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8000 - Miscellaneous Statutes and Regulations
§ 240.17Ad-12 Safeguarding of funds and securities.
(a) Any registered transfer agent that has custody or possession of
any funds or securities related to its transfer agent activities shall
assure that: (1) All such securities are
{{10-31-07 p.9438.06}}held in
safekeeping and are handled, in light of all facts and circumstances,
in a manner reasonably free from risk of theft, loss or destruction
(other than by a transfer agent's certificate); and (2) all such funds
are protected, in light of all facts and circumstances, against misuse.
In evaluating which particular safeguards and procedures must be
employed, the cost of the various safeguards and procedures as well as
the nature and degree of potential financial exposure are two relevant
factors.
(b) For purposes of this section, the term securities
shall have the same meaning as the term securities
certificate as defined in § 240.17f--1(a)(6).
[Codified to 17 C.F.R. § 240.17Ad-12]
[Section 240.17Ad-12 added at 48 Fed. Reg. 27248, June 21, 1983,
effective July 25, 1983; amended at 68 Fed. Reg. 74401, December 23,
2003, effective January 22,
2004]
§ 240.17Ad-13 Annual study and evaluation of internal
accounting control.
(a) Accountant's Report. Every registered transfer
agent, except as provided in paragraph (d) of this section, shall file
annually with the Commission and the transfer agent's appropriate
regulatory agency in accordance with
§ 240.17Ad-2(h), a
report specified in paragraph (a)(1) of this section prepared by an
independent accountant concerning the transfer agent's system of
internal accounting control and related procedures for the transfer of
record ownership and the safeguarding of related securities and funds.
That report shall be filed within 90 calendar days of the date of the
study and evaluation set forth in paragraph (a)(1).
(1) The accountant's report shall:
(i) State whether the study and evaluation was made in accordance
with generally accepted auditing standards using the criteria set forth
in paragraph (a)(3) of this section;
(ii) Describe any material inadequacies found to exist as of the
date of the study and evaluation and any corrective action taken, or if
no material inadequacy existed, the report shall so state;
(iii) Comment on the current status of any material inadequacy
described in the immediately preceding report; and
(iv) Indicate the date of the study and evaluation.
(2) The study and evaluation of the transfer agent's system of
internal accounting control for the transfer of record ownership and
the safeguarding of related securities and funds shall cover the
following:
(i) Transferring securities related to changes of ownership
(i.e., cancellation of certificates or other instruments
evidencing prior ownership and issuance of certificates or instruments
evidencing current ownership);
(ii) Registering changes of ownership on the books and records of
the issuer;
(iii) Transferring record ownership as a result of corporate
actions (e.g., issuance, retirement, redemption,
liquidation, conversion, exchange, tender offer or other types of
reorganization);
(iv) Dividend disbursement or interest paying-agent activities;
(v) Administering dividend reinvestment programs; and
(vi) Distributing statements respecting initial offerings of
securities.
(3) For purposes of this report, the objectives of a transfer
agent's system of internal accounting control for the transfer of
record ownership and the safeguarding of related securities and funds
should be to provide reasonable, but not absolute, assurance that
securities and funds are safeguarded against loss from unauthorized use
or disposition and that transfer agent activities are performed
promptly and accurately. For purposes of this report, a material
inadequacy is a condition for which the independent accountant believes
that the prescribed procedures or the degree of compliance with them do
not reduce to a relatively low level the risk that errors or
irregularities, in amounts that would have a significant adverse effect
on the transfer agent's ability promptly and accurately to transfer
record ownership and safeguard related securities and funds, would
occur or not be detected within a timely period by employees in the
normal course of performing their assigned functions. Occurrence of
errors or irregularities more frequently than in isolated instances may
be evidence that the system has a material inadequacy. A significant
adverse effect on a transfer agent's ability promptly and accurately to
transfer record ownership and safeguard
{{2-28-92 p.9439}}related
securities and funds could result from any condition or conditions that
individually, or taken as a whole, would reasonably be expected to:
(i) Inhibit the transfer agent from promptly and accurately
discharging its responsibilities under its contractual agreement with
the issuer;
(ii) Result in material financial loss to the transfer agent; or
(iii) Result in a violation of § § 240.17Ad--2, 17Ad--10 or
17Ad--12(a).
(b) Notice of Corrective Action. If the accountant's
report describes any material inadequacy, the transfer agent shall,
within sixty calendar days after receipt of the report, notify the
Commission and its appropriate regulatory agency in writing regarding
the corrective action taken or proposed to be taken.
(c) Record Retention. The accountant's report and any
documents required by paragraph (b) of this section shall be maintained
by the transfer agent for at least three years, the first year in an
easily accessible place.
(d) Exemptions. The requirements of
§ 240.17Ad--3 shall
not apply to registered transfer agents that qualify for exemptions
pursuant to this paragraph, 17Ad--3(d).
(1) A registered transfer agent shall be exempt if it performs
transfer agent functions solely for:
(i) Its own securities;
(ii) Securities issued by a subsidiary in which it owns 51% or
more of the subsidiary's capital stock; and
(iii) Securities issued by another corporation that owns 51% or
more of the capital stock of the registered transfer agent.
(2) A registered transfer agent shall be exempt if it:
(i) Is an exempt transfer agent pursuant to § 240.17Ad--(b);
and
(ii) In the case of a transfer agent that performs transfer agent
functions for redeemable securities issued by companies registered
under section 8 of the Investment Company Act of 1940, maintains master
securityholder files consisting of fewer than 1000 shareholder
accounts, in the aggregate, for each of such issues for which it
performs transfer agent functions.
(3) A registered transfer agent shall be exempt if it is a bank
or financial institution subject to regulation by the Board of
Governors of the Federal Reserve System, the Office of the Comptroller
of the Currency or the Federal Deposit Insurance Corporation, provided
that it is not notified to the contrary by its appropriate regulatory
agency and provided that a report similar in scope to the requirements
of § 240.17Ad--13(a) is prepared for either the bank's board of
directors or an audit committee of the board of directors.
