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F ederal reserve bank of Dallas F IS C A L A G E N T O F T H E U N IT E D S T A T E S DALLAS, TE X A S 75222 Circular No. 73-117 M a y 29, 1973 USE OF RESTRICTIVE ENDORSEMENTS To All Banking Institutions, and Others Concerned, in the Eleventh Federal Reserve District Our Circular No. 73-25, dated January 31, 1973, contained information concerning the use of restrictive endorsements on bearer United States Treasury securities and on plans for extending the use of such endorsements to Federal Agency securities. Since then, Treasury Department Circular No. 853 — “Regulations Governing Restrictive Endorsements of United States Bearer Securities’ — has been revised, effective April 11, 1973. Enclosed is an excerpt from the Federal ' Register of April 30, 1973 setting forth the text of the revision. In addition, most Federal Agencies have adopted the same restrictive endorsement procedures with regard to their bearer securities. The revision of the Treasury regulations is intended to simplify the procedures for restrictively endorsing Treasury securities and to eliminate certain limitations on the use of such endorsements. In particular, the requirement that a bank’ A B A code number be perforated beneath the endorse s ment has been eliminated. Also, in addition to those banking institutions previously authorized, savings and loan associations and building and loan associations are n o w expressly authorized to use the procedures set forth in the Treasury regulations, and all banks presenting bearer Treasury securities to a Federal Reserve Bank for conversion into book-entry securities m a y n o w restrictively endorse such securities. The bearer securities of the following Federal Agencies are n o w governed by the restrictive endorsement procedures set forth in Treasury Department Circular No. 853: Export-Import Bank of the United States Government National Mortgage Association Federal H o m e Loan Bank Board Federal H o m e Loan Mortgage Corporation Federal National Mortgage Association United States Postal Service Washington Metropolitan Area Transit Authority In addition, the F a r m Credit Administration has issued regulations authorizing the application of restrictive endorsement procedures to the bearer securities of the Banks for Cooperatives, Federal Intermediate Credit Banks and Federal Land Banks. Such regulations parallel the Treasury regula tions except that they do not, at this time, authorize the use of restrictive endorsements on securities presented for conversion into book-entry form. Information and instructions on such matters as the authorized form of the endorsement, the requirements for endorsement and the procedures for granting relief on account of restrictively endorsed securities proven to have been lost or stolen are set forth in Treasury Department Circular No. 853. Instructions on the procedures to be followed in submitting such securities to this Bank, and a form for that purpose, are enclosed. Additional forms will be furnished upon request. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) A s n oted in our C ircular N o. 73-25, th e u se o f th e r e str ic tiv e en d o rsem en t procedures can m in im ize t h e r isk o f loss a sso cia te d w ith sh ip m e n ts o f va lu ab les and, a t t h e sa m e tim e , effect sig n ifica n t c o st sa v in g s. T h e re c en t c h a n g e s in th e T rea su ry r e g u la tio n s should fa c ilita te th e use o f such en d o rsem en ts. A ccord in gly, w e u rge all b an k s in t h is D is tr ic t to m a k e th e fu lle s t p ossib le use o f t h e r e str ic tiv e en d o rsem en t procedures. T h e officers in c h a r g e o f F isc a l A g e n c y a c tiv itie s at each o f our offices w ill be p leased to d isc u ss a n y q u estio n s y o u m a y h a v e con cern in g such procedures. Y ou rs v e r y tru ly, P. E . Coldwell P r esid en t E n closu re (s) SECURITIES PREPARED AND SHIPPED IN ACCORDANCE WITH THE REGULATIONS * 'GOVERNING RESTRICTIVE ENDORSEMENTS OF BEARER GOVERNMENT AND CERTAIN AGENCY SECURITIES T h is form should be typed in triplicate. The original should accompany the shipment, a copy should be sent under separate cover, and a copy should be retained by the sender. TO: Federal Reserve Bank, Station K, Dallas, Texas 75222 orThe__________________________________Branch El P a s o 79999 Houston 77001 San Antonio 78206 The following is a list of bearer se c u r it ie s in the total par amount of $______________ restric tively endorsed, prepared for shipment and sent to you be the undersigned pursuant to Treasury Department Circular No. 853, R ev is