Scripophily is in the business of selling cancelled stock and bond certificates to collectors

No-action to Scripophily.com under Section

In your letter of August 6, 2002, as supplemented by telephone conversations with the staff, you request assurance that the Staff of the Division of Market Regulation ("Division") will not recommend enforcement action to the Commission under Section 15(a) of the Securities Exchange Act of 1934 ("Exchange Act") if Scripophily.com ("Scripophily") effects transactions in single share stock certificates as described below without registering as a broker-dealer under Section 15(b) of the Exchange Act.

We understand the facts to be as follows:

Scripophily is in the business of selling cancelled stock and bond certificates to collectors. These certificates may be purchased for their decorative value or historical significance.

Scripophily plans to expand this business to include the marketing of non-cancelled single share stock certificates as gifts, collectibles or novelty items. The stock certificates will not be advertised as investments, but rather marketed as historic documents in traditional media and catalogs, and on the Internet. Scripophily will purchase these single share certificates from a registered broker-dealer that is not affiliated with Scripophily. Moreover, you represent that neither you nor any other person associated with Scripophily is associated with a broker-dealer.

As you noted in your letter, the Division issued a series of letters in 1992 and 1993 that permitted businesses to sell framed single share stock certificates without broker-dealer registration in limited circumstances.1 The single share letters represented an attempt to balance the broker-dealer registration requirements of the Exchange Act with a limited business model that did not raise many of the investor protection concerns that broker-dealer registration and regulation are designed to address.2 The letters were predicated on four conditions that were designed to ensure that securities purchased from these firms were not purchased for investment purposes. These four conditions were that: (1) Firms must offer and sell only single shares; (2) Firms must offer and sell only mounted, matted and framed certificates; (3) Firms must market the shares as gifts, not investments; and (4) Firms must offer and sell the framed shares for at least twice the value of the underlying share of stock. Each firm represented that it would purchase the shares though a registered broker-dealer.

Scripophily represents that it will purchase the shares only through a registered broker-dealer. Scripophily will meet two of the four single share conditions. In particular, Scripophily will offer and sell only single share certificates as well as sell the certificates for at least twice the share's underlying value.

Instead of the other two conditions, Scripophily proposes to comply with three additional conditions, which you believe will accommodate Scripophily's business model while ensuring that Scripophily's customers and market participants are not mislead.

• The non-cancelled single share certificates will be issued in the name of "Scripophily.com."
• Scripophily will stamp the share certificates on the back with the words "non-redeemable" and "non-transferable."
• Scripophily will prominently disclose at the point of purchase that the company is not a registered broker-dealer, that the non-cancelled single share stock certificates are not being sold for investment purposes, and that the certificates are non-redeemable and non-transferable. In both online and non-electronic transactions, this disclosure will be presented in writing at the point of purchase in a font that is no smaller than the biggest font on the page. Furthermore, Scripophily will repeat this information in a letter accompanying the delivery of the share certificates.

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Collector's Corner

When my sister Kim suggested I write a piece about The Man from U.N.C.L.E. (MFU) for Scripophily Corner, I remembered that I still had the "Music from the Man from U.N.C.L.E." LP that I had received on my birthday. (No, I'm not telling you which one.) Curious as to its value, I went to completed auctions on eBay (09.21.00) where, to my surprise, I found over 600 MFU items, like the 1966 MFU Thrush Ray Gun Affair Game (with two pieces missing) that went for $72! And the three MFU puzzles that sold for $80.98!! And the Corgi diecast MFU car (MIB) that found a buyer for $510!!!

Of course, there were many less expensive MFU collectibles, like Viewmaster reels, paperback books, and several copies of my record, one of which sold for $12.95 (Darn! I thought I was rich!), but the action of MFU items in the collectibles market made me realize that spies don't die. They don't fade away, either. They just live forever on the Web.

It's hard to believe that a series that is not being shown regularly on any nationwide network could continue to generate devotion in fans old and new, but a search of the Internet revealed a number of sites dedicated to Napoleon Solo, Illya Kuryakin, and the United Network for Law and Enforcement. (I admit that I, too, was once a diehard fan and that I still think of them fondly.) The series is something of a worldwide phenomenon, as there are fan pages in Dutch, French, Spanish, and even Japanese!

TNT holds the broadcast rights to the series, and though they use it primarily as filler, they do have a Web page devoted to the show. The site http://www.tnt.turner.com/action/uncle provides a concise history of the series (did you know that Ian Fleming was an early collaborator and contributed several ideas, including Napoleon Solo's name?), a multimedia archive, and a fan chat room.

Though TNT is the "official" site, two others offer much more extensive and interesting fare. The first, The Fans from U.N.C.L.E. at http://www.manfromuncle.org, offers a much more detailed history of the series, an episode guide, fan articles, a section called Buying and Collecting U.N.C.L.E. and lots more.

The second, The Man from U.N.C.L.E. Episode Guide (http://members.aol.com/Wmkoenig/unclepg.htm) is an award-winning (Lycos and Britannica.com) site with synopses, reviews, interviews, and a really great, up-to-date index of related sites. It is terrific.

To read more about the show, you might want to consult the following:
The Man from U.N.C.L.E. Book: The Behind-the-Scenes Story of a Television Classic, by Jon Heitland (Introduction by Robert Vaughn). Paperback, 1987. Available from Amazon.com for $12.55 (plus shipping), this is considered the series "bible". You can view a sample chapter at Jon Heitland's Web site, http://members.aol.com/heitlandjo/UNCLEbook.html where you can also order the book, which the author will autograph for free.

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