[Codified to 17 C.F.R. § 240.17Ad--13]
[Section 240.17Ad--13 added at 48 Fed. Reg. 27248, June 21, 1983,
effective September 30, 1983]
§ 240.17Ad--14 Tender agents.
(a) Establishing book-entry depository accounts. When
securities of a subject company have been declared eligible by one or
more qualified registered securities depositories for the services of
those depositories at the time a tender or exchange offer is commenced,
no registered transfer agent shall act on behalf of the bidder as a
depositary, in the case of a tender offer, or an exchange agent, in the
case of an exchange offer, in connection with a tender or exchange
offer, unless that transfer agent has established, within two business
days after commencement of the offer, specially designated accounts.
These accounts shall be maintained throughout the duration of the
offer, including protection periods, with all qualified registered
securities depositories holding the subject company's securities, for
purposes of receiving from depository participants securities being
tendered to the bidder by book-entry delivery pursuant to transmittal
letters and other documentation and for purposes of allowing tender
agents to return to depository participants by book-entry movement
securities withdrawn from the offer.
{{2-28-92 p.9440}}
(b) Exclusions. The rule shall not apply to tender or
exchange offers (1) that are made for a class of securities of a
subject company that has fewer than (i) 500 security holders of record
for that class, or (ii) 500,000 shares of that class outstanding; or
(2) that are made exclusively to security holders of fewer than 100
shares of a class of securities.
(c) Definitions. For purposes of this rule, (1) the
terms "subject company," "business day," "security
holders," and "transmittal letter" shall be given the meanings
provided in § 240.14d--1(b); (2) unless the context otherwise
requires, a tender or exchange offer shall be deemed to have commenced
as specified in § 240.14d--2; (3) the term "bidder" shall mean
any person who makes a tender or exchange offer or on whose behalf a
tender or exchange offer is made; (4) a "qualified registered
securities depository" shall mean a registered clearing agency
having rules and procedures approved by the Commission pursuant to
section 19 of the Securities Exchange Act of 1934 to enable book-entry
delivery of the securities of the subject company to, and return of
those securities from, the transfer agent through the facilities of
that securities depository; and (5) the term "depositary" refers
to that agent of the bidder receiving securities from tendering
depository participants and paying those participants for shares
tendered. The term "exchange agent" refers to the agent
performing like functions in connection with an exchange offer.
(d) Exemptions. The Commission may exempt from the
provisions of this rule, either unconditionally or on specified terms
and conditions, any registered transfer agent, tender or exchange
offer, or class of tender or exchange offers, if the Commission
determines that an exemption is consistent with the public interest,
the protection of investors, the prompt and accurate clearance and
settlement of securities transactions, the maintenance of fair and
orderly markets, or the removal of impediments to a national clearance
and settlement system.
[Section 240.17Ad--14 added at 48 Fed. Reg. 3071, January
25, 1984, effective March 1, 1984]
§ 240.17Ad--15 Signature guarantees.
(a) Definitions. For purposes of this section, the
following terms shall mean:
(1) Act means the Securities Exchange Act of 1934;
(2) Eligible Guarantor Institution means:
(i) Banks (as that term is defined in section 3(a) of the Federal
Deposit Insurance Act [12 U.S.C.
1813(a)]);
(ii) Brokers, dealers, municipal securities dealers, municipal
securities brokers, government securities dealers, and government
securities brokers, as those terms are defined under the Act;
(iii) Credit unions (as that term is defined in Section 19
(b)(1)(A) of the Federal Reserve Act
[12 U.S.C. 461(b)]);
(iv) National securities exchanges, registered securities
associations, clearing agencies, as those terms are used under the Act;
and
(v) Savings associations (as that term is defined in section 3(b)
of the Federal Deposit Insurance Act
[12 U.S.C. 1813(b)]).
(3) Guarantee means a guarantee of the signature of the person
endorsing a certificated security, or originating an instruction to
transfer ownership of a security or instructions concerning transfer of
securities.
(b) Acceptance of Signature Guarantees. A registered
transfer agent shall not, directly or indirectly, engage in any
activity in connection with a guarantee, including the acceptance or
rejection of such guarantee, that results in the inequitable treatment
of any eligible guarantor institution or a class of institutions.
(c) Transfer agent's standards and procedures. Every
registered transfer agent shall establish:
(1) Written standards for the acceptance of guarantees of
securities transfers from eligible guarantor institutions; and
(2) Procedures, including written guidelines where appropriate,
to ensure that those standards are used in determining whether to
accept or reject guarantees from eligible
{{8-31-95 p.9440.01}}guarantor institutions. Such
standards and procedures shall not establish terms and conditions
(including those pertaining to financial condition) that, as written or
applied, treat different classes of eligible guarantor institutions
inequitably, or result in the rejection of a guarantee from an eligible
guarantor institution solely because the guarantor institution is of a
particular type specified in paragraphs (a)(2)(i)--(a)(2)(v) of this
section.
(d) Rejection of items presented for transfer. (1) No
registered transfer agent shall reject a request for transfer of a
certificated or uncertificated security because the certificate,
instruction, or documents accompanying the certificate or instruction
includes an unacceptable guarantee, unless the transfer agent
determines that the guarantor, if it is an eligible guarantor
institution, does not satisfy the transfer agent's written standards or
procedures.
(2) A registered transfer agent shall notify the guarantor and
the presentor of the rejection and the reasons for the rejection within
two business days after rejecting a transfer request because of a
determination that the guarantor does not satisfy the transfer agent's
written standards or procedures. Notification to the presentor may be
accomplished by making the rejected item available to the presentor.
Notification to the guarantor may be accomplished by telephone,
facsimile, or ordinary mail.
(e) Record retention. (1) Every registered transfer
agent shall maintain a copy of the standards and procedures specified
in paragraph (c) of this section in an easily accessible place.
(2) Every registered transfer agent shall make available a copy
of the standards and procedures specified in paragraph (c) of this
section to any person requesting a copy of such standards and
procedures. The registered transfer agent shall respond within three
days of a request for such standards and procedures by sending the
requesting party a copy of the requested transfer agent's standards and
procedures.
