Company Name: Jesse M. Brill, Esq.
Public Availability Date:  Sep. 24, 1979

SEC Staff Response Letter

Jesse M. Brill, Esq.

Assistant General Counsel

Dean Witter Reynolds, Inc.

45 Montgomery Street

P. O. Box 7597

San Francisco, CA 94120

Dear Mr. Brill:

I am responding to your letter of August 8, 1979 requesting confirmation of certain interpretations relating to the Commissions recent interpretive release (No. 33-6099), pertaining to Rule 144.

In regard to the matters raised by you, the Divisions views are as follows:

(1) Non-affiliate trusts and estates which hold non-restricted securities need not comply with the requirements of Rule 144, even though an affiliate is the trustee, executor, or beneficiary. However, as pointed out in Item 9(c) of Release 33-6099, if an affiliate is the trustee or executor of any such trust or estate, the affiliate would have to aggregate his or her personal sales, pursuant to Rule 144(a)(2)(ii) with those of the trust or estate. Moreover, it should be noted that where an affiliate is both the executor or trustee and a beneficiary, the estate or trust would be considered an affiliate subject to the rule.

(2) Aggregation of sales in the trust and estate context is only a one-way street. Thus, as pointed out above, an affiliate who acts as trustee or executor would have to aggregate his or her sales with all sales made by trusts and estates in which the affiliate serves as trustee or executor. But the trusts and estates would not be required to aggregate with sales made by the affiliate, unless the sales by such entities were made in concert with one another.

(3) Pursuant to Rule 144(a)(2)(i), all family members living in the same household as an affiliate are subject to Rule 144 with respect to sales of their securities, and aggregation among all such persons is a two-way street.

(4) Tacking of holding periods will not be permitted with respect to restricted securities that are sold by a settlor to a trust. As pointed out in Item 31 of Release No. 33-6099, however, tacking will be permitted if a settlor donates securities to a trust.

(5) The filing of an amended Form 144 to lock in an increase in trading volume that has occurred during the three-month period since the filing of a prior Form 144 may also be considered the equivalent of a new Form 144 which locks in the trading volume for three months from the date of its filing.

(6) As pointed out in Item 81 of Release 33-6099, a person may cover a Rule 144 short sale against the box position with stock purchased in the open market. However, if the short position is in fact covered with stock acquired in the open market, the restricted securities sold against the box are not cleansed of their restrictions. Thus, such securities would continue to be considered restricted securities.

(7) Tacking of holding periods would be permitted with respect to restricted securities that are transferred to a former spouse as part of a divorce settlement agreement. However, tacking would not be permitted if restricted shares were transferred to the former spouse outside of the settlement agreement in order to satisfy support or other obligations arising from the divorce.

(8) The positions set forth in the staffs letters concerning Weyerhaeuser Company (available 8/26/77), Familian Corporation (available 5/3/76), and Georgia-Pacific Corporation (available 9/24/76) regarding the issuance of additional shares pursuant to a merger or acquisition agreement continue to represent the views of the Division on such matters, notwithstanding any inference to the contrary that might be drawn from Item 30(b) in Release 33-6099. As pointed out in those letters, the holding period for shares issued pursuant to a contingency clause in such an agreement would generally relate back to the closing date of the agreement, unless the shares were issued to fulfill a guarantee of a specific dollar figure on resale of the shares originally issued.

Sincerely,

Peter J. Romeo

Chief Interpretive Counsel

Incoming Letter

INQUIRY LETTER

DEAN WITTER REYNOLDS INC.

45 Montgomery Street, P.O. Box 7597

San Francisco, Ca 94120

(415) 392-7200

August 08, 1979

Mr. Peter J. Romeo

Office of Chief Counsel

Division of Corporation Finance

Securities and Exchange Commission

500 North Capitol Street, N. W.

Washington, D. C. 20549

Dear Mr. Romeo:

The purpose of this letter is to confirm some of the interpretations discussed in our telephone conversation of August 7, 1979 relating to the new Rule 144 Interpretative Release No. 33-6099.

1. Trusts and estates holding non-restricted securities are not deemed affiliates (despite the definition of the term "person" in Rule 144(a)(2)(ii) solely because an affiliate is the trustee, executor, or beneficiary. Thus, such trusts and estates need not comply with any of the requirements of Rule 144. (See Interpretations Nos. (9)(c) and 32(c).

2. Aggregation in the trust and estate context is only a one-way street. That is (absent concerted action), an affiliate who acts as trustee or executor would have to aggregate with his or her sales, all sales made by trusts and estates in which the affiliate serves as trustee or executor. The trusts or estates, however, would not be required to aggregate with sales made by the affiliate. (This is the Staffs position, despite the inference which could be drawn from Interpretation No. (7).)

3. Despite the positions in 1 and 2 above, the definition of "person" in Rule 144(a)(2)(i) still means that all family members living in the same household as an affiliate are required to sell their securities pursuant to Rule 144, and aggregation among all such persons is a two-way street.

4. The interpretation set forth in Interpretation No. (31)(b) relating to private sales is the Staffs current position and the positions set forth in The Chesapeake Corporation of Virginia, avail. October 6, 1978, is no longer the Staffs position.

5. The interpretation set forth in Interpretation No. (39) which permits the filing of an amended Form 144 to "lock in" an increase in trading volume, in fact, permits the filing of a new Form 144 which would lock in the trading volume for three months from the date of filing of the new Form 144.

6. The position set forth in Shearson Hayden Stone, Inc., avail. January 21, 1979. CCH Para. 82,026, a person may cover a Rule 144 short sale against the box position with stock purchased in the open market is the Staffs position. However, the impression which may have been conveyed in the Shearson letter that the restricted securities sold against the box are cleansed of all restrictions, when the short position is covered with stock purchased in the open market is not correct. The restricted securities would retain their restrictions. This position is consistent with the position taken in Interpretation No. (76).

7. I am also enclosing a copy of the Cray Research, Inc. interpretative letter which, in turn, refers to the Scan-Optics Inc. letter, avail. September 15, 1977, relating to the use of restricted and control securities to satisfy alimony and support obligations.

8. I respectfully suggest that the Staff give additional consideration to the interpretation set forth in Interpretation No. (30)(b) in light of (a) Rule 144(d)(4)(C); (b) the Weverhauser and Georgia Pacific letters summarized on the attached pages, and (c) the practical problems which would arise with respect to several outstanding merger and acquisition agreements with similar provisions, made in reliance upon the express language in Rule 144 (d)(4)(C) and the Staff positions in the Weverhauser and Georgia Pacific letters.

Lastly, the Rule 144 Interpretative Release represents a yeoman effort on the part of the Staff to codify and re-examine the interpretations issued by the Staff over the past several years. You and your colleagues are to be congratulated for such an undertaking and for the Interpretative Release itself.

Sincerely,

Jesse M. Brill

Assistant General Counsel