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Securities Act of 1933
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Re: |
EIG Mutual Holding Company |
The positions of the Divisions of Corporation Finance and Market Regulation are as follows. Capitalized terms have the same meanings defined in your letter.
Based on the facts presented, the Division will not recommend enforcement action to the Commission if the Holding Company, in reliance on your opinion of counsel that the described demutualization is exempt under Section 3(a)(10) of the Securities Act, issues or exchanges Holding Company Stock for Membership Interests in EIG without registration under the Securities Act.
Holding Company Stock issued in the demutualization to Eligible Members for their Membership Interests in EIG will not be restricted securities within the meaning of Rule 144(a)(3) under the Securities Act. The Division's view is that Holding Company Stock may be resold as follows:
Based on the facts presented, but without necessarily agreeing with your analysis, the Division will not recommend enforcement action to the Commission under Section 15(a) of the Exchange Act if the Call Center personnel, the Producers, or the EIG Personnel communicate with members in the manner described in your letter without the Call Center Personnel, the Producers, or the EIG Personnel registering as brokers under Section 15(b) of the Exchange Act.
In reaching this position, the Division particularly notes that: (1) the Conversion and the activities of the Call Center personnel, the Producers, and the EIG Personnel in connection therewith are one-time, non-recurring events; (2) no compensation of the Call Center personnel, the Producers, or the EIG Personnel will be payable contingent upon the consummation of the Conversion or depend upon the votes or elections made by Voting Members; (3) the Call Center personnel, the Producers, and the EIG Personnel will not be compensated, directly or indirectly, for their efforts in connection with the Conversion; (4) the Call Center personnel and EIG Personnel will receive only the compensation they already receive as directors, officers, or employees of EIG, the Holding Company, the Intermediate Holding Company, or EICN performing duties for EIG, the Holding Company, the Intermediate Holding Company, or EICN otherwise than in connection with the Conversion; (5) the activities of the Call Center personnel, the Producers, and the EIG Personnel will be strictly limited and, with respect to the Call Center personnel and the EIG Personnel, supervised in accordance with the provisions set forth in the letter; (6) the Call Center personnel, the Producers, and the EIG Personnel will not handle customer funds or securities in connection with the Conversion; (7) no Call Center personnel, Producers, or EIG Personnel will be hired solely for the purpose of assisting Voting Members in connection with the vote on the Plan by Voting Members; (8) the Call Center personnel, the Producers, and the EIG Personnel will not discuss the potential market value of the Holding Company or of the Holding Company Stock; and (9) the Call Center personnel, the Producers, and the EIG Personnel will not advise policyholders on how to vote on the Plan, other than confirming that the board of directors of EIG has unanimously voted to adopt the Plan.
The Division also notes that you have not requested relief, and the Division takes no position, on the application of the broker-dealer registration requirements of Section 15(a) of the Exchange Act to the limited communications of the Call Center personnel or the Producers which occur prior to the date on which the Member Information Statement and other documents prepared or approved by EIG and the Commissioner for use in connection with the Special Meeting are available. In addition, the Division notes that you have not requested relief, and the Division takes no position, on the application of the broker-dealer registration requirements of Section 15(a) of the Exchange Act to any anticipated activities of the Agent and its employees.
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The above positions are based on the representations made to the Divisions in your letter and your opinions of counsel. Any different facts or conditions might require the Divisions to reach a different conclusion. This response expresses the positions of the Divisions of Corporation Finance and Market Regulation on enforcement action only and does not express any legal conclusions on the questions presented.
Sincerely,
For the Division of Corporation Finance
Sonia G. Barros
Attorney-Advisor
For the Division of Market Regulation
Brian A. Bussey
Assistant Chief Counsel
The Incoming Letter is in Acrobat format.
http://www.sec.gov/divisions/corpfin/cf-noaction/eig102506.htm
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