March 5, 1996



     Capital is the lifeblood of our economy.  By guarding the
integrity of our capital markets through full and fair
disclosure, the federal securities laws protect investors while
at the same time ease the ability for companies to raise funds
from the public. 

     These laws, however, are not administered without cost.  We
who regulate our nation's financial markets must continuously
strive to strike a balance between the benefits and the burdens
posed by the rules we promulgate.  For this reason, the SEC
periodically reviews areas of its regulatory structure to see how
they might be made more efficient and less burdensome.  
     In 1995, we undertook two such reviews.  The Advisory
Committee on Capital Formation and Regulatory Processes, ably
chaired by Commissioner Steve Wallman, is concluding its work at
this writing.  The Committee is examining ways to improve the
process for registering securities that are offered in our public
markets, including the concept of registering companies as
opposed to transactions or offerings of securities. 

     The second review, and the subject of this Report, was that
undertaken by the Task Force on Disclosure Simplification.  The
Task Force was asked to review rules and forms affecting capital
formation, with a view toward streamlining, simplifying, and
modernizing the overall regulatory scheme without compromising or
diminishing important investor protections.  To balance our
internal perspective on these matters, I asked Philip Howard, an
outspoken advocate of regulatory common sense, to lend a hand. 

     In a seven-month period, the Task Force reviewed most forms
and rules relating to capital-raising transactions; periodic
reporting pursuant to the Exchange Act; proxy solicitations; as
well as tender offers and beneficial ownership reports under the
Williams Act.  Suggestions were sought from interested
organizations and hundreds of recommendations were considered. 

     The resulting report offers a regulatory blueprint for
corporation finance in the years ahead.  Together with the
Commission's continued emphasis on the primacy of investor
protection, these common-sense recommendations will help to
ensure that ours remain the strongest, most vibrant, transparent,
and liquid capital market in the world for many years to come. 


                                   Arthur Levitt                                                    March 5, 1996

The Honorable Arthur Levitt
Chairman
Securities and Exchange Commission
450 Fifth Street, NW
Washington, D.C.  20549

Dear Chairman Levitt:

          Simplifying securities regulation offers unusual
challenges because the SEC acts, not just as the regulator of the
markets, but as referee.  Market participants are keenly aware of
the need for the SEC to maintain a level and orderly playing
field, and, in making these recommendations, the Task Force was
mindful not to tip the balance among the many market interests.

          Like all agencies, however, the SEC has suffered from
the bureaucratic tendency to create ever thicker rule books. 
Each complication breeds another level of complexity and, over
time, the original regulatory goal becomes obscured amid
thousands of words of detailed dictates.  Some SEC rules,
intended to guide market participants in daily decisions, have
become a kind of Latin liturgy, comprehensible only to those of
us who have devoted our professional lives to abstract regulatory
nuances.

          The Task Force began the process of simplification by
combing the rule books for duplication and obsolescence.  The
resulting recommendations would clean out significant regulatory
clutter.  The Task Force then tackled several well-known
regulatory problems, and has recommended overhaul of, for
example, the format for prospectuses and the regulations
governing trading during a distribution, as well as liberalizing
rules for capital-raising by smaller companies.

          The Task Force has sought to present an agenda for
simplification that is sensible and achievable in a short period.

This effort, however, is only the beginning.  Changing long-
established conventions is never easy; our eyesight has
difficulty focusing on changes that in future years may seem
natural and obvious.  To help focus future reforms, the Task
Force has identified anomalies caused by a misfit between
statutory precepts born over 60 years ago and the realities of
modern global electronic markets.  Overall, the Task Force has
sought to set out in a new direction, on a path where a
regulatory agency sees its job always to monitor its own
performance at the same time that it regulates ours.

          The few months that the Task Force worked on this
project demonstrated how ready all participants are for a fresh
==========================================START OF PAGE 3======

look.  The SEC staff members who constituted the Task Force took
on the challenge of simplification with enthusiasm and
creativity.  I could not commend them more highly.  Many experts
and practitioners offered ideas and comments revealing wisdom
born of decades of practical experience.  I thank my colleagues
at Howard, Darby & Levin, particularly Gus Caywood and Ed
Reitler, who were resourceful and helpful to me throughout the
project.

          Finally, I thank you for initiating the kind of self-
examination that I believe is critical to the effectiveness of
this and every government agency.


                                   Yours respectfully,



                                   Philip K. Howard

                         Acknowledgements


     The following is a list of the members of the Task Force on
Disclosure Simplification responsible for preparing this Report:

Office of the Chairman

Brian J. Lane, Counselor to the Chairman
(Acting Director of Division of Corporation Finance)

Division of Corporation Finance

Abigail Arms, Associate Director
P.J. Himelfarb, Special Counsel
Frank G. Zarb, Jr., Special Counsel
Douglas G. Tanner, Associate Chief Accountant
M. Kathleen Haller, Attorney-Advisor

Office of the General Counsel

Catherine T. Dixon, Counselor for Legal Policy
Elliot B. Staffin, Attorney-Advisor

Office of the Chief Accountant

John W. Albert, Associate Chief Accountant

Division of Investment Management

Kenneth J. Berman, Assistant Director

Division of Market Regulation

Larry E. Bergmann, Associate Director
Nancy J. Sanow, Assistant Director
K. Susan Grafton, Senior Counsel

                        TABLE OF CONTENTS

SUMMARY OF SIGNIFICANT RECOMMENDATIONS  . . . . . . . . . . . xii

I.   ELIMINATION OF RULES AND FORMS . . . . . . . . . . . . .   8

     SECURITIES ACT REGULATIONS . . . . . . . . . . . . . . .   8

          Eliminate Regulation B (Rules 300-346), and
          accompanying Schedules A, B, C, and D, and Forms
          1-G and 3-G, which provide a limited exemption for
          certain interests in oil or gas rights, due to its
          limited use and the availability of more
          beneficial exemptions.  . . . . . . . . . . . . . .   9

          Eliminate Regulation E (Rules 601-610) and
          accompanying Forms 1-E and 2-E, which relate to a
          limited exemption for certain types of investment
          companies designed to aid small businesses, or 
          incorporate Regulation E within Regulation A  . . .  10

          Eliminate Regulation F (Rules 651-656) and
          accompanying Form 1-F, pertaining to a limited
          exemption for assessments levied on assessable
          stock and for resales of forfeited assessable
          stock, because the adoption of Rule 504 has
          significantly reduced the Regulation's utility  . .  11

     OTHER SECURITIES ACT RULES . . . . . . . . . . . . . . .  13

          Eliminate Securities Act Rule 148, which sets
          forth a safe harbor for resales made under the
          repealed Bankruptcy Act, because the rule has
          become outdated.  . . . . . . . . . . . . . . . . .  13

          Combine Rules 152a and 236, both of which relate
          to fractional shares, and adjust the dollar cap
          under Rule 236 to account for inflation.  . . . . .  13

          Eliminate Securities Act Rules 445, 446, and 447,
          which relate to securities offered through
          competitive bidding, because these rules have
          become obsolete.  . . . . . . . . . . . . . . . . .  14

          Eliminate Rule 494, which relates to newspaper
          prospectuses of foreign government securities,
          because the rule has become outdated. . . . . . . .  15

     EXCHANGE ACT RULES . . . . . . . . . . . . . . . . . . .  15

          Eliminate paragraph (c) of Exchange Act Rule 16b-
          1, which pertains to the acquisition of securities
          resulting from a railroad or other carrier
          reorganization approved by the Interstate Commerce
          Commission  . . . . . . . . . . . . . . . . . . . .  15

          Eliminate Exchange Act Rule 16b-4, which pertains
          to certain holding company redemption
          transactions, because the rule is of marginal
          utility . . . . . . . . . . . . . . . . . . . . . .  16

     FORMS  . . . . . . . . . . . . . . . . . . . . . . . . .  16

          Consider eliminating the Form D filing requirement
          under Regulation D and Section 4(6) of the
          Securities Act because the requirement has
          outlived its usefulness . . . . . . . . . . . . . .  16

          Eliminate Form SR and, instead, require the use of
          proceeds following initial public offerings to be
          reported on Exchange Act reports  . . . . . . . . .  17

          Eliminate Exchange Act Form 8-B, regarding
          registration of securities of successor issuers,
          because Exchange Act Rule 12g-3 has rendered the
          form largely superfluous  . . . . . . . . . . . . .  18

          Eliminate Form 10-C and Rules 13a-17 and 15d-17,
          which require issuers registered under the
          Exchange Act and quoted in Nasdaq to report
          certain corporate events to the Commission and the
          NASD  . . . . . . . . . . . . . . . . . . . . . . .  19

          Eliminate the exhibit requirements of Form 11-K
          that provide little information that is not
          otherwise available to plan participants. . . . . .  19

          Eliminate Items 3(e) and 4(a) of Form F-6,
          governing the registration of American Depositary
          Receipts, because the elicited information appears
          to be rarely used . . . . . . . . . . . . . . . . .  20

II.  PRESENTATION OF INFORMATION  . . . . . . . . . . . . . .  21

     CLEAR AND ACCURATE DISCLOSURE  . . . . . . . . . . . . .  21

          Develop a "plain English" introduction to the
          prospectus to enhance its readability by
          individual investors, by eliminating boilerplate
          "legalese" and requiring a summary of key
          information . . . . . . . . . . . . . . . . . . . .  21

          Require a "plain English" summary sheet in tender
          offer statements, which would function as a "road
          map" by providing shareholders with answers to
          commonly asked questions about the offer  . . . . .  23

                   
==========================================START OF PAGE ii======
          Allow registrants to include earnings releases,
          which often are written in "plain English," in
          their quarterly reports, thereby making such
          reports more readable and easier to prepare . . . .  24

     UNEVEN DISCLOSURE  . . . . . . . . . . . . . . . . . . .  25

     TIMELY DELIVERY OF INFORMATION . . . . . . . . . . . . .  26

     ELECTRONIC MEDIA . . . . . . . . . . . . . . . . . . . .  27

III. SECURITIES ACT CONCEPTS  . . . . . . . . . . . . . . . .  29

     STRAINS IN THE REGULATORY FRAMEWORK  . . . . . . . . . .  29

          Introduction  . . . . . . . . . . . . . . . . . . .  29

          Snapshot of the Securities Act Regulatory Scheme  .  29

          Specific Strains in the Regulatory Framework  . . .  32

               Difficulties of Regulating Information Flow  .  33

               What's Being Offered and Sold: Impact of
               Proliferation of Derivative Securities on the
               Regulatory Structure . . . . . . . . . . . . .  35

               Perceived Over-Regulation of Offers  . . . . .  36

               Prospectus Delivery  . . . . . . . . . . . . .  36

          Advisory Committee on the Capital Formation and
          Regulatory Processes:  Company Registration . . . .  36

          Other Suggestions . . . . . . . . . . . . . . . . .  39

               Regulating the Flow of Information . . . . . .  39

               "Pink Herring" Registration of Offers  . . . .  40

          Quick and Narrow Fixes -- Task Force
               Recommendations  . . . . . . . . . . . . . . .  41

               Revise Rule 152  . . . . . . . . . . . . . . .  41

               Presumptive "Public Offering" Doctrine . . . .  42

          Pending Staff Initiatives . . . . . . . . . . . . .  43

               Prospectus Delivery  . . . . . . . . . . . . .  43

               Offshore Press and Internet Activities . . . .  43
              
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IV.  FACILITATING CAPITAL-RAISING . . . . . . . . . . . . . .  45

     DELIVERY OF EXCHANGE ACT PERIODIC REPORTS  . . . . . . .  46

          Eliminate Forms S-2/F-2, and permit smaller
          companies reporting on Forms S-1/F-1, and timely
          reporting for 12 months, to deliver along with
          their prospectuses periodic reports in lieu of
          restating information regarding themselves in
          prospectuses  . . . . . . . . . . . . . . . . . . .  46

     SHELF OFFERINGS  . . . . . . . . . . . . . . . . . . . .  48

          Smaller Issuers . . . . . . . . . . . . . . . . . .  48

               Allow smaller companies to price the
               securities on a delayed basis in order to
               time securities offerings more effectively
               with opportunities in the marketplace  . . . .  48

          Seasoned Issuers  . . . . . . . . . . . . . . . . .  50

               Reconsider restrictions on "at-the-market"
               shelf offerings registered by seasoned
               issuers on Forms S-3/F-3 . . . . . . . . . . .  50


               Permit companies engaging in shelf offerings
               to include secondary offerings without
               identifying the selling security holders
               until the time of the actual offering  . . . .  51

               Adopt a "universal registrant" rule, which
               would enable a parent company to name itself
               and its majority-owned subsidiaries as
               possible issuers on a shelf registration
               statement, and defer the choice of actual
               issuer until the time of takedown  . . . . . .  51

               Permit a company to reallocate securities, or
               register a new class of securities, on a
               shelf registration statement by post-
               effective amendment  . . . . . . . . . . . . .  52

               Permit seasoned issuers to register a dollar
               amount without specifying the classes of
               securities being registered  . . . . . . . . .  53

               Allow seasoned issuers to pay registration
               fees at the time securities are taken down
               from the shelf . . . . . . . . . . . . . . . .  54
                   
==========================================START OF PAGE iv======


     FUNDAMENTAL CHANGES  . . . . . . . . . . . . . . . . . .  54

          Consider clarifying what is a "fundamental change"
          to provide registrants with certainty regarding
          when a post-effective amendment is required . . . .  54

     BROKER-DEALER RESEARCH REPORTS . . . . . . . . . . . . .  55

          Consider streamlining and modernizing the safe
          harbors provided in Securities Act Rules 137, 138
          and 139 relating to the use of broker-dealer
          research reports  . . . . . . . . . . . . . . . . .  55

     MARKET-MAKING TRANSACTIONS . . . . . . . . . . . . . . .  55

          Eliminate an affiliated broker-dealer's prospectus
          delivery obligation in connection with "regular
          way" market making transactions . . . . . . . . . .  55

     AFFILIATE STATUS . . . . . . . . . . . . . . . . . . . .  56

          Consider revising Rule 144's definition of
          "affiliate," consistent with Section 2(11) of the
          Securities Act, to exclude certain persons, such
          as some outside directors, who are not actually or
          potentially in a position to control a company's
          offering activities . . . . . . . . . . . . . . . .  56

     TRUST INDENTURE ACT OF 1939  . . . . . . . . . . . . . .  57

          Permit a shelf registrant to qualify an indenture
          by post-effective amendment so that it need not
          file a new registration statement when adding a
          new class of debt securities  . . . . . . . . . . .  57

          Eliminate Forms T-1 and T-2 for determining
          trustee eligibility and, instead, require an
          issuer to make an "eligible trustee"
          representation in the registration statement  . . .  58

V.   SMALL BUSINESS INITIATIVES . . . . . . . . . . . . . . .  61

     LOCAL OFFERING EXEMPTION . . . . . . . . . . . . . . . .  61

          Liberalize the local offering exemption by adding
          a "substantial compliance" provision, expanding
          the concept of residence for individual and
          business purchasers, relaxing the triple 80
          percent "doing business" test, and shortening the
          resale holding period under Rule 147 while
          creating a new limited exemption for certain local
          offerings that cross state lines  . . . . . . . . .  61

                   
==========================================START OF PAGE v======


     REGULATION A . . . . . . . . . . . . . . . . . . . . . .  65

          Expand the Regulation A exemption by permitting
          small businesses to raise five million dollars
          within six months rather than five million dollars
          per year  . . . . . . . . . . . . . . . . . . . . .  65

     REGULATION D . . . . . . . . . . . . . . . . . . . . . .  66

          Reduce the regulatory burden on nonreporting
          companies engaged in exempt offerings under
          Regulation D by permitting the use of uncertified
          financial statements when the offering amount is
          five million dollars or less  . . . . . . . . . . .  66

VI.  SIGNIFICANT CORPORATE TRANSACTIONS . . . . . . . . . . .  68

     WILLIAMS ACT AND PROXY RULES . . . . . . . . . . . . . .  68

          Consider the creation of an integrated regulation
          for mergers, tender offers and other extraordinary
          transactions  . . . . . . . . . . . . . . . . . . .  68

               Revise proxy statement disclosure
                    requirements. . . . . . . . . . . . . . .  68

               Clarify the treatment of cash mergers. . . . .  69

               Combine Schedules 13E-4 and 14D-1. . . . . . .  69

               Move substantive disclosure requirements out
               of rules and into schedules. . . . . . . . . .  69

          Reduce the disclosure obligations for an investor
          with a passive investment purpose, who acquires or
          holds more than five percent but less than a
          certain percentage of a company's equity
          securities, by allowing such an investor to file a
          short form Schedule 13G rather than a Schedule 13D
          report  . . . . . . . . . . . . . . . . . . . . . .  70

               Permit investors with passive investment
               intent to use Schedule 13G . . . . . . . . . .  70



               Codify staff position permitting control
               persons of institutional investors to file
               jointly with such institutional investors on
               Schedule 13G under certain conditions  . . . .  71

          Exemptive Order For Multinational Tender Offers . .  72

                   
==========================================START OF PAGE vi======

          Consider permitting direct mailing of proxy
          soliciting materials to non-objecting beneficial
          owners of voting securities held of record by
          brokers, banks and other intermediaries . . . . . .  72

          Consider eliminating filing of preliminary proxy
          statements in contested elections of directors  . .  73

          Study the shareholder proposal process  . . . . . .  73

     EXCHANGE OFFERS  . . . . . . . . . . . . . . . . . . . .  74

          Place certain seasoned issuer exchange tender
          offers on the same footing as cash tender offers
          by permitting such issuers' registration
          statements to go effective automatically upon
          filing  . . . . . . . . . . . . . . . . . . . . . .  74

          In registration statements relating to exchange
          offers or other acquisitions involving
          nonreporting target companies, require only
          financial information about the target company
          that the target company has provided to its
          shareholders  . . . . . . . . . . . . . . . . . . .  75

VII. REGISTRATION . . . . . . . . . . . . . . . . . . . . . .  77

     INTERNAL REORGANIZATIONS . . . . . . . . . . . . . . . .  77

          Exempt certain internal holding company
          reorganizations from registration so long as the
          reorganization is the sole purpose of the
          transaction and fundamental shareholder rights and
          interests remain substantially unchanged  . . . . .  77

          Ease financial disclosure requirements for
          internal holding         company reorganizations
          that are subject to registration  . . . . . . . . .  78

     SPIN-OFFS  . . . . . . . . . . . . . . . . . . . . . . .  79

          Codify a rule permitting certain unregistered
          spin-offs of subsidiaries or divisions by
          reporting companies . . . . . . . . . . . . . . . .  79

     EXCHANGE OFFERINGS . . . . . . . . . . . . . . . . . . .  79

          Broaden the circumstances in which the guaranteed
          convertible securities of a wholly owned
          subsidiary can be exchanged for those of its
          parent without the expense and delay of
          registration  . . . . . . . . . . . . . . . . . . .  79
                  
==========================================START OF PAGE vii======


          Codify staff positions permitting certain
          unregistered issuances of securities pursuant to
          Securities Act Section 3(a)(10) that have been
          subject to judicial or administrative review and
          approval  . . . . . . . . . . . . . . . . . . . . .  80

     AMERICAN DEPOSITARY RECEIPTS . . . . . . . . . . . . . .  81

          Eliminate the requirement to register under
          Section 12(b) of the Exchange Act American
          Depositary Receipts registered on Securities Act
          Form F-6  . . . . . . . . . . . . . . . . . . . . .  81

VIII.     REPORTING . . . . . . . . . . . . . . . . . . . . .  82

     SUSPENSION AND TERMINATION OF REGISTRATION AND
     REPORTING OBLIGATIONS  . . . . . . . . . . . . . . . . .  82

          Expand the circumstances in which companies may
          terminate registration under Section 12 of the
          Exchange Act  . . . . . . . . . . . . . . . . . . .  82

          Similarly revise the rules governing when
          companies may suspend Section 15(d) reporting
          obligations . . . . . . . . . . . . . . . . . . . .  83

          Promulgate a rule pursuant to Section 12(h) of the
          Exchange Act permitting the modification of
          periodic reporting obligations for certain
          companies in bankruptcy or liquidation  . . . . . .  83

          Re-examine periodic reporting obligations under
          Section 15(d) of the Exchange Act to ensure that
          such obligations are more closely aligned with the
          period during which securities are actually sold  .  84

     CONCURRENT EXCHANGE ACT/SECURITIES ACT REGISTRATION  . .  85

          Permit a company to register concurrently a public
          offering under the Securities Act and a class of
          securities under the Exchange Act by filing a
          single form that would cover both registrations . .  86

     SECURITIES ACT FORM ELIGIBILITY  . . . . . . . . . . . .  86

          Permit a company to switch to a shorter Securities
          Act form at the time of filing any amendment if it
          has become eligible to use the shorter form since
          filing its initial registration statement.  . . . .  86

          Exclude automatically effective registration
          statements on Form S-8 from the general rule that

                  
=====================================START OF PAGE viii======

          filings are deemed to be on the proper form unless
          objection is raised by the Commission prior to
          effectiveness . . . . . . . . . . . . . . . . . . .  87

IX.  DISCLOSURE GENERALLY . . . . . . . . . . . . . . . . . .  88

     ENVIRONMENTAL LEGAL PROCEEDINGS  . . . . . . . . . . . .  88

          Eliminate the $100,000 "one size fits all"
          materiality standard for certain environmental
          legal proceedings and replace it with a general
          materiality standard to ensure that companies will
          not be required to disclose non-material
          information . . . . . . . . . . . . . . . . . . . .  88


     EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . .  88

          Consider clarifying and streamlining the rules
          governing when companies must disclose executive
          compensation information in registration and proxy
          statements  . . . . . . . . . . . . . . . . . . . .  89

     OTHER REGULATION S-K MODIFICATIONS . . . . . . . . . . .  89

          Streamline Item 101's disclosure requirements
          relating to the description of the registrant's
          business by eliminating duplication of
          quantitative information provided in the financial
          statements  . . . . . . . . . . . . . . . . . . . .  90

          Revise Item 102 relating to the description of
          property to elicit more meaningful and material
          disclosure  . . . . . . . . . . . . . . . . . . . .  90

          Limit the scope of Item 507, relating to
          securities offered for the account of a company's
          individual security holders, so that a company
          only would have to disclose information regarding
          certain of its selling affiliates and significant
          beneficial owners rather than all of its selling
          security holders  . . . . . . . . . . . . . . . . .  90

          Move undertakings in Item 512 into a rule in
          Regulation C, and clarify when offers and sales
          may be made when a registrant has an obligation to
          file a Section 10(a)(3) updating prospectus.  . . .  91

          Eliminate Item 702's requirement to state the
          general effect of any arrangement regarding
          indemnification of a registrant's directors,
          officers, or control persons, which typically

                
==========================================START OF PAGE ix======

          results in "boilerplate" disclosure of minimal
          value to investors  . . . . . . . . . . . . . . . .  92

          Adjust certain dollar thresholds in Regulations S-
          K and S-X for inflation since the time of their
          adoption  . . . . . . . . . . . . . . . . . . . . .  92

     EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . .  93

          Create a new exhibit form, which would enable a
          company to file most of its exhibits on one form,
          thereby making such exhibits easier to locate and
          update  . . . . . . . . . . . . . . . . . . . . . .  93

          Permit automatic effectiveness of a post-effective
          amendment filed solely to add an exhibit  . . . . .  94

          Eliminate specific exhibits that appear to be
          rarely used or contain information that is
          otherwise available . . . . . . . . . . . . . . . .  94

     INDUSTRY SPECIFIC DISCLOSURE . . . . . . . . . . . . . .  95

          Modernize the existing Industry Guides, consider
          adopting additional industry-specific disclosure
          rules, and relocate all such guides and rules
          within Regulation S-K . . . . . . . . . . . . . . .  95


     STAFF LEGAL BULLETINS  . . . . . . . . . . . . . . . . .  99

          Consider publishing "Staff Legal Bulletins" to
          announce significant legal interpretations of
          interest to a wide group of issuers . . . . . . . .  99

     EDGAR  . . . . . . . . . . . . . . . . . . . . . . . . .  99

          As part of the study regarding the EDGAR filing
          system, consider whether certain EDGAR forms
          should be eliminated at some future date. . . . . .  99

          Enable EDGAR filers to receive certain filing date
          adjustments without the need for a case-by-case
          determination by the staff as to whether the
          request should be granted.  . . . . . . . . . . . . 100

          Pursue an electronic linkage of EDGAR with the
          exchanges, Nasdaq and NASAA . . . . . . . . . . . . 100

X.   TRADING PRACTICES RULES  . . . . . . . . . . . . . . . . 102

     DISCUSSION OF THE TRADING PRACTICES RULES  . . . . . . . 102

                   
==========================================START OF PAGE x======

     RECOMMENDATIONS  . . . . . . . . . . . . . . . . . . . . 103

          Replace the trading practices rules, which have
          become unnecessarily complicated and burdensome,
          with a new, streamlined, more understandable
          regulation that would restrict a narrower range of
          activities, persons and issuers . . . . . . . . . . 103

XI.  ACCOUNTING DISCLOSURE CHANGES  . . . . . . . . . . . . . 106

          Permit companies to "income average" when
          determining the significance of acquisitions and
          equity method investments, thereby refining the
          circumstances when the company must provide
          separate financial statements to those instances
          where the acquisition or investment is truly
          significant . . . . . . . . . . . . . . . . . . . . 106

          Reduce the effect of the 45-day "black out" period
          during which many registrants are effectively
          prevented from undertaking a public offering by
          narrowing the scope of the accounting rules
          requiring updated audited financial statements in
          certain registration statements declared effective
          45 days after the registrant's fiscal year end  . . 108

          Expand the circumstances in which a company may
          incorporate by  reference audited financial
          statements of significant investees so that such
          statements need not be reproduced in filings with
          the Commission. . . . . . . . . . . . . . . . . . . 109

          Streamline the complex and often confusing rules
          requiring separate   audited financial statements
          of affiliates whose stock collateralizes a
          registrant's securities, and of persons who
          guarantee a registrant's securities . . . . . . . . 109

     ELIMINATION OF ACCOUNTING RULES  . . . . . . . . . . . . 111

          Streamline accounting and related disclosure
          requirements by eliminating duplicative rules and
          those rules that have outlived their usefulness . . 111

XII.  TECHNICAL CHANGES . . . . . . . . . . . . . . . . . . . 116

          Make technical changes to numerous other rules and
          forms, which in the aggregate should render the
          Commission's disclosure requirements easier to
          understand and follow . . . . . . . . . . . . . . . 116

XIII.     OTHER CURRENT COMMISSION INITIATIVES  . . . . . . . 124

                   
==========================================START OF PAGE xi======


          Streamlining Disclosure Requirements Relating to
          Significant Business Acquisitions; Quarterly
          Reporting of Unregistered Equity Sales  . . . . . . 124

          Relief from Section 12(g) Registration for Small
               Issuers  . . . . . . . . . . . . . . . . . . . 124

          Solicitations of Interest Prior to Initial Public
               Offerings  . . . . . . . . . . . . . . . . . . 124

          Rule 144 -- Holding Period; New Trading
               Strategies . . . . . . . . . . . . . . . . . . 125

          Exemption for Certain California Limited Issues . . 125

          Problematic Practices Under Regulation S  . . . . . 126

          Streamlining and Consolidation of Executive and
          Director Compensation . . . . . . . . . . . . . . . 126

          Abbreviated Financial Statements  . . . . . . . . . 126

          Section 16 - Ownership Reports and Trading by
          Officers, Directors and Principal Security
          Holders . . . . . . . . . . . . . . . . . . . . . . 126

          Derivatives Disclosure  . . . . . . . . . . . . . . 127

          Use of Electronic Media . . . . . . . . . . . . . . 127

                  
==========================================START OF PAGE xii======


SUMMARY OF SIGNIFICANT RECOMMENDATIONS


     Chairman Arthur Levitt organized the Task Force on
Disclosure Simplification in August 1995 to review forms and
rules relating to capital-raising transactions, periodic
reporting pursuant to the Exchange Act, proxy solicitations, and
tender offers and beneficial ownership reports under the Williams
Act.  The goal was to simplify the disclosure process and,
consistent with investor protection, to make regulation of
capital formation more efficient. 

     To aid its review, the Task Force met over a seven-month
period with issuing companies, investor groups, underwriters,
accounting firms, lawyers and others who participate daily in the
capital markets.  These participants helped the Task Force to
identify and formulate reforms that reduce costs and regulatory
burdens without impairing the transparency and integrity of our
capital markets.  None suggested wholesale deregulation, and
virtually all emphasized the importance of basic regulatory goals
to preserve orderly markets.  

     The recommendations that follow would eliminate or modify
many rules and forms, and simplify several key aspects of
securities offerings.  Certain recommendations reinforce the
Commission's other initiatives to improve the disclosure process,
and should be viewed as part of those ongoing efforts.  The
recommendations roughly fall into three categories:

     (1)  Weeding out forms and regulations that are duplicative
          of other requirements or have outlived their
          usefulness;

     (2)  Requiring more readable and informative disclosure
          documents; and

     (3)  Reducing the cost of securities offerings and
          increasing access of smaller companies to the
          securities markets.

     In addition to specific recommendations, the Task Force has
sought to identify anomalies of the regulatory structure.  The
basic structure has served the markets well for over 60 years,
but should be rethought in the age of novel financial instruments
and virtually instantaneous electronic communication and
clearance settlement practices.  Re-configuring these regulatory
tenets must be done with caution, in order to avoid tipping the
balance in favor of certain market participants or jeopardizing
investor protection.  But the need for modernization is apparent,
and the Task Force has identified areas for Commission review. 
Of course, in considering how the Commission would like to
proceed with reviewing any of the matters discussed in the
Report, the Commission should thoroughly consider the scope of
its authority and other related issues.

     A summary of the principal recommendations follows.


I.  Elimination and Streamlining of Rules and Forms

     The Task Force recommends eliminating or modernizing many
rules relating to disclosure and registration procedures to
simplify the rule books and reduce the cumulative burden of
compliance.  By eliminating unnecessary detail, these
recommendations also should help focus disclosure on issues of
importance to investors.  If all of the recommendations are
implemented, the Commission would eliminate 81 rules and 22
forms, and modify dozens of others.  In total, the
recommendations would eliminate or modify approximately 23
percent of the rules and 54 percent of the forms and schedules
reviewed by the Task Force.

     Selected examples of the recommendations are as follows.

     Streamline Accounting Disclosures

     Many accounting rules have become outdated or duplicative of
the requirements of "generally accepted accounting principles,"
resulting in unnecessary complication and expense.  Upon review,
the Task Force recommends eliminating 11 accounting rules and 9
staff accounting bulletins.  The Task Force also recommends
modifying other accounting rules that appear to be unnecessarily
restrictive.  

     For example, some companies awaiting audit of their year-end
financial statements have a "black-out" period in which they
cannot issue new securities.  The Task Force believes this period
is unduly restrictive in light of other ongoing disclosure
obligations, and recommends retaining the requirement only for
initial public offerings.  These and other accounting-related
recommendations are discussed more fully under "Accounting
Disclosure Changes."

     Eliminate Outdated Regulation

     Many rules, while well conceived when initially adopted,
have become obsolete.  For example, Regulation B, adopted in 1963
(and substantially revised in 1972), provides an exemption for
certain offerings of "fractional undivided interests" in oil and
gas rights.  Despite its eight pages in the Code of Federal
Regulations, the Regulation has fallen largely into disuse as a
result of changes in the energy market and the availability of
other exemptions.  Another set of obsolete rules was promulgated
in the late 1940s to govern securities offerings through

                   
==========================================START OF PAGE 2======


competitive bidding with multiple underwriters.  The rules were
adopted largely to accommodate other rules which have themselves
already been discarded.  As explained more fully under
"Elimination of Rules and Forms," the Task Force recommends that
these and similarly outdated rules be eliminated.

     Disclosures required of issuers include numerous outdated or
ostensibly immaterial categories.  The Task Force recommends
modifying dozens of requirements in virtually every area of
corporate finance, from raising dollar thresholds for disclosure
in Regulations S-K and S-X to updating industry-specific
disclosure requirements in the Industry Guides.

     Another outdated standard is the requirement that companies
disclose government environmental proceedings that may result in
monetary sanctions of $100,000 or more.   Depending largely on
the size of the company, this requirement can result in
disclosure that is not material to a particular company. 
Therefore, the Task Force proposes that the Commission replace
the $100,000 "one size fits all" standard with a more flexible
general materiality standard, or raise the threshold to a higher
dollar amount.  These and other recommendations are discussed
more fully under "Disclosure Generally." 

