Federal Register / Vol. 60, No. 35 / Wednesday, February 22, 1995 / Notices 9875

20 Investment Company Act Release No. 20472

(Aug. 11, 1994) (59 FR 42187) (proposing

amendments to Rule 6–07 of Regulation S–X).

21 Investment Company Act Release No. 20614

(Oct. 13, 1994) (59 FR 52689).

22 Investment Advisers Act Release No. 1406

(March 16, 1994) (59 FR 13464). 1 15 U.S.C. 78s(b)(1) (1988).

invested in open-end investment

companies, or ‘‘mutual funds’’—have

grown steadily. The conferees will

discuss a number of Commission

initiatives aimed at improving

disclosure to mutual fund investors.

The conferees will discuss ways to

improve the quality of information

regarding mutual funds available to

investors, particularly less experienced

investors, as well as federal and state

efforts toward more uniform federal and

state investment company disclosure

requirements. The conferees will also

discuss the steps they are taking to

examine and to improve the clarity and

adequacy of mutual fund prospectuses.

In response to a request from certain

members of Congress, the Division of

Investment Management prepared a

study dated September 26, 1994 on the

use of derivatives by mutual funds. As

part of its study, the Division

recommended that the Commission

consider seeking public comment in

early 1995 on alternatives for improving

risk disclosure in mutual fund

prospectuses. The conferees are

expected to discuss issues relating to

investment company risk disclosure,

including the possible use of

quantitative risk measurement. In

addition, the conferees will discuss

ways to facilitate investor access to

information about portfolio securities

held by funds.

The Commission recently proposed

rule and form amendments relating to

the reporting of expenses by investment

companies.20 The proposed

amendments would require an

investment company to reflect as

expenses in its financial statement

certain liabilities of the company paid

by broker-dealers in connection with the

allocation of the company’s brokerage

transactions to the broker-dealers. The

amendments are intended to enhance

the information provided to investors so

that they may better assess investment

company expenses and performance.

The conferees are expected to discuss

this proposal and the comments that the

Commission has received.

In October of 1994, the Commission

adopted significant revisions to the

proxy rules applicable to funds.21 The

amended rules are the first significant

revisions to the fund proxy rules since

1960 and reflect the Commission’s

commitment to improved disclosure for

fund shareholders. The conferees are

expected to discuss the revised rules.

b. Investment Advisers

On March 16, 1994, the Commission

proposed two new rules under the

Investment Advisers Act of 1940

(‘‘Advisers Act’’).22 One of these rules

would expressly prohibit investment

advisers from making unsuitable

recommendations to clients; the other

proposed rule would prohibit registered

investment advisers from exercising

investment discretion over client

accounts unless they reasonably believe

that the custodians of those accounts

send account statements to the clients at

least quarterly. The conferees will

discuss the status of the proposed rules.

The conferees will also discuss ways

in which the Commission and the states

can coordinate their respective

investment adviser inspection programs

and efforts to identify investment

advisers that have failed to register as

such with the Commission or the

appropriate state authorities.

(4) Enforcement Issues

In addition to the above-stated topics,

the state and federal regulators will

discuss various enforcement-related

issues which are of mutual interest.

(5) Investor Education

Recently, the Commission announced

a number of initiatives to aid investors

in understanding how to invest wisely

and protect themselves from abusive

and fraudulent industry practices. The

States and NASAA have a longstanding

commitment to investor education and

the Commission is intent on

coordinating and complementing those

efforts to the greatest extent possible.

The participants at the conference will

discuss investor education and potential

joint projects in each of the working

group sessions. They will specifically

consider the results of recent

Commission activities in this area:

Information generated at a series of

town meetings and investor forums;

public reaction to a new toll-free

information line for investors and a new

electronic bulletin board which

provides information about the

Commission and its responsibilities; the

usefulness of other explanatory

informational materials, including new

pamphlets provided by the Commission

to the public; and the progress of

Commission efforts to develop ‘‘plain

English’’ instructions for mandatory

disclosure items, and guidelines for

simpler summaries of information in

required filings. Future projects to be

considered will include the following:

(1) Developing an ‘‘Investor Information

Kit’’ for novice or unsophisticated

investors that includes basic

information that every investor should

know in an easy-to-use format; (2)

developing a model curriculum for high

school classes and adult seminars on the

basics of how to invest wisely and what

to do if a problem arises; and (3)

designing a distribution plan for

Commission educational products to

assure that information is provided to

investors when they are in the process

of making major investment decisions

and most likely to need such

information.

