Investment Company Act of 1940 — Section 24(f) and Rule 24f-2
AXA Equitable Life Insurance Company, et al.

February 27, 2009

RESPONSE OF THE OFFICE OF CHIEF COUNSEL DIVISION OF INVESTMENT MANAGEMENT

Our Ref. No. 200712181747 File No. 000-20501

Your letter dated February 26, 2009 requests our assurance that we would not recommend enforcement action to the Securities and Exchange Commission ("Commission") under section 6(b) of the Securities Act of 1933 (the "1933 Act") against AXA Equitable Life Insurance Company ("AXA Equitable") or certain separate accounts (as defined in section 2(a)(37) of the Investment Company Act of 1940 (the "1940 Act")) (the "Separate Accounts") maintained by AXA Equitable which are excluded from the definition of investment company pursuant to section 3(c)(11) of the 1940 Act if, under the circumstances described below, AXA Equitable and the Separate Accounts utilize the fee payment mechanism pursuant to section 24(f) of the 1940 Act and rule 24f-2 thereunder for securities issued in connection with such Separate Accounts and registered under the 1933 Act.

BACKGROUND

You state the following: AXA Equitable issues certain group variable annuity contracts to certain pension, profit sharing or governmental plans (the "Contracts"). AXA Equitable currently maintains six Separate Accounts that are utilized to fund the benefits available under the Contracts.¹ These Separate Accounts are not required to register as investment companies under the 1940 Act because the assets of the Separate Accounts are derived solely from sales of the Contracts to plans qualifying for the exclusion under section 3(c)(11) of the 1940 Act.² The interests in the Separate Accounts under the Contracts, however, do not qualify for any exemption from registration under the 1933 Act.³

Interests under the Contracts are registered under the 1933 Act on either Form N-3 or Form N-4. Form N-3 is used for interests in managed separate accounts. These are separate accounts that would be open-end management investment companies but for the exclusion from the definition of investment company under section 3(c)(11). Form N-4 is used for interests in unit investment trusts ("UITs"). These are separate accounts that invest in underlying management investment companies.

You state that historically AXA Equitable and each Separate Account have paid registration fees related to the Contracts utilizing the standard fee payment mechanism applicable to offerings registered under the 1933 Act. In general, you propose that each Separate Account pay registration fees for interests under the Contracts pursuant to the same procedures under section 24(f) of the 1940 Act and rule 24f-2 thereunder as are currently applicable to any separate account registered under the 1940 Act and utilizing either Form N-3 or Form N-4. You assert that permitting each Separate Account to file annual notices on Form 24F-2 is consistent with the instructions to Forms N-3 and N-4 and with the purposes of section 6(b) of the 1933 Act, section 24(f) of the 1940 Act and rule 24f-2 thereunder.

LEGAL ANALYSIS

Section 6(b) of the 1933 Act generally requires a registrant to pay to the Commission a fee to register the securities it proposes to offer. Section 24(f) of the 1940 Act and the rules thereunder modify the 1933 Act registration provisions for certain registered funds. Section 24(f) of the 1940 Act, in relevant part, provides that an open-end management company or UIT shall be deemed to have registered an indefinite amount of securities upon the effective date of its registration statement and shall pay a registration fee based on the aggregate sales price for which the company's securities were sold pursuant to a registration of an indefinite amount of securities under section 24(f)(2) during the previous fiscal year, which is then reduced by the aggregate redemption or repurchase price of the securities of the company during that year and by the aggregate redemption or repurchase price of any unused securities of the company in prior years. Section 24(f)(4) provides that the Commission may adopt rules to implement the section and, pursuant to such authority, the Commission adopted rule 24f-2.⁴ This rule requires that any open-end management company or UIT file a Form 24F-2 accompanied by a registration fee not later than 90 days after the end of any fiscal year during which it has publicly offered its securities.

Section 24(f) and rule 24f-2 set forth a procedure designed to simplify the registration of securities and related payment of fees by certain types of investment companies that sell and redeem their securities on a continuous basis. When it amended rule 24f-2 in 1997, the Commission noted that this type of issuer often cannot predict the number of securities it will sell at the time it files its registration statement under the 1933 Act. It also noted that such funds often experience a high turnover in their outstanding securities, as a substantial number of securities that are sold replace securities that recently have been redeemed or repurchased. The Commission stated that section 24 of the 1940 Act and related rules "were designed to address the problem of inadvertent ‘over sales' (i.e., sales in excess of securities registered) that easily could occur with a fund that continually issues securities".⁵

You are concerned that, as a technical matter, the Separate Accounts are not subject to section 24(f) and rule 24f-2, and therefore are not eligible to use Form 24F-2.⁶ You assert that it is appropriate nonetheless for the Separate Accounts to use the registration process laid out in these provisions. You argue that, in adopting the forms utilized by the Separate Accounts to register under the 1933 Act, the Commission clearly intended that the Separate Accounts be permitted to utilize the registration process under section 24(f).⁷ In addition, you argue that this result is consistent with the purposes underlying these registration provisions, due to the substantial similarity between the Separate Accounts and open-end management companies and UITs.⁸ In particular, a Separate Account which sells and redeems its securities on a continuous basis often cannot predict the number of securities it will sell at the time it files its registration statement under the 1933 Act. In addition, a Separate Account often experiences a high turnover in its outstanding securities, as a substantial number of securities that are sold replace securities that recently have been redeemed or repurchased. Finally, a Separate Account could experience the problem of inadvertent "over sales" (i.e., sales in excess of securities registered) because it continually issues securities.

