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Chapter 4 (v.2) - undercover artist - entire novel

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Jacob Rohrer, Jr. Crisp and Joseph C. Klausmeier, Jr. Volume 06, No. Watkins; Stone Family Records, by Mrs. Robert D. Jenkins; Huffman, by Mrs. Robert M. Rouse; Williams - Kidwell Bible, by Mrs. Northcutt; Elmwood Cemetery, by M. Volume 08, No. William M. Census Records, by Allan S. Helen Hite Sallee. Bright Bible, William and Agnes A. Ink markings on front and rear covers, else G. Boone; Caroline A. Clore; Bible Record of Albert T. Moss, by Mrs. Eugenia B. Toland; Rhea Family Bible, by Mrs. Judith A. Walters; Adres Family Bible, by D.

Lynn Bolin. Edgeworth; Mills-Hanks Cemetery, by Mrs. Richard Q. Amelia Grimes. Sebastian; Walter Crow, by Mrs. Jean Houston. McClure; Willoughby T. Cooper Bible Record, by Mrs. Fred Garrett. Gibson; Miss Sarah Logan. Maxim Coppage. Ezra E. Palmer, Jr. Leonard T. Harris; Westerfield Bible, by Mrs. James T. Alexander; Mrs. Almedia Howe. Volume 09, No. William A. Howard to F. Taylor, Transcript of Letters-J. Osborn to F. Taylor, by Mrs. Glenn R. Hand; Waterfield Data, by Mrs.

Frank s. Woods Bible, James D. Woods Bible, by Mrs. After I finished the sketch he walked over, liked it, then gave me his business card asking if he might have a copy when finished. The Chief returned the sketchbook. Morton wanted you to be a farmer like him. Later after you physically developed, he switched to you being a cop, justifiably.

As you know, in my case, I enjoy working at a number of interests: policing, fine art painting, occasionally woodcarving, farming being my mainstay. Uncle Mort taught me agricultural skills I practice to this day. I really enjoy the hard work. In addition, at harvest time it is always rewarding. Aunt Mabelle steered me to art, drawing and painting becoming an intricate part of my life. You are fortunate to enjoy good qualities instilled from each of your adopted parents.

I also take pride in all I do, Chief. The consensus for free spirits like us, is, we are weirdoes. I have no desire for the pressure sweating daily to meet preposterous art agency schedules. A disparate example; it galls me to think corporate America today is mirrored by the turn-of-the-century land-grabbers who paid paltry wages to mountain people, pillaged their land, afterward decimated their earth while holding them financially hostage in company towns. Facial makeup on Wall Street is the only difference, big shot there to small-town crook. The average John Doe in the Land of the Free is inherently subjective to the will and temperament of local hoodlums clear to Wall Street, with ties interchangeable; they in turn allied to self-interest politicians.

The fact is - some of us independent creative individuals flourish on self-entertainment, indulgence, containment, living true to self and nature. Briefly stone-faced, Chief Marshall finally chuckled. Well, you have my blessings. The Chief shifted in his seat. His expression turned serious as he propped a hand under his chin and braced the elbow on his chair arm.

Here it comes, Chip suspected, gripping his sketchpad with both hands and picturing William Tell aiming the arrow at an apple on his head, the archer about to sneeze. To the contrary, a bizarre, rather serious matter has surfaced, an assignment of extreme importance involving working freelance in the field.

Chip's eyebrows lifted forming deep furrows across his tanned forehead.

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I knew it; there goes my dang vacation! What tools he implies make me so darn special? Though proud of consideration, and be acknowledged by the Chief for decorated street service in bygone times, he felt increasingly uneasy. For an instant, he entertained dropping the proposal. However, he had no desire to disappoint an old friend who in fact was his relative who had called under duress asking him a favor. In truth, the telephone call amounted to a plea, so dire a matter it motivated his calling long distance to discuss his desperate plight in depth. His friend was befuddled, had sought professional advice to realign priorities.

As Chief and proper authority, he was summoned by the friend as a last resort to help him hurdle a job-related obstacle of horrendous proportion. Bound by principles, he would comply. This is his call and I would understand him rejecting. Gee whiz! What is this? The assignment involves organized crime, doing dangerous undercover work. It's a modest city of a quarter-million and located on the Patuxent River west bank south of Washington, D. The city is an industrial center with high-rise buildings in close proximity to outreaching suburbs.

The river port is growing in commercial prominence. The Chesapeake Bay is only fifteen miles down river, and east. At the mention of the Chesapeake Bay, Chip perked up, stopped pad tapping. The constriction in his throat relaxed. Time might allow me to paint the Chesapeake area: boats, docks, anglers, shore with water scenes - some calm with watercraft bobbing about, others stormy with ships in peril.

This could be the beginning of a fine art career and my lucky break; he realized, with mounting excitement.

UNDERCOVER ARTIST: Chapter 4, book by Virgil Dube

Silence hung between the two as Chip mulled over the proposal, unconsciously fidgeting with his pants cuff while evaluating the pros and cons of such a venture. A syndicate is supposedly operating in Elm Park Community just outside the central city district. The crimes seemed linked. Somehow, they are spiraling from that particular neighborhood. Morris heads a task force closely affiliated with the Feds. He had placed seven undercover cops in supposedly safe concealments in close proximity to the neighborhood.

Their mission entailed spying on one particular residence, plus a shipping dock and an outlying red-light district adjacent a separate neighborhood slum. All undercover cops, including a brilliant black female detective from Washington, D. The seventh off the radar screen was a decorated officer, a fine family man, a civic hero of sorts.

Disheartened at the losses, desperate for results only undercover work can produce, Morris sought my advice on placing someone who might better fit-in, to throw this mob off-balance. He had called my home after supper seeking fresh ideas. Surprising me, he jumped at my off-handed suggestion. I merely hinted at a person similar to you, a former good street cop with your artistic talent who might act as a viable smoke screen. He asked me to clarify, was ecstatic and pressed me to approach you. I felt bad, that I had spoken rashly. I hemmed and hawed initially, said you were imperative in our investigations, but he pushed harder.

Finally caving in, I told him I would at least present this proposition to you. I knew I should have spilled the goods to you last night, but I felt uncomfortable, impersonal, and also unprofessional over the phone. Moreover, I needed extra time to think how your being away might affect our investigative necessities, especially that your work greatly aids criminal profiling.

Chip entertained reasons to refuse the request, specifically gallivanting up north to put his life in danger instead of getting away several days in the woods to camp, paint and relax. For the moment, he remained quiet, fascinated and surprisingly tantalized at saying, yes. This is a new territory for me, a totally different ball game. I suppose in conjunction with Captain Morris, you two see me disguised as an eccentric artist struggling for notoriety, a penniless weirdo slumming around that criminal neighborhood. If seven good cops have been lost, that will be a tough act to follow, unless some additional and convincing element enters into the picture.

