December 9, 2004
Mr. James Dilworth
Re: Denial of No-Action Request of Dilworth Capital Management, LLC
Dear Mr. Dilworth:
In your letter dated November 12, 2004, on behalf of Dilworth Capital Management, LLC ("Dilworth Capital"), you request assurances that the Division of Market Regulation ("Division") would not recommend enforcement action to the Commission under Section 15(a) of the Securities Exchange Act of 1934 ("Exchange Act") if Dilworth Capital engages in the activities described in your letter without registering as a broker-dealer in accordance with Section 15(b) of the Exchange Act.
Based on the facts and representations set forth in your letter, the Division is unable to assure you that it would not recommend enforcement action to the Commission if Dilworth Capital engages in the proposed activities without registering as a broker-dealer. We note particularly that an entity or natural person located in the United States that directs broker-dealer activity towards foreign investors located outside the United States is not exempt from the registration requirements of Section 15 of the Exchange Act.1 Similarly, an entity or natural person that directs broker-dealer activity exclusively towards institutional investors is not exempt from the registration requirements of Section 15 of the Exchange Act.2
We express no view with respect to other questions Dilworth Capital's proposed activities may raise, including the applicability of any other provision of the federal securities laws, any state law, or any self-regulatory organization rules. Before engaging in the activities described in your letter, you should consult with private counsel familiar with the federal securities laws to obtain legal advice as to how the above issues should be resolved in your particular circumstances. Private counsel would be in a position to advise you on the basis of a more thorough understanding of your proposed activities. In the event you and your counsel determine that you need a staff letter with respect to your proposed activities, your formal request should be submitted in accordance with Securities Act Release No. 6269, a copy of which is enclosed.
Brian A. Bussey
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