Lost Securityholders

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 240 and 249

[Release No. 34-39176; File No. S7-21-96]

RIN 3235-AG99

Lost Securityholders

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission is adopting Rule 17Ad-

17 and Rule 17a-24 under the Securities Exchange Act of 1934. Rule

17Ad-17, which is designed to address the problem of ``lost

securityholders,'' requires transfer agents to conduct searches in an

effort to locate lost securityholders. Rule 17a-24, which is designed

to assist the Commission in monitoring the effects of Rule 17Ad-17,

requires transfer agents to file information on lost securityholders

with the Commission. The rules are designed to reduce the number of

lost securityholders.

EFFECTIVE DATE: Secs. 240.17Ad-17 and 240.17Ad-7(i) will be effective

December 8, 1997, and Secs. 240.17a-24 and 249b.102, the amendments to

Form TA-2 will be effective February 4, 1998.

FOR FURTHER INFORMATION CONTACT: Jerry W. Carpenter, Assistant

Director; Christine Sibille, Senior Counsel; Jeffrey Mooney, Attorney;

or Theodore Lazo, Attorney at 202/942-4187, Office of Risk Management

and Control, Mail Stop 5-1, Division of Market Regulation, Securities

and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

Transfer agents serve as the custodians of securityholder records,

including records of securityholders' addresses, for issuers. In this

capacity, transfer agents frequently are responsible for disseminating

shareholder communications and dividend and interest payments. For

various reasons, transfer agents occasionally have outdated or

incorrect addresses for some securityholders (``lost

securityholders'').\1\ As a result, these shareholders do not receive

dividend and interest payments to which they are entitled. Generally,

issuers retain custody of such dividend and interest payments, and if

contact is not reestablished with a securityholder prior to the

expiration of the appropriate state's escheat period, the issuer must

turn the securityholder's assets over to the state unclaimed property

administrator While various transfer agents attempt to locate lost

securityholders, the extent and type of efforts used very considerably

from one transfer agent to another.\2\ The Securities and Exchange

Commission (``Commission'') believes that establishing minimum search

requirements in this area will facilitate locating lost

securityholders.

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\1\ For example, some securityholders do not provide a new

address when they move.

\2\ See Securities Exchange Act Release No. 37595 (August 22,

1996), 61 FR 44249 (release proposing Rule 17Ad-17 and Rule 17a-24),

note 13 (discussing the methods transfer agents currently use to

locate lost securityholders).

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On August 22, 1996, the Commission issued for comment a release

(``Proposing Release'') \3\ proposing Rule 17Ad-17 \4\ and Rule 17a-24

\5\ under the Securities Exchange Act of 1934 (``Exchange Act'') and

proposing amendments to Rule 17Ad-7,\6\ which were designed to address

the problem of lost securityholders. Proposed Rule 17Ad-17 would

require that transfer agents exercise reasonable care, including

conducting data base searches, in an effort to locate lost

securityholders.\7\ The proposed amendment to Rule 17Ad-7 set forth the

retention time periods for the records relating to compliance with

proposed Rule 17Ad-17. Proposed Rule 17Ad-24 would have required

certain entities that hold assets for others (e.g., transfer agents and

broker-dealers) to file annually with the Commission a list of the

social security numbers of all lost securityholders contained in their

records. The Proposing Release also requested comment on whether either

the Commission or a private entity should create and operate a lost

securityholder data base.

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\3\ Id. The Commission later extended the comment period

contained in the Proposing Release. Securities Exchange Act Release

No. 37949 (November 15, 1996), 61 FR 59046 (extending comment

period).

\4\ 17 CFR 240.17Ad-17.

\5\ 17 CFR 240.17Ad-24.

\6\ 17 CFR 240.17Ad-7.

\7\ The Proposing Release also discussed transfer agents'

obligations under Rule 17Ad-10 to maintain and keep current accurate

master securityholder files (defined below in note 10), which

include information such as securityholders' names and addresses.

The Proposing Release concluded that maintaining accurate

securityholder files is one of the most basic steps in addressing

the lost securityholder problem. The Commission believes that

conducting data base search for lost securityholders pursuant to

Rule 17Ad-17 will enhance a transfer agent's fulfillment of its

responsibilities under Rule 17Ad-10.

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The Commission received 57 comment letters from 52 commenters in

response to the Proposing Release.\8\ The commenters in general

expressed support for proposed Rule 17Ad-17 although several commenters

expressed concerns about specific provisions of the proposed rule. The

commenters in general expressed concern about proposed Rule 17a-24. The

Commission is adopting Rule 17Ad-17 substantially as proposed but with

some modifications to reflect commenters' views and is amending Rule

17Ad-7 as proposed. The Commission is adopting proposed Rule 17a-24

with substantial revisions and is making related changes to Form TA-

2\9\ In addition, the Commission has directed its staff to review the

operations of the adopted rules after three years and to report back to

the Commission on its findings.

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\8\ The Commission received comment letters from eighteen

transfer agents, five trade associations representing transfer

agents, five individuals, three corporations, one broker-dealer, two

professional search firms, and eighteen government entities. A

summary of comments has beem prepared by the staff of the Division

of Market Regulation. The summary is included along with the comment

letters in Public File No. S7-21-96, which is available for

inspection and copying in the Commission's Public Reference Room,

450 Fifth Street, NW., Washington, DC 20549.

\9\ Form TA-2 is referenced in 17 CFR 249b.102.

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[[Page 52230]]

II. Discussion

A. Rule 17Ad-17: Obligation to Search

As adopted, Rule 17Ad-17 requires that transfer agents exercise

reasonable care to ascertain the correct addresses of all lost

securityholders in their records. At a minimum, transfer agents must

conduct two searches using an information data base. In addition,

transfer agents may not use any service designed to locate their lost

securityholders that results in a charge to a securityholder until

after the two data base searches have been conducted.

1. Definition of Lost Securityholders

Rule 17Ad-17 generally defines a ``lost securityholder'' as a

securityholder to whom an item of correspondence that was sent to the

securityholder at the address in the transfer agent's master

securityholder file has been returned as undeliverable.\10\ However, if

a transfer agent re-sends the returned item to the securityholder

within one month, the transfer agent has the option to delay

classifying the securityholder as lost for purposes of Rule 17Ad-17

until the item is again returned to the transfer agent as

undeliverable. If and when a transfer agent receives a new address for

a lost securityholder, either directly from the securityholder or

through the transfer agent's own efforts, the securityholder will no

longer be classified as lost.

