or about March, 1977, al a time when Registrant had

associated with it both Kobrin, who had been

criminally convicted of securities law violations, and a

person who has been enjoined for securities law

violations, Registrant willfully violated Section 15(b)

of the Exchange Act and Rule 15b10-4(c) thereunder in

that Ftegistrant failed to establish, maintain, and

enforce written procedures relating to the supervision

of customer accounts as prescribed by the above rule.

(4) ln or about March, 1977, at a time when

Registrant had associated with it both Kobrin, who

had been criminally convicted of securities law

violations, and a person who had been enjoined for

securities law violations, Registrant willfully violated

Section 15(b) of the Exchange Act and Rule 15b10-6

thereunder in that Registrant failed to obtain the

signature of a supervisor on each customer account

card.

It is therefore in the public interest to impose the

sanction specified in the offer of settlement.

Accordingly, lT lS ORDERED that, effective at the

opening of business on the second Monday after the

date of this order, Donald & Co. Securities Inc'' be

and hereby is censured.

George A. Fitzsimmons

Secretary

SECURITIES EXCHANGE ACT OF 1934

Refease No. 15292/November 2, 1978

Division of Investment Management's Inlerpretative

Positions Relating to Rule 13f-1 and Related Form 13F

AGENCY: Securities and Exchange Commission.

ACTION: lnterpretative release,

SUMMARY: The Securities and Exchange Commission today authorized the issuance of a release

reflecting the views of the Division of Investment

Management regarding the reporting obligation and

filing requirement of certain institutional investment

managers under the Commission's recently implemented institutional disclosure program. Since the

release is intended to assist interested p

their understanding of, and compliance with

program.

EFFECTIVE DATE: November 2,1978.

FOR FURTHER INFORMATION CONTACT:

Michael S. Llchtenthal, Esq. (202-755-9034) or

W. Scott Cooper, Esq. (202-755-1792')

Division of lnvestment Management,

Securities and Exchange Commission,

500 North Capitol Street

Washington, D.G. 20549.

SUPPLEMENTARY INFORMATION: Section 1

the securities Exchange Act of 1934 ("Exchang

[15 U.S.C. 78a et seq. as amended by Pub. L

94-29 (June 4, 1975)l was adopted by Congress a

of the Securities Acts Amendments of 1975. Ge

Section 13(f) [15 U.S.C. 78m(f )] empowe

Commission to adopt rules which would cre

reporting and disclosure system to collect sp

informalion concerning Section 13(dX1) [15 U

78M(dX1)l equity securities held in account

which certain institutional investment man

exercise investment discretion. The reporting s

required by Section 13(f) is intended to create 

Commission a central repository of historic

current data about the investment activit

institutional investment managers.

On June 15, 1978, the Commission announc

adoption of Rule 13f-1 [17 CFR 240.13f-1] and r

Form 13F [17 CFR 249.3251in Exchange Act R

No. 14852, effective July 3'1, 1978, [43 FR 2670

22, '19781, implementing the basic institu

disclosure program mandated by Section 13(f). 

the Rule, as adopted, an institutional inve

manager exercising investment discretion (as d

in Section 3(a)(35) o! the Exchange Act [15 U

78(c)(a)(35)l) with respect to accounts having 

than $'100,000,000 or more in exchange-tra

NASDAQ-quoted equity securities on the last t

day of any of the twelve months of a calend

must file annually with the Commission, and

bank, with the appropriate banking agency, wit

days after the last day of such calendar year

13F, beginning with the calendar year 1978. Th

requires the reporting of the name of the issue

the title of class, CUSIP number, number of sha

principal amount in the case of convertible deb

aggregate f air market value of each such e

security held. The form also requires infor

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The following are intended to

explanation and analysis of Rule

Form 13F set forth in Exchange

14852, and ref lect the views of the

date of this release.

1. Reporting requirements. Who

Report?

concerning the nature of investment discretion and

voting authority possessed.l

Since the adoption of the Rule, the Commission's

Division of Investment Management (,'Division") has

received requests for interpretations with respect to

various provisions under the Rule and the related

Form. In order to assist other persons in their

understanding of, and compliance with, the Rule, the

Commission has authorized the publication of this

interpretative release settlng forth the current views of

the Division.

however, that, by rule, investment discretion is

deemed to exist with respect to all accounts over

which any person under control of such natural

person or company (such as subsidiaries) exercises

investment discret ion.

Quesllon: When a managed account is an institutional account such as a pension or endowment

fund, when is investment discretion ,,sole" and when

is it "shared"?

Answer: lt depends on which most accurately

reflects the nature of investment discretion possessed

by the manager. lf the manager makes all decisions,

then of course he has sole investment discretion. lf he

merely makes recommendations to internal managers

of the account, which make their own decisions, then

he does not have investment discretion at all.3 lf the

decision-making can best be described as joint

decision-making, then investment discretion should

be reported as shared.