However, different would be a better description, maybe something added to bolster the disguise. Please think it over, let me know in a day or so, even longer. He recalled once during the labor when she informed him Oliver Marshall was a distant in-law of hers. Now sitting nervously before his revered boss and distant relative, he looked down at his own large and powerful hands.

Despite intense scrubbing, traces of stubborn grime were evident in skin crevices, even under his fingernails. Settling back in his seat, he began unconsciously to dig at the dirt with opposing nails, and withdrew into deep contemplation. He saw nothing, in particular, yet swooned with surprise and anxiousness, even pride at consideration for such an important assignment by this stalwart man.

Police work was one thing. Of paramount interest in this incredible proposal stemmed from the opportunity for him to paint in a new and exciting location. How delightful that I can paint the Chesapeake Bay. Picture ideas are already flashing through my mind. Both men lapsed into temporary silence. Chip weighed the pros and cons of the unbelievable proposal.

The Chief twiddled his thumbs courteously waiting, feeling he might not have to wait the day, or longer he had suggested and anticipated. Though he had warned Morris Swensen it might take time, even if Chip remotely considered the proposition, he seemed on the verge of answering.

Chip mulled on, mentally inflicted with the duel opinion swinging in opposing directions, just two weeks ago, I asked for time off.

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If I do this, that trip will have to wait. Since I face no obligations now that Vickie Price and I have separated, she leaving for Las Vegas and the riches and glamour it offers a single girl. Why not give it a shot if the mission offers me fresh painting subjects, beautiful and enjoyable scenery, possibly an excellent opportunity not to squander.


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  • He chuckled silently at his next thought, the decisive factor, hell; my being away will give Sassy the reign of the roost. It should be ready tomorrow morning. Lastly, I stress … this is top secret, not even Vickie is to know. How you deal with that matter is your affair. Vickie skipped out, left me for the glitzy Vegas strip. In and out quick, little funny business between, Chief Marshall thought, chuckling. As the door closed behind Chip, Chief Marshall harbored regrets atop an ominous feeling.

    His major concern regarded him and Chip, he and the police department not being on equitable standing after he returns. He slumped in his chair asking himself, could we afford having this very talented man away for months. Would his uncle Morton Racer, if alive, chastise me putting Chip in possible harms way? Would cousin Mabelle become angry and rebuke me? Chip Racer is not only a relative and personal friend; many forensic experts view him as one of the best criminal sketch artists in the southeast, if not the whole country.

    Criminal apprehension due to his work has him ranked among the elite in the nation, the reason we kept his identity closely guarded. His job and identity are secret except to a small group with tight security clearance, his services screened to the public and channeled only through my office. Make certain he stays out of harms way.

    Also, please keep close tabs on him for a few days. That afternoon Chip packed an array of basic personal items into two suitcases. He placed equipment in boxes that Chief Marshall promised to ship him. Afterward, he notified several trusted overseers. These he routinely hired to manage his property during absences. The next morning he drove his recently purchased four-wheel drive forest green Jeep Wrangler he named Nellie to Police Headquarters. His pride and joy sported beige canvas top, tan seats, straight-line six 4.

    Nellie was to him as Silver was to The Lone Ranger, trustworthy in tight and nasty spots. Not sparkly with testosterone injection, or a show-mobile to elevate self-esteem, the Wrangler was a rustic mud and brush-battered swamp companion. The vehicle suited him perfectly to trek the wilderness in the quest of his art, also looked the part as he embarked on his trip north. Driving is more comforting than flying in a jumbo jet with nothing but air between the ground and me. I prefer it over a silky Greyhound ride chancing my life with a sleep-deprived bus driver, or endure a stink-bomb sitting next to me on a plane, bus, or train.

    A quiet open-air drive would not happen, at least the first couple hundred miles. Lester explained that his car had conked, needed a mechanic and serious tune-up. He asked for a lift to Tifton to visit his parents on their thirty-fifth wedding anniversary. Reluctant but amiable to his close friend, Chip consented, determined to remain tight-lipped about his mission, especially around inquisitive and clever Lester.

    His former partner had a knack for closing cases by prying, twisting and turning one's statements to confuse and catch detainees off guard, the mark of a natural interrogative police officer. However, this is different. I have sworn to secrecy considering Lester quickly smells blood and gets nosy. I plan to visit Maine afterward, perhaps Nova Scotia should I have extra time.

    Since when did you take a liking to the North Country, bitter cold verses your humid mosquito-infested swamp paradise? I thought you were headed to Whitehead to cuddle-up with the gators, strain the skeeters through your teeth, and even tickle the bellies of lazy cottonmouths.

    Partner, the Las Vegas thing is bugging you. Get away, let the heartache die off naturally. Have some fun, my friend. Hey, if I get away from mom, I might mosey up to Nova Scotia and look up your frozen ass. All I ask is that you go easy on yourself, partner. Vickie has always had a wild streak. Truthfully, I need distance to clear my head. I hope you went all the way to California and hopped on a boat to China, darling Vickie! Chip wore everyday faded jeans; loose white tee shirt, and sandals.

    Beneath his Marlin's baseball cap, he peered through dark sunglasses. Lester stood six-foot-six square-jawed with good features. He weighed two-forty-five with a modest beer-gut. He wore a narrow-brimmed brown dress hat to compliment his usual tan suit. The unbuttoned jacket revealed a holstered full-size glock. Chip glided gracefully, quietly. Lester stepped heavily, his highly polished size-thirteen brown wing tips striking the asphalt pavement with sledgehammer authority. A husky Latino man of medium height exited the grocery store.

    He approached Chip and Lester pushing a shopping cart loaded with paper grocery bags. Spotting the imposing police officer resembling Elvis Presley, plus the powerfully built and slightly smaller companion who personified a Viking seaman, he grew alarmed. Lowering his head, he pretended to adjust the bags as he pushed the cart in a wide arch. He felt relief both men gave him a quick unassuming glimpse. Scooting behind the wheel, he cranked the car loaded with enough contraband to lock him years in Raiford Prison, then eased the vehicle back as inconspicuously as possible. Turning the wheel to drive up the lane, he glanced at the rustic-looking Jeep, a genuine backwoods vehicle, noting a small red smudge peeping through brownish gray mud blending with orange dust obviously churned up on a country clay road.

    The impact left no dent, which would have added little to the other numerous marks etched in the layers of dried muck, and decaying vegetation snagged in crevices. The law, those good ole country boys looking like they live in the local barbeque shack, in fact enjoys feasting on lawbreakers, especially foreigners, and gay boys like me! He drove east on Interstate 10, swung north on Interstate 75, then slowed to ten miles per hour below the speed limit as he headed toward Atlanta.

