10724 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules

1 15 U.S.C. 77a et seq.

2 15 U.S.C. 77j. See also Section 5(b)(1) of the

Securities Act, 15 U.S.C. § 77e(b)(1).

3See Section 2(10) of the Securities Act, 15 U.S.C.

77b(10).

4The Securities Act provides that ‘‘a

communication provided after the effective date of

the registration statement * * * shall not be

deemed a prospectus if it is proved that prior to or

at the same time with such communication a

written prospectus meeting the requirements of’’

Section 10(a) is provided. See Section 2(10)(a) of

the Securities Act, 15 U.S.C. 77b(10)(a).

A written confirmation must be sent to a

purchaser prior to settlement pursuant to Rule 10b–

10 under the Securities Exchange Act of 1934, 17

CFR 240.10b–10.

5See Section 5(b)(2) of the Securities Act, 15

U.S.C. 77e(b)(2).

6 15 U.S.C. 78a et seq.

7 17 CFR 240.15c6–1. See Exchange Act Release

No. 33023 (Oct. 6, 1993) [58 FR 52891].

8The Commission has published notice of a

proposed rule change of the Municipal Securities

Rulemaking Board that will require transactions in

municipal securities to settle by T+3. Exchange Act

Release No. 34541 (Aug. 17, 1994) [59 FR 43603].

9The effective date was changed from June 1,

1995 to June 7, 1995 in Exchange Act Release No.

34952 (Nov. 9, 1994) [59 FR 59137].

10The term ‘‘new issues’’ is used herein to refer

to both initial public offerings by issuers and

offerings of additional securities by reporting

companies.

11Rule 15c6–1 also contains a specific exemption

for sales of unlisted limited partnership interests.

12A system for when-issued trading could be

developed to help alleviate such failed transactions,

but commentators have suggested that when-issued

trading would not be a solution since, among other

reasons, many institutional customers are unable to

engage in when-issued trading. See letter from

Joseph McLaughlin, infra footnote 15.

SECURITIES AND EXCHANGE

COMMISSION

17 CFR Parts 228, 229, 230, 239, and

240

Release No. 33–7141; 34–35396; IC–20903

File No. S7–7–95

RIN 3235–AG40

Prospectus Delivery; Securities

Transactions Settlement

AGENCY: Securities and Exchange

Commission.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Commission is proposing

revisions to its rules and forms and a

new rule under the Securities Act of

1933 in order to implement two

solutions to prospectus delivery issues

arising in connection with the change to

T+3 securities transaction settlement.

The proposals are based on

recommendations submitted by

representatives of financial

intermediaries. In addition, the

Commission is proposing to amend an

exemption from T+3 clearance and

settlement for purchases and sales of

securities pursuant to a firm

commitment offering. Such exemption

is proposed to be limited to offerings of

asset-backed securities and structured

securities and would provide an

extended settlement time frame to firm

commitment offerings under certain

conditions.

DATES: Comments should be received on

or before March 31, 1995.

ADDRESSES: Comment letters should

refer to File Number S7–7–95 and be

submitted in triplicate to Jonathan G.

Katz, Secretary, U.S. Securities and

Exchange Commission, 450 Fifth Street,

N.W., Mail Stop 6–1, Washington, D.C.

20549. The Commission will make all

comments available for public

inspection and copying in its Public

Reference Room at the same address.

FOR FURTHER INFORMATION CONTACT:

Anita Klein, Michael Mitchell or Joseph

Babits, (202) 942–2900, Division of

Corporation Finance; and, with regard

to questions concerning the T+3

settlement proposals, Jerry W. Carpenter

or Christine Sibille, (202) 942–4187,

Division of Market Regulation; and,

with regard to questions concerning

Rule 15c2–8 proposals, Alexander Dill,

(202) 942–4892, Division of Market

Regulation; and, with regard to

questions concerning the application of

the proposal to investment companies,

Kathleen Clarke, (202) 942–0721,

Division of Investment Management,

U.S. Securities and Exchange

Commission, Washington, D.C. 20549.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

Under the Securities Act of 1933 (the

‘‘Securities Act’’), 1 a prospectus used

after a registration statement has been

filed must meet the disclosure

requirements of Section 10 of the

Securities Act. 2 The term ‘‘prospectus’’

is defined broadly to include any

written communication that ‘‘offers a

security for sale or confirms the sale of

any security.’’ 3 Because information

generally contained in a confirmation

typically does not satisfy the disclosure

requirements of Section 10, a prospectus

meeting Section 10(a) requirements

must be sent or given prior to or at the

same time with the confirmation. 4 In

addition, the Securities Act prohibits

persons from sending securities through

interstate commerce ‘‘for the purpose of

sale or for delivery after sale, unless

accompanied or preceded by a

prospectus that meets the requirements’’

of Section 10(a). 5

On October 6, 1993, the Commission

adopted Rule 15c6–1 under the

Securities Exchange Act of 1934 (the

‘‘Exchange Act’’) 6 to establish three

business days after trade (hereinafter,

‘‘T+3’’) as the standard settlement time

frame for most broker-dealer trades. 7

Rule 15c6–1 covers all securities other

than exempted securities, government

securities, municipal securities, 8

commercial paper, bankers’

acceptances, or commercial bills. That

Rule is scheduled to become effective

on June 7, 1995. 9

When Rule 15c6–1 was proposed in

February 1993, it provided that public

offerings of debt and equity securities

would have to be settled by T+3.

Commentators on the proposal raised

concerns that new issues of securities 10

could not be settled by T+3 because the

prospectus could not be printed prior to

the trade date (the date on which the

securities are priced) and therefore the

prospectus printing and delivery

process could not be completed within

a T+3 time frame. To address those

concerns, Rule 15c6–1 was modified

upon adoption to provide a limited

exemption from T+3 for the sale of

securities for cash pursuant to firm

commitment offerings registered under

the Securities Act.11 Accordingly, an

underwriter can set any settlement

period for such offerings. Resales of

such securities, other than the sale to an

initial purchaser by a broker-dealer

participating in such offering, remain

subject to the T+3 time frame.

Since the adoption of Rule 15c6–1,

members of the brokerage community

have suggested that the Commission

eliminate this exemption from T+3 and

ease the problems associated with

prospectus delivery within T+3 by other

means. The primary reasons expressed

for requiring T+3 settlement of such

offerings are: (i) the secondary market

for a new issue may be subject to greater

price fluctuations or instability, which

in turn may expose underwriters,

dealers and investors to

disproportionate credit and market risk;

and (ii) the bifurcated settlement cycle

created for initial sales and resales of

new issues would be disruptive to

broker-dealer operations and to the

clearance and settlement system. In

particular, it has been noted that if a

purchaser of a new issue sells on the

first or second day after pricing, the

purchaser’s broker will not be able to

settle with the buyer’s broker on a T+3

schedule because the securities will not

yet be available for settlement purposes.

As a result, all such trades by the

purchasers would ‘‘fail’’ and result in

expense, inefficiencies and greater

settlement risk for all participants. 12 A

bifurcated settlement cycle also may

require the maintenance of separate

computer systems and additional

internal procedures.
Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules 10725

13See Brown & Wood (Feb. 17, 1995). An earlier

no-action letter granted relief in connection with

the use of electronic means to transmit

confirmations. See Thomson Financial Services,

Inc. (Oct. 8, 1993).

14The Division of Corporation Finance staff, in

addition to issuing the Brown & Wood letter, is

considering generally delivery under the Securities

Act of prospectuses through other non-paper media

(e.g., audiotapes, videotapes, facsimile, directed

electronic mail, and CD ROMs). The staff

anticipates submitting to the Commission in the

near future recommendations intended both to

facilitate compliance with the Securities Act’s

prospectus delivery requirements and to encourage

continued technological developments of non-paper

delivery media.

15See letter from Robin Shelby, CS First Boston

Corporation; Goldman Sachs & Co.; Steven

Barkenfield, Lehman Brothers Inc.; and John Ander,

Morgan Stanley & Co. Inc. to Anita Klein, Securities

and Exchange Commission, dated Jan. 24, 1995 and

letter from Goldman Sachs to Anita Klein,

Securities and Exchange Commission, dated Feb. 3,

1995. See also letter from Joseph McLaughlin,

Brown & Wood, on behalf of the Securities Industry

Association, to Anita Klein, Securities and

Exchange Commission, dated Feb. 1, 1995. Copies

of these proposals are available for inspection and

duplication at the Commission’s Public Reference

Room, 450 Fifth St. NW, Washington, D.C. 20549,

File Number S7–7–95.

16Today’s proposal is not the first time the

Commission has addressed concerns that the

settlement schedule is difficult to meet in

connection with firm commitment offerings of

securities for cash. In 1987, the Commission issued

a release, in response to industry requests, making

alternative proposals to expedite the prospectus

delivery process. See Securities Act Release No.

6727 (July 31, 1987) [52 FR 29206]. Those proposals

engendered opposition from commentators and

were not adopted by the Commission.

17See Rule 421(a) under the Securities Act, 17

CFR 230.421(a). Rule 421(a) does require that

information in a prospectus be set forth in a fashion

so as not to obscure any of the required information

or any information necessary to keep the required

information from being incomplete or misleading.

18Rules specifying information required on the

cover pages of the prospectus are: (i) Item 501(c) of

Regulation S–K, 17 CFR 229.501(c) (information

that must be contained on the outside front cover

page of the prospectus); and (ii) Item 502 of

Regulation S–K, 17 CFR 229.502 (information that

must be contained on the inside front cover page

and the outside back cover page). See also Item 501

and Item 502 of Regulation S–B, 17 CFR 228.501

and 228.502.

Rules specifying information required in the

forepart of the prospectus are: (i) Item 503(b) of

Regulation S–K, 17 CFR 229.503(b) (mailing address

and telephone number of the registrant’s executive

offices); and (ii) Item 503(c) of Regulation S–K, 17

CFR 229.503(c) (a discussion of the principal risk

factors related to the offering). See also Item 503(b)

and Item 503(c) of Regulation S–B, 17 CFR

228.503(b) and 228.503(c).

Other rules, certain Securities Act Industry

Guides, and a Commission release, which are

applicable only to limited categories of transactions,

specify location or order of prospectus information:

(i) Items 903(a) and 904(a) of Regulation S–K, 17

CFR 229.903(a) and 229.904(a) specify, respectively,

that a summary of a roll-up transaction be included

in the forepart of the disclosure document and that,

immediately following the summary, a reasonably

detailed description of each material risk and effect

of the roll-up transaction be included; (ii) Securities

Act Industry Guide 4, 17 CFR 229.801(d), for oil

and gas programs, specifies that disclosure

throughout the prospectus should appear in the

sequence indicated; (iii) Securities Act Industry

Guide 5, 17 CFR 229.801(e), relating to interests in

real estate limited partnerships, specifies that

suitability standards, if any, to be utilized by the

registrant should be described immediately

following the cover page; (iv) Securities Act Release

No. 6900 (June 17, 1991) [56 FR 28979], relating to

limited partnerships, requires that the forepart of

the prospectus begin with a cover page, a table of

contents, a summary, disclosure of risk factors and

suitability standards, and requires that a glossary be

located in the back of the prospectus.

19Of course, the information set forth in the

prospectus must nevertheless be presented in a

clear, concise and understandable fashion, as

required by Rule 421(b) under the Securities Act,

17 CFR 230.421(b). See also Rule 421(a), supra

footnote 17.

20But see proposed revision to Item 502(f) of

Regulation S–K, 17 CFR 229.502(f).

According to the brokerage

community, the primary reason that

settlement within T+3 currently is not

feasible for many new issues is the

amount of time it takes to print and

deliver prospectuses. Some of these

timing difficulties can be expected to be

alleviated as markets increasingly rely

on electronic delivery of materials. In

recognition of that development, the

Commission staff has recently issued an

interpretive letter to facilitate the use of

electronic transmission to satisfy

prospectus delivery requirements.13

Until the markets create systems that

make electronic delivery the method of

choice, and most investors have the

means to accept electronic delivery,

however, the Commission must address

delivery of prospectuses in paper

form.14

While multiple recommendations

have been made that the Commission

eliminate the existing T+3 exemption

and facilitate the prospectus delivery

process, members of the brokerage

community are not in unanimity as to

how the prospectus delivery process

could best be expedited. Two proposals

by members of the brokerage

community have been presented for

Commission consideration.15 Those

proposals recommend markedly

different solutions to accomplishing

prospectus delivery in a T+3 time

frame.16

The approaches reflected in the two

proposals are not mutually exclusive

methods of expediting prospectus

delivery. The Commission therefore is

proposing amendments to its rules that

would accomplish both proposals.

Comment is sought regarding which

alternative should be implemented or

whether the Commission should

implement both proposals and thereby

allow market participants a choice as to

which approach to use in any given

offering. Alternatively, would some

other combination of the proposals best

expedite prospectus delivery? Comment

also is solicited with respect to whether

there is a need for any Commission

action with respect to prospectus

delivery to accommodate T+3 clearance

and settlement.

II. The Prospectus Delivery Proposals

A. The Four Firms Proposal and Related

Commission Proposals

The first proposal to facilitate T+3

settlement was made by a group of four

firms: CS First Boston Corporation,

Goldman, Sachs & Co., Lehman Brothers

Inc. and Morgan Stanley & Co.