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\10\ ``Master securityholder file'' is defined in Rule 17Ad-9(b)

as the official list of individual securityholder accounts.

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Under the definition as proposed, a securityholder would have been

classified as lost only after two separate items of correspondence

mailed at least three months apart had each been returned as

undeliverable. Commenters in general were opposed to a requirement that

three months elapse between the mailing of two undeliverable items of

correspondence, stating that this approach would increase costs by

requiring transfer agents to initiate new coding mechanisms.\11\ In

addition, some commenters stated that continuing to mail distributions

to an incorrect address increases risk of loss. Commenters also noted

that the proposed definition of lost securityholder could result in

long delays before some shareholders are defined as lost.\12\

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\11\ The Proposing Release noted that the three month period was

intended to give transfer agents time to receive any delayed change

of address notifications prior to having to conduct searches.

\12\ For example, if an issue does not pay dividends or

interest, the only securityholder correspondence may be the annual

report. In such an instance, a securityholder would not have been

classified as lost until a year after the first correspondence had

been returned as undeliverable.

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The Commission believes that the revised definition produces a more

consistent result as to when shareholders are classified as lost.\13\

In addition, the Commission understands that some transfer agents have

internal procedures whereby they promptly remail returned

correspondence because they have found such remailing procedures to be

beneficial in reducing the number of lost securityholders.\14\

Therefore, the revised definition gives transfer agents flexibility to

delay coding a securityholder as lost until after the remailed item is

returned as undeliverable.

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\13\ The revised definition avoids situations where

securityholders of issues with quarterly mailings would have been

defined as lost three months after a correspondence was first

returned as undeliverable while securityholders of issues with only

annual mailings would not have been defined as lost until a year

after a correspondence was first returned as undeliverable.

\14\ Transfer agents have found that some items are returned as

a result of the deliverer's error rather than an incorrect address

and that remailing will result in the securityholder receiving the

item.

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In addition, the Commission is making minor technical amendments to

the proposed definition of lost securityholder. For example, to take

into account future developments in the methods used to disseminate

shareholder communications, the rule no longer refers to returned

correspondence that were ``sent by first class mail.''

2. Transfer Agents' Search Requirements

a. Type of Search

Rule 17Ad-17 requires every recordkeeping transfer agent whose

master securityholder file includes accounts of lost securityholders to

search for such securityholders' current address using at least one

information data base. The transfer agent's search for a lost

securityholder must be based on the taxpayer identification number

(``TIN'') or on the name of the lost securityholder if a search based

on TIN is not reasonably likely to locate the lost securityholder.

As originally proposed, the search could be based on a

securityholder's name if such a search was reasonably likely to locate

the lost securityholder. Commenters were divided as to the advisability

of such provision. While most commenters agreed that TIN searches are

more effective, some commenters argued that transfer agents should have

the flexibility to search by name when advisable (e.g., when the TIN is

missing or incomplete). By revising the requirement to permit name

searches only when a TIN search is not reasonably likely to locate the

lost securityholder (e.g., when the TIN is missing or incomplete), the

Commission believes transfer agents are afforded sufficient flexibility

to conduct the most effective search.

b. Time Frames for Search

The rule as adopted also differs from the proposal with respect to

the time frames in which the searches must be conducted. As proposed, a

transfer agent would have had to conduct a search within three months

of a securityholder being classified as lost. If after the first search

the securityholder had continued to be classified as lost, the proposal

would have required another search between 12 and 18 months after the

initial search. Many commenters suggested that conducting an initial

search three months after a securityholder was classified as lost was

too soon for the data bases to be updated, and that conducting a second

search between 12 and 18 months after the first search was too long a

period from loss of contact.

As adopted, a transfer agent must conduct the initial search

between three and 12 months of a securityholder being classified as

lost.\15\-\16\ If the lost securityholder is not found, the

transfer agent must conduct a second search between six and 12 months

after the initial search.

Demonstrated below are time frames in which the second search would

need to be conducted depending upon when the first search occurred.

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\15\-\16\ As discussed in the Proposing Release, the

Commission encourages transfer agents to take immediate steps upon

learning a shareholder's address may not be correct. Proposing

Release, note 16. The Proposing Release discusses several techniques

that, while not required by the rule, may be beneficial in reducing

the number of lost securityholders for which the transfer agent must

search. Proposing Release, note 13.

[[Page 52231]]

Lost 3 mos. 9 mos. 12 mos. 15 mos. 18 mos. 21 mos. 24 mos.

(2) 1st Search

1st search at:

3 mos.

(2) 2d Search

6 mos.

(2) 2d Search

9 mos.

(2) 2d Search

12 mos.

(2) 2d Search

The second search is intended to take advantage of address changes that

may have been added to the data base after the initial search. The

transfer agent must conduct these searches without charge to a lost

securityholder.

Under the proposed rule, the time in which transfer agents would

have been required to conduct the first search would have depended on

the frequency of mailings associated with an issue. (The first search

would have had to be conducted between three and 15 months after the

return of the first correspondence based on whether the issue had

quarterly or annual mailings.) \17\

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\17\ Between three to 12 months would have elapsed between the

first and second returned items of correspondence, and the first

search would have had to be conducted within three months after the

return of the second item of correspondence.

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Because the timing of the search requirements would have been

dependent upon the frequency of issuers' mailings, commenters noted

that transfer agents would not have had much flexibility in determining

when to search for lost securityholders.

Under the adopted rule, the first search must be conducted between

three to 12 months after the first correspondence is returned. However,

unlike the proposed rule, transfer agents may search at any time during

this period. As a result, transfer agents' search requirements are

triggered within basically the same timeframes whether there are

quarterly or annual mailings, but transfer agents will be better able

to use their discretion as to the most appropriate time to conduct the

searches. Additionally, this revision may permit transfer agents to

conduct more cost-effective searches by allowing transfer agents to

bundle together many lost securityholders for submission to a data base

service which should lower internal costs and increase the likelihood

that transfer agents will qualify for volume discounts from data base

services.

c. Exceptions to the Search Requirement

In the Proposing Release, the Commission requested comment on

whether the requirement to search for lost securityholders should apply

only when a lost securityholder's account contained assets over some de

minimis amount.\18\ Many commenters agreed that transfer agents should

not be required to expend funds to search for a lost securityholder

when the cost of a search could exceed the amount in the

securityholder's account. Although varying de minimis amounts were

suggested, most commenters favored a de minimis threshold of $100 per

account.

