==========================================START OF PAGE 1======

SECURITIES AND EXCHANGE COMMISSION

[Release No. 33-7413, File No. S7-15-97]

Securities Uniformity; Annual Conference on
Uniformity of Securities Laws 

AGENCY:  Securities and Exchange Commission.

ACTION:  Publication of release announcing issues to be

considered at a conference on uniformity of securities laws and

requesting written comments. 

SUMMARY:  In conjunction with a conference to be held on April

28, 1997, the Commission and the North American Securities

Administrators Association, Inc. today announced a request for

comments on the proposed agenda for the conference.  This meeting

is intended to carry out the policies and purposes of section

19(c) of the Securities Act of 1933, adopted as part of the Small

Business Investment Incentive Act of 1980, to increase uniformity

in matters concerning state and federal regulation of securities,

to maximize the effectiveness of securities regulation in

promoting investor protection, and to reduce burdens on capital

formation through increased cooperation between the Commission

and the state securities regulatory authorities.

DATES:  The conference will be held on April 28, 1997.  Written

comments must be received on or before April 23, 1997 in order to

be considered by the conference participants.

ADDRESSES:  Written comments should be submitted in triplicate by

April 23, 1997 to Jonathan G. Katz, Secretary, Securities and

Exchange Commission, 450 5th Street, N.W., Washington, D.C. 

20549.  Comments also may be submitted electronically at the
==========================================START OF PAGE 2======

following E-mail address: rule-comments@sec.gov.  Comments should

refer to File No. S7-15-97; this file number should be included

on the subject line if E-mail is used.  Comment letters will be

available for public inspection at the Commission's Public

Reference Room, 450 5th Street, N.W., Washington, D.C.  20549. 

Electronically submitted comment letters will be posted on the

Commission's internet web site (http://www.sec.gov).

FOR FURTHER INFORMATION CONTACT:  John D. Reynolds or Richard K.

Wulff, Office of Small Business Review, Division of Corporation

Finance, Securities and Exchange Commission, 450 5th Street,

N.W., Washington, D.C.  20549, (202) 942-2950.

SUPPLEMENTARY INFORMATION:

I.   Discussion

     A dual system of federal-state securities regulation has

existed since the adoption of the federal regulatory structure in

the Securities Act of 1933 (the "Securities Act"). -[1]- 

Issuers attempting to raise capital through securities offerings,

as well as participants in the secondary trading markets, are

responsible for complying with the federal securities laws as

well as all applicable state laws and regulations.  It has long

been recognized that there is a need to increase uniformity

between federal and state regulatory systems, and to improve

cooperation among those regulatory bodies so that capital

formation can be made easier while investor protections are


---------FOOTNOTES----------
     -[1]-     15 U.S.C. 77a et seq.
==========================================START OF PAGE 3======

retained.

     The importance of facilitating greater uniformity in

securities regulation was endorsed by Congress with the enactment

of section 19(c) of the Securities Act in the Small Business

Investment Incentive Act of 1980. -[2]-  Section 19(c)

authorizes the Commission to cooperate with any association of

state securities regulators which can assist in carrying out the

declared policy and purpose of section 19(c).  The policy of that

section is that there should be greater federal and state

cooperation in securities matters, including:  (1) maximum

effectiveness of regulation; (2) maximum uniformity in federal

and state standards; (3) minimum interference with the business

of capital formation; and (4) a substantial reduction in costs

and paperwork to diminish the burdens of raising investment

capital, particularly by small business, and a reduction in the

costs of the administration of the government programs involved. 

In order to establish methods to accomplish these goals, the

Commission is required to conduct an annual conference.  The 1997

meeting will be the fourteenth such conference.

     Recently, Congress has examined the system of dual federal

and state securities regulation and the effects of such dual

regulation on the nation's securities markets.  During this

process, Congress considered the need for regulatory changes to

promote capital formation, eliminate duplicative regulation,


---------FOOTNOTES----------
     -[2]-     Pub. L. 96-477, 94 Stat. 2275 (October 21, 1980).
==========================================START OF PAGE 4======

decrease the cost of capital and encourage competition, while at

the same time promoting investor protection.  These efforts

resulted in passage of The National Securities Markets

Improvement Act of 1996 -[3]- (the "1996 Act"), which was

signed by President Clinton on October 11, 1996.  The 1996 Act

contains significant provisions that realign the regulatory

partnership between federal and state regulators.  The

legislation reallocates responsibility for regulation of the

nation's securities markets between the federal government and

the states in order to eliminate duplicative costs and burdens

and improve efficiency, while preserving investor protections. 

The 1996 Act addresses regulation applicable to securities

offerings, investment companies and advisers and broker-dealers.

