
[Federal Register: November 26, 2008 (Volume 73, Number 229)]
[Rules and Regulations]               
[Page 71919-71923]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26no08-5]                         

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 270

[Release No. IC-28487; File No. S7-32-08]
RIN 3235-AK24

 
Temporary Exemption for Liquidation of Certain Money Market Funds

AGENCY: Securities and Exchange Commission.

ACTION: Interim final temporary rule; request for comment.

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SUMMARY: The Securities and Exchange Commission (``Commission'') is 
adopting an interim final temporary rule under the Investment Company 
Act of 1940 (``Investment Company Act'' or ``Act'') to provide relief 
from certain provisions of the Act for those money market funds that 
have elected to participate in a temporary guaranty program (``Guaranty 
Program'' or ``Program'') established by the U.S. Department of 
Treasury (``Treasury Department''). The Guaranty Program includes a 
procedure for the orderly liquidation of money market fund assets in 
certain circumstances, and the interim final temporary rule will permit 
money market funds that commence liquidation under the Guaranty Program 
to temporarily suspend redemptions of their outstanding shares and 
postpone the payment of redemption proceeds.

DATES: Effective Date: From November 26, 2008 until October 18, 2009, 
unless the Commission publishes a notice in the Federal Register 
announcing an earlier termination date in connection with termination 
of the Guaranty Program.
    Comment Date: Comments should be received on or before December 26, 
2008.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/final.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number S7-32-08 on the subject line; or
     Use the Federal eRulemaking Portal (http://
www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

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

All submissions should refer to File Number S7-32-08. This file number 
should be included on the subject line if e-mail is used. To help us 
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/final.shtml). Comments are 
also available for public inspection and copying in the Commission's 
Public Reference Room, 100 F Street, NE., Washington, DC 20549, on 
official business days between the hours of 10 a.m. and 3 p.m. All 
comments received will be posted without change; we do not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly.

FOR FURTHER INFORMATION CONTACT: Thu B. Ta, Senior Counsel, or Diane C. 
Blizzard, Attorney-Fellow, at (202) 551-6792, Office of Regulatory 
Policy, Division of Investment Management, Securities and Exchange 
Commission, 100 F Street, NE., Washington, DC 20549-5041.

SUPPLEMENTARY INFORMATION: The Commission is adopting rule 22e-3T [17 
CFR 270.22e-3T] under the Investment Company Act \1\ as an interim 
final temporary rule. We are soliciting comments on all aspects of the 
interim final temporary rule. We will carefully consider the comments 
that we receive and intend to respond to them in a subsequent release.
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    \1\ 15 U.S.C. 80a. Unless otherwise noted, all references to 
rules under the Investment Company Act will be to Title 17, Part 270 
of the Code of Federal Regulations [17 CFR 270], and all references 
to statutory sections are to the Investment Company Act.
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I. Background

    Money market funds are open-end management investment companies 
(``funds'') registered under the Investment Company Act that have an 
investment objective of maintaining a stable net asset value (typically 
$1.00 per share) by investing in short-term, high quality 
securities.\2\ Rule 2a-7

[[Page 71920]]

