Federal Register / Vol. 61, No. 121 / Friday, June 21, 1996 / Notices 31989

2The Partnership will preserve the accounts,

books, and other documents required to be

maintained in an easily accessible place for the first

two years.

3The Partnership will preserve the accounts,

books, and other documents required to be

maintained in an easily accessible place for the first

two years.

15. The Partnership believes that the

exemptions requested are consistent

with the protection of investors in view

of the substantial community of interest

among all the parties and the fact that

the Partnership will be an ‘‘employees’

securities company’’ as that term is

defined in section 2(a)(13).

16. The Partnership states that each

Eligible Officer will be equipped by

experience and education to understand

and evaluate the structure, management,

and plan of the Partnership as compared

to other investment opportunities, to

understand and evaluate the risks of

investing in the Partnership, and to

understand that the Partnership is being

offered without registration under the

Act and the Securities Act and the

protections afforded thereby.

Applicant’s Conditions

The Partnership agrees to comply

with the following as conditions if the

requested order is granted:

1. Each proposed transaction

otherwise prohibited by section 17(a) or

section 17(d) and rule 17d–1 to which

the Partnership is a party (the ‘‘Section

17 Transactions’’) will be effected only

if the General Partner determines that:

(a) the terms of the transaction,

including the consideration to be paid

or received, are fair and reasonable to

the Partners and do not involve

overreaching of the Partnership or its

Partners on the part of any person

concerned; and (b) the transaction is

consistent with the interests of the

Partners, the Partnership’s

organizational documents, and the

Partnership’s reports to its Partners. In

addition, the General Partner will record

and preserve a description of such

affiliated transactions, their findings,

the information or materials upon

which their findings are based and the

basis therefor. All such records will be

maintained for the life of the

Partnership, and at least two years

thereafter, and will be subject to

examination by the SEC and its staff.2

2. In connection with the Section 17

Transactions, the General Partner, will

adopt and periodically review and

update, procedures designed to ensure

that reasonable inquiry is made, prior to

the consummation of any such

transaction, with respect to the possible

involvement in the transaction of any

affiliated person or promoter of or

principal underwriter for the

Partnership, or any affiliated person of

such a person, promoter or principal

underwriter.

3. The General Partner will not invest

the funds of the Partnership in any

investment in which a ‘‘Co-Investor’’

has or proposes to acquire the same

class of securities of the same issuer,

where the investment involves a joint

enterprise or other joint arrangement

within the meaning of rule 17d–1 in

which the Partnership and the CoInvestor are participants, unless any

such Co-Investor, prior to disposing of

all or part of its investment, (a) gives the

General Partner sufficient, but not less

than one day’s notice of its intent to

dispose of its investment, and (b)

refrains from disposing of its investment

unless the Partnership has the

opportunity to dispose of the

Partnership’s investment prior to or

concurrently with, and on the same

terms as, and pro rata with the CoInvestor. The term ‘‘Co-Investor’’ means

any person who is: (a) an ‘‘affiliated

person’’ (as such term is defined in the

Act) of the Partnership; (b) a member of

the Baum Entities; (c) a officer or

director of one or more of the Baum

Entities; or (d) a company in the General

Partner or Adviser acts as a general

partner or has a similar capacity to

control the sale or other disposition of

the company’s securities (including

without limitation other Investor Fund).

The restrictions contained in this

condition 3, however, shall not be

deemed to limit to prevent the

disposition of an investment by a CoInvestor: (a) to its direct or indirect

wholly-owned subsidiary, to any

company (a ‘‘parent’’) of which the CoInvestor in a direct or indirect whollyowned subsidiary, or to a direct or

indirect wholly-owned subsidiary of its

parent; (b) to immediate family

members of the Co-Investor or a trust

established for any such family member;

(c) when the investment is comprised of

securities that are listed of any exchange

registered as a national securities

exchange under section 6 of the

Exchange Act; or (d) when the

investment is comprised of securities

that are national market system

securities pursuant to section 11A(a)(2)

of the Exchange Act and rule 11As2–1

thereunder.