Incorporated (hereinafter, the ‘‘Four

Firms Proposal’’). The Four Firms

Proposal is premised on the view that

the process of preparation and delivery

of prospectuses in new issues can be

accelerated sufficiently to comply with

T+3 if six steps are taken by the

Commission. According to the

proponents, these steps would modify

the registration process in ways that

would facilitate the printing of a

significant portion of the final

prospectus prior to pricing, and

therefore accommodate compliance

with T+3. Certain aspects of the Four

Firms Proposal also are proposed to

apply to offerings of investment

company shares. Comment is requested

on whether some or all of those aspects

of the Four Firms Proposal should apply

to investment companies.

1. Re-ordering of Prospectuses

The Four Firms Proposal first suggests

that the contents of prospectuses could

be re-ordered so that all portions likely

to be subject to change at the time of

pricing are placed together at the front.

The Four Firms Proposal indicates that

this change would expedite printing of

the prospectus because the bulk of it is

unlikely to change as a result of pricing

and, therefore, could be printed in

advance of pricing.

In practice, prospectus information

has been organized roughly in the order

in which the Commission forms set

forth the required items of disclosure.

While information contained in a

prospectus need not follow the order of

the items in the form,17 some

Commission rules currently require that

certain information is to be included in

a specified part of the prospectus, or in

a specified order.18

Under the proposal, the Commission

would not raise objections if a

prospectus is re-ordered to place the

sections likely to change at the front in

order to expedite the printing process,19

provided that the cover pages of the

prospectus continue to contain the

information currently specified by

Commission rules.20 In addition, any
10726 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules

21See proposed revisions to Item 503(c) of

Regulation S–K, 17 CFR 229.503(c) and Item 503(c)

of Regulation S–B, 17 CFR 228.503(c).

22See proposed revisions to Item 503(b) of

Regulation S–K, 17 CFR 229.503(b), Item 503(b) of

Regulation S–B, 17 CFR 228.503(b) and Securities

Act Industry Guide 4, 17 CFR 229.801(d).

23The requirements not proposed to be changed

are those set forth supra footnote 18 other than the

rules set forth supra footnotes 21 and 22.

24 17 CFR 230.430A.

25See Securities Act Release No. 6714 (May 27,

1987) [52 FR 21252].

26These increases are most common in the

context of an initial public offering, since the lack

of an existing market makes it difficult to estimate

market demand and the appropriate price for such

securities.

27See Section 6 of the Securities Act, 15 U.S.C.

77f, and Rule 413 under the Securities Act, 17 CFR

230.413.

28See proposed revisions to General Instructions

of Forms SB–1, SB–2, S–1, S–2, S–3, S–11, F–1, F–

2 and F–3.

29 Information regarding the effect of the increase

in offering size may be required in the new

registration statement and would not have been

contained in the earlier registration statement.

A similar short-form procedure was adopted by

the Commission for registration of additional

securities for employee benefit plans. See General

Instruction E to Form S–8.

30See proposed Rule 462(b), 17 CFR 230.462(b).

This registration statement would be required to be

filed within two business days of the pricing of the

securities registered on the earlier registration

statement. While indications of interest may exceed

the amount of securities registered in the earlier

registration statement, no offers would be permitted

prior to the filing of the registration statement with

respect to the additional 20% and no sales of the

additional 20% would be permitted prior to the

effectiveness thereof.

31See newly proposed Rule 430A(b), 17 CFR

230.430A(b).

32See proposed revisions to Rule 402 under the

Securities Act, 17 CFR 230.402. In addition, Items

601(b)(24) of Regulations S–K and S–B, 17 CFR

229.601(b)(24) and 17 CFR 228.601(b)(24), are

proposed to be revised so that a power of attorney

included in the earlier registration statement

relating to the offering may also relate to the shortform registration statement filed to register the

additional securities.

summary section, which logically can

appear only near the front of the

prospectus, and the discussion of risk

factors must remain in the forepart of

the prospectus, although those sections

may immediately follow a ‘‘pricing

information’’ section which would

include disclosure likely to be subject to

change at pricing, such as: use of

proceeds, the plan of distribution and

capitalization.21 Accordingly, certain

Commission rules that specify the

location of other information in the

forepart of the prospectus, or in a

specified order within the prospectus,

are proposed to be eliminated.22 No

revision to the remaining order and

location rules, which relate to specific

and limited classes of transactions, are

proposed at this time.23 Comment is

requested as to whether the Commission

should require that the summary and

risk factors disclosure immediately

follow the cover page of the prospectus.

In addition, should other rules that

would continue to specify order or

location also be revised to accommodate

expedited printing of prospectuses?

2. Extension of Pricing Period

Under Rule 430A under the Securities

Act,24 if a prospectus supplement

containing pricing and other

information omitted from a registration

statement is not filed by the later of five

business days after the effective date of

the registration statement or any posteffective amendment thereto, the

information omitted must be filed in a

post-effective amendment rather than

under Rule 424(b). Unlike a filing under

Rule 424(b), a post-effective amendment

must be declared effective prior to any

sale of the securities. The second

modification suggested by the Four

Firms Proposal is a revision to Rule

430A to extend, from five business days

to ten business days, the period during

which an offering in reliance on that

rule may be priced and a supplement

filed. According to the Four Firms

Proposal, issuers delay the time at

which they seek to have registration

statements effective, and therefore

printing of the prospectus, because they

have only five days thereafter in which

to price and file the required pricing

supplement. By extending the time in

which to file the pricing supplement,

the Commission would encourage

issuers to have their filings become

effective earlier, and consequently start

the printing earlier.

The principal purpose of the five

business day limitation was to ensure

that delays in pricing securities under

Rule 430A would not permit delayed

offerings to be made by persons that do

not meet the criteria for use of shelf

registration.25 An extension of the fiveday period would not appear to defeat

the purpose of that limitation. The

Commission therefore proposes to

extend the period during which the

pricing supplement may be filed from

five business days to ten business days

after the effective date of the registration

statement. Comment is requested as to

whether any problems could arise from

the extension, and whether such

extension would in fact encourage

earlier printing of all or a portion of the

prospectus. Comment also is requested

as to whether a longer period, such as

15, 25 or 30 business days, would

provide additional flexibility and

further expedite prospectus delivery for

purposes of complying with T+3.

3. Changes in Offering Size and

Estimated Price Range

The Four Firms Proposal also states

that delays in printing prospectuses in

430A offerings arise because a posteffective amendment must be filed if

there is a material decrease in the

amount of securities offered or the

pricing of the securities falls outside the

range estimated in the effective

registration statement. Printing and

sales are delayed until such amendment

is declared effective. Similarly, where

participants decide to increase the size

of the offering, a new registration

statement to register the additional

securities must be filed and declared

effective.26 The Four Firms Proposal

suggests that no filing with the

Commission be required if the size of

the offering is increased or decreased up

to 20% or the price deviates from the

estimated price range by up to 20%.

a. Increases in Offering Size. Where a

registrant wishes to offer and sell more

securities than were included in the

registration statement at the time it

became effective, the Securities Act

requires that it register the additional

securities.27 The Commission

understands that the determination of

offering size, particularly in certain

market climates, can change at the time

when prospectus printing is imminent.

In light of the timing difficulties

presented by that situation, the

Commission is proposing changes to

facilitate expedited registration in a

Rule 430A offering if it is done solely

for the purpose of increasing an offering

size by up to 20%.

Under the proposal, a short-form

version of such a registration statement

would be accepted.28 Such registration

would consist of: the facing page, a

statement incorporating the contents of

the earlier registration statement relating

to the offering, all required consents and

opinions, the signature page, and any

information required in the new

registration statement that is not in the

earlier registration statement.29 To

ensure that no delay would result from

Commission processing, such

registration statements would be made

effective automatically upon filing.30

Such a short-form registration statement

would be deemed to be a part of the

earlier registration statement relating to

the offering.31

To expedite preparation of such

registration statements, the Commission

also would provide that duplicated or

facsimile versions of manual signatures

could be included on the signature page

of such registration statements, rather

than the manual signatures currently

required.32 In addition, opinions and

consents required in such registration

statements could be incorporated by

reference to the extent that the opinions
Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules 10727

33See Rule 411(c) under the Securities Act, 17

CFR 230.411(c), proposed Rule 439(b) under the

Securities Act, 17 CFR 230.439(b), and proposed

changes to General Instructions of Forms SB–1, SB–

2, S–1, S–2, S–3, S–11, F–1, F–2 and F–3.

34See proposed changes to Rules 402 and 439

under the Securities Act, 17 CFR 230.402 and

230.439.

35See proposed revisions to Rule 457(o) under the

Securities Act, 17 CFR 230.457(o). Such flexibility

already is provided in connection with unallocated

shelf registration statements.

36 In most non-shelf offerings, such information

currently is required to be included on the cover

page of the registration statement. See, e.g., the

‘‘Calculation of Registration Fee’’ section in Form

S–1. The registrant would continue to be required

in Rule 430A offerings to specify in the prospectus,

however, the amount of securities offered and,

where the registrant is not a reporting company, a

bona fide estimate of the range of the maximum

offering price.

37See Securities Act Release No. 6964 (Oct. 22,

1992) [57 FR 48970] for a discussion of the

materiality standard as it applies to these changes.

38See proposed revision to Instruction to

Paragraph (a) of Rule 430A, 17 CFR 230.430A. As

proposed, a change or deviation beyond the 20%

threshold would continue to require a post-effective

amendment only if it materially changes the

previous disclosure.

39 Id.

40See Securities Act Rule 461(a), 17 CFR

230.461(a). The facsimile or duplicate version need

not be followed by transmission of the manually

signed version to the Commission.

41See Securities Act Rule 461(a), 17 CFR

230.461(a). The liability of persons who sign the

registration statement, the underwriters and others

under Section 11(a) of the Securities Act, 15 U.S.C.

§ 77k(a), is based upon the registration statement at

the time it becomes effective.

and consents contained in the earlier

effective registration statement were

drafted to apply to any subsequent

registration statement filed solely to

increase the offering up to the 20%

threshold.33 Where consents cannot be

incorporated, duplicated or facsimile

versions of manual signatures would be

accepted in the new consents required

to be filed.34 Comment is requested with

regard to whether some or all of these

changes to facilitate expedited

registration to increase a Rule 430A

offering should be extended to all

registered offerings.

The Commission also is proposing to

increase registrants’ flexibility with

respect to the amount of securities

registered in Rule 430A offerings and

thereby minimize the instances in

which an increase in offering size

results in the need to file a new

registration statement. Such offerings

would be permitted to be registered by

specifying only the title of the class of

securities to be registered and the

proposed maximum aggregate offering

price in the ‘‘Calculation of Registration

Fee’’ section.35 The amount of securities

to be registered and the proposed

maximum offering price per unit would

no longer be required to be set forth.36

Under the proposal, an issuer would

register a specified dollar amount of a

class of securities, such as $50 million

of common stock, and would not be

required to register more if the number

of shares to be offered was increased,

unless the aggregate amount of the

offering would exceed the total dollar

amount registered. If registrants register

a dollar amount greater than what is

used for the offering, Rule 429 under the

Securities Act could be used to save any

amount of the registration fee paid to

the Commission for the remaining dollar

amount. Under Rule 429, the registrant,

in a new registration statement filed in

the future for another offering of that

class of securities, could simply indicate

that part of the registration fee had been

paid previously in connection with the

earlier registration. Comment is

requested with regard to whether the

flexibility provided by specifying the

dollar amount of the class of securities

registered should be extended to all

registered offerings.

b. Changes in Offering Size; Deviation

from Price Range. The Commission also

is proposing to address the concerns

raised in the Four Firms Proposal with

respect to filings resulting from a 20%

decrease of the offering size or a 20%

deviation from the estimated price

range. Currently, a post-effective

amendment is not required to be filed

where there is a decrease in volume of

securities offered or a price chosen that

is outside the disclosed estimated price

range, unless the volume decrease or

price change would materially change

the disclosure included in the

registration statement at the time of

effectiveness.37

The proposal would provide that a

post-effective amendment need not be

filed if there is a decrease in the offering

size of up to 20% or a deviation in price

from the estimated price range of up to

20%.38 In addition, the proposal would

provide that, where an increase of up to

20% in the offering size would not

require additional securities to be

registered, such an increase also would

not result in the need to file a posteffective amendment.39 Comment is

requested with respect to whether lower

thresholds, such as 15%, or higher

thresholds, such as 25%, should be

used. Commenters also should consider

whether this proposal would facilitate

non-Rule 430A offerings and should be

extended to those offerings as well.

While the proposal contemplates that no

post-effective amendment need be filed,

issuers would continue to be

responsible for evaluating the effect of

such a volume change or price deviation

on the accuracy and completeness of

disclosure made to investors, including

disclosure regarding the use of offering

proceeds, dilution and debt coverage.

4. Immediate Takedowns from a Shelf

Registration

The Four Firms Proposal also requests

that the Commission permit immediate

takedowns after a shelf registration

statement becomes effective. Immediate

offerings from an effective shelf

registration statement currently are

permitted. At the time of effectiveness,

the shelf registration statement must

accurately reflect all information

known. If an offering of securities is

certain at the time the registration

statement becomes effective, the

relevant information (e.g., description of

securities, plan of distribution and use

of proceeds) must be disclosed and the

Rule 430A undertakings should be

included, if the issuer wants Rule 430A

pricing flexibility. Accordingly, no rule

amendments are required to address this

request.

