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Jeankeat Treatise

Jeankeat Treatise


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Jean Keating’s “Cracking The Code # 7” February 2005: © Protected by common law copyright © The courts are operating

under Statute Law. A “Statute” is defined in black’s 4th edition revised as a kind of bond or obligation of record, being an abbreviation for “statute merchant” or “statute staple.” Statute –merchant = is defined as a security for a debt acknowledged to be due, entered into before the chief magistrate of some trading town, pursuant to the statute 13 Edward I. De Mercatoribus, by which not only the body of the debtor might be imprisoned, and his goods seized in satisfaction of the debt, but also his lands might be delivered to the creditor till out of the rents and profits of them the debt be satisfied. This was also called a Pocket Judgment. Statute Staple = A 1353 statute establishing procedure for settling disputes among merchants who traded in staple towns. The statute helped merchants receive swift judgment for debt. Cf. STATUTE MERCHANT. 2. A bond for commercial debt. A statute staple gave the lender a possessory right in the land of a debtor who failed to repay a loan. See STAPLE. “A popular form of security after 1285 . . . was the . . . ‘statute staple’ – whereby the borrower could by means of a registered contract charge his land and goods without giving up possession; if he failed to pay, the lender became a tenant of the land until satisfied . . . the borrower under a statue or recognizance remained in possession of his land, and it later became a common practice under the common-law forms of mortgage likewise to allow the mortgagor to remain in possession as a tenant at will or at sufferance of the mortgage.”J.H. Baker, An introduction to English Legal History 354 (3d edition 1990). Recognizance = A bond or obligation of record binding a person to some act as to appear in court and subject to forfeit money if obligation is not fulfilled. Fifa = Fifa, short for the Latin phrase fieri facias (“let it be made . . .”) was a court (execution) to the sheriff to levy on (Take) the property of a debtor in order to satisfy a judgment (see judgment and execution dockets, above). The sheriff might typically keep track of fifas in a Sheriff’s Fifa Docket Book. Usually written on a fill-in-the blank form, a fifa names the parties to the court judgment and the value of property to be taken to satisfy the judgment. On the back, the sheriff or his deputies annotate their actions in carrying out the order. The fifas were to be returned to the court which issued them and the actions annotated on the Judgment Docket. Theoretically, the docket books should contain everything that was noted on the fifas. In websters 1913 dictionary the word stand is defined as being also the word statute. I believe this is why the judge in every court always asks do you under – stand the charges being assessed against you. In the O.E. [Old English] it is understandan, to stand under or to be subjected to or under the control of or I am subjecting or agreeing to put my myself under the control of or putting myself under the statute or bond of record. I have been doing more research on our prison system via the internet and have found out some interesting things, regarding what is really going on in the courtroom. The court is looking for an acceptance and acceptor under 3-410 of the U.C.C. as the Principal has the primary obligation to pay or discharge any instrument presented for acceptance. Since they are presenting a Bill of Exchange [indictment] for acceptance. This is called an acceptance for honor, which involves a negotiable instrument especially a bill of exchange [indictment] that has been accepted for payment. The complaint, information, or indictment is a three party Draft, Commercial paper, or Bill of Exchange under Article 3 of the U.C.C. The Grand Jury Foreman is the Drawer or Maker of the Indictment by his signature, the Defendant/Debtor or Straw man is the Drawee and the State is the Payee and the live man is the Payor. What they are doing in the courtroom is all commercial, this is in conformity to 27 CFR 72.11, where it says all crimes are commercial. What the judge and prosecutor are doing in the courtroom is making a commercial presentment under section 3-501 (1) "Unless excused (section 3-511) presentment is necessary to charge secondary parties as follows": (a) Presentment for acceptance is necessary to charge the drawer and endorsers of a draft where the draft so provides, or is payable elsewhere than at the residence or place of business of the Drawee, or its date of


payment depends upon such presentment. The holder may at his option present for acceptance any other draft payable at a stated date; (b) Presentment for payment is necessary to charge any endorser; (c) in the case of any drawer, the acceptor of a draft payable at a bank or the maker of a note payable at a bank, presentment for payment is necessary, but failure to make presentment discharges such drawer, acceptor or maker only as stated in section 3-502 (1)(B). If you don't accept the charge or presentment you are in dishonor for non acceptance under 3-505 of the U.C.C. (c) and 3-501 (2) (a), (b). Acceptance is the drawer's signed engagement to honor the draft as presented. It must be written on the draft, and may consist of his signature alone. It becomes operative when completed by delivery or notification 3-410 of the U.C.C. You are the fiduciary trustee of the straw man which is a Cesti Que Trust; in this capacity you have the responsibility to discharge all his debts, by operation of law. “All moneys of the Federal Reserve Board shall be treated as trust funds for the purpose of section 906 (a) (2) (FOOTNOTE 1) of title 2. This section is effective for fiscal year 1986 and every fiscal year thereafter.” TITLE 12 BANKS AND BANKING CHAPTER 14 SECTION 1772 (e). Every account is a trust, this is why every deed, conveyance or transfer uses the words Grantor, Grantee, or Assignor, Assignee, or Transferor or Transferee. You are also the principal or asset holder on the private side of the accounting ledger; you are holding the exemption necessary to discharge the debt. When they monetize debt they have to have a principal, capital and interest is what circulates as principal and is called revenue or re-venue. Principal is where venue lies. Revenue is a Tax debt or Tax bills. All bills when presented represent revenue, interest, capitol, or accruals circulating from you as the principal, when it is returned back to you as capital or interest it is called income or in-coming. This method of accounting is called the "Accrual Accounting Method" and is represented by debits and credits. Debits are assets Credits are liabilities. The credits and liabilities have to be in balance, this is accomplished through double bookkeeping entries or reverse bookkeeping entry. These bookkeeping entries are the funds referred to in commercial banking. When you are in dishonor they cannot use your exemption to pass the debt or charge through your account to obtain a discharge, so they sell your dishonor, which has a commercial of $ 1,000,000 dollars for each count. When social security # is assigned or issued a blank bond is issued and when you are imprisoned the bond is filled out. This bond is called a Bid Bond, standard form 24 (REV. 1098) prescribed by GSA-FAR (48CFR) 53.228(a). This is also called a prison bond. These are also referred to as contract surety bonds. The first, the bid bond, provides financial assurance that the bid has been submitted in good faith and that the contractor intends to enter into the contract at the price bid and provide the required performance and payment bonds. The second, the performance bond, protects the obligee from financial loss should the contractor fail to perform the contract in accordance with the terms and conditions of the contract documents. The Third kind of contract bond is the payment bond which guarantees that the contractor will pay certain subcontractor, labor and material bills associated with the project. The fourth bond and most important is the STANDARD FORM 28 (Rev. 6/2003) prescribed by GSA-FAR (48 CFR) 53.228 (e) OMB No. 9000-0001, if you read this form carefully it says under the sworn statement “I also depose and say that, concerning any stocks or bonds included in the assets listed below, that there are no restrictions on the resale of these securities pursuant to the registration provisions of Section 5 of the Securities Exchange Act of 1933. The word securities takes you back to section 8-102 (9) of Article 8 of the UCC, which defines securities as a financial asset (i) security (ii) obligation of a person, or a share, participation of a person or in property or an enterprise of a person, which is, or is of a type, dealt in or traded on financial markets, or which is recognized in any area in which it is issued or dealt in as a medium for investment; or (iii) any property held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the person that the property is to be treated as a financial asset under this Article. As the context requires, the term means either the interest itself or the means by which a person’s claim to it is evidenced, including a certificated or uncertificated security, a security certificate, or a security entitlement. The definition of “security” has three components. First, there is the subparagraph (i) test that the interest or obligation be fully transferable, in the sense that the issuer either maintains transfer books or the


obligation or interest is represented by a certificate in bearer or registered form. Second, there is the subparagraph (ii) test that the interest or obligation be divisible, that is, one of a class or series, as distinguished from individual obligations of the sort governed by ordinary contract law or by Article 3. Third, there is the subparagraph (iii) functional test, which generally turns on whether the interest or obligation is, or is of a type, dealt in or traded on securities markets or securities exchanges. There is, however, an “opt in” provision in subparagraph (iii) which permits the issuer of any interest or obligation that is “a medium of investment” to specify that it is a security governed by Article 8. The divisibility test of subparagraph (ii) applies to the security-that is, the underlying intangible interest-not the means by which that interest is evidenced. Thus, securities issued in book-entry only form meet the divisibility test because the underlying intangible interest is divisible via the mechanism of the indirect holding system. This is so even though the clearing corporation is the only eligible direct holder of the security. The third component, the functional test in subparagraph (iii), provides flexibility while ensuring that the Article 8 rules do not apply to interest or obligations in circumstances so unconnected with the securities markets that parties are unlikely to have thought of the possibility that Article 8 might apply. Subparagraph (iii)(A) covers interests or obligations that either are dealt in or traded on securities exchanges or securities markets, or are of a type dealt in or traded on securities exchanges or securities markets. The “is dealt in or traded on” phrase eliminates problems in the characterization of new forms of securities Which are to be traded in the markets, even though no similar type has previously been dealt in or traded in the markets. Subparagraph (iii)(B) covers the broader category of media for investment, but it applies only if the terms of the interest or obligation specify that it is an Article 8 security. This opt-in provision allows for deliberate expansion of the scope of Article 8. Section 8-103 contains additional rules on the treatment of particular interests as securities or financial assets. 1. Part 5 rules apply to security entitlements, and Section 8-501 (b) provides that a person has a security entitlement when a financial asset has been credited to a “security account.” Thus, the term “securities account” specifies the type of arrangements between institutions and their customers that are covered by Part 5. A securities account is a consensual arrangement in which the intermediary undertakes to treat the customer as entitled to exercise The rights that comprise the financial asset. The consensual aspect is covered by the requirement that the account be established pursuant to agreement. The term agreement is used in the broad sense defined in section 1-201(3). There is no requirement that a formal or written agreement. 1-201(3) “Agreement”, as distinguished from “contract”, means the bargain of the parties in fact, as found in their language or inferred from other circumstances, including course of performance, course of dealing, or usage of trade as provided in Section 1-303. 1-303. Course of performance, Course of Dealing, and Usage of Trade. (a) A “course of performance” is a sequence of conduct between the parties to a particular transaction that exists if; (1) the agreement of the parties with respect to the transaction involves repeated occasions for performance by a party; and (2) the other party, with knowledge of the nature of the performance and opportunity for objection to it, accepts the performance or acquiesces in it without objection. (b) A “course of dealing” is a sequence of conduct concerning previous transactions between the parties to a particular transaction that is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct. (c) A “usage of trade”is any practice or method of dealing having such regularity of observance in a place, vocation, or trade as to justify an expectation that it will be observed with respect to the transaction in


Release of Lien on Real Property. A surety's assets pledged in support of a payment bond may be released to a subcontractor or supplier upon Government receipt of a Federal district court 4 . (d) A course of performance or course of dealing between the parties or usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware is relevant in ascertaining the meaning of the parties’ agreement. Release of Personal Property from Escrow. course of dealing. (2) course of performance prevails over course of dealing and usage of trade. the interpretation of the record is a question of law. may give particular meaning to specific terms of the agreement.203-5] [Page 541-542] TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM CHAPTER 1--FEDERAL ACQUISITION REGULATION PART 28_BONDS AND INSURANCE--Table of Contents Subpart 28. (e) Except as otherwise provided in subsection (f). the contracting officer shall release the security interest on the individual surety's assets using the Optional Form 90. a course of performance is relevant to show a waiver or modification of any term inconsistent with the course of performance. or a similar release as soon as possible consistent with the conditions in subparagraphs (a) (1) and (2) of this subsection. 2003] From the U. (a) After consultation with legal counsel. course of dealing. And (3) course of dealing prevails over usage of trade.2_Sureties and Other Security for Bonds Sec. or Optional Form 91.203-5 Release of lien. If it is established that such a usage is embodied in a trade code or similar record.question. Code of Federal Regulations] [Title 48. (g) Evidence of relevant usage of trade offered by one party is not admissible unless the party has given the other party notice that the court finds sufficient to prevent unfair surprise to the other party. or usage of trade must be construed whenever reasonable as consistent with each other. (f) Subject to Section 2-209 and Section 2A-208. Government Printing Office via GPO Access [CITE: 48CFR28. Volume 1] [Revised as of October 1. 28.and usage of trade. If such a construction is unreasonable: (1) express terms prevail over course of performance.S. A usage of trade applicable in the place in which part of the performance under the agreement is to occur may be so utilized as to that part of the performance. The existence and scope of such a usage must be proved as facts.and may supplement or qualify the terms of the agreement. the express terms of an agreement and any applicable course of performance.

204-3] [Page 553-554] TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM (This book contains chapter 1. (c) Upon written request by the individual surety. 2004] From the U. The security interest shall be maintained for the later of (i) 1 year following final payment. parts 1 to 51) CHAPTER 1--FEDERAL ACQUISITION REGULATION -------------------------------------------------------------------PART 28_BONDS AND INSURANCE--Table of Contents Subpart 28.204-3 Irrevocable letter of credit (ILC). (1) Contracts subject to the Miller Act. the contracting officer will give consideration as to whether the unreleased portion of the lien is sufficient to cover the remaining contract obligations. including payments to subcontractors and other potential liabilities. [54 FR 48988. 5 . or (iii) pending resolution of all claims filed against the payment bond during the 1-year period following final payment. the contracting officer may release a portion of the security interest on the individual surety's assets based upon substantial performance of the contractor's obligations under its performance bond. The individual surety shall. Volume 1] [Revised as of October 1.S. (2) Contracts subject to alternative payment protection (28.1021(b)(1)).[[Page 542]] judgment. 1989. Government Printing Office via GPO Access [CITE: 48CFR28. June 20. The security interest shall be maintained for the full contract performance period plus one year. Release of the security interest in support of a payment bond must comply with the subparagraphs (a) (1) through (3) of this subsection. Nov. The security interest shall be maintained for 90 days following final payment or until completion of any warranty period (applicable only to performance bonds). 28. (ii) until completion of any warranty period (applicable only to performance bonds). or a sworn statement by the subcontractor or supplier that the claim is correct along with a notarized authorization of the release by the surety stating that it approves of such release. the contracting officer may release the security interest on the individual surety's assets in support of a bid guarantee based upon evidence that the offer supported by the individual surety will not result in contract award.2_Sureties and Other Security for Bonds Sec. whichever is later. (b) Upon written request. furnish an affidavit agreeing that the release of such assets does not relieve the individual surety of its obligations under the bond(s). as amended at 61 FR 31652. (3) Other contracts not subject to the Miller Act. as a condition of the partial release. 1996] [Code of Federal Regulations] [Title 48. 28. In making this determination.

204). ILCs over $5 million must be confirmed by another acceptable financial institution that had letter of credit business of at least $25 million in the past year. (2) If used as an alternative to corporate or individual sureties as security for a performance or payment bond. until the period of required coverage is institution with a written statement waiving the right to payment. The period of required coverage shall be: (i) For contracts subject to the Miller Act. or (B) For performance bonds only. or (C) For payment bonds only.228-14. (B) For performance bonds only. the contracting officer shall use the sight draft set forth in the clause at 52. or other acceptable substitute. the later of-(A) 90 days following final payment. the offeror/contractor may submit an ILC with an initial expiration date estimated to cover the entire period for which financial security is required or an ILC with an initial expiration date that is a minimum period of one year from the date of issuance. (d) If the contractor does not furnish an acceptable replacement ILC. (1) The offeror/contractor shall provide the contracting officer a credit rating from a recognized commercial rating service as specified 6 . the ILC should expire no earlier than 60 days after the close of the bid acceptance period.(a) Any person required to furnish a bond has the option to furnish a bond secured by an ILC in an amount equal to the penal sum required to be secured (see 28. (c) To draw on the ILC. (ii) For contracts not subject to the Miller Act. expire only as provided in paragraph (f) of this subsection. require presentation of no document other than a written demand and the ILC (and letter of confirmation. (b) The ILC shall be irrevocable. and present it with the ILC (including letter of confirmation. A separate ILC is required for each bond. The ILC shall provide that. the later of-(A) One year following the expected date of final payment. Unless the financial institution issuing the ILC had letter of credit business of at least $25 million in the past year. unless the issuer provides the beneficiary written notice of non-renewal at least 60 days in advance of the current expiration date. the contracting officer shall draw on the ILC prior to the expiration date of the ILC to cover these claims. (f) The period for which financial security is required shall be as follows: (1) If used as a bid guarantee. until completion of any warranty period. there are outstanding claims against the payment bond. the contracting officer shall immediately draw on the ILC. and be issued/confirmed by an acceptable federally insured financial institution as provided in paragraph (g) of this subsection. the ILC is automatically extended without amendment for one year from the expiration date. (g) Only federally insured financial institutions rated investment grade or higher shall issue or confirm the ILC. or any future expiration date. until completion of any warranty period. if any) to the issuing financial institution or the [[Page 554]] confirming financial institution (if any). after the period of performance of a contract where ILCs are used to support payment bonds. until resolution of all claims filed against the payment bond during the one-year period following final payment. (e) If. if any). at least 30 days before an ILC's scheduled expiration.

means a written commitment by a federally insured financial institution to pay all or part of a stated amount of money. 10010. June 20. New York NY. until the expiration date of the letter.204-4. insert the following clause: Irrevocable Letter of Credit (Dec 1999) (a) “Irrevocable letter of credit” (ILC). International Chamber of Commerce Publication No. Inc. 1993 Revision. 1997] 52. the letter of credit and letter of confirmation formats in paragraphs (e) and (f) of this clause shall be used. 7 (see 28. as used in this clause. or 7 . the later of -(A) One year following the expected date of final payment. Telefax: (212) 633-6025. shall be issued/confirmed by an acceptable federally insured financial institution as provided in paragraph (d) of this clause. (2) If used as an alternative to corporate or individual sureties as security for a performance or payment bond. This pamphlet may be obtained by calling the Office of Management and Budget's publications office at (202) 395-7332. the offeror/Contractor may submit an ILC with an initial expiration date estimated to cover the entire period for which financial security is required or may submit an ILC with an initial expiration date that is a minimum period of one year from the date of issuance. until the period of required coverage is completed and the Contracting Officer provides the financial institution with a written statement waiving the right to payment. 1996. 500. if any). Aug. (c) The letter of credit shall be irrevocable. Telephone: (212) 206-1150. E-mail: iccpub@interport.Irrevocable Letter of Credit. shall require presentation of no document other than a written demand and the ILC (including confirming letter.. The ILC shall provide that. 7. and -(1) If used as a bid guarantee. Use of Irrevocable Letters of Credit. 156 Fifth Avenue. Neither the financial institution nor the offeror/Contractor can revoke or condition the letter of credit. is available from: ICC Publishing. the ILC is automatically extended without amendment for one year from the expiration date.in Office of Federal Procurement Policy Pamphlet No. (2) If the contracting officer learns that a financial institution's rating has dropped below the required level.204-3(h)) that indicates the financial institution has the required rating(s) as of the date of issuance of the ILC. as amended at 62 FR 44807.228-14. the contracting officer shall give the contractor 30 days to substitute an acceptable ILC or shall draw on the ILC using the sight draft in paragraph (g) of the clause at 52. the ILC shall expire no earlier than 60 days after the close of the bid acceptance period. or any future expiration date. (2) A copy of the Uniform Customs and Practice (UCP) for Documentary Credits. 22. or to secure other types of bonds such as performance and payment bonds. As prescribed in 28.228-14 -. (b) If the offeror intends to use an ILC in lieu of a bid bond. until completion of any warranty period. (B) For performance bonds only. The period of required coverage shall be: (i) For contracts subject to the Miller Act. (h)(1) Additional information on credit rating services and investment grade ratings is contained within Office of Federal Procurement Policy Pamphlet No. upon presentation by the Government (the beneficiary) of a written demand therefor.net [61 FR 31653. unless the issuer provides the beneficiary written notice of non-renewal at least 60 days in advance of the current expiration date.

if any. until completion of any warranty period.] It is a condition of this Letter of Credit that it is deemed to be automatically extended without amendment for one year from the expiration date hereof. for all or any part of this credit if presented with this Letter of Credit and confirmation.(C) For payment bonds only. [This paragraph is omitted if used as a bid guarantee. 8 .S. until resolution of all claims filed against the payment bond during the one-year period following final payment. confirming financial institution’s] office at [issuing financial institution’s address and.S. (ii) For contracts not subject to the Miller Act. Government agency] [U. confirming financial institution’s address] and expires with our close of business on ______. at the office specified in paragraph 1 of this Letter of Credit on or before the expiration date or any automatically extended expiration date. and subsequent paragraphs are renumbered. 3. or any automatically extended expiration date. ILCs over $5 million must be confirmed by another acceptable financial institution that had letter of credit business of at least $25 million in the past year. if any. if any. This Letter of Credit is transferable. Such transfer or assignment shall be only at the written direction of the Government (the beneficiary) in a form satisfactory to the issuing financial institution and the confirming financial institution. Government Agency’s Address] 1. This Letter of Credit is payable at [issuing financial institution’s and. We hereby undertake to honor your or the transferee’s sight draft(s) drawn on the issuing or. At the time we notify you. unless at least 60 days prior to any expiration date. if any. if any) by the same means of delivery. ________________ Account party’s name ________________________ Account party’s address ______________________ For Solicitation No. __________ (for reference only) To: [U. we notify you or the transferee by registered mail. 2. or (B) For performance bonds only. Transfers and assignments of proceeds are to be effected without charge to either the beneficiary or the transferee/assignee of proceeds. or other receipted means of delivery. (d) Only federally insured financial institutions rated investment grade or higher shall issue or confirm the ILC. the confirming financial institution. or any future expiration date. We hereby establish this irrevocable and transferable Letter of Credit in your favor for one or more drawings up to United States $ ______. 4. if any. the later of -(A) 90 days following final payment. The offeror/Contractor shall provide the Contracting Officer a credit rating that indicates the financial institution has the required rating(s) as of the date of issuance of the ILC. Unless the financial institution issuing the ILC had letter of credit business of at least $25 million in the past year. (e) The following format shall be used by the issuing financial institution to create an ILC: _____________________________________________________ [Issuing Financial Institution’s Letterhead or Name and Address] Issue Date ______ Irrevocable Letter of Credit No. that we elect not to consider this Letter of Credit renewed for any such additional period. we also agree to notify the account party (and confirming financial institution.

9 . 6. 500. 500. 3. that we elect not to consider this confirmation extended for any such additional period.: ___________ Gentlemen: 1. If this credit expires during an interruption of business of this financial institution as described in Article 17 of the UCP. Draft(s) drawn under the Letter of Credit and this Confirmation are payable at our office located at ___________________. and to the extent not inconsistent therewith. 2. International Chamber of Commerce Publication No.] It is a condition of this confirmation that it be deemed automatically extended without amendment for one year from the expiration date hereof. 4. the account party. or any automatically extended expiration date. unless: (a) At least 60 days prior to any such expiration date. $_______ and expiring with our close of business on _____________ [the expiration date]. Sincerely. by registered mail or other receipted means of delivery. the financial institution specifically agrees to effect payment if this credit is drawn against within 30 days after the resumption of our business. We hereby undertake to honor sight draft(s) drawn under and presented with the Letter of Credit and this Confirmation at our offices as specified herein. of its election not to extend the expiration date of the Letter of Credit. 5. _______________________ [Issuing financial institution] (f) The following format shall be used by the financial institution to confirm an ILC: ___________________________________________________________________ [Confirming Financial Institution’s Letterhead or Name and Address] (Date) _____________ Our Letter of Credit Advice Number _____________ Beneficiary: ___________ [U.S. to the laws of ________ [state of confirming financial institution]. if any. and ourselves.5. International Chamber of Commerce Publication No. we shall notify the Contracting Officer. Government agency] Issuing Financial Institution: __________________ Issuing Financial Institution’s LC No. and to the extent not inconsistent therewith. to the laws of _____________________ [state of confirming financial institution. or any automatically extended expiration date. issued by __________ [name of issuing financial institution] for drawings of up to United States dollars ___________/U. or (b) The issuing financial institution shall have exercised its right to notify you or the transferee. We hereby confirm the above indicated Letter of Credit.S. otherwise state of issuing financial institution]. This confirmation is subject to the Uniform Customs and Practice (UCP) for Documentary Credits. and subsequent paragraphs are renumbered. 1993 Revision. the original of which is attached. This Letter of Credit is subject to the Uniform Customs and Practice (UCP) for Documentary Credits. [This paragraph is omitted if used as a bid guarantee. or the transferee and the issuing financial institution. 1993 Revision.

State] (Date) ______________ [Name and address of financial institution] Pay to the order of ______________ [Beneficiary Agency] ___________ the sum of United States $____________. a New York Post story on the for-profit private prison industry stated. From 1995 to 2000. ALEC. except through the principal's exemption. we specifically agree to effect payment if this credit is drawn against within 30 days after the resumption of our business.6. One of the Industries tools for accomplishing this is the American Legislative Exchange Council. Industry leaders CCA and Wackenhut have paid tens (if not hundreds) of thousands of dollars in exchange for a privileged position on ALEC's Criminal Justice Task Force (which CCA chairs). a powerful right wing lobby group that helps corporations draft and enacts "model" legislation-. where a little money goes a long way." In order to prosper. the industry spends millions on campaign contributions. million in fees in the next fiscal year alone. New York City has a $ 6. When insuring their cargo shippers would seek out investors to insure their property. ___________________ [Beneficiary Agency] ____________________ [By] On April 9. Wackenhut. we as owner principal’s work on the General Calendar Accounting Year or Cycle. "America's new wall of homeland security is creating a big demand for cells to hold suspects and illegal aliens who might be rounded up. The war on terrorism has created a buzz in the private prison industry. and Cornell spent $520. Sincerely. this deficit represents unredeemed debt on the credit side of the accrual accounting system and cannot be executed to the debit side of accrual accounting ledger.000 on state elections. Corporations work on the Fiscal Accounting Cycle because they operate using commercial debt.6 billion dollar deficit. CCA. Lehman Brothers Bank will underwrite New York's $ 6.000 senior secured credit facility.000. in turn.6 billion in bonds and pay underwriters over $30.6 billion dollar deficit. who guarantees the sale of newly issued securities by purchasing all or part of the shares for resale to the public. not only promotes privatization. ______________. and in 1998.for a price. An underwriter is an Insurer or one who buys stock from the issuer with an intent to resell it to the public or an entity or person. In addition to investing heavily in groups like ALEC and the Reason Foundation. If this confirmation expires during an interruption of business of this financial institution as described in Article 17 of the UCP. to be combined with a $150 million notes offering. prison operators need to maintain a steady flow of prisoners and prison dollars. New York has therefore put its bond underwriting business up for bid. This means that New York will issue $ 6. The term underwriter derives its meaning from former British Insurance Practices. especially an investment banker. 2002 (12:18 pm) Lehman Brothers Banking Cartel in New York City agreed to provide prison industry leader CCA (Corrections Corporation of America) with a new $ 695. The insurers would 10 . the industry spent $540. but also brags of having helped enact "Truth in Sentencing" and "Three Strikes" laws in 25 states. ___________________________ [Confirming financial institution] (g) The following format shall be used by the Contracting Officer for a sight draft to draw on the Letter of Credit: Sight Draft ________________________ [City. Less than three weeks after September 11th.000 in Federal elections. This draft is drawn under Irrevocable Letter of Credit No.

11 . the concept of underwriting have expanded significantly since its inception. but prevented them from being removed from the New York Stock Exchange. One important condition is that it distribute 95% of its income to shareholders. Tennessee at 10 Burton Hills Blvd and can be reached at 1-800-624-2931.37. During the next week. Because the stock has lost 75% of its value. the stock hit a new low of $2. Instrumental in pulling off this contract was former Federal Bureau of Prisons head J. and how morale or turnover will effect daily operations. This was a $4 Billion Transaction. Together. Share prices bottomed out at $0. Joel Dyer notes that outside one CCA facility. The Private prison’s largest shareholder. including prison security. Shares hit a new 52 week low of 2.000 loss for 1999 and was in default on the terms of its credit facility. stock rose $1 a share on news that their $1 billion credit line is restructured and they receive a $780. there’s also been millions in attorney fees. Quinlan is now one of the top executives in the company. 18 cents.12”. Specifically. that really inspires confidence in the justice system.add their signatures and would write their names under those of the shipper.” Shareholder lawsuits still must be settled on satisfactory terms for the deal to be finalized. hence the term 'underwriter'. there is a placard with the words “Yesterday’s closing stock price.18 –yes. but not without a $1. At the close of business 26 April. On June 7.50 the previous week. They have a Dunn & Bradstreet rating and are headquartered in Nashville. Meanwhile Prison Realty just paid a dividend on their preferred stock (belonging to executives and institutional partners). which sent the common stock to new lows as shareholders realized they are not likely to see dividends soon.000 federal contract.000. Localities that have contracts with the companies are concerned about whether guards will get paid. In his book the Perpetual Prisoner Machine [see resources]. Germany. with guaranteed 95% occupancy rate. down from the 52 week high of $22.000 restricting plan from its current shareholder Pacific Life Insurance Co.12 each. but bankruptcy is a possibility. a provision making REITs attractive to investors. The Federal Contract. In Berlin Germany there ticker symbol is CXW. two of the executives are leaving. companies acquire U. or even seeing “Yesterday’s Closing Stock Price: $2. but the other requirement was met when Lehman Brothers refinanced PZN’s $ 1 billion credit line. they are filing class actions suits against Prison Realty Trust for false claims on Securities and Exchange Commission documents. Michael Quinlan. class action lawsuits from shareholders about the merger and management fees for restructuring. The private prison was offered a $200. which does not change the underlying financials of the company. provided financial resources to reject a restructuring offer from Pacific Life Insurance. They instituted a 10 for 1 split. Corrections Corporation. CCA later merged into PRISON REALTY TRUST. Their Ticker Symbol for their stock is CXW_pb on the NYSE and CXW under business services on the NYSE.000.” Imagine the legitimacy and confidence that are lost by people driving by seeing the stock price plummet. the price closed below $3 a share again after briefly hitting $3. Wall Street was unimpressed at the company’s earlier scheme to issue junk bonds. CCA and its spin off Prison Realty Trust. the major stock holder is the Paine Webber Group. Now you know how they are financing the commodities and securities market and why New York City is called the Great Whore of Babylon in the Book of Revelations Chapter 18 verses 10-24. it posted a $62. Investors are angry that PZN lost its REIT status and the related dividend. Dreman Value Management.S.DE in Frankfurt. was pleased at the offer: “We always maintained that the (prison) business was great.00 and talks started on financial restructuring to remedy default on credit line. who is now on the Board of PZN. Prices through the first half of may have generally been below $3 a share.3 million severance. but a Legg-Mason stock analyst declared PZN an UNDERPERFORM. The Corrections Corporation of America owns most of your prison systems and sells its stock and shares on the New York Stock Exchange.000. they are concerned about the non-disclosure of payments by PZN to CCA. lost $265 million: “It’s a slim chance. West Mutual Shippers Association out of Luxemburg is underwriting Social Security Administration a surety ship contract or Bond. Both in terms of the insurance industry and securities markets. In April of 2000. Prison Realty Trust failed to meet those conditions of cash flow problems. but this has been a financial engineering disaster. Of course.BE and CXW.” says an analyst for First Union Securities. a Real Estate Investment Trust that is exempt from corporate taxes if it meets certain conditions. company audits expressed doubt about the company’s solvency.

less dilution and potentially higher returns for existing shareholders of Prison Realty Trust. than the agreement Prison Realty Trust currently has with Fortress Investment Group LLC. Altman was Vice Chairman of the Blackstone Group from 1987 through 1992 “where he led the firm’s merger advisory business. Bundesversicherungsanstalt Fuer Angestellte (or BfA). Group MENATEP is an international diversified holding company and long-term Russian strategic and portfolio investor in international financial and capital markets. a Fairchild technology venture (Israel). Stirling Square. from the German Federal Government’s social security and pension agency. New York. The company’s Blackstone Alternative Asset Management unit handles $1 billion in hedge funds for pension giant CalPERS. 13 Panamax and three Aframax tankers. NY 10154 USA Phone. The Blackstone Group was founded in 1985 by a group of four. Fortress Investment Group is a global alternative investment and asset management firm founded in 1998 with approximately $11 billion in equity capitol. APCO Worldwide is located at 1615 L St. The transaction. Stelmar operates one of the world’s largest and most modern Handymax and Panamax tanker fleets with an average age of approximately six years. 5-7 Carlton Gardens. the largest Russian holding company. Military-industrial complex and oil industry. The Blackstone Group has ties to American International Group Inc. 4th Floor London. According to the Blackstone website. They are located at 1251 Avenue of the Americas 16th floor New York. GAGFAH. SW1Y 5AD U.5 billion euros (U.blackstone. (AIG) and Kissinger Associates. AIG acquired a 7 % non-voting interest in the company in 1998 for $150 million”and committed to invest $1.com/company/bst_group. 2004 merged with Stelmar Shipping Ltd. Teuza Fund. a $1. including Peter G. and 700 million euros of private equity capitol. phone # 1-202-778-1000. they include Kissinger Associates. The Blackstone Group is also handling the restructuring of Global Crossing. and Scandinaviska Enskilda Banken. Kissinger Associates is located at 350 Park Avenue. the Blackstone Group was appointed as Enron’s principal financial advisor with regard to financial restructuring. The Blackstone Group is located at 345 Park Avenue New York.” Blackstone has developed strategic alliances with some of the largest and most sophisticated international financial institutions. Other groups associated with Kissinger are Kissinger McLarty Associates.C. John Kerry Forbes 2004 campaign ‘advisor’ Roger C. Phone: +44 20 7451 4000 Fax: +44 20 7451 4038. Stelmar’s 40 vessel fleet consists of 24 Handymax. Henry Kissinger’s real name is 12 . Washington.On February 23. 2000 Pacific Life Insurance Company submitted to the board of directors of Prison Realty Trust a shareholder based proposal to invest in and restructure Prison Realty Trust (NYSE:PZN). The Blackstone group is a private investment banking firm and describes itself as a leading global investment and advisory firm. which is valued at approximately 3. Kissinger Associates and APCO Worldwide announced that they had formed “a strategic alliance”. N. Schwarzman./Henry Kissinger. GmbH. D.” the website states [1] (http://www. Peterson and Stephen A.W. In addition to AIG. Stelmar is an international provider of petroleum products and crude oil transportation services and is Headquartered in Athens. $4. APCO worldwide was started by Margery Kraus in 1984 and she is active on the board of Group Menatep (chair. NY 10020 1-212-798-6100. # 900. In October 2004. includes the assumption of 1. Fortress on November 15.” In December 2001. Advisory Board). the Blackstone Group and Bank of America.2 billion in future Blackstone sponsored funds. Inc..S. Roland Berger & Partner.3 billion).4 billion acquisition loan. London location is the Blackstone Group International Limited.html). Fortress just recently completed the acquisition of Germany’s fourth largest residential housing company. +1 212 583 5000 Fax: +1 212 583 5712.4 billion euros of existing financing. The shareholder proposal would involve additional value.K. Greece.

