies to orders submitted by Users 6 designated as a
(1)Mid-Point Passive Liquidity Order (“MPL Order”) 7 or
(2)Primary Sweep Order (“PSO”). 8 The text of the proposed rule change is available at the Exchange, the Commission's Public Reference Room, and *http://www.nyse.com.* 6 *See* NYSE Arca Rule 1.1(yy) for the definition of “User.” 7 *See* NYSE Arca Equities Rule 7.31(h)(5). *See also* Securities Exchange Act Release No. 56072 (July 13, 2007), 72 FR 39867 (July 20, 2007) (SR-NYSEArca-2007-61). 8 *See* NYSE Arca Equities Rule 7.31(kk). *See also* Securities Exchange Act Release No. 55896 (June 11, 2007), 72 FR 33795 (June 19, 2007) (SR-NYSEArca-2007-50) II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, NYSE Arca included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The Exchange has prepared summaries set forth in sections A, B, and C below of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend its Fee Schedule as it applies to Users submitting any order that is designated as either an MPL Order or PSO. First, with the adoption of the MPL Order and the changes to the Fee Schedule proposed herein, any order designated as an MPL Order shall not be eligible for a per share credit, if such order executes against an incoming marketable order, regardless of order type. According to the proposal, MPL Orders will be exempted from credits that currently appear in the following sections of the Exchange's Fee Schedule: NYSE ARCA MARKETPLACE: TRADE RELATED CHARGES, NYSE ARCA MARKETPLACE: MARKET MAKER FEES AND CHARGES, and the ETP Holder Transaction Credit and Market Data Revenue Sharing Credit under NYSE ARCA MARKETPLACE: OTHER FEES AND CHARGES. Consistent with the proposal to exempt MPL Orders from any credits, the Exchange will not assess fees to ETP Holders submitting MPL Orders for execution, as such orders shall not be viewed as removing liquidity from the NYSE Arca book. Secondly, consistent with the proposal to exempt Users submitting MPL Orders from any credits, the Exchange will not assess fees to Users submitting MPL Orders for execution, as such orders shall not be viewed as removing liquidity from the NYSE Arca book. Accordingly, MPL Orders will be exempted from fees that currently appear in the following sections of the Exchange's Fee Schedule: NYSE ARCA MARKETPLACE: TRADE RELATED CHARGES and NYSE ARCA MARKETPLACE: MARKET MAKER FEES AND CHARGES. Finally, the Exchange proposes to amend the Fee Schedule to exempt Users from the $0.001 per share fee for any order routed to the New York Stock Exchange, L.L.C. (“NYSE”) if such order is for a security listed on the NYSE and is designated as a PSO. Accordingly, PSOs will be exempted from the $0.001 per share fee for orders routed outside the book to the NYSE that currently appears in the following section of the Exchange's Fee Schedule: NYSE ARCA MARKETPLACE: TRADE RELATED CHARGES. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with section 6(b) of the Act 9 in general and furthers the objectives of section 6(b)(4) 10 in particular that it is intended to provide for the equitable allocation of reasonable dues, fees, and other charges among its members and other persons using its facilities. 9 15 U.S.C. 78f(b). 10 15 U.S.C. 78f(b)(4). B. Self Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments on the proposed rule change were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing proposed rule change is subject to section 19(b)(3)(A)(ii) of the Act 11 and subparagraph (f)(2) of Rule 19b-4 thereunder 12 because it establishes or changes a due, fee, or other charge applicable only to a member imposed by a self-regulatory organization. Accordingly, the proposal is effective upon Commission receipt of the filing. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. 11 15 U.S.C. 78s(b)(3)(A)(ii). 12 17 CFR 240.19b-4(f)(2). IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NYSEArca-2007-82 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F. Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSEArca-2007-82. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F. Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of NYSE Arca. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEArca-2007-82 and should be submitted on or before September 18, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 13 13 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16908 Filed 8-27-07; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-56300; File No. SR-NYSEArca-2007-63; SR-NYSEArca-2007-64] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by NYSE Arca, Inc. Relating to Conforming Amendments Involving the Deletion of Rule 10a-1 Under the Securities Exchange Act of 1934 August 22, 2007. Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on June 29, 2007, NYSE Arca, Inc. (the “Exchange”), through its wholly owned subsidiary NYSE Arca Equities, Inc. (“NYSE Arca Equities”), filed with the Securities and Exchange Commission (the “Commission”) the proposed rule changes as described in Items I and II below, which Items have been prepared by the Exchange. The Exchange filed the proposals as “non-controversial” rule changes under Rule 19b-4(f)(6) under the Act, 3 which rendered the proposals effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule changes from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 17 CFR 240.19b-4(f)(6). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Changes A. NYSE Arca Equities Rule 4.5(e), Rule 7.16, Rule 7.18, and Rule 7.37 The Exchange proposes to make certain conforming amendments to NYSE Arca Equities Rule 4.5(e), Rule 7.16, Rule 7.18, and Rule 7.37 to address the impending deletion of Rule 10a-1 under the Securities Exchange Act of 1934. These conforming “housekeeping” changes will replace references to Rule 10a-1 and, where appropriate, add references to relevant rules in Regulation SHO. The text of the proposed rule change is available at the Exchange, on the Exchange's Web site at *http://www.nyse.com,* and at the Commission's Public Reference Room. B. NYSE Arca Rule 4.5(f) and Rule 11.8 The Exchange also proposes to make certain conforming amendments to NYSE Arca Rule 4.5(f) and Rule 11.8 to address the impending deletion of Rule 10a-1 under the Act. These conforming “housekeeping” changes will replace references to Rule 10a-1 and, where appropriate, add references to relevant rules in Regulation SHO. The text of the proposed rule change is available at the Exchange, on the Exchange's Web site at *http://www.nyse.com,* and at the Commission. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Changes In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule changes and discussed any comments it received on the proposed rule changes. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in sections (A), (B), and
(C)below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Changes 1. Purpose a. *NYSE Arca Equities Rule 4.5(e), Rule 7.16, Rule 7.18, and Rule 7.37* On June 28, 2007, the SEC released final rules deleting the price test of Rule 10a-1 and amending Regulation SHO to prohibit any SRO from having a price test in place. The Exchange proposes to make certain conforming amendments to NYSE Arca Equities Rule 4.5(e), Rule 7.16, Rule 7.18, and Rule 7.37 to address the deletion of Rule 10a-1. This rule filing proposes to delete the Exchange's current price test restrictions and remove requirements relating to marking sell orders “exempt” based on exceptions set forth in Rule 10a-1. In addition, other conforming and “housekeeping” changes are also proposed to replace references to Rule 10a-1 in certain Exchange rules and, where appropriate, add references to relevant rules in Regulation SHO. b. *NYSE Arca Rule 4.5(f) and Rule 11.8* On June 28, 2007, the SEC released final rules deleting the price test of Rule 10a-1 and amending Regulation SHO to prohibit any SRO from having a price test in place. The Exchange proposes to make certain conforming amendments to NYSE Arca Rule 4.5(f) and Rule 11.8 to address the deletion of Rule 10a-1. This rule filing proposes to delete the Exchange's current price test restrictions and remove requirements relating to marking sell orders “exempt” based on exceptions set forth in Rule 10a-1. In addition, other conforming and “housekeeping” changes are also proposed to replace references to Rule 10a-1 in certain Exchange rules and, where appropriate, add references to relevant rules in Regulation SHO. 2. Statutory Basis The Exchange believes the proposed rule changes are consistent with section 6(b) of the Act 4 in general and further the objectives of section 6(b)(5) 5 in particular in that they are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principals of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. 4 15 U.S.C. 78f(b). 5 15 U.S.C. 78f(b)(5). B. Self-Regulatory Organization's Statement on Burden on Competition The Exchange does not believe that the proposed rule changes will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Changes Received From Members, Participants or Others Written comments on the proposed rule changes were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Changes and Timing for Commission Action The foregoing proposed rule changes have become effective upon filing pursuant to section 19(b)(3)(A) of the Act 6 and Rule 19b-4(f)(6) 7 thereunder because they do not
(i)Significantly affect the protection of investors or the public interest,
(ii)impose any significant burden on competition, and
(ii)become operative within 30 days after the date of the filing. 6 15 U.S.C. 78s(b)(3)(A). 7 17 CFR 19b-4(f)(6). The Exchange has asked the Commission to waive the 30-day operative delay. The Commission believes such waiver is consistent with the protection of investors and the public interest because it would allow the proposed rule changes to be effective on July 6, 2007, the compliance date for the amendments to Rule 10a-1 and Regulation SHO. 8 For this reason, the Commission designates the proposals to be operative upon filing with the Commission. 