II.  1997 Conference

     The Commission and the North American Securities

Administrators Association, Inc. ("NASAA") -[4]- are

planning the 1997 Conference on Federal-State Securities

Regulation (the "Conference") to be held April 28, 1997 in

Washington, D.C.  At the Conference, representatives from the

Commission and NASAA will form into working groups in the areas

of corporation finance, market regulation and oversight,

---------FOOTNOTES----------
     -[3]-     Pub. L.  104-290,  110  Stat.  3416  (October  11,
1996).


     -[4]-     NASAA is an association of securities
               administrators from each of the 50 states, the
               District of Columbia, Puerto Rico, Mexico and
               twelve Canadian Provinces and Territories.
 
==========================================START OF PAGE 5======

investment management, and enforcement, to discuss methods of

enhancing cooperation in securities matters in order to improve

the efficiency and effectiveness of federal and state securities

regulation.  Generally, attendance will be limited to

representatives of the Commission and NASAA in an effort to

promote frank discussion.  However, each working group in its

discretion may invite certain self-regulatory organizations to

attend and participate in certain sessions.

     Representatives of the Commission and NASAA currently are

formulating an agenda for the Conference.  As part of that

process the public, securities associations, self-regulatory

organizations, agencies, and private organizations are invited to

participate through the submission of written comments on the

issues set forth below.  In addition, comment is requested on

other appropriate subjects sought to be included in the

Conference agenda.  All comments will be considered by the

Conference attendees.

III. Tentative Agenda and Request for Comments

     The tentative agenda for the Conference consists of the

following topics in the areas of corporation finance, investment

management, market regulation and oversight, and enforcement.  

(1)  CORPORATION FINANCE ISSUES

     A.   Uniformity of Regulation

     The 1996 Act amended Section 18 of the Securities Act
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-[5]- to preempt state blue-sky registration of securities

offerings of "covered securities" -[6]- and prohibit state

reviews of offerings of covered securities. -[7]-  The

definition of covered securities does not include the following

which, therefore, remain subject to state registration

requirements:

     -    securities quoted on the Nasdaq SmallCap market;

     -    securities quoted on the Nasdaq over-the-counter
          Electronic Bulletin Board;

     -    securities quoted on the over-the-counter "pink
          sheets;" 

     -    securities listed on national securities exchanges
          other than the NYSE or AMEX (unless the Commission
          determines by rule that the listing standards of such
          exchanges are substantially similar to the listing
          standards of the NYSE, AMEX, or Nasdaq/NMS);

     -    various investment grade securities, such as asset-
          backed and mortgage-backed securities, since these
          securities usually are not listed on a national
          exchange or Nasdaq/NMS;  

     -    private placements of securities under Section 4(2) of
          the Securities Act that do not meet the requirements of




---------FOOTNOTES----------
     -[5]-     15 U.S.C. 77r.


     -[6]-     15  U.S.C.  77r(b).     "Covered  securities"  are
               defined  in  Section  18.     The  term  generally
               includes New York  Stock Exchange, Inc.  ("NYSE"),
               American Stock Exchange,  Inc. ("AMEX") and Nasdaq
               National Market  System ("Nasdaq/NMS") securities,
               registered   investment  company   securities  and
               specified exempt securities and offerings.


     -[7]-     15 U.S.C. 77r(a).
==========================================START OF PAGE 7======

          Rule 506 of Regulation D; -[8]- and

     -    securities offered in reliance upon Commission rules
          adopted under Section 3(b) of the Securities Act, e.g.,
          offerings that are exempt from registration with the
          Commission under Regulation A -[9]- and Rules 504
          and 505 of Regulation D.

In addition, with respect to offerings of covered securities

(other than listed securities), the states retain the authority

to require specified fee payments and/or notice filings.  The

states' continuing authority to regulate certain offerings and to

require other filings and fees continues the need for uniformity

between the federal and state registration systems where

consistent with investor protection.  

     The 1996 Act requires the Commission to conduct a study as

to the extent to which uniformity of state regulatory

requirements for securities and securities transactions that are

not covered securities has been achieved. -[10]-  The

Commission is instructed to consult with the states as well as

issuers, brokers and dealers in conducting this study.  The

results of the study are to be reported to Congress within a year

following the enactment of the 1996 Act.  The Commission and

NASAA will discuss the nature and extent of uniformity at present

and discuss steps to increase uniformity in light of the 1996


---------FOOTNOTES----------
     -[8]-     17 CFR 230.501 through 230.508.


     -[9]-     17 CFR 230.251 through 230.263.


     -[10]-    Section 102(b) of 1996 Act.
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Act.

     B.   Sales to Qualified Purchasers under the 1996 Act

     Section 18 of the Securities Act, as amended by the 1996

Act, excludes from state regulation and review securities

offerings to purchasers who are defined by Commission rules to be

"qualified purchasers." -[11]-  A security sold to a

"qualified purchaser" is a "covered security" subject to the same

new regulatory approach as other covered securities as described

above.  The Commission will be undertaking rulemaking to define

"qualified purchaser" for this purpose, and will discuss with

NASAA the appropriate criteria for this definition.

