August 4, 1989
TO: UNIT INVESTMENT TRUST COMMITTEE NO. 48-89
RE: PROPOSED RULE 144A -- DEFINITION OF "ILLIQUID SECURITY"
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As we previously informed you, the SEC has reproposed Rule
144A, which would provide a safe harbor from registration for
certain resales of privately placed securities. (See Memorandum
to Unit Investment Trust Committee No. 35-89, dated July 17,
1989.)
In response to comments by the Institute and others, the
Release states that the Commission is considering revising its
position on restricted securities so that, if Rule 144A is
adopted, those securities eligible for resale under Rule 144A
would not be considered illiquid securities per se for purposes
of portfolio restrictions on mutual funds and UITs. Instead,
liquidity "would be a question of fact for the board of directors
to determine".
Since UITs would not be able to rely on the revised
restrictions, as proposed, please consider what alternatives
would be appropriate. I suggest that we discuss this matter
after our meeting on performance data on August 10.
Craig S. Tyle
Assistant General Counsel