    Chip sped from Tallahassee Saturday morning, admiring colorful sunrays piercing soft violet cloud bands streaking across the eastern horizon. He felt adventurous, suppressing underlying apprehension concerning his impulsive undertaking. The crisp clear air refreshed him immensely. A high-pressure system had moved across the southeastern U. Lieutenant Harold had crammed two large suitcases in with his baggage and personal item heap. Thanks to the Chief for shipping my art supplies and exercise equipment to Morris Swensen. I wonder how long Lester vacations with his celebrating parents, surely a month by the looks of his luggage.

    A typical temperamental artist, he sought solace for creative contemplation, which involved occasional stops whenever the countryside offered tantalizing subjects to be quick-sketched or photographed. With no strict schedule, he intended to take liberties. Lester's contentment involved a lopsided conversation in which Chip added only sporadic comment. Paying homage to the scenery, plus pacify Lester, Chip replied to show politeness.

    Privately, he delved on his adventure, his rash decision, with apprehension growing, surprisingly clinging so early into the trip. Chief Marshall is certainly fair, allowing me to take the vacation plus a bonus once this mission is over, and I return home. Crossing the Florida-Georgia line with a murky cloud settled over him, he wondered, when will I see my home again, if ever? Why, and where had such a negative thought materialized? The Chief said plainly that my role in the investigation would be supportive, information gathering only, so, why worry, Racer.

    Ignoring the gloomy feeling, he picked up his end of the conversation with Lester, sports, women, the farm, the two reminiscing old days as patrol partners on Tallahassee streets. Once north of Tifton and alone, Chip relaxed, enjoying the ride, reflecting on his life, namely his adoption by his Aunt Mabelle and Uncle Morton Racer shortly after his parents had died in an automobile accident on Interstate 75 south of Cleveland, near Chattanooga, Tennessee. Though strict guardians, his aunt and uncle had loved and instilled in him traditional values, hand-me-down morals and ethics derived from the old-timers, his West Florida common-folk ancestors.

    Uncle Mort, a long-time Quincy Deputy Sheriff in his younger years, had operated a hog farm. When not engaged with school homework, or everyday chores, he would help uncle Mort slop the hogs; even accompany him when he hauled a sizable number to the Quincy slaughterhouse. He accompanied Uncle Mort many times to Quincy to collect food wastes given him by area restaurants. He still held admiration for the aging man, who would drive his second vehicle, an old Dodge pickup truck out to his fields loaded with a fifty-five gallon drum of slops on the flat bed. With the help of his young nephew and the drum full, Uncle Mort maneuvered it to the rear tailgate, where he would dip with an old bucket and feed the gathered horde.

    His favorite, Queen-Bee, a black-and-white promiscuous sow, came running with her squealing piglets, dangerously dashing around or under her ponderous body. Sows, boars, piglets, would appear from every sector of the vast field, running through corn stalks, across peanut rows and melon patches like starving hellions hurrying to their last meal. The brood would cluster at the long wood trough located at hickory grove on the muddy bank of Panther Creek, grunting, squealing, squirming, butting, wedging, without consideration for family, friend, or foe. Uncle Mort would dip and toss slop, unexhausted bucket after bucket.

    Together they watched with pleasure the squirming mass greedily gobble the delicious concoction. Hard as a rock, surprisingly strong, the little guys always panicked, squirmed like crazy to free themselves from my grasp, and then scampered back into the feeding frenzy. I sure miss the old days helping Uncle Mort. In his offset study and office, where in a fireplace on chilly nights, I enjoyed watching him feed a large log, even trimmed tree limbs, a foot at a time into the hot embers letting them burn, slowly.

    While working in the peanut, corn, and watermelon fields, she could always tell when he had indulged in the fruits of his labor. Even so, she never objected openly, or chastised him later. During evening hours, he had taken to punching and kicking a body bag hanging in the barn. Bart became an excellent karate champion when the family lived at the old home place just outside Altha on the Blountstown end off Highway He remembered vividly as a boy walking among and admiring the cluttered antique cars, junked, filling the property uncle Milton once owned that nowadays would garner a fortune if reconditioned.

    The relics had been more or less his companions while playing cops and robbers. Over the years and exposed to weather, they had dissolved into rust heaps in the weedy landscape. Uncle Mort had slapped the bag around occasionally since he in his youth had been a martial art trainee of modest skill. Observing his quickness and talent, uncle Mort had personally tutored him. A natural athlete under top-notch supervision, he had improved steadily from the onset.

    Aunt Mabelle wedged in her version of culture by encouraging his artistic development, allowing him liberty to take field-sketch trips once his chores were finished. She enrolled him in night art courses. His teacher, a local painter supplementing his income at Mount Pleasant high school, gave lessons on the Old Masters traditional painting and drawing techniques.

    He aspired to study early twentieth-century illustrators, who, likewise, practiced these conventional skills. Graduating early from high school, he furthered his education at Florida State University majoring in commercial illustration, later to minor in fine art. Both Aunt Mabelle and Uncle Mort fell ill. Staying at home, he gave them and their deteriorating financial situation priority. Without hesitation, he hired medical aids to attend his guardians, applied for entry, and attended the Florida Law Enforcement Academy.

    Though gravely ill, Uncle Mort lived long enough to sell most of his hogs, plus a portion of the farm to help Chip pay spiraling out of control medical bills. Both died a year later and within weeks of each other. Chip had just turned twenty-one. After he inherited the farm, he sold additional land to pay the outstanding debt, ultimately retaining sixty acres of the original one hundred-sixty, including the farmhouse, barn and out buildings.

    He quit the Quincy Police Department and returned to school studying agriculture. Divided between home and school, he finally received an agricultural degree. Twelve years had passed. Remaining a Quincy resident rather than return to hometown Altha, he had cultivated a small portion of the farm using hired help. In addition, he had commuted daily to Tallahassee to his new and exciting job as a street cop for the Tallahassee Police Department. When Captain Marshall recognized his artistic talent after he had sketched a man at a crime scene from an eyewitness description, with the criminal quickly apprehended, he transferred him to Investigation.

    During the intervening seven years he again attended school to earn a criminology degree, soon became an accomplished forensic sketch artist with far-reaching demand. Thinking back, he found words difficult in describing his gratitude to Aunt Mabelle and Uncle Mort for adopting him. A day never passed some little reminder of either, or both, surfaced to touch and warm his heart. Today on the long highway stretching northward to an uncertain destiny, love plus fond memories of the hog feedings gripped and warmed him deeply.

