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11630. Due-Bills and Due-Bill Checks

(a) Definition of Due-Bills
The term "due-bill" as used in this Rule means an instrument employed for the purpose of evidencing the transfer of title to any security or rights pertaining to any security contracted for or evidencing the obligation of a seller to deliver such to a subsequent purchaser. A due-bill shall not be transferable or assignable by the purchaser.
(b) Definition of Due-Bill Checks
The term "due-bill checks" as used in this Rule means a due-bill in the form of a check payable on the date of payment of a cash dividend, interest on registered bonds or interest on unit investment trust securities, which prior to such date shall be considered as a due-bill, as defined in paragraph (a) of this Rule, for the amount of such dividend or interest.
(c) Due-bills for Stock Dividends and Rights
A security sold before it trades "ex-dividend" (for stock and scrip dividends) or "ex-rights" and delivered too late for transfer on or before the record date, shall be accompanied by a due-bill for the distribution to be made. When a due-bill accompanying a delivery evidences the obligation of the seller to deliver stock, the purchaser shall prorate the value of the contract, and shall make payment of the balance upon redemption of the due-bill. The requirement to pro-rate the value of the contract as described above shall not apply to stock dividends less than ten percent (10%) or to "spinoffs" or rights.
(d) Due-bill Checks for Cash Distribution and Interest
Due-bill checks for a cash distribution, interest on registered bonds or interest on unit investment trust securities shall accompany securities delivered too late for transfer on or before the record date.
(e) Redemption of Due-Bills
Due-bills for any security or rights pertaining to any security shall be redeemable on the date on which the security or rights are issued by the corporation or as soon thereafter as the signer or guarantor of the due-bill can obtain transfer of the security or rights into denominations necessary to effect the redemption of the due-bills.
(f) Default Upon Redemption of Due-Bills
A due-bill for any security or rights pertaining to any security issued pursuant to paragraph (c) of this Rule and presented for redemption pursuant to the terms of paragraph (e) of this Rule, and not honored by the seller may, at the option of the buyer, be treated as a "fail to receive" from the seller, and the distribution evidenced by such due-bill may be bought-in for the account and risk of the seller pursuant to the terms of Rule 11810. However, buy-ins executed in accordance with this paragraph (f) must be executed after the payable date of such securities as determined by the issuing corporation.

• • • Supplementary Material: --------------

.01 Sample Due-Bills Form.

(a) Due-Bill for Stock Dividend or Stock Distribution
       For value received, the undersigned hereby assigns, transfers and sets over to __________________________________ the stock distribution of ______ ( ) shares of _____________________ stock of ______________________________ to be issued on ___________________ to the registered holder of ___________ ( ) shares of _________________ stock of ___________________ represented by certificate number ___________________ , to which the undersigned is entitled as a stock dividend, and hereby irrevocably constitutes and appoints __________________________________ attorney to transfer the shares representing said stock dividend on the books of said corporation, with full power of substitution in the premises.

_________________________________
(Date)
  _________________________________
(Official Signature)

(b) Due-Bill for Rights
       For value received, the undersigned hereby assigns, transfers, and sets over to _____________________________________________________ the warrant and/or fractional warrant to which the undersigned is entitled, evidencing the rights to subscribe for _____________________ _________________________ , which warrant and/or fractional warrant is to be issued to the holder of record at the close of business _________________________ of ______________ ( ) shares of ________________________ stock of _______________________ represented by certificate No. _________________

_________________________________
(Date)
  _________________________________
(Official Signature)

(c) Due-Bill for Interest on When Issued Contract
       This is to certify that, upon issuance of _______________________ in accordance with the plan approved by _________________________ , the undersigned will pay to ______________________________________ $ __________ representing (contingent)(income) interest for ___________ on $ _____ principal amount of said bonds sold to it when, as, and if issued on _____ 20 _____

    This due-bill shall become null and void if the contract for sale of said bonds can not be completed in accordance with the plan approved by ___ , on _______________________

_________________________________
(Date)
_________________________________
(Official Signature)

(d) Due-Bill for Dividend on When Issued Contract
       This is to certify that, upon issuance of _____________________ in accordance with the plan approved by _________________________ , the undersigned will pay to _______________________ $ _____ , representing the dividend of $ _____ per share declared for the period ending 20 _____ , on _____________ shares of _______________________ stock of ____ sold to it when, as, and if issued on _______________________ 20 _____

    This due-bill shall become null and void if the contract for sale of said stock cannot be completed in accordance with the plan approved by ____ , on _________________________

_________________________________
(Date)
  _________________________________
(Official Signature)

(e) Due-Bill Check
Consider this check as due-bill until payable date as shown below


NEW YORK _________________ ,
        X Y Z BANK
20 _____ No. 1999

1-2
___
210
Pay To The Order Of__________________________________________________    


$ __________________________________________________
   
Dollars    


In Payment of Dividend or Interest


Dividend Account –

Interest Account –

On
____________________________________
NOT PAYABLE
BEFORE
____________________________________


RECORD DATE__________________________________________

Amended by SR-FINRA-2010-030 eff. Dec. 15, 2010.
Amended eff. Feb. 21, 1969; Mar. 1, 1970; Nov. 1, 1971; Nov. 1, 1972; Mar. 18, 1983.

Selected Notices: 83-69, 10-49.

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