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\18\ In calculating this amount, all assets in that account for

which the transfer agent maintains records are included regardless

of whether the transfer agent is actually in possession of the

property. Therefore, the value of the assets in the securityholder's

account includes dividends, interest, and other payments due to the

securityholder and the value of any underlying assets (e.g., the

value of securities owned by the shareholder as shown on the

transfer agent's records).

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The Commission believes that there should be a de minimis exception

from the search requirements that will allow transfer agents to forgo

searches that would not be cost-effective. Based on what the Commission

understands to be the low cost of data base searches,\19\ the

Commission is amending the proposed rule to permit transfer agents to

exclude from the search requirements any lost securityholder when the

value of all dividend, interest, and other payments due to the

securityholder plus the value of all assets listed in the lost

securityholder's account is less than $25. The Commission believes that

this exemption will reduce the economic impact of the rule on transfer

agents while still affording sufficient protection to

securityholders.\20\

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\19\ Refer to Section IV below for a discussion of the cost of

data base searches.

\20\ Some commenters stated that for efficiency reasons some

transfer agents will search for all lost securityholders.

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In the Proposing Release, the Commission noted that data base

searches generally are considered a cost-effective way to locate lost

securityholders. The Commission requested comment on the potential

effectiveness of the rule in addressing the lost securityholder issue.

The request was intended to elicit comment on situations where data

base searches would not be an appropriate method of locating lost

securityholders. One commenter requested that exemptions from the

search requirement be created for certain categories of securityholders

that will not be reached through an electronic data base search,

specifically any lost securityholder (1) whose last known address is

outside of the United States; (2) whose account has a missing or

incomplete TIN; (3) which is not a natural person (e.g., a

corporation); or (4) who is known to be deceased.

Based on this request and on additional research into the

capabilities of existing commercial data bases, the Commission has

decided to create an exemption from the search requirements for

securityholders for whom the transfer agent has received documentation

of their death \21\ and an exemption for securityholders which are not

natural persons. The Commission understands that the data bases relied

upon by most transfer agents do not contain information on estates or

heirs and that there is no automated method by which such information

can be obtained. \22\ Securityholders which are not natural persons

likewise cannot be located easily through the use of information data

bases and comprise a minuscule percentage of the total amount of lost

securityholders.

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\21\ Such documentation may consist of a report received from an

information data base.

\22\ The Commission has been informed that in the future some

information data bases may be updated to include beneficiary data.

If a low cost method of determining a deceased's beneficiary becomes

available, the Commission may reexamine the application of search

requirements to this category of securityholder.

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The Commission is not adopting the other suggested exemptions

because data base searches for those categories of lost securityholders

could in many cases be effective. For example, although the Commission

understands that most data bases currently do not contain the names of

individuals living outside of the United States, it is possible that a

securityholder with a foreign last known address was only temporarily

living out of the country and that a data base search will provide an

updated domestic address.

With respect to the commenter's request for an exemption for

securityholders with missing or incomplete TINs, the adopted rule

permits transfer agents to conduct a search based on a lost

securityholder's name when a search based on a TIN is not reasonably

likely to locate a lost

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securityholder. Therefore, the Commission also believes that no

exemption should be created for accounts with missing TINs.

d. Assessment of Procedures

In the Proposing Release, the Commission requested comment on

whether the rule should include (1) a requirement that transfer agents

periodically assess the effectiveness and appropriateness of the search

procedures and technology they employ, and/or (2) a requirement that

transfer agents' search procedures meet a performance standard based on

success in locating lost securityholders. Most commenters that

addressed the issue generally did not support adopting a strict

application of this requirement. For example, some commenters believe

that transfer agents should not have an absolute requirement to locate

a certain percentage of their shareholders because the results of the

searches frequently were outside of their control. While the adopted

rule does not specifically contain such requirements, the Commission

believes that transfer agents should bear these concepts in mind in

determining whether they have met their obligation to exercise

reasonable care under Rule 17Ad-17(a). For example, if a transfer agent

is using a data base service that routinely fails to locate any or that

locates only a very small percentage of lost securityholders, the

transfer agent should evaluate whether the use of such service

constitutes the exercise of reasonable care.

3. Definition of Information Data Base

As proposed, Rule 17Ad-17 would have defined an information data

base as any automated data base service that (1) contains addresses of

U.S. residents, including addresses in the geographic area in which the

lost securityholder's last known address is located, (2) covers a

reasonably broad geographic area, (3) is indexed by TIN or by name, and

(4) is updated at least four times a year. The Commission has revised

the definition based on commenters' suggestions. The first requirement

has been revised to require that the data base contain addresses from

the entire United States. The second requirement has been revised to

require that the data base contain names of at least 50% of the U.S.

adult population. The third requirement also has been revised to

clarify that an information data base must be indexed by TINs if a TIN

search is used or by name if a name search is used. The fourth

requirement is adopted as proposed. The revisions are intended to

preclude the use of a data base that contains a small number of names

but covers a broad geographic area or one that contains a large number

of names but covers only a small geographic area.

The Commission also is adopting an alternative standard that will

provide flexibility to transfer agents in fulfilling their obligations

to search for lost securityholders. The alternative will permit

transfer agents to use any service to locate lost securityholders if

that service produces comparable results to the information data base

described above. As part of their obligation to maintain records

discussed below, a transfer agent relying on this alternative would be

required to develop written procedures documenting and describing the

alternative service used.

4. Use of Professional Search Firms

The Proposing Release discussed the current practice of some

transfer agents to use professional search firms that charge a lost

securityholder a fee for locating the lost securityholder's assets. As

proposed and as adopted, Rule 17Ad-17 will prohibit a transfer agent

from using any service to locate a securityholder that results in a

charge to the securityholder until after the two data base searches

required by the rule have been conducted. While a few commenters argued

against the proposed prohibition, many commenters supported the

provision with some arguing for additional restrictions.

