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228 X-9880 R.eg. T-54 I~TERPRETATION OF LAW OR REGULATION (Copies to be sent to all Federal reserve banks) April 28, 1937 Mr. -------------------------' Federal Reserve ank of 4J 0 ___, Dear Mr. Reference is made to your letter of March 10, 1937, regarding the inquiry received from & Co., Inc., as to whether or not the company is subject to Regulation T. It is understood that & Co., Inc., is not a member of a n~tional securities exchange and that the sole question pr~sented is whether it should be cont.=.lidered n "broker or dealer who transacts a business in securities through the medium of any such member" wi.thin the meaning of section 7 of the Secur.ities Exchnngt; Act of 1934. Since this question necessarily depends upon questions of fact it will be seen that, in general, each cuse must turn upon the facts involved in that particular situation and could not be determined without giving careful consideration to all such relevant facts. Hmvever the firm in question presents the specific inquiry of whether it would cease to be a "broker or dealer who transucts a bu~iness in securities through the medium of any such member" if lt ceased to handle any business in registered securities. In this connection i~ is to be noted that the language involved does not refer to transacting a businens in regist~red securities but refers to transacting a business in securities. Therefore, the Board feels that the mere failure to handle any business in registered securities would not, in itself, be sufficient. to keep a person from being a broker or dealer who transacts a business in securities through the medium of such a member. The Board has not seen fit to specif;y any conditions or fuctual situations which would prevent ~ person from being a broker or dealer who transacts a business in securities through the medium of a member; and for your confidential information it may be stated that, in general, it seems advisable for all doubts to be resolved in favor of the presumption that the broker o~ dealer does transact a business in securities through the medium of a membor. In this connection it is understood ., 229 X-~1880 Hug. T-54 -2that a number of firmf} who express doubt as to whether they actually "transact a business in securities through the medium of any such member" follow the pr:,visions of' Regulaticn T and thus avoid any question in the matter. Very truly yours, (Signed) Chester Morrill Chester Morrill, Secreta!"'.{. '