— (1) IMPLEMENTATION OF SECTION 3(c)(1)(B).—Within one year after the date of enactment of this Act, the Commission shall prescribe rules to implement the requirements of section 3(c)(1)(B) of the Investment Company Act of 1940 (15 U.S.C. 80a–3(c)(1)(B)). (2) EMPLOYEE EXCEPTION.—Within one year after the date of enactment of this Act, the Commission shall prescribe rules pursuant to its authority under section 6 of the Investment Company Act of 1940 (15 U.S.C. 80a–6) to permit the ownership by knowledgeable employees of an issuer or an affiliated person of the issuer of the securities of that issuer or affiliated person without loss of 16 the issuer’s exception under section 3(c)(1) or 3(c)(7) of such Act from treatment as an investment company under such Act.

HPOPS tries to skirt this established fact through 21 Similar statutory exemptions apply to State Street and to its unregistered, commingled trust funds such as LDBF and the Commodities Strategy under the federal Investment Advisers Act of 1940 and Investment Company Act of 1940. See 15 U.S.C. § 80b-2(a)(11)(A) (stating that investment advisers do not include “a bank, or any bank holding company as defined in the Bank Holding Company Act of 1956 [12 U.S.C.A. § 1841 et seq.] which is not an investment company”); 15 U.S.C. § 80a-3(c)(3) (excluding from the definition of “investment company,” “[a]ny bank or insurance company,” and certain common trust funds or similar funds “maintained by a bank”). Case 1:08-cv-05442-RJH-JLC Document 80 Filed 07/30/10 Page 31 of 34 - 28 - 25034981_16 two misleading and elliptical citations.

Under similar statutory exemptions, State Street’s unregistered, commingled trust funds at issue here are excluded from the definition of investment adviser and investment company under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. See 15 U.S.C. § 80b-2(a)(11)(A) (stating that investment advisers do not include “a bank, or any bank holding company as defined in the Bank Holding Company Act of 1956 [12 U.S.C.A. § 1841 et seq.] which is not an investment company”); 15 U.S.C. § 80a-3(c)(3) (excluding from the definition of “investment company,” “[a]ny bank or insurance company,” and certain common trust funds or similar funds “maintained by a bank”). Case 1:08-cv-05442-RJH-JLC Document 42 Filed 06/09/10 Page 26 of 32 - 22 - form the basis for a TSA violation or fraud in the inducement claim – are quite narrow, and are based upon the August 2005 written presentation to LDBF regarding the Enhanced DJ-AIG Strategy and LDBF.

Under similar statutory exemptions, State Street’s unregistered, commingled trust funds at issue here are excluded from the definition of investment adviser and investment company under the Investment Advisers Act of 1940 and the Investment Company Act of 1940. See 15 U.S.C. § 80b-2(a)(11)(A) (stating that investment advisers do not include “a bank, or any bank holding company as defined in the Bank Holding Company Act of 1956 [12 U.S.C.A. § 1841 et seq.] which is not an investment company”); 15 U.S.C. § 80a-3(c)(3) (excluding from the definition of “investment company,” “[a]ny bank or insurance company,” and certain common trust funds or similar funds “maintained by a bank”). Case 1:08-md-01945-RJH Document 128 Filed 06/09/10 Page 26 of 32 - 22 - form the basis for a TSA violation or fraud in the inducement claim – are quite narrow, and are based upon the August 2005 written presentation to LDBF regarding the Enhanced DJ-AIG Strategy and LDBF.

Nothing in Bienstock’s complaint suggests that Moody’s is a “registered investment company,” which must be engaged primarily in the business of “investing, reinvesting, or trading in securities,” “issuing face-amount certificates of the installment type,” or “own[ing] or propos[ing] to acquire investment securities having a value exceeding 40 per centum of the value of [another] issuer’s total assets.” 15 U.S.C. § 80a-3(a)(1). 5 Case 1:09-cv-02858-SHS-RLE Document 4 Filed 05/18/09 Page 9 of 17 In fact, Moody’s is not a registered investment company, nor is it an “investment adviser” under the Investment Company Act.

In Morrison, the Attorney 4 In numerous other statutes (including the Exchange Act), Congress instructed agencies to adopt rules that are in the public interest and consistent with governing law (or statutory purposes). See 15 U.S.C. § 78s(b)(3)(A); 5 U.S.C. § 5349(a); 7 U.S.C. § 6j(a)(2)(C); 15 U.S.C. § 80a- 2(a)(48)(B); 15 U.S.C. § 80a-3(c)(1)(B); 15 U.S.C. § 80a-63(b)(2); 15 U.S.C. § 6758(b)(4). Legislative history confirms Congress meant to do the same here.