5. Acceleration of Effectiveness

The Four Firms Proposal also

recommends that requests to accelerate

effectiveness of registration statements

be accepted by fax transmission. Rule

revisions are proposed to allow such

transmissions.40 The Four Firms

Proposal also suggests that the

Commission accept oral acceleration

requests. Rule revisions also are

proposed to permit oral requests for

acceleration to be made, provided that

a version of the registration statement

filed with the Commission is

accompanied by a letter indicating that

the registrant and the managing

underwriter may make oral requests for

acceleration and that they are aware of

their obligations under the Securities

Act.41 Comment is requested regarding

whether oral acceleration requests

present greater risks of being

transmitted by persons without the

authority to do so, or being transmitted

without the knowledge of all

participants in the offering. If so, should

written requests continue to be

required?

6. Four-Day Settlement Period

Finally, the Four Firms Proposal

suggests that Rule 15c6–1 be amended

to provide that, if the offering is priced

after the close of the market, payment of

funds and delivery of securities may

occur not later than the fourth business

day thereafter (‘‘T+4’’). When such

securities are priced late in the day, it

is difficult to print the final prospectus

for delivery by T+3. Further, the

majority of secondary trading in the

securities generally does not begin until
10728 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules

42See proposed Rule 15c6–1(e), 17 CFR

240.15c6–1(e).

43This provision will be available for firm

commitment offerings subject to a T+3 settlement

time frame under paragraph (a) of Rule 15c6–1, 17

CFR 240.15c6–1(a), and for firm commitment

offerings subject to a T+4 settlement time frame

under paragraph (d) of Rule 15c6–1, 17 CFR

240.15c6–1(d).

44Short-form registration is used herein to refer

to registration on Commission Forms S–3 or F–3.

45 ‘‘Preliminary prospectus’’ is used herein to

refer to either a preliminary prospectus used in

reliance on Rule 430, 17 CFR 230.430, or a

prospectus filed in accordance with Rule 430A(a),

17 CFR 230.430A(a), which omits specified pricerelated information.

46This price-related information may be omitted

from the registration statement at the time it is

declared effective pursuant to Rule 430A under the

Securities Act. The description of securities would

be made in accordance with Item 202 of Regulation

S–K, 17 CFR 229.202, or be a summary of such

information.

47The final prospectus filed with the Commission

would be the prospectus contained in the

registration statement at the time it becomes

effective, as modified subsequently by any

prospectus filed pursuant to Rule 424(b), 17 CFR

230.424(b).

48 ‘‘Shelf registration’’ is used herein to refer to

registration of a delayed offering pursuant to Rule

415(a)(1)(x) under the Securities Act, 17 CFR

230.415(a)(1)(x).

49 ‘‘Base prospectus’’ is used herein to refer to a

prospectus contained in a registration statement at

the time of effectiveness that omits information that

is not yet known concerning a delayed offering

pursuant to Rule 415(a)(1)(x), 17 CFR

230.415(a)(1)(x).

50For medium-term note programs, however, any

program supplement also would be delivered under

the SIA proposal.

51 17 CFR 230.434.

52The Commission provided analogous treatment

with respect to prospectus delivery in connection

with employee benefit plans when it adopted

revisions to Form S–8 in 1990. See Securities Act

Release No. 6867 (June 13, 1990) [55 FR 23909].

the opening of the market on the next

business day. Thus, for these offerings

there is less concern about an increase

in failed transactions from secondary

market trading or the need for special

systems to accommodate two days of

when-issued trading in order to effect

delivery of securities in secondary

market trades. The Four Firms are of the

view that only minor systems

modifications would be needed to

accommodate a T+4 cycle, so the

concerns previously expressed by the

industry about the costs of maintaining

systems for T+3 for all purposes except

firm commitment offerings is reduced

substantially.

The Commission is proposing to

revise Rule 15c6–1 to establish T+4 as

the standard settlement cycle for sales

in connection with firm commitment

offerings priced after the market closed

and invites comment as to whether such

a T+4 settlement period is workable.

Specifically, would this period create

confusion in the marketplace?

Some industry participants may

believe that a T+4 requirement for firm

commitment offerings is not sufficiently

flexible. As an alternative, the

Commission is publishing for comment

a provision that would permit the

settlement cycle for a firm commitment

offering to be set for any period equal

to or less than T+5. 42 Rule 15c6–1(a)

contains an override provision that

permits the parties to a contract to

establish an alternate settlement time

frame if expressly agreed to at the time

of the transaction. In the release

adopting the Rule 15c6–1, the

Commission stated that this provision

was not intended to permit brokerdealers to specify before execution of

specific trades that a group of trades

will settle in a time frame other than

T+3.

If a situation occurs that requires

more time for settlement of a firm

commitment offering, it may be onerous

for every broker-dealer in the offering to

expressly set an alternate time frame for

each individual trade. The Commission

invites comment as to whether it would

be appropriate to expand the override

provision to allow the managing

underwriter to establish T+3, T+4, or

T+5 as the settlement time frame for the

entire offering. 43 The underwriter

would be required to provide notice of

its intent to set an alternate time frame

by sending written notice to prospective

purchasers on or before the date the

securities are priced and by providing

notice of the alternate time frame to an

exchange where the securities are listed

or a registered securities association

through which quotations are

disseminated. Additionally, brokerdealers participating in the offering

would retain their ability to use the

specific trade override provision.

Commenters are requested to provide

comments on the benefits and

drawbacks to this approach, including

whether such an amendment would

create uncertainty in the marketplace.

What are the relative benefits and

drawbacks of the proposal establishing

T+4 as the standard settlement cycle for

offerings priced after the close of the

market and the proposal giving

underwriters the ability to select an

alternate trade date? Would adoption of

the first proposal make it unnecessary to

adopt the second proposal? Should T+3

or T+4 be the standard for offerings that

are priced after the close of the market?

B. The SIA Proposal and Related

Commission Proposals

In the other proposal received by the

Commission, the Securities Industry

Association has recommended that the

Commission adopt a rule allowing

prospectus information to be delivered

without the use of the traditional final

prospectus (hereinafter, the ‘‘SIA

Proposal’’). Where short-form

registration 44 is not used, the SIA

Proposal would provide that all

required prospectus information be

delivered to investors in the preliminary

prospectus traditionally disseminated

and, if necessary, a supplementing

memorandum. 45 This supplementing

memorandum would either set forth or

summarize: (i) previously undisclosed

information describing the registered

securities (other than certain pricerelated information contained in the

confirmation); 46 and (ii) previously

undisclosed actual or anticipated

changes between the preliminary

prospectus circulated to investors and

the final prospectus filed with the

Commission. 47

For securities offerings that use shortform registration, the SIA Proposal

contemplates different methods of

delivery depending upon whether or not

shelf registration is used. 48 For shelf

offerings, the SIA Proposal would

require delivery of the base

prospectus 49 contained in the

registration statement at the time it is

declared effective and an abbreviated

supplementing memorandum. 50 The

abbreviated supplementing

memorandum in that case would set

forth or summarize only a description of

the material changes in the registrant’s

affairs pursuant to Item 11 of Form S–

3 or Form F–3 (‘‘Item 11 information’’)

that have not been disclosed in its

Exchange Act reports. For non-shelf

offerings using short-form registration,

the SIA Proposal would require delivery

of only an abbreviated supplementing

memorandum describing Item 11

information. A preliminary prospectus

would be delivered only at the issuer’s

discretion. Supplementing memoranda

and abbreviated supplementing

memoranda used under the SIA

Proposal would be required to be filed

with the Commission within two

business days after first being sent to

investors.

The Commission’s proposal varies

from the rule proposed by the SIA. Like

the SIA Proposal, however, proposed

Rule 434 under the Securities Act 51

would permit issuers to convey

prospectus information in more than

one document and allow such

documents to be delivered to investors

at separate intervals and in varying

manners. 52

The rule would provide that, in the

aggregate, all required information be

disclosed to investors on a timely basis
Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules 10729

53The traditional final prospectus currently

reflects the information set forth in the registration

statement at the time of effectiveness, any posteffective amendment and the pricing supplement.

Post-effective amendments, however, are unlikely

to be filed unless the pricing date exceeds the five

business day limitation allowing for use of a pricing

supplement.

54Thus, investors that wish to acquire a

traditional final prospectus would have access to

one through the Commission, where the issuer

would continue to file all required prospectus

disclosure in the traditional, integrated format.

Comment is requested as to whether access to a

final prospectus in traditional, integrated format

should be ensured other than through the

Commission’s facilities, such as through the issuer

or underwriter(s)’ facilities. See also proposed Rule

434(c)(4), 17 CFR 230.434(c)(4), with regard to

short-form registrants.

55The delivered documents could not materially

differ from the prospectus disclosure in the

registration statement at the effective date, in any

post-effective amendment thereto and in the pricing

supplement.

56As under the current practice, the staff will

continue to consider whether recirculation of a

prospectus is needed when there are material

changes in disclosure arising after the prospectus

subject to completion has been given to investors.

See Rules 460 and 461(b) of Regulation S–K, 17 CFR

230.460 and 230.461(b).

(i.e., prior to or at the same time as a

confirmation is sent). Reliance upon this

rule would allow participants in a firm

commitment underwritten offering of

securities for cash (hereinafter, an

‘‘eligible offering’’) to forego last-minute

mass printing, shipping and mailing of

a traditional final prospectus, which is

generally undertaken only after pricing

of the offering. The proposed rule sets

forth two methods for delivering

prospectus information: one that is

available for eligible offerings not using

shelf registration, and one that is

available for eligible offerings using

short-form registration.

1. Prospectus Delivery Method for

Offerings Not Made Using Short-Form

Registration

In all eligible offerings not made using

short-form registration, persons could

comply with their prospectus delivery

obligations by delivering a preliminary

prospectus, a confirmation and, as

needed, a supplementing memorandum.

A supplementing memorandum would

be required to be delivered only if

information material to investors with

respect to the offering is not disclosed

in the preliminary prospectus or the

confirmation. This method of delivery

differs from traditional prospectus

delivery primarily in that it is

accomplished in more than one

document. Investors would be delivered

information comparable to that which is

currently required to be delivered.

a. Rule 430A Offerings. In Rule 430A

offerings, a preliminary prospectus

omitting the price-related information

specified in the rule would be delivered

in addition to a supplementing

memorandum that contains such pricerelated information (to the extent not

contained in the confirmation). The

supplementing memorandum also

would contain any other necessary

material disclosure missing from the

preliminary prospectus. Together, the

preliminary prospectus and the

supplementing memorandum would

contain information comparable to the

traditional final prospectus.53

b. Offerings Not Made in Reliance on

Rule 430A. In offerings not proceeding

under Rule 430A, a preliminary

prospectus containing price-related

information alone could be delivered to

investors. Unlike in Rule 430A

offerings, the price-related information

could be included in the preliminary

prospectus. If such information is

included in the preliminary prospectus,

a supplementing memorandum would

not have to be delivered unless material

changes or material additions to the

information in the preliminary

prospectus must be disclosed. In all

cases, the preliminary prospectus and

any supplementing memorandum,

together, would contain information

comparable to the traditional final

prospectus, which currently reflects the

information set forth in the registration

statement at the time it goes effective.

c. Use of Incremental Disclosure. As

the SIA Proposal notes, the use of a

preliminary prospectus and a separate

supplementing memorandum may not

be feasible in all offerings. Whether the

latter document, which is anticipated to

be brief, can convey clearly the missing

or changed information will depend

upon the nature and magnitude of the

disclosure differences between the

preliminary prospectus and the

prospectus contained in the effective

registration statement (as modified by

post-effective amendments). In some

cases, the disclosure that would have to

be contained in the supplementing

memorandum may not be able to be

described in isolation from other

disclosure in the preliminary

prospectus. Where disclosure in many

parts of the preliminary prospectus has

changed, participants may find the

option of preparing a supplementing

memorandum is not of great benefit.

Comment is requested as to whether

the proposal should be limited either

with respect to the amount of time that

could elapse between delivery of the

preliminary prospectus and the

supplementing memorandum, or with

respect to the magnitude of changes that

a supplementing memorandum could

contain. If the latter, how would the

acceptable magnitude be defined?

d. Filing and Review of Registration

Statements. Although the method of

delivering prospectus information

would change under the proposed rule,

neither the process of filing registration

statements and amendments thereto, nor

the Commission’s registration statement

review process, would be altered.54 The

proposed rule would require that the

preliminary prospectus and the

supplementing memorandum, taken

together, not materially differ from the

disclosure filed with the Commission in

connection with the registration

statement.55 This provision would

preserve the integrity of the

Commission’s review process and

ensure that the delivered prospectus

disclosure is comparable to that

contained in the registration statement.

Under the proposed rule, a

supplementing memorandum would be

filed with the Commission pursuant to

Rule 424(b)(1) under the Securities Act

within two business days after the

earlier of pricing and first use. Thus, the

Commission staff generally would not

review supplementing memoranda prior

to use.56 Comment is requested as to

whether the proposal should require

that the supplementing memorandum

be filed prior to use and, therefore, be

subject to staff review.

e. Comparison With SIA Proposal.

The proposed method of prospectus

delivery applicable to non-short form

offerings departs from the SIA Proposal

in one significant respect. While the SIA

Proposal contemplates that a

supplementing memorandum could

summarize previously undisclosed

information, the proposed rule would

require full disclosure of material

changes or material additions. Comment

is requested regarding whether a

summary version of material

information should be permitted under

the proposed rule.

2. Prospectus Delivery Method for

Offerings Using Short-Form Registration

As in the case of non-short-form

offerings, the proposed delivery method

for offerings using short-form

registration would allow the disclosure

to be contained in more than one

document delivered at different times.

