DD Support Board and Research Team

[BigBake1]

Although I see what you are saying I do believe her interpretation is more along the lines of getting slapped with a lien against your debt score without ever being notified that there was a debt. For example there have been cases in which a Chill and even Global Lock have been applied without notice on some legitimate transactions only to have them lifted or resumed just days later. The whole thing could have been avoided with a simple notification in those cases.

What Impact did that have? Well the deposits were frozen and the individuals that had legitimate documentation were rather put off that they had no access to their accounts for those shares. It is difficult to do business in the future with those same people when they are put off with such transactions, they do not care if it was external to the issuer.

The DTCC is in fact complying with the SECs request to provide a "Fair Process", so they are the ones that actually proposed an advanced warning notification before applying a chill or lock. She is just concurring with their proposal in this case. The DTC is giving them 20 days to answer or provide documents for a deposit chill notice or they will apply a lock on the security.

You can thank the lawyers in the IPWG case for that because it created this "Fair Procedures" process to comply with Section 17A(b)(3)(H). The whole original proposal can be read here:

http://www.sec.gov/rules/sro/dtc/2013/34-71132.pdf

When DTC detects large volume deposits of a low-priced or thinly-traded security, and its monitoring otherwise suggests that an issue may not be freely-tradeable, it imposes a Deposit Chill on that issue. The Deposit Chill blocks the deposit of further securities of the issue, although other services, including book-entry transfer movements, continue to be provided with respect to the Eligible Securities deposited at DTC before the Deposit Chill.

Section 2 of proposed Rule 22(A) addresses the procedures by which DTC gives affected issuers notice of a Deposit Chill and the procedures they may follow to object to the restriction, under the standards discussed in Section D(1), below.

Section 2 also provides that if an issuer fails to respond to a notice of a Deposit Chill as required, or if DTC determines that the response is insufficient to establish that Deposited Securities satisfy DTC’s eligibility requirements, a Global Lock will be instituted. Under such circumstances, an issuer would be given notice of the impending Global Lock and an opportunity to demonstrate that a response to the Deposit Chill notice had, in fact, been submitted or that in reviewing the response, DTC had made a clerical mistake or oversight.

This Whitepaper goes into a little more detail as to how the notices will be handled, overnight courier, 20 days to answer.. etc..

http://www.dtcc.com/~/media/Files/Downloads/WhitePapers/Sevice_Restriction_September2013.ashx