An investment company, commonly known as a mutual fund, 1 “is a pool of assets, consisting primarily of a portfolio of securities, and belonging to the individual investors holding shares in the fund.” Jones v. Harris Assocs. L.P., 559 U.S. 335, 338 (2010)(quoting Burks v. Lasker, 441 U.S. 471, 480 (1979)); see also 15 U.S.C. §80a-3(a). An investment adviser creates the mutual fund by incorporating the investment company, choosing the directors, managing the investments, and taking fees from the money invested in the company.

¶66. Defendants’ unilateral modification to the Fund’s “Principal Investment Strategies” after the damage was done was unauthorized and in violation of the Investment Company Act of 1940, 15 U.S.C. § 80a-3 (the “ICA”). Pursuant to the ICA, Defendants were required to hold a shareholder vote prior to deviating from the Fund’s restriction against investing more than 15% of the Fund’s assets in emerging markets—Defendants failed to hold this vote.

nited States v. SmithKline Beecham Clinical Labs., 149 F.3d 227 (3d Cir. 1998) .................................................................................5 Wilson v. Daily News of the Virgin Islands, 881 F.2d 82 (3d Cir. 1989) ...............................................................................4, 5 Woodward Governor Co. v. Curtiss-Wright Flight Sys., 164 F.3d 129-30 (2d Cir. 1999) ..........................................................................14 Young v. Nationwide Life Ins. Co., 2 F. Supp. 2d 914 (S.D. Tex. 1998)................................................................8, 11 STATUTES 15 U.S.C. § 46(b) ..............................................................................................passim 15 U.S.C. § 78j(b) ......................................................................................................7 15 U.S.C. § 80a-2(a)(9)..............................................................................................4 15 U.S.C. § 80a-3(c)(1)..............................................................................................4 Case 3:11-cv-04194-PGS -DEA Document 21 Filed 03/05/12 Page 6 of 23 PageID: 635 - v - 15 U.S.C. § 80a-26(f)........................................................................................passim 15 U.S.C. § 80a-35(b) .......................................................................................passim 15 U.S.C. § 80a-41...................................................................................................13 15 U.S.C. § 80a-43...................................................................................................15 15 U.S.C. § 80a-46(b) ..............................................................................................15 N.Y. Ins. Law. § 4240(a)(12)...................................................................................11 OTHER AUTHORITIES 17 C.F.R. § 270.30e-1 ....................................................

Advisors, Inc. v. Lewis, 444 U.S. 11 (1979) ...................................................................................... 10 Trs. of Laborers’ Local No. 72 Pension Fund v. Nationwide Life Ins. Co., 783 F. Supp. 899 (D.N.J. 1992) .................................................................... 17 Woods v. Southern Co., 396 F. Supp. 1351, 1365 (N.D. Ga. 2005) ..................................................... 14 Wright v. Oregon Metallurgical Corp., 360 F.2d 1090 (9th Cir. 2004) ...................................................................... 14 Zang v. Paychex, Inc., 728 F. Supp. 2d 261 (W.D.N.Y. 2010)............................................... 14, 19, 21 Zavolta v. Lord, Abbett & Co., No. 08-04546, 2010 WL 686546 (D.N.J. Feb. 24, 2010).......................... 11-12 STATUTES, REGULATIONS AND RULES 15 U.S.C. § 80a-3(c)(11) (ICA § 3(c)(11)) ........................................................... 4 15 U.S.C. § 80a-35(b) (ICA § 36(b)) .................................................... 1, 2, 3, 4, 6 15 U.S.C. § 80a-46(b) (ICA § 47(b)) ..........................................................7, 8, 10 15 U.S.C. § 80a-46(b)(1) (ICA § 47(b)(1)) .......................................................... 9 15 U.S.C. § 80b-2(a)(11) (IAA § 202(a)(11))..................................................... 23 15 U.S.C. § 80b-15 (IAA § 215).......................................................................... 2 29 U.S.C. § 1002(17) (ERISA § 3(17)).............................................................. 16 Case 2:10-cv-01655-WJM -MF Document 52 Filed 02/04/11 Page 9 of 36 PageID: 3513 ix 29 U.S.C. § 1002(21)(A) (ERISA § 3(21)(A)) ................................................... 16 29 U.S.C. § 1002(21)(A)(ii) (ERISA § 3(21)(A)(ii)) .......................................... 23 29