At the time FRR 4 was issued, 17 CFR 200.81 provided for publication of certain interpretive and no-action letters 30 days after the staff's response was sent or given to the requesting party. The references to "30 days" in FRR 4

therefore were derived from, and consistent with, 17 CFR 200.81. This section, however, was amended recently to make no-action and certain interpretive letters available to the public as soon as practical after a staff response is sent or given to a requesting party.2 The Commission intends to keep its policy concerning the release of independence letters consistent with the policy for the release of interpretive and no-action positions as expressed in 17 CFR 200.81. Accordingly, each letter requesting the staff's views on an accountant's independence together with the staff's response to such a request will be made available for public inspection and copying as soon as practical after the staff's response is sent or given to the requesting party, unless temporary confidential treatment has been granted.

As indicated in the above quote from FRR 4, requests for temporary confidential treatment for independence letters have been processed in accordance with the provisions of 17 CFR 200.81(b). This policy will be continued. Under the circumstances and conditions set forth in 17 CFR 200.81(b), as amended, confidential treatment therefore may be granted for this correspondence for a period of up to 120 days from the date the staff's response has been sent or given to the requesting party.3

Release No. 33-6805/October 19, 1988 Information has come to the attention of the Commission that investors in the United States are being solicited to purchase and are purchasing the common stock of Multireal Properties, Inc. ("Multireal"), a Toronto, Ontario, Canada corporation. Since no registration statement has been filed or become effective pursuant to the Securities Act of 1933 ("Securities Act") with respect to these securities, their offer and sale may be in violation of Section 5 of the Securities Act. Accordingly, the Commission has placed the

2 Securities Act Release No. 6793 (August 19, 1988) [53 FR 32604]; Securities Act Release No. 6764 (April 7, 1988) [53 FR 12412].

Volume 42, No. 1

securities of Multireal on the Foreign Restricted List. See Securities Act Releases Nos. 4407 (August 17, 1961) and 4802 (September 23, 1965). The Securities Act registration requirement applies to any public offering of securities within the United States, whether by a domestic or foreign company. Registration is designed to provide disclosure of financial and other information about the issuer and its securities which will enable investors to make an informed and realistic evaluation of the worth of the securities. Failure to comply with the registration requirement may deprive investors of much or all of this essential information, and the absence of such information facilitates false claims as to the worth of the securities. Thus, investors are denied the essential protection which the Securities Act seeks to provide.

The primary purpose of the issuance of a restricted list is to alert not only public investors, but also broker-dealer firms that particular foreign securities are being offered for public sale in this country in possible violation of the Securities Act registration requirement. Before executing transactions in securities on the Foreign Restricted List, brokers and dealers should satisfy themselves that any such security purchased by them for resale, or acquired in the execution as broker of a customer's order, is not in fact part of an unlawful offering or distribution. Otherwise, the broker or dealer may involve itself in unlawful activities in violation of Section 5 of the Securities Act.

The inclusion of a security on the list, or the absence thereof, does not mean that the Commission has in any way considered its investment merit, for the Commission has no jurisdiction to pass upon the merits of securities. Accordingly, it follows that the deletion of a security from the list is not to be taken as an indication that the Commission has in any way considered the merits thereof. Moreover, it is recongized that in some instances persons other than the issuer may be involved in an unlawful distribution of a particular security, and in those instances the inclusion of the issuer's name on the list does not mean that the possible violation is attributable to the issuer or its management.

It will assist the Commission in the effective execution of its enforcement program in the area

35

89

P3US-P9R-6EHB

of foreign securities if brokers, dealers, investors
and other members of the public will advise the
Commission promptly of offers to sell securities
from abroad which are being made otherwise
than by means of a prospectus or offering circular
which has been filed with and cleared by the
Commission. Such information should be re-
ported to the nearest Regional or Branch Office of
the Commission, or addressed to: Securities and
Exchange Commission, Division of Enforce-
ment, 450 Fifth Street, N.W., Washington, D.C.
20549, ATTN: Peter J. Henning, Staff Attorney,
(202-272-3889) Mail Stop 10-1.

