[Federal Register Volume 86, Number 78 (Monday, April 26, 2021)]
[Proposed Rules]
[Pages 21969-21972]
[FR Doc No: 2021-08622]

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DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2021-0260; Project Identifier MCAI-2020-01255-T]
RIN 2120-AA64

Airworthiness Directives; Airbus Canada Limited Partnership (Type
Certificate Previously Held by C Series Aircraft Limited Partnership
(CSALP); Bombardier, Inc.) Airplanes

AGENCY: Federal Aviation Administration (FAA), DOT.

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: The FAA proposes to adopt a new airworthiness directive (AD)
for certain Airbus Canada Limited Partnership Model BD-500-1A10 and BD-
500-1A11 airplanes. This proposed AD was prompted by a report that
following an in-service engine shutdown during taxi, water was found to
be dripping into the forward avionics bay; the water caused a short
circuit and tripped a circuit breaker. This proposed AD would require
replacing the forward galley slotted drain covers with solid blanking
plates and modifying the associated drain tubing to block water. The
FAA is proposing this AD to address the unsafe condition on these
products.

DATES: The FAA must receive comments on this proposed AD by June 10,
2021.

ADDRESSES: You may send comments, using the procedures found in 14 CFR
11.43 and 11.45, by any of the following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the instructions for submitting comments.
     Fax:<PHONE_NUMBER>.
     Mail: U.S. Department of Transportation, Docket
Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery: Deliver to Mail address above between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays.
    For service information identified in this NPRM, contact Airbus
Canada Limited Partnership, 13100 Henri-Fabre Boulevard, Mirabel,
Qu[eacute]bec J7N 3C6, Canada; telephone<PHONE_NUMBER>; email
<EMAIL_ADDRESS>internet http://a220world.airbus.com. You may view
this service information at the FAA, Airworthiness Products Section,
Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For
information on the availability of this material at the FAA, call 206-
231-3195.

Examining the AD Docket

    You may examine the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2021-
0260; or in person at Docket Operations between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays. The AD docket contains
this NPRM, any comments received, and other information. The street
address for Docket Operations is listed above.

FOR FURTHER INFORMATION CONTACT: Darren Gassetto, Aerospace Engineer,
Mechanical Systems and Administrative Services Section, FAA, New York
ACO Branch, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590;
telephone<PHONE_NUMBER>; email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Comments Invited

    The FAA invites you to send any written relevant data, views, or
arguments about this proposal. Send your comments to an address listed
under ADDRESSES. Include ``Docket No. FAA-2021-0260; Project Identifier
MCAI-2020-01255-T'' at the beginning of your comments. The most helpful
comments reference a specific portion of the proposal, explain the
reason for any recommended change, and include supporting data. The FAA
will consider all comments received by the closing date and may amend
the proposal because of those comments.
    Except for Confidential Business Information (CBI) as described in
the following paragraph, and other information as described in 14 CFR
11.35, the FAA will post all comments received, without change, to
https://www.regulations.gov, including any personal information you
provide. The agency will also post a report summarizing each
substantive verbal contact received about this proposed AD.

Confidential Business Information

    CBI is commercial or financial information that is both customarily
and actually treated as private by its owner. Under the Freedom of
Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public
disclosure. If your comments responsive to this NPRM contain commercial
or financial information that is customarily treated as private, that
you actually treat as private, and that is relevant or responsive to
this NPRM, it is important that you clearly designate the submitted
comments as CBI. Please mark each page of your submission containing
CBI as ``PROPIN.'' The FAA will treat such marked submissions as
confidential under the FOIA, and they will not be placed in the public
docket of this NPRM. Submissions containing CBI should be sent to
Darren Gassetto, Aerospace Engineer, Mechanical Systems and
Administrative Services Section, FAA, New York ACO Branch, 1600 Stewart
Avenue, Suite 410, Westbury, NY 11590; telephone<PHONE_NUMBER>; email<EMAIL_ADDRESS>Any commentary that the FAA receives which is
not specifically designated as CBI will be placed in the public docket
for this rulemaking.

Background

    Transport Canada Civil Aviation (TCCA), which is the aviation
authority for Canada, has issued TCCA AD CF-2020-30R1, dated December
11, 2020, (referred to after this as the Mandatory Continuing
Airworthiness Information, or the MCAI), to correct an unsafe condition
for certain Airbus Canada Limited Partnership Model BD-500-1A10 and BD-
500-1A11 airplanes. You may examine the MCAI in the AD docket on the
internet at https://www.regulations.gov by searching for and locating
Docket No. FAA-2021-0260.
    This proposed AD was prompted by a report that following an in-
service engine shutdown during taxi, water was found to be dripping
into the forward avionics bay; the water caused a short circuit and
tripped a circuit breaker. The FAA is proposing this AD to address
water ingress into the forward avionics bay, which could short circuit
the equipment in the bay area and lead to a loss of air data sources
and consequent reduced functional capabilities and increase in crew
workload, possibly leading to a loss of continued safe flight and
landing. See the MCAI for additional background information.

Related Service Information Under 1 CFR Part 51

    Airbus Canada Limited Partnership has issued Service Bulletin
BD500-530009, Issue 001, dated July 31, 2020. This service information
describes procedures for replacing the forward galley slotted drain
covers with solid blanking plates and modifying the associated drain
tubing to block water. This service information is reasonably available
because the interested parties have access to it through their normal
course of business or by the means identified in the ADDRESSES section.

FAA's Determination

    This product has been approved by the aviation authority of another
country, and is approved for operation in the United States. Pursuant
to the FAA's bilateral agreement with the State of Design Authority,
the FAA has been notified of the unsafe condition described in the MCAI
and service information referenced above. The FAA is proposing this AD
because the FAA evaluated all the relevant information and determined
the unsafe condition described previously is likely to exist or develop
on other products of the same type design.

Proposed Requirements of This NPRM

    This proposed AD would require accomplishing the actions specified
in the service information described previously.

Costs of Compliance

    The FAA estimates that this proposed AD affects 39 airplanes of
U.S. registry. The FAA estimates the following costs to comply with
this proposed AD:

                                      Estimated Costs for Required Actions
----------------------------------------------------------------------------------------------------------------
                                                                                Cost per       Cost on U.S.
                          Labor cost                              Parts cost        product         operators
----------------------------------------------------------------------------------------------------------------
1 work-hour x $85 per hour = $85.............................            $665             $750          $29,250
----------------------------------------------------------------------------------------------------------------

    The FAA has included all known costs in its cost estimate.
According to the manufacturer, however, some or all of the costs of
this proposed AD may be covered under warranty, thereby reducing the
cost impact on affected operators.

Authority for This Rulemaking

    Title 49 of the United States Code specifies the FAA's authority to
issue rules on aviation safety. Subtitle I, section 106, describes the
authority of the FAA Administrator. Subtitle VII: Aviation Programs,
describes in more detail the scope of the Agency's authority.
    The FAA is issuing this rulemaking under the authority described in
Subtitle VII, Part A, Subpart III, Section 44701: General requirements.
Under that section, Congress charges the FAA with promoting safe flight
of civil aircraft in air commerce by prescribing regulations for
practices, methods, and procedures the Administrator finds necessary
for safety in air commerce. This regulation is within the scope of that
authority because it addresses an unsafe condition that is likely to
exist or develop on products identified in this rulemaking action.