ed , and the instructions printed on the reverse s id e of this form. T itle of Loan (or Issue).. .Transaction Coupon number*_______ Denomination □ □ □ Conversion to Book Entry Redemption Exchange for new is s u e (See subscription form) and all subse quent coupons are attached. Serial Numbers L iste d in Seq uence Denomination Serial Numbers L iste d in Sequence This is to certify that this list was prepared and checked under my supervision, and the se cu ritie s listed were pack aged and shipped under my supervision. ( S u b m itte r ) (S ig n a tu re and t i t l e of o f fic e r) (D a te ) (A ddress) (City an d S ta te ) ---------------------- A * When m ature d s e c u r i t i e s w ith no c o u p o n s a t t a c h e d are su b m i tt e d , the ’’N O N E ” sh o u l d be w ritte n in t h i s s p a c e . I f any u nm ature d c o u p o n s a re m is s i n g , d e t a i l e d i n fo rm a tio n s h o u l d b e fu rn i s h e d and, i f re d em p tio n i s d e s i r e d , d e d u c t i o n of the am oun t of s u c h c o u p o n s will be m ade. If e x c h a n g e for a n e w i s s u e i s d e s i r e d , a r e m i t t a n c e for th e am o unt of m i s s i n g c o u p o n s m u s t a c c o m p an y th e s h ip m e n t. FA-788 Rev. 2-73 PREPARATION OF SECURITIES FOR SHIPMENT Treasury Department Circular No. 853, Revised, contains the regulations governing restrictive endorsements or bearer Government and certain Agency s e cu ritie s. The requirements for imprinting restrictive endorsements on securities and attached unmatured coupons, as set forth in Circular No. 853, should be carefully observed. In addition to the provisions of the circular, the following instructions are applicable to the processing of securities and their preparation for shipment. 1. MINGLING OF ISSUES.— Restrictively endorsed securities of different i s s u e s which are sorted by issu e , denomination, and serial number may be submitted in a single shipment, but where securities to be redeemed at or after their maturity or call date are included in the same shipment with those to be presented for exchange, they should be clearly segregated. Securities submitted for redemption at par in payment of Federal e s ta te taxes should be similarly separated. 2. SECURITIES PRESENTED FOR EXCHANGE.— Where securities bearing restrictive endorse ments are submitted in exchange before or at maturity pursuant to an exchange offering, and the securities offered are available in registered form and registration is desired, complete registration instructions should be given at the time the subscription is entered. 3. LISTING OF SECURITIES.— After the submitter has imprinted the endorsements a s set forth in DC 853 and sorted the securities according to the instructions of the Federal Reserve Bank to which the submitter will ship the securities, the submitter must prepare a list of all securities of each issue included in the shipment. The list should be prepared in the order in which the securities are to be packaged and shipped and should show in the c a se of each iss u e the date of the next maturing coupon, specifying either that all subsequent coupons are attached or indicating which coupons, if any, are missing and whether or not remittance for the value of any missing coupons accompanies the securities. The list should be verified against the securities. One copy of the list should accompany the shipment. The list must be prepared whether or not the securities are microfilmed in accordance with paragraph 4 below. 4. MICROFILMING OF SECURITIES.-Microfilms or other photographic reproductions of endorsed securities should be made, where fac ilitie s are available, by banks and District Directors, Internal Revenue Service. Where securities bearing restrictive endorsements have become lost, stolen, or destroyed, such film or photographic reproductions will be acceptable to e sta b lish that they were so endorsed prior to their loss, theft, or destruction. No prints may be made from the film records unless specifically authorized by a Federal Reserve Bank or the Treasury Department. 5. SUPERVISION OF LISTING AND VERIFICATION .