     The Task Force also found unnecessary disclosure burdens in
other areas.  One example requires issuers making an exchange
offer for the securities of a non-reporting company to provide
audited financial statements of such company whether or not
audited financials have been provided in the past.  There is no
apparent need for requiring the acquiror to provide more
financial information about the target to the target's
shareholders than the target's shareholders have been provided in
the past.  As discussed under "Significant Corporate
Transactions," elimination of this requirement would both
streamline disclosures in exchange offer registration statements
and reduce the cost of preparing such documents.


II.   Simplify Disclosure Formats

     A cornerstone of the securities laws is the requirement of
full and fair disclosure.  The prospectus -- the traditional
offering document -- describes the company and its management and
financial condition so that market participants can make an
informed judgment about a company and its prospects in deciding
whether to buy its securities.  While prospectuses are
indispensable sources of information for market professionals and
therefore to the market, the reality is that these and other
disclosure documents are often written in a manner that has been
described as "turgid," "opaque" and "unreadable."  Dense writing,
with legal boilerplate and repetitive descriptions of the
company, has become the standard convention.  

               
==========================================START OF PAGE 3======

     One reason for this convention appears to be stylistic and
formatting habits that have become entrenched by years of
practice.  It is undoubtedly easier to copy from previous
disclosures than it is to formulate new and more effective ways
to communicate with investors.  The Commission's own rules -- for
example, requiring certain disclosures to be presented in almost
unreadable bold capital letters -- may have contributed to the
problem.  Fear of liability by companies and underwriters for
omissions also may have created a bias towards repetitive and
over-inclusive disclosures, with trivial information sometimes
receiving as much attention as material information. 

     The Task Force recommends, as a first step, that the
Commission adopt a new format for the opening pages of disclosure
documents under the Securities Act of 1933 ("Securities Act") and
tender offer documents under the Securities Exchange Act of 1934
("Exchange Act").  The Task Force also urges the Commission to
continue its plain-English initiatives and make other
modifications to the disclosure rules to encourage disclosure
that is both concise and more readable.  

     For prospectuses, the Task Force suggests that the dense and
uninformative disclosure on cover pages be replaced with
easy-to-read disclosure that would summarize important aspects of
the offering.  Today, the opening pages of prospectuses are
dominated by boilerplate legal disclaimers.  Under the Task
Force's idea, the first few pages would answer the more common
questions asked by investors, such as a description of the
securities (including special features), identification of the
issuer and underwriter, an explanation of why funds are needed,
the offering price, the securities' trading symbol (if any) and
any special characteristics of the offering, including risk
factors.  Two illustrations of possible formats are included in
"Presentation of Information." 

     Similar problems of readability occur with documents used in
extraordinary business transactions such as tender offer
documents.  Investors typically receive dense offering and
transmittal documents that contain an overwhelming amount of
information.  The Task Force recommends that a standardized
summary sheet be included on the inside cover of each Offer to
Purchase.  An outline of the information required and a sample
summary also are included in "Presentation of Information."


III.  Reduce the Costs of Securities Offerings

     Permit Delayed Offerings and Simplify Reporting By Smaller
     Companies

                   
==========================================START OF PAGE 4======


     Over a decade ago, the Commission significantly streamlined
the registration process for certain large publicly-traded
issuers with three years of reporting history with the
Commission.  By introducing "shelf registration" for primary
offerings of securities by these issuers, the Commission
permitted certain relatively large, seasoned companies to sell
some or all of the securities under an already effective
registration statement at a time of their own choosing.  In 1992,
the Commission reduced the reporting period and market float
requirements of Form S-3 and thereby extended the benefits of
shelf registration to a wider variety of issuers.  This
flexibility allowed such companies to take advantage of perceived
"market windows." 

     The Task Force recommends that a modified shelf registration
procedure be provided to smaller companies that have filed timely
public reports with the Commission for at least 12 months.  This
would provide approximately 4,800 companies with greater
flexibility with respect to the timing of their offerings.

     The Task Force also recommends permitting these smaller
companies to deliver certain prior periodic reports to
prospective investors instead of repeating similar information in
the prospectus.  This delivery method, now used by companies
filing on Forms S-2/F-2 and reporting for 36 months, saves
printing and other costs and results in a streamlined
registration statement more focused on the proposed transaction. 
The Task Force believes that this delivery method should be
expanded to issuers timely reporting for at least 12 months and
using Forms S-1/F-1 (which will render Forms S-2/F-2
superfluous).  

     These proposals are discussed in more detail under
"Facilitating Capital-Raising." 

     Exempt Certain Small Local Offerings

     Under Regulation A, small companies may offer publicly up to
five million dollars worth of unregistered securities within a
12-month period by way of a short-form offering circular.  When
it created this exemption, the Commission recognized that the
costs of registration may otherwise effectively preclude such
smaller offerings.  The Task Force recommends that this exemption
be liberalized to permit an eligible company to raise five
million dollars within each 6-month period, rather than each
12-month period.  This exemption would be of particular
assistance to a rapidly growing, small company. 

     Another existing exemption that is advantageous for small
businesses permits certain unregistered offerings within the
borders of a single state.  The Task Force recommends relaxing
the restrictions in the Commission's safe harbor rule, Rule 147,

            
==========================================START OF PAGE 5======

to make the exemption more useful to smaller companies.  In
addition, the Task Force recommends that the Commission adopt a
"regional" exemption for offerings up to five million dollars
that cross state lines but remain within a prescribed regional
area.  This exemption would permit offerings in a metropolitan
area that is not contained within a single state.  A fuller
discussion of these proposals is included under "Small Business
Initiatives".

     Some of these recommendations that affect small business
will be of interest to state securities regulators; the
Commission should follow its normal practice of coordinating such
initiatives with the states.

     Seasoned Issuers

     The Report includes several recommendations to reduce costs
of registration and enhance timing flexibility for larger, more
seasoned issuers, such as permitting shelf registrants to
register dollar amount of offerings without any description of
the securities to be offered and deferring payment of filing fees
until the time of the actual offering.  These and similar
recommendations are described in "Facilitating Capital-Raising."


IV.  Simplify Other Regulatory Requirements

     In addition to the reforms designed to reduce costs of
registration, the Task Force has sought to identify rules and
requirements that may have unnecessarily affected decisions in
the capital-raising process or caused unnecessary compliance
costs.

     Overhaul the Rules on Trading During a Securities
     Distribution

     Few rules have resulted in more day-to-day effort by
securities firms and by Commission staff than the rules
regulating purchases by an issuer or underwriter during a
securities distribution (Exchange Act Rules 10b-6, 10b-6A, 10b-7,
and 10b-8).  Few would take issue with their purpose:  to protect
the integrity of the offering process by precluding interested
parties from activities influencing the market price for the
offered security.  But few, also, would dispute that these
"trading practices rules" have become unnecessarily complicated
and, in many respects, outdated.

     The Task Force recommends a wholesale revision of the
"trading practices rules"  with a new regulation that would be
narrower in scope and easier to understand and follow.  Among
other things, the new rules would establish separate requirements
for issuers and other distribution participants, and in the case

                   
==========================================START OF PAGE 6======

of underwriters and broker-dealers, exempt actively-traded
securities, permit a greater range of activities by distribution
participants, make an exception for de minimis transactions, and
substantially reduce the rule's application to debt securities. 
The new regulation also would broaden the opportunities for
permissible passive market-making and provide more flexibility
for stabilizing transactions.  Finally, the Task Force recommends
rescission of Rule 10b-8 entirely, which covers rights offerings.

     These recommendations are discussed in greater detail under
"Trading Practices Rules."

     Place Exchange Tender Offers on the Same Timetable as Cash
     Tender Offers

     Today, a cash tender offer can be commenced immediately upon
filing appropriate disclosure documents.  A tender offer that
includes securities rather than cash, however, must wait until a
registration statement relating to the offered securities is
filed, possibly reviewed by Commission staff, and declared
effective before the offer can be commenced.  The Task Force
recommends that most registration statements relating to exchange
tender offers filed by seasoned issuers eligible to use the short
form registration statements, Forms S-3/F-3, be deemed effective
automatically upon filing.  This recommendation, discussed more
fully under "Significant Corporate Transactions," would place
such exchange tender offers on the same footing as cash tender
offers.  Just as with the current practice involving cash tender
offers, exchange offer registration statements would remain
subject to post-effective review by Commission staff.


V.  Securities Act Concepts

     The statutory framework of the Securities Act, which has
served the financial markets well for over 60 years, currently is
being reexamined in light of the constant evolution of today's
capital markets.  A number of initiatives have been undertaken by
the Commission, Congress, state regulators and the private sector
to reassess the continuing effectiveness of the Securities Act
registration, prospectus delivery and other requirements.

     The rapidly evolving world in which we live is placing many
strains on the system.  Technological developments and
globalization, for example, have made securities regulation today
quite different from 1933.  Many other strains exist as well.

     A number of approaches to address some or all of the strains
currently are being debated.  These include the global
alternative of "company registration" being considered by the
Advisory Committee on the Capital Formation and Regulatory
Processes chaired by Commissioner Steven M.H. Wallman, and less

                   
==========================================START OF PAGE 7======

global alternatives, such as narrowing the definition of "offer,"
which would allow issuers to "test the waters" for interest
without the cost of full-blown registration; or permitting a
"pink herring" registration, an alternative to the previous
approach, that would require companies to file a simplified
registration statement in order to "test the waters."

     Pending further consideration of all of the alternatives,
the Task Force recommends a quick fix dealing with "integration"
of private and public offerings to avoid unnecessary frictions
for issuers in their capital-raising activities as well as other
initiatives for seasoned issuers.  

     A discussion of possible alternative approaches, as well as
specific recommendations, is included under "Securities Act
Concepts."
   

                  *   *   *   *   *   *   *   *


     These and many other recommendations are discussed in more
detail under the following thirteen tabs:  Elimination of Rules
and Forms; Presentation of Information; Securities Act Concepts;
Facilitating Capital-Raising; Small Business Initiatives;
Significant Corporate Transactions; Registration; Reporting;
Disclosure Generally; Trading Practices Rules; Accounting
Disclosure Changes; Technical Changes; and Other Current
Commission Initiatives.

                   
==========================================START OF PAGE 8======


I.   ELIMINATION OF RULES AND FORMS


     This section includes Task Force recommendations that focus
on ways to streamline the non-financial disclosure rules.  In
some cases, the Task Force recommends eliminating forms or rules
that no longer serve a significant purpose, because more recent
regulatory initiatives by the Commission have rendered them
outdated and superfluous.  In other instances, the Task Force
recommends eliminating rules or forms that impose disclosure
requirements that are overly burdensome by comparison with the
utility of the disclosures elicited. 


     A.   SECURITIES ACT REGULATIONS


          1.   Eliminate Regulation B (Rules 300-346), and
               accompanying Schedules A, B, C, and D, and Forms
               1-G and 3-G, which provide a limited exemption for
               certain interests in oil or gas rights, due to its
               limited use and the availability of more
               beneficial exemptions.

     Regulation B provides a conditional, limited exemption from
Securities Act registration for offerings of "fractional
undivided interests" in oil or gas rights of up to $250,000 per
offering.  The Commission originally enacted Regulation B in 1963
and last revised it substantially in 1972.

     In order to obtain the Regulation B exemption, an offeror of
fractional undivided interests in certain specified oil or gas
rights must file an offering sheet with the Commission at least
ten days prior to commencing the offering.  The offering sheet
must contain the information specified by Schedules A, B, C, or
D, depending on the distinct type of oil/gas interest, as well as
on whether the enterprise is producing or non-producing.  These
schedules require detailed information concerning the nature and
amount of the interests offered; a discussion of the legal rights
and obligations created by such interests; a description of the
property in question; for producing interests, a history of the
oil/gas production activities in the field in question; and, for
non-producing interests, a description of plans for the drilling
of wells, including the estimated costs and method of financing
such drilling.  Regulation B does not require any offeror to
furnish current or past financial statements.

     Regulation B also requires an offeror to submit two post-
offering reports:  Form 1-G and Form 3-G.  Form 1-G, which is
filed with the Commission, requires disclosure of information
pertaining to each sale of the offered securities.  Form 3-G,
which is sent to each purchaser, as well as filed with the

                   
==========================================START OF PAGE 9======

Commission, must disclose more detailed information pertaining to
the offering's results, including the actual cost of drilling and
expenses incurred in the selling effort.  

     Between 1966 and 1977, the Commission received 6,904
Regulation B filings.  This relatively large number of Regulation
B filings corresponded with an increase in oil/gas drilling
activity and related financing triggered by the energy crisis of
the mid-1970s.  In 1975 alone, the Commission received 625
Regulation B offering sheets pertaining to $35.4 million in total
sales.  


     However, by 1977 the number of Regulation B offering sheets
filed with the Commission had dropped to 96, covering only $7.3
million in aggregate sales of oil/gas securities.  Since then,
the number of Regulation B offering sheets filed has steadily
declined, from 94 such filings in 1980, to 13 in 1985, seven in
1990, four in 1992, and, finally, zero in 1995.  Moreover, since
enactment of Regulation B's reporting requirements in 1972, the
Commission has received only one each of Form 1-G and Form 3-G.

     The decrease in submissions may be due to a decrease in
small scale oil/gas ventures occurring in the United States since
the end of the 1970s energy crisis, as well as the availability
of other exemptions, such as the limited offering exemptions from
registration set forth in Regulation D, or the private placement
exemption under Section 4(2) of the Securities Act.  Of these
exemptions, Rule 504 of Regulation D probably offers the most
benefits to the small oil or gas issuer.  There are several
reasons why such an issuer, which is not an Exchange Act
reporting company, would elect to proceed under Rule 504 rather
than Regulation B when claiming an exemption for an offering of
fractional undivided oil or gas interests.  First, under Rule
504, an offeror can claim an exemption for a maximum amount of
securities that is four times greater than that allowed under
Regulation B ($1,000,000 compared to $250,000).  Second, the Rule
504 exemption is not conditioned on specific disclosures other
than the notice filing of Form D (which the Task Force proposes
to eliminate).  Third, while Rule 504 is available for an
offering of fractional undivided interests in an oil or gas
limited partnership, Regulation B is unavailable for such an
offering.

     Given the current lack of use by small oil/gas financiers of
the Regulation B exemption, the availability of a more flexible
exemption under Rule 504, and the potential availability of other
limited offering exemptions with higher dollar limits, retention
of this exemption with its disclosure requirements serves little
purpose.  Accordingly, the Task Force recommends the elimination
of Regulation B in its entirety, along with the elimination of
Schedules A, B, C, and D, and Forms 1-G and 3-G.

                 
==========================================START OF PAGE 10======

          2.   Eliminate Regulation E (Rules 601-610) and
               accompanying Forms 1-E and 2-E, which relate to a
               limited exemption for certain types of investment
               companies designed to aid small businesses, or 
               incorporate Regulation E within Regulation A.

     Regulation E provides an exemption from registration under
the Securities Act for small offerings of securities issued by
two types of investment companies:  small business investment
companies ("SBICs") and business development companies ("BDCs"). 
Regulation E was adopted in 1958, shortly after the enactment of
the Small Business Investment Act of 1958 ("SBIA"), and was
extended to BDCs in 1984.  Both types of companies were
authorized by Congress in order to stimulate the flow of capital
to small businesses.  

     SBICs were authorized pursuant to the SBIA.  Their
activities are limited to investing in small businesses by
purchasing securities and making loans.  Such investments are
facilitated by the Small Business Administration, which is
authorized to license SBICs and to provide or guarantee loans to
SBICs at favorable rates.  BDCs are investment companies that are
regulated under specific provisions under the Investment Company
Act of 1940 ("Investment Company Act").  BDCs must make specific
types of investments in small businesses, as well as provide
significant managerial assistance to the companies in which they
invest. 

     Regulation E has been used infrequently.  The Commission has
received a total of only 40 Form 1-E filings by 14 investment
companies, with all but eight of these filings made prior to 1985
and only one since 1990.  Furthermore, since Regulation E's
inception, the Commission has received only four Form 2-E
filings.  

     There may be several reasons for Regulation E's limited use.

First, the five million dollar limit on offerings under the
Regulation E exemption may tend to discourage its use.  Many
SBICs and BDCs may prefer instead to conduct private placements
or registered public offerings, which are not subject to this
limitation.  Second, Regulation E is available only to those
SBICs that are registered investment companies.  Most SBICs,
however, elect to avoid registration as investment companies by
meeting the exception in Investment Company Act Section 3(c)(1)
for any issuer that has fewer than 100 beneficial owners and does
not make a public offering.  Unregistered SBICs therefore may not
avail themselves of Regulation E even if it were available, since
such an offering, if made to the public, may result in the loss
of the exemption from Investment Company Act registration.
                   

==========================================START OF PAGE 11======

     Another reason for the disuse of Regulation E may be that
the same form that a SBIC must file to register under the
Investment Company Act (Form N-5) can also be used by the SBIC to
fulfill its Securities Act registration requirements.  Because of
the convenience afforded by Form N-5's dual function, a SBIC that
intends to register under the Investment Company Act is more
likely to register an initial public offering of securities on
Form N-5.

     The Commission's experience with Regulation E suggests that
there does not appear to be any need for a small offering
exemption for SBICs and BDCs.  Consequently, the Task Force
recommends eliminating Regulation E and the two forms that are
required to be filed with the Commission in connection with its
use, Forms 1-E and 2-E.  

     Alternatively, the Task Force recommends that the Commission
consider eliminating Regulation E and expanding the Regulation A
exemption to include registered SBICs and BDCs.  This approach
has two advantages.  First, the Commission could, at the same
time, consider ways to make unregistered small offerings more
attractive to SBICs and BDCs by, for example, extending
Regulation A's $1,500,000 limit for selling securityholder
resales to these issuers.  The Task Force's recommendation to
amend Regulation A to permit issuers to raise five million
dollars during any six month period rather than five million
dollars per year also may benefit registered SBICs and BDCs. 
Second, while Regulation E differs from Regulation A in certain
respects that are attributable to special characteristics of
SBICs and BDCs, the Task Force believes that amending Regulation
A to accommodate registered SBICs and BDCs would be relatively
easy to accomplish.


          3.   Eliminate Regulation F (Rules 651-656) and
               accompanying Form 
               1-F, pertaining to a limited exemption for
               assessments levied on assessable stock and for
               resales of forfeited assessable stock, because the
               adoption of Rule 504 has significantly reduced the
               Regulation's utility.

     Regulation F provides a conditional limited exemption from
Securities Act registration for assessments levied on assessable
stock and for resales of forfeited assessable stock.  The
Commission promulgated Regulation F in 1959 at the same time that
it enacted Securities Act Rule 136.  Rule 136(c) defines
"assessable stock" to mean "stock which is subject to resale by
the issuer . . . in the event of a failure of the holder of such
stock to pay any assessment levied thereon."  Thus, assessable
stock is stock the purchase of which triggers an annual
obligation to pay an amount, termed an "assessment," to the
                   
==========================================START OF PAGE 12======

issuer in addition to the original offering price.  If the buyer
fails to pay the levied assessment after receiving a notice of
delinquency from the issuer, the issuer can reclaim the original
stock and resell it, usually at an auction.

     Under Rule 136, both the levying of an assessment on
assessable stock and the resale of forfeited assessable stock
constitute the issuance of securities, which trigger registration
requirements under the Securities Act.  Regulation F establishes
a partial conditional exemption from registration for these
transactions.  In order to qualify for the exemption, a company
must be incorporated or have its principal business operations in
the United States.  In addition, a company cannot claim more than
$300,000 in exempted assessable stock transactions for any one
calendar year.  
             
     A company also must file a Form 1-F with the Commission's
regional office closest to its principal business operations at
least 10 days prior to levying any claimed exempted assessment or
sale of delinquent assessable stock.  Form 1-F requires
disclosure of pertinent information about the issuer; its 10
percent beneficial stockholders; its directors and officers; its
levied assessments, resales of forfeited assessable stock, and
other unregistered securities issued during the preceding year;
and its current proposed assessments or resales of forfeited
assessable stock.
  
     Historically, only two types of companies have issued
assessable stock:  mining companies and water extraction/delivery
companies, also known as mutual water companies.  Since the
promulgation of Regulation F, approximately 40 such companies
have filed a total of 234 1-F forms.  Most of these filings
occurred between 1967 and 1982.  Only 32 Form 1-F filings have
occurred between 1983 and 1995.  Ten companies were responsible
for those filings.  Since 1992, only three companies have filed a
total of 10 1-F forms with the Commission.

     The primary reason for the recent steady decline of Form 1-F
filings appears to be the availability of more beneficial limited
offering exemptions, particularly the Rule 504 exemption. 
Virtually all Regulation F companies have been non-reporting
companies eligible to claim a Rule 504 exemption.  In 1982, the
Commission adopted its first version of Rule 504.  Following that
year, the annual number of Form 1-F submissions steadily
decreased from nine in 1982, to six in 1983, three in 1984, zero
in 1985 and 1986, and an average filing rate of two to three for
the years 1987 to 1995.  

     There are several reasons why an assessable stock issuer
would seek to proceed under Rule 504 rather than Regulation F. 
First, it would receive a higher annual dollar limit ($1,000,000
compared to $300,000).  Second, Rule 504 posits no informational
                   
==========================================START OF PAGE 13======

requirements.  Third, the Rule 504 exemption is available for new
issues as well as assessments and sales of forfeited assessable
stock.  Therefore, given the lack of filings under Regulation F
and the availability of the broader Rule 504 exemption, the Task
Force recommends that the Commission eliminate Regulation F in
its entirety, along with its accompanying Form 1-F.

     B.   OTHER SECURITIES ACT RULES


          1.   Eliminate Securities Act Rule 148, which sets
               forth a safe harbor for resales made under
               the repealed Bankruptcy Act, because the rule
               has become outdated. 

     Rule 148 was originally designed to be a counterpart to Rule
144 and to provide a safe harbor for the resales of certain
categories of securities acquired in bankruptcy proceedings,
including securities issued under the federal Bankruptcy Act,
portfolio securities sold under the Securities Investors
Protection Act (SIPA), and where the Federal Deposit Insurance
Corporation (FDIC) has been appointed receiver of the debtor's
assets.  

     In 1978, the federal Bankruptcy Act was repealed and
replaced with the Bankruptcy Code, which provides an exemption
from Securities Act registration as well as a safe harbor for the
resales of securities received under a plan of reorganization. 
Through no-action letters, the Commission has taken the position
that Rule 148 is applicable only to resales of securities that
were issued under the repealed Bankruptcy Act, and not to resales
of securities subject to the new Bankruptcy Code.  Consequently,
Rule 148 appears to be outdated and should be eliminated.


          2.   Combine Rules 152a and 236, both of which
               relate to fractional shares, and adjust the
               dollar cap under Rule 236 to account for
               inflation.

     Rules 152a and 236 relate to fractional interests.  Rule
152a applies when fractional interests resulting from a stock
dividend, stock split, reverse stock split, conversion, merger or
similar transaction are combined and sold.  The rule clarifies
that the offer and sale of the combined fractional interests is
deemed to be a transaction by persons other than an issuer,
underwriter or dealer under Section 4(1) of the Securities Act,
even if the transaction is effected on behalf of the security
                   
==========================================START OF PAGE 14======

holders by the issuer or an affiliate of the issuer or by a bank
or other independent agent.  

     Rule 236 relates to situations in which issuers sell stock
in order to obtain funds to pay shareholders cash in lieu of
fractional interests in connection with a stock dividend, stock
split, reverse stock split, conversion, merger or similar
transaction.  Rule 236 provides that the sale of stock for that
purpose is exempt from registration provided certain conditions
are met, including that the issuer is a reporting company; that
the aggregate gross proceeds from the sale of all shares offered
in connection with the transaction for the purpose of providing
such funds do not exceed $300,000; and that at least ten days
prior to the offering of the shares, the issuer furnishes to the
Commission in writing certain information about the transaction.

     The Task Force recommends that Rule 236 be merged with Rule
152a and that Rule 236 then be eliminated.  As a result,
companies considering the treatment of fractional interests need
only consult one rule.  

     The Task Force also recommends that, in conjunction with
merging the rules, the Commission eliminate the reporting
requirement in Rule 236 and increase the $300,000 cap to
$600,000.  The $300,000 cap was established in 1982. That number,
converted to current dollars based on the CPI-U Index, would be
approximately $560,000 today.


          3.   Eliminate Securities Act Rules 445, 446, and
               447, which relate to securities offered
               through competitive bidding, because these
               rules have become obsolete.

     The Task Force recommends eliminating Rules 445, 446 and
447, which govern registration statements filed in connection
with securities to be offered through competitive bidding (e.g.,
by means of a solicitation of competitive proposals from
underwriters).  These rules were promulgated in the late 1940s
principally to accommodate registered public utility holding
companies and their subsidiaries ("registered holding
companies").  These companies were subject to Rule 50 under the
Public Utility Holding Company Act of 1935 ("PUHCA"), which
required that their securities be sold through competitive bids.

     Rules 445, 446 and 447 appear to be rarely used at present
and are unlikely to be used in the future.  A review of
Commission filings shows that there was only one competitive bid
filing in 1994, and no competitive bid filings in 1995.  One
reason for the lack of filings under these rules may be that,
beginning in 1982, the Commission began to relax the rigid
bidding requirements of PUHCA Rule 50 in recognition of the fact
                   
==========================================START OF PAGE 15======

that these procedures often precluded registered holding
companies from obtaining the benefits of the Securities Act Rule
415 shelf registration procedure, placing them at a disadvantage
compared to other issuers in getting access to the capital
markets on short notice.  In 1994, the Commission determined that
competitive bidding was no longer necessary to prevent abuses in
the issuance and sale of securities by these companies and
rescinded Rule 50.  

     In recommending this course of action, the Task Force does
not intend to preclude an issuer from undertaking a competitive
bidding process, which will continue to be permissible under
other existing rules.


          4.   Eliminate Rule 494, which relates to
               newspaper prospectuses of foreign government
               securities, because the rule has become
               outdated.

     Rule 494 was adopted in 1951 to accommodate a then common
practice of advertising securities issued by foreign national
governments.  The rule limits such "newspaper prospectuses" for
foreign government securities to advertisements appearing in
newspapers, magazines and other periodicals that are distributed
by second class mail.  However, the practice appears to have
fallen into disuse.  The Task Force believes that this rule is
outdated and should be eliminated.


     C.   EXCHANGE ACT RULES


     Two exemptions from the short-swing profit recovery
provisions of Section 16(b) of the Exchange Act do not appear to
serve a useful function.  Both were crafted in another era to
address very narrow circumstances.  While the staff is not able
to monitor when these exemptions are used, the available evidence
suggests that such use is rare.  Thus, the Task Force recommends
that these provisions be eliminated.


          1.   Eliminate paragraph (c) of Exchange Act Rule
               16b-1, which pertains to the acquisition of
               securities resulting from a railroad or other
               carrier reorganization approved by the
               Interstate Commerce Commission.

     Paragraph (c) of Rule 16b-1 exempts from Section 16(b) the
acquisition of securities resulting from a reorganization of a
railroad or other carrier approved by the Interstate Commerce
Commission, an agency that was abolished as of January 1, 1996. 
                   
==========================================START OF PAGE 16======

The function of approving such reorganizations has now been
transferred to the Surface Transportation Board, an independent
agency of the Department of Transportation.

     The Task Force recommends that the Commission consider
eliminating this paragraph since the security to be received in
the reorganization is likely to be of a different class than that
surrendered, whereas only securities of the same class or
securities that are convertible into such class (e.g., equity-
based derivatives) are matchable under Section 16(b).

     These recommendations should be viewed together with other
initiatives concerning rules under Section 16(b) which are
discussed in "Other Current Commission Initiatives."  


          2.   Eliminate Exchange Act Rule 16b-4, which
               pertains to certain holding company
               redemption transactions, because the rule is
               of marginal utility.

     It is an unusual situation where a holding company owns
securities in only one company and desires to exchange its own
shares through a redemption for those of that one company.  It is
this type of transaction that is protected from Section 16(b) by
Rule 16b-4, if the Rules's conditions are met.  Like Rule 16b-
1(c), this Rule does not appear to be used.  Moreover, it also
exempts an exchange of one class of securities, or securities
that are convertible into such class (e.g., equity-based
derivatives), for another class of securities -- a transaction
not likely subject to Section 16(b) in any event.  As such, the
Task Force recommends that Rule 16b-4 be eliminated.


     D.   FORMS


          1.   Consider eliminating the Form D filing
               requirement under Regulation D and Section
               4(6) of the Securities Act because the
               requirement has outlived its usefulness.

     The Commission currently requires the filing of Form D by an
issuer that engages in an unregistered offering of its securities
in reliance on an exemption under Regulation D or Section 4(6) of
the Securities Act.  An issuer also may utilize the form to give
notice its reliance on the Uniform Limited Offering Exemption
("ULOE") for its securities offering exemption in those states
that have adopted ULOE and Form D.  For each claimed exempt
offering, an issuer must file a Form D with the Commission no
later than 15 days after the offering's first sale of securities.

Form D requires the issuer to disclose basic information
                   
==========================================START OF PAGE 17======

concerning the identity of the issuer and the offering, including
information regarding the offering price, number of investors,
expenses involved, use of proceeds and the exemption claimed.  

     The Task Force recommends that the Commission, in
consultation with North American Securities Administrators
Association, Inc. ("NASAA"), consider the continued need for a
Form D filing requirement with the Commission.  The Commission
does not require an issuer to file a notice when making offerings
under other exemptions from Securities Act registration, such as
an intrastate offering under the Rule 147 safe harbor. 
Furthermore, with the curtailing of Form D's notice requirement
in 1986, a current Form D typically provides only minimal
information about the filer and the claimed exempt offering. 
Similar information regarding unregistered sales is currently
required by Item 701 of Regulations S-K and S-B, which applies to
an issuer registering an initial public offering or other
offering of securities on Form S-1, as well as to a foreign
private issuer registering an offering of securities on Form F-1.

In addition, the Commission recently proposed to require the
disclosure of Item 701 information on a quarterly basis
concerning the unregistered sales of equity securities,
regardless of the exemption claimed.  See Release No. 33-7189
(June 27, 1995).  

     If Form D were to be eliminated, Rules 503 and 507 also
should be eliminated.  Rule 503 sets forth the notice filing
requirement for issuers claiming a Regulation D exemption.  Rule
507 provides that an issuer is ineligible to claim a Regulation D
exemption if it has previously been subject to a court order for
failing to comply with Rule 503.


          2.   Eliminate Form SR and, instead, require the
               use of proceeds following initial public
               offerings to be reported on Exchange Act
               reports.

     Securities Act Rule 463 requires issuers to report on Form
SR the use of proceeds following an initial public offering
within ten days of the first three months following the effective
date of the registration statement, and every six months
thereafter, until the offering has been terminated or all
proceeds have been applied.  In 1994 and 1995, 2,103 and 1,635
such filings were made, respectively.   

     The Task Force recommends the elimination of Form SR in
favor of requiring first-time issuers to report the use of
proceeds on their first Exchange Act report after effectiveness
and thereafter on their Exchange Act reports (e.g., quarterly
reports) through the termination of the offering or application
of the proceeds.  This consolidation of disclosure requirements
                   
==========================================START OF PAGE 18======

would facilitate reporting by registrants, who would have to
comply with fewer forms in satisfying their substantive reporting
obligations.  Furthermore, these important disclosures regarding
the use of proceeds and the progress of the offering would appear
within a filing that is more easily monitored by investors.  

     If the proposal to eliminate Form SR is adopted, Rule 463 of
Regulation C, which relates to the reporting of use of proceeds,
should be revised to reflect the proposed changes.


          3.   Eliminate Exchange Act Form 8-B, regarding
               registration of securities of successor
               issuers, because Exchange Act Rule 12g-3 has
               rendered the form largely superfluous.

     The Task Force recommends the elimination of Form 8-B.  This
form was adopted in 1936 to provide for registration of
securities of certain successor issuers under Section 12 of the
Exchange Act.  An issuer uses Form 8-B to register its securities
in the situation where the issuer does not have securities
registered under Section 12 of the Exchange Act, but has
succeeded to an issuer that had securities registered under
Section 12 at the time of the succession.

     The Commission received only 59 Form 8-B filings in 1994 and
58 such filings in 1995.  Form 8-B has been rendered largely
superfluous by the application of Exchange Act Rule 12g-3 to
successor issuers.  In the event of a succession by merger,
consolidation, exchange of securities, or acquisition of assets,
Rule 12g-3 deems to be registered under Section 12 of the
Exchange Act the equity securities of an issuer not previously
registered under Section 12 that are issued to the holders of
equity securities registered pursuant to that section.  Hence, a
successor to an issuer with a class of securities registered
under Section 12 is deemed to succeed to that registration and
need not file a Form 8-B. 