(6) General

There are a number of matters which

are applicable to all, or a number, of the

areas noted above. These include

EDGAR, the Commission’s electronic

disclosure system, rulemaking

procedures, training and education of

staff examiners and analysts and sharing

of information.

The Commission and NASAA request

specific public comments and

recommendations on the abovementioned topics. Commenters should

focus on the agenda but may also

discuss or comment on other proposals

which would enhance uniformity in the

existing scheme of state and federal

regulations, while helping to maintain

high standards of investor protection.

Dated: February 15, 1995.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–4237 Filed 2–21–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35378; File No. SR–DTC–

95–02]

Self-Regulatory Organizations; The

Depository Trust Company; Notice of

Filing and Order Granting Accelerated

Approval of Proposed Rule Change

Concerning Procedures Relating to

Rule 17Ad–16 and Order Designating

The Depository Trust Company as the

Approved Qualified Registered

Securities Depository

February 15, 1995.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

January 13, 1995, The Depository Trust

Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) the proposed rule

change as described in Items I and II

below, which items have been prepared

primarily by DTC. The Commission is
9876 Federal Register / Vol. 60, No. 35 / Wednesday, February 22, 1995 / Notices

2Securities Exchange Act Release No. 35039

(December 1, 1994), 59 FR 63656.

3An ‘‘appropriate qualified registered securities

depository’’ is defined by Rule 17Ad–16 to mean

the qualified registered securities depository that

the Commission so designates by order or, in the

absence of such designation, the qualified registered

securities depository that is the largest holder of

record of all qualified registered securities

depositories as of the most recent record date. A

‘‘qualified registered securities depository’’ is

defined by Rule 17Ad–16 to mean a clearing agency

registered under Section 17A of the Act that

performs clearing agency functions and that has

rules and procedures concerning its responsibility

for maintaining, updating, and providing

appropriate access to the information it receives.

4 DTC has consulted with both the Philadelphia

Depository Trust Company (‘‘Philadep’’) and the

Midwest Securities Trust Company (‘‘MSTC’’)

regarding DTC’s designation as the appropriate

qualified registered securities depository. Both

Philadep and MSTC have agreed, either orally or in

writing, that DTC should be designated as the

appropriate qualified registered securities

depository. Letter from J. Keith Kessel, Compliance

Officer, Philadep, to Walter Harris, Manager, DTC

(December 19, 1994). Both of these depositories

have filed with the Commission procedures for

disseminating to their participants information on

transfer agent changes received from DTC. File Nos.

SR–MSTC–95–02 and SR–Philadep–95–01.

5LENS enables DTC Participants to choose from

a menu on their Participant Terminal System screen

certain notices received by DTC which they wish

to order. The Securities and Exchange Commission

issued an order approving DTC’s LENS on June 12,

1991 (Securities Exchange Act Release No. 29291

(June 12, 1991), 56 FR 28190 [File No. SR–DTC–91–

08]).

6The Commission delegated to the Director of the

Division of Market Regulation authority to

designate by order the appropriate qualified

registered securities depository. Securities

Exchange Act Release No. 35039 (December 1,

1994), 59 FR 63565; 17 CFR 200.30–3(a)(56) (1994).

7 DTC held securities on behalf of participants

that equaled $7.5 trillion and 98.8% of the total

market value of securities held in total by the three

registered securities depositories that handle

corporate securities. DTC 1993 Annual Report at 5.

publishing this notice and order to

solicit comments from interested

persons and to grant accelerated

approval to the proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

DTC, seeks designation as the

‘‘appropriate qualified registered

securities depository’’ to receive notices

of transfer agent changes pursuant to the

recently adopted Rule 17Ad–16 2 of the

Act. This proposed rule change also

seeks approval of procedures that DTC

has established to receive and transmit

such notices to other registered

securities depositories, participants, and

others.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

DTC included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. DTC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

The Commission recently adopted

Rule 17Ad–16. That rule is designed to

address the current and continuing

problem of transfer delays due to

unannounced transfer agent changes,

including the change of a transfer agent

for a particular issue and the change of

the name or address of a transfer agent.