under the Investment Company Act governs the operation of money market 
funds; the rule facilitates the maintenance of a stable net asset value 
by permitting money market funds to use the amortized cost method of 
valuing their securities.
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    \2\ See Valuation of Debt Instruments and Computation of Current 
Price Per Share by Certain Open-End Investment Companies (Money 
Market Funds), Investment Company Act Release No. 13380 (July 11, 
1983) [48 FR 32555 (July 18, 1983)]. Most money market funds seek to 
maintain a stable net asset value per share of $1.00, but a few seek 
to maintain a stable net asset value per share of a different 
amount, e.g., $10.00. For convenience, throughout this release, the 
discussion will simply refer to the stable net asset value of $1.00.
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    Under the Act, funds must calculate their current net asset value 
per share by reference to: (i) The market values of their portfolio 
securities or, (ii) in the absence of readily available market 
quotations for the securities, their fair value as determined in good 
faith by the funds' boards of directors.\3\ Rule 2a-7 provides an 
exemption from these requirements in the case of money market funds. 
Under the amortized cost method of valuation in rule 2a-7, portfolio 
securities are valued by reference to their acquisition cost as 
adjusted for amortization of premium or accumulation of discount.\4\ In 
order to use this method of valuing securities, a money market fund 
must establish controls to monitor the deviation between the fund's 
stabilized share price, e.g., $1.00, and its market-based share 
price.\5\ If the deviation becomes significant, the fund's board of 
directors may be required to take steps necessary to address this 
deviation, including re-pricing its shares at less than $1.00.\6\ This 
is often referred to as ``breaking the buck.''
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    \3\ Section 2(a)(41) of the Act and rules 2a-4(a)(1) and 22c-1 
under the Act.
    \4\ Rule 2a-7(a)(2). Money market funds may also use the penny-
rounding method of pricing to maintain a stable price per share. See 
rule 2a-7(a)(18).
    \5\ Rule 2a-7(c)(7)(ii)(A).
    \6\ See rule 2a-7(c)(7)(ii)(B) (requiring fund boards to 
``promptly consider what action, if any, should be initiated by the 
board of directors'' if the deviation between a money market fund's 
market-based net asset value and amortized cost price per share 
exceeds \1/2\ of 1 percent).
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    The risk-limiting conditions built into rule 2a-7, together with 
the management skill and, in some cases, the financial commitment of 
the advisers that sponsor money market funds, have contributed to the 
stability of money market funds for more than 30 years. Until recently, 
only one money market fund, a small institutional fund, had ever broken 
the buck.\7\ On September 16, 2008, The Reserve Primary Fund became the 
first large money market fund to break the buck when it announced that 
it would re-price its securities at $0.97 per share. The fund sought 
and obtained from us an order permitting it to suspend redemptions and 
postpone the payment of redemption proceeds.\8\ These events, and the 
turmoil in the credit markets in general, have placed pressure on money 
market funds, particularly those that offer their shares primarily to 
institutional shareholders and have experienced substantial 
redemptions.\9\
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    \7\ Community Bankers U.S. Government Money Market Fund broke 
the buck in 1994.
    \8\ In the Matter of The Reserve Fund, Investment Company Act 
Release No. 28386 (Sept. 22, 2008) (order).
    \9\ Between September 11th and September 17th, the assets of 
institutional money market funds fell by $173 billion. See 
Investment Company Institute, Money Market Mutual Fund Assets (Sept. 
18, 2008), http://www.ici.org/stats/mf/mm_09_18_
08.html#TopOfPage.
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    To bolster investor confidence in money market funds and protect 
the stability of the global financial system, on September 19, 2008, 
the Treasury Department announced the establishment of the Guaranty 
Program.\10\ Under the Guaranty Program, the Treasury Department will 
guarantee the share price of participating money market funds that seek 
to maintain a stable net asset value of $1.00 per share, or some other 
fixed amount, subject to certain conditions and limitations. The 
Guaranty Program provides coverage only to shareholders of record as of 
September 19, 2008, and the coverage is limited to the number of shares 
they held as of the close of business on that day. The Commission is 
assisting the Treasury Department in administering the Guaranty 
Program.
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    \10\ See Press Release, U.S. Dep't of the Treasury, Treasury 
Announces Guaranty Program for Money Market Funds (Sept. 19, 2008), 
http://www.treas.gov/press/releases/hp1147.htm. The Program is 
backed by the Exchange Stabilization Fund, which currently has 
assets of approximately $50 billion.
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    The Treasury Department opened the Guaranty Program on Monday, 
September 29, 2008. Most of the nation's money market funds elected to 
participate in the Program by the October 8, 2008 deadline by executing 
an agreement with the Treasury Department (``Guarantee Agreement'' or 
``Agreement'') and paying the required participation fee.\11\
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    \11\ The Guaranty Program is currently scheduled to terminate on 
December 18, 2008, unless the Secretary of the Treasury extends it, 
but in no event may the Program be extended beyond September 18, 
2009. See sections 1(v), 3(a), and 3(b) of the Agreement. A form of 
the Guarantee Agreement is available at: http://www.treas.gov/
offices/domestic-finance/key-initiatives/money-market-docs/
Guarantee_Agreement_Stable-Value_Single-Fund.pdf.
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    Under the terms of the Guaranty Program, the Treasury Department 
guarantees that, upon the liquidation of a participating money market 
fund, the fund's shareholders will receive the fund's stable share 
price of $1.00 for each fund share owned as of September 19, 2008.\12\ 
Pursuant to the Agreement, a participating money market fund that 
breaks the buck, i.e., experiences a ``Guarantee Event,'' \13\ is 
required to commence liquidation within five business days (with an 
exception under a curing provision).\14\ The Agreement further requires 
the fund board to promptly suspend the redemption of its outstanding 
shares ``in accordance with applicable Commission rules, orders and no-
action letters.'' \15\ The fund must be liquidated within thirty days 
after a Guarantee Event unless the Treasury Department, in its 
discretion, consents in writing to a later date (the ``Liquidation 
Date'').\16\ These provisions are intended to ensure that the money 
market fund liquidates in an orderly manner and maximizes the proceeds 
realized from the disposition of the fund's portfolio securities.\17\
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    \12\ Sections 7(g) and 1(j) of the Agreement.
    \13\ For funds that seek to maintain a stable net asset value 
per share of $1.00, Section 1(i) of the Agreement defines a 
``Guarantee Event'' as:
    The first date after the Agreement Date on which the Market-
Based NAV of the Fund is less than $0.995 * * * provided, however, 
that if a Guarantee Event occurs prior to the Execution Date, then 
the Guarantee Event shall be deemed to have occurred on the 
Execution Date, provided, further, that if the Market-Based NAV of 
the Fund is greater than or equal to $0.995 on any date after such 
Guarantee Event but prior to the commencement of liquidation of the 
Fund as provided under Section 2(c)(iii) * * * subject to the 
delivery of the notice provided for in Section 2(g), the Guarantee 
Event will be deemed to have not occurred (a ``Guarantee Cure 
Event'').
    \14\ Sections 2(c) and 1(i) of the Agreement.
    \15\ Section 7(a)(ii) of the Agreement.
    \16\ Section 7(c) of the Agreement.
    \17\ Section 7(a)(i) of the Agreement.
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II. Discussion

