[Federal Register: January 7, 1999 (Volume 64, Number 4)] [Notices] [Page 1035-1036] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr07ja99-43] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. IC-23629; 812-11446] Bergstrom Capital Corporation; Notice of Application December 31, 1998 AGENCY: Securities and Exchange Commission (``SEC''). ACTION: Notice of application for an order under section 6(c) of the Investment Company Act of 1940 (the ``Act'') for relief from section 2(a)(19) of the Act. ----------------------------------------------------------------------- SUMMARY OF APPLICATION: Applicant, a registered investment company, requests an order under section 6(c) of the Act declaring that one of its directors, who also will be a director and officer of the parent company of a registered broker-dealer, will not be deemed an ``interested person'' of applicant. FILING DATE: The application was filed on December 28, 1998. HEARING OR NOTIFICATION OF HEARING: An order granting the application will be issued unless the SEC orders a hearing. Interested persons may request a hearing by writing to the SEC's Secretary and serving applicant with a copy of the request, personally or by mail. Hearing requests should be received by the SEC by 5:30 p.m. on January 25, 1999, and should be accompanied by proof of service on applicant in the form of an affidavit, or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the SEC's Secretary. ADDRESSES: Secretary, SEC, 450 Fifth Street, NW, Washington, DC 20549. Applicant: 505 Madison Street, Suite 220, Seattle, Washington 98104- 1138. FOR FURTHER INFORMATION CONTACT: Timothy R. Kane, Senior Counsel, at (202) 942-0615 or Mary Kay Frech, Branch Chief, at (202) 942-0564 (Division of Investment Management, Office of Investment Company Regulation). SUPPLEMENTARY INFORMATION: The following is a summary of the application. The complete application may be obtained for a fee from the SEC's Public Reference Branch, 450 Fifth Street, NW., Washington, DC 20549 (tel. (202) 942-8090). Applicant's Representations 1. Bergstrom Capital Corporation (``Fund'') is a Delaware corporation registered under the Act as a closed-end management investment company. 2. The Fund's board of directors is composed of five individuals, two of whom are not ``interested persons'' within the meaning of section 2(a)(19) of the Act (``Disinterested Directors''). 3. William H. Sperber, one of the two Disinterested Directors, is also managing director, chief executive officer, and founder of The Trust Company of Washington (``TCW''). TCW is in the process of reorganization whereby it will become a wholly-owned subsidiary of Manzanita Capital, Inc. (``Manzanita''). As part of the reorganization, McAdams Wright Ragen, Inc. (``MWR''), a newly-formed company which is registered as a broker-dealer under the Securities Exchange Act of 1934 (``1934 Act''), will become a wholly-owned subsidiary of Manzanita. MWR will provide brokerage services to high net worth individuals and will not provide brokerage services to institutional investors. 4. As a result of the reorganization, Mr. Sperber will become a director and president of Manzanita. Mr. Sperber's responsibilities will continue to be related to the operations of TCW. Mr. Sperber will not become a director, officer, or employee of MWR, and will not be involved in any way with the day-to-day management of MWR. The reorganization is expected to be consummated on or about January 1, 1999. Applicant's Legal Analysis 1. Section 2(a)(19)(A)(v) of the Act defines an ``interested person'' of a registered investment company to include any broker- dealer registered under the 1934 Act or any affiliated person of the broker-dealer. Applicant states that Mr. Sperber may be deemed an affiliated person of MWR because he will be a director, president, and shareholder of Manzanita, an entity that controls MWR within the meaning of section 2(a)(9) of the Act. Because Mr. Sperber may be deemed an affiliated person of MWR, Mr. Sperber would be considered an interested person of the Fund. 2. Rule 2a19-12 under the Act provides, in relevant part, that a director of a registered investment company will not be considered an interested person [[Page 1036]] solely because the director is an affiliated person of a registered broker-dealer, provided that: (1) the broker-dealer does not execute any portfolio transactions for the ``company complex,'' as that term is defined in the rule, engage in any principal transactions with the company complex, or distribute shares of the company complex, for at least six months prior to the time the director is to be considered independent and for the period during which the director continues to be considered independent; (2) the company's board of directors finds that the company and its shareholders will not be adversely affected if the broker-dealer does not engage in transactions for or with the company complex; and (3) no more than a minority of the company's independent directors are affiliated with broker-dealers. The Fund states that it may not rely on rule 2a19-1 in determining Mr. Sperber's status because, as one of only two Disinterested Directors, Mr. Sperber represents more than a minority of the Fund's Disinterested Directors. 3. The Fund requests an order under section 6(c) of the Act declaring that Mr. Sperber will not be deemed an interested person under section 2(a)(19) of the Act. Section 6(c) of the Act provides, in part, that the SEC may exempt any person from any provision of the Act or any rule under the Act if and to the extent the exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. 4. Applicant states that its request for relief meets this standard. Applicant asserts that Mr. Sperber's relationship with MWR poses no potential conflict of interest because MWR has not and will not engage in business of any kind with the Fund. Applicant further states that Mr. Sperber will not be involved in the day-to-day management of MWR. In addition, applicant notes that, if the requested relief is granted, only 50% of the Fund's Disinterested Directors will be affiliated with a broker-dealer. Applicant's Condition Applicant agrees that any order granting the requested relief will be subject to the following condition: 1. The Fund will comply with all of the requirements of rule 2a19-1 with respect to Mr. Sperber, except paragraph (a)(3) of the rule. For the Commission, by the Division of Investment Management, under delegated authority. Margaret H. McFarland, Deputy Secretary. [FR Doc. 99-292 Filed 1-6-99; 8:45 am] BILLING CODE 8010-01-M