8 For purposes only of waiving the 30-day pre-operative period, the Commission has considered the impact of the proposed rule changes on efficiency, competition and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule changes, the Commission may summarily abrogate such rule changes if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule changes are consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File No. SR-NYSEArca-2007-63 or SR-NYSEArca-2007-64 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549. All submissions should refer to File No. SR-NYSEArca-2007-63 or SR-NYSEArca-2007-64. The file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule changes that are filed with the Commission, and all written communications relating to the proposed rule changes between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room, 100 F Street, NE., Washington, DC 20549 on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal offices of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File No. SR-NYSEArca-2007-63 or SR-NYSE-2007-64 and should be submitted on or before September 18, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 9 9 17 CFR 200.30-3(a)(12). Florence E. Harmon, Deputy Secretary. [FR Doc. E7-16957 Filed 8-27-07; 8:45 am] BILLING CODE 8010-01-P SMALL BUSINESS ADMINISTRATION Data Collection Available for Public Comments and Recommendations ACTION: Notice and request for comments. SUMMARY: In accordance with the Paperwork Reduction Act of 1995, this notice announces the Small Business Administration's intentions to request approval on a new and/or currently approved information collection. DATES: Submit comments on or before October 29, 2007. ADDRESSES: Send all comments regarding whether this information collection is necessary for the proper performance of the function of the agency, whether the burden estimates are accurate, and if there are ways to minimize the estimated burden and enhance the quality of the collection, to Gail Hepler, Chief 7a Loan Policy Branch, Office of Financial Assistance, Small Business Administration, 409 3rd Street, SW., Suite 8300, Washington, DC 20416. FOR FURTHER INFORMATION CONTACT: Gail Hepler, Chief 7a Loan Policy Branch, Office of Financial Assistance, 202-205-7530, *gail.hepler@sba.gov;* Curtis B. Rich, Management Analyst, 202-205-7030, *curtis.rich@sba.gov* . SUPPLEMENTARY INFORMATION: The SBA has continued to hear from many lenders, particularly rural/small lenders, that despite recent efforts to streamline its loan processes through such initiatives as SBAExpress, the Agency is not meeting the needs of these lenders for small SBA guaranteed loans. This is supported by the limited number of SBA loans produced by smaller lenders. As a result, SBA is moving forward to redesign its standard 7(a) loan application form and re-engineer its standard 7(a) loan process for loans of $350,000 or less, which will be processed through a centralized and highly automated and streamlined loan facility. The proposed information collection thus represents the first phase of the redesign of an existing SBA loan form (SBA Form 4 and Form 4-I), initially for loans of $350,000, with the redesign intended to reduce the time and paperwork of lenders and the public to prepare an SBA loan application. This redesign of the SBA loan application process for loans of $350,000 or less will be the first phase of what ultimately will become a tiered loan application process that will require less information for smaller loans but appropriately more information from a borrower or lender as the size and/or complexity of a loan increases. *Title:* “Application for Community Lender Initiative and Instructions Community Lender Initiative Eligibility Questionnaire.” *Description of Respondents:* SBA Lenders and SBA loan applicants. *Form No.'s:* N/A. *Annual Responses:* 4,000. *Annual Burden:* 24,000. Jacqueline White, Chief, Administrative Information Branch. [FR Doc. E7-16939 Filed 8-27-07; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION Disaster Declaration # 10989 and # 10990; Pennsylvania Disaster # PA-00011 AGENCY: U.S. Small Business Administration. ACTION: Notice. SUMMARY: This is a notice of an Administrative declaration of a disaster for the Commonwealth of Pennsylvania dated 08/21/2007. *Incident:* Severe Storms And Flooding *Incident Period:* 08/06/2007 through 08/09/2007. *Effective Date:* 08/21/2007. *Physical Loan Application Deadline Date:* 10/22/2007. *Economic Injury
(EIDL)Loan Application Deadline Date:* 05/21/2008. ADDRESSES: Submit Completed Loan Applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: Notice is hereby given that as a result of the Administrator's disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations. The following areas have been determined to be adversely affected by the disaster: *Primary Counties:* Allegheny, Westmoreland *Contiguous Counties:* Pennsylvania, Armstrong, Beaver, Butler, Cambria, Fayette, Indiana, Somerset, Washington The Interest Rates are: Percent Homeowners With Credit Available Elsewhere: 6.250. Homeowners Without Credit Available Elsewhere: 3.125. Businesses With Credit Available Elsewhere: 8.000. Businesses & Small Agricultural Cooperatives Without Credit Available Elsewhere: 4.000. Other (Including Non-Profit Organizations) With Credit Available Elsewhere: 5.250. Businesses and Non-Profit Organizations Without Credit Available Elsewhere: 4.000. The number assigned to this disaster for physical damage is 10989 6 and for economic injury is 10990 0. The State which received an EIDL Declaration # is Pennsylvania. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008). Dated: August 21, 2007. Steven C. Preston, Administrator. [FR Doc. E7-16989 Filed 8-27-07; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION Disaster Declaration # 10919 and # 10920; Texas Disaster Number TX-00254 AGENCY: U.S. Small Business Administration. ACTION: Amendment 8. SUMMARY: This is an amendment of the Presidential declaration of a major disaster for the State of Texas (FEMA-1709-DR), dated 06/29/2007. *Incident:* Severe Storms, Tornadoes, and Flooding. *Incident Period:* 06/16/2007 through 08/03/2007. *Effective Date:* 08/21/2007. *Physical Loan Application Deadline Date:* 10/29/2007. *EIDL Loan Application Deadline Date:* 03/31/2008. ADDRESSES: Submit Completed Loan Applications to: U.S. Small Business Administration, Processing And Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the Presidential disaster declaration for the State of Texas, dated 06/29/2007 is hereby amended to include the following areas as adversely affected by the disaster: *Primary Counties:* Atascosa, Liberty, Refugio, San Patricio, Taylor, Upshur. *Contiguous Counties:* Texas, Camp, Chambers, Fisher, Hardin, Harris, Harrison, Jefferson, Jones, Marion, Morris, Polk. All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008). Herbert L. Mitchell, Associate Administrator, for Disaster Assistance. [FR Doc. E7-16988 Filed 8-27-07; 8:45 am] BILLING CODE 8025-01-P SMALL BUSINESS ADMINISTRATION [Disaster Declaration # 10919 # 10920] Texas Disaster Number TX-00254 AGENCY: U.S. Small Business Administration. ACTION: Amendment 7. SUMMARY: This is an amendment of the Presidential declaration of a major disaster for the State of Texas (FEMA-1709-DR), dated 06/29/2007. *Incident:* Severe Storms, Tornadoes, and Flooding. *Incident Period:* 06/16/2007 through 08/03/2007. EFFECTIVE DATE: 08/18/2007. *Physical Loan Application Deadline Date:* 10/29/2007. *EIDL Loan Application Deadline Date:* 03/31/2008. ADDRESSES: Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155. FOR FURTHER INFORMATION CONTACT: A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street, SW., Suite 6050, Washington, DC 20416. SUPPLEMENTARY INFORMATION: The notice of the President's major disaster declaration for the State of Texas, dated 06/29/2007 is hereby amended to extend the deadline for filing applications for physical damages as a result of this disaster to 10/29/2007. All other information in the original declaration remains unchanged. (Catalog of Federal Domestic Assistance Numbers 59002 and 59008) Herbert L. Mitchell, Associate Administrator for Disaster Assistance. [FR Doc. E7-16990 Filed 8-27-07; 8:45 am] BILLING CODE 8025-01-P DEPARTMENT OF STATE [Public Notice 5914] Culturally Significant Objects Imported for Exhibition; Determinations: “Dali & Film.” SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, *et seq.* ; 22 U.S.C. 6501 note, *et seq.* ), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236 of October 19, 1999, as amended, and Delegation of Authority No. 257 of April 15, 2003 [68 FR 19875], I hereby determine that the objects to be included in the exhibition “Dali & Film,” imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at the Los Angeles County Museum of Art, Los Angeles, CA, from on or about October 14, 2007, until on or about January 6, 2008; Salvador Dali Museum, St. Petersburg, FL, beginning on or about February 1, 2008, until on or about June 1, 2008, Museum of Modern Art, New York, NY, beginning on or about June 29, 2008, until on or about September 15, 2008 and at possible additional exhibitions or venues yet to be determined, is in the national interest. Public Notice of these Determinations is ordered to be published in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: For further information, including a list of the exhibit objects, contact Julie Simpson, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone:
(202)453-8050). The address is U.S. Department of State, SA-44, 301 4th Street, SW., Room 700, Washington, DC 20547-0001. Dated: August 17, 2007. C. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E7-17018 Filed 8-27-07; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF STATE [Public Notice 5915] Culturally Significant Objects Imported for Exhibition Determinations: “Jasper Johns: Gray” SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, *et seq.* ; 22 U.S.C. 6501 note, *et seq.* ), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236 of October 19, 1999, as amended, and Delegation of Authority No. 257 of April 15, 2003 [68 FR 19875], I hereby determine that the objects to be included in the exhibition “Jasper Johns: Gray,” imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at the Art Institute of Chicago, Chicago, Illinois, from on or about November 3, 2007, until on or about January 6, 2008; Metropolitan Museum of Art, New York, New York, beginning on or about February 5, 2008, until on or about May 5, 2008, and at possible additional exhibitions or venues yet to be determined, is in the national interest. Public Notice of these Determinations is ordered to be published in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: For further information, including a list of the exhibit objects, contact Julie Simpson, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone:
