[Federal Register Volume 62, Number 239 (Friday, December 12, 1997)]
[Notices]
[Pages 65466-65467]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32528]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39408; File No. SR-Philadep-97-05]


Self-Regulatory Organizations; Philadelphia Depository Trust 
Company; Notice of Filing and Order Granting Accelerated Approval of 
Proposed Rule Change Relating to Unclaimed Dividends and Distributions

December 5, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on September 25, 1997, 
Philadelphia Depository Trust Company (``Philadep'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I and II below, which items have been 
prepared primarily by Philadep. The Commission is publishing this 
notice and order to solicit comments on the proposed rule change from 
interested parties and to grant accelerated approval.
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    \1\ 15 U.S.C. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Under the proposed rule change, Philadep will amend its rules 
governing unclaimed dividends and distributions.\2\ The amendments 
reflect undertakings recently agreed to by Philadep in connection with 
settling an administrative proceeding with the Commission.\3\
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    \2\ The text of the proposed amendments was submitted with 
Philadep's rule filing and is available for inspection and copying 
at the Commission's Public Reference Room and through the principal 
office of Philadep.
    \3\ Securities Exchange Act Release No. 38918 (August 11, 1997) 
(order instituting proceedings pursuant to Section 19(h) and 21C of 
the Act, making findings, and imposing remedial sanctions) 
[Administrative Proceeding File No. 3-9360] (``Order'').

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[[Page 65467]]

II. Self-Regulatory Organization's Statements Regarding the Proposed 
Rule Change

    In its filing with the Commission, Philadep included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. Philadep has prepared summaries, set forth in sections 
(A), (B) and (C) below, of the most significant aspects of these 
statements.\4\
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    \4\ The Commission has modified the text of the summaries 
prepared by Philadep.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In accordance with the Order, Philadep will amend Philadep Rule 29, 
entitled ``Unclaimed Dividends and Other Distributions,'' and Philadep 
Rule 2, Section 1(e), which governs the retention of any unclaimed 
dividend or other distribution. The Order provides that within forty-
five (45) days of the entry of the Order, Philadep shall file with the 
Commission:

    A proposed rule change amending Rule 2, Section 1(e), Rule 29, 
Section 3 and the procedures thereunder, to provide that Philadep 
shall diligently research each unclaimed dividend or other 
distribution received after the Closing Date with a value greater 
than $500. Any such unclaimed dividend or other distribution with a 
value of $500 or less shall continue to be treated in accordance 
with Rule 29 (i.e., Philadep can take it into income after five (5) 
years). All unclaimed dividends and other distributions subject to 
Rule 29 shall be held and invested in accordance with Philadep's 
Participants' Fund Rule 4. No unclaimed dividends or distributions 
received after the Closing Date in excess of $500 shall be taken 
into income.

    In their current form, both Philadep Rule 2, Section 1(e), and 
Philadep Rule 29, Section 3, provide that (i) any dividends or 
distributions outstanding and unclaimed after five years from the date 
of such dividend or distribution shall be taken into income by Philadep 
and (ii) the participant shall waive any claim to any such dividend or 
distribution except as Philadep otherwise may provide in accordance 
with its by-laws and rules. Rule 2 and Rule 29 will be amended to 
provide that Philadep may not retain any unclaimed dividends or 
distributions in excess of $500 that are paid and received after the 
closing date.\5\ Also under the proposed rule change, Philadep will 
amend Rule 29, Section 1, to provide that Philadep shall diligently 
research any unclaimed dividend or distribution with a value greater 
than $500 that is received after the effective date of the amendments. 
No changes to Philadep's rules will be made with respect to unclaimed 
dividends or distributions received prior to the closing.
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    \5\ The closing date tentatively has been scheduled for December 
15, 1997, but may be rescheduled by mutual consent of the parties. 
The actual closing date will be inserted into the amended rules.
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    Finally, Philadep is amending Rule 29 by adding a new Section 3 
that will require that all unclaimed dividends and distributions that 
are subject to Rule 29, but as yet not taken into income by Philadep in 
accordance with Rule 29, be held and invested pursuant to the same 
procedures as set forth in Philadep Participants' Fund Rule 4.
    Philadep believes the proposed rule change is consistent with the 
requirements of Section 17A(b)(3)(F) of the Act \6\ and the rules and 
regulations thereunder because the amendments contemplated by the 
proposed rule change will better assure the safeguarding of securities 
and funds in the custody or control of Philadep or for which Philadep 
is responsible. Furthermore, Philadep believes the amendments are 
consistent with the undertakings set forth in the Order.
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    \6\ 15 U.S.C. 78q-1(b)(3)(F).
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(B) Self-Regulatory Organization's Statement on Burden on Competition

    Philadep does not believe that the proposed rule change will impose 
any burden on competition not necessary or appropriate in furtherance 
of the purpose of the Act.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received with respect 
to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Section 17A(b)(3)(F) of the Act \7\ requires that the rules of a 
clearing agency be designed to assure the safeguarding of securities 
and funds in its custody or control or for which it is responsible. The 
Commission believes that the proposed rule change is consistent with 
this obligation because it will increase the likelihood that unclaimed 
dividends and distributions will be returned to their owners.
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    \7\ 15 U.S.C. 78q-1(b)(3)(F).
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    The Commission finds good cause for approving the proposed rule 
change prior to the thirtieth day after the publication of notice of 
the filing. Approving prior to the thirtieth day after publication of 
notice will allow Philadep to implement the undertakings set forth in 
the Order immediately which should benefit the owners of unclaimed 
dividends and distributions.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. Copies of such filing also will be available 
for inspection and copying at the principal office of SCCP. All 
submissions should refer to File No. SR-Philadep-97-05 and should be 
submitted by January 2, 1998.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 97-32528 Filed 12-11-95; 8:45 am]
BILLING CODE 8010-01-M