-The listing and verification, as well as the checking of any photographic reproductions, should be made under the supervision of an officer of the bank concerned, or an employee authorized by the District Director of the Internal Revenue Service concerned, who should sign all three copies of the listing. The officer or employee signing the list should also supervise the packaging and shipment of the s ecurities. The original and triplicate copy of the list, as well as the photographic records, if made, should be retained by the bank or the District Director, Internal Revenue Service, until the transaction is completed by receipt or notice of payment or, in appropriate c a se s , receipt of the securities issued in exchange. MONDAY, APRIL 30, 1973 WASHINGTON, D.C. Volume 38 ■ Number 82 PART II DEPARTMENT OF THE TREASURY Fiscal Service, Bureau of the Public Debt RESTRICTIVE ENDORSEMENTS OF UNITED STATES BEARER SECURITIES Dept. Circular No. 853 2d Rev. No. 82— Pt. IX— -1 \ / 10682 RULES AND REGULATIONS Title 31 — Money and Finance: Treasury CHAPTER II— FISCAL SERVICE, DEPART MENT OF THE TREASURY securities assigned in blank, or to bearer, or so assigned as to become, in effect, payable to bearer. SUBCHAPTER B— BUREAU OF TH E PUBLIC DEBT § 3 2 8 .2 PART 328— RESTRICTIVE ENDORSE MENTS OF U.S. BEARER SECURITIES Certain words and terms, as used in these regulations, are defined as follows: (a) “Banks” refer to, and include, in corporated banks (i.e., banks doing a gen eral commercial banking business), in corporated trust companies (i.e., trust companies doing either a general bank ing business or a general trust business), and savings and loan associations, build ing and loan associations, and such other financial institutions as may be desig nated by the Federal Reserve banks. This definition is lim ited to institutions in corporated w ithin the United States, its territories and possessions, the Common w ealth of Puerto Rico and the Canal Zone. (b) “Bearer securities” or “securities'* are those which are payable on their face to “bearer,” the ownership of which is not recorded. They include “Treasury bonds,” “Treasury notes,” “Treasury certificates of indebtedness,” and “Treas ury bills.” The regulations in 31 CFR part 328 have been amended for the purpose of reducing costs of shipping definitive bearer securities submitted for conver sion to book-entry securities or for re demptions or exchanges. Notice and public procedures are un necessary and are dispensed w ith as the fiscal policy of th e United States is in volved. The changes were effected under authority of R.S. 3706; 40 Stat. 288, 502, 1309; 46 Stat. 20; 48 Stat. 343; 49 Stat. 20; 56 Stat. 189; 73 Stat. 622; 85 Stat. 5, 74 (31 U.S.C. 738a, 739, 752, 752a, 753, 754, 754a and 754b); and 5 U.S.C. 301. Dated April 11, 1973. [ seal] Jo hn K . C ar lo ck, Fiscal Assistant Secretary. Department of the Treasury Circular No. 853, Revised, dated December 4,1964, is hereby further amended and revised and issued as Department of the Treas ury Circular No. 853, Second Revision, effective April 11, 1973. Sec. 328.1 328.2 328.3 328.4 328.5 328.6 328.7 328.8 328.9 S cope o f r e g u la tio n s . D e fin itio n s. A u th o riz a tio n fo r re s tr ic tiv e e n d o rse m e n ts . E ffect o f re s tr ic tiv e e n d o rse m e n ts . F o rm s o f e n d o rse m e n t. R e q u ire m e n ts f o r e n d o rse m e n t. S h ip m e n t o f s e c u ritie s . L oss, t h e f t , o r d e s tr u c tio n o f s e c u ritie s b e a rin g r e s tr ic tiv e e n d o rse m e n ts . M iscellan eo u s. A u t h o r i t y : R .S . 3706; 40 S ta t. 1309; 46 S ta t. 20; 48 S ta t. 343; 49 56 S ta t. 189; 73 S ta t. 622; 85 S ta t. U .S.C . 738a, 739, 752, 752a, 753, 754, 7 5 4 b ); a n d 5 U.S.C. 301. § 3 2 8 .1 288, 502, S ta t. 20; 5, 74 (31 754a a n d S cop e o f regu lations. The regulations in this part are ap plicable only to U.S. bearer secu rities1 presented (a) by or through banks for paym ent at or after their m aturity or call date, or in exchange for any secu rities under any exchange offering, (b) by banks for conversion to book-entry securities, (c) by or through banks at any tim e prior to their m aturity or call date for redemption at par and applica tion of the entire proceeds in paym ent of Federal estate taxes, provided said secu rities by the term s of their issue are eligible for such redemption, and (d) by Service Center Directors and District D i rectors, Internal Revenue Service, for re demption, with the proceeds to be ap plied in paym ent of taxes (other than securities presented under paragraph (c) of this sectio n ). These regulations do not apply to bearer securities presented for any other transactions, or to registered 1 C e rta in ag e n c ie s o f t h e U n ite d S ta te s a n d c e r ta in G o v e rn m e n t a n d G o v e rn m e n t-s p o n so re d c o rp o ra tio n s also a u th o r iz e t h e r e s tr ic tiv e e n d o rs e m e n t o f b e a re r se c u ritie s . D efin itio n s. Revenue Service, in their respective dis tricts as to the procedure to be followed under the authority granted by these regulations. R estrictive endorsements shall not be placed on securities until such inform ation is received from the Federal Reserve banks. § 328.4 E ffect o f restrictive e n d orse m en ts. _ Bearer securities bearing restrictive endorsements as herein provided will thereafter be nonnegotiable and pay m ent, redemption, or exchange will be m ade only as provided in such endorse m ents. § 328.5 F orm s o f endorsem ent. (a) Wft:~a presented by banks— (1 ) For payment or exchange.