Regulatory Findings

    The FAA determined that this proposed AD would not have federalism
implications under Executive Order 13132. This proposed AD would not
have a substantial direct effect on the States, on the relationship
between the national Government and the States, or on the distribution
of power and responsibilities among the various levels of government.
    For the reasons discussed above, I certify this proposed
regulation:
    (1) Is not a ``significant regulatory action'' under Executive
Order 12866,
    (2) Would not affect intrastate aviation in Alaska, and
    (3) Would not have a significant economic impact, positive or
negative, on a substantial number of small entities under the criteria
of the Regulatory Flexibility Act.

List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by
reference, Safety.

The Proposed Amendment

    Accordingly, under the authority delegated to me by the
Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

PART 39--AIRWORTHINESS DIRECTIVES

0
1. The authority citation for part 39 continues to read as follows:

    Authority:  49 U.S.C. 106(g), 40113, 44701.

Sec.  39.13  [Amended]

0
2. The FAA amends Sec.  39.13 by adding the following new airworthiness
directive:

Airbus Canada Limited Partnership (Type Certificate Previously Held
by C Series Aircraft Limited Partnership (CSALP); Bombardier, Inc.):
Docket No. FAA-2021-0260; Project Identifier MCAI-2020-01255-T.

(a) Comments Due Date

    The FAA must receive comments on this airworthiness directive
(AD) action by June 10, 2021.

(b) Affected ADs

    None.

(c) Applicability

    This AD applies to the Airbus Canada Limited Partnership (type
certificate previously held by C Series Aircraft Limited Partnership
(CSALP); Bombardier, Inc.) airplanes identified in paragraphs (c)(1)
and (2) of this AD, certificated in any category.
    (1) Model BD-500-1A10 airplanes, having serial number (S/N)
50001 through 50018 inclusive, and 50020 through 50055 inclusive.
    (2) Model BD-500-1A11 airplanes, having S/N 55001 through 55016
inclusive, 55018 through 55068 inclusive, 55070 through 55083
inclusive, 55086 through 55088 inclusive, and 55090.

(d) Subject

    Air Transport Association (ATA) of America Code 53, Fuselage.

(e) Reason

    This AD was prompted by a report that following an in-service
engine shutdown during taxi, water was found dripping into the
forward avionics bay; the water caused a short circuit and tripped a
circuit breaker. The FAA is issuing this AD to address water ingress
into the forward avionics bay, which could short circuit the
equipment in the bay area and lead to a loss of air data sources and
consequent reduced functional capabilities and increase in crew
workload, possibly leading to a loss of continued safe flight and
landing.

(f) Compliance

    Comply with this AD within the compliance times specified,
unless already done.

(g) Replacement and Modification

    Within 12 months after the effective date of this AD, replace
the forward galley slotted drain covers with solid blanking plates
and modify the associated drain tubing to block water, in accordance
with paragraph 2, ``Procedure,'' of the Accomplishment Instructions
of Airbus Canada Limited Partnership Service Bulletin BD500-530009,
Issue 001, dated July 31, 2020.

(h) Other FAA AD Provisions

    The following provisions also apply to this AD:
    (1) Alternative Methods of Compliance (AMOCs): The Manager, New
York ACO Branch, FAA, has the authority to approve AMOCs for this
AD, if requested using the procedures found in 14 CFR 39.19. In
accordance with 14 CFR 39.19, send your request to your principal
inspector or responsible Flight Standards Office, as appropriate. If
sending information directly to the manager of the certification
office, send it to ATTN: Program Manager, Continuing Operational
Safety, FAA, New York ACO Branch, 1600 Stewart Avenue, Suite 410,
Westbury, NY 11590; telephone<PHONE_NUMBER>; fax<PHONE_NUMBER>. Before
using any approved AMOC, notify your appropriate principal
inspector, or lacking a principal inspector, the manager of the
responsible Flight Standards Office.
    (2) Contacting the Manufacturer: For any requirement in this AD
to obtain instructions from a manufacturer, the instructions must be
accomplished using a method approved by the Manager, New York ACO
Branch, FAA; or Transport Canada Civil Aviation (TCCA); or Airbus
Canada Limited Partnership's TCCA Design Approval

Organization (DAO). If approved by the DAO, the approval must
include the DAO-authorized signature.

(i) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information
(MCAI) TCCA AD CF-2020-30R1, dated December 11, 2020, for related
information. This MCAI may be found in the AD docket on the internet
at https://www.regulations.gov by searching for and locating Docket
No. FAA-2021-0260.
    (2) For more information about this AD, contact Darren Gassetto,
Aerospace Engineer, Mechanical Systems and Administrative Services
Section, FAA, New York ACO Branch, 1600 Stewart Avenue, Suite 410,
Westbury, NY 11590; telephone<PHONE_NUMBER>; email<EMAIL_ADDRESS>    (3) For service information identified in this AD, contact
Airbus Canada Limited Partnership, 13100 Henri-Fabre Boulevard,
Mirabel, Qu[eacute]bec J7N 3C6, Canada; telephone<PHONE_NUMBER>;
email<EMAIL_ADDRESS>internet http://a220world.airbus.com. You
may view this service information at the FAA, Airworthiness Products
Section, Operational Safety Branch, 2200 South 216th St., Des
Moines, WA. For information on the availability of this material at
the FAA, call<PHONE_NUMBER>.

    Issued on April 21, 2021.
Gaetano A. Sciortino,
Deputy Director for Strategic Initiatives, Compliance & Airworthiness
Division, Aircraft Certification Service.
[FR Doc. 2021-08622 Filed 4-23-21; 8:45 am]
BILLING CODE 4910-13-P


[Federal Register Volume 79, Number 95 (Friday, May 16, 2014)]
[Notices]
[Pages 28571-28575]
[FR Doc No: 2014-11292]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72151; File No. SR-NASDAQ-2014-048]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Consolidate Certain Committee Functions Into the NASDAQ Review Council

May 12, 2014.
    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 April 30, 2014 The NASDAQ Stock Market LLC (``NASDAQ'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') a proposed rule change as described in Items I, II and
III below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    NASDAQ proposes a rule change to consolidate responsibilities of
certain committees of the Board of Directors and to make related
changes to the Exchange By-Laws and Rules.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASDAQ 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 those 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 parts 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 is proposing to expand the regulatory responsibilities
of the NASDAQ Review Council (the ``Review Council''), a committee of
the Exchange Board of Directors (the ``Board'') not composed solely of
Directors, to include responsibilities of other Board committees not
composed solely of Directors and consequently sunset those committees.
The Exchange's committee structure and related Exchange By-Laws are
largely based on those of NASD (now known as FINRA) and were adopted
pursuant to the Exchange's approval as a national securities
exchange.\3\ The Exchange is proposing to make its committee structure
more efficient and effective by vesting the Review Council, which is a
committee of the Board with both adjudicatory and policy
responsibilities, with the adjudicatory responsibilities of the Market
Operations Review Committee (``MORC'') and with the advisory role of
the Market Regulation Committee.
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    \3\ Securities Exchange Act Release No. 53128 (January 13,
2006), 71 FR 3550 (January 23, 2006).
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Review Council
    The Review Council is a Board committee charged with considering
and making recommendations to the Board on policy and rule changes
relating to business and sales practices of members and associated
persons and enforcement policies, including policies with respect to
fines and other sanctions. The Review Council is also an adjudicatory
body, responsible for the review of appeals of disciplinary
proceedings, statutory disqualification proceedings, or membership
proceedings.\4\ In addition, the Review Council may review offers of
settlement, letters of acceptance, waiver and consent, and minor rule
violation plan letters, exercises of exemptive authority, and such
proceedings or actions as may be authorized by the Exchange's rules.
The Review Council is comprised of no fewer than eight and no more than
twelve members, whereby at least twenty percent of the members must be
nominated by the Board's Member Nominating Committee.\5\ Moreover, the
Review Council must have at least three Public members,\6\ as defined
in the By-Laws, and the number of Non-Industry members \7\ shall equal
or exceed the sum