    Approaching Atlanta, he swung east on Interstate After stopping for gas near Florence, South Carolina, he drove north on Interstate Breezing happily along, he allowed fond memories of sweet Aunt Mabelle to take center stage. Early Monday morning Chip crossed the Maryland state line. Leaving the Interstate, he turned onto US , a four-lane highway leading ultimately to Brooktown. Soon he hit the west-side city limits, the highway merging into John Smith Boulevard.

    Passing John Smith Memorial College, he noticed a police athletic facility on a stretch of the road lined by numerous small businesses, most clustered in strip malls. Chip found a barbershop.

    He ate a Krystal breakfast, then rented a motel room. After showering, and shaving, he collapsed on the bed for a much-needed nap. Waking, he whittled on Sassy, later drove about the sprawling city taking in the compact downtown area with clustered high-rise buildings surrounding a charming central town square. A quaint old redbrick Town Hall Meeting facility, modern Police Headquarters, and a variety of specialty shops and commercial stores joined each other to encompass Town Square.

    Centered within the Square he noticed an attractive block-square park. Large oaks sprawled above and shaded many benches, winding stone walkways and water fountains. Chip drove on to observe the surrounding suburbs, the bustling river port, fishing wharfs and industrial sector. He noted painting subjects galore: inland farms, the Bay, fishing piers, docks and boats, boathouses surrounded by fascinating equipment and clutter, bait shacks, people of varying class — some interesting characters, plus numerous bird species.

    Reluctantly, he departed from the Bay area to continue his sightseeing excursion taking in portions of the positive and negative aspects of Brooktown. Mid-afternoon found him parked curbside, mid-block and catty-corner to Town Square, directly across Main Street from Police Headquarters. He killed the engine feeling is if one-foot was sinking in mud, the other gingerly pressing on a piecrust. What the heck, he reasoned, unlatching his seat belt then stepping out of Nellie.

    Perhaps something good will happen from this undertaking. Entering an obscure side door, he proceeded up a stairway to the fifth floor. Farther down the hall, he approached a second door on the left with large gold leaf lettering centered two-lines on the textured and smoky window, Captain Swensen — Detective Unit Chief. The tall stout middle-aged man, topped by thin silver hair, squeezed his hulky body between his chair and a file cabinet. With remarkable agility, he skirted around his desk.

    Welcome to Brooktown, our city we proudly refer to as modern Jamestown. The smart people call me, Bulldog, the others … well, whatever, if you know what I mean. I appreciate you coming in response to our desperate situation. Bulldog seems appropriate, Chip admitted, visualizing sketching a caricature of the tough-looking man in the future. Morris closed the office door and locked it, which struck Chip as overcautious in police headquarters.

    After the Captain maneuvered back into his cramped space, both men sat to face each other a first time. Expecting the usual small talk for new acquaintances, the Captain surprised Chip when he drove straight to the point. He had a distinct feeling Chief Marshall had already unloaded his police and personal history and rehashing it would be unwarranted. Not good, it will have normally resolute citizens fleeing if it flourishes in and around Elm Park Community and like a disease, spreads.

    Note the red dots, each representing one in an alarming number of killings over three years — twenty-eight to date. The victims are drug dealers gunned down at close range with a twelve-gauge shotgun. Rather than slugs, the killer gets close and uses buck … full-choke, nasty, deadly. Officer Oliver McQuill was an upstart young man Ryder killed point-blank after he pulled a speeding driver over. Ryder shot him from the front passenger seat.

    The Captain paused, as if expecting input or reaction from his guest. Chip, attentive, nodded but made no response. Not making headway, Chief Stillwell decided we would resort to undercover tactics, an operation that has experienced disastrous consequences. We believe small players, or thugs connected to a crime syndicate, are closely aligned with night clubs in the red-light district and are operating from a residential house the local clergy is calling the Den of Sin. It's a boarding house and legitimate housing complex sheltering multiple residents.

    Women reside there who work nightly under a dope-head pimp holding the house mortgage. We checked whether he makes his payments, or not; he does. Months back, we threw the dice chancing a raid on the joint, but found no contraband, no open prostitution, or any criminal activity to justify arrests. We pulled back with limited insight to broaden our investigation. If we conjured up charges for another raid to smash the local operation, arrest a host of criminals, the charges might not stick.

    We could slip backward with far-reaching consequences, especially detrimental to the whole north side. In other words, premature action would present a legal hassle for us that some deadbeat law firm would feast on. Since we suspect Brooktown big shots are funding the active coordinators dealing drugs, prostitution, perhaps actively engaged in murder, eliminating the Den might foil us disclosing and capturing the prime money people. This could be damaging to prosecution if we made premature arrests on shaky charges.

    Shamefully, we need the Den to operate in order to continue and complete our investigation. We along with the feds need concrete evidence to round up the entire bunch: syndicate bosses and financiers, street thugs, dealers, traffickers, far-reaching links and contributors. Your job is to investigate, to build a framework for a solid legal case prior to our task force of local, state, and federal agents coming forward to mop up this operation before the fall election.

    Should you run into trouble and have to shoot your way out, I will personally handle snooping reporters and authorities. However, you must avoid unnecessary exposure; also maintain a low profile. We need answers to longstanding questions. Information is paramount, Chip, not heroism, nor carelessness, which would be disastrous and unnecessarily endanger you.

    Who knows, conceivably a far-reaching crime syndicate connecting players in D. The Feds led by Agent Alexander Hogan have come on board to help. You'll not meet any of these officials, at least for a while. Going on, you'll have free reign to snoop and get at the bottom of the criminal organization so we can operate within the law. Convictions must stick. We anticipate and are fearful the crime wave will spread to other decent Brooktown neighborhoods shortly after the fall elections. This is unacceptable and cannot happen. Speaking bluntly, should certain D.

    I shudder at this prospect should we fail. The crime wave must be crushed, and soon! However, it has grown in recent years making life better for all citizens. Take Elm Park Community, for instance. Great American elm trees grace the old neighborhood symbolizing a grand past. Not only beautiful, the trees offer protective canopies over quaint streets, notably those majestically skirting our fine public park. In the past, a fungal disease decimated elms across the country, especially in our state.

    A replanting project was proposed. Consequently, our civic leaders and City Council endorsed it. The fresh trees are Dutch elm disease resistant hybrid saplings, the Valley Forge and New Harmony varieties the National Arboretum laboratory in Glenn Dale, Maryland planted years ago to beautify that historical sector of our city.

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    After replanting the trees, seeing them thrive, city officials went to greater lengths. The Mayor, Councilmen, and notable elders, pushed and got public support to refurbish Elm Park Community to its former grandeur. However, another disease, crime, has since infected that neighborhood. We must eradicate the plight before we achieve our objective. Elm Park's citizens want the neighborhood to be a model community in Brooktown, also for Maryland.