—The endorse m ent placed on a bearer security pre sented for paym ent or exchange by a bank should be in the follow ing form: F o r p r e s e n ta tio n to t h e F e d e ra l R e serv e B a n k o f __________________________ , F isc a l A g e n t o f th e U n ite d S ta te s , f o r re d e m p tio n o r in e x c h a n g e fo r s e c u ritie s o f a n e w issu e , in a c c o rd a n c e w ith w r itte n in s tr u c tio n s s u b m itte d b y ----------------------------------------------------( In s e rt n a m e o f p re s e n tin g b a n k ) § 3 2 8 .3 A u thorization fo r restrictive e n dorsem ents. (2) For redemption at par.—The en dorsement placed on a bearer security (a) By banks.—Banks are authorized,presented for redemption at par in pay under the conditions and in the form m ent of Federal estate taxes should be hereinafter provided, to place restrictive in the following form: endorsements upon the face of bearer p r e s e n ta tio n to th e F e d e l R e securities owned by them selves or their F o r__________________________ _raF isceserv g eB a n k al A nt of of customers for the purpose of presenta t h e U n ite d S ta te s , fo r re d e m p tio n a t p a r in tion to Federal Reserve banks or p a y m e n t o f F e d e ra l e s ta te ta x e s , in a c c o rd branches, or to the Treasurer of the a n c e w ith w r itte n in s tr u c tio n s s u b m itte d United States, as follows: b y ------------------------ ---------------------------( I n s e r t n a m e o f p r e s e n tin g b a n k ) (1) For paym ent or redemption—at any tim e w ithin 1 calendar m onth prior (b) For conversion to book-entry se to their m aturity date, or the date on curities.—The endorsement placed on a which they become payable pursuant to bearer security presented for conversion a call for redemption, or at any tim e to a book-entry security shall be in the after their m aturity or call date; following form: (2) For exchange—during any period F o r p r e s e n ta tio n to th e F e d e ra l R eserv e B a n k for their presentation pursuant to an o f __________________________ _ F isc a l A g e n t o f exchange offering; t h e U n ite d S ta te s , f o r c o n v e rsio n t o b o o k (3) For redemption at par in payment e n tr y s e c u ritie s b y __________________________ _ of Federal estate taxes (only eligible (In s e rt n am e of securities)—at any tim e prior to their p re s e n tin g b a n k ) m aturity or call redemption date; and (c) When presented by Service Center (4) For conversion to book-entry secu rities under subpart O of part 306 of this Directors or District Directors, Internal chapter—at any tim e prior to their m a Revenue Service.—The endorsement placed on a bearer security by a Service turity or call redemption date. ' (b) By Service Center Directors and Center Director or a D istrict Director, District Directors, Internal Revenue Internal Revenue Service, should be in ' Service.—Service Center Directors and the following form : D istrict Directors, Internal Revenue F o r p r e s e n ta tio n to th e F e d e ra l R e serv e B a n k Service, are authorized, under the condi o f ____- ______________________ F isc a l A g e n t o f tions and in the form hereinafter pro t h e U n ite d S ta te s , fo r re d e m p tio n , t h e p r o vided, to place restrictive endorsements ceed s to b e c re d ite d t o t h e a c c o u n t o f th e upon the face of bearer securities for the S erv ice C e n te r D ire c to r, I n te r n a l R e v e n u e purpose of presentation to Federal R e S erv ice, a t _________________ , f o r c r e d it o n l _______________________ta serve banks or branches, or to the Treas th e F e d e r a(In c o m e , g if ts , o r o th e r ) x e s d u e urer of the United States, for redemp f r o m ____________________________ _ tion and application of the proceeds in paym ent of taxes (other than securities (N am e a n d a d d re ss) presented for redemption at par and ap plication of the proceeds in payment of § 3 2 8 .6 R eq u irem en ts fo r en d orsem en t. Federal estate ta x e s). (a) On bearer securities.—The en (c) Instructions from Federal Reservedorsement m ust be im printed in th e leftbanks.