SECURITIES EXCHANGE ACT OF 1934

SECURITIES EXCHANGE ACT OF 1934
Release No. 34-26180/October 14, 1988

17 CFR Part 240

Recission of Rules under the Securities
Exchange Act of 1934

ACTION: Rescission of Rules; Conforming
Amendment.

SUMMARY: The Commission today is rescind-
ing seven obsolete rules. The first is Rule 7c2-1
under the Securities Exchange Act of 1934
(“Act”), which provides an exemption from the
provisions of Section 7(c)(2) for certain securities
exempt from registration under Section 12(a) of
the Act or traded on exchanges exempt from
registration under Section 5 of the Act. The sec-
ond rule is Rule 15a-3 under the Act, which
exempts from broker-dealer registration ex-
change specialists executing block trades. The
third rule is Rule 15b7-1 under the Act, which
provides that the Commission not name a se-
curities salesperson as a party to an admin-
istrative proceeding without first obtaining the
salesperson's consent. The fourth rule is Rule
15A12-1 under the Act, a cross-reference rule
which provides for the application procedures
outlined in Rule 15b7-1 to administrative pro-
ceedings concerning the suspension or expulsion
of a broker-dealer from membership in a regis-
tered national securities association. The fifth
rule is Rule 15c2-3, which prohibits broker-deal-
ers from trading in certain German securities.
The sixth rule is Rule 19a3-1, a cross-reference
rule to Rule 15b7-1. The seventh rule is Rule

1See Securities Exchange Act Release No. 11 (September
28, 1934).

2 See Securities Exchange Act Release Nos. 432 (De-

19b-3, which prohibits national securities ex-
changes from promulgating rules which fix com-
missions. These rules have become unnecessary
due to action by the courts, Congress, and the
passage of time. Consistent with investor protec-
tion, the Commission is rescinding the rules as
part of its ongoing effort to update regulation and
eliminate obsolete rules. Finally, the Commission
is making a conforming amendment to Rule 12a-5
of the Act to reflect the rescission of Rule 7c2-1.
EFFECTIVE DATE: [Upon publication in the
Federal Register].

FOR FURTHER INFORMATION CONTACT:
Arian Colachis, Esq., 202/272-2415, Division of
Market Regulation, Room 5023, Securities and
Exchange Commission, 450 5th Street, N.W.,
Washington, D.C. 20549.

SUPPLEMENTARY INFORMATION: Rule
7c2-1 under the Act is being rescinded. At the
time Rule 7c2-1 was adopted,1 and during subse-
quent amendments,2 Section 7(c)(2) prohibited a
broker-dealer from extending credit to a cus-
tomer without collateral, or on any collateral
other than exempted securities or securities reg-
istered upon a national securities exchange. The
rule originally was intended to provide a tempo-
rary exemption from the provisions of Section
7(c)(2) of the Act so that securities traded on
national securities exchanges that were exempt
from registration under Section 5 of the Act could
be used as collateral to the same extent as those
traded on registered exchanges. The rule was
later modified to provide a similar exemption for
securities that were either listed on national se-
curities exchanges or had unlisted trading priv-
ileges, but were not subject to the registration
requirements in Section 12(a) of the Act.

In 1968, Section 7(c)(2) was amended, eliminat-
ing the requirement that securities be exempted
securities or registered on a national securities
exchange in order to be used as collateral by
broker-dealers in credit transactions.3 As a result
of the 1968 Amendments, the Commission has
determined that Rule 7c2-1 has become obsolete.
Accordingly, the Commission is rescinding the
rule. At the same time, the Commission is also
amending Rule 12a-5 of the Act to reflect the
rescission of Rule 7c2-1.

The Commission is rescinding Rule 15a-3 under

cember 2, 1935); 808 (September 28, 1936); and 1887 (Sep-
tember 10, 1938).

3 Pub. L. No. 90-437, 82 Stat. 452 (1968).