4. The Partnership and the General

Partner will maintain and preserve, for

the life of the Partnership and at least

two years thereafter, such accounts,

books and other document as constitute

thereafter, such accounts, books, and

other documents as constitute the

record forming the basis for the audited

financial statements that are to be

provided to the Partner and each annual

report of the Partnership required to be

sent to the Partners, and agree that all

such records will be subject

examination by the SEC and its staff.3

5. The General Partner will send to

each Partner who had a capital account

interest in the Partnership, at any time

during the fiscal year then ended,

Partnership financial statements audited

by the Partnership’s independent

accountants. At the end of each fiscal

year, the General Partner will make a

valuation or have a valuation made of

all of the assets of the Partnership as of

such fiscal year in a manner consistent

with customary practice with respect to

the valuation of assets of the Kind held

by the Partnership. In addition, within

90 days after the end of each fiscal year

of the Partnership or as soon as

practicable thereafter, the General

Partner shall send a report to each

person who was a Partner at any time

during the fiscal year then ended,

setting forth such tax information as

shall be necessary for the preparation by

the Partner of his, her, or its federal and

state income tax returns and a report of

the investment activities of the

Partnership during such year.

6. In any case where purchases or

sales were made by the Partnership from

or to an entity affiliated with the

Partnership by reason of a 5% or more

investment in such entity by an

advisory director, director, officer, or

employee, of any one or more of the

Baum Entities, such individual will not

participate in the Partnership’s

determination of whether or not to effect

such purchase or sale.

For the SEC, by the Division of Investment

Management, under delegated authority.

Jonathan G. Katz,

Secretary.

[FR Doc. 96–15907 Filed 6–20–96; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–37314; File No. SR–DTC–

96–08]

Self-Regulatory Organizations; The

Depository Trust Company; Order

Granting Accelerated Approval of a

Proposed Rule Change To Establish a

Custody Service for Certain NonDepository Eligible Securities

June 14, 1996.

On April 2, 1996, The Depository

Trust Company (‘‘DTC’’) filed with the

Securities and Exchange Commission

(‘‘Commission’’) a proposed rule change

(File No. SR–DTC–96–08) pursuant to

Section 19(b)(1) of the Securities
31990 Federal Register / Vol. 61, No. 121 / Friday, June 21, 1996 / Notices

1 15 U.S.C. § 78s(b)(1) (1988).

2Securities Exchange Act Release No. 37256 (May

30, 1996), 61 FR 29158.

3A more detailed description of DTC’s proposed

Custody Services is set forth in Exhibit B, ‘‘DTC

Custody Service,’’ to the filing, which is available

for review at the Commission’s Public Reference

Room.

4All necessary documents (e.g., stock powers or

endorsements) to effect a legal transfer from

customer or firm name to DTC’s nominee name

must be deposited with DTC prior to or

contemporaneously with a participant’s instruction

to transfer the position from a participant’s custody

free account to the participant’s general free

account. Custody Issues eligible for transfer from a

participant’s custody free account to its general free

account are those Custody Issues for which (i) all

necessary documents of transfer are on deposit at

DTC, (ii) there are no pending restrictions on

transferability, and (iii) the issue is otherwise DTC

eligible.

5Phase I will be implemented immediately and

Phase II will be implemented in several months.

DTC will be required to notify the Commission in

writing thirty days prior to the scheduled

implementation of Phase II of the Custody Service

or sooner, if known. If there are deviations in the

manner of implementation or in the operation of

Phase II from those that are described in the

proposed rule change (File No. SR–DTC–96–08),

DTC will be required to file a proposed rule change

in accordance with Section 19(b)(1) of the Act prior

to commencement of operation of Phase II. In

addition, DTC will be required to file a proposed

rule change pursuant to Section 19(b)(1) prior to

implementation of Phase III because Phase III

operations will require additional development to

accommodate the processing of stock dividends.

