EXHIBIT E SECURITIES INDUSTRY ASSOCIATION, Mr. JOHN M. MEYER, Jr., DEAR MR. MEYER: On behalf of Robert M. Gardiner, Chairman of the Board of Directors of SIA, I am forwarding to you a copy of his recent letter to Rep. John E. Moss regarding the development of a privately-owned comprehensive securities depository system. Sincerely, Hon. JOHN E. Moss, RICHARD O. SCRIBNER, Vice President and General Counsel―(N.Y.). SECURITIES INDUSTRY ASSOCIATION, Chairman, Subcommittee on Commerce and Finance of the Committee on Interstate and Foreign Commerce, 2125 Rayburn House Office Building, Washington, D.C. DEAR CHAIRMAN Moss: I am writing as Chairman of the Securities Industry Association, the new trade association for the securities business, to apprise you of a recent action of our Board of Directors which, at its meeting on February 5, 1972, considered and endorsed the creation of a privately-owned comprehensive securities depository system. In our view this would be a highly desirable step toward the effective resolution of the certificate handling challenge that faces our industry. We support the current efforts of the National Coordinating Group for Comprehensive Securities Depositories and the Banking and Securities Industry Committee (BASIC) to develop such a system, and we will encourage our members to support those efforts as well. As you may know, our members are also members of various of the stock exchanges and the NASD. They represent the vast majority of the broker-dealer users of the NYSE Stock Clearing Corporation, the Central Certificate Service, the Pacific Coast Stock Exchange Clearing and Depository organizations, the Midwest Stock Exchange clearing organizations, and National Over-the-Counter Clearing Corporation. They will also be major users of the forthcoming National Clearing Corporation of the NASD. Looking to the future, it is our hope that competition between these various entities can be eliminated insofar as clearing and depository services are concerned. This would have the beneficial result of avoiding duplication of facilities and disparity of systems. We believe firmly that a fully coordinated userowned and user-controlled network of depositories and clearing facilities is in the interest of the firms of this Association and its institutional and individual clients. We are delighted that BASIC in the area of its concentration has accepted the concept of user-owned and operated depositories both regionally and in New York. If legislative changes are necessary to accomplish BASIC's goals, we pledge to put our regional district organizations with their local legislative expertise and contacts at its disposal. We plan also to apprise BASIC and the chairman of the Senate committee of this action by our Board. Sincerely yours, EXHIBIT F ROBERT M. GARDINER, THE CORPORATE SECRETARY, AMERICAN SOCIETY OF CORPORATE SECRETARIES, INC., New York, February 24, 1972. "BASIC" SEEKS AMENDMENT OF UNIFORM COMMERCIAL CODE After twenty months of study, the Banking and Securities Industry Committee, known as BASIC, a seven-man inter-industry committee comprised of senior representatives of the National Association of Securities Dealers, the New York Stock Exchange, the American Stock Exchange and the New York Clearing House banks, has concluded that the most practical way further to reduce securities transfer problems is to establish a system of interconnected regional depositories and to expand the existing depositories to include securities held by banks, mutual funds, insurance companies and others. Their studies indicate that the elimination of approximately 75% of the physical delivery of certificates in transactions involving that larger group of financial institutions can flow from the development of a system of regional depositories in which those insti tutions participate. However, before using the depositories for their securities, most of which are beneficially owned by others, banks and other financial institutions want assurance that they will have a substantial voice in the management and control of the depository so as to achieve a sigificant influence over the safety of their deposits. Accordingly, BASIC is seeking the enactment in all fifty states of an amendment to the Uniform Commercial Code permitting banks, broker/dealers, registered investment companies and other governmentally regulated or supervised financial institutions to participate in the ownership of the capital stock of the depository, such ownership being presently limited to national securities exchanges and assocations. The present provisions of the Uniform Commercial Code, particularly Sections 8-102 (3) and 8-320, authorize a "clearing corporation," or securities depository, to transfer ownership of investment securities by book entry. Under the present legislation, there are two depositories in operation, one in New York City and one in San Francisco, and active consideration is being given to the establishment of a third in Chicago. Representatives of the banking and securities communities of Chicago, New York and San Francisco have formed a national coordinating group to facilitate the expansion of existing securities depositories into a network of interconnected regional securities depositories. The national coordinating group is working with persons in both the public and private sectors in all 50 states with a view to nationwide adoption of the proposed amendment. A memorandum in support of the proposed amendment of Section 8-102 (3) of the Code has been prepared by BASIC and copies are available upon request to BASIC at its office at 84 William Street, New York, N.Y. The Society has supported BASIC in its efforts to develop the use of depositories to minimize the physical delivery of certificates in transactions among financial institutions, and supports the proposed amendment as a necessary step to obtain utilization of such depositories by banks and financial institutions. Six Regional Groups have been furnished with the names of the proponents of the amendatory legislation in certain key states and will coordinate the efforts of the Society in support of its enactment therein. Members of the Society who wish to support the proposed legislation are requested to work through the Detroit, Houston, New York, St. Louis, San Francisco and Southeastern Regional Groups or through the New York office of the Society. JUMBO CERTIFICATES PERMIT BETHLEHEM STEEL TO SET NEW RECORDS On February 8, the record date for Bethlehem Steel's March 10, 1972 dividend, its New York transfer office issued only 580 certificates to effect the transfer of 832,864 shares, or an average of 1,436 shares per certificate. 