of the number of Industry members \8\ and Member Representative
members.\9\ The By-Laws provide that a quorum for the transaction of
business consists of a majority of the Review Council, including not
less than 50 percent of the Non-Industry members of the Review Council
and at least one Member Representative member.
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    \4\ Decisions issued by the Review Council may be reviewed by
the Board. See, e.g., Rule 9351. If the Board does not call the
proceeding for review, the proposed written decision of the Review
Council shall constitute the final disciplinary action of NASDAQ for
purposes of Exchange Act Rule 19d-1(c)(1), unless the Review Council
remands the proceeding. See, e.g., Rule 9349(c).
    \5\ Pursuant to the By-Laws, the Board's Member Nominating
Committee is responsible for the nomination of candidates for each
Member Representative Director position on the Board that is to be
elected by Nasdaq Members or the Company Member under the terms of
the LLC Agreement and the By-Laws, and shall nominate candidates for
appointment by the Board for each vacant or new position on the
Nasdaq Listing and Hearing Review Council, the Nasdaq Review
Council, or other committee that is to be filled with a Member
Representative member under the terms of the By-Laws. See Exchange
By-Law, Article III (6)(b). Further provided by the By-Laws, the
Member Nominating Committee shall consist of no fewer than three and
no more than six members, and all members of the Member Nominating
Committee shall be a current associated person of a current Nasdaq
Member. See Exchange By-Law, Article III (6)(b)(iii).
    \6\ ``Public member'' means a Nasdaq Listing and Hearing Review
Council member, Nasdaq Review Council member, or member of any other
committee appointed by the Board who has no material business
relationship with a broker or dealer, the Company or its affiliates,
or FINRA. See Exchange By-Law, Article I (z).
    \7\ ``Non-Industry member'' means a Nasdaq Listing and Hearing
Review Council member, Nasdaq Review Council member, or member of
any other committee appointed by the Board who is (i) a Public
member; (ii) an officer or employee of an issuer of securities
listed on the national securities exchange operated by the Company;
or (iii) any other individual who would not be an Industry member.
See Exchange By-Law, Article I (w).
    \8\ ``Industry member'' means a Nasdaq Listing and Hearing
Review Council member, Nasdaq Review Council member, or member of
any other committee appointed by the Board who (i) is or has served
in the prior three years as an officer, director, or employee of a
broker or dealer, excluding an outside director or a director not
engaged in the day-to-day management of a broker or dealer; (ii) is
an officer, director (excluding an outside director), or employee of
an entity that owns more than ten percent of the equity of a broker
or dealer, and the broker or dealer accounts for more than five
percent of the gross revenues received by the consolidated entity;
(iii) owns more than five percent of the equity securities of any
broker or dealer, whose investments in brokers or dealers exceed ten
percent of his or her net worth, or whose ownership interest
otherwise permits him or her to be engaged in the day-to-day
management of a broker or dealer; (iv) provides professional
services to brokers or dealers, and such services constitute 20
percent or more of the professional revenues received by the
committee member or 20 percent or more of the gross revenues
received by the committee member's firm or partnership; (v) provides
professional services to a director, officer, or employee of a
broker, dealer, or corporation that owns 50 percent or more of the
voting stock of a broker or dealer, and such services relate to the
director's, officer's, or employee's professional capacity and
constitute 20 percent or more of the professional revenues received
by the committee member or 20 percent or more of the gross revenues
received by the committee member's firm or partnership; or (vi) has
a consulting or employment relationship with or provides
professional services to the Company or any affiliate thereof or to
FINRA (or any predecessor) or has had any such relationship or
provided any such services at any time within the prior three years.
See Exchange By-Law, Article I (m).
    \9\ ``Member Representative member'' means a Nasdaq Listing and
Hearing Review Council member, Nasdaq Review Council member, or
member of any other committee appointed by the Board who has been
elected or appointed after having been nominated by the Member
Nominating Committee pursuant to these By-Laws. See Exchange By-Law,
Article I (r).
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Market Operations Review Committee
    The MORC is responsible for considering Exchange member appeals of
determinations made pursuant to Exchange Rules 4612, 4619, 4620, 11890,
and Exchange Options Rules Chapter V Section 6. Decisions of the MORC
in these matters are not appealable, however, determinations of the
MORC with respect to Rule 11890 may be arbitrated.\10\ The By-Laws
require that the MORC be comprised of a number of Member Representative
members that is equal to at least 20 percent of the total number of
members of the MORC. Moreover, the By-Laws require that no more than 50
percent of the members of the MORC be engaged in market making activity
or employed by a NASDAQ member firm whose revenues from market making
exceed 10 percent of its total revenues. The By-Laws do not provide a
description of what is a quorum for purposes of holding a meeting of
the MORC, however, the committee has adopted a three member quorum
requirement.\11\
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    \10\ See Rule 11890(c)(3). Unlike disciplinary proceedings under
the Rule 9000 Series, speedy resolution of matters under the MORC's
jurisdiction is important to ensuring fair and equitable treatment
of market makers, and, with regard to clearly erroneous
determinations, benefits market participants and helps ensure the
accuracy of transactional information disseminated to investors.
    \11\ Rule 11890(c)(2) expressly requires a panel to consist of
three or more members of the MORC, provided that no more than 50
percent of the members of any panel are directly engaged in market
making activity or employed by a member firm whose revenues from
market making activity exceed ten percent of its total revenues. The
rule also states that in no case shall a MORC Panel include a person
affiliated with a party to the trade in question.
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Market Regulation Committee
    The Market Regulation Committee (the ``Regulation Committee'') is a
committee of the Board, which is responsible for providing advice and
guidance to the Board on regulatory proposals and industry initiatives
relating to quotations, execution, trade reporting, and trading
practices; advising the Board in its administration of programs and
systems for the surveillance and enforcement of rules governing
Exchange Members' conduct and trading activities in the Exchange;
providing a pool of attorney panelists for hearing panels under the
Exchange rules; participating in the training of hearing panelists on
issues relating to quotations, executions, trade reporting, and trading
practices; and reviewing and recommending to the Review Council changes
to the Exchange's guidelines for sanctions to be imposed on members for
violations of Exchange rules. The Regulation Committee must have at
least 50 percent Non-Industry committee members and must include a
broad representation of participants in the Exchange, including
investors, market makers, integrated retail firms and order entry
firms. The By-Laws provide that a quorum for the transaction of
business consists of a majority of the Regulation Committee, including
not less than 50 percent of the Non-Industry committee members. The
requirement that not less than 50 percent of Non-Industry members be
present will be waived if at least 50 percent of the Non-Industry
members are present at or have filed a waiver of attendance for a
meeting after receiving an agenda prior to such meeting.
The New Review Council
    The Exchange is proposing to expand the responsibilities of the
Review Council by merging the adjudicatory role of the MORC and the
advisory role of the Regulation Committee, both as described above,
into the Review Council. The Exchange is proposing to amend the By-Laws
and Exchange Rules by eliminating references to the Regulation
Committee and MORC, and adding the description of these roles to the
Review Council's responsibilities under the By-Laws and Exchange Rules.
The Exchange is also proposing to define a new type of Panelist under
the rules, which will replace the Regulation Committee Panelist. The
new ``Special Panelist'' will take on the role provided currently by
Regulation Committee Panelists, which is discussed in more detail
below. All of these changes taken together will ensure each function of
the MORC and Regulation Committee will continue, unaltered.
    The current composition requirements of the Review Council are as
prescriptive, if not more so, than the composition requirements of the
MORC and Regulation Committee. As noted above, the Review Council must
have between eight and twelve members, whereas the MORC and Regulation
Committee have no such minimum and maximum composition requirements. In
practice, both the MORC and Regulation Committee have fewer members
than eight members each. In addition, the Review Council must have at
least twenty percent of its members nominated by the Member Nominating
Committee. The MORC has an identical requirement, but the Regulation
Committee does not. The Review Council is also required to have at
least three Public Members, which helps ensure that there is
representation on the Review Council by individuals with no material
relationship with a broker or dealer, the Exchange, its affiliates, or
FINRA, whereas neither the MORC nor the Regulation Committee has such a
representation requirement. Similarly, the Review Council is required
to have a number of Non-Industry Members that is greater than or equal
to the total number of Industry and Member Nominating Committee
Members, which is another means of ensuring independent members of the
Review Council. The Regulation Committee has a similar requirement that
Non-Industry Members must be greater than or equal to at least 50
percent of the total number of members, however, the MORC has no such
requirement.
    Under the Exchange's By-Laws, the MORC has a unique composition