Although the more extensive search techniques employed by

professional search firms may locate some securityholders that the data

base searches will not locate, the charges of such firms can cost a

securityholder a significant portion of his or her assets. The

Commission believes that transfer agents should make efforts (i.e., the

search provisions of Rule 17Ad-17(a)(1)) to locate lost securityholders

before permitting services to charge them for reuniting them with their

assets. Therefore, the Commission is adopting Rule 17Ad-17(a)(2) as

proposed to delay transfer agents' use of professional search firms

where the charge is assessed to the securityholder until after a

transfer agent has completed two searches under Rule 17Ad-17.\23\

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\23\ Because a professional search firm that charges a fee to

the transfer agent rather than to lost securityholders could qualify

as an information data base search under the rule, professional

search firms could be used to satisfy the transfer agent's search

obligation under Rule 17Ad-17.

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5. Verification of Securityholder

In order to guard against delivery of distributions to an incorrect

recipient, the Commission recommended in the Proposing Release that

transfer agents should verify that the person at the newly obtained

address is in fact its account holder before disbursing securities or

funds. One commenter expressed concern that requiring a transfer agent

to confirm a securityholder's identity may restrict the transfer

agent's ability to correct its master securityholder file because some

shareholders may fail to return verification forms. The language in the

Proposing Release was not intended to mandate a particular procedure.

Instead, it was intended to highlight the need for transfer agents to

use care prior to disbursement of securityholder funds. Prior to

disbursing funds or to updating their master securityholder files,

transfer agents should determine whether such action is appropriate

based on all relevant factors.

B. Rules 17Ad-7 and 17Ad-17: Recordkeeping Requirements

Rule 17Ad-17 requires that all recordkeeping transfer agents

maintain records to demonstrate their compliance with the requirements

under the rule. Paragraph (i) is being added to Exchange Act Rule 17Ad-

7 to require that transfer agents maintain the records required by Rule

17Ad-17 for a period of not less than three years and that transfer

agents maintain these records in an easily accessible place during the

first year.\24\

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\24\ Rule 17Ad-7 sets forth the lengths of time and the methods

by which transfer agents must maintain the records which they are

required to keep pursuant to Exchange Act Rules 17Ad-6, 17f-2, and

17Ad-17.

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In the Proposing Release, the Commission suggested that transfer

agents document the date each securityholder is classified as lost and

the date the data base searches are conducted. One commenter

interpreted this discussion to be a requirement that such dates be

recorded on each lost securityholder's individual account record. This

commenter stated that this requirement could require costly systems

upgrades and that transfer agents instead should be allowed to

demonstrate that data base searches have been conducted by referencing

procedures that are in place and that reasonably assure that the

searches are conducted on a timely basis. The language in the Proposing

Release was not intended to specify the recordkeeping method to be used

by transfer agents. Rather it was intended to provide flexibility to

transfer agents to create systems that adequately demonstrate

compliance with Rule 17Ad-17. However, the Commission does not believe

that referencing

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procedures without any specific documentation demonstrating that

searches have been appropriately conducted is adequate.

The Commission also is adding language to Rule 17Ad-17 to clarify

that transfer agents must maintain written procedures on how they will

comply with the rule. The amendment to the rule is intended to give

transfer agents more guidance on what the minimum recordkeeping

requirements are while still providing flexibility to determine the

most efficient method of demonstrating compliance with the requirements

of the rule.

C. Rule 17a-24: Lost Securityholder Data

In the Proposing Release, the Commission also discussed the

creation of a data base that would contain information (e.g., TINs) on

all lost securityholders. Proposed Rule 17a-24 would have required

certain entities that hold assets for others (e.g., transfer agents and

broker-dealers) to file annually with the Commission a list of the TINs

of all lost securityholders contained in their records. The Commission

also requested comment on whether the Commission or its delegee should

create and operate a lost securityholder data base or whether the

Commission should release the information it received under Rule 17a-24

to the public to permit private entities to create data bases.

Most commenters were opposed to the creation of a lost

securityholder data base. Many commenters believed that the data base

would result in a loss of privacy for securityholders. Other commenters

suggested that the data base could result in fraudulent claims.

Finally, some commenters opined that the data base would be of limited

utility because it would require that securityholders take the

initiative to discover whether they had any unclaimed assets.

In response to concerns expressed by commenters, the Commission has

determined to adopt proposed Rule 17a-24 with revisions that will only

require the reporting of certain aggregate data. As noted in the

Proposing Release, the Commission believes that there is a need to

gather data on lost securityholders in order to obtain better

information as to the extent to which lost securityholders are not

receiving assets to which they are entitled and to assess the

effectiveness of search techniques employed by transfer agents.\25\

Similar to the proposed rule, the final rule will require each

recordkeeping transfer agent to file annually with the Commission

information on lost securityholders contained in the transfer agent's

records.\26\ However, the Commission has determined to require transfer

agents to submit only aggregate data regarding the accounts of lost

securityholders instead of the individual data that would have been

required by proposed Rule 17a-24. This aggregate information would have

been available by totaling the information that would have been

required by proposed Rule 17a-24 or currently is readily accessible by

transfer agents.

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\25\ 61 FR at 44252-44253.

\26\ 61 FR at 44253.

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Specially, the Commission is revising proposed Rule 17a-24 to

require registered transfer agents to disclose the aggregate number of

lost securityholder accounts as of June 30 of each year and the

percentage of total accounts represented by such lost securityholder

accounts. These figures would be reported for specified periods of

time: one year or less, three years or less, five years or less, or

greater than five years.\27\ The Commission also is requiring

information on lost securityholder accounts that escheat to state

unclaimed property administrators on an annual basis. To facilitate the

reporting of this information, the Commission is amending Exchange Act

Form TA-2,\28\ the annual report of registered transfer agents. The

Commission believes that this will be the least burdensome and most

efficient way for transfer agents to comply with the revised rule.

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\27\ The Commission requested comment in the Proposing Release

on whether the filing requirement should include information

concerning the length of time securityholders have been lost. 61 FR

at 44253.

\28\ Pursuant to Exchange Act Rule 17Ac2-2, registered transfer

agents are required to file an annual report on Form TA-2 by August

31 of each calendar year. 17 CFR 240.17Ac2-2.