A. Reason for the Exemption

    Section 22(e) of the Investment Company Act prohibits funds, 
including money market funds, from suspending the right of redemption, 
or postponing the date of payment or satisfaction upon redemption of 
any redeemable security for more than seven days, except for certain 
periods specified in that section. Although section 22(e) permits funds 
to postpone the date of payment or satisfaction upon redemption for up 
to seven days, it does not permit funds to suspend the right of 
redemption, absent certain specified circumstances or a Commission 
order. However, in order for the Guaranty Program to operate as 
intended, a participating money market fund that experiences a 
Guarantee Event and must liquidate may need to suspend redemptions and 
postpone the payment of proceeds beyond the seven-day limit

[[Page 71921]]

(specifically, until the Liquidation Date provided by the Agreement).
    The temporary rule we are adopting today provides the necessary 
exemption to permit participating money market funds to take full 
advantage of the Program and initiate the steps necessary to protect 
the interests of all shareholders during liquidations, including those 
shareholders not covered by the Guaranty Program.\18\ Specifically, the 
rule is designed to facilitate orderly liquidations and help prevent 
the sale of fund assets at ``fire sale'' prices. Such a result could 
lead to substantial losses for the liquidating fund and further depress 
prices for short-term securities that may be held in the portfolios of 
other money market funds.
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    \18\ As discussed above, the Guaranty Program covers only 
shareholders of record as of September 19, 2008, and the coverage is 
limited to the number of shares they held as of the close of 
business on that day.
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    We are adopting the rule on an interim final basis because the 
Program is already in place and participating money market funds are 
currently subject to its liquidation provisions. In light of current 
market conditions, it is possible that a Guarantee Event could occur 
for a participating money market fund at any time. We could, 
alternatively, consider individual applications for orders under 
section 22(e) from funds that experience Guarantee Events. When the net 
asset value of a money market fund falls below $1.00 per share and the 
fund decides to liquidate, however, redemption requests can outpace the 
fund's ability to sell off its portfolio instruments and the 
Commission's ability to grant a timely exemptive order. As a result, 
consideration of individual applications for exemptive orders for funds 
that experience Guarantee Events would be impracticable.
    The Commission finds that the interim final temporary rule is 
necessary and 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. Section 22(e) was designed to prevent 
funds and their investment advisers from interfering with the 
redemption rights of shareholders for ``ulterior motives,'' such as to 
prevent a reduction in management fees that would result from 
significant redemption requests.\19\ Liquidation of a money market fund 
under the Guaranty Program would ultimately eliminate a source of 
advisory fees for the adviser.\20\ Section 22(e) also provides for 
suspending redemptions and postponing payment in certain specified 
circumstances or ``for such other periods as the Commission may by 
order permit for the protection of security holders.'' \21\ The 
temporary rule we are adopting today is intended to achieve the same 
purposes when a money market fund commences liquidation under the 
Guaranty Program.
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    \19\ See Investment Trusts and Investment Companies: Hearings on 
S. 3580 Before a Subcomm. of the Senate Comm. on Banking and 
Currency, 76th Cong., 3d Sess. 291 (``Senate Hearings'') (statement 
of David Schenker, Chief Counsel, Investment Trust Study, SEC).
    \20\ Moreover, the Guarantee Agreement would preclude a 
liquidation from relieving the adviser or any other affiliated 
person of the fund from their obligations to support the fund's net 
asset value under any agreement in place at the time the Agreement 
is entered into by the fund. See sections 1(n) and 5(c) of the 
Guarantee Agreement.
    \21\ Section 22(e)(3) of the Act.
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B. Operation of Rule 22e-3T