(3) Every registered transfer agent shall maintain, for a period
of three years following the date of the rejection, a record of
transfers rejected, including the reason for the rejection, who the
guarantor was and whether the guarantor failed to meet the transfer
agent's guarantee standards.
(f) Exclusions. Nothing in this section shall prohibit a
transfer agent from rejecting a request for transfer of a certificated
or uncertificated security:
(1) For reasons unrelated to acceptance of the guarantor
institution;
(2) Because the person acting on behalf of the guarantor
institution is not authorized by that institution to act on its behalf,
provided that the transfer agent maintains a list of people authorized
to act on behalf of that guarantor institution; or
(3) Because the eligible guarantor institution of a type
specified in paragraph (a)(2)(ii) of this section is neither a member
of a clearing corporation nor maintains net capital of at least
$100,000.
(g) Signature guarantee program. (1) A registered
transfer agent shall be deemed to comply with paragraph (c) of this
section if its standards and procedures include:
(i) Rejecting a request for transfer because the guarantor is
neither a member of nor a participant in a signature guarantee program;
or
(ii) Accepting a guarantee from an eligible guarantor institution
who, at the time of issuing the guarantee, is a member of or
participant in a signature guarantee program.
(2) Within the first six months after revising its standards and
procedures to include a signature guarantee program, the transfer agent
shall not reject a request for transfer because the guarantor is
neither a member of nor participant in a signature guarantee program,
unless the transfer agent has given that guarantor ninety days written
notice of the transfer agent's intent to reject transfers with
guarantees from non-participating or non-member guarantors.
(3) For purposes of paragraph (g) of this section, the term
"signature guarantee program," means a program, the terms and
conditions of which the transfer agent reasonably determines:
(i) To facilitate the equitable treatment of eligible guarantor
institutions; and
(ii) To promote the prompt, accurate and safe transfer of
securities by providing:
{{8-31-95 p.9440.02}}
(A) Adequate protection to the transfer agent against risk of
financial loss in the event persons have no recourse against the
eligible guarantor institution; and
(B) Adequate protection to the transfer agent against the
issuance of unauthorized guarantees.
[Codified to 17 C.F.R. § 240.17Ad--15]
[Section 240.17Ad--15 added at 57 Fed. Reg. 1095, January 10, 1992,
effective February 24,
1992]
§ 240.17Ad--16 Notice of Assumption or Termination of Transfer
Agent Services.
(a) A registered transfer agent that ceases to perform transfer
agent services on behalf of an issuer of securities, including a
registered transfer agent that ceases to perform transfer agent
services on behalf of an issuer of securities because of a merger or
acquisition by another transfer agent, shall send written notice of
such termination to the appropriate qualified registered securities
depository on or before the later of ten calendar days prior to the
effective date of such termination or the day the transfer agent is
notified of the effective date of such termination. Such notice shall
include the full name, address, telephone number, and Financial
Industry Number Standard ("FINS") number of the transfer agent
ceasing to perform the transfer agent services for the issuer; the
issuer's name; the issue or issues handled and their CUSIP number(s);
and if known, the name, address, and telephone number of the transfer
agent that thereafter will provide transfer services for the issuer. If
no successor transfer agent is known, the notice shall include the name
and address of a contact person at the issuer.
(b) A registered transfer agent that changes its name or address or
that assumes transfer agent services on behalf of an issuer of
securities, including a transfer agent that assumes transfer agent
services on behalf of an issuer of securities because of a merger or
acquisition of another transfer agent, shall send written notice of
such to the appropriate qualified registered securities depository on
or before the later of ten calendar days prior to the effective date of
such change in status or the day the transfer agent is notified of the
effective date of such change in status. A notice regarding a change of
name or address shall include the full name, address, telephone number,
and FINS number of the transfer agent and the location where
certificates are received for transfer. A notice regarding the
assumption of transfer agent services on behalf of an issuer of
securities, including assumption of transfer agent services resulting
from the merger or acquisition of another transfer agent, shall include
the full name, address, telephone number, and FINS number of the
transfer agent assuming the transfer agent services for the issuer; the
issuer's name; and the issue or issues handled and their CUSIP
number(s).
(c) The notice described in paragraphs (a) and (b) of this section
shall be delivered by means of secure communication. For purposes of
this section, secure communication shall include telegraph, overnight
mail, facsimile, or any other form of secure communication.
(d)(1) The appropriate qualified registered securities depository
that receives notices pursuant to paragraphs (a) and (b) of this
section shall deliver within 24 hours a copy of such notices to each
qualified registered securities depository. A qualified registered
securities depository that receives notice pursuant to this section
shall deliver a copy of such notices to its own participants within 24
hours.
(2) A qualified registered securities depository may comply with
its notice requirements under paragraph (d)(1) of this section by
making available the notice of all material information from the notice
within 24 hours in a manner set forth in the rules of the qualified
registered securities depository.
(3) A qualified registered securities depository shall maintain
such notices for a period of not less than two years, the first six
months in an easily accessible place. Such notice shall be made
available to the Commission or other persons as the Commission may
designate by order.
{{10-31-07 p.9440.03}}
(4) A registered transfer agent that provides notice pursuant to
paragraphs (a) and (b) of this section shall maintain such notice for a
period of not less than two years, the first six months in an easily
accessible place.
(e) For purposes of this section, a qualified registered
securities depository shall mean a clearing agency registered
under section 17A of the Act (15
U.S.C. 78q--1) that performs clearing agency functions as
described in Section 3(a)(23)(A)(i) of the Act
(15 U.S.C. 78c(a)(23)(A)(i)) 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.
(f) For purposes of this section, an appropriate qualified
registered securities depository shall 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.
[Codified to 17 C.F.R. § 240.17Ad--16]
[Section 240.17Ad--16 added at 59 Fed. Reg. 63661, December 8,
1994, effective February 6,
1995]
§ 240.17Ad--17 Transfer agents' obligation to search for lost
securityholders.
