December 22, 1989
TO: STATE SECURITIES MEMBERS NO. 45-89
RE: PENNSYLVANIA ADOPTS OVERSALES POLICY
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The Pennsylvania Securities Commission recently issued
Corporation Finance Release 89-CF-7 that codifies the
Commission's policy with respect to oversales of securities by
mutual funds and unit investment trusts.
The Commission has long taken the position that oversales
constitute a violation of Section 201 of the Pennsylvania
Securities Act of 1972 and may have required that a rescission
offer be made to investors in the event of an oversale. In lieu
of initiating an enforcement action for a Section 201 violation
based on oversales, the staff of the Commission will accept an
informal settlement with a mutual fund if a fund complies with
the following:
1. pays, as costs of the investigation, fees that
would otherwise have been due; and
2. files a representation with the Commission that
a. payment of the costs of the investigation does not
constitute retroactive registration,
b. the oversales remain unregistered securities, and
c. the issuer will comply with the registration
requirements of the Pennsylvania Securities Act of
1972 in the future.
Attached is a copy of the Commission's release. We will
keep you informed of future developments.
Patricia Louie
Assistant General Counsel
Attachment