# ONE INTERNATIONAL > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Asec%3Ad021ad75457a26cd ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text ROPES GRAY ONE INTERNATIONAL 30 KENNEDY 02903-2328 RI 40 455-4400 FAX WRITERS 401 455-4401 DIRECT DIAL NUMBER Chief Counsel Director of Investment Division Securities 800 Re 202 626-3900 FAx 202 626-3961 1995 RULE 20549 AVAILABILITY_1 The Standish Value Stable Wood Inc Ayer Group Trust Mr Murphy On behalf the that request of our client staff 3c1 of Section of the Division proposed Wood Inc Standish we respectfully Ayer of Investment under the Investment to the applies Standish Company as amended the 1940 Act below described activities concur with our interpretation Management Act of 1940 Facts The Standish established by Standish investment collective vehicle governmental trust will be tax exempt Standish 1940 amended as the Trusts It investment is is directed plans which registered will serve as the Trusts Trust is Street as will Company and profit-sharing trusts be organized so-called by virtue of satisfying the requirements as an investment adviser investment as and certain group of Revenue Ruling under the Investment manager being 1-100 Advisers Act of and State Street will serve as Trustee expected that funds for tax-qualified pension The Trust the State Value Group Trust Stable and State Street Bank and Trust retirement which Wood Inc Ayer pursuant each with its own to the Trusts investment Agreement objectives EAST 20005-3333 SECTION Commission N.W DC Washington it DC ACT Management and Exchange 450 Fifth Street as SUITE WASHINGTON SQUARE STREET Murphy Esq Associate Dear I3 7400 95 December 27 Jack ONE rRANKLIN BOSTON MASSACH USETTS 02110-2624 617 951-7000 FAX 617 951-7050 PLAZA PROVIDENCE PLACE of Trust and policies one or more separate may be established ROPES GRAY Jack Murphy Esq 27 1995 December Page from time to time by State Street at the direction of Standish Group Trust Fund will seek to level preserving and secondarily principal interest as declining risk to indicate rates AAA-rated securities of private investment adviser Contract or trust Accordingly in investing investment contract contract provider between the prior to structured based objective significant primarily securities and as However if the of its rated amount It is intended Rule 506 under Standish 3c1 The amount investment to to pay units that involve 1940 Act or Section of Section of the intends to of factors including calculated or decrease its in Group Trust will the redemptions as additional Act of Section expected that Fund some if not fund as the but of such exceeds Participating similar pro with either in compliance within is Fund value premiums be offered the meaning share pro-rated in Group Trust certain upon such to of such Participating account exceeds units value will pay conditions value units designated of negotiations book amended the 1933 offering It of each such investment Participating of cash invested interest treat as certain the Trusts provider result Group Trust Fund investment then Trust by separate or in such other 3c of the all of the issuer for purposes of the 1940 Act value accrued account 42 of the 1933 Act guaranteed to in between Group Trust Fund public Trust must each Contracts subject of units Participating the contract in of each plan enter into may vary as Trust Investment fiduciary of the Participating Contract and the value Act of 1933 the Securities as will not redemptions of such structured value structured on behalf on the difference Guaranteed Fund in Group Trust provider account investment the value value increase will Participating issued the contract the extent will be required the such factors without and agency synthetic and the Participating certain upon Trust manner with consistent market fund Group Trust Fund Is serve as Group Trust Fund Is will serve as the terms of each provider of the amount withdrawn the investment its government entity serve participating Contract Although Trust to Group Trust Fund the contract Participating units.2 Standish issuers when may be available achieve to of U.S income appreciation appreciation will seek designed is will provide that guarantee only capital and State Street or another Group Trust Fund to of current investment initial Trustee directed Trusts that diversified portfolio in investing high will seek capital Group Trust Fund principal through achieve The in Trusts Group Trust Fund by reference premium owed account will and thereafter will be adjusted formula contained to withdrawals from or additional in the investment structured to the investments contract in the Contract in Group Trust provider initially equal based on and other Fund and any ROPES GRAY Jack Murphy Esq December 27 1995 Page plans Fund and State Street Standish will -- and not plan accept Group Trust Fund deemed discussed participants and thus under the staffs in greater Accordingly plans forth in The set below has the investment existing the decision to withdraw the investment direction nor both Trust would of units plan invest in will not be letter which in Group Trust Fund and conditions criteria eligibility must be made fund is for self- for on behalf desirable the generic investment alternative investment in and the initial investment to must not be made of fiduciary of its sole discretion in the exercise of an Trust.3 must be made by pursuant to make such to the with any participant in the Participating of the the plan or such fiduciary sponsor plan or poll plan participants be Participating and subsequent decisions on behalf investment generic Group Trust Fund acting acting of Group no-action assets of the generic initially Such decisions may anyone Fund invest of or upon consultation seek the views participants funding medium assets from Participating plan Trust owners investment distinct as Group Trust Fund to where Group Trust Fund in serving alternative that much to Group Trust Fund and separate Second PanAgora developed the following invest in or how whether decides be the beneficial to in Group Trust it can be clearly established where actually self-directed plans as investors plans under circumstances only to seeking First