The rule requires a registered transfer

agent to send a notice to the

‘‘appropriate qualified registered

securities depository’’ 3 when the

assuming or terminating transfer agent

services on behalf of an issuer or when

changing its name or address.

In order to eliminate uncertainty

about where registered transfer agents

should direct notices required by Rule

17Ad–16 and to reduce unnecessary

costs and administrative burdens for

transfer agents and registered securities

depositories, DTC hereby respectfully

requests designation as the ‘‘appropriate

qualified registered securities

depository’’ in order to be the sole

recipient for all such notices sent by

transfer agents pursuant to the rule.4

DTC has established procedures for

providing copies of each such notice

received to the other registered

securities depositories and to

participants and others. Generally, DTC

will forward such notices to the

Midwest Securities Depository Trust

Company (‘‘MSTC’’) and the

Philadelphia Depository Trust Company

(‘‘Philadep’’) by facsimile transmission

no later than the business day following

DTC’s receipt of such notice from the

transfer agent. DTC will notify its

participants and other interested parties

through DTC’s Legal Notice System

(‘‘LENS’’) 5 no later than the business

day following DTC’s receipt of such

notice from the transfer agent.

The proposed rule change is

consistent with the requirements of

Section 17A of the Act in that it

promotes the prompt and accurate

clearance and settlement of securities

transactions as well as the timely

transfer of securities certificates

resulting in greater number of securities

being immobilized promptly.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

DTC does not believe that the

proposed rule change will impose any

burden on competition not necessary or

appropriate in furtherance of the

purposes of the Act.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants or Others

Written comments from DTC

participants or others have not been

solicited or received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The Commission believes DTC’s

proposed rule change is consistent with

the requirements of the Act, particularly

Section 17A of the Act, and the rules

and regulations thereunder applicable to

registered securities depositories. The

proposed rule change will allow DTC to

comply with Commission Rule 17Ad–16

which requires registered securities

depository to provide their participants

with notices received from a transfer

agent, directly or through the

appropriate qualified registered

securities depository, when the transfer

agent is terminating or assuming

transfer agent services on behalf of an

issuer or when changing its name or

address. Rule 17Ad–16 became effective

on February 6, 1995. DTC also has

requested that the Commission find

good cause for approving the proposed

rule change prior to the thirtieth day

after the day of publication of notice of

the filing in the Federal Register

because accelerated approval will

permit DTC to comply with the

requirements of Rule 17Ad–16. The

Commission finds good cause for so

approving the proposed rule change on

an accelerated basis.

With this order, the Commission also

is designating DTC as the appropriate

qualified registered securities

depository.6 DTC is the largest holder of

record among qualified registered

securities depositories for the most

issues.7 Also, as previously stated, both

MSTC and Philadep have agreed that

DTC should be designated as the

appropriate qualified registered

securities depository.

IV. Solicitation of Comments

Interested persons are invited to

submit written date, views, and

arguments concerning the foregoing.

Persons making written submissions
Federal Register / Vol. 60, No. 35 / Wednesday, February 22, 1995 / Notices 9877

8 17 CFR 200.30–3(a)(56) (1994).

9 17 CFR 200.30–3(a)(12) (1994).

1 15 U.S.C. 78s(b)(1) (1988).

2Rule 17Ad–16 defines a ‘‘qualified registered

securities depository’’ as a clearing agency

registered under Section 17A of the Act that

performs clearing agency functions and that has

rules and procedures concerning its responsibility

for maintaining, updating, and providing

appropriate access to the information it receives

pursuant to this section.

3 17 CFR § 240.17Ad–16 (1994).

4Rule 17Ad–16 defines an ‘‘appropriate qualified

register securities depository’’ as the qualified

registered securities depository that the

Commission so designates by order or, in the

absence of such designation, the qualified registered

securities depository that is the largest holder of

record of all qualified registered securities

depositories as of the most recent record date.

5 17 CFR § 240.17Ad–16. See also Securities

Exchange Act Release No. 35039 (December 1,

1994), 59 FR 63656 (release adopting Rule 17Ad–

16).