     C.   Commission Exemptive Authority

     The 1996 Act added new Section 28 to the Securities Act

granting the Commission extensive general authority to craft

exemptions from the Securities Act to the extent that such

exemptions are necessary or appropriate in the public interest

and consistent with the protection of investors. -[12]- 

This new authority permits the Commission to adopt rules which

exempt any person, security or transaction, or any classes

thereof, from one or more of the provisions of the Securities

Act.  The Commission is authorized to adopt conditions for the

availability of such exemptions or, if deemed appropriate, adopt

unconditional exemptions.  The Commission and NASAA will discuss

---------FOOTNOTES----------
     -[11]-    15 U.S.C. 77r(b)(3).


     -[12]-    15 U.S.C. 77z-3.
==========================================START OF PAGE 9======

the nature and extent of appropriate exemptions that may be

adopted under the Commission's new authority and the appropriate

criteria of and conditions to such exemptions.  In this regard,

the definition of covered securities does not encompass

securities issued pursuant to exemptions under new Section 28. 

Accordingly, securities or transactions determined to be exempt

under Commission rules adopted pursuant to new section 28 may be

subject to state regulation and review.  The conferees will

discuss how offerings exempted under new Section 28 may be

regulated in a uniform manner under state securities laws to the

greatest possible extent, consistent with investor protection.  

     D.   Small Business Initiatives

     During 1996 the Commission adopted and revised rules to

provide additional assistance to small business.  On May 1, 1996,

the Commission adopted Rule 1001, a new Securities Act Section

3(b) exemption from the registration requirements of the federal

securities laws. -[13]-  Under the exemption, offers and

sales of securities, in amounts of up to $5 million, that satisfy

the conditions of a 1994 exemption from California state

qualification requirements (Section 25102(n) of the California

Corporations Code) are exempt from federal registration.  Also on

May 1, 1996, the Commission adopted amendments to certain rules

---------FOOTNOTES----------
     -[13]-    Securities Act Release No.  7285 (May 1, 1996) [61
FR 21356].
==========================================START OF PAGE 10======

under the Securities Exchange Act of 1934 -[14]- ("Exchange

Act") that raised the asset threshold for when a company must

become a "public" reporting company from $5 million to $10

million. -[15]-  

     On February 20, 1997, the Commission adopted amendments to

the holding period requirements contained in Rule 144 under the

Securities Act. -[16]-  Rule 144 provides a Securities Act

registration safe harbor for resales of securities by persons who

hold either "restricted" securities or securities of a company of

which they are affiliates.  "Restricted" securities generally

include securities issued in offerings under certain exemptions

from federal registration.  The amendments permit the resale of

limited amounts of restricted securities after a one-year, rather

than the previous two-year, holding period.  In addition, the

amendments permit unlimited resales of restricted securities by

non-affiliates after a holding period of two years, rather than

the previous three-year period.  The Commission believes that

these changes will reduce the cost of private capital formation

and especially benefit small businesses, without reducing

investor protections.  In a companion release, the Commission

proposed certain changes to Rule 144 to simplify the rule's

---------FOOTNOTES----------
     -[14]-    15 U.S.C. 78a et seq.


     -[15]-    Securities Exchange Act Release No. 37157  (May 1,
               1996) [61 FR 21354].


     -[16]-    Securities  Act  Release  No. 7390  (February  20,
1997) [62 FR 9242].
==========================================START OF PAGE 11======

operation and solicited comments on additional changes to Rule

144. -[17]-  

     Also on February 20, 1997, the Commission proposed

amendments to Rule 430A to permit certain smaller or less

seasoned reporting companies to price securities on a delayed

basis after effectiveness of a registration statement, if they

meet specified conditions. -[18]-  The proposals are

intended to provide flexibility and efficiency to qualified

registrants, enabling them to time their offerings to

advantageous market conditions, consistent with investor

protection. 

     The participants will discuss the impact of the recent

Commission rule changes and the need for any additional exemptive

relief in the small business area.  Conferees will consider the

recent proposals and discuss the effects of such proposals, if

adopted, on small business and public investors.    

     During the fall of 1996, the Commission began meeting with

small businesses in town hall meetings conducted throughout the

United States.  These town hall meetings are intended to provide

basic information to small businesses about fundamental

requirements that must be addressed when they wish to raise

capital through the public sale of securities.  In addition, the

---------FOOTNOTES----------
     -[17]-    Securities  Act  Release  No.  7391  (February 20,
               1997) [62 FR 9246].


