[Title 17 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 1997 Edition]
[From the U.S. Government Printing Office]
17
Commodity and Securities Exchanges
[[Page i]]
PART 240 to END
Revised as of April 1, 1997
CONTAINING
A CODIFICATION OF DOCUMENTS
OF GENERAL APPLICABILITY
AND FUTURE EFFECT
AS OF APRIL 1, 1997
With Ancillaries
Published by
the Office of the Federal Register
National Archives and Records
Administration
as a Special Edition of
the Federal Register
[[Page ii]]
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1997
For sale by U.S. Government Printing Office
Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328
[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 17:
Chapter II--Securities and Exchange Commission (Continued) 3
Chapter IV--Department of the Treasury.................... 757
Finding Aids:
Table of CFR Titles and Chapters.......................... 829
Alphabetical List of Agencies Appearing in the CFR........ 845
Table of OMB Control Numbers.............................. 855
List of CFR Sections Affected.............................
861
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Cite this Code: CFR
To cite the regulations in this volume use title, part
and section number. Thus, 17 CFR 240.0-1 refers to
title 17, part 240, section 0-1.
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[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
regulation. Each title is divided into chapters which usually bear the
name of the issuing agency. Each chapter is further subdivided into
parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
volume.
LEGAL STATUS
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noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie
evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
The Code of Federal Regulations is kept up to date by the individual
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To determine whether a Code volume has been amended since its
revision date (in this case, April 1, 1997), consult the ``List of CFR
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative
List of Parts Affected,'' which appears in the Reader Aids section of
the daily Federal Register. These two lists will identify the Federal
Register page number of the latest amendment of any given rule.
EFFECTIVE AND EXPIRATION DATES
Each volume of the Code contains amendments published in the Federal
Register since the last revision of that volume of the Code. Source
citations for the regulations are referred to by volume number and page
number of the Federal Register and date of publication. Publication
dates and effective dates are usually not the same and care must be
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instances where the effective date is beyond the cut-off date for the
Code a note has been inserted to reflect the future effective date. In
those instances where a regulation published in the Federal Register
states a date certain for expiration, an appropriate note will be
inserted following the text.
OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires
Federal agencies to display an OMB control number with their information
collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
amendments to existing regulations in the CFR. These OMB numbers are
placed as close as possible to the applicable recordkeeping or reporting
requirements.
OBSOLETE PROVISIONS
Provisions that become obsolete before the revision date stated on
the cover of each volume are not carried. Code users may find the text
of provisions in effect on a given date in the past by using the
appropriate numerical list of sections affected. For the period before
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For
the period beginning January 1, 1986, a ``List of CFR Sections
Affected'' is published at the end of each CFR volume.
CFR INDEXES AND TABULAR GUIDES
A subject index to the Code of Federal Regulations is contained in a
separate volume, revised annually as of January 1, entitled CFR Index
and Finding Aids. This volume contains the Parallel Table of Statutory
Authorities and Agency Rules (Table I), and Acts Requiring Publication
in the Federal Register (Table II). A list of CFR titles, chapters, and
parts and an alphabetical list of agencies publishing in the CFR are
also included in this volume.
An index to the text of ``Title 3--The President'' is carried within
that volume.
The Federal Register Index is issued monthly in cumulative form.
This index is based on a consolidation of the ``Contents'' entries in
the daily Federal Register.
A List of CFR Sections Affected (LSA) is published monthly, keyed to
the revision dates of the 50 CFR titles.
REPUBLICATION OF MATERIAL
There are no restrictions on the republication of material appearing
in the Code of Federal Regulations.
INQUIRIES
For a legal interpretation or explanation of any regulation in this
volume, contact the issuing agency. The issuing agency's name appears at
the top of odd-numbered pages.
For inquiries concerning CFR reference assistance, call 202-523-5227
or write to the Director, Office of the Federal Register, National
Archives and Records Administration, Washington, DC 20408.
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Raymond A. Mosley,
Director,
Office of the Federal Register.
April 1, 1997.
[[Page vii]]
THIS TITLE
Title 17--Commodity and Securities Exchanges is composed of three
volumes. The first volume containing parts 1 to 199, comprises Chapter
I--Commodity Futures Trading Commission. The second volume contains
Chapter II--Securities and Exchange Commission, parts 200 to 239. The
third volume, comprising part 240 to end, contains the remaining
regulations of the Securities and Exchange Commission, and Chapter IV--
Department of the Treasury. The contents of these volumes represent all
current regulations issued by the Commodity Futures Trading Commission,
the Securities and Exchange Commission, and the Department of the
Treasury as of April 1, 1997.