     In order to accommodate the elimination of Form 8-B, the
Task Force recommends expanding Rule 12g-3 to include any
transactions or securities that are currently covered by Form 8-
B, but not Rule 12g-3.  In addition, the Task Force suggests
clarifying in Rule 12g-3 the staff's position that the rule
applies to issuers with securities registered under Section 12(b)
of the Exchange Act, as well as to those with securities
registered under Section 12(g).  Consistent with current staff
practice, the successor issuer would be required to file a
current report on Form 8-K with respect to the transaction and
subsequently comply with all the applicable provisions of the
Exchange Act.  
                   
==========================================START OF PAGE 19======


          4.   Eliminate Form 10-C and Rules 13a-17 and 15d-
               17, which require issuers registered under
               the Exchange Act and quoted in Nasdaq to
               report certain corporate events to the
               Commission and the NASD.

     The Task Force recommends elimination of Rules 13a-17 and
15d-17, as well as related Form 10-C, since the information
required to be reported on Form 10-C is already reported on a
more detailed basis with the Commission under existing reporting
rules.  

     Under Rules 13a-17 and 15d-17, issuers that are registered
pursuant to Section 12(g) or subject to Section 15(d) and quoted
in Nasdaq are required to file a Form 10-C to report any
aggregate increase or decrease in the amount of securities of
such class which exceeds five percent of the amount of the class
outstanding as last reported, or to report changes in their
corporate name.  In 1994 and 1995, 1,515 and 1,635 filings were
made, respectively.  

     The rules requiring the filing of Form 10-C were adopted in
1971, shortly after the Nasdaq automated system became
operational, in order to provide the NASD with more timely notice
of certain events to help in its administration of the new Nasdaq
system and its publication of daily price indexes.  The Task
Force believes that Form 10-C has outlived its usefulness as a
Commission filing and therefore could be eliminated without any
loss of information to the market or harm to investors in Nasdaq
quoted companies.  In this regard, the Task Force notes that
companies whose equity securities are registered under Section
12(g) with the Commission must file all Exchange Act reports with
the Commission.




          5.   Eliminate the exhibit requirements of Form
               11-K that provide little information that is
               not otherwise available to plan participants.

     Issuers that have registered interests in employee stock
purchase, savings and similar plans under the Securities Act are
required to file annual reports with respect to such plans on
Form 11-K.  The Task Force recommends that the Commission
eliminate the exhibit requirements of Form 11-K.  The exhibits
provide little information that is not otherwise available to
plan participants, and the Task Force understands that the
exhibit requirements  are particularly burdensome to registrants.
                   
==========================================START OF PAGE 20======

     The Commission alternatively should consider eliminating the
Form 11-K requirement for ERISA plans.  Much of the information
elicited by the form relates rather narrowly to the plan and its
management, rather than to the registrant and its financial
condition.  The key element of Form 11-K, for example, is the
plan's audited financial statements.  However, plan management is
principally a concern of laws other than the securities laws
(i.e., ERISA).  

     In considering this recommendation, the Commission should
take into account that plan financial statements included in Form
11-K typically are incorporated by reference into a registration
statement on Form S-8.  The Commission also should consider
whether any relief resulting from this recommendation should be
extended to plans that are not covered by ERISA.


          6.   Eliminate Items 3(e) and 4(a) of Form F-6,
               governing the registration of American
               Depositary Receipts, because the elicited
               information appears to be rarely used.

     Item 3(e)

     Item 3(e) of Form F-6 requires the registrant to include, as
an exhibit, the name of each dealer known to the registrant who
has deposited shares against issuance of American Depositary
Receipts, proposes to deposit shares or participated in a plan to
deposit shares, within the past six months.  The Task Force
recommends that this item be eliminated because the required
information appears to be of little use to the marketplace.  In
addition, because the base number of outstanding shares is not
normally publicly available, the information regarding semi-
annual adjustments to that number appears to be of little use. 

     Item 4(a)

     Under current rules, a registrant on Form F-6 must undertake
to provide semi-annual updated information generally concerning
dealers depositing shares in the facility and the number of
shares issued/cancelled during the covered period.  The Task
Force recommends elimination of this requirement, embodied in
Item 4(a), because the required information appears to be of
little use to the marketplace.  In addition, because the base
number of outstanding shares is not normally publicly available,
the information regarding semi-annual adjustments to that number
appears to be of little use.
                  
==========================================START OF PAGE 21======

II.  PRESENTATION OF INFORMATION

     From the investor's prospective, disclosure may not be
effective unless it is understandable, complete and timely. 
Fulfillment of each of these goals sometimes may be hindered by
current practices in drafting documents.  These goals, and
suggestions for better achieving them, are discussed more fully
below.


     A.   CLEAR AND ACCURATE DISCLOSURE


          1.   Develop a "plain English" introduction to the
               prospectus to enhance its readability by
               individual investors, by eliminating
               boilerplate "legalese" and requiring a
               summary of key information.

     The U.S. securities markets are built upon the foundation of
full and fair disclosure.  The prospectus, the basic disclosure
document used to sell securities in public offerings, contains
information about the issuer, including its business, its
management and financial condition, enabling market participants
to make informed judgments about a company and its prospects. 
The prospectus also contains information specific to the offering
such as risk factors, use of proceeds, the terms of the
securities and the underwriting arrangement.  Availability of
this information has played a significant role in the success of
the U.S. capital markets and confidence in their integrity.

     As a practical matter, however, prospectuses often are far
more useful to the professional investor than to most retail
investors.  While prospectuses contain certain complex material
often relating to the description of securities, even basic
information about an issuer's business is written in a way that
has been described as "turgid," "opaque" and "unreadable."  
Drafters claim that this dense writing style stems in part from
an effort to meet the high standard of diligence under the
Securities Act that is imposed on companies, management and
underwriters with respect to the adequacy and accuracy of
disclosures provided to investors.  Issuers, underwriters and
their lawyers produce defensively written documents that put a
premium on legal jargon and over-inclusive disclosures.  Trivial
points sometimes receive as much attention as material
information, and in the end may bury points significant to an
investment decision.  In the eyes of many, today's prospectus has
become a legal document to shield against liability, rather than
a useful and informative disclosure document, as contemplated by
the Commission's current "plain English" rule, Rule 421 of
Regulation C under the Securities Act and case law.  See e.g.,
McMahan & Co. v. Wherehouse Entertainment, Inc., 900 F.2d 576 (2d
                   
==========================================START OF PAGE 22======

Cir. 1990), cert. denied, 501 U.S. 1249 (1991); In re Franchard
Corp., Release No. 33-4710, [1964-1966 Transfer Binder] Fed. Sec.
L. Rep. (CCH)   77,113 (July 31, 1964).  This unfortunate result
especially is evident with respect to offering documents relating
to initial public offerings and complex transactions.  As
Chairman Levitt recently observed, "our passion for full
disclosure has created fact-bloated reports and prospectuses that
are more redundant than revealing."   

     The Task Force believes that issuers, management and
underwriters should begin drafting and using "plain English"
offering materials.  As a first step, the Task Force briefly sets
forth below its recommendations for presenting information on the
front cover, inside cover and first page or back cover of a
prospectus.  The Task Force also suggests the use of a "plain
English" glossary to explain technical terms used in the
document.  Further, the Task Force recommends that the Commission
consider publishing an interpretive release to assist in the
preparation of "plain English" disclosure documents by every
issuer; a release similar to that published in 1991 with respect
to the importance of clear, concise and comprehensible disclosure
in offering materials used by limited partnerships and other
direct participation investment programs.  See Release No. 33-
6900 (June 17, 1991).  

     Prospectus Cover.  The Task Force recommends eliminating
many of the legal warnings on the cover page.  In their current
form, these warnings often convey little useful information, and,
because they are written in dense capital letters, also are
virtually unreadable.  Instead, the cover should be more inviting
to the reader, and legal warnings that continue to be necessary
should be set forth in a more readable style and format.

     Inside Cover.  The Task Force believes that the inside cover
should be required to contain a table of contents and summary
financial information, either in tabular or graphic form, which
the issuer and underwriter believe would be useful to a potential
investor.  

     First Page or Back Cover.  The Task Force recommends a
format that, in addition to basic information about the issuer,
would include: (i) a summary paragraph of key points of interest
(including a characterization of risk); and (ii) a tabular
presentation of features of the offering, such as the exchange
where the securities are traded, company dividend policy, etc. 
The Task Force also recommends that the Commission consider
requiring the tabular presentation to include certain items that
are not now required, but which may assist investors in
understanding the offering, such as the effect of dilution (which
is now required only in initial public offerings) and certain
significant financial ratios.  
                   
==========================================START OF PAGE 23======

     Other Presentation Suggestions.  The Task Force recommends
that the Commission clarify that disclosure regarding the risks
of the offering pursuant to Item 503 of Regulation S-K must be
set forth in full in the forepart of the prospectus and cannot be
incorporated by reference from other filings or portions of the
document.

     Samples.  Included at the end of this section are two
illustrations of the first few pages of a prospectus in a more
plain English format.  


          2.   Require a "plain English" summary sheet in
               tender offer statements, which would function
               as a "road map" by providing shareholders
               with answers to commonly asked questions
               about the offer.

     In connection with a tender offer, shareholders are
furnished with a disclosure document known as an "Offer to
Purchase," which provides information about the bidder, the terms
and conditions of the offer and the procedures for tendering
shares required by Exchange Act Regulations 14D and 14E or Rule
13E-4.  These documents often are quite lengthy and contain
technical and legal terms not commonly understood by the reader. 
The Task Force recommends that the Commission include tender
offer materials within its plain English initiatives so as to
make these lengthy, complex and legalistic documents more
understandable.

     One suggestion to facilitate shareholder comprehension of
the essential terms and provisions of the offer is the use of a
glossary to explain technical terms used elsewhere in the tender
offer materials.  Another idea is a "plain English" summary. 
This summary, which would begin on the inside cover page of the
Offer to Purchase, would provide investors with a ready reference
to certain basic information about the offer.  The information
would be presented as responses to common shareholder questions,
such as the following: 

         Who is the person offering to buy the securities?

         What are the classes and amounts of securities being
          sought?

         How much is the bidder paying and what will be the form
          of payment?

         Is information on the bidder's financial condition
          relevant to my decision whether to tender?

         How long do I have to decide whether to tender?  
                   
==========================================START OF PAGE 24======

         What are the most significant conditions to the offer? 


         How do I tender my shares?  

         How may I withdraw my tendered shares?  

         If the transaction is a consensual one, what does my
          board of directors think of this offer?  

         Is this the first step in a going private transaction?

         Will this tender offer be followed by a merger if not
          all of the company's shares are tendered?

         If I decide not to tender, how will the tender offer
          affect my shares?  

         What is the market value (if traded) or the net asset
          or liquidation value (if not traded) of my shares?

         Who can I talk to if I have questions about the offer?

     Each of the items briefly described in the summary would
reference a more detailed discussion elsewhere in the tender
offer materials.  Bidders also would provide a statement at the
bottom of the summary to the effect that the Offer to Purchase
must be reviewed in its entirety for a full understanding of the
offer.  

     An example of a sample summary relating to a "plain vanilla"
cash tender offer is included at the end of this section.  Of
course, the exact contents of the summary will depend upon the
structure and terms of the particular transaction.  For instance,
a summary relating to a tender offer for limited partnership
interests would have to include summarized risk factor disclosure
in bullet point format, as well as highlight conflicts of
interests faced by general partners and other affiliates in
making the offer.
    
     The Task Force also recommends that the Commission consider
whether a summary should be required in any solicitation or
recommendation by the target company to the holders of the
security to accept or reject the tender offer.


          3.   Allow registrants to include earnings
               releases, which often are written in "plain
               English," in their quarterly reports, thereby
               making such reports more readable and easier
               to prepare.

                  
==========================================START OF PAGE 25======

     The Task Force recommends permitting registrants to use
quarterly earnings releases in place of, or in conjunction with,
the quarterly report on Form 10-Q.  Quarterly earnings releases
typically are issued shortly after the end of the quarter, before
the Form 10-Q is prepared.  In addition to quarterly financial
information, earnings releases often include a narrative
discussion of other material developments that, unlike the filing
on Form 10-Q, is typically in a "plain English" format.  

     The Commission should permit companies to file their
earnings releases under cover of a Form 10-Q, provided that such
releases and any accompanying disclosures contain all of the
information required by the form.  Other than requiring that
Management's Discussion and Analysis be set forth in a single
coherent discussion in accordance with applicable Commission and
staff positions, there would be no restrictions on the format or
order in which information is presented, so long as the
presentation is balanced, informative and easily understood.  

     This recommendation should enhance the readability of
quarterly information since earnings releases usually are written
in a clear, less legalistic manner than the required Form 10-Q. 
At the same time, the recommendation may reduce the regulatory
burden on registrants, who will be spared the requirement to re-
order quarterly information in the format required by Form 10-Q. 
The Task Force notes that this recommendation is not intended to
lessen the quality of disclosure, and recognizes there is a risk
that this idea possibly could result in the preparers of earnings
releases switching to a more formalistic document -- a result
that should be avoided since it would defeat the "plain English"
goal.  


     B.   UNEVEN DISCLOSURE

     Apart from the need for plain and simple disclosure, there
arises the issue of whether the Commission should attempt to
encourage issuers to provide investors with "better" information
than is now mandated.  In particular, the Commission should
consider ways to further encourage the disclosure of so-called
"soft information" or voluntary forward-looking information.

     The value of forward-looking information to investors has
been debated for the last 20 years.  Until the early 1970s,
issuers were prohibited from providing this information to
investors because the Commission believed it was inherently
speculative and created an opportunity for abuse.  With the
adoption of a safe harbor in 1979, the disclosure of forward-
looking information was not only permitted, it was affirmatively
encouraged.  This safe harbor was intended to provide protection
from liabilities under the Securities Act and the Exchange Act
for companies that make projections in good faith and on a

                   
==========================================START OF PAGE 26======

reasonable basis in Commission filings.  This was done because
the Commission recognized that many investors and analysts found
such information extremely useful in assessing the merits of
investing in a particular company.

     Over the years, issuers have provided this information
orally to professional analysts and investors, either over the
telephone or personally at so-called "road shows" (typically
meetings hosted by issuers and underwriters with potential
investors).  By providing this information orally, issuers have
avoided Securities Act Section 11 liability that attaches to a
registration statement at the time of effectiveness.  Further, it
is believed that issuers are less likely to fear unfounded
lawsuits by professional investors.

     As a result, some believe that two separate (but parallel)
disclosure systems have developed -- one for retail customers and
one for professionals.  The Commission itself recognized the
existence of concerns in this area in connection with its Safe
Harbor Concept Release.  See Release No. 33-7101 (Oct. 13, 1994).

In that release, the Commission sought comment on a panoply of
issues relating to the disclosure of forward-looking information,
including whether mandatory disclosure of projections in
prospectuses was an appropriate solution to the problem of "road-
show" selective disclosure. 

     Early in its inquiry, the Task Force evaluated concerns that
have been raised with respect to this perceived disparity of
disclosure, with a view toward recommending that the Commission
consider requiring a fair summary in the front of the prospectus
of any "road show" information (whether communicated orally or in
writing).  Based on the Commission's historic experience in this
area, however, the Task Force was mindful that issuers likely
would resist providing such disclosure absent assurances of some
additional measure of protection.  During the pendency of the
Task Force, in December 1995, Congress enacted the Private
Securities Litigation Reform Act creating a statutory safe harbor
from liabilities from private rights of action arising from the
disclosure of specified forward-looking information.  As a
result, it is uncertain at this early stage whether issuers will
feel sufficient comfort to volunteer more forward-looking
information in reliance upon the statutory safe harbor.  It is
important to note, moreover, that the new statutory safe harbor
excludes, among other types of transactions, all initial public
offerings.  Accordingly, the Task Force suggests that the
Commission's staff continue to monitor developments in this area.



     C.   TIMELY DELIVERY OF INFORMATION
                   
==========================================START OF PAGE 27======

     Regardless of how simple or how complete a prospectus is, it
cannot aid an investment decision unless it is received prior to
the time the decision is made.  As discussed in greater detail in
"Securities Act Concepts," however, questions as to the
appropriate timing and method of providing disclosure to
investors are being widely debated.
The Task Force believes that there is no quick fix in this
complex area, and that the Commission should give full and
careful consideration to these questions and the divergent
solutions now being debated.  


     D.   ELECTRONIC MEDIA

     Discussions about the potential promises of electronic
technology are not new.  Even three decades ago, securities law
experts were predicting that developments in communications
technology would provide opportunities for improving disclosure,
while at the same time reducing the cost of disseminating
information to investors.  In his 1966 article entitled "Truth in
Securities Revisited," which contains proposals that contributed
to the development of the integrated disclosure system, Professor
Milton H. Cohen called the promises of technological development
"the real hope and challenge" of securities regulation.  
     The potential promises in using electronic media as a
disclosure medium are developing rapidly with respect to all
types of information, including that relating to capital-raising
activities and secondary trading in the securities markets. 
Technological developments are making it possible to deliver
documents electronically, such as prospectuses that until
recently were delivered in paper format.  Just this past October,
the Commission issued an interpretive release regarding the use
of electronic media to deliver information under the Securities
Act, the Exchange Act, and the Investment Company Act.  See
Release No. 33-7233 (October 6, 1995).

     Meanwhile, access to most EDGAR documents has been
commonplace for some time now for investors and the financial
markets.  And very recently, the Commission started its own "home
page" on the Internet (World Wide Web address
http://www.sec.gov), which contains Commission filings, rule
proposals, litigation releases, opinions, speeches, testimony and
press releases, as well as an electronic copy of this Report.  

     As is often the case, these positive developments are
accompanied by some challenges of equal magnitude, some of which
are unfolding with equivalent speed.  Such disclosure challenges
include establishing controls and procedures to ensure that
information is presented in a clear, understandable format, that
information is adequate and accurate, and that it is subject to
the review of effective "gatekeepers."  In addition, the
Commission will likely be called upon to evaluate the

                   
==========================================START OF PAGE 28======

effectiveness and efficiency of disseminating information through
delivery, publication and/or access, and to respond to the ever-
increasing pace of information flow.  Indeed, the pace of
information flow in some respects appears to have already begun
to erode some of the assumptions traditionally made by securities
regulators, such as the existence of natural "information
barriers."  Some of these challenges, and possible responses to
them, are discussed more fully in "Securities Act Concepts." 

     While resolution of these rapidly developing broad
disclosure and legal questions in the electronic world is not
within the scope or capability of the Task Force given the time-
frame established for its work, the Task Force has included in
this Report a few incremental recommendations designed to make
the EDGAR system more user-friendly.    






                  
==========================================START OF PAGE 29======

III.      SECURITIES ACT CONCEPTS


          A.   STRAINS IN THE REGULATORY FRAMEWORK


               1.  Introduction

          In connection with the Task Force's review of existing
rules, regulations and forms, questions have been raised with
respect to several premises of, and concepts underlying, the
Securities Act regulatory framework.  Many of these questions
currently are the subject of considerable debate, both within and
outside the Commission.  First instituted in the 1930s and
revised over the years by Congress and the Commission, the
intricate web of Securities Act provisions and rules governing
the capital formation process have been criticized by some as
excessively restrictive in light of present market conditions
and, by others, as unduly lax in protecting investors.  While
none of the various participants in this debate seriously
questions the fundamental importance of and need for full, fair
and timely disclosure of information to investors, there is
substantial disagreement as to how that goal best can be
accomplished given the constant evolution of today's capital
markets.   A number of initiatives thus have been undertaken by
the Commission, Congress, state regulators and the private
sector, in an effort to reassess the continuing effectiveness of
the Securities Act registration, prospectus delivery and other
requirements.

     Among these initiatives are the Commission's formation in
early 1995 of the Advisory Committee on the Capital Formation and
Regulatory Processes ("Advisory Committee"), which is chaired by
Commissioner Wallman, and the Commission's publication for
comment in mid-1995 of still-pending proposals to permit "testing
the waters" in advance of an initial public offering (Release No.
33-7188 (June 27, 1995)); to re-consider the prohibition on
general solicitation and advertising for private placements
(Release No. 33-7185 (June 27, 1995)); and to craft appropriate
rule revisions to keep pace with transfers of economic or other
interests in securities through equity swaps, forwards and other
arrangements -- commonly known as "derivatives" -- without any
accompanying transfer of legal title to the underlying "physical"
instrument (Release No. 33-7187 (June 27, 1995); Release No. 33-
7190 (June 27, 1995)).  Other initiatives include legislation
introduced by Congressman Fields (Capital Markets Deregulation
and Liberalization Act of 1995, 104th Cong., 1st Sess. (1995)),
and a blue-ribbon panel formed this past October by NASAA, of
which Commissioner Wallman is a member. 

          The following discussion distills some of the ongoing
debate regarding the need to adapt existing Securities Act
                   
==========================================START OF PAGE 30======

requirements and related concepts to current market conditions,
by outlining certain perceived strains in the system, the
resultant problems for raising capital and timely dissemination
of full and fair disclosure to investors, and a comprehensive
solution and several narrow proposals that address certain of the
perceived strains.  The Task Force also is recommending a "quick
fix" that, if adopted by the Commission, could resolve one issue
without preempting the Commission's ability to evaluate the
merits of any proposed broader initiatives.  Recognizing
therefore that these issues should be and are being fully and
publicly deliberated in such diverse fora as the Advisory
Committee, Commission rulemaking proceedings and the Congress,
the Task Force believes that Commission implementation of the
specific "quick fix" discussed below, as well as the concepts
discussed under "Facilitating Capital-Raising," could serve to
reduce unnecessary costs of corporate capital formation
consistent with the disclosure objectives of the Securities Act.


               2.  Snapshot of the Securities Act Regulatory
                   Scheme

          The Securities Act has served the U.S. financial
markets well over the past 60-plus years.  The volume of
securities trading on the exchanges has doubled since 1935,
increasing from $176 billion to $3.5 trillion.  In 1934,
businesses raised $641 million in our capital markets; in 1984,
$126.8 billion; and last year, that figure broke a trillion
dollars.

          As adopted in 1933 and later amended by Congress, the
Securities Act is intended to ensure that investors receive full
and fair disclosure with respect to securities offerings by
issuers and their affiliates.  To this end, the Securities Act
requires registration of every offer or sale of a security and
delivery of a prescribed prospectus to investors unless the
securities transaction complies with one of the enumerated
statutory exemptions contained in Sections 3 and 4 of the
Securities Act.  In general, these exemptions reflect legislative
judgments that certain types of investors or securities in
certain types of offerings do not necessarily require the
protections afforded by the Securities Act.  One exemption of
particular importance in the U.S. capital markets is the private
offering exemption allowing issuers to offer and sell
unregistered securities to financially sophisticated investors
able to "fend for themselves."

     In short, the statutory framework of the Securities Act
provides that, absent an exemption:
                   
==========================================START OF PAGE 31======


              No security may be offered for sale until a
               registration statement containing prescribed
               information is filed with the Commission;

              After a registration statement is filed, oral and
               written offers are permitted.  Written offers
               must be made by means of a statutory prospectus;
               use of sales literature or other writings are
               prohibited during this "waiting" period;

              After a registration statement becomes effective,
               either by lapse of time or more typically by
               Commission action, the confirmation of sale and
               other offering materials such as sales literature
               may be distributed to investors so long as the
               confirmation of sale and sales literature are
               accompanied or preceded by the final statutory
               prospectus; and

              After a registration statement becomes effective,
               securities may be delivered for sale so long as
               they are accompanied or preceded by the final
               statutory prospectus.

          Moreover, securities sold other than pursuant to a
public offering may be subject to strict limitations on resale,
rules regarding how they can be offered and sold, etc.

          In interpreting and administering the statutory scheme,
the courts and Commission early on developed several Securities
Act concepts, including:

              "general solicitation" -- broadly construed to
               mean identifying persons interested in acquiring
               securities in a private offering through
               advertisements or soliciting activities beyond
               persons having a pre-existing relationship with
               the issuer or placement agent;


              "gun jumping" or "conditioning the market" --
               broadly construed to mean impermissible
               soliciting activities both prior to the filing of
               a registration statement and during the "waiting
               period" between such filing and the effective
               date; and

              "integration" -- generally the combination of
               either two or more ostensibly separate exempt
               offerings, or an exempt offering and registered
               offering, to assess compliance with the
                   
==========================================START OF PAGE 32======

               registration and prospectus delivery requirements
               of the claimed exempt offering.

          Over the years, the Commission or its staff has
modified these concepts to accommodate changes in the securities
markets, including the rapid globalization of those markets, the
growth in institutional ownership of corporate equity and debt
securities, the continuing development of new corporate financing
techniques, and technological advances in communication.  To
illustrate, the Commission recognized early in its history that
the integration concept might operate to impede unnecessarily
legitimate capital raising transactions.  Accordingly, the
Commission in 1935 adopted Rule 152 providing for a limited
exception from application of this concept to integrate
legitimate private offerings with subsequent public offerings. 
Beginning with a 1986 interpretive letter (Verticom (avail.
February 12, 1986)), the Commission staff has given issuers some
comfort that an otherwise valid private placement would not be
integrated with a subsequent public offering despite the fact
that the public offering was contemplated at the time of the
private placement.  Previously, Rule 152 had been construed by
many to mean that the public offering could not have been
contemplated at the time of the prior private offering. 

     Further, the Commission has adopted safe harbors to guide
issuers seeking to conduct legitimate unregistered offerings
(Regulation D and Regulation S), and investors in reselling
privately (Rule 144A), based on the fundamental principle that
registration should be required only for those offerings made in
the U.S. markets to persons who require the full panoply of
safeguards afforded by the Securities Act.  One such safe harbor
created a "bright-line" integration test assuring companies that
any offers or sales of securities they might make more than six
months after completion of a private placement or other exempt
offering under Regulation D would not be considered part of the
previous offering.  A later refinement of the integration concept
was made in a staff no-action and interpretive letter (Black Box
Inc. (avail. June 26, 1990)), which permits an otherwise valid
private offering to a limited number of qualified buyers to be
conducted concurrently with a registered public offering on the
policy ground that such buyers possess the requisite level of
sophistication to request the information they deem necessary to
informed investment decision making through means other than a
registration statement, and that investors in the registered
offering are not adversely affected.


               3.  Specific Strains in the Regulatory
                   Framework

          While the success of Commission and staff initiatives
in this area is evidenced daily by the efficient operation of the
                   
==========================================START OF PAGE 33======

public and private markets, strains in the current regulatory
system are appearing in connection with various categories of
securities offerings.  In some cases, more and more people are
asking whether the Securities Act's framework, at least as
currently interpreted and administered, is working to frustrate,
rather than to facilitate, the dissemination of information
required, or in some instances demanded, by investors and other
market participants.  Five developments have been identified for
the Task Force as eroding the Securities Act's effectiveness:

              Technological developments in the field of
               electronic communications; 

              Erosion of traditional distinctions between
               public and private offerings;

              Globalization of the capital markets and
               concomitant erosion of "country walls" between
               such markets;

              Novel financing instruments, methods of raising
               capital and risk management initiatives; and

              Regulatory initiatives designed to reduce other
               market risks, such as those relating to the
               clearance and settlement system, which are
               compressing the time frame for many offerings.

          The list is not intended to be all inclusive.  Many
other concerns have been raised.  For example, delays in
accessing the capital markets due to the need to file a
registration statement for each offering may frustrate the issuer
community.  When issuers take advantage of the current shelf
procedure, frustrations still may develop due to the need to
register securities in advance, e.g., market overhang concerns. 
Moreover, distinctions and rules regulating "restricted
securities" and securities sold offshore that flow back to the
United States without any investor protections are also issues
and concerns.  The Advisory Committee has been studying and
evaluating these and other strains and issues for the past year
and the system it currently is reviewing intends to address these
and other problems within the statutory framework while enhancing
investor protection.

                   a.   Difficulties of Regulating
                        Information Flow

          Regulatory requirements that result in the imposition
of artificial barriers to the flow of accurate information
generally are not effective, in some cases not possible, and are
viewed by some as not ultimately in the best interests of
investors and the markets.  Whether for better or worse, market
                   
==========================================START OF PAGE 34======

dynamics with respect to various securities transactions are
starting to outstrip or have outstripped the current regulations.

For example:  

              Dramatic advances in electronic communications
               have made corporate communications, financial,
               business and marketing information, analyst
               research reports and other information more
               widely and instantaneously accessible through the
               Internet, Bloomberg's and other computer-based
               information service providers.  As a consequence,
               in some offerings information outside of the
               mandated disclosure package -- the registration
               statement and the traditional prospectus that is
               part of the registration statement -- is readily
               available to and accessible by computer-literate
               investors acquiring securities in public
               offerings and secondary trading transactions. 
               Because of the Securities Act's broad coverage of
               offers as interpreted by the Commission, legal
               uncertainties exist as to whether dissemination
               of this information may give rise to
               impermissible offers. 
  
              Information relating to the private securities
               markets, such as secondary price data and
               securities ratings, is accessible to
               sophisticated and unsophisticated investors
               alike.  Similarly, information disseminated by a
               foreign company that is directed to persons
               outside the United States often is accessible to
               U.S. as well as foreign investors through the
               company's Website on the Internet, Bloomberg's,
               the press and other information service
               providers.  Again, the Securities Act's broad
               coverage of offers as interpreted by the
               Commission raises legal uncertainties as to
               whether dissemination of this information may
               give rise to impermissible offers. 

          Compliance with required prospectus delivery
obligations has become more and more difficult, and in some cases
not possible.  Questions frequently are raised about how to
provide investors with disclosure that is received in sufficient
time to be useful in making investment decisions.  For example:

              Tensions have arisen between the prospectus
               delivery scheme of the Securities Act and private
               and public initiatives to minimize risk exposure
               by reducing clearance and settlement periods. 
               Compliance with physical delivery of a final
               statutory prospectus before or concurrently with
                   
==========================================START OF PAGE 35======

               the confirmation of sale is becoming more and
               more difficult within today's "T+3" clearance and
               settlement period.  This delivery problem likely
               will be exacerbated, unless more flexible means
               are used or permitted for communication, such as
               electronic delivery of information (see Release
               No. 33-7233 (Oct. 6, 1995)) and incorporation by
               reference if the financial markets generally were
               to move to a "T+1" clearance and settlement
               period, notwithstanding the Commission's recent
               adaptation of its prospectus delivery rules to
               accommodate T+3.

                   b.   What's Being Offered and Sold:
                        Impact of Proliferation of
                        Derivative Securities on the
                        Regulatory Structure

          Today's regulatory structure focuses on offers, sales
or transfers of legal title to a security evidencing a bundle of
rights and obligations.  However, securities transactions more
and more frequently are premised on the concept of buying,
selling or transferring financial, economic or investment risks
and/or interests through swap agreements, forward contracts,
options, option-like products and other derivative instruments. 
It is not unusual now for a company contemplating future sales of
additional shares of stock to enter into "hedging" transactions
for the purpose of minimizing its exposure to downward market
price movements in its stock.  The counterparty to the
transaction, such as an investment banking firm, may manage its
risk exposure by engaging in short selling activities in the
trading markets.  (Generally speaking, short selling occurs when
a person sells securities he or she does not own and subsequently
settles the trade by either borrowing securities from another
investor or buying the securities in the market.)  Nor is it
unusual for an investment banking firm bidding to underwrite an
offering of new debt securities to hedge its exposure to
movements in market rates of interest by entering into an
interest swap agreement with a third party.  Risk management
activities effected through instruments that attempt to shift
some or all of the economic risk to the public markets are
becoming a regular way of doing business.  While the Commission
has sought through the rulemaking process to identify needed
adjustments of existing rules to track economic risk-shifting and
other unique or novel features of these transactions (e.g.,
Release No. 33-7250 (Dec. 28, 1995) (proposed Regulation S-K 305
relating to disclosure of derivatives); Release No. 33-7190 (June
27, 1995) (Regulation S release); Release No. 33-7187 (June 27,
1995) (proposed Rule 144 and Section 16(a) rule revisions)), much
more must be learned before a comprehensive solution to these
developments can be formulated.

                   
==========================================START OF PAGE 36======

                   c.   Perceived Over-Regulation of Offers

          A further regulatory dilemma stems from applications of
the gun-jumping and integration doctrines to prevent use of
certain financing techniques in circumstances where investor
protection concerns arguably are not implicated.  Due to
Commission interpretations, substantial legal uncertainties exist
today with respect to the ability of a company to begin an
offering of securities in reliance on the private offering
exemption, and later switch to a registered public offering. 
Again due to Commission interpretation, substantial legal
uncertainties regarding the validity of a private offering also
exist when a company commences a public offering, withdraws its
registration statement upon losing its market window, and makes a
private placement of securities of the same class to financially
sophisticated investors, unless it waits another six months. 
Despite the Black Box letter discussed above, companies remain
reluctant to make limited private offerings to sophisticated
buyers during a registered offering because of integration and
general solicitation concerns.  Legal and other commentators
maintain that the uncertainties (and concomitant costs)
surrounding an issuer's ability, based on current interpretation,
to complete as registered an offering commenced privately, to
conduct simultaneous private and public offerings, or to place
privately securities with sophisticated buyers following a
terminated public offering, unduly interfere with the capital
formation process without providing countervailing investor
protections.  

                   d.   Prospectus Delivery

      Another regulatory problem relates to the required method
of delivering Securities Act prospectuses to investors.  As
discussed, the acceleration of the offering process attendant to
adoption of T+3 would be increased in the event the markets
evolve further toward a T+1 environment.  Even now as a result of
often conflicting time pressures, the statutory prospectus may
not be delivered until after the confirmation of sale.  