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Avenue, NW.,

Washington, DC 20549. Copies of the

submission, all subsequent

amendments, all written statements

with respect to the proposed rule

change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying in

the Commission’s Public Reference

Room, 450 Fifth Avenue, NW.,

Washington, DC. Copies of such filing

will also be available for inspection and

copying at the principle office of DTC.

All submissions should refer to the File

No. SR–DTC–95–02 and should be

submitted by March 15, 1995.

It is hereby ordered, Pursuant to

Section 19(b)(2) that the proposed rule

change (File No. SR–DTC–95–02) be,

and hereby is approved. It is further

ordered, pursuant to delegated authority

that DTC is designated the appropriate

qualified registered securities

depository.8

For the Commission by the Division of

Market Regulation, pursuant to the delegated

authority.9

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–4277 Filed 2–21–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35380; File No. SR–MSTC–

95–2]

Self-Regulatory Organizations;

Midwest Securities Trust Company;

Notice of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change Relating to the

Modifications of Procedures

Implementing Rule 17Ad–16

February 15, 1995.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934 (the

‘‘Act’’),1 notice is hereby given that on

January 24, 1995, the Midwest

Securities Trust Company (‘‘MSTC’’)

filed with the Securities and Exchange

Commission (the ‘‘Commission’’) the

proposed rule change as described in

Items I and II below, which items have

been prepared primarily by MSTC. The

Commission is publishing this notice

and order to solicit comments from

interested persons and to grant

accelerated approval of the proposed

rule change.

I. Self-Regulatory Organization’s

Statement of Terms of Substance of the

Proposed Rule Change

MSTC, a ‘‘qualified registered

securities depository,’’ 2 as that term is

defined in Rule 17Ad–16 3 under the

Act, proposes to adopt procedures to

maintain, update, and provide

appropriate access to the information it

receives pursuant to Commission Rule

17Ad–16. MSTC requests that the

Commission designate The Depository

Trust Company (‘‘DTC’’) as the

‘‘appropriate qualified registered

securities depository’’ 4 authorized to

receive Rule 17Ad–16 notices on behalf

of MSTC.

To ensure that Rule 17Ad–16 notices

are timely disseminated, DTC and

MSTC have agreed that all such notices

will be forwarded by DTC to MSTC via

facsimile transmission on a daily basis.

MSTC proposes to maintain the Rule

17Ad–16 notices received from DTC for

at least two years with the first six

months being in an easily accessible

place on MSTC’s premises.

MSTC proposes to maintain

conformity with Rule 17Ad–16 by

making all material information

contained in any Rule 17Ad–16 notice

that MSTC receives from DTC available

to its participants. This will be

accomplished by updating MSTC’s

security account masterfile on a daily

basis. Upon electronic inquiry by a

participant, the security account

masterfile will provide the participant

with on-line information about a

security, including the transfer agent’s

name and address.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

MSTC included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. MSTC has prepared

summaries, set forth in sections (A), (B),

and (C) below, of the most significant

aspects of such statements.

(A) Self-Regulatory Organization’s

Statement of the Purposes of, and

Statutory Basis for, the Proposed Rule

Change

On December 1, 1994, the

Commission adopted Rule 17Ad–16.5

Among other things, the rule requires a

transfer agent to file a notice with the

appropriate qualified registered

securities depository if the transfer

agent ceases to perform transfer agent

services or assumes transfer agent

services on behalf of an issuer or

changes its name or address. The rule

also requires the appropriate qualified

registered securities depository to

forward those notices to all qualified

registered securities depositories, that in

turn must notify their participants of

such transfer agent changes. Because

MSTC has agreed that DTC should be

the appropriate qualified registered

securities depository, transfer agents

will send these notices to DTC. DTC

then will forward a copy of these

notices to all qualified registered

securities depositories.

MSTC will provide its members online access to the information in the

notices by updating MSTC’s security

account masterfile on a daily basis. The

purpose of this proposed rule change is

to adopt procedures to implement and

assure compliance with Rule 17Ad–16.

MSTC states that the proposed rule

change is consistent with Sections

17A(b)(3) (A) and (F) of the Act in that

it facilitates the prompt and accurate

clearance and settlement of securities

transactions.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

MSTC believes that no burden will be

placed on competition as a result of the

proposed rule change.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants or Others

MSTC neither solicited nor received

written comments on the proposed rule

change.