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[[Stamp]] AIR TRANSPORT ASSOCIATION OF AMERICA 1000 CONNECTICUT AVENUE, N.W. WASHINGTON, D.C. 20036 Telephone 296-5900 Office of the March 11,1968 General Counsel Memorandum To: Airline Attorneys (Copies to Airline Finance & Accounting Conference Representatives and Washington Representatives.) From: Joseph F. Healy, Jr. Assistant General Counsel Subject: Proposed Regulations Relating to Industrial Revenue bonds The Securities and Exchange Commission and the Treasury Department, in separate but possible related actions, have announced that they have under consideration proposed regulations dealing with industrial revenue bonds. The SEC has already published its proposed rules for public comment, while the Treasury, through the device of an IRS Technical Information Release, has stated that a proposed regulation the the subject will be issued on or about March 15, 1968. Copies of both documents are attached. Airline interest in this matter relates to the possible adverse effect of such regulations on the issuance and sale of airport revenue bonds. The SEC proposal provides that any part of an obligation evidenced by a bond, note, debenture, or other evidence of indebtedness issued by a state or its political subdivisions, or an agency or instrumentality thereof, which is payable from payments to be made for property or money used under a lease, sale or loan arrangement with industrial or commercial enterprises shall be deemed to be a separate "security" issued by the private lessee or obligor. Thus, the registration and other disclosure requirements of the Securities Act of 1933 and the Securities Exchange Act of 1934 would have to be met, when otherwise applicable, by the private company involved. The underlying theory of the SEC is that since industrial revenue bonds are not backed by the taxing power and general credit of the governmental instrumentality issuing them, the prospective investor would in reality be purchasing in interest in the lease or other obligation of the private company and thus should be furnished sufficient information about the obligation of the private lessee and about its business to enable the investor to make and informed investment judgment. TRAVEL, MAIL AND SHIP BY AIR-BETTER AND FASTER