               4.  Advisory Committee on the Capital
                   Formation and Regulatory Processes: 
                   Company Registration


     Following a one-year study, the Advisory Committee is in the
process of completing its report to the Commission recommending a
package of concepts termed "company registration."  The purpose
of company registration is to streamline and lower the costs of
the capital formation process, improve investor protection and
enhance corporate disclosure.  In addition, the Advisory

==========================================START OF PAGE 37======

Committee intends that the company registration system, in full
implementation, resolve all the various identified deficiencies
in the current regulatory system for already public companies. 
At a public meeting held February 22, 1996, the Advisory
Committee agreed upon the core elements of the company
registration model, which would be implemented on an experimental
basis pursuant to simple rule changes (described below) during a
two-year, voluntary pilot project should the Commission adopt the
Advisory Committee's recommendation.  The Committee therefore
directed its staff to complete a final draft of its Report and
Recommendations for submission to the Commission, subject to
additional revision in light of the last meeting's discussion and
final review by the members.  

     As approved by the Advisory Committee, the company
registration model to be presented to the Commission will
recommend a shift in regulatory focus from the present,
transaction-by-transaction registration of securities offerings
by seasoned reporting companies, to the one-time, "pay-as-you-go"
registration of such companies and all securities they (or their
affiliates) might issue thereafter.  Except for specified
exceptions that the Advisory Committee believes the Commission
should carve out solely for purposes of the pilot program,
securities issued by a registered company would be deemed
registered for both Securities Act and Exchange Act purposes, so
long as the company continued to meet prescribed eligibility
conditions (e.g., for purposes of the pilot, a two-year
Commission reporting history, national stock exchange or
Nasdaq/NMS listing, and $75 million public float).  

          Company registration would have, among others, the
following effects:

              permit disclosure to be incorporated by reference
               into a confirmation of a sale rather than require
               physical delivery of all information to a
               purchaser;

              allow identification of selling security holders
               in and underwriter(s) of a shelf offering at the
               time of the offering;

              allow a post-effective amendment to a shelf
               registration statement to include reallocation of
               previously registered securities and registration
               of new classes of securities;

              permit registration by certain issuers of a
               dollar amount without specification of the
               related classes of securities;
                   
==========================================START OF PAGE 38======

              eliminate staff review of all offering documents,
               except those involving "extraordinary"
               transactions (e.g., mergers of equals), and shift
               focus of staff review to periodic and current
               reports;

              permit registration fees to be paid at the time
               of a takedown from a shelf offering -- "pay as
               you go";

              narrow the class of persons considered affiliates
               of the issuer; and
 
              allow all acquisitions effected through an
               issuance of company stock, except those
               constituting "extraordinary" transactions
               (involving changes of more than 40 percent of a
               company's outstanding capitalization), to be made
               immediately off the shelf; as a consequence, all
               mergers, exchange offers, and other business
               combinations that fall below the 40 percent
               threshold can be made without a Securities Act
               waiting period -- having the effect of placing
               such mergers and exchange offers on the same time
               table as cash tender offers.

     Along with focusing on the need to streamline the offering
process to reduce the costs of corporate capital-raising, the
Advisory Committee plans to recommend various disclosure
enhancements that are designed to benefit investors in the
context of securities offerings by issuers and affiliates, and
the secondary trading markets.  Specifically, use of the system
would be conditioned upon the following enhancements:  (1)
additional reports to the board by senior management on
compliance, on a continuous basis, with disclosure procedures
established to ensure the integrity and accuracy of periodic and
current reports and to avoid potential insider trading abuses;
(2) inclusion of risk factors in Forms 10-K; (3) expansion and
acceleration of reporting of material events on Form 8-K; and (4)
certification by top managers, attached as exhibit to the Form
10-K, that they have reviewed all Exchange Act reports and are
not aware of any materially false or misleading disclosures or
omissions.  Additional guidance would be provided regarding the
due diligence responsibilities of such gatekeepers as
underwriters, auditors and outside directors, with a view toward
improving practices in this area.

     Implementation of the two-year pilot company registration
system, which as noted would be available on a voluntary basis
only to seasoned companies, would be accomplished pursuant to a
series of rule amendments within the context of the current
statutory framework.  The necessary changes for the streamlining

==========================================START OF PAGE 39======

concepts, almost all of which are similar if not identical to the
Task Force's recommendations for seasoned issuers outlined in
"Facilitating Capital-Raising," would entail use of a new company
registration form (Form C-1), modeled on current Form S-3 and the
shelf registration procedure, with certain modifications.  In
addition to a "pay-as-you-go" fee regime, the system would
include provisions for prior Commission staff review of offering
documents filed in connection with "extraordinary" transactions
(as previously described), and, significant to the Advisory
Committee, extension of Section 11 strict liability to takedown
prospectus supplements by requiring that they be filed on Form 8-
K no later than the sale of securities.  There would be no change
in the nature or amount of disclosure required to be on file with
the Commission at the time of the sale of securities -- all
current line-item disclosure requirements would carry over to the
pilot.


               5.  Other Suggestions


          The Advisory Committee has labored to devise a
comprehensive and detailed model to lower the costs of the
capital formation process, improve investor protection and
enhance corporate disclosure.  The model seeks to address all of
the perceived strains on the system for already public companies.

Several other ideas have been floated to address certain of the
perceived strains described above.

                   a.   Regulating the Flow of Information

          One approach is set forth in a speech delivered by
Linda C. Quinn, former Director of the Commission's Division of
Corporation Finance to the fall meeting of the American Bar
Associations' Federal Regulation of Securities Committee in
Washington, D. C. (Linda C. Quinn, Reforming the Securities Act
of 1933:  A Conceptual Framework, 10 Insights 25 (Jan. 1996)). 
This approach suggests that offers be deregulated and the mandate
that the statutory prospectus be the only written communication
during the offering period be reconsidered.  The speech posits
whether the federal securities laws might better serve investors
by assuring the free flow of fair and accurate communications,
whether written or oral, rather than by restricting the content
and manner of any communications.  Distinctions between oral and
written communications would be removed.

          In addition to the manner in which information is
communicated to investors, the speech also suggests that the
traditional single uniform approach to delivery of the mandated
prospectus may no longer be warranted.  Rather, it is suggested
that the costs of delivering a mandated document be balanced
against the benefits provided to investors.

                   
==========================================START OF PAGE 40======

          Another suggestion being floated that relates to
deregulating offers and revisiting the mandated delivery system
would be to provide information about the issuer and its
securities through a core information file available at the
Commission.  The content of this file has not yet been fleshed
out.  Under this idea, strict liability under Section 11, now
applicable to false and misleading registration statements, would
attach to the core information file.  While written or oral
offers of securities could be made without the necessity of
compliance with the statutory prospectus requirement (in the case
of the written offers), no sales could be effected until the
company's core data base file is current and complete. 
Negligence liability under Section 12(2) would apply to all
material outside the core file.  Because information in the core
file would be publicly available and accessible by any investor,
the requirement to deliver the information (today through the
statutory prospectus) prior to or along with the confirmation of
sale would be eliminated.  The description provided to the Task
Force did not distinguish between seasoned and unseasoned
issuers. 

                   b.   "Pink Herring" Registration of
                        Offers

          A countervailing approach intending to maintain the
investor protection benefits in the Securities Act, to the
deregulating offers concept just described, would permit offers
to be made after an issuer filed a highly simplified, short form
and inexpensive registration statement (termed by some a "pink
herring").  Thereafter, the company could elect whether to pursue
a public or a private offering in light of the type and level of
investment interest thus elicited.  Far broader in scope than the
pending "IPO test the waters" proposal (see Release No. 33-7188
(June 27, 1995)) because it would permit general soliciting
communications that are clearly "offers" subject to Securities
Act registration, and permit non-registered sales to be made on
the basis of registered offers, this approach is premised on a
similar concern for reducing unnecessary financing costs.

          Private or already public companies could "test the
waters" without risking a violation of the statute by filing the
"pink herring" containing limited price, type of security,
distribution and financial information.  They then would be
permitted to make a general solicitation and public offer and
obtain a preliminary assessment whether enough market interest
exists to warrant the expense of a fully registered public
offering.  Regardless of the amount of securities intended to be
offered, the initial filing fee would be nominal, such as $250. 
If investor interest in registered securities were deemed
sufficient to justify the costs, the issuer subsequently could
pursue a fully registered public offering (distribution of a
traditional red herring and final prospectus subject to the full

                   
==========================================START OF PAGE 41======

panoply of Securities Act liabilities, and payment of the full
registration fee).  If instead, the issuer determines that it can
sell only privately, to financially sophisticated investors
pursuant to a private offering, it could proceed in that
direction without waiting six months between the public, or
"registered," offers and a subsequent private placement.  A new
safe harbor would prevent integration of the registered offers
and non-registered sales, subject to specified conditions. 
Concerns about protecting the retail investing public should not
be implicated if only qualified, non-retail investors would be
allowed to purchase the privately placed securities
(alternatively, placement could be permitted under any other
applicable exemption without regard to any general solicitation
limitation).


               6.  Quick and Narrow Fixes -- Task Force
                   Recommendations

          In addition to the specific suggestions described
below, the Task Force also outlines other more general ideas in
Subpart 7 that follows.  

                   a.   Revise Rule 152

          The safe harbor of Rule 152 is limited to a private
offering conducted in reliance on the Section 4(2) private
placement exemption (this would include the limited offering
exemption of Rule 506 of Regulation D) that is followed by a
public offering (whether conducted pursuant to the registration
process or one of the public offering exemptions).

          The Task Force recommends that the Commission revisit
the current safe harbor with a view towards expanding its reach
so as to permit a company to switch from a private to public
offering without the necessity for an intervening termination of
the private offering.  In addition to removing artificial
barriers that do not further the disclosure purposes of the
Securities Act, liberalization of Rule 152 also will permit a
company to engage in "test the waters" offering activities among
qualified investors in reliance on the private offering exemption
prior to filing a registration statement.

     In addition to the above suggestion, the Task Force concurs
with commentators that a comparable safe harbor should be
implemented with respect to exempt small business offerings
conducted in reliance on Section 3(b) of the Securities Act that
are followed by a public registered offering.  The safe harbor
would provide only that an otherwise valid exempt offering need
not be integrated with either a subsequent public offering or an
earlier abandoned public offering.  In considering this
suggestion, the Commission should consider whether or not the
                   
==========================================START OF PAGE 42======

safe harbor should permit companies to start an offering as an
exempt public offering and complete it as a registered offering. 
In other words whether the safe harbor should allow for
unfettered "test the waters" offering activities prior to filing
of the registration statement.

          The Task Force believes that the Commission should
consider whether certain offerings that may give rise to
disclosure abuses should be excluded from any of these safe
harbor suggestions.  Historically, such offerings have included
blind pools, blank check companies, penny stocks and direct
participation investment programs.  

                   b.   Presumptive "Public Offering"
                        Doctrine

          Since 1984, it generally has been the staff's position
that the act of filing with the Commission a registration
statement in connection with a non-shelf offering is deemed to be
the commencement of the public offering of securities covered by
that registration statement.  Consequently, a company is viewed
as engaging in soliciting activity whether or not the company or
other participants in the distribution in fact use the document
to market securities.  As a result, companies that for valid
reasons determine after making their filing with the Commission
that a public offering is not feasible generally are precluded
from raising capital in the private markets until the
registration statement is withdrawn and the six-month safe harbor
from integration that is set forth in Regulation D is satisfied. 


          In the Task Force's view, a publicly filed registration
statement should not result in a per se conclusion that the
company is engaging in general soliciting activities.  Rather
than rely on an irrebuttable presumption, the Task Force suggests
that the traditional facts and circumstances general solicitation
analysis used in other contexts also be applied here.  To provide
greater certainty to companies, however, the Task Force
recommends that the Commission consider adopting a safe harbor
that would allow a company to access the private markets while it
has "quietly" filed a registration statement with the Commission.



          In formulating a safe harbor, the Task Force suggests
that the Commission consider the inclusion of investor protection
safeguards relating to investor sophistication and the nature of
the offering (e.g., has the type of offering raised investor
protection concerns in the past).  Further, the structure of the
safe harbor will depend in part on the Commission's regulatory
response to general soliciting activities.       
                   
==========================================START OF PAGE 43======

               7.  Pending Staff Initiatives

                   a.   Prospectus Delivery

          The Commission last May adopted revisions to its rules
and forms and a new rule to implement two solutions to prospectus
delivery issues arising in connection with the change to a T+3
clearance and settlement period (Release No. 33-7168 (May 11,
1995)).  The Task Force understands that last fall the Commission
staff informally was advised of other prospectus delivery issues
and currently is working to address the problem.  The Task Force
further understands that this initiative is intended to address a
specific identifiable problem and will not attempt to resolve the
more global concern of how and when information should be
provided to investors.

          Regardless of the outcome of this initiative, the Task
Force recommends that the Commission consider whether there may
be certain types of offerings where delivery of the mandated
disclosure document prior to or with the confirm does not further
the information flow to investors.  For instance, when a seasoned
issuer is offering additional shares of common stock, the
Commission should consider permitting full incorporation by
reference into a confirmation sent to an investor; an approach
also contemplated by the Advisory Committee's company
registration model.  Such an approach could be based on the
nature of the purchasers and/or the offering.

                   b.   Offshore Press and Internet
                        Activities

          Concerns have been expressed that journalists for
publications with circulation in the U.S. have been excluded from
offshore press activities conducted by foreign issuers. 
Preliminary Note 7 to Regulation S states that such journalists
should not be precluded from offshore press conferences, press
releases and meetings with company press spokespersons in which
an offshore offering or tender offer is discussed, provided that
the information is made available to the foreign and U.S. press
generally and is not intended to induce purchases or tenders of
securities by U.S. persons.  Nonetheless, foreign issuers
involved in global offerings with a public or private U.S.
tranche have been concerned that U.S. press contacts would
constitute "gun jumping" and thus improper offers under the
Securities Act.  The Task Force understands that the Commission
staff currently is working on a proposal to address these
concerns.

          Similar uncertainties arise when a foreign issuer
involved in an offshore offering puts information about the
offering up on its Internet Website that is accessible by U.S.
persons.  Even though the offer is not being made to U.S.

                   
==========================================START OF PAGE 44======

persons, concerns have been raised that this activity might
constitute an improper offer under the Securities Act.  The Task
Force understands that the Commission staff currently is working
on a proposal to address these concerns. 
                   
==========================================START OF PAGE 45======

IV.       FACILITATING CAPITAL-RAISING


          The Task Force recommendations described below are
intended to streamline further procedures and practices under the
current registration system.  The recommendations for seasoned
issuers set forth under the "Shelf Offerings" caption, as well as
certain other items in this Report, are substantially identical
to the streamlining concepts of the "company registration"
framework developed by the Advisory Committee.  Although the Task
Force was not designed to overlap with the work of the Advisory
Committee, the Task Force members have followed the work of the
Advisory Committee.  The Task Force recommends almost all of the
streamlining elements of company registration.  Given its
original purpose, the Task Force only has sought to identify and
recommend ways to streamline the regulatory process and thus only
has looked at the suggestions individually.  Were the Commission
to reach the next step of putting the pieces together into a
comprehensive package, the Task Force recommends that the
Commission consider reasonably expected investor protections
consequences of any particular package.  The Task Force notes
that the Advisory Committee has devoted significant time to
deliberations on these issues as it assembled its complete model
and has added, what the Advisory Committee intends to be,
significant investor protections.  

          The Task Force anticipates that concerns likely will be
raised regarding the effect the recommendations may have on the
disclosure documents used by seasoned as well as smaller issuers.

Some concerns already have been expressed regarding increased
reliance on Exchange Act reports of smaller issuers.  For
instance, underwriters may have reservations regarding the
increased use of annual and quarterly reports to replace the type
of prospectus disclosure which formerly reflected substantial
investigation and input from underwriters and counsel.  With
respect to seasoned issuers, underwriters and other persons
having a due diligence obligation under the Securities Act may
have reservations that the recommendations will frustrate further
their ability to conduct such investigations by compressing
further the time period between when an issuer decides to access
the market and its securities are sold (sometimes no more than a
couple of hours). 

          The Task Force has decided that on balance, even though
concerns have been and likely will be raised on some or all of
the recommendations, it made better sense to include the
recommendations in the Report.  In the Task Force's view, the
concerns should not be insurmountable and thus can be addressed
in connection with any rulemaking initiatives the Commission
undertakes.  
                   
==========================================START OF PAGE 46======

          The Task Force believes that the Commission, in its
consideration of these recommendations and any alternatives that
may be suggested, should take steps to ensure that the quality of
disclosure provided to investors be at least of the same quality
as that provided to investors today.  The Task Force notes that
improving the quality of disclosures in periodic reports is an
area being considered by the Advisory Committee.

          A.   DELIVERY OF EXCHANGE ACT PERIODIC
               REPORTS


               Eliminate Forms S-2/F-2, and permit smaller
               companies reporting on Forms S-1/F-1, and
               timely reporting for 12 months, to deliver
               along with their prospectuses periodic
               reports in lieu of restating information
               regarding themselves in prospectuses.

          Companies that have been filing Exchange Act reports
with the Commission ("reporting companies") for a three-year
period and meet the other registrant criteria are eligible to
register their securities offerings on Forms S-2/F-2.  Under this
framework, rather than reiterating in the prospectus the company-
specific information found in their Exchange Act reports,
companies may incorporate by reference that information into the
prospectus and physically deliver annual and interim reports with
a prospectus more focused on the details of the offering.  The
Task Force believes that the benefits of this delivery option
should be extended to a larger group of issuers and recommends
that the three-year reporting requirement be reduced to one year.

Because of the substantive disclosure included in today's proxy
statement, the Task Force also recommends that the Commission
consider expanding the information package that can be delivered
to include the proxy statement.

          This recommendation should reduce the costs of
registration for approximately 4,800 smaller companies by
eliminating certain printing and other costs associated with the
preparation of a traditional prospectus filed as part of a
registration statement on 
Forms S-1/F-1.  According to statistics compiled pursuant to the
Paperwork Reduction Act of 1980, preparation time of Forms S-2/F-
2 is less than half the preparation time of Forms S-1/F-1. 
Additionally, the terms of the offering, including the securities
                   
==========================================START OF PAGE 47======

to be offered, and the risks and benefits of investment would be
highlighted since the prospectus would not restate information
about the company.  For company-specific information,
shareholders need only look to the annual and interim information
delivered with the prospectus.  Of course, any material changes
in the registrant's affairs since the end of the latest Form 10-K
which were not described in subsequent Forms 10-Q would have to
be discussed in the prospectus filed as part of the effective
registration statement or, during the post-effective period, in a
prospectus supplement. 

          This recommendation, which narrows significantly the
gap between Forms S-1/F-1 and Forms S-2/F-2, would obviate the
need for those two separate and distinct registration forms.  The
Task Force thus recommends that Items 11 and 12 of Forms S-1/F-1
-- which relate to the information about the company -- be
modified to include the voluntary delivery option for companies
which have been reporting for at least one year, so that such
companies have a choice of including comprehensive disclosure
within the prospectus or delivering information.  Forms S-2 and
F-2 then could be eliminated, a result consistent with
suggestions received by the Task Force and with the streamlining
recommendations contained elsewhere in this Report.  

          The advantage of delivering Exchange Act documents with
the prospectus (instead of physically putting company-related
information in the prospectus) also would extend to use of Form
S-4 and Schedule 14A.  For exchange offers and merger proxy
solicitations on that form and schedule conducted by (and for)
12-month Form S-1/F-1 registrants, use of the delivery option
could mean even more savings for smaller companies.

          Where a company distributes required documents to its
shareholders, the Commission may want to consider the
appropriateness of allowing existing shareholders to elect not to
receive additional copies of the same information in connection
with the company's offering of additional securities.  The Task
Force believes that the option not to receive documents should
rest with the shareholders.  

          The Task Force recognizes that this recommendation may
be inconsistent with its recommendations designed to improve the
readability of disclosure documents.  While implementation of
this recommendation may result in registration statements that
are more focused on the proposed offering, the delivery of
multiple documents (e.g., the prospectus, annual report, and
quarterly reports) could create a less readable and user friendly
presentation than a single comprehensive prospectus.  One way to
address readability concerns in these circumstances is to require
a one-page guide, or "road map," which would essentially be a
more descriptive table of contents.  In any event, if this
recommendation is implemented, the Commission should monitor

                   
==========================================START OF PAGE 48======

disclosure practices to assure that the disclosure package
provided to investors is readable and informative.

          The Task Force also anticipates that concerns might be
expressed regarding the quality of the disclosure in the Exchange
Act reports of less-seasoned issuers.  Some concerns have been
expressed regarding increased reliance on Exchange Act reports of
smaller issuers.  Underwriters may have reservations regarding
the increased use of annual and quarterly reports to replace the
type of prospectus disclosure which today often provides the
opportunity for substantial investigation and input from
underwriters and counsel.  To address such concerns the
Commission, in its consideration of the expanded delivery option,
should take steps to ensure that the quality of disclosure
provided to investors in the offering documents be at least of
the same quality as that provided to investors in today's
traditional prospectus.  The Task Force notes that the quality of
disclosure in periodic reports and the adequacy of due diligence
on such reports by underwriters and directors are areas being
considered by the Advisory Committee. 

   
          B.   SHELF OFFERINGS

          The Task Force recommends several revisions to the
shelf registration procedure so as to provide increased
flexibility to a wider array of companies with respect to their
capital-raising activities.  Among other things, these
recommendations include: permitting delayed pricing for
registrants that have been reporting for 12 months; eliminating
restrictions on "at-the-market offerings" by seasoned Form S-3/F-
3 eligible companies; permitting a modified universal registrant
procedure; and permitting short form universal shelf registration
statements to include secondary resales.  


               1.  Smaller Issuers


                   Allow smaller companies to price the
                   securities on a delayed basis in order to
                   time securities offerings more
                   effectively with opportunities in the
                   marketplace.

          Today, smaller companies may not be able to take
advantage of "market windows" for their securities because they
are not eligible to use the Commission's shelf registration
process for primary delayed offerings.  The Task Force believes
that the Commission should consider providing a modified form of
shelf registration procedure to smaller companies.
                   
==========================================START OF PAGE 49======

          The Task Force suggests that a procedure similar to
Rule 430A, but without the requirement that a prospectus
supplement containing pricing information be filed within 15
business days after the effective date of a registration
statement, be provided to 12-month reporting companies.  No
changes to either the short form registration eligibility
requirements or disclosure requirements are suggested.  In short,
the prospectus would be complete except with respect to pricing
information permitted to be omitted under Rule 430A.  However,
given that disclosure of certain terms of preferred or debt
securities, such as financial covenants, may not be practicable
until pricing, the Commission should consider whether some
additional flexibility with respect to delayed disclosure is
appropriate for such securities.  The Task Force contemplates
that, like today under Rule 430A, the pricing-related information
contained in the pricing supplement would be deemed part of the
registration statement, and accordingly this recommendation would
not change the protections afforded investors under the liability
provisions of the Securities Act.  

          As a result of this recommendation, approximately 4,800
smaller companies would be able to sell their securities on a
delayed and continuous basis, as long as they deliver a pricing
supplement containing Rule 430A information, their base
prospectus and any updating prospectus supplements.  It has been
suggested that providing additional flexibility to smaller
companies could result in such entities raising more capital
through the public markets rather than through exempt offerings
conducted in the domestic and offshore markets.     

          While this recommendation will afford small companies
time and cost savings, the Task Force appreciates concerns raised
about possible adverse effects shelf registration may have on the
adequacy and accuracy of disclosures provided to investors, on
Commission oversight of the disclosures and on the role of
underwriters in the registration process.  These concerns are
similar to those raised when the shelf registration rule was
first being considered on a temporary basis and was made
available to any offering including an initial public offering. 
One suggestion to address these concerns is to require a waiting
period between the company's determination to sell its securities
and the commencement of the offering, during which an underwriter
could conduct a due diligence examination.  Further, certain
types of offerings may give rise to disclosure abuses.  Such
offerings historically have included blind pools, blank check
companies, penny stocks, and direct participation investment
programs.  In formulating a modified shelf rule for smaller
issuers using Form S-1, the Commission therefore should consider
excluding, in whole or in part, such offerings from the
procedure.  
                  
==========================================START OF PAGE 50======

          Moreover, the Task Force anticipates that the
registration statement and any post-effective amendment to
reflect a fundamental change or to update the financial
statements and other information in accordance with Section
10(a)(3) of the Securities Act, as well as the company's periodic
reports filed under the Exchange Act, would remain subject to
Commission oversight through the selective review process. 


               2.  Seasoned Issuers


                   a.   Reconsider restrictions on "at-the-
                        market" shelf offerings registered by
                        seasoned issuers on Forms S-3/F-3.
 
          An "at-the-market offering" is an offering on a
national securities exchange or through a market maker of
securities for which there is an existing trading market.  For
example, if a company's common stock is trading on the New York
Stock Exchange and that company offers shares of common stock on
or through the facilities of an exchange or to or through a
market-maker otherwise than on an exchange at the then current
market price, it is conducting an at-the-market offering.  The
Task Force suggests that the Commission reconsider the
feasibility, consistent with investor protection and orderly
market concerns, of eliminating one or more of the current
restrictions on an at-the-market shelf offering to make it a more
useful tool for capital-raising by seasoned issuers eligible to
use Forms S-3/F-3 for offerings of common stock and non-
investment grade securities. 

          Under current rules, a registrant may not make an at-
the-market offering on Forms S-3/F-3 unless certain conditions
are met.  The conditions are that:  the amount of securities
registered cannot exceed ten percent of the registrant's non-
affiliate public float (i.e., the aggregate market value of the
registrant's outstanding voting stock held by non-affiliates of
the registrant); the securities must be sold through an
underwriter or underwriters acting as principal(s) or agent(s)
for the registrant; and the underwriter or underwriters must be
named in the prospectus.

          Concerns have been raised as to whether elimination of
any or all of the at-the-market offering requirements may have
the unintended effect of impairing investor protection and
contributing to disorderly markets.  These concerns are similar
                 
==========================================START OF PAGE 51======

to concerns raised when at-the-market offerings were initially
considered by the Commission at the time that it adopted
procedures for primary shelf registration.  The Task Force
therefore believes that further analysis of the use of at-the-
market- offerings, and reconsideration of the original concerns
prompting inclusion of the restrictions on their use,
particularly in light of subsequent regulatory changes, is
warranted.  This review should take into account the Commission's
overall experience with the shelf registration process and
subsequent regulatory changes, including the proposal of the Task
Force to amend the trading practices rules.


                   b.   Permit companies engaging in shelf
                        offerings to include secondary
                        offerings without identifying the
                        selling security holders until the
                        time of the actual offering.

          In 1992, the Commission adopted provisions permitting
universal shelf offerings in an effort to facilitate the use of
shelf registration for delayed offerings of common stock and
convertible securities.  Universal shelf provisions permit
registration of a dollar amount of securities without identifying
the precise timing of each subsequent offering or specific amount
of each class to be offered, provided the aggregate dollar amount
of the securities to be offered is set forth in the registration
statement.  For example, a company can register an aggregate
dollar amount, identify the classes of securities covered and not
allocate the specific amounts to be offered in each category.  At
the time of its adoption, the Commission only contemplated use of
the universal shelf for primary offerings of securities.  The
Task Force does not believe that there is a need to retain that
restriction and recommends that the Commission consider expansion
of the universal shelf provisions to permit registration of
secondary offerings.  Under this proposal, issuers would not be
required to identify the selling security holders until the time
of the actual offering unless such identities are known prior to
the date that the initial registration statement is declared
effective.      


                   c.   Adopt a "universal registrant"
                        rule, which would enable a parent
                        company to name itself and its
                        majority-owned subsidiaries as
                        possible issuers on a shelf
                        registration statement, and defer
                        the choice of actual issuer until
                        the time of takedown.
                  
==========================================START OF PAGE 52======

          In some instances, an issuer is not in a position to
determine whether it or one of its  subsidiaries will be issuing
securities included on a shelf registration statement.  The
Commission staff has taken a no-action position where a
registrant named itself as well as its wholly-owned finance
subsidiaries in a registration statement as possible issuers, so
that the actual "issuer" could be chosen later at the time of the
takedown.  

          The Task Force recommends that the Commission consider
the need for a rule that would more broadly permit an issuer to
name on a registration statement itself and one or more of its
majority-owned subsidiaries as possible issuers.  This
modification would eliminate pressure on multiple registrants to
select prematurely the registrant, whether or not a finance or
operating entity, which will be implementing the takedown from
the shelf without reducing the level of significant information
provided to investors.  Each registrant, however, would have to
meet independently the form eligibility requirements.  Further,
the financial and narrative disclosures in the registration
statement would have to be complete with respect to each of the
named registrants.  Depending on the structure of the offering, a
separate core registration statement may be required for each
registrant.  In addition, care should be taken to avoid the
potential for investor confusion with respect to the issuer of
the securities.  


                   d.   Permit a company to reallocate
                        securities, or register a new class
                        of securities, on a shelf
                        registration statement by post-
                        effective amendment.

          Rule 413 requires that a registrant file a new
registration statement in order to supplement its offering with
additional securities.  However, the Task Force believes that the
Commission should consider whether Rule 413 should be construed
to preclude an issuer from either adding an additional class of
securities or reallocating the securities registered on its
registration statement by way of post-effective amendment.  To
address possible disclosure abuses, the Commission may decide to
require such post-effective amendments to be declared effective
and not receive the same administrative treatment as post-
effective amendments filed pursuant to Rule 462(b).  Post-
effective amendments filed pursuant to Rule 462(b) to increase
the size of an offering by no more than 20 percent become
effective automatically upon filing with the Commission.   

          For example, a registrant originally registers one
million dollars consisting of 100,000 shares of common stock
priced at $5.00 per share and 100,000 shares of preferred stock
                   
==========================================START OF PAGE 53=====

also priced at $5.00 per share.  If some time after the
registration statement is declared effective, the registrant
decides to reallocate its one million dollar offering to include
50,000 shares of common stock and 150,000 shares of preferred
stock, the registrant could do so by way of a post-effective
amendment so long as the one million dollar offering amount is
not exceeded.  Similarly, a company that has an effective one
million dollar universal shelf registration statement covering
senior securities may add common stock by means of a post-
effective amendment so long as the one million dollar offering
amount is not exceeded.  If the one million dollar offering
amount is exceeded under either example, the excess amount must
be registered on a new registration statement, unless the
recommendation described below to permit registration of
additional dollar amounts by post-effective amendment is
implemented by the Commission.  Depending on the structure of the
offering, this may require a separate core registration statement
for each registrant.  


                   e.   Permit seasoned issuers to register
                        a dollar amount without specifying
                        the classes of securities being
                        registered.

          Under current Commission rules, seasoned issuers are
permitted to register dollar amounts of securities provided that
they identify the classes of securities covered by the
registration statement for all securities they reasonably expect
to issue over the ensuing two years.  Since such issuers may not
determine the specific terms of the securities until the actual
offering date, disclosure regarding the classes of securities
being registered is often general since most of the terms
typically are not known at the effective date.

          The Task Force recommends that the Commission consider
the feasibility of allowing such seasoned issuers to register
dollar amounts without specifying the classes of securities
registered.  Disclosure regarding the exact class and terms of
securities to be offered would be provided at the time of the
offering.  As a result, such issuers would be afforded even
greater flexibility in their capital-raising efforts than under
the current regulations.

          Furthermore, the Task Force recommends that such
issuers be permitted to register additional dollar amounts by
means of post-effective amendments rather than the current
procedure of filing a new registration statement and using Rule
429 to bring up currently effective registration statements into
the new registration statement.  The Commission should consider
whether this is consistent with Section 6(a) of the Securities
Act.
                  
==========================================START OF PAGE 54======

                   f.   Allow seasoned issuers to pay
                        registration fees at the time
                        securities are taken down from the
                        shelf. 

          Although seasoned issuers may conduct delayed offerings
by taking advantage of the shelf registration procedure, they are
required to pay fees to the Commission upon the initial filing of
the registration statement.  As a result, issuers may be paying
fees to the Commission months before they are actually offering
securities to the public.  