    The exemption from section 22(e) provided by rule 22e-3T is 
available to any money market fund that has a currently effective 
Agreement, subject to two other conditions.\22\ First, the fund must 
have delivered to the Treasury Department the required notice 
indicating that it has experienced a Guarantee Event and will promptly 
commence liquidation of the fund under the terms of the Agreement.\23\ 
Second, the fund must not have cured the Guarantee Event, as provided 
under the terms of the Agreement.\24\ In the event that a participating 
money market fund experiences a Guarantee Event and commences 
liquidation in compliance with the terms of the Agreement, the fund 
will be exempt from section 22(e).
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    \22\ Rule 22e-3T(a).
    \23\ Rule 22e-3T(a)(2). See also section 2(c) of the Agreement.
    \24\ Rule 22e-3T(a)(3). See also section 1(i) of the Agreement.
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    The rule also provides that the Commission may rescind or modify 
the exemptive relief by order if necessary to protect the liquidating 
money market fund's security holders.\25\ This provision permits the 
Commission to modify the relief if, among other things, a liquidating 
fund has not devised, or is not properly executing, a plan of 
liquidation that protects fund security holders. Under this provision, 
the Commission may modify the relief ``after appropriate notice and 
opportunity for hearing,'' in accordance with section 40 of the Act.
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    \25\ Rule 22e-3T(b).
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    The Program cannot extend beyond September 18, 2009. Under the 
terms of the Agreement, however, a money market fund has thirty days to 
liquidate. Accordingly, rule 22e-3T will expire on October 18, 
2009.\26\
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    \26\ The Commission may publish a notice in the Federal Register 
announcing an earlier expiration date for the rule if the Guaranty 
Program terminates before September 18, 2009.
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III. Request for Comment

    The Commission requests comment on interim final temporary rule 
22e-3T. We will carefully consider the comments that we receive and 
intend to respond to them in a subsequent release. We seek comment 
generally on all aspects of the temporary rule. Are the conditions for 
relief adequate to protect the interests of security holders? Should 
the rule include additional conditions and, if so, what should those 
conditions be? Should the rule have a later or earlier expiration date 
and, if so, what should the expiration date be and why?

IV. Other Matters

    The Administrative Procedure Act (``APA'') generally requires an 
agency to publish notice of a proposed rulemaking in the Federal 
Register.\27\ This requirement does not apply, however, if the agency 
``for good cause finds * * * that notice and public procedure thereon 
are impracticable, unnecessary, or contrary to the public interest.'' 
\28\ The APA also generally requires that an agency publish an adopted 
rule in the Federal Register 30 days before it becomes effective.\29\ 
This requirement also does not apply, however, if the agency finds good 
cause for making the rule effective sooner.\30\
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    \27\ 5 U.S.C. 553(b).
    \28\ Id.
    \29\ 5 U.S.C. 553(d).
    \30\ Id.
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    For the reasons discussed in this release, we believe that we have 
good cause to act immediately to adopt this rule on an interim final 
temporary basis. The Treasury Department established the Program in 
response to extraordinary market turmoil and in recognition that 
maintaining confidence in money market funds is critical to protecting 
the integrity and stability of the global financial markets. The 
Program is currently operating to guarantee a large portion of existing 
money market fund assets. Immediate adoption of this rule will 
facilitate the Program and allow it to operate as designed. Without the 
relief provided by this rule, liquidating funds would not be able to 
promptly suspend redemptions and postpone the payment of proceeds 
without formally requesting and obtaining an individual exemption from 
the Commission, which could cause the funds to be inundated with 
redemption requests that they would have to meet

