December 27, 1989
TO: UNIT INVESTMENT TRUST MEMBERS NO. 74-89
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 now accept
an informal settlement with a unit investment trust upon
submission of the following:
1. payment of the costs of the investigation, which
shall be equal to the registration fee that would
otherwise have been due if the oversale had been
registered, plus $100.00,
2. a representation that payment of the costs of the
investigation does not constitute retroactive
registration of the oversold securities, and
3. a statement from counsel that the sponsor has been
advised by legal counsel of the oversale and that
the sponsor will continue to make every effort to
register sufficient amounts of securities in the
future.
The foregoing procedure is available solely to unit
investment trusts for sales of securities in excess of the amount
registered which are isolated in nature and do not constitute a
course of conduct in violation of the Pennsylvania Securities
Act.
Attached is a copy of the Commission's release. We will
keep you informed of future developments.
Patricia Louie
Assistant General Counsel
Attachment