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The Commission believes that revised Rule 17a-24 is preferable to

the rule as proposed at this time. The aggregate information required

by the adopted rule should, as a result of Rule 17Ad-17, be readily

available to transfer agents. Moreover, the collection of aggregate

data, rather than taxpayer identification numbers or other personal

data, ameliorates privacy concerns raised by some commenters. In

addition to not requiring individual data, the revised rule will enable

the Commission to better monitor the effectiveness of Rule 17Ad-17 over

time and determine whether additional measures are necessary to find

lost securityholders. Finally, the Commission has narrowed the scope of

the rule. Unlike the proposed rule which would have applied to any

recordkeeping broker-dealer or transfer agent, as adopted Rule 17a-24

applies only to recordkeeping transfer agents. The Commission believes

that a narrower focus is preferable at this time.

III. Regulatory Flexibility Analysis

The following discussion summarizes the Commission's Final

Regulatory Flexibility Analysis (``FRFA'') in accordance with the

Regulatory Flexibility Act (``RFA'') \29\ in connection with Rule 17Ad-

17, Rule 17a-24, and the related amendments to Rule 17Ad-7 adopted

today. A complete copy of the FRFA may be obtained by contacting

Theodore Lazo, Attorney, Division of Market Regulation, U.S. Securities

and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549 at

202/942-4187.

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\29\ 5 U.S.C. 601-612.

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The FRFA explains both the need for and the objectives of the rules

adopted by the Commission. As set forth in greater detail in the FRFA,

the adopted rules with establish minimum standards for all transfer

agents with respect to lost securityholders and may help the Commission

to monitor the effectiveness of these standards. The FRFA further

explains that the Commission believes that imposing an affirmative

obligation on transfer agents to search for lost securityholders is in

the public interest and will enhance investor protection.

The FRFA also (i) summarizes the significant issues raised by

public comments in response to the Commission's Initial Regulatory

Flexibility Analysis (``IRFA''), (ii) summarizes the Commission's

assessment of such issues, and (iii) states any changes made in the

proposed rules as a result of such comments. As noted in the FRFA, none

of the comment letters received related directly to the IRFA, but seven

commenters supplied data on the costs of proposed Rule 17Ad-17.\30\ As

discussed in the FRFA, the Commission believes that most of this cost

data is overstated because it includes costs not created by the rule.

The Commission also believes that the revisions to proposed Rule 17Ad-

17 (e.g., the extended time frames for conducting searches and the

exceptions to the search requirements) will eliminate any excess costs

of compliance with the rule that commenters contended would arise. The

FRFA also notes that Rule

[[Page 52234]]

17a-24 has been revised to minimize the costs to all transfer agents.

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\30\ The cost data that the Commission received is discussed

more fully in Section IV below.

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The FRFA also provides a description of and an estimate of the

number of small entities to which the rule will apply. The FRFA states

that the Commission estimates that 413 registered transfer agents

qualify as ``small entities'' and will be subject to the requirements

of the rule.

As required by the RFA, the FRFA describes the projected reporting,

recordkeeping, and other compliance requirements of the rule and

includes as estimate of the classes of small entities that will be

subject to the requirements and the type of professional skills

necessary for preparation of the reports or records. As discussed

above, Rule 17Ad-17 does not require any specific type of recordkeeping

other than that which is necessary to demonstrate compliance with the

rule, including establishing written procedures with respect to

compliance with the rule. The FRFA states that the Commission believes

that Rule 17Ad-17 as adopted provides sufficient flexibility for all

transfer agents, including transfer agents which are small entities, to

maintain records in the most cost-effective manner. The FRFA also

states that the Rule 17a-24 as adopted will require transfer agents to

report aggregate data regarding their lost securityholder accounts and

that the Commission believes that such records will be readily

available to transfer agents.

The FRFA also describes the steps the Commission has taken to

minimize the significant economic impact on small entities consistent

with the stated objectives of applicable statutes (e.g., alternative

standards for small entities). As discussed further in the FRFA, the

Commission has amended proposed Rule 17Ad-17 to provide additional

flexibility to all transfer agents, including smaller transfer agents.

In addition, the Commission has attempted to devise the most reasonable

and simplest approach that would afford transfer agents as affective

means to reduce the number of lost securityholders. The FRFA further

explains that the Commission requested comment on the adoption of a

requirement that transfer agents use search techniques based on their

periodic assessment or a requirement that transfer agents' search

procedures meet a performance based standard. In light of the comments

received on the issue, the Commission is not adopting a periodic

assessment requirement or a performance based standard. However, the

Commission has revised the proposed rule to permit transfer agents to

use any combination of services to local lost securityholders that

provides a comparable result to an information data base.

As detailed in the FRFA, the Commission has decided not to create

an exception to Rule 17Ad-17 for small entities. The FRFA explains that

the Commission believes that any increased costs incurred by small

entities because of the rule will be reasonable and are justified by

the necessity to ensure that all securityholders receive the same level

of investor protection. While the Commission has decided not to create

an exception to the rule for small entities, the adopted rule does

provide a de minimis exception for lost securityholders whose accounts

hold assets of less than $25. The Commission believes that small

transfer agents will likely rely on the de minimis exception more than

large transfer agents.\31\

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\31\ The Commission understands that small transfer agents tend

to provide services to issuers with smaller prices per share. On

occasion, when shareholders sell their positions, they fail to

completely close out their account. As a result, they may leave an

account holding only a few shares or the most recent dividend

payment. Because a few shares of a smaller issuer is more likely to

be under the de minimis amount than a few shares of a larger issuer,

the Commission believes that the de minimis exception may be more

beneficial to small transfer agents. Some large transfer agents also

have stated that because it is more cost efficient to search for all

of their lost securityholders than to segregate out the small

accounts, they probably will not use the exemption.

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With respect to Rule 17a-24, the FRFA notes that the Commission has

amended the proposed rule to reduce the reporting burden on all

transfer agents and to minimize the compexity and operational burden of

the requirements. Finally, the Commission states that any increased

costs are justified by the need to monitor the effectiveness of Rule

17Ad-17.

Based on the analysis contained in the FRFA, the Commission

believes that the adopted rules will not adversely affect small

entities and include sufficient regulatory flexibility for compliance

to minimize the impact on small entities. The FRFA is available for

public inspection in File No. S7-21-96, and a copy may be obtained by

contacting Theodore Lazo, U.S. Securities and Exchange Commission, 450

Fifth Street, NW, Mail Stop 5-1, Washington, DC 20549.