requirement that limits its membership to no more than 50 percent of
members that are engaged in market making activity or employed by a
NASDAQ member firm whose revenues from market making exceed 10 percent
of its total revenues. This requirement ensures that the composition of
the MORC is never overrepresented by market making members. The
Exchange is proposing to adopt this requirement for the new Review
Council under the By-Laws.
    The By-Laws limit the members of the Review Council to a maximum of
two consecutive three-year terms. The By-Laws further require that
membership of the Review Council is divided into three classes of
members, whose terms expire in different years, thus ensuring that the
Review Council is not completely reconstituted in any given year.
Neither the MORC nor the Regulation Committee has such requirements.
Last, although the By-Laws are silent on what constitutes a quorum for
the conduct of business of the MORC, the committee has adopted a three
member quorum requirement. Accordingly, NASDAQ is proposing to adopt a
three Review Council member quorum requirement, solely applicable to
the conduct of business formerly within the scope of the MORC.
    In terms of the functions of the MORC, the Review Council will now
be responsible for determinations pursuant to Exchange Rules 4612,
4619, 4620, 11890, and Exchange Options Rules Chapter V Section 6.\12\
As noted above, the current Review Council is an adjudicatory body
charged with the review of disciplinary, statutory disqualification and
membership proceedings. In this regard, members of the Review Council
are called upon to preside over matters, apply Exchange rules and
render decisions that represent disposition of the matter for the
parties. As such, it is well-positioned to take on the additional
adjudicatory responsibilities of the MORC, which likewise requires its
members to preside over matters, apply Exchange rules and render
decisions. Moreover, the Exchange believes that given the diverse
composition of the Review Council, which includes both Member
Representative Members, and Industry and Non-Industry members, it has
an adequately broad representation of Exchange constituents and
independent members that are well suited to make determinations
concerning the rules within the current jurisdiction of the MORC. In
this regard, the Exchange notes that the Review Council is currently
constituted with members who are compliance officers at member firms,
associated persons of member firms, academics, and attorneys. The MORC
is constituted with a similar mix of members.\13\
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    \12\ Unlike decisions of the Review Council issued pursuant to
proceedings concerning disciplinary, statutory disqualification and
membership proceedings, decisions made by the new Review Council
with regard to Exchange Rules 4612, 4619, 4620, 11890, and Exchange
Options Rules Chapter V Section 6 are not eligible for Board review
or appeal to the SEC, but rather will represent the final resolution
of such matters.
    \13\ In fact, one individual serves on both the Review Council
and MORC.
---------------------------------------------------------------------------

    In terms of the policy role of the Regulation Committee, under the
proposed changes, the Board will continue to be able to solicit advice
and guidance on regulatory proposals and industry initiatives relating
to quotations, execution, trade reporting, and trading practices from
the Review Council, when the Board determines to do so, much as it can
under the current By-Law provisions on policies concerning member sales
practices, enforcement policies, fines and sanctions.
    The Exchange notes that it is only transferring the advisory role
of the Market Regulation Committee to the Review Council. The Exchange
is not proposing to draw upon the Review Council as a source of
attorney panelists for hearing panels or the training thereof on issues
relating to quotations, executions, trade reporting, and trading
practices. Rather, the Exchange is proposing to delete the definition
of Market Regulation Committee under Rule 9120(u) and adopt a new
definition of a ``Special Panelist'' thereunder. A Special Panelist
will take the role of the Market Regulation Committee panelists in
NASDAQ's rules and will be drawn from FINRA's pool of Hearing Panelists
provided by their Market Regulation Committee and from other sources
the Board deems appropriate given the responsibilities of such Hearing
Panelists. All Special Panelists must be approved by the Board, at
least annually.
Changes to Rule 9231(b)
    The Exchange is proposing minor technical changes to Rule 9231(b),
which concerns the composition of Hearing Panels. NASDAQ is eliminating
references to NASD and replacing them with the correct acronym for the
Financial Industry Regulatory Authority, FINRA. When NASDAQ originally
adopted the rule, FINRA was still the NASD and NASDAQ did not amend
Rule 9231(b) to reflect the name change. NASDAQ is replacing references
to the Market Regulation Committee in Rule 9231(b)(2) with references
to Special Panelists, as described above.
    NASDAQ is also adding an additional category of person eligible to
be a Panelist on a Hearing Panel. NASDAQ may currently draw upon a
person who: Previously served on the Review Council; previously served
on a disciplinary subcommittee of the Review Council, including a
Subcommittee, an Extended Proceeding Committee, or their predecessor
subcommittees; previously served as a Director, but does not serve
currently in that position; or served on the FINRA National
Adjudicatory Council or on a disciplinary subcommittee of the FINRA
National Adjudicatory Council prior to the date that NASDAQ commenced
operating as a national securities exchange.\14\ NASDAQ is proposing to
include a FINRA Panelist as a person authorized to be a Panelist in a
NASDAQ proceeding, if the Panelist is approved by the Board at least
annually.
---------------------------------------------------------------------------

    \14\ See Rule 9231(b).
---------------------------------------------------------------------------