—Federal Reserve banks will in hand portion of the face of each security form eligible banks and Service Center w ith the first line thereof parallel to the Directors and D istrict Directors, Internal le ft edge o f .t h e security and in such FEDERAL REGISTER, VOL. 38, NO. 82— MONDAY, APRIL 30, 1973 RULES AND REGULATIONS 10683 m aimer as to be clearly legible and in cases of exchange, rem ittance equal to the general regulations governing U nited such position th a t it w ill not obscure the the face am ount of th e m issing coupons States securities.) Except for bearer se serial number, series designation, or m ust accompany the securities. All m a curities subm itted for redemption at par other identifying data, and cover the tured coupons, including coupons which in paym ent o f Federal estate taxes, a sm allest possible portion of the text on w ill mature on or before th e date of bank will be considered th e owner of se th e face of th e security. The dimensions redemption or exchange (except as curities handled on behalf o f customers of the endorsement should be approxi otherwise specifically provided in an an unless it otherwise requests. The appli m ately 4 Inches in width and iy 2 inches nouncem ent of an exchange offering), cation for relief (form PD 2211) and in in height, and m ust be im printed by should be detached from securities upon structions w ill be furnished by the Fed stam p or plate of such character as will which restrictive endorsements are to be eral Reserve banks. render the endorsement substantially in imprinted. (b) Bond of indemnity .—Where secu eradicable. The nam e of the Federal R e rities bearing restrictive endorsements § 3 2 8 .7 S h ip m en t o f securities. serve bank of the district m ust appear shipped by a bank have been lost, stolen, on th e plate or stam p used for the im Securities bearing restrictive endorse or destroyed, a bond of indem nity w ith printing of the endorsement, and pres m ents m ay be shipped, at the risk and surety satisfactory to the Secretary of entation to the appropriate branch of expense of the shipper, by registered the Treasury w ill be required from the the Federal Reserve bank named will be mail, messenger, armored car service, or owner. If such bond is executed by a bank considered as presentation to the bank. express to the Federal Reserve bank of or other corporation, the execution m ust W hen securities are to be presented to the district in which the presenting be authorized by general or special reso th e Treasurer of the United States, the bank, the Service Center Director, or the lution of the board of directors, or other words “Treasurer of the U nited States" D istrict Director, Internal Revenue Serv body exercising sim ilar functions under should be used in lieu of the words “Fed ice, is located, or to the appropriate its bylaws. Ordinarily, no surety will be eral Reserve Bank o f ________________, branch of such Federal Reserve bank, required on a bond executed by a pre F iscal Agent of the U nited States.” No shipm ents to the Treasurer of the United senting bank. The Secretary of the subsequent endorsement w ill be recog States, W ashington, D.C., should be Treasury reserves the right, however, to require a surety in any case in which he nized. If the form of endorsement on a made by messenger or armored car. considers such action necessary for the security is different than th at prescribed § 3 2 8 .8 Loss, th e ft or d estruction o f protection of the United States. in § 328.5, the provisions of §§ 328.7 and secu rities bearin g restrictive en d orse 328.8 shall not apply to the security. § 3 2 8 .9 M iscellan eou s. m ents. (b) On coupons.—Unmatured cou pons attached to restrictively endorsed (a) General.—R elief will be provided The provisions of this circular are sub securities should be canceled by im print on account of securities bearing restric ject to the current revision of Depart ing the prescribed endorsement in such tive endorsements proved to have been m ent Circular No. 300. The Secretary of m anner th at a substantial portion of the lost, stolen or destroyed, upon the own the Treasury reserves the right at any endorsem ent w ill appear on each such er’s application, in the same manner as tim e to amend, supplement, or withdraw coupon. If any such coupons are m issing, registered securities which have not been any or all of the provisions of these deduction of their face am ount will be assigned. (See subpart N of the current regulations. m ade in cases of redemption, and in revision of Department Circular No. 300, [F R Doc.73— 7401 F ile d 4 -2 7 -7 3 ;8 :4 5 a m ] FEDERAL REGISTER, VOL. 3 8 , NO. 82— MONDAY, APRIL 30, 1973