[[Page 71922]]

in the interim. This could result in a disorderly liquidation that 
would be at odds with the objective of the Program and could 
substantially harm certain of the affected fund's security holders.\31\
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    \31\ Without the exemption provided by rule 22e-3T, section 
22(e) could operate to compel funds to redeem shares of earlier-
redeeming security holders at or near the $1.00 amortized cost and, 
as a result of current market conditions, later-redeeming 
shareholders at less than $1.00.
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    The temporary rule takes effect on November 26, 2008. For the 
reasons discussed above, we have acted on an interim final basis. We 
emphasize that we are requesting comment on the temporary rule. We will 
carefully consider the comments we receive, and we intend to respond to 
them in a subsequent release. Moreover, this is a temporary rule that 
will expire on October 18, 2009. The rule will have no application to 
any money market fund after that time.
    We find that there is good cause to have the temporary rule take 
effect on November 26, 2008, and that notice and public procedure in 
advance of effectiveness of the rule are impracticable, unnecessary, 
and contrary to the public interest.

V. Paperwork Reduction Act

    Rule 22e-3T does not impose any recordkeeping or information 
collection requirements, or other ``collections of information'' within 
the meaning of the Paperwork Reduction Act.\32\ Accordingly, the 
Paperwork Reduction Act is not applicable.
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    \32\ 44 U.S.C. 3501 et seq.
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VI. Cost-Benefit Analysis

    The Commission is sensitive to the costs and benefits of its rules. 
We have identified certain costs and benefits of rule 22e-3T and 
request comment on all aspects of this cost-benefit analysis, including 
identification and assessment of any costs and benefits not discussed 
in this analysis. Where possible, we request that commenters provide 
empirical data to support any positions advanced.
    As discussed above, the Guarantee Agreement requires money market 
funds to engage in an orderly liquidation upon experiencing a Guarantee 
Event. The Agreement further contemplates that funds will suspend the 
redemption of fund shares pending the liquidation. We believe it is 
necessary to provide an exemption from section 22(e) for funds 
participating in the Program to facilitate orderly liquidations.

A. Benefits

    As discussed above, the rule will facilitate achievement of the 
benefits of the Guaranty Program by permitting participating money 
market funds to fulfill their obligations under the Agreement and 
initiate the steps necessary to effect an orderly liquidation. An 
orderly liquidation would protect value for fund shareholders and 
minimize disruption to financial markets. The rule would also provide 
certainty for participating funds, and enable funds to avoid the 
expense and delay of obtaining an exemptive order from the Commission.

B. Costs

    Most of the costs associated with rule 22e-3T, such as the 
requirement to deliver to the Treasury Department a notice indicating 
that the money market fund has experienced a Guarantee Event, are 
necessitated by the Agreement. The rule may, however, impose some costs 
on shareholders who seek to redeem their shares, but are unable to do 
so. We believe the potential costs associated with rule 22e-3T are 
modest because the rule provides a narrow exemption that is only 
triggered in connection with the Guaranty Program and the exemption is 
only temporary.

C. Request for Comment

    We request comment on all aspects of this cost-benefit analysis. 
Commenters should address in particular whether rule 22e-3T will 
generate the anticipated benefits or impose any other costs on funds or 
other market participants. We also request comment as to any costs or 
benefits associated with rule 22e-3T that we may not have considered 
here. Commenters are specifically invited to share quantified costs and 
benefits.