    The Exchange notes that FINRA's rule concerning the selection
criteria for its Panelists is substantially similar to that of the
Exchange. Specifically, FINRA Rule 9231(b)(1) provides that a Panelist
be a person who: Currently serves or previously served on a District
Committee; previously served on the National Adjudicatory Council;
previously served on a disciplinary subcommittee of the National
Adjudicatory Council or the National Business Conduct Committee,
including a Subcommittee, an Extended Proceeding Committee, or their
predecessor subcommittees; or, previously served as a Director or a
Governor, but does not serve currently in any of these positions.
NASDAQ believes that drawing from FINRA's pool of Panelists will
provide the Exchange with individuals that have adequate experience and
expertise to be NASDAQ Panelists, and will provide a larger pool from
which to draw Panelists. NASDAQ notes that, by requiring the Board to
approve a FINRA Panelist as a precondition to that Panelist
participating in a NASDAQ matter, NASDAQ is ensuring that the Panelists
that review NASDAQ matters are adequately qualified to adjudicate such
matters.
Other Technical Changes
    Lastly, NASDAQ is making two minor technical corrections to its
rules. NASDAQ is deleting an extraneous ``and'' from the definition of
``Hearing Officer'' under Rule 9120(r). NASDAQ

is also adding the word ``to'' to Rule 11890(c)(1), which was
erroneously omitted.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act \15\ in general, and furthers the objectives of Section
6(b)(5) of the Act \16\ in particular, in that it is designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and, in general to protect investors and the public
interest, and is not designed to permit unfair discrimination between
customers, issuers, brokers or dealers. The Exchange also believes that
the proposed rule is consistent with Section 6(b)(6) of the Act,\17\
which requires the rules of an exchange provide that its members be
appropriately disciplined for violations of the Act as well as the
rules and regulations thereunder, or the rules of the Exchange, by
expulsion, suspension, limitation of activities, functions, and
operations, fine, censure, being suspended or barred from being
associated with a member, or any other fitting sanction.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b).
    \16\ 15 U.S.C. 78f(b)(5).
    \17\ 15 U.S.C. 78f(b)(6).
---------------------------------------------------------------------------

    The Exchange believes that the proposed changes are consistent with
these requirements because they bring efficiency to the committee
process, by vesting a single Board committee with responsibilities
currently spread across multiple committees, while ensuring that such
responsibilities are performed to a high regulatory standard. In this
regard, the new Review Council is, by every measure, a more diverse
body than the committees that it replaces. The broad membership of the
new Review Council will ensure that decisions made with respect to the
MORC's former responsibilities are made fairly. In this regard, the
Exchange notes that the Review Council will adopt the MORC requirement
that not more than 50 percent of the committee's members be engaged in
market making activity or employed by a NASDAQ member firm whose
revenues from market making exceed 10 percent of its total revenues.
    As discussed above, the By-Laws limit Review Council members to a
maximum of two consecutive three-year terms, unlike the MORC and
Regulation Committee. This requirement ensures that there is a
consistent influx of new members to the Review Council. The By-Laws
further require that membership of the Review Council is divided into
three classes of members, whose terms expire in different years, thus
ensuring that the Review Council is not completely reconstituted in any
given year. The Exchange notes that the expansion of the Review
Council's responsibilities is an extension of the functions that it
already performs. As discussed above, the Review Council is currently
an adjudicatory body under NASDAQ's rules, as well as an advisory
committee to the Board. Accordingly, the Exchange believes that the
proposed changes will serve to protect the public interest and promote
appropriate discipline of members for violations of securities laws and
rules of the Exchange.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange 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, as amended.
Specifically, the Exchange believes that this change will bring
efficiency and consistency in application of the investigative and
adjudicatory processes by consolidating Board committee functions.
Consequently, the changes will not impact competition among brokers or
dealers, nor will they impact competition among the Exchange and its
peers.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(ii) of the Act \18\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\19\
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(3)(a)(ii) [sic].
    \19\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend 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. If the Commission
takes such action, the Commission shall institute proceedings to
determine whether the proposed rule should be approved or 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 email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2014-048 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2014-048. This
file number should be included on the subject line if email 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 Web site
viewing and printing in the Commission's Public Reference Room, 100 F
Street NE., Washington, DC 20549, on official business days between the
hours of 10:00 a.m. and 3:00 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 Number SR-NASDAQ-2014-048, and

should be submitted on or before June 6, 2014.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-11292 Filed 5-15-14; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 77, Number 85 (Wednesday, May 2, 2012)]
[Notices]
[Pages 26052-26056]
[FR Doc No: 2012-10569]

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SECURITIES AND EXCHANGE COMMISSION

[Investment Company Act Release No. 30055; File No. 812-13927]

Invesco Total Property Market Income Fund, et al.; Notice of
Application

April 26, 2012.
AGENCY: Securities and Exchange Commission (``Commission'').

ACTION: Notice of application under section 6(c) of the Investment
Company Act of 1940 (``Act'') for an exemption from section 19(b) of
the Act and rule 19b-1 under the Act.

-----------------------------------------------------------------------

Summary of Application: Applicants request an order to permit certain
registered closed-end investment companies to make periodic
distributions of long-term capital gains with respect to their
outstanding common shares as frequently as monthly in any one taxable
year, and as frequently as distributions are specified by or in
accordance with the terms of any outstanding preferred shares that such
investment companies may issue.

Applicants: Invesco Total Property Market Income Fund (the ``Property
Fund'') and Invesco Advisers, Inc. (together, the ``Applicants'').

DATES: Filing Dates: The application was filed on July 22, 2011 and
amended on December 22, 2011.

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 May 21, 2012, 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 Commission's Secretary.

ADDRESSES: Elizabeth M. Murphy, Secretary, Securities and Exchange
Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants,
1555 Peachtree Street NE., Atlanta, Georgia 30309.

FOR FURTHER INFORMATION CONTACT: Jill Ehrlich, Senior Counsel, at (202)
551-6819, or Mary Kay Frech, Branch Chief, at<PHONE_NUMBER> (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 via the
Commission's Web site by searching for the file number, or for an
applicant using the Company name box, at http://www.sec.gov/search/search.htm, or by calling<PHONE_NUMBER>.

Applicants' Representations

    1. The Property Fund is a closed-end management investment company
registered under the Act and is organized as a Delaware statutory
trust.\1\ The Property Fund's primary investment objective will be to
provide a high level of current income. It is currently contemplated
that the common shares of the Property Fund and the common shares of
additional Funds will be listed on a national securities exchange as
defined in section 2(a)(26) of the Act (each, an ``Exchange''). The
Property Fund currently does not intend to issue any preferred shares,
but may do so in the future. Applicants believe that investors in the
common shares of the Property Fund may prefer an investment vehicle
that provides regular/monthly distributions and a steady cash flow.
---------------------------------------------------------------------------

    \1\ Applicants request that any order issued granting the relief
requested in the application also apply to each registered closed-
end investment company advised by Invesco Advisers, Inc. (including
any successor in interest), or by an entity controlling, controlled
by or under common control (within the meaning of section 2(a)(9) of
the Act) with Invesco Advisers, Inc. (any such entity, including
Invesco Advisers, Inc., the ``Adviser) that seeks in the future to
rely on the order. The Property Fund is the only closed-end
investment company that currently intends to rely on the order. Any
closed-end investment company that relies on the order in the future
will comply with the terms and conditions of the application (such
investment companies, together with the Property Fund, the
``Funds''). A successor in interest is limited to entities that
result from a reorganization into another jurisdiction or a change
in the type of business organization.
---------------------------------------------------------------------------