     -[18]-    Securities  Act Release  No.  7393  (February  20,
               1997) [62 FR 9276].
==========================================START OF PAGE 12======

Commission has learned and will continue to learn more about the

concerns and problems facing small businesses in raising capital

so that initiatives and programs can be designed to meet their

needs, consistent with the protection of investors.  To date, the

Commission has held six town hall meetings attended by more than

1,000 small business persons.  The Commission representatives

will share information and ideas obtained from these meetings

with conference participants.

     E.   Securities Act Concept Release

     The Commission issued a concept release during 1996 to

solicit comment on the best means of improving the regulation of

the capital formation process while maintaining or enhancing

investor protection. -[19]-  The Commission has been

engaged in a broad reexamination of the regulatory framework for

the offer and sale of securities under the Securities Act.

     The concept release solicited comment on different

approaches, such as:  the recommendation of the Advisory

Committee on the Capital Formation and Regulatory Processes that

a "company registration" approach be adopted; modifications to

the existing shelf registration system (many of which were

recommended by the Commission's Task Force on Disclosure

Simplification); reforms that would liberalize the treatment of

unregistered securities; and an approach that would involve

deregulation of offers.  Comment also was requested with regard


---------FOOTNOTES----------
     -[19]-    Securities  Act Release  No. 7314 (July  25, 1996)
[61 FR 40044].
==========================================START OF PAGE 13======

to any other approaches that should be considered.  The comment

period ended October 31, 1996.  The participants will discuss the

conceptual issues raised by the release and the comments received

in response to such release and consider the changes that should

be made in the regulation of securities offerings.

     F.   Report of the Advisory Committee on the Capital         
          Formation and Regulatory Processes 

     On July 24, 1996, the Advisory Committee on the Capital

Formation and Regulatory Processes (the "Advisory Committee")

presented its report to the Commission recommending the adoption

of a company registration system.  The Advisory Committee

recommended a fundamental conceptual change in the scheme of

regulation governing offerings by public companies.  The Advisory

Committee advised the Commission to shift the focus of the

regulatory process for public offerings of securities by these

companies from a transactional registration system to a company

registration system, beginning with a pilot program.  As a part

of this new approach, the Advisory Committee recommended

enhancements to the Exchange Act periodic reporting requirements.

The participants will consider the recommendations proposed by

the Advisory Committee, including the impact of such conceptual

changes on the coordination of federal and state securities

regulation.

     G.   Disclosure Simplification

     On March 5, 1996, the Commission published the Report of the

Task Force on Disclosure Simplification (the "Task Force

Report").  The Task Force Report includes several recommendations
==========================================START OF PAGE 14======

intended to reduce the costs of raising capital by both smaller

and seasoned companies.  In addition, the Task Force Report

includes a discussion of the ongoing debate regarding the need to

adapt existing Securities Act requirements and related concepts

to current market conditions.  Since publication of the Task

Force Report, the Commission initiated implementation of certain

of the recommendations by eliminating 45 rules and four forms

that were viewed as redundant or otherwise no longer necessary

-[20]- and published proposals to implement additional

recommendations to eliminate unnecessary requirements and

streamline the disclosure process. -[21]-

     The conference participants will discuss the findings and

recommendations of the Task Force Report and consider the

Commission's proposals that would implement certain

recommendations.  Conferees will consider how the Commission's

proposals, if adopted, would impact the system of dual federal

and state regulation.

     H.   Plain English

     One of major concerns of the Task Force on Disclosure

Simplification was the lack of readability of prospectuses and

other disclosure documents.  The Task Force Report criticized

prospectuses for their dense writing, legal boilerplate and

---------FOOTNOTES----------
     -[20]-    Securities Act Release No. 7300 (May 31, 1996) [61
FR 30397].


     -[21]-    Securities Act Release No. 7301 (May 31, 1996) [61
FR 30405].
==========================================START OF PAGE 15======

repetitive disclosures and recommended using plain English

disclosure to improve the readability of prospectuses.  The

Commission on January 14, 1997 proposed several rule amendments

that would be a first step in implementing the Task Force's

recommendation. -[22]-  The proposals require the use of

plain English writing principles when drafting the front part of

prospectuses -- the cover page, summary and risk factors sections

of these documents.   Concurrently with the issuance of the plain

English proposal, the Commission's Office of Investor Education

and Assistance issued a draft copy of a handbook to help issuers

write plain English documents.  

     The Division of Corporation Finance is operating a pilot

program for companies that want to draft their documents in plain

English.  The Division's staff works with volunteers on the

techniques for designing and writing plain English documents

filed under either the Securities Act or the Exchange Act.  The

company participants can draft plain English documents and submit

them to the staff for suggestions and comments in a nonpublic

forum.  

     Conferees will discuss the Plain English initiative,

including federal and state coordination needed to facilitate

implementation of the initiative.

