|
| TO: |
CHIEF EXECUTIVE OFFICER |
| SUBJECT: |
Warning of Fictitious "Limited Edition" U. S. Treasury Securities
|
The U. S. Department of the Treasury has discovered certain
entities attempting to engage banks and others in the purchase
and sale of "Limited Edition" Treasury securities. No such
securities exist.
The Treasury Department has asked the FDIC and other agencies to
warn Treasury securities market participants of this activity.
The Treasury Department has prepared the attached statement
describing the structure of the fictitious securities.
Banks offered transactions involving these securities should
immediately contact Mr. Jim Kramer-Wilt of the Treasury
Department's legal staff at (304) 480-5190. For more
information, please contact the Bureau of the Public Debt at
(202) 219-3632.
|
Nicholas J. Ketcha Jr. |
|
Director |
Attachment: (below)
Distribution: FDIC-Supervised Banks (Commercial and Savings)
NOTE: Paper copies of FDIC financial institution letters may be
obtained through the FDIC's Public Information Center, 801 17th
Street, N.W., Room 100, Washington, D.C. 20434 (800-276-6003 or
(703) 562-2200).
WARNING NOTICE TO FINANCIAL INSTITUTIONS
REGARDING "LIMITED EDITION" TREASURY SECURITIES
The Bureau of the Public Debt recently became aware of a
situation in which certain foreign individuals and groups are
attempting to defraud entities by offering to sell and structure
transactions in non-existent United States Treasury securities.
Certain entities (e.g., broker-dealers and banks) have been
approached with a proposal to purchase and resell a fictitious
instrument referred to as "Limited Edition" U.S. Treasury
securities. As part of this scheme, these entities are being
sought to act as fiduciaries for the transactions.
This is to advise that there is no such security as a "Limited
Edition" Treasury security.
The bogus "Limited Edition" Treasury securities are
represented as having the following features: a term of 10 years;
an annual interest rate of 6%; a minimum purchase amount of $100
million; an unspecified offering amount (i.e., the securities are
represented as being available for sale until "exhausted"); an
initial price of 57% of the face value; and, issued in physical
(paper) form. The proposal makes numerous other
misrepresentations about the way marketable U.S. Treasury
securities may be bought or sold and it also misrepresents the
role that the Department of the Treasury plays in the original
sale and issuance of Treasury securities.
If domestic financial institutions are approached by
individuals offering such a transaction, they should immediately
contact Mr. Jim Kramer-Wilt of the Treasury's legal staff at
(304) 480-5190. If contact is made at an institution's overseas
branch or affiliate or at a foreign financial institution, the
appropriate local law enforcement authority should be notified.
|
