52226 Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Rules and Regulations

and after the closing date for comments,

in the Rules Docket for examination by

interested persons. A report that

summarizes each FAA-public contact

concerned with the substance of this AD

will be filed in the Rules Docket.

Commenters wishing the FAA to

acknowledge receipt of their comments

submitted in response to this notice

must submit a self-addressed, stamped

postcard on which the following

statement is made: ‘‘Comments to

Docket Number 97–ANE–36–AD.’’ The

postcard will be date stamped and

returned to the commenter.

The regulations adopted herein will

not have substantial direct effects on the

States, on the relationship between the

national government and the States, or

on the distribution of power and

responsibilities among the various

levels of government. Therefore, in

accordance with Executive Order 12612,

it is determined that this final rule does

not have sufficient federalism

implications to warrant the preparation

of a Federalism Assessment.

The FAA has determined that this

regulation is an emergency regulation

that must be issued immediately to

correct an unsafe condition in aircraft,

and is not a ‘‘significant regulatory

action’’ under Executive Order 12866. It

has been determined further that this

action involves an emergency regulation

under DOT Regulatory Policies and

Procedures (44 FR 11034, February 26,

1979). If it is determined that this

emergency regulation otherwise would

be significant under DOT Regulatory

Policies and Procedures, a final

regulatory evaluation will be prepared

and placed in the Rules Docket. A copy

of it, if filed, may be obtained from the

Rules Docket at the location provided

under the caption ADDRESSES.

List of Subjects in 14 CFR Part 39

Air transportation, Aircraft, Aviation

safety, Incorporation by reference,

Safety.

Adoption of the Amendment

Accordingly, pursuant to the

authority delegated to me by the

Administrator, the Federal Aviation

Administration amends part 39 of the

Federal Aviation Regulations (14 CFR

part 39) as follows:

PART 39—AIRWORTHINESS

DIRECTIVES

1. The authority citation for part 39

continues to read as follows:

Authority: 49 U.S.C. 106(g), 40113, 44701.

§ 39.13 [Amended]

2. Section 39.13 is amended by

adding the following new airworthiness

directive:

97–21–01 MT-Propeller Entwicklung

GMBH: Amendment 39–10154. Docket

97–ANE–36–AD.

Applicability: MT-Propeller Entwicklung

GMBH Model MTV–3–B–C/L250–21. These

propellers are installed on but not limited to

Sukhoi 29 aircraft.

Note 1: This airworthiness directive (AD)

applies to each propeller identified in the

preceding applicability provision, regardless

of whether it has been modified, altered, or

repaired in the area subject to the

requirements of this AD. For propellers that

have been modified, altered, or repaired so

that the performance of the requirements of

this AD is affected, the owner/operator must

request approval for an alternative method of

compliance in accordance with paragraph (b)

of this AD. The request should include an

assessment of the effect of the modification,

alteration, or repair on the unsafe condition

addressed by this AD; and, if the unsafe

condition has not been eliminated, the

request should include specific proposed

actions to address it.

Compliance: Required as indicated, unless

accomplished previously.

To prevent propeller hub cracks, which

could result in propeller blade separation

and possible loss of control of the aircraft,

accomplish the following:

(a) Perform initial and repetitive dye

penetrant or eddy current inspections for

cracks in the propeller hub, and rework

propeller hub, Part Number (P/N) B–050, or

replace with a propeller hub, P/N A–909–A,

all in accordance with MT-Propeller

Entwicklung GMBH Service Bulletin (SB) No.

12A, dated July 17, 1997, as follows:

(1) Within 50 hours time in service (TIS)

after the effective date of this AD, perform

the initial inspection.

(2) Thereafter, inspect as follows:

(i) For propellers with hubs, P/N B–050,

inspect at intervals not to exceed 50 hours

TIS, or 6 months since last inspection,

whichever occurs first.

(ii) For propellers with hubs, P/N A–909–

A, inspect at intervals not to exceed 200

hours TIS, or 12 months since last

inspection, whichever occurs first.