In addition, delivery would have to

occur prior to or with a confirmation.

Unlike the proposed delivery method

for other offerings, however, the

proposal for offerings using short-form

registration relies upon delivery of

certain prospectus information by

publication with the Commission.

Currently, in recognition of the

market following that exists for issuers
10730 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules

57To be eligible to use short-form registration for

a primary offering, an issuer must have a public

float of $75 million and must have been reporting

with the Commission for one year. See General

Instructions I.A.3. and I.B.1. to Form S–3 and

General Instructions I.A.1. and I.B.1. to Form F–3.

58This disclosure would be a fair and accurate

summary of that which is required under Item 202

of Regulation S–K, 17 CFR 229.202.

59The abbreviated supplementing memorandum

would be required to be filed with the Commission

pursuant to Rule 424(b)(1) under the Securities Act,

17 CFR 230.424(b)(1) (or, if the disclosure

represents a fundamental change in the information

contained in the registration statement, in a posteffective amendment declared effective prior to the

time a confirmation is sent or given). Pursuant to

Rule 430A, the abbreviated supplementing

memorandum would be deemed to be a part of the

registration statement at the time it became

effective.

60The information currently required to be

physically delivered in a short-form final

prospectus would consist of disclosure required by

Items 501–510 and 202 of Regulation S–K, 17 CFR

229.502–229.510 and 229.202, as well as Item 11

information.

Section 5(b)(1) of the Securities Act, 15 U.S.C.

§ 77e(b)(1), prohibits transmission of any

prospectus relating to any security with respect to

which a registration statement has been filed unless

the prospectus meets the requirements of Section 10

of the Securities Act, 15 U.S.C. 77j.

61As proposed, an abbreviated supplementing

memorandum would be filed with the Commission

in accordance with Rule 424(b)(1), 17 CFR

230.424(b)(1), and would be deemed a part of the

registration statement pursuant to Rule 430A. If the

disclosure represents a fundamental change in the

information contained in the registration statement,

however, a post-effective amendment rather than a

filing pursuant to Rule 424(b)(1) would be required.

See proposed Rule 434(c)(3), 17 CFR 230.434(c)(3).

62The base prospectus omits information that is

not yet known with respect to the terms of a

specific securities offering. The omitted information

is included in the prospectus supplement filed after

the effective date of the registration statement. The

base prospectus and prospectus supplement, which

are physically delivered together, comprise the final

prospectus.

63See proposed Rule 424(e), 17 CFR 230.424(e).

Prospectus supplements for shelf offerings generally

are required to be filed with the Commission two

or more business days after the earlier of pricing or

first use. See Rule 424(b)(2), 17 CFR 230.424(b)(2).

64See proposed Rule 434(b) and (c), 17 CFR

230.434(b) and (c).

65These offerings are described in Rule

415(a)(1)(i) under the Securities Act, 17 CFR

230.415(a)(1)(i).

using short-form registration, physical

delivery of most issuer-specific

information is not required for offerings

by such persons.57 Instead, such

information is incorporated by reference

into the prospectus from the issuer’s

Exchange Act reports. Delivery of such

information is therefore accomplished

by publication of such information

through filing with the Commission.

Thus, the traditional final prospectus

that is physically delivered by shortform issuers contains primarily

‘‘offering-specific’’ information as to

which the efficient market theory

generally has not been applied,

including a description of: the terms of

the securities offered, risk factors

specific to the registered transaction, the

intended use of offering proceeds, and

the plan of distribution for the

securities. The balance between

information physically delivered to

investors and information published

would be altered by the proposed rule.

a. Short-Form, Non-Shelf Registration.

The proposed rule would permit

participants in non-shelf offerings using

short-form registration to comply with

their delivery obligations by distributing

a preliminary prospectus and an

abbreviated supplementing

memorandum. The abbreviated

supplementing memorandum would be

required to contain: (i) a fair and

accurate summary of the description of

securities; 58 and (ii) Item 11

information, to the extent not disclosed

in the preliminary prospectus or the

registrant’s Exchange Act reports.59

Under the proposed rule, it is likely

that the preliminary prospectus would

contain the bulk of offering-specific

disclosure that would have been

physically delivered in a traditional

final prospectus.60 Thus, offeringspecific information physically

delivered would continue to surpass

offering-specific information published

in those offerings. Where Rule 430A is

relied upon, certain price-related

information that may be excluded at

effectiveness also would not be in the

preliminary prospectus. Such

information generally would not be

included in the abbreviated

supplementing memorandum, but it

would be on file with the Commission

prior to the time confirmations are sent.

The price itself will be set forth in the

confirmation.

b. Short-Form Delayed Shelf

Registration. The proposed rule would

permit participants in delayed shelf

offerings using short-form registration to

comply with their delivery obligations

by distributing a base prospectus and an

abbreviated supplementing

memorandum. As in the case of nonshelf offerings, the abbreviated

supplementing memorandum would be

required to contain: (i) a fair and

accurate summary of the description of

securities; and (ii) Item 11 information,

to the extent not disclosed in the base

prospectus or the registrant’s Exchange

Act reports. 61

Traditionally, the final prospectus

delivered to investors in delayed shelf

offerings would include information set

forth in both the base prospectus and a

prospectus supplement.62 Information

in the prospectus supplement would no

longer be delivered physically to

investors, except to the extent it is

disclosed pursuant to the abbreviated

supplementing memorandum. For

example, use of proceeds, syndicate and

plan of distribution information and a

full description of securities need not be

included in the abbreviated

supplementing memorandum. The

proposal would require, however, that

the prospectus supplement in such

offerings be filed with the Commission

by the time any confirmation is sent or

given to investors.63 In addition, such

prospectus supplement would be

deemed a part of the registration

statement upon filing with the

Commission.

As proposed, Rule 434 would not

apply to offerings pursuant to the

Commission’s shelf registration rules

other than delayed shelf offerings made

by persons using short-form

registration.64 It appears that other types

of shelf offerings would not be

contemplated within the parameters of

firm commitment underwritten offerings

for cash. Comment is requested,

however, with respect to whether any

other type of shelf offerings, including

secondary offerings,65 could take place

in connection with a firm commitment

underwritten offering for cash. If so,

should the proposed rule be extended to

such offerings?

c. Variations from the SIA Proposal.

Under the SIA Proposal, in the case of

short-form delayed shelf offerings,

publication of prospectus information

would only occur after the time

confirmations had been sent, since the

prospectus supplement would not be

required to be filed with the

Commission until two business days

after the earlier of pricing or first use.

The proposed rule does not incorporate

this aspect of the SIA Proposal because

delaying the availability of disclosure to

a time after delivery of the confirmation

appears inconsistent with Sections 5(b)

and 2(10)(a) of the Securities Act and

may not be particularly useful to

investors.

For non-shelf offerings using shortform registration, the proposed rule also

diverges from the SIA Proposal in that

it would require delivery of a

preliminary prospectus, rather than just

an abbreviated supplementing

memorandum. Under the SIA Proposal,

the abbreviated supplementing

memorandum would include only a

summary of Item 11 information. Thus,

the SIA Proposal essentially would not

require physical delivery of offeringspecific information. The proposed rule

would require physical delivery of

certain offering-specific disclosure.

Comment is requested with respect to

whether the proposed rule strikes the
Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules 10731

66Offerings of novel or complex securities, even

when done through short-form registration, are

sometimes sold through use of a preliminary

prospectus.

67 17 CFR 240.15c2–8(b).

68Any person who is expected to receive a

confirmation must have been sent a preliminary

prospectus at least 48 hours prior to the sending of

the confirmation. This requirement is satisfied by

delivering a preliminary prospectus that is current

at the time of its delivery.

69 In a best efforts offering, the underwriter acts

as an agent for the issuer and agrees to use its best

efforts to sell the securities on behalf of the issuer.

70 ‘‘Asset-backed security’’ is defined for purposes

of this release the same way it is defined in General

Instruction I.B.5. of Form S–3: a security that is

primarily serviced by the cashflows of a discrete

pool of receivables or other financial assets, either

fixed or revolving, that by their terms convert into

cash within a finite time period plus any rights or

other assets designed to assure the servicing or

timely distribution of proceeds to the

securityholders.

appropriate balance between physical

delivery of prospectus information and

publication by filing. Should the full

description of securities required by

Item 202 of Regulation S–K be required

to be physically delivered? If so, would

such description cause the abbreviated

supplementing memorandum to become

so lengthy that the timing difficulties

associated with prospectus delivery

would not be surmounted? Should the

proposed rule require physical delivery

of other offering-specific information,

such as disclosure of risk factors?

Offerings registered through shortform registration currently proceed

frequently with delivery of only a final

prospectus, although a preliminary or

base prospectus is prepared for filing

with the Commission.66 Those offerings

could proceed under the proposed rule

only if a preliminary or base prospectus

is delivered. Although base

prospectuses are commonly prepared

well in advance of a takedown from the

delayed shelf, comment is requested

with respect to whether a preliminary

prospectus could be prepared and

delivered sufficiently in advance of

pricing in such offerings to warrant

adoption of the proposed rule as it

relates to non-shelf offerings made in

short-form registration. If not, what

alternative document should be allowed

to be used to convey the required

information? On the other hand,

commenters should address whether

physical delivery of all offering-specific

information should be required for

offerings using short-form registration.

3. Conforming Changes to Rule 15c2–8

Although the delivery of a prospectus

to investors in advance of the final

prospectus is not required by the

Securities Act, paragraph (b) of Rule

15c2–8 under the Exchange Act 67

requires broker-dealers, in the case of

certain initial public offerings, to deliver

a copy of the preliminary prospectus at

least 48 hours prior to the mailing of the

confirmation.68 Other provisions of Rule

15c2–8 govern the furnishing of the

prospectus to broker-dealers

participating in the offering to ensure

that they have the latest available

information when they solicit investors.

The Commission is proposing

amendments to Rule 15c2–8 to reflect

the provisions of proposed Rule 434 and

new means of disseminating

confirmations and prospectuses. The

proposed revisions would add new

paragraph (j) that states that, for

purposes of Rule 15c2–8, the terms

‘‘preliminary prospectus’’ and ‘‘final

prospectus’’ include the terms

‘‘prospectus subject to completion’’ and

‘‘Section 10(a) prospectus,’’

respectively, as such terms are used in

proposed Rule 434. Also, the proposals

substitute the term ‘‘sending’’ for the

term ‘‘mailing.’’ These proposed

revisions are not intended to make

substantive changes to Rule 15c2–8.

Commenters are requested to provide

their views on whether these proposals

are appropriate in light of proposed

Rule 434, and whether any other

changes to Rule 15c2–8 are necessary in

light of Securities Act rule revisions

proposed herein.

4. Scope of the Proposed Rule

a. Exchange Offers and Business

Combinations; Best Efforts Offerings.

Proposed Rule 434 extends only to

offerings where the sole consideration

given in exchange for securities is cash.

Offerings such as exchange offers and

business combinations would not be

included. In those offerings, the final

prospectus is traditionally used to begin

the process of soliciting votes or

consents to a transaction. Thus, the

logistical difficulties of prospectus

delivery intended to be minimized by

the proposal should not be associated

with those offerings.

The proposed rule also does not

extend to offerings that are made other

than on a firm commitment basis with

underwriters. The SIA Proposal would

cover agency transactions in securities

registered on a delayed shelf registration

statement. In a firm commitment

underwriting, the underwriter(s) agree

to purchase the securities from the

issuer for a fixed price and then resells

the securities to the public, thereby

assuming the risk of market fluctuations

in the price of securities. According to

the SIA Proposal, the prospectus

delivery pressures appear to be greatest

in such firm commitment offerings

where the underwriter must make

payment of its own funds to the issuer

on a specified date, whether or not its

customers have paid for the securities.

In contrast, in a best efforts offering,69

the broker-dealer is required to pay

customers’ funds promptly to the issuer

(or to a separate bank or escrow account

in the case of a contingency) upon

receipt. In that case, a broker-dealer

would not pay out funds that it has not

received, or use its own funds to pay for

securities that have not been sold.

Comment is requested as to whether

there are other types of offerings with

comparable timing pressures to which

the proposed rule ought to be expanded.

Should the proposal be extended to

some or all agency transactions in

delayed-shelf-registered securities? Are

such transactions subject to particular

timing pressures in connection with

settlement that are absent in best efforts

offerings? Are such transactions sold to

such a large number of investors that

mass printing and delivery is required?

b. Offerings of Asset-backed

Securities. The SIA Proposal

recommends including firm

commitment underwritten offerings of

asset-backed securities (‘‘ABS’’) within

the scope of the proposed rule. The

Commission, however, has determined

to exclude ABS offerings from proposed

Rule 434 for several reasons.70 First, it

appears that settlement in connection

with ABS offerings currently takes place

outside of the T+3 time frame, on

approximately a T+10 cycle, and is

likely to continue to do so. The existing

settlement schedule is the result

primarily of factors unique to these

offerings, which include: (i) the

distinctive structuring process for most

ABS offerings; (ii) the time needed for

identification of the specific pool of

collateral which will support the ABS;

and (iii) the necessity of assembling the

prospectus (or prospectus supplement),

which describes all material features of

the collateral and the transaction’s

structure, shortly before sale of the ABS.

Furthermore, concerns relating to a

bifurcated settlement cycle do not

appear to be a pressing problem in the

ABS market.

