Investment Company Act of 1940: Aetna Life Insurance & Annuity Co. et al.,

[Federal Register: June 19, 2001 (Volume 66, Number 118)]

[Notices]

[Page 32968-32970]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr19jn01-76]

SECURITIES AND EXCHANGE COMMISSION

[Release No. IC-25002; File No. 812-12482]

Aetna Life Insurance and Annuity Company, et. al.

June 13, 2001.

AGENCY: Securities and Exchange Commission (``SEC'' or ``Commission'').

ACTION: Notice of Application for an order under section 6(c) of the Investment Company Act of 1940 (the ``1940 Act'' or the ``Act'') to amend a prior order of the Commission under section 6(c) of the 1940 Act which granted exemptions from the provisions of sections 2(a)(32), 22(c), and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder to the extent necessary to permit the recapture of credits applied to contributions made under certain deferred variable annuity contracts.

Applicants: Aetna Life Insurance and Annuity Company (``ALIAC'') and its Variable Annuity Account B (``V A B''), Aetna Insurance Company of America (``AICA'' and, together with ALIAC, ``Aetna''), Golden American Life Insurance Company (``Golden'') and its Separate Account B (``Account B''), First

[[Page 32969]]

Golden American Life Insurance Company of New York (``First Golden''), Reliastar Life Insurance Company of New York (``Reliastar'' and, together with Golden and First Golden, the ``Life Companies''), Directed Services, Inc., (``DSI''), and Washington Square Securities, Inc., (``WSS'') (collectively, the ``Applicants'').

Summary of Application: Applicants seek an order under section 6(c) of the 1940 Act to amend a existing order (Investment Company Act Release No. 24649, dated September 20, 2000, File No. 812-12098) (``Existing Order``) to: (1) Add the Life Companies, Account B, DSI, and WSS (collectively, ``Additional Applicants'') as parties to the Existing Order, and (2) permit the Additional Applicants to recapture certain bonuses applied to purchase payments made under (a) certain deferred variable annuity contracts and certificates, including certain certificate data pages and endorsements, that Golden will issue through Account B (the ``Account B Contracts'') and under (b) contracts and certificates, including certain certificate data pages and endorsements, that the Life Companies may issue in the future through Account B, or through any other separate accounts, whether existing or created in the future, of the Life Companies (the ``Future Accounts,'') and together with Account B, the ``Accounts'') and that are substantially similar in all material respects to the deferred variable annuity contracts (``V A B Contracts'') covered by the Existing Order (collectively, the ``Future Contracts'' and together with the Account B Contracts, the ``Contracts''). Applicants also request that the order being sought extend to any National Association of Securities Dealers, Inc. (``NASD'') member broker-dealer controlling or controlled by, or under common control with any Additional Applicant, whether existing or created in the future, that serves as a distributor or principal underwriter of the Contracts offered through the Accounts (collectively ``Affiliated Broker-Dealers'').

Filing Date: The application was filedon March 21, 2001, and amended and restated on June 8, 2001.

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 Applicants with a copy of the request, personally or by mail. Hearing requests should be received by the SEC by 5:30 p.m. on July 9, 2001, and should be accompanied by proof of service on Applicants, in the form of an affidavit or, for lawyers, a certificate of service. Hearing requests should state the nature of the writer's interest, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the SEC's Secretary.

ADDRESSES: Secretary, Securities and Exchange Commission, 450 5th Street, NW., Washington, DC 20549-0609. Applicants, in care of Aetna, 151 Farmington Avenue, TS31, Hartford, Connecticut 06156, Attn: J. Neil McMurdie, Esq.

FOR FURTHER INFORMATION CONTACT: Alison Toledo, Attorney, or Lorna MacLeod, Branch Chief, Office of Insurance Products, Division of Investment Management, at (202) 942-0670.

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, 450 5th St., NW., Washington, DC 20549- 0102 (tel. (202) 942-8090).

Applicants' Representations

1. Golden is a stock life insurance company originally incorporated under the laws of Minnesota on January 2, 1973 and later redomiciled in Delaware. Like ALIAC and AICA, Golden is an indirect wholly-owned subsidiary of ING Groep. N.V. (``ING''), a global financial services holding company based in The Netherlands. Golden is the depositor for Account B, which was established on July 14, 1988 pursuant to authority granted under a resolution of Golden's Board of Directors. Golden also serves as depositor for several currently existing Future Accounts. Golden may establish one or more additional Future Accounts for which it will serve as depositor.

2. First Golden is a stock life insurance company organized under the laws of the State of New York in 1996. First Golden is a wholly- owned subsidiary of Golden and an indirect wholly-owned subsidiary of ING. First Golden serves as depositor for several currently existing Future Accounts. First Golden may establish one or more additional Future Accounts for which it will serve as depositor.

3. Reliastar is a stock life insurance company organized under the laws of the State of New York in 1917. Reliastar is an indirect wholly- owned subsidiary of ING. Reliastar serves as depositor for several currently existing Future Accounts. Reliastar may establish one or more additional Future Accounts for which it will serve as depositor.