Queslion: Does the foregoing answer also apply if

the managed account is an investrnent company or

separale account of an insurance company?

Answer: Yes.

Questlon: lf, following the above, an investment

adviser has sole investment discretion over portfolio

securities of an investment company, does the

investment company have any reporting obligations

regarding such securities, including that of fiiing an information stalement?

Answer: No. Again, reporting obligations relate to

the possession of investment discretion.

Question: In determining whether investment discre_

tion is sole, shared or none, is the determination (and

response) to be given in terms of particular securities

within an account, or as to the account as a whole?

Answer: The account as a whole, reflecting the

statutory provision (Section 13(f)) itsetf.

Question: In the case of a pension f und placed in an entity such as a master trust which is divided into

segments for the purposes of investment management, each segment being assigned to a separate

the operation of the provisions of this title

and the rules and regulations thereunder.

3 Unless he otherwise possesses the authority

(contemplated by Section 3(aX3S) (A) ol the Exchange

Act) to determine purchases and sales.

supplement the

13f-1 and related

Act Release No.

Division as of the

is Required to

Queslion: lf a natural person or company advises an

account, but does not have de jure or cle tacto

investment discretion over the account, is it.required

to report in respect of such account?

Answer: No. The reporting reguirements apply to

persons who have "investment discretion,' as defined

in Section 3(aX35) of the Exchange Act.2 Note,

1 The Release announcing the adoption of the Rule

sought comments concerning the usef ulness and

costs associated with quarterly, as opposed to annual,

reporting. The Division is presenily reviewing the

numerous comments it has received concerning that

matterand will be in a position to make a recommendation to the Commission in the near future.

2 Section 3(aX35) states:

A person exercises ,,investment discretion"

with respect to an account if, directly or

indirectly, such person (A)=is authorized to

determine what securities or other property

shall be purchased or sold by or for the

account, (B) makes decisions as to what

securities or other property shall b e

purchased or sold by or for the account even

though some other person may have

responsibility for such investment deci_

sions, or (C) otherwise exercises such

influence with respect to the purchase and

sale of securities or other property by or for

the account as the Commission, by rule,

determines, in the public interest or for the

protection of investors, should be subiect to

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Questlon: In the foregoing situation, if there is one

manager assigned the role of reviewing and approving

the decisions of the various separate managers and

which receives a fee for this activity (in addition to a

fee lor any administrative duties), would this manager

report as having "shared" investment discretion?

Answer: lt is most probable that this activity, for

which a fee is received, is a form of shared investment

discretion.

Quesllon: Could a natural person investing for his

own account be subject to the reporting requirements?

Answer: No, Section 13(fX5) of the Exchange Act

[15 U.S.C. 78m(f)(5)] excludes natural persons

investing for their own accounts from the definition of

"institutional investment manager."

Questlon: lf a natural person (e.9., a trustee) has

investment discretion over an account having at least

g10O million in 13(f) securities of another person (as

defined in Seciion 3(aXg) of the Exchange Act [15

U.S.C. 78(cXaXg)lto include a "natural person, company, government, or political subdivision, agency' or

instrumentality of a government"), would the natural

person be subject to the reporting requirements?

Answer: Yes, Seotion 13(f)(5) of the Exchange Act

includes natural persons in the definition o f

"institutional investment manager" when such

persons exercise investment discretion over the

account of any other person. Note that a natural

person investing for his or her own account and

managing the accounts of other persons could be

required to report if the accounts of the other persons

have in the aggregate at least $100 million in 13(f)

securities, although the value of the securities in the

account of the natural person would not be included

in determining whether the natural person met the

$100 million threshold. Similarly, in the case of a

partnership which exercises investment discretion

over various accounls, the personal investments of

the individual partners would not be aggregated with

the holdings or advisory accounts of the partnership.

Queslion: Does a person who exercises investment

discretion with respect to an account organized by or

under the auspices of a governmental authority (e.9.,

Q'{nunicipal pension fund) have to report, assuming

tiib basic reporting criteria are mel?

securities?

Answer: Yes, if in the aggregate its subsidia

investment discretion over $100 million or m

Section 13(f) securities. Under Rule'l3f-1(b) [1

240.13f-1(b)] an institutional investment m

would be deem6d to exercise investment dis

over all accounts with respect to which any 

under its control exercises investment discre

addition, under Specialnstruction vto Form 1

parent would be deemed to have shared inve

discretion with each of its subsidiaries with res

the specific 13(f) securities under their res

control. However, since none of the subs

would have investment discretion-over at lea

million in 13(f) securities they would not hav

named in ltem 7 of Form 13F.

2. Mechanics of Reporting

Question: In the situation described in the im

ately preceding question, how would the repo

accomplished?