The OMB control numbers for the Securities and Exchange Commission
appear in Sec. 200.800 of Chapter II. For the convenience of the user,
Sec. 200.800 is reprinted in the Finding Aids section of the volume
containing part 240 to end.
For this volume, Tracey L. Thompson was Chief Editor. The Code of
Federal Regulations publication program is under the direction of
Frances D. McDonald, assisted by Alomha S. Morris.
[[Page viii]]
[[Page 1]]
TITLE 17--COMMODITY AND SECURITIES EXCHANGES
(This book contains part 240 to end)
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Part
Chapter ii--Securities and Exchange Commission--(Continued). 240
Chapter iv--Department of the Treasury...................... 400
[[Page 3]]
CHAPTER II--SECURITIES AND EXCHANGE COMMISSION--Continued
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Part Page
240 General rules and regulations, Securities
Exchange Act of 1934.................... 5
241 Interpretative releases relating to the
Securities Exchange Act of 1934 and
general rules and regulations thereunder 433
242 Regulation M................................ 438
249 Forms, Securities Exchange Act of 1934...... 448
249a Forms, Securities Investor Protection Act of 1970 [Reserved]
249b Further forms, Securities Exchange Act of
1934.................................... 463
250 General rules and regulations, Public
Utility Holding Company Act of 1935..... 464
251 Interpretative releases relating to the
Public Utility Holding Company Act of
1935 and general rules and regulations
thereunder.............................. 508
256 Uniform system of accounts for mutual
service companies and subsidiary service
companies, Public Utility Holding
Company Act of 1935..................... 509
257 Preservation and destruction of records of
registered public utility holding
companies and of mutual and subsidiary
service companies....................... 527
259 Forms prescribed under the Public Utility
Holding Company Act of 1935............. 535
260 General rules and regulations, Trust
Indenture Act of 1939................... 539
261 Interpretative releases relating to the
Trust Indenture Act of 1939 and general
rules and regulations thereunder........ 556
269 Forms prescribed under the Trust Indenture
Act of 1939............................. 557
270 Rules and regulations, Investment Company
Act of 1940............................. 560
271 Interpretative releases relating to the
Investment Company Act of 1940 and
general rules and regulations thereunder 698
[[Page 4]]
274 Forms prescribed under the Investment
Company Act of 1940..................... 701
275 Rules and regulations, Investment Advisers
Act of 1940............................. 708
276 Interpretative releases relating to the
Investment Advisers Act of 1940 and
general rules and regulations thereunder 733
279 Forms prescribed under the Investment
Advisers Act of 1940.................... 734
281 Interpretative releases relating to
corporate reorganizations under Chapter
X of the Bankruptcy Act................. 736
285 Rules and regulations pursuant to section
15(a) of the Bretton Woods Agreements
Act..................................... 736
286 General rules and regulations pursuant to
section 11(a) of the Inter-American
Development Bank Act.................... 738
287 General rules and regulations pursuant to
section 11(a) of the Asian Development
Bank Act................................ 740
288 General rules and regulations pursuant to
section 9(a) of the African Development
Bank Act................................ 741
289 General rules and regulations pursuant to
section 13(a) of the International
Finance Corporation Act................. 743
290 General rules and regulations pursuant to
section 9(a) of the European Bank for
Reconstruction and Development Act...... 746
300 Rules of the Securities Investor Protection
Corporation............................. 748
301 Forms, Securities Investor Protection
Corporation............................. 754
[[Page 5]]
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934--Table of Contents
Subpart A--Rules and Regulations Under the Securities Exchange Act of
1934
Rules of General Application
Sec.
240.0-1 Definitions.
240.0-2 Business hours of the Commission.
240.0-3 Filing of material with the Commission.
240.0-4 Nondisclosure of information obtained in examinations and
investigations.
240.0-5 Reference to rule by obsolete designation.
240.0-6 Disclosure detrimental to the national defense or foreign
policy.
240.0-8 Application of rules to registered broker-dealers.
240.0-9 Payment of fees.
240.0-10 Small entities for purposes of the Regulatory Flexibility Act.
240.0-11 Filing fees for certain acquisitions, dispositions and similar
transactions.
Definition of ``Equity Security'' as Used in Sections 12(g) and 16
240.3a4-1 Associated persons of an issuer deemed not to be brokers.
240.3a11-1 Definition of the term ``equity security''.
