28540 Federal Register / Vol. 63, No. 100 /Tuesday, May 26, 1998 / Notices

9 15 U.S.C. 78o-3.

10 15 U.S.C. 78o-3.

11 15 U.S.C. 78c(f).

12 15 U.S.C. 78s(b)(2).

13 17 CFR 200.30–3(a)(12).

members or affiliates of members and

proposes revising the definition of

‘’actively-traded securities’’ to extend

the exemption to securities issued by a

distribution participant or an affiliate of

the distribution participant. Paragraph

(1)(7)(A), as amended, is set forth below.

Language to be deleted from the

paragraph appears in brackets.

Actively-traded securities means securities

that have an ADTV value of at least $1

million and are issued by an issuer whose

common equity securities have a public float

value of at least $150 million[; provided,

however, that such securities are not issued

by the distribution participant or an affiliate

of the distribution participant].

Finally, Sullivan Cromwell notes that

Paragraph (l)(1) refers to secondary

distributions ‘‘by an issuer.’’ Sullivan

and Cromwell asks whether secondary

distributions by an existing security

holder are subject to the Interpretation.

If not, Sullivan and Cromwell

recommends amending the text of

proposed Paragraph (l)(1) to extend the

exemption to such distributions. NASD

Regulation did not intend to exclude

from the exemption secondary offerings

by security holders. Accordingly, it has

revised Paragraph (l)(1) as set forth

below. New language is italicized.

Language to be deleted from the

paragraph appears in brackets.

The term public offering shall exclude

secondary distributions by an issuer or any

security holder of the issuer, of [whose

securities are] actively-traded securities.

IV. Conclusion

The Commission has carefully

considered the comments set forth in

the Sullivan and Cromwell letter. As

discussed in detail above, the NASD

Regulation has made a number of

technical amendments to the proposal

in response to the Sullivan and

Cromwell letter, which the Commission

believes are consistent with the spirit of

the Interpretation. Indeed, the

Commission believes the changes to the

proposal which were made pursuant to

Amendment No. 1 and No. 2 will

facilitate the ability of NASD member

firms to comply with the Interpretation,

because the amendments further clarify

the intent of the proposed rule change.

For example, in response to the Sullivan

and Cromwell letter, the Interpretation

was amended to clarify that the

exemption in paragraph (b)(9)(B) for

sales to the accounts of restricted

persons established for the benefit of

bona fide public customers was

intended to apply across all industries,

as opposed to life insurance companies

exclusively. Similarly, Amendment No.

1 to the proposal facilitates member firm

compliance by amending the paragraph

(b)(9)(A)(ii) exemption for shares of a

member traded on an exchange or

Nasdaq to include an exemption for

shares of a member traded as a part of

a holding company. This amendment

fosters member firm compliance with

the Interpretation by recognizing that

many of the largest broker-dealers are

subsidiaries of publicly traded holding

companies and are not themselves

publicly traded.

NASD Regulation has determined not

to revise the proposal in response to

Sullivan and Cromwell’s suggestion that

paragraph (b)(9) of the Interpretation,

which with certain exceptions, prohibits

sales of hit issue securities to any

person who owns or has contributed

capital to a broker-dealer, be revised

such that it only applies to institutions

engaged ‘‘principally in the brokerdealer business.’’ The Commission

agrees with NASD Regulation that such

an amendment is inconsistent with the

scope and intent of the proposal,

because the modification would leave

open a substantial possibility of selfdealing between broker-dealers and

owners of broker-dealers. Accordingly,

the Commission believes NASD

Regulation has a sound investor

protection basis for its decision not to

narrow the scope of paragraph (b)(9) of

the Interpretation as requested by

Sullivan and Cromwell.

The Commission believes the

proposed rule change, as amended, is

consistent with the provisions of section

15(A)(b)(6) of the Act,9 which provides

in pertinent part that the rules of a

national securities association be

designed to prevent fraudulent and

manipulative acts, promote just and

equitable principles of trade and protect

investors and the public interest.

