§689e Issuance and Guarantee of Trust Certificates

Summary

The Administrator may sell trust certificates that show ownership of all or part of debentures issued by a New Markets Venture Capital company, if those certificates come from a trust or pool made only of debentures the Administrator guaranteed. The Administrator can guarantee timely payment of principal and interest on those trust certificates under rules it sets. That guarantee only covers the principal and interest on the underlying debentures. If a debenture is prepaid or defaults, the guarantee is reduced in the same proportion that the prepaid or defaulted debenture represented in the trust. Interest on prepaid or defaulted debentures is guaranteed only up to the date the guarantee is paid. If all debentures are prepaid or default, the trust certificate can be called for redemption. The U.S. government promises to pay any amounts required under these guarantees. The Administrator must not charge a fee for the guarantee, though an agent can charge an Administrator-approved fee for certain services. If the Administrator pays a claim, it takes over the rights that were paid. The Administrator can run a central registration for these certificates and hire agents to pool debentures, keep bank accounts, and issue certificates. Agents must have fidelity bonds or insurance. The Administrator may regulate brokers and dealers, and electronic or book-entry registration is allowed.