Another major advantage of REIT investment is its liquidity (ease of liquidation of assets into cash). there are over 300 publicly traded REIT’s operating in the United States their assets total over $300 billion. and in 1993 REIT investment barriers to pension funds were eliminated. Following WWII. along with generating between $45 to $123 million in additional cash flow to Prison Realty Trust.1%) Equity REITS invest and own properties (thus responsible for the equity or value of their real estate assets). This trend of reforms continued to increase the interest in and value of REIT investment. and the military. whose main function is to pass profits on to investors. or invest in (purchase) existing mortgages or mortgage backed securities. Mortgage REITs: (1. Investments in real estate provided investors with income and appreciation. which is now called the Mossad. companies who are able distribute the majority of income cash flows to investors without taxation at the corporate level (providing that certain conditions are met). Pacific Life Insurance Company is a member of the fortune 500 group. Pacific Life was founded in 1868 and provides life and health insurance products.6%) Mortgage REITs deal in investment and ownership of property mortgages. businesses and pension plans a variety of investment products and services. One reason for the liquid nature of REIT investments is that its shares are primarily traded on major exchanges. the demand for real estate funds skyrocketed and President Eisenhower signed the 1960 real estate investment trust tax provision which reestablished the special tax considerations qualifying REIT’s as pass through entities (thus eliminating the double taxation). Their revenues come principally from their property rents. REIT’s qualify as pass through entities.5 million shares of Prison Realty Trust. CIA. The Tax Reform Act of 1986 allowed REIT’s to manage their properties directly. companies as clients. The origins of the real estate investment trust. was reversed in the 1930s. and currently counts 65 of the 100 largest U. As pass through entities. These REITs loan money for mortgages to owners of real estate. The Prison Realty Trust [PZN]. This law has remained relatively intact with minor improvements since its inception. beneficially owns approximately 4. investors could avoid double taxation because trusts were not taxed at the corporate level if income was distributed to beneficiaries. REIT investment increased throughout the 1980s with the elimination of certain real estate tax shelters. Pacific Life.3%) 13 .Henry Stern. making it easier to buy and sell REIT assets/shares than to buy and sell properties in private markets. a long term investor. as compared to traditional private real estate ownership which are not very easy to liquidate. making it one of the largest financial institutions in America. Their revenues are generated primarily by the interest that they earn on the mortgage loans. REIT’s were unable to secure legislation to overturn the 1930 decision until 30 years later. individual annuities and group employee benefits. manages and sells real estate assets. REIT’s fall into three broad categories: Equity REIT’s: (96. At that time. and potentially higher future returns. He trains global terrorist groups for the FBI. The pacific life family of companies manages $300 billion in assets. and all passive investments were taxed first at the corporate level and later taxed as a part of individual incomes. a REIT’s business activities are generally restricted to generation of property rental income. and offers to individuals. Approximately two-thirds of these trade on the national stock exchanges. Today. This tax advantage. which are the groups running are government at every facet of its existence. Unlike stock and bond investment companies. A REIT is a company that buys. however. who started and trained the terrorist group the Stern Gang in Israel. Hybrid REITs: (2.S. which is a real estate investment trust [REIT] and is the world’s largest private sector owner and developer. The shareholder proposal by Pacific Life provides for additional value in the form of Series C Preferred Stock (approximately $2. or REIT (pronounced “reet”) date back to the 1880s.20 per share) to be distributed to existing shareholders. REIT’s allows participates to invest in a professionally managed portfolio of real estate properties. develops.

Individual REITs are able to distinguish themselves by specialization. Unicor is a supplier to the military during the current war in Iraq. state. is operated by the Department of Justice (DOJ) and is wholly owned government corporation which employs 25 percent of the Federal Bureau of Prisons’ sentenced inmate population. office buildings. San Diego (Navy SSC San Diego) Southwest Border High Intensity Drug Trafficking Area (HIDTA) UNICOR U. Parole Commission 14 . which is composed of the following Agencies: Biometric Consortium Border Research and Technology Center (BRTC) Bureau of Alcohol. and Firearms (BATF) Corrections Program Office (CPO) Counter drug Technology Assessment Center (CTAC) Drug Enforcement Administration (DEA) Federal Bureau of Prisons (FBP) Federal Prison Industries (operated by DOJ). founded in 1934. REITs may focus their investments geographically (by region.S. industrial facilities. The government has also created the Prison Industrial Complex. or metropolitan area).S.8% Self Storage 3.5% Lodging/Resort 6. apartments or healthcare facilities).S.0% Industrial/Office 33. also known by its trade name UNICOR. Certain REITs choose a broader focus.6% Diversified 8. Department of Justice (DOJ) U. Tobacco.1% Federal Prison Industries. investing in a variety of types of property and mortgage assets across a wider spectrum of locations. or in property types (such as retail properties. Department of Defense (DOD)/Biometric Management Office (BMO) U.Hybrid REITs combine the investment strategies of Equity REITs and Mortgage REITs by investing in both properties and mortgages. The current REIT industry’s investment choices can be broken down by property: • • • • • • • • • Retail 20% Residential 21. also known as UNICOR Immigration and Naturalization Service National Institute of Corrections (NIC) National Institute of Justice (NIJ) National Law Enforcement and Corrections Technology Center (NLECTC) National Technical Information Service (NTIS) Office of Correctional Education (OVAE) Office of Drug Control Policy (ODCP) Office of Law Enforcement Standards (OLES) Office of Law Enforcement Technology Commercialization (OLETC) Office of National Drug Control Policy (ONDCP) Office of Science and Technology (OS&T) Space and Naval Warfare Systems Center.5% Mortgage Backed 1. Customs Service U.3 % Health Care 3. Department of Homeland Security/Border and Transportation Security Directorate (BTS) U.S.S.1% Specialty 2.

Inc.Non-Governmental Entities Alternative Monitoring Services American Correctional Association American Legislative Exchange Council (ALEC) “Bed brokers” BI Inc. TRansCor America Urban Development Corporation U. North American In telecom) R&S Prisoner Transport “Rent-a-call (see “bed brokers”) Scientific Applications and Research Associates (SARA) The Sentencing Project SENTRI/Secured Electronic Network for Travelers’ Rapid Inspection Serco Group. Communities and Culture Premier Detention Services Printrak (Motorola) Prison Industries The Prison Litigation Reform Act (1996) Prison Realty Trust (merged with Corrections Corporation of America) Prison telephone service (AT&T the Authority. (Biometric Systems) The [Biometric Foundation] Bobby Ross Group Capital Correction Resources Cornell Corrections correctionalnews. MCI Maximum Security. Management and Training Corporation Manhattan Institute Marriott Management Services Misuse of labor N-Group Securities National Criminal Justice Commission National Institute of Corrections (NIC) Open Society Institute/Center on Crime. Corrections Corporation purchased by Corrections Corporation of America Wackenhut Corporation/Wackenhut Corrections Other Related Disinfopedia Resources 15 .com corrections. BellSouth MAX. Stun Tech Inc.) Juvenile and Jail Facility Management Services Justice Policy Institute (JPI) Justice Technology Information Network (JTIN) Law Enforcement and Corrections Technology Advisory Council (LECTAC) Mace Security Inc.com Corrections Corporation of America (CCA) Corrections Yellow Pages Dominion Management Dove Development Corporation Earl Warren Legal Institute Federal Extradition Agency (private) General Security Service Government owned/contractor operated Iridian Technologies. Inc. Inc. (formerly IriScan.S.

6. and pre-release. 5. 4. They are promoting public policy in regard to prize and capture law under the War Powers Acts. 12. 1990. 11. The Wackenhut Corporation is a U. Contracting Out [also called Outsourcing] Management Contracts Public-Private Competition [also called managed competition or market testing] Franchise Internal Markets Vouchers Commercialization [also referred to as service shedding] Self Help [also referred to as transfer to non-profit organization] Volunteers Corporatization Asset Sale or Long-Term Lease Private Infrastructure Development and Operation Cornell Corrections Inc. they go up to maximum security. based division of Group 4 Falck A/S. it was a rough business plan. 3. They are the moving force and promoter of the National Council of State Legislatures who privatize criminal statutes for financial gain and profit. They have grown 33-fold in revenues and offenders under contract since that time. 7. provider of contract services to the business. They built correctional facilities in Plymouth. Massachusetts. The types and techniques of Privatization are: 1. American Legislative Exchange Council is owned by Paul Weyrich of the Free Congress Foundation and receives financial support from all of your major corporations. juvenile. the other in Central Falls.Biometrics Defense contractors Eugenics Federal contractors Global detention system Global economy Globalization Military-industrial complex Surveillance-industrial complex Population control Prison labor Sustainable development Timeline to global governance External links Wikipedia: carceral state Wikipedia: retribution justice Wikipedia: prison-industrial complex Disinfopedia is an encyclopedia of people. 8. 9. Suite 400 Los Angeles California 90034 1-310-391-2245. CORNELL and their Company’s concept began December 7. There 16 . yet the Dillon Read Venture Capitol became there first investor on February 21. and government markets. commercial. Sepulveda Blvd. Rhode Island. the president and is a think tank promoting privatization of penal institutions for financial gain they are located at 3415 S.S. 10. 1991 [They are also called Trinity Venture Capital and Shane Reihill is the Chairman and founder.S. The Reason Foundation is run by David Nott. They have diversified and are now dependent upon development and have diversified into the three sectors of the business.secure institutional. It is a project of the Center for Media & Democracy. 2. [NYSE:CRN] is chaired by DAVID M. the world’s second largest provider of Security Services and is based in Copenhagen. Denmark and is the premier U. They are the only company really in the business of aggressively growing in each of these three sectors. issues and groups shaping the public agenda. email bob AT Disinfopedia.

through you and is funded by your commercial dishonor. Holding. Biotechnology. Now you know why the United States of America is the Plaintiff in every Federal Tax Case. when it is sold at the International Level it goes Ordinance or Military and uses a nine digit accounting number. Cosmetics. Materials. put out by CCH and says that the law of the Merchant governs all sections in the Internal Revenue Code. Media. Auto. . Defense.000 employees spread across 40 countries.org/pays/USAs. Real Estate. It has some 40. This company is currently operating in five different time zones and is headquartered at 1700 W. Fashion. Inc. that are movable at the time of identification to contract for sale and future goods. Xignite. The Warden is a Bailee or Warehouseman [before the term admiral was used He was called Custos Maris “Warden of the Sea”] [In some ancient records He was called Capitanus Maritimarum or “Captain or Tenant in Chief of the Maritime”] who receives personal property from another as Bailment.institutional revenues are around 42 percent.000 Corporations.” U. Finance. Section 1775.htm you will see the 20 largest companies. Transportation.04 of Title 17 Corporations: Partnerships of the Ohio Revised Code says “Rules of Law and Equity. This bank was started by the Paul Warburg family which owns and controls the World Bank and started the Federal Reserve System. Transnational Corporations Observatory. Recreational. Packaging. AutoTRIS is the Automated Forensic Traces Investigation System and was designed in the Russian Federal Center of Forensic Science using a graphical toolkit that was developed at Automation Designs & Solutions. Credit Card Companies. growing crops. especially articles of trade or items of merchandize. The CUSIP Agency is 17 . non-profit organization created by Re’gis Castellani in October 1999 in Marttiques [France]. London based UBS Warburg is the investment banking division of the Swiss giant UBS. SUITE 1500 HOUSTON. These factors represent the outsourcing phase of the prison system. the subject matter of foreign exchange transactions documents. CNF Inc]. which explains why they are supplying all the Bond forms respecting the Bid. Advertising. Every metropolitan Police Department and Federal Police have this system installed in their Vehicles and is referred to as the Criminal Justice Tracking System.C. 1-103. accounts. Computer. they own and run the prison system.” UCC 1-103 is quoted in the Administrative Manual of the Internal Revenue Service. Textile Apparel. Medical. Tourism. juvenile revenues approximate 40 percent and prerelease revenues are around 18 percent. one of the largest banks in the world. This program is used as a Jail Management System for Inmate Tracking. instruments. Suite 211 – Foster City. School. Telecommunications. Services. Waste Management. CUSIP is the trademark for the system that uniquely identifies securities and other instruments of general interest. to govern. Privatization is the transfer of assets or service delivery from the government sector. Energy. Conglomerate. Hotels. Metal. and Staffing. letter-of-credit rights. Payment and Affidavit of Individual Surety. The term includes the unborn young of animals. designs the software that is used in AutoTRIS and is located at 1291 East Hillsdale Boulevard. and other identified things to be severed from real property . deposit accounts. including specially manufactured goods. California 94404. or general intangibles. Based on the above information it looks like GSA and GAO are heavily involved in the accounting aspect of the Prison System.C. Performance. Tobacco. LOOP SOUTH. for other software products. Goods are tangible or movable property other than money. Paper. Appliance.C. Electricity. AutoTRIS is copyrighted and licensed to AD&S in the USA and other countries of America. Banks. This is where AutoTRIS and CUSIP come in.United States of America. Retail. Equipment. The term does not include money in which the price is to be paid. Everything is being run under the Law Merchant under U. Also spelled Bailor. The Bailer is one who provides bail as a surety for a criminal defendant’s release. UBS Warburg is located at 141 West Jackson Boulevard Chicago. Chemical. Motorbike. Food Chains.transnationale. letters of credit. Printing & Publishing. Healthcare. When your dishonor is sold within the United States it has a six digit accounting # and is called a Cardinal number. Bailment is the delivery of personal property by one person [the Bailor] to another [the Bailee] who holds the property for a certain purpose under an expressed or implied-in-fact contract. Insurance. Consulting. Restaurants.C. Water. Electronics. The Name CUSIP is derived from the ABA Committee on Uniform Security Identification Procedures.C. Construction. This system also has a Law Enforcement Module and a Court Management Module for courtroom accounting. . Mining. including the Law Merchant. investment property. The sale of goods is governed by Article 2 of the U. .C. Post: USPS [United States Postal Service. maintains a global profile on 10. Prisons are nothing but warehouses for the storage of goods and chattel under commercial law. Notice that the Postal Service is involved in this. Inc.650-655-3700 or call toll free 1-866-XML-SOAP. Aerospace. This group is the United States of America and is the largest stock holder in the world in Corrections Corporation of America that owns and controls the entire world prison system. TEXAS [77027] [1-713-235-9366]. Pharmaceutical. Go to the Paine Webber group on any search engine or go to www. 2-102(a) (24). Private Person. Illinois 60604. Dillion Read Venture Capital a New York based corporation merged with SG Warburg in 1997 creating Warburg Dillion Read. chattel paper. “Goods means all things.

securities depositories and numbering agencies. commodities. Preferred Stock. and administer the PPN system primarily for the Insurance Industry. maturity. GSCC. dealers. I bet that this standard # 6166 is the number of a man and His number is 666 and is talked about in Revelations 13. banks. and Freddie Mac]. Omega LLC. and DTCC.. Standard & Poor’s CUSIP Service was selected by the NAIC to create. Omega is industry-backed and marketoriented. the CUSIP Service Bureau developed specialized numbering scheme TBA [The Bond Market Association] mortgagedbacked securities [Mortgage Backed Securities is ownership position in a group. and Sinking Funds. Clearstream International. a security’s mortgage type [Ginnie Mae. while facilitating cross-border communications among global custodians. of mortgage loans. Term Bonds. And is located at 55 Water Street. GCN [the Global Clearing Network] and DCC&S [Defined Contribution Clearance & Settlement]. The first position of a CINS code is always represented by an alpha character. I finally understand where the United States of America is located and who they are and why in the Bluebook put out by the ABA [American Bar Association] they are referred to as a foreign country. the financial instruments will be identified by a CINS [CUSIP International Numbering System] number. It is also called or referred to as the EMCC. I have the Articles of Incorporation of THE ASSOCIATION of NATIONAL NUMBERING AGENCIES or [ANNA SC] the registered office is located and established at 6. Sally Mae. which identifies for purchase Serial Bonds. or pool. It is Bonds in which interest and principal received from this pool of mortgage loans are passed through to the Bondholders]. and settlement month. At the International level there is EPIM [the European Pre-issuance Messaging]. ISID Plus has been designed to minimize the impact on back-office systems and operations. and securities. EPIM was launched as a cooperative effort by Euroclear. Treasury Bills. CUSIP also identifies the issuers of securities and other financial instruments within a standard nine-character framework. How much do you want to bet that CUSIP and DTC is the clearinghouse for all Arrest Warrants? Which are commercial checks under Article 3 of the U. These are the clearinghouses for all shares and stocks sold through the CCA and the Paine Webber Group. NSCC. and disseminating this information to the financial marketplace.C. as amended from time to time [hereafter “the Standard”]. CINS numbers employ the same issuer [6 characters] Issue [2 characters & check digit] concept espoused by the CUSIP Numbering System. securities organizations. enhancing. and Fannie Mae. Freddie Mac.the organization within the ABA [American Bankers Association] which is charged with the responsibility of developing. I have a 26 Page list with Bonds. avenue de Schiphol-1140 Brussels – Belgium. Currency. and maintaining the system and policies necessary for uniform securities identification. The National Association of Insurance Commissioners [NAIC] in October 1988 mandated the use by issuers of a uniform private placement number [PPN] to identify investments in their annual statements filed with the State Regulatory Authorities. All Bonds are identified by using a CUSIP nine digit number.? I also have a form called a PRIVATE PLACEMENT DEBT. A/K/A the United States of American. Sally Mae. which operates under a license agreement with the ABA. is the leading of complete global trade management services. A unique partnership between the securities Industries leading utility and the commercial sector. TBA and CUSIPs incorporate within the number itself. CUSIP is the Trademark of Standard and Poor’s. FICC. To show how massive this system is ISID plus contains over 500.. Ginnie Mae. DTCC. which are either underwritten debt issues or domiciled equities outside the United States and Canada. depositories. Through its integrated suite of Intelligent Trade Management Solutions SM. Interestedly this is the same address of the DTC Depository Trust Cooperation and The Depository Trust Company which is the holding and settlement company for all credit card trust accounts and is the holder of all bonds and certificated securities for all investors and which is the clearinghouse for all goods. signifying the Issuer’s country code [domicile] or Geographic region.C. Working with the MBSCC. including banks. MSCC. which is a central messaging hub linking the parties involved in the Issuance of European Commercial Paper [ECP]. NY 10041. The CINS number was developed in 1988 by Standard & Poor’s and Telekurs [USA] in response to the North American Securities industries need for 9 character identifier for International Financial Instruments. 47th floor New York. a joint venture company owned equally by the Depository Trust & Clearing Corporation [DTCC] and Thomson Financial.000 global financial instruments and cross references all major national numbering systems. issuing and paying agents. 18 and whose 18 . The object of ANNA is to maintain and promote the standards of International Standard ISO 6166. They are also offering TBAs which are futures contracts on mortgaged-backed pools. coupon. assign. I have a form from CUSIP called a PRIVATE PLACEMENT EQUITY which identifies Mutual Funds. CINS numbers appear in the International Securities Identification Directory [ISID Plus Services] which is co-produced by Standard & Poor’s and Telkurs [USA]. Notes. For financial instruments actively traded on an International basis. Fannie Mae. Warrant and Rights. and exchanges.

airlines. Which brought together the G 7 Central Bank ministers. with the establishment of the World Trade Organization Financial Services Agreement which demands that all countries allow foreign banks.” Most guards in public prisons belong to the LEOU. Penal Institutions. a private corporation. from subjection to a judicial lien. That set the tone for other countries to follow suit. I think ANNA is owned by the Order of Jesuits out of Rome Italy. which is part of the American Federation of State. ALEC.g. In the late 1990’s they set up a new structure called the Financial Stability Forum. and Banks. this makes the Treasury Secretary of the United States a puppet of the Federal Reserve. The Bank for International Settlements is at the apex of all of the world’s central banks. They are private corporations established in every country to manage and control that country’s monetary system. and Municipal Employees AFSCME. why aren’t we as principals on the Private side of the accounting cycle using our Exemption Priority to discharge all this Public Debt under the Uniform Exemption Act section 3 “Exempt” means protected. and “exemption” means protection. all that has to be done in order to destroy a country is to sell their currency at same time. CORNELL CORRECTIONS. agriculture. and local governments? As the Nation put it: The selling point was simple: Private companies could build and run prisons cheaper that the governments. They have been meeting since 1975 when there were only five countries. The Nation explains this miracle would be accomplished. because of a Commercial Dishonor. Since the central banks hold the currency of other countries. “Private prisons receive a guaranteed [per diem] fee for each prisoner. there is the move towards a global stock exchange. Rights. has contributed to a changed financial landscape. Options. Russia is the most recent country to join. The Third to Sixth Character: attributes for further description and grouping. along with the IMF and World Bank. Furthermore. Therefore as a result of the global volatility which I believe was a result of the central bank’s selling the aforementioned countries currencies. policies and movement of monies and investments. stocks. Also contributing to the new financial architecture is the rise of multi-national and transnational corporations. G 7 Finance Ministers. since they control and dictate monetary policy worldwide. Italy. preferred shares etc. Unfettered American Capitalism would produce a better fetter. also known as fascism. Germany. equities into shares. “A person who has doubts is thinking about two different things at the same time and can’t make up his mind about anything” or as the King James Version says “A double minded man is unstable in all his ways. Each dime they don’t spend on food or medical care [for prisoners] or on wages and training for the guards is a dime they can pocket. telephone companies. Furthermore. They participate fully in every area with the exception of finance where they only participate in financial terrorism. etc. Others]. Further more. Under Article 29 ANNA has a list of all public finds. financial. In addition. banks. the rise of public-private partnerships which is a merger between government and business. and other securities composing ANNA’S Portfolio.purpose under Article 3 is to carry out any commercial. Debt Instruments.” James 1:8. Futures. or proceeding to collect a debt. or civil transactions directly or indirectly related to the objects of ANNA. shares. and Russia. The Second Character: Group within category e. brokerage firms and insurance companies to enter their market. Great Britain. Then in 1998 they were joined by the central bank ministers. The First Character: Category [Equities. the establishment of a World’s Customs Organization and “open skies” between countries. Canada. state. Under Article 5 ANNA has unlimited Capital through BIS [Bank for International Settlements]. Why is privatizing prisons so appealing to federal. Every individual in Prison is in there. the head General. WACKENHUT. The U. the Comptroller of the Currency and FDIC. UBS WARBURG. DILLION READ VENTURE CAPITOL.S. bonds. SG WARBURG. mergers and acquisitions. in addition to the Central Banks. they chipped away at national financial sovereignty. REASON FOUNDATION. I have a pointed question for you. their respective Securities and Exchange Commissions. has changed the control of our banking system by repealing the Glass-Stegall Act in 1999 that allowed banks to buy brokerage firms and insurance companies. County. ANNA also assigns the ISIN [International Securities Identification Number]. CCA. process. which is run by Count Hans Kolvenbach. there is the Group of Eight which is comprised of the heads of state from the United States. saving cash-strapped states millions of dollars each year” while simultaneously generating huge profits. This represents a further integration of the economies. Let us regain and claim our honor and status as the Principal with primary responsibility on obligations for 19 . regardless of the actual costs. For 22 years. The answer is we are all double minded and do not know who we are in a commercial setting. Pontiff and Gregorian Counsel for the Order of Jesuits and he is called the “Black Pope” and who owns and controls all Prisons. Japan. the Financial Stability Forum was set up as a further layer and deeper integration of the global economies. country privatization of its assets such as railroads. the G7 finance ministers met alone. WARBURG DILLON READ and the PAINE WEBBER GROUP. France.

102-1 and 28.106-3 (b)] Standard Form 25.com/q/mh?s=CXW. performance. Neither the financial institution nor the offeror/Contractor can revoke or condition the letter of credit.575 shares as of 10-Sep-02 20 . The Bid.450 shares as of 2-May-03 Ferguson. Performance Bonds [see title 48 sections 28.235.106-3 (b)].106-3 (b)] form 28 Affidavit of Individual Surety [see title 48 sections 28. as used in this clause. and Payment Bonds are then underwritten by an Affidavit of Individual Surety through the Banks as Investment Securities for resale to the public. Through our Exemption as Principal. John D. 1.yahoo. and payment bonds and Affidavit of Individual Surety. Optional form 90.340 shares as of 2-May-03 28. Under section (g) of the clause at 52.487. There are seventeen more corporations owning various amounts of shares at varying dollar values. means a written commitment by a federally insured financial institution to pay all or part of a stated amount of money. [see title 48 sections 28. The Bid Bond is then indemnified by a surety company through Performance and Payment Bonds. Barclays Bank Pic 1. Release of Personal Property from Escrow [see title 48 section 28.228-14 the contractor can draw on the ILC using the sight draft draw up in section (g). (a) “Irrevocable letter of credit” (ILC).042 dollars. Brokerage Houses and Insurance Companies Bid on the Investment Securities with a Bid Bond issued by the GSA. or to secure other types of bonds such as performance and payment bonds. By legal definition all of your Federal and State “Statutes” are Bonds or Obligations of Record and are represented in the courtroom by the Recognizance Bond. Bid Bonds are usually purchased by Brokerage Houses. 3. These bonds can be used to release the liens imposed by the bid.203-5].083. upon presentation by the Government (the beneficiary) of a written demand therefor. The underwriter is the one who buys the stock from the Issuer the CCA with intent to resell it to the public or an entity or person.254 dollars. until the expiration date of the letter. Michael 40. which is usually an investment banker.791. and Insurance Companies. Performance.986. we can use these Standard form 24 Bid Bonds [ see title 48 section 28. issued by GSA under the Comptroller General.discharge on the public and payment on the private. which is a Bond of Record or Obligation for the payment of debt. 041.671 shares valued at $37. goods or chattel as they are called in commercial law. The Institutional Holders who own most of the Shares are: 1. An Irrevocable Letter of Credit under title 48 section 52. the letter of credit and letter of confirmation formats in paragraphs (e) and (f) of this clause shall be used.101]. Joseph V. J. 2. These can be viewed by going to http://finance. 64. Legg Mason Inc. Russell. 084. (b) If the offeror intends to use an ILC in lieu of a bid bond. Quinlan. Release of Lien on Real Property [see title 48 section 28.228-14 can be used in lieu of a bid bond..102-1 and 28.563 shares valued at $43. 2. FMR [Fidelity Management & Research Corporation 3. to discharge any debts. The investment banker purchases all or part of the shares of the stock for resale to the public in the form of newly issued investment securities based on the shares of the stock. The Top Insider & Rule 144 Holders are: 1. creates or issues stock certificates based on prison population..024 shares at a value of $109. and Payment Bonds Standard Form 25A.203-5] And Optional Form 91.102-1 and 28. 3. A condensed version of what is going on is that the CCA as a corporation.

which shows a map of the circuit courts. P.GOV.228(h). then to Financial Department. because these will. Go to a search engine and type in U. District Courts are buying up the State Court default judgments. Jimmy Horne.S Courts. and a SF274 Payment Bond and a Reinsurance Agreement in Favor of the United States SF 275 and a list of Admitted Reinsurers. Insurance Law and Practice section 7681. . admitted reinsurers and forms. Go to court links and click. When these Bonds are pooled they become mortgage backed securities or surety bonds. . Currently global terrorism is being funded by the prison system and the State’s Retirement Fund go to www. a list of the 7th and 8th circuit courts will appear. Securicor is one of your biggest international securities companies and is located in South Africa and have acquired Gray Security Services. click on sureties it will take you to FMS. and handles all matters prior to and subsequent to loss. you will also see a list of the Department of the Treasury’s Listing of Approved Sureties [Department Circular 570]. who accepts the risk in exchange for a percentage of the original premium. click on Illinois Northern District Court. Pools and Associations . to an insurance lawyer means one thing only – the ceding by one insurance company to another of all or a portion of its risks for a stipulated portion of the premium. or a larger number of smaller risks. consolidations and mergers. This treatise represents about 700 hours of brainstorming. at 479-80 [1976].TREAS. O’Neill & J. click on 7th circuit. Thus it has so often been used in connection with transferred risks.817 shares as of 23-May-03 5. Securicor was formed from the merger between Securicor pic and Group 4 Falk. and in other connections that it now lacks a clear-cut field of operation. the Law of Reinsurance in England and Bermuda 4 [1998]. Reinsurance is defined as insurance of all or part of one insurer’s risk by a second insurer.751 shares as of 29-Jun-04 As you can see by the above information. Secondly. reinsurance can increase the capacity of the insurer to accept risk. volume 1 is approximately 1. These should be consulted and read before these bonds are used. Post Judgment Interest Rates. this is usually done by an investment company or investment banker.4. . These bonds are being used in cases where it is desired to cover the excess of a Direct Writing Company’s underwriting limitation by reinsurance instead of co-insurers on Miller act performance bonds running to the United States. there on left side you will see sureties listing. Also termed reassurance. then a Reinsurance Company comes in and purchases a Performance Bond as a surety for the Bid Bond. Turner. . Thirdly. and list of sureties.202-1 and 53. then go to administrative services. The Payment Bond is then under written by an Affidavit of Individual Surety. Reinsurance. excess insurance. then click on Clerk’s Office. The Performance Bond is then under written by a Payment Bond. Contractors and Insurance Companies are bidding on the default judgments with a Bid Bond. which was completed in July 2004. this is all admiralty maritime at its finest. and Lloyds’ Syndicates.326 pages volume 2 is 823 pages long. The term ‘reinsurance’ has been used by courts. reinsurance can strengthen the solvency of an insurer from the point of view of any regulations under which the insurer must operate which provide for a minimum ‘solvency margin. They are then put on the bond market through TBA [The Bond Association]. Woloniecki. you will see Criminal Justice Act. These FAR regulations come in two volumes. John R. 21 . Securicor operates in 50 different countries. or a combination of both . . 13.’ generally expressed as a ratio of net premium income over capital and free reserves. First. The laying off of risk by means of reinsurance traditionally serves three basic purposes. and text writers with so little discrimination that such confusion has arisen as to what that term actually connotes. in which the liability of the reinsurer is solely to the reinsured. assumed risks. when you refuse to pay or dishonor the debt. at least in part. The insurer may be enabled to take on larger individual risks. 13 a John Allen Appleman & Jean Appleman. which is the ceding company . reinsurance can promote financial stability by ameliorating [improving] the adverse consequences of an unexpected accumulation of losses or of a single catastrophic losses.T. U. and in which contract the ceding company retains all contact with the original insured. 5. All of the performance and payment bonds are regulated and controlled by FAR [Federal Acquisition Regulations] which is under [48 CFR] 28. be absorbed by reinsurers. attorneys.Org this is a 115 page treatise on the Terrorism Investments of the 50 States. click on forms and you will see Reinsurance Agreement for a Miller Act Performance Bond SF 273. . this system permeates every fabric of our society. These bonds are also sold as investment securities through brokerage houses or insurance companies.S.DivestTerror.W.