(a)(1) Every recordkeeping transfer agent whose master
securityholder file includes accounts of lost securityholders shall
exercise reasonable care to ascertain the correct addresses of such
securityholders. In exercising reasonable care to ascertain for its
master securityholder file such lost securityholders' current
addresses, each recordkeeping transfer agent shall conduct two data
base searches using at least one information data base service. The
transfer agent shall search by taxpayer identification number or by
name if a search based on taxpayer identification number is not
reasonably likely to locate the securityholder. Such data base searches
must be conducted without charge to a lost securityholder and with the
following frequency:
(i) Between three and twelve months of such securityholder
becoming a lost securityholder and
(ii) Between six and twelve months after the transfer agent's
first search for such lost securityholder.
(2) A transfer agent may not use a search method or service to
establish contact with lost securityholders that results in a charge to
a lost securityholder prior to completing the searches set forth in
paragraph (a)(1) of this section.
(3) A transfer agent need not conduct the searches set forth in
paragraph (a)(1) of this section for a lost securityholder if:
(i) It has received documentation that such securityholder is
decreased or
(ii) The aggregate value of assets listed in the lost
securityholder and all securities owned by the lost securityholder as
recorded in the transfer agent's master securityholder files, is less
than $25; or
(iii) The securityholder is not a natural person.
(b) For purposes of this section:
(1) Information data base service means either:
(i) Any automated data base service that contains addresses from
the entire United States geographic area, contains the names of at
least 50% of the United States adult population, is indexed by
taxpayer identification number or name, and is updated at least four
times a year; or
(ii) Any service or combination of services which produces
results comparable to those of the service described in paragraph
(b)(1)(i) of this section in locating lost securityholders.
(2) Lost securityholder means a securityholder:
(i) To whom an item of correspondence that was sent to the
securityholder at the address contained in the transfer agent's master
securityholder file has been returned as
{{10-31-07 p.9440.04}}undeliverable; provided, however,
that if such item is re-sent within one month to the lost
securityholder, the transfer agent may deem the securityholder to be a
lost securityholder as of the day the resent item is returned as
undeliverable; and
(ii) For whom the transfer agent has not received information
regarding the securityholder's new address.
(c) Every recordkeeping transfer agent shall maintain records to
demonstrate compliance with the requirements set forth in this section
which shall include written procedures which describe the transfer
agent's methodology for complying with this section.
[Codified to 17 C.F.R. § 240.17Ad--17]
[Section 240.17Ad--17 added at 62 Fed. Reg. 52237, October
7, 1997, effective December 8, 1997; amended at 68 Fed. Reg. 14316,
March 25, 2003, effective March 31, 2003]
§ 240.17Ad--19 Requirements for cancellation, processing,
storage, transportation, and destruction or other disposition of
securities certificates.
(a) Definitions. For purposes of this section:
(1) The terms cancelled or cancellation means the
process in which a securities certificate:
(i) Is physically marked to clearly indicate that it no longer
represents a claim against the issuer; and
(ii) Is voided on the records of the transfer agent.
(2) The term cancelled certificate facility means any
location where securities certificates are cancelled and thereafter
processed, stored, transported, destroyed or otherwise disposed of.
(3) The term certificate number means a unique
identification or serial number that is assigned and affixed by an
issuer or transfer agent to each securities certificate.
(4) The term controlled access means the practice of
permitting the entry of only authorized personnel to areas where
securities certificates are cancelled and thereafter processed, stored,
transported, destroyed or otherwise disposed of.
(5) The term CUSIP number means the unique
identification number that is assigned to each securities issue.
(6) The term destruction means the physical ruination
of a securities certificate by a transfer agent as part of the
certificate destruction procedures that make the reconstruction of the
certificate impossible.
(7) The term otherwise disposed of means any
disposition other than by destruction.
(8) The term securities certificate has the same
meaning that it has in § 240.17f--1(a)(6).
(b) Required procedures for the cancellation, storage,
transportation, destruction, or other disposition of securities
certificates. Every transfer agent involved in the handling,
processing, or storage of securities certificates shall establish and
implement written procedures for the cancellation, storage,
transportation, destruction, or other disposition of securities
certificates. This requirement applies to any agent that the transfer
agent uses to perform any of these activities.
(c) Written procedures. The written procedures required
by paragraph (b) of this section at a minimum shall provide that:
(1) There is controlled access to any cancelled certificate
facility;
(2) Each cancelled certificate be marked with the word
"CANCELLED" by stamp or perforation on the face of the
certificate unless the transfer agent has procedures adopted pursuant
to this rule for the destruction of cancelled certificates within three
business days of their cancellation;
(3) A record that is indexed and retrievable by CUSIP and
certificate number that contains the CUSIP number, certificate number
with any prefix or suffix, denomination, registration, issue date, and
cancellation date of each cancelled certificate;
(4) A record that is indexed and retrievable by CUSIP and
certificate number of each destroyed securities certificate or
securities certificate otherwise disposed of, the
records
{{10-31-07 p.9440.05}}must
contain for each destroyed or otherwise disposed of certificate the
CUSIP number, certificate number with any prefix or suffix,
denomination, registration, issue date, and cancellation date, and
additionally for any certificate otherwise disposed of a record of how
it was disposed of, the name and address of the party to whom it was
disposed, and the date of disposition;
(5) The physical transportation of cancelled certificates be made
in a secure manner and that the transfer agent maintain separately a
record of the CUSIP number and certificate number of each certificate
in transit;
(6) Authorized personnel of the transfer agent or its designee
supervise and witness the intentional destruction of any cancelled
certificate and retain copies of all records relating to certificates
which were destroyed; and
(7) Reports to the Lost and Stolen Securities Program be effected
in a timely and complete manner, as provided in § 240.17f--1 of any
cancelled certificate that is lost, stolen, missing, or counterfeit.
(d) Recordkeeping. Every transfer agent subject to this
section shall maintain records that demonstrate compliance with the
requirements set forth in this section and that describe the transfer
agent's methodology for complying with this section for three years,
the first year in an easily accessible place.
