April 13, 1992
TO: STATE LIAISON COMMITTEE NO. 14-92
UNIT INVESTMENT TRUST COMMITTEE NO. 21-92
RE: INSTITUTE SUBMITS OVERSALES RECOMMENDATIONS TO NASAA
COMMITTEE
__________________________________________________________
As you know, one of the most important issues that remains
non-uniform is the states' treatment of oversales. At the urging
of the Institute, NASAA adopted a resolution in 1984 which
strongly encouraged its members not to require rescission offers
when oversales are promptly admitted and the appropriate fees are
paid. The resolution also encouraged the states to permit mutual
funds and unit trusts to register an indefinite number of shares
or pay a single fee for registering an indefinite number of
shares. Since adoption of the 1984 resolution, the Institute has
continued to work with NASAA and the individual states to
encourage adoption of an indefinite registration procedure as a
solution for oversales.
In conjunction with a project currently under review by the
NASAA Investment Company Registration/Trading Practices Committee
(i.e., uniformity of securities registration procedures), the
Institute submitted the attached memorandum outlining the
oversales problem. The Institute recommended that states with a
high maximum fee or those that require rescission in the event of
an oversale adopt a "true indefinite" registration procedure.
This procedure would permit a fund or trust to register an
indefinite amount of securities through payment of a nominal fee
at the time of the initial registration or renewal. Thereafter,
a sales report would be required to be filed with an additional
fee based upon actual sales in the state. The NASAA Committee is
scheduled to meet later this month to discuss this project.
We will keep you advised of developments.
Patricia Louie
Assistant General Counsel
Attachment