The prisons are referred to as credit facilities. Under section 9303 Government Obligations may be substituted for Surety Bonds. The Bid. 11. Department of the Treasury issues each year. The Prisons are acting in the capacity of a fiduciary or custodian over Government Securities or otherwise for the account of a customer. government agencies and government sponsored enterprises 3. 4. Sally Mae. The office responsible for the regulations is the Office of the Commissioner. payment bonds and Affidavit of Individual Surety in addition to being sold on the commodities and securities exchange as pooled mortgaged backed securities and cleared for settlement through the FICC [Fixed Income Clearing Corporation]. and that are not government securities brokers or dealers. The surety company issuing these bonds must be listed as a qualified surety on the Treasury List. The following types of assets are most commonly pledged to secure discount window advances. Performance and Payment Bonds.The Miller Act is found in Title 40 U.A. 12. who is the holder until the Bonds are sold. Payment Bonds and Affidavit of Individual Surety fall in the category of surety bonds under these provisions. Fannie Mae. Bureau of the Public Debt. sections 270 a – 270d-1 and is federal law requiring the posting of performance and payment bonds before an award is made for a contract for construction. performance. The bid.S. Collaterized Mortgage Obligations 5. I believe that the prisons are repository institutions or facilities for securities [prisoners] as collateral for the public and national debt. Assets accepted as collateral are assigned a lend able value [market or 22 .C.S. They function essentially the same way that a Depository Bank does under 17 CFR section 450. 78 c (a) (43)—(44). industrial. 1. or agricultural loans Commercial real estate loans Consumer loans Check with your local Reserve Bank if you have any questions About other types of collateral +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++The Federal Reserve System Discount Window Collateral Margins Table includes valuation margins for the most commonly pledged asset types.S. alteration. institutions or repositories. Asset backed securities 6. Ginnie Mae. All discount Window advances must be secured by collateral acceptable to the Reserve Bank. 9. Government Obligations are defined as public debt obligations of the United States Government and an obligation whose principal and interest is unconditionally guaranteed by the Government. Money market instruments Residential real estate loans Commercial.S.C. Corporate bonds 7. 10. Obligations of the United States Treasury 2. Performance.S. which the U. Obligations of U. The regulations in subchapter B are promulgated by the Assistant Secretary (Domestic Finance) pursuant to a delegation of Authority from the Secretary of The Treasury. are also being pledged as collateral for funds and a line of credit at the discount window or the open-market trading desk of Freddie Mac. Obligations of states or political subdivisions of the U. Sureties and Surety Bonds are covered in Title 31 sections 9301-9309. as defined in sections 3 (a) (44) of the Securities Exchange Act of 1934 (15U. 8. or your local Federal Reserve Bank. The prisoners represent asset or repository money for the Bid. or repair of a public work or building.

the prisoners are the actual reinsurance or surety and their sentence represents the valued and marketable risk involved with the materials. When Excess Risks on bonds in favor of the United States are protected by reinsurance. Suite 800 Washington. Since everybody on the public or debt side is bankrupt or insolvent how can they assume a liability or risk? They can’t that is why they have to look to the exempt priority private asset side of the accounting ledger to assume reinsurance or risk. He is then required to get a reinsurance company to act as surety on the bid bond. SAA is licensed as a rating or advisory organization and has been designated as a statistical agent by all the states except Texas for the reporting of fidelity and surety experience. His address is 1101 Connecticut Avenue. Revised September 1. or securities for the bid. collateral.P. When a corporation wants to build or perform construction. D. 20036. Boit [ Federal Case No. Charles Townshend who passed The Townshend Act in 1767 and who was the Lord High Admiral on the British Board of Trade caused the American Revolution due to the high Tariffs. Ohio is the transfer agent for bonds her telephone # 1-216-274-1606 and Holly Pattison of National City Bank is also a transfer agent. the underwriting limitation in force on the day in which the bond was provided will govern absolutely. and then a performance bond is issued to guarantee cost of material and supplies. Ohio 44115 telephone # 1-216-515-6662. England. This is termed assumed risk in insurance and represents a present peril. Duties. The National Association of 23 . An Affidavit of Individual Surety is used as a surety for the bid. 6. [see the attached schedules] The Treasury Department issues certificates of authority to insurance companies who submit a financial statement to the Department of the Treasury. if the contractor is awarded the bid.W. Under King Charles 11. SAA represents more than 500 companies that collectively underwrite the vast majority surety and fidelity bonds in the United States.914. 988 & 989 of the Huntress. This can only be done with Asset Collateral through goods [prisoners] under mercantile civil and commercial law. as well as a number of foreign affiliates. due to their dishonor and default judgment in court.face value multiplied by the margin] deemed appropriate by the Federal Reserve Bank. such reinsurance is to be effected by use of a Federal reinsurance form to be filed with the bond or within 45 days thereafter. This fact leads me to believe that in addition to being a Repository Bank with prisoners being the assets.C. 3. You can’t pay a debt or assume a risk with a debt instrument. I spent 30 minutes on the phone with Robert Duke. performance. N. 1978 [31 CFR 223. In protecting such excess risks. 82) 89 says that all Revenue is of admiralty maritime law. you will find out that all insurance is of Admiralty Maritime Law and The Huntress [Federal Case No.] Treasury refers to a bond of this type as an Excess Risk. nonprofit. The bid bond is a three party obligation with the obligee as the owner of the bid. The published underwriting limitation is on a per bond basis but does not limit the amount of a bond that a company may write. performance and payment bonds. Read pgs. who is the director of underwriting for the Surety Association of America under circular 570 for the Department of the Treasury whose telephone # is 1-202-463-0600. By talking with a broker named Jim McFadden for AG Edwards I found out that the Bond Register and paying agent for the County of Cuyahoga is Frank Lamb a Trustee for Huntington National Bank at 917 Euclid Avenue Cleveland.10-11. The Surety Association of America is a voluntary. The reinsurance company’s limitation on liability is determined and predicated on 10% of the Policy Holders surplus retained by earnings from capitol surplus. Her Telephone # 1-216-222-2552. performance and payment bonds. hazard. That is why there is a penal sum or clause attached to each bond for non performance and payment of the bonds. he receives bids from a contractor. performance and payment bonds. Imposts and Excises imposed on the Colonists on imports from London. then requires that the contractor submit a bid bond. I also found out that Lisa Jennings of J. [2 Ware (Dav. and payment relative to the bonds. coinsurance or other methods as specified in Treasury Circular 297. Morgan Bank in Cleveland. The reinsurance company who is acting as surety for the bid bond also acts as the underwriter through a payment bond. I went through circular 570 of the Department of Treasury and called several of the admitted reinsurance companies through their underwriting department and found out they knew absolutely nothing about reinsurance relative to bid. supplies and cost factors involved with the guaranteed performance. revenue causes had been heard and tried in the colonies by the vice admiralty. unincorporated association of companies engaged in the business of suretyship. or danger of loss.776]. If you read De Lovio v. and payment bonds. the corporation who is the owner and obligee. the contractor then becomes the principal obligor. Companies are allowed to write bonds with a penal sum over their underwriting limitation as long as they protect the excess amount with reinsurance.

The underwriter may acquire the securities either by negotiation with the issuer or by award on the basis of competitive bidding. either directly or through their agents.sio. SEE BONDHOLDER. See: NET PROCEEDS. CLEARANCE = The process of delivering securities from a seller to a buyer. ISSUER = A state. REGISTERED BOND. TRUSTEE. municipality. See: REGISTERED BOND. BOND PROCEEDS = The money paid to the issuer by the purchaser or underwriter of a new issue of municipal securities. 7. PRIMARY DISTRIBUTOR.C. The trustee under a trust indenture often also acts as registrar. The trustee under a trust indenture often also acts as transfer agent.Surety Bond Producers is the international organization of professional surety bond producers and brokers.C. 4. WORD DEFINITIONS RELATIVE TO BONDS 1. 2. UNDERWRITER = A Broker – dealer that purchases a new issue of municipal securities from the issuer for resale in a primary offering. D. See: DELIVERY DATE. kept by a transfer agent or registrar on behalf of the issuer. SUNDICATE. that lists the names and addresses of the holders of the registered bonds.org sio@sio. D. 20015 www.org I also believe that the Bid Bonds are being used to purchase commercial items [commercial paper] such as court judgments this is done through GSA SF form 1449 contract form and is a rated order under DPAS [Defense Priorities and Allocations System] see 15CFR 700 this is under the National Security Industrial Base Regulations. SURETY INFORMATION OFFICE National Association of 5225 Wisconsin Avenue NW. for guaranteeing performance. 6. NEGOTIATED SALE. TRANSFER AGENT = The person or entity that performs the transfer function for an issue of registered municipal securities. or governmental agency or authority that raises funds through the sale of municipal securities. BOND REGISTER = A record. Washington. and innovation in surety and to advocate its use worldwide. REGISTRAR. NASBP represents more than 5. such as license and permit bonds. political subdivision. Compare: TRANSFER AGENT. and issue other types of surety bonds. TRANSFER AGENT. Compare: CLEARANCE. 20015 600 5225 Wisconsin Ave. See: COMPETITIVE SALE. NW. See: BONDHOLDER. GOOD DELIVERY. Compare: SETTLEMENT. 24 . This is all under the Executive Branch under the President and Military.000 personnel who specialize in surety bonding. NASBP’s mission is to strengthen professionalism. These moneys are used to finance the project or other purpose for which the securities were issued and to pay certain costs of issuance as may provided in the bond contract or bond purchase agreement. See: BOND REGISTER. TRANSFER. 5. provide performance and payment bonds for the construction industry. SETTLEMENT = Delivery of and payment for a security. Compare: PLACEMENT AGENT. (202) 686-7463 Fax (202) 686-3656 Washington. HOLDER = The owner of a security. an official of the issuer or a third party engaged by the issuer to act as its agent. Compare: REGISTRAR. 3. PRIMARY OFFERING. TRUSTEE. expertise. REGISTRAR = The person or entity responsible for maintaining records on behalf of the issuer that identify the owners of a registered bond issue. 9. This person or entity may be the issuer. Surety Bond producers Suite Suite 600. 8.

GLOBAL CERTIFICATE. PRIVATE ACTIVITY BOND. Industrial development bonds. Most municipal securities issued in recent years have been in bookentry only form. WRITTEN AWARD. Compare: CLEARING CORPORATION. Such securities do not constitute general obligations of the conduit issuer because the conduit borrower is liable for generating the pledged revenues. The issuer issues a global certificate that is then lodged in the facilities of a depository or other book-entry agent and kept safely by the agent until maturity.S. See: HOUSING REVENUE BOND. See: REGISTERED CLEARING AGENCY. The date of the award is generally considered the “sale date” of an issue. Compare: IMMOBLIZED SECURITY. DEPOSITORY = A registered clearing agency that provides immobilization. See: BID. For example. Compare: BOOK-ENTRY ONLY. BOND PURCHASE AGREEMENT. 14. OBLIGOR. or in the name of. and transfers of ownership by. BOND PURCHASE AGREEMENT [BPA] – The contract between the underwriter and the issuer setting forth the final terms. 15. Ownership interests of. IMMOBILIZED SECURITY = A physical security that is held in a central depository for the account of its beneficial owner but that may be withdrawn from the depository in physical form. 11. prices and conditions upon which the underwriter purchases a new issue of municipal securities in a negotiated sale. BENEFICIAL OWNER = The person to whom the benefits of ownership of given securities accrue. Such certificates are often used in book-entry systems. another person or held in an account over which another person has investment discretion. less commonly. with the beneficial owners of the securities only designated on the firm’s records. even though the securities might be held by. See: BOOK-ENTRY ONLY.Multi-family housing revenue bonds. See: GLOBAL CERTIFICATE. Government securities) or in the form of a single. Immobilized securities may be transferred when sold by entries on the records of the depository or by withdrawal of actual certificates. See: CONDUIT FINANCING. CONDUIT FINANCING = The issuance of municipal securities by a governmental unit (referred to as the “conduit issuer” to finance a project to be used primarily by a third party.A security that is not available top purchasers in physical form. multifamily housing revenue bonds and qualified 501 (c) (3) bonds are common type’s conduit financings. 12.10.” See: NEGOTIATED SALE. AWARD = The official acceptance by the issuer of a bid or offer to purchase a new issue of municipal securities by an underwriter. Compare: VERBAL AWARD. 501 (c) (3) ORGANIZATION = An organization recognized by the Internal Revenue Service as a notfor-profit organization. a securities firm might hold securities in “street name” in its vaults or at a securities depository. 18. investors are reflected solely by appropriate books and record entries. A conduit borrower also is frequently a party to the bond purchase agreement in a conduit financing. Compare: CERTIFICATED SECURITY. 17. INDUSTRIAL DEVELOPMENT. GLOBAL CERTIFICATE = A single certificate sometimes referred to as a “jumbo certificate. The security for this type of issue is customarily the credit of the conduit borrower or pledged revenues from the project financed. rather than the credit of the conduit issuer. 16. usually a for – profit entity engaged in private enterprise or a 501 (c) (3) organization (referred to as the “conduit borrower”). UNDERWRITING AGREEMENT. and no certificates can be obtained. Such a security may be held either as a computer entry on the records of a central holder (as is the case with certain U. CONDUIT BORROWER = A borrower of bond proceeds in a conduit financing.” representing an entire maturity of an issue of securities. WRITTEN AWARD. BOOK-ENTRY ONLY (BEO) or BOOK-ENTRY SECURITY. the “underwriting agreement. The bond purchase agreement is sometimes referred to as the “purchase agreement” or. 19. A 501 (c) (3) organization can borrow funds to finance projects on a tax-exempt 25 . Compare: BONDHOLDER. global certificate. IMMOBLIZED SECURITY. The securities are available to beneficial owners only in book-entry form. 13. safekeeping and book-entry clearance and settlement services to its participants.

MUNICIPAL SECURITIES = a general term referring to securities issued by local governmental subdivisions such as cities. 23.basis through a conduit issuer. clearance and settlement services for its members. clearance and settlement of securities transactions. as described below. more than 10% of the proceeds of the issue are used for any private business use (the “private business use text”) and the payment of the principal of or interest on more than 10 % of the proceeds of such issue is secured by or payable from property used for a private business use (the “private security or payment test”). See: CONDUIT ISSUER. 22. 27. Interest on private activity bonds is not excluded from gross income for federal income tax purposes unless the bonds fall within certain defined categories (“qualified bonds” or “qualified private activity bonds”). A municipal security is considered a private security bond if it meets either of two sets of conditions set out in section 141 of the Internal Revenue Code. REGISTERED CLEARING AGENCY. comparison. In some cases. Conduit authorities generally are financed by fees payable by conduit borrowers. A municipal security also is a private activity bond if. 20. See: NATIONAL SECURITIES CLEARING CORPORATION. Compare: TAXABLE MUNICIPAL SECURITY. CONDUIT FINANCING. DEPOSITORY TRUST AND CLEARING CORPORATION. DEPOSITORY TRUST AND CLEARING CORPORATION (DTCC) = The entity formed by the merger of Depository Trust and National Securities Clearing Corporation. A prime feature of these securities is that interest or other investment earnings on them usually are excluded from gross income of the holder for federal income tax purposes. with certain exception. the amount of proceeds of the issue used to make loans to non-governmental borrowers exceeds the lesser of 5 % of the proceeds or $ 5 million (the “private loan financing test”). See: CONDUIT BORROWER. A municipal security is a private activity bond if. The following categories of private activity bonds are qualified bonds under federal tax laws: 26 . fees or tolls. In other cases. Issuers of municipal securities are exempt from most federal securities laws. CLEARING CORPORATION = A registered clearing agency that provides specialized comparison. funding or administrative oversight. usually are financed by service charges. Examples of such conduit authorities include health facilities authorities. Authorities. Examples include not-for-profit colleges and universities. 25. or a separately established not-for-profit entity formed on behalf of a governmental entity. hospitals. 24. other than conduit authorities. AUTHORITY = A unit or agency of government. authorities issue private activity bonds for the purpose of making the proceeds available to qualified private entities for use as permitted under the federal tax laws. See: CLEARING CORPORATION. Most categories of qualified private activity bonds are subject to the alternative minimum tax. or special districts. See: AUTHORITY. towns. counties. NATIONAL SECURITIES CLEARING CORPORATION (NSCC) – A clearing corporation. 21. CONDUIT ISSUER = An issuer of municipal securities in a conduit financing. authorities have the power to issue debt that is secured by the lease rental payments made by a governmental unit using the facilities constructed with bond proceeds. PRIVATE ACTIVITY BOND (PAB) = A municipal security the proceeds of which are used by one or more private entities. either paid directly by the borrower or under the bond contract. DTCC facilitates the clearance and settlement of securities transactions. registered with the Securities and Exchange Commission pursuant to section 17 A of the Securities Exchange Act of 1934. established to perform specialized functions. See: NATIONAL SECURITIES CLEARING CORPORATION. An authority may function independently of other governmental units. Industrial development authorities and housing finance authorities. Compare: DEPOSITORY. although they also may have taxing powers. museums and retirement communities. that provides specialized systems for the confirmation. PRIVATE ACTIVITY – Qualified 501 (c) (3) bonds. 26. REGISTERED CLEARING AGENCY = An organization. A clearing corporation typically offers services such as automated comparison systems and transaction netting systems. villages. or it may depend upon other units for its creation. as well as securities issued by states political subdivisions or agencies of states. with certain exceptions.

certain residential rental projects (including multifamily housing revenue bonds).” It was in these later senses that bulla became in England billa. 27 .” e. Qualified 501 (c) (3) bonds = Private activity bonds issued to finance a facility owned and utilized by a 501 (c) (3) organization. Qualified student loan bonds = Private activity bonds issued to finance student loans for attendance at higher education institutions. INTERNATIONAL BILL OF EXCHANGE In the Open Market Trading Desk in the Investing Trading Glossary A bill of exchange is defined as a “General Term for a document demanding payment. as far as I can find. in this sense only. rehabilitation and relocation activities for redevelopment purposes by a governmental entity in designated blighted areas. Being a word of common use. a charter. a papal bull. including airports. Under Title 18 sections 513 (A) the term security as defined in the Electronic Fund transfer Act under 916 (c) has been amended and moved to Title 15 section 78 (c) subsection 10. clearance. Enterprise zone bonds are also considered exempt facility bonds. Qualified small issue bonds = Private Activity bonds issued to finance manufacturing facilities. “a bill. taking into account certain prior issues. draft. Exempt facility bonds – Private activity bonds issued to finance various types of facilities owned or used by private entities. and certain other local utility facilities. So the Oxford English Dictionary.28. 34.exempt basis in an amount up to $1 million. any official or formal document. The ability of states to issue new and refunding qualified veterans’ mortgage bonds on a tax – exempt basis is limited. See: ENTERPRISE ZONE BOND. bulla was probably pronounced with u. 31. and certain other transportation-related facilities. Qualified redevelopment bonds are payable from general taxes or from tax increment revenues. 32. schedule. Qualified 501 (c) (3) bonds are not subject to the federal alternative minimum tax.” This says it all if you have wisdom and understanding. 30. an amulet for the neck”. solid and hazardous waste disposal facilities.. sometimes the obvious escapes everybody. though no direct evidence of this has been found. “a document furnished with a seal. nor would it be even if ‘bill’ and ‘bull’ had originally conveyed the same or similar meanings. whence in mediaeval Latin “a seal” especially the seal appended to a charter etc. In classical Latin bulla was ” a bubble. A ‘bull’ was a sealed document setting forth something or other in an authoritative manner. or an amount up to $10 million. seems to have carried the meaning of a humble petition for remedy of a stated grievance. memorandum. A ‘bill’ on the other hand. The word Bill is an alteration of the Latin word Bulla in its mediaeval sense. water. note. HOUSING REVENUE BOND. and William Langland. passing into English y. a boss. Qualified mortgage bonds = Private activity bonds issued too fund mortgages to finance owner-occupied residential property. 29. Qualified veterans’ mortgage bonds = Private activity bonds that are general obligations of a state issued to fund mortgage loans to finance owner – occupied residential property for veterans. and. a stud. so far as one can gather from the evidence of contemporary literature. or any renewal thereof the maturity of which is likewise limited is not included in this definition of a security. At least up to the end of the fourteenth century the two words almost always carried meanings that were respectively inconsistent with each other. bill of exchange. exclusive of days of grace.g. transferred sense. or banker’s acceptance which has a maturity at the time of issuance of not exceeding nine months. paper. sewer. Qualified mortgage bonds are often referred to as single family mortgage revenue bonds. where it says that any currency. i. The word occurs several times in this sense. note. See: TAX INCREMENT BOND. and certain other types of facilities. thence. bille. and. in Gower. 33. Qualified redevelopment bonds = Private activity bonds issued to finance certain acquisition. taking into account certain capital expenditures incurred during the three years prior and the three years following the issuance of such bonds. This explanation is not convincing. docks. Qualified small issue bonds may be issued on a tax. See: HOUSING REVENUE BOND – Single family mortgage revenue bonds.Multiple-family housing revenue bonds. by extension.

especially a bill of exchange. or as security for. (3) The instrument is issued or transferred as payment of. In Clearfield Trust Co. This type of acceptance inures to the benefit of all successors to the party for whose benefit it is made. but by a third party. an antecedent claim against any person.” 2 Stephen’s Commentaries on the Laws of England 202-03 (L. v. Honor 2. 1988]. [UNICTRAL CONVENTION ON INTERNATIONAL BILLS OF EXCHANGE OR INTERNATIONAL PROMISSORY NOTES] December 8. If an instrument is issued for a promise of performance. its rights and duties are governed by federal common law in the absence of a 28 . by which the third party agrees to pay the debt when it becomes due if the original Drawee does not. Also termed acceptance supra protest. (b) “Consideration” means any consideration sufficient to support a simple contract. with the consent of the holder.. whether or not the claim is due. of the amount of the bill. the issuer has a defense to the extent performance of the promise is due and the promise has not been performed. where a bill has been dishonoured by non-payment and protested any person may intervene and pay it supra protest for the honor of any person liable thereon. or “order. Letters of Credit section 37]. be accepted in this way for the honor of either the drawer or an indorser (i. Thus the term “negotiable instrument” is limited to a signed writing that orders or promises payment of money. (2) The transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding.” The definition in Section 3-104 (a) incorporates other definitions in Article 3. Black’s Law Dictionary 8th edition a negotiable instrument. Consideration. to the extent the promise has been performed. The definition of “negotiable instrument” defines the scope of Article 3 since Section 3-102 states: “This Article applies to negotiable instruments. to prevent the bill being sent back upon the drawer or indorser as unpaid) by a friend placing his own name upon it as acceptor of the whole. 1950). 3-303 Value and Consideration (a) An Instrument is issued or transferred for value if: (1) The instrument is issued or transferred for a promise of performance. Value 3.Acceptance 4.” defined in Section 3-103(a) (12). There are three elements of an acceptance 1. or part only. (4) The instrument is issued or transferred in exchange for a negotiable instrument. [Cases: Bills and Notes key 71. Crispin Warmington ed. that has been accepted for payment. The drawer or maker of an instrument has a defense if the instrument is issued without consideration. the instrument is also issued for consideration. Bills and Notes. 363 (1943). the effect being to discharge all parties subsequent to the party for whose honour it is paid.” defined in Section 3-103 (a) (8). after a protest has been drawn up declaratory of its dishonour by the Drawee.J. the court held that if the United States is a party to an instrument. C. 318 U. An instrument is either a “promise. United States.e. for the purpose of protecting the honor or credit of one of the parties. or (5) The instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument. “’Acceptance for honor supra protest’ is an exception to the rule that only the Drawee can accept a bill. A promise is a written undertaking to pay money signed by the person undertaking to pay. Money is defined in section 1-201(24) and is not limited to United States dollars.S. 21st ed. A bill which has been dishonored by non-acceptance and is not overdue may. An order is a written instruction to pay money signed by the person giving the instruction. If an instrument is issued for value as stated in subsection (a)..S. An acceptance for honor is an undertaking not by a party to the instrument. It also includes a medium of exchange established by a foreign government or monetary units of account established by an intergovernmental organization or by agreement between two or more nations. acceptance for honor supra protest. Similarly.

Convention Article 1 there is little chance that the Convention will apply accidentally to a transaction that the parties intended to be governed by this Article. (b) “Instrument means a negotiable instrument. Kim bell Foods. 2(2). In 1989 the United Nations Commission on International Trade Law [UNICTRAL] completed a convention on International Bills of Exchange and International Promissory Notes. the court stated a three prong test to ascertain whether the federal common law rule should follow the state rule.S. (2) Is payable on demand or at a definite time. Convention Articles 1(3). 3. at the time it is issued or first comes into possession of a holder. (a) Except as provided in subsections (c) and (d). or protect collateral to secure payment. 715 (1979). Thus.” a person entitled to enforce the instrument may treat It as either. it contains a conspicuous statement. It does not apply at all to checks. because it applies only if the bill or note specifically calls for application of the Convention. and otherwise falls within the definition of a “check” in subsection (f) is a negotiable instrument and a check.specific federal statute or regulation In United States v. (ii) an authorization or power to The holder to confess judgment or realize on or dispose of collateral or (iii) a waiver of the benefit of any law intended for The advantage or protection of an obligor. 2(1). Inc. (e) An instrument is a “note” if it is a promise and is a “draft” if it is An order. however expressed. (d) A promise or order other than a check is not an instrument if. That Convention applies only to bills and notes that indicate on their face that they involve cross-border transactions. rules in formulating federal common law on the subject. In most instances courts under the Kimbell test have shown a willingness to adopt the U.C. (c) An order that meets all of the requirements of subsection (a). except paragraph (1). if it: (1) Is payable to bearer or to order at the time it is issued or first Comes into possession of a holder.C. the convention will preempt state law with respect to international bills of exchange and notes governed by the Convention. and (3) Does not state any other undertaking or instruction by the Person promising or ordering payment to do any act in addition (1) An undertaking or power to give. Negotiable Instrument. maintain. an international bill of exchange or promissory note that meets the definition of instrument in section 3-104 will not be governed by Article 3 if it is governed by the Convention. If the United States becomes a party to this convention. If the instrument falls within the definition of both “note And “draft. to the effect that the promise or order is not negotiable or is not and instrument governed by this Article. with or without interest or other Charges Described in the promise or order. 29 . Moreover.104. “negotiable Instrument” means an unconditional promise or order to pay a Fixed amount of money. In Kimbell the Court adopted the priorities rules of Article 9. 440 U..

A teller’s check is always drawn by a bank and is usually drawn on another bank. other than a documentary draft. “Money orders” are sold both by banks and non-banks. types any member bank and any Federal or State branch or agency of a foreign bank subject to reserve requirements under section 3105 of this title (hereinafter in this section referred to as “institutions”). The term “bill of exchange” is not used in Article 3. Postal money orders are subject to federal law. and (iv) requires as a condition to payment.2 of the terms “checks. Most obviously the Convention does not include the limitation on extraneous undertakings set forth in Section 3104 (a)(3).” Subsections (f) through (j) define particular instruments that fall within the categories of draft or note. and does not permit documents payable to bearer that would be permissible under Section 3-104 (a)(1) and Section 3-109. exclusive of days of grace – 30 . Subsection (i) states the essential characteristics of a travelers check. however. A draft is an instrument that is an order. The most common form of money order of money order sold by banks is that of ordinary check drawn by the purchaser except that the amount is machine impressed. A note is an instrument that is a promise.” Teller’s check. a countersignature by a person whose specimen signature appears on the instrument. (i) “Traveler’s check” means an instrument that (i) is payable on demand. a draft drawn on an insurance company payable through a bank is not a check because it is not drawn on a bank. and both are included in the definition of “check. If a money order falls within the definition of a tellers check. Bankers Acceptance: Title 12 Section 372 (a) Institutions.(f) “Check” means (i) a draft. However. may accept drafts or bills of exchange drawn upon it having not more than six months’ sight to run. Section 3-104 (j) treats them as notes. includes a “check” which is defined in subsection (f). There are some differences between the requirements of Article 3 and the requirements included in Article 3 of the Convention on International Bills of Exchange and International Promissory Notes. is also included in the definition of “check. “Check” includes a share draft drawn on a credit union payable through a bank because the definition of bank (Section 4-105) includes credit unions.” A cashier’s check. In revised Article 3. The definitions in Regulation CC section 229. It is generally understood to be a synonym for the term “draft.” Traveler’s checks are issued both by banks and nonbanks and may be in the form of a note or draft. defined in subsection (g). “Teller’s check” is separately defined in subsection (h). Instruments are divided into two general categories: drafts and notes. Section 3-104(e). payable on demand and drawn on a bank or (ii) a cashier’s check or teller’s check. A certificate of deposit is a note of the bank. Article 3 treats both types of teller’s checks identically. such as “money order.” and Travelers check” are different from the definitions of those terms in Article 3. The seller bank is the drawee and has no obligation to a holder to pay the money order. (ii) is drawn on or payable at or through a bank. In most respects. (j) acknowledgment by a bank that a sum of money has been received by the bank and a promise by the bank to repay the sum of money. They vary in form and their form determines how they are treated in Article 3. An instrument may be a check even though it is described on its face by another term.” (g) “Cashier’s check” (i) means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank. (iii) is designated by the term “traveler’s check” or by a substantially similar term. The requirement that the instrument be “drawn on or payable at or through a bank” may be satisfied without words on the instrument that identify a bank as drawee or paying agent so long as the instrument bears an appropriate routing number that identifies a bank as paying agent. The term “draft. the rules applicable to teller’s checks apply. That kind of money order is a check under Article 3 and is subject to a stop order by the purchaser-drawer as in the case of ordinary checks. In some cases a teller’s check is drawn on a nonblank but is made payable at or through a bank. or through a bank. See Convention Article 3. (h) “Teller’s check” means a draft drawn by a bank (i) on another bank. Certificates of deposit are treated in former Article 3 as a separate type of instrument. the requirements of 3-104 and Article 3 of the Convention are quite similar.” ”cashier’s check. drafts and bills of exchange.” defined in subsection (e).

the limitations contained in this section shall not apply to that portion of an acceptance which is issued by such institution and which is covered by a participation agreement sold to another institution (q) Definitions by board In order to carry out the purposes of this section. authorized for such institution under this section. foreign banks security no institution shall accept such bills. (d) Ratio limit for domestic transactions Notwithstanding subsections (b) and (c) of this section. or be obligated for a participation share in such bills. with respect to Institutions which do not have capital or capital stock. may authorize. by regulation or order. under such conditions as it may prescribe. the board may Define any of the terms used in this section. growing out of domestic transactions shall not exceed 50 per centum of the aggregate of all acceptances. or which are secured at the time of acceptance by a warehouse receipt or other document conveying or securing title covering readily marketable staples. (e) Ratio limit for single entity. association or other entity in an amount equal at any time in the aggregate to more than 10 per centum of it’s paid up and unimpaired capital stock and surplus. (b) Ratio limit of bills to unimpaired capital stock and surplus Except as provided in subsection (c) of this section. in the case of a United States branch or agency of a foreign bank. any institution to accept such bills. partnership. which grow out of transactions involving the domestic shipment of goods. with respect to any institution. no institution shall except such bills. the aggregate acceptances. corporation. including obligations for a participation share in such acceptances. foreign banks The Board. in the case of a United States Branch or agency of a foreign bank. (f) Exception for participation agreements With respect to an institution which issues an acceptance. in the case of a United States Branch or agency of a foreign bank. in an amount not exceeding ay any time in the aggregate 200 per centum of its paid up and unimpaired capital stock and surplus or. unless the institution is secured either by attached documents or by some other actual security growing out of the same transaction as the acceptance. (c) Authorization for special ratio limit. its dollar equivalent as determined by the board under subsection (h) of this section. or be obligated for a participation share in such bills. its dollar equivalent as determined by the board under subsection (h) of this section. (h) Dollar equivalent of foreign bank paid-up capital stock and surplus 31 . the board shall define an equivalent measure to which the limitations contained in this section shall apply.(i) (ii) (iii) which grows out of transactions involving the importation or exportation of goods. and. including obligations for a participation share in such acceptances. its dollar equivalent as determined by the Board under subsection (h) of this section. whether in a foreign or domestic transaction. for any one person. or. in an amount equal at any time in the aggregate to more than 150 per centum of its paid up and unimpaired capital stock and surplus or.

All monetized debt has to have a Principal from which Capital and Interest circulates. This would also make John Snow the Secretary of The Treasury. which was or is being chaired by Nicholas Brady. There are 12 letters and 8 numbers after the letter. indictment. they both have 8 numbers or digits. 2004 Congress reestablished the Department of The Treasury and the office of the Secretary of the Treasury. and two letters. This can only be accomplished in the courtroom when you do an acceptance for honor of the charges or charging instruments. After this the real Secretary of the Internal Revenue Code is Manual Diaz Faldana and John Snow is the Secretary of the Federal Reserve /IMF. or summons. also see 31 3301 Historical Notes and is the source for 12 USC 121. this capital and interest is called accruals under GAAP. I do not think that this is a coincidence. The International Monetary Fund has replaced the office of the Secretary of the Treasury of the United States. 1920 [ Chp. all charge backs should be to this bank and not the Secretary of the Treasury. information. 41 Stat. under Chapter XII. as determined by the board. complaint. These letters designate which Federal Reserve district or bank is handling your account. Louis L: San Francisco I: Minneapolis J: Kansas City The whole problem and nothing else is that the public and national debt or deficit is not being redeemed on the public side through your exemption on the private side. This is the reason you have run away inflation and wars in the public realms. and was one of the instruments for loaning money. through reverse bookkeeping entries. under this method of accounting the debits and credits have to be in balance. Section 1 “Act of Congress Establishing The Treasury Department”. If you study this in detail you will find out that your red number on the back of the SS card corresponds to these serial numbers on the front of Federal Reserve Notes. the 8 digit # is your account number. 214. They have to pass the credits or liabilities through your account to effectuate post settlement and closure of your account. Prior to this on time deposit accounts [ these are accounts where the funds cannot be withdrawn for a fixed period of time and then only after notice] were given an exemption as a reserve requirement and this exemption was used or tendered through a Bill of Exchange. designated by the letter in front of the number. The office of the Secretary of The Treasury of the United States was abolished in 1920.Any limitation or restriction in this section based on paid up and unimpaired capital stock and surplus of an institution shall be deemed to refer. the business transacted by all such branches and agencies shall be aggregated in determining compliance with the limitation or restriction. with respect to a United States branch or agency of a foreign bank. in a recent conversation with Walker Todd exchief and legal counsel for the Federal Reserve. which is represented by the charging instrument can be zeroed out by transferring the credits or liabilities over to the debit or asset side of the accounting ledger by the clerk of the court. by the Act of May 29. 654. located in the upper right and lower left sections of the note. Why? Because the Public side is where the bankruptcy or insolvency is through contract and agreement under The Hague Conventions and the Public Policy of [HJR 192 codified at Title 31 section 5118 2 (d). However on November 14. to the dollar equivalent of the paid-up capital stock and surplus of the foreign bank. That’s right bunkies. then the debt. This is where the accrual method of accounting is derived from. he divulged to me that Reserve requirements were waived under Title 12 section 3105. The letters below designate which district or bank is handling your account as the fiduciary trustee in bankruptcy. The 8 numbers on the front of Federal Reserve Notes have two identical series of numbers. liability. the red number on the back of the card is your exempt priority prepaid account number and is assigned to one of the 12 Federal Reserve Banks. the clerk of the court is a public accountant and the docket sheet is an accounting ledger for intermediate accounting entries and practices. Guess what replaced the reserve requirements under time deposits? Your exemption as the Principal on the private side. this is accomplished through reverse bookkeeping entries or matching principles. I have the legislative documentation of this. one is a prefix and the other is a suffix letter. who in reality is the Secretary of the Treasury of Puerto Rico. The Social Security # on the front of your Social Security Card is assigned to the debtor or straw man. 32 . A: Boston E: Richmond B: New York F: Atlanta C: Philadelphia G: Chicago K: Dallas D: Cleveland H: St. and if the foreign bank has more than United States Branch or agency. Bills of Exchange have not been discontinued or done away with they are called drafts. or deficit.