Answer: lf none ol the subsidiaries individu

investment discretion over $100 million in 13(f) 

ties, then, as explained above, only the 

corporalion would have a filing obligation. Th

the parent would simply aggregate the holdin

subsidiaries and check shared investment dis

under ltem 6(b) without naming the subsidiar

on the cover page or in ltem 7.

Question: What if one or more such subsid

have investment discretion over $100 million 

securities?

Answer: lf one or more of the subsidiaries w

have investment discretion over $100 million 

securities, then it too would have a reporting 

tion. As such, there would then exist two p

reporting persons. However, under General lnst

B to Form 13F only one manager could 

information with respecto a given security. T

the parent were to file the report for both, it wo

separately the holdings of its other subs

which it would report in the aggregate. The 

corporation would check ltem 6(b) (indicating 

investment discretion) for all of the entries 

Form, but would only name the subsidiary h

'reporting obligation in response to ltem 7. Purs

Special Instruction i that subsidiary would a

named on the cover page of the Form filed 

parent corporation. ln addition, that subsidiar

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file a cover page and a separate statement indicating

that its parent would be filing on its behall.

lf, in the above situation, the subsidiary with a

reporting obllgation were to file on its own behalf,

then it too would check ltem 6(b) for all entries and

name its parent in ltem 7. The parent would then

include a statemenl with its report indicating that the

subsidiary would be filing on behalf of the parent.

Question: For purposes of ltem 6(b) of the Form,

would investment discretion be deemed shared if a

subsidlary exercises investment discretion without

interference from its parent?

Answer: Yes, Subsection 13f-1(b) states: ,,An

institutional investment manager shalt also be

deemed to exercise 'investment discretion' with

respect to alf accounts over which any person under

its control exercises investment discretion."

Queslion: Can ltem 6(b) and ltem 6(c) both be

checked with respect to the same securities?

Answer: Yes. This would be appropriate where, for

example, a parent was reporting in respecl of a

subsidiary (6(b)) which shares investment discretion

with another person (such as a co-trustee - 6(c)).

Ouestion: How would holdings be reported by a

parent for a multi-tiered corporate structure where the

parent, its mid-level subsidiary, and lower level subsidiary are all reporting persons?

Answer: The securities over which the lower-level

subsidiary exercises investment discretion would be

listed separately, and ltem 6(b) would be checked to

indicate shared investmennt discretion. In ltem 7,

both the mid-level subsidiary and the lower-level

subsidiary would be named in accordance with the

instructions to indicate that they have shared investment cliscretion with the parent. Any additional

securities with respect to which the mid-level

subsidiary exercises investment discretion would be

reported in a similar manner, noting in ttem 7 that

investment discretion is shared with the parent. Of

course, the parent would indicate that it is filing on

behalf of the two subsidiaries on the cover page, and

each subsidiary would file an information statement

indicating thai its parent would be filing on its behalf.

By the Commission.

George A. Fitzsimmons

Secretary

SECURITIES EXCHANGE ACT OF 1934

Release No.1S289/November t, 197g

LOST AND STOLEN SECURITIES PROGRAM

Extension of the Pilot period; Redesignation ot

Securities lnformation Center, Inc.; Fleregistration of

Certain Institutions.

AGENCY: Securities and Exchange Commission.

ACTION: Notice of the extension of the Lost and

Stolen Securities Program's (the ,'program',) pilot

period, the redesignation of Securities Information

Genter, lnc. ("SlC") as the Commission,s designee to

maintain and operate the data base of missing, lost,

counterfeit or stolen securities, and the reregistration

of certain institutions sublect to Rute 17f-1 (17 CFR

5240.17f-1) with SlC.

SUMMARY: This action extends the program's pilot

period until June 20, 1979, redesignates SIC as the

Commission's designee for a period of two years

beginning January 1, 1979, and requires certain institutions subject to 5240.17f-1 to register with StC

utilizing a revised registration form before December

15, 1978.

EFFECTIVE DATE: November 1, 1g7B

FOR FURTHER INFORMATTON CONTACT: Gregory

C. Yadley, Dlvision of Market Regulation, Securities

and Exchange Commission, Washington, D.C. 20549

(202l 376-8129.

SUPPLEMENTARY INFOFMATIONi: The Commission today announced the extension of the program,s

pilot period until June 30, 1979, the iedesignation of

SIC as the Commission's designee to maintain and

operale the computerized data base of missing, lost,

counterfeit or stolen securities for a period of two

years beginning January 1, 1979, and the reregistration of certain institutions subject to Rule 17t-1 (.17,

CFR 5240.17f-1) with StC before December 15, 1978.1

In addition, all institutions which register as direct

inquirers and direct inquirers who fail to submit a new

registration form indicating a change of status in

accordance with instructions contained in the

Appendix will be charged for SIC's services according

to an estirnated revised fee schedule beginning on

January 1,1979.

1 Both the pilot period and SIC's originat period of

designation will expire on December 31. .197g.

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