          The Task Force suggests that the Commission consider
its authority to implement a "pay as you go" policy pursuant to
which seasoned issuers would be permitted to pay fees at the time
securities are taken down from the shelf.  This would provide
issuers with additional flexibility by allowing them the use of
the funds required for Commission fees until the actual offering
date.


          C.   FUNDAMENTAL CHANGES


               Consider clarifying what is a "fundamental
               change" to provide registrants with
               certainty regarding when a post-effective
               amendment is required.

          The Task Force suggests that the Commission provide
greater certainty with respect to what events constitute a
"fundamental change" requiring a registrant to file a post-
effective amendment to its shelf registration statement.  The
Task Force recommends that the Commission set forth specific
situations which would be considered a fundamental change
requiring a post-effective amendment, including a change in
accountants, a change in control, a change that cannot be
succinctly stated in a supplement, a material acquisition or
disposition, a change in the business or operations of a
registrant that would require a restatement of the financial
statements, or bankruptcy.

          The undertaking to file a post-effective amendment to
reflect a fundamental change applies to continuous and delayed
offerings permitted under the Commission's shelf registration
rule, Rule 415.  The Task Force suggests that the Commission
consider requiring a post-effective amendment filing for any
offering, whether or not it relates to an offering conducted
under the shelf registration rule, whenever there is a
fundamental change.
                  
==========================================START OF PAGE 55======

          D.   BROKER-DEALER RESEARCH REPORTS


               Consider streamlining and modernizing the
               safe harbors provided in Securities Act
               Rules 137, 138 and 139 relating to the use
               of broker-dealer research reports.

          Securities Act Rules 137 through 139 provide safe
harbors for brokers and dealers who disseminate information,
opinions or recommendations regarding registrants or a class of a
registrant's securities.  The Task Force recommends that the
Commission, consistent with investor protection, consider ways to
streamline and modernize those rules to, among other things,
reflect rapid advances in communications technology,
globalization of the markets and other developments since these
safe harbors were adopted in 1970.  For example, the Commission
may wish to consider whether the current exclusion from these
rules of any research report with respect to initial public
offerings remains necessary for and consistent with investor
protection.  The Task Force also recommends that Rule 138, which
is a narrow rule relating to research reports concerning S-2/F-2
companies, be consolidated with Rule 139.  

          While revisiting these rules, the Commission also
should review certain restrictions on participating dealers
publishing reports regarding companies ineligible to use 
Forms S-3/F-3, such as the prohibition against publishing a more
favorable opinion or recommendation than that published in their
last publication.  Specifically, the Commission should consider
whether these restrictions should be based upon criteria other
than the form eligibility of the issuer, such as market
capitalization.  


          E.   MARKET-MAKING TRANSACTIONS


               Eliminate an affiliated broker-dealer's
               prospectus delivery obligation in connection
               with "regular way" market making
               transactions.

          Market-making transactions by a broker-dealer who is an
affiliate of the issuer of the securities in which the broker-
dealer makes a market must comply with the registration and
prospectus delivery requirements of the Securities Act.  The Task
Force recommends that the Commission eliminate the affiliated
broker-dealer's prospectus delivery obligation that exists for
"regular way" market-making transactions in outstanding
                   
==========================================START OF PAGE 56======

securities of a Section 12 reporting company.  The Task Force
believes that under these circumstances, the burden on dealers
can be reduced without sacrificing investor protections.  In
implementing this recommendation, the Commission should consider
whether certain offerings that traditionally have given rise to
abuses should be excluded.  Historically, such offerings have
included blind pools, blank check companies, penny stocks and
direct participation investment programs.
 

          F.   AFFILIATE STATUS 


               Consider revising Rule 144's definition of
               "affiliate," consistent with Section 2(11)
               of the Securities Act, to exclude certain
               persons, such as some outside directors, who
               are not actually or potentially in a
               position to control a company's offering
               activities.

          The Task Force recommends that the Commission consider
whether the broad concept of "affiliate" could be narrowed to
focus, consistent with Section 2(11), on persons in a position
actually or potentially to control the issuer's activities.  Some
critics maintain that the concept has expanded unduly over the
years to cover all Section 16 insiders, regardless of actual or
potential control.  The Commission may want to consider this
proposal in conjunction with its consideration of the scope of
"outside directors" for proportionate liability allocation
purposes under the Private Securities Litigation Reform Act of
1995. 

          Under Rule 144(a)(1) an "affiliate" of an issuer
includes "a person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under
common control with, such issuer."  The Task Force believes that
a broad rule subjecting secondary resales to the provisions of
Rule 144, solely because of a person's status as an outside
director, may not further the purposes of the Securities Act. 
Individual outside directors usually are not conduits for
distributions by the issuer unless they are associated with a
broker-dealer.  This recommendation would not alter any other
obligation of outside directors to comply with other applicable
provisions of the federal securities laws, including the
obligation to report holdings and transactions on Forms 3, 4, and
5 pursuant to Section 16(a) of the Exchange Act.
                   
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          G.   TRUST INDENTURE ACT OF 1939

          The Task Force understands that the Commission may
undertake a study of the Trust Indenture Act of 1939 (the "Trust
Indenture Act") to evaluate the continued effectiveness of
specific provisions of the Trust Indenture Act, and to determine
whether the outright repeal or fundamental revision of the Trust
Indenture Act advocated by some commentators would be
appropriate.  If the Commission undertakes such a study and
determines that the Trust Indenture Act should be maintained, the
Task Force recommends the following revisions in order to further
streamline the rules promulgated under the Trust Indenture Act.


               1.  Permit a shelf registrant to qualify an
                   indenture by post-effective amendment so
                   that it need not file a new registration
                   statement when adding a new class of debt
                   securities.

          Under Section 309(a)(1) of the Trust Indenture Act,
indentures relating to registered debt securities are deemed to
be qualified upon effectiveness of the registration statement. 
Currently, there are no provisions for the post-effective
qualification of indentures under the Trust Indenture Act. 
However, indentures used in delayed offerings, while qualified at
the time of effectiveness, frequently do not specify business
terms until the actual sale of the securities at a date later
than the effectiveness of the registration statement.  Under
current practice, a form of indenture is qualified at the time
the registration statement goes effective, with the business
terms permitted to be specified in a supplemental indenture.

          When a registrant wishes to reallocate securities in a
shelf registration statement to issue debt securities that were
not included in the registration statement at the time of
effectiveness, however, the registrant currently would be
required to file a new registration statement in order to both
reallocate the securities and to qualify a new indenture.  In
another proposal, the Task Force recommends permitting
registrants to reallocate securities registered on shelf
registration statements by post-effective amendment.  As a
follow-up to the reallocation proposal, the Task Force further
recommends allowing for post-effective qualification of
indentures.  As a result, registrants would be able to reallocate
debt securities on a shelf registration statement by post-
effective amendment.  This proposal would provide issuers with
complete flexibility in reallocating registered securities.

          In order to allow for post-effective qualification of
indentures, the Task Force recommends that the Commission
promulgate a rule under the Trust Indenture Act that defines when
                   
==========================================START OF PAGE 58======

"registration becomes effective as to such security" under
Section 309(a)(1) for purposes of securities to be offered on a
delayed basis.  Under the definitional rule, a registration
statement would become effective as to securities to be offered
on a delayed basis either: (i) when the registration statement
becomes effective; or (ii) when a post-effective amendment
containing the new form of indenture becomes effective.  As with
the current system, this system could involve the qualification
of the new form of indenture contained in the post-effective
amendment, with the business terms specified later in a
supplemental indenture.

          The Task Force believes that allowing for post-
effective qualification would not erode investor protection since
the indenture still would be qualified prior to any sales of
securities and all the mandatory indenture provisions under the
Trust Indenture Act would be automatically incorporated into the
qualified indenture as required by the 1990 amendments to the
Trust Indenture Act.  


               2.  Eliminate Forms T-1 and T-2 for
                   determining trustee eligibility and,
                   instead, require an issuer to make an
                   "eligible trustee" representation in the
                   registration statement.

          Under Section 305(a) of the Trust Indenture Act, the
Commission may require that certain information regarding the
trustee be disclosed by the registrant in its registration
statement so that the Commission can determine whether the
trustee is eligible to act under Section 310(a).  Such
information regarding trustee eligibility must be contained in a
separate part of the registration statement and signed by the
designated trustee.  Currently, the Commission requires
registrants to use Forms T-1 (for a corporate trustee) and T-2
(for an individual trustee) for statements of eligibility and to
file the forms as exhibits to the registration statement.  In
1994, 962 Form T-1s were filed and zero Form T-2s were filed and,
in 1995, 683 Form T-1s were filed and zero Form T-2s were filed. 


          The 1990 amendments to the Trust Indenture Act
substantially reduced the disclosure requirements under Forms T-1
and T-2.  Specifically, the trustee eligibility provisions were
amended so that the enumerated conflicts of interest are
disqualifying, and must be disclosed, only if there is a default.

Therefore, under the post-1990 Form T-1, if no default exists,
the registrant need only provide information required by Items 1,
2, 15 and 16 of the form concerning the name of the trustee, any
affiliations of the trustee with the obligor, the order or rule
by which a foreign trustee is authorized to act as sole trustee,
                   
==========================================START OF PAGE 59======

and certain exhibits relating to trustee eligibility.  Similarly,
under Form T-2, the registrant need only disclose a limited
amount of information (Items 1 and 2) if no default exists. 
However, other than the exhibits, much of the information
required under Forms T-1 and T-2 where there is no default is
already required to be disclosed in Securities Act registration
statements as part of the description of securities.  Item
202(b)(10) of Regulation S-K requires the registrant to disclose,
in part, the "name of the trustee(s) and the nature of any
material relationship with the registrant or with any of its
affiliates."   

          The Task Force recommends that Forms T-1 and T-2 be
eliminated.  In lieu of filing a statement of trustee eligibility
on Form T-1 or T-2, the Task Force recommends that the registrant
be required to make a representation in the registration
statement that the named trustee is eligible to act under Section
310(a).  The representation would serve as part of the
information used by the Commission in determining trustee
eligibility rather than the information provided on Forms T-1 and
T-2.  Because of the Commission's reliance on the registrant's
representation, the exhibits required under the forms would no
longer be necessary.  In addition, the registrant would be
required to file as an exhibit to the registration statement a
statement by the named trustee confirming its eligibility under
Section 310(a).  Such a statement would be signed by the trustee,
thereby assuring that the trustee had notice of being named as a
trustee.  Further, the registrant would be able to rely on the
statement of the trustee when making its representation as to the
trustee's eligibility.

          In shelf offerings, where a trustee may not be
identified at the time the registration statement is filed, the
registrant would be required to make a representation that the
trustee will be eligible (upon selection) to act under Section
310(a) of the Trust Indenture Act and that it will provide a
statement of the trustee in accordance with Section 305(b)(2)
upon selection.  Together, the representation and the trustee
statement filed later would serve as the application for
determining trustee eligibility, which is allowed to be filed on
a delayed basis pursuant to Section 305(b)(2) for registered
shelf offerings.

          An issuer may have debt securities that are exempt from
registration under the Securities Act but are nevertheless
subject to the Trust Indenture Act.  For such debt securities, an
issuer must file a Form T-3 in addition to the applicable trustee
eligibility form.  If Forms T-1 and T-2 are eliminated, then Form
T-3 should be modified so that the trustee eligibility
information is provided in Form T-3.
                   
==========================================START OF PAGE 60======

          In addition, if Forms T-1 and T-2 are eliminated, the
rules which set forth the requirements relating to the filing of
the forms (Rules 5a-1 through 5a-3 and 5b-1 through 5b-3) should
be eliminated.

                  
==========================================START OF PAGE 61======


V.        SMALL BUSINESS INITIATIVES


          The Commission has long recognized that small
businesses play a pivotal role in ensuring the vitality of the
nation's economy.  Over the years, the Commission has taken
numerous steps to ease the way for small businesses to access
U.S. capital markets.  Among some of the most significant
measures taken by the Commission were the small business
initiatives in 1992.  As a result of those initiatives, the
Commission adopted major revisions to its rules implementing
Securities Act registration exemptions and established an
integrated registration and reporting system for small business
issuers.  The Task Force makes the following additional
recommendations.


          A.   LOCAL OFFERING EXEMPTION


               Liberalize the local offering exemption by
               adding a "substantial compliance" provision,
               expanding the concept of residence for
               individual and business purchasers, relaxing
               the triple 80 percent "doing business" test,
               and shortening the resale holding period
               under Rule 147 while creating a new limited
               exemption for certain local offerings that
               cross state lines.

          Section 3(a)(11) of the Securities Act permits an
issuer with localized business operations to sell securities
exclusively to local investors without the need to register with
the Commission.  The Commission promulgated Rule 147 in 1974 to
provide a safe harbor under Section 3(a)(11).  

          Over the years, the safe harbor provided by Rule 147
appears to have been infrequently used by issuers seeking to
raise capital within the borders of a single state, and critics
have described the rule as unreasonably strict and narrow.  

          Generally speaking, in order to fall within the Rule's
safe harbor, an issuer must offer and sell all of its securities
only to persons who are resident of the same state in which the
issuer is resident and doing business or, if the issuer is a
corporation, in which it is incorporated and doing business.  The
Commission has narrowly construed both Section 3(a)(11) and Rule
147 to mean that if any part of an issue is offered or sold to a
non-resident, even if unintentionally, the entire offering is
disqualified from receiving the exemption.  Even de minimis sales
to non-residents trigger the disqualification.  
                   
==========================================START OF PAGE 62======

          Moreover, Rule 147 requires that, for the most recent,
specified fiscal period, an issuer must have derived at least 80
percent of its gross revenues and have at least 80 percent of its
assets located within the particular state.  Rule 147 further
requires that an issuer use within the state at least 80 percent
of the net proceeds derived from the sale of the exempted
securities in order to fall within the Rule's safe harbor.  This
"triple 80 percent" test appears to be stricter than the
"predominant amount of business" test, which some courts have
adopted to determine whether an issuer has satisfied the "doing
business" requirement under Section 3(a)(11).  See, e.g., Chapman
v. Dunn, 414 F.2d 153 (6th Cir. 1969).  The current test also
appears to be stricter than the "substantial operational
activities" test, which the Commission utilized for determining
an issuer's Section 3(a)(11) eligibility prior to the enactment
of Rule 147.  The Commission explained this latter test in a 1961
release, which set forth guidelines for interpreting Section
3(a)(11).  See Release No. 33-4434 (December 6, 1961).

          Indications are that, because of the strict provisions
of Rule 147, issuers have utilized the local offering exemption
only sparingly, if at all.  The Commission's goal should be to
create a usable offering exemption for small issuers that
reflects the realities of the nexus to more than one locality of
today's small businesses.  Today, an individual investor often
maintains more than one residence, which makes it difficult and
costly for a small company to ensure that it has truly engaged in
a local offering.  Further, an individual investor may be equally
(or even more) familiar with companies located around his or her
place of employment as those located near his or her residence.

          Because some of the problems associated with Rule 147
stem from the statutory language of Section 3(a)(11) itself, the
most expedient way to accomplish reform of the local offering
exemption for small companies is for the Commission to both
revise Rule 147 as much as the statute will allow and exercise
its Section 3(b) authority to create an expanded local offering
exemption, subject to the following guidelines.  The new Section
3(b) exemption would apply to any specified capital raising
transaction that does not exceed $5,000,000.  Offerings greater
than that amount would have to meet the more stringent
requirements of Rule 147 and/or Section 3(a)(11).  With this two-
tier approach in mind, the Task Force makes the following
recommendations for an expanded offering exemption for small
companies.  For each recommendation, the Task Force has noted
whether it can be implemented under a revised Rule 147 exemption,
a new Section 3(b) exemption, or both.

          1.  The Commission should add a "substantial
compliance" provision similar to that contained in Rule 508 of
Regulation D.  Under such a provision, an issuer would not lose
the exemption for the entire offering by making an inadvertent

                   
==========================================START OF PAGE 63======

offer or sale to a non-resident as long as it fulfills the
following requirements:  a) the issuer must have reasonably
believed that the non-resident was in fact a resident; b) the
number of inadvertent non-resident purchasers was de minimis; and
c) the issuer must have made a good faith effort to comply with
all of the Rule's provisions.  The Task Force believes that the
Commission could promulgate such a "substantial compliance"
provision when revising Rule 147 under Section 3(a)(11). 
However, even if the Commission reaches a contrary determination
regarding Rule 147, it should promulgate this "substantial
compliance" provision as part of a new Section 3(b) exemption.

          2.  The Commission should clarify that the primary
focus of the local offering exemption is on purchasers rather
than offerees so that an issuer would not violate the rule if a
non-resident inadvertently became an offeree.  This would protect
an issuer that utilizes newspapers of limited, albeit general,
circulation or outdated mailing lists to advertise its offering. 
As the Commission has previously acknowledged in the above-
referenced 1961 release interpreting Section 3(a)(11), as long as
the issuer included the appropriate cautionary statements warning
a prospective purchaser that the offering was limited to local
residents, the mere fact that some non-residents read the
advertisement or otherwise became inadvertent recipients of the
solicitation would not disqualify the offering from receiving the
exemption's benefits.  The Task Force believes that the
Commission could implement this recommendation under Section
3(b), as well as under Section 3(a)(11).

          3.  The Commission should expand the concept of
residence for the purpose of determining an eligible individual
purchaser.  This would accommodate those investors that spend
substantial amounts of time in more than one state.  A person
should be considered a "local" where:  a) such person owns or
leases a dwelling which is maintained as a personal residence; b)
such person's principal place of employment or occupation is
located; or c) such person is registered to vote.  The Commission
could act on this recommendation when revising Rule 147 under
Section 3(a)(11), as well as when creating a new local offering
exemption under Section 3(b).

          4.  The Commission also should consider expanding the
concept of residence for a corporate or other business purchaser.

Rule 147 currently restricts the residence of a corporation,
partnership, trust or other business organization to the state in
which its principal business office is located.  The Commission
should consider expanding the "business purchaser" residence
requirement to include any state in which the business purchaser
has an office from which it operates a bona fide business
enterprise, provided this is the office that handles the
investment in question.  Again, the Commission could implement
                   
==========================================START OF PAGE 64======

this recommendation when revising Rule 147 as well as under
Section 3(b).    

          5.  The Commission should change the determining factor
of an issuer's residence to be the location of its principal
place of business, regardless of the particular form of business
organization involved.  Rule 147(c)(1)(i) currently limits the
residence of a corporation, limited partnership, trust, or other
form of business organization that is organized under local law,
to its place of incorporation or organization.  In so doing, the
Rule excludes from its scope a substantial number of business
organizations that have taken advantage of another state's
favorable corporate, partnership or tax laws when forming their
enterprises despite maintaining their principal places of
business elsewhere.  The Commission should adopt a "principal
place of business" residence requirement for all issuers,
regardless of their business form.  The Commission could
implement this recommendation only under Section 3(b) since
Section 3(a)(11) utilizes the term "incorporated," thereby
restricting the statutory exemption to a corporation that is both
incorporated and doing business within the same state of
residence as its offerees and purchasers.

          6.  The Commission should modify or eliminate the
"triple 80 percent" test by which it currently determines whether
an issuer is "doing business" to qualify for the local offering
exemption under Rule 147.  The Commission should either
substantially lower the threshold "doing business" amount under
Rule 147 or eliminate it altogether and replace it with a more
general "predominant amount of business" or "substantial
operational activities" standard.  For example, the Commission
could adopt a "doing business" standard that is satisfied by the
issuer having earned less than 80 percent but more than 50
percent of its gross revenues and having less than 80 percent but
more than 50 percent of its assets located in the particular
state.  Furthermore, the Commission should consider discarding
the "use of proceeds" portion of the "triple 80 percent" test. 
In this regard, as long as investors have recourse to an issuer,
the local offering exemption would remain available if an issuer
eventually uses the proceeds of a local offering to fund an out-
of-state project, but otherwise continues to meet the "gross
revenues" and "net asset" requirements.  The Commission could
implement this recommendation both when revising Rule 147 and
proceeding under Section 3(b).     

          7.  The Commission should consider permitting an issuer
to claim the local offering exemption for an offering that
crosses state lines in certain limited circumstances.  Such a
transaction would retain its "local" character as long as it was
confined to:  a) a metropolitan region that is recognized as a
single statistical area, such as the District of Columbia-
Northern Virginia-Maryland area or the New York City-Northern New
                   
==========================================START OF PAGE 65======

Jersey-Connecticut region; or b) an area within a certain
prescribed distance (e.g., 100 miles) from the issuer's principal
place of business.  The Commission could implement this
recommendation only pursuant to its Section 3(b) authority.

          8.  The Commission should consider relaxing the nine-
month resale safe harbor for purchasers of securities issued in a
local offering.  Under Rule 147, a purchaser of local offering
securities cannot resell them out of state for at least nine
months following the issuer's last sale of such securities.  The
Task Force believes that this period may impose an unnecessary
burden on the marketability of such securities.  Accordingly, the
Task Force recommends that the Commission curtail the nine-month
period to either 90 days or six months.  The Commission has
previously utilized each of these periods as a measurement under
the federal securities laws.  For example, under Section 4(3) and
Rule 174, the Commission utilizes a 90-day period to determine a
dealer's prospectus delivery requirements concerning the initial
public offering of an issuer that is a non-reporting company and
is not traded on Nasdaq.  The Commission adopted a six month
period as the basis for its integration principle under Rule 147
as well as Regulation A.  The Commission could implement this
"shortened holding period" recommendation under both Section
3(a)(11) and Section 3(b).   

          9.   For purposes of safeguarding investor protection,
the Commission should consider excluding offerings by "blank
check" and "blind pool" business organizations and direct
participation investment programs from the scope of the expanded
offering exemption, whether implemented under Section 3(b) or as
a revised Rule 147.  


          B.   REGULATION A


               Expand the Regulation A exemption by
               permitting small businesses to raise five
               million dollars within six months rather
               than five million dollars per year.

          Regulation A, promulgated under Securities Act Section
3(b), provides an exemption for small offerings of up to five
million dollars within a 12-month period.  However, the
Commission's exemptive authority under Section 3(b) of the
Securities Act is broader.  It may exempt any single offering up
to an aggregate five million dollars, without any explicit
limitation on the number of offerings in a given time period. 
The Commission included a 12-month limitation to prevent
companies from evading the spirit of the five million dollar
limitation by making multiple five million dollars offerings
within a short period of time (e.g., four five million dollar

                   
==========================================START OF PAGE 66======

offerings which really would amount to one $20 million non-exempt
offering).  The Task Force believes that the 12-month limitation
may not be necessary and that the scope of the exemption for
Regulation A purposes should be changed from a 12-month to a 6-
month period so that $10 million could be sold under the
exemption annually.  Changing the limit on the ceiling in this
way would assure that small businesses have more frequent access
to the marketplace and can continue to play their essential role
in the success of the U.S. market system.

          Alternatively, the Task Force recommends that the
Commission consider revising Regulation A to permit five million
dollars to be raised per offering rather than within a specific
time period, applying standard integration analysis to determine
when multiple offerings in fact constitute a single offering. 
This approach would be consistent with a recent Commission
proposal regarding a California limited offering exemption.  See
Release No. 33-7185 (June 27, 1995).  In that release, the
Commission proposed a new exemption from registration for limited
offerings up to five million dollars that meet the qualifications
of a new California exemption, regardless of whether such
offerings are separated by any particular time period.  Thus, the
Task Force believes that modification to an offering-by-offering
rule rather than an annual ceiling would be consistent with
harmonization of the federal and state regulatory scheme.  


          C.   REGULATION D


               Reduce the regulatory burden on nonreporting
               companies engaged in exempt offerings under
               Regulation D by permitting the use of
               uncertified financial statements when the
               offering amount is five million dollars or
               less.

          The requirements in Rule 502, relating to financial
statement disclosure for non-reporting companies selling
securities pursuant to Rules 505 or 506 of Regulation D, are
currently inconsistent with the requirements for disclosure of
non-financial information.  The level of non-financial disclosure
required is determined by whether the offering could
alternatively be accomplished under Regulation A.  If the
offering amount is five million dollars or less, the issuer must
provide the same kind of information as in a Regulation A
offering.  If not, the issuer must deliver the same kind of
information as would be provided in a registration statement
under the Securities Act on the form that the issuer would be
eligible to use.
                   
==========================================START OF PAGE 67======

          The level of financial statement disclosure is
similarly based upon the size of the offering, but does not
depend upon the five million dollar Regulation A threshold. 
Instead, it depends upon three levels of offering size:  a
certified balance sheet is required for offerings up to two
million dollars; certified financials pursuant to Regulation S-B
are required for offerings from two million dollars up to $7.5
million; and certified financials as would be provided in a
registration statement under the Securities Act on the form that
the issuer would be entitled to use are required for offerings
over $7.5 million.  The last two disclosure categories need not
be satisfied if that information cannot be obtained without
unreasonable effort or expense in which event only an audited
balance sheet need be provided.  In addition, financial and non-
financial information is required to be furnished to a purchaser
only to the extent material to an understanding of the issuer,
its business and the securities being offered.

          In 1992, as part of the Commission's small business
initiatives, the Commission considered revising the financial
information requirements of Rule 502 to eliminate the requirement
for certified financial statements, regardless of the size of the
offering.  This proposal was not received favorably and was never
adopted.  The Task Force recommends that the Commission consider
a similar, more limited, revision to the financial information
requirements.  Specifically, the Task Force recommends conforming
the financial information requirements to the rule's non-
financial requirements so that offerings below five million
dollars could contain uncertified financial statements.  This
recommendation also would simplify preparation of Regulation D
offerings by eliminating the two different schemes for financial
and non-financial disclosure. 

                  
==========================================START OF PAGE 68======

VI.       SIGNIFICANT CORPORATE TRANSACTIONS


          A.   WILLIAMS ACT AND PROXY RULES


               1.  Consider the creation of an integrated
                   regulation for mergers, tender offers and
                   other extraordinary transactions.

          To promote uniform disclosure practices among similar
types of transactions, the Task Force recommends that the
Commission consider creating a new regulation integrating the
transactional disclosure requirements of Forms S-4 and F-4 (form
for registration of securities issued in mergers, exchange offers
and other business combination transactions), Schedules 14A
(proxy solicitations), 14C (information statements), 13E-3
(going-private transactions), 13E-4 (issuer tender offers) and
14D-1 (third party tender offers).  Much like Regulation S-K, the
regulation should standardize, where appropriate, the type of
disclosure among different forms of such extraordinary
transactions.  The Task Force believes that integration would
eliminate the redundancies that currently exist by having the
same disclosure item appear in the different forms and schedules
where the investment and/or voting decision confronting
shareholders is essentially the same.  This approach also would
facilitate greater uniformity in the disclosure disseminated to
investors.

          In formulating the new regulation, the Task Force also
recommends that the Commission consider the following additional
revisions.  These recommendations also should be considered
independently if the Commission determines not to establish a new
integrated disclosure regulation:

                   a.   Revise proxy statement disclosure
                        requirements.

          The disclosure requirements of proxy statements
regarding mergers, consolidations, acquisitions and similar
matters are contained in Items 11 through 14 of Schedule 14A. 
Item 11 sets forth disclosure requirements regarding
authorization or issuance of securities otherwise than for
exchange.  Item 12 sets forth disclosure requirements regarding
modification or exchange of securities.  Item 13 sets forth
financial and other information requirements for transactions
pursuant to Items 11 and 12.  Item 14 sets forth disclosure
requirements regarding mergers, consolidations, acquisitions and
similar matters in proxy statements.  

          The Task Force recommends that Items 11 through 14 of
Schedule 14A be substantially revised and simplified, and that

                   
==========================================START OF PAGE 69======

conforming changes be made to Form S-4 to the extent that it
contains substantially similar language and the Form S-4
proxy/prospectus procedure is not used.  This recommendation is
intended to clarify and simplify current rules, not to suggest
that substantive modifications be effected. 

                   b.   Clarify the treatment of cash
                        mergers.

          Item 14 of Schedule 14A addresses the disclosure
requirements for cash mergers in a complex instruction.  Since
very little, if any, information is necessary regarding the
acquiring company in cash mergers, the Task Force recommends that
Item 14 be revised to make clear that information regarding the
acquiror in cash mergers is only necessary if it is material to
the voting securityholder's evaluation of the proposed
transaction.  Such material information would include, for
example, information about the acquiror's financial ability to
satisfy the terms of the offer, or potential conflicts of
interest between the management of the target company and that of
the acquiring company.

                   c.   Combine Schedules 13E-4 and 14D-1.

          Due to the substantial similarities between the
disclosure required for issuer tender offers (Schedule 13E-4) and
third party tender offers (Schedule 14D-1), the Task Force
believes that benefits may be achieved by combining the Schedules
into a uniform tender offer schedule.  One major difference
between the two schedules concerns their respective financial
disclosure requirements.  In certain respects, a Schedule 13E-4
filer must disclose more financial information than a Schedule
14D-1 bidder.  These financial disclosure differences should not
pose an obstacle to merger of the two schedules.

          Similarly, the Commission should consider merging
Schedules 13E-4F and 14D-1F together.  These Schedules pertain,
respectively, to issuer and third party tender offers involving
certain Canadian companies.  The eligibility criteria and the
disclosure requirements are substantially similar for both
Schedules.

                   d.   Move substantive disclosure
                        requirements out of rules and into
                        schedules.

          Some of the disclosure requirements for tender offers
are set forth in the tender offer rules, while the balance of
such requirements are included in Schedules 14D-1 and 13E-4.  For
example, Rule 14d-6(e) requires disclosure of (i) the scheduled
expiration date of the tender offer and information regarding
extension of that date, and (ii) information with regard to

                   
==========================================START OF PAGE 70======

withdrawal rights.  The Task Force believes that this dispersion
of disclosure requirements is unduly confusing.  Therefore, the
Task Force recommends consolidation of all such disclosure
requirements in the new integrated regulation or, if such
regulation is not adopted, in the schedules.

          The Task Force also recommends that any disclosure
requirements for proxy statements contained in the rules rather
than in Schedule 14A similarly be moved into that schedule (e.g.,
the date by which shareholder proposals must be submitted for
inclusion in a company's proxy statement, which requirement is
now in Rule 14a-5).


               2.  Reduce the disclosure obligations for an
                   investor with a passive investment
                   purpose, who acquires or holds more than
                   five percent but less than a certain
                   percentage of a company's equity
                   securities, by allowing such an investor
                   to file a short form Schedule 13G rather
                   than a Schedule 13D report.

          With certain exceptions, Exchange Act Section 13(d) and
the regulations promulgated thereunder require a beneficial owner
of more than five percent of a class of equity securities
registered under Section 12 of the Exchange Act to file a
Schedule 13D report with the Commission within ten days after it
has exceeded the five percent threshold.  The purpose of Section
13(d)'s reporting regimen is to function as an early warning
system to the company, its shareholders and the markets about a
potential change in control of the company.

          However, the scope of the Section 13(d) reporting
scheme may place an unnecessary reporting obligation on persons
whose acquisitions have a passive investment purpose and thus do
not involve the concerns of the Williams Act.  Consequently, the
Task Force recommends the following Regulation 13D revisions.

                   a.   Permit investors with passive
                        investment intent to use Schedule
                        13G.

          The Commission should amend Regulation 13D to permit
any investor, whether institutional or non-institutional, that
acquires or holds more than five percent but less than a certain
percentage (e.g., 10, 15 or 20 percent) of a class of Section
13(d) securities with a passive investment purpose, to file a
Schedule 13G instead of a Schedule 13D.  Schedule 13G is the
"short form" Section 13(d) report, which primarily applies to
certain qualifying institutional investors.  Schedule 13G only
requires minimum disclosure of certain basic items of information

                   
==========================================START OF PAGE 71======

concerning the beneficial owner's identity and a description of
the securities interest in question, and need only be filed
within 45 days of the end of the fiscal year in which the
threshold is exceeded.  While the Commission proposed a similar
amendment to Regulation 13D in 1989, it has not acted on this
proposal.

          The Task Force therefore recommends that the Commission
revisit the 1989 proposing release and renew the debate on these
issues.  In determining the best method to implement this
recommendation, the Task Force recognizes that the Commission may
wish to take into account its intervening liberalization of the
proxy rules in 1992, particularly reliance that was placed in
that context upon the beneficial ownership rules.  Also, in
determining the appropriate beneficial ownership ceiling, the
Commission again should seek comment on the level of holdings
that would implicate a controlling interest.  

                   b.   Codify staff position permitting
                        control persons of institutional
                        investors to file jointly with such
                        institutional investors on Schedule
                        13G under certain conditions.

          Institutional investors who, as part of the ordinary
management of their investment portfolios, acquire securities
representing more than five percent of a class of equity
securities are required under Section 13(d) of the Exchange Act
to file reports indicating their beneficial ownership with the
Commission.  If these securities were acquired with neither the
purpose nor effect of changing or influencing the control of the
issuer, and not in connection with nor as a participant in any
transaction having such purpose or effect, the institutional
investor is eligible to report the acquisition on Schedule 13G.  