I have found that most people do not know the difference between Federal Common Law and English Common Law. CHAR YIGH MARINE (PANAMA) S. January. such as it is. occupational government since 1861.S.C. against the captor. another excellent case is LINDO v.” Pg.C. “An action will not lie at common law for false imprisonment. for the same multiplicity of suits may arise there.A. The Name of the Journal is the American Bar Association Journal Volume 24. the name of the article is “What Happened to Federal Jurisprudence” by Albert Schweppe of the Seattle Bar Association. the only rights they have are remedies as defined in 1-201 of the U. 375 or at 2 DOUGLAS 595.S. 1781. This is all Karmic and involves the laws of Karma.S. This is why the United States has been divided into Internal Revenue Districts under title 26 section 7621 by the president of the United States and is what the zip code designates.ERIE FEDERAL COMMON LAW by John P. this is one of the best cases I have ever read on the Admiralty and Civil Law and how it is being applied in the courts. provisional. ED. Why do you think the police are so quick to shoot people? This executes or eliminates both the debtor and the debt.R. as officers in the Navy. 2d pg. The inconvenience will be just as great before the judicature. All the English Common Law was grounded in substance and ownership of property through Allodial Title. In the United States everything started with the Civil War and the Insurrection and Rebellion Acts of August 6.P. and that of his owners. where the imprisonment was merely in consequence of taking a ship as prize. Prior to this the English Common Law was called the general federal common law. & 213. no man would dare to take a ship. LLB 31 L. this case was decided the 7th day of February. would destroy the British Navy. by the owners. Lord Mansfield said “that the action a new attempt. 1862. “Besides. they also collect the insurance money. This says it all. RODNEY. appendix sections 781-790. This case says you have to have a interest or a lien before you can intervene with a claim in Admiralty under rule 24 of the F.S. Title 46 appendix sections 741-752 and the Public Vessels Act enacted in 1925 to allow claims against the United States for damages caused by one of its vessels. CT. The best article bar none is the SUPREME COURT AND THE POST. you are actually worth more dead [debt] than alive. 1938. and every man on board a ship taken as prize. This case is quoted in LE CAUX v. If an action at law should lie. which are still current law today under title 50 sections 212. the argument of policy. ALLEGRE U. What happened in 1938 is that they changed the Rules of Decisions under section 34 of the Judiciary Act of 1789. 890 F.S 64. because this defendant is captain of a letter of marque. Read this in conjunction with the Insurrection & Rebellion Acts of August 6. Joseph ALMEIDA 23 U. 25 U. 613.C. In INTERPOOL LTD v. The people did not have title to anything under the current system. 6 L.The reason wars are fought is to kill or execute people to cancel the debt. 12 Wheat 611. 746. 827. When they execute the debtor to eliminate the debt. EDEN Volume 99 English Reports Pg. 473. 1861 and July 17. This is also the occult or hidden meaning of the scriptures in regard to salvation and redemption. Any body who tries to run from the police is called an absconding debtor in admiralty maritime law and may be shot or captured under the law of Prize. You will find out that under Title 12 section 1811 and section 3104 [insurance of deposits] every demand deposit account including checking. 375 of English Reports. under public compulsive authority. this is an extremely difficult case to find and research. savings and credit card accounts are insured under the FDIA [Federal Depository Insurance Act] through the FDIC [Federal Depository Insurance Corporation] Title 12 section 1811 (a). does not apply in the present instance. MD. 1861 & July 17. Ludington. we have been under a military. 2d pg.” The current Suits in Admiralty Act passed in 1920 gives injured parties the right to sue the government in Admiralty. 6 Led. The attached treatise and other attachments pretty well explains the IRS. in one swift action or execution. by Lord Mansfield possibly one of the greatest jurist of admiralty whoever sat on the Kings Bench. MANRO v. 817 (1938) decision. not. I have read over 250 Law Review articles and only one tells you what happened in 1938. and every man on board his ship. which says they must have your consent before they prosecute you. As to the other ground. Federal Common Law is that decisional body of law [rules of decision] [commercial] that came out of the Eire v. but in the Court of Admiralty. 58 S. It states that in maritime commercial transactions.ED. Tompkins 304 U. 10 Wheat 473. 473. 1862 and the first Income Tax Act 33 . Another excellent case is RAMSAY v. who acts voluntarily for his own private profit. Title 46 U.A. 2 DOUGLAS. 595 or pg. Read the case of J. which in physics involves the Laws of Cause and Effect. Another excellent case is THE CARTONA 297 Federal Reporter 1st series pg. it must not be sought in a Court of Common Law. from the English Common Law to the Federal Common law. the uniform commercial code is taken as indicative of federal common law of admiralty. although the ship has been acquitted. if it succeeded. 1453 (1989). which.C. 1006. that if there is a remedy. 611.

They had to insure or indemnify their losses through a maritime insurance policy. The SS-5 application is an express agreement or contract. trade. I believe that this Act was the predecessor for title 26 section 7621. 1862 Internal Revenue Act. which is mentioned throughout scripture. which is the court and is entitled to reimbursement from the creditor. another Joint-Tortfeasor [a corporation like Wal Mart] pays your debt. 74b Stat.C. When you refuse to pay the debt which you contracted to pay under the SS5 application. from any profession. This should tell you something. CIA ATLANTICA PACIFICA. 1864 c. This is basically all insurance. Roosevelt outlawed gold and gold contracts to avert the apparent peril or loss of gold in the Treasury. 2nd. Contribution is either pro rata or according to the degree of fault. this created a marine peril or peril of the sea. 467 F. 33 of the R. This is why you have degrees of a Felony 1st. 192 and title 31 section 5118 (2) (d). and statutory indemnity. 4th and 5th and Misdemeanors.S.A. they accomplished this through FICA [Federal Insurance Contribution Act]. This is how all of your corporations are financing their operations. sections 4613. 1165 of the TULANE LAW REVIEW. (contract). securities. I believe that the venue and jurisdiction of the District of Columbia was extended out into the states through section 7621 of title 26. An excellent treatise on this can be found in volume 55 pg. How many times have you heard a court order a defendant [debtor] to pay Restitution to the court? Indemnity is an extreme form of Contribution. which is the insurance policy under Social Security. Everybody who has a SS number is a Co-debtor or Co-surety for the loss of the gold or money under the public policy of H.J. Cohen in Volume 42:2:595 of the Alabama Law Review. CONTRACTORS TRANSPORT CORP. "An Act to facilitate Judicial Proceedings in Adjudications upon captured Property. before you ever go to court on any charges. The IRS's return address is a Federal Regional address with a Zip Code. dividends. The word Contribution comes from the word tribulation. profits. 174 sections 29. Another thing that most people are not aware of is that everybody is a merchant at law under Article 2-104 (1). There is also an excellent treatise on Suretyship principles in the New Article 3 Clarifications and Substantive Changes by Neil B. To avert the loss of gold. due to the run on the Treasury. and for the better Administration of the Law of Prize" was the predecessor for the Act of June 30. gains. 884 (1967) is an excellent case on general average contributions. do to the foreign gold contracts. because they use commercial paper in their every 34 . The Income Tax is passed on the Admiralty side of the court or military and is collected from the Prize side of War. The origins of indemnity and contribution can be traced to the concepts of contract and restitution. 1960. Grant Gilmore the co-author of the Law of Admiralty wrote Article 9 of the U. S. 1862 chapter 50 37th Congress. I believe also that the Act of March 25. SUPP. or vocation carried on in the United States or elsewhere. 578.C. HUMBLE OIL & REFINING CO. Section 1 of the July 1. through the court and prison system. This is called general average contribution in admiralty maritime law. and as a co-surety Wal Mart now subrogates itself to the creditor under the doctrine of suretyship. There are four kinds of indemnity and two kinds of contribution. implied agreement (contract). An excellent case on Contribution is DAWSON v. which means they are in a District [Internal Revenue District] within a Federal Regional Area. employment.approved August 5. 32. v. 2D 727 (1972). 4652 and which established the law of Prize and the Prize Commissioners under title 10 sections 76517681 of the Military Code of Justice. is he sold more gold contracts that the treasury had gold. restitution indemnity. 274 F. Public Law 86-682. What Franklin Delano Roosevelt did in June of 1933. Every State has passed or adopted the Joint-Tort-Feasors Act under the doctrine of Contribution. on secured transactions.R. salaries. which is of admiralty maritime law. 3rd. stocks. because of the run on the treasury. 1862 Internal Revenue Act and reestablished by section 90 of this Act and which imposed an income tax on the annual rents. designated by a Zip Code. under sections 2 & 3 of this act the president divided the States and Territories into collection districts and further under section 3 the assessor is authorized to divide his district into convenient assessment districts. under the direction of the Secretary of The Treasury. 4614. The four kinds of indemnity are express agreement. In admiralty any time cargo [gold] is sacrificed to avert the peril of the sinking or loss of the ship. everybody who is a passenger on the ship or vessel [the United States] has to pay for the loss or sacrifice through the doctrine of Contribution. or from any other source whatever on the income of every person residing in the United States or any citizen of the United States. We are still under the War Powers Acts of 1840 and 1861. established the office of the Commissioner of Internal Revenue. where the President divided the districts up into Internal Revenue Districts. created by executive order 11649 and the Act of Congress creating the Zip Code approved September 2. 1861 and was repealed by section 89 of the July 1. that makes you a joint Tortfeasor under the doctrine of Contribution.

2. This is why in title 26 section 6305” says upon receiving a certification from the Secretary of Health and Human Services. We as Principals own. capital. The bottom line to all this is that you only have what you lay claim to. under section 452 (b) of the Social Security Act with respect to any individual. or service of process. why? Because there is no money everything is insurance and you can’t pay a tax with a debt instrument. interest. and control both sides of the accounting ledger. When you are refused access to a credit card by alleged bad credit they [the bank] are making a claim on your account by using your exemption. The Jewish Passover is just an exchange of the future to the past or the past to the future.25 etc. To leave a place usually hurriedly. in the same manner. prosecution. ROCK ISLAND & PACIFIC RY. because you have abandoned your exemption as the Principal. redeem or effectuate post settlement and closure of your account. A tax is nothing but a return of capital and interest back to the principal that is why a return is called a tax return.day transactions and hold themselves by occupation as having knowledge or skill peculiar to the practices or goods involved in the transaction or to which the knowledge or skill may be attributed. because there is no money that is why they have to do an exchange using your exemption for the debt to discharge. the private.25 and so on you get 666. if they do settlement and closure and release the account they are giving you your deduction for the prepaid account as the principal. hold. this is called the death or debt penalty.” The word Abscond means “To depart secretly or suddenly. these documents will list you as the Principal as the recipient or Fiduciary Creditor and the Corporation as the payor Fiduciary Debtor. They are assuming ownership of your name as the principal. Remember that rights are defined under 1-201 (34) of the UCC as remedies. They are supposed to return your Capital and Interest back to you as the Creditor and Prinicpal. v. All of your state criminal statutes have this term in their statutes or codes. with the same powers. CO.” The inference here is that the Secretary is collecting an insurance premium as though it were a tax. debit or asset side and the public. this is what makes it a prepaid account and tax deductible. “If the offender [debtor] under community control ABSCONDS or otherwise leaves the jurisdiction of the court without permission from the probation officer. 294 U. 648. Gold held in reserve is 15 % based on $100 deposit = 666. the probation agency. and (except as provided in this section) subject to the same limitations as if such amount were a tax imposed by subtitle C.S.07. This is why the banks never close your account after you have withdrawn all your money. This is one of the reasons the court never tells or disclose to you what is going on in the courtroom by way of a commercial transaction and that you are the goods or chattel involved in the transaction. This comes from a Federal Reserve Report which says that 15 % of 100 = 85. or if the offender [debtor] is confined in any institution for the commission of any offense. In Ohio it is in title 29 section 2951. If you look at any 1099 OID [original issue discount] or 1099 INT [interest] or 1099 PTR [patron] which are issued by banks to corporations. Page 668 of this case a debtor is referred to has an offender. credit or debt side. total 100. accrual or revenue on you as the principal. the Secretary shall assess and collect the amount certified by the Secretary of Health and Human Services. Isn’t murder a Capital Offense and isn’t Capital interest or accruals from you as the Principal? An exemption is intellectual property under international law. this way they can use your exemption to pay the tax and release the merchandise to you in exchange. 15 % of 85 = 72. 20 % = 500 this is commodities and 10 % = 1000 and Franklin Delano Roosevelt sold more Gold 35 . CHICAGO. 85. which is why it is all commercial and why most people end up in prison or jail. with another’s money or property. and 72. They cannot execute on a contract under the common law. In other words your treasury Bill is exchanged for a Treasury Bond making the Bill a future event or Futures Contract. or the court to do so. the period of community control ceases to run until the time that the offender [debtor] is brought before the court for its further action. what merchants are collecting at the retail level is the tax. All merchandise is prepaid before it leaves the factory.” An absconding debtor is defined in Black’s Law Dictionary 8th edition as a “A debtor who flees from creditors to avoid having to pay a debt. it becomes abandoned property and the corporations use it on a 1096 or 1098 tax return as prepaid interest to get your deduction and pass the tax on to you. especially to avoid arrest. if you don’t use it. An offender is defined or called a debtor in admiralty maritime law read the case of CONTINENTAL ILLINOIS NATIONAL BANK & TRUST CO. Absconding from a debt was formerly considered an act of bankruptcy. When you don’t use your exemption in exchange for the debt or deficit they execute on you to eliminate the debt. in the prisons or credit facilities as they are really called. This is what you are paying every time you make a purchase at the retail level on a retail contract under the truth in lending. Under Title 26 section 163 all prepaid interest is tax deductible.

but the office of the Dean of the Arches. The senate house of a province. 31. 10. a doctor. 1809. A piece of ground attached to a house. They were divided into three tribes. A Lord’s court held his manor. Spelman. Taken as a body. 2. DECURIO = Latin. Clarke 5 Howard. Civilian = One who is called or versed in the Civil Law. the place where the decuriones assembled. as distinguished from the Ecclesiastical. a nobleman’s house. household. Hall. the senate house. The court was formerly held in the hall belonging to the College of Civilians.] 454. [46 U. A decurion In the provincial administration of the Roman Empire. A manor. A manse. This is why they passed HJR 192 [Title 31 section 5118 2 (d)] and goes into the 33 % that provides funds for funding the public municipalities. the judge of which is called the “The Dean of Arches” because his court was anciently held in the church of Saint Mary Le-Bow. said to have been made by Romulus.S. making thirty curiae in all. This practice was written for private viewing only and not public as evidenced by its substance. professor. The place or building in which each curia assembled to offer sacred rites. a third edition was published in the year 1722 and a new edition in 1791 of which this is a exact and faithful copy of which Lord Hardwicke considered of “unquestionable character”. The first edition was printed in 1679. the decurions were the chief men or official personages of the large towns. Also a private citizen. A judicial tribunal or court held in the Sovereign’s palace.Contracts than the Treasury had Gold and was the reason for the passage of the Federal Reserve Act and why they had to take gold and silver out of circulation to cover up the fraud. In Roman Law A division of the Roman people. who was registrar of the Court of Arches during the reign of Queen Elizabeth: Arches Court = In English Ecclesiastical Law a Court of Appeal belonging to the Archbishop of Canterbury. the hall of a manor. or student of the Civil Law. The palace. it receives and determines appeals from the sentences of all inferior Ecclesiastical Courts within the province. THE PRACTICE AND JURISDICTION OF THE COURT OF ADMIRALTY IN THREE PARTS by John E. Spelman. as distinguished from such as belong to the Army and Navy or [in England] the church. by Francis Clerke. Register = An officer authorized by law to keep a record called a “Register” or Registry” as the Register for the Probate of Wills. in right of such added office. This practice is quoted in Waring v. a yard or courtyard. or retinue of a sovereign. The tenants who did suit and service at the lord’s court. A court of justice The civil power. CURIA = In old European Law. The judge of the Arches. Esquire Date: 1809 This practice was used by Proctors in the Vice Admiralty Courts in the Colonies prior to the American Revolution and was delivered to the clerk of the Maryland district court. Cowell.” It is now held in Westminster Hall. The place of meeting of the Roman senate. which is raised upon pillars built arch wise 3 BL Commentary 64. Phillip Moore on the 4th day of October. [Sancta Maria de – Arcubus]. the decurions of a city were charged 36 . It’s proper jurisdiction is only over the thirteen peculiar parishes belonging to the Archbishop in London. Cod. having been for a long time united with that of the Archbishop’s principal official. and each tribe into ten curiae. commonly called “Doctor’s Commons. First Part Historical Examination of Admiralty Second Part Translation of the Praxis [practice] Supremae Curiae Admiralitalis [The High Court of Admiralty]. So named from the steeple. A court.

The former is called a procuration. the judges of our day. The district courts today possess the authority and jurisdiction of the High Court of Admiralty. The right was first recognized in United States admiralty courts in Bradford v. the mode of proceeding and the final sentencing are the same as in Ecclesiastical cases. of the place to which they are sent. n. The Lord High Admiral grants the office of Registrar of the Admiralty for life. or cognizance of all commercial and maritime causes between subjects of their own nations. or the factor or agent of your correspondents in parts beyond seas. having powers both magisterial and legislative. The commercial Courts or Tribunals on the continent of Europe were formerly called Consuls. exercising admiralty and maritime jurisdiction. who have or 37 . The Lords commissioners of the Admiralty. a full proof of the debt is to be made to the Judge according to his discretion. The Plaintiff is also obliged to find Fidejussores to these effects. Fidejussores were the guarantors for payment of the Defendant [Debtor] debts. Commercial agents who are sent from one country to another are called Consuls. for the payment of the defendant’s costs if the plaintiff fail in his cause. Judges and Consuls. In Spain Priors and Consuls. To these commercial and maritime Courts. “commonly signifies an offence in omitting that which we ought to do. A Letter Rogatory was called a patent writ [open writ one not sealed or closed] close writ [a royal writ sealed because the contents were not deemed appropriate for public inspection.” “If he be declared in contumacy [contempt] Scacc. who possess the same jurisdiction as the Lord High Admiral. This is the same manner in which papers are filed and authenticated in the Ecclesiastical Courts. decree a sequestration [removal of property from debtor] at the instance of the creditor alone. 1794 is the supreme law of the land under the U. The term Registrar is almost synonymous with Register does this ring a bell. and they are detained unjustly possessed by some person. if he does not appear within the term assigned to him by the Judge. or are possessed or detained by others in some other manner. therefore.” A loan is a maritime contract. In France. and especially in time of war or commotion. A suit upon juratory caution is the equivalent of a suit in forma pauperis. who should be bound to the plaintiff. In Italy. viz. you are in “contumacy [contempt] and in pain of their contumacy[contempt] be decreed to have incurred the first default. See 1 Spence. that your goods or vessel are taken by enemies or pirates. in our authour’s time. Bradford. and for the production of the plaintiff personally as often as he may be called. Bonds were referred to as Fidejussory Security. or procuratory with the Proxy or Procuratory ad lites. the supremacy clause of the constitution. Some of the courts were called admiralty. yet here it is taken as a non appearance in Court at a day assigned” If you don’t make an appearance and pay the debt. Case 1129 (1878). n. without the existence of any suspicion. according to custom. “Before making the seizure. as against all others in general. Eq. the attachment is granted upon the simple assertion of the creditor. in Ecclesiastical causes. In such cases you may obtain a Warrant to arrest the goods after this matter as your proper goods: and also a citation as well against those in particular thus occupying or detaining. may consign certain goods to your use or benefit. Scacc. others were called consular courts.S. and hold their offices at will. which was a debt contract to preserve the debt owed to the crown under this treaty and which we still are paying for today. commissions sub mutuoe or letters rogatory were. which is contrary to the ancient usage of the Court of Admiralty. procuracy. because they formerly had a consular jurisdiction. If nothing is proved to the Judge and nothing is sworn by the creditor. usually directed. now you know why under Article 6 Section 2. 54. In this country the clerks of the District Courts of the United States are appointed by the Courts respectfully in which they Act. Maritime Consuls. Jay’s Treaty a commercial treaty entered into on November 19. 3 F. Four defaults are to be pronounced against the defendant. 11. Hence the most ancient work. on maritime and commercial law is called. Jur. and afterwards brought to this kingdom. “ It often happens. and at this day it seems that they might with propriety be directed to the Court or Judge. for the prosecution of the suit. The judges were called consuls and the code which they operated by was called the consulate of the sea.with the entire control and administration of its internal affairs. The Civil Law distinguishes between a Letter and a Warrant of Attorney. in the sum for which the action was instituted. As all civil and maritime cause is summary. the Consulate of the sea. Default mentioned above. proxy. 5. a juratory caution in maritime law is a court’s permission for an indigent to disregard filing fees an court costs. which is extant. Constitutor by roman law is a person who by agreement becomes responsible for the payment of another’s debt. These consuls were civil judges. Constitution. before the Judge shall decree the plaintiff to be put in possession of the goods of the defendant. A defendant needs at least two Fidejussores.

Which Warrant being executed and returned as above.” At the time this work was authored the Admiralty Court was merely a Civil Court of Instance. there are only two sorts in use [pg. but the decree is to be that in pain of the contumacy [contempt] of those who have not appeared. and being your property.] 5. 31. not for a debt as in the former case. from convening] the other criminal. Tit. called “The Commissioners for causes of depredations [plundering or pillaging]. 4. If you read Title 18 section 7 says that Citizens of the United States are Commercial Vessels. [a crimine seu querimonia]. This term is a corruption of the Roman-law term intra praesidia. in Tit. 33. either in or out of Court. [a conveniendo. although it relates to the practice of the Ecclesiastical Court. City. the prize jurisdiction was not vested in the High Court of Admiralty. and they are either: 1. the goods belong to you. or those made at publick acts. The oath to hold bail was an oath of calumny [oath to support plaintiff or defendant’s good faith and belief that there was a bone fide claim]. All such writings as are taken out of public registries. or other publick person. Instrument drawn under the hand of a Notary Public. the goods are to be adjudged to you. but in a board of Commissioners. Those writings which are subscribed by the person and witnesses. Section 7 talks about Special maritime and territorial jurisdiction of the United States defined: The term “special maritime and territorial jurisdiction of the United States”. And this is publick as to its effects. one of which is conventional or civil. (though written by a private) as of a Prince. Accounts 2. & c.” The purpose of attachment of debtor’s goods was to compel an appearance to obtain quasi in personam jurisdiction over the Res. Instruments are for the most part two-fold either publick or private Publick Instruments are: 1. is equally applicable to the Admiralty Courts. to answer you in a certain cause of a civil and maritime nature. University or College. Under the principle of postliminium. you are to be put in possession of them.pretend to have any interest in them. Private Inventories or Registers. matters of record. the captured person’s rights or goods were restored too prewar status when the captured person returned. All writings whatsoever (though private) which are exemplified by the authority of the Judge or Magistrate. There were arguments brought on various grounds such as infra praesidia [within the defenses] this is the international doctrine that someone who captures goods will be considered the owner of the goods if they are brought completely within the Captor’s power. Consetio’s Practice of the Ecclesiastical Courts. 123]. Private letters betwixt one friend and another. 3. one tradesman and another. or before a notary and witnesses within the 15 days which are allowed by the statutes of the kingdom for bringing appeals. if no one appears. In respect of the subject matter of the libel. That which is sealed with some publick or authentick seal. Private Instruments are such as are made without any solemnity. includes: 38 . and after the fourth default. as used in this title. 3. 2. London. 1708. [that is to say. An appeal of an interlocutory decree may be done either viva voce [orally or by word of mouth] before the Judge or apud acta [recorded in writing and to appeals taken orally in front of the judge] when he delivers the sentence or interlocutory decree. the proceedings are to be in all things as above. The fact is that until the 44th year of Elizabeth. This essay. which referred to goods or persons taken by an enemy during war.

53 U. and a new and extended admiralty jurisdiction beyond its heretofore known and admitted limits. 1986). and being on a voyage upon the waters of any of the Great Lakes. or to any corporation created by or under the laws of the United States. or commerce you have passed or qualified under the nexus and situs requirements. a place of business. SUPP. 920 (M. allegedly for security purposes. 1966). has never been supposed to extend to contracts made on land and to be executed on land. over the cars engaged in transporting passengers or merchandise from one State to another. The Constitution makes no distinction in that respect. I have talked to Lee Brobst and he has informed me that he has researched and checked out the fact that all the buildings. It would be in the power of Congress to confer admiralty jurisdiction upon its courts. any other waters within the admiralty and maritime jurisdiction of the United States and out of the jurisdiction of Any particular State.6012.COMMERICAL INSTRUMENTS 39 .S. 53 U. or property in the United States. Fitzhugh. 2d 1022 (4TH Cir. or a municipality.” TITLE 46 SECTIONS 31301. under the 4th section of the 14th amendment of the Constitution of the United States cannot challenge the validity of the public And national debt and why under the Bankruptcy Code of Title 11 Who may be a debtor section 109 (a) “Notwithstanding any other provision of this section. (12 HOW. Read EXECUTIVE JET AVIATION. But if the power of regulating commerce can be made the foundation of jurisdiction in its courts. or enrolled under the laws of the United States. SUPP. District. or possession thereof. 268. be extended to contracts and torts on land when the commerce is between different States. And if the admiralty jurisdiction. and any Vessel belonging in whole or part to the United States or any citizen thereof. Ebb is the incoming or high tide and the flow is the outgoing or low tide. or upon the Saint Lawrence River where the same constitutes the International Boundary Line. that house the birth certificates have a stake outside the building that has a high water mark on the stake. The tidewater limitation has been abandoned in The Genesee Chief v. 2d 454 (1972). FITZHUGH. LA. 93 S.Y. “This power is as extensive upon land as upon water.1 (a). (12 Howard) 443 (1851). All citizens of the United States are debtors. MAYER BOAT WORKS. may be created on water under that authority. 34 L.) 443 (1851). MEMBERSHIP CORP. This is referred to in case law as the ebb and flow of the tide. 249.ED. trusts. and deny to the parties the trial by jury. may be debtor under this title. INC. CITY OF CLEVELAND. This why under 26 CFR 1.. And it may embrace also the vehicles and persons engaged in carrying it on. 504.D. in matters of contract and tort which the courts of the United States may lawfully exercise on he high seas. If you have a nexus or activity that bears a relationship to a traditional maritime activity. Now the judicial power in cases of admiralty and maritime jurisdiction. 1972). N. commercial paper. 352 (E. 265 F.” – PROPELLER GENESSEE CHIEF v. 409 U.CT. v. INC. or of any States. It says that all citizens and residents of the United States have to make returns of income to the Secretary and why a citizen or resident of the United States. AFF’D 468 F. BLANCHARD v. licensed. (2) Any vessel registered. 343 F. INC. Territory. This is one of the reasons all checks and drafts have a water mark on them. and over the persons engaged in conducting them. 493. the same reason would justify the same exercise of power on land. it can with the same propriety and upon the same construction. can be extended to the lakes under the power to regulate commerce. If you understand Admiralty Maritime Law you know that the High Water Mark defines the jurisdiction of the Law of Admiralty.S.(1) The high seas.D. This has recently been changed to be the Situs or Locality test. BRIGHT MARINE BASIN.S.. AMERICAN COMMERCIAL BARGE LINES CO. HAASINGER V. v. such as insurance. or any of the waters connecting them.31343 Under CHAPTER 313 --. only a person that resides or has a domicile. 2d 950 (1972). This is because admiralty maritime law has been brought inland through the law of trusts and is so stated in Ruling Case Law on the Laws of Trusts. TIDELAND ELEC. 781 F.

to exercise several types of subject matter jurisdiction historically exercised by separate courts. VODUSEK v. including courts of law. Federal Rules Decisions page 325. DECLARATION OF CITIZENSHIP (a) Except as provided by the Secretary of Transportation. that includes any part of a documented vessel [birth certificate] or a vessel for which an application for documentation [birth certificate application] is filed.S. must be filed with the Secretary of Transportation to be valid.S. 1916 (46 U. In 1966 the Federal Rules of Civil Procedure were merged with the Admiralty maritime rules.D. SUBCHAPTER 11 – COMMERCIAL INSTRUMENTS SECTION 31321. a bank account with which the customer is permitted to write drafts against money held on deposit. and as a result. with which members of this court are singularly deficient in experience. and admiralty – each of which has its own traditional procedures. CREDIT CARD TRUST ACCOUNT NOW ACCOUNT = Negotiable order of withdrawal account. to the extent the vessel is involved. and to the nonspecialist lawyer who finds himself – sometimes to his surprise – involved in a case cognizable only on the admiralty “side” of the court. to trap the unwary . 93 L. conveyance.” said Mr.AND MARITIME LIENS SECTION 31306. frequently subtle in their nature. single federal court has at least three separate departments – law. STEWART & SONS. 336 U. “Is a unique system of substantive law and procedure. and discharge (a)(1) A bill of sale. mortgage. BLACK DIAMOND S. equity.R. in one civil action.” To the extent that admiralty procedure differs from civil procedure.C. . [see clearance]. after complying with customs. Clearance is the right of a ship or vessel to leave port or harbor [hospital]. or related instrument. 622. A debit card is directly tied to Depository Trust Company [DTC] a 40 . 386. Filing. 3d 148 (4TH Cir. the transferee shall file with the instrument a declaration. and admiralty. equity. Federal courts are authorized. when an instrument [birth certificate] transferring an interest in a vessel is presented to the Secretary for filing or recording. stating information about citizenship and other information the Secretary may require to show the transaction involved does not violate section 9 or 37 of the Shipping Act. The birth certificate is issued by the port collector [Department of Health and Human Resources] evidencing the ship or vessel’s right to leave port or harbor [hospital].S. recording. 2 Benedict on Admiralty iii-iv (6th edition (Knauth) 1940). Knauth a charter member of the rules committee stated this “The near approach of the common law-equity procedure to the relatively simple and untechnical state of the traditional Admiralty Practice has produced a new series of traps and pit-falls consisting of the remaining differences. Clearing under maritime law is the departure of a ship or vessel from port [hospital].ED. against any person except. “Admiralty practice. Justice Jackson. The hospital where you are born is the port or harbor of entry. This is spelled out in 34 F. . BAYLINER MARINE CORP. health laws and other local regulations. 754 (1949). This is one of the reasons the Secretary of Transportation is the trustee or receiver in bankruptcy and admiralty under 46 USCS Appx section 1247. 808. 1995). CORP v. it is a mystery to most trial and Appellate judges.CT. 403. in the form the Secretary may prescribe by regulation. 69 S. assignment. 71 F. whenever made. 835). Alfred W.

Government Securities Clearing Corporation. Beneficial owners will not receive certificates representing their beneficial interests in the securities. however. Pursuant to a letter from the Security and Exchange Commission.000 million of principal amount and an additional certificate will be issued with respect to any remaining principal amount of the issue. and clearing corporations that clear through or maintain a custodial relationship with a direct participant. and a “clearing agency” registered under Section 17 A of the Securities Exchange Act of 1934.. and the National Association of Securities Dealers. 1995 (As amended and supplemented. The securities will be issued as fully-registered securities registered in the name of Cede & Co. DTCC. DTC. from the direct or indirect participant through which the beneficial owner entered into the transaction. The DTC and NSCC are a integrated holding company members that have DTC settling accounts and a DTC credit card billing facility to allow them to have their NSCC monthly bills automatically billed to a credit card. If. is owned by a number of direct participants of DTC and members of the National Securities Clearing Corporation. providing for the issuance from time to time of one or more Series of Asset Backed Certificates and is the originator of the Chevy Chase Master Credit Card Trust 11 (the “Registrant” or the “Trust”). Access to the DTC system is also available to others such as both United States and non-United States securities brokers and dealers. which is DTC’s partnership nominee. Division of Corporation Finance. Office of Chief Council.B. or any other name as may be requested by an authorized representative of DTC.. one certificate will be issued with respect to each $500. 41 . The DTC rules applicable to its participants are on file with the SEC. The DTC will act as securities depository for the securities. Transfers of beneficial interests in the securities are to be accomplished by entries made on the books of direct and indirect participants acting on behalf of beneficial owners. which will receive a credit for the securities on DTC’s records. either directly or indirectly. is expected to receive written confirmations providing details of the transaction. corporate and municipal debt issues. Inc. The Bank has made application for an exemption from certain requirements. and Emerging Markets Clearing Corporation. a “banking organization” within the meaning of the New York Banking Law.S. This eliminates the need for physical movement of certificates representing certificates. and certain other organizations. banks trust companies. except if the use of the book-entry system for the securities is discontinued. The Certificates do not represent obligations of or interests in the Bank. 1989 granting the Bank’s application. the aggregate principal amount of any issue exceeds $500. Inc. More information about the DTC can be found at www. banks trust companies. F. and money market instruments from over 85 countries that its participants deposit with DTC. (the “Bank”) is the transferor and servicer under the Pooling and Servicing Agreement dated as of June 1. is a limited purpose trust company organized under the New York Banking Law. as well as by the New York Stock Exchange. Direct participants include both United States and nonUnited States securities brokers and dealers. dated July 31. the Bank is not required to respond to various items of form 10-K. The beneficial interest of each actual purchaser of security is in turn to be recorded on the direct and indirect participants’ records. MBS Clearing Corporation. A beneficial owner. For 12/31/97 Chevy Chase Bank.Custodial Clearing Facility owned by the major banks and security firms and monitored by various banking regulatory agencies and the Securities and Exchange Commission. in turn. as well as periodic statements of their holdings. the American Stock Exchange LLC.com. CC Master Credit Card Trust 11 10-K. Generally. also subsidiaries of DTCC. the world’s largest depository. a “clearing corporation” within the meaning of the New York Uniform Commercial Code section 8-102 (5). DTC also facilitates the post-trade settlement among direct participants of sales and other securities transactions in deposited securities through electronic computerized book-entry transfers and pledges between direct participants.dtcc. each in the aggregate principal amount of the issue.000 million. DTC is a wholly owned subsidiary of the Depository Trust & Clearing Corporation (“DTCC”). The Certificates listed on page 1 hereof will be referred to collectively herein as the “Certificates”. as the trustee. one fully registered global security will be issued for each issue securities. however. Beneficial owners will not receive written confirmation from DTC of their purchase. a member of the Federal Reserve System. clearing corporations. Such items are designated herein as “Not Applicable”. Purchases of the securities under the DTC system must be made by or through direct participants. DTC holds and provides asset servicing for over two million issues of United States and non-United States equity issues. the “Agreement”) by and between the Bank and the Bankers Trust Company. and will be deposited with DTC.