    Revitalizing Brooktown through Elm Park refurbishment has politicians scrambling for votes in the upcoming fall election. Politicians running for office are capitalizing on its popularity in brochures, radio and TV ads. Sadly, many candidates are incumbents with lackluster histories who are blowing hot air for votes. Finishing this investigation by October could affect their ambitious; even spoil desperate efforts for re-election. The docks and warehouses are busy around the clock.

    Pausing, the Captain shifted awkwardly in his chair crossing his beefy legs. Chip viewed the maneuver as a minor miracle in the cramped space. Next, he twisted in his swivel chair reaching for a water pitcher resting on a small table in a tight corner adjacent the wall and a file cabinet. Captain Swensen loosened his antique strip tie, shirt coffee stains suddenly evident. After wiping his face of sweat, he poured himself a glass and took a hearty swig. Thanks for the break, Captain! Though long-winded, you are understandably thorough, a plus for me on the streets.

    He noticed the young man gaze into space after studying the map, probably associating it with his earlier city tour, getting familiar with the street layout. He liked Chip Racer, was appreciative Chief Marshall had offered him. He understood why Oliver coveted him, was concerned for his safety.

    Your life will depend on you concealing the badge. I'll keep it near should I need it. In addition, I brought my old threat-level C Kevlar vest. You never know. The vest could be a lifesaver. Nodding, the Captain felt the young man was ideal, and one-hundred percent committed. Mind if I ask the disguises of the missing undercover cops, especially the D. The FBI knowing plenty about key D. She had just begun working at Lust Strip, where she posed as a nightclub waitress in Sweet Adeline, when she disappeared. Shatron vanished before relaying us a single bit of information.

    He posed with heavy disguise as a nighttime drifter to spy on the local dealers in Elm Park and Ragwood, also to sniff out the shotgun killer. He coughed nervously attempting to mask momentary emotion. Embarrassed, he unconsciously adjusted a paper heap on his desk. Gut-wrenched over Jimmy, cursing this damn job, I called Oliver Marshall for advice, and help. I gather the last agent, Forrester, was special, perhaps a friend.

    Sounds like the criminals laid for your people, like you said earlier, an insider finding them out. Months back it dawned on me someone close to the investigation, even on the task force with an overabundance of personnel, might be spying. After awhile I began to focus on a particular field officer affiliate who was under internal investigation because of domestic abuse. Having alternative reason after the seventh undercover agent vanished, I withdrew him as an affiliate and transferred him from Silva Precinct to Headquarters where I could monitor his activities closely.

    Once he settled here, my suspicion grew. Members are cautioned that mergers or acquisitions involving an issuer and a member or its parent that result in the public ownership of the member or its parent are subject to Schedule E regardless of whether the merger or acquisition occurs subsequent to the public offering. Schedule E also applies to corporate reorganizations similar to the example cited in which a blind-pool company issues a proxy statement to investors.

    The proxy statement solicits their consent to a reorganization that results in the acquisition of a member or its parent, and previously authorized, but unissued, shares are to be issued to the owners of the member or its parent as a result of the affirmative action of the shareholders of the blind-pool company. Section 9 of Schedule E requires that the reorganization that is the subject of the proxy be carried out in compliance with Schedule E.

    Therefore, members are cautioned that pursuant to Section 14 of Schedule E, proxy materials filed with the SEC under SEC rules that involve a reorganization to acquire a member or its parent must be filed with the NASD Corporate Financing Department for review and must be in compliance with the provisions of Schedule E prior to the effective date of the reorganization. In addition, if a business combination between a member or its parent and a blind-pool company should be proposed and the result of the transaction would be that the member or its parent would be publicly held, the documents relating to that transaction must be filed with the NASD for review under Schedule E.

    The NASD also believes that where there is a short time period between the close of a public offering and the close of a merger, in the case noted above, nine business days serious questions arise concerning whether the member and the issuer provided adequate disclosure to the public with respect to merger negotiations that may have been in progress prior to the closing of the offering.

    If such merger negotiations were in progress and the prospectus was not amended to disclose them, serious violations of the Securities Act of and the anti-fraud provisions of the Securities Exchange Act of may have occurred. It would also be clarified that any other offering that results in the public ownership of a member would be subject to Schedule E However, it will not be a settlement date since many of the nation's banking institutions will be closed.

    January 16, , is considered a business day for receiving customers' payments under Regulation T of the Federal Reserve Board. The date by which members must take such action is shown in the column entitled "Regulation T Date. For the past two years, a Subcommittee of the Corporate Financing Committee has studied the corporate financing activities in which members engage for the benefit of their issuer-clients in connection with takeover transactions, corporate reorganizations, and merchant-banking activities.

    The Subcommittee has reported on these activities to the full Committee and has made recommendations on how Schedule E to the NASD By-Laws "Schedule E" and the Interpretation of the Board of Governors — Review of Corporate Financing the "Interpretation" should be amended to regulate the distribution-related issues that were identified. The Subcommittee reviewed numerous transactions in which members acted as financial advisors, consultants, and underwriters in connection with private placements of high-yield debt securities to institutional customers.

    The placement of the high-yield debt securities in a private offering permits a rapid acquisition or restructuring of the target company. In addition, member firms often were permitted to participate as a "partner" in the takeover transaction by purchasing equity securities of the company on the same terms as were other insiders.

    In these latter cases, the member departs from the traditional role of financial consultant or advisor and becomes a principal in the takeover transaction. In such transactions, the member also agrees to provide liquidity to its institutional customers, and the issuer usually grants demand registration rights to the institutional investors. The registration rights generally obligate the issuer to file a registration statement covering the securities and use its best efforts to have the registration statement declared effective within six months of the closing of the private offering.

    As a result, the securities become freely transferable, and the institutional investor can act as a selling security holder in a public distribution of the securities and sell or otherwise transfer the securities on a delayed or continuous basis under Rule As noted above, in many of these situations the member purchases an equity interest in the issuer.

    In cases where the ownership interest of the member rises to the level of affiliation as defined in Schedule E, and the member represents that it intends to provide liquidity to its institutional customers or to execute sale transactions in the "shelf securities on their behalf, Schedule E would apply to the offering. Schedule E contains requirements intended to deal with the conflicts of interest present when a member underwrites its own securities or the securities of an affiliate. These conflicts generally arise when the member engages in pricing the offering and conducting due diligence.