test detail Standish -- contribution self-directed only under very limited circumstances fiduciary directed defmed will be participant-directed Trusts Participating whether as to for assets of the investment units in generic Trust Group Trust investment alternative Third of units in Group Trust any specific Trust Participating alternative portion will Such generic such as stable value that investment income or specific be invested mentions least units in to Trust the portion will agree generic 50% of its assets invested or to in the Participating account balances of the relevant in generic Trust under the investment Fund that any information investment will typically each purchase Group Trust Fund participants in Group Trust alternative growth than at of their contributions or any Finally each Participating participants other may be made Fourth no representation that must have Fund or other property securities immediately following alternative have alternatives its own delivered investment investment to in objective GRAY RoPEs Jack Murphy Esq 27 1995 December Page Group Trust Fund invest By its the signing Adoption Fund in Group Trust continue to Group Trust Fund Trust that and to the to the redeem to time to with such comply any seek and criteria establishing that invests in from each such conditions will have Standish Trust to meet with Standishs or cooperate by and criteria alternative satisfy the fails established with such investment in the of each investment time the to Fund and conditions confirmation Trust Participating at No that will continue with an investment compliance as the generic long from time conditions foregoing to maintain Agreement of Trust terms of the with such compliance continues it involuntarily satisfy for so will Standish Participating the ability will agree effect in Group Trust criteria eligibility the to alternative connection in and warrant that represent Trust such conditions satisfy pursuant will of its assets required meets the applicable it Each Participating Standish criteria Trust investment same portion Agreement disclaimer by the that or the assets each Participating Trust will be accompanied can be given assurances the foregoing to monitor efforts and conditions criteria Analysis 3c Section company paper not shall propose no-action letter it much any would to in relevant the part that outstanding term investment than short-term other securities owned by not more than one hundred persons and which does not In The PanAgora Group Trust make of its securities public offering to April 29 1994 consider invest in December 28 1994 the below discussed staff different we believe that seek be mere device separate to invest above fiduciary assets of separate property other will have than units under will which will in Group Trust on self-directed Group Trust Fund investment invested Unlike the Fund plans will not by plan participants determine alternative 50% of its assets Fund standards and agreed that by the generic that For the reasons Watkins decisions will investment represented least -- letter letter stated by Latham that how or and Group Trust of the Trust assure investment generic no-action different circumstances participants Fund at Watkins eligibility whether owner of the companys of the PanAgora activities stated Management who decides beneficial as contemplated individual have be scope impose Fund pre-existing purchase of units in Group Trust alternative discussing Standish will the the proposed that to subsequent Latham and not plan The plan fiduciary investment in of Investment plan participant company In the conclusion for facilitating plan Fund contribution in Group Trust -- of the Division from PanAgora are clearly distinguishable As discussed staff investment private might reach the defined Emphasis added securities the whose issuer are beneficially presently that of the 1940 Act provides include facts whether to invest and in how much Group Trust immediately following the alternative in securities presented of generic or other in PanAgora each ROPES GRAY Jack Murphy Esq 27 December 1995 Page Group Trust Fund any manner that represented has not has it polled for assets represented that take direction Trust Fund In investment not not plan Fund The with respect to generic to cumulative invest in will same or the assets its include will disclaimer or in all the that generic of its assets portion in investment that assure be made fact with alternatives there can be no assurances that it of assets in Group investment generic consult it that desirable will also have fiduciary nor will have agreed to the them in to and would be with any investment of these factors effect Group Trust Fund alternative are as of any alternative will not additional contributions investment and by the plan fiduciary amount to ability currently company circumstances investment trust would be Group Trust investment continued Fund continue two Group any portion Fund and alternatives investment that on Fund alternative in assets of self-directed plans may be invested from the circumstances in investment of the conditions Trust Fund which are that of their contributions any communications in Group Group Trust Fund Trust be imposed will plan Fund balances participants will include the including no that or public Consequently where in Group Trust the private investment trust As described participants no representation or account to the future.4 PanAgora for such choice other private under the private created alter means that any funds to Fund entity matter in pro-rated sole authority investment generic for that be invested investment investment in or from Group Trust to or that such as an available in allocated to be so held in to the separate As noted above wishes to invest that amounts Group in Group Trust invested assets the investment in by such generic held of the possession generic investment will be invested alternative fiduciarys alternatives distinguishable or the identified participants that under which are clearly that units of the generic such units will continue that investment the plan in Group Trust will Fund The fact the equate in the one of the investments generic completely withdraw invests