17 CFR § 270.27f-1 - Notice of right of withdrawal required to be mailed to periodic payment plan certificate holders and exemption from section 27(f) for certain periodic payment plan certificates.
(a) The notice and statement of charges (notice) required by section 27(f) of the Act shall be sent by first-class mail and shall be accompanied by a written instruction sheet and a return form to be used in connection with the exercise of the right of withdrawal described in the notice. Except for a confirmation slip, the plan certificate, and any notice required by applicable State law, no other written or graphic material may be included with such notice.
(b) The notice may be mailed by the issuer, the principal underwriter for, or the depositor of, the issuer or a recordkeeping agent for the issuer if the custodian bank has delegated the mailing of the notice to any of them or the issuer has been permitted to operate without a custodian bank by Commission order.
(c) Solely for purposes of section 27(f) of the Act, the postmark date on the envelope containing the certificate shall determine whether a certificate has been surrendered within the 45-day period.
(d) Form N-27F-1 is hereby prescribed to inform certificate holders, other than holders of plans upon which the amount of sales load deducted from any payment does not exceed 9 percent of any payment and variable annuity contracts, of their withdrawal right pursuant to section 27(f) of the Act. The text of Form N-27F-1 is as follows:
Dear __ (2) __: This notice is required to be sent to all purchasers of plan certificates pursuant to laws administered by the U.S. Securities and Exchange Commission. You should read it carefully and retain it with your financial records.
Of the $______ (3) __ you have paid on your __ (4) __ plan, representing __ (5) __ regular monthly payments, $_____ (6) __ or __ (7) __ percent has been deducted for various charges.
A total of $______ (8) __ or __ (9) __ percent of your first __ (10) __ monthly payments will be deducted from those payments for similar charges.
Charges of $______ (11) __ or __ (12) __ percent will be deducted from each subsequent payment. You have until __ (13) __ to surrender your certificate for any reason and receive a refund of all of the charges which have been deducted from your payments, and, in addition, the value of your account on the date your certificate is received.
In determining whether or not to exercise your right you should consider, among other things, the projected cost of your investment and your ability to make the scheduled payments over the life of your plan as they become due. Your plan provides for __ (14) __ payments of $______ (15) __ per __ (16) __, or total payments of $______ (17) __. If you made all of the scheduled payments over the full term of your plan, the total deductions would be $______ (18) __ or an effective charge of __ (19) __ percent of your total payments. However, if you do not complete your program, the deduction of various charges from your initial payments will result in your paying effective charges in excess of that rate. For a more complete description of the charges deducted under your plan, carefully review your prospectus.
If you wish to exercise your right of withdrawal, return your plan certificate to __ (20) __ by __ (21) __ in accordance with the enclosed instructions.
Very truly yours,
__ (22) __.
General instructions. A. The notice shall be legible and shall be printed or typed on letter-size paper. It shall be in modern type at least as large as 10-point modern type. All type shall be leaded at least 2 points. Parenthetical references should be completed in accordance with the Itemized Instructions below and need not be underlined or boldfaced.
B. The notice shall bear the letterhead of the sender and the mailing date. An inconspicuous reference to the form number may appear on the notice.
Itemized Instructions. Insert the following in the corresponding numbered spaces on Form N-27F-1.
(1) The name of the plan and the account number of the certificate holder. An additional internal record keeping reference may also be included at the option of the sender.
(2) The name of certificate holder or an identification such as “Investor” or “Planholder.”
(3) The total amount paid by the certificate holder as of the date of the mailing.
(4) The name of the plan.
(5) The number of regular monthly payments or their equivalent made by the certificate holder as of the date of mailing.
(7) The percentage that the total charges set forth in Item (6) are of the total payments included under Item (3) above.
(8) The total dollar amount of all charges scheduled to be deducted from the payments made by the certificate holder before the first regular payment upon which there would be a reduction in the rate of the applicable sales charge below 9 percent of the certificate holder's gross payment.
(9) The percentage that the total charges set forth in Item 8 are of the total payments included under Instruction 8 above.
(10) The number of regular monthly payments required to be made before the rate of the sales charges deducted from such regular payment is reduced to less than 9 percent of the certificate holder's gross payment.
(11) The dollar amount of the charges to be deducted from each payment made by the certificate holder after the first regular payment upon which there would be a reduction in the rate of the applicable sales charge below 9 percent of the certificate holder's gross payment. If a portion of the payments is used for the purchase of completion insurance, the amount attributable thereto shall not be included as a charge and the following phrase shall be added: “Apart from insurance premiums based upon the amount of coverage in effect at the time of payment.”
(13) The date which is 45 days from the date on which the notice will be mailed.
(14) The number of monthly or quarterly payments provided for under the plan.
(15) The dollar amount of each scheduled periodic payment to be made by the certificate holder.
(16) The period (e.g., month, quarter) for which payments are scheduled to be made under the plan.
(19) The percentage that the total charges as set forth in Item 18 are of the total payments scheduled to be made by the certificate holder over the full term of the plan.
(20) The name and address of the custodian bank or other person authorized to accept surrendered certificates.
(21) The date which is 45 days from the date on which the notice will be mailed.
(22) The name of a responsible officer of the sender with his title.