    Schedule E, therefore, requires the participation of a "qualified independent underwriter" in the offering. The qualified independent underwriter is required to perform independent due diligence, participate in the preparation of the registration statement and prospectus and to provide a recommendation stating that, in its opinion, the securities being distributed to the public are offered at a yield that is no lower or a price that is no higher than that which it would recommend. The Committee recognizes, however, that transactions in "high-yield" debt securities generally take place in negotiated transactions between institutional investors and are usually in large amounts.

    In light of this fact, the Committee believes that it is neither practical nor necessary to require a pricing opinion from a qualified independent underwriter every time a selling security holder wishes to sell a portion of its securities off the shelf. The Committee recognizes that many institutional investors regularly invest large amounts of money in high-yield securities and that they are capable of determining a fair yield or dividend for such securities.

    As a result, the Committee believes that it is appropriate to exempt a qualified independent underwriter from rendering an opinion on the price of the securities to be offered as required under Section 3 c l of Schedule E if the securities are sold solely to institutional investors. Under the proposal, Section 2 of Schedule E would be amended to define an institutional investor as:. Additionally, proposed subsection 3 d of Schedule E provides conditions under which the pricing recommendation of a qualified independent underwriter would not be required.

    Buying Options

    They are: 1 the securities offered are registered with the SEC pursuant to the Securities Act of ; 2 the securities are to be offered or sold pursuant to Rule adopted under the Securities Act of ; 3 the securities will be offered or sold from time to time in negotiated transactions; 4 sales by the affiliated member must be made solely to institutional investors defined in Subsection 2 n ; and 5 the qualified independent underwriter complies with its due diligence responsibility on a continuous basis as long as the registration statement is effective.

    With respect to the qualified independent underwriter's due diligence responsibilities, the Committee is aware that members acting as qualified independent underwriters employ different procedures in order to comply with their obligation to " The qualified independent underwriters and their counsel must determine which procedures they will use and whether those procedures will permit them to represent to the NASD that they have exercised the usual standards of due diligence.

    The NASD believes that, as long as the registration statement is effective, a qualified independent underwriter must, at a minimum, receive the following information: all correspondence with the SEC relating to the offering; all press releases; and all other documents customarily reviewed by underwriters in connection with a due diligence review, including quarterly and annual financial statements and reports. The NASD will require that a qualified independent underwriter be contractually obligated to receive this information on a continuous basis, as long as the registration statement is effective, so that it can comply with its due diligence responsibility.

    Such participation requires the pricing opinion and due diligence of a qualified independent underwriter. The exception for Rule , Schedule E offerings discussed above also has been proposed to apply to "proceeds offerings" where a qualified independent underwriter is required. The last date for comment on that proposal is December 31, Comments must be received no later than December 31, If the proposed amendment, or an amended version resulting from comments received, is approved by the Board, it must be filed with and approved by the Securities and Exchange Commission before becoming effective.

    Questions concerning this notice can be directed to Richard J. Fortwengler, Assistant Director, Corporate Financing, at The rule imposes special suitability and recordkeeping requirements on certain broker-dealers that recommend transactions in designated securities to persons who are not "established customers. SEC Rule 15c prescribes specific procedures a firm must follow before such designated securities can be recommended to nonestablished customers. Included is the requirement to obtain from each customer oral or written suitability information detailing such a customer's previous investment experience, investment objectives, and financial situation.

    The scope of the information gathered is very important. With that information, the firm must reasonably determine whether transactions in these designated securities are suitable for the particular customer. If the firm determines that the securities are suitable for purchase by the customer, the firm must prepare a written statement of its reasons for making such a determination, deliver it to the customer, and secure a manually signed copy from the customer acknowledging receipt of the firm's suitability determination. The customer also must review and agree that the information contained on the form from which the suitability determination was made accurately reflects the customer's financial situation, investment objectives, and investment experience.

    In addition, the firm must obtain the customer's written agreement for the first three purchase transactions involving designated securities. Both the customer suitability statement and the written agreement must be properly executed by the customer and then received by the firm prior to any transactions in designated securities. NASD members have requested guidance concerning the extent of customer information that must be gathered to make a suitability determination, and the proper text of both the firm's suitability determination and the customer's writ ten agreement for the transaction.

    Please note that these suggested forms are intended to serve as models, not as requirements for use. Included among these rules is a Government Securities Advertising Rule.


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    • This rule will require members to file advertising relating to government securities with the NASD. This requirement will be implemented as of January 1, The text of the proposed amendments follows' this notice. Public Law the "Government Securities Act of " , enacted by Congress in October , amended the Securities Exchange Act of Act by adding a new Section 15C that requires registration of government securities brokers and dealers and provides for adoption of rules for such brokers and dealers by the Treasury Department. In addition, the Government Securities Act amended Section 15A f of the Act to provide the NASD with the authority to adopt and implement rules applicable to its members; to enforce compliance with the provisions of the Government Securities Act and rules and regulations adopted thereunder; to discipline members for violations of the Government Securities Act and rules; to examine members' books and records; and to implement the provisions of the Act relating to denial of membership, or association with members, or persons or entities subject to statutory disqualification.

      In addition, the Government Securities Act provided the NASD with the authority to adopt rules to prohibit fraudulent, misleading, deceptive, and false advertising of government securities. These amendments have been incorporated into the Government Securities Rules. The remainder of the rule proposals relating to government securities activities of NASD member firms were circulated for member comment in Notice to Members , dated August 12, Notice to Members solicited member votes on the proposals, which were approved by the membership and filed with the Securities and Exchange Commission.

      The Commission approved the amendments on November 2, These amendments are divided into four parts:. These amendments incorporate into existing By-Law provisions appropriate references to government securities brokers and dealers or to the rules of the Treasury Department. New Section 6 states that the By-Law provisions governing qualifications of members and rulemaking authority conferred upon the NASD shall not be inconsistent with the Government Securities Act.

      This provision is similar to an existing provision in the By-Laws relating to municipal securities brokers and dealers. This section defines government securities principals and representatives. It also requires registration of government securities principals and representatives, and exempts from registration persons serving in an exclusively clerical or ministerial capacity. The definitions of the categories of individuals required to be registered either as principals or representatives track the provisions of Section Such registration is required to provide the NASD with the information needed to make a determination of potential statutory disqualification and identify a firm's principals for purposes of contact with and examination of the firm.

      The amendment to Article I, Section 5 of the Rules of Fair Practice is intended to clarify that the applicable Rules of Fair Practice do not apply to members that are registered with the SEC under Section 15C as sole government securities brokers or dealers. The provisions of the Rules of Fair Practice will, of course, remain fully applicable to members registered under Section 15 b of the Act. The remaining provisions of the proposed rule package are designated as "Government Securities Rules. The proposed rules include provisions relating to the maintenance of books and records, supervisory procedures, and regulation of activities of members that are experiencing financial or operational difficulties or that are changing their exemptive status under the customer protection provisions applicable to government securities brokers and dealers.