investment Fund Also generic in Group Trust to nor an investment of such units and the other investments investment can be assured participant time basis for participants Fund Trust representation the to amounts alternative of the given constitute basis in additional be no reasonable Group with with an investment alternative Trust Fund that the effect to there simply will investment investment the Fund plan from direction will out by the plan participants Furthermore the participants Fund The alternative mention that fiduciary Group Trust connection fiduciary will continue alternative Trust in held will have views of plan participants the with or taken consulted addition the plan to plan The plan seek investment or otherwise participants whether as to participants in Group Trust investment Group of the generic from plan communications plan their sought and will not not has it to under choice and will not poil them investment decisions be promoted will not as an investment on self-directed can be made will be invested mentioning plan to in the generic disclaimer as to any GRAY RoPEs Jack Murphy Esq 27 1995 December Page above the simply are not plan participants with respect decision We believe that in there are substantial participant direction has foreseeable future Unless the not the from participating this this which Group trusts including plans ERISA investment any significant degree number of reasons such as mutual funds due fiduciary standards and prohibited available may be preferable cases particular investment with only limited skill of particular of assets investment through normally required an investment Smaller plans them these sized stand-alone of the replication vehicles many cases investment more diversified by establishing plans for is minimum seeking managers its deprive account index own smaller would investment through trust them participation index in of account options expensive size group For of $20 are of trusts provide plans investing establishment of plan could achieve with substantial self-directed available to of the investment investment deprive and of $2 million it through trust plan of account stand-alone able to or plan without having the benefits To many the expertise manager sponsored by group In the benefits obtain stand-alone be achieved account less smaller obtain able to obtain and choices fund managed by to of an index reduce the investment of more diversified and investment Many established could In the case stand-alone significantly than strict portion numbers of reasons variety managed by that to the significant in substantial investment plan group investment to subject with additional establishment in as do plans amended and the of collective constitute e.g $100 million or more and are therefore size with reasonably better way and strategies of several substantial in benefit trust plans as ERISA fiduciaries exist for investment may require manager in this styles trusts Often for the minimum investment plan perspective of 1974 assets may be the only way for group million but accept as trusts alternatives available manager Act policy of ERISA such Such investment for tax-qualified other types to provisions vehicles vehicle Security serve will be excluded companies they must be operated that where and therefore manager manager commit the amounts example fact They provide pension other to amount management by such permit that plans public are considered may be the only form of collective trust group the the point investment assets significant represent which collective to transaction Group trusts have grown to all benefit From Income that they acknowledge vehicles of investment collective the assets of which of which investment to plan trustees may prefer these vehicles Consequently investment of this favor of employee private Employee Retirement provide vehicles managers number the in reasons policy for provide the to subject public above described market would be unfortunate result make any to This trend is likely to continue for the grown substantially staff makes it clear that the scope of the PanAgora letter does circumstances in Group the opportunity Fund Trust 3c1 Recently interpretation of Section prohibit afforded units to to alternatives assets than plans such plans of and in ROPES GRAY Jack Murphy Esq December 27 1995 Page Request We respectfully request above self-directed be the beneficial owner of units described 1940 Act assuming that the your concurrence plan in -- in our view that and not the participants Group Trust Fund look-through provisions under the circumstances thereof -- would be deemed to for purposes of Section of Section 3c1A 3c1 of the do not apply Should you need any further information please do not hesitate to contact undersigned at 617 951-7400 Very truly yours Bryan Chegwidden 3050055.12 the %rI RESPONSE DIVISION DEC OF THE OFFICE OF INVESTMENT OF CHIEF COUNSEL MANAGEMENT 28 Our Ref No 95-423--CC The Standish Ayer Wood Inc Stable Value Group Trust File No 132-3 Your letter of December 27 1995 requests assurance that the action staff would not recommend enforcement to the Commission of the Investment if for purposes of section Company Act of 1940 defined contribution participant-directed plan that invests portion of its assets in separate investment fund the of The Standish Wood Inc Stable Value Ayer Group Trust Group Trust is treated as single beneficial owner of the investment fund under the circumstances described 3c Fund below You state that the Group Trust will be collective investment vehicle for tax-qualified retirement and prof itdefined sharing plans including participant-directed contribution will consist of the Fund and plans The Group Trust other investment in funds that may the future be created at any direction of the the Standish Ayer Wood Inc investment fund investment Group Trusts manager Each separate will have its own investment objectives and policies and will he treated as separate issuer for purposes of section Standish You represent that Standish has developed certain criteria the investment of assets in the Fund by governing participantdirected defined contribution plan Participating Plan or the including following Plan Plans