Each of the Certificates, representing investors’ interest in the Trust, are represented by a single certificate registered in the name of Cede & Co., the nominee of the Depository Trust Company. To the best knowledge of the Registrant, there is no established public trading market for the Certificates. Each of the Certificates, representing investor’s interests in the Trust, are represented by a single certificate registered in the name of Cede & Co., the nominee of the Depository Trust Company (“DTC”), an investor holding an interest in the Trust is not entitled to receive a Certificate representing such interest except in certain limited circumstances. Accordingly, Cede & Co is the sole holder of record of the Certificates, which it held behalf of approximately 50 brokers, dealers, banks and other direct participants in the DTC system at December 31, 1997. Such direct participants may hold Certificates for their own accounts or for the accounts of their customers. The following table sets forth, with respect to each of the Certificates, the identity of each direct DTC participant that holds positions in such Certificates in excess of 5% of the outstanding Principal amount thereof at December 31, 1997. First USA Bank, National Association (the “Bank”), a direct wholly owned subsidiary of BANK ONE CORPORATION (“BANK ONE), is the Transferor, with respect to the CC Master Credit Card Trust II (formerly Chevy Chase Master Credit Card Trust II) (the “Trust”) under the Pooling and Servicing Agreement dated as of June 1, 1995, among the Bank, as Transferor and Servicer, and Bankers Trust Company, as Trustee (the “Trustee”), as supplemented and amended (the “Pooling and Servicing Agreement”). The Certificates listed on page 1 hereof will be referred to collectively herein as the “Certificates”. The Certificates do not represent obligations of or interests in the Bank. The Bank will respond only to certain items of form 10-K. In doing so, the Bank will be relying on a letter dated July 31, 1989 from the Securities and Exchange Commission, Division of Corporate Finance, Office of Chief Counsel to Chevy Chase Bank, F.S.B., the then Servicer of the Trust, granting the Servicer of the Trust relief from the requirement to respond to various items of form 10-K. The items to which the Bank is not required to respond are designated herein as “Not Applicable”. The final payments with respect to class A Floating Rate Asset Backed Certificates, Series 1996-A and class B Floating Rate Asset Backed Certificates, Series 1996-A were made on September 15, 2001 and November 15, 2001, respectively. Information with respect to such Certificates is only included in Item 14 (a) (i) which contains the Summary of Annual Distributions on the Certificate holders for the year ended December 31, 2001. There are no material pending legal proceedings with respect to the Trust, involving the Trust, the Trustee or the Registrant. The Bank is a defendant in various lawsuits, including lawsuits seeking class action certification in both state and federal courts. These lawsuits challenge certain policies and practices of Bank’s credit card business. A few of these lawsuits have been conditionally certified as class actions. The Bank has defended itself against claims in the past and intends to continue to do so in the future. While it is impossible to predict the outcome of any of these lawsuits, the Bank believes that any liability which might result from these lawsuits will not have a material adverse effect on the Trust. Each of the Certificates, representing investors’ interests in the Trust, are represented by a single certificate registered in the name of Cede & Co., the nominee for the Depository Trust Company (“DTC). To the best knowledge of the Registrant, there is no established public trading market for the Certificates. PRISM = Parallel Risk Management System = monitoring & risk management system for the futures options market segment at NSCCL. NSCCL = Is wholly owned subsidiary of NSE. SGL = Subsidiary General Ledger.


U.C.C. = Law of agreement. Docket of apparent authority. This information came off of the 10-K form of Chase Credit Card Master Trust for 12/31/99 [formerly know as “Chemical Master Credit Card Trust 1] (issuer) Chase Manhattan Bank USA, National Association (depositor) (Exact name of registrant as specified in its charter) Securities are registered pursuant to Section 12 (b) of the Act. The Chase Master Credit Card Trust I (the predecessor of Chase Credit Card Master Trust (the “Trust”) was formed pursuant to a Pooling and Servicing agreement, as amended (the “Agreement”) between The Chase Manhattan Bank (formerly known as Chemical Bank), as seller and servicer, and an unrelated trustee (the “Trustee”). The trust files reports pursuant to section 13, 15 (d) and 16 of the Securities Exchange Act of 1934, as amended (the Exchange Act”), submitted to the Office of Chief Counsel on behalf of the originators of the Trust. Accordingly, responses to certain items have been omitted from or modified in this Annual Report on Form 10-K. The Chase Credit Card Master Trust is the Issuer of Asset Backed Certificates, Seriesn1995-2, Series 1995-3, Series 1995-4, Series !996-1, Series 1996-2, Series 1996-3, Series 1996-4, Series 1997-1, Series 1997-2, Series 1997-3, Series 1997-4, Series 1997-5, Series 1998-2, Series 1998 -3, Series 1998-5, Series -6 Series 1999-1, Series 1999-2 and Series 1999-3. Under Item 12 [Security Ownership of Certain Beneficial Owners and Management] of the 10-k shows the records of the DTC system that hold positions in Certificates representing interests in the Trust equal to more than 5 % of the total principal amount of one or more classes of Certificates outstanding on that date as follows. There are more than a hundred banks and companies listed as beneficiaries of the trust and Certificates. Most important Articles of UCC in order of importance is the following: 1. Article 2 Sales 2. Article 2A Leases 3. Article 1 [General Provisions] 4. Article 8 Investment Securities 5. Article 5 Letters of Credit 6. Article 4 Bank Deposits and Collections 7. Article 4A Funds Transfers 8. Article 3 Negotiable Instruments 9. Article 9 Secured Transactions 10. Article 7 Documents of Title 11. Article 6 Bulk Sales In order for there to be a secured interest there must be a sale, contract, or agreement under Article 2 section 2-106 (1). This means that a bill of sale must exist at the retail level. When a baby is born a birth certificate is issued and registered with the Bureau of Vital Statistics and is then registered with the Department of Commerce, after it is registered it becomes a Certificated Security and is sent to the DTC [Depository Trust Corporation], where it is deposited in a Trust Company and a Indenture trustee is appointed over the account. The trustee keeps an accounting of all of the bookkeeping entries and the paid out interest to direct participants as investors. This same procedure is followed in the Banking Industry on checking, saving accounts, or credit card accounts. The Birth Certificate now becomes a certificated security, financial asset, or possessory pledge under Article 8 “Investment Securities” to perfect a security interest in the property. Along with the revision of Article 8, significant changes have been made in the rules concerning security interests in securities. The revision returns to the pre-1978 structure in which the rules on securities interest in investment securities are set out in Article 9, rather than Article 8. The changes in Article 9 are, in part, conforming changes to adapt Article


9 to the new concept of a security entitlement. The Article 9 changes, however go beyond that to establish a simplified structure for the creation and perfection of security interests in investment securities, whether held directly or indirectly. The Revised Article 9 rules continue the long established principle that a security interest in security represented by a certificate can be perfected by possessory pledge. The Revised rules, however, do not require that all security interests in investment securities be implemented by procedures based on the conceptual structure of the common law pledge. Under the revised Article 9 rules, a security interest in securities can be created pursuant to Section 9-203 in the same fashion as a security interest in any other form of property, that is, by agreement between the debtor and secured party. There is no requirement of a “Transfer,” “delivery,” or any similar action, physical or metaphysical, for the creation of an effective security interest. A security interest in securities is, of course, a form of property interest, but the only requirements for creation of this form of property interest are those set out in Section 9-203. 9-102 (65) “Promissory note” means an instrument that evidences a promise to pay a monetary obligation, does not evidence an order to pay, and does not contain an acknowledgement by a bank that the bank has received for deposit a sum of money or funds. The perfection methods for security interests in investment securities are set out in Sections 9-309, 9-313, and 9-314. The basic rule is that a security interest may be perfected by “control.” The concept of control, defined in Section 8-106, plays an important role in both Article 8 And Article 9. In general, obtaining control means taking the necessary steps to place the lender in a position where it can have the collateral sold off without the further cooperation of the debtor. Thus, for certificated securities, a lender obtains control by taking possession of the certificate with any necessary indorsement. For securities held through a securities intermediary, the lender can obtain control in two ways. First, the lender obtains control if it becomes the entitlement holder; that is, has the securities positions transferred to an account in its own name. Second, the lender obtains control if the securities intermediary agrees to act on instructions from the secured party to dispose of the positions, even though the debtor remains the entitlement holder. Such an arrangement suffices to give the lender control even though the debtor retains the right to trade and exercise other ordinary rights of an entitlement holder. Except where the debtor is itself a securities firm, filing of an ordinary Article 9 financing statement is also a permissible alternative method of perfection. However, filing with respect to investment property does not assure the lender the same protections as for other forms of collateral, since the priority rules provide that a secured party who obtains control has priority over a secured party who does not obtain control. The details of the new rules on security interests, as applied both to the retail level and arrangements for secured financing of securities dealers, are explained in the Official Comments to Sections 9-309, 9-312, 9313, and 9-314, 9-309 Security Interest Perfected Upon Attachment. 9-309 (6) a security interest arising under Section 2-401, 2-505, 2-711(3), or 2A508(5), until the debtor obtains possession of the collateral; 2-401 (1) Title to goods cannot pass under a contract for sale prior to their identification to the contract [Section 2-501]. PERFORMANCE 2-501. Insurable Interest in Goods; Manner of Identification of Goods. (1) The buyer obtains a special property and an insurable interest in goods by identification of existing goods as goods to which the contract refers even if the goods so identified are nonconforming and the buyer has an option to return or reject them. Such identification may be made at any time and in any manner explicitly agreed to by the parties. In the absence of explicit agreement identification occurs:


9-309 (9) a security interest arising in the delivery of a financial asset under Section 9-206(c). uncertificated security. (a) [Perfection by filing permitted. electronic chattel paper. Instruments. goods. (2) The seller retains an insurable interest in goods so long as title to or any security in the goods remains in the seller. If the identification is by the seller alone. 9-104. or electronic documents may be perfected by control of the collateral under Section 7-106.] (b) [Control or Possession of certain Collateral. Control of Investment Property (a) [Control under Section 8-106] A person has control of a certificated security.] A security interest in investment property. if: (1) the secured party is the commodity intermediary with which the commodity contract is carried. instruments. 45 . Documents.(a) when the contract is made if it is for the sale of goods already existing and identified. or 9-107. When possession by or Delivery to Secured Party Perfects Security Interest Without Filing. (c) when the crops are planted or otherwise become growing crops or the young to be born within 12 months after contracting or for the sale of crops to be harvested within 12 months or the next normal harvest season after contracting which ever is longer. money. (3) Nothing in this section impair any insurable interest recognized under any other statute or rule of law. marked. the seller may until default or insolvency or notification to the buyer that the identification is final substitute other goods for those identified. Perfection by Permissive Filing. or security entitlement as provided in Section 8-106. 9-313. Deposit Accounts. or tangible chattel paper by taking possession of the collateral. Perfection by Control. 9-312 Perfection of Security Interest in Chattel Paper. and commodity intermediary have agreed that the commodity intermediary will apply any value distributed on account of the commodity contract as directed by the secured party without further consent by the commodity customer. or otherwise designated by the seller as goods to which the contract refers. 9-314. 9-105. 9-106. (a) [Perfection by Control. a secured party may perfect a security interest in tangible negotiable documents. deposit accounts. (b) If the contract is for the sale of future goods other than those described in paragraph (c). secured party. and Money. A secured party may perfect a security interest in certificated securities by taking delivery of the certificated securities under section 8-301. (a) [Perfection by possession or delivery] Except as otherwise provided in subsection (b). Investment Property. when goods are shipped.] (3) a security interest in money may be perfected only by the secured party’s taking possession under Section 9-313.] A secured party has control of a commodity contract. (b) [Control of Commodity contract. Goods covered by Documents. Temporary Perfection Without Filing or Transfer of Possession. letter-of –credit rights. 9-106. or (2) the commodity customer. Letter of Credit Rights.

and the financial asset is registered in the name of. or (3) becomes obligated under other law. (ii) an obligation of a person or share. This account is a “Securities account” which under Article 8 section 8-501 (a) means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset. for the purpose of giving rights on the instrument to any person. and has not been indorsed to the securities intermediary or in blank. 9-107 Control of Letter-of-Credit Right. or other interest in a person or in property or an enterprise of a person. including a certificated or uncertificated security.” is defined in 8-102 (9) as a: (i) a security.” (c) Except as otherwise provided in subsections (d) and (e). 46 . the term means either the interest itself or the means by which a person’s claim to it is evidenced. regulation. a person has a security entitlement even though he securities intermediary does not itself hold the the financial asset. accepts it for credit to the person’s securities account. A secured party has control of a letter of credit right to the extent of any right to payment or performance by the issuer or any nominated person if the issuer or nominated person has consented to an assignment of proceeds of the letter of credit under Section 5-114(c) or otherwise applicable law or practice. (2) receives a financial asset from the person or acquires a financial asset for the person and. or a security entitlement. 3-105 Issue of Instrument (a) “Issue” means the first delivery of an instrument by the maker or drawer. the other person is treated as holding the financial asset directly rather than as having a security entitlement with respect to the financial asset.(b) [Effect of control of securities account or commodity account] A secured party having control of all security entitlements or commodity contracts carried in a securities account or commodity account has control over the securities account or commodity account. a person acquires a security entitlement if a securities intermediary: (1) indicates by book entry that a financial asset has been credited to the person’s securities account. (c) If a condition of subsection (b) has been met. (e) Issuance of a security is not establishment of a security entitlement. in either case. whether to a holder or nonholder. (d) If a securities intermediary holds a financial asset for another person. A “Financial asset. or specially indorsed to the other person. which is. As context requires. or (iii) any property that is held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this Article. payable to the order of. or rule to credit a financial asset to the person’s securities account. dealt in or traded on financial markets. or which is recognized in any area in which is issued or dealt in as a medium for investment. or is of a type. participation. a security certificate.

In the case of action or non-action by or at a branch or separate office of a bank. (c) “Issuer” applies to issued and unissued instruments and means a maker or drawer of an instrument. Article 4 A-104. or (ii) the originator if the originator is a bank. Must have right in order to have interest. this article governs Article 3. (d) “Originator bank” means (i) the receiving bank to which the payment order of the originator is issued if the originator is not a bank. but Article 8 governs this Article.” Article 4-102. “If a promise or order at the time it is issued or first comes into possession of a holder contains a statement. Funds transfer – Definitions In this Article: (a) “Funds transfer” means the series of transactions. Also termed underwriter. The term includes any payment order issued by the originator’s bank or intermediary bank intended to carry out the originator’s payment order. Official Comment 47 .(b) An unissued instrument. the promise or order is not thereby made conditional for the purposes of section 3-104 (a). is binding on the maker or drawer. A funds transfer is completed by acceptance by the beneficiary’s bank of a payment order for the benefit of the beneficiary of the originator’s payment order. its liability is governed by the law of the place where the branch or separate office is located. An instrument that is conditionally issued or is issued for a special purpose is binding on the maker or drawer. insurance underwriter carrier. payment. If there is conflict. beginning with the originator’s payment order. but if the promise or order is an instrument. Applicability (a) To the extent that items within this Article are also within Article 3 and 8. made for the purpose of making payment to the beneficiary of the order. or an unissued incomplete instrument that is completed. but failure of the condition or special purpose to be fulfilled is a defense. by contract to assume the risk of anothers loss and to compensate for that loss. there cannot be a holder in due course of the instrument. (b) “Intermediary bank” means a receiving bank other than the originator’s bank or the beneficiary’s bank. to the effect that the rights of a holder or transferee are subject to claims or defenses that the issuer could assert against the original payee. required by applicable statutory or administrative law. they subject to those Articles. Issuer = One who agrees. or collection is governed by the law of the place where the bank is located. but nonissueance is a defense. (a) The liability of a bank for action or nonaction with respect to an item handled by it for purposes of presentment. (c) “Originator” means the sender of the first payment order in a funds transfer. to make something public. 3-106 (d) Unconditional Promise or Order. assurer [for life insurance].

g. The comments to this Article suggest in most instances the relevant Regulation CC provisions. and the midnight deadline may be extended (Regulation CC.30(c). Bank. and the contracts of the parties thereto apply to the items collected through banking channels where no specific provision is found in this Article In the case of conflict. to action or nonaction of a bank with respect to an item under the rule of part 4 of Article 4. Bonds and like instruments constituting investment securities under Article 8 may also be handled by banks for collection purposes. 26.. However . 849. and indorsers must know that action wil be taken with respect to it in other jurisdictions. presentment. Banque De Bruxelles.36(d).R. Section 4-215(e) and (f). section 4001 et seq. This is especially pertinent with respect to the law of the place of payment. 128 N.A. 48 . although not referred to in this Article. b. forwarding. and tests these by the law of the state of the location of the bank which uses the subagent. Various sections of Article 8 prescribe rules of transfer some of which (see sections 8108 and 8-304) may conflict with provisions of this Article (Sections 4-205.E. Nicholas Bank of New York v. For example. this Article governs. 488. the provisions of the EFFA and the Regulation CC control with respect to checks. Sections 4. payee.1. 1995. 173 N. State Nat. One federal law that does so is the Expedited Funds Availability Act. The subsection applies to questions of possible vicarious liability of a bank for action or non-action of sub-agents (see Section 4-202(c)). similar reconciling provisions are not necessary in the case of Articles 5 and 7. In some instances this law is alluded to in the statute. 12 U. 229. since that method of notice became an implied part term of the indorser’s contract.C. Specifically the subsection applies to the initial act of a depository bank in receiving an item and to the incidents of such receipt.S. and its implementing Regulation CC. applicable federal law may supercede provisions of this Article. all settlements are final and not provisional (Regulation CC. to action or non-action of a bank which suspends payment or is affected by another bank suspending payment (4-216). In addition. The conflicts of rule of Weissman v. Section 4-103 (a) leaves open the possibility of an agreement with respect to applicable law. In other instances. the drawer. 4-301. In the case of conflict. e.Y. In a case in which subsection (b) makes this Article applicable. their transfer. in using an ambulatory instrument. Amendments approved by the Permanent Editorial Board for Uniform Commercial Code November 4. except between the depository bank and its customer. 254 N. 4-303) as well as action or non-action of a collecting bank (4-201 through 4-216). 835 (1930). The routine and mechanical nature of bank collections makes it imperative that one law govern the activities of one office of a bank. This freedom of agreement follows the general policy of Section 1-105. See section 3-102 (b). See section 4-104(a)(9). The rules of Article 3 governing negotiable instruments. In the case of Article 7 documents of title frequently accompany items but they are not themselves items. Section 4-210 deals specifically with overlapping problems and possible conflicts between this Article and Article 9.301 and 4-302 are consistent with section 5-112. b. is more theoretical than practical. 27 N. Adoption of what is in essence a tort theory of the conflict of laws is consistent with the general theory of this Article that the basic duty of a collecting bank is one of good faith and the exercise of ordinary care. 241 (1891). is rejected. Article 8 governs. Section 229. The requirements found in some cases that to hold an indorser notice must be given in accordance with the law of the place of indorsement. The subsection applies to action or non-action of a payor bank in connection with handling an item (see Sections 4-215(a). and 4-208). payment and remittance or credit of proceeds. Subsection (b) is designed to state a workable rule for the solution of otherwise vexatious problems of the conflicts of laws: a. 12 CFR Pt. 4-207.E.. 4-302. 2. The phrase “action or non-action with respect to nay item handled by it for purposes presentment. payment or collection” is intended to make the conflicts rule of subsection (b) apply from the inception of the collection process of an item through all phases of deposit. 13 L.Y. is rejected. Section 229. The conflicts rule of St. Justification lies in the fact that.

8-102 (7) “Entitlement Holder” means a person identified in the records of a Securities intermediary as the person having a Security Entitlement against the Securities Intermediary. a person who knows that a representative has transferred a financial asset or interest therein in a transaction that is. recreation improvement. 8-102 (4) “Certificated Security” means a security that is represented by a certificate.C. or (2) six months after a date set for payment of money against presentation or surrender of the certificate. navigation development. Under section 4 (h) of the TVC its officers can condemn real estate in condemnation proceedings under the right of eminent domain. Bank must be debtor to have secured interest. A government owned corporation. electric power production. the Authority’s other programs are financed primarily by congressional appropriations. if money was available for payment on that date. 1-201 (37) “Signed” includes using any symbol executed or adopted with present intention to adopt or accept a writing. U. created in 1933. and the investigation so required would establish the existence of the adverse claim. Article 8 105. Notice of Adverse Claim (a) A person has notice of an adverse claim if: (1) the person has notice of the adverse claim.C. That person is the Entitlement Holder 8-102 (8) “Entitlement Order” means a notification communicated to a Securities Intermediary directing transfer or redemption or redemption of a financial asset to which the entitlement has a security entitlement. However. The authorities activities include flood control. Though its power program is financially self supporting. (d) A purchaser of a certificated security has notice of an adverse claim if the security certificate: 49 . (b) An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate or sets a date on or after which the certificate is to be presented or surrendered for redemption or exchange does not itself constitute notice of an adverse claim except in the case of a transfer more than: (1) one year after a date set for presentment or surrender for redemption or exchange. (3) The person has a duty. (2) the person is a aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim. If a person acquires a Security Entitlement by virtue of section 8-105 (b) (2) or (3). (b) Having knowledge that a financial asset or interest therein is or has been transferred by a representative imposes no duty of inquiry into the rightfulness of a transaction and is not notice of an adverse claim. Silence is acquiescence. for the individual benefit of the representative or otherwise in breach of duty has notice of an adverse claim. to investigate whether an adverse claim exists.Tennessee Valley Authority = Part of executive branch of Government. or whose proceeds are being used. and forest and wildlife development. fertilizer development. imposed by statute or regulation. that conducts a unified program of resource development to advance economic growth in the Tennessee Valley region.

12 CFR 201. or 9-107 pursuant to the debtor’s security agreement.3 (d) 50 . (B) the collateral is not a certificated security and is in the possession of the secured party under Section 9-313 pursuant to the debtor’s security agreement. or electronic documents. (2) the debtor has rights in the collateral or the power to transfer rights in the collateral to a secured party. letter-of-credit rights. has been indorsed “for collection” or “for surrender” or for some other purpose not involving transfer. 9104. a description of the land concerned. payment intangible. chattel paper. (3) one of the following conditions is met: (A) the debtor has authenticated a security agreement that provides a description of the collateral and. and the secured has control under section 7-106.(1) whether in bearer or registered form. or (D) the collateral is deposit accounts. (e) Filing of a financing statement under Article 9 is not notice of a adverse claim to a financial asset. (b) [Enforceability] Except as otherwise provided in subsections (c) through (i). Article 9 109 (d) this article does not apply to: Article 9-109 (7) “An assignment of a single account. electronic chattel paper. 9-105. (C) the collateral is a certificated security in registered form and the security certificate has been delivered to the secured party under section 8-301 pursuant to the debtor’s security agreement. Proceeds. Supporting Obligations. or (2) is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor. a security interest is enforceable against the debtor and third parties with respect to the collateral only if: (1) value has been given. Formal Requisites. payment intangibles. Article 9-109 (5) “an assignment of accounts. or promissory note to an assignee in full or partial satisfaction of a preexisting indebtness. (a) [Attachment] A security interest attaches to collateral when it becomes enforceable against the debtor with respect to the collateral. investment property. 9-106. 9-203 Attachment and Enforceability of Security Interest. unless an agreement expressely postpones the time of attachment. but the mere writing of a name on the certificate is not such a statement. if the security interest covers timber to be cut. or promissory notes which is for the purpose of collection only.

.. regulation or treaty of the United States whose requirements for a security interest’s obtaining priority over the rights of a lien creditor with respect to the property preempt Section 9-310(a): THE DEPOSITORY TRUST COMPANY RESPONSE TO THE DISCLOSURE FRAMEWORK FOR SECURITIES SETTLEMENT SYSTEMS JUNE 2002 -2Table of Contents Disclosure Framework Introduction ........ a Federal Reserve Bank may................ Regulations.................. Securities Transfers....................30 VII............ Securities Overdrafts.... Schedule of the Times of Significant Processing Events .. Risk Control Measures ..........] Except as otherwise provided in subsection (d)...... Funds Transfers and Linkages Between Transfers...... an affirmative vote of 5 or more members of the Board of Governors is required before credit may be extended............ and Treaties.... partnerships..........................54 -3Introduction The following document consists of the response made by The Depository Trust Company (“DTC”) to the questionnaire entitled Disclosure Framework For Securities Settlement Systems (the “Disclosure Framework”)...... (a) [Security interest subject to other law.. DTC’s response provides only a general overview of how DTC deals with certain risk management issues...................... Rules and Procedures of the SSS....... advance credit to individuals... Diane Brennan 51 ...... or fully guaranteed as to principal and interest by..................38 IX........................................ Perfection of Security Interests in property subject to certain Statutes.53 2................... Therefore.“Emergency credit for others.................................................. Basic Information..33 VIII..............47 EXHIBITS 1..... Where the collateral used to secure such credit consists of assets other than obligations of.21 V....4 II........................ In unusual and exigent circumstances......... Diagrams of the Organizational and Ownership Structures of DTC............. after consultation with the Board of Governors................ Title grants and agreements the rate applicable to such credit will be above the highest rate in effect for advances to depository institutions....... Requests for further information may be directed to: Ms. Relationships with Participants.................................14 III................ in the judgment of the Federal Reserve Bank credit is not available from other sources and failure to obtain such credit would adversely effect the economy... Default Procedures .............. the United States or an agency thereof............................................3 I............ Article 9-311........ Securities Lending and Back-to-Back Transactions ......... and corporations that are not depository institutions if...... The Disclosure Framework was developed under the auspices of the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions.......... Relationships with other SSSs and Commercial Intermediaries ...................... the filing of a financing statement is not necessary or effective to perfect a security interest in property subject to: (1) a statute............ Consistent with the purpose of the Disclosure Framework................................ this document should not be relied upon by DTC Participants or others as a complete discussion of these matters.............................24 VI...... Operational Risks...16 IV............................

Director-Risk Management Phone: (212) 855-3320 Fax: (212) 855-3274 -4I. What is the name of the SSS? The Depository Trust Company (“DTC”). New York (Eastern Time).S. (a) What types of instrument are eligible for deposit at the SSS (e. with operating facilities in multiple locations. Where and in which time zone is the SSS located? DTC’s principal offices are located in New York. C. Government Debt U.g. debt..) The following types of instruments are eligible for deposit at DTC: DEBT (in addition to Government and Municipal Debt) Asset Backed Securities Auction Rate Notes Bank Notes Certificates of Deposit (Retail & Institutional CDs) Collateral Mortgage Obligations (CMOs) Commercial Paper (CP) Consumer Price Index-Linked Bonds (CPI Bonds) Convertible Debt Corporate Bonds Deposit Notes Discount Notes Insured Custodial Receipts Medium Term Notes (MTNs) Notes/Tender Rate Notes -5Variable Rate Demand Obligations (VRDOs) Zero Coupon Bonds EQUITY American Depositary Receipts (ADRs) Auction Rate Preferred Securities Closed End Funds Common Stock Limited Partnerships Preferred Stock Rights to Purchase Securities Unit Investment Trusts (UITs) Units Warrants GOVERNMENT SECURITIES Brady Bonds Non-U. B. What functions does the SSS perform? 1. warrants. equities. Does the SSS serve as a securities depository and/or provide securities settlement services? Yes. Treasury. etc. Federal Agency and Government Sponsored Enterprises Issues MUNICIPAL SECURITIES Auction Rate Notes Insured Custodian Receipts 52 . BASIC INFORMATION A. DTC serves as a custodian of the securities deposited by its Participants and provides securities settlement services.S.

and Thomson Financial ESG. Does the SSS provide cash accounts and/or provide funds transfers in conjunction with securities transfers? If so. also as free book-entry movements at DTC (referred to herein as “long allocations”). in what currencies? DTC provides each of its Participants with both a securities account and a U.S. Does the SSS provide a trade matching service? Do others provide such services for securities settled at the SSS? DTC does not provide a trade matching service. (c) Please describe whether eligible securities are dematerialized. a service provider that is jointly owned by DTC’s parent. immobilized or transferred physically. if any. trades netted in NSCC’s CNS system are settled by transfers to and from accounts at DTC. NSCC Participants obligated to deliver securities deliver them to NSCC as free bookentry movements at DTC (referred to herein as “short covers”). However. 4. The Depository Trust & Clearing Corporation (“DTCC”). Does the SSS offer a securities lending or borrowing program? DTC provides services that facilitate securities lending and borrowing transactions initiated by its Participants. NSCC Participants obligated to receive securities receive them from NSCC. 6. Except for U. NSCC’s CNS system provides for multilateral netting. most institutional trades that are to be settled at DTC are submitted for matching to Omgeo. Currently.Municipal Bonds Municipal Notes Variable Rate Demand Obligations (VRDOs) (b) What types of instrument are eligible for transfer within the SSS? All the types of instruments listed above are eligible for transfer among Participants of DTC by book-entry delivery within DTC. dividends.S. which is also a whollyowned subsidiary of DTCC. DTC’s payment order service provides a vehicle for the transfer of cash between securities borrowers and lenders to account for adjustments in the market value of the borrowed securities during the period the loan is outstanding. Securities lent by one Participant to another can be delivered by book-entry either free or against payment. 3. -6(d) Does the SSS provide safekeeping for physical certificates? Yes. 2. Treasury securities (and a small number of other issues) which are dematerialized. NSCC provides a trade matching service. Does the SSS provide custodial and/or related services such as the collection of interest. what types of netting (bilateral or multilateral). eligible securities are immobilized. As part of NSCC’s guarantee of settlement of marketplace transactions in CNS-eligible securities. NSCC becomes the contra-party to each CNS transaction. Does the SSS provide a trade netting service (as distinct from undertaking the settlement of securities transfers on a net basis)? Do others provide such services for securities settled at the SSS? In either case. dollar money settlement account in order to permit Participants to effect deliveries of securities against payment. The CNS system. continually nets all trades due to settle the next day against each other and against prior days’ unsettled long and short positions in the same securities. principal or withholding tax reclamations? 53 . 5. For trades netted in the Continuous Net Settlement (“CNS”) system of National Securities Clearing Corporation (“NSCC”). Likewise. are performed? -7DTC itself does not provide a trade netting service as defined above. which is currently available only for DTC-eligible securities.

dtc. What type of organization is the SSS? 1. Participants can accept tender and exchange offers for securities in their accounts and deliver them to offerors’ agents through DTC. DTC is a private sector company owned by members of the financial industry... Please indicate whether the SSS is organized on a for-profit or a nonprofit basis. a “banking organization” within the meaning of the New York 54 . -8With respect to withholding taxes applicable to dividends paid on foreign ordinary shares and American Depositary Receipts in DTC’s custody.org. the holder of record. conversions. DTC provides services for the custody. rights to purchase additional shares. Does the SSS act as a central counterparty or principal to transactions with its participants? No. These securities include certificates that the Participant desires to have registered in its name or in the name of its customer. DTC offers a number of services that are related to its core custodial and securities settlement services. Other services are described in DTC’s most recent annual report and in other DTC publications. which can be found on DTC’s website: www. Other? Please specify. under a policy adopted by DTC’s Board of Directors. -9DTC is organized on a for-profit basis.g. Please indicate whether the SSS is a public sector or private sector entity. as well as securities issues that cannot be made eligible for book-entry services for legal or regulatory reasons (e. For example. securities with certain transfer restrictions). What is the legal basis for the establishment of the SSS and for securities transfers made through it? DTC is a limited-purpose trust company organized under the New York Banking Law. assigns each Participant the voting rights on securities credited to that Participant’s securities account as of the record date. 7. through arrangements with the taxing authorities in certain countries DTC provides a service for beneficial owners entitled to a reduced rate to obtain reduced withholding at source. 3. Similarly. 8. DTC’s nominee. puts. DTC provides the means for Participants to exercise warrants. However. DTC’s Underwriting service permits underwriters of new and secondary issues of securities to distribute them by book-entry against payment through the depository. In effect. Cede & Co. clearance and settlement by physical delivery of securities for which book-entry services are not made available. When permitted by an issuer’s reinvestment plan. on behalf of interested customers. DTC’s Dividend Reinvestment service allows Participants. rather than by refund.Which types of service are provided? DTC collects and distributes to Participants dividend and interest payments for securities in its custody. When a security in the depository’s custody matures or is called by the issuer. no dividends are paid to stockholders and each year substantially all revenues in excess of DTC’s current and anticipated needs are refunded to Participants. and other rights respecting securities in their DTC accounts. to reinvest dividends on shares without withdrawing them from DTC. D. DTC presents the security for redemption and distributes the proceeds to the appropriate Participants. DTC’s Proxy service permits Participants to exercise voting rights on securities in the depository’s custody. 2.

if any.10 DTC carries on all of its own activities and has not outsourced its operations to third parties. Securities and Exchange Commission (“SEC”) pursuant to the provisions of Sections 17A and 19(a) of the Securities Exchange Act of 1934. Beyman Chief Information Officer Lehman Brothers Frank J. Dirks Chief Operating Officer The Depository Trust & Clearing Corporation . Participants of DTCC. What entity or entities operate the SSS? Which functions of the SSS. Inc. in turn. Casper Managing Director and Chief Operating Officer Fischer Francis Trees & Watts. MBSCC and EMCC) are allocated entitlements to purchase the common stock of DTCC based upon their usage of all five registered clearing agencies. 3. Bodson Managing Director Morgan Stanley Stephen P. These shares are held by their self-regulatory organizations in a representative capacity for their members. DTC is also a “clearing corporation” within the meaning of Article 8 of the New York Uniform Commercial Code. Jill M. 2. Bisignano Chief Administrative Officer and Senior Executive Vice President Citigroup/Salomon Smith Barney Corporate & Investment Bank Michael C.S. Sachs & Co. Who are the owners of the SSS? DTC is a wholly-owned subsidiary of DTCC. as amended (the “Exchange Act”). DTCC. Attached as Exhibit 1 are diagrams of the organizational and ownership structures of DTC. such as some smaller broker-dealers. NSCC and the other registered clearing agencies that are subsidiaries of DTCC (GSCC. Jonathan E. are outsourced to third parties? . DTC is registered as a clearing agency with the U. (a) What is its composition? The following is a list of DTC’s current Directors and their affiliations: Bradley Abelow Managing Director Goldman. President and Chief Executive Officer The Depository Trust & Clearing Corporation Dennis J. Certain participants.Banking Law. E. Please describe and provide a diagram outlining the organizational and ownership structure of the SSS. Fenoglio Executive Vice President State Street Corporation George Hrabovsky 55 . is industryowned. Does the SSS have a Board of Directors? Yes. 1. and a member of the Federal Reserve System.11 Mary M. have chosen not to purchase the shares to which they are entitled. Considine Chairman.