The SIA Proposal treats ABS offerings

the same as other offerings using shortform registration. Unlike other issuers

using short-form registration, however,

the special purpose ABS issuer is not

required to have a history of filing

Exchange Act reports to use such forms.

In fact, these special purpose issuers

typically are newly created with each

securities offering. Investors in ABS

offerings have recourse only to the

special purpose issuer’s assets as the
10732 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules

71While the sponsor/depositor associated with

the offering may be a seasoned, reporting company,

the reporting history of the sponsor/depositor

usually is not relevant because there is no recourse

to the sponsor/depositor.

72 15 U.S.C. § 80a–1 et seq.

73See the Four Firms letter, supra note 15.

source of payment on their ABS.71 The

Commission’s treatment of short-form

issuers under proposed Rule 434 is

predicated, in part, on the fact that

significant issuer-specific information is

available through Exchange Act reports.

There is no equivalent source of

information about the special-purpose

issuer in ABS offerings.

In addition, most ABS offerings are

registered as delayed offerings under the

Commission’s shelf registration rule.

While the base prospectus includes a

general description of the securities that

may be offered from time to time, the

terms of a specific ABS offering are

included in the prospectus supplement.

Such supplement details the

characteristics of specific pool assets

and the structure of the transaction, and

is of significant length and complexity.

The Commission’s proposed rule would

provide that only a summary of such

information be physically delivered in

short-form delayed shelf offerings. In

the case of ABS offerings, a summary of

such terms would not serve as an

adequate substitute for the complete

description in the prospectus

supplement.

Treating ABS offerings the same as

non-short-form offerings under the

proposed rule, and thereby requiring

use of a preliminary prospectus, also

would not be appropriate. Offerings of

ABS differ significantly from

conventional offerings of corporate

securities. The principal focus in ABS

offerings is on the structure of the

transaction and the nature of the

collateral generating the payment

streams supporting the ABS. As a

particular offering evolves, a variety of

structures may be considered as the

sponsor attempts to meet investors’

needs by adjusting the impact of, e.g.,

prepayment rate and cash flow variables

on particular classes within the

structure. The process of developing a

satisfactory structure typically extends

almost to the time when the security is

priced. Consequently, a preliminary

prospectus (or, in the case of a delayed

shelf offering, a preliminary prospectus

supplement) is virtually never utilized.

Finally, even in the rare instance

when an ABS offering may employ a

preliminary prospectus, the complexity

of the disclosure and the structural

modifications occurring during the

course of the offering do not lend

themselves to incremental delivery of

prospectus information. Nevertheless,

comment is requested regarding

whether any ABS offerings could be

accomplished within the strictures of

the proposed rule while maintaining the

present quality of prospectus disclosure.

c. Offerings of Structured Securities.

As in the case of asset-backed securities,

the SIA Proposal would extend relief to

structured securities. The Commission’s

proposed Rule 434, however, would

exclude offerings of such securities.

These securities usually have terms that

are highly complex, with many

employing one or more indices as a

basis for determining the issuer’s

payment obligations (e.g., coupon,

principal, redemption payments).

Structured securities often are designed

with specific market risks in mind, as

well as risks relating to the issuer.

Consequently, a structured security’s

value is derived not only from the

creditworthiness of its issuer, but also

from any underlying assets, indices,

interest rates or cash flow upon which

the security is predicated.

The incremental distribution of

information proposed under the rule,

when combined with the complex

nature of these securities, may result in

material disclosure not being readily

accessible to investors. Additionally,

issuers of securities with complex terms

or formulas for the calculation of

payment obligations may not be able to

develop a summary description (as

contemplated by the rule for short-form

offerings) that is an adequate substitute

for the complete description presently

delivered to investors. A complete

description of offering-specific

information is of particular importance

to investors in making an investment

decision, given the market risks

resulting from the structure of these

securities.

Comment is solicited regarding the

exclusion or inclusion of these

securities with respect to the proposed

rule. Comment is requested as to

whether the proposed incremental

delivery procedure would impede an

investor’s ability to consider and

evaluate material information about

structured securities. Can structured

securities be adequately summarized?

Also, are there additional concerns that

further warrant the exclusion of

structured securities? Comment also is

solicited regarding whether ‘‘structured

securities’’ as used in proposed Rule

434 should be defined. If so, how

should such securities be defined? For

example, should such definition

conform to the proposed definition in

Rule 15c6–1(c)(2) discussed below?

d. Investment Companies. The

proposed rule provides that it does not

apply to the offering of any security of

any company registered or required to

be registered under the Investment

Company Act of 1940 72 or any company

that is treated as a business

development company under that Act.

In making its proposal, the SIA did

not specifically address the applicability

to registered investment companies. The

Commission understands that open-end

investment company (mutual fund)

initial offerings typically do not raise

the prospectus delivery logistical

concerns that have led to these

proposals. Mutual fund shares are

normally offered on a continuous basis,

and a preliminary prospectus is not

generally printed. Moreover, the

Commission has concerns that separate

delivery of a document that

supplements and modifies a prospectus

may be inconsistent with efforts to

simplify investment company

prospectuses.

Comment is requested on whether

adoption of a T+3 settlement period will

raise prospectus delivery concerns with

respect to initial offerings of closed-end

funds and unit investment trusts.

Commenters favoring the application of

proposed Rule 434 to investment

companies should address the effects of

the proposal on retail investors’ ability

to understand their investment in these

types of companies, as well as the

specific investment company-related

rules that would require modification.

5. Feasibility of the Proposal

A number of concerns have been

raised about the feasibility of the SIA

Proposal for issuers and underwriters

and the utility of the disclosure to

investors.73 Comment is requested with

respect to each of the issues raised

under the following captions.

a. Investor Confusion and Resistance.

Investors may be obliged to read

multiple documents to ascertain the

required information about the

transaction and securities. While

prospectuses included in short-form

registrations currently are not selfcontained, given the incorporation by

reference of issuer-specific information,

would investors expect and require an

integrated disclosure document for

other offerings, e.g., initial public

offerings?

Because a supplementing

memorandum could reflect additions to,

or changes from, the disclosure

contained in a preliminary prospectus,

thereby modifying or superseding such

information, would investors be

confused and frustrated in attempting to

determine the important and relevant

information? Is this process further
Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules 10733

74 15 U.S.C. § 77d(3); 17 CFR 230.174.

75See letter from Joseph McLaughlin, supra

footnote 15, page 4.

76For purposes of Rule 15c6–1, a structured

security is proposed to be defined as a security

whose cash flow characteristics depend upon one

or more indices or that have imbedded forwards or

options or a security where an investor’s investment

return and the issuer’s payment obligations are

contingent on, or highly sensitive to, changes in the

value of underlying assets, indices, interest rates or

cash flows. See proposed Rule 15c6–1(c)(2), 17 CFR

240.15c6–1(c)(2).

exacerbated when a preliminary

prospectus is distributed before staff

comments on the document are resolved

and multiple changes to the document

are reflected in the supplementing

memorandum? Are concerns that

investors might not be shown all

changes made in response to staff

comments appropriate? Is the purported

function of the supplementing

memorandum inconsistent with its

anticipated brevity?

Investors also may be required to

examine multiple documents in order to

obtain price-related information.

Purchasers in secondary trades may

receive prospectus information that

does not disclose pricing information

included only in the confirmations in

connection with the primary offering.

Would such delivery be adequate with

respect to secondary market trading

transactions effected during the

prospectus delivery period specified in

Securities Act Section 4(3) and Rule 174

thereunder? 74

Investors who receive a

supplementing memorandum may not

have retained, or may have difficulty

locating, a copy of the preliminary

prospectus previously sent. Does this

possibility compromise the utility of

this proposed method for prospectus

delivery?

Is there a risk that investors who

receive more than one preliminary

prospectus will be unwilling to be

responsible for matching related

supplementing memoranda to such

preliminary prospectuses? How

significant are concerns relating to

investor confusion from mismatches or

the inability to match related

documents?

Will investors require the delivery of

a traditional final prospectus (even if

delivered after the confirmation) for

convenience of reference or for other

reasons?

b. Monitoring Delivery. Because

prospectus information would be

delivered incrementally, would

participants in the offering require redelivery of the preliminary prospectus

at the time any supplementing

memorandum is delivered? If so, to

what extent would this negate the

intended benefits of the modified

delivery method? Would new

recordkeeping burdens be incurred in

connection with recording the delivery

of the prospectus where delivery is

effected incrementally? Would other

variables exist under this delivery

scheme that would impose substantial

additional monitoring and

recordkeeping burdens on underwriters?

In the event an issuer delivers more

than one version of the preliminary

prospectus, would recordkeeping

regarding which investors received

which versions be burdensome?

Commenters also should consider

whether broker-dealers will be able to

comply with Rule 15c2–8 and, if not,

specifically discuss why compliance

would not be feasible.

c. Third Parties’ Opinions. Would

issuers’ and underwriters’ counsel have

difficulty giving opinions as to the

adequacy of disclosure in the

supplementing memorandum and

preliminary prospectus, particularly if

the supplementing memorandum only

summarizes certain changes fully set

forth in the filing declared effective?

Auditors also may be expected to

perform additional work. The additional

work required by third parties may

result in higher legal and accounting

costs to issuers. How likely is it that

disagreements, or the time required to

reach agreement, among the parties

about the content of a supplementing

memorandum will negate the purported

benefits of the proposal?

III. Revision of the Rule 15C6–1

Exemption

Because the difficulties associated

with prospectus delivery within a T+3

time frame were the principal reason for

the current exemption for firm

commitment offerings in Rule 15c6–1,

the Commission believes that the

necessity for such exemption should be

reconsidered in light of the proposals to

alleviate those timing difficulties. It is

consistent with the purposes of Rule

15c6–1 to establish T+3 as the standard

settlement cycle for firm commitment

offerings. It has been estimated that

approximately $20 billion in new issues

may be subject to settlement risk in any

given day.75 Rule 15c6–1 was intended

to reduce the credit and market risk

inherent in the settlement of securities

transactions. Thus, by including these

trades within a T+3 settlement time

frame, the goal of risk reduction will be

greatly enhanced. Moreover, by revising

the exemption, the Commission believes

that it will provide certainty to the

industry in the form of a written

standard.

As discussed above in connection

with the SIA Proposal, offerings of assetbacked securities raise concerns

different from other offerings, and it

does not appear that settlement of such

offerings typically will occur within a

T+3 time frame. The Commission

therefore preliminarily believes that it

would be appropriate to continue to

exempt from T+3 settlement sales of

asset-backed securities sold pursuant to

a firm commitment offering.

The release adopting Rule 15c6–1

includes an interpretation with respect

to the treatment of a type of assetbacked security, mortgage pass-throughs

in the to-be-announced market. With

respect to the purchase or sale of such

securities, the Commission interprets

Rule 15c6–1 to permit settlement to

occur within three days after the date a

specific pool of mortgages is identified

as collateral for the securities for

purposes of the sales agreement with the

customer. The Commission invites

comment as to whether a similar

interpretation should be applied to all

asset-backed securities. If such an

interpretation is provided, is an express

exemption still needed for offerings of

asset-backed securities?

While it appears that offerings of

structured securities 76 currently settle

within a T+5 settlement cycle, it may be

difficult to settle offerings of structured

securities by T+3 because of the time

difficulties associated with prospectus

delivery. As proposed, Rule 434 would

not apply to such securities. The

revisions contemplated in connection

with the Four Firms Proposal, however,

would provide the same benefits with

respect to prospectus delivery in

offerings of structured securities as to

other offerings. Although an exemption

for offerings of structured securities may

create problems in secondary market

trading as described above, the

Commission currently believes that it is

preferable that the exemption for firm

commitment offerings be continued for

offerings of structured securities

because of the possible difficulties of

settling such instruments within a T+3

time frame. The Commission invites

comment as to the feasibility of this

approach. In addition, the Commission

invites comment as to the proposed

Rule 15c6–1 definition of structured

securities. Does the definition provide

sufficient guidance as to the class of

securities included?

The Commission invites commenters

to address the merits of the proposed

Rule 15c6–1 amendments. Assuming

the adoption of the proposals relating to

prospectus delivery, should the

exemption for firm commitment
10734 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules

77 5 U.S.C. 603 (1988).

offerings be modified? Comment is

specifically requested on the treatment

of asset-backed securities and structured

securities and particularly whether any

exemption from the requirements of

Rule 15c6–1 is needed for offerings of

such securities. Would any exemption

be needed if managing underwriters are

given the ability to set alternate

settlement time frames as previously

discussed? Further, the Commission

also invites comment on whether

offerings of any other classes of

securities pursuant to a firm

commitment underwriting may need to

be exempted from the scope of Rule

15c6–1.

IV. Cost-Benefit Analysis

To evaluate fully the costs and

benefits associated with the proposals,

the Commission requests commenters to

provide views and empirical data as to

the costs and benefits associated with

such proposals. The proposals are

expected to benefit issuers and other

participants in certain offerings by

lowering the transaction costs

associated with the printing and

delivery of prospectuses, and by

providing them additional flexibility in

reacting to changes in market conditions

and in clearance and settlement of

trades. For example, mass printing and

delivery of a supplementing

memorandum or abbreviated

supplementing memorandum, due to its

expected brevity, would be expected to

consume far less time and be less

expensive for issuers to undertake than

would production of a traditional final

prospectus. Furthermore, the proposals

are not expected to diminish investor

protection; rather, investors would be

expected to benefit from the proposals

since offering participants would be

required to settle certain underwritten

offerings in T+3 as opposed to T+5.

