ATTACHMENT 4 - Exchange Act Release No. 34-15289.pdf

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Federal Securities Law Reporter, Release—The Lost, Missing, Stolen and Counterfeit Securities Information System; Release No. 34-15289, November 1, 1978., Securities and Exchange Commission

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Corporate Governance > Federal Securities Law Reporter > Securities Exchange Act of 1934 > Securities Exchange Act of 1934 Laws and Explanations > Accounts and Records of Exchanges and Members —Sec.

17 > Preservation of Records and Reports of Certain Stabilizing Activites > Release—The Lost, Missing, Stolen and Counterfeit Securities Information System; Release No. 34-15289, November 1, 1978., Securities and Exchange Commission

Release No. 34-15289, November 1, 1978.

Description of the System

Introduction

Under 17 CFR §240.17f-1, certain financial institutions are required to make reports and inquiries related to missing, lost, stolen and counterfeit securities. If the security involved is a United States Government or Agency security, such reports and inquiries must be made to a Federal Reserve Bank or Branch. 1 In the case of all other securities, reports and inquiries must be directed to the Securities Information Center, Inc. (“SIC”) which has been designated by the Commission to receive and process all such data until December 31, 1980.

SIC will continue to operate substantially in the same manner as it has since October 3, 1977. All institutions are urged to carefully read the material below and to refer, if necessary, to Securities Exchange Act Release No.

13832 2 in which the text of §240.17f-1 and important explanatory information appears.

Reporting Institutions

The institutions subject to 17 CFR §240.17f-1 are defined as “reporting institutions” and include every national securities exchange, member thereof, registered securities association, broker, dealer, municipal securities dealer, registered transfer agent, registered clearing agency, participant therein, member of the Federal Reserve System and bank whose deposits are insured by the Federal Deposit Insurance Corporation. All such organizations are required to report to and make inquiries of the system.

1979 Registration Requirements

To make reports and inquiries of the data base maintained by SIC, all reporting institutions must complete and file the 1979 registration form that accompanies this material, except institutions registered with SIC as indirect inquirers whose 1978 registration forms are presently current and correct. An institution must file the 1979 registration form if (1) it is presently registered as a direct inquirer, regardless of whether the information submitted on the 1977 registration form continues to be current and correct, (2) it is presently not registered with SIC, or (3) it is presently registered with SIC as an indirect inquirer and desire to amend or update their 1977 registration form in any way.

Direct inquirers must submit the 1979 registration form in order that SIC may have on file a current agreement to pay the 1979 registration fees. Currently registered direct inquirers who fail to submit the 1979 registration form will be deemed to have agreed to the increased 1979 fees and charges and will be billed accordingly. In completing the 1979 registration form, currently registered direct and indirect inquirers should update and amend the information submitted previously and may, if they desire, amend their registration to indicate a change in their inquiry participation status. The election of inquiry participation status will be binding through June 30, 1979.

All registration forms should be filled out and returned to:

ATTACHMENT 4 - Exchange Act Release No. 34-15289 http://prod.resource.cch.com/resource/scion/document/default/%28%40%40SEC01+ACT34%2326193C%29sec0109013e2c8646f0e8?cfu=Legal&cpid=WKUS-Legal-IC

Securities Information Center, Inc.

P. O. Box 421

Wellesley Hills, Mass. 02181

The deadline for registration is December 15, 1978.

Reports

A report is a notice of (1) securities lost, stolen, missing, or counterfeit; (2) recovery of securities previously reported lost, stolen, or missing; or (3) a correction or update of a previous report other than recovery.

All reporting institutions are required to make reports enumerated in paragraph (b) of 17 CFR §240.17f-1 directly to the appropriate instrumentality, and should use Form X-17F-1A for such purposes. If the security involved is a United States Government or Agency security, the appropriate instrumentality is any Federal Reserve Bank or Branch. In the case of all other securities, the appropriate instrumentality is SIC. Reports must also be sent to a transfer agent for the issue and to the appropriate law enforcement agency if criminality is suspected.

In the case of reports concerning securities for which SIC is the appropriate instrumentality, all Form X-17F-1As must be signed by an authorized individual whose signature is on file with SIC and should be mailed to SIC at P.

O. Box 421, Wellesley Hills, Mass. 02181 within the time limits set forth in 17 CFR §240.17f-1. All reports will be entered into the computer data base within one day of receipt.

Preliminary reports may also be made by telephone or telex and institutions are encouraged to use this service.

Preliminary reports should include the reporting institution's FINS number, 3 the CUSIP number and certificate numbers (including all prefixes and suffixes) of the securities, and indication of whether or not criminality is suspected. Preliminary reports must be followed promptly by a written report on Form X-17F-1A signed by an authorized individual and mailed to SIC at P. O. Box 421, Wellesley Hills, Mass. 02181.

The designee will send a written report confirmation to the reporting institution on a weekly basis.

Inquiries

Under 17 CFR §240.17f-1, reporting institutions must inquire of the data base of reported security losses, thefts, and counterfeits to determine the validity of securities coming into their possession or control. In the case of inquiries with respect to securities for which SIC is the appropriate instrumentality, reporting institutions must employ the manual, computer-assisted system designed by SIC.

For the purposes of this system, all reporting institutions must register as either direct or indirect inquirers.

Direct inquirers make inquiries of the system directly by using telephone, telex, or mail. Alternatively, a reporting institution can participate as an indirect inquirer by arranging with a direct inquirer to act on its behalf in making inquiries of the system. Direct inquirers will be charged the registration fees and usage charges described below.

Indirect inquirers will not be charged any fees by SIC but may expect direct inquirers acting on their behalf to charge them costs and service charges.

