NEWS RELEASE [ALLIANCE CAPITAL LOGO]
FOR IMMEDIATE RELEASE
Contacts: Valerie Haertel (Investor Relations) John Meyers (Media)
(212) 969-6414 (212) 969-2301
investor_relations@acml.com john_meyers@acml.com
ALLIANCE CAPITAL MANAGEMENT CONFIRMS SETTLEMENT
AGREEMENTS WITH NEW YORK ATTORNEY GENERAL
AND SECURITIES AND EXCHANGE COMMISSION
NEW YORK, NY, DECEMBER 18, 2003 - Alliance Capital Management L.P. ("Alliance
Capital") and Alliance Capital Management Holding L.P. ("Alliance
Holding")(NYSE: AC) today confirmed that Alliance Capital has reached terms with
the New York State Attorney General ("NYAG") and the Staff of the Securities and
Exchange Commission ("SEC") for the resolution of regulatory claims with respect
to market timing in some of its mutual funds. The agreement with the SEC is
reflected in an Order of the Commission. The agreement with the NYAG is subject
to final, definitive documentation.
Lewis A. Sanders, Chief Executive Officer, said, "These settlement
agreements are an extremely important step--and an important point of departure.
The key provisions of these agreements, which we endorse strongly, will bring
large and lasting benefits to our clients, strengthen the governance and thus
the integrity of our mutual fund services, and codify our commitment to best
industry practices in many areas."
Among key provisions of these agreements are the following:
o Under both the SEC and NYAG agreements, Alliance Capital will
establish a $250 million fund to compensate fund shareholders for the
adverse effects of market timing in some of its mutual funds. Of the
$250 million fund, the agreements characterize $150 million as
disgorgement and $100 million as a penalty.
o The agreement with the NYAG includes a weighted average reduction in
fees of 20% on Alliance Capital's U.S. long-term open-end retail
funds, commencing January 1, 2004, for a minimum of 5 years.
Under both agreements, Alliance Capital's Mutual Funds Boards, the majority
of which have already moved to elect independent chairmen from among their
independent directors, will also have independent directors that comprise at
least 75% of each Board, and will add a senior officer and any needed staff to
assist the Boards in their oversight of compliance, fiduciary issues and
conflicts of interest.
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"While the management fee reduction is an integral part of the agreement
with the NYAG, we embrace it fully. Driving costs out of our mutual fund
operations and passing on the resulting savings in the form of lower fees and
expenses to our mutual fund shareholders is a major company priority," Mr.
Sanders said. "The establishment of the $250 million fund delivers on our public
commitment that any client adversely affected by inappropriate market timing in
our mutual funds will receive compensation," he added.
The terms and conditions of the agreements also include, among others:
o formation of a Code of Ethics Oversight Committee, composed of senior
executives of Alliance Capital's operating businesses, to oversee all
matters relating to issues arising under the Alliance Capital Code of
Ethics;
o establishment of an Internal Compliance Controls Committee, chaired by
Alliance Capital's Chief Compliance Officer, to review compliance
issues throughout Alliance Capital, endeavor to develop solutions to
those issues as they may arise from time to time, and oversee
implementation of those solutions;
o establishment of a company ombudsman to whom Alliance Capital
employees may convey concerns about Alliance Capital business matters
that they believe involve matters of ethics or questionable practices;
o engagement of an Independent Compliance Consultant to conduct a
comprehensive review of Alliance Capital's supervisory, compliance,
and other policies and procedures designed to prevent and detect
conflicts of interest, breaches of fiduciary duty, breaches of the
Alliance Capital Code of Ethics and federal securities law violations
by Alliance Capital and its employees; and
o commencing in 2005, and at least once every other year thereafter,
Alliance Capital shall undergo a compliance review by an independent
third party.
Mr. Sanders concluded, "Our clients' best interests are primary to us. The
structural steps outlined above will work to insure this result, as will
additional actions we are taking to restructure and reposition our mutual fund
business. We have appointed a new management team of the highest caliber and
integrity, to set this business on the right path. In the days ahead, we expect
to announce further initiatives that--while not part of the settlement
agreements--will further demonstrate our commitment to achieving best industry
practices with respect to such issues as transparency, alignment of the
company's interests with those of our mutual fund shareholders, improved share
class designs, and above all, offering distinctive investment services which
will help clients better
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establish and achieve their financial goals. These initiatives will be important
to Alliance Capital and to its investors. Perhaps they will even contribute
constructively to mutual fund industry reform."
In connection with establishing the restitution fund, Alliance Capital
expects to take a $140 million pre-tax charge to its fourth-quarter earnings. As
a result of this charge, together with the charge taken in the third quarter,
Alliance Capital and Alliance Holding do not anticipate payment of a
distribution to their respective Unitholders for the fourth quarter.
Distributions are expected to resume for the first quarter of 2004, with payout
policy returning to traditional levels for the second quarter of 2004. The
aggregate management fee reduction for 2004 is expected to be approximately $70
million, based on current assets under management, with the reduction varying in
both amount and rate by individual fund. The effect of such fee reductions on
earnings, net of currently planned reductions in expenses, is estimated to be
approximately $0.20 per Unit in 2004.
ABOUT ALLIANCE CAPITAL
Alliance Capital is a leading global investment management firm providing
investment management services for many of the largest U.S. public and private
employee benefit plans, foundations, public employee retirement funds, pension
funds, endowments, banks, insurance companies and high-net-worth individuals
worldwide. Alliance Capital is also one of the largest mutual fund sponsors,
with a diverse family of globally distributed mutual fund portfolios. Through
its Sanford C. Bernstein & Co., LLC subsidiary, Alliance provides in-depth
research, portfolio strategy and trade execution to the institutional investment
community.
At September 30, 2003, Alliance Holding owned approximately 30.9% of the
Alliance Capital Units. AXA Financial was the beneficial owner of approximately
55.1% of the outstanding Alliance Capital Units at September 30, 2003 (including
those held indirectly through its ownership of 1.9% of the outstanding Alliance
Holding Units), which, including the general partnership interests in Alliance
Capital and Alliance Holding, represent an approximate 55.6% economic interest
in Alliance Capital. AXA Financial, Inc. is a wholly owned subsidiary of AXA,
one of the largest global financial services organizations. Additional
information may be found at www.alliancecapital.com.
FORWARD-LOOKING STATEMENTS
Certain statements provided by Alliance Capital and Alliance Holding in
this press release are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements are subject to risks, uncertainties and other factors, which could
cause actual results to differ materially from future results expressed or
implied by such forward-looking statements. The most significant of such factors
include, but are not limited to, the following: the performance of financial
markets, the investment performance of Alliance Capital's sponsored investment
products and separately managed accounts, general economic conditions, future
acquisitions, competitive conditions, and government regulations, including
changes
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in tax rates. Alliance Capital and Alliance Holding caution readers to carefully
consider such factors. Further, such forward-looking statements speak only as of
the date on which such statements are made; Alliance Capital and Alliance
Holding undertake no obligation to update any forward-looking statements to
reflect events or circumstances after the date of such statements.
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