V. Summary of Initial Regulatory

Flexibility Analysis

The Commission has prepared an

Initial Regulatory Flexibility Analysis

(‘‘IRFA’’), pursuant to the requirements

of the Regulatory Flexibility Act,77

regarding the proposed rule and

amendments to existing regulations. The

IRFA notes that the proposed rule and

amendments are intended to provide

entities with, and reflect the availability

of, greater flexibility and efficiency with

respect to the timing of printing and

delivery of prospectus information,

thereby facilitating compliance with

Rule 15c6–1 under the Exchange Act

and access to the public securities

markets. As discussed more fully in the

analysis, the proposed rule and

amendments to Securities Act

regulations are anticipated to decrease

costs associated with fulfilling entities’

prospectus delivery obligations under

the Securities Act. The proposed

amendments to Exchange Act

regulations are not anticipated to have

any significant economic impact on

entities. The proposed rule could

impose minimal additional reporting,

recordkeeping or compliance

requirements, while the proposed

amendments would not impose any new

reporting, recordkeeping or compliance

requirements on any entities. No

alternatives to the proposed rule and

amendments consistent with their

objectives and the Commission’s

statutory mandate were found.

It is expected that the overall effect of

the proposed rule and amendments will

provide entities increased efficiency in

raising capital from the public securities

markets. The proposal to provide for the

incremental delivery of prospectus

information, if adopted, would apply to

any entity engaged in a public

distribution with respect to an eligible

offering. The proposed amendments to

Securities Act regulations are intended

to streamline the registration process

and thereby facilitate compliance with

prospectus delivery within T+3 and

would apply to any entity engaged in a

public offering of securities. The

proposed amendments to Exchange Act

regulations are intended to reflect the

availability of expedited delivery of

prospectus information provided by the

proposed new rule and amendments to

the Securities Act regulations.

Commenters are encouraged to

comment on any aspect of the analysis.

Such comments will be considered in

the preparation of the Final Regulatory

Flexibility Analysis if the proposed rule

and amendments are adopted. A copy of

the IRFA may be obtained from Michael

Mitchell, Division of Corporation

Finance, Securities and Exchange

Commission, 450 Fifth Street, NW., Mail

Stop 3–3, Washington, DC 20549, (202)

942–2900.

VI. General Request for Comments

Any interested person wishing to

submit written comments on any aspect

of the proposed rule and amendments to

the rules and forms, as well as on other

matters that might have an impact on

the proposals contained herein, is

requested to do so. In addition, the

Commission requests comment on

whether any further changes to the rules

and forms are necessary or appropriate

to facilitate T+3 at this time. Comment

is requested specifically from investors,

broker-dealers, underwriters, issuers,

analysts and other persons that rely on

the information provided in the

prospectus supplement. Comments

should be submitted in triplicate to

Jonathan G. Katz, Secretary, U.S.

Securities and Exchange Commission,

450 Fifth Street, NW., Washington, DC

20549 and should refer to file number

S7–7–95.

VII. Statutory Bases

The proposed rule and the

amendments to the Commission’s rules

and forms under the Securities Act are

being proposed pursuant to sections 6,

7, 8, 10 and 19(a) of the Securities Act

of 1933, as amended. The proposed

revisions to the Commission’s rules

under the Exchange Act are being

proposed pursuant to sections 3, 10, 12,

15 and 23 of the Securities Exchange

Act of 1934, as amended.

List of Subjects in 17 CFR Parts 228,

229, 230, 239, and 240

Brokers, Investment companies,

Reporting and recordkeeping

requirements, Securities, Small

businesses.

Text of Proposed Amendments

In accordance with the foregoing,

Title 17, chapter II of the Code of

Federal Regulations is proposed to be

amended as follows:

PART 228—INTEGRATED

DISCLOSURE SYSTEM FOR SMALL

BUSINESS ISSUERS

1. The authority citation for part 228

continues to read as follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j,

77k, 77s, 77aa(25), 77aa(26), 77ddd, 77eee,

77ggg, 77hhh, 77jjj, 77nnn, 77sss, 78l, 78m,

78n, 78o, 78w, 78ll, 80a–8, 80a–29, 80a–30,

80a–37, 80b–11, unless otherwise noted.

2. By revising paragraph (b) and

paragraph (c) of § 228.503 to read as

follows:

§ 228.503 (Item 503) Summary Information

and Risk Factors.

* * * * *

(b) Address and telephone number.

Include in the prospectus the complete

mailing address and telephone number

of the small business issuer’s principal

executive offices.

(c) Risk factors. Small business

issuers discuss, on the page

immediately following the cover page of

the prospectus (or following the

summary, if included), or on the page

immediately following a section

containing pricing information where

such section immediately follows the

cover page (or following the summary,

if included), any factors that make the

offering speculative or risky. These
Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules 10735

factors may include no operating

history, no recent profit from

operations, poor financial position, the

kind of business in which the small

business issuer is engaged or proposes

to engage, or no market for the small

business issuer’s securities.

Instruction to Item 503(c). ‘‘Pricing

information’’ as used in paragraph (c)

includes disclosure required by Items 504

and 508 of Regulation S–B (§ 228.504 and

§ 228.508) and information regarding the

small business issuer’s capitalization.

3. By amending § 228.601 to revise the

third sentence of paragraph (b)(24) to

read as follows:

§ 228.601 (Item 601) Exhibits.

* * * * *

(b) * * *

(24) Power of attorney. * * * A power

of attorney that is filed with the

Commission shall relate to a specific

filing, an amendment thereto, or a

related registration statement that is to

be effective upon filing pursuant to Rule

462(b) under the Securities Act

(§ 230.462(b) of this chapter). * * *

* * * * *

PART 229—STANDARD

INSTRUCTIONS FOR FILING FORMS

UNDER SECURITIES ACT OF 1933,

SECURITIES EXCHANGE ACT OF 1934

AND ENERGY POLICY AND

CONSERVATION ACT OF 1975—

REGULATION S–K

4. The authority citation for part 229

continues to read in part as follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j,

77k, 77s, 77aa(25), 77aa(26), 77ddd, 77eee,

77ggg, 77hhh, 77iii, 77jjj, 77nnn, 77sss, 78c,

78i, 78j, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79e,

79n, 79t, 80a–8, 80a–29, 80a–30, 80a–37,

80b–11, unless otherwise noted.

* * * * *

5. By revising the last sentence of the

introductory text of paragraph (f) of

§ 229.502 to read as follows:

§ 229.502 (Item 502) Inside front and

outside back cover pages of prospectus.

* * * * *

(f) * * * Such disclosure need not be

included on the inside front cover page

of the prospectus, if it is included,

under appropriate caption, elsewhere in

the prospectus.

* * * * *

6. By revising paragraph (b) and

paragraph (c) of § 229.503 to read as

follows:

§ 229.503 (Item 503) Summary

information, risk factors and ratio of

earnings to fixed charges.

* * * * *

(b) Address and telephone number.

Registrants shall include in the

prospectus the complete mailing

address, including zip code, and the

telephone number, including area code,

of their principal executive offices.

(c) Risk factors. Registrants, where

appropriate, shall set forth, on the page

immediately following the cover page of

the prospectus (or following the

summary, if included), or on the page

immediately following a section

containing pricing information where

such section immediately follows the

cover page (or following the summary,

if included), under an appropriate

caption, a discussion of the principal

factors that make the offering

speculative or one of high risk; these

factors may be due, among other things,

to such matters as an absence of an

operating history of the registrant, an

absence of profitable operations in

recent periods, the financial position of

the registrant, the nature of the business

in which the registrant is engaged or

proposes to engage, or, if common

equity or securities convertible into or

exercisable for common equity are being

offered, the absence of a previous

market for the registrant’s common

equity.

Instruction to Item 503(c). ‘‘Pricing

information’’ as used in paragraph (c)

includes disclosure required by Items 504

and 508 of Regulation S–K (§ 229.504 and

§ 229.508) and information regarding the

registrant’s capitalization.

* * * * *

7. By amending § 229.601 to revise the

fourth sentence of paragraph (b)(24) to

read as follows:

§ 229.601 (Item 601) Exhibits.

* * * * *

(b) * * *

(24) Power of attorney. * * * A power

of attorney that is filed with the

Commission shall relate to a specific

filing, an amendment thereto, or a

related registration statement that is to

be effective upon filing pursuant to Rule

462(b) under the Securities Act

(§ 230.462(b) of this chapter). * * *

* * * * *

8. Guide 4 (referenced in § 229.801(d))

is amended by removing the first

sentence of the Guide.

Note: The text of Guide 4 does not and the

amendments will not appear in the Code of

Federal Regulations.

PART 230—GENERAL RULES AND

REGULATIONS, SECURITIES ACT OF

1933

9. The authority citation for part 230

continues to read in part as follows:

Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j,

77s, 77sss, 78c, 78l, 78m, 78n, 78o, 78w,

78ll(d), 79t, 80a–8, 80a–29, 80a–30, and 80a–

37, unless otherwise noted.

* * * * *

10. By amending § 230.402(a) to add

a sentence between the fourth and fifth

sentences to read as follows:

§ 230.402 Number of copies; binding;

signatures.

(a) * * * Registration statements filed

pursuant to Rule 462(b) under the Act

(§ 230.462(b)), however, may include

duplicated or facsimile versions of

manual signatures of persons required

to sign, and such signatures shall be

considered manual signatures for

purposes of the Act and rules and

regulations thereunder. * * *

* * * * *

11. By amending § 230.424 by

redesignating paragraphs (e) and (f),

respectively, as paragraphs (f) and (g)

and by adding paragraph (e) to read as

follows:

§ 230.424 Filing of prospectuses; number

of copies.

* * * * *

(e) Ten copies of each form of

prospectus which, but for the

application of Rule 434 under the Act

(§ 230.434) would be filed pursuant to

paragraphs (b)(2) or (b)(5) of this

section, shall be filed pursuant to this

paragraph with the Commission on or

prior to the date on which a

confirmation is sent or given.

* * * * *

12. By amending § 230.430A by

removing the word ‘‘five’’ and adding,

in each place it appears, the word ‘‘ten’’

in paragraph (a)(3); by adding a sentence

at the end of Instruction to paragraph

(a); by redesignating paragraphs (c), (d),

and (e) as paragraphs (d), (e), and (f) and

by adding paragraph (c) to read as

follows:

§ 230.430A Prospectus in a registration

statement at the time of effectiveness.

* * * * *

Instruction to paragraph (a): * * *

Notwithstanding the foregoing, any increase

or decrease in volume up to 20% or deviation

in the price range of up to 20% may be

reflected in the form of prospectus filed with

the Commission pursuant to Rule 424(b)(1)

(§ 230.424(b)(1)) or Rule 497(h)

(§ 230.497(h)), provided that in the case of a

volume increase no form of prospectus filed

pursuant to Rule 424(b)(1) (§ 230.424(b)(1))

may be used if the total dollar value of

securities offered exceeds that which was

registered.

* * * * *

(c) Where a registration statement is

filed to increase the amount of securities

in a Rule 430A (§ 230.430A) offering

and it is to be effective upon filing

pursuant to Rule 462(b) (§ 230.462(b)),
10736 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules

such registration statement upon its

effectiveness shall be deemed part of the

earlier filed registration statement with

respect to such offering.

* * * * *

13. By adding § 230.434 to read as

follows:

§ 230.434 Prospectus delivery

requirements in firm commitment

underwritten offerings of securities for

cash.

(a) Where securities, other than assetbacked securities and structured

securities, are offered for cash in a firm

commitment underwritten offering and

the conditions described in paragraph

(b) or paragraph (c) of this section are

satisfied:

(1) The prospectus subject to

completion and the supplementing

memorandum described in paragraphs

(b)(1) and (b)(2) of this section, taken

together, and the prospectus subject to

completion and the supplementing

memorandum described in paragraphs

(c)(1) and (c)(2) of this section, taken

together, shall constitute prospectuses

that meet the requirements of Section

10(a) of the Act (15 U.S.C. 77j(a)) for

purposes of Section 5(b)(2) and Section

2(10)(a) of the Act (15 U.S.C. 77e(b)(2)

and 77b(10)(a)); and

(2) Such Section 10(a) prospectuses

shall have:

(i) Been sent or given prior to or at the

same time that a confirmation is sent or

given for purposes of Section 2(10)(a) of

the Act; and

(ii) Accompanied or preceded the

transmission of the securities for

purposes of sale or for delivery after sale

for purposes of Section 5(b)(2) of the

Act.

(b) With respect to offerings of

securities (other than offerings pursuant

to Rule 415 under the Act (§ 230.415))

that are registered on any form other

than Form S–3 or Form F–3 (§§ 239.13

and 239.33 of this chapter) under the

Act the following conditions are

satisfied:

(1) A prospectus subject to

completion and any supplementing

memorandum described in paragraph

(b)(3) of this section are sent or given

prior to or at the same time with the

confirmation;

(2) Except for information omitted

from the prospectus in a registration

statement at the time of effectiveness in

accordance with Rule 430A

(§ 230.430A), such prospectus subject to

completion and supplementing

memorandum, together, are not

materially different from the prospectus

in the registration statement at the time

of its effectiveness or post-effective

amendment thereto at the time of its

effectiveness; and

(3) A supplementing memorandum

setting forth all information material to

investors with respect to the offering

that is not disclosed in the prospectus

subject to completion or the

confirmation is filed with the

Commission pursuant to Rule 424(b)(1)

under the Act (§ 230.424(b)(1)).

