August 1, 1991
TO: STATE SECURITIES MEMBERS NO. 29-91
RE: INSTITUTE SUBMITS COMMENTS ON PROPOSED MASSACHUSETTS ROLL-
UP REGULATION
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The Institute submitted the attached comment letter to the
Massachusetts Securities Division regarding proposed regulation
950 CMR 13.305(C) which would provide grounds for denying the
registration of securities of a direct participation program if
the program fails to provide for either supermajority votes with
regard to certain roll-up or exchange transactions or fails to
provide appraisal rights for dissenters in such transactions. As
drafted, the proposed regulation would apply to limited
partnerships, business trusts or similar direct participation
programs. Since many mutual funds are organized as Massachusetts
business trusts, it is conceivable that the proposed regulation
may be construed to apply to mutual funds.
In its comment letter, the Institute noted that given the
extensive and detailed regulation mutual funds are subject to
under the 1940 Act, the proposed regulation would not provide any
additional protection to investors. The Institute therefore
recommended that a definition of "direct participation program"
be included in the regulation in order to avoid any possible
confusion that the provisions of the regulation applied to mutual
funds.
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We will keep you advised of developments.
Patricia Louie
Assistant General Counsel
Attachment