UNITED STATES OF AMERICA Before the SECURITIES AND EXCHANGE COMMISSION INVESTMENT ADVISERS ACT OF 1940 Release No: 1767 / September 30, 1998 ADMINISTRATIVE PROCEEDING File No. 3-9751 In the Matter of : : ORDER INSTITUTING ABN AMRO-NSM INTERNATIONAL : ADMINISTRATIVE AND CEASE-AND- FUNDS MANAGEMENT, B.V., : DESIST PROCEEDINGS PURSUANT TO : SECTIONS 203(e) AND 203(k) OF Respondent : THE INVESTMENT ADVISERS : ACT OF 1940, MAKING : FINDINGS AND IMPOSING : REMEDIAL SANCTIONS ______________________________: I. The Commission deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 (Advisers Act), against ABN AMRO-NSM International Funds Management, B.V. (AANIFM). In anticipation of the institution of these administrative proceedings, the Respondent has submitted an Offer of Settlement, which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the findings herein, except as to jurisdiction contained in Section III. A. herein, which is admitted, the Respondent consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, Making Findings and Imposing Remedial Sanctions (Order). II. Accordingly, it is ordered that administrative and cease- and-desist proceedings be, and hereby are, instituted. III. On the basis of this Order and the Offer of Settlement submitted by the Respondent, the Commission makes the following findings:[1] A. AANIFM, a Netherlands company, has been registered with the Commission as an investment adviser pursuant to Section 203 of the Advisers Act since 1982, and currently provides investment advisory services to foreign and U.S. advisory clients. ABN AMRO Bank, N.V. and Banque de Neuflize Schlumberger Mallet S.A. NSM, which were established in the Netherlands and France, respectively, each own 50% of the stock of AANIFM. AANIFM presently manages approximately $955 million in client securities. B. Between January 1993 and October 1995, AANIFM, while acting as a sub-adviser for three advisory clients, executed 242 transactions on a riskless principal basis and 163 transactions on a principal basis through affiliated broker-dealers in Europe and Asia under common control with AANIFM without disclosing to the three advisory clients the capacity in which it was acting and without obtaining the advisory clients' consent prior to completing the transactions. As a result of the above-described activity, AANIFM willfully violated Section 206(3) of the Advisers Act. C. AANIFM's Form ADV filed with the Commission failed to affirmatively disclose that its related parties, affiliated broker-dealers under common control, engaged in the transactions described in paragraph III.B. above with its clients. Furthermore, AANIFM did not disclose to its advisory clients what restrictions or internal procedures were used in light of the potential conflicts of interest in the principal transactions. As a result, AANIFM willfully violated Section 207 of the Advisers Act. IV. In view of the foregoing, the Commission finds it is in the public interest to impose the sanction specified in the Offer of Settlement. ACCORDINGLY, IT IS HEREBY ORDERED, effective immediately: A. That AANIFM cease and desist from committing or causing any violation, and any future violation, of Sections 206(3) and 207 of the Advisers Act; B. That AANIFM shall, within ten days of the date of the Order, pay a civil money penalty in the amount of $25,000 to the United States Treasury. Such payment shall be: (a) made by United States postal money order, certified check, bank cashier's check or bank money order; (b) made payable to the Securities and Exchange Commission; (c) hand-delivered to the Comptroller, Securities and Exchange Commission, Operations Center, 6432 General Green Way, Stop 0-3, Alexandria, VA 22312: and d) submitted under cover letter which identifies AANIFM as the respondent in these proceedings, as well as the Commission's file number, a copy of which cover letter and money order or check shall be sent to Mary E. Keefe, Regional Director, Midwest Regional Office, Securities and Exchange Commission, 500 W. Madison, Suite 1400, Chicago, Illinois 60661; and C. That AANIFM shall comply with its undertakings: a. to maintain previously adopted written policies and procedures reasonably designed to prevent and detect future violations of Sections 206(3) and 207 of the Advisers Act; b. within sixty days of the issuance of the Order to provide training to relevant employees designed reasonably to effect understanding of and compliance with the newly implemented policies and procedures; and c. within ninety days of the issuance of the Order to provide an affidavit evincing compliance with paragraphs IV.C.a. and IV.C.b. above. By the Commission. Jonathan G. Katz Secretary **FOOTNOTES** [1]: The findings herein are made pursuant to AANIFM's Offer and are not binding on any other person or entity named as a respondent in this or any other proceeding.