(c) With respect to offerings of

securities (other than offerings pursuant

to Rule 415(a)(1)(i)–(ix) and (xi)

(§ 230.415(a)(1)(i)–(ix) and (xi)) that are

registered on Form S–3 or Form F–3

(§§ 239.13 and 239.33 of this chapter)

the following conditions are satisfied:

(1) A prospectus subject to

completion and the abbreviated

supplementing memorandum described

in paragraph (c)(2) of this section are

sent or given prior to or at the same time

with the confirmation;

(2) The abbreviated supplementing

memorandum delivered to investors sets

forth:

(i) If not disclosed in the prospectus

subject to completion, a description of

securities required to be disclosed

pursuant to Item 202 of Regulation S–

K (17 CFR 229.202 of this chapter), or

a fair and accurate summary thereof;

and

(ii) If not disclosed in the registrant’s

Exchange Act reports or the prospectus

subject to completion, all material

changes in the registrant’s affairs

required to be disclosed pursuant to

Item 11 of Form S–3 or Form F–3

(§§ 239.13 and 239.33 of this chapter),

as applicable;

(3) The abbreviated supplementing

memorandum described in paragraph

(c)(2) of this section is filed with the

Commission pursuant to Rule 424(b)(1)

under the Act (§ 230.424(b)(1)) or, if the

disclosure represents a fundamental

change in the information set forth in

the prospectus filed as part of the

registration statement declared effective

or any post-effective amendment

thereto, is filed in a post-effective

amendment to the registration statement

that is declared effective prior to the

time any confirmation is sent or given;

(4) In an offering made pursuant to

Rule 415(a)(1)(x) under the Act

(§ 230.415(a)(1)(x)), a form of prospectus

is filed pursuant to Rule 424(e) under

the Act (§ 230.424(e)), and in an offering

not made pursuant to Rule 415(a)(1)(x)

under the Act (§ 230.415(a)(1)(x)), a

prospectus meeting the requirements of

Section 10(a) of the Act other than by

virtue of paragraph (a)(1) of this section

is filed with the Commission prior to

the effective date of the registration

statement; and

(d) The information contained in any

form of prospectus filed with the

Commission pursuant to Rule 424(e)

under the Act (§ 230.424(e)) shall be

deemed to be a part of the registration

statement as of the time such

information is filed with the

Commission.

(e) For purposes of this section, assetbacked securities shall mean assetbacked securities as defined in General

Instruction I.B.5 of Form S–3 (§ 239.13

of this chapter).

(f) For purposes of this section,

prospectus subject to completion shall

mean any prospectus that is either a

preliminary prospectus used in reliance

on Rule 430 (§ 230.430), a prospectus

filed in accordance with Rule 430A(a)

(§ 230.430A(a)), or a prospectus omitting

information that is not yet known

concerning a delayed offering pursuant

to Rule 415(a)(i)(x) under the Act

(§ 230.415(a)(1)(x)) that is contained in a

registration statement at the time of

effectiveness.

(g) Notwithstanding paragraphs (a)

through (f) of this section, this section

shall not apply to the offering of any

security of any company registered or

required to be registered under the

Investment Company Act of 1940 (15

U.S.C. 80a–1 et seq., as amended) or any

company that is exempt from the

requirement to register under that Act

through filing either a notification of

election or a notice of intent to file a

notification of election to be treated as

a business development company under

that Act.

14. By designating the existing text as

paragraph (a) and adding paragraph (b)

to § 230.439 to read as follows:

§ 230.439 Consent to use of material

incorporated by reference.

(a) * * *

(b) In a registration statement filed

pursuant to Rule 462(b) under the Act

(§ 230.462(b)), any required consent may

be incorporated by reference into the

registration statement from a previously

filed registration statement relating to

the offering, provided that the consent

contained in the previously filed

registration statement expressly

provides for such incorporation. Any

consent filed in a Rule 462(b)

(§ 230.462(b)) registration statement may

contain duplicated or facsimile versions

of required signatures, and such

signatures shall be considered manually

signed for purposes of the Act and the

rules thereunder.

15. By amending § 230.457 to revise

paragraph (o) to read as follows:

§ 230.457 Computation of fee.

* * * * *
Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules 10737

(o) Where an issuer is offering

securities pursuant to Rule 430A under

the Act (§ 230.430A) or where an issuer

eligible to use Form S–3 (§ 239.13 of this

chapter) is registering securities

pursuant to General Instruction I.B.1 or

I.B.2 to Form S–3 to be offered on a

delayed or continuous basis pursuant to

Rule 415(a)(1)(x) under the Act

(§ 230.415(a)(1)(x)), or pursuant to

General Instruction H. to Form S–4

(§ 239.25 of this chapter) in connection

with a business combination transaction

pursuant to Rule 415(a)(1)(viii) under

the Act (§ 230.415(a)(1)(viii)), the

registration fee may be calculated on the

basis of the maximum offering price of

all the securities listed in the

‘‘Calculation of Registration Fee’’ table.

16. By revising the first sentence of

paragraph (a) and adding two new

sentences immediately after the first

sentence of paragraph (a) to § 230.461 to

read as follows:

§ 230.461 Acceleration of effective date.

(a) Requests for acceleration of the

effective date of a registration statement

shall be made by the registrant and the

managing underwriters of the proposed

issue, or, if there are no managing

underwriters, by the principal

underwriters of the proposed issue, and

shall state the date upon which it is

desired that the registration statement

shall become effective. Such requests

may be made in writing or orally,

provided that, if oral requests are to be

made, a letter indicating that fact and

stating that the registrant and the

managing or principal underwriters are

aware of their obligations under the Act

must accompany the filing of the

registration statement with the

Commission. Written requests may be

sent to the Commission by facsimile

transmission. * * *

* * * * *

17. By revising the section heading,

designating the existing text as

paragraph (a), and adding paragraph (b)

to § 230.462 to read as follows:

§ 230.462 Effective date of certain

registration statements.

(a) * * *

(b) A registration statement and any

post-effective amendment thereto shall

become effective upon filing with the

Commission if:

(1) The registration statement is for

the sole purpose of registering

additional securities of the same

class(es) as were included in an earlier

registration statement for the same

offering filed pursuant to Rule 430A

under the Act (§ 230.430A) and declared

effective by the Commission;

(2) The new registration statement is

filed within two business days of the

pricing of the earlier registration

statement; and

(3) The new registration statement

registers no more than 20% of the

amount of such class(es) of securities

that were registered in the earlier

registration statement.

PART 239—FORMS PRESCRIBED

UNDER THE SECURITIES ACT OF 1933

18. The authority citation for part 239

continues to read in part as follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s,

77sss, 78c, 78l, 78m, 78n, 78o(d), 78w(a),

78ll(d), 79e, 79f, 79g, 79j, 79l, 79m, 79n, 79q,

79t, 80a–8, 80a–29, 80a–30 and 80a–37,

unless otherwise noted.

* * * * *

19. By amending Form SB–1

(referenced in § 239.9) by adding one

check box to the cover page

immediately before ‘‘Calculation of

Registration Fee,’’ by adding a Note to

appear immediately after the

Calculation of Registration Fee table,

and by adding paragraph H to General

Instructions to read as follows:

Note: The text of Form SB–1 does not and

the amendments will not appear in the Code

of Federal Regulations.

Form SB–1

Registration Statement Under the Securities

Act of 1933

* * * * *

If this Form is registering additional

securities pursuant to Rule 462(b) under the

Securities Act, please check the following

box and list the Securities Act registration

statement number of the earlier effective

registration statement for the same offering.

[ ] 33–llllll

* * * * *

Calculation of Registration Fee

* * * * *

Note: For offerings made pursuant to Rule

430A under the Securities Act, only the title

of the class of securities to be registered, the

proposed maximum aggregate offering price

for that class of securities and the amount of

registration fee need to appear in the

Calculation of Registration Fee table. Any

difference between the dollar amount of

securities registered for such offerings and

the dollar amount of securities sold may be

carried forward on a future registration

statement pursuant to Rule 429 under the

Securities Act.

* * * * *

General Instructions

* * * * *

H. Registration of Additional Securities

With respect to offerings registered

pursuant to Rule 462(b) under the Securities

Act, the registrant may file a registration

statement consisting only of the following:

the facing page; a statement that the contents

of the earlier registration statement,

identified by file number, are incorporated by

reference; required opinions and consents;

the signature page; and any information

required in the new registration statement

that is not in the earlier registration

statement. Any opinion or consent required

in such a registration statement may be

incorporated by reference from the earlier

registration statement with respect to the

offering, if: (i) Such opinion or consent

expressly provides for such incorporation;

and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule

411(c) and Rule 439(b) under the Securities

Act.

* * * * *

20. By amending Form SB–2

(referenced in § 239.10) by adding one

check box to the cover page

immediately before ‘‘Calculation of

Registration Fee,’’ by adding two

sentences to the end of the Note

following the Calculation of Registration

Fee table, and by adding paragraph C to

General Instructions to read as follows:

Note: The text of Form SB–2 does not and

the amendments will not appear in the Code

of Federal Regulations.

Form SB–2

Registration Statement Under the Securities

Act of 1933

* * * * *

If this Form is registering additional

securities pursuant to Rule 462(b) under the

Securities Act, please check the following

box and list the Securities Act registration

statement number of the earlier effective

registration statement for the same offering.

[ ] 33–llllll

* * * * *

Note: * * * For offerings made pursuant to

Rule 430A under the Securities Act, only the

title of the class of securities to be registered,

the proposed maximum aggregate offering

price for that class of securities and the

amount of registration fee need to appear in

the Calculation of Registration Fee table. Any

difference between the dollar amount of

securities registered for such offerings and

the dollar amount of securities sold may be

carried forward on a future registration

statement pursuant to Rule 429 under the

Securities Act.

* * * * *

General Instructions

* * * * *

C. Registration of Additional Securities

With respect to offerings registered

pursuant to Rule 462(b) under the Securities

Act, the registrant may file a registration

statement consisting only of the following:

the facing page; a statement that the contents

of the earlier registration statement,

identified by file number, are incorporated by

reference; required opinions and consents;

the signature page; and any information

required in the new registration statement

that is not in the earlier registration

statement. Any opinion or consent required
10738 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules

in such a registration statement may be

incorporated by reference from the earlier

registration statement with respect to the

offering, if: (i) Such opinion or consent

expressly provides for such incorporation;

and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule

411(c) and Rule 439(b) under the Securities

Act.

* * * * *

21. By amending Form S–1

(referenced in § 239.11) by adding one

check box to the cover page

immediately before ‘‘Calculation of

Registration Fee,’’ and by adding two

sentences to the end of the Note

following the Calculation of Registration

Fee table, and by adding paragraph V to

General Instructions to read as follows:

Note: The text of Form S–1 does not and

the amendments will not appear in the Code

of Federal Regulations.

Form S–1

Registration Statement Under the Securities

Act of 1933

* * * * *

If this Form is registering additional

securities pursuant to Rule 462(b) under the

Securities Act, please check the following

box and list the Securities Act registration

statement number of the earlier effective

registration statement for the same offering.

[ ] 33–llllll

* * * * *

Note: * * * For offerings made pursuant to

Rule 430A under the Securities Act, only the

title of the class of securities to be registered,

the proposed maximum aggregate offering

price for that class of securities and the

amount of registration fee need to appear in

the Calculation of Registration Fee table. Any

difference between the dollar amount of

securities registered for such offerings and

the dollar amount of securities sold may be

carried forward on a future registration

statement pursuant to Rule 429 under the

Securities Act.

General Instructions

* * * * *

V. Registration of Additional Securities

With respect to offerings registered

pursuant to Rule 462(b) under the Securities

Act, the registrant may file a registration

statement consisting only of the following:

the facing page; a statement that the contents

of the earlier registration statement,

identified by file number, are incorporated by

reference; required opinions and consents;

the signature page; and any information

required in the new registration statement

that is not in the earlier registration

statement. Any opinion or consent required

in such a registration statement may be

incorporated by reference from the earlier

registration statement with respect to the

offering, if: (i) Such opinion or consent

expressly provides for such incorporation;

and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule

411(c) and Rule 439(b) under the Securities

Act.

* * * * *

22. By amending Form S–2

(referenced in § 239.12) by adding one

check box to the cover page

immediately before ‘‘Calculation of

Registration Fee,’’ by adding two

sentences to the end of the Note

following the Calculation of Registration

Fee table, and by adding paragraph III

to General Instructions to read as

follows:

Note: The text of Form S–2 does not and

the amendments will not appear in the Code

of Federal Regulations.

Form S–2

Registration Statement Under the Securities

Act of 1933

* * * * *

If this Form is registering additional

securities pursuant to Rule 462(b) under the

Securities Act, please check the following

box and list the Securities Act registration

statement number of the earlier effective

registration statement for the same offering.

[ ] 33–llllll

* * * * *

Note: * * * For offerings made pursuant to

Rule 430A under the Securities Act, only the

title of the class of securities to be registered,

the proposed maximum aggregate offering

price for that class of securities and the

amount of registration fee need to appear in

the Calculation of Registration Fee table. Any

difference between the dollar amount of

securities registered for such offering and the

dollar amount of securities sold may be

carried forward on a future registration

statement pursuant to Rule 429 under the

Securities Act.