     I.   Electronic Delivery of Disclosure Documents

     The Commission has issued interpretive releases and rules

---------FOOTNOTES----------
     -[22]-    Securities Act Release No. 7380 (January 14, 1997)
               [62 FR 3152].
==========================================START OF PAGE 16======

addressing the use of electronic media to deliver or transmit

information under the federal securities laws. -[23]- 

These initiatives reflect the Commission's continuing recognition

of the benefits that electronic technology provides to the

financial markets.  These releases are premised on the belief

that the use of electronic media should be at least an equal

alternative to the use of paper delivery. 

     The participants will discuss the impact of electronic

technology on the capital formation process and consider the

nature and extent of regulatory changes to accommodate the use of

such technology in securities offerings.  In particular,

conferees will consider the various approaches that have been

taken by states and the Commission relative to securities

offerings on the Internet.

     J.   Internationalization of the Securities Markets

          1.   Foreign Issuers in the U.S. Market

     Foreign companies raising funds from the public or having

their securities traded on a national exchange or the Nasdaq

Stock Market are generally subject to the registration

requirements of the Securities Act and the registration and

reporting requirements of the Exchange Act.  The Commission has

provided a separate integrated disclosure system for foreign

private issuers that provides a number of accommodations to
---------FOOTNOTES----------
     -[23]-    Securities Act Release No. 7233 (October 6,  1995)
               [60  FR 53458],  Securities Act  Release No.  7289
               (May 9, 1996) [61 FR 24652].
==========================================START OF PAGE 17======

foreign practices and policies.  Foreign companies conducting

securities offerings in the U.S. continue to be subject to state

regulation and review unless the securities being offered are

"covered securities" within the meaning of the 1996 Act.  The

participants will discuss steps to increase coordination of

federal and state treatment of multinational offerings.

          2.   Regulation S

     In 1990, the Commission adopted Regulation S -[24]- to

clarify the extraterritorial application of the registration

requirements of the Securities Act.  The Commission intended for

Regulation S to make clear that registration of an offering of

securities under the Securities Act would not be required where

the offering takes place outside the United States and the

securities offered come to rest offshore.  Following the adoption

of Regulation S, the Commission became aware of certain abusive

practices under the regulation.  The Commission issued a release

on February 20, 1997 proposing revisions to Regulation S to

prevent those abusive practices. -[25]-  The proposals

include lengthening the restricted period during which persons

relying on the Regulation S safe harbor may not sell equity

securities into the United States from 40 days to two years

(absent registration or a valid exemption) and classifying equity

---------FOOTNOTES----------
     -[24]-    17 CFR  230.901  through 230.904  and  Preliminary
Notes.


     -[25]-    Securities  Act Release  No.  7392  (February  20,
               1997) [62 FR 9258].
==========================================START OF PAGE 18======

securities placed offshore pursuant to Regulation S as

"restricted securities" under Rule 144.  The proposals would

apply to offshore sales of equity securities of domestic issuers

and of foreign issuers where the principal market for those

securities is the United States.

     Conferees will discuss the proposed changes to Regulation S, 

share their experiences with Regulation S offerings and discuss

steps to increase coordination of federal and state regulation of

such offerings.

(2)  MARKET REGULATION ISSUES

     A.   National Securities Markets Improvement Act of 1996

          1.   State Licensing Requirements

     The 1996 Act directed the Commission to conduct a study of

the impact of disparate state licensing requirements on

associated persons of registered broker-dealers and the methods

for states to attain uniform licensing requirements for such

persons.  The Commission is required to consult with the self-

regulatory organizations ("SROs") and the states, and to prepare

and submit a report to Congress by October 11, 1997.  To this

end, Commission staff have been consulting with the SROs, NASAA,

and members of the securities industry.  The initial goal is to

determine the extent to which state licensing requirements differ

and the effect of different state requirements and procedures

upon associated persons and broker-dealers.  The next phase of

the study will be to analyze the need for and feasibility of

requiring uniform state requirements (through legislation or
==========================================START OF PAGE 19======

other means).  The participants will discuss the status of the

study at the conference.

          2.   State Requirements for 
               Exchange-Listed Securities

     As noted above, the 1996 Act amended Section 18 of the

Securities Act to provide an exemption from state blue sky laws

and regulations for securities that are listed on the NYSE, the

AMEX, and the Nasdaq/NMS.  The amendments to Section 18 also

allow the Commission by rule to designate securities listed on

other national securities exchanges as exempt from state blue sky

laws and regulations if the applicable listing standards are

substantially similar to those of the NYSE, AMEX, or Nasdaq/NMS. 

Section 18 allows the Commission to adopt such a rule on its own

initiative or in response to a rulemaking petition.  The

Commission has received rulemaking petitions from the Pacific

Stock Exchange, Inc., the Chicago Board Options Exchange, Inc.,

and the Chicago Stock Exchange, Inc.  The participants will

discuss these proposals and their potential impact on NASAA

members.

          3.   Broker-Dealer Books and Records

     Section 103 of the 1996 Act prohibits any state from

imposing broker-dealer books and records requirements that are

different from or in addition to the Commission's requirements. 