(e) Exemptive authority. Upon written application or
upon its own motion, the Commission may grant an exemption from any of
the provisions of this section, either unconditionally or on specific
terms and conditions, to any transfer agent or any class of transfer
agents and to any securities certificate or any class of securities
certificates.
[Section 240.17Ad-19 added at 68 Fed. Reg. 74401, December 23,
2003, effective January 22, 2004]
§ 240.17Ad--20 Issuer restrictions or prohibitions on ownership
by securities intermediaries.
(a) Except as provided in paragraph (c) of this section, no
registered transfer agent shall transfer any equity security registered
pursuant to section 12 or any equity security that subjects an issuer
to reporting under section 15(d) of the Act (15 U.S.C. 78l
or 15 U.S.C. 78o(d)) if such security is subject to any restriction or
prohibition on transfer to or from a securities intermediary in its
capacity as such.
(b) The term securities intermediary means a clearing
agency registered under section 17A of the Act (15 U.S.C. 78q--1) or a
person, including a bank, broker, or dealer, that in the ordinary
course of its business maintains securities accounts for others in its
capacity as such.
(c) The provisions of this section shall not apply to any equity
security issued by a partnership as defined in rule 901(b) of
Regulation S--K (§ 229.901(b) of this chapter).
[Section 240.17Ad--20 added at 69 Fed. Reg. 70862, December 7,
2004, effective March 7, 2005]
* * * * *
§ 240.17f--1 Requirements for reporting and inquiry with respect
to missing, lost, counterfeit or stolen securities.
(a) Definitions. For purposes of this section:
(1) The term "reporting institution" shall include every
national securities exchange, member thereof, registered securities
association, broker, dealer, municipal securities dealer, government
securities broker, government 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;
(2) The term "uncertificated security" shall mean a
security not represented by an instrument and the transfer of which is
registered upon books maintained for that purpose by or on behalf of
the issuer;
{{10-31-07 p.9440.06}}
(3) The term "global certificate securities issue" shall
mean a securities issue for which a single master certificate
representing the entire issue is registered in the nominee name of a
registered clearing agency and for which beneficial owners cannot
receive negotiable securities certificates;
(4) The term "customer" shall mean any person with whom the
reporting institution has entered into at least one prior
securities-related transaction; and
(5) The term "securities-related transaction" shall mean a
purpose, sale or pledge of investment securities, or a custodial
arrangement for investment securities.
(6) The term securities certificate means any physical
instrument that represents or purports to represent ownership in a
security that was printed by or on behalf of the issuer thereof and
shall include any such instrument that is or was:
(i) Printed but not issued;
(ii) Issued and outstanding, including treasury securities;
(iii) Cancelled, which for this purpose means either or both of
the procedures set forth in § 240.17Ad--19(a)(1); or
(iv) Counterfeit or reasonably believed to be counterfeit.
(7) The term issuer shall include an issuer's:
(i) Transfer agent(s), paying agent(s), tender agent(s), and
person(s) providing similar services; and
(ii) Corporate predecessor(s) and successor(s).
(8) The term missing shall include any securities
certificate that:
(i) Cannot be located or accounted for, but is not believed to be
lost or stolen; or
(ii) A transfer agent claims or believes was destroyed in any
manner other than by the transfer agent's own certificate destruction
procedures as provided in § 240.17Ad--19.
(b) Every reporting institution shall register with the Commission
or its designee in accordance with instructions issued by the
Commission except:
{{10-31-07 p.9441}}
(1) A member of a national securities exchange who effects
securities transactions through the trading facilities of the exchange
and has not received or held customer securities within the last six
months;
(2) A reporting institution that, within the last six months,
limited its securities activities exclusively to uncertificated
securities, global securities issues or any securities issue for which
neither record nor beneficial owners can obtain a negotiable securities
certificate; or
(3) A reporting institution whose business activities, within the
last six months, did not involve the handling of securities
certificates.
(c) Reporting requirements--(1) Stolen
securities.
(i) Every reporting institution shall report to the Commission or
its designee, and to a registered transfer agent for the issue, the
discovery of the theft or loss of any securities certificates where
there is substantial basis for believing that criminal activity was
involved. Such report shall be made within one business day of the
discovery and, if the certificate numbers of the securities cannot be
ascertained at that time, they shall be reported as soon thereafter as
possible.
(ii) Every reporting institution shall promptly report to the
Federal Bureau of Investigation upon the discovery of the theft or loss
of any securities certificate where there is substantial basis for
believing that criminal activity was involved.
(2) Missing or lost securities. Every reporting
institution shall report to the Commission or its designee, and to a
registered transfer agent for the issue, the discovery of the loss of
any securities certificate where criminal actions are not suspected
when the securities certificate has been missing or lost for a period
of two business days. Such report shall be made within one business day
of the end of such period except that:
(i) Securities certificates lost, missing, or stolen while in
transit to customers, transfer agents, banks, brokers or dealers shall
be reported by the delivering institution by the later of two business
days after notice of nonreceipt or as soon after such notice as the
certificate numbers of the securities can be ascertained.
(ii) Where a shipment of retired securities certificates is in
transit between any transfer agents, banks, brokers, dealers, or other
reporting institutions, with no affiliation existing between such
entities, and the delivering institution fails to receive notice of
receipt or non-receipt of the certificates, the delivering institution
shall act to determine the facts. In the event of non-delivery where
the certificates are not recovered by the delivering institution, the
delivering institution shall report the certificates as lost, stolen,
or missing to the Commission or its designee within a reasonable time
under the circumstances but in any event within twenty business days
from the date of shipment.
(iii) Securities certificates considered lost or missing as a
result of securities counts or verifications required by rule,
regulation or otherwise (e.g., dividend record date
verification made as a result of firm policy or internal audit function
report) shall be reported by the later of ten business days after
completion of such securities count or verification or as soon after
such count or verification as the certificate numbers of the securities
can be ascertained.
(iv) Securities certificates not received during the completion
of delivery, deposit or withdrawal shall be reported in the following
manner:
(A) Where delivery of the securities certificates is through a
clearing agency, the delivering institution shall supply to the
receiving institution the certificate number of the security within two
business days from the date of request from the receiving institution.