IV. Costs and Benefits of the Rules and Their Effects on

Competition, Efficiency, and Capital Formation

Section 23(a)(2) of the Exchange Act \32\ requires the Commission,

in adopting rules under the Exchange Act, to consider the competitive

effects of such rules and to make a determination whether any burden on

competition is necessary or appropriate in furthering the purposes of

the Exchange Act. Furthermore, section 3 of the Exchange Act \33\ as

amended by the recently enacted National Securities Markets Improvement

Act of 1996 (``Markets Improvement Act'') \34\ provides that whenever

the Commission is engaged in rulemaking and is required to consider or

determine whether an action is necessary or appropriate in the public

interest, the Commission also shall consider, in addition to the

protection of investors, whether the action will promote efficiency,

competition, and capital formation.

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\32\ 15 U.S.C. 78w(a)(2).

\33\ 15 U.S.C. 78c.

\34\ Pub. L. 104-290, section 106, 110 Stat. 3416 (1996).

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The Commission has considered Rule 17Ad-17 and Rule 17a-24 in light

of the standards cited in sections 3 and 23(a)(2) of the Exchange Act

and believes that for the reasons stated herein, the adoption of the

rules will (i) promote efficiency for securityholder recordkeeping by

subjecting all transfer agents to the same flexible rules governing

searches for lost securityholders and reporting information to the

Commission related to such searches, (ii) not adversely affect capital

formation because it relates solely to post-issuance activity, and

(iii) not impose any burden on competition not necessary or appropriate

in furtherance of the Exchange Act.

In the Proposing Release, the Commission stated its view that the

proposed Rule 17Ad-17 would not have a significant impact on transfer

agent competition. All transfer agents will be subject to the same

specified minimum standard for reasonable care in attempting to locate

securityholders with whom contact has been lost. As discussed below,

the cost of compliance with the proposed rule is minimal, and for many

transfer agents that currently conduct securityholder searches using an

information data base, the proposed rule will impose no additional

cost. Because a transfer agent's cost of compliance generally is based

upon the number of securityholders it must attempt to locate, transfer

agents, regardless of their size, should incur comparable relative

costs in exercising comparable care. On average, compliance costs

should be roughly proportional to the number of securityholder records

maintained by the transfer agent.

One commenter stated that the rule as proposed could have an

anticompetitive effect because the costs could cause additional

transfer agents to abandon an

[[Page 52235]]

already contracting market. However, this commenter did not provide any

detail as to the burden created by the rule or why such burden should

disproportionately affect certain transfer agents. The Commission

believes that the rule as adopted has been drafted so as to provide the

maximum flexibility to transfer agents to meet their obligations in the

most cost-effective manner possible. After careful consideration of the

commenter's views, the Commission has determined that Rule 17Ad-17 will

not impose any burden on competition not necessary or appropriate in

furtherance of the Exchange Act.

In the Proposing Release, the Commission estimated compliance costs

to the industry of approximately $750,000, based on an estimated cost

of $3.00 per account and a total estimated 250,000 lost securityholder

accounts. Based on more recent data obtained from several large

transfer agents, the Commission has revised its cost estimate per

account to $3.38 the first year and $1.79 per account in the following

years. Significantly, based on its most recent information, the

Commission now believes that there may be as many as 3 million lost

securityholder accounts. Due primarily to this change in estimated lost

securityholder accounts, the Commission's revised estimate of the

aggregate costs to the industry are one time compliance costs of $4.6

million and annual compliance costs of $5.2 million.

The Commission received seven comment letters that provided

specific cost estimates. One commenter estimates (assuming one search

and match) that the cost of locating an account will be approximately

$6.00, which includes out-of-pocket postage, staff, and computer time.

A second commenter states that vendor prices for data base searches may

vary widely and that the actual cost per account will range from $5.00

to $12.00.\35\ A third commenter estimates an aggregate cost of as much

as $4.75 for each lost securityholder and total initial programming

costs of $150,000.\36\ Two commenters estimate that charges from firms

for data base searches range from $2.00 per account to approximately

$1.00 per account for tape files. Another commenter anticipates that

the costs of complying with the rule will exceed $100,000 in additional

labor costs together with software and hardware costs each year.

Another commenter estimates that the cost per account for using an

information data base ranges from less than $.10 when using a CD ROM to

as much as $1.70 to use a third party vendor data base.

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\35\ The commenter's estimates include the cost of the data base

search itself plus such items as system processing expenses to

generate the search and to receive the matched file from the data

base vendor; printing and mailing expenses; handling and other

related charges for returned items; and expenses for replacement of

uncashed checks and lost securities.

\36\ The estimate of $4.75 is based on postage, data base

charges, and an increase in processing staff by two full time

positions. Currently, this commenter conducts periodic searches for

its lost securityholders.

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The Commission believes that the estimates higher than the

Commission's estimate of $3.38 per lost account overstate the costs

involved because the figures include expenses not related to the rule

or which are required already as a part of the transfer agent's duties

(e.g., the cost of shareholder mailings). Furthermore, the Commission

believes that compliance with the rule as it is being adopted will not

require transfer agents to incur any substantial costs with respect to

additional labor, hardware, or software because the rule's requirements

regarding coding securityholders as lost are consistent with current

state escheatment laws. Such state laws also require transfer agents to

be able to produce information on lost securityholders for annual

filings with the state, and therefore transfer agents' computer systems

currently should be capable of producing lists of lost securityholders

to provide to the data bases. Thus, the Commission believes that

transfer agents' current computer systems should not require

significant changes in order to comply with the rule.

Further, the Commission has amended the proposal so as to lower the

cost of compliance with the rule. For example, the Commission has

created a de minimis exception to the rule because searches for

accounts with lesser values would not produce as great a benefit (i.e.,

the cost of locating such securityholders would be a much larger

percentage of the assets to be returned). In addition, the Commission

has amended the rule to be more consistent with current state law

requirements by eliminating the requirement that three months elapse

between two mailings prior to coding a securityholder as lost.

Accordingly, the Commission is retaining its estimate of $3.38 per

account in the first year and $1.79 per account in the following years.

The Commission believes that the cost of the rule will be

outweighed by its benefits. The rule will create a uniform standard

applicable to all transfer agents thus ensuring that all investors have

the opportunity to the reunited with their assets.\37\ In addition, the

rule will guarantee that transfer agents make at least two attempts to

locate lost securityholders before forwarding names to a search firm

that may result in substantial charges to the securityholder. Thus, the

rule should help investors recover a greater percentage of their

assets.