      In addition, these rules contain a government securities advertising rule which imposes a requirement that government security advertising be filed with the NASD Advertising Department. The amendments became effective upon approval by the Securities and Exchange Commission on November 2, With respect to the filing requirement for advertising, however, the NASD has determined that such filings should commence as of January 1, Questions concerning this notice can be directed to T. Questions relating to the advertising rule may be directed to R. Questions relating to financial responsibility aspects of the rules may be directed to Walter J.

      Robertson, Associate Director, Financial Responsibility, at When used in these By-Laws, and any rules of the Corporation, unless the context otherwise requires, the term:. A person is subject to a "disqualification" with respect to membership, or association with a member, if such person:. No member shall permit any person associated with such member to engage in the investment banking or securities business unless the member determines that such person has complied with the applicable provisions under Article II of the By-Laws.

      Following the termination of the association with a member of a person who is registered with it, such member shall promptly, but in no event later than thirty 30 calendar days after such termination, give written notice to the Association on a form designated by the Board of Governors of the termination of such association. A member who does not submit such notification in writing within the time period prescribed shall be assessed a late filing fee as specified by the Board of Governors. Termination of registration of such person associated with a member shall not take effect so long as any complaint or action is pending against a member and to which complaint or action such person associated with a member is also a respondent, or so long as any complaint or action is pending against such person individually or so long as any examination of the member or person associated with such member is in process.

      The Corporation, however, may in its discretion declare the termination effective at any time. A person whose association with a member has been terminated and is no longer associated with any member of the Corporation shall continue to be subject to the filing of a complaint under the Code of Procedure based upon conduct which commenced prior to the termination, but any such complaint shall be filed within one 1 year after the effective date of termination of registration pursuant to Section 3 above or, in the case of an unregistered person, within one 1 year after the date upon which such person ceased to be associated with the member.

      In the exercise of such powers, the Board of Governors shall have the authority to:. The Board of Governors is hereby authorized to prescribe appropriate sanctions applicable to members, including censure, fine, suspension or expulsion from membership, suspension or barring from being associated with all members, limitation of activities, functions and operations of a member, or any other fitting sanction, and to prescribe appropriate sanctions applicable to persons associated with members, including censure, fine, suspension or revocation of registration, if any, suspension or barring a person associated with a member from being associated with all members, limitation of activities, functions and operations of a person associated with a member, or any other fitting sanction, for:.

      Under no circumstances shall the Board of Governors or any officer, employee or member of the Corporation have power to:. No member shall use the name of the Corporation except to the extent that may be authorized by the Board of Governors. No officer, employee, member of the Board of Governors or of any District or the Committee, shall have any power to incur or contract any liability on behalf of the Corporation not authorized by the Board of Governor The Board may delegate to the President of the Corporation, or his delegate, such authority a it deems necessary to contract on behalf of the Corporation or to satisfy unanticipated liabilities during the period between Board meetings.

      No member of the Board of Governors or of any committee of the Corporation shall directly or indirectly participate in any adjudication of the interests of any party which would at the same time substantially affect his intere: or the interests of any person in whom he is directly or indirectly interested.

      In any such case, the member shall disqualify himself or shall be disqualified by the Chairman of the Board or Committee. The provisions of the By-Laws conferring rulemaking authority upon the Board of Governors shall not be applicable to the municipal securities activities of members or persons associated with members to the extent that the application of such authority would be inconsistent with Section 15B of the Act. The provisions of the By-Laws governing qualifications of members and persons associated with members and conferring rulemaking authority upon the Board of Governors shall not be applicable to the government securities activities of members or persons associated with members to the extent that the application of such provisions or authority would be inconsistent with Section 15A f of the Act.

      Persons associated with a member shall have the same duties and obligations as a member under these Rules of Fair Practice. Unless otherwise inc cated herein, the requirements of these rules ar in addition to those contained in the Rules of Fair Practice for members that are subject to ft provisions of the Rules of Fair Practice. Persons associated with a member shall have the same duties and obligations as a member under these rules.

      Unless the context otherwise requires, or unless defined in these rules, terms used in the rules and provisions hereby adopted, if defined in the By-Laws or Rules of Fair Practice shall have the meaning as defined therein. Further, the term shall not be applicable to any member that is subject to Section This explanation outlines and discusses some of the financial and operational deficiencies which could initiate actions under the rule. Subparagraphs b 2 and c 2 of the rule recognize that there are various unstated financial and operational reasons for which the Association may impose restrictions on a member so as to prohibit its expansion or to require a reduction in overall level of business.

      These provisions are deemed necessary in order to provide for the variety of situations and practices which do arise and, which if allowed to persist, could result in increased exposure to customers and to broker-dealers. In the opinion of the Board of Governors, it would be impractical and unwise to attempt to identify and list all of the situations and practices that might lead to the imposition of restrictions or the types of remedial actions the Corporation may direct be taken because they are numerous and cannot be totally identified or specified with any degree of precision.

      The Board believes, however, that it would be helpful to members' understanding to list some of the other bases upon which the Corporation may conclude that a member is in or approaching financial difficulty. Every member of the Corporation shall keep in each office maintained by him, in the form to be supplied by the Board of Governors, a copy of the Certificate of Incorporation, By-Laws, Government Securities Rules, and Code of Procedure of the Corporation, and of all additions and amendments from time to time made thereto, and of all interpretative rulings made by the Board of Governors, all of which shall be available for the examination of any customer who makes requests therefore.

      For the purpose of any investigation, or determination as to filing of a complaint, or any hearing of any complaint against any member of the Corporation or any person associated with a member made or held in accordance with the Code of Procedure, any District Business Conduct Committee, or the Board of Governors, or any duly authorized member or members of any such Committees or Board, or any duly authorized agent or agents of any such Committee or Board shall have the right to:.

      No member or person associated with a member shall refuse to make any report as required in this Section, or refuse to permit any inspection of books, records, and accounts as may be validly called for under this Section. Any District Business Conduct Committee, Market Surveillance Committee or the Board of Governors, in the administration and enforcement of the Securities Exchange Act of , the rules and regulations thereunder including the rules of the Treasury Department or these Government Securities rules, and after compliance with the Code of Procedure, may:.

      All fines imposed pursuant to Section 12 of these rules shall be paid to the Treasurer of the Corporation and shall be used for the general corporate purposes. Any member that fails promptly to pay any fine imposed pursuant to Section 12 of these rules, or any costs imposed pursuant to Section 12 of these rules, or any costs imposed pursuant to Section 14 of these rules after such fine or costs have become finally due and payable, may after seven 7 days' notice in writing be summarily suspended or expelled from membership in the Corporation.