    2. Invesco Advisers, Inc., a registered investment adviser under
the Investment Advisers Act of 1940, as amended (``Advisers Act''),
will serve as the Property Fund's investment adviser. Each Fund will be
advised by investment advisers that are registered under the Advisers
Act.
    3. Applicants represent that, before any Fund implements a proposed
distribution policy with respect to its common shares in reliance on
the order, the Fund's board of trustees or directors (the ``Board''),
including a majority of the members of the Board who are not
``interested persons'' of the respective Fund, as defined in section
2(a)(19) of the Act (the ``Independent Trustees''), will approve the
Fund's adoption of the proposed distribution policy. Applicants
represent that the Board will request and evaluate, and the Adviser
will furnish, such information as may be reasonably necessary to make
an informed determination of whether the Board should adopt and
implement the proposed distribution policy. Applicants state that, in
particular, the Board, including the Independent Trustees, will review
information regarding the purpose and terms of the proposed
distribution policy, any reasonably foreseeable material effect of such
policy on the Fund's long-term total return (in relation to market
price and net asset value per common share (``NAV'')), the relationship
between such Fund's distribution rate on its common shares under the
policy and such Fund's total return (in relation to NAV), and whether
the rate of distribution will exceed such Fund's expected total return
(in relation to NAV). Applicants represent that the Independent
Trustees also will consider what conflicts of interest the Adviser and
the affiliated persons of the Adviser and the Fund might have with
respect to the adoption or implementation of such policy. Applicants
state that, after considering such information, the Board of the
relevant Fund, including the Independent Trustees, will only approve a
distribution policy with respect to the Fund's common shares (the
``Plan''), if the Board, including the Independent Trustees, determines
that the Plan is consistent with the Fund's investment objective(s) and
in the best interests of the Fund's common shareholders.
    4. Applicants state that the purpose of any Plan will be to permit
a Fund to provide its common shareholders with periodic distributions
as nearly equal as practicable and any required special distributions
over the course of each year. Applicants represent that, under the Plan
of a Fund, such Fund will distribute to its respective common
shareholders a fixed percentage of the market price of such Fund's
common shares at a particular point in time, or a fixed percentage of
NAV at a particular time or a fixed amount per common share, any of
which may be adjusted from time to time. Applicants state that the
minimum annual distribution rate with respect to such Fund's common
shares would be independent of the Fund's performance during any
particular period but would be expected to correlate with the Fund's
performance over time. Except for extraordinary distributions and
potential increases or decreases in the final dividend periods in light
of the Fund's performance for the entire calendar or taxable year and
to enable the Fund to comply with the distribution requirements of
Subchapter M and section 4982 of the Internal Revenue Code of 1986, as
amended (the ``Code'') for the calendar or taxable year, each
distribution on the common shares would be at the stated rate then in
effect.
    5. Applicants state that, in conjunction with approving a Plan, the
Board of each Fund will also approve the Fund's adoption of compliance
policies and procedures under rule 38a-1 under the Act that: (i) Are
reasonably designed to ensure that all notices required to be sent to
each Fund's shareholders pursuant to section 19(a) of the Act, rule
19a-1 thereunder and condition 4 below (each a ``19(a) Notice'')
include the disclosure required by rule 19a-1 and by condition 2(a)
below, and that all other written communications by the Fund or its
agents described in condition 3(a) below about the distributions under
the Plan include the disclosure required by condition 3(a) below, and
(ii) require each such Fund to keep records that demonstrate its
compliance with all of the conditions of the order and that are
necessary for the Fund to form the basis for, or demonstrate the
calculation of, the amounts disclosed in its 19(a) Notices.

Applicants' Legal Analysis

    1. Section 19(b) generally makes it unlawful for any registered
investment company to make long-term capital gains distributions more
than once every twelve months. Rule 19b-1 limits the number of capital
gains dividends, as defined in section 852(b)(3)(C) of the Code
(``distributions''), that a fund may make with respect to any one
taxable year to one, plus a supplemental ``clean up'' distribution made
pursuant to section 855 of the Code not exceeding 10% of the total
amount distributed for the year, plus one additional capital gain
dividend made in whole or in part to avoid the excise tax under section
4982 of the Code.
    2. Section 6(c) of the Act provides that the Commission may, by
order upon application, conditionally or unconditionally exempt any
person, security, or transaction, or any class or classes of persons,
securities or transactions, from any provision of the Act, if and to
the extent that 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.
    3. Applicants state that the one of the concerns leading to the
enactment of

section 19(b) and adoption of rule 19b-1 was that shareholders might be
unable to distinguish between frequent distributions of capital gains
and dividends from investment income. Applicants state, however, that
rule 19a-1 effectively addresses this concern by requiring that
distributions (or the confirmation of the reinvestment thereof)
estimated to be sourced in part from capital gains or capital be
accompanied by a separate statement showing the sources of the
distribution (e.g., estimated net income, net short-term capital gains,
net long-term capital gains and/or return of capital). Applicants state
that similar information is included in the Funds' annual reports to
shareholders and IRS Form 1099-DIV, which is sent to each common and
preferred shareholder who received distributions during a particular
year (including shareholders who have sold shares during the year).
    4. Applicants further state that each of the Funds will make the
additional disclosures required by the conditions set forth below, and
each of them will adopt compliance policies and procedures in
accordance with rule 38a-1 under the Act to ensure that all required
19(a) Notices and disclosures are sent to shareholders. Applicants
argue that by providing the information required by section 19(a) and
rule 19a-1, and by complying with the procedures adopted under the Plan
and the conditions listed below, each Fund's shareholders would be
provided sufficient information to understand that their periodic
distributions are not tied to the Fund's net investment income (which
for this purpose is the Fund's taxable income other than from capital
gains) and realized capital gains to date, and may not represent yield
or investment return. Accordingly, Applicants assert that continuing to
subject the Funds to section 19(b) and rule 19b-1 would afford
shareholders no extra protection.
    5. Applicants note that section 19(b) of the Act and rule 19b-1
were intended to prevent certain improper sales practices, including,
in particular, the practice of urging an investor to purchase shares of
a fund on the basis of an upcoming capital gains dividend (``selling
the dividend''), where the dividend would result in an immediate
corresponding reduction in NAV and would be in effect a taxable return
of the investor's capital. Applicants submit that the ``selling the
dividend'' concern should not apply to closed-end investment companies,
such as the Funds, which do not continuously distribute shares.
According to Applicants, if the underlying concern extends to secondary
market purchases of shares of closed-end funds that are subject to a
large upcoming capital gains dividend, adoption of a periodic
distribution plan actually helps minimize the concern by avoiding,
through periodic distributions, any buildup of large end-of-the-year
distributions.
    6. Applicants also note that common shares of closed-end funds
often trade in the marketplace at a discount to the funds' NAV.
Applicants believe that this discount may be reduced if the Funds are
permitted to pay relatively frequent dividends on their common shares
at a consistent rate, whether or not those dividends contain an element
of capital gain.
    7. Applicants assert that the application of rule 19b-1 to a Plan
actually could have an inappropriate influence on portfolio management
decisions. Applicants state that, in the absence of an exemption from
rule 19b-1, the adoption of a periodic distribution plan imposes
pressure on management (i) not to realize any net long-term capital
gains until the point in the year that the fund can pay all of its
remaining distributions in accordance with rule 19b-1 and (ii) not to
realize any long-term capital gains during any particular year in
excess of the amount of the aggregate pay-out for the year (since as a
practical matter excess gains must be distributed and, accordingly,
would not be available to satisfy pay-out requirements in following
years), notwithstanding that purely investment considerations might
favor realization of long-term gains at different times or in different
amounts. Applicants assert that by limiting the number of capital gain
distributions that a fund may make with respect to any one year, rule
19b-1 may prevent the normal and efficient operation of a periodic
distribution plan whenever that fund's realized net long-term capital
gains in any year exceed the total of the periodic distributions that
may include such capital gains under the rule.
    8. Applicants also assert that rule 19b-1 may force the fixed
regular periodic distributions under a periodic distribution plan to be
funded with returns of capital \2\ (to the extent net investment income
and realized short term capital gains are insufficient to fund the
distribution), even though realized net long-term capital gains
otherwise could be available. To distribute all of a fund's long-term
capital gains within the limits in rule 19b-1, a fund may be required
to make total distributions in excess of the annual amount called for
by its periodic distribution plan or to retain and pay taxes on the
excess amount. Applicants assert that the requested order would
minimize these anomalous effects of rule 19b-1 by enabling the Funds to
realize long-term capital gains as often as investment considerations
dictate without fear of violating rule 19b-1.
---------------------------------------------------------------------------

