218.01 Securities of an investment company formed to invest only in bank stock would not be exempt securities under Section 3(a)(2) because the investment company is not a bank. [Nov. 26, 2008]

218.02 Section 3(a)(2) provides an exemption for securities issued by states and political subdivisions or public instrumentalities thereof. The section also provides a specific exemption for certain tax-exempt industrial development bonds. Although not covered by the specific exemption, taxable industrial development bonds can qualify for the broader exemption as securities issued by states or public instrumentalities thereof. However, such taxable bond issues must also be examined to determine whether they give rise to separate securities of other persons within the meaning of Rule 131. Absent another exemption, registration of any such separate Rule 131 securities would be required. [Nov. 26, 2008]

218.03 A bank guarantee of an industrial development bond is exempt under Section 3(a)(2) as a security issued by a bank. The underlying industrial development bond, if tax-exempt, likewise would be exempt under Section 3(a)(2), either because it satisfies the specific requirements applicable to tax-exempt industrial development bonds or because it is a security guaranteed by a bank. [Nov. 26, 2008]

218.04 Participations in a banker’s acceptance, offered and sold by a broker who holds the banker’s acceptance, are separate securities which are not exempt as securities issued by a bank within the meaning of Section 3(a)(2). [Nov. 26, 2008]

218.05 The reference in Section 3(a)(2) to Section 103(c) of the Internal Revenue Code is out of date and should read Section 103(b). This reference is important in determining which kinds of tax exempt industrial revenue bonds are exempted from Securities Act registration by Section 3(a)(2). [Nov. 26, 2008]