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\37\ Some transfer agents currently attempt to locate lost

securityholders, but the extent and type of efforts used vary

greatly among transfer agents. In some cases, transfer agents

forward the names of lost securityholders directly to professional

search firms, in which case the securityholder must pay a fee to

regain its assets. In other cases, the transfer agent searches for

lost securityholders only if the search are authorized and paid for

by the issuer.

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Based on comments received, the Commission believes that the number

of lost securityholders compared to total accounts held by transfer

agents is small, approximately 1.34%. However, the actual dollar amount

of those assets can be significant. The Commission believes that the

total value of assets held in accounts coded as ``lost'' may in fact

exceed $450 million.\38\

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\38\ The data cited in this paragraph is based on a limited

informal survey of several large transfer agents.

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The Commission believes that Rule 17Ad-17 mandates a cost-effective

means for locating lost securityholders. Because of the de minimis

exception, transfer agents are not required to search for lost

securityholders unless their accounts are worth $25 or more. The

Commission believes that the rate of success for data base searches is

at least 60%.\39\ Thus, even if every account of lost securityholders

was worth only $25, the rule would provide an average benefit of $15

per lost securityholder account (i.e., 60% of $25). This estimated

benefit is larger than any commenter's estimate of the per account cost

of data base searches.\40\ Futhermore, because the value of many

accounts will exceed $25, the Commission expects that the actual

benefit will be higher.

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\39\ The Commission staff contacted several transfer agents to

obtain an estimated success rate. Only one of the transfer agents

contacted currently uses data base searches to find lost

securityholders. That transfer agent, which has been conducting

searches on a monthly basis for over a year, stated that its success

rate using data base searches is never less than 75% and sometimes

is as high as 94%. For purposes of the cost-benefit analysis, the

Commission is assuming a 60% success rate in order to be

conservative.

\40\ One commenter stated that the per account cost could be as

high as $12.00. However, as discussed above, the Commission believes

that this estimate includes many costs not created by the rule.

Also, as noted above, the Division of Market Regulation estimates

the average cost of data base searches required by the rule will

total only $3.38 per account in the first year and $1.79 per account

in the following years.

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The Commission has considered the substantial likely benefits that

investors

[[Page 52236]]

will receive from adoption of the rule and the additional cost the rule

will impose on transfer agents. The Commission has decided to adopt the

rule given the lack of consistent standards currently in effect with

respect to lost securityholders and the relatively minor cost per

account imposed by the rule. In consideration of cost, the Commission

has designed the final rule to give transfer agents maximum flexibility

to comply with the rule's requirements and to minimize their search and

recordkeeping expenses.

Rule 17a-24 as adopted differs from the proposed rule. Because the

adopted rule requires that information be reported on a form that all

transfer agents subject to the rule are required to file, the rule

should not create an additional filing burden. In addition, the

information that the reporting transfer agents must file should be

currently available to such transfer agents.\41\ Thus, because the rule

should not create any significant costs to transfer agents, the

Commission has determined that Rule 17a-24 will not impose any burden

on competition not necessary or appropriate in furtherance of the

Exchange Act.

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\41\ Transfer agents must record which of their securityholders

are lost and the date that such securityholders become lost in order

to comply with state escheatment laws.

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In addition, the Commission believes that the benefits of the rule

justify the costs. The benefits of the rule are to provide the

Commission with information to determine whether transfer agents are

more successful in locating lost securityholders and, therefore,

whether Rule 17Ad-17 is effective. The costs of compliance with Rule

17a-24 should be limited to the costs involved in compiling the

information required to be reported once a year.

V. Paperwork Reduction Act

As set forth in the Proposing Release, Rule 17Ad-17 and Rule 17a-24

contain collections of information within the meaning of the Paperwork

Reduction Act of 1995 (``PRA'').\42\ Accordingly, the collection of

information requirements contained in the rules and related amendments

were submitted to the Office of Management and Budget (``OMB'') for

review and were approved by OMB which assigned the following control

numbers: Rule 17Ad-17, control number 3235-0469; and Rule 17a-24,

control number 3235-0470.\43\ The collection of information

requirements are in accordance with Section 3507 of the PRA.\44\ An

agency may not conduct or sponsor and a person is not required to

respond to a collection of information unless the agency displays a

valid OMB control number.

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\42\ 44 U.S.C. 3501 et seq.

\43\ Rule 17Ad-7 was previously submitted to OMB, which approved

the rule and assigned the following control number 3235-0136.

\44\ 44 U.S.C. 3507.

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The collections of information under Rule 17Ad-17, Rule 17a-24, and

Rule 17Ad-7 are mandatory. As described in more detail above and in the

Proposing Release, the collections of information are necessary to

enable recordkeeping transfer agents, as the usual custodians of the

records that determine the ownership of securities and the entitlement

to corporate distributions, to reduce significantly the number of lost

securityholders and for the Commission to monitor compliance with the

rule. The Commission may review this information during periodic

examinations or with respect to investigations. The records required to

be filed with the Commission and any records required to be kept

pursuant to these rules that are requested by and submitted to the

Commission will be kept confidential to the extent permitted by the

Freedom of Information Act \45\ and the Privacy Act of 1974.\46\

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\45\ U.S.C. 552.

\46\ 5 U.S.C. 552a.

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Based upon further review of the disclosure and recordkeeping

changes required by Rule 17Ad-7, the Commission is retaining its burden

estimates for the collection of information under that rule. Thus, the

description and estimated burden of the collection of information

requirement under Rule 17Ad-7 have not changed and are set forth in the

Proposing Release.

Originally, the Commission estimated compliance costs of Rule 17Ad-

17 to the industry of approximately $750,000, based on an estimated

cost of $3.00 per account and a total estimated 250,000 lost

securityholder accounts. Based on comments received questioning the

Commission's original burden estimate, the Commission obtained more

recent data from several large transfer agents. As a result, the

Commission has revised its cost estimate per account to $3.38 the first

year and $1.79 per account in the following years. Significantly, based

on its most recent information, the Commission now believes that there

may be as many as 3 million lost securityholder accounts. Due primarily

to this change in estimated lost securityholder accounts, the

Commission's revised estimate of the aggregate costs to the industry

are one time compliance costs of $4.6 million and annual compliance

costs of $5.2 million.

Due to the changes in Rule 17a-24 as adopted and the corresponding

changes on Form TA-2, the Commission will be resubmitting its

collection of information requirement to OMB for review and approval.

