PROCEDURES FOR REMOVING RESTRICTIONS DTC’s pr
Post# of 2245
Posted On: 08/31/2014 1:12:02 AM
PROCEDURES FOR REMOVING RESTRICTIONS
DTC’s proposed rule will also seek SEC approval to reinstate full services under the following circumstances. Under the Safe Harbor provision of Securities Act Rule 144, restricted securities may become freely transferable after a specified holding period has elapsed. Because securities that have been Globally Locked have been credited to participant accounts without transfer during the period of the Global Lock, DTC is proposing, by analogy to Rule 144, to release Global Locks after the following periods have elapsed:
If the Global Lock is the result of a judicial action or administrative proceeding alleging that the issuer’s shares had been distributed in violation of Section 5 of the Securities Act:
• DTC may lift the Global Lock one-year after the latest date on which the outstanding litigation
or administrative proceeding has been resolved with respect to any defendant that deposited the
securities at DTC. This one-year approach applies to issuers that are not SEC reporting companies,
• DTC may lift the Global Lock six-months after the latest date on which the outstanding litigation or administrative proceeding has been resolved with respect to any such defendant. This six-month approach applies to issuers that are SEC reporting companies. If the Global Lock is the result of an issuer’s failure to respond or to respond adequately to a Deposit Chill notice:
• DTC may lift the Global Lock one-year after the date it was imposed for issuers that are not SEC
reporting companies,
• DTC may lift the Global Lock six-months after the date it was imposed, for issuers that are SEC reporting companies.
The release of a Global Lock under these circumstances would only be available to an issuer that is not and never had been, a “shell company” as defined in Securities Act Rule 144(i), unless the issuer had ceased to
be a shell company and filed the specified disclosures required by this rule to no longer be deemed a shell company. If new facts come to light during the six-month or one-year period that call into question whether
the securities satisfy DTC’s eligibility requirements, DTC may not release the Global Lock (subject to the fair procedures discussed above.)
CONCLUSION
DTC has designed the proposed rule changes described in this White Paper to provide issuers with fair procedures to receive notice of, and to challenge, Deposit Chills and Global Locks at DTC. The proposal also provides fair procedures for releasing restrictions. Again, DTC welcomes comments and suggestions to the procedures discussed in this White Paper, which should be addressed to issuerfeedback@dtcc.com.
http://www.google.com/url?sa=t&rct=j&...5972,d.eXY
DTC’s proposed rule will also seek SEC approval to reinstate full services under the following circumstances. Under the Safe Harbor provision of Securities Act Rule 144, restricted securities may become freely transferable after a specified holding period has elapsed. Because securities that have been Globally Locked have been credited to participant accounts without transfer during the period of the Global Lock, DTC is proposing, by analogy to Rule 144, to release Global Locks after the following periods have elapsed:
If the Global Lock is the result of a judicial action or administrative proceeding alleging that the issuer’s shares had been distributed in violation of Section 5 of the Securities Act:
• DTC may lift the Global Lock one-year after the latest date on which the outstanding litigation
or administrative proceeding has been resolved with respect to any defendant that deposited the
securities at DTC. This one-year approach applies to issuers that are not SEC reporting companies,
• DTC may lift the Global Lock six-months after the latest date on which the outstanding litigation or administrative proceeding has been resolved with respect to any such defendant. This six-month approach applies to issuers that are SEC reporting companies. If the Global Lock is the result of an issuer’s failure to respond or to respond adequately to a Deposit Chill notice:
• DTC may lift the Global Lock one-year after the date it was imposed for issuers that are not SEC
reporting companies,
• DTC may lift the Global Lock six-months after the date it was imposed, for issuers that are SEC reporting companies.
The release of a Global Lock under these circumstances would only be available to an issuer that is not and never had been, a “shell company” as defined in Securities Act Rule 144(i), unless the issuer had ceased to
be a shell company and filed the specified disclosures required by this rule to no longer be deemed a shell company. If new facts come to light during the six-month or one-year period that call into question whether
the securities satisfy DTC’s eligibility requirements, DTC may not release the Global Lock (subject to the fair procedures discussed above.)
CONCLUSION
DTC has designed the proposed rule changes described in this White Paper to provide issuers with fair procedures to receive notice of, and to challenge, Deposit Chills and Global Locks at DTC. The proposal also provides fair procedures for releasing restrictions. Again, DTC welcomes comments and suggestions to the procedures discussed in this White Paper, which should be addressed to issuerfeedback@dtcc.com.
http://www.google.com/url?sa=t&rct=j&...5972,d.eXY
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If the broker-dealer fails to deliver for 13 days, the regulation imposes a “close out” duty to purchase and deliver securities “of like kind and quantity.”
https://www.bloomberg.com/opinion/articles/20...ify%20wall
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