Here is an excerpt from the "letter to shareholders", dated January 11, 2012. It clearly states the timeline for the distribution of the divi's and the chill as well as what UBRG was told by the DTC and FINRA; how the divi-shares were registered/reported to FINRA. also, now that there is the 'chill', what is required (by DTC) to be done, who UBRG is working with from the DTC... etc. I hope you find some of this info to be 'helpful'. lol The only thing that I find to be 'off' is the time it is taking to get the chill removed, but hey, that's what red tape is all about!
MyBad
Depository Trust Company (DTC)
The Depository Trust & Clearing Corporation (DTCC) located in New York, through its subsidiaries, provides clearing, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. The Depository Trust Company (DTC) is a subsidiary of the DTCC, a member of the U.S. Federal Reserve System and a registered clearing agency with the Securities and Exchange Commission. The DTC manages the electronic clearing and settlement of your stocks and other securities, similar to an escrow agent. Securities that are eligible to be electronically cleared and settled through the DTC are considered "DTC eligible". Universal’s stock has been “DTC eligible” for the Deposit/Withdrawal At Custodian (DWAC) and the Fast Automated Securities Transfer (FAST) program in the secondary market for many years in conjunction with its transfer agent, Corporate Stock Transfer. DWAC is an electronic method of transferring shares between brokers using the Depository Trust Company (DTC) and a transfer agent, with the transfer agent serving as a custodian. This electronic method of clearing securities speeds up the receipt of stock and cash, and thus accelerates the settlement process for investors. The DTC imposed “Chill”
On July 27, 2011 the Depository Trust Company’s (DTC) Corporate Compliance Department notified our transfer agent Corporate Stock Transfer, who subsequently notified Universal Bioenergy, that the DTC had imposed a “Chill” or minor deposit restriction/suspension on Universal’s stock on July 22, 2011, and the Company was removed from the DWAC/FAST Program. We discussed the matter with the DTC staff and they informed us that some of their members known as “Participants”, had noticed large quantities of Universal Bioenergy’s shares being deposited into their brokerage firms all in the month of July, and this was a cause for some concern. Just as the banks monitor and report daily cash deposits of more than $10,000 under the Currency and Foreign Transactions Reporting Act, the DTC monitors the movements of stocks and other securities.
On July 12, 2011, the Company issued a stock dividend to all shareholders of record as of July 1, 2011. Based on our discussions with the DTC, the “Chill” may have been caused by the issuance of the stock dividend. The DTC informed us that they required verification and confirmation that the dividend shares that were issued, were either properly registered with the SEC, or exempt from registration under the Securities Act of 1933 (the “Securities Act”). According to the DTC’s “Deposit User Guide” on page 30, it appears this “Chill” or suspension is an action that is sometimes taken by the DTC when there is either a “Corporate Action” taken by an issuer, or due to “temporary service problems” of the transfer agent. It can also be triggered by a large stock dividend, a forward stock split or reverse stock split by an issuer. Therefore, the “Chill” placed on our stock was not due to any failure, neglect or wrong on the part of Universal Bioenergy or its officers.
The following is a timeline of the steps taken to issue the stock dividend;
On June 6, 2011, the Company approved a 1 for 10 stock dividend for all of its shareholders of record as of July 1, 2011. Each shareholder would receive one (1) share of stock for each ten (10) shares of stock that they owned. The action was approved by our Board of Directors, reviewed by our legal counsel and submitted to FINRA.
On June 7, 2011, a formal request was submitted to Corporate Stock Transfer to process the documentation required to issue the stock dividend.
On June 8, 2011, we submitted the “Issuer Company-Related Action Notification Form” to FINRA for the stock dividend. The Company received the final notification from FINRA announcing to distribute the common stock dividend to our shareholders. The final notification was posted on FINRA’s, OTC Bulletin Board website at www.otcbb.com, under the tab “Daily List” and the “Headlines By Date”, 2011 Daily List Index for dividends for June 8, 2011.
On June 13, 2011, a Form 8-K Report was filed with the United States Securities and Exchange Commission to fully disclose the matter regarding the stock dividend.
July 1, 2011 was the record date for all registered shareholders, and July 8, 2011, was the official payment/distribution date for the dividend shares.
On July 11, 2011, a legal opinion was prepared by our securities counsel, which was addressed to CEDE & Company, the DTC’s nominee for the stock dividend for the beneficial shareholders, notifying them that the shares were to be issued pursuant to an “exemption from the registration requirements” of Rule 144, under the Securities Act of 1933, to all shareholders holding free trading shares as of the record date.
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On July 12, 2011, our transfer agent, Corporate Stock Transfer issued 11,415,311 shares of common stock as a dividend to all registered shareholders of record on July 1, 2011. Of the 11,415,311dividend shares, a total of 8,666,676 shares were issued as free trading shares pursuant to an exemption from registration requirements of Rule 144, under the Securities Act of 1933 to all shareholders holding free trading shares as of the record date. The 8,666,676 dividend shares were deposited with the DTC, and registered in the name of the DTC’s nominee CEDE & Company, who subsequently distributed the shares to the DTC’s Participants, e.g., banks and broker dealers for final distribution and deposit of the shares into the accounts of the beneficial shareholders. The balance of the 11,415,311 shares, or 2,748,635 dividend shares were issued in a hard certificate form with a restrictive legend and sent via certified mail to all shareholders with restricted shares as of the record date.
On July 22, 2011, exactly ten days later, after noticing the large deposits of Universal’s stock from the dividend into their “Participants” accounts, the DTC imposed the “Chill” on our stock and the stock was temporarily not “DTC eligible” for their clearing and settlement.
The “Chill” does not affect our normal business operations. However, shareholders with internet brokerage accounts with firms such as Scottrade, TD Ameritrade or E*Trade may not be able to purchase our stock, although you should still be able to sell our stock through these internet brokers as usual. Since many shareholders trade through these internet brokers which clear and settle through the DTC, we believe the “Chill” may be contributing to significant limitations on the ability for many to purchase our shares. However, if you have an account with a full service broker, they will still clear and settle our stock manually, and you can buy and sell our stock as freely as usual without any DTC imposed restrictions. How do we fix it? Removing the DTC “Chill”
Now, “How do you remove the “Chill” and when will it be lifted?” In our discussions with the DTC regarding resolving this issue, they require one of their Members/Participants to verify and confirm that the issued stock was either “properly registered with the SEC or exempt from registration”. We have had extensive discussions with our legal counsel and several DTC Participants to assist the Company in resolving this matter. We have all of the documentation regarding the issuance of the stock dividend shares and all other shares that have been issued by the Company. The documentation will all be submitted to the DTC in cooperation with one of their Participants.
Based on the information above, and our discussions with the DTC, the “Chill” on our stock appears to be related to the issuance of the stock dividend. We have not been informed of any other reasons beyond that. Additionally, since all of the appropriate documentation was filed with the transfer agent, FINRA and the SEC, the “Chill” imposed on our stock was not due to any failure, neglect or wrong on the part of Universal Bioenergy or its officers.
We feel very confident that once all of the required information is submitted and reviewed by the DTC’s compliance department, the “Chill” will be lifted. We do not have an exact time for its removal, however we have been told that the process could take from 30 to 60 days from that point. We will update you as soon as we hear from the DTC regarding the lifting of the “Chill”.
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