6For example, a participant having previously

deposited into the Custody Service a certificate

(‘‘certificate No. 1’’) representing 1,000 shares of a

Custody Issue registered in the name of ABC

submits a withdrawal-by-transfer (‘‘WT’’)

instruction to register 100 shares of such stock in

the name of XYZ with the balance to remain

registered in the name of ABC. Upon receipt of the

WT request, DTC will (i) decrease the participant’s

custody free account by 1,000 shares, (ii) increase

the participant’s custody transfer account by 1000

shares, and (iii) delete certificate No. 1 from the

custody certificate database (described infra note 7).

Certificate No. 1 and the WT instructions then will

be forwarded to the transfer agent. When DTC

receives the newly issued certificates from the

transfer agent, DTC will (i) decrease the

participant’s custody transfer account by 1000

shares, (ii) deliver the certificate representing 100

shares to ABC as prescribed by the WT instructions,

(iii) increase the participant’s custody free account

by 900 shares, and (iv) add the certificate

representing 900 shares to the custody certificate

database.

7The custody certificate database will reflect the

certificate number, denomination, issuance date,

registration, and other pertinent details of each

certificate deposited into the Custody Service.

8 DTC will require its participants to notify DTC

of redemptions and reorganizations involving

Custody Issues where DTC has not already

announced such an activity.

9The Reorg Deposit Service enables DTC

participants to deposit at DTC certificates for up to

two years after the reorganization activity and to

have DTC collect the proceeds on their behalf. For

a complete description of DTC’s Reorg Deposit

Service, refer to Securities Exchange Act Release

No. 34189 (June 9, 1994), 59 FR 30818 [SR–DTC–

94–06] (notice of filing and immediate effectiveness

of proposed rule change).

10Supra, note 5.

11 17 CFR 240.15c3–3(b) (1995).

12 17 CFR 240.15c3–3(c) (1995).

13 15 U.S.C.§ 78q–1(b)(3)(F) (1988).

Exchange Act of 1934 (‘‘Act’’) 1 to

establish a custody service for certain

non-depository eligible securities.

Notice of the proposal was published in

the Federal Register on June 7, 1996.2

No comment letters were received. For

the reasons discussed below, the

Commission is granting accelerated

approval of the proposed rule change.

I. Description

The rule change will establish a

method by which the securities industry

can centralize the safe-keeping of

certificates which are not currently

deposited at DTC because either the

DTC participant desires that the

certificate be held in customer or firm

name or the issue is not eligible for full

depository services (e.g., securities with

certain transfer restrictions). The

Custody Service will permit DTC

participants to deposit such securities at

DTC for safe-keeping and other limited

depository services.3 Certificates

deposited through the Custody Service

will be held by DTC in customer or firm

name and will not be transferred into

DTC’s nominee name. Therefore, a

security issue deposited through the

Custody Service (‘‘Custody Issue’’) will

not be eligible for all DTC book-entry

services unless a depositing participant

directs DTC to transfer the position

originally credited to the participant’s

custody free account to the participant’s

general free account.4

The Custody Service will be

implemented in three phases. This order

approves implementation of the first

two phases.5 As each phase is

introduced, additional services will be

offered to DTC participants. During

Phase I, DTC will accept deposits,

process withdrawals, and transfer

eligible Custody Issues into a

participant’s general free account. DTC

will designate two segregated (‘‘seg’’)

accounts of the participant’s DTC

general account for Custody Service use.