Upon registering with the system as a direct inquirer, the reporting institution will be assigned appropriate access codes which will be based, in part, on the institution's FINS number. The code must be used each time the reporting institution makes an inquiry of the system, whether on its own behalf or on behalf of another institution, to insure that only authorized direct inquirers have access to the system.

In addition to the reporting institution's access code, the inquiry must include the securities' CUSIP and certificate numbers (including all suffixes and prefixes). Multiple inquiries can be made in a single mailing, telephone call, or telex transmission.

All direct inquirers must have at least one primary access station from which inquiries will be made to SIC and to which monthly written inquiry confirmations will be mailed. If desired, a direct inquirer can access the system from various stations within its organization. These additional stations can be registered as either primary or secondary access stations. A secondary station makes inquiries of the system directly but written confirmations of such inquiries will be directed to a primary access station of the institution. A primary access station receives confirmations for its own use of the system and for use by its secondary access stations, if any. Every secondary station must be associated with one and only one primary station.

Processing of Inquiries

Direct inquirers may inquire of the data base by telephone, telex or mail. In the case of telephone inquiries, direct inquirers will receive a special telephone number to be used for such purposes. On calling, the direct inquirer must furnish the operator its access code, and the certificate's CUSIP and certificate number. Each inquiry will be assigned a validation number which confirms for the direct inquirer that the inquiry was made. Mail and telex inquiries should include the identical information and will be processed upon their receipt by SIC.

The operator will then enter the data into the data base to determine if the CUSIP and certificate numbers in the inquiry match those in a previously submitted report. If so (a “hit”), the inquiring institution will be notified immediately of the match. This positive confirmation will include instructions on how to contact the reporting institution which submitted the matching report and notice, if any, of suspected criminality. The reporting institution will also be notified of the hit and of the identity of the inquiring institution.

Written confirmations of inquiries that do not result in a match (negative confirmations) will be mailed to the direct inquirer monthly. An optional prompt written confirmation service will be available to direct inquirers at additional cost. With this service, the primary access station will receive confirmation by mail of all inquiries (positive or negative) and of all reports received by the system from that station or its secondary access stations. There will be one such mailing for each day on which reports and/or inquiries are received from the station or its secondary access stations.

Schedule of Charges

Under a pricing structure and schedule of fees approved by the Commission, organizations that are direct inquirers will be charged an annual registration fee and usage fees. An indirect inquirer will not be charged these fees but may expect that the institution that makes inquiries on its behalf will require compensation for its costs and services.

Fees do not cover participants' use of the mails, telephone, or telex for making reports or inquiries, nor any training or education of employees of direct or indirect inquirer in connection with the use of the system.

Registration—This annual fee for direct inquirers covers the cost of maintaining registration data, assignment of access codes, and billing of all charges. The fee is based on the number of access stations designated by the direct inquirer on its registration form.

For each primary access station—$20.00

For each secondary access station—$10.00

Prompt Written Confirmation Service (Optional)—Institutions desiring this service will receive prompt written confirmation of all inquiries and reports received from a direct inquirer each day via mail, telephone or telex.

Each primary access station using the service (per quarter)—$20.00

Usage—These fees will cover the cost of verification of authorized system access, matching of reports and inquiries, notification of matches, confirmation of inquiries, retention of files, and system improvements.

Usage charges will be billed quarterly in advance to a single primary access station. These charges, approved by the Commission, are based on the aggregate volume of inquiries made by all participating institutions. The aggregate cost for processing these inquiries is apportioned among all direct inquirers according to their size classification. Thus, an institution is not billed on the basis of its actual usage of the system and, for the charge assessed, it may make an unlimited number of inquiries.

The charges outlined below are based on estimates of the number of direct inquirers that will register for 1979 and of the aggregate number of inquiries (10,000 per day). The chart shows how the range in rates may be affected by the total number of registered direct inquirers. It must be stressed that neither the Commission nor SIC has any control over this variable.

Type Size Estimated Annual Usage Charges

Banks Amounts of Deposits

If 500 Direct Inquirers

If 1000 Direct Inquirers

If 1500 Direct Inquirers

Over $1 Billion 3200 3000 2800 $500 Million to $1 Billion 1600 1500 1400 Less than $500 Million 150 100 75

Securities Organizations

Annual Revenue (Most recent fiscal year)

Over $25 Million 3200 3000 2800 $5 Million to $25 Million 2100 1800 1600 $500,000 to $5 Million 600 500 400 Less than $500,000 300 250 200

Non-Bank Transfer Agents

Number of Shares Issued Last Year

100,000 shares or more 150 150 150 Less than 100,000 shares 50 50 50

All charges will be billed in advance on a quarterly basis and adjusted subsequently to reflect the actual aggregate volume of inquiries.

Questions concerning any aspect of the Lost and Stolen Securities Program should be directed to Commission personnel at 202-376-8129 or to SIC at 617-235-1940.

Footnotes

1 Instructions on how to make reports and inquiries with respect to United States Government or Agency securities are contained in Securities Exchange Act Release No. 13832 (42 FR 41022 (August 12, 1977)).

The procedures for reports of Government Agency securities have not been changed from those in operation during the pilot period.

2 42 FR 41022 (August 12, 1978).

3 FINS ( "Financial Industry Number Standard") numbers are compiled in the 1976 FINS Directory (First

Edition), published by the Depository Trust Company. If an institution is uncertain as to whether it has a FINS number, it should consult this Directory, its self-regulatory organization, its trade association, or SEC personnel at 202-376-8134. If an institution has not been assigned a FINS number, a number may be obtained at no cost by writing the Depository Trust Company, Attention: FINS Publication, 55 Water Street, New York, New York 10041.