December 28, 1990
TO: CONTRACTUAL PLANS COMMITTEE NO. 14-90
RE: NORTH CAROLINA TO ADMINISTRATIVELY DENY REGISTRATION
TO CONTRACTUAL PLANS
__________________________________________________________
The Institute has been informed by the Deputy Securities
Administrator of the North Carolina Securities Division that the
Division intends to issue administrative stop orders to deny the
registration statements of all contractual plans in North
Carolina. The Division will be basing such stop orders on the
grounds that the contractual plan fee structure exceeds the
limits set forth in Rule 1307(a) and (b) of the Division. Rule
1307(a) and (b) limit the amount of all commissions and expenses
to ten percent of the aggregate selling price of the securities.
A copy of Rule 1307 is attached.
The staff of the Division has indicated that it will
contact each plan sponsor individually to give the sponsor the
opportunity to voluntarily withdraw its application to register
and/or renew in North Carolina. If the sponsor elects not to
voluntarily withdraw its application for registration and/or
renewal, the Division anticipates issuing stop orders on or after
January 1, 1991.
The Institute has requested that the Division defer the
issuance of any stop order denying the effectiveness of the
registration statement of any contractual plan until the
Institute and its contractual plan members have had the
opportunity to meet with the Division. A copy of the Institute's
letter to the Division is attached.
We will be scheduling a meeting with the staff of the
Division as soon as possible and will keep you informed of
developments.
Patricia Louie
Assistant General Counsel
Attachments