One seg account will be utilized to

reflect securities on deposit with DTC

that are stored in DTC’s vault (‘‘custody

free account’’). The second seg account

will be utilized to reflect previously

deposited securities placed in-transit

(‘‘custody transfer account’’).6

DTC participants will access the

Custody Service through a new

participant terminal system (i.e., DTC’s

PTS System) application that will

interface with the custody certificate

database 7 in a real time manner and

will provide separate Custody Service

inquiry and processing options. The

inquiry options will enable participants

to retrieve and view certificate level

detail of Custody Service deposits

stored in the custody certificate

database. In addition to the PTS

function, participants will be able to

submit Custody Service transactions

through existing DTC outputs including

computer-to-computer, main frame dual

host, and the distributed program link.

Phase II of the Custody Service will

add redemption and reorganization

services. When a custody position

becomes the subject of a reorganization

or redemption, DTC generally will

report the event to its participants using

existing services.8 In addition, DTC

participants will be able to utilize DTC’s

Reorg Deposit Service 9 to present

eligible Custody Issues for mandatory

reorganizations, full and partial calls,

maturities, name changes, reverse splits,

mergers, and other similar activities.

Participants will be able to submit

negotiable and transferrable Custody

Issues for voluntary reorganizations

through existing, modified services.

DTC also will collect and distribute the

proceeds derived from the presentment

of custody deposits.

In Phase III of the Custody Service,

DTC will implement the capability to

collect and distribute dividend and

interest payments for Custody Issues.

DTC intends only to implement Phase I

at this time with the other phases to

follow in accordance with the

experience and needs of DTC

participants.10

DTC believes that the Custody Service

will provide brokers and dealers with

appropriate control over Custody Issues

for purposes of Rule 15c3–3(b) 11 under

the Act. In accordance with the

requirements for the satisfactory control

of securities set forth in Rule 15c3–

3(c)(5),12 DTC believes (i) it is a ‘‘bank’’

within the meaning of Section 3(a)(6) of

the Act because it is a member bank of

the Federal Reserve System, (ii) the

delivery of Custody Issues to brokers

and dealers will not require the

payment of money or value, and (iii) the

Custody Issues in DTC’s custody or

control will not be subject to any right,

charge, security interest, lien, or claim

of any kind in favor of DTC or any

person claiming through DTC.

II. Discussion

Section 17A(b)(3)(F) 13 of the Act

requires that the rules of a clearing

agency be designed to promote the

prompt and accurate clearance and

settlement of securities transactions and

to assure the safeguarding of securities

and funds which are in the custody or

control of the clearing agency or for

which it is responsible. The

Commission believes DTC’s proposed
Federal Register / Vol. 61, No. 121 / Friday, June 21, 1996 / Notices 31991

14 17 CFR 200.30–3(a)(12) (1995).

rule change is consistent with DTC’s

obligations under Section 17A of the

Act because the rule change will allow

DTC participants to remove certificates

representing Custody Issues from their

vaults and to deposit them into the

Custody Service at DTC. Depositing

certificates into the Custody Service

along with the correspondent eligibility

of Custody Issues for certain DTC

securities processing services should

help to reduce the costs, inefficiencies,

and risks associated with the physical

safekeeping of these securities outside

of DTC and thereby should promote the

prompt and accurate clearance and

settlement of transactions in and the

safeguarding of these types of securities.

Moreover, the Commission believes the

proposal is consistent with DTC’s

obligations to safeguard securities and

funds under its control because Custody

Issues on deposit at DTC will not be

subject to any right, charge, security

interest, lien, or claim of any kind in

favor of DTC or any person claiming

through DTC.

DTC has requested that the

Commission find good cause for

approving the proposed rule change

prior to the thirtieth day after the date

of publication of notice of the filing. The

Commission finds good cause for so

approving the proposed rule change

because accelerated approval will

permit DTC participants to begin

immediately the process of transferring

Custody Issues to DTC in order that they

may utilize the Custody Service as soon

as possible. Furthermore, the

Commission has not received any

comment letters and does not expect to

receive any comment letters on the

proposal.

