SEC no-action letter: Hartford Investment Financial Services, LLC; HL Investment Advisors, LLC; and Hartford Securities Distribution Company, Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
V/ASHINGTON, D.C. 20549 otvlstoN oF
CORPORATIOI( FINAXCE
May 14, 2008
Jerome S- FortinsSr, Esq￾Shearman & Sterling LLP 599 Lexington Avenue NewYork NY 10022-6069 Re: In the Matter of Hartford Investment Financial Services, LLC, HL Investment Advisors, LLC, and Hartford Securities Distribution company, lnc., Administrative proceeding File No. 3-12476-waiver Request under Regulation A and Rule 505 of Rezulation D Dear Mr. Fortins$:
This is in response to your letter dated June 8, 2006, written on behalf of Hartford [nvestment Financial services, LLC ("I{artford lnvestrnent"), HL Investment Advisors, LLC (.,HL Advisors"), and Hartford Securities Distribution Company, Inc. ("Hartford Distribution," and together with Hartford In!'estrnent and HL Advisors, the "Respondents"), and constitxting an application for reliefunder Rule 262 ofResulation A and Rule 505(b)(2)(iii)(C) ofRegulation D under the Securities Astol 1933 ("secunties Acr"). y-ou requested relief &om disqualificatiors liom exemptions arailable under Regulation A and Rule 505 ofRegulation D that may have arisen by virnre of the order entered November 8, 2006 by the Secunties and Exchanfe Commission in In lhe Malter of [Iartford Inve ment Financial Semices, LLC, HL Investment Advisors, LLC', and Harfortl Securilies Dislribution Company,1nc., Securities Act Release No. 8750 (the "Order,'): The disqualif,rcations may have arisen because the Order cites Section l5(b) of the Securities Exohange Act of 1934 and Section 203(e) of the Investment Advisers Act of 1940 as authority for its issuance and certain orders issued under those provrstons may result in disqualifications of this krnd. Iior purposes of this letter, \r'e have assumecl as facts thc representatrons set forth in your letter and the findings supporling entry of the Order. We also have assumed thaf the Respondents have complied and will continue to comply with the Order. On the basis ofyour letter, I have determined that you have made showings of good cause under Rule 262 and Rule 505(bX2Xiit(C) that it is not necessary under the circumstances to deny the exemptions arailable under Regulation A and Rule 505 ofRegulation D by reason of entry ofthe Order- Accordingly, pursuant to delegated authority, and without necessarily agreeing that such disqualifications arose by virtrle oi entry ofthe Ordel the Respondents are granted relief from any disqualificationi from exemptions oiherwise available under Regulation A and Rule 505 ofRegulation L) that may hive ansen as a result of entry ofthe Order, effective the date of this letter. Very truly yours, Chicf, Office of Small tlusiness I,olicy

SHreu,uN & StrRtttqc,'-o
599tEXtNGT0NAVrNUr I NrWt0Rl( | lty I 10022-6069 WWW.SHtARMAIl.C0M I I +1,212.848.4000 I f +1.212-848./179 j fortinsky@shearrnan. com 212-848-4900 Via Electronic Mail and U.S. Mail Gerald J. Laporte, Esq. Chief, Office of Small Business Policy Division <if Cnrporation Finance U.S. Securities and Exchange Commission 100 F Street, N.E., 3rd Floor Washington, DC 20549-3628 June 8, 2006 In the Matter o1'Sales Practices by Certain Broker-Dealers Concenting Mutual Irunds (HO-09949): In the Matter of I{artfbrd Investment Financial Services (C-0382-31 Dear Mr. Laporte:
On hehalf of I{artford Investment Financial Services, LLC ("Hartford Investment"), HL lnvestment Advisors, LLC ("IIL Advisors"), and Hartford Securities Distribution Company, Inc. ("Hartfbrd Distribution," and together with Hartford Investment and HL Advisors, the "Respondents"), the settling Respondents in administrative proceedings arising out of the above￾captioncd investigation, I write, pursuanto Rule 262 of Regulation A and Rule 505(b)(2)(iii)(Ci of Regulation D of the Securities and Exchange Commission (the "Commission") promulgated under the Securities Act of 1933 (the "Securities Act"), to request waivers ofany disqrialifications fiom exemptions under Regulation A and Rule 505 of Regulation D that may be applicable to the Responder.rts and any of the issuers described below as a result of the entry of an Order Instituting Administrative zurd Cease-and-Desist Proceedings, Making Findings and Imposing Remedial Sanctions and a Cease-and-Desist Order Pursuanto Section 8A of the Securities Act of l 933, Sections 2O3(e'1, 203(f1 and 203(k) of the lnvcstment Advisers Act of 1940, and Sections 9(b) and 9(l) ofthe Investment Company Act of 1940 {rhe "Order"). The Respondents request that these waivers be granted effective upon the cntry of tlie Order_ Aeu 0tiAst | 8t{|itc I BI ,sstts I !Bssft00Rf I tRAt{KfuRI I H0fi6 K0flG I L0li00N I trlAl!ti||M I trtL[Lo pARfi MUNICH I llu rOfil( I PAflIS I |]0/\1t I sAll ffiAflctsc0 | 5A0PAUL0 I s tGAp0Rt I l0t(y0 I T0R0Nt0 I lriAstltNcl0fl, 0c

Gerald J. Laporte, Esq.