          Although persons controlling such institutional
investors also are considered under Commission rules to be
beneficial owners of those securities, such persons are generally
not eligible to avail themselves of the short form reporting
privilege.  Nevertheless, the staff has taken the position in no-
action letters that such control persons may file jointly with
the institutional investors on the short form report, provided
that such control persons' individual ownership (i.e., ownership
other than that which is attributable to the person by virtue of
their relationship with the institutional investor) does not
exceed one percent of the class of the issuer's equity
securities.  The Task Force recommends the codification of this
staff position.
                  
==========================================START OF PAGE 72======

               3.  Exemptive Order For Multinational Tender
                   Offers

          In 1991, the Commission issued a release proposing
rules, forms and an order that would permit tender offers (cash
or exchange) to proceed in the United States on the basis of the
applicable regulation of the target company's home jurisdiction,
where 10 percent or less of the class of securities sought in the
tender or exchange offer is held of record by U.S. holders.  See
Release No. 34-29275 (June 5, 1991).  No action has yet been
taken by the Commission on such proposal.  The Task Force has not
included a specific recommendation in this Report regarding the
treatment of multinational tender offers because it understands
that the Commission's staff is actively working on a rulemaking
proposal relating to certain of these offerings.  The Task Force
anticipates that in reviewing the staff's proposal, the
Commission would balance carefully the need to encourage foreign
issuers to extend offshore offerings to U.S. shareholders with
the adequacy of the bidder's home-country disclosure
requirements.


               4.  Consider permitting direct mailing of proxy
                   soliciting materials to non-objecting
                   beneficial owners of voting securities held
                   of record by brokers, banks and other
                   intermediaries. 

          In 1992, the Commission adopted extensive revisions to
the proxy rules in order to alleviate regulatory burdens on
shareholder communications.  In view of ongoing technological and
other developments in shareholder communications, including
possible changes in applicable state law and stock exchange
requirements that overlap with the Commission's proxy regulations
in this area, the Task Force recommends that the Commission
consider whether an additional revision is warranted to permit
companies to mail proxy soliciting materials relating to a
shareholder vote directly to non-objecting beneficial owners of
voting securities held of record on their behalf by brokers,
banks and other intermediaries (collectively referred to as
"NOBOs").  For example, some recently amended state corporation
laws and the Revised Model Corporation Act have introduced a
concept of consenting beneficial holders who can be recognized as
shareholders for some purposes (e.g., receipt of notices). 
However, the current Commission rules permit direct company
mailing (or electronic delivery) to NOBOs of all communications
except proxy soliciting materials (or information statements). 
Only if the company is willing to incur the additional cost and
other burdens attendant to mailing (or otherwise transmitting)
the same set of materials twice -- both to the record holders and
the NOBOs -- is direct transmission of proxy and other soliciting
materials permissible.  Of course, some mechanism (such as use of

                  
==========================================START OF PAGE 73======

an omnibus proxy) would have to be developed by the Commission to
ensure compliance with applicable state-law voting requirements.


               5.  Consider eliminating filing of preliminary
                   proxy statements in contested elections of
                   directors.

          Consistent with the Commission's previous efforts to
liberalize the regulatory scheme pertaining to proxy
solicitations, the Task Force recommends that the Commission
permit most Schedule 14A proxy statements filed in connection
with an election contest to be filed in definitive form
immediately upon use.  This change is consistent with the current
rules in that issuers and other soliciting parties currently are
allowed to use all other soliciting material immediately upon
filing with the Commission.  Soliciting parties also are
permitted to disseminate preliminary proxy statements immediately
so long as such material is not accompanied by a proxy card. 
This recommendation may not be appropriate where there is a
significant inequality of resources among the parties to the
election contest.  One approach to address this concern would be
for the Commission to identify an appropriate threshold based on
the target company's unaffiliated market float, below which the
contestants' proxy statements would not be afforded such
treatment.  The Task Force believes that shareholders of these
target companies under the threshold may benefit from staff
review of preliminary proxy material.  


               6.  Study the shareholder proposal process.

          Few areas of the federal securities laws have been as
contentious as shareholder proposals under Exchange Act Rule 14a-
8.  The Rule, first adopted in 1942, provides a federal framework
for shareholders to submit proposals to a vote of their fellow
shareholders where otherwise appropriate under state law.  Under
the rule, public companies generally must include proposals that
meet this (and several other criteria) in proxy statements sent
to all shareholders at no cost to the shareholder proponent. 
This provides a low cost mechanism for shareholders to
communicate with one another regarding proposals they plan to
raise at the meeting, using the company's proxy statement as a
vehicle.

          The contention arises in two primary areas:  (1) what
proposals should be included; and (2) what efficiencies should be
added to the process.  Although the debate dates back over 20
years, it seemingly has intensified as issuer groups complain
that Rule 14a-8 has become a vehicle for shareholder groups to
conduct referenda on social issues that many companies believe
are not relevant to their business.  Although the proposal and

                   
==========================================START OF PAGE 74======

supporting statements are limited by rule to 500 words, some
issuers (typically those that receive a number of proposals)
argue that the cost of inclusion of these proposals outweighs any
benefit to the shareholder body at large.  Activist shareholder
proponents, particularly proponents of social issues, counter
that it is a fundamental right of shareholders to submit
proposals for consideration and that major social issues (e.g.,
affirmative action or doing business in particular countries) are
of importance to shareholders and have an impact on the company's
profitability.  Criticism, however, is not limited to the area of
social proposals.  In general, shareholders acknowledge the value
of the rule in addressing issues of corporate governance.

          The Task Force considered many possibilities, including
raising the thresholds for submitting a proposal; removing the
exclusion for ordinary business; revisiting the personal
grievance exclusion; raising the threshold for resubmitting a
proposal from the prior year that did not garner much support;
imposing a reasonable ceiling on the number of proposals that
must be included in a single proxy statement; and turning the
entire process of determining which shareholder proposals should
be included in a proxy statement over to the individual states. 
Unfortunately, no attempt at compromise appeared to address
adequately the concerns of both proponents and issuers.  In order
to find a complete solution, the Task Force believes the
Commission will need to undertake a formal and in-depth study of
the entire shareholder proposal process.  In the interim,
however, the Commission may wish to consider suggestions received
by the Task Force in favor of raising the threshold for
resubmissions while at the same time considering added
flexibility.



          B.   EXCHANGE OFFERS


               1.  Place certain seasoned issuer exchange
                   tender offers on the same footing as cash
                   tender offers by permitting such issuers'
                   registration statements to go effective
                   automatically upon filing.

          Under the current regulatory scheme, bidders are not
required to submit cash tender offer documents for Commission
staff review prior to commencement of an offer.  The tender offer
statement is filed with the Commission on the same day the tender
offer is commenced.  However, if the tender offer consideration
involves the issuance of bidder securities, a bidder must file a

                   
==========================================START OF PAGE 75======

registration statement and await its effectiveness prior to
commencing the tender offer.  

          To place exchange tender offers on an equal footing
with all-cash offers, the Task Force recommends that registration
statements on Forms S-4/F-4 relating to exchange tender offers by
S-3/F-3 eligible companies become automatically effective upon
filing, so long as the securities offered are common stock traded
on a national securities exchange or quoted in Nasdaq NMS, or are
investment grade debt or preferred stock.  However, automatic
effectiveness would not be available for going-private or roll-up
transactions.  

          Similar to cash offers, exchange tender offer filings
still would be reviewed by the staff during the pendency of the
tender offer.

          Alternatively, the Commission should consider allowing
shareholders to tender during the period between filing and
effectiveness of the registration statement.  This alternative
assumes withdrawal rights during at least the waiting period and
at most through the pendency of the offer and any extension
thereof.  


               2.  In registration statements relating to
                   exchange offers or other acquisitions
                   involving nonreporting target companies,
                   require only financial information about
                   the target company that the target
                   company has provided to its shareholders.

          In exchange offers or other acquisitions involving
nonreporting target companies, audited financial statements of
the target may not be readily available.  The Task Force believes
that it represents an unreasonable burden to require acquirors to
obtain audited financials for the target when it is the target
company's shareholders themselves who will be the recipients of
the information.  The target shareholders made an initial
investment decision in the target, and then continued to hold the
target's shares, without the benefit of audited financial
statements.  The Task Force cannot identify any significant
reason why the target shareholders should receive more and
different information about their company in this context than
they received prior to the exchange offer.  

          Building on positions previously taken by the
Commission staff, the Task Force recommends that the Commission
require acquirors to provide only the financial information that
the target has previously provided to its shareholders.  As part
of this recommendation, acquirors also would no longer be
required to provide a reconciliation to U.S. GAAP of the

                   
==========================================START OF PAGE 76=====

financial statements of nonreporting foreign private issuers,
unless such a reconciliation was already available.  This
recommendation would not alter any of the existing requirements
to provide pro forma financial information under Article 11 of
Regulation S-X.  In addition, it would not alter any of the
existing requirements to provide audited financial statements
pursuant to Rule 3-05 of Regulation S-X if a registration
statement on Form S-4 is used for resales to the public by any
person who with regard to the securities being reoffered is
deemed to be an underwriter within the meaning of Rule 145(c). 
Furthermore, the disclosure requirements in proxy statements when
the acquiror's shareholders are voting would remain the same. 
This recommendation also would not apply to roll-up transactions.

                   
==========================================START OF PAGE 77======

VII.      REGISTRATION


          A.   INTERNAL REORGANIZATIONS


               1.  Exempt certain internal holding company
                   reorganizations from registration so long
                   as the reorganization is the sole purpose
                   of the transaction and fundamental
                   shareholder rights and interests remain
                   substantially unchanged.

          A typical internal holding company reorganization is a
corporate restructuring where a holding company is created to be
a parent to a pre-existing operating company and shares in the
pre-existing company are exchanged pro-rata for shares in the
holding company.  Companies carry out such reorganizations for a
variety of reasons, such as facilitation of acquisitions, joint
ventures, financing and tax planning.
  
          Under current rules, most internal holding company
reorganizations, even reorganizations that do not alter important
shareholder rights, must be registered under the Securities Act. 
As Rule 145 is currently written, the issuance of securities in
connection with a merger that requires a shareholder vote must be
registered.  Rule 145 deems such transactions to involve an
"offer" or "sale" of securities under Section 2(3) of the
Securities Act.  Most holding company reorganizations involve a
merger between the pre-existing company and a shell company and
require shareholder approval.  

          The Task Force recommends permitting unregistered
internal holding company reorganizations, so long as the
reorganization is the sole purpose of the transaction, and
fundamental shareholder rights and interests are substantially
unchanged.  In these circumstances, there may well be no "offer"
or "sale" of a new security under Section 2(3) of the Securities
Act, and therefore no registration requirement under Section 5 of
that Act.  Shareholders receive shares which, in reality,
represent substantially the same interests and carry the same
rights as those held prior to the reorganization.  To implement
this recommendation, the Task Force suggests revising Rule 145 to
remove internal holding company reorganizations from the
description of covered transactions subject to registration. 

          This recommendation is consistent with the theory
apparently underlying recently enacted legislation in Delaware
and Pennsylvania that permits internal holding company
reorganizations to be carried out without shareholder approval or
the availability of appraisal rights, so long as certain
conditions -- evidently designed to ensure continuity of
                   
==========================================START OF PAGE 78======

shareholder rights and interests -- are satisfied.  The
recommendation also is consistent with recent staff interpretive
letters involving reorganizations carried out pursuant to the new
Delaware and Pennsylvania laws.  In the recent interpretive
letters, the Division agreed that no "offer" or "sale" would be
involved so long as certain additional conditions are met,
including, among others, that shareholders will receive shares of
the same class evidencing the same proportional interest in the
holding company as they held in the pre-existing company and the
rights and interests of the shareholders in the new holding
company stock will be substantially the same as their rights and
interests prior to the transaction.  The factors cited in these
recent letters would serve as a basis in formulating the proposed
new rule.   

          The Task Force understands that the recent enactment of
Section 3(a)(12) under the Securities Act, providing a
transaction exemption for certain bank holding company
reorganizations, may raise issues relating to the implementation
of this recommendation.  These issues should be addressed in the
rulemaking process. 


               2.  Ease financial disclosure requirements for
                   internal holding         company
                   reorganizations that are subject to
                   registration.

          Additional recommendations relating to holding company
reorganizations follow.  

          Accounting Change

          When the registrant is a successor to an ongoing
business for which audited financial statements have been
provided for the periods specified in Rules 3-01 and 3-02 of
Regulation S-X, the Task Force recommends revising Rule 3-01(a)
of Regulation S-X to eliminate the requirement that the successor
provide an audited balance sheet as of a date within 135 days of
the date of effectiveness of the registration statement. 

          Modification of Disclosure Requirements of Form S-4

          The Task Force recommends that the Commission codify
the staff's position that an issuer engaged in a holding company
reorganization may omit from its proxy statement/prospectus filed
as part of a registration statement on Form S-4 the financial and
other information analogous to that information which may be
omitted pursuant to Instruction 4 to Item 14 of Schedule 14A
under the Exchange Act.  The required information would thus be
largely limited to information about the reorganization itself. 
                   
==========================================START OF PAGE 79======

          B.   SPIN-OFFS


               Codify a rule permitting certain
               unregistered spin-offs of subsidiaries or
               divisions by reporting companies. 

          The Task Force recommends that the Commission codify
the staff position stated in a series of no-action letters that
certain non-abusive spin-offs of subsidiaries or divisions of
companies reporting under the Exchange Act may be effected
without registration under the Securities Act, so long as the
marketplace is provided with sufficient information about the
entity to be spun-off.  Specifically, the Task Force recommends
that the Commission adopt a rule to permit unregistered spin-offs
of subsidiaries of reporting issuers where shareholders receive
information substantially similar to information contained in
Schedule 14A or 14C, and the spun-off company registers under the
Exchange Act prior to the distribution (or in the case of a
foreign private issuer, provides home country information under
Rule 12g3-2(b)).  Consistent with the current line of no-action
positions, this relief would not be available (a) in those
situations where the securities being spun-off are "restricted
securities" (as defined in Rule 144(a)(3)) that were acquired
from a third-party within the prior three years; or (b) for spin-
offs lacking a valid business purpose.  The Commission staff
receives numerous no-action requests in this subject area each
year.  This recommendation would save registrants the time and
expense spent preparing those requests and permit Commission
staff to reallocate the time spent processing such requests to
other matters.



          C.   EXCHANGE OFFERINGS


               1.  Broaden the circumstances in which the
                   guaranteed convertible securities of a
                   wholly owned subsidiary can be exchanged
                   for those of its parent without the
                   expense and delay of registration.

          Section 3(a)(9) of the Securities Act provides for an
exemption from registration for certain exchanges by an issuer
with its existing security holders.  Often, Section 3(a)(9)
exempts the issuance of securities underlying convertible
securities.  However, since this exemption requires that both the
security issued and the security exchanged be those of the same
issuer, the availability of the exemption to wholly-owned
subsidiaries that issue convertible securities guaranteed by the
                   
==========================================START OF PAGE 80======

parent and convertible into the securities of the parent has been
unclear. 

          The Task Force recommends building on, and broadening,
a staff no-action position with respect to when two such issuers
can be considered the same issuer for purposes of Section
3(a)(9).  This recommendation could be implemented by modifying
Securities Act Rule 149 to define the term "exchanged by the
issuer with its existing security holders exclusively" under
Section 3(a)(9) to include convertible securities issued by a
wholly-owned subsidiary when such securities are fully and
unconditionally guaranteed by the parent and convertible into
securities of the parent.  The Task Force also recommends that
conforming changes be made to the Rule 144 tacking provision
consistent with staff no-action relief.


               2.  Codify staff positions permitting certain
                   unregistered issuances of securities
                   pursuant to Securities Act Section
                   3(a)(10) that have been subject to
                   judicial or administrative review and
                   approval. 

          Section 3(a)(10) of the Securities Act provides an
exemption from the registration requirements of the Securities
Act for securities issued in exchange for other securities,
claims or property interests, where the issuance has been
approved by a court or by an authorized federal or state
administrative body following a hearing on the fairness of the
terms and conditions of the proposed issuance at which all
persons to whom securities are proposed to be issued has the
right to appear.  The Task Force suggests that the Commission
consider the appropriateness of a rule codifying the staff's
position that (1) the term "any court" in Section 3(a)(10)
includes foreign courts; (2) the court or administrative body
must specifically consider the fairness of the terms and
conditions of the exchange to the persons to whom securities are
to be issued in the exchange, and (3) in making its fairness
determination the court or administrative body must have
sufficient information before it to determine the value of both
the securities, claims or interests to be surrendered and the
securities to be issued in the proposed transaction.  Consistent
with the staff's position, the exemption would not be available
in connection with class action litigation settlements where the
fairness hearing occurs prior to the time the court is provided
with all terms of the settlement payment formula, and with
information as to the number of persons participating in the
settlement and the value of their individual claims against the
issuer.
                  
==========================================START OF PAGE 81======

          D.   AMERICAN DEPOSITARY RECEIPTS


               Eliminate the requirement to register under
               Section 12(b) of the Exchange Act American
               Depositary Receipts registered on Securities
               Act Form F-6.

          Under current rules, American Depositary Receipts
("ADRs") that are traded on the Nasdaq stock market or in the
over-the-counter market generally are exempt from the Exchange
Act registration and reporting requirements applicable to the
deposited securities.  ADRs that are listed on a national
securities exchange are, however, subject to such requirements,
as are the deposited securities to which they relate. 

          The Task Force recommends that the Commission eliminate
Exchange Act registration for the latter category of ADRs.  In
these circumstances, Exchange Act registration imposes a
regulatory burden with no apparent benefit to investors, since it
results in no additional disclosure and creates an unwarranted
distinction between Nasdaq-traded ADRs and exchange-listed ADRs.

                   
==========================================START OF PAGE 82======

VIII.     REPORTING


          A.   SUSPENSION AND TERMINATION OF REGISTRATION AND
               REPORTING OBLIGATIONS


               1.  Expand the circumstances in which
                   companies may terminate registration
                   under Section 12 of the Exchange Act.

          A company is required under Exchange Act Section 12(g)
and Rule 12g-1 to register a class of its equity securities under
the Exchange Act, thus incurring periodic reporting and other
obligations under that Act, if it has 500 record holders and
total assets exceeding five million dollars at the end of its
fiscal year.  Once registered, however, unless the number of
holders drops below 300, a company cannot terminate its
registration until it has fallen below both the five million
dollar asset threshold and the 500 holder threshold.  That is,
even though there is no initial registration obligation unless
both thresholds are met, a company may not terminate its
registration even if it falls below one of them.  In the case of
the asset threshold, it could not terminate its registration
unless its total assets have fallen below five million dollars on
the last day of each of the most recent three fiscal years.  The
latter requirement helps to ensure that a decline in total assets
below the threshold has some permanence.     

          The Task Force suggests that the Commission revisit the
rule relating to the termination of Exchange Act registration to
consider whether companies should be permitted to terminate
reporting when they fall below only one, but not both, of the
thresholds.  The Task Force also recommends that the requirement
that the value of assets fall below five million dollars on the
last day of each of the most recent three fiscal years be revised
to require that assets fall below that amount on the last day of
each of the most recent two fiscal years.  A two-year history
should in most cases be sufficient to ensure that a company's
eligibility for de-registration is firmly established.  

          This suggestion seems consistent with the theory that
only companies that meet both thresholds are large enough to be
subject to compulsory registration, reporting and other
obligations under Exchange Act.  After all, companies are not
considered large enough to be subject to an initial obligation to
register until both the assets and holders thresholds are met.  A
company that no longer meets one of the thresholds should
therefore be entitled to opt-out of registration.  On the other
hand, investors buying equity of reporting companies may do so
with the expectation that they will continue to be public
                  
==========================================START OF PAGE 83======

companies subject to the full regulatory scheme of the Exchange
and Williams Acts.

          Additionally, it has been brought to the attention of
the Task Force that some companies which had previously
registered under the Exchange Act when the asset thresholds were
lower are effectively prevented from exiting the system, even
though they would not under current rules have an obligation to
register in the first place because they have five million
dollars or less in assets.  (The Commission increased the asset
threshold from one million dollars to three million dollars in
1982, and from three million dollars to the current five million
dollars in 1986.  The Commission has recently proposed to raise
the asset threshold to ten million dollars.)  The revision
proposed by the Task Force would permit such companies with less
than five million dollars of total assets or less than 500
holders of record to terminate their registrations.  

          In making this recommendation, and the recommendation
below to make similar modifications to the rules relating to the
suspension of an issuer's reporting obligations under the
Exchange Act Section 15(d), the Task Force is aware of the
outstanding proposal to raise the thresholds for termination of
registration, and suspension of reporting obligations, from five
million dollars to ten million dollars.  See Release No. 33-7186
(June 27, 1995).  It is not the intention of the Task Force to
recommend that the Commission implement both the outstanding
proposal and its own recommendations.  In the event that the
Commission adopts the outstanding proposal, it should carefully
evaluate the combined effect of that adoption and the Task
Force's recommendations.   


               2.  Similarly revise the rules governing when
                   companies may suspend Section 15(d)
                   reporting obligations.
  
          In connection with Exchange Act Rule 12h-3 governing
suspension of reporting obligations under Section 15(d) of the
Exchange Act, the Task Force recommends expanding the
circumstances in which companies may suspend their Section 15(d)
reporting obligations.  Since the rules governing the suspension
of Section 15(d) reporting obligations are substantially similar
to the rules governing the termination of Section 12
registration, the Task Force recommends making the same revisions
to Rule 12h-3 as to Rule 12g-1 described above.


               3.  Promulgate a rule pursuant to Section
                   12(h) of the Exchange Act permitting the
                   modification of periodic reporting
                  
==========================================START OF PAGE 84======

                   obligations for certain companies in
                   bankruptcy or liquidation.

          In 1972, the Commission stated that the staff would
consider providing certain companies subject to bankruptcy
proceedings relief from Exchange Act reporting on a case-by-case
basis.  See Release No. 34-9660 (June 30, 1972).  The Task Force
recommends that the Commission adopt a limited exemptive rule,
pursuant to Section 12(h) of the Exchange Act, covering companies
in bankruptcy that satisfy certain conditions.  Such a rule
would, in most cases, eliminate the requirement that registrants
consult with the staff before modifying their reporting
obligation during the pendency of a bankruptcy proceeding.

          Any exemptive rule largely should track the pre-
conditions for relief set forth in current no-action letters,
such as the preparation of Exchange Act reports involving
unreasonable effort or expense (in light of the curtailment of
the company's operations), the company's securities being
minimally traded, exchange-traded securities being de-listed, and
the company's preparation of periodic reports under the
supervision of a trustee or other court-appointed officer and
undertaking to file such reports with the Commission on Form 
8-K.  Consistent with the no-action letters, the relief would be
limited to the time that the company is in bankruptcy.  Upon
emerging from bankruptcy, the company would resume its full
Exchange Act reporting obligations.  In addition, in any future
filings under the Securities Act, the company would have to
provide audited financial statements for any period for which
audited financial statements are required under the Securities
Act, even though some portion of such periods might cover the
period during which the company was in bankruptcy. 
    
          The Commission staff has provided similar relief to
certain liquidating trusts, such as trusts created in connection
with companies that are winding down after filing articles of
dissolution with their states of incorporation.  The new rule
also should provide relief to such liquidating trusts.

          The proposed new rule should not cover certain
situations that the Task Force believes may involve potential for
abuse, such as liquidating trusts established in connection with
real estate limited partnerships or trusts designed to cover
anticipated environmental or other liabilities.       


               4.  Re-examine periodic reporting obligations
                   under Section 15(d) of the Exchange Act
                   to ensure that such obligations are more
                   closely aligned with the period during
                   which securities are actually sold.
                   
==========================================START OF PAGE 85======

          Section 15(d) of the Exchange Act states that an issuer
that has filed a registration statement under the Securities Act
that has become effective is subject to Exchange Act reporting
obligations.  The Task Force recommends that the Commission
revisit periodic reporting requirements under Section 15(d) in
order to provide clarification and avoid possible anomalous
interpretations that may be inconsistent with the purposes of the
Section.  
          A reporting obligation under Section 15(d) of the
Exchange Act commences at the time a registration statement under
the Securities Act becomes effective.  Although a company may
postpone its offering for market, business or other legitimate
reasons, it has a reporting obligation even though no securities
have been sold.  In the Task Force's view, this reporting
obligation should commence instead at the earlier of the time
securities are sold or when-issued trading commences.  Therefore,
the Commission should consider revising its rules to implement
this "springing" reporting obligation approach.  Registrants, of
course, could restart their Securities Act offering only with a
current prospectus.  

          The Commission may also wish to consider other possible
alternatives to ensure that reporting obligations are more
closely aligned with the period during which securities are
actually sold.  One alternative would be to require that certain
registrants with effective registration statements remain subject
to reporting obligations for a fixed period of time following de-
registration of their securities.  

          While these recommendations would likely ease the
regulatory burdens on some registrants, they may in some respects
increase the burdens on others.  The Task Force believes that
they deserve consideration in light of other recommendations
contained in this Report to extend some shelf registration
concepts to smaller issuers and the importance of maintaining
information in the marketplace during the time period that
securities are offered and sold. 


          B.   CONCURRENT EXCHANGE ACT/SECURITIES ACT
               REGISTRATION
                  
==========================================START OF PAGE 86======

               1.  Permit a company to register concurrently
                   a public offering under the Securities
                   Act and a class of securities under the
                   Exchange Act by filing a single form that
                   would cover both registrations.

          Under current rules, a reporting company can register a
class of securities under the Exchange Act on a short form
registration statement, Form 8-A.  A company registering an
initial public offering is permitted to use Form 8-A even though
it is not technically subject to reporting until after its first
Securities Act registration.  Form 8-A is a short form
registration form that requires only a description of the
registrant's securities pursuant to Item 202 of Regulation S-K
and the filing of certain exhibits.

          Registrants who are concurrently registering securities
under the Securities Act and the Exchange Act must file two
forms, Form 8-A and the appropriate Securities Act form.  Since
the Securities Act form will contain or incorporate by reference
all of the information called for by Form 8-A, the Task Force
recommends that the Commission dispense with the requirement to
file Form 8-A.  In order to provide for registration under the
Exchange Act, Forms S-1/F-1, S-2/F-2 (if not eliminated as
recommended), S-3/F-3 and S-4/F-4 should be modified to include a
box on the cover page of the registration statement that could be
checked to indicate when concurrent Exchange Act registration is
being made, and to include certain other information, such as
title of the class of securities to be registered.

          Concurrent registration would not, however, be
available for a universal shelf registration statement since that
document normally does not include an adequate description of the
securities for the purposes of Exchange Act registration.  

          The Task Force also recommends that the Commission
consider providing a procedural mechanism for automatically
registering securities issued on a shelf takedown, such as by
checking a box on Rule 424 prospectuses.  


          C.   SECURITIES ACT FORM ELIGIBILITY


               1.  Permit a company to switch to a shorter
                   Securities Act form at the time of filing
                   any amendment if it has become eligible
                   to use the shorter form since filing its
                   initial registration statement.

          Pursuant to Rule 401 of Regulation C, the form and
content of a registration statement and prospectus are determined

                   
==========================================START OF PAGE 87======

on the initial filing date of such registration statement and
prospectus.  A company is not permitted under Rule 401 to
reevaluate its status until it files an amendment pursuant to
Section 10(a)(3) of the Securities Act.  This means that, even if
a company meets the eligibility criteria to use a shorter form at
the time of a pre-effective or post-effective amendment, current
rules require it to file the amendment on the longer form that
applied at the time of its initial registration statement.

          The Task Force believes that a company should be
permitted to take advantage of a form if it meets the eligibility
criteria for that form at the time it files an amendment. 
Therefore, the Commission should permit companies to determine
the appropriate form upon filing any amendment, whether it is a
pre-effective amendment or a post-effective amendment.  When
filing an amendment other than for the purposes of Section
10(a)(3), a company would not be required to revert to a more
comprehensive form than the one used for its initial registration
statement.  


               2.  Exclude automatically effective registration
                   statements on Form S-8 from the general rule
                   that filings are deemed to be on the proper
                   form unless objection is raised by the
                   Commission prior to effectiveness.

          Paragraph (g) of Rule 401 provides that a registration
statement or amendment is deemed to be filed on the proper form
unless the Commission objects to the form prior to the effective
date of the registration statement or amendment.  To prevent
abuses of this rule, the Task Force recommends that the
Commission consider excluding registration statements on Form S-
8, which are automatically effective upon filing.  Since there is
no time period between filing and effectiveness, the Commission
does not have an opportunity to object to the form.  Thus, the
appropriateness of the form should not be governed by the
effectiveness of the Form S-8 registration statement.

                   
==========================================START OF PAGE 88======

IX.       DISCLOSURE GENERALLY


          A.   ENVIRONMENTAL LEGAL PROCEEDINGS


               Eliminate the $100,000 "one size fits all"
               materiality standard for certain
               environmental legal proceedings and replace
               it with a general materiality standard to
               ensure that companies will not be required
               to disclose non-material information.

          Instruction 5 to Item 103 of Regulation S-K provides
guidance in connection with the disclosure of environmental
proceedings.  Instruction 5(A) directs the disclosure of a
proceeding that is material to the business or financial
condition to the registrant.  Instruction 5(B) directs disclosure
if the proceeding involves primarily a claim for damages, or
involves potential monetary sanctions, capital expenditures,
deferred charges or charges to income, and the amount involved,
exclusive of interest and costs, exceeds 10 percent of the
current assets of the registrant and its subsidiaries
consolidated.  Instruction 5(C) calls for disclosure when a
governmental authority is a party and the proceeding involves
monetary sanctions, unless the registrant reasonably believes
that the proceeding will result in monetary sanctions of less
than $100,000.         

          The Task Force recommends that the Commission revise
Instruction 5(C) to replace the $100,000 standard with a general
materiality standard.  Alternatively, the Commission could simply
raise the dollar thresholds that trigger disclosure.  The Task
Force understands that in some circumstances this "one size fits
all" approach may result in the disclosure of non-material
information about environmental proceedings.  

          To address this concern, the Task Force recommends that
the Commission replace the $100,000 standard, as well as the
current assets standard in Instruction 5(B), with a more flexible
general materiality standard.  Should the Commission implement
the general materiality recommendation, consideration should be
given to providing guidance in an instruction with respect to
determining materiality by suggesting, for example, consideration
of whether a governmental authority is a party, the nature of
possible monetary sanctions, effects and potential effects on
equity, future capital expenditures, cash flows, deferred charges
and charges to income.  


          B.   EXECUTIVE COMPENSATION
                  
==========================================START OF PAGE 89======

               Consider clarifying and streamlining the
               rules governing when companies must disclose
               executive compensation information in
               registration and proxy statements.

          The Task Force recommends that the Commission consider
the necessity or appropriateness of the following suggested
changes:

              Amend S-K Item 402(i), the 10-year Option
               Repricing Table to reduce the look-back period
               from ten years to five years;


              Amend S-K Item 402(f), requiring disclosure of
               the Pension Plan Table, which is now widely
               regarded as confusing and otherwise of scant
               utility to shareholders attempting to track post-
               retirement payouts to senior executives, to
               require a more meaningful, individualized
               presentation of all ERISA and non-ERISA (top-hat)
               defined-benefit or actuarial plan benefits
               expected to be paid upon retirement to each of
               the five most highly compensated executive
               officers (as defined for Regulation S-K Item 402
               purposes); and

              Provide interpretive guidance on compliance with
               Item 10 of Schedule 14A.  Issuers reportedly have
               experienced some difficulty in determining what
               proxy disclosure is required with respect to
               plans that do not fit readily within the criteria
               of Item 10.

          The Task Force notes that the Commission has an
outstanding proposal on the executive and director compensation
disclosure requirements set forth in Item 402.  The proposal
would allow registrants to shift to the Form 10-K selected items
of executive pay disclosure now required in proxy or information
statements delivered to shareholders.  Also proposed are
amendments designed to elicit more streamlined, tabularized
information on director compensation in any document requiring
Item 402 disclosure.  See Release No. 33-7184 (June 27, 1995).

 
          C.   OTHER REGULATION S-K MODIFICATIONS


          The Task Force is making several recommendations with
respect to Regulation S-K that are designed to streamline
disclosure, eliminate duplication, improve the disclosure
elicited by the items and update thresholds.  To the extent

                   
==========================================START OF PAGE 90======

appropriate, the Task Force recommends making conforming changes
to Regulation S-B.


               1.  Streamline Item 101's disclosure
                   requirements relating to the description
                   of the registrant's business by
                   eliminating duplication of quantitative
                   information provided in the financial
                   statements.