III. Conclusion

On the basis of the foregoing, the

Commission finds that the proposed

rule change is consistent with the

requirements of the Act and in

particular Section 17A of the Act and

the rules and regulations thereunder.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act, that the

proposed rule change (File No. SR–

DTC–96–08) be and hereby is approved

on an accelerated basis.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.14

Jonathan G. Katz,

Secretary.

[FR Doc. 96–15908 filed 6–20–96; 8:45 am]

BILLING CODE 8010–01–M

SELECTIVE SERVICE SYSTEM

Forms Submitted to the Office of

Management and Budget for Extension

of Clearance

The following forms, to be used only

in the event that inductions into the

armed services are resumed, have been

submitted to the Office of Management

and Budget (OMB) for the extension of

clearance in compliance with the

Paperwork Reduction Act (44 U.S.C.

Chapter 35):

SSS–21

Title: Claim Documentation Form—

Administrative.

Purpose: Is used to document those

claims for reclassification which can be

approved by an Area Office upon the

presentation of documentary proof.

Respondents: Registrants whose past

or present status is reason for

reclassification.

Frequency: One-time.

Burden: The reporting burden is ten

minutes or less per individual.

SSS–23

Title: Claim Documentation Form—

Divinity Student.

Purpose: Is used to document a claim

for classification as a divinity student.

Respondents: Registrants who are

divinity students.

Frequency: One-time.

Burden: The reporting burden is 20

minutes or less per individual.

SSS–24

Title: Claim Documentation Form—

Hardship to Dependents.

Purpose: Is used to document a claim

for classification on the basis of the

hardship induction will cause a

registrant’s dependent(s).

Respondents: Registrants whose

induction will cause hardship on their

dependent(s).

Frequency: This form is normally

used one-time.

Burden: The reporting burden is 30

minutes or less per individual.

SSS–25

Title: Claim Documentation Form—

Minister of Religion.

Purpose: Is used to document claims

for classification as a regular or duly

ordained minister.

Respondents: Registrants who are

regular or duly ordained ministers.

Frequency: One-time.

Burden: The reporting burden is 20

minutes or less per individual.

SSS–26

Title: Claim Documentation Form—

Alien or Dual National.

Purpose: Is used to document a

registrant’s claim for classification as an

Alien, Dual National or Treaty Alien.

Respondents: Registrants who wish to

be classified as an Alien, Dual National

or Treaty Alien.

Frequency: One-time.

Burden: The reporting burden is 20

minutes or less per individual.

SSS–27

Title: Claim Documentation Form—

Postponement of Induction.

Purpose: Is used to document a claim

for the postponement of induction.

Respondents: Registrants whose

present status warrants postponement of

induction.

Frequency: This form is normally

used one-time.

Burden: The reporting burden is ten

minutes or less per individual.

SSS–109

Title: Student Certificate.

Purpose: Is used to substantiate a

claim for postponement of induction

because the subject registrant is a

student.

Respondents: Registrants who are

attending school but have not

graduated.

Frequency: This certificate is

normally used one-time.

Burden: The reporting burden is six

minutes or less per individual.

SSS–130

Title: Application by Alien for Relief

from Training and Service in the Armed

Forces of the United States.

Purpose: Is used to request relief from

training and service based on being a

national of a country with which an

applicable treaty is in effect, i.e. ‘‘Treaty

Alien.’’

Respondents: Those registrants who

are ‘‘Treaty Aliens’’ and desire not to

serve in the Armed Forces of the United

States.

Frequency: One-time.

Burden: The reporting burden is five

minutes or less per individual.

SSS–402

Title: Uncompensated Registrar

Appointment.

Purpose: Is used to verify the official

status of applicants for the position of

Uncompensated Registrars and to

establish authority for those appointed

to perform as Selective Service System

Registrars.

Respondents: United States citizens

over the age of 18.

Frequency: One-time.

Burden: The reporting burden is three

minutes or less.

Copies of the above identified forms

can be obtained upon written request to