(202)453-8050). The address is U.S. Department of State, SA-44, 301 4th Street, SW., Room 700, Washington, DC 20547-0001. Dated: August 17, 2007. C. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E7-17017 Filed 8-27-07; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF STATE [Public Notice 5917] Culturally Significant Object Imported for Exhibition Determinations: “Painted With Words: Vincent van Gogh's Letters to Emile Bernard” SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, *et seq.* ; 22 U.S.C. 6501 note, *et seq.* ), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236 of October 19, 1999, as amended, and Delegation of Authority No. 257 of April 15, 2003 [68 FR 19875], I hereby determine that the object to be included in the exhibition “Painted with Words: Vincent van Gogh's Letters to Emile Bernard,” imported from abroad for temporary exhibition within the United States, is of cultural significance. The object is imported pursuant to a loan agreement with the foreign owner or custodian. I also determine that the exhibition or display of the exhibit object at the Morgan Library & Museum, New York, New York, from on or about September 28, 2007, until on or about January 6, 2008, and at possible additional exhibitions or venues yet to be determined, is in the national interest. Public Notice of these Determinations is ordered to be published in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: For further information, including a description of the exhibit object, contact Paul W. Manning, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone: 202/453-8052). The address is U.S. Department of State, SA-44, 301 4th Street, SW., Room 700, Washington, DC 20547-0001. Dated: August 16, 2007. C. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E7-17022 Filed 8-27-07; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF STATE [Public Notice 5916] Culturally Significant Objects Imported for Exhibition; Determinations: “Renoir Landscapes” SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, *et seq.* ; 22 U.S.C. 6501 note, *et seq.* ), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236 of October 19, 1999, as amended, and Delegation of Authority No. 257 of April 15, 2003 [68 FR 19875], I hereby determine that the objects to be included in the exhibition “Renoir Landscapes,” imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at the Philadelphia Museum of Art, Philadelphia, PA, from on or about October 4, 2007, until on or about January 6, 2008, and at possible additional exhibitions or venues yet to be determined, is in the national interest. Public Notice of these Determinations is ordered to be published in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: For further information, including a list of the exhibit objects, contact Julie Simpson, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone:
(202)453-8050). The address is U.S. Department of State, SA-44, 301 4th Street, SW., Room 700, Washington, DC 20547-0001. Dated: August 17, 2007. C. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E7-17020 Filed 8-27-07; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF TRANSPORTATION Federal Highway Administration Environmental Impact Statement, Canyon and Ada Counties, ID State Highway 44 (SH-44) Corridor Preservation Study AGENCY: Federal Highway Administration (FHWA), U.S. DOT. ACTION: Letter of Project Initiation; Notice of Intent to prepare an Environmental Impact Statement (EIS); for the preservation of right-of-way to construct additional travel lanes and other improvements to approximately 17 miles of SH-44 from Exit 25 at Interstate 84 (I-84) in Canyon County to Ballantyne Lane in Ada County. SUMMARY: The FHWA hereby gives notice that it intends to prepare an EIS for the proposed preservation of right-of-way for the construction of projects that would increase surface transportation capacity (additional travel lanes, intersection improvements) and improve operating conditions and safety (access management improvements) for both near-term and long-term needs. This EIS is being prepared and considered in accordance with the National Environmental Policy Act
(NEPA)of 1969, regulations of the Council on Environmental Quality (40 CFR parts 150-1508), and FHWA regulations, guidance and policy. Anticipated Federal approvals/actions needed for this project to be constructed include permits for sections 401 and 404 of the Clean Water Act (U.S. Army Corps of Engineers) and compliance with section 4(f) of the Department of Transportation Act, section 7 of the Endangered Species Act and section 106 of the national Historic Preservation Act. *Cooperating Agencies:* There are no cooperating agencies identified for this project. DATES: Public comments and questions are welcome anytime during the NEPA process and should be directed to the address listed below. Additional formal opportunities for public participation are tentatively scheduled as follows: Review and comment of Draft EIS (including a public hearing): Fall 2008. Review of Final EIS: Spring 2009. Notices of availability for the Draft EIS, Final EIS and Record of Decision will be provided through direct mail, the **Federal Register** and other media. Notification also will be sent o Federal, State, local agencies, persons, and organizations that submit comments or questions. Precise schedules and locations for public meetings will be announced in the local news media. Interested individuals and organizations may request to be included on the mailing list for the distribution of meeting announcements and associated information. FOR FURTHER INFORMATION CONTACT: Edwin Johnson, Field Operations Engineer; Federal Highway Administration, 3050 Lake Harbor Lane, Suite 126, Boise, Idaho 83703, Telephone:
(208)334-9180. SUPPLEMENTARY INFORMATION: Electronic Access An electronic copy of this document may be downloaded using a modem and suitable communications software from the Government Printing Office's Electronic Bulletin Board Service at
(202)512-1661. Internet users may reach the Office of the **Federal Register** 's home page at *http://nara.gov/fedreg* and the Government Printing Office's database at: *http://access.gpo. gov.nara.* Background Recommendations for improvements along this corridor are identified in the regional long-range transportation plan, “Communities in Motion,” prepared by the Boise-Nampa Metropolitan Planning Organization, Community Planning Association of Southwest Idaho (COMPASS) and adopted by the COMPASS board in August 2006. SH-44 lies in an important east/west corridor connecting Ada and Canyon counties from the city of Eagle to the highway's junction with I-84 in Canyon County. The once rural areas along the highway are changing from farms and orchards to subdivisions and businesses. The highway runs through the central business districts of the cities of Star and Middleton. The speed is gradually decreased from 55 to 25 mph within city limits. It is one of only three main highways that carry traffic directly from the city of Caldwell to Boise. Growth and development have resulted in higher traffic volumes and congestion. The city of Middleton has identified a need for a bypass of its downtown area and has preliminary plans for a route south of town. There has been discussion about a bypass for the city of Star, but the level of support for this has not been determined. Public scoping meetings on this project were held from 4 p.m. to 8 p.m. on May 24, 2006 in Middleton, ID, and May 25, 2006 in Eagle, ID, to solicit public comment regarding the full spectrum of issues and concerns, including the need for the project, alternate routes around the cities of Middleton and Star, access management, and environmental issues to be considered in the analysis. Attendees were informed at the meeting that an EIS would be prepared for the corridor preservation study. The EIS will examine the short and long-term impacts of a reasonable range of alternatives, including the no action alternative, on the natural, physical, and human environments. The impacts assessment will include, but not be limited to, impacts on wetlands, wildlife; social environment; changes in land use; noise, aesthetics; changes in traffic; and economic impacts. Environmental Justice (as outlined in Executive Order 12898) will also be addressed as part of the impact assessment. The EIS will also examine measures to mitigate adverse impacts resulting from the proposed action. Comments are being solicited from Federal, State, and local agencies and from private organizations and citizens who have interest in this proposal. Public information meetings will be held in the project area to discuss the potential alignments and alternatives. The draft EIS will be available for public and agency review, and a public hearing will be held to receive comments. Public notice will be given of the time and place of all meetings and hearings. Comments and/or suggestions from all interested parties are requested, to ensure that the purpose and need for the project, the full range of all issues, and significant environmental issues in particular, are identified and reviewed. Comments or questions concerning this proposed action and/or its EIS should be directed to the FHWA at the addresses listed previously. (Catalog of Federal Domestic Assistance Program Number 20.205, Highway Research, Planning and Construction. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this proposed action.) Authority: 23 U.S.C. 315; 23 CFR 771.123; 49 CFR 1.48. Peter J. Hartman, Idaho Division Administrator, FHWA. [FR Doc. 07-4195 Filed 8-27-07; 8:45 am]
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Traces to 15 documents
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  • 17 CFR 240.19
  • 15 USC 78
  • 17 CFR 19
  • 79 Stat. 985
  • 49 CFR 1.48
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Notice of application for an order under the Investment Company Act of 1940, as amended (the “Act”)
U.S.C.§ 78s
U.S.C.§ 78f
U.S.C.§ 552
C.F.R.§ 200.30-3
C.F.R.§ 242.600
U.S.C.§ 78q–1
U.S.C.§ 78c
U.S.C.§ 2459
Fed. Reg.Notices
Cite17 CFR 240.19
Cite15 USC 78
Cite17 CFR 19
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