      A member may also be summarily suspended or expelled from membership in the Corporation if the member fails to immediately terminate the association of any person who fails to pay promptly any fine imposed pursuant to Section 12 of these rules or any costs imposed pursuant to Section 14 of these rules after such fine or costs have become finally due and payable after seven 7 day's notice in writing. The registration of a person associated with a member, if any may be summarily revoked if such person fails to pay promptly any fine imposed pursuant to section 12 of these rules, or any costs pursuant to section 14 of these rules after such fine or costs have become finally due and payable after seven 7 days notice in writing.

      Any member or person associated with such member disciplined pursuant to Section 12 of these rules shall bear such pan of the costs of the proceedings as the District Business Conduct Committee or Market Surveillance Committee in the Board of Governors deems fair and appropriate in the circumstances. This amendment, which replaces the Interpretation of the Board of Governors Relating to Prompt Payment by members for shares of investment companies, establishes time frames within which members must transfer payment for investment company shares to investment companies or their agents.

      The text of the amendment follows this notice. That interpretation did not, however, include a definition of the term "prompt payment. The amendment, as approved by the Commission, was adopted pursuant to member vote, which was solicited in Notice to Members In order to facilitate changes in internal firm procedures that will be required by this rule, the NASD has determined that the rule will become effective January 1, The text of the new rule is attached.

      Questions concerning this notice can be directed to A. NASD members are advised that the Securities and Exchange Commission SEC has approved an amendment to the NASD Board of Governors' "Free-Riding and Withholding" Interpretation that would provide members with an alternative means of complying with the Interpretation for sales of new issues to the accounts of investment partnerships and investment corporations and similar type accounts. The amendment to the NASD Board of Governors' "Free-Riding and Withholding" Interpretation Interpretation approved by the Securities and Exchange Commission is intended to provide members with an alternative means of compliance with the existing requirements of the Interpretation in making sales of "hot issue" securities to the accounts of investment partnerships and corporations, including hedge funds, investment clubs, and other similar accounts.

      Under the heading "Investment Partnerships and Corporations," the Interpretation now provides, with no alternative means of compliance, that members and their associated persons are prohibited from selling securities of a new issue that trades at a premium "hot issue" securities to any investment partnership, corporation, or similar account unless "the member receives from such account, prior to the execution of the transaction, the names and business connections of all persons having any beneficial interest in the account.

      It is intended to protect the integrity of the public offering system by ensuring that underwriters make a bona fide public distribution of "hot issue" securities and do not retain those securities for their own benefit or use those securities to favor persons who can direct future business to the firm. Without restricting purchases by investment partnerships, the provisions of the Interpretation could be evaded easily. Because the existing provision was the exclusive means of compliance, the NASD National Business Conduct Committee NBCC and the NASD Board of Governors determined that it would be appropriate to propose an alternative means for members to comply with the Interpretation when selling "hot issue" securities to investment partnerships and similar accounts.

      Because of concern that members can encounter difficulty in complying with the requirements of the provision since persons responsible for the management of investment partnerships and similar accounts may be hesitant to release the names of persons holding beneficial interests in such accounts , the NASD proposed in Notice to Members May 23, that a member or associated person would be presumed to be in compliance with the requirements of the Interpretation's section on investment partnerships either by obtaining the list of actual names pursuant to the existing requirement or by receiving from the account manager specific written representations that none of the beneficial owners are restricted persons.

      Following review of comments received, the NBCC concluded that the amendment's reliability would be determined by the time and effort expended by the account manager to understand and properly apply the complex provisions of the Interpretation. As a result, the NBCC determined that it should consider other approaches to provide members with an effective means of ensuring that restricted accounts are not recipients of "hot issue" securities in violation of the Interpretation.

      The NBCC appointed a subcommittee to consider alternatives to amending the Interpretation, including the May proposal and subsequent proposed modifications to it, as well as a new proposal to establish a "safe harbor" procedure by requiring a member to obtain an opinion of counsel through the account manager. Based on the subcommittee's study of alternative proposals, the NBCC and Board of Governors concluded that the original proposal should be rejected as a less effective means of ensuring that members are advised correctly of the restricted status of an account than is offered by an opinion-of-counsel approach, which is the approach contained in the amendment recently approved by the SEC.

      The NBCC also concluded that an assurance by the account manager may be accurate in many situations, but does not offer as positive an assurance as does the opinion of counsel. Following review of the comments, the NBCC and Board concluded that an opinion of counsel has the advantage of building a "safe harbor" procedure with a greater degree of accountability than does a blanket representation of the account manager. The amendment is intended to provide an alternative means for members to comply with the Interpretation when selling "hot issue" securities to investment partnerships and similar accounts.

      The amendment provides that a member or associated person of a member may not sell "hot issue" securities to the types of accounts specified unless, prior to executing a transaction with the account, the member has obtained a copy of a current opinion from counsel stating that counsel reasonably believes that no person with a beneficial interest in the account is a restricted person under the Interpretation and stating that, in providing such opinion, counsel:.

      As the amendment offers only an alternative means of compliance, members may continue to comply with the current requirements of the Interpretation's section on investment partnerships by obtaining a list of the names and business connections of all persons having a beneficial interest in the account from the account manager in the case of both domestic and foreign accounts. The amendment, however, eliminates the present alternative for foreign investment partnership and foreign investment companies' accounts in countries having secrecy laws that now allow a member to obtain a blanket representation from his account manager that none of the beneficial owners are restricted persons.

      Thus, foreign investment accounts must in the future provide either a list of the names and business connections of the beneficial owners or an opinion from counsel who is required to be an attorney admitted to practice in the United States. In addition, the amendment requires members to maintain in their files a copy of the opinion of counsel or a list of names of the beneficial owners for at least three years following the member's last sale of a new issue to that account. Finally, the amendment requires that, irrespective of which means of compliance a member selects, the list of names or opinion of counsel shall be deemed current only for a period of 18 months after which a new list or a new opinion of counsel must be obtained.

      Mylod, Assistant General Counsel, at The section under the heading "Investment Partnerships and Corporations" of the Board of Governors' Interpretation is amended as follows: Investment Partnerships and Corporations. A member may not sell securities of a public offering that trade at a premium in the secondary market whenever such secondary market begins "hot issue" , to the account of any investment partnership or corporation, domestic or foreign except companies registered under the Investment Company Act of including, but not limited to, hedge funds, investment clubs, and other like accounts unless the membe r complies with either of the following alternatives:.

      The term beneficial interest means not only ownership interests, but every type of direct financial interest of any persons enumerated in paragraphs 1 through 4 hereof in such account, including, without limitation, management fees based on the performance of the account.