August 31, 1989
TO: UNIT INVESTMENT TRUST COMMITTEE NO. 57-89
RE: WASHINGTON MANUAL EXEMPTION
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As you know, the manual exemption has been attacked in some
states because state administrators believe that securities that
could not otherwise qualify for registration such as penny
stocks, are being sold without registration pursuant to the
manual exemption. Unfortunately, such attacks impact unit trusts
because many unit trusts rely on the manual exemption for
resales. In an effort to prevent the sale of penny stocks in
Washington, the Washington Securities Division recently proposed
to limit its manual exemption to only those securities listed in
a particular manual, Fitch Investors Service.
The Institute sent a comment letter to the Division stating
that an exemption from registration for resales of units of unit
trusts was appropriate because the securities had been registered
under the Washington Securities Act. We are pleased to report
that, based on the Institute's comment letter, the Division has
reproposed the rule. The reproposed rule will exempt resales of
units if the trust is listed in either Fitch's Investors Service,
Moody's Investors Service or Standard and Poor's Corporation
Records, provided the trust was previously registered under the
Investment Company Act of l940 and the Washington Securities Act.
Attached is a copy of the reproposed rule.
Please let me know if you have any comments. We will keep
you informed of developoments.
Natalie Shirley
Associate General Counsel
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