P age 2
June 8, 2006
BACKGROUND
The staff of the Commission has engaged in settlement discussions with the Respondents in connection with the adrninistrative proceedings arising out of the above-captioned investigation, which was brought pursuant to Section 8A ofthe Securities Act, Sections 203(e), 203({), and 203(k) of the lnveshnent Advisers Act of 1940 {"Advisers Act") and Sections 9(b) and 9(fl of the Investment Company Act of 1940 ("Investment Company Act"). As a result of these discussions, the Respondents submitted a joint Offer of Settlement (the "Offer"). In the Offer, solely for the purpose ofproceedings brought by or on behalf of the Commission or to which thc Commission is a party, the Respondents consent to the entry of the Order, rvithout admitting or denying the lindings contained therein (other than those relating to the jurisdiction of the Corrirnission, rvhich are admitted). The Order, which was entered today, found that F-espc'rirlents f{artlbrd Investment and HI- Advisors violated Sections 17 (a)(2) and (3) ofthe Securitres Act, Section 206(2) of the Advisers Act, and Section 34(b) of the lnvestment Conrpany Act in connection with their directed brokerage program for the years 2000-03. The Cctmrnissiotr found fufther that Respondent Hartford Distribution caused and aided and abetted the other Respondents'violations of Sectiorx 11(a)(2) and (3) of the Securities Act and Section 206(2) of the Advisers Act- Additionally, the Order censured the Respondents, ordered each of thcm to cease and dcsist from such violative conduct, and required that the Respondents pzry disgorgement in the amount of $40 million and a oivil money penalty of $ l5 million, for which the Respondents rvill bejointly and severally liable, DISCUSSION The Respondents understand that the entry of the Ordcr may disqualif, them, affiliated entities, and certain issuers lrom certain exemptions under Regulation A and Rule 505 of Regulation D pronrulgated under the Securities Act, insofar as the Order causes the Respondents to be subject to an order of the Commission entered pursuant to Section 203(e) of the Advisers Act. The Respondents are concemed that, should any of them be decmed to be a general partner, promoter or underrvriter of the securities ofan "issuei' for the purposes ofSecurities Act Rule 262(b)(3), one or nlore o1'the Respondents, those of its issuer affiliates, and other issuers with which they are associated in one ofthose listed capacities and rvhich rely upon or may rely upon these offcring exemptions when issuing securities rvould be prohibited from doing so. The Commission has the authority to rvaive the Regulation A and Regulation D exemption disqualifications upon a showing ofgood cause that such disqualifications are not nccessary under the circumstances. See l7 C.F.R. $$ 230-262 and 230.505(b)(2XiirXC).

Gerald J, Laporte, Esq￾Page 3
June 8, 2006
The Respondents request that the Commission waive any disqualifying effects that the Order may have under Regulation A and Rule 505 of Regulation D with respect to the Respondents, their issuer affiliates, or third-party issuers with wlrich one or more of the Respondents are associated in the capacities listed above, on the following grounds:
l. The conduct to be addressed in the Order does not relate to the matters addressed
by Regulation A and Rule 505 of Regulation D. The Order concemed the Respondents' use of directed brokerage in connection with the marketing and distribution of their mutual fund and variable annuity products. None of the findings set forth in the Order relate to small issues or to limited offers or sales of securities under $5 million that is, the subject matter of Regulation A and Rule 505 of Regulation D, respectively.
2. Disqualification could put the Respondents at a significant conpetitive
dis:rdvantage. The disqualification of the Respondents (or any of their issuer affiliates, or third￾p.Lr. issuers with which one or nlore of the Respondents are associated in one of the capacities listrJ above) from the exemptions under Regulation A and Rule 505 of Regulation D would be unduly and disproportionately severe in light of the nature of the violations addrcssed in the Order. Ifdisquali{ied Iiom these exemptions, the Respondents (or their issucr affiliates or third￾party issuers with which one or more ofthe Respondents are associated in one of the capacities listed above) would find it more difficult to issue securities to raise new capital or for other purposes. In addition, they would find themselves at a competitive disadvantage in comparison with others that are able to rely on the regrrlatory exemptions.