(3) Following inspection, if no cracks are

found, and within 50 hours TIS after the

effective date of this AD, rework the existing

propeller hub, P/N B–050, or install propeller

hub, P/N A–909–A.

(4) Following inspection, if cracks are

found, prior to further flight remove the

existing propeller hub, and replace with a

serviceable propeller hub.

(b) An alternative method of compliance or

adjustment of the compliance time that

provides an acceptable level of safety may be

used if approved by the Manager, Boston

Aircraft Certification Office. Operators shall

submit their requests through an appropriate

FAA Maintenance Inspector, who may add

comments and then send it to the Manager,

Boston Aircraft Certification Office.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this airworthiness directive,

if any, may be obtained from the Boston

Aircraft Certification Office.

(c) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the aircraft to

a location where the inspection requirements

of this AD can be accomplished.

(d) The actions required by this AD shall

be performed in accordance with the

following MT-Propeller Entwicklung GMBH

SB:

Document No. Pages Date

12A .................. 1–3 July 17, 1997.

Total pages: 3.

This incorporation by reference was

approved by the Director of the Federal

Register in accordance with 5 U.S.C. 552(a)

and 1 CFR part 51. Copies may be obtained

from MT-Propeller Entwicklung GMBH,

Airport Straubing-Wallmuhle, D–94348

Atting, Germany; telephone (0 94 29) 84 33,

fax (0 94 29) 84 32, Internet:

‘‘propeller@aol.com’’. Copies may be

inspected at the FAA, New England Region,

Office of the Assistant Chief Counsel, 12 New

England Executive Park, Burlington, MA; or

at the Office of the Federal Register, 800

North Capitol Street, NW., suite 700,

Washington, DC.

(e) This amendment becomes effective on

October 22, 1997.

Issued in Burlington, Massachusetts, on

September 26, 1997.

James C. Jones,

Assistant Manager, Engine and Propeller

Directorate, Aircraft Certification Service.

[FR Doc. 97–26373 Filed 10–6–97; 8:45 am]

BILLING CODE 4910–13–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 73

[Airspace Docket No. 94–ASO–18]

RIN 2120–AA66

Establishment of Restricted Areas;

Camp Lejeune, NC

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final rule.

SUMMARY: This action establishes

restricted areas at Camp Lejeune, NC, to

augment an expansion of the existing

Camp Lejeune training range facilities.

The U.S. Marine Corps (USMC)

requested this action in order to

accommodate the increased training

activities required by operational units.

EFFECTIVE DATE: 0901 UTC, November 6,

1997.

FOR FURTHER INFORMATION CONTACT: Paul

Gallant, Airspace and Rules Division,
Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Rules and Regulations 52227

ATA–400, Office of Air Traffic Airspace

Management, Federal Aviation

Administration, 800 Independence

Avenue, SW., Washington, DC 20591;

telephone (202) 267–8783.

SUPPLEMENTARY INFORMATION:

Background

The USMC requested that the FAA

establish restricted areas at Camp

Lejeune, NC, because the existing

facilities do not contain sufficient firing

ranges, maneuver areas, or impact areas

to accommodate the expanded, more

complex Marine Corps training

requirements which have evolved in

recent years. Two USMC studies

documented shortfalls in the existing

range capabilities. These limitations

have precluded Camp Lejeune from

fulfilling a number of basic Fleet Marine

Force training requirements. As a result,

the USMC has been required to conduct

periodic, multi-million dollar

deployments of personnel and

equipment to other locations in the

United States in order to complete

essential training events.

On June 15, 1995, the FAA published

a notice of proposed rulemaking

(NPRM) which proposed to amend 14

CFR part 73 to establish Restricted

Areas R–5303A, B, and C, and R–5304A,

B, and C, at Camp Lejeune, NC (60 FR

31426).

Interested parties were invited to

participate in this rulemaking effort by

submitting written comments on the

proposal to the FAA. Two comments

were received by the FAA in response

to the proposal. The Aircraft Owners

and Pilots Association objected to the

proposal, stating that the restricted areas

would interfere with general aviation

aircraft transiting the area and would

prevent pilots from using Federal

Airway V–139 between Wilmington,

NC, and New Bern, NC.