The receiving institution shall report within one business day of
notification of the certificate number;
(B) Where the delivery of securities certificates is in person
and where the delivering institution has a receipt, the delivering
institution shall supply the receiving institution the certificate
numbers of the securities within two business days from the date of
request from the receiving institution. The receiving institution shall
report within one business day of notification of the certificate
number;
(C) Where the delivery of securities certificates is in person
and where the delivering institution has no receipt, the delivering
institution shall report within two business days of notification of
nonreceipt by the receiving institution; or
(D) Where delivery of securities certificates is made by mail or
via draft, if payment is not received within ten business days, the
delivering institution shall confirm
{{10-31-07 p.9442}}with the
receiving institution the failure to receive such delivery; if
confirmation shows nonreceipt, the delivering institution shall report
within two business days of such confirmation.
(3) Counterfeit securities. Every reporting
institution shall report the discovery of any counterfeit securities
certificate to the Commission or its designee, to a registered transfer
agent for the issue, and to the Federal Bureau of Investigation within
one business day of such discovery.
(4) Transfer agent reporting obligations. Every
transfer agent shall make the reports required above only if it
receives notification of the loss, theft or counterfeiting from a
non-reporting institution or if it receives notification other than on
a Form X--17F--1A or if the certificate was in its possession at the
time of the loss.
(5) Recovery. Every reporting institution that
originally reported a lost, missing or stolen securities certificate
pursuant to this Section shall report recovery of that securities
certificate to the Commission or its designee and to a registered
transfer agent for the issue within one business day of such recovery
or finding. Every reporting institution that originally made a report
in which criminality was indicated also shall notify the Federal Bureau
of Investigation that the securities certificate has been recovered.
(6) Information to be reported. All reports made
pursuant to this Section shall include, if applicable or available, the
following information with respect to each securities certificate:
(i) Issuer;
(ii) Type of security and series;
(iii) Date of issue;
(iv) Maturity date;
(v) Denomination;
(vi) Interest rate;
(vii) Certificate number, including alphabetical prefix or
suffix;
(viii) Name in which registered;
(ix) Distinguishing characteristics, if counterfeit;
(x) Date of discovery of loss or recovery;
(xi) CUSIP number;
(xii) Financial Industry Numbering System ("FINS") Number;
and
(xiii) Type of loss.
(7) Forms. Reporting institutions shall make all
reports to the Commission or its designee and to a registered transfer
agent for the issue pursuant to this section on Form X--17F--1A.
Reporting institutions shall make reports to the Federal Bureau of
Investigation pursuant to this Section on Form X--17F--1A, unless the
reporting institution is a member of the Federal Reserve System or a
bank whose deposits are insured by the Federal Deposit Insurance
Corporation, in which case reports may be made on the form required by
the institution's appropriate regulatory agency for reports to the
Federal Bureau of Investigation.
(d) Required inquiries. (1) Every reporting institution
(except a reporting institution that, acting in its capacity as
transfer agent, paying agent, exchange agent or tender agent for an
equity issue, or registrar for a bond or other debt issue, compares all
transactions against a shareholder or bondholder list and a current
list of stop transfers) shall inquire of the Commission or its designee
with respect to every securities certificate which comes into its
possession or keeping, whether by pledge, transfer or otherwise, to
ascertain whether such securities certificate has been reported as
missing, lost, counterfeit or stolen, unless:
(i) The securities certificate is received directly from the
issuer or issuing agent at issuance;
(ii) The securities certificate is received from another
reporting institution or from a Federal Reserve Bank or Branch;
(iii) The securities certificate is received from a customer of
the reporting institution; and
(A) is registered in the name of such customer or its nominee;
or
{{10-31-07 p.9442.01}}
(B) was previously sold to such customer, as verified by the
internal records of the reporting institution;
(iv) The securities certificate is received as part of a
transaction which has an aggregate face value of $10,000 or less in the
case of bonds, or market value of $10,000 or less in the case of
stocks; or
(v) The securities certificate is received directly from a drop
which is affiliated with a reporting institution for the purposes of
receiving or delivering certificates on behalf of the reporting
institution.
(2) Form of inquiry. Inquiries shall be made in such
manner as prescribed by the Commission or its designee.
(3) A reporting institution shall make required inquiries by the
end of the fifth business day after a securities certificate comes into
its possession or keeping, provided that such inquiries shall be made
before the certificate is sold, used as collateral, or sent to another
reporting institution.
(e) Permissive reports and inquiries. Every reporting
institution may report to or inquire of the Commission or its designee
with respect to any securities certificate not otherwise required by
this section to be the subject of a report or inquiry. The Commission
on written request or upon its own motion may permit reports to and
inquiries of the system by any other person or entity upon such terms
and conditions as it deems appropriate and necessary in the public
interest and for the protection of investors.
(f) Exemptions. The following types of securities are
not subject to paragraphs (c) and (d) of this section:
(1) Security issues not assigned CUSIP numbers;
(2) Bond coupons;
(3) Uncertificated securities;
(4) Global securities issues; and
(5) Any securities issue for which neither record nor beneficial
owners can obtain a negotiable securities certificates.
(g) Recordkeeping. Every reporting institution shall
maintain and preserve in an easily accessible place for three years
copies of all Forms X-17F-1A filed pursuant to this section, all
agreements between reporting institutions regarding registration or
other aspects of this section, and all confirmations or other
information received from the Commission or its designee as a result of
inquiry.
[Codified to 17 C.F.R. § 240.17f-1]
[Section 240.17f-1 added at 42 Fed. Reg. 41025, August 12, 1977,
effective October 3, 1977; amended at 44 Fed. Reg. 31503, May 31, 1979,
effective July 1, 1979; 45 Fed. Reg. 14022, March 4, 1980, effective
February 27, 1980; 53 Fed. Reg. 37289, September 26, 1988, effective
December 27, 1988; 53 Fed. Reg. 40721, October 18, 1988; 68 Fed. Reg.