Kessler Vice Chairman A. Swayne Executive Vice President JP Morgan Chase Arthur L. Silver Executive Vice President and President of PaineWebber Services UBS PaineWebber.President Alliance Global Investor Services Ronald J.G. Kinney President and Co-Chief Operating Officer New York Stock Exchange Peter B.8 million paid-in capital and $24 million in retained earnings. 2. DTC had $77. DTC has required certain Participants to obtain a thirdparty guarantee of their obligations to DTC. Please describe the financial resources of the SSS. Catherine R.12 Thompson M. Perna Senior Executive Vice President The Bank of New York Ronald Purpora Chief Executive Officer Garban LLC Peter Quick President American Stock Exchange Robert H. Messenger Chief Executive Officer National Financial Services LLC Eileen K. Edwards. the Board of Directors is responsible for supervising the business and affairs of DTC in order to promote DTC’s ability to serve its Participants. Madoff Senior Managing Director Bernard L. insurance coverage or other similar arrangements? On occasion. DTC currently maintains insurance coverage in the following amounts: . Inc. Amount of paid-in capital and retained earnings? As of December 31. Madoff Investment Securities James H. Murray Managing Director Credit Suisse First Boston Thomas J. 2001. Zeigon Managing Director Deutsche Bank AG (b) What are its responsibilities? Generally. F. Inc. $650 million on premises coverage under Blanket Bond/All-Risk policies. 1. . $650 million in-transit coverage under Blanket Bond/All-Risk policies for securities in transit while in the custody of messengers or a .13 - 56 . Guarantees. Thomas Senior Vice President and Chairman Merrill Lynch Securities Services Division James W. .

user guides) have the same status as the rules and procedures? Yes.14 II.75 billion committed line of credit with a group of banks to provide liquidity in the event a Participant fails to pay its daily money settlement obligation to DTC. Describe the process for changing rules and procedures. . 4. the Board of Governors of the Federal Reserve System (the “Fed”). 2. the SEC (after review by the Fed) pursuant to the standards set forth in Section 19(b) of the Exchange Act. DTC and its activities are regulated by the SEC. DTC’s coverage under the Blanket Bonds/All-Risk policies provides secondary coverage for securities lost while in the custody of an armored carrier. $1 million under Mail Policy covering registered securities lost after having been sent via first class mail. including any need for regulatory approval. 1. Credit lines or letters of credit? DTC currently maintains a $1. $800 million in-transit coverage provided by the insurer of the armored car carrier service used by DTC. 3. Does other documentation provided to participants (e. Please describe whether the SSS or its operator is subject to authorization. Changes in DTC’s Procedures are subject to approval by the Board of Directors or by the Chairman of the Board. RULES AND PROCEDURES OF THE SSS A. supervision or oversight by an external authority. . Does the SSS maintain a complete list of the rules and procedures governing the rights and obligations of participants and the duties of the SSS? Yes.. $25 million under Mail Policy covering registered securities lost after having been sent via registered or express mail or express courier. The rights and responsibilities of DTC to its Participants and of DTC’s Participants to DTC are set forth in DTC’s Rules and Procedures. None of the amendments to DTC’s Rules and Procedures can become effective until filed with. Any changes are also provided to Participants. and approved or otherwise permitted by.transportation company. and the New York State Banking Department. 3. (b) How are participants notified of changes in rules and procedures? DTC notifies Participants of revisions to its Rules and Procedures by Important Notice. . (a) What authority is required.g. Reference is made to the discussion of DTC’s Participants Fund in Section VI below. . and how does this differ depending on the type of change involved? Approval by DTC’s Board of Directors is required to amend DTC’s Rules. How can participants obtain a copy of the rules and procedures? DTC provides each Participant with a copy of DTC’s Rules and Procedures. DTC also maintains a $50 million committed line of credit with a bank to provide funds so that DTC can distribute principal and income payments to its Participants when the payments are received too late to allocate on the payable date. additional transit coverage is available for non-negotiable securities.15 (c) Is there a procedure for participants or others to comment on proposed rule changes? 57 . Powers to assess participants or equity holders? DTC has the right under its Rules to apply its Participants Fund to any uninsured loss suffered by DTC and to require its Participants to make additional deposits to the Participants Fund in order to replenish it. G. .

Within each membership category. whenever such action is deemed necessary or expedient. Please describe the types of membership offered by the SSS. 2. A third party whose name may appear on an additional account has no rights under DTC’s Rules. a Limited Participant. RELATIONSHIPS WITH PARTICIPANTS A. Full service membership – “Participants” . Does the fact that a sub-account at the SSS bears the name of a third party give any rights to that third party as a participant under the rules of the system? No. 1. C. or any Managing Director or Vice President. including both differences in rules across participants and the rationale for these differences. B.16 III. if any. Under SEC procedures. received by DTC must be submitted to the SEC as part of DTC’s filing. It should be noted. DTC’s procedures are designed to facilitate its Participants’ segregation of securities so that they may comply with their legal or regulatory obligations. Pledgees in DTC’s system are not required to be Participants. How do the types differ? DTC has two categories of membership: . Can participants establish accounts for their customers’ assets that are segregated from their own asset accounts at the SSS? Participants can request DTC to provide an additional account in DTC’s system in order to segregate their assets from those of their customers. Within each membership category each Participant is subject to the same Rules and Procedures. . proposed new services) are developed in close consultation with Participants. the SEC also solicits comments on proposals filed by DTC. While each Participant is required to make at least the minimum deposit to DTC’s Participants Fund. is this accomplished through a single omnibus customer account or through a multiplicity of accounts and/or sub-accounts? Participants have the option of segregating securities within their own account (omnibus) or of using additional accounts. Are the rules and procedures binding on the SSS as well as its participants? Under what conditions and on whose authority can written rules and procedures be waived or suspended by the SSS? DTC’s Rules and Procedures are incorporated by reference into the Participant Agreement that is executed by the Participant and DTC. may not be required to make a Participants Fund deposit. DTC’s Rules allow for the extension. 1. the President.17 The segregation of securities is not compulsory under DTC’s Rules and Procedures.g. 3. Is the segregation optional or compulsory? . 2. are all participants subject to the same rules and procedures? Please describe important exceptions. Please describe participant requirements for each type of membership. If so.Yes. waiver or suspension of any of DTC’s Rules by the Board of Directors. Participants or others may submit to DTC for its consideration their comments with respect to any proposal to revise its Rules or Procedures. Membership for certain services only – “Limited Participants”. depending upon whether the services it utilizes could result in a settlement obligation to DTC. however. that most DTC proposals (e. Written comments. the Chairman of the Board.. B. Such additional accounts are subject solely to the instructions of the Participant. 58 . and are binding on both the Participant and DTC.

DTC analyzes the capital and financial stability of the applicant as well as the business and market risks to which the applicant is subject and decides whether the applicant has the financial capability to meet its likely DTC obligations. and transaction activity on a daily basis to assure that the Participant continues to be capable of meeting its obligations to DTC.1. please describe. economic. Are participants required to hold an equity stake in the SSS? No. D. In no case. does DTC admit brokers-dealers with less than $500. “fit and proper” tests)? If so. or recordkeeping problems experienced with any DTC Participant. capital adequacy. Each applicant is judged on its own merits. to meet the technical demands of interfacing with the depository. The Department also monitors Participants’ settlement obligations. minimum capital requirements. F. DTC’s Compliance Department obtains information daily from other internal DTC departments regarding settlement. DTC monitors its Participants on an ongoing basis to assure that the Participants are in compliance with DTC’s Rules and Procedures. 2. The Rules also . 4. operational. Yes. information obtained from other self-regulatory organizations and information gathered from various financial publications are analyzed to assure that the Participant continues to be financially stable. and character. The Compliance Department reviews the financial condition of all DTC Participants at least quarterly.g. operational capability. Financial statements filed with regulatory agencies. Yes. Are participants required to be subject to a supervisory regime? If so. Yes. 3. Under what conditions can participants terminate their membership in the SSS? Does this mark the end of all liabilities of the participant? If not. The extent and nature of the business which the applicant intends to conduct through DTC is carefully analyzed so that the likely range of settlement obligations that the applicant will have in DTC and the degree of risk to DTC can be evaluated. however. Under what conditions can the SSS terminate a participant’s membership in the SSS? 59 . data processing capability. DTC’s Participant admissions policy permits entities to become Participants only if they are subject to regulation in their home jurisdiction.whether it has the personnel.19 E.. DTC also evaluates the operational capability of the applicant . Are there financial. Does the SSS engage in oversight of its participants to ensure that their actions are in accordance with its rules and procedures? If so. DTC’s Rules set forth the basic standards for the admission of DTC Participants. etc. personal or other requirements (e. please describe what liabilities could remain.000 in excess net capital or banks with less than $2 million in equity. A Participant may terminate its membership in DTC by so notifying DTC in writing. a Participant remains obligated to satisfy any obligations and liabilities arising out of its membership in DTC. . please describe. please describe.18 require all DTC Participants to demonstrate to DTC that these standards are met on an ongoing basis. Notwithstanding any such termination.. Are participants required to be domiciled or resident in a particular jurisdiction? No. DTC’s Rules provide that the admission of a Participant is subject to an applicant’s demonstration that it meets reasonable standards of financial responsibility.

has reasonable grounds to believe that the Participant or any person . . . including the standard of liability (negligence. gross negligence. . The Participant has failed to pay any fine. (a) What is the name of the other SSS? Where is it located? (b) What securities are eligible for transfer via the linkage to the other SSS? 60 . in statute or contract)? As a general proposition. strict liability or other). the Exchange Act. (2) making a misstatement of a material fact or omitting to state a material fact to DTC in connection with its application to become a Participant or thereafter.. judgment or decree of any court or other governmental authority of competent jurisdiction from acting as a broker. Please identify each of the other SSSs used and the type of securities transferred via the linkages. DTC may terminate a Participant’s membership under any of the following circumstances: . . the Investment Advisers Act. indirect or consequential damages).e. . sale or delivery of any security. fee or other charge provided under DTC’s Rules or Procedures. The Participant or any person associated with the Participant is permanently or temporarily enjoined by order. The Participant’s financial or operational condition has deteriorated to a point that its continuation as a Participant would jeopardize the interests of DTC and its other Participants. Where are these liabilities and their limitations set out (e.21 IV.20 associated with the Participant is responsible for (1) fraud. G.. (3) violating any Rule or any agreement with DTC or (4) the willful violation of the Securities Act. or any rule or regulation thereunder.. fraudulent acts or breach of fiduciary duty. and are set forth in DTC’s Procedures. RELATIONSHIPS WITH OTHER SSSs AND COMMERCIAL INTERMEDIARIES A. Does the SSS maintain linkages (including sub-custodian or cash correspondent relationships) or other relationships with other SSSs? 1. investment adviser. the Investment Company Act. The Participant or any person associated with the Participant is expelled or suspended from a national securities association or exchange registered under the Exchange Act. underwriter.DTC will terminate a Participant’s membership (i. DTC’s responsibilities to Participants for the manner in which DTC’s services are provided are a matter of contract between DTC and its Participants. willful misconduct. trust company. The Participant has failed to make any other required deposit with DTC. dealer. DTC’s Board of Directors. .g. cease to act for the Participant) upon determining that under DTC’s Rules the Participant is no longer qualified or is deemed to be insolvent. The Participant has failed to make required deposits to the Participants Fund within the required ten business day period after demand. investment company. fiduciary. and any limitation to the scope of liability of the SSS (e. or in connection with the purchase. Please describe the scope of the SSS’s liability to participants. . .g. bank. The Participant has failed to meet its settlement obligation to DTC. the force majeure standard. insurance company or other financial institution or from engaging in or continuing any conduct or practice in connection with any such activity. In addition. or a committee authorized thereby.

custodians or cash correspondents. (d) Does the other SSS provide custody services to the SSS and. The Canadian. Please describe the standards used in approving or reviewing relationships with other SSSs. Does the SSS use securities custodians (other than the other SSSs addressed in the previous question) and/or commercial cash correspondents? Please identify the custodians or cash correspondents used and the duties that each performs. The form of agreement must be filed with the SEC for approval. who bears any credit or custody risks? DTC maintains an account at the Federal Reserve Bank of New York. Neither SSS provides custody services to DTC. Monte Titoli (Italy).22 Transfers against payment are effected in the normal manner for such transfers at DTC. Transfers of DTC-eligible securities to and from the DTC accounts of those central securities depositories may be made free of payment and. among other things. Clearstream Banking Frankfurt (Germany). a DTC Participant acts on behalf of the SSS. DTC ‘s Risk Management Committee. NECIGEF (The Netherlands) and the Tel Aviv Stock Exchange Clearinghouse (Israel) have each opened a Participant account at DTC. U. CAVALI (Peru). including any financial or operational requirements or the presence of insurance or public supervision. DTC’s ability to obtain its securities promptly. which is described in Section VIII below. Caja de Valores (Argentina). SEC regulations require that the form of agreement that DTC executes with a securities custodian contain certain specified provisions relating to. DTC receives reports on the internal controls of its securities custodians from their independent accountants or internal auditors. . if so. reviews linkages with other securities settlements systems. CRESTCo (the United Kingdom). Hong Kong Securities Clearing Company Limited (Hong Kong). in the case of CDS. the quantities of securities represented by the applicable balance certificates in the FAST program are adjusted accordingly. That Participant uses its DTC account to make and receive transfers of DTC-eligible securities between DTC Participants and the SSS. a number of transfer agents hold balance certificates registered in the name of DTC’s nominee as custodians for DTC. In each of those linkages. B. Most transfer agents in the FAST Program and all banks in the Depository Facility Program are required to carry insurance in a form and 61 . Issues which are transferred over the Federal Reserve System’s securities transfer system (e. In DTC’s Depository Facility Program.S. German and Swiss (SIS Sega Intersettle) depositories provide custody services to DTC. please describe the timing of the transfers and the corresponding payments. The transfers at DTC to and from the account of that Participant may be free or against payment. C. Treasury securities) and which are eligible at DTC may be transferred to and from that account free of payment. custodians and cash correspondents in order to assess any operational and financial risks arising from such linkages.g.(c) Are transfers of securities made via the linkage to the other SSS limited to only those that are free of payment or are transfers against payment also made via the linkage to the other SSS? If against payment. In DTC’s Fast Automated Securities Transfer (FAST) Program. The Canadian Depository for Securities Canada (“CDS”). certain banks (as well as regional offices of NSCC) hold securities overnight as custodians for DTC after the securities have been deposited in the DTC system. As securities are deposited in and withdrawn from the DTC system. DTC has indirect linkages with Euroclear and Clearstream Luxemburg.. against payment. The securities are shipped to DTC on the next business day.

Is it normal practice to register the securities in the name of the SSS (or its nominee) or in the name of the beneficial owner? Are there instances in which securities housed within the SSS are registered to neither the SSS (or its nominee) nor the beneficial owner? 3. please identify the circumstances in which such exposure could arise. Are matched settlement instructions binding on participants? (a) If so. do the rules and procedures of the SSS provide for an unwind or reversal of such transfers in case of bankruptcy or other events which result in the buyer’s name not being entered on the 62 . as well as any pre-matching process that takes place. and agreed-on trades can then be settled at DTC.. No. transfers of securities at DTC on the instructions of NSCC are the result of matching in the NSCC system.g. (c) Please provide a time line indicating the points at which matched instructions become binding. will it hold securities registered in the name of the beneficial owner? . Securities and cash positions at all of DTC’s custodians and cash correspondents are balanced and confirmed daily. If the SSS offers custodial services. FUNDS TRANSFERS AND LINKAGES BETWEEN TRANSFERS A. as described in Section VIII below. (b) Please describe whether this is a feature of the SSS’s rules and procedures or of national law or regulations. How long does the registration process typically take? Are participants notified when registration is complete? 6. . forced settlement. DTC does not advance securities or funds on behalf of other intermediaries. penalties. short positions). please describe the consequences of failure by participants to meet obligations (e. As described in Section I above. DTC does not advance securities or funds to or on behalf of other intermediaries. . Please discuss whether and how settlement instructions are matched between participants prior to processing by the SSS. Please describe measures in place to protect the SSS and its members against the failure of other SSSs or commercial intermediaries to meet obligations to the SSS.23 D. collateral or alternative sources of funds and securities. B. Matching is not required for all transactions at DTC. including collateral controls.24 V. No. Is matching required for all transactions without exception? 2. Under what circumstances does the SSS initiate registration of securities in the buyer’s name? 5. SECURITIES TRANSFERS. Participant accounts maintained by securities depositories are subject to all of DTC’s normal risk management controls. Who is the registrar? 2. 1.amount satisfactory to DTC. Broker-dealers and their institutional customers can agree on the details of trades by using a matching service provider such as Omgeo. Are securities transferred within the SSS registered? 1. What procedure is used when instructions do not match? 3. As noted above. such as issuing and paying agents. Does the SSS advance funds or securities to or on behalf of other intermediaries such as issuing or paying agents? If so. including risk controls. A transfer of securities at DTC can be effected on instructions to DTC only from the delivering Participant. E.25 4. Can securities be transferred within the SSS before registration in the buyer’s name is complete? If so.

For most registered securities issues. is able to determine when registration is complete. DTC debits the securities from the Participant’s account and instructs the transfer agent to register the transfer of the securities into the name designated by the Participant. 2. Some transfers are processed in batches. Transfers of securities within the DTC system are processed by debits and credits to Participants’ accounts. at what time or times is the processing initiated and completed? 4. Please describe whether final funds transfers in conjunction with the SSS are made as debits and credits to balances held at the SSS. Securities settlements occur daily. and free deliveries can be effected until 6:00 P. A large number of registered securities issues are issued in book-entry-only (“BEO”) form. D. Transfers of securities delivered against payment are effective simultaneously with payment. upon inquiry. its customer or another party. there are one or more global certificates registered in the name of Cede & Co. The reregistered securities are then sent to the Participant or its customer. or in one or more batches? 3. during what hours does the processing occur? If in batches. the time period for the registration process referred to in the preceding paragraphs is subject to SEC rules. On the instructions of the withdrawing Participant. a Participant with securities on deposit within the DTC system can withdraw the securities physically and have them reregistered in the name of the Participant. . The registration process usually takes 2-3 days. Please indicate whether the transfers are processed as debits and credits to members’ accounts or via some other method. On a continuous (real-time) basis. 1. A Participant depositing a security is given immediate credit for the deposit in the Participant’s DTC account and can use that credit to effect bookentry transactions. For example. Please describe how securities transfers are processed within the SSS. The Participant. deliveries of securities for value can be effected until 3:30 P.26 C. If continuous. Do securities settlements occur daily? Please identify securities for which settlement occurs only on specific days of the week or month.M. For transfer agents required to register with the SEC. at the central bank. or via some other method. On what entity (SSS or other) does the participant bear cash deposit risk? 3. Transfer instructions received from Participants during the day are processed on a real-time basis. 1. and other transfers are processed on a real-time basis.register? With the exception of securities in DTC’s custody for which book-entry services are not available. Generally. Does the SSS maintain cash accounts for its participants? Are these accounts equivalent to deposit accounts at a commercial or central bank or do they serve only as “cash memorandum” accounts? 2. The source of the transfer instructions determines whether a batch method or real-time method is used. transfer instructions received early in the processing day from NSCC or from a trade matching service provider such as Omgeo are processed at that time in batches. at one or more commercial banks. securities certificates for registered issues deposited in the DTC system are sent by DTC to the issuer’s transfer agent for registration of transfer into the name of DTC’s nominee. and the issuer does not make securities certificates available to Participants or their customers. Under what circumstances does the SSS provide credit extensions or advances of funds to its participants and thereby expose itself to credit risk? 63 . For these issues. Cede & Co. Bearer securities can also be deposited at DTC.M.

In addition to a securities account at DTC. which is a DTC Participant bank with access to the Fedwire system. DTC and NSCC net the settlement balances of each DTC Participant that is also a member of NSCC. When do securities transfers and funds transfers become final? (a) At what time do securities transfers become final? After what event or events? (b) At what time do funds transfers become final? After what event or events? Does this timing allow for same-day retransfer of funds received in exchange for securities? (c) If final delivery of securities precedes the final transfer of funds. At the end of each day. Each Participant must engage a Settling Bank. the debits and credits in the Participant’s settlement account are netted. Are funds transfers and securities transfers processed within the same system or in different systems? If different.27 4. The debits and credits arise from securities transfers against payment made and received by the Participant and from other transactions such as principal and income payments received in respect of securities credited to the Participant’s securities account. A Settling Bank is not required to pay DTC a debit balance on behalf of a Participant and is not required to advance funds to a Participant. Please discuss whether participants are notified of securities or funds transfers while they are still provisional. Is the SSS a DVP system? If so. Where the SSS provides more than one alternative for settlement processing. 3. what actions will be taken if securities are not received? (e) Does the timing of finality differ depending on the type of security transferred or the currency in which payment is to be made? Please describe. each Participant has a settlement account. and the Participant pays any net debit balance to DTC. E. How long can such credit extensions last? How long do they typically last? DTC does not maintain cash accounts for its Participants. debits and credits are entered into the Participant’s settlement account. to act on the Participant’s behalf in settling with DTC. Then. A Participant which qualifies as a Settling Bank may act as its own Settling Bank. The DTC system is 64 . 1. Payments are made to and from DTC’s account at the Federal Reserve Bank of New York through the Federal Reserve System’s money transfer system (sometimes called the Fedwire system). please describe the DVP model used according to the models outlined in the DVP Report (see the Introduction). how are they linked? (a) Please describe whether each securities transfer is linked to a specific funds transfer on a trade-by-trade basis or on a net basis or via some other method. or both. During the day. can participants dispose freely of such funds prior to securities finality? If so. only when they are final. please provide a response for each alternative and indicate the relative importance of each alternative. can participants dispose freely of such securities prior to funds finality? If so. DTC pays any net credit balance in the account to the Participant. what actions will be taken if funds are not received? (d) If final delivery of funds precedes the final transfer of securities. Please also provide a diagram indicating the timing of events in the processing of securities and funds transfers in the SSS..28 2. The DTC system provides a DVP mechanism. DTC neither advances funds nor provides intra-day credit extensions to its Participants. After netting with NSCC. (b) Does the SSS “split” large transactions into multiple transactions or require participants to do so? .

dollars. the debits and credits in each Participant’s settlement account are netted.similar to Model 2. No. when a delivery of securities against payment is made at DTC. the net debit cap control and the largest provisional net credit procedure applicable to money market instruments (“MMIs”). above. from the standpoint of the delivering Participant. The conditions under which DTC will cease to act for a Participant are set forth in Section III above. At the end of the processing day. all payments in DTC’s daily money settlement are made in U. To the extent that the rules and procedures grant discretion in the determination of the use of default or other exceptional procedures. Please indicate whether the guarantee is a feature of the SSS’s rules and procedures or of national law or regulations. What actions does the guarantee obligate the SSS to take? 3. A receiving Participant is permitted to dispose of securities prior to money settlement with DTC subject to the application of DTC’s risk management controls. Please discuss the events or circumstances that would constitute default of a participant under the rules and procedures of the SSS or that would lead the SSS to make use of exceptional settlement arrangements or unwind procedures. Funds transfers and securities transfers are processed within the same system at DTC. are the collateral control. DEFAULT PROCEDURES A. DTC will employ the default procedures 65 . the corresponding debit and credit are entered in the settlement accounts of the receiving and delivering Participants. Failure by a participant to meet a test of its solvency under the applicable laws of its jurisdiction? 2. Does the SSS itself “guarantee” funds or securities transfers? 1. there is a size limitation of $50 million on deliveries against payment of MMIs. Under certain circumstances. please discuss where the authority to exercise such discretion resides and the circumstances in which this authority would be used. 1. However. Funds transfers over the Fedwire between DTC and a Settling Bank acting on behalf of a Participant are final when made. DTC does not itself guarantee any funds or securities transfers which its Participants are obligated to make. . F. At present. DTC employs three principal risk management controls to protect DTC and its Participants against the risk that a Participant will fail to pay the net debit balance in its settlement account. which are discussed in Section VIII below. the receiving Participant can return (reclaim) the securities on the day of the transfer or the next day. Participants are notified of securities or funds transfers by DTC when processed. The timing of finality of securities transfers and funds transfers does not depend on the type of security transferred. Under what circumstances and at what point are transfers guaranteed by the SSS? 2.30 VI. Those risk management controls.S. Large transactions are not split into multiple transactions. Attached as Exhibit 2 is a schedule of the times of significant processing events. however. and the net credit balance or net debit balance is settled between DTC and the Participant.29 Securities transfers at DTC are final when made. . As described in subsection D. Failure to make payments or deliveries of securities within the time specified? 3. which are described in Section VIII below.

. in order to complete settlement. DTC has available liquidity resources of $2. In the event that it ceases to act for a Participant. DTC is required to notify the SEC and each Participant promptly thereafter. collateral. In the event that DTC becomes concerned with a Participant’s operational or financial soundness. publish an Important Notice to its Participants and submit a filing to the SEC.g. Should DTC make a charge against a Participant’s required deposit to the Fund (pro rata or otherwise). 2. when the SSS’s obligations to participants would be met.g. insurance. A Participant may make a voluntary deposit to the Fund in excess of the amount required.32 (a) How and on what authority would a decision to unwind securities or funds transfers be made by the SSS? (b) When and how would participants be notified of a decision to unwind provisional securities or funds transfers? (c) How long would participants have to cover any debit positions in their own securities or funds accounts resulting from an unwind? (d) In the event of an unwind. loss-sharing arrangements. DTC could charge the excess to its retained earnings or pro rata to the required Fund deposits of all other Participants.000. Each Participant’s obligation to make an additional deposit to the Fund will be reflected as a debit in its money settlement account on the business day following such notification. In the event of such loss. 4. If the Fund is applied to a loss. B. if any).31 3. when participants would need to cover their loss-sharing obligations).described below only if DTC has determined that the Participant is insolvent as defined in DTC’s Rules (e. entry of a court order adjudging the Participant a bankrupt or insolvent) or the Participant fails to settle with DTC. How and at what point are participants notified that this has occurred? Notification of DTC’s decision to cease to act for a Participant will be provided immediately to the SEC and to other clearing agencies in which the Participant is also a member. DTC will broadcast such notification to its Participants over DTC’s Participant Terminal System (PTS). consisting of an all cash Participants Fund (the “Fund”) of $600 million and a committed bank line of credit of $1.). Each Participant is required to make a deposit to the Fund based upon a sixty business-day rolling average of the Participant’s intra-day net debit peaks. The minimum deposit is $10.. . etc. would all transfers be unwound or 66 . DTC would first charge the loss to that Participant’s deposit to the Fund (including its voluntary deposit.35 billion. DTC may require an additional deposit to the Fund. If the loss exceeded the failing Participant’s deposit.75 billion. In addition to being a liquidity resource. . What procedures are followed by the SSS once it has determined that a default event has occurred or that exceptional settlement arrangements are to be employed? 1. Please describe all conditions under which provisional transfers of securities or funds could be unwound by the SSS. the Participant must make an additional deposit to the Fund in an amount equal to the charge.g. DTC will be expected to continue to meet all its obligations. the Fund is available to satisfy any uninsured loss incurred by DTC.. Please describe and provide a time line indicating the order in which these resources would be used as well as the timing of participant notifications and important deadlines (e. participants fund. including a loss resulting from a Participant’s failure to settle. Would the SSS be expected to continue to meet all its obligations to participants under these circumstances? Please discuss the resources in place to ensure that this would occur (e. including the completion of settlement.

and could this cause provisional securities or funds transfers to be unwound? No. only securities purchases or only those of a subset of participants) by unwound? (e) If only a subset of transfers. under a “zero-hour” rule). However. to DTC’s account. These funds will ordinarily be restored on the day following the failure to settle.. As described in Section V above. Is it possible for debit positions (overdrafts) in securities accounts at the SSS to arise? Yes.E. SECURITIES LENDING AND BACK-TO-BACK-TRANSACTIONS A. on that day to wire the necessary settlement funds.M. 1. two processes initiated externally can cause short positions to arise. Deposit Rejects: Most short positions are the result of deposit rejects. DTC will borrow from its line of credit banks. Transfers of securities or funds so defined are final. when the failing Participant pays DTC. If the Fund is not sufficient. the Participant is required to provide a cash security deposit to DTC (the “short position penalty”) equal to 130% of the market value of the deposited security (marked to the market each day) until the matter is resolved.2 above would ever be unwound. what procedure would be followed to determine which transfers and in what order? In the event of a Participant’s failure to settle.g. If the Participant fails to wire the necessary settlement funds. SECURITIES OVERDRAFTS. the deposited certificate rejected by the transfer agent is returned to the Participant and the quantity of the deposited security is deducted from the Participant’s DTC account.would only a subset of transfers (e. . Have loss-sharing procedures been invoked? 2. pledging collateral securities in the failing Participant’s account. DTC has never suffered a loss resulting from a Participant default or insolvency and has never made a charge against the Participants Fund. DTC is authorized to sell the collateral securities in the failing Participant’s account.33 C. . Has a participant in the SSS ever been declared in default or become insolvent? 1. 5. If the transfer agent refuses to register the security in the name of DTC’s nominee. Under what conditions could such debit positions occur? Normally.. 67 . DTC will first use the Fund (including any voluntary deposits) as a liquidity resource to complete settlement.g.. a Participant depositing a registered security at DTC is given immediate credit for the deposit in the Participant’s DTC account. If that deduction results in a negative position in the Participant’s account (a “short position”). Please describe whether any of these defaults or insolvencies resulted in losses for the SSS or its participants and how they were absorbed. short positions) can occur. 6. VII. Please describe any circumstances in which transfers of securities or funds that were defined as final in response to question V. a Participant cannot overdraw its account at DTC. and the deposited certificate is sent by DTC to the issuer’s transfer agent for registration of transfer into the name of DTC’s nominee.e. Since the creation of the depository in 1973. including interest. Can bankruptcy or insolvency be declared retrospectively in the SSS’s jurisdiction (e. The failing Participant has until 10:00 A. since deliveries are not processed by DTC unless the delivering Participant has a sufficient quantity of securities credited to its account prior to the delivery. Debit positions (i.

DTC permits a Participant having a short position in a particular security to use DTC’s facilities to communicate with other Participants having long positions in that security in order to arrange to purchase a sufficient quantity to cover the short position. DTC allocates the called securities by means of an impartial lottery. because of deliveries effected by a Participant between the publication date and the date DTC is able to allocate called securities to its account. Partial Call Lotteries: Under DTC’s Procedures relating to a call (i. . rectified or managed? DTC discourages short positions by charging the short position penalty until the position is covered..34 . and do not create failed transactions. the average age of a short position at DTC is between seven and eight days.. please explain the basis for differential treatment by the SSS. For the vast majority of partial calls of callable securities on deposit with DTC. short positions in debt securities (which represent the vast majority of short positions at DTC) can be outstanding at most until the securities are redeemed or mature.e. The following briefly describes a few of these procedures: . based upon Participants’ net long positions as of the close of business on the day prior to the publication of the call notice..35 long periods because. A Participant having a short position in a particular security as the result of the partial call allocation process is permitted for a limited period of time to reverse book-entry deliveries of that security effected by the Participant between the publication date and the allocation date. the Participant that reverses the book-entry delivery will still have an obligation to deliver to the receiving Participant securities in settlement of the original transaction). must run its lottery after publication date. (a) Do these conditions always result in debit positions in securities accounts rather than failed transactions? If not. particularly those that are outstanding for . the settlement obligations of the parties are re-opened. A Participant having a short position in a particular security as the result of a rejected deposit is permitted for a limited period of time to reverse book-entry deliveries of that security effected by the Participant between the date of the deposit and the date of the reject. . the settlement obligations of the parties are reopened (i. therefore. The processes described above result in short positions only. If a book-entry delivery is reversed under this procedure. redemption) of part of an issue. for example. If a book-entry delivery is reversed under this procedure. How long can such debit positions last? How long do they typically last? While theoretically there is no limit to the time short positions can be outstanding. (b) Are these situations covered explicitly by the rules and procedures of the SSS? Yes.e. To the extent that. the Participant will be left with a short position. the issues are difficult to purchase on the open market. Currently. 2. 3. How are debit positions in securities accounts prevented. the depository does not receive notice of the call in advance of the publication date and. the Participant’s remaining long position is less than the amount allocated. DTC also has a number of procedures to help reduce and eliminate short positions. 68 .

