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S-56 Reg. T-61 462 INTERPRETATION OF LAW OR REGULATION (Copies to be sent to all Federal Reserve banks) October lb, 1937. Mr. , Vice President, Federal Reserve Bank of -----Dear Mr. Reference is made to your letter of August 20, 1937, and our letter of October 2, 1937, relating to the status, under Regulation T, of the certificates of deposit for the 5% Convertible Colla.toral Trust Bonds of (B) Corporation and the stamped certificates of capital stock of The (A) Corporation involved in a proposed plan to consolidate these two corporations. As ind..i.cated in our letter of October 2, the views of the Securities and Exchange Commission were requested in connection with the question of whether or not the certificates of deposit and the stamped stock are rogistered securi tics. TheTe is attached a self-explanator.r letter from Mr. Harold H. Neff, Director of the Cornmission 1 s Forms and Regulations Division, from which it will be noted that Mr. Neff is of the opinion that the stamped stock and the certificates of deposit here in question are, respecti vcly, not the same securities e.s the unstampod stock and the bonds for which the certificates were issued, and that neither the stamped stock nor tho certificates are registered securities under the Securities E..x.ch.:mgc Act of 193-4. The Board sees no reason to differ with the views expressed by the Director of tho Commission's Forms and Regula-cions Division and also is of the opinion that the stamped stock and the certificatos of deposit, rosp<'ilCtively, should not be considered to represent, for tho purposes of Regulation T, the unstampcd stock and the bonds for which tho cer-· tificates are issued. Accordingly, it is the view of the Board that, in the case of a customer with a restricted account containing the unstamped stock or the bonds in question, the creditor ma;,' not, without the deposit of additional margin, permit the stock to be sta.mped or release the bonds from the account against the receipt of tho certificate of deposit. Very truly yours, (Signed) L. P. Bethea L. P. Bethea., Assistant Secretury. Attachment. S,...36-..a Reg. T-61 SECURITIES AND E.1CHANGE COMMISSION 463 Vhshington Bonrd of Governors of thu Federal R2sorve System Wnshington, D. C. October 8, 1937. Gentlemen: This will acknowledge the receipt of your letter of OctobGr 2, 1937, in which you reqllCflt an opinion whether tho stampod certificates of Capital Stock of (A) Corporation and· certificates of deposit for tho 5% Convertible Collaturnl Trust Bonds of (B) Corporc:.:.tion, issued in connectior: with tho plan of consolidntion of the two corporc:.:.tions, arc sccuri tius 1·cgistorod on n natim}al socuri tios oxchangc under the Securities Exchange Act of 1934. With respect to tho stamping of tho stock of (A) Corpora-t,ton, I understand the relevant facts to be as follows~ Und0r the Agreement of Consolidatior. dated August 17, 1937, holders of the stock of (A) Corporation other than the (B) Corporation arc to roceivo in oxchango for each share held one share of 5% Cumulative Convertible Prior Pre-· ferred Stock of the nGw corporation,. which is to be known as (C) Corporo.tion. As an alternativo, hownvor, stockholders of (A) Corporo.tion Railway Company on the bnsis of o.re offered common stock of _ 1! shares of Railway Company stock for each share cf (A) Corporation. Holders desiring to accept this alternate offer were required to present their certificates on or before August 16, 1957, for stamping thereon of a notation of Duch acceptance. As to the (B Corporation) bonds, tho Lgroemont of Consolidation providus that. tho now corporation will assumt.: the bonds and will upon resolution of tho board of dirocto:;:-s pay ~200 in cash and ~~(300 par value of 5% Cu. mulativo Convertible Prior Prof'un•od Stock in the nov~ corporation tn exchangu for each $1,000 principal amount of the bonds. Thu Plan of Consolidation provides that bondholders desiring to accept this exch;:;..Y!gc:J offur must deposit their bonds with a designated depositFry in exchange for a registered transforable certificate of deposit. Bonds so dcposi tod :nay be withdrawn at an;y· time prior to the accoptanco by tho new corporation of tho offer of exchange. It is· rrrJ opl.nJ.on, on the basis of the facts stated above, that the stamned stock and the certificates of deposit are, respectively, not \ihe same securities as the 1.mstamped stoc::.C and the bonds for which the certificates wero issuad. Accordingly, since no application has been filed for registration of tho stamped stock or the certificates of deposit, neither or.' those securities is presently rcgistured under the Securities Exchan5o Act of 1954. I .. Vory truly yours, (Signed) Harold 11. Noff H[.;.rold H. Neff Director Forms und R..::gul.:Ltions Division
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