74400, December 23, 2003, effective January 22,
2004]
§ 240.17f-2 Fingerprinting of securities industry personnel.
(a) Exemptions for the fingerprinting requirement.
Except as otherwise provided in paragraph (a)(1) or (a)(2) of this
section, every member of a national securities exchange, broker,
dealer, registered transfer agent and registered clearing agency shall
require that each of its partners, directors, officers and employees be
fingerprinted and shall submit, or cause to be submitted, the
fingerprints of such persons to the Attorney General of the United
States or its designee for identification and appropriate processing.
(1) Permissive exemptions. Every member of a national
securities exchange, broker, dealer, registered transfer agent and
registered clearing agency may claim one or more of the exemptions in
paragraph (a)(1)(i), (ii) (iii) or (iv) of this section;
Provided, That all the requirements of paragraph (e) of this
section are also satisfied.
(i) Member of a national securities exchange, broker,
dealer or registered clearing agency. Every person who is a
partner, director, officer or employee of a member of a national
securities exchange, broker, dealer, or registered clearing agency
shall be exempt if that person:
(A) Is not engaged in the sale of securities;
{{10-31-07 p.9442.02}}
(B) Does not regularly have access to the keeping, handling or
processing of (1) securities, (2) monies, or
(3) the original books and records relating to the
securities or the monies; and
(C) Does not have direct supervisory responsibility over persons
engaged in the activities referred to in paragraphs (a)(1)(i)(A) and
(B) of this section.
(ii) Registered Transfer Agents. Every person who is a
partner, director, officer or employee of a registered transfer agent
shall be exempt if that person:
(A) Is not engaged in transfer agent functions (as defined in
section 3(a)(25) of the Securities Exchange Act of 1934) or activities
incidental thereto; or
(B) Meets the conditions in paragraphs (a)(1)(i)(B) and (C) of
this section.
(iii) Registered broker-dealers engaged in sales of certain
securities. Every partner, director, officer and employee of a
registered broker or dealer who satisfies paragraph (a)(1)(i)(B) of
this section shall be exempt if that broker or dealer:
(A) Is engaged exclusively in the sale of shares of registered
open-end management investment companies, variable contracts, or
interests in limited partnerships, unit investment trusts or real
estate investment trusts; Provided, That those securities
ordinarily are not evidenced by certificates;
(B) Is current in its continuing obligation under
§§ 240.15b1-1 and 15b3-1(b) to update item 10 of Form BD to disclose
the existence of any statutory disqualification set forth in
sections 3(a)(39),
15(b)(4) and 15(b)(6) of the
Securities Exchange Act of 1934;
(C) Has insurance or bonding indemnifying it for losses to
customers caused by the fraudulent or criminal acts of any of its
partners, directors, officers or employees for whom an exemption is
being claimed under paragraph (a)(1)(iii) of this section; and
(D) Is subject to the jurisdiction of a state insurance
department with respect to its sale of variable contracts.
(iv) Illegible fingerprint cards. Every person who is
a partner, director, officer or employee shall be exempt if that member
of a national securities exchange, broker, dealer, registered transfer
agent or registered clearing agency, on at least three occasions:
(A) Attempts in good faith to obtain from such person a complete
set of fingerprints acceptable to the Attorney General or its designee
for identification and appropriate processing by requiring that person
to be fingerprinted, by having that person's fingerprints rolled by a
person competent to do so and by submitting the fingerprint cards for
that person to the Attorney General of the United States or its
designee in accordance with proper procedures;
(B) Has that person's fingerprint cards returned to it by the
Attorney General of the United States or its designee without that
person's fingerprints having been identified because the fingerprints
were illegible; and
(C) Retains the returned fingerprint cards and any other required
records in accordance with paragraph (d) of this section and
§§ 240.17a-3(a)(13), 17a-4(e)(2) and 17Ad-7(e)(1) under the
Securities Exchange Act of 1934.
(2) Other exemptions by application to the Commission.
The Commission, upon specified terms, conditions and periods, may
grant exemptions to any class of partners, directors, officers or
employees of any member of a national securities exchange, broker,
dealer, registered transfer agent or registered clearing agency, if the
Commission finds that such action is not inconsistent with the public
interest or the protection of investors.
(b) Fingerprinting pursuant to other law. Every member
of a national securities exchange, broker, dealer, registered transfer
agent and registered clearing agency may satisfy the fingerprinting
requirement of section 17(f)(2)
of the Securities Exchange Act of 1934 as to any partner, director,
officer or employee, if:
(1) The person, in connection with his or her present employment
with such organization, has been fingerprinted pursuant to any other
law, statute, rule or regulation of any state or federal government or
agency thereof;
(2) The fingerprint cards for that person are submitted, or are
caused to be submitted, to the Attorney General of the United States or
its designee for identification and appropriate processing, and the
Attorney General or its designee has processed those fingerprint cards;
and
{{6-30-89 p.9442.03}}
(3) The processed fingerprint cards or any substitute records,
together with any information received from the Attorney General or its
designee, are maintained in accordance with paragraph (d) of this
section.
(c) Fingerprinting plans of self-regulatory organizations.
The fingerprinting requirement of section 17(f)(2) of the
Securities Exchange Act of 1934 may be satisfied by submitting
appropriate and complete fingerprint cards to a registered national
securities exchange or to a registered national securities association
which, pursuant to a plan filed with, and declared effective by, the
Commission, forwards such fingerprint cards to the Attorney General of
the United States or its designee for identification and appropriate
processing. Any plan filed by a registered national securities exchange
or a registered national securities association shall not become
effective, unless declared effective by the Commission as not
inconsistent with the public interest or the protection of investors;
and, in declaring any such plan effective, the Commission may impose
any terms and conditions relating to the provisions of the plan and the
period of its effectiveness as it may deem necessary or appropriate in
the public interest, for the protection of investors, or otherwise in
furtherance of the purposes of the Securities Exchange Act of 1934.
(d) Record maintenance--(1) Maintenance of processed
fingerprint cards and other related information. Every member of a
national securities exchange, broker, dealer, registered transfer agent
and registered clearing agency shall maintain the processed fingerprint
card or any substitute record when such card is not returned after
processing, together with any information received from the Attorney
General or its designee, for every person required to be fingerprinted
under section 17(f)(2) of the Securities Exchange Act of 1934 and for
persons who have complied with this section pursuant to paragraphs (b)
or (c) of this section. Every substitute record shall state the name of
the person whose fingerprint card was submitted to the Attorney General
of the United States, the name of the member of a national securities
exchange, broker, dealer, registered transfer agent or registered
clearing agency that submitted the fingerprint card, the name of the
person or organization that rolled the fingerprints, the date on which
the fingerprints were rolled, and the date the fingerprint card was
submitted to the Attorney General of the United States. The processed
fingerprint card and every other substitute record containing the
information required by
{{6-30-83 p.9443}}this
paragraph, together with any information received from the Attorney
General of the United States, shall be kept in an easily accessible
place at the organization's principal office and shall be made
available upon request to the Commission, the appropriate regulatory
agency (if not the Commission) or other designated examining authority.
The organization's principal office must provide to the regional,
branch or satellite office actually employing the person written
evidence that the person's fingerprints have been processed by the FBI,
and must provide to that office a copy of any criminal history record
information received from the FBI. All fingerprint cards, records and
information required to be maintained under this paragraph shall be
retained for a period of not less than three years after termination of
that person's employment or relationship with the organization.
(2) Record maintenance by designated examining authorities.
The records required to be maintained and preserved by a member of
a national securities exchange, broker, or dealer pursuant to the
requirements of paragraph (d)(1) of this section may be maintained and
preserved on behalf of that member, broker, or dealer by a
self-regulatory organization that is also the designated examining
authority for that member, broker or dealer, Provided That
the self-regulatory organization has filed in accordance with
§ 240.17f-2(c) a fingerprinting plan or amendments to an existing
plan concerning the storage and maintenance of records and that plan,
as amended, has been declared effective by the Commission, and
Provided Further That:
(i) Such records are subject at any time, or from time to time,
to reasonable periodic, special or other examinations by
representatives of the Commission; and
(ii) The self-regulatory organization furnishes to the
Commission, upon demand, at either the principal office or at the
regional office complete, correct and current hard copies of any and
all such records.
(3) Reproduction of records on microfilm. The records
required to be maintained pursuant to paragraph (d)(1) of this section
may be produced or reproduced on microfilm and preserved in that form.
If such microfilm substitution for hard copy is made by a member of a
national securities exchange, broker, dealer, registered transfer agent
or registered clearing agency, or by a self-regulatory organization
maintaining and storing records pursuant to paragraph (d)(2) of this
section, it shall at all times:
(i) Have available for examination by the Commission, the
appropriate regulatory agency (if not the Commission) or other
designated examining authority, facilities for the immediate, easily
readable projection of the microfilm and for the production of easily
readable and legible facsimile enlargements;
(ii) File and index the films in such a manner as to permit the
immediate location and retrieval of any particular record;
(iii) Be ready to provide, and immediately provide, any facsimile
enlargement which the Commission, the appropriate regulatory agency (if
not the Commission) or other designated examining authority by their
examiners or other representatives may request; and
(iv) For the period for which the microfilm records are required
to be maintained, store separately from the original microfilm records
a copy of the microfilm records.
(e) Notice requirement. Every member of a national
securities exchange, broker, dealer, registered transfer agent and
registered clearing agency that claims one or more of the exemptions in
paragraph (a)(1) of this section shall make and keep current a
statement entitled "Notice Pursuant to Rule 17f-2" containing the
information specified in paragraph (e)(1) below.
(1) Contents of statement. The notice required by
paragraph (e) of this section shall:
(i) State the name of the organization and state whether it is a
member of a national securities exchange, broker, dealer, registered
transfer agent, or registered clearing agency;
(ii) Identify by division, department, class, or name and
position within the organization all persons who are claimed to have
satisfied the fingerprinting requirement of section 17(f)(2) of the
Securities Exchange Act of 1934 pursuant to paragraph (b) of this
section;
(iii) Identify by division, department, class, title or position
within the organization all persons claimed to be exempt under
paragraphs (a)(1)(i)-(iii) of this section, and identify
{{6-30-83 p.9444}}by name all
persons claimed to be exempt under paragraph (a)(1)(iv). Persons
identified under this paragraph (e)(1)(iii) shall be exempt from the
requirement of section 17(f)(2) of the Securities Exchange Act of 1934
unless notified to the contrary by the Commission;
(iv) Describe, in generic terms, the nature of the duties of the
person or classes of persons, and the nature of the functions and
operations of the divisions and departments, identified as exempt in
paragraph (e)(1)(iii) above; and
(v) Describe the security measures utilized to ensure that only
those persons who have been fingerprinted in accordance with the
fingerprinting requirement of section 17(f)(2) of the Securities
Exchange Act of 1934 or who are exempt under paragraph (a)(1)(iv) of
this section have access to the keeping, handling or processing of
securities or monies or the original books and records relating
thereto.
(2) Record maintenance. A copy of the notice required
to be made and kept current under paragraph (e) of this section shall
be kept in an easily accessible place at the organization's principal
office and at the office employing the persons for whom exemptions are
claimed and shall be made available upon request for inspection by the
Commission, appropriate regulatory agency (if not the Commission) or
other designated examining authority.
(3) Exemption from the notice requirement. A
registered transfer agent that performs transfer agent functions only
on behalf of itself as an issuer and that receives fewer than 500 items
for transfer and fewer than 500 items for processing during any six
consecutive months shall be exempt from the notice requirement of
paragraph (c) of this section.
[Codified to 17 C.F.R. § 240.17f-2]
[Section 240.17f-2 added at 41 Fed. Reg. 13596, March 31, 1976,
effective July 1, 1976; amended at 42 Fed. Reg. 754, January 4, 1977;
47 Fed. Reg. 54060, December 1, 1982, effective November 22, 1982]
[The page following this is 9457.]
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