VI. Statutory Basis

Pursuant to section 17A(d)(1) of the Exchange Act, 15 U.S.C. 78a-

1(d)(1), the Commission amends Rule 17Ad-7 and Form TA-2 and adopts

Rule 17Ad-17 and Rule 17a-24 in Chapter II of Title 17 of the Code of

Federal Regulations.

List of Subjects in 17 CFR Parts 240 and 249

Reporting and recordkeeping requirements; Securities; Transfer

agents.

Text of the Amendments

For the reasons set out in the preamble, the Commission amends

Title 17, Chapter II of the Code of Federal Regulations to read as

follows:

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF

1934

1. The authority citation for part 240 continues to read in part as

follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee,

77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78k, 78k-l,

781, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d), 79q,

79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4 and 80b-11, unless

otherwise noted.

* * * * *

2. By adding Sec. 240.17a-24 to read as follows:

Sec. 240.17a-24 Reports of lost securityholders.

(a) Each recordkeeping transfer agent shall file with the

Commission on Form TA-2 (17 CFR 249b.102) the following aggregate

information with respect to lost securityholder accounts contained on

such transfer agent's master securityholder files:

(1) The total number of lost securityholder accounts and the

percentage of lost securityholder accounts compared to total number of

accounts contained on the transfer agent's master securityholder files.

(2) The information required by paragraph (a)(1) of this section

shall be provided separately for securityholders lost one year or less,

three years or less, five years or less, and more than five years and

for securityholders whose assets which have escheated to unclaimed

property administrators within the last calendar year.

[[Page 52237]]

(b) For purpose of this section, lost securityholder means a

securityholder:

(1) To whom an item of correspondence that was sent to the

securityholder at the address contained in the transfer agent's master

securityholder file has been returned as undeliverable; provided,

however, that if such item is re-sent within one month to the lost

securityholder, the transfer agent may deem the securityholder to be a

lost securityholder as of the day the re-sent item is returned as

undeliverable and

(2) For whom the transfer agent has not received information

regarding the securityholder's new address.

3. Section 240.17Ad-7 is amended by adding paragraph (i) to read as

follows:

Sec. 240.17Ad-7 Record retention.

* * * * *

(i) The records required by Sec. 240.17Ad-17(c) shall be maintained

for a period of not less than three years, the first year in an easily

accessible place.

4. Section 240.17Ad-17 is added to read as follows:

Sec. 240.17Ad-17 Transfer agents' obligation to search for lost

securityholders.

(a)(1) Every recordkeeping transfer agent whose master

securityholder file includes accounts of lost securityholders shall

exercise reasonable care to ascertain the correct addresses of such

securityholders. In exercising reasonable care to ascertain for its

master securityholder file such lost securityholders' current

addresses, each recordkeeping transfer agent shall conduct two data

base searches using at least one information data base service. The

transfer agent shall search by taxpayer identification number or by

name if a search based on taxpayer identification number is not

reasonably likely to locate the securityholder. Such data base searches

must be conducted without charge to a lost securityholder and with the

following frequency:

(i) Between three and twelve months of such securityholder becoming

a lost securityholder and

(ii) Between six and twelve months after the transfer agent's first

search for such lost securityholder.

(2) A transfer agent may not use a search method or service to

establish contact with lost securityholders that results in a charge to

a lost securityholder prior to completing the searches set forth in

paragraph (a)(1) of this section.

(3) A transfer agent need not conduct the searches set forth in

paragraph (a)(1) of this section for a lost securityholder if:

(i) It has received documentation that such securityholder is

decreased or

(ii) The aggregate value of assets listed in the lost

securityholder and all securities owned by the lost securityholder as

recorded in the transfer agent's master securityholder files, is less

than $25; or

(iii) The securityholder is not a natural person.

(b) For purposes of this section:

(1) Information data base service means either:

(i) Any automated data base service that contains addresses from

the entire United States geographic area, contains the names of at

least 50% of the United States geographic area, contains the names of

at least 50% of the United States adult population, is indexed by

taxpayer identification number or name, and is updated at least four

times a year; or

(ii) Any service or combination of services which produces results

comparable to those of the service described in paragraph (b)(1)(i) of

this section in locating lost securityholders.

(2) Lost securityholder means a securityholder:

(i) To whom an item of correspondence that was sent to the

securityholder at the address contained in the transfer agent's master

securityholder file has been returned as undeliverable; provided,

however, that if such item is re-sent within one month to the lost

securityholder, the transfer agent may deem the securityholder to be a

lost securityholder as of the day the resent item is returned as

undeliverable; and

(ii) For whom the transfer agent has not received information

regarding the securityholder's new address.

(c) Every recordkeeping transfer agent shall maintain records to

demonstrate compliance with the requirements set forth in this section

which shall include written procedures which describe the transfer

agent's methodology for complying with this section.

PART 249b--FURTHER FORMS, SECURITIES EXCHANGE ACT OF 1934

5. The authority citation for part 249b continues to read in part

as follows:

Authority: 15 U.S.C. 78a, et seq., unless otherwise noted;

* * * * *

Note: Form TA-2 does not and the amendments will not appear in

the Code of Federal Regulations.

Sec. 249b.102 [Form TA-2 Amended]

6. Form TA-2 (referenced in Sec. 249b.102) is amended by adding

paragraph 8 to Instruction I.A. to read as follows:

Form TA-2

* * * * *

I. General Instruction for Filing and Amending Form TA-2.

A. * * *

8. ``Lost securityholder'' is defined in Rule 17a-24(b)(1) (17 CFR

240.17a-24(b)(1)).

* * * * *

Sec. 249b.102 [Form TA-2 Amended]

7. Form TA-2 (referenced in Sec. 249b.102) is amended by adding

paragraph c to Question 4 to read as follows:

Form TA-2

* * * * *

4. * * *

c. (i) Number of lost securityholder accounts and (ii) percentage

of total accounts represented by lost securityholder accounts as of

June 30 for:

Accounts of securityholders lost one year or less:---------------------

Accounts of securityholders lost three years or less:------------------

Accounts of securityholders lost five years or less:-------------------

Accounts of securityholders lost more than five years:-----------------

Accounts of securityholders which have escheated to states within the

year ended June 30:----------------------------------------------------

* * * * *

Dated: October 1, 1997.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97-26519 Filed 10-6-97; 8:45 am]

BILLING CODE 8010-01-M