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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Gary Korn who wrote (24999)	11/30/1997 1:55:00 PM
From: Lorare	Read Replies (1) \| Respond to of 61433

Generally, the most senior officers and all directors are prohibited from "margining" their shares because Rule 144 considers them "affiliates" and requires that their shares contain a "restricted legend" which prohibits a broker from placing these shares in a margin "type." Many brokerages will, however, allow such important clients to borrow on these shares by granting a "restricted security loan" which is in effect a non-purpose loan not directly collateralized by the underlying security. The usual amount is say 20-30% of the value of the shares on deposit. For cash withdrawals this amount is lessor, for purposes of diversification this amount could be larger. It is completely up to the brokerage firm's whim. It would be exceeding rare to allow large loans to purchase more of the security since this would increase the concentration of the position which is contrary to the underlying purpose of the loan, which is diversification. Another consideration is rule 12b (the short swing profit rule.) Any "affiliate" who purchases securities must wait 6 months before they an sell the same security. So if short term liquidity is an issue, buying more would not make sense. Perhaps the most interesting consideration is Rule 145, which deals with former "affiliates" who become non affiliates by way of a merger. As I understand it, these officers must wait 6 months after a merger before they can sell any shares and then they must do so under this rule. How does this relate to current insider selling of ASND? If a merger is in the offing and liquidity is an issue, these officers are better off selling some shares now, otherwise they must wait 6 months. I hope this helps. Regards, Lorare