(a) Application of loss-sharing provisions allocating the loss to participants? (b) Absorption of the loss by the SSS? (c) Other? Please specify. DTC’s retained earnings as well as the Participants Fund (involving loss sharing by Participants on a pro rata basis) would be available for such loss.36 The short position penalty would be available to cover the obligation of a failing Participant. However. Under what conditions are delivery instructions by participants receiving and redelivering securities on the same day under back-to-back transactions settled for same-day value? (a) Only if the participant has securities on deposit with the SSS that have been received pursuant to a final securities transfer? (b) If the participant has securities on deposit with the SSS that have been received pursuant to a provisional securities transfer? . Is the process for lending securities automatic? If not. . How does the SSS settle back-to-back transactions? 1. (e) Other? Please specify. DTC provides services that facilitate securities lending by its Participants and their customers. please describe the procedures used by the SSS to determine whether a securities loan will be made. failure by a participant with a debit balance in a securities account or unavailability of the securities in the market).g. Which securities on deposit at the SSS are eligible for lending? Do participants have the option to make securities available for lending or is it mandatory? 4.. 4. using the Participant’s short position penalty to fund the purchase price. In the extremely unlikely event that the short position penalty and the failing Participant’s deposit to the Participants Fund are not sufficient to cover any loss suffered by DTC. 69 . C. B. and whether they are addressed by the written rules and procedures of the SSS.37 (c) Before securities have been received either provisionally or finally. 2. What procedures would be followed by the SSS in case the debit cannot be rectified (e. At what point are participants notified that securities are being lent to them in order to complete their settlements? 3. DTC itself is authorized to purchase a sufficient quantity of the security to cover the short position. as described in Section I above. Under what circumstances does the SSS provide for the lending of securities to ensure settlements? 1. but when a matched receipt instruction exists for the same or greater value? Is such a practice limited to markets where matching is binding? (d) Before securities have been received either provisionally or finally. Are lent securities identified by the SSS with specific participants as lenders or only with a common pool of securities available for lending? Does the participant whose securities are lent become a principal to the transaction? DTC itself does not provide for the lending of securities to ensure settlements. With respect to a Participant short position that has been outstanding for 90 days or more.. but when a third party has promised to deliver to the SSS securities of the same or greater value? Must the provider of the guarantee have itself received the securities through a final transfer? Please describe how the SSS evaluates such promises.

a Participant receiving a delivery of securities intra-day is able to redeliver those securities for same-day value in advance of final settlement so long as DTC’s collateral. Information Services. Please describe the process for the internal review of risk management policies and procedures. However. 2. The Committee reports to the Audit Committee of DTC’s Board of Directors. Does the Board of Directors review risk management policies and procedures? Does the Board have a risk management or audit committee? Yes. Operations. DTC continually performs risk assessments of its operations. representing the following areas: Finance. attorneys. a project may be subject to risk assessment reviews by the Committee. before being offered. 3. 1. data processing systems. Does the SSS have a risk management function with clear independence from and authority over operational marketing functions? Yes. . Systems Processing and Legal.39 4. including limits on amounts involved or related to the liquidity of the underlying securities. International. Risk. internal auditors and DTC’s independent accountant. DTC has a Risk Management Committee (the “Committee”) to evaluate and coordinate the risk management activities within the organization. The Committee is composed of nine officers. net debit cap and Largest Provisional Net Credit (“LPNC”) controls applicable to both the redelivering Participant and the counterparty to the redelivery are satisfied. Please describe limits or controls in place with respect to any of the above arrangements for the settlement of back-to-back transactions. Risk assessment is a crucial element of such reviews. B. communications networks and facilities. Whenever a new or expanded service is proposed.2. These controls are described in Section VIII below. 1. For each such audit or examination. Is there a risk management policy that addresses the review and approval of new products and services offered by the SSS? At what level of the organization is risk management approval given for a new product or service? As a matter of DTC practice. please address the following questions. Please describe the roles and responsibilities of those areas of the SSS responsible for risk management and control. Please describe any internal or external audits or supervisory/regulatory examinations that are performed with respect to the SSS. President or Chairman. . DTC’s General Counsel acts as Chairman. Auditing. Under what conditions are payment instructions by participants in the SSS under back-to-back transactions settled for same-day value? Can participants use the proceeds of an on-delivery of securities without the need for an extension of credit? DTC does not settle “back-to-back” transactions as defined herein. DTC’s Board of Directors has an Audit Committee whose responsibilities include the review of DTC’s risk management policies and procedures. In appropriate cases. the project is reviewed by members of senior management.38 VIII. RISK CONTROL MEASURES A. 3. The Committee is independent from the operational and marketing functions. Who performs the audit or examination? DTC’s Internal Audit Department and its independent accountant 70 . a new product or service must receive risk management approval by DTC’s Chief Operating Officer.

40 DTC’s independent accountant. What is the scope of the audit or examination? (a) Please indicate whether and how it addresses the sufficiency of and compliance with internal controls. In the case of CMOs. Such examinations cover all critical processing areas of the operation. 2.41 (b) If pricing models are used. which are complex. D. and the Securities and Exchange Commission routinely examine the depository. procedures and records. In addition. pricing data is supplied by lead underwriters for new issues not yet priced by a vendor. .. The collateralization control is meant to assure that DTC has available sufficient collateral to cover the Participant’s net settlement debit in the event that it fails to settle. In addition.e. on a rotation schedule. DTC attempts to obtain pricing data from two outside sources. C. an annual audit of all critical areas. Evaluations of DTC’s financial statements and internal controls over securities and related monies processed and/or held for Participants and others are conducted on a periodic basis. DTC’s Internal Audit Department conducts. 4. highly interest-rate-sensitive securities. 3. Any instances of noncompliance are reported to senior DTC management and are corrected. How frequently are securities revalued? Daily. Are audit or examination reports available for review by participants? DTC’s independent accountant issues a report on internal controls which is provided to all Participants and interested third parties. What are the sources for security valuations? (a) What outside price or data sources are used? DTC attempts to obtain an end-of-day price in an automated format from a third-party vendor for each of its eligible securities.regularly review the adequacy of DTC’s internal controls. the New York State Banking Department. 3. The Securities and Exchange Commission conducts an annual inspection of DTC’s data processing areas and has conducted an inspection of selected operating areas every other year. What is the frequency of the audit or examination? . The above vendor data is supplemented with DTC’s mainframebased pricing models for Money Market Instruments. mark to market) the securities that it holds. the Federal Reserve Bank of New York and the New York State Banking Department each conduct annual reviews. as well as the data processing environment. Please describe how these valuations are used by risk control systems at the SSS. Does the lien apply only to the securities owned by the participants themselves or does it extend to the securities beneficially owned by customers 71 . Please discuss whether the SSS has a lien on the securities held in or transferred through it. the Federal Reserve Bank of New York. 1. Please discuss whether the SSS has the capacity to value (i. please describe how the models are chosen and how the model inputs are obtained. DTC monitors the value of the securities used as collateral to support a Participant’s net settlement debit. 2. 1. All examinations are designed to test for compliance with DTC’s Rules and Procedures. (b) Please indicate whether and how it addresses the SSS’s compliance with its own rules and procedures.

DTC does not share its collateral system with any other SSS. DTC is not aware of the beneficial ownership of securities credited to the accounts of its Participants. mitigates DTC’s risk in providing this guarantee. usually in conjunction with the renewal of its agreement with its line-of-credit banks. What types of transaction at the SSS involve the use of collateral? Transactions that are processed in DTC’s end-of-day net settlement system are subject to DTC’s collateral requirements.42 2. Does the SSS share a collateral system with another SSS or payment system? No. Under what circumstances and in what manner would such a lien allow the SSS to use the securities? As indicated above. DTC is authorized to sell the collateral securities in order to cover that debit.43 A security’s haircut is determined by the application of criteria relating to security type. 5. DTC’s Rules give DTC the right to pledge such collateral securities to DTC’s line of credit banks in the event of a Participant failure to settle. Does the SSS manage its own collateral system? Yes.. In the event that a failing Participant is insolvent and unable to pay its settlement debit. Securities that are not acceptable to the banks receive no collateral value in DTC’s system. at the time of the return the Participant’s net debit with DTC is fully supported by other collateral acceptable to DTC). DTC’s Risk Management Committee is responsible for approving any changes in the 72 . DTC and NSCC have entered into a limited cross-guaranty agreement which provides. Because DTC may have to finance a Participant’s failure to settle. together with the collateral controls applicable in DTC’s system. DTC’s haircuts range from 2% to 100%. the haircut structure takes into consideration market fluctuations and the haircuts imposed on DTC by DTC’s line of credit banks. with respect to CNS long allocations. Collateral can be returned to the Participant intra-day as long as the returned collateral is excess (i. The collateral value attributed to securities is equal to the prior business day’s closing market price. 3. What are the policies with regard to the type of collateral used or haircuts required? All types of securities that are eligible for deposit may be used as collateral.of participants? 2. 4. rating. DTC’s guarantee eliminates a potential NSCC risk. How are collateral valuation methodologies developed and reviewed? . and (3) securities that have been delivered intra-day to the Participant’s account against payment. Not giving collateral value to long allocations. (2) securities in the Participant’s account that the Participant has designated as collateral. . Can collateral at the SSS be posted and returned on the same day? Yes. Collateral includes: (1) the Participant’s deposit to the Participants Fund. DTC manages its own collateral system. DTC’s haircut policy is reviewed at least annually. 1. including securities that are treated as collateral. 6.e. market price and whether the security is traded on an exchange (including NASDAQ). the goal of DTC’s collateralization control is to assure that DTC has access to sufficient collateral of the Participant to cover any net debit in its money settlement account. Please discuss the circumstances in which the SSS requires collateral to limit or mitigate risks. less a haircut as determined by DTC. E. a DTC guarantee either to return the securities to NSCC or to compensate NSCC for these securities if the receiving DTC Participant (which is also a member of NSCC) redelivers the securities.

4. for example corporate or municipal bonds. To what extent are collateral policies described in the written rules and procedures of the SSS? DTC collateral policies are described in DTC’s Procedures.M. The LPNC control is lifted after 3:00 P. . Do limits apply to implicit as well as explicit extensions of credit or 73 . DTC also employs net debit caps. or (4) $1. DTC would invoke MMI issuer failure procedures which entail reversing all of that day’s activities in the issuer’s MMI. F. however. For MMIs. As discussed above. in the absence of a refusal to pay. if any.established haircut levels. 7. including a cash Participants Fund and a committed line of credit.. In such a case. Please explain the types of limit used and the exposures to which they apply. however.M. DTC’s principal risk would arise from the failure of one or more of its Participants to settle their net debit obligations with DTC at the end of a business day. Please describe the SSS’s use of limits on exposures to monitor or control risks. (2) an amount.35 billion. DTC maintains liquidity resources of $2. maturity proceeds are automatically debited to the paying agent’s Participant account and credited to the accounts of Participants that have positions in the MMI. these debits and credits are only provisional because the paying agent has until that time to inform DTC of its refusal to pay for the maturity. This credit is not available as collateral. To help limit the risk to DTC arising from the combination of an issuer’s failure and a Participant’s failure to settle. The issuer’s paying agent must be a DTC Participant.8 billion (an amount that is $550 million less than the amount of DTC’s total liquidity resources). (3) an amount. 2. from using the largest net settlement credit it has received with respect to any single MMI issuer. collateral requirements and the Largest Provisional Net Credit (“LPNC”) control. All of these reversals would be processed without regard to the system’s collateral and net debit cap controls.44 The LPNC control is designed to address risks associated with DTC’s processing of maturity payments on MMIs. The market values of collateral securities are monitored daily based upon price and rating data provided by independent sources. Each Participant’s net debit is limited throughout the processing day to a net debit cap that is the lesser of four amounts: (1) a net debit cap based on the three largest net debits that each Participant incurs over a rolling three-month period. 1. Do limits apply to participants individually or in the aggregate or both? Risk management controls are applied to Participants on an individual basis.M. DTC’s system requires that a Participant’s net settlement debit be fully collateralized. This control operates by prohibiting the Participant prior to 3:00 P. In order to assure that DTC is able to complete settlement on the day of a Participant failure. Until 3:00 P. determined by the Participant’s Settling Bank. nor is it used in the calculation of the Participant’s net debit. DTC established the LPNC control. Do the limits apply to all participants and/or to other SSSs with which the SSS is linked? What are the exceptions to the limits? The risk management controls apply to all Participants. if any. determined by DTC. DTC receives maturity proceeds from the issuer’s paying agent by Fedwire and does not credit these proceeds to Participants until they are received. including any new issuances that day. maturities are handled differently. Early on the maturity date. DTC’s settlement system imposes net debit caps on all Participants. including other SSSs that participate in DTC’s system. 3. For most securities that pay principal at maturity.

In the event of financial inadequacy.46 2. Does the SSS maintain or administer loss-sharing arrangements other than those applicable to events of default and addressed in Section VI above? Are these loss-sharing pools pre-funded by participants? No. Request that the Participant arrange to clear its transactions through another DTC Participant and itself retire as a Participant. The authority to set or amend these policies coincides with the authority to amend DTC’s Procedures (as described in Section I above). above. . If a completed transaction will result in a net settlement debit that is either not fully collateralized or exceeds the Participant’s net debit. Is there a special risk control regime that the SSS would apply to a participant known to be experiencing financial difficulties? DTC maintains relationships with other self-regulatory organizations so that there is an exchange of vital information concerning Participants’ operational and financial soundness. These policies are reviewed by DTC senior management and by the Audit Committee of DTC’s Board of Directors. when on-deliveries of securities are permitted pursuant to provisional but not final delivery of securities)? Reference is made to information provided in response to subsection V. Increase the Participant’s required deposit to the Participants Fund. DTC could raise the haircuts in its collateral valuation of those securities. DTC carefully monitors a Participant’s daily activity and may exercise its right under its Rules to limit the Participant’s access to DTC services.45 5. Please provide assessments of the operational reliability of the computer and 74 .. DTC does not maintain or administer loss-sharing arrangements other than as described in Section VI above. 3.E. DTC could take the following possible courses of action: . . DTC has the capacity to monitor all of its Participants’ accounts on a real-time basis. 1. Lower the Participant’s net debit cap. the transaction will be automatically blocked and pended. .securities (e.47 IX. . To what extent are limit policies described in the written rules and procedures of the SSS? Where does additional authority to set or amend limit policies reside? DTC’s limit policies are described in its written Procedures. 7. How are limit policies developed and reviewed? DTC’s Risk Management Committee is responsible for developing limit policies. G. . OPERATIONAL RISKS A.g. 6. . . DTC’s Compliance Department is responsible for the application of these policies. If the troubled Participant is a primary market maker or the specialist in an issue or issues. Please describe other controls to mitigate or reduce risks at the SSS. Does the SSS or its participants have the capacity to monitor participants’ accounts continuously during processing? Each DTC Participant has the capability to monitor its own account on a real-time basis. Depending upon the circumstances. Require the Participant to settle its net debit earlier in the day. Does the SSS automatically reject transactions that exceed limits or is compliance determined ex post? DTC’s collateral monitor control systematically reviews each transaction to assure that if completed there will be enough collateral in the accounts of both the deliverer and the receiver to support the net debit of each.

. What is the percentage uptime of the systems used by the SSS? (a) Whole system overall? (b) Broken down by major components (e. On-Time Settlement Performance. The period measured is 8:00 a. These reliability reports include hardware. to 5:00 p. and 5:00 p. DTC conducts self-assessments of the operational reliability of the depository’s computer and other systems. to 5:00 p. with no loss of data. which covers peak Participant use. including communications networks. central processing facility)? (c) During critical processing periods? 2.866%.) for major systems components are as follows -. Outages are .. software applications. How long would it take the SSS to resume operations if primary systems become unusable? DTC maintains an alternate data center and has a state-of-the-art disaster recovery capability.85%.m.other systems used by the SSS. Outages are measured whenever a failure occurs that affects mission-critical systems that in turn delay Participant processing. “Participant Terminal Availability” is defined as the availability of DTC’s Participant Terminal System (PTS) terminal network in Participant locations. “Software Availability” is defined as the ability of DTC’s software to operate without downtime. and reports the monthly results quarterly to the DTC Board of Directors. 99. which covers peak Participant use. DTC has not experienced any major operational problems during the past two years. Software Availability.865%. . including any criteria that the SSS uses internally for this purpose. The period measured is 8:00 a. . Has the SSS experienced major operational problems during the past two years? (a) Have settlements been delayed. Definitions of these metrics follow: . to 5:00 p. The period measured is 8:00 a. Does the SSS have a formal plan for business continuity in place? 2. This capability provides for full recovery of DTC’s entire system within one hour. What are the major elements of the business continuity plan? 5.m. the systems used by DTC were available at a rate of 99. been disrupted or otherwise failed because of operational problems during this period? (b) Please describe the nature of any such problems. B.m.85% overall and 99. Is this plan available for review by participants? 3.865% during critical period processing.g. 1. How often is this plan tested? Does this involve participants in the SSS? 4. “On-Time Settlement Performance” is achieved if settlement cut-off and payment of credits are not later than 15 minutes beyond scheduled times and key prior cut-offs are not 30 minutes late. Please describe contingency or disaster recovery planning at the SSS.m. . Statistics for critical period processing (between 8:00 a. Participant Terminal Availability. 99.Hardware Availability. 99.m. DTC has never experienced a failure in its daily settlement.. 99. in both cases exceeding DTC’s goals.m. on-time settlement performance and terminal systems performance. 1. “Hardware Availability” is defined as the readiness of production system hardware to process deliveries and complete settlement.98%.48 measured whenever a failure occurs that affects mission-critical systems that in turn delay Participant processing.m. communications network.m. Over the period January 2000 through December 2001.. The system uses a remote 75 . which covers peak Participant use.

change controls or those covering remote access)? 1. Extensive physical and environmental control systems are used in both the data centers. The plan addresses a single catastrophic failure. In addition to verification procedures in place permitting Participants to verify that only valid settlement instructions have been received for compared trades. DTC conducts disaster recovery tests for each mission critical operation on an ongoing basis. Testing varies from tabletop testing to actually closing departments and resuming operations at the contingency site. civil disturbance. The details of the disaster recovery plan are not available for review except by DTC’s regulators. the depository has developed a Business Continuity plan. Each weekend DTC tests the system by comparing a portion of the data between the two sites. A command center for monitoring key environmental control systems is staffed 24 hours a day. and possible security breaches. flood.50 C. DTC periodically operates its production system and communications network from its alternate data center. Any potential problems result in an alarm sounding and trigger supervisory intervention.. the back-up mainframe at a secondary site would be initialized for production using a complete duplicate set of production files maintained at the back-up site. All systems activity is 76 . 2. electronic access to DTC’s computers is generally controlled via leased lines and dial-in/call-back networks. or any other contingency affecting its operating premises. Internal systems contingency and disaster recovery testing is conducted weekly. Please describe controls or security procedures in place to ensure that the SSS acts only on authentic settlement instructions from valid participants. What are the key features of the internal controls covering operations and security at the SSS (e. in the event of a disaster at the primary production site data center.g. such as the loss of one building. Backup emergency generators and an uninterrupted power supply are available and tested periodically. New program code is extensively tested through established certification procedures before being moved to the production environment. . this plan is tested on an ongoing basis. the integrity of DTC’s computer processing. The recovery processes are documented and practiced by DTC staff. User ID and password authentication is required in order to help prevent unauthorized transactions from entering DTC systems. to prevent security breaches and to establish accountability for transactions entered. Are internal operational and security controls included in the internal and/or external audits of the SSS? 3. Are internal operational and security controls covered by regulatory requirements applicable to the SSS? Annual risk assessments include the review of DTC’s primary data centers. The plan details how critical operational units would displace less urgent functions in the event the critical operation’s facilities were not available. instantaneous confirmation of recorded transactions is available to Participants through PTS. To ensure its ability to sustain business processes in the event of fire. Access to sensitive PTS functions requires the authorization of a DTC officer.data facility under which mainframe-based disk drives connected to the production mainframe immediately replicate any changes to disk drives on the . DTC also switches primary and alternate processing sites on a quarterly basis thereby testing the disaster recovery processes with every Participant that utilizes the remote access capabilities of the depository.49 back-up system located at a separate site. Thus. seven days a week. Most of the depository’s business processes rely on operational activities as well as computer facilities. In many cases.

An extensive Information Services Security Policy Statement (distributed to all employees annually). The goal of DTC’s internal control structure is to ensure that the integrity of our production systems is never jeopardized. Formal escalation procedures exist for reporting.51 into production. Systems development methodologies. DTC works diligently to eliminate the possibility of access to sensitive data and records by unauthorized users and programs. personal. and . The systems development and maintenance activities also are controlled through the use of a separate test machine. An independent Certification Unit is responsible for transferring all application programs from test to production libraries and source code is recompiled prior to being moved . which addresses key areas of risk associated with Information Services and directs that appropriate actions be taken to minimize risk.logged and is available for reporting purposes as the need arises. In this connection.. organizational structure. How does the SSS ensure that such standards are met on a continuing basis and what sanctions are available to the SSS if they are not? 2. standards and procedures over the certification process have been developed. . SEC technical staff makes annual on-site visits to DTC and confers with DTC staff from time-to-time throughout the year. under which the SEC evaluates various aspects of DTC’s data processing environment. In addition to the authentication and access procedures described above. and violation monitoring. the confidentiality of proprietary. and management participation in implementing the data security policy. communications providers)? 1. Contingency planning processes. . DTC has from time-to-time retained outside consultants to provide independent assessments of DTC’s systems and systems security.52 D. the depository is subject to the SEC’s Automation Review Policy (ARP). company-wide awareness of the need for data security. the continuance of data processing in the event of an emergency. A high-level Security Committee. Capacity planning processes. which helps ensure the accuracy and integrity of company data. including: . . Finally. prevention. . Participants are responsible for reporting to DTC any problems with recorded transactions. How would the SSS allocate losses incurred due to operational problems 77 . For example.g. Unauthorized access is prevented through awareness. Security violation reports are monitored and appropriate follow-up action is taken. In addition to the internal and external audits described above. and other sensitive data. documented and adherence by employees is required. Does the SSS impose minimum operational or performance standards on third parties (e. accountability. Security assessments. the internal control structure includes: . and reported differences are followed up until resolved by DTC personnel. The use of sensitive computer console commands is restricted via a console security system. investigating and resolving attempted security violations. A variety of measures are taken by DTC to protect the Data Center and Communications areas. DTC’s internal operational and security controls are included in the internal and external audits of DTC and are covered by the regulatory requirements applicable to DTC. All securities transactions are included on daily activity statements given to Participants.

DTC will pursue a claim against the vendor.53 EXHIBIT I 78 . Attachments . If DTC’s claim is not fully satisfied. In the event that losses are incurred by the depository as the result of operational problems caused by systems or applications software packages or external data provided by vendors (third parties).caused by third parties? DTC imposes both operational and performance standards on its software vendors as part of its contractual agreements. any remaining losses not covered by DTC’s insurance will be satisfied from DTC’s retained earnings or the Participants Fund. Actual performance against standards is monitored as part of DTC’s ongoing systems reliability analysis and reporting.

5946.16 Ming the Mechanic The NewsLog of Flemming Funch The unknown 20 trillion dollar company 2003-10-30 17:37 13 comments 79 .

well. Now.000. in case it should disappear.and that's the real interesting part . Something to think about. You can even get a job there. well. you needed to get them shipped off to a broker. And you're in reality the beneficiary rather than the owner. It is a private company. It turns out that this company holds 23 trillion dollars in assets.S. banks) who own the Federal Reserve Bank. Some kind of financial service thing. Rather it is because they seem to have a monopoly on what they do. go and take a look at their annual report. and it would be impractical to invest via computer or over the phone. And. the stocks were placed under their "street name". Not that I can vouch for or agree with everything the guy is saying. the average American has no clue that this financial institution is the most powerful banking corporation in the world. but which you should. And . I'm sure that is all well and good. of course. government becomes unable to pay its debts. As it so turns out.000 dollars in assets. DTCC seems like a nice and friendly company.by Flemming Funch There is a busy little private company you probably never have heard about. And if you needed to trade them. In the old days. Now. when you owned stocks you would have the stock certificates lying in your safe. And. And if they all stick to their job.S. they're in the name of the brokerage. How can a private banking trust company hold assets of over $19 trillion and be unknown? In a recent press release dated April 19.000. See their website. and will explain why it is really more practical to do that than to put it in your name. Nowadays that would be considered very cumbersome. if you ask anybody about this. Which is all fine and dandy if everything goes right. Because legally they own them. The problem with that is that it appears that Cede isn't just some dummy name. 23. Looks pretty boring. The general public has no knowledge of what the DTC is or what they do. I. The Unknown $19 Trillion Depository Trust Company by Anthony Wayne Part I of II This exclusive report is a compilation of interviews and background research from October 1995 through April 1999. But if somebody at some point should decide otherwise. who actually knows about it. appear to be legally owned by them. Starts with a nice litte Flash presentation and has a nice message from the CEO. Its name is the Depository Trust & Clearing Corporation. what they typically do is to put the stocks into the name of "Cede and Company" or "Cede & Co" or some such variation. I will include it at the bottom too.S. but an actual corporation that DTCC controls. An fascinating article about this whole thing is here. the Depository Trust Company stated: 80 . they might just not give you your stocks back.e. it is not because DTCC has a nice website and says good things about saving their customers money that they are trusted with that kind of resources. as in thousands of thousands of millions. but they're just holding them in trust and trading them for you. That's trillions. and had 917 trillion dollars worth of transactions in 2002.99% of all stocks in the U. And the broker might tell you that it is just a fictitious name. You'll find very little about it on the net otherwise. 1999. and there's a national U. well. In brief. Instead. So the shortcut was invented that the broker would hold your stocks instead of you.000. emergency and/or the U. owned by the same people (major U. And take a look at the numbers. with a positive slogan and out there to make a little business. but obviously he's been researching this quite a bit. To serve you better. The Depository Trust Company (DTC) is the best kept secret in America. it appears the rules were then changed so the brokers are not allowed any longer to put the stocks in their own name. they will naturally tell you that it is all a formality.S. Headquartered at 55 Water Street in New York City. maybe it is. and just keep the money and your stocks flowing smoothly. And in order for him to legally be able to trade them for you. and some of it is a little whacko. they process the vast majority of all stock transactions in the United States as well as for many other countries.

1999. I brought this matter to the attention of our research assistants at the Christian Common Law Institute [formerly the North Bridge News] and we began our lengthy investigation into the matter. Now. as trustee and power of attorney. We handle the book entry transactions for all banks and brokers. The Federal Reserve Board of Governors is listed. holding nearly $19 trillion in assets for its Participants and their customers. Rose Barnabic of the DTC Finance Department who said that "DTC assets are currently estimated at around $11 trillion". If you're not aware how the system works. banks and brokerage houses. Also.The Depository Trust Company (DTC) is the world's largest securities depository. to transfer original trust assets comprising of common stocks and bonds to a new trust set up in another jurisdiction. as they are more commonly called. During my initial telephone interview. now the Mortgage-Backed Securities Division of the DTC) is owned by the same stockholders as the Federal Reserve System. the can of worms we've opened up should frighten every American. They process all of their book entry settlement transactions. Last year." (* these are not the actual figures quoted in the letter in order to protect the privacy of the account holder. DTC processed over 164 million book-entry deliveries valued at more than $77 trillion. the DTC itself has stated that their assets total "nearly $19 trillion" (see above).. The Federal Reserve Board. "DTC is 35. In November 1995. The Federal Reserve Corporation. We're a private bank for securities. The big question is this. This means they cannot be physically re-registered with a certificate sent to the new trustees.]. It is a limited purpose trust company and is a unit of the Federal Reserve. Just who gave this private bank and trust company such a broad range of financial power and clout? The reason the public doesn't know about DTC is that they're a privately owned depository bank for institutional and brokerage firms only.. after encountering numerous "no comments" and a myriad of "that's not my department" excuses via telephone.P.1% owned by the New York Stock Exchange on behalf of the Exchange's members. at their request. This same Midlantic Bank Assistant V. He said he'd been employed there for 19 years and was "very proud" of his employer. Every bank and brokerage firm must secure their membership with us in case they become insolvent. but they are not the owners. in order to protect her privacy Rights.. "Of the 11 municipal bonds. Jim informed me back then (1995) that "the DTC is the largest limited trust company in the world with assets of $ 9. N. in New Jersey [now PNC Bank. we were asked not to name the Midlantic Assistant V. I eventually spoke with Mr. is also a private company and is not an agency or department of our federal government. Why did anyone feel it was necessary to illegally record our conversation without advising us? Was some federal alphabet agency monitoring DTC calls to safeguard National Security? That in itself is suspicious enough to warrant a big red warning flag. Jim McNeff said "There's no need for the public to know about us. I spoke with Ms. Alan Greenspan. a/k/a The Federal Reserve System. 8 are held in book entry only. you should visit or call a stock broker or bank and instruct them you want to purchase some shares of common 81 . In other words. Yes. After 3 years.. either Jim's employer or some other unknown person or persons were illegally listening or taping our telephone conversation according to the electronic eavesdropping equipment we have installed on our end. let's see how this effects the average working American family. 1995. Jim McNeff who told me his position was Director of Training for the DTC. The DTC is a private bank that processes every stock and bond (paper securities) for all U. As of April 19. this writer was authorized.P. Inc. N. every person who has a stock or bond in their portfolio had better read this report and act on the information we are disclosing here. It is operated by a separate management and has an independent board of directors. so your assets are secure with DTC". Mr. In dealing with the trust department of Midlantic Bank. The FED. the Depository Trust Company is really just a 'front' or a division of the Federal Reserve System. you read that correctly. In July 1998.A. An Assistant Vice President from the Trust & Financial Management Office of Midlantic Bank said to me "it will take at least 6 weeks to do this as the majority of the stocks and bonds are not held in the name of the trust". also stated in a letter dated November 17.A." -New York Stock Exchange. With the advent of reported Y2K computer glitches and the possible collapse of our 'paper asset' economy. it's required by the Federal Reserve that DTC handle all transactions". In disbelief.. according to the 1998 Federal Registry. We respect these requests with full moral compliance). headed by Mr. mandates that the DTC process every securities transaction in the US. It's no wonder that the DTC (including the Participants Trust Company.1 trillion". is nothing more than a liaison advisory panel between the owners and the Federal Government.S. McNeff had also stated "the DTC is a brokerage clearing firm and transfer center.

000 outstanding 8. and they now physically hold (as of April 1999) 99% of all stock and bond book-entrys in their street name. as shown on certificates we have personally examined from numerous certificate holders. and keep them hidden where only you know their location. In the 1980s. by ChaseMellon Shareholder Services. If not. re-register the stocks and bonds in your name (if you still can).000 corporate debt issues. McNeff gave us was correct when he confirmed that Cede Company was a controlled private holding company of the DTC." states Mr. Ridgefield Park. We have now found the following proof that CEDE is real from the Bear Stearns internet site: NEW YORK. or is it really in "trust" if the private Federal Reserve System is technically holding it in their "unknown" entity's name? Obviously. New York . they cannot hold any assets in the customer's name.. McNeff. Remember. we suggest you keep them there. first initiated by Lincoln's debt bonds of 1864? According to Mr. LLC. whom we refer to as participants. Our members are banks and broker/dealers. The DTC's private holding company or street name. The assets must be held in the name of DTC's holding company. New Jersey 07660. If you have stock or bond certificates in your name buried in your back yard or under your mattress. liquidation preference of $25. no bank or broker can place any stock or bond into their firm's own name due to Federal Trade Commission (FTC) and Security and Exchange Commission (SEC) regulations. the DTC was a former member of the New York Stock Exchange (NYSE). for example. including 51.000 equity issues and 170.. not the actual owner's names.000. "Cede Company" or "Cede & Co". is shown as either "CEDE and Company". We also have more than 95% of all municipals on deposit. The broker will place your stock or bond purchase into their safekeeping under a "street name". He was correct since we now know that the NYSE holds 35. upon your buy or sell instructions. McNeff of the DTC. The DTC was created in 1973 as a user-owned cooperative for post-trade settlement.Bear Stearns Finance LLC today announced that it will redeem all of the 6. the Depository Trust Company absolutely controls every paper asset transaction in the United States as well as the majority of overseas transactions. Is this the collateral being held by the private Federal Reserve System to pay off the national debt owed to them by our federal government. but have been unable to get any background information on them. Otherwise. and the payment of the redemption price will be made to Cede & Co. because physical certificates create risk. the "Group of 30" [business leaders] recommended that stock certificates be eliminated. They will set up a brokerage account for you and act as your agent with full durable power of attorney (which you must legally sign over to them) to conduct business on your behalf. you have absolutely no control over them (see Part II of our exclusive research report on the DTC for more information on beneficial ownership status). The Securities Exchange Commission (SEC) issued a concept release in 1994 to 82 .1% of the "ownership" of the DTC on behalf of their NYSE members. CEDE & Co. since your bank or broker can't use their name on the certificate. We have searched every source known to learn who CEDE really is. 1999 . We handle listed and unlisted equities.. they use a fictitious street name. All of the Series A Shares are held by Cede & Co. getting a stock or bond certificate these days is not so easy if possible at all: "For the most part. The banks and brokers are merely custodians for their clients. The broker or bank must then send the transaction to the DTC for ledger posting or book entry settlement under mandate by the Federal Reserve System. Simply put. CUSIP number G09198105.00% Exchangeable Preferred Income Cumulative Shares.. so the DTC transfers the certificates to our own private holding company or nominee name. as nominee of The Depository Trust Company. and "Our sister company is the National Securities Clearing Corporation.00 per Series A Share.March 16. "Since the DTC is a banking trust company. equating to more than 78% of shares outstanding on the New York Stock Exchange (NYSE). That's how DTC has more than $19 trillion dollars of assets in trust. McNeff.stock or a small municipal bond. we can't hold the certificates in our name. it might be very wise to cancel your brokerage account and power of attorney status. Is Cede Company fictitious or is their identity perhaps a larger secret than DTC? We must presume that the information Mr. However. Series A ("EPICS") of Bear Stearns Finance LLC. By federal law (SEC). According to Mr.. if stock and bond certificates you've purchased aren't in your name. as paying agent. then the "holder" (the Federal Reserve System) could theoretically refuse to surrender them back to you under a "national emergency" according to the Trading with the Enemy Act (as amended). issuers know little about the role of the Depository Trust Company (DTC). the NSCC" (they have since merged). whose address is: 85 Challenger Road.