4. Account B is a segregated asset account of Golden. Account B is registered with the Commission under the Act as a unit investment trust. Account B will fund the variable benefits available under the Account B Contracts. Units of interest in Account B under the Account B Contracts it funds will be registered under the Securities Act of 1933 (the ``1933 Act''). Golden may issue Future Contracts through Account B. The Life Companies also may issue Future Contracts through Future Accounts of the Life Companies.

5. That portion of the assets of Account B that is equal to the reserves and other Account B Contract liabilities with respect to Account B is not chargeable with liabilities arising out of any other business of Golden. Any income, gains or losses, realized or unrealized, from assets allocated to Account B are, in accordance with the Account B Contracts, credited to or charged against Account B, without regard to other income, gains or losses of Golden. The same will be true of any Future Account of the Life Companies.

6. DSI is the principal underwriter of Account B. DSI is registered with the Commission as a broker-dealer under the Securities Exchange Act of 1934, as amended (the ``1934 Act''), and is a member of the NASD. DSI, acting as principal underwriter, may enter into arrangements with one or more registered broker-dealers (that may or may not be affiliated with DSI) to offer and sell Contracts. A successor Affiliated Broker-Dealer may enter into similar arrangements for the Contracts. DSI may act as principal underwriter for Future Accounts of the Life Companies and as distributor for Future Contracts. A successor Affiliated Broker-Dealer also may act as principal underwriter for the Accounts and as distributor for any of the Contracts.

7. WSS is registered with the Commission as a broker-dealer under the 1934 Act and is a member of the NASD. WSS, acting as principal underwriter, may enter into arrangements with one or more registered broker-dealers (that may or may not be affiliated with WSS) to offer and sell Future Contracts. A successor Affiliated Broker-Dealer may enter into similar arrangements for Future Contracts. WSS may act as principal underwriter for Future Accounts of the Life Companies and as distributor for Future Contracts. A successor Affiliated Broker-Dealer also may act as principal underwriter for Future Accounts of the Life Companies and as distributor for Future Contracts.

8. On September 20, 2000, the Commission issued the Existing Order

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   exempting certain transactions of Aetna, V A B, and Future Accounts of Aetna from the provisions of Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder to the extent necessary to permit Aetna to recapture, under specified circumstances, certain bonuses applied to purchase payments made under the V A B Contracts described in the application for the Existing Order (``Prior Application'') (Investment Company Act Release No. 24629, dated Aug. 20, 2000, File No. 812-12098).

9. But for the depositor and issuing separate account, the Account B Contracts are identical to the V A B Contracts described in the Prior Application. Future Contracts will be substantially similar in all material respects to the V A B Contracts covered in the Existing Order.

10. Additional Applicants will recapture bonuses under the Contracts under the same circumstances covered by the Existing Order. The Existing Order grants exemptions from Sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act and Rule 22c-1 thereunder to the extent necessary to permit Aetna to recapture bonuses in the following three instances: (i) Aetna will recapture all bonuses if the Contract owner returns the Contract for a refund during the 10-day (or longer, if required) ``free look'' period; (ii) the amount of any account value, step-up value or roll-up value death benefit will not include any bonus credited to a Contract owner's account after or within 12 months of the date of death; and (iii) Aetna will recapture the bonus according to the forfeiture schedules described in the Prior Application if the Contract owner withdraws Year 1 Payment(s) during the first seven account years.

    Applicant's Legal Analysis

1. Section 6(c) of the Act authorizes the Commission to exempt any person, security or transaction, or any class of classes of persons, securities or transactions from the provisions of the Act and the rules promulgated thereunder if and to the extent that such 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. Applicants request that the Commission, pursuant to Section 6(c) of the Act, grant exemptions summarized above with respect to Account B and any Future Account that the Life Companies have established or may establish in the future, in connection with the issuance of Contracts that are substantially similar in all material respects to the VA B Contracts described in the Prior Application and that are underwritten or distributed by DSI, WSS, or Affiliated Broker-Dealers. Applicants believe that the requested exemptions are 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.

2. Applicants submit that the recapture of bonuses by Additional Applicants will not raise concerns under sections 2(a)(32), 22(c) and 27(i)(2)(A) of the Act, and Rule 22c-1 thereunder for the same reasons given in support of the Existing Order. The bonuses will be recapturable under the same circumstances and on the same basis as described in the Prior Application.

   Conclusion

   Applicants submit, based on the grounds summarized above, that their exemptive request meets the standards set out in Section 6(c) of the Act, namely, that the exemptions requested are 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, and that, therefore, the Commission should grant the requested order.

   For the Commission, by the Division of Investment Management, pursuant to delegated authority. Margaret H. McFarland, Deputy Secretary.

   [FR Doc. 01-15362Filed6-18-01; 8:45 am]

   BILLING CODE 8010-01-M