Company Name: Diagnostic Data Inc.
Public Availability Date: Feb. 18, 1977

[INQUIRY LETTER]

Diagnostic Data, Inc.

518 Logue Avenue

Mountain View, California 94043

(415) 964-7676

December 29, 1976

Securities and Exchange Commission

500 N. Capital Street

N.W. Washington, D.C. 20549

Gentlemen:

As President of this company, I readily understand that I am subject to Rule 144 and have no misunderstanding regarding this fact.

My youngest son, who lives and works in Massachusetts, recently had a new daughter and I gave him 400 shares of registered Diagnostic Data stock which I had purchased in the open market some eight years ago. The transfer agent insists that this gift stock must now have a legend as restricted securities in the hands of my married and independent son under Rule 144 (a)(3).

Such a restrictive interpretation of your regulations is inconceivable to me and I would like an official ruling from the SEC regarding this matter.

Your early response will be appreciated.

Sincerely,

M. G. Smith

President

MGS:JF

[STAFF REPLY LETTER]

Mr. M. G. Smith

President

Diagnostic Data Inc.

518 Logue Avenue

Mountain View, California 94043

Re: Diagnostic Data Inc.

Dear Mr. Smith:

This is in response to your letter of December 29, 1976, requesting an interpretation under Rule 144 of the Securities Act of 1933. You state that you have recently given 400 shares of Diagnostic Data Inc. (the "company") stock to your son, and that you are an "affiliate" of the company within the meaning of Rule 144. You question whether or not these shares are "restricted securities".

It is this Division's view that your son would be deemed to hold "restricted securities" within the meaning of Rule 144(a)(3) inasmuch as they have been acquired from an affiliates of the issuer in a transaction not involving any public offering. However, under Rule 144(e), stock acquired by gift is deemed to have been acquired by the donee when it was acquired by the donor. It would appear your son has met the two year holding requirement of Rule 144, and therefore could sell the stock pursuant to Rule 144 assuming the conditions to its use are met.

Sincerely,

Norman Schou

Special Counsel