    \2\ Returns of capital as used in the application means return
of capital for financial accounting purposes and not for tax
accounting purposes.
---------------------------------------------------------------------------

    9. Applicants state that Revenue Ruling 89-81 under the Code
requires that a fund that seeks to qualify as a regulated investment
company under the Code and that has both common shares and preferred
shares outstanding designate the types of income, e.g., investment
income and capital gains, in the same proportion as the total
distributions distributed to each class for the tax year. To satisfy
the proportionate designation requirements of Revenue Ruling 89-81,
whenever a fund has realized a long term capital gain with respect to a
given tax year, the fund must designate the required proportionate
share of such capital gain to be included in common and preferred share
dividends. Applicants state that although rule 19b-1 allows a fund some
flexibility with respect to the frequency of capital gains
distributions, a fund might use all of the exceptions available under
the rule for a tax year and still need to distribute additional capital
gains allocated to the preferred shares to comply with Revenue Ruling
89-81.
    10. Applicants assert that the potential abuses addressed by
section 19(b) and rule 19b-1 do not arise with respect to preferred
shares issued by a closed-end fund. Applicants assert that such
distributions are either fixed or are determined in periodic auctions
or remarketings by reference to short-term interest rates rather than
by reference to performance of the issuer, and Revenue Ruling 89-81
determines the proportion of such distributions that are comprised of
the long-term capital gains.
    11. Applicants also submit that the ``selling the dividend''
concern is not applicable to preferred shares, which entitle a holder
to no more than a periodic dividend at a fixed rate or the rate
determined by the market, and, like a debt security, are priced based
upon their liquidation value, dividend rate, credit quality, and
frequency of payment. Applicants state that investors buy preferred
shares for the purpose of receiving payments at the frequency bargained
for and do not expect the liquidation value of their shares to change.
    12. Applicants request an order pursuant to section 6(c) of the Act
granting an exemption from section

19(b) of the Act and rule 19b-1 thereunder to permit each Fund to
distribute periodic capital gain dividends (as defined in section
852(b)(3)(C) of the Code) as often as monthly in any one taxable year
in respect of its common shares and as often as specified by or
determined in accordance with the terms thereof in respect of its
preferred shares (if any).

Applicants' Conditions

    Applicants agree that, with respect to each Fund seeking to rely on
the order, the order will be subject to the following conditions:
    1. Compliance Review and Reporting. The Fund's chief compliance
officer will (a) report to the Fund's Board, no less frequently than
once every three months or at the next regularly scheduled quarterly
Board meeting, whether (i) the Fund and its Adviser have complied with
the conditions of the order and (ii) a material compliance matter (as
defined in rule 38a-1(e)(2) under the Act) has occurred with respect to
such conditions; and (b) review the adequacy of the policies and
procedures adopted by the Board no less frequently than annually.
    2. Disclosures to Fund Shareholders.
    (a) Each 19(a) Notice disseminated to the holders of the Fund's
common shares, in addition to the information required by section 19(a)
and rule 19a-1:
    (i) Will provide, in a tabular or graphical format:
    (1) The amount of the distribution, on a per common share basis,
together with the amounts of such distribution amount, on a per common
share basis and as a percentage of such distribution amount, from
estimated: (A) Net investment income; (B) net realized short-term
capital gains; (C) net realized long-term capital gains; and (D) return
of capital or other capital source;
    (2) The fiscal year-to-date cumulative amount of distributions, on
a per common share basis, together with the amounts of such cumulative
amount, on a per common share basis and as a percentage of such
cumulative amount of distributions, from estimated: (A) Net investment
income; (B) net realized short-term capital gains; (C) net realized
long-term capital gains; and (D) return of capital or other capital
source;
    (3) The average annual total return in relation to the change in
NAV for the 5-year period (or, if the Fund's history of operations is
less than five years, the time period commencing immediately following
the Fund's first public offering) ending on the last day of the month
ended immediately prior to the most recent distribution record date
compared to the current fiscal period's annualized distribution rate
expressed as a percentage of NAV as of the last day of the month prior
to the most recent distribution record date; and
    (4) The cumulative total return in relation to the change in NAV
from the last completed fiscal year to the last day of the month prior
to the most recent distribution record date compared to the fiscal
year-to-date cumulative distribution rate expressed as a percentage of
NAV as of the last day of the month prior to the most recent
distribution record date. Such disclosure shall be made in a type size
at least as large and as prominent as the estimate of the sources of
the current distribution; and
    (ii) Will include the following disclosure:
    (1) ``You should not draw any conclusions about the Fund's
investment performance from the amount of this distribution or from the
terms of the Fund's Plan'';
    (2) ``The Fund estimates that it has distributed more than its
income and net realized capital gains; therefore, a portion of your
distribution may be a return of capital. A return of capital may occur,
for example, when some or all of the money that you invested in the
Fund is paid back to you. A return of capital distribution does not
necessarily reflect the Fund's investment performance and should not be
confused with `yield' or `income;' '' \3\ and
---------------------------------------------------------------------------

    \3\ The disclosure in this condition 2(a)(ii)(2) will be
included only if the current distribution or the fiscal year-to-date
cumulative distributions are estimated to include a return of
capital.
---------------------------------------------------------------------------

    (3) ``The amounts and sources of distributions reported in this
19(a) Notice are only estimates and are not being provided for tax
reporting purposes. The actual amounts and sources of the amounts for
tax reporting purposes will depend upon the Fund's investment
experience during the remainder of its fiscal year and may be subject
to changes based on tax regulations. The Fund will send you a Form
1099-DIV for the calendar year that will tell you how to report these
distributions for federal income tax purposes.'' Such disclosure shall
be made in a type size at least as large as and as prominent as any
other information in the 19(a) Notice and placed on the same page in
close proximity to the amount and the sources of the distribution.
    (b) On the inside front cover of each report to shareholders under
rule 30e-1 under the Act, the Fund will:
    (i) Describe the terms of the Plan (including the fixed amount or
fixed percentage of the distributions and the frequency of the
distributions);
    (ii) Include the disclosure required by condition 2(a)(ii)(1)
above;
    (iii) State, if applicable, that the Plan provides that the Board
may amend or terminate the Plan at any time without prior notice to
Fund shareholders; and
    (iv) Describe any reasonably foreseeable circumstances that might
cause the Fund to terminate the Plan and any reasonably foreseeable
consequences of such termination.
    (c) Each report provided to shareholders under rule 30e-1 under the
Act, and each prospectus filed with the Commission on Form N-2 under
the Act, will provide the Fund's total return in relation to changes in
NAV in the financial highlights table and in any discussion about the
Fund's total return.
    3. Disclosure to Common Shareholders, Prospective Common
Shareholders and Third Parties.
    (a) The Fund will include the information contained in the relevant
19(a) Notice, including the disclosure required by condition 2(a)(ii)
above, in any written communication (other than a Form 1099) about the
Plan or distributions under the Plan by the Fund, or agents that the
Fund has authorized to make such communication on the Fund's behalf, to
any Fund common shareholder, prospective common shareholder or third-
party information provider;
    (b) The Fund will issue, contemporaneously with the issuance of any
19(a) Notice, a press release containing the information in the 19(a)
Notice and file with the Commission the information contained in such
19(a) Notice, including the disclosure required by condition 2(a)(ii)
above, as an exhibit to its next filed Form N-CSR; and
    (c) The Fund will post prominently a statement on its (or the
Adviser's) Web site containing the information in each 19(a) Notice,
including the disclosure required by condition 2(a)(ii) above, and will
maintain such information on such Web site for at least 24 months.
    4. Delivery of 19(a) Notices to Beneficial Owners. If a broker,
dealer, bank or other person (``financial intermediary'') holds common
shares issued by a Fund in nominee name, or otherwise, on behalf of a
beneficial owner, the Fund: (a) Will request that the financial
intermediary, or its agent, forward the 19(a) Notice to all beneficial
owners of the Fund's shares held through such financial intermediary;
(b) will provide, in a timely manner, to the financial intermediary, or
its agent, enough copies of the 19(a) Notice