I asked. We are. This is the manifestation of the new international god. Do you remember Black Monday? There were 535 million transactions on Monday.. are electronic computer ledger debit transfers between Federal Reserve System member banks. 1987 -. the New World Order [I prefer the 83 . It coincided with the infamous Regulation CC that purportedly gave us faster three day availability of funds from deposited checks. providing optional direct registration on the books of the issuer instead of a certificate. and 400 million transactions on Tuesday". This is more commonly called a 'cashless transaction'. During my telephone conversation. In attempting to give me an example of how trustworthy the DTC is when I asked him how he could back up such a statement. This means that brokers and banks must get your stock or bond transaction into the street name (Cede & Co.9% that began the great stock market crash of 1929 and foreshadowed the Great Depression. Manager.October 19. But. the Dow Jones Industrial Average (DJIA) went above a record 11. As of May 3. Faith. what not to do. Fed Funds. Just prior to the 1929 stock market crash. That fall far surpassed the one-day loss of 12. Most of us remember a few years back the purported computerized selling of stocks that resulted in Wall Street's "Black Monday": Dow Dives 508. 1996. The Depository Trust Company (1996) Now we're about to reveal to you the most shocking discovery we came across during our research into this matter. 1999.32 Points in Panic on Wall Street "The largest stock-market drop in Wall Street history occurred on "Black Monday" -. After all. brokers transmit instructions to purchase through DTC. No checks or drafts have been allowed from that day. so shares can be delivered electronically. He was very proud to inform me that "DTC cleared every transaction without a single glitch!". the federal government issued a new regulation requiring stock and bond certificate transfers to be cleared in three days instead of the previous five day time period. That's hard to do considering banks claim it takes 3 or more days to clear a check that you've submitted to pay for a stock purchase. 1995. on the brink of the Mother of all economic Depressions. The Dow's 1987 fall also triggered panic selling and similar drops in stock markets worldwide" -Source: Facts on File World News CD ROM The stock exchanges had dramatic record losses. losing 22. and it will be as deliberate and manipulated as the first one that began with the stock market crash of 1929. without a doubt. On June 7.. Was this just one of the planned tests for a Y2K internationally planned worldwide economic meltdown? The Great Depression is about to be repeated.. McNeff was trying to assure me that they [the DTC] have "never lost a certificate or made a mistake in a book ledger transaction". just like the scenario we are experiencing today. With the direct registration system. and a record volume of shares were traded on that infamous Monday in October 1987.. someone has to program a computer to tell it what to do. or a Fedwire. there's a reason for this new regulation and it coincides with the introduction of the new FRS "dollars". We all asked ourselves how computers could have done this by themselves without someone knowing about it. Black Monday was a deliberately manipulated disaster for many Americans at the whim of a controlled test by the DTC.32 points. Will Y2K be a manipulated and deliberate a financial meltdown? Too many facts already support this probability. It's quite obvious that the stock markets are going to 'crash and burn' at some future date and for some 'unknown' reason since the controlled test was so successful. or even when to do or not do it. only Fed Funds will be accepted". he replied "DTC's first controlled test was 4 or 5 years ago. On February 22. McNeff accurately stated.) of the DTC within 3 working days. McNeff. "This is the day that clearing house funds will no longer be accepted for stock or bond transactions" was my reply from Jim.. Corporate Trust Services. Mr. which the issuer or transfer agent then registers.6% of its total value. "What switch?". just as Mr.gradually decrease certificates. Wall Street was posting record prices. What was the purpose of this test? Common sense tells you that you test something before you intend to use it.when the Dow Jones Industrial Average plunged 508. "Instead. Read these quotes again: He stated that Black Monday was a controlled test.000 points." -John D.. record earnings. and record profits. this enhances the portability of shares between transfer agents and brokerage accounts. "the DTC will flip the switch" according to Mr. I call it the reality of the mark of the beast.

bonds. they may be forced to share or relinquish their lifetime of hard-earned wealth. $100 FRB notes issued by the Federal Reserve Bank are being exchanged for new $100 FRS issued by the Federal Reserve System.S. new $20 and $50 FRS's are replacing the older notes as well. and mutual funds. Atlanta. then perhaps they'll cash them in for the federal government's failure to repay the loans that have become way overdue. RR-2449 released May 20. 1998. I told him "yes". The DTC is owned by the private Federal Reserve System owners (Click for a complete list of names). but he ignored my question. Why new paper 'money' and for what purpose? Because the new FRS notes in your pocket can be scanned and whoever scans them can know exactly how much money you have on you. On March 6. the older FRB notes will no longer be 'legal' and there will be a penalty for hoarding them. it looks much like the standard metal detector scanners you walk through at all airports. but much more sophisticated. But. just like we are already under (See further Executive Orders). 1933. When I confirmed that was true. but don't tell me how much". they have now blamed it on the purported drug dealers who are allegedly destroying our currency by money laundering schemes. manufactured by Diebold. The U. In 1995.. then he said "Good. some of Lincoln's gold backed bonds from 1864 have not been repaid yet. to pass legislation allowing pension funds to be used by the government as purported 'loans'. they're out of luck because for the 'good of the nation'. he asked me to walk through what looked like a typical airport scanner. our entire nation is still under the Executive Order declaration of the War Powers Act and in a continual state of national emergency (See Clinton's 1994 Executive Order 12919). we [the former North Bridge News] published that we expected a new national "dollar" emergency to be declared within a year or two. The majority is stored in the impervious rock vaults they own beneath New York City. Congress has attempted... he thanked me and told me to please move on. After saying he would "really appreciate it" if I would help them with a test. Is it any surprise that the DTC physically holds all the remaining non-book entry issued stock and bond certificates in the same place? Technically. CEDE and Company. This is what happened to those Americans holding gold and gold coins after 1933. old U. 84 . These new notes have scanable magnetic platinum encryption on the plastic strips embedded inside the bills. and for a reason.. He looked at a computer screen and said "Do you have a new $100 bill?". Inc. "We are most gratified with the successful introduction of the new $100 and $50 notes and look forward to the same success with the new $20s. This can be done without the consent of Congress under an Executive Order based on the War and Emergency Powers Act and a state of National Emergency. Just like we thought at the time. -U.S.S. Under the War Powers Act.S. Treasury claims this is for "the blind". To me. Since late 1996. wallet or purse no different in theory than a credit card scanner. Where did this gold end up? Into the hands of the Federal Reserve System owners. I participated in a 'test' of this machine at a U. A new feature in the $20 will facilitate the development of convenient scanning devices that could identify the note as a $20. These certificates are technically in the name of DTC's private holding company. It was declared due to the deliberately calculated stock market crash that preceded the Great Depression. Office of Public Affairs. as he introduced himself and flashed his ID quickly in my face so I couldn't read it) if I had any of the new $100 or $50 bills in my pockets. The President can enforce any new emergency at any time under Executive Order or Presidential Directive." Chairman Greenspan said. I tried to ask him how the machine knew that. What people don't realize is that very soon. on no less than two occasions since 1995. For the first time. I looked in my wallet and saw I had one new $100 FRS note. The older FRB notes are not encoded to do this. Treasury Agent. all bullion gold and gold coins were forcibly taken from the hands of private citizens (see New York Times)..term 'New World DISorder' as a more accurate description]. international airport in 1998. I was asked (by who I believe was a U. All the Federal Reserve System has to do is hand it over. what happens to the people counting on those pension fund investments in order to feed themselves in their retirement? Too bad for them. a machine-readable capability has been incorporated for the blind. I took a good look at the scanning system and believe I have now spotted them at Kennedy. No noise. This writer knows firsthand of at least one machine. Consider this my fellow Christian Americans: All pension funds and other institutional 'managed funds' are comprised of paper asset investments such as stocks. President Roosevelt declared a national emergency touted as a "Banking Holiday".S. CEDE. Now. Heck. No beeps. No sound at all. Since the Federal Reserve System already holds our stocks and bonds in their fictitious DTC "street name". Treasury.. (a/k/a InterBold) that scans the money in your pockets.

international gold supplies have been so low that some private Swiss Banks have been paying a premium above the market wholesale value for gold bullion. this amount was estimated by a DTC employee at more than $11 Trillion. Combine that with the new scanner to stop large amounts from entering into the U... and the scenario amounts to a planned shortage of paper FRS notes. and the soon to be astronomical price of gold which most Americans will be forbidden to have or hoard. precious metal prices increase. In 3 1/2 years. Practically. World gold availability on the open market is now at a record low and mining production of gold is also at a record low output.000 if they're really trying to thwart the drug dealers. The Depository Trust Company has grown since October 1995. until you begin to realize that there must be some other hidden agenda: They are apparently going to stop money from entering the U. What happened to 'supply and demand' with gold and silver? Normally. It's already been tested. the banning of the older FRB notes. there isn't one stock or bond issued that is not controlled by the DTC. who supplies raw gold to a major Swiss Banking company smelter and processor The spot gold market has been manipulated to keep the price low so that the Federal Reserve System owners can purchase all that is available through their various trusts and corporations.. The day has come when you must decide to accept or reject the beast and the New World Disorder. the DTC itself has stated in a press release that their asset value is nearly $19 trillion. when supply is high the price decreases. we exposed The Depository Trust Company (DTC) as the Unknown $ 9. excerpts of which were first published in November 1995 by the former North Bridge News. by Anthony Wayne In Part I of this series.000 into the U. 1999.S. This is not speculation.Miami and Los Angeles airports. It appears that our startling discoveries of the inner-workings of the DTC had only scratched the surface. they want to know if someone is carrying more than $10. This is the truth of reality.. People will be at the mercy of the federal government for daily food and for jobs. When supply is low. Perhaps the private FED will peg the new dollar to gold prices. The latest trend over the past ten years is for stock and bond brokers to offer "book-entry ownership" only.. Obviously.S. As of April 19.. just like before. Every book-entry stock or bond is literally owned by the DTC. They control the circulation amounts of paper money in the U. Just ask Jim McNeff of the DTC.1 Trillion Company. The facts we've presented in this report all point to this. Since 1985. Will the President call for the confiscation of all gold bullion and bullion coins as Roosevelt did? Who will end up with it? The Federal Reserve System owners. it is being held for you under a "street name" by the DTC 85 .. Banks issue ATM debit cards and tell you they must charge more for your account if you use a real live human teller instead of the machine. Part II of IIYou don't own your Stocks. the National Securities Clearing Corporation (NSCC) and the Participants Trust Company (PTC) are now merged into the DTC.or any of your Bonds.. Common sense dictates that they should be more concerned about people leaving with more than $10. This was confirmed to us by a gold and diamond mining Chief Executive from Rex Mining in Guinea.S. Checks are soon to be totally phased out. so to speak. their assets increased nearly $ 10 Trillion. Who ends up being the only winner? The Federal Reserve System stockholders.S. The odd part about this is that these machines seem to all be located in the customs areas where you enter the U.S.. That's a lot of stocks and bonds supposedly held in trust. We'd like to add more fuel to this blazing fire by further exposing the DTC and those behind it. once again. As of March 1999. for a reason. What will stocks and bonds purchased with old dollars be worth then? Pennies to the dollar. Since June 1998.The Depository Trust Company does. and their new system works. most bond and many stock issuers have converted from the issuance of certificates to book-entry systems administered and controlled by the DTC. as many experts have already speculated. from a foreign country. West Africa. If you purchase any stock or bond through a broker. On July 1998. The switch is being turned on.

You have the complete control over it. the broker will tell you "why of course you're the Beneficial Owner". it may have been registered in your broker's street name. If you have a book entry stock or bond. you won't be issued a certificate. his stock or bond with his name appearing on the face of the certificate. such as Cede and brokerage firms holding for customers. Over 2/3rds of the shares are registered on LargeCo's books in the name of Cede & Co. 1893. Most of the remainder of LargeCo's stock (26% of the total) is held by the Large family. This is the safest way to own a paper asset. If you don't believe this is true. BENEFICIAL OWNER. and you keep it. not you. you possess it. The fact is. and holds. Cede is a depository company which holds the shares as nominee on behalf of brokerage firms.. the DTC. This is a difficult pill to swallow for those who have placed their assets in stocks and bonds over the past decade. you only have the right to "receive proceeds or other advantages as the beneficiary". The DTC is the legal property-holder.P. Your broker sends you a fancy accounting every month of your purported holdings. however. It's important to note that you have purchased that particular stock or bond without becoming a registered holder of the actual stock or bond certificate. you are the owner. stock-holder. You literally possess the fully registered certificate and only you can transfer or sell it. All book-entry stocks and bonds you purchase make you the beneficial owner. possesses as creditor.: The common stock of LargeCo. we found the following examination question about Cede & Co. view the fund as the owner of the shares it holds and vote the shares themselves. Instead. Instead. 1893. Inc. Cede & Company. The company that issued the certificate has registered the owner's (holder's) name on their official books. under the US Security and Exchange Commission (SEC) rules. and that the remainder of the Cede stock is beneficially owned by several well known mutual funds.A Dictionary of Law. then you'll know the truth. you hold it. The difference between the two is like night and day. which is still actively involved in management. holds and owns your book-entry stock or bond.A Beneficial Owner is nothing more than a beneficiary. owns. The DTC owns that bond or stock. mutual funds. the DTC. you have become a beneficial owner. you are considered the heir presumptive or heir at law to the stock or bond you paid for. By all Rights and definition of law. Take the time to absorb and understand the following definitions: REGISTERED HOLDER. You have it. You are at the mercy of the registered owner. This means that your lawful Rights in that stock or bond are confined to that of a successor or heir. you have been designated by the legal registered owner. Your name appears nowhere on the book entry or certificate as the actual owner.A Registered Holder literally possesses. Morgan's internet site: 86 . who live next door to the Larges in downtown Rome.of your stock or bond. The DTC is the Registered Owner . as the Beneficial Owner. If you're lucky. then call your broker right now and ask them who's name is listed as the Registered Holder of your book-entry stocks and bonds. The brokerage firms in turn are also nominees with respect to some of the shares. According to the DTC. it's registered (as the legal Registered Owner or agent) in their "street name". Rather than in your name. In legal terms. (In the past.holder . which they hold on behalf of their customers. LargeCo is aware that the beneficial owner of about half the stock registered in Cede's name is the Small family. not the registered holder. along with dividend and interest payments paid. share-holder. is publicly traded on the New York Stock Exchange. mutual funds and other active traders. The DTC controls.A Dictionary of Law. You are not the owner. view the customer as the beneficial owner of the shares and consider the customer to be the one with the right to vote the shares. you only receive the benefit of ownership (interest and dividends) without holding title to your property. Nominees. you are the consignee. The owner of a book-entry stock or bond is the entity or name that it is registered under. This is broker language for "your stocks and bonds are held by the DTC in their street name as the creditor". owner and purchaser. but this is no longer allowed). "One who has deposited with a third person an article of property for the benefit of a creditor". From J. He may emphasize to you that the stocks and bonds are being held in "safe keeping" for your own protection.unless you have specifically requested to hold the certificate yourself.. "One who is entitled to the benefit of a contract". At the University of Utah College of Law.

and settlement organization for securities traded in the United States. generally in lots of 100 shares or fewer. it also facilitates annual meetings. The transfer agent handles the record-keeping associated with changes in share ownership. to surrender.. it lists the following as supportive case law.. Registered shareholders are listed directly with the issuer or its U. that's why we are exposing this paper asset scam to you. Large holders. are required to make periodic filings . and 13-D . In the Black's 1951 Fourth Edition.. The point is. typically provide the names of individual investors. 3rd Edition of 1992 If Americans had any idea that they have relinquished the lawful ownership of their stocks and bonds to someone or something else. this may not provide the level of shareholder identification required for a successful investor relations effort. assigned and granted ownership to someone else other than yourself. Generally used to designate the transfer of territory from one government to another". called NOBO for Non-Objecting Beneficial Owner. DTC uses electronic book-entry to facilitate settlement and custody rather than the physical delivery of certificates.Registered and beneficial shareholders There are two types of shareholders: registered. Their name says it all. now that you know the truth. whose ADRs are held by third-parties and are listed under a "nominee" or "street" name. registered. 72.S. we strongly suggest. and investor inquiries. do something about it and get your assets back into your name. Beneficial shareholders.N. the primary safekeeping. The registered list also includes nominee names such as Cede & Co. to assign. Sixth Edition. You have surrendered. Lists of beneficial shareholders who do not object to disclosing their holdings are available from banks and broker-dealers. Registered shareholders are typically individual investors who have physical possession of their share certificates. C. Everyone in the brokerage business keeps pronouncing this name as "See Dee" and Company. including investment managers. These shares are said to be held in street name because they are kept with the DTC in the name of the broker-dealer or the custodian bank . who do not usually disclose their holdings. then promptly call your broker and tell him you want all your securities transferred and re-registered into your name as the Registered Holder and Owner. To help identify institutional investors. See Synonyms at 'relinquish'.C. there would be a revolution.such as 13-F. transfer agent. Which brings us to the street name used. but it's spelled C-E-D-E and pronounced "Seed".with the Securities and Exchange Commission (SEC) disclosing the name and value of the positions in their portfolios. to withdraw. If he says he can't do that because your stock or bond is a book-entry transaction only. the word Cede is defined as "To yield up. 1990. An issuer's depositary bank can provide the identities of registered shareholders on a regular basis. How ironic and sarcastic can they be? "CEDE. distribution of dividend payments. especially by treaty. do not have physical possession of their certificates. 103 Fed.Y. for your own security. clearing. This is where the real irony comes. to grant." -American Heritage Dictionary of the English Language.not the underlying shareholder. issuers use publicly available filings. and beneficial. which can include individual as well as institutional investors. that you sell your book-entry assets 87 . CEDE & Co.. which represent the aggregate position of the Depository Trust Company (DTC). Have you made the connection yet? Your book-entry stocks and bonds and all stock and bond certificates purchased through your broker and held by them under your brokerage account are owned by CEDE & COMPANY (the DTC) as the registered owner. In a sense. These lists. Our suggestion to you is this: If you don't literally have every stock and bond registered certificate in your possession. and designated by the DTC as the registered owner of over $19 Trillion (USD) of our stocks and bonds. According to Black's Law Dictionary. who hold an ADR in physical form. third-party broker-dealers or custodian banks hold their securities on their behalf. However. United States. Goetze v. 13-G.To surrender possession of.

immediately. Don't let the broker tell you that it's "safer" for you if they keep your certificates. Remember, you know the truth. Even if all your stock and bond certificates were burned in a fire, the process to have them replaced is simple. If someone were to steal your certificates, you simply report them stolen to the company that issued them and they're automatically cancelled, just like a stolen credit card. Replacement certificates are then issued to replace the lost or stolen originals. Most people don't realize that when they open a brokerage account, they have entered into an contractural agreement allowing the broker to assign the stocks and bonds to an undisclosed creditor, the DTC. (We suggest you read the small print on your brokerage agreement). This gives the broker your express written permission to place all your securities into the ownership of the DTC. Your broker is an agent for the DTC through mandatory Securities and Exchange Commission regulations and mandates by the Federal Reserve System private bank. Your broker represents them, not you. Your brokerage account is nothing more than a ledger of accounting. It reflects no assets held in your name. The assets are registered in a "street name" that is not you or your name. Sure.... you receive the interest and dividends, but you do so as a beneficiary to the real owner. Your brokerage account in no way, shape, or manner reflects who literally owns your securities. What you own is a brokerage account and nothing more. A greater consideration is just exactly who does the DTC hold these securities for? As the owner, who has the DTC pledged these securities to? Our research points to the Federal Reserve System, an international private banking cartel with major offices found in Moscow, London, Tokyo, and Peking. By treaty with the United Nations and in compliance with the Bretton Woods Agreement, the DTC under regulation of the Federal Reserve System has pledged all those stocks and bonds to the International Monetary Fund (IMF). These are the same paper securities found in your IRA and pension fund accounts, as well as in your brokerage account. Remember, you don't own them.... you're just a beneficiary. The truth is, the securities you purchased and paid for with your hard earned money is collateral for the United Nations which is backed by the Federal Reserve System and it's associated agencies, such as the International Monetary Fund. Is it any wonder that the UN can operate year after year with increasing budgets, but without sufficient funds? The UN has nearly $19 Trillion of backing and reserves, thanks to millions of duped Americans. We are financing the New World Dis-Order with our stocks and bonds. [< Back] [Ming the Mechanic] [Add a comment]

13 comments 31 Oct 2003 @ 14:33 by waalstraat : The way I see it DTC is merely stocking up for our falling............. 31 Oct 2003 @ 17:44 by koravya : Thanks for this Info I appreciate it, and so the Economics students I share it with. Clearly, we all need to know what kind of scenario we may be looking forward to. 6 Nov 2003 @ 09:14 by Stefanti @ : Weak The more I learn about the "free" global economy over the years, the more unbelievable it looks and the more weaker I feel. What to do with the information now? Sell the few shares I hold? This sort of information makes long term planning increasingly difficult. Stefan Thiesen 6 Nov 2003 @ 14:17 by ming : Investing Well, if the little secret mentioned above actually resulted in all stocks being confiscated, the world economy would


crash. So, I don't really think that's what anybody has in mind. More likely it is being used as a collateral. So, I wouldn't really change my investment habits based on this. Diversification is always good, of course, so don't just have stocks. 10 Nov 2003 @ 03:13 by Stefanti @ : Investing Well Ming - what I mean also is that by simply buying stocks, we all seem to hand over incredible power to an organization of tremendous size and with totally dubious goals and no democratic legitimation whatsoever. 10 Nov 2003 @ 05:29 by ming : Handing over power Yeah, but it is worse than that. By just using national currencies for anything whatsoever we all hand over incredible power to essentially the same unelected bunch of people. So, if we are to create an alternative, it would have to cover most aspects of what we need, or you'll just be feeding another arm of the same monster. We'd need an economic system that isn't tied in at all with dollars and the stock market and banks, but that would fill the same needs that are met for us from those. I.e. an easy way of gathering and transporting and storing and exchanging tokens of value. And that is not as unlikely a battle as it might seem. If somebody came up with some expanded PayPal type of scheme that really worked better than the alternatives, and which we could trust, and which was anchored into different bedrock, lots of people wouldn't look back at all. 22 Dec 2003 @ 14:11 by tony @ : dtc/cede Bank deposits appear to be similar to stock "deposits" with cede. Check your state laws. For instance, in MA, funds on general deposit in a bank are the property of the bank. The bank account is the property of the depositor, and the relationship between the depositor and the bank is that of creditor to debtor. If you have your property in the hands of a third party, the third party might unlawfully (without a court order) deprive you of your asset. Of course you can then sue them, if you can still afford to do so! 26 Jun 2004 @ 15:02 by hscott @ : Trying to verify I checked out the DTC annual report and cannot find the numbers you suggest. Their Asset column for 2002 shows $17.9 Billion NOT $23 Trillion as you state. And the Liability column shows approximately the same value, which would make sense if they are holding securities in trust. Where exactly did you get the $23 Trillion dollar number? 26 Jun 2004 @ 16:05 by ming : Verification Glad you're checking it out. Well, part of the trick is that DTC (which handles stock transfers) is a separate company from CEDE (which is the legal owner), but CEDE is a wholly owned subsidiary. The way I understand it. But let me see again where I found the number ... Yeah, the document called DTC Consolidated Financial Statements shows 17.9 billion in assets. I think it was the annual report. Which has changed since last year and now shows the 2003 report. ... So, it says its subsidiaries settled transactions worth $923 trillion, and it says that values of securities on deposit is 24.6 trillion, which sounds like that 23 trillion number for 2003 rather than 2002. Hm, I do seem to remember them saying it more directly, and using the word "assets". But it was in a somewhat promotional piece (like the annual report), where they were bragging about it, rather than in their actual financial statement. Anyway, a key to the argument is what the relation is between DTC and CEDE. If DTC owns CEDE and CEDE legally owns those now 24.6 trillion - that's what's remarkable. Even if everybody involved will say that "oh, it is just a formality, and of course it really is the stock holders' stocks". Oh, even if they didn't own them, it should be major news that they're even holding that amount of stocks for anybody. But the truly earth-shattering part would be the CEDE part. Unfortunately, the relationship between DTC and CEDE, or even the factual existence of CEDE, is based on heresay and rumors. I.e. I haven't seen any documentation of it. And obviously DTC don't even mention CEDE as far as I can see. Even if they do own CEDE, and CEDE does own all the stocks, I don't find it surprising that they can get away with ignoring it in their actual financial statement. If the auditors even knew that, they would probably be quite content with the explanation that, oh, it is just stuff we're temporarily holding, and it is of course all the customer's


money. All seems logical and reasonable. Except for that it isn't, if the legal reality, when it comes down to it, is that they own it and the customers don't. 28 Jun 2004 @ 09:38 by hscott @ : re: verification I understand your concern but from a pure accounting perspective the $23 trillion dollars in assets would be offset by exactly the amount in liabilities such that in terms of book value its a wash. Neither company is "worth" $23 trillion. This facility is absolutely necessary in order to have a liquid marketplace and that liquidity is a big portion of the grease that keeps the machine of our economy moving. The best thing that could be done to stabalize the markets and defend us from bubbles that ultimately burst would be to eliminate the taxation of dividends. If all companies paid dividends, that would be a throttle switch which prevents irrational pricing. PE ratios would be held in check by Dividend Yeilds because stockholders would have two sources of value, the equity value of the stock AND the stream of cash flows from dividends. The lack of dividends by most companies is what creates upward price pressure beyond a rational valuation of a company because that's the only way a person can make a return in the markets. Every trade has a seller who think the stock is capped out and a buyer who thinks it has upside potential. 28 Jun 2004 @ 14:07 by ming : Economy It is probably very useful to have mechanisms like that in the economy. And, I'm sure, normal proper accounting wouldn't count the $23 trillion as an asset, even if it is in CEDE's name some or all of the time. For most people it matters not very much if CEDE owns their stocks, because they let you trade them and get the money. A bit like how most everything else works in the money system. You put your money in the bank without much hesitation, because you expect that you can use it when you feel like it, and most of the time you can. You trust the paper money others give you, even though it is only pieces of paper, because you expect them to convert to stuff you want, any time. But it can also get to look a bit like musical chairs. It is no problem at all as long as the music keeps playing. We hope it doesn't stop, and maybe it won't. But if it does, one might suddenly become painfully aware of a lot of small print one didn't pay attention to. Like that one's stocks are owned by somebody else. And I understand that it works in a very similar way the ownership of real estate and of motor vehicles. I'll have to write about that some other time. But, essentially, unless you have a land patent on your land, it is really owned by a government agency. Which gracefully lets you live there and use it and act like you're buying and selling it. Likewise with a car. There's a certain piece of paper that most people don't know about that the factory sends to the government, unless you insist that they don't and give it to you instead. Which legally (again, just as a formality, to serve you better) gives the government the ownership, so they can then issue you a pink slip which gives you the right to use it, including the ability to transfer that right to somebody else (=selling it). 30 Nov 2004 @ 18:03 by Kent @ : Necessity? Any accountability to me? hscott said: "This facility is absolutely necessary in order to have a liquid marketplace and that liquidity is a big portion of the grease that keeps the machine of our economy moving." Let's assume your premise is correct; does the need also justify ignoring individual investors (me)? While I am not "old", I have been around long enough to know when something is not on the up-and-up. Why avoid me? This clearinghouse has no advocates for the individual investor. Its secondary reason for existence has become that of feeding the financial community whose livelyhood depends upon betting on the future values of stock. Translation: it benefits those who expect something for nothing. See my link above for my frustrating trial with this "necessary facility". 21 Dec 2004 @ 18:42 by di @ : other trillion companies? What information! Thank you for all of the details.

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in the collateral.) Priority [who is first ?] Attachment is paramount. Three elements of law Rules and Regulations. Consent comes from Accord.) Attachment 2. The term does not include investment property or accounts evidenced by an instrument.S.tv opentopia UCC is not law.) Control 3. Title 22 section 286. where did they get ownership ?. Who has first control and attachment ?.) Attachment 2. please type the word you see on the left: Other stories in Information 2005-01-27 23:06: Central banks lose faith in the dollar 2004-12-08 17:10: Art Pad 2004-11-20 17:05: Intellectual Property Protection Act 2004-11-20 15:45: Toulouse sites 2004-10-07 20:25: Every movie ever made 2004-10-07 15:36: Grassroots TV Networking 2004-10-02 17:19: Happiness and dung huts 2004-08-31 23:59: Friendster vs Blogging 2004-08-19 01:51: Reusable Proofs of Work 2004-08-19 01:20: History of Online Communities [< Back] [Ming the Mechanic] þÿ [PermaLink]? [TrackBack]? Link to this article as: http://ming. Must be a Creditor and Debtor. Article 4 is Bank Collections. passbook. just give you the note so I could get a loan of Capital and Interest ? Debtor is defined in Article 9-102 (28) “(A) as a person having an interest [ownership]. where the Birth Certificate is registered is an agency of District of Columbia or United States. Perfection equals filing. Claims court is where common law is. Authority. There has to be a sale or contract under Article 2 before there is a secured interest. Law is remedy. Filing Makes security agreement public filing. remedies are written. Debtor had to have right. Control.) Control 93 . Attachment is the most aspect of UCC. 1. Debtor has Entitlement Rights. Signed shows intent. Under Buck Act all States became an arm of the United States Government. Article 8 Investment or Entitlement Securities. 1-201 (370). other than a security interest or other lien. In order to have attachment rights they must be seller. U. Entitlement is only valid if value has been given. title. time.htm Main Page: ming.) Perfection and 4. it had to be sold to them by debtor. became member of IMF [International Monetary Fund]. Article 5 Letters of Credit.) Entitlement 3. Understand comes from the old French word which means to stand under.” Organic Act of 1871 created District of Columbia and Bureau of Vital Statistics.) Possession 3.) Control [Attachment] 4.) Perfection [Attachment] 2. Entitlement Rights under Article 8 are Four major issues to understand under code as ascertained by Professor Grant Gilmore who wrote the book.php/__show_article/_a000010-000923. When Did bank tell you that you were selling them note ? What did they give to you for note ? Did I. Article 9-102 (29) “Deposit account” means a demand. The Debtor does. Article 2 Sales.tv/flemming2.) Enforcement. the law of admiralty and Article 9 and they are 1. savings. If the Bank gave value where did they get it from ? Debtor collector must have entitlement rights in order to collect a debt. Possession is subject to provisions of Article 4-210. If bank claims ownership. Article 3 Negotiable Instruments. 1. and interest in order to pass it to secured party or creditor.For verification. or similar account maintained with a bank. whether or not the person is an obligor. Article 1 is General Provisions. Agreements are implied. Bank commits deceptive trade practices by pretending to lend you there Capital and Interest or money.

[means the sender of the first payment order in a funds transfer] or Issue under 3-105 (a) of the U. Promissory Note is order for payment. Promissory Note is order to pay. this form under Exhibit 4. Security Intermediary is Bank. NEW YORK.) Priority They have to prove there case or claim. NEW YORK] TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER. whether to a holder or nonholder.. You have to use cut off rule.3 states “UNLESS AND UNTIL IT [PROMISSORY NOTE] IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM. If there is a conflict. Issue of Instrument.. 94 . there is no sale agreement. but Article 8 [Investment Securities] governs this Article. HAS AN INTEREST HEREIN. AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. whether to a holder or nonholder. this Article governs Article 3.C. PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF.C. THE BANK INSURANCE FUND OR ANY GOVERNMENTAL AGENCY.105. being ” the first delivery of an instrument by the maker or drawer. which gives attachment rights. they are subject to those Articles. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO.” All banks file a Registration Statement Form S-3 under the Securities Act of 1933 with the Commodity & Securities Exchange. for the purpose of giving rights on the instrument to any person.4.C. Priority rule is purchaser or bill of sale. (b) How are you entitled to stand here as the Plaintiff ? How can you have a lien on something that was never sold ? Loan Originator Will the real bank please stand up ? All Banks are nothing but a servicer or laundering machine and not Lenders. THESE SECURITIES ARE NOT SAVINGS OR DEPOSIT ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NONBANK SUBSIDIARY OF BANK ONE CORPORATION AND ARE NOT INSURED BY THE FEDERAL DEPOSITORY INSURANCE CORPORATION. ANY TRANSFER. (a) “Issue” means the first delivery of an instrument by the maker or drawer.C. 3. EXCHANGE OR PAYMENT. for the purpose of giving rights on the instrument to any person” and 3-105 (c) “Issuer” issued and unissued instruments and means a maker or drawer of an instrument. CEDE & CO. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY [55 WATER STREET. they are under a pooling and service agreement through a parent Trust Company for transferred Certificated Securities [also known as promissory notes] from you as the Originator under Article 4A-104 of U. Article 3 is governed by Article 4.” Under 4-102 Applicability (a) “To the extent that items [commercial paper] within this Article are also within Articles 3 and 8. Article 4A 104 (c) defines payment order “Originator” means the sender of the first payment order in a funds transfer. THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.

for the purpose of giving rights on the instrument to any person. or any organized groups of persons. manager depositor. or distributor of their securities. such as trusts. Investment Companies must also file a FORM S-3 REGISTRATION STATEMENT under section 12 of the Commodities Securities Exchange Act of 1934 as amended. whether to a holder or nonholder. 4A104. (c) “Issuer” applies to issued and unissued instruments and means a maker or drawer of an instrument. This is true even though such entities have been created under and pursuant to the same indenture of trust or contract of custodianship. investment adviser.Under an indenture agreement the bank is to make interest payments at maturity on the principal to the person in whose name the note or one or more predecessor Securities is registered at the close of business on the Regular Record Date for such interest. made for the purpose of making payment to the beneficiary of the order. In such cases it is the trust. or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities. The term includes any payment order issued by the originator’s bank or an intermediary bank intended to carry out the originator’s payment 95 . notice whereof shall be given to the Holder of this Note not less than 10 days prior to such Special Record Date. unincorporated investment organizations.” This is a reiteration of section 4A104 (c). funds. For purposes of the Act. The word lender is defined in Mortgage Banking terms from the Mortgage Bankers Association as a “person or entity that originates mortgage loans. Funds Transfer-Definitions In this Article: (a) “Funds transfer” means the series of transactions. and has such must file a notification of registration independent of that of the investment company the securities of which constitute its assets. Any such interest not punctually paid or duly provided for shall forthwith cease to be payable to the holder on such Regular Record Date and may either be paid to the person in whose name this note [or one or more Predecessor Securities] is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee. Attention is further directed to the fact that a trust or other form of organization which issues periodic payment plan certificates and the assets of which are securities issued by an investment company is itself an investment company. the fund or other unincorporated entity must file an individual notification of registration. 3-105 (a) “Issue” means the first delivery of an instrument by the marker or drawer. The Investment Company Act of 1940 section 8 (a) requires all investment companies organized or created under the laws of the United States to register with the Securities Exchange Commission by filing a Notification of Registration Form N-8A. or have the same corporate trustee. are regarded as distinct entities. beginning with the originator’s payment order.

(b) “Intermediary bank” means a receiving bank other than the originator’s bank or the beneficiary’s bank. gas. (c) “Originator” means the sender of the first payment order in a funds transfer. committee or other legal entity. or unit type. the term “issuer” means the person by whom the equipment or property is to be used. except that in the case of an unincorporated association which provides by its articles for limited liability of any or all of its members. restricted management. or with respect to certificates of interest or shares in an unincorporated investment trust not having a board of directors (or persons performing similar functioning) or of the fixed. the term “issuer” the person or persons performing the acts and assuming the duties of depositor or manager pursuant to the provisions of the trust or other agreement or instrument under which such securities are issued. except that with respect to equipment-trust certificates or like securities. or collateral-trust certificates. A funds transfer is completed by acceptance by the beneficiary’s bank of a payment order for the benefit of the beneficiary of the originator’s payment order. or in the case of a trust. or such right or of any interest in such right (whether whole or fractional) who creates fractional interests therein for the purpose of public offering.order. Issuer is defined in the Securities Exchange Act of 1933 section 2 (4) as every person who issues or proposes to issue any security. voting-trust certificates. and except that with respect to fractional undivided interests in oil. or (ii) the originator if the originator is a bank. 96 . except with respect to certificates of deposit. (d) “Originator bank” means (i) the receiving bank to which the payment order of the originator is issued if the originator is not a bank.

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