Specifically, the proposal preserves

public confidence in the fairness of the

investment banking and securities

business by ensuring that members of

the investment banking community do

not unfairly benefit from public

offerings by virtue of their positions as

insiders, to the detriment of public

investors. Preservation of investor

confidence in the fairness of the markets

is critical to the continued participation

of all classes of securities marked

participants. The Commission believes,

moreover, that the proposed rule change

is consistent with section 15A(b)((9) 10

in that it will alleviate certain inequities

caused by the Interpretation, which

imposed burdens on competition not

necessary or appropriate in furtherance

of the purposes of the Act.

In approving this proposal, the

Commission notes that it is has

considered the proposal’s impact on

efficiency, competition, and capital

formation.11 The Commission believes

the proposal will facilitate the capital

raising process by removing restrictions

and compliance burdens imposed by the

Interpretation with respect to certain

transactions where application of the

Interpretation does not enhance investor

protection or the public interest. For

example, the proposal excludes from the

definition of public offering secondary

offerings by an issuer whose securities

are actively traded securities. At the

same time, the Interpretation continues

to apply to those securities allocations

that pose a risk of undercutting the

Interpretation’s objective of ensuring a

bona fide distribution of hot issue

securities to the public.

It is therefore ordered, pursuant to

Section 19(b)(2) 12 of the Act, that the

proposed rule change SR–NASD–97–95

be and hereby is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.13

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 98–13850 Filed 5–22–98; 8:45 am]

BILLING CODE 8010–01–M

SMALL BUSINESS ADMINISTRATION

Notice of Action Subject to

Intergovernmental Review Under

Executive Order 12372

AGENCY: U.S. Small Business

Administration.

ACTION: Notice of Action Subject to

Intergovernmental Review Under

Executive Order 12372.

SUMMARY: The Small Business

Administration (SBA) is notifying the

public that it intends to grant the

pending applications of 22 existing

Small Business Development Centers

(SBDCs) for refunding on October 1,

1998, subject to the availability of funds.

Four states do not participate in the EO

12372 process, therefore, their addresses

are not included. A short description of

the SBDC program follows in the

supplementary information below.

The SBA is publishing this notice at

least 90 days before the expected

refunding date. The SBDCs and their

mailing addresses are listed below in

the addresses section. A copy of this

notice also is being furnished to the
Federal Register / Vol. 63, No. 100 /Tuesday, May 26, 1998 / Notices 28541

respective State single points of contact

designated under the Executive Order.

Each SBDC application must be

consistent with any area-wide small

business assistance plan adopted by a

State-authorized agency.

DATES: A State single point of contact

and other interested State or local

entities may submit written comments

regarding an SBDC refunding on or

before June 25, 1998.

ADDRESSES:

Addresses of Relevant SBDC State

Directors

Mr. Robert McKinley, Region Director,

Univ. of Texas at San Antonio, 1222

North Main Street, San Antonio, TX

78212, (210) 458-2450

Mr. Dennis Gruell, State Director,

University of Connecticut, 2 Bourn

Place, U–94, Storrs, CT 06269-5094,

(860) 486–4135

Dr. Elizabeth Gatewood, Region

Director, University of Houston, 1100

Louisiana, Suite 500, Houston, TX

77002, (713) 752–8444

Ms. Hazel Kroesser Palmer, State

Director, West Virginia Development

Office, 950 Kanawha Boulevard, East,

Charleston, WV 25301, (304) 558–

2960

Mr. Clinton Tymes, State Director,

University of Delaware, Suite 005—

Purnell Hall, Newark, DE 19711, (302)

831–2747

Ms. Janet Holloway, State Director,

University of Kentucky, 225 Business

& Economics Bldg., Lexington, KY

40506–0034, (606) 257–7668

Ms. Liz Klimback, Region Director,

Dallas Community College, 1402

Corinth Street, Dallas, TX 75212,

(214) 860–5833

Mr. Craig Bean, Region Director, Texas

Tech University, 2579 South Loop

289, Suite 114, Lubbock, TX 79423–

1637, (806) 745–3973

Mr. Doug Gurley, State Director,

University of Mississippi, Old

Chemistry Building, University, MS

38677, (601) 232–5001

Mr. James L. King, State Director, State

University of New York, SUNY Plaza,

S–523, Albany, NY 12246, (518) 443–

5398

Ms. Diane Wirth, Acting State Director,

Univ. of Maryland/College Park, 7100

Baltimore Avenue, Suite 401,

Baltimore, MD 20740, (301) 403–8163

Ms. Diane Wolverton, State Director,

University of Wyoming, P.O. Box

3622, Laramie, WY 82071–3622, (307)