          Item 101 generally requires a five-year description of
the development of the registrant's business; disclosure of the
amount of revenue, operating profit or loss and assets
attributable to each of the industry segments for the preceding
three fiscal years; a narrative description of the registrant's
business; and disclosure of financial information about foreign
and domestic operations and export sales.  

          The Task Force recommends eliminating paragraph (b),
relating to quantitative disclosure regarding business segments,
and paragraph (d)(1), regarding quantitative disclosure of
foreign operations.  This information already is provided in the
financial statements. 


               2.  Revise Item 102 relating to the
                   description of property to elicit more
                   meaningful and material disclosure.

          Item 102 requires a brief statement of the location and
general character of the principal plants, mines and other
materially important physical properties of the registrant and
its subsidiaries.  Additionally, the registrant must identify
segment(s) that use the properties described and state any
limitations on ownership of the property.  

          The Task Force believes that the disclosure provided in
response to Item 102 often contains a substantial amount of
immaterial information, which sometimes may obscure the material
information.  The Task Force, accordingly, recommends that the
Commission revise Item 102 in a manner that more effectively
elicits disclosure of material facts regarding a registrant's
principal properties, rather than lists of properties and their
immaterial characteristics.  

               3.  Limit the scope of Item 507, relating to
                   securities offered for the account of a

==========================================START OF PAGE 91======

                   company's individual security holders, so
                   that a company only would have to
                   disclose information regarding certain of
                   its selling affiliates and significant
                   beneficial owners rather than all of its
                   selling security holders.

          Under Item 507, if any of the securities to be
registered are to be offered for the account of security holders,
the registrant must name each security holder, and related
information.  The Task Force recommends that Item 507 be modified
to require that only affiliates (as defined by Rule 144) within
the last two years and beneficial holders of a certain percentage
(e.g., five percent) of the registrant's securities be identified
individually.  The Task Force notes that there is a recent
Commission proposal to reduce the Rule 144 holding period for
resales by affiliates from two years to one year.  See Release
No. 33-7187 (June 27, 1995).  If that proposal is adopted, the
Task Force recommends that the Commission consider conforming the
period of time for disclosure of affiliates under Item 507 from
two years to one year.  


               4.  Move undertakings in Item 512 into a rule
                   in Regulation C, and clarify when offers
                   and sales may be made when a registrant
                   has an obligation to file a Section
                   10(a)(3) updating prospectus.

               The Task Force recommends that the Commission
          make the following revisions to the undertakings
          required by Item 512 of Regulation S-K: 

              Item 512 should be eliminated and the
               undertakings should be made into rules. 
               Codifying the Item 512 undertakings will, among
               other things, reduce the amount of information
               that registrants are required to provide in Part
               II of the registration statement; and

              The Commission should clarify when offers and
               sales may be made when a registrant has an
               obligation to file a Section 10(a)(3) updating
               prospectus by post-effective amendment.  For
               example, a registrant may file a Section 10(a)(3)
               updating prospectus prior to the time the current
               prospectus goes stale and continue to make offers
               and sales pursuant to that current prospectus. 
               Once the current prospectus goes stale, the
               registrant then may use the Section 10(a)(3)
               updating prospectus to make offers.  However,
               sales cannot be made until the post-effective
                  
==========================================START OF PAGE 92======

               amendment containing the Section 10(a)(3)
               updating prospectus is effective.


               5.  Eliminate Item 702's requirement to state
                   the general effect of any arrangement
                   regarding indemnification of a
                   registrant's directors, officers, or
                   control persons, which typically results
                   in "boilerplate" disclosure of minimal
                   value to investors.

          The Task Force recommends the elimination of Item 702
of Regulation S-K.  Item 702 requires the registrant to set forth
in Part II of the registration statement the general effect of
any statute, charter provisions, by-laws, contracts or other
arrangements under which any director or officer is indemnified
against liability.  The Task Force believes that the disclosure
elicited by this Item has become boilerplate and of little value
to investors and that any concerns should be adequately addressed
if the Commission modifies Item 510 to add a new paragraph (b)
that would apply to registration statements that are to become
effective by Commission action, and to registration statements on
Form S-8.  This new paragraph would require that the registrant
disclose in the prospectus that it will perform the matters that
are now the subject of the Item 512(h) undertaking, such as that
the registrant will submit indemnification provisions to a court
for a determination of validity whenever directors and officers
are indemnified against liability.  Item 512(h) should then be
eliminated.  


               6.  Adjust certain dollar thresholds in
                   Regulations S-K and S-X for inflation
                   since the time of their adoption.

          The Task Force recommends that the following thresholds
be adjusted for inflation (determined by accounting for the
passage of time since the thresholds were originally set and
rounding to an appropriate whole number):

              The $60,000 threshold in paragraph (a) of Item
               404 of Regulation S-K (relating to disclosure of
               a registrant's transactions with management and
               others)  should be increased to $100,000.  The
               $60,000 threshold was established in 1983.  That
               number, converted to current dollars based on the
               CPI-U Index, would be $92,590 today;

              The $50,000 threshold set forth in the
               instructions to Item 509 of Regulation 
                  
==========================================START OF PAGE 93======

               S-K (relating to disclosure of payments to
               experts and counsel) should be increased to
               $100,000.  The $50,000 threshold was established
               in 1982.  That number, converted to current
               dollars based on the CPI-U Index, would be
               $79,637 today;

              The $100,000 threshold set forth in Rule 3-11 of
               Regulation S-X (relating to the definition of an
               inactive registrant) should be increased to
               $200,000.  The $100,000 threshold was established
               in 1980.  That number, converted to current
               dollars based on the CPI-U Index, would be
               $186,529 today; and

              The threshold set forth in Rule 144(h) for filing
               of a Form 144 should be revised from the current
               level of sales over 500 shares or an aggregate
               sales price in excess of $10,000 over a three-
               month period.  The $10,000 threshold was
               established in 1972.  That number, converted to
               current dollars based on the CPI-U Index, would
               be $36,000 today.  For small business issuers,
               the threshold for filing a Form 144 should be
               raised to 500 shares or $40,000.  For issuers who
               are not small business issuers, the threshold
               should be increased further to 1,000 shares or
               $100,000.


          D.   EXHIBITS


               1.  Create a new exhibit form, which would
                   enable a company to file most of its
                   exhibits on one form, thereby making such
                   exhibits easier to locate and update.

          The Task Force recommends consolidating all exhibit
filings into a single "supplemental information" Form EX, filed
as a separate Section 13(a) or 15(d) report.  Under current
rules, locating a specific exhibit can be extremely difficult for
registrants and investors alike, as every filing requires its own
set of exhibits and an exhibit may not be physically attached to
a particular filing that calls for it, since exhibits are often
incorporated by reference from previous filings.  Adding to the
confusion, different filings often bear different file numbers,
so a search for exhibits often must follow a few different
trails.

          The recommendation to consolidate all exhibits would
greatly simplify matters.  A person looking for an exhibit
                  
==========================================START OF PAGE 94======

typically would have to look in one place.  There would, however,
be a few exceptions.  For instance, exhibits that relate directly
to a specific filing, such as consents and opinions, would
continue to be filed with such filing.  Annual reports to
shareholders incorporated into, and included as an exhibit to, a
Form 10-K filing would continue to be filed with such filing.

          In addition, in the context of offerings of asset-
backed securities, registrants would no longer be permitted to
file a form of prospectus supplement as an exhibit to the
registration statement.  They would, instead, be filed within
Part I of the registration statement.  

          The filing would be "evergreen" in that it would be
continuously updated by the registrant.  Stale exhibits could be
withdrawn by the registrant for liability purposes, but would
continue to be publicly available.    


               2.  Permit automatic effectiveness of a post-
                   effective amendment filed solely to add
                   an exhibit.

          Following effectiveness, companies may update their
registration statements to include new consents or opinions. 
Under current rules, registrants eligible to use Forms 
S-3/F-3 may file updated exhibits post-effectively on Form 8-K. 
The exhibit is then automatically incorporated by reference into
its prospectus.  By contrast, registrants that are not eligible
to use Form S-3/F-3 can accomplish the same thing only by way of
post-effective amendments, which are subject to possible staff
review.  
  
          In order to facilitate the filing of updated exhibits
by non-S-3/F-3 registrants, the Task Force recommends that the
Commission adopt a rule to permit any post-effective amendments
filed solely to add exhibits to be effective automatically upon
filing.


               3.  Eliminate specific exhibits that appear
                   to be rarely used or contain information
                   that is otherwise available.

          In the course of its review of the exhibit requirements
in Item 601 of Regulation S-K, the Task Force identified five
exhibits that should be eliminated either because the information
contained in the exhibit appears to be infrequently used or
because the information is otherwise available.  Under Rule 418,
the documents would nonetheless be subject to a specific staff
request to provide a copy supplementally to the staff to aid its
                  
==========================================START OF PAGE 95======

review of a filing or to publicly file the document as an
exhibit.  The exhibits that should be eliminated are as follows: 

                  Opinion re discount on capital shares
          (Exhibit 6);

                  Opinion re liquidation preference (Exhibit
          7); 

                  Statement re computation of per share
          earnings (Exhibit 11);

                  Material foreign patents (Exhibit 14); and

                  Information from reports furnished to state
                   insurance regulatory authorities (Exhibit
                   28). 


          E.   INDUSTRY SPECIFIC DISCLOSURE


               Modernize the existing Industry Guides,
               consider adopting additional industry-
               specific disclosure rules, and relocate all
               such guides and rules within Regulation S-K.

          There are currently seven Industry Guides, which
provide disclosure guidance with respect to gas and electric
utilities (Guide 1), oil and gas operations (Guide 2),
statistical disclosure by bank holding companies (Guide 3), oil
and gas drilling programs (Guide 4), partnerships and REITs
(Guide 5), property casualty insurance claims (Guide 6) and
significant mining operations (Guide 7).  

          Although the Industry Guides are reflected in the table
of contents to Regulation S-K, they are technically and
physically separated from that Regulation.  The Task Force
understands that many registrants find this separation confusing.

The Industry Guides should, therefore, be incorporated into
Regulation S-K and placed intact at the end of that Regulation in
the manner that industry-specific disclosure requirements are
currently placed in Regulation S-X.  The Commission also should
consider adopting rules to provide disclosure guidance for
transactions in other specialized industries, such as real estate
and asset-backed transactions.

          The Task Force, additionally, recommends that all of
the industry-specific disclosure requirements be modernized. 
Although a more detailed review would undoubtedly highlight other
appropriate changes, the Task Force has the following specific
recommendations:  
                  
==========================================START OF PAGE 96======

              Guide 1 (Gas & Electric Utilities)

               -   Eliminate this Guide.  The information
                   appears to be adequately covered by the
                   requirements of Regulation S-K (principally
                   Items 101 and 303).

              Guide 2 (Oil & Gas Operations)

               -   Eliminate the reference to Rule 4-10(k). 
                   This reference is obsolete.

               -   Consider codification of all (or certain)
                   SABs and ASRs relating to oil and gas into
                   Guide 2 or Rule 4-10 of Regulation S-X.  

               -   Eliminate the proviso stating that certain
                   limited partnerships and joint ventures with
                   oil and gas drilling programs need not comply
                   with Guide 2.  Drilling programs should be
                   required to provide the disclosure required
                   by Guide 2 to the extent available. 

              Guide 3 (Statistical Disclosure by Bank Holding
               Companies)

               -   Update to accommodate changes in the
                   economic, accounting and regulatory
                   environments impacting banks and related
                   entities.  Reflect the impact of (and conform
                   the disclosure requirements to) recently
                   issued accounting standards, such as SFAS 91,
                   SFAS 114, SFAS 115 and SFAS 118.  Numerous
                   disclosures that duplicate GAAP and certain
                   disclosures that may no longer be necessary
                   can be eliminated.  Clarify and incorporate
                   SAB 69 into revised Guide 3. 

              Guide 5 (Partnerships & REITs)

               -   Overall revisions to this Guide are necessary
                   to reflect subsequent changes in the economic
                   environment relating to real estate
                   companies, disclosure rules, GAAP and staff
                   policies.  Consolidate into Guide 5 changes
                   that were adopted in Release No. 33-6900
                   (June 17, 1991) and certain of the
                   requirements of Form S-11.  Revise to
                   eliminate duplicative disclosures required by
                   Regulation S-K and certain other non-
                   substantive disclosures.  Other changes that
                   should be considered include:
                  
==========================================START OF PAGE 97======

                        Eliminate all prior performance tables,
                        except for Table III (operating results
                        of prior programs), and modify Table III
                        to incorporate some useful portions of
                        the other tables;

                        Clarify Item 19C regarding when "broker-
                        dealer only" material is subject to
                        staff review;

                        Codify staff practice of requiring
                        information in reports on Form 10-K
                        information that is similar to that
                        required by Items 13 and 14 of Form S-
                        11; and

                        Staff practice has been to apply the
                        disclosure guidelines and requirements
                        of Guide 5 and Release No. 33-6900 to
                        offerings that are substantially similar
                        to those subject to those requirements. 
                        For example, blind pool partnerships,
                        through practice, comply with certain
                        disclosure guidelines in Guide 5
                        relating to prior performance
                        information.  In addition, these
                        partnerships also provide the
                        undertakings set forth in Item 20 of
                        Guide 5 which relate to the filing
                        requirements of prospectus supplements
                        and post-effective amendments.  Blind
                        pool REITs, due to their similarity to
                        partnerships, also comply with these
                        requirements.  The Task Force recommends
                        that the practice of compliance with
                        these disclosure guidelines and filing
                        requirements be codified among the
                        industry-specific rules.  These
                        requirements would apply to offering
                        documents relating to ongoing
                        partnership offerings, or offerings of a
                        similar nature, without limitation to
                        the real estate industry.  This would be
                        consistent with the Commission's
                        interest in providing investors in
                        partnership offerings with clear,
                        concise information on an ongoing basis.

              Guide 6 (Property Casualty Insurance Claims)

               -   In order to accommodate the recommended
                   elimination of Article 7 of Regulation S-X,
                  
==========================================START OF PAGE 98======

                   incorporate the provisions of note 6 to Rule
                   7-03(a) of Regulation S-X (which requires
                   disclosure of investments in excess of 10
                   percent of equity).

              Guide 7 (Significant Mining Operations)

               -   Revise and simplify the following definitions
                   in Guide 7.  One approach would be as
                   follows:

                   (2)  Proven (Measured) Reserves:  Reserves
                   for which (a) quantity is computed from
                   dimensions revealed in underground workings
                   and/or drill holes, outcrops, and trenches;
                   grade and/or quantity are computed from the
                   results of detailed sampling and (b) the
                   sites for inspection, sampling, and
                   measurement are spaced so closely and the
                   geologic character so well defined that size,
                   shape, depth, and mineral content of reserves
                   are well established.

                   (4)(i)  Exploration Stage -- Includes all
                   issuers in search for mineral deposits
                   (reserves) which are not in either the
                   development or production stage.  Such an
                   issuer may indicate the size of a mineralized
                   area and describe briefly the geologic,
                   geotechnical, sampling and other such surface
                   work which could warrant testing in depth.


                   (4)(ii)  Development Stage -- Includes all
                   issuers that have intersected a mineralized
                   deposit with a sufficient number of drill
                   holes, pits, or underground sampling to
                   determine sufficient tonnage and average
                   grade.  This deposit does not qualify as a
                   commercially viable ore body (reserves) until
                   a final economically feasible study based
                   upon such work is concluded.

                   These revisions are intended to provide
                   clarification to the current definitions and
                   current staff positions.  They are not
                   intended to make any substantive
                   modifications to the definitions and current
                   positions.  

               -   Correct the following technical errors:
                  
==========================================START OF PAGE 99======

                        In the second paragraph of subparagraph
                        (a)(1), replace the words "oil, shale,
                        tar, sands" with "oil-shale, tar-sands;"

                        In subparagraph (b)(7), replace the word
                        "geographic" with the word "geologic;"
                        and

                        In subparagraph (c)(1)(i), insert the
                        word "data" after "sample-assay."


          F.   STAFF LEGAL BULLETINS


               Consider publishing "Staff Legal Bulletins"
               to announce significant legal
               interpretations of interest to a wide group
               of issuers.

          There are several ways in which the Commission and the
staff provide companies and the private bar with guidance in
complying with the securities laws.  Among these are interpretive
releases, informal written requests for no-action interpretive
advice and oral requests for such advice.  The Task Force
recommends that the Commission staff consider adopting another
means of providing interpretive advice similar to the Staff
Accounting Bulletins (or "SABs") issued by the accounting staff
of the Commission.  Such "Staff Legal Bulletins" would describe
significant interpretive positions of interest to a wide group of
issuers.  The bulletins should be made widely available through
traditional means as well as on the Commission's Internet World
Wide Web site.

          G.   EDGAR

               1.  As part of the study regarding the EDGAR
                   filing system, consider whether certain
                   EDGAR forms should be eliminated at some
                   future date.

          The Task Force has considered suggestions that certain
Electronic Data Gathering, Analysis, and Retrieval ("EDGAR")
forms be eliminated.  However, because of the architecture of the
Commission's EDGAR system, the Task Force is not recommending any
changes with respect to the existing forms.  

          EDGAR processes and disseminates most filings made by,
or with respect to, domestic companies.  Electronic filers must
identify their filings in accordance with the EDGAR Filer Manual
                 
==========================================START OF PAGE 100======

so that the EDGAR system can understand and process them
consistently with the Commission's recordkeeping system. 
Compliance with the formatting requirements also is necessary to
allow the Commission staff and the public to easily retrieve
electronic filings and locate information contained in them.   

          The architecture of the EDGAR system is currently being
reevaluated.  See Release No. 34-36683 (January 5, 1996).  As
part of this reevaluation, basic issues as to how EDGAR filings
should be structured, presented, formatted, filed, processed and
disseminated are being considered.  During the EDGAR contract
recompetition, the Task Force recommends that the automated
processing functions of EDGAR be reviewed to determine if and
where the system could be simplified and made more user-friendly,
without diminishing its utility -- for example, by establishing a
program that assists the filer in selecting the appropriate form
type.


               2.  Enable EDGAR filers to receive certain filing
                   date adjustments without the need for a
                   case-by-case determination by the staff as to
                   whether the request should be granted.

          Under current rules, an electronic filer must petition
the staff for a filing date adjustment where the filer has in
good faith attempted to file a document with the Commission in a
timely manner but the filing was delayed because of technical
difficulties beyond the filer's control.  The Task Force believes
that it may be appropriate to provide for filing date adjustments
for certain routine filings without the need for a case-by-case
staff determination.  For example, a filing date could be
adjusted automatically for an Exchange Act report filed no more
than a specified number of days late when a company certified
that it made good faith efforts to file the report on or before
the due date but was prevented from doing so by technical
difficulties beyond its control.  This would be consistent with
the treatment of notices of late filing under Rule 12b-25 under
the Exchange Act and temporary hardship exemptions under
Regulation S-T and would benefit the filers and the staff by
reducing the time currently required to prepare and process
requests for adjustments.  In non-routine matters, such as tender
offers, staff involvement with filing date adjustments would
continue.


               3.  Pursue an electronic linkage of EDGAR
                   with the exchanges, Nasdaq and NASAA.

          The Task Force recommends that the Commission continue
to pursue the establishment of an electronic linkage to EDGAR for
the exchanges, Nasdaq and the states, through NASAA.  Under

==========================================START OF PAGE 101======

current rules, paper copies of registration statements and other
disclosure documents that are filed with the Commission must be
simultaneously provided to each exchange upon which the
registrant's securities are listed.  These paper delivery
requirements apply even to companies that currently make
electronic filings with the Commission.  The Task Force
understands that Commission filings provide information about the
registrant needed by exchanges and Nasdaq in order to enforce
their regulations.  The same is true with regard to many
securities filings required to be made with the states.  The
establishment of an electronic linkage would both facilitate the
regulatory processes of the exchanges, Nasdaq and the states, as
well as eliminate requirements that registrants deliver to them
extra paper copies of Commission filings.
                 
==========================================START OF PAGE 102======

X.        TRADING PRACTICES RULES

               A.  DISCUSSION OF THE TRADING PRACTICES RULES

          To prevent manipulative activities during offerings of
securities, the Commission has implemented a series of rules
under the Exchange Act, which are referred to as the trading
practices rules and include Rules 10b-6, 10b-6A, 10b-7, 10b-8,
and 10b-21.  These rules are meant to protect the integrity of
the offering process by precluding persons with a stake in the
offering from activities that could influence artificially the
market for the offered security. 

          Rule 10b-6 is a prophylactic rule that prohibits
issuers, underwriters, and others participating in a distribution
from bidding for, purchasing, or inducing others to purchase the
offered securities or related securities during the distribution.

Rule 10b-6 contains exceptions from its general prohibitions that
are designed to accommodate market activities consistent with the
rule's anti-manipulation purpose.  Rule 10b-6A permits "passive
market making" (i.e., transactions that follow, but do not lead,
the market), by Nasdaq market makers participating in
distributions of Nasdaq securities.  Rule 10b-7 prescribes the
parameters for stabilizing activity, i.e., transactions made to
facilitate an offering of a security by preventing or retarding a
decline in the open market price of any security.  Rule 10b-8
pertains to distributions of securities being offered through
rights, and restricts the prices at which rights may be purchased
as well as the prices at which the securities being distributed,
or securities of the same class and series, may be sold.  Rule
10b-21 prohibits persons who engage in short sales in
anticipation of a public offering from covering such sales with
securities obtained from an underwriter, broker, or dealer who is
participating in the offering.

          The securities markets have changed dramatically since
these rules were implemented or last significantly amended. 
These changes include the expanded role of institutional
investors, new kinds of trading instruments and strategies,
enhanced transparency of securities transactions, expanded
surveillance capabilities of the self-regulatory organizations
("SROs"), increasing globalization of securities markets, and
transformation of the capital raising process.  To address
whether these changes warrant revision or even rescission of the
trading practices rules, in 1994 the Commission issued a release
commencing a comprehensive reexamination of the rules and the
concepts underlying them.

          Upon reviewing these rules and comments received in
connection with the concept release, the Task Force recommends
that significant revisions be made to the structure and scope of
                 
==========================================START OF PAGE 103======

the trading practices rules.  The rules are unnecessarily
complicated, rigid, and onerous, making both compliance with, and
administration of, their provisions difficult.  Moreover, Rule
10b-6 in particular covers classes of issuers and transactions
that are broader than necessary, particularly given today's trade
reporting and surveillance capabilities.  In our view,
fundamental changes to these rules can be made, thereby reducing
impediments to capital formation, but without undermining their
important investor protection goals.


          B.   RECOMMENDATIONS

               Replace the trading practices rules, which
               have become unnecessarily complicated and
               burdensome, with a new, streamlined, more
               understandable regulation that would
               restrict a narrower range of activities,
               persons and issuers.

          The Task Force recommends that the trading practices
rules be completely rewritten in a manner that would both
simplify these rules and narrow their application.  For example,
Rule 10b-6 applies during distributions of securities of almost
all issuers, regardless of their size, and during a period
generally commencing before offers or sales begin -- even if the
offering is not priced for another month or more.  The Task Force
believes that prophylactic trading restrictions are no longer
necessary for such a lengthy period, and that underwriters and
broker-dealers, at least, need not be restricted so
comprehensively with respect to such a broad class of securities.

By shortening the time frame of many of the restrictions and, in
the case of underwriters and broker-dealers, focusing them upon
less actively-traded issuers, the Task Force believes the
Commission could ease substantially the burdens imposed by the
trading practices rules while reducing their complexity.

          The Task Force's proposed narrowing of the trading
practices rules would not confer a license to manipulate in non-
covered transactions.  All activities in connection with an
offering of securities, whether or not within the scope of the
restructured trading practices rules, would remain subject to
Rule 10b-5 and other general anti-fraud and anti-manipulation
statutory provisions and rules.  The Task Force believes that the
SROs should play an integral role in this revised regulatory
scheme: to help guard against abuse, the SROs should expand their
surveillance capabilities in connection with securities
offerings.
                 
==========================================START OF PAGE 104======

          Under the Task Force's recommendation, the Commission
would adopt a new regulation to replace the existing trading
practices rules.  This regulation would employ a number of
provisions of the Securities Act and Exchange Act.

          The provisions proposed to replace Rule 10b-6 would be
contained in two rules:  one rule covering underwriters,
prospective underwriters, and broker-dealers participating in a
distribution (collectively "underwriters"); and the other rule
covering issuers and selling securityholders.  Depending on the
security's characteristics, the restrictions under these new
rules would not commence until one business day or five business
days prior to the pricing of the offered security, the principal
event meriting regulatory protection.

          Especially given the narrower application and shorter
restricted period of the new rules, the current complex series of
exceptions to Rule 10b-6 could be streamlined considerably.  The
securities subject to the rule governing underwriters would be
limited primarily by the addition of an exception covering
actively-traded securities.  The Task Force also recommends
adding other exceptions to this rule to cover all distributions
to QIBs of Rule 144A-eligible securities (the current exception
covers Rule 144A-eligible foreign securities only), de minimis
transactions, routine dissemination of research reports, options
exercises, and transactions in baskets of securities.  These new
exceptions would respond to specific concerns raised by
commenters.

          In the rule governing issuers and selling
securityholders, the Task Force recommends that the existing
exception for issuers' plan transactions be broadened to give
these plans greater flexibility.  

          Issuers and selling securityholders, unlike
underwriters, lack the legitimate independent business reasons to
engage in trading during a distribution.  In addition, as
principals in the distribution, they might have a greater
incentive to influence the market to maximize offering proceeds. 
Therefore, most of the exceptions applicable to underwriters
would be unnecessary or inappropriate for inclusion in this rule.

          Rule 10b-6A, adopted in 1993, is an exception to Rule
10b-6 for passive market making in certain Nasdaq securities. 
Passive market making is limited to certain firm commitment,
fixed price offerings when distribution participants account for
at least 30 percent of Nasdaq trading volume in the security. 
The Task Force recommends that the new rule proposed to replace
Rule 10b-6A relax current eligibility criteria, thereby
permitting Nasdaq passive market making in a greater number of
offerings and securities.

==========================================START OF PAGE 105======

          The Task Force recommends that the new rule proposed to
replace Rule 10b-7 provide greater flexibility for stabilizing
transactions.  Among other things, this rule should allow
underwriters to follow the independent market for a security,
eliminate the distinction in the current rule between exchange-
traded securities and over-the-counter securities, and permit
stabilizing levels to refer to prices reported in the security's
principal market, wherever located.  The Task Force further
recommends that information on stabilizing and other market
activities be written in "plain English," and be tailored to the
particular offering.  This will provide more useful disclosure to
investors about underwriters' potential market activities than is
provided by the current boilerplate language. 

          Because stabilizing is activity specifically intended
to influence a security's market price, the stabilizing rule
would not be limited to the shortened time period applicable to
the other restructured trading practices rules that are
recommended by the Task Force, and would not include an exception
for actively-traded securities.  To harmonize treatment of
foreign and domestic issuers' securities, the Task Force
recommends that the current rule's exception for distributions to
QIBs of Rule 144A-eligible foreign securities be expanded to
cover all Rule 144A-eligible securities.

          The Task Force recommends that Rule 10b-8 be rescinded
because it is not necessary to have a detailed, complex rule
pertaining solely to distributions through rights.  In the
proposed new rule governing the activity of underwriters, the
Task Force recommends replacing the current exception for Rule
10b-8 transactions with a new exception permitting bids or
purchases of rights during the rights offering.

          Finally, in light of the narrow scope of Rule 10b-21,
and the adoption of other regulatory measures that address short
selling activity, the Task Force questions whether it is
necessary to have a special regulation to deal exclusively with
this activity.  A number of commenters maintain that the current
rule is too easily circumvented and does not capture adequately
conduct that can depress artificially a security's price shortly
before the offering price is determined.  Since the initial
adoption of the rule in 1988, the NASD has implemented a short
sale rule on a pilot basis, and the Commission has adopted the
Nasdaq passive market making rule; both may reduce the need for
Rule 10b-21.  Further, in the absence of this rule, short selling
to depress an offering price would continue to be covered by the
general anti-fraud and anti-manipulation provisions of the
Securities Act and Exchange Act.  Therefore, the Commission
should seek comment on whether Rule 10b-21 continues to be
necessary or appropriate, or whether the rule should be amended
to cover transactions in related securities.

=========================================START OF PAGE 106======  

XI.   ACCOUNTING DISCLOSURE CHANGES

          In formulating its recommendations concerning potential
accounting disclosure changes, the Task Force received
suggestions from a number of participants in the financial
reporting process.  Many of the Task Force's recommendations that
follow reflect the input received from these participants.  Other
suggestions -- such as integration of the financial reporting
requirements of Regulation S-X with the narrative disclosure
requirements of Regulation S-K in one comprehensive package and
another to modify the interim reporting scheme -- will be
considered as part of a longer-term review.

          These suggestions are important, however, and they will
be considered as part of a longer range project to evaluate the
recommendations of the various private sector organizations that
have issued reports on the information needs of users of
financial information.  Those reports make a number of
recommendations to enhance the utility of financial reporting
that will be considered by accounting standard setters,
predominately the FASB, and by regulators, such as the
Commission.

          Further, the proposed revisions to Rule 3-05 of
Regulation S-X, with respect to financial statements of acquired
businesses (see Release No. 33-7189 (June 27, 1995)), were not
duplicated in this Report.  If adopted, the proposals would
eliminate the requirement to provide audited financial statements
for certain pending acquisitions and generally would allow
registrants to provide information about consummated significant
acquisitions in Securities Act registration statements on the
same time schedule as for Exchange Act reporting.  In addition,
the proposed rules also would provide an automatic waiver of the
earliest year of required financial statements otherwise required
in certain cases when the financial statements are not readily
available.

          A.   Permit companies to "income average" when
               determining the significance of acquisitions
               and equity method investments, thereby
               refining the circumstances when the company
               must provide separate financial statements
               to those instances where the acquisition or
               investment is truly significant.

          In addition to their own financial statements,
registrants are often required to present separate audited
financial statements of other persons in filings with the
Commission.  The two most common situations where separate
audited financial statements of another person are required in a

=========================================START OF PAGE 108======

registrant's filings relate to (1) business acquisitions where
the acquired business exceeds 10 percent in significance and (2)
financial statements of equity method investees when the
significance of the investee to the registrant exceeds 20
percent.  Significance is measured using the three significant
subsidiary tests of Rule 1-02(w) of Regulation S-X, one of which
is a comparison of the investee's income to the registrant's
income.  Under current rules, if the registrant's income for the
most recent fiscal year is 10 percent or more lower than the
average of the last five fiscal years, the registrant may elect
to use the average income for purposes of determining
significance under the significant subsidiary tests (thereby
reducing the level of significance of the investee and
eliminating or reducing the requirements to present its audited
financial statements).  

          However, the rule allowing registrants to income
average is not applicable if the registrant reported a loss,
rather than income, in the latest fiscal year.  In such
circumstances, the test could operate to require unnecessary
disclosure, particularly with respect to companies with
relatively small losses in the latest fiscal year. 

          The Task Force proposes changing the rules to allow
registrants to income average, for purposes of determining
significance, whenever the registrant's income or loss for the
most recent fiscal year is 10 percent or more lower than the
average of the last five fiscal years.

          Implementation of this recommendation would require a
revision to the definition of "significant subsidiary" in Rule 1-
02(w) of Regulation S-X.


          B.   Reduce the effect of the 45-day "black out"
               period during which many registrants are
               effectively prevented from undertaking a
               public offering by narrowing the scope of
               the accounting rules requiring updated
               audited financial statements in certain
               registration statements declared effective
               45 days after the registrant's fiscal year
               end.

          The Exchange Act generally requires filing of audited
annual financial statements of a registrant 90 days after the end
of the registrant's most recently completed fiscal year. 
However, unless the registrant meets the requirements of Rule 3-
01(c) of Regulation S-X (relating to expected profits for the
most recent fiscal year and a history of profitable operations),
registration statements filed under the Securities Act must
include audited financial statements of the registrant for the

=========================================START OF PAGE 109======

registrant's most recent fiscal year if the registrant statement
is declared effective more than 45 days after the registrant's
fiscal year.  This requirement to provide updated audited
financial statements 45 days after a registrant's fiscal year is
difficult for many registrants to satisfy, and in some
circumstances, prevents a registrant from filing a Securities Act
registration statement during this 45-day "black-out" period. 
The Task Force believes that the requirement to provide updated
audited financial statements in Securities Act filings sooner
than required under the Exchange Act should be eliminated for
repeat issuers.  This recommendation would not alter current
requirements relating to initial public offerings under the
Securities Act.


          C.   Expand the circumstances in which a company
               may incorporate by  reference audited
               financial statements of significant
               investees so that such statements need not
               be reproduced in filings with the
               Commission.

