The SEC's Stance on DTC As noted in the SEC o
Post# of 18238
The SEC's Stance on DTC
As noted in the SEC opinion:
"...DTC provides clearance, settlement, custodial, underwriting, registration, dividend, and proxy services for a substantial portion of all equities, corporate and municipal debt, exchange traded funds, and money market instruments available for trading in the United States. In 2010, DTC processed 295,000,000 book entry transfers of securities worth $273.8 trillion."
If DTC doesn't process and settle trading in your securities, it just doesn't happen.
From the DTC perspective, a chill does not change the eligibility status of an Issuer's securities, just what services the DTC will offer for those securities. So while an Issuer's securities may still be in street name (a CEDE account), DTC can refuse to allow the book entry trading and settlement of those securities.
On March 15, 2012 the Securities and Exchange Commission (SEC) issued an administrative opinion that sheds some light, though not much, on the DTC process (In the Matter of the Admin. Proc. File No. 3-13687). As further discussed herein, the SEC ultimately issued an opinion stating that an Issuer is entitled to due process proceedings by DTC as a result of a DTC chill placed on an Issuers securities.
In the Matter of the Application of aforementioned issuer in September 2009, DTC put a chill on the trading of aforementioned securities following the initiation by the SEC of an action against certain defendants, not IPWG, for improper issuance and trading in certain OTC securities, including this particular company and 3 other Issuers. Neither this issuer nor any of its officers or directors was a party to the SEC proceeding.
The portion of the SEC action related to this issuer indicated that about 80,000,000 shares of its stock was sold in the public markets without proper registration or an exemption from registration. In May 2010 the SEC settled with the Defendants related to the issuer for the usual penalties and permanent injunctions, which settlement did not address the already issued securities.
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