3. Disqualification is unnecessary because thc Respondents have taken and will
undertake further significant steps to ensure that conduct addressed in the Order does not recur. 'I'he Commission has made findings in the Order recogrizing that the Respondents, prior to the Order, voluntarily (a) formed a conmittee designed to ensure that prospectus and SAI disclosures for investment products are accurate, appropriate, timely, :rnd, where appropriate, consistent; and (b) appointed a senior-level employee to implement certain written policies and procedures requiring that revenue sharing arrangements be in writing and in a lbrm approved by the chief legal officer of Hartford Life, Inc- ("Hartford Life') or his delegate. Pursuant to the Order, the Respondents rvill undertake the f<rllowing additional remedial steps, among others: (a) appoinl a senior-level employcc who will be responsible for, among other things, oversight over compliance matters relating to preventing and detecting conflicts of interest concerning the lines ofbusiness of Hartford Lifc's lnvestment Products Division, breaches offiduciary duty by the Respondenls, and violations of the federal secunties laws by the Respondents; (b) annually prepare, for review and approval by the funds'boards ofdirectors, disclosures to be included in the relevant prospectuses and SAIs about paltnents made by the Respondents to broker-dealers relating to the sale ofthe funds' shares; (c) make annual presentations to the funds'boards of clirectors, which will include an overyierv of thcir revenue sharing arrangements and policies, any material changes to such policies, the numbcr and types ofsuch arrangements, the tlpes of

Gerald J. Laporte, Esq.
June 8, 2006 services received, the identity ofparticipating broker-dealers, and the total dollar amounts paid; (d) establish an Intemal Compliance Controls Committee to be chaired by Hartford Life's Vice President, Securities Compliance; and (e) give all employees of the Investment Products Division annual compliance training relating to business ethics and disclosure obligations. We respectfully submit that, in light of these measuresi and in light of the substantial payrnent of $55 million that the Respondents rvill make pursuant to the Order, the Commission need not subject the Respondents to the further burden of disqualification from the exemptions discussed above in order to achieve its remedial goals. For these reasons, we believe that disqualification is not appropriate and is not necessary for the protection ofinvestors, and that the Respondents have shown good cause to grant thc requested relief, Accordingly, we respectfully urge the Commission to waive, effective upon the entry of the Order, the disqualilication provisions in Regulation A and Rulc 505 olRegulation D to the cxtent they may be applicable to the Respondents, any affiliated issuers, and certain third-party issuers (as described above), as a result of the entry of the Order-' If you have any questions regarding this request, please contact me. Very truly yours, S. cc: Daniel R. Gregus, Esq. Midwest Regional Office U,S. Securities & Exchange Commission NYDOCSoI/800146 5 We note in support of this requesi that thc C<rmmission has granted reliefunder Rule 262 of Regulation A and Rulc 505(b)(2)(iii)(C) ofRegulation D for similar reasons. See, e.g., Legg Mason Wood llalker, Jncorporated, SEC No-Action Letter (pub. avail. Sept. 21,2005); Pludentia! Equity Group, ZZC, SEC No￾Action Letter Grub- avail. July 25, 2OO5); Smith Barney Fund Mdnagement LLC and Citigroup Global Markets, Inc., SEC No-Action Letter (May 3 t, 2005); Citigroup Global Markets,Iac., SEC No-Action Letter (Ivlar, 23,2005); Sybaris Clubs Int'l,1nc , SEC No-Aclion l-ener (pub. avail. July t, 1996); The Cooper Companies,1rc., SEC No-Action Lener fuub, avail. Dec.20, 1994); Michigan Nat'l Corp_,SEC No-Action Letter (pub- avait Dec- 17,199]); General Electric co., sEC No-ActioD Letter (pub. avail. N.lay 24, 1988); see also Pradential Securities 1nc-, SEC No-Aclion Letl€r (pub_ avail_ July 10,2O03); Credit Suisse F'ir-rl Boston Corporation, SEC No-Action L€tler (pul]. avail_ Jan.29,2002'1 Dain Rauscher, Incorporated, SEC No-Action Letter (pub. avail. Sept 27, 2O0l); Legg Mason Wood Plalker, Incorpordted, SEC No-Acrion Letter (pub. avail- June ll,200l); Prudentiq! Securities lhc., SEC No-Action lrtter {pub. avail, Jan 29, 2001 ).