          Under Rule 3-09 of Regulation S-X, registrants are
required to provide audited financial statements of significant
investees accounted for under the equity method.  An investee is
"significant" if the registrant's investment exceeds 20 percent
of the registrant's total assets or the investee provides more
than 20 percent of the registrant's income.  The Task Force
recommends clarifying current rules to state more explicitly that
registrants may incorporate such financial statements by
reference in all reports and filings under the Exchange Act (and,
consequently, that registrant's filing on Forms S-3/F-3 may
incorporate by reference their Exchange Act reports containing
such financial information).  The Task Force also recommends
permitting issuers eligible to use Forms S-1/F-1 that have been
reporting for 12 months to deliver the financial statements of
"significant investees" in lieu of restating them in the
prospectus, and to incorporate by reference financial statements
of significant investees that are eligible to use Forms S-3/F-3. 
The Commission should consider whether such relief should be
extended to all classes of issuers. 


          D.   Streamline the complex and often confusing
               rules requiring separate   audited financial
               statements of affiliates whose stock
               collateralizes a registrant's securities,
               and of persons who guarantee a registrant's
               securities.

          Rule 3-10 of Regulation S-X requires separate audited
financial statements of each affiliate whose stock constitutes a
                 
==========================================START OF PAGE 110======

significant portion of the collateral for any public issuance of
the registrant's securities.  In addition, Rule 3-10 requires a
registrant to file separate audited financial statements of each
guarantor of the registrant's publicly issued securities.  Rule
3-10, as currently written and interpreted by the staff, can lead
to multiple sets of financial statements.  In many situations,
such financial statements may be of limited usefulness to
investors.  The Task Force believes that simplification and
streamlining of this rule is necessary.  The following
recommendations have been divided into two separate
recommendations, the first dealing with collateralizations and
the second dealing with guarantees.

          Financial statements of affiliates whose stock
collateralizes securities of a registrant.

          Rule 3-10 currently provides that the collateral is
significant, and thus audited financial statements of the
affiliate whose stock constitutes the collateral are required,
when the book value, fair value or market value of the collateral
exceeds 20 percent of the principal amount of the secured class
of securities.  The Task Force recommends that audited financial
statements of the affiliate should only be required when the
value of the securities of the affiliate which collateralize the
securities of the registrant exceeds 40 percent of the principal
amount of the secured class of securities.  If the value of the
collateral constitutes between 20 percent and 40 percent of the
principal amount of the secured class of securities, the Task
Force recommends the rules be revised to require only condensed
financial statements of the affiliate.  Such condensed financial
information could be placed in an audited footnote to the
registrant's financial statements, provided, however, the
affiliate is consolidated with the registrant.  Alternatively,
the Commission could require such information in a schedule
pursuant to Rule 5-04.

          Financial statements of guarantors.

          The rules requiring separate financial statements of
each guarantor of a security are currently contained in SAB 53
and Rule 3-10 of Regulation S-X, as interpreted through various
no-action positions taken by the Division staff.  In addition,
the guarantor (if a subsidiary of the issuer) oew rulessuer (if
the issuer is a subsidiary of the guarantor) must file periodic
reports under the Exchange Act unless it obtains Section 12(h)
reporting relief.  This relief normally is granted only if the
guarantor or the issuer is wholly-owned and the guarantee is full
and unconditional.  The current financial statement requirements
for guarantors are complex, provide for multiple outcomes
depending on the corporate structure of the registrant and the
level of significance of any non-guaranteeing subsidiaries and
are not understood by many registrants. 
                
==========================================START OF PAGE 111======

          The Task Force recommends that the Commission simplify
the reporting alternatives under Rule 3-10 and SAB 53 and clarify
the definition of wholly-owned subsidiary to be consistent with
the definition of General Instruction J of Form 10-K.  The Task
Force recommends that, if the guarantee is full, unconditional
and joint and several, the Commission require either summarized
consolidating financial information or condensed consolidating
financial statements, depending upon the significance of any non-
guaranteeing subsidiaries.  This would greatly simplify Rule 3-10
and SAB 53 and actually provide more useful information to
investors than is currently provided in many circumstances.  If
only summarized consolidating financial information is required,
it should be on the condition that in the event of a default on
the security or other events which increase the need for
disclosure of information relating to the issuer or guarantor,
the level of disclosure increases and condensed consolidating
financial information or full financial statements would be
required.  If the guarantees are not full, unconditional and
joint and several, or the affiliate is wholly-owned, separate
audited financial statements would continue to be required.


          E.   ELIMINATION OF ACCOUNTING RULES


               Streamline accounting and related disclosure
               requirements by eliminating duplicative
               rules and those rules that have outlived
               their usefulness.

          The accounting and related disclosures required in
Commission documents are governed by GAAP and the rules and
regulations of the Commission.  GAAP applies to all companies,
while the rules and regulations of the Commission apply primarily
to public companies.  Therefore, when preparing Commission
documents, registrants must comply with GAAP as well as
Commission accounting rules, most of which are contained in
Regulation S-X.  In many cases, the Commission adopted rules that
were subsequently codified by the Financial Accounting Standards
Board (FASB) as a part of GAAP.  In addition, when more than one
independent body is making rules for disclosure for different but
overlapping populations, it is inevitable that some duplication
will occur.  As a result, over the years, redundancies have
developed between the FASB accounting rules and Regulation S-X.  

          The recommended changes made to the accounting items
listed below are intended to eliminate Commission accounting
rules where information required under a rule is substantially
duplicative of information required by the current accounting
literature, or where the accounting rule has otherwise outlived
its usefulness.  
                 
==========================================START OF PAGE 112======

              Eliminate Rule 3-12 of Regulation S-X.
               Rule 3-12 sets forth the requirements regarding
               the age of financial statements at the effective
               date of a registration statement or at the
               mailing of a proxy statement.  This rule largely
               duplicates the information contained in Rules 3-
               01 and 3-02.  Therefore, the Task Force
               recommends the elimination of Rule 3-12 and the
               merging of any non-duplicative portions into
               Rules 3-01 and 3-02.

              Eliminate subparagraph (a) of Rule 3-15 of
               Regulation S-X.
               Subparagraph (a) of Rule 3-15 relates to the
               format of the income statement and balance sheet
               of real estate investment trusts (REITs).  This
               rule is no longer necessary because GAAP
               adequately provides for the formatting of the
               balance sheets and income statements for REITs.



              Eliminate Rule 3-16 of Regulation S-X.
               Rule 3-16 sets forth the requirements for
               registrants that have emerged from a corporate
               reorganization.  This rule may be eliminated
               because the disclosures required by GAAP
               (including SOP 90-7, "Reorganizations Under the
               Bankruptcy Code") and Item 303 of Regulation S-K
               (management's discussion and analysis) are
               adequate and cover the information required in
               Rule 3-16.

              Eliminate Rule 4-05 of Regulation S-X.
               Rule 4-05, relating to current assets and current
               liabilities when a company's operating cycle is
               longer than one year, may be eliminated because
               current GAAP disclosures are adequate.

              Eliminate Rule 4-06 of Regulation S-X.
               Rule 4-06 requires that reacquired indebtedness
               of a registrant must be deducted from the
               appropriate liability caption on the registrant's
               balance sheet.  The Task Force believes that this
               rule is unnecessary because GAAP, including
               current accounting practices, requires that such
               items reacquired should be deducted from the
               appropriate caption on the balance sheet.

              Eliminate Rule 4-07 of Regulation S-X.
               Rule 4-07, relating to the mandated balance sheet
               presentation for discounts on shares, should be

==========================================START OF PAGE 113======

               eliminated because it is outdated and
               unnecessary.

              Eliminate subparagraphs (f) and (k)(1) and modify
               subparagraph (m) of Rule 4-08 of Regulation S-X.
               Rule 4-08 relates to the general notes to the
               financial statements.  Subparagraph (f), relating
               to significant changes in bonds, mortgages and
               similar debt, and subparagraph (k)(1), relating
               to related party disclosures,  should be deleted
               from Rule 4-08 because disclosure under current
               GAAP, including SFAS 57, appears to be adequate.

               In addition, subparagraph (m), relating to
               repurchase agreements, should be revised to
               eliminate the disclosure requirements already
               required by SFAS 107 and SFAS 115.

              Eliminate subparagraphs (b) through (h) of Rule
               4-10 of Regulation S-X.
               Rules 4-10(b) through (h), setting forth the
               requirements under the successful efforts
               accounting method followed by oil and gas
               producers, are duplicative of SFAS 19.  Specific
               rules for both the successful efforts and full
               cost accounting methods were maintained in
               Regulation S-X as a result of the Commission's
               action to supersede the FASB's determination to
               designate successful efforts as the method of
               accounting to be applied uniformly by all oil and
               gas producers.

              Eliminate or modify Article 7 of Regulation S-X. 

               Article 7, relating to requirements for insurance
               companies, could be eliminated because the AICPA
               Industry Guides adequately cover disclosures by
               insurance companies.  However, if Article 7 is
               deleted, the provisions of Notes 6 to 7-03(a),
               relating to disclosure of investments in excess
               of 10 percent of shareholders' equity, should be
               incorporated into Industry Guide 6.

               Alternatively, Rule 7-02(b) could be eliminated
               because its requirements are covered by SFAS 120
               and SOP 95-1.

               Any change to Article 7 would require
               corresponding changes to the EDGAR Financial Data
               Schedules, which are based in part on information
               elicited by disclosure requirements in Article 7.
                 
==========================================START OF PAGE 114======

              Modify Rule 10-01(a) of Regulation S-X.
               Rule 10-01(a) sets forth requirements for
               condensed financial statements to be filed for
               interim periods.  In 1992, interim reporting
               requirements were modified for small businesses. 
               In recommending this action, the staff
               highlighted its potential to be substituted for
               the current Rule 10-01(a).  Rule 10-01(a) may now
               be rewritten to be consistent with the
               modifications adopted for small business issuers
               under Regulation S-B.  This revision would reduce
               the degree of detail required and would make the
               small business modifications applicable to all
               registrants filing interim reports.

              Eliminate Staff Accounting Bulletin 43.
               This bulletin provides guidance concerning the
               early adoption of new rules for separate
               financial statements required by Regulation S-X. 
               Guidance is no longer necessary due to lapse of
               time.

              Eliminate or Modify Staff Accounting Bulletin 50.
               The Task Force recommends below that General
               Instruction G to Form S-4, relating to the filing
               and effectiveness of registration statements
               involving the formation of bank holding companies
               and requests for confidential treatment, be
               eliminated.  If this instruction is eliminated,
               the Commission should consider eliminating or
               modifying SAB 50, which relates to financial
               statement requirements in filings involving the
               formation of a bank holding company.

              Modify Staff Accounting Bulletin 80.
               This bulletin provides guidance relating to the
               application of Rule 3-05 in initial public
               offerings.  The Task Force recommends that this
               bulletin be revised to codify previous staff
               relief granted.

              Eliminate Staff Accounting Bulletin 86.
               This bulletin provides guidance on accounting for
               the tax benefits of net operating loss
               carryforwards that existed as of the date of a
               quasi-reorganization.  The guidance is based on
               SFAS 96, which subsequently has been amended by
               SFAS 109.  Eliminating SAB 86 will have the
               effect of deleting questions 4 and 5 from SAB
               Topic 5.S.  SAB 86 may be eliminated because SFAS
               109 contains adequate guidance with respect to
               the accounting covered by those questions.

==========================================START OF PAGE 115=====

              Eliminate Staff Accounting Bulletin 91.
               This bulletin provides guidance on accounting for
               income tax benefits of bad debts of thrifts. 
               This guidance is unnecessary because of the
               issuance of SFAS 109.

              Eliminate Staff Accounting Bulletin Topic 12.A.4
               This bulletin, which provides guidance in filings
               by Canadian registrants, is no longer necessary.

              Eliminate Staff Accounting Bulletin Topic 5.C
               This Bulletin provides guidance on accounting for
               tax benefits of loss carryforwards and is no
               longer necessary because of the issuance of SFAS
               109.

              The Commission should consider eliminating or
               modifying Rule 3A-02 of Regulation S-X, Staff
               Accounting Bulletin 51, and Staff Accounting
               Bulletin 84 if the FASB issues new standards on
               consolidation.
               The FASB has issued an exposure draft of a
               proposed accounting standard to specify when
               entities should be included in consolidated
               financial statements.  The comment period expired
               on January 15, 1996.  If the FASB issues new
               standards on consolidation, Rule 3A-02 of
               Regulation S-X, SAB 51, and SAB 84 should be
               reviewed to determine whether they are
               duplicative of FASB standards and should be
               deleted or modified. 

              Rescission of Staff Accounting Bulletin 57
               This bulletin provided guidance as to the
               accounting for stock warrants when issuance is
               contingent on achievement of certain future
               events.  SAB 57 contained a commitment to revisit
               that guidance upon completion of a FASB project
               on accounting for stock compensation and was
               identified by the Task Force as representing
               outdated guidance to be included with the Task
               Force recommendations.  FASB Statement 123,
               Accounting for Stock-Based Compensation includes
               specific provisions for transactions with non-
               employees that were effective as of December 15,
               1995.  Since transactions with non-employees were
               the transactions covered by SAB 57, the SAB was
               rescinded as of December 15, 1995.

==========================================START OF PAGE 116======

XII.  TECHNICAL CHANGES


          This section focuses principally on recommendations
that are designed to modernize current disclosure requirements. 
In addition, several recommendations in this section relate to
technical adjustments that the Task Force believes have become
appropriate in light of technological advances in communications,
or to accommodate other Task Force recommendations.  


          Make technical changes to numerous other
          rules and forms, which in the aggregate
          should render the Commission's disclosure
          requirements easier to understand and follow.

          The Task Force recommends making the following changes
in order to modernize and make technical modifications to certain
rules and forms:

              Securities Act Rule 153 (Definition of "preceded
               by a prospectus" as used in Section 5(b)(2), in
               relation to certain transactions)

               If practicable due to availability of a site on
               the Internet, extend Rule 153 to include delivery
               for Nasdaq listed companies (unlike an exchange,
               for which Rule 153 is available, there is no
               physical place to deliver prospectuses for Nasdaq
               trades).

              Securities Act Rule 252 (Regulation A -- Offering
               statement)

               Consider allowing the addition or withdrawal of a
               delaying notation by facsimile under Rule
               252(h)(2).

              Securities Act Rule 402 (Regulation C -- Number
               of copies -- binding -- signatures)

               Modify and clarify that typed, faxed or
               duplicated signatures are acceptable so long as
               manual signatures are retained by the company for
               an appropriate time period.  Existing rules
               applicable to electronic filings and securities
               offered under employee benefit plans have a five-
               year retention period.

              Securities Act Rule 406 (Regulation C --
               Confidential treatment of information filed with
               the Commission)
               
==========================================START OF PAGE 117======

               Clarify that confidential treatment requests must
               be submitted in paper format only.  

              Securities Act Rule 424 (Regulation C -- Filing
               of prospectuses -- number of copies)

               Consider revising paragraph (d) to permit
               prospectuses consisting of a radio or television
               broadcast that must be reduced to writing to be
               filed no later than the day used rather than five
               days prior to use.


              Securities Act Rule 457 (Regulation C --
               Computation of fee)

               Consider adding a specific reference to spin-offs
               in Rule 457(f) consistent with the staff's
               informal guidance that the registrant should look
               to Rule 457(f) for guidance when computing the
               filing fee for a spin-off.

              Securities Act Rule 471 (Regulation C --
               Signatures to amendments)

               Modify and clarify that typed, faxed or
               duplicated signatures are acceptable so long as
               manual signatures are retained by the company. 
               Existing rules applicable to electronic filings
               and securities offered under employee benefit
               plans have a five-year retention period.

              Securities Act Rule 473 (Regulation C -- Delaying
               amendment)

               Consider revising Rule 473 to allow the filing of
               the specified amendments by facsimile.  

              Securities Act Rule 503 (Regulation D -- Filing
               notices of sales)

               If Form D and Rule 503 are not eliminated (as
               recommended above):

               Modify and clarify that typed, faxed or
               duplicated signatures are acceptable so long as
               manual signatures are retained by the company. 
               Existing rules applicable to electronic filings
               and securities offered under employee benefit
               plans have a five-year retention period.
               
==========================================START OF PAGE 118======

               Revise paragraph (c) to state in rule form
               (rather than requiring an undertaking) that, upon
               written request of the staff, the issuer must
               furnish to the Commission the information
               furnished by the issuer to any purchaser that is
               not an accredited investor.

              Securities Act Rule 504 (Regulation D --
               Exemption for limited offerings and sales of
               securities not exceeding $1,000,000)

               Move the exemption relating to information
               requirements from Rule 502(b) into Rule 504(b).

              Securities Act Rule 702(T), Rule 703(T) and Form
               701 (Notice of sales pursuant to an exemption
               under Section 701; disqualifying provision
               relating to an exemption under Section 701;
               report of sales of securities pursuant to a
               compensatory benefit plan or contract relating to
               compensation)

               Formally eliminate Rule 702(T), Rule 703(T) and
               Form 701 so that they will be removed from the
               Code of Federal Regulations.  By their terms,
               Rules 702(T) and 703(T) (and thus Form 701) were
               effective only until 1993.

              Securities Act Rule 902(a)(1) (Regulation S --
               Rules governing offers and sales made outside the
               U.S. without Securities Act registration)

               Update the definition of "a designated offshore
               securities market" to include markets that have
               been recognized as such since the adoption of the
               rule.

              Exchange Act Rule 3a12-3(b) (Exemptions from
               Sections 14(a), (b), (c), (f), and Section 16 for
               securities of certain foreign issuers)

               Make revisions to clarify that foreign issuers
               may ascertain their status as foreign private
               issuers at the end of each fiscal quarter and
               upon the occurrence of specified events.  

               For purposes of the Section 16 look-back
               provisions, clarify that a foreign private issuer
               may disregard the period prior to which it lost
               its status as a foreign private issuer.
                
==========================================START OF PAGE 119======

              Exchange Act Rule 12b-11 (Regulation 12B --
               Registration and reporting -- Number of copies --
               signatures -- binding)

               Modify and clarify that typed, faxed or
               duplicated signatures are acceptable so long as
               manual signatures are retained by the company. 
               Existing rules applicable to electronic filings
               and securities offered under employee benefit
               plans have a five-year retention period.

              Exchange Act Rules 13a-13 and 15d-13 (Quarterly
               Reports on Form 10-Q and Form 10-QSB)

               Eliminate subparagraphs (c)(1) and (2) of Rules
               13a-13 and 15d-13, which exempt small life and
               mutual life insurance companies from filing
               quarterly financial results on Form 10-Q and Form
               10-QSB.  The exemption for small life insurance
               companies expired by its terms on December 20,
               1983, and the exemption for mutual life companies
               was meant to track the small life insurance
               companies exemption.  

              Exchange Act Rule 14d-1 (Scope of and definitions
               applicable to Regulations 14D and 14E)

               Modify and clarify that typed, faxed or
               duplicated signatures are acceptable so long as
               manual signatures are retained by the company. 
               Existing rules applicable to electronic filings
               and securities offered under employee benefit
               plans have a five-year retention period.

              Exchange Act Rules 15d-6 and 12h-3 (Suspension of
               duty to file reports under Section 15(d))

               Combine Rule 15d-6 and Rule 12h-3 into one rule
               located among the rules promulgated pursuant to
               Section 15(d), so that registrants can look to a
               single rule for the requirements relating to the
               suspension of Section 15(d) reporting
               obligations.  Rule 12h-3 would be eliminated as a
               separate rule.

              Exchange Act Rule 16a-3 (Reporting transactions
               and holdings)

               Modify and clarify that typed, faxed or
               duplicated signatures are acceptable so long as
               manual signatures are retained by the company. 
               Existing rules applicable to electronic filings
               
==========================================START OF PAGE 120======

               and securities offered under employee benefit
               plans have a five-year retention period.

              Exchange Act Rule 24b-2 (Non-disclosure of
               information filed with the Commission and with
               any exchange)

               Clarify that confidential treatment requests must
               be submitted in paper format only.  

              Items 501(b) and (c)(8) of Regulation S-K (Cross-
               reference sheet; "Subject to completion" legend)

               Eliminate the requirement for a cross-reference
               sheet under Item 501(b).  The requirement under
               Item 502(g) to include a reasonably detailed
               table of contents with page numbers, including
               the location of any risk factors section, is
               sufficient guidance.  If the cross-reference
               sheet is eliminated, references to it should be
               deleted from Securities Act Rule 472.

               Eliminate the requirement under Item 501(c)(8) to
               set forth the "Subject to Completion" legend in
               red ink.  Such a revision would conform
               Regulation S-K to Regulation S-B. 

              Item 509 of Regulation S-K  (Interests of named
               experts and counsel)

               Add an instruction to Item 509 to require that
               indemnification provisions relating to named
               experts and counsel be disclosed.

              Form 1-A (Regulation A offering statement)

               Revise and update the narrative disclosure model
               for offering circulars and offering statements
               under Regulation A.

              Form S-4 (Registration statements to be used
               under the Securities Act by domestic companies to
               register securities in a merger or exchange
               offer)

               Consider eliminating General Instruction G to
               Form S-4, which relates to the filing and
               effectiveness of registration statements
               involving the formation of bank holding companies
               and requests for confidential treatment.  This
               instruction is no longer necessary because
               Securities Act Section 3(a)(12) provides an
                  
==========================================START OF PAGE 121======

               exemption for bank holding company
               reorganizations.

               If General Instruction G to Form S-4 is
               eliminated, references to the instruction should
               be deleted from Rules 406(a), 464, 473(d), 475a,
               and 477(b) in Regulation C.

              Form F-4 (Registration statements to be used
               under the Securities Act by foreign private
               issuers to register securities in a merger or
               exchange offer)

               Delete the references in Rules 406(a), 464,
               473(d), and 475a of Regulation C to registration
               statements filed on Form F-4 in compliance with
               General Instruction F.  This reference appears to
               be in error.  

              Form 8-K (Current report pursuant to Section 13
               or 15(d) of the Exchange Act)

               Clarify in Item 2 of Form 8-K that, upon the
               acquisition of operating real estate, the
               registrant is considered to have purchased
               operating properties (as opposed to assets in the
               ordinary course of business) and Item 7 of Form
               8-K and Rule 3-14 of Regulation S-X applies. 
               This would codify current staff interpretations.  

              Form 10-K (Annual report pursuant to Section 13
               or 15(d) of the Exchange Act)

                   Eliminate Instruction I which relates to
                   "Registrants Filing on 
                   Form S-18," since Form S-18 no longer exists.

                   Add an instruction explaining the
                   significance of the market capitalization
                   determination and the manner in which it
                   should be determined.  The market
                   capitalization project has shown that a very
                   large number of companies complete this
                   portion incorrectly.  Require a standardized
                   numerical presentation.

                   Require a table of contents in lieu of cross
                   references to the items of the form.

==========================================START OF PAGE 122======

                   General Instruction J to Form 10-K provides
                   for abbreviated disclosure by certain
                   subsidiaries, subject to certain conditions. 
                   The Task Force recommends that these
                   conditions be updated as follows: 

                   -- Current rules require the subsidiary to
                   provide a narrative analysis by management. 
                   The Task Force recommends updating the
                   provisions to more closely track the current
                   disclosure requirements in Item 303 of
                   Regulation S-K relating to Management's
                   Discussion and Analysis. 

                   -- Current rules require that the subsidiary
                   has not had, during the previous 36 months, a
                   material default in any payment of principal,
                   interest, a sinking or purchase fund
                   installment or any other material default,
                   which was not cured within 30 days, or a
                   material default in the payment of rentals
                   under material long-term leases. The Task
                   Force recommends revisions to reduce the
                   applicable time-period to 12 months. This
                   change would conform this requirement in the
                   Form 10-K to the more up-to-date requirements
                   of Forms S-3/F-3. 

              Form 15 (Certification and notice of termination
               of registration under Section 12(g) of the
               Exchange Act or suspension of duty to file
               reports under Sections 13 and 15(d) of the
               Exchange Act)

               Consider parentheticals under each of the boxes
               on the form so that anyone reading the form will
               immediately understand why the registrant will no
               longer be a reporting company.

               If the recommendation to merge Exchange Act Rules
               12h-3 and 15d-6 is implemented, make appropriate
               simplifying revisions. 

              Form 18 (Application for registration of
               securities of foreign governments and political
               subdivisions thereof)

               Update outdated references in this form, such as
               the reference to the "Statistical Handbook of the
               League of Nations."

              Other Revisions

=========================================START OF PAGE 123======

               As a result of the small business initiatives,
               all references to Forms 10-Q, 
               10-K and 10 were revised to, where appropriate,
               also reference the small business equivalents of
               those forms, such as Form 10-KSB.  However, not
               all changes were made with the correct
               conjunction (e.g., "Form 10-K and Form 10-KSB" as
               opposed to "Form 10-K or Form 10-KSB").  The Task
               Force recommends that such references be reviewed
               and corrected.

               Change the references in Forms F-7, F-8, F-9, F-
               10 and F-80 to Rule 24 of the Commission's Rules
               of Practice to refer instead to Item 10 of
               Regulation 
               S-K.  Rule 24 has been eliminated and its
               requirements are now set forth in Item 10.

==========================================START OF PAGE 124======

XIII.     OTHER CURRENT COMMISSION INITIATIVES


          The Commission should consider this Report in
conjunction with the many other initiatives currently being
undertaken by the Commission to streamline and modernize
regulations relating to corporation finance.  A brief summary of
such initiatives is set forth below.


              Streamlining Disclosure Requirements Relating to
               Significant Business Acquisitions; Quarterly
               Reporting of Unregistered Equity Sales

               The Commission proposed new rules designed to
               streamline the disclosure requirements relating
               to significant business acquisitions.  The
               proposed rules would eliminate the requirement to
               provide audited financial statements for certain
               pending business acquisitions and would generally
               allow registrants to provide information about
               significant acquisitions in Securities Act
               registration statements on the same time schedule
               as for Exchange Act reporting.  The proposed
               rules also would provide an automatic waiver of
               the earliest year of required audited financial
               statements otherwise required in certain cases
               when they are not readily available.  In
               addition, the Commission proposed rule revisions
               that would require registrants to report on a
               quarterly basis recent unregistered sales of
               equity securities.  See Release No. 33-7189 (June
               27, 1995).

              Relief from Section 12(g) Registration for Small
               Issuers

               The Commission proposed to raise the asset
               threshold that subjects companies to registration
               under Section 12(g) of the Exchange Act from five
               million dollars to ten million dollars.  The
               proposals also would raise the asset threshold
               for termination of Section 12(g) registration and
               suspension of Section 15(d) reporting from five
               million dollars to ten million dollars.  See
               Release No. 33-7186 (June 27, 1995).

              Solicitations of Interest Prior to Initial Public
               Offerings

               The Commission proposed a rule that would allow
               issuers contemplating initial public offerings to

==========================================START OF PAGE 125======

               solicit indications of investor interest in their
               companies prior to the filing of a registration
               statement under the Securities Act.  In addition,
               if an issuer "tests the waters" under this
               proposed new rule and decides not to proceed with
               a registered offering, the issuer may still use
               Regulation A.  See Release No. 33-7188 (June 27,
               1995).

               In addition, the Commission proposed to amend the
               "test the waters" provisions under Regulation A
               to permit issuers that "test the waters" under
               Regulation A, and then decide to have a
               registered offering instead, to do so without
               waiting 30 days.  See Release No. 33-7188 (June
               27, 1995).


              Rule 144 -- Holding Period; New Trading
               Strategies

               The Commission proposed to reduce the holding
               period required for resales by any person under
               Rule 144 from two years to one year, and to
               reduce the holding period for resales by non-
               affiliates without restriction from three years
               to two years.  See Release No. 33-7187 (June 27,
               1995).

               In addition, the Commission solicited comment on
               whether Rule 144 should be revised to address new
               trading strategies such as equity swaps.  See
               Release No. 33-7187 (June 27, 1995).

              Exemption for Certain California Limited Issues

               The Commission proposed a new exemption from
               registration for limited offerings up to five
               million dollars that meet the qualifications of a
               new California exemption for offerings made to
               specified classes of qualified purchasers that
               are similar to accredited investors under
               Regulation D.  See Release No. 33-7185 (June 27,
               1995).

               In addition, the Commission solicited comment on
               whether it should revise or eliminate the
               prohibition against general solicitation in
               offerings pursuant to Rules 505 and 506 under
                 
==========================================START OF PAGE 126======

               Regulation D.  See Release No. 33-7185 (June 27,
               1995).

              Problematic Practices Under Regulation S

               The Commission published its views concerning
               problematic practices under Regulation S and
               requested comment on whether that Regulation
               should be amended to limit its vulnerability to
               abuse. See Release No. 33-7190 (June 27, 1995).  

              Streamlining and Consolidation of Executive and
               Director Compensation

               The Commission proposed amendments to Item 402 of
               Regulations S-B and S-K and to Forms 10-K and
               10-KSB and Schedule 14A under the Exchange Act. 
               The annual proxy and information statement would
               be streamlined by allowing some of the more
               detailed compensation disclosure required by Item
               402 of Regulations S-B and S-K to be provided in
               the annual report on Form 10-K filed with the
               Commission rather than included in the proxy or
               information statement furnished to shareholders.
               The proposals also would affect director
               compensation disclosure, which would remain in
               the proxy statement, by consolidating certain
               elements of that disclosure into an
               easier-to-read tabular format that provides
               information for each director.  See Release No.
               33-7184 (June 27, 1995).

              Abbreviated Financial Statements

               The Commission proposed amendments to allow the
               use of abbreviated financial statements in annual
               reports delivered to shareholders pursuant to the
               proxy rules.  Rule changes also were proposed to
               allow the use of abbreviated financial statements
               in other disclosure documents, including
               prospectuses, required to be delivered to
               investors.  See Release No. 33-7183 (June 27,
               1995).  Chairman Levitt has announced that
               further thought is being given to this proposal
               in light of the public comments, and
               consideration is being given to whether there are
               alternatives that may better serve both investors
               and companies.
              Section 16 - Ownership Reports and Trading by
               Officers, Directors and Principal Security
               Holders

=========================================START OF PAGE 127======

               In 1994, the Commission issued two releases
               proposing amendments to certain rules regarding
               the filing of ownership reports by officers,
               directors and principal security holders and
               solicited comment on the Section 16 treatment of
               cash-only instruments.  See Release No. 34-34514
               (August 10, 1994) (the "Proposing Release");
               Release No. 34-34681 (September 16, 1994) (the
               "Cash-Only Release").  On October 11, 1995, the
               Commission proposed an alternative scheme to
               amend Rule 16b-3 and solicited comment on various
               other issues relating to Section 16.  See Release
               No. 34-36356 (October 11, 1995) (the "Alternative
               Proposal Release").  The Alternative Proposal
               Release proposed a major simplification of Rule
               16b-3 to exempt from Section 16(b) most
               transactions between an officer or director and
               the issuer.  Comment also was solicited on
               simplifying the reporting of transactions under
               Section 16(a).  The release further proposed
               greater flexibility for DRIP plans.  In addition,
               the Commission solicited comment as to the
               continued efficacy of Section 16(b) and whether
               legislation should be proposed to rescind it.

              Derivatives Disclosure

               In response to an increasing involvement in
               derivatives activity by public companies leading
               to potential exposure to significant risks, the
               Commission issued interpretive guidance and
               proposed rule amendments in a release in late
               1995.  See Release No. 34-36643 (December 28,
               1995).  The release was intended to (1) enhance
               disclosures about registrants' accounting
               policies associated with derivatives and other
               instruments and (2) increase quantitative and
               qualitative disclosures by registrants about the
               market risks inherent in these instruments.  

              Use of Electronic Media

               The Commission is working to facilitate the use
               of electronic media to enhance communication and
               save costs.  The Commission implemented one of
               its initiatives in this area in a recent
               interpretive release that discusses the ability
               to use electronic delivery of prospectuses and
               reports to shareholders who have the means to
               communicate electronically.  The interpretive
               guidance is intended to assist market
               participants in using electronic media to provide
                 
==========================================START OF PAGE 128======

               information under the federal securities laws and
               to encourage continued research and development
               and use of such media.  See Release No. 33-7233
               (October 6, 1995).  A release also was issued
               proposing technical amendments to rules premised
               on paper delivery to make it clear how those
               rules should be implemented when electronic media
               are being used.  See Release No. 33-7234 (October
               6, 1995).

               In addition, the Commission has embarked on an
               effort to make documents and other information
               available through the Internet.  As part of this
               endeavor, the Commission established a "home
               page" on the World Wide Web, which offers access
               to the Commission's EDGAR database of corporate
               information, SEC News Digests, rule proposals,
               litigation releases, speeches, testimony, press
               releases, and other information relating to the
               Commission, including an electronic copy of this
               Report.  The Commission's World Wide Web address
               is http://www.sec.gov.

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