assembled in the form and at the place that the financial intermediary,
or its agent, reasonably requests to facilitate the financial
intermediary's sending of the 19(a) Notice to each beneficial owner of
the Fund's shares; and (c) upon the request of any financial
intermediary, or its agent, that receives copies of the 19(a) Notice,
will pay the financial intermediary, or its agent, the reasonable
expenses of sending the 19(a) Notice to such beneficial owners.
    5. Additional Board Determinations for Funds Whose Common Shares
Trade at a Premium.
    If:
    (a) The Fund's common shares have traded on the Exchange that they
primarily trade on at the time in question at an average premium to NAV
equal to or greater than 10%, as determined on the basis of the average
of the discount or premium to NAV of the Fund's common shares as of the
close of each trading day over a 12-week rolling period (each such 12-
week rolling period ending on the last trading day of each week); and
    (b) The Fund's annualized distribution rate for such 12-week
rolling period, expressed as a percentage of NAV as of the ending date
of such 12-week rolling period, is greater than the Fund's average
annual total return in relation to the change in NAV over the 2-year
period ending on the last day of such 12-week rolling period; then:
    (i) At the earlier of the next regularly scheduled meeting or
within four months of the last day of such 12-week rolling period, the
Board including a majority of the Independent Trustees:
    (1) Will request and evaluate, and the Fund's Adviser will furnish,
such information as may be reasonably necessary to make an informed
determination of whether the Plan should be continued or continued
after amendment;
    (2) Will determine whether continuation, or continuation after
amendment, of the Plan is consistent with the Fund's investment
objective(s) and policies and in the best interests of the Fund and its
shareholders, after considering the information in condition 5(b)(i)(1)
above; including, without limitation:
    (A) Whether the Plan is accomplishing its purpose(s);
    (B) The reasonably foreseeable material effects of the Plan on the
Fund's long-term total return in relation to the market price and NAV
of the Fund's common shares; and
    (C) The Fund's current distribution rate, as described in condition
5(b) above, compared with the Fund's average annual taxable income or
total return over the 2-year period, as described in condition 5(b), or
such longer period as the Board deems appropriate; and
    (3) Based upon that determination, will approve or disapprove the
continuation, or continuation after amendment, of the Plan; and
    (ii) The Board will record the information considered by it
including its consideration of the factors listed in condition
5(b)(i)(2) above and the basis for its approval or disapproval of the
continuation, or continuation after amendment, of the Plan in its
meeting minutes, which must be made and preserved for a period of not
less than six years from the date of such meeting, the first two years
in an easily accessible place.
    6. Public Offerings. The Fund will not make a public offering of
the Fund's common shares other than:
    (a) A rights offering below NAV to holders of the Fund's common
shares;
    (b) An offering in connection with a dividend reinvestment plan,
merger, consolidation, acquisition, spin off or reorganization of the
Fund; or
    (c) An offering other than an offering described in conditions 6(a)
and 6(b) above, provided that, with respect to such other offering:
    (i) The Fund's annualized distribution rate for the six months
ending on the last day of the month ended immediately prior to the most
recent distribution record date,\4\ expressed as a percentage of NAV as
of such date, is no more than 1 percentage point greater than the
Fund's average annual total return for the 5-year period ending on such
date; \5\ and
---------------------------------------------------------------------------

    \4\ If the Fund has been in operation fewer than six months, the
measured period will begin immediately following the Fund's first
public offering.
    \5\ If the Fund has been in operation fewer than five years, the
measured period will begin immediately following the Fund's first
public offering.
---------------------------------------------------------------------------

    (ii) The transmittal letter accompanying any registration statement
filed with the Commission in connection with such offering discloses
that the Fund has received an order under section 19(b) to permit it to
make periodic distributions of long-term capital gains with respect to
its common shares as frequently as twelve times each year, and as
frequently as distributions are specified by or determined in
accordance with the terms of any outstanding preferred shares that such
Fund may issue.
    7. Amendments to Rule 19b-1.
    The requested order will expire on the effective date of any
amendment to rule 19b-1 that provides relief permitting certain closed-
end investment companies to make periodic distributions of long-term
capital gains with respect to their outstanding common shares as
frequently as twelve times each year.

    For the Commission, by the Division of Investment Management,
under delegated authority.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-10569 Filed 5-1-12; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: October 1, 2009 (Volume 74, Number 189)]
[Notices]
[Page 50792]
[DOCID:fr01oc09-69]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER09-1555-000]

Wisconsin Power and Light Company; Notice of Filing

September 24, 2009.
    Take notice that, on September 23, 2009, Wisconsin Power and Light
Company filed to supplement its filing in the above captioned docket
with information required under the Commission's regulations. Such
filing served to reset the filing date in this proceeding.
    Any person desiring to intervene or to protest this filing must
file in accordance with Rules 211 and 214 of the Commission's Rules of
Practice and Procedure (18 CFR 385.211, 385.214). Protests will be
considered by the Commission in determining the appropriate action to
be taken, but will not serve to make protestants parties to the
proceeding. Any person wishing to become a party must file a notice of
intervention or motion to intervene, as appropriate. Such notices,
motions, or protests must be filed on or before the comment date.
Anyone filing a motion to intervene or protest must serve a copy of
that document on the Applicant and all the parties in this proceeding.
    The Commission encourages electronic submission of protests and
interventions in lieu of paper using the ``eFiling'' link at http://
www.ferc.gov. Persons unable to file electronically should submit an
original and 14 copies of the protest or intervention to the Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426.
    This filing is accessible on-line at http://www.ferc.gov, using the
``eLibrary'' link and is available for review in the Commission's
Public Reference Room in Washington, DC. There is an ``eSubscription''
link on the Web site that enables subscribers to receive e-mail
notification when a document is added to a subscribed docket(s). For
assistance with any FERC Online service, please e-mail
<EMAIL_ADDRESS>or call<PHONE_NUMBER> (toll free). For
TTY, call<PHONE_NUMBER>.
    Comment Date: 5 p.m. Eastern Time on October 2, 2009.

Kimberly D. Bose,
Secretary.
[FR Doc. E9-23654 Filed 9-30-09; 8:45 am]

BILLING CODE 6717-01-P