Miscellaneous Exemptions
240.3a12-1 Exemption of certain mortgages and interests in mortgages.
240.3a12-2 [Reserved]
240.3a12-3 Exemption from sections 14(a), 14(b), 14(c), 14(f), and 16
for securities of certain foreign issuers.
240.3a12-4 Exemptions from sections 15(a) and 15(c)(3) for certain
mortgage securities.
240.3a12-5 Exemption of certain investment contract securities from
sections 7(c) and 11(d)(1).
240.3a12-6 Definition of ``common trust fund'' as used in section
3(a)(12) of the Act.
240.3a12-7 Exemption for certain derivative securities traded otherwise
than on a national securities exchange.
240.3a12-8 Exemption for designated foreign government securities for
purposes of futures trading.
240.3a12-9 Exemption of certain direct participation program securities
from the arranging provisions of sections 7(c) and 11(d)(1).
240.3a12-10 Exemption of certain securities issued by the Resolution
Funding Corporation.
240.3a12-11 Exemption from sections 8(a), 14(a), 14(b), and 14(c) for
debt securities listed on a national securities exchange.
240.3a40-1 Designation of financial responsibility rules.
240.3a43-1 Customer-related government securities activities incidental
to the futures-related business of a futures commission
merchant registered with the Commodity Futures Trading
Commission.
240.3a44-1 Proprietary government securities transactions incidental to
the futures-related business of a CFTC-regulated person.
240.3a51-1 Definition of ``penny stock''.
Definitions
240.3b-1 Definition of ``listed.''
240.3b-2 Definition of ``officer.''
240.3b-3 Definition of ``short sale.''
240.3b-4 Definition of ``foreign government,'' ``foreign issuer'' and
``foreign private issuer.''
240.3b-5 Non-exempt securities issued under governmental obligations.
240.3b-6 Liability for certain statements by issuers.
240-3b-7 Definition of ``executive officer.''
240.3b-8 Definitions of ``Qualified OTC Market Maker,'' ``Qualified
Third Market Maker'' and ``Qualified Block Positioner.''
240.3b-9 Definition of ``bank'' for purposes of section 3(a) (4) and
(5) of the Act.
240.3b-10 [Reserved]
240.3b-11 Definitions relating to limited partnership roll-up
transactions for purposes of sections 6(b)(9), 14(h) and
15A(b)(12)-(13).
Registration and Exemption of Exchanges
240.6a-1 Form of application and amendments.
240.6a-2 Periodic amendments to registration statements or exemption
statements of exchanges.
240.6a-3 Supplemental material.
240.7c2-1 [Reserved]
Hypothecation of Customers' Securities
240.8c-1 Hypothecation of customers' securities.
240.9b-1 Options disclosure document.
Short Sales
240.10a-1 Short sales.
240.10a-2 Requirements for covering purchases.
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Manipulative and Deceptive Devices and Contrivances
240.10b-1 Prohibition of use of manipulative or deceptive devices or
contrivances with respect to certain securities exempted from
registration.
240.10b-2 [Reserved]
240.10b-3 Employment of manipulative and deceptive devices by brokers
or dealers.
240.10b-4 [Reserved]
240.10b-5 Employment of manipulative and deceptive devices.
240.10b-6--8 [Reserved]
240.10b-9 Prohibited representations in connection with certain
offerings.
240.10b-10 Confirmation of transactions.
240.10b-13 Prohibiting other purchases during tender offer or exchange
offer.
240.10b-16 Disclosure of credit terms in margin transactions.
240.10b-17 Untimely announcements of record dates.
240.10b-18 Purchases of certain equity securities by the issuer and
others.
240.10b-21 [Reserved]
Reports Under Section 10A
240.10A-1 Notice to the Commission Pursuant to Section 10A of the Act.
Adoption of Floor Trading Regulation (Rule 11a-1)
240.11a-1 Regulation of floor trading.
240.11a1-1(T) Transactions yielding priority, parity, and precedence.
240.11a1-2 Transactions for certain accounts of associated persons of
members.
240.11a1-3(T) Bona fide hedge transactions in certain securities.
240.11a1-4(T) Bond transactions on national securities exchanges.
240.11a1-5 Transactions by registered competitive market makers and
registered equity market makers.
240.11a2-2(T) Transactions effected by exchange members through other
members.
Adoption of Regulation on Conduct of Specialists
240.11b-1 Regulation of specialists.
Exemption of Certain Securities From Section 11(d)(1)
240.11d1-1 Exemption of certain securities from section 11(d)(1).