1,864 certificates were canceled. Transfers received prior to noon were available for delivery the following morning and the remainder were available for delivery the next morning. Both the average number of shares per certificate-1,436-and the total shares transferred-832,864-constituted new record highs for Bethlehem Steel. Without the use of jumbo certificates, the issuance of more than 8,330 certificates and the cancellation of an equal number would have been required, as compared to the 580 certificates actually issued and 1,864 canceled. Also, it would not have been possible to maintain 48-hour delivery without the jumbo certificate. COMBINED DIVIDEND CHECKS Pennsylvania Power & Light Company has given us information about their new practice of issuing one combined dividend check to shareholders owning more than one class of PP&L stock-provided, of course, that registration is under the same name. The new stub itemizes the dividend payable on each class of stock owned. Provision is made at the bottom of the check for change of address or new taxpayer identification number. Members who might be interested may obtain further details from the National Office or from Mr. George I. Kline, Supervisor-Shareowner Affairs, in the Company's offices, 901 Hamilton Street, Allentown, Pa. 18101. SOCIETY'S BY-LAWS AMENDED The Society's By-Laws were amended at a meeting of the Board of Directors on January 18, 1972 to include the planning functions within the responsibilities of the Advisory Committee. To accomplish this, Section 1 of Article VIII was amended to read: "There shall be an Advisory Committee which shall consist of active members who have served as President of the Society and who are active as Corporate Secretaries, or whose responsibility includes the functions of the office of Secretary. The Committee shall perform consulting, planning and advisory services on such matters as shall be assigned to it from time to time by the Board of Directors or incumbent President of the Society and may on its own initiative make such other recommendations to the Board or the President as the Committee may think advisable with respect to the conduct and the planning of the affairs of the Society. Whenever the Committee, whether by request of the Board or of the President or on its own initiative, shall be studying a matter involving long range planning, the Board may appoint, on a temporary basis and for such matters only, one or more members whose active membership may be expected to extend for a period beyond that of the regular members of the Committee." EXHIBIT G NEW YORK STATE BANKERS ASSOCIATION. Hon. JOHN H. HUGHES, Chairman, Senate Judiciary Committee, Hon. EDWARD F. CRAWFORD, Chairman, Assembly Judiciary Committee, HON. WILLIAM T. CONKLIN, All Members Senate and Assembly Judiciary Committee. MEMORANDUM IN SUPPORT OF SENATE 7280-BY SENATOR CONKLIN (JUDICIARY COMM.); ASSEMBLY 8290-BY ASSEMBLYMAN CRAWFORD (JUDICIARY COMM.) Re An act to amend the uniform commercial code, in relation to the manner of transferring investment securities, and Senate 7281-A-By Senator Conklin (Judiciary Comm.); Assembly 8296-A-By Assemblyman Crawford (Judiciary Comm.). Re An act to amend the estates, powers and trusts law, in relation to the holding of securities by fiduciaries and by custodians for fiduciaries. This memorandum is submitted by the New York State Bankers Association on behalf of the commercial banks in the State of New York (both state and national). This Association adds its support to the above two bills recommended by the Banking and Securities Industry Committee (known as BASIC). The first bill would amend the Uniform Commercial Code to allow clearing corporations (depositories) to be owned by participants other than stock exchanges. We understand that this legislation has been recommended to all 50 states. The second bill would amend the Estates, Powers and Trusts Law to allow the placing in depositories of securities held in a fiduciary capacity. Since extensive memorandums in support have been fi'ed by BASIC outlining in detail the merits of the two proposals, it would be repetitious for us to again recite the merits of the two proposals. We concur in the belief that these bills would help minimize the physical delivery of certificates in transactions among financial institutions and thus greatly reduce the chance for error and loss. We earnestly urge that both of the above bills be reported out of committee and be passed by the legislature. Respectfully submitted, JOHN LEFEROVICH, JR., EXHIBIT H APPLICABILITY OF ELECTRICAL COMMUNICATIONS WITHIN A DEPOSITORY SYSTEM Report of Ad Hoc Communications Committee March 17, 1972 Banking and Securities Industry Committee 84 William Street Ne v York, N. Y. 10038 Attached is the report of the ad hoc Communications Committee concerning certain steps which the banking and securities industries could take to install a communications network to serve depositories and their members. This report recognizes the need for a certain "threshold" number of firms in favor of the concept before implementation would be seriously considered. Consequently, it would be helpful to those involved in developing a comprehensive depository to receive comments on the report from people within the industry especially from those who are potential communicators. Specifically it would be helpful to know: 1) whether your firm would be likely to 2) if not, what characteristics should the Accordingly, I hope you will give the attached report careful atten tion. It would be appreciated if you would comment at an early date. The BASIC staff stands ready to try to answer any questions you might have on this subject. P.S. Additional copies of the Yours very truly, Hermon W. Bois Herman W. Bevis |