766–3505

Mr. Max Summers, State Director,

University of Missouri, Suite 300,

University Place, Columbia, MO

65211, (314) 882–0344

Ms. Holly Schick, State Director, Ohio

Department of Development, 77 South

High Street, Columbus, OH 43226–

1001, (614) 466–2711

Mr. Donald L. Kelpinski, State Director,

Vermont Technical College, P.O. Box

422, Randolph Center, VT 05060,

(802) 728–9101

Ms. Carmen Marti, SBDC Director, Inter

American University, Ponce de Leon

Avenue, #416, Edificio Union Plaza,

Suite 7–A, Hato Rey, PR 00918, (787)

763–6811

Mr. Chester Williams, SBDC Director,

University of the Virgin Islands, 8000

Nisky Center, Suite 202, St. Thomas,

US V. Islands 00802, (809) 776–3206

Mr. Ronald Manning, State Director,

Iowa State University, 137 Lynn

Avenue, Ames, IA 50010, (515) 292–

6351

FOR FURTHER INFORMATION CONTACT:

Johnnie L. Albertson, Associate

Administrator for SBDCs, U.S. Small

Business Administration, 409 Third

Street, SW., Suite 4600, Washington, DC

20416.

SUPPLEMENTARY INFORMATION:

Description of the SBDC Program

A partnership exists between SBA

and an SBDC. SBDCs offer training,

counseling and other business

development assistance to small

businesses. Each SBDC provides

services under a negotiated Cooperative

Agreement with SBA, the general

management and oversight of SBA, and

a state plan initially approved by the

Governor. Non-Federal funds must

match Federal funds. An SBDC must

operate according to law, the

Cooperative Agreement, SBA’s

regulations, the annual Program

Announcement, and program guidance.

Program Objectives

The SBDC program uses Federal

funds to leverage the resources of states,

academic institutions and the private

sector to:

(a) Strengthen the small business

community;

(b) Increase economic growth;

(c) Assist more small businesses; and

(d) Broaden the delivery system to

more small businesses.

SBDC Program Organization

The lead SBDC operates a statewide

or regional network of SBDC subcenters.

An SBDC must have a full-time Director.

SBDCs must use at least 80 percent of

the Federal funds to provide services to

small businesses. SBDCs use volunteers

and other low cost resources as much as

possible.

SBDC Services

An SBDC must have a full range of

business development and technical

assistance services in its area of

operations, depending upon local needs,

SBA priorities and SBDC program

objectives. Services include training and

counseling to existing and prospective

small business owners in management,

marketing, finance, operations,

planning, taxes, and any other general

or technical area of assistance that

supports small business growth.

The SBA district office and the SBDC

must agree upon the specific mix of

services. They should give particular

attention to SBA’s priority and special

emphasis groups, including veterans,

women, exporters, the disabled, and

minorities.

SBDC Program Requirements

An SBDC must meet programmatic

and financial requirements imposed by

statute, regulations or its Cooperative

Agreement. The SBDC must:

(a) Locate subcenters so that they are

as accessible as possible to small

businesses;

(b) Open all subcenters at least 40

hours per week, or during the normal

business hours of its state or academic

Host Organization, throughout the year;

(c) Develop working relationships

with financial institutions, the

investment community, professional

associations, private consultants and

small business groups; and

(d) Maintain lists of private

consultants at each subcenter.

Dated: May 18, 1998.

Johnnie L. Albertson,

Associate Administrator, for Small Business

Development Centers.

[FR Doc. 98–13844 Filed 5–22–98; 8:45 am]

BILLING CODE 8025–01–P

SMALL BUSINESS ADMINISTRATION

Heartland States Regional Fairness

Board; Public Hearing

The Heartland States Regional

Fairness Board Hearing, to be held on

June 8, 1998, starting at 10:00 a.m. at the

Junior League, 10435 Clayton,

Frontenac, Missouri, in space being

provided by the Junior League, to

receive comments from small businesses

concerning regulatory enforcement or

compliance taken by Federal agencies.

Transcripts of these proceedings will be

posted on the Internet. These transcripts

are subject only to limited review by the

National Ombudsman.