240.11d1-2 Exemption from section 11(d)(1) for certain investment
company securities held by broker-dealers as collateral in
margin accounts.
Registration of Securities Information Processors
240.11Aa2-1 Designation of national market system securities.
240.11Aa3-1 Dissemination of transaction reports and last sale data
with respect to transactions in reported securities.
240.11Aa3-2 Filing and amendment of national market system plans.
240.11Ab2-1 Registration of securities information processors: Form of
application and amendments.
240.11Ac1-1 Dissemination of quotations.
240.11Ac1-2 Display of transaction reports, last sale data and
quotation information.
240.11Ac1-3 Customer account statements.
240.11Ac1-4 Display of customer limit orders.
Securities Exempted From Registration
240.12a-4 Exemption of certain warrants from section 12(a).
240.12a-5 Temporary exemption of substituted or additional securities.
240.12a-6 Exemption of Securities underlying certain options from
section 12(a).
240.12a-7 Exemption of stock contained in standardized market baskets
from section 12(a) of the Act.
Regulation 12B: Registration and Reporting
General
240.12b-1 Scope of regulation.
240.12b-2 Definitions.
240.12b-3 Title of securities.
240.12b-4 Supplemental information.
240.12b-5 Determination of affiliates of banks.
240.12b-6 When securities are deemed to be registered.
240.12b-7 [Reserved]
Formal Requirements
240.12b-10 Requirements as to proper form.
240.12b-11 Number of copies; signatures; binding.
240.12b-12 Requirements as to paper, printing and language.
240.12b-13 Preparation of statement or report.
240.12b-14 Riders; inserts.
240.12b-15 Amendments.
General Requirements as to Contents
240.12b-20 Additional information.
240.12b-21 Information unknown or not available.
240.12b-22 Disclaimer of control.
240.12b-23 Incorporation by reference.
240.12b-24 [Reserved]
240.12b-25 Notification of inability to timely file all or any required
portion of a Form 10-K, 10-KSB, 20-F, 11-K, N-SAR, Form 10-Q
or Form 10-QSB.
Exhibits
240.12b-30 Additional exhibits.
[[Page 7]]
240.12b-31 Omission of substantially identical documents.
240.12b-32 Incorporation of exhibits by reference.
240.12b-33 Annual reports to other Federal agencies.
Special Provisions
240.12b-35 [Reserved]
240.12b-36 Use of financial statements filed under other acts.
Certification by Exchanges
240.12d1-1 Registration effective as to class or series.
240.12d1-2 Effectiveness of registration.
240.12d1-3 Requirements as to certification.
240.12d1-4 Date of receipt of certification by Commission.
240.12d1-5 Operation of certification on subsequent amendments.
240.12d1-6 Withdrawal of certification.
Suspension of Trading, Withdrawal, and Striking From Listing and
Registration
240.12d2-1 Suspension of trading.
240.12d2-2 Removal from listing and registration.
Unlisted Trading
240.12f-1 Applications for permission to reinstate unlisted trading
privileges.
240.12f-2 Extending unlisted trading privileges to a security that is
the subject of an initial public offering.
240.12f-3 Termination or suspension of unlisted trading privileges.
240.12f-4 Exemption of securities admitted to unlisted trading
privileges from sections 13, 14, and 16.
240.12f-5 Exchange rules for securities to which unlisted trading
privileges are extended.
240.12f-6 [Reserved]
Extensions and Temporary Exemptions; Definitions
240.12g-1 Exemption from section 12(g).
240.12g-2 Securities deemed to be registered pursuant to section
12(g)(1) upon termination of exemption pursuant to section
12(g)(2) (A) or (B).
240.12g-3 Registration of securities of successor issuers.
240.12g3-2 Exemptions for American depositary receipts and certain
foreign securities.
240.12g-4 Certifications of termination of registration under section
12(g).
240.12g5-1 Definition of securities ``held of record''.
240.12g5-2 Definition of ``total assets''.
240.12h-1 Exemptions from registration under section 12(g) of the Act.
240.12h-2 [Reserved]
240.12h-3 Suspension of duty to file reports under section 15(d).
240.12h-4 Exemption from duty to file reports under section 15(d).
Regulation 13A: Reports of Issuers of Securities Registered Pursuant to
Section 12
Annual Reports
240.13a-1 Requirements of annual reports.
240.13a-2 Annual reports of predecessors.
240.13a-3 Reporting by Form 40-F registrant.
Other Reports
240.13a-10 Transition reports.