General Instructions

* * * * *

III. Registration of Additional Securities

With respect to offerings registered

pursuant to Rule 462(b) under the Securities

Act, the registrant may file a registration

statement consisting only of the following:

the facing page; a statement that the contents

of the earlier registration statement,

identified by file number, are incorporated by

reference; required opinions and consents;

the signature page; and any information

required in the new registration statement

that is not in the earlier registration

statement. Any opinion or consent required

in such a registration statement may be

incorporated by reference from the earlier

registration statement with respect to the

offering, if: (i) such opinion or consent

expressly provides for such incorporation;

and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule

411(c) and Rule 439(b) under the Securities

Act.

* * * * *

23. By amending Form S–3

(referenced in § 239.13) by adding one

check box to the cover page

immediately before ‘‘Calculation of

Registration Fee,’’ by adding two

sentences to the end of the Note

following the Calculation of Registration

Fee table, and by adding paragraph IV

to General Instructions to read as

follows:

Note: The text of Form S–3 does not and

the amendments will not appear in the Code

of Federal Regulations.

Form S–3

Registration Statement Under the Securities

Act of 1933

* * * * *

If this Form is registering additional

securities pursuant to Rule 462(b) under the

Securities Act, please check the following

box and list the Securities Act registration

statement number of the earlier effective

registration statement for the same offering.

[ ] 33–llllll

* * * * *

Note: * * * For offerings made pursuant to

Rule 430A under the Securities Act, only the

title of the class of securities to be registered,

the proposed maximum aggregate offering

price for that class of securities and the

amount of registration fee need to appear in

the Calculation of Registration Fee table. Any

difference between the dollar amount of

securities registered for such offerings and

the dollar amount of securities sold may be

carried forward on a future registration

statement pursuant to Rule 429 under the

Securities Act.

General Instructions

* * * * *

IV. Registration of Additional Securities

With respect to offerings registered

pursuant to Rule 462(b) under the Securities

Act, the registrant may file a registration

statement consisting only of the following:

the facing page; a statement that the contents

of the earlier registration statement,

identified by file number, are incorporated by

reference; required opinions and consents;

the signature page; and any information

required in the new registration statement

that is not in the earlier registration

statement. Any opinion or consent required

in such a registration statement may be

incorporated by reference from the earlier

registration statement with respect to the

offering, if: (i) such opinion or consent

expressly provides for such incorporation;

and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule

411(c) and Rule 439(b) under the Securities

Act.

* * * * *

24. By amending Form S–11

(referenced in § 239.18) by adding

paragraph G to General Instructions, by

adding one check box to the cover page

immediately before ‘‘Calculation of

Registration Fee’’ and by adding two

sentences to the end of the Note

following the Calculation of Registration

Fee table to read as follows:

Note: The text of Form S–11 does not and

the amendments will not appear in the Code

of Federal Regulations.
Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules 10739

Form S–11

For Registration Under the Securities Act of

1933 of Securities of Certain Real Estate

Companies

General Instructions

* * * * *

G. Registration of Additional Securities

With respect to offerings registered

pursuant to Rule 462(b) under the Securities

Act, the registrant may file a registration

statement consisting only of the following:

the facing page; a statement that the contents

of the earlier registration statement,

identified by file number, are incorporated by

reference; required opinions and consents;

the signature page; and any information

required in the new registration statement

that is not in the earlier registration

statement. Any opinion or consent required

in such a registration statement may be

incorporated by reference from the earlier

registration statement with respect to the

offering, if: (i) such opinion or consent

expressly provides for such incorporation;

and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule

411(c) and Rule 439(b) under the Securities

Act.

* * * * *

Form S–11

Registration Statement Under the Securities

Act of 1933

* * * * *

If this Form is registering additional

securities pursuant to Rule 462(b) under the

Securities Act, please check the following

box and list the Securities Act registration

statement number of the earlier effective

registration statement for the same offering.

[ ] 33–llllll

* * * * *

Note: * * * For offerings made pursuant to

Rule 430A under the Securities Act, only the

title of the class of securities to be registered,

the proposed maximum aggregate offering

price for that class of securities and the

amount of registration fee need to appear in

the Calculation of Registration Fee table. Any

difference between the dollar amount of

securities registered for such offerings and

the dollar amount of securities sold may be

carried forward on a future registration

statement pursuant to Rule 429 under the

Securities Act.

* * * * *

25. By amending Form F–1

(referenced in § 239.31) by adding one

check box to the cover page

immediately before ‘‘Calculation of

Registration Fee,’’ by adding two

sentences to the end of the Note

following the Calculation of Registration

Fee table, and by adding paragraph V to

General Instructions to read as follows:

Note: The text of Form F–1 does not and

the amendments will not appear in the Code

of Federal Regulations.

Form F–1

Registration Statement Under the Securities

Act of 1933

* * * * *

If this Form is registering additional

securities pursuant to Rule 462(b) under the

Securities Act, please check the following

box and list the Securities Act registration

statement number of the earlier effective

registration statement for the same offering.

[ ] 33–llllll

* * * * *

Note: * * * For offerings made pursuant to

Rule 430A under the Securities Act, only the

title of the class of securities to be registered,

the proposed maximum aggregate offering

price for that class of securities and the

amount of registration fee need to appear in

the Calculation of Registration Fee table. Any

difference between the dollar amount of

securities registered for such offerings and

the dollar amount of securities sold may be

carried forward on a future registration

statement pursuant to Rule 429 under the

Securities Act.

General Instructions

* * * * *

V. Registration of Additional Securities

With respect to offerings registered

pursuant to Rule 462(b) under the Securities

Act, the registrant may file a registration

statement consisting only of the following:

the facing page; a statement that the contents

of the earlier registration statement,

identified by file number, are incorporated by

reference; required opinions and consents;

the signature page; and any information

required in the new registration statement

that is not in the earlier registration

statement. Any opinion or consent required

in such a registration statement may be

incorporated by reference from the earlier

registration statement with respect to the

offering, if: (i) such opinion or consent

expressly provides for such incorporation;

and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule

411(c) and Rule 439(b) under the Securities

Act.

* * * * *

26. By amending Form F–2

(referenced in § 239.32) by adding one

check box to the cover page

immediately before ‘‘Calculation of

Registration Fee,’’ by adding two

sentences to the end of the Note

following the Calculation of Registration

Fee table, and by adding paragraph IV

to General Instructions to read as

follows:

Note: The text of Form F–2 does not and

the amendments will not appear in the Code

of Federal Regulations.

Form F–2

Registration Statement Under the Securities

Act of 1933

* * * * *

If this Form is registering additional

securities pursuant to Rule 462(b) under the

Securities Act, please check the following

box and list the Securities Act registration

statement number of the earlier effective

registration statement for the same offering.

[ ] 33–llllll

* * * * *

Note: * * * For offerings made pursuant to

Rule 430A under the Securities Act, only the

title of the class of securities to be registered,

the proposed maximum aggregate offering

price for that class of securities and the

amount of registration fee need to appear in

the Calculation of Registration Fee table. Any

difference between the dollar amount of

securities registered for such offerings and

the dollar amount of securities sold may be

carried forward on a future registration

statement pursuant to Rule 429 under the

Securities Act.

General Instructions

* * * * *

IV. Registration of Additional Securities

With respect to offerings registered

pursuant to Rule 462(b) under the Securities

Act, the registrant may file a registration

statement consisting only of the following:

the facing page; a statement that the contents

of the earlier registration statement,

identified by file number, are incorporated by

reference; required opinions and consents;

the signature page; and any information

required in the new registration statement

that is not in the earlier registration

statement. Any opinion or consent required

in such a registration statement may be

incorporated by reference from the earlier

registration statement with respect to the

offering, if: (i) such opinion or consent

expressly provides for such incorporation;

and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule

411(c) and Rule 439(b) under the Securities

Act.

* * * * *

27. By amending Form F–3

(referenced in § 239.33) by adding one

check box to the cover page

immediately before ‘‘Calculation of

Registration Fee,’’ by adding two

sentences to the end of the Note

following the Calculation of Registration

Fee table, and by adding paragraph IV

to General Instructions to read as

follows:

Note: The text of Form F–3 does not and

the amendments will not appear in the Code

of Federal Regulations.

Form F–3

Registration Statement Under the Securities

Act of 1933

* * * * *

If this Form is registering additional

securities pursuant to Rule 462(b) under the

Securities Act, please check the following

box and list the Securities Act registration

statement number of the earlier effective

registration statement for the same offering.

[ ] 33–llllll

* * * * *

Note: * * * For offerings made pursuant to

Rule 430A under the Securities Act, only the

title of the class of securities to be registered,
10740 Federal Register / Vol. 60, No. 38 / Monday, February 27, 1995 / Proposed Rules

the proposed maximum aggregate offering

price for that class of securities and the

amount of registration fee need to appear in

the Calculation of Registration Fee table. Any

difference between the dollar amount of

securities registered for such offerings and

the dollar amount of securities sold may be

carried forward on a future registration

statement pursuant to Rule 429 under the

Securities Act.

General Instructions

* * * * *

IV. Registration of Additional Securities

With respect to offerings registered

pursuant to Rule 462(b) under the Securities

Act, the registrant may file a registration

statement consisting only of the following:

the facing page; a statement that the contents

of the earlier registration statement,

identified by file number, are incorporated by

reference; required opinions and consents;

the signature page; and any information

required in the new registration statement

that is not in the earlier registration

statement. Any opinion or consent required

in such a registration statement may be

incorporated by reference from the earlier

registration statement with respect to the

offering, if: (i) such opinion or consent

expressly provides for such incorporation;

and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule

411(c) and Rule 439(b) under the Securities

Act.

* * * * *

PART 240—GENERAL RULES AND

REGULATIONS, SECURITIES

EXCHANGE ACT OF 1934

28. The authority citation for part 240

continues to read in part as follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j,

77s, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c,

78d, 78i, 78j, 78l, 78m, 78n, 78o, 78p, 78q,

78s, 78w, 78x, 78ll(d), 79q, 79t, 80a–20, 80a–

23, 80a–29, 80a–37, 80b–3, 80b–4 and 80b–

11, unless otherwise noted.

* * * * *

29. Section 240.15c2–8(b) is amended

by revising the phrase ‘‘mailing’’ to read

‘‘sending’’.

30. Section 240.15c2–8(c) is amended

by revising the phrase ‘‘mail’’ to read

‘‘send’’.

31. Section 240.15c2–8(d) is amended

by revising the phrase ‘‘mail’’ to read

‘‘send’’.

32. Section 240.15c2–8 is amended by

adding paragraph (j) to read as follows:

§ 240.15c2–8 Delivery of prospectus.

* * * * *

(j) For purposes of this section, the

term preliminary prospectus shall

include the term prospectus subject to

completion as used in 17 CFR

230.434(f), and the term final prospectus

shall include the term Section 10(a)

prospectus as used in 17 CFR 230.434(f).

33. Amend § 240.15c6–1 by revising

the phrase ‘‘paragraph (b)’’ contained in

paragraph (a) to read ‘‘paragraphs (b),

(d), and (e)’’; by revising the phrase

‘‘Paragraph (a)’’ contained in the

introductory text of paragraph (b) to

read ‘‘Paragraphs (a) and (d)’’; by

revising the phrase ‘‘the sale for cash of

securities’’ contained in paragraph (b)(2)

to read ‘‘the sale for cash of asset-backed

securities or structured securities’’; and

by adding paragraphs (c), (d), and (e) to

read as follows:

§ 240.15c6–1 Settlement cycle.

* * * * *

(c) For purposes of this section:

(1) Asset-backed security means an

asset-backed security as defined in

General Instruction I.B.5 of Form S–3

(§ 239.13 of this chapter); and

(2) Structured security means a

security whose cash flow characteristics

depend upon one or more indices or

that have imbedded forwards or options

or a security where an investor’s

investment return and the issuer’s

payment obligations are contingent on,

or highly sensitive to, changes in the

value of underlying assets, indices,

interest rates or cash flows.

(d) Paragraph (a) of this section shall

not apply to securities that are sold

pursuant to a firm commitment

underwritten offering registered under

the Securities Act of 1933 and that are

priced after 4:30 p.m. Eastern time on

the date such securities are priced,

provided that a broker or dealer shall

not effect or enter into a contract for the

purchase or sale of such securities that

provides for payment of funds and

delivery of securities later than the

fourth business day after the date of the

contract unless otherwise expressly

agreed to by the parties at the time of

the transaction.

(e) For purposes of paragraphs (a) and

(d) of this section, the parties to a

contract shall be deemed to have

expressly agreed to an alternate date for

payment of funds and delivery of

securities at the time of the transaction

for a contract for the sale for cash of

securities pursuant to a firm

commitment offering registered under

the Securities Act of 1933 if:

(1) The alternate date is no later than

the fifth business day after the date of

the contract;

(2) The managing underwriter has

selected such date for all securities sold

pursuant to such offering;

(3) Information disclosing the

alternate date is contained in a written

notice sent or given to all prospective

purchasers on or before the date the

securities which are sold pursuant to

such offering are priced;

(4) The managing underwriter

provides written notification to all

exchanges on which the securities are

listed and all registered securities

associations through which quotations

for such securities are disseminated

prior to the date the securities which are

sold pursuant to such offering are

priced; and

(5) The parties to the contract have

not expressly agreed to another date for

payment of funds and delivery of

securities at the time of the transaction.

Dated: February 21, 1995.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–4647 Filed 2–24–95; 8:45 am]

BILLING CODE 8010–01–P