investment in the Fund will be made with assets directed by Plan participants to an account with an identified generic investment objective generic investment option The decision the Fund invest assets investment option the initial investment and to withdraw assets from the Fund will be made solely by direction from or Plan fiduciary without consultation with any Plan participant in to of generic both initially and subsequent to each purchase of Fund units by Immediately following at least 50 of the options generic investment option assets will consist of securities or property other than units of the Fund No that any representation will be made to Plan participants to or account specific portion of their contributions balances under the Plan or any specific portion of the in the relevant generic investment option will be invested Fund If Plan delivers any information to participants that mentions an investment in the Fund it will be -2disclaimer that no assurances to the effect accompanied by that the investment be can generic option will given continue to invest its assets or the same portion of its assets in the Fund Plan as an investor represent that before accepting Standish will require the Plan to represent and warrant that it will comply with the foregoing eligibility criteria for as long as the Plan invests in the Fund Standish will monitor Plans periodically Participating compliance with these criteria and will have the ability without the consent of the to redeem the Plans interest in the Fund if the Plan Plan is not in compliance or fails to cooperate with Standishs efforts to monitor compliance You in the Fund 3c Section of the Investment from Company Act excludes definition of investment company any issuer that is not making and does not propose to make public offering and whose securities outstanding other than short-term paper are owned by not more than 100 persons beneficially Generlly beneficial of issuer by term ownership company that includes an employee benefit plan deemed to be beneficial In The PanAgora Group ownership by single person Trust pub avail Apr 29 1994 PanAgora the staff concluded that for purposes of determining compliance with the limit of section in each participant 100-person defined contribution participant-directed plan who allocates to issuer should be portion of his or her account treated as beneficial owner of that issuers securities PanAgora was based on the staffs view that the securityholders of issuer should be deemed company that invests in to be beneficial owners of the issuers securities if the company is managed to facilitate its securityholders individual decisions to invest in the issuer.3 the 3c 3c 3c 3c 2a The term company is defined in section of the Investment Act to mean any corporation partnership Company association joint-stock company trust fund or organized group of persons whether incorporated or not An exception to the general rule is attribution provisions of section assumes that those provisions do not apply 1992 See e.g WR Investment the limited partners of Partners found in Your the letter pub avail Apr 15 partnership were the beneficial interest in owners of the partnerships entity because the which made all the investment decisions for general partner the partnership would consult with the limited partners about their individual investment objectives and vary from investment 3c continued.. -3The eligibility criteria and other representations set out your letter and described above are designed to ensure that Plans will not be managed to facilitate their Participating individual decisions to invest in the Fund In participants this regard we note particularly your representations that Plan participants discretion will be limited to allocating his or her account number of generic investment options the among decision to invest in the Fund and the amount of assets of Plan invested will be solely within the discretion fiduciary and immediately following any purchase of Fund units Plan less than 5O of the asets of by Participating generic investment option will be invested in the Fund in On the enforcement basis of the foregoing we would not recommend action to the Commission if for purposes of section Plan is deemed to be single beneficial owner of the .continued investment each limited partners percentage share of profits Six Pack pub avail Nov 13 1989 the partners of general partnership were the beneficial investment in owners of the partnerships the entity because partnership permitted each partner to determine the amount of his or her contribution to each investment based on his or her individual investment particular Market Capital pub objectives Tyler Capital Fund L.P./South avail Sept 28 1987 the partners of general partnership were the beneficial owners of the partnerships investment in the partnership created entity because separate subaccount for each new investment it made and permitted each on an investment-by-investment partner to contribute basis to and losses based on individual circumstances 3c The 50% is intended to ensure that Plan representation decision to allocate assets to investment participants generic is not the substantial of decision to invest option equivalent in the Fund this in its By incorporating representation the staff does not suggest that response higher percentage investment necessarily would mean that Plans participants must be treated as the beneficial owners of an underlying issuers securities Nor does the staff foreclose the that different facts from those stated here might possibility Plan as owner The staff justify treating single beneficial does not intend to respond to no-action that requests however involve generic investment option seeking to invest more than 50% of its assets in issuer if the request does not otherwise differ materially from the facts described in the letter incoming 3c 3c -4facts and represen is based on the position different facts that should note and tations in your letter you result different might require and circumstances Funds units This H_ Barry Senior Mendelson Counsel --- Source: Frix Law Library, 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Public record. Not legal advice.