Company Name: Lawrence B. Rabkin, , Esq.
Public Availability Date: Aug. 16, 1982

INQUIRY LETTER

ROSENBLUM, RABKIN, PARISH, BACHLI & BACIGALUPI

TENTH FLOOR, 114 SANSOME STREET

SAN FRANCISCO, CALIFORNIA 94104

(415) 421-8202

June 22, 1982

VIA EXPRESS MAIL

Office of the Chief Counsel

Securities and Exchange Commission

Division of Corporation Finance

500 North Capitol Street

Washington, D.C. 20549

Re: Rule 501(a)(8) of Regulation D

Gentlemen:

We are writing this letter to request confirmation of our interpretation of Rule 501(a)(8) of Regulation D of the General Rules and Regulations under the Securities Act of 1933, as amended (the "Act"). We represent a number of broker-dealers and issuers who are regularly involved in private placements of limited partnership interests. It has been our experience that revocable family trusts are common investors in such programs. These revocable family trusts are typically established by a husband and wife (the "granters") to facilitate the distribution of their estate in the event of the death of either or both of them. In general, during the joint lives of the grantors, the trusts may be revoked at any time by written notice of either grantor. Furthermore, the trusts may be amended at any time by the joint action of the grantors. After the death of the first grantor, the trusts may be revoked or amended at any time by the survivor. Due in part to these characteristics, the Internal Revenue Service has taken the position that the tax benefits of investments made by such trusts pass through to the grantors.

As the beneficiaries interests may be divested at any time by the decision of the grantors to revoke the trust, or altered by their decision to amend the trust, we believe that the beneficiaries should not be deemed to be "equity owners" within the meaning of Rule 501(a)(8) of Regulation D of the General Rules and Regulations under the Act. In our opinion the grantors, for whose benefit the decision to invest will be made, are the sole "equity owners" of the trust. Therefore, it is our opinion that if the grantors qualify as "accredited investors" under either Rule 501(a)(1), (2), (3), (4), (6) or (7), then such a trust would qualify as an entity in which all of the equity owners are accredited investors. Under these circumstances, we are of the opinion that such a trust would be an accredited investor pursuant to Rule 501(a)(8) of Regulation D. For example, if the joint net worth of the grantors, who would be husband and wife, exceeds one million dollars, then we believe the trust, which would be the purchaser of the limited partnership interest, would qualify as an accredited investor.

We request your concurrence in our views that the equity owners of a revocable family trust are the grantors rather than the beneficiaries. Since Regulation D is currently in effect and the interpretation given Rule 501(a)(8) may have a bearing upon the number of subscriptions accepted by the general partners in future programs offered pursuant to Rule 506 of Regulation D, we request that you respond to this letter as quickly as possible.

Very truly yours,

ROSENBLUM, RABKIN, PARISH,

BACHLI & BACIGALUPI

By:

Member of Firm

STAFF REPLY LETTER

JUL 16 1982

RESPONSE OF THE OFFICE OF CHIEF COUNSEL

DIVISION OF CORPORATION FINANCE

Re: Rule 501(a)(8) of Regulation D

Incoming letter dated June 22, 1982

Your letter seeks interpretive advice from this Division as to the application of the definition of "accredited investor" in Rule 501(a)(8) under the 1933 Act to a revocable grantor trust for which the grantor is an "accredited investor."

The revocable grantor trust about which you inquire is established by the grantor, typically a parent, to facilitate the distribution of an estate in the event of death. During the life of the grantor, the trust may be amended or revoked by the grantor, and all the tax benefits of investments made by the trust pass through to the grantor.

On the basis of the facts presented in your letter, this Division is of the view that if each grantor of the revocable grantor trust is an accredited investor under Rule 501(a)(1), (2), (3), (4), (6), or (7), then such trust may be considered an accredited investor under Rule 501(a)(8). This would mean, for instance, that where a husband and wife are grantors and have a joint net worth in excess of one million dollars, the revocable trust for which the husband and wife are grantors would be accredited under Rule 501(a)(8).

Because this position is based upon the representations made to the Division in your letter, it should be noted that any different facts or conditions might require a different conclusion.

Sincerely,

David B. H. Martin, Jr.

Special Counsel