VII. Consideration of Promotion of Efficiency, Competition, and Capital 
Formation

    Section 2(c) of the Investment Company Act requires the Commission, 
when engaging in rulemaking that requires it to consider or determine 
whether an action is necessary or appropriate in the public interest, 
to consider whether the action will promote efficiency, competition, 
and capital formation.\33\ We anticipate that the rule will promote 
efficiency in the financial markets by facilitating orderly 
liquidations. The rule also may promote capital formation by providing 
investors reassurance about the safety of money market funds and 
minimizing disruption in the financial markets. We do not anticipate 
any effect on competition. We request comment on whether rule 22e-3T is 
likely to promote efficiency, competition, and capital formation. 
Commenters are requested to provide empirical data to support their 
views.
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    \33\ 15 U.S.C. 80a-2(c).
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VIII. Regulatory Flexibility Act Certification

    Section 3(a) of the Regulatory Flexibility Act (``RFA'') \34\ 
requires the Commission to undertake an initial regulatory flexibility 
analysis of the effect of its rules on small entities unless the 
Commission certifies that the rules do not have a significant economic 
impact on a substantial number of small entities.\35\ Pursuant to 
section 605(b) of the RFA, the Commission hereby certifies that 
Investment Company Act rule 22e-3T does not have a significant impact 
on a substantial number of small entities.\36\
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    \34\ 5 U.S.C. 603(a).
    \35\ 5 U.S.C. 605(b).
    \36\ Although the requirements of the RFA do not apply to rules 
adopted under the APA's ``good cause'' exception, see 5 U.S.C. 
601(2) (defining ``rule'' and notice requirement under the APA), we 
have nevertheless provided this certification.
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    Rule 0-10 of the Investment Company Act defines a ``small entity'' 
for purposes of the Act as an investment company that, together with 
other investment companies in the same group of related investment 
companies, has net assets of $50 million or less as of the end of its 
most recent fiscal year. Rule 22e-3T applies only to funds 
participating in the Treasury Department's Temporary Guaranty Program 
for Money Market Funds, and none of these funds meets the definition of 
a small entity under the Act.
    We solicit comment on the certification. Commenters are asked to 
describe the nature of any impact on small entities and provide any 
empirical data.

IX. Statutory Authority

    The Commission is adopting rule 22e-3T pursuant to the authority 
set forth in sections 6(c), 22(e) and 38(a) of the Investment Company 
Act [15 U.S.C. 80a-6(c), 80a-22(e) and 80a-37(a)].

List of Subjects in 17 CFR Part 270

    Investment companies; Securities.

Text of Rule

0
For the reasons set out in the Preamble, the Commission amends Title 
17, Chapter II of the Code of Federal Regulations as follows:

[[Page 71923]]

PART 270--RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940

0
1. The authority citation for Part 270 is amended by adding the 
following citation to read as follows:

    Authority: 15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, and 80a-
39, unless otherwise noted.
* * * * *
    Section 270.22e-3T is also issued under 15 U.S.C. 80a-6(c) and 
80a-37(a).
* * * * *

0
2. Section 270.22e-3T is added to read as follows:


Sec.  270.22e-3T   Temporary exemption for liquidation of certain money 
market funds.

    (a) A registered investment company, or a series thereof 
(``fund''), is exempt from the requirements of section 22(e) of the Act 
(15 U.S.C. 80a-22(e)) if:
    (1) The fund has a currently effective agreement (``Agreement'') 
with the U.S. Department of the Treasury (``Treasury'') to participate 
in the Temporary Guaranty Program for Money Market Funds (``Program'');
    (2) The fund has delivered to Treasury a notice indicating that it 
has experienced a guarantee event, and will promptly commence 
liquidation of the fund under the terms of the Agreement; and
    (3) The fund has not cured the guarantee event as provided under 
the terms of the Agreement.
    (b) For the protection of security holders of a fund, the 
Commission may issue an order to rescind or modify the exemption 
provided by this section as to that fund, after appropriate notice and 
opportunity for hearing in accordance with section 40 of the Act (15 
U.S.C. 80a-39).
    (c) This section will expire on October 18, 2009, unless the 
Commission publishes a notice in the Federal Register announcing an 
earlier termination date in connection with termination of the Guaranty 
Program.

    Dated: November 20, 2008.

    By the Commission.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-28050 Filed 11-25-08; 8:45 am]

BILLING CODE 8011-01-P
