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94-15 SEC Issues Alert Regarding Stolen Stock Certificates

SUGGESTED ROUTING

Senior Management
Internal Audit
Legal & Compliance
Operations

Executive Summary

On February 15, 1994, the Securities and Exchange Commission (SEC) asked the NASD to alert its members to a possible fraud involving cancelled General Motors Corporation common stock certificates. The certificates involved were issued prior to January 1, 1984.

Background

According to the SEC, cancelled General Motors Corporation common stock certificates are being presented for sale or for use as collateral at banks and brokerage firms around the world. The certificates, which were stolen after cancellation, may number as many as 1.3 million.

Although United States criminal authorities are currently investigating this matter, the SEC is warning all securities firms, depositories, and other financial institutions that these securities are being circulated. The securities involved are General Motors Corporation common stock certificates issued prior to January 1, 1984. Please note, however, that not all securities issued prior to 1984 are invalid.

Verifying Certificates

Members should take whatever precautions necessary to protect themselves from possible loss, including examining certificates for indication of cancellation and verifying certificate numbers with the Securities Information Center and the transfer agent. The current transfer agent for these certificates is First Chicago Trust Company at (201) 222-4451, or members may write to John P. Bagdonas, Vice President, P. O. Box 2519, Jersey City, NJ 07303-2519.

The complete text of the SEC letter is reprinted on the following pages.

THE CHAIRMAN

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

February 15, 1994

BY FAX; 9-785-1804

Mr. Joseph R. Hardiman

President

National Association of Securities Dealers,

Inc. 1735 K Street,

N.W. Washington, D.C. 20006

Re: GM Certificates

Dear Mr. Hardiman:

The purpose of this letter is to alert you to a possible fraud involving stolen stock certificates that has been detected in the United States.

The Securities and Exchange Commission ("SEC") has learned that as many as 1.3 million cancelled General Motors Corporation common stock certificates which should have been destroyed may have been misappropriated.1/ During recent months, many of these General Motors certificates have been presented, for sale or as collateral for loans at brokerage firms and banks around the world. In particular, it appears that these certificates were stolen after cancellation. The cancellation is generally evidenced solely by small perforation holes in the lower right corner of the certificates (although some of the stolen certificates may not even bear the perforation marks). We understand that some people may erroneously interpret these perforation marks as a form of notarization.

In light of the potential losses to financial institutions and investors, it is critical that all securities firms, depositories, and other financial institutions be alerted that such securities are being circulated. As part of efforts to minimize the potential damage from continued circulation of the stolen certificates, I am forwarding this notice to all members of the International Organization of Securities Commissions for distribution to relevant financial institutions and others.

It is our understanding that all the securities involved were General Motors Corporation common stock certificates issued prior to January l, 1984. Not all securities issued prior to 1984, however, are invalid. In addition, there may be securities certificates of other issuers that have not yet been reported as lost or stolen. Thus, we urge care in accepting securities from non-customers and in the inspection of each certificate before treating it as valid. To determine the validity of a General Motors stock certificate you may call First Chicago Trust Company, the current transfer agent, at 201/222/4451 or write to Mr. John P. Bagdonas, Vice President, P.O. Box 2519, Jersey City, NJ 07303-2519.

Thank you for your attention to this matter. If you should need additional information, please contact Brandon Becker, Director of the SEC's Division of Market Regulation at (202) 272-3000, or Michael D. Mann, Director of the SEC's Office of International Affairs at (202) 272-2306.

Sincerely

Arthur Levitt

Chairman


1/ For your information, U.S. criminal authorities have begun an investigation in connection with this matter.


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