240.13a-11 Current reports on Form 8-K (Sec. 249.308 of this chapter).
240.13a-13 Quarterly reports on Form 10-Q and Form 10-QSB
(Sec. 249.308a and Sec. 249.308b of this chapter).
240.13a-16 Reports of foreign private issuers on Form 6-K (17 CFR
249.306).
240.13a-17 [Reserved]
Regulation 13b-2: Maintenance of Records and Preparation of Required
Reports
240.13b2-1 Falsification of accounting records.
240.13b2-2 Issuers representations in connection with the preparation
of required reports and documents.
Regulation 13D
240.13d-1 Filing of Schedules 13D and 13G.
240.13d-2 Filing of amendments to Schedules 13D or 13G.
240.13d-3 Determination of beneficial owner.
240.13d-4 Disclaimer of beneficial ownership.
240.13d-5 Acquisition of securities.
240.13d-6 Exemption of certain acquisitions.
240.13d-7 [Reserved]
240.13d-101 Schedule 13D--Information to be included in statements
filed pursuant to Sec. 240.13d-1(a) and amendments thereto
filed pursuant to Sec. 240.13d-2(a).
240.13d-102 Schedule 13G--Information to be included in statements
filed pursuant to Sec. 240.13d-1(b) and (c) and amendments
thereto filed pursuant to Sec. 240.13d-2(b).
240.13e-1 Purchase of securities by issuer thereof.
240.13e-2 [Reserved]
240.13e-3 Going private transactions by certain issuers or their
affiliates.
240.13e-4 Tender offers by issuers.
240.13e-100 Schedule 13E-3, Transaction statement pursuant to section
13(e) of the Securities Exchange Act of 1934 and rule 13e-3
(Sec. 240.13e-3) thereunder.
240.13e-101 Schedule 13E-4. Tender offer statement pursuant to section
13(e)(1) of the Securities Exchange Act of 1934 and
Sec. 240.13e-4 thereunder.
[[Page 8]]
240.13e-102 Schedule 13E-4F. Tender offer statement pursuant to section
13(e) (1) of the Securities Exchange Act of 1934 and
Sec. 240.13e-4 thereunder.
240.13f-1 Reporting by institutional investment managers of information
with respect to accounts over which they exercise investment
discretion.
240.13f-2(T) EDGAR filing of Form 13F reports by institutional money
managers.
Regulation 14A: Solicitations of Proxies
240.14a-1 Definitions.
240.14a-2 Solicitations to which Sec. 240.14a-3 to Sec. 240.14a-15
apply.
240.14a-3 Information to be furnished to security holders.
240.14a-4 Requirements as to proxy.
240.14a-5 Presentation of information in proxy statement.
240.14a-6 Filing requirements.
240.14a-7 Obligations of registrants to provide a list of, or mail
soliciting material to, security holders.
240.14a-8 Proposals of security holders.
240.14a-9 False or misleading statements.
240.14a-10 Prohibition of certain solicitations.
240.14a-11 Special provisions applicable to election contests.
240.14a-12 Solicitation prior to furnishing required proxy statement.
240.14a-13 Obligation of registrants in communicating with beneficial
owners.
240.14a-14 Modified or superseded documents.
240.14a-15 Differential and contingent compensation in connection with
roll-up transactions.
240.14a-101 Schedule 14A. Information required in proxy statement.
240.14a-102 [Reserved]
240.14a-103 Notice of Exempt Solicitation. Information to be included
in statements submitted by or on behalf of a person pursuant
to Sec. 240.14a-6(g).
240.14a-104 Notice of Exempt Preliminary Roll-up Communication.
Information regarding ownership interests and any potential
conflicts of interest to be included in statements submitted
by or on behalf of a person pursuant to Sec. 240.14a-2(b)(4)
and Sec. 240.14a-6(n).
240.14b-1 Obligation of registered brokers and dealers in connection
with the prompt forwarding of certain communications to
beneficial owners.
240.14b-2 Obligation of banks, associations and other entities that
exercise fiduciary powers in connection with the prompt
forwarding of certain communications to beneficial owners.
Regulation 14C: Distribution of Information Pursuant to Section 14(c)
240.14c-1 Definitions.
240.14c-2 Distribution of information statement.
240.14c-3 Annual report to be furnished security holders.
240.14c-4 Presentation of information in information statement.
240.14c-5 Filing requirements.
240.14c-6 False or misleading statements.
240.14c-7 Providing copies of material for certain beneficial owners.
240.14c-101 Schedule 14C. Information required in information
statement.
Regulation 14D
240.14d-1 Scope of and definitions applicable to Regulations 14D and
14E.
240.14d-2 Date of commencement of a tender offer.
240.14d-3 Filing and transmission of tender offer statement.
240.14d-4 Dissemination of certain tender offers.
240.14d-5 Dissemination of certain tender offers by the use of
stockholder lists and security position listings.
240.14d-6 Disclosure requirements with respect to tender offers.
240.14d-7 Additional withdrawal rights.
240.14d-8 Exemption from statutory pro rata requirements.
240.14d-9 Solicitation/recommendation statements with respect to
certain tender offers.
240.14d-10 Equal treatment of security holders.
240.14d-100 Schedule 14D-1. Tender offer statement pursuant to section
14(d)(1) of the Securities Exchange Act of 1934.
240.14d-101 Schedule 14D-9.
240.14d-102 Schedule 14D-1F. Tender offer statement pursuant to rule
14d-1(b) under the Securities Exchange Act of 1934.
240.14d-103 Schedule 14D-9F. Solicitation/recommendation statement
pursuant to section 14(d)(4) of the Securities Exchange Act of
1934 and rules 14d-1(b) and 14e-2(c) thereunder.
240.14e-1 Unlawful tender offer practices.
240.14e-2 Position of subject company with respect to a tender offer.
240.14e-3 Transactions in securities on the basis of material,
nonpublic information in the context of tender offers.
240.14e-4 Prohibited transactions in connection with partial tender
offers.
240.14e-6 Repurchase offers by certain closed-end registered investment
companies.
240.14e-7 Unlawful tender offer practices in connection with roll-ups.
240.14f-1 Change in majority of directors.
[[Page 9]]
Exemption of Certain Securities From Section 15(a)
240.15a-2 Exemption of certain securities of cooperative apartment
houses from section 15(a).
240.15a-3 [Reserved]
240.15a-4 Forty-five day exemption from registration for certain
members of national securities exchanges.
240.15a-5 Exemption of certain nonbank lenders.
Registration of Brokers and Dealers
240.15a-6 Exemption of certain foreign brokers or dealers.
240.15b1-1 Application for registration of brokers or dealers.
240.15b1-2 [Reserved]
240.15b1-3 Registration of successor to registered broker or dealer.
240.15b1-4 Registration of fiduciaries.
240.15b1-5 Consent to service of process to be furnished by nonresident
brokers or dealers and by nonresident general partners or
managing agents of brokers or dealers.
240.15b2-2 Inspection of newly registered brokers and dealers.
240.15b3-1 Amendments to application.
240.15b5-1 Extension of registration for purposes of the Securities
Investor Protection Act of 1970 after cancellation or
revocation.
240.15b6-1 Withdrawal from registration.
240.15b7-1 Compliance with qualification requirements of self-
regulatory organizations.
240.15b9-1 Exemption for certain exchange members.
Rules Relating to Over-the-Counter Markets
240.15c1-1 Definitions.
240.15c1-2 Fraud and misrepresentation.
240.15c1-3 Misrepresentation by brokers, dealers and municipal
securities as to registration.
240.15c1-4 [Reserved]
240.15c1-5 Disclosure of control.
240.15c1-6 Disclosure of interest in distribution.
240.15c1-7 Discretionary accounts.
240.15c1-8 Sales at the market.
240.15c1-9 Use of pro forma balance sheets.
240.15c2-1 Hypothecation of customers' securities.
240.15c2-3 [Reserved]
240.15c2-4 Transmission or maintenance of payments received in
connection with underwritings.
240.15c2-5 Disclosure and other requirements when extending or
arranging credit in certain transactions.
240.15c2-6 [Reserved]
240.15c2-7 Identification of quotations.
240.15c2-8 Delivery of prospectus.
240.15c2-11 Initiation or resumption of quotations without specific
information.
240.15c2-12 Municipal securities disclosure.
240.15c3-1 Net capital requirements for brokers or dealers.
240.15c3-1a Options (Appendix A to 17 CFR 240.15c3-1).
240.15c3-1b Adjustments to net worth and aggregate indebtedness for
certain commodities transactions (Appendix B to 17 CFR
240.15c3-1).
240.15c3-1c Consolidated Computations of Net Capital and Aggregate
Indebtedness for Certain Subsidiaries and Affiliates (Appendix
C to 17 CFR 240.15c3-1).
240.15c3-1d Satisfactory Subordination Agreements (Appendix D to 17 CFR
240.15c3-1).
240.15c3-1e Temporary Minimum Requirements (Appendix E to 17 CFR
240.15c3-1e).
240.15c3-2 Customers' free credit balances.
240.15c3-3 Customer protection--reserves and custody of securities.
240.15c3-3a Exhibit A--formula for determination reserve requirement of
brokers and dealers under Sec. 240.15c3-3.
240.15c6-1 Settlement cycle.
Regulation 15D: Reports of Registrants Under the Securities Act of 1933
Annual Reports
240.15d-1 Requirement of annual reports.
240.15d-2 Special financial report.
240.15d-3 Reports for depository shares registered on Form F-6.
240.15d-4 Reporting by Form 40-F Registrants.
240.15d-5 Reporting by successor issuers.
240.15d-6 Suspension of duty to file reports.
Other Reports
240.15d-10 Transition reports.
240.15d-11 Current reports on Form 8-K (Sec. 249.308 of this chapter).
240.15d-13 Quarterly reports on Form 10-Q and Form 10-QSB
(Sec. 249.308a and Sec. 249.308b of this chapter).
240.15d-16 Reports of foreign private issuers on Form 6-K (17 CFR
249.306).
240.15d-17 [Reserved]
Exemption of Certain Issuers From Section 15(d) of the Act
240.15d-21 Reports for employee stock purchase, savings and similar
plans.
240.15g-1 Exemptions for certain transactions.
240.15g-2 Risk disclosure document relating to the penny stock market.
240.15g-3 Broker or dealer disclosure of quotations and other
information relating to the penny stock market.
240.15g-4 Disclosure of compensation to brokers or dealers.
[[Page 10]]
240.15g-5 Disclosure of compensation of associated persons in
connection with penny stock transactions.
240.15g-6 Account statements for penny stock customers.
240.15g-8 Sales of escrowed securities of blank check companies.
240.15g-9 Sales practice requirements for certain low-priced
securities.
240.15g-100 Schedule 15G--Information to be included in the document
distributed pursuant to 17 CFR 240.15g-2.
National and Affiliated Securities Associations
240.15Aa-1 Registration of a national or an affiliated securities
association.
240.15Aj-1 Amendments and supplements to registration statements of
securities associations.
240.15Al2-1 [Reserved]
240.15Ba2-1 Application for registration of municipal securities
dealers which are banks or separately identifiable departments
or divisions of banks.
240.15Ba2-2 Application for registration of non-bank municipal
securities dealers whose business is exclusively intrastate.
240.15Ba2-4 Registration of successor to registered municipal
securities dealer.
240.15Ba2-5 Registration of fiduciaries.
240.15Ba2-6 [Reserved]
240.15Bc3-1 Withdrawal from registration of municipal securities
dealers.
240.15Bc7-1 Availability of examination reports.
Registration of Government Securities Brokers and Government Securities
Dealers
240.15Ca1-1 Notice of Government securities broker-dealer activities.
240.15Ca2-1 Application for registration as a government securities
broker or government securities dealer.
240.15Ca2-2 [Reserved]
240.15Ca2-3 Registration of successor to registered government
securities broker or government securities dealer.
240.15Ca2-4 Registration of fiduciaries.
240.15Ca2-5 Consent to service of process to be furnished by non-
resident government securities brokers or government
securities dealers and by non-resident general partners or
managing agents of government securities brokers or government
securities dealers.
240.15Cc1-1 Withdrawal from registration of government securities
brokers or government securities dealers.
Reports of Directors, Officers, and Principal Shareholders
240.16a-1 Definition of Terms.
240.16a-2 Persons and transactions subject to section 16.
240.16a-3 Reporting transactions and holdings.
240.16a-4 Derivative securities.
240.16a-5 Odd-lot dealers.
240.16a-6 Small acquisitions.
240.16a-7 Transactions effected in connection with a distribution.
240.16a-8 Trusts.
240.16a-9 Stock splits, stock dividends, and pro rata rights.
240.16a-10 Exemptions under section 16(a).
240.16a-11 Dividend or interest reinvestment plans.
240.16a-12 Domestic relations orders.
240.16a-13 Change in form of beneficial ownership.
Exemption of Certain Transactions From Section 16(b)
240.16b-1 Transactions approved by a regulatory authority.
240.16b-2 [Reserved]
240.16b-3 Transactions between an issuer and its officers or directors.
240.16b-4 [Reserved]
240.16b-5 Bona fide gifts and inheritance.
240.16b-6 Derivative securities.
240.16b-7 Mergers, reclassifications, and consolidations.
240.16b-8 Voting trusts.
Exemption of Certain Transactions From Section 16(c)
240.16c-1 Brokers.
240.16c-2 Transactions effected in connection with a distribution.
240.16c-3 Exemption of sales of securities to be acquired.
240.16c-4 Derivative securities.
[[Page 11]]
Arbitrage Transactions
240.16e-1 Arbitrage transactions under section 16.
Preservation of Records and Reports of Certain Stabilizing Activities
240.17a-1 Recordkeeping rule for national securities exchanges,
national securities associations, registered clearing agencies
and the Municipal Securities Rulemaking Board.
240.17a-2 Recordkeeping requirements relating to stabilizing
activities.
240.17a-3 Records to be made by certain exchange members, brokers and
dealers.
240.17a-4 Records to be preserved by certain exchange members, brokers
and dealers.
240.17a-5 Reports to be made by certain brokers and dealers.
240.17a-6 Right of national securities exchange, national securities
association, registered clearing agency or the Municipal
Securities Rulemaking Board to destroy or dispose of
documents.
240.17a-7 Records of non-resident brokers and dealers.
240.17a-8 Financial recordkeeping and reporting of currency and foreign
transactions.
240.17a-10 Report of revenue and expenses.
240.17a-11 Notification provisions for brokers and dealers.
240.17a-13 Quarterly security counts to be made by certain exchange
members, brokers, and dealers.
240.17a-18 [Reserved]
240.17a-19 Form X-17A-19 Report by national securities exchanges and
registered national securities associations of changes in the
membership status of any of their members.
240.17a-21 Reports of the Municipal Securities Rulemaking Board.
240.17a-22 Supplemental material of registered clearing agencies.
240.17a-23 Recordkeeping and reporting requirements relating to broker-
dealer trading systems.
240.17d-1 Examination for compliance with applicable financial
responsibility rules.
240.17d-2 Program for allocation of regulatory responsibility.
240.17f-1 Requirements for reporting and inquiry with respect to
missing, lost, counterfeit or stolen securities.
240.17f-2 Fingerprinting of securities industry personnel.
240.17h-1T Risk assessment recordkeeping requirements for associated
persons of brokers and dealers.
240.17h-2T Risk assessment reporting requirements for brokers and
dealers.
240.17Ab2-1 Registration of clearing agencies.
240.17Ac2-1 Application for registration of transfer agents.
240.17Ac2-2 Annual reporting requirement for registered transfer
agents.
240.17Ac3-1 Withdrawal from registration with the Commission.
240.17Ad-1 Definitions.
240.17Ad-2 Turnaround, processing, and forwarding of items.
240.17Ad-3 Limitations on expansion.
240.17Ad-4 Applicability of Secs. 240.17Ad-2, 240.17Ad-3 and 240.17Ad-
6(a) (1) through (7) and (11).
240.17Ad-5 Written inquiries and requests.
240.17Ad-6 Recordkeeping.
240.17Ad-7 Record retention.
240.17Ad-8 Securities position listings.
240.17Ad-9 Definitions.
240.17Ad-10 Prompt posting of certificate detail to master
securityholder files, maintenance of accurate securityholder
files, communications between co-transfer agents and
recordkeeping transfer agents, maintenance of current control
book, retention of certificate detail and ``buy-in'' of
physical over-issuance.
240.17Ad-11 Reports regarding aged record differences, buy-ins and
failure to post certificate detail to master securityholder
and subsidiary files.
240.17Ad-12 Safeguarding of funds and securities.
240.17Ad-13 Annual study and evaluation of internal accounting control.
240.17Ad-14 Tender agents.
240.17Ad-15 Signature guarantees.
240.17Ad-16 Notice of assumption or termination of transfer agent
services.
240.19a3-1 [Reserved]
240.19b-3 [Reserved]
240.19b-4 Filings with respect to proposed rule changes by self-
regulatory organizations.
240.19c-1 Governing certain off-board agency transactions by members of
national securities exchanges.
240.19c-3 Governing off-board trading by members of national securities
exchanges.
240.19c-4 Governing certain listing or authorization determinations by
national securities exchanges and associations.
240.19c-5 Governing the multiple listing of options on national
securities exchanges.
240.19d-1 Notices by self-regulatory organizations of final
disciplinary actions, denials, bars, or limitations respecting
membership, association, participation, or access to services,
and summary suspensions.
240.19d-2 Applications for stays of disciplinary sanