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llulins No. 11. x-8055 FEDERAL RESERVE BOARD STATEMENT FOR THE PRESS For immediate r e l e a s e . October 9, 1934. WITHDRAWALS PRIOR TO DESIGNATION OP OLD ACCOUNTS. In i n t e r p r e t i n g s e c t i o n 7(a) of Regulation T on October 2, 1934, t h e F e d e r a l Reserve Board s a i d : " I f , between the opening of b u s i n e s s on October 1, 1934 and the time of t h e d e s i g n a t i o n of such account a s an old account, t h e r e has been anf withdrawal of money or s e c u r i t i e s from t h e account, such account cannot be d e s i g n a t e d as an old account u n l e s s i t i s an u n r e s t r i c t e d account on October 15 or on t h e date of such d e s i g n a t i o n , whichever i s the l a t e r , or u n l e s s t h e cash a n d / o r s e c u r i t i e s withdrawn from the account a r e r e p l a c e d b e f o r e t h e account i s d e s i g nated as an old a c c o u n t . " inquiries. T h i s r u l i n g has given r i s e t o two a d d i t i o n a l (1) Does i t prevent the withdrawal of any s e c u r i t i e s or only of s e c u r i t i e s which as of October 15 w i l l have t h e s t a t u s of r e g i s t e r e d a n d / o r exempted s e c u r i t i e s ? and (2) What i s meant by the replacement of cash or s e c u r i t i e s withdrawn from the account? In answer t o the f i r s t q u e s t i o n , t h e Board has r u l e d t h a t the r e s t r i c t i o n a p p l i e s t o the w i t h drawal of u n r e g i s t e r e d , non-exempted s e c u r i t i e s a s w e l l as t o the w i t h drawal of r e g i s t e r e d a n d / o r exempted s e c u r i t i e s . In answer to the second q u e s t i o n , t h e Board has r u l e d t h a t , where cash has been withdrawn, i t must be r e p l a c e d by an e q u i v a l e n t amount of cash and, where s e c u r i t i e s have been withdrawn, t h e y must be r e p l a c e d by money a n d / o r s e c u r i t i e s t o such an e x t e n t t h a t the money p l u s the market v a l u e of the s e c u r i t i e s d e p o s i t e d i s not l e s s than the aggregate market value of the s e c u r i t i e s - 2 - X-8055 which were withdrawn and the money p l u s the maximum loan v a l u e of the s e c u r i t i e s d e p o s i t e d i s not l e s s than the a g g r e g a t e maximum loan v a l u e of the s e c u r i t i e s which were withdrawn from the a c c o u n t . For t h e purpose of determining the amount of cash a n d / o r s e c u r i t i e s needed t o r e p l a c e s e c u r i t i e s withdrawn, the c u r r e n t market value and maximum loan v a l u e of the s e c u r i t i e s withdrawn and of t h e s e c u r i t i e s r e p l a c e d must be a s c e r t a i n e d in accordance w i t h s e c t i o n 3 of R e g u l a t i o n T a s of the opening of b u s i n e s s on October 15 or the d a t e of r e p l a c e m e n t , whichever i s l a t e r .
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