The restricted areas will be managed

on a real-time basis to minimize impact

on nonparticipating aircraft. Cherry

Point Approach Control will be the

designated controlling agency for the

restricted areas. The approach control

has dedicated direct landlines to the

Camp Lejeune Range Control and has

the authority to call an immediate cease

fire in the event of an aircraft

emergency, unauthorized aircraft

intrusion, or operational necessity. The

lowest subareas, R–5303A and R–

5304A, will be the most frequently used

areas. Normally, V–139, above 7,000 feet

mean sea level (MSL), will remain

available for transit by nonparticipating

aircraft. When nonparticipating aircraft

on V–139 are unable to transit above the

restricted area altitudes in use, the range

activity will either be capped, or a cease

fire imposed, to accommodate the

aircraft on the airway. On occasion, air

traffic control (ATC) may vector

nonparticipating aircraft off the airway

to the east of the range through

Restricted Areas R–5306D and R–5306E,

which will be deactivated for that

purpose.

The FAA believes that the real-time

procedures for the activation and

deactivation of the airspace should

minimize the impact on

nonparticipating aircraft.

The North Carolina Department of

Transportation (NCDOT) commented

that the mitigation procedures satisfy its

concerns about the impact on general

aviation and, provided that the range

and airspace operations are conducted

as proposed, the proposal may be the

best compromise for all airspace users.

However, NCDOT expressed concerns

about the proposal considering the

amount of existing special use airspace

(SUA) in the State, and the impact on

V–139. NCDOT suggested that this

action should be reviewed after the

airspace has been operational for some

time and that, if the real-time

procedures do not prove satisfactory, a

new airway segment should be

considered between Wilmington and

New Bern with an intersection over the

Albert J. Ellis Airport, Jacksonville, NC.

NCDOT further commented that the 6-

hour Notices to Airmen (NOTAM) time

proposed in the time of designation of

the restricted areas is too short.

In response to NCDOT’s comment, the

time requirement for NOTAM activation

of the restricted areas will be increased

from the proposed 6 hours in advance,

to 24 hours in advance. Regarding the

impact on V–139, the FAA believes that

the real-time use procedures should

minimize the impact to aircraft

transiting the area or utilizing V–139. As

part of its annual review of SUA, the

FAA will monitor the implementation

of this rule and the effectiveness of the

real-time procedures described above.

Airspace and/or procedural

modifications may be considered in the

future, if warranted.

The Rule

This rule amends 14 CFR part 73 by

establishing Restricted Areas R–5303A,

B, and C, and R–5304A, B, and C, at

Camp Lejeune, NC. The restricted areas

will overlie a Government-purchased

tract of land contiguous to Camp

Lejeune, known as the Greater Sandy

Run Area, and will extend from the

surface up to but not including Flight

Level (FL) 180. The airspace will be

subdivided vertically. The subdivisions

will be configured as follows: R–5303A

and R–5304A extending from the

surface to but not including 7,000 feet

Mean Sea Level (MSL); R–5303B and R–

5304B extending from 7,000 feet MSL to

but not including 10,000 feet MSL; and

R–5303C and R–5304C extending from

10,000 feet MSL to but not including FL

180.

The activities to be conducted in the

restricted areas include the firing of

various surface weapons and airdelivered ordnance (helicopters only).

No fixed-wing participating aircraft

operations will be conducted in the

restricted areas. Most training activities

will be conducted in the lowest portion

of the restricted areas (i.e., R–5303A and

R–5304A, below 7,000 feet MSL).

The time of designation for R–5303A

and R–5304A will be 0600 to 1800 local

time, Monday through Friday, with a

provision for activation at other times

by NOTAM at least 24 hours in advance.

Restricted Areas R–5303B/C and R–

5304B/C will be activated by NOTAM at

least 24 hours in advance when required

for training.

It is estimated that the highest altitude

strata of the restricted areas will be

required approximately 10% of the

time. An estimated 75% of the total

training activities will take place during

daylight hours. On a yearly basis, it is

projected that the restricted areas will

be used on 30 to 40 weeknights.

