January 23, 1990
TO: UNIT INVESTMENT TRUST MEMBERS NO. 5-90
RE: VERMONT OVERSALES POLICY
__________________________________________________________
The Securities Division (Division) of the Vermont
Department of Banking and Insurance recently issued the attached
no-action policy with respect to oversales by a unit investment
trust.
The Division has taken the position that oversales
constitute a violation of Section 4205 of the Vermont Securities
Act and required that a rescission offer be made to investors in
the event of an oversale. However, the Division will not
institute an enforcement action against a unit investment trust
in the event of an oversale if within 45 days of notification of
the oversale to the Division, the following offer of informal
settlement is made by the sponsor of the trust to the Division:
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 $150.00,
2. an acknowledgement 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 had 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 only if the oversales
are inadvertant, isolated in nature and not otherwise violative
of the Vermont Securities Act.
We will keep you informed of further developments.
Patricia Louie
Assistant General Counsel
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