Based on the facts and representations set forth in your letter, we would not recommend enforcement action to the Commission under section 6(b) of the 1933 Act against AXA Equitable or the Separate Accounts if, under the circumstances described in this letter, AXA Equitable and the Separate Accounts utilize the fee payment mechanism pursuant to section 24(f) of the 1940 Act and rule 24f-2 thereunder for securities issued in connection with such Separate Accounts and registered under the 1933 Act. This letter expresses our position on enforcement action only, and does not express any legal conclusion on the issues presented. Because our position is based on the facts and representations in your letter, you should note that any different facts and representations may require a different conclusion.

Shannon Conaty
Senior Counsel

Endnotes

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¹ The Separate Accounts consist of Separate Account Nos. 3, 4, 10, 13, 66, and 206 of AXA Equitable; prior to May 1, 2008, Separate Account 191 and 200 were utilized to fund the benefits under the Contracts. The Separate Accounts issue redeemable securities (as defined in section 2(a)(32) of the 1940 Act).

² The exclusion in section 3(c)(11) extends to "any separate account the assets of which are derived solely from (A) contributions under pension or profit-sharing plans which meet the requirements of section 401 of the Internal Revenue Code of 1986 or the requirements for deduction of the employer's contribution under section 404(a)(2) of such Code, (B) contributions under governmental plans in connection with which interests, participations, or securities are exempted from the registration provisions of section 5 of the [1933 Act] by section 3(a)(2)(C) of such Act, and (C) advances made by an insurance company in connection with the operation of such separate account".

³ You state that, because the Contracts are sold to plans which cover self-employed individuals (i.e., employees within the meaning of section 401(c)(1) of the Internal Revenue Code), the interests under the Contracts are not eligible for the exemption provided by section 3(a)(2) of the 1933 Act.

⁴ See, e.g., Notice for Public Comment of Proposed Rule 24f-2 under the Investment Company Act of 1940 for Registration under the Securities Act of 1933 of an Indefinite Number of Securities of Certain Investment Companies and of a Proposed Amendment to Rule 24f-1 under the Investment Company Act of 1940, IC-9347 (July 8, 1976) (proposing release); Registration of an Indefinite Number of Investment Company Shares, IC-9989 (Nov. 3, 1977) (adopting release); Registration Fees for Certain Investment Companies, IC-20874 (Feb. 1, 1995) (proposing release) and IC-21332 (Sept. 1, 1995) (adopting release) (amending rules 24f-1 and 24f-2 and adopting Form 24F-2); Registration under the Securities Act of 1933 of Certain Investment Company Securities, IC-22747 (July 14, 1997) (proposing release) and IC-22815 (Sept. 10, 1997) (adopting release) (amending rule 24f-2 and Form 24F-2).

⁵ IC-22747, supra note 4.

⁶ In particular, section 24(f), rule 24f-2, and Form 24F-2 are available to open-end management companies and UITs. Sections 4 and 5 of the 1940 Act define open-end management companies and UITs as investment companies. The Separate Accounts, however, are excluded from the definition of investment company by section 3(c)(11) of the 1940 Act.

⁷ The general instructions to each of Form N-3 and Form N-4 specifically require that these forms be used for registration under the 1933 Act of variable annuity contracts funded by separate accounts which rely on the exception in section 3(c)(11) of the 1940 Act. General Instruction A to Form N-3 states: "Form N-3 shall also be used to file a registration statement under the 1933 Act, and any amendments thereto, for variable annuity contracts funded by separate accounts which would be required to be registered under the 1940 Act as management investment companies except for the exclusion provided by Section 3(c)(11) of the 1940 Act." General Instruction A to Form N-4 states: "Form N-4 shall also be used to file a registration statement under the 1933 Act and any amendments thereto for variable annuity contracts funded by separate accounts which would be required to be registered under the 1940 Act as unit investment trusts except for the exclusion provided by Section 3(c)(11) of the 1940 Act." General Instruction B to each form then notes that registration fees should not be paid when filing such form and cites to sections 24(f) of the 1940 Act and rule 24f-2 thereunder.

⁸ See Registration Forms for Insurance Company Separate Accounts that Offer Variable Annuity Contacts, IC-13689 (Dec. 23, 1983) (proposing release for Forms N-3 and N-4) (noting that the Commission believes that Forms N-3 and N-4 should be made available to those non-registered separate accounts "that are most similar to registered separate accounts").

Incoming Letter

The Incoming Letter is in Acrobat format.