In addition, the same section directs the Commission to consult

periodically with state securities authorities concerning the

adequacy of the Commission's requirements.  The Commission's
==========================================START OF PAGE 20======

current proposal to amend Rules 17a-3 and 17a-4 -[26]-

originated in discussions between NASAA representatives and the

Commission about the adequacy of the existing broker-dealer books

and records requirements. -[27]-  The proposed amendments

clarify, modify, and expand the Commission's record-keeping

requirements with respect to purchase and sale documents,

customer records, associated person records, customer complaints,

and certain other matters.  In addition, the proposed amendments

specify certain types of books and records that broker-dealers

must make available in their local offices.  In consideration of

the substantial number of organizations that have expressed

interest in commenting on the proposed amendments, the Commission

extended the comment period until March 31, 1997.  The

participants at the Conference will discuss the proposed

amendments and the comments received.

     B.   Central Registration Depository ("CRD") Redesign

     The CRD system is a computer system operated by the National

Association of Securities Dealers, Inc. ("NASD") that is used by

the Commission, the states and the SROs primarily as a means to

facilitate registration of broker-dealers and their associated

persons.  The NASD is in the process of implementing a

comprehensive plan to redesign the CRD and to expand its use by


---------FOOTNOTES----------
     -[26]-    17 CFR 240.17a-3 and 17a-4.


     -[27]-    Securities Exchange Act Release No. 37850 (October
               22, 1996) [61 FR 55593].
==========================================START OF PAGE 21======

federal and state securities regulators as a tool for broker-

dealer regulation.  As a result of the NASD's efforts, the

redesigned CRD system ultimately is expected to provide the

Commission, SROs, and state securities regulators with: (i)

streamlined capture and display of data; (ii) better access to

registration and disciplinary information through the use of

standardized and specialized computer searches; and (iii)

electronic filing of uniform registration and licensing forms,

including Forms U-4, U-5, BD and BDW.

     The NASD has been testing the pilot version of the

redesigned CRD since mid-1996, and this version is now in use on

a trial basis at approximately 800 broker-dealers nationwide. 

Among other things, the participants will discuss the status of

the CRD implementation process, and issues relating to the

conversion of existing registration information to the redesigned

CRD and electronic filing of uniform forms.

     C.   Broker-Dealer Examinations

     In December 1995, regulators responsible for examining

broker-dealers (NASAA on behalf of state regulators, the AMEX,

the CBOE, the NYSE, the NASD and the Commission) signed a

Memorandum of Understanding ("MOU") in which they committed to

undertake their regulatory responsibilities in the most efficient

and effective manner possible by sharing information,

coordinating examinations and identifying regulatory priorities. 

As part of the MOU, NASAA, the SROs and the Commission agreed to

meet yearly for a national planning summit and each state
==========================================START OF PAGE 22======

securities regulator, NASD district office and Commission

regional office agreed to meet at least annually for a regional

planning summit, to discuss examination schedules and priorities,

review broker-dealers' examination histories, and discuss other

areas of related interest, with the goal of encouraging

information-sharing to avoid unnecessary duplication of

examinations.  Common regulatory findings and the status of this

coordination and of the implementation of the MOU will be

discussed.

     In March 1996, the Commission, NASAA, the NASD and the NYSE

released a report on the findings of a joint regulatory effort -

"The Joint Regulatory Sales Practice Sweep: A Review of the Sales

Practice Activities of Selected Registered Representatives and

the Hiring, Retention, and Supervisory Practices of the Brokerage

Firms Employing Them."  The objectives of this joint initiative

were to identify possible problem registered representatives, to

review their sales practices, and to assess whether adequate

hiring, retention, and supervisory mechanisms were in place.  The

findings of the report suggested generally that, while many firms

maintain satisfactory supervisory mechanisms, firms can and

should improve and strengthen their hiring, retention, and

supervisory practices.  Consequently, the report contained

specific recommendations aimed at improving brokerage firms'

hiring, retention, and supervisory practices.  The attendees will

discuss implementation of the recommendations.

     D.   Arbitration
==========================================START OF PAGE 23======

     The NASD and other members of the Securities Industry

Conference on Arbitration have been developing new approaches to

important issues affecting the administration of securities

arbitration over the past year.  Much of their work was prompted

by the 1996 report of the NASD's Arbitration Policy Task Force. 

The participants will discuss the status of some of the important

developments in this area.  For example, proposed changes related

to the variations in administering claims of different dollar

amounts, the administration of older claims, and punitive damages

are likely to be discussed.

     E.   Internet Fraud/ Electronic Delivery

     A leading area of mutual interest to both the Commission

staff and NASAA is the impact of developments in technology. 