Training will also be conducted on 30

to 40 weekend days, which may include

additional night-time operations. Peak

firing periods are expected to occur

between the hours of 0800–1600,

Tuesday, Wednesday, and Thursday,

with March through October projected

as the peak firing months.

The new restricted areas will be

configured to maximize training

flexibility and to facilitate the activation

of only those portions of the restricted

areas actually needed for training

operations. When activated, the

restricted areas may impact the segment

of V–139 between Wilmington, NC, and

New Bern, NC. In order to minimize the

impact on air traffic utilizing V–139, the

restricted areas will be subject to realtime activation procedures. The lowest

subareas, R–5303A and R–5304A, will

be the most frequently used areas.

Normally, V–139, above 7,000 feet MSL,

will remain available for transit by

nonparticipating aircraft. When

nonparticipating aircraft on V–139 are

unable to transit above the restricted

area altitudes in use, the range activity

will either be capped, or a cease fire

imposed, to accommodate the aircraft

on the airway. On occasion, ATC may

vector nonparticipating aircraft off the

airway to the east of the range through

Restricted Areas R–5306D and R–5306E,
52228 Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Rules and Regulations

which will be deactivated for that

purpose. These procedures will be

specified in a joint-use letter of

procedure between the using agency

and the controlling agency. The letter of

procedure will include provisions to

give ATC priority for use of the airspace

when necessary during periods of severe

weather, or emergency situations.

The FAA has determined that this

regulation only involves an established

body of technical regulations for which

frequent and routine amendments are

necessary to keep them operationally

current. Therefore, this regulation: (1) is

not a ‘‘significant regulatory action’’

under Executive Order 12866; (2) is not

a ‘‘significant rule’’ under DOT

Regulatory Policies and Procedures (44

FR 11034; February 26, 1979); and (3)

does not warrant preparation of a

regulatory evaluation as the anticipated

impact is so minimal. Since this is a

routine matter that will only affect air

traffic procedures and air navigation, it

is certified that this rule will not have

a significant economic impact on a

substantial number of small entities

under the criteria of the Regulatory

Flexibility Act.

Section 73.53 of 14 CFR part 73 was

republished in FAA Order 7400.8D

dated July 11, 1996.

Environmental Review

The USMC issued a final

environmental impact statement (EIS) in

May 1991 for the Proposed Expansion

and Realignment of the Marine Corps

Base Camp Lejeune Onslow County, NC.

Based upon proximity to the ground site

for military training and other

geographic factors, the USMC

considered 13 alternatives as potential

solutions to accommodate training

needs at Camp Lejeune. These

alternatives included a variety of

options ranging from maintaining the

status quo (no action) to relocating of

Marine Corps Base Camp Lejeune, as

well as increasing off-base training. Two

airspace alternatives were brought

forward for further consideration;

Alternative One, which is the

designation of new restricted areas at

Camp Lejueune, as described in this

rule and the No Action Alternative.

Alternative One was identified as the

environmentally preferable alternative

in the EIS.

The No Action Alternative would

consist of the continued utilization of

existing training facilities, with no

additional special use airspace to

contain the increased training activities

needed by operational units. The No

Action Alternative failed to address the

training deficiencies as identified at

Camp Lejeune. Without the additional

special use airspace, implementation of

Marine Battle Skills Training would

increase training pressures on existing

firing ranges outside the area of Camp

Lejeune. Modern long-range weapons

would not be accommodated at Camp

Lejeune and would continue to be

deployed elsewhere. The USMC issued

a Record of Decision in October 1991

that adopted all practicable means to

avoid or minimize harm.

In June 1997, the USMC submitted to

the FAA an Addendum to the EIS. In

August 1997, the FAA completed a

written reevaluation of the EIS and

adopted and recirculated the

Addendum and the EIS as final,

pursuant to 40 CFR 1506–3(a) and (b) 62

FR 43730 and 62 FR 44685. After careful

and thorough consideration of the facts

contained herein and following

consideration of the views of those

Federal agencies having jurisidiction by

law and special expertise with respect

to the environmental impacts described,

the undersigned finds that the proposed

Federal action is consistent with

existing national policies and objectives

as set forth in section 101 (a) of the

National Environmental Policy Act of

1969, as amended.

This final rule constitutes final agency

action under 49 USC 46110. Any person

disclosing a substantial interest in this

order may appeal the order to the courts

of appeal of the United States or the

United States or the United States Court

of Appeals of the District of Columbia

upon petition, filed within 60 days after

the order is issued.

List of Subjects in 14 CFR Part 73

Airspace, Navigation (air).

Adoption of the Amendment

In consideration of the foregoing, the

Federal Aviation Administration

amends 14 CFR part 73, as follows:

PART 73—SPECIAL USE AIRSPACE

1. The authority citation for part 73

continues to read as follows:

Authority: 49 U.S.C. 106(g), 40103, 40113,

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389.

§ 73.53 [Amended]

2. Section 73.53 is amended as

follows:

* * * * *

R–5303A Camp Lejeune, NC [New]

Boundaries. Beginning at lat. 34°41′40′′N.,

long. 77°33′09′′W.; to lat. 34°39′16′′N., long.

77°28′31′′W.; to lat. 34°36′51′′N., long.

77°29′01′′W.; to lat. 34°36′13′′N., long.

77°31′51′′W.; to lat. 34°37′03′′N., long.

77°35′25′′W.; to lat. 34°38′49′′N., long.

77°37′31′′W.; to the point of beginning.

Designated altitudes. Surface to but not

including 7,000 feet MSL, excluding the

airspace 1,500 feet AGL and below within a

3NM radius of Sky Manor airport.

Time of designation. 0600–1800 MondayFriday; other times by NOTAM at least 24

hours in advance.

Controlling agency. USMC, Cherry Point

Approach Control.

Using agency. USMC, Commanding

General, U.S. Marine Corps Air Station,

Cherry Point, NC.

R–5303B Camp Lejeune, NC [New]

Boundaries. Beginning at lat. 34°41′40′′N.,

long. 77°33′09′′W.; to lat. 34°39′16′′N., long.

77°28′31′′W.; to lat. 34°36′51′′N., long.

77°29′01′′W.; to lat. 34°36′13′′N., long.

77°31′51′′W.; to lat. 34°37′03′′N., long.

77°35′25′′W.; to lat. 34°38′49′′N., long.

77°37′31′′W.; to the point of beginning.

Designated altitudes. 7,000 feet MSL to but

not including 10,000 feet MSL.

Time of designation. By NOTAM at least

24 hours in advance.

Controlling agency. USMC, Cherry Point

Approach Control.

Using agency. USMC, Commanding

General, U.S. Marine Corps Air Station,

Cherry Point, NC.

R–5303C Camp Lejeune, NC [New]

Boundaries. Beginning at lat. 34°41′40′′N.,

long. 77°33′09′′W.; to lat. 34°39′16′′N., long.

77°28′31′′W.; to lat. 34°36′51′′N., long.

77°29′01′′W.; to lat. 34°36′13′′N., long.

77°31′51′′W.; to lat. 34°37′03′′N., long.

77°35′25′′W.; to lat. 34°38′49′′N., long.

77°37′31′′W.; to the point of beginning.

Designated altitudes. 10,000 feet MSL to

but not including FL 180.

Time of designation. By NOTAM at least

24 hours in advance.

Controlling agency. FAA, Washington

ARTCC.

Using agency. USMC, Commanding

General, U.S. Marine Corps Air Station,

Cherry Point, NC.

R–5304A Camp Lejeune, NC [New]

Boundaries. Beginning at lat. 34°37′03′′N.,

long. 77°35′25′′W.; to lat. 34°36′13′′N., long.

77°31′51′′W.; to lat. 34°36′51′′N., long.

77°29′01′′W.; to lat. 34°32′16′′N., long.

77°30′13′′W.; to lat. 34°29′43′′N., long.

77°35′15′′W.; to lat. 34°32′42′′N., long.

77°34′54′′W.; to the point of beginning.

Designated altitudes. Surface to but not

including 7,000 feet MSL, excluding the

airspace 1,500 feet AGL and below within a

3NM radius of Holly Ridge airport.

Time of designation. 0600–1800, MondayFriday; other times by NOTAM at least 24

hours in advance.

Controlling agency. USMC, Cherry Point

Approach Control.

Using agency. USMC, Commanding

General, U.S. Marine Corps Air Station,

Cherry Point, NC.

R–5304B Camp Lejeune, NC [New]

Boundaries. Beginning at lat. 34°37′03′′N.,

long. 77°35′25′′W.; to lat. 34°36′13′′N., long.

77°31′51′′W.; to lat. 34°36′51′′N., long.

77°29′01′′W.; to lat. 34°32′16′′N., long.

77°30′13′′W.; to lat. 34°29′43′′N., long.
Federal Register / Vol. 62, No. 194 / Tuesday, October 7, 1997 / Rules and Regulations 52229

1For example, some securityholders do not

provide a new address when they move.

2See Securities Exchange Act Release No. 37595

(August 22, 1996), 61 FR 44249 (release proposing

Rule 17Ad–17 and Rule 17a–24), note 13

(discussing the methods transfer agents currently

use to locate lost securityholders).

3 Id. The Commission later extended the comment

period contained in the Proposing Release.

Securities Exchange Act Release No. 37949

(November 15, 1996), 61 FR 59046 (extending

comment period).

4 17 CFR 240.17Ad–17.

5 17 CFR 240.17Ad–24.

6 17 CFR 240.17Ad–7.

7The Proposing Release also discussed transfer

agents’ obligations under Rule 17Ad–10 to maintain

and keep current accurate master securityholder

files (defined below in note 10), which include

information such as securityholders’ names and

addresses. The Proposing Release concluded that

maintaining accurate securityholder files is one of

the most basic steps in addressing the lost

securityholder problem. The Commission believes

that conducting data base search for lost

securityholders pursuant to Rule 17Ad–17 will

enhance a transfer agent’s fulfillment of its

responsibilities under Rule 17Ad–10.

8The Commission received comment letters from

eighteen transfer agents, five trade associations

representing transfer agents, five individuals, three

corporations, one broker-dealer, two professional

search firms, and eighteen government entities. A

summary of comments has beem prepared by the

staff of the Division of Market Regulation. The

summary is included along with the comment

letters in Public File No. S7–21–96, which is

available for inspection and copying in the

Commission’s Public Reference Room, 450 Fifth

Street, NW., Washington, DC 20549.

9Form TA–2 is referenced in 17 CFR 249b.102.

77°35′15′′W.; to lat. 34°32′42′′N., long.

77°34′54′′W.; to the point of beginning.

Designated altitudes. 7,000 feet MSL to but

not including 10,000 feet MSL.

Time of designation. By NOTAM at least

24 hours in advance.

Controlling agency. USMC, Cherry Point

Approach Control.

Using agency. USMC, Commanding

General, U.S. Marine Corps Air Station,

Cherry Point, NC.

R–5304C Camp Lejeune, NC [New]

Boundaries. Beginning at lat. 34°37′03′′N.,

long. 77°35′25′′W.; to lat. 34°36′13′′N., long.

77°31′51′′W.; to lat. 34°36′51′′N., long.

77°29′01′′W.; to lat. 34°32′16′′N., long.

77°30′13′′W.; to lat. 34°29′43′′N., long.

77°35′15′′W.; to lat. 34°32′42′′N., long.

77°34′54′′W.; to the point of beginning.

Designated altitudes. 10,000 feet MSL to

but not including FL 180.

Time of designation. By NOTAM at least

24 hours in advance.

Controlling agency. FAA, Washington

ARTCC.

Using agency. USMC, Commanding

General, U.S. Marine Corps Air Station,

Cherry Point, NC.

* * * * *

Issued in Washington, DC, on October 1,

1997.

John S. Walker,

Program Director for Air Traffic Airspace

Management.

[FR Doc. 97–26671 Filed 10–6–97; 8:45 am]

BILLING CODE 4910–13–P

SECURITIES AND EXCHANGE

COMMISSION

17 CFR Parts 240 and 249

[Release No. 34–39176; File No. S7–21–96]

RIN 3235–AG99

Lost Securityholders

AGENCY: Securities and Exchange

Commission.

ACTION: Final rule.

SUMMARY: The Securities and Exchange

Commission is adopting Rule 17Ad–17

and Rule 17a–24 under the Securities

Exchange Act of 1934. Rule 17Ad–17,

which is designed to address the

problem of ‘‘lost securityholders,’’

requires transfer agents to conduct

searches in an effort to locate lost

securityholders. Rule 17a–24, which is

designed to assist the Commission in

monitoring the effects of Rule 17Ad–17,

requires transfer agents to file

information on lost securityholders with

the Commission. The rules are designed

to reduce the number of lost

securityholders.

EFFECTIVE DATE: §§ 240.17Ad–17 and

240.17Ad–7(i) will be effective

December 8, 1997, and §§ 240.17a–24

and 249b.102, the amendments to Form

TA–2 will be effective February 4, 1998.

FOR FURTHER INFORMATION CONTACT: Jerry

W. Carpenter, Assistant Director;

Christine Sibille, Senior Counsel; Jeffrey

Mooney, Attorney; or Theodore Lazo,

Attorney at 202/942–4187, Office of

Risk Management and Control, Mail

Stop 5–1, Division of Market Regulation,

Securities and Exchange Commission,

450 Fifth Street, NW., Washington, DC

20549.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

Transfer agents serve as the

custodians of securityholder records,

including records of securityholders’

addresses, for issuers. In this capacity,

transfer agents frequently are

responsible for disseminating

shareholder communications and

dividend and interest payments. For

various reasons, transfer agents

occasionally have outdated or incorrect

addresses for some securityholders

(‘‘lost securityholders’’).1 As a result,

these shareholders do not receive

dividend and interest payments to

which they are entitled. Generally,

issuers retain custody of such dividend

and interest payments, and if contact is

not reestablished with a securityholder

prior to the expiration of the appropriate

state’s escheat period, the issuer must

turn the securityholder’s assets over to

the state unclaimed property

administrator While various transfer

agents attempt to locate lost

securityholders, the extent and type of

efforts used very considerably from one

transfer agent to another.2 The

Securities and Exchange Commission

(‘‘Commission’’) believes that

establishing minimum search

requirements in this area will facilitate

locating lost securityholders.

On August 22, 1996, the Commission

issued for comment a release

(‘‘Proposing Release’’) 3 proposing Rule

17Ad–17 4 and Rule 17a–24 5 under the

Securities Exchange Act of 1934

(‘‘Exchange Act’’) and proposing

amendments to Rule 17Ad–7,6 which

were designed to address the problem of

lost securityholders. Proposed Rule

17Ad–17 would require that transfer

agents exercise reasonable care,

including conducting data base

searches, in an effort to locate lost

securityholders.7 The proposed

amendment to Rule 17Ad–7 set forth the

retention time periods for the records

relating to compliance with proposed

Rule 17Ad–17. Proposed Rule 17Ad–24

would have required certain entities

that hold assets for others (e.g., transfer

agents and broker-dealers) to file

annually with the Commission a list of

the social security numbers of all lost

securityholders contained in their

records. The Proposing Release also

requested comment on whether either

the Commission or a private entity

should create and operate a lost

securityholder data base.

The Commission received 57

comment letters from 52 commenters in

response to the Proposing Release.8 The

commenters in general expressed

support for proposed Rule 17Ad–17

although several commenters expressed

concerns about specific provisions of

the proposed rule. The commenters in

general expressed concern about

proposed Rule 17a–24. The Commission

is adopting Rule 17Ad–17 substantially

as proposed but with some

modifications to reflect commenters’

views and is amending Rule 17Ad–7 as

proposed. The Commission is adopting

proposed Rule 17a–24 with substantial

revisions and is making related changes

to Form TA–29 In addition, the

Commission has directed its staff to

review the operations of the adopted

rules after three years and to report back

to the Commission on its findings.