This year there were ongoing discussions concerning a variety of

new issues.  Areas of concern include: industry retention of

electronic records and communications; computer security;

unregistered brokerage, investment advisory and other regulated

financial business conducted through the Internet; foreign

exchange and foreign financial sector access to the U.S. through

electronic media; and industry and investor education about the

use of electronic media for the securities business.  In 1996,

the Division issued no-action or information letters with respect

to certain financial business activities on the Internet,

including issuer-based bulletin board services, -[28]- non-

---------FOOTNOTES----------
     -[28]-    Spring Street  Brewing Co. (April 17,  1996); Real
               Goods Trading  Corp. (June 24,  1996); PerfectData
                                                   (continued...)
==========================================START OF PAGE 24======

profit matching services, -[29]- and activities of on-line

service providers (America Online, Compuserve, and Microsoft).

-[30]-  The Commission staff and NASAA also have ongoing

consultations on state securities law issues.

     On May 9, 1996, the Commission published an interpretive

release expressing its views on the electronic delivery of

documents that broker-dealers, transfer agents, and investment

advisers are required to send to their customers. -[31]- 

The conference participants will discuss these and other matters

concerning the Internet and the use of electronic media.

-[32]-

     F.   Regulation M

     On December 18, 1996, the Commission approved Regulation M,

representing the most sweeping changes in the way the Commission

seeks to prevent the manipulation of securities offerings since

the Commission adopted Rules 10b-6, 10b-7, and 10b-8 (also known

---------FOOTNOTES----------
     -[28]-(...continued)
               Corp.  (August 5,  1996);  and  Flamemaster  Corp.
               (November 6, 1996).


     -[29]-    Angel  Capital  Electronic  Network  (October  25,
1996).


     -[30]-    Charles Schwab & Co., Inc. (November 27, 1996).


     -[31]-    Securities Exchange  Act Release No. 37182 (May 9,
               1996) [61 FR 24644].


     -[32]-    See related discussion  under Corporation  Finance
               Issues, supra page 13.
==========================================START OF PAGE 25======

as the "trading practices rules") over 40 years ago. -[33]-

Regulation M, which became effective March 4, 1997, differs from

the former trading practices rules by focusing the restrictions

on securities that are more susceptible to manipulation; using

better measures for manipulative potential; recognizing the

global nature of securities markets; assimilating the changes in

market transparency and surveillance; and codifying a variety of

earlier actions by the Commission to adapt the former rules to

current market conditions.  Regulation M addresses the concern

that persons with a stake in a securities offering, such as

issuers, selling securityholders and underwriters, might

artificially influence the market price of the security in

distribution, thereby boosting its offering price.  The

regulation seeks to prevent this result by restricting the

activities of these persons.  In particular, Regulation M

requires offering participants to cease their market activities,

such as proprietary trading, during a restricted period that

begins one or five business days prior to the offering's pricing

and ends when the offering is over.  A notable change from the

trading practices rules, and one which reflects the more focused

approach of Regulation M, is that underwriters of an actively-

traded security of a larger issuer would not be subject to these

restrictions.  Participants will discuss issues raised by the new

regulation.

---------FOOTNOTES----------
     -[33]-    Securities   Exchange   Act   Release  No.   38067
               (December 20, 1996) [62 FR 520].
==========================================START OF PAGE 26======

     G.   Order Execution Rules

     In August of 1996, the Commission adopted Rule 11Ac1-4

-[34]- ("Limit Order Display Rule") and amendments to Rule

11Ac1-1 -[35]- ("Quote Rule") (collectively "Order

Execution Rules"). -[36]-  The Limit Order Display Rule

requires, under certain circumstances, the public display of

customer limit orders priced better than an exchange specialist's

or market maker's quote.  The Limit Order Display Rule also

requires that specialists and market makers add limit orders

priced at their quote to the size associated with their quote

when the quote represents the best market-wide price.  The rule

establishes standard display requirements for limit orders in all

markets.  The Quote Rule was amended to require specialists and

market makers to reflect in their quote any better priced order

that they enter into an electronic communication network, or in

the alternative, the electronic communication network may route

the best specialists' or market makers' orders entered therein

into the public quotation stream.  In addition, the Quote Rule

was amended to require that substantial market makers for any

security listed on an exchange publish their quotations for such

security.  The Order Execution Rules enhance the quality of

---------FOOTNOTES----------
     -[34]-    17 CFR 240.11Ac1-4.


     -[35]-    17 CFR 240.11Ac1-1.


     -[36]-    Securities   Exchange   Act  Release   No.  37619A
               (September 6, 1996) [61 FR 48290].
==========================================START OF PAGE 27======

public quotations for equity securities and improve investor

access to the best prices available.  The new rules also present

investors with improved execution opportunities and improved

access to best prices when they buy and sell securities. The

participants will discuss the new rules and their implementation.

     H.   Bank Securities Activities

     Last year, the NASD submitted a rule proposal to the

Commission that would govern the conduct of member broker-dealers

operating on the premises of financial institutions.  The NASD

has since substantially revised its rule proposal to address a

number of issues raised by the commenters, and expects to submit

a revised rule proposal to the Commission shortly.  The

participants will discuss the proposed rule revisions, as well as

other developments in this area, including a proposal by the

federal banking regulators to require bank employees that sell

securities directly to take certain qualification examinations

currently required of broker-dealer employees.

(3)  INVESTMENT MANAGEMENT ISSUES 

     Title III of the 1996 Act (the "Investment Advisers

Supervision Coordination Act" ("Coordination Act")) made several

amendments to the Investment Advisers Act of 1940, -[37]-

the most significant of which reallocates federal and state

responsibilities over investment advisers.  Under the new scheme


---------FOOTNOTES----------
     -[37]-    15 U.S.C. 80b-1 et seq.
==========================================START OF PAGE 28======

larger advisers will principally be regulated by the Commission,

while smaller advisers the businesses of which tend to be more

local will be primarily regulated by the states.

     Upon the effective date of the Coordination Act, an

investment adviser that is regulated or required to be regulated

as an investment adviser in a state in which it maintains its

principal office and place of business is prohibited from

registering with the Commission unless the adviser (i) has assets

under management of not less than $25 million (or such higher

amount as the Commission may, by rule, deem appropriate), or (ii)

is an adviser to an investment company registered under the

Investment Company Act of 1940. -[38]-  The Commission is

authorized to deny registration to any applicant that does not

meet the criteria for Commission registration and is directed to

cancel the registration of any adviser that no longer meets the

criteria for registration.

     The Coordination Act preempts state investment adviser

statutes as they apply to investment advisers registered with the

Commission.  The Coordination Act preserves, however, the ability

of state regulators to (i) investigate and bring enforcement

actions against Commission-registered advisers with respect to

fraud and deceit, (ii) require Commission-registered advisers to

file notice documents with the state, and (iii) require

Commission-registered advisers to pay state registration and


---------FOOTNOTES----------
     -[38]-    15 U.S.C. 80a-1 et seq.
==========================================START OF PAGE 29======

other fees.  State law is also preempted as to certain

"supervised persons" of Commission-registered advisers, except

that a state retains the authority to register an investment

adviser representative that has a place of business in the state.

     On December 20, 1996 the Commission proposed rules designed

to implement the provisions of the Coordination Act. -[39]- 

The proposed rules (i) address the procedures by which advisers

not eligible to register will identify themselves to the

Commission and withdraw from registration, (ii) exempt certain

advisers that do not meet the criteria for Commission

registration from the new prohibition, and (iii) define certain

terms used in the statute.  The comment period on the proposed

rules closed on February 10, 1997.

     The conferees will discuss the Commission's rules as they

affect the allocation of regulatory responsibilities between the

states and the Commission.  In addition, the conferees will

discuss mutual concerns regarding the implementation of the

Coordination Act, including the transition to the new regulatory

scheme, the sharing of information regarding the status of

registrants, and arrangements for the provision of technical

assistance by the Commission including training, conducting joint

exams and sharing of information with respect to investment

advisers.  In addition, state and federal regulators will discuss

the coordination of regulatory, examination and enforcement

---------FOOTNOTES----------
     -[39]-    Investment Advisers Act Release No. 1601 (December
               20, 1996) [61 FR 68480].
==========================================START OF PAGE 30======

activities subsequent to the effective date of the Coordination

Act.  The conferees will also discuss progress with regards to

the development of a one-stop electronic filing system for

investment advisers, and the development of a system for

investors to obtain information regarding the disciplinary

history of investment advisers.

(4)  ENFORCEMENT ISSUES

     In addition to the above-stated topics, the state and

federal regulators will discuss various enforcement-related

issues which are of mutual interest.

(5)  INVESTOR EDUCATION

     The Commission is pursuing a number of programs for

investors on how to invest wisely and to protect themselves from

fraud and abuse.  The states and NASAA have a longstanding

commitment to investor education and the Commission is intent on

coordinating and complementing those efforts to the greatest

extent possible.   The participants at the conference will

discuss investor education and potential joint projects in some

of the working group sessions.  

(6)  GENERAL

     There are a number of matters which are applicable to all,

or a number, of the areas noted above.  These include EDGAR, the

Commission's electronic disclosure system, rulemaking procedures,

training and education of staff examiners and analysts and

sharing of information.  

     The Commission and NASAA request specific public comments
==========================================START OF PAGE 31======

and recommendations on the above-mentioned topics.  Commenters

should focus on the agenda but may also discuss or comment on

other proposals which would enhance uniformity in the existing

scheme of state and federal regulation, while helping to maintain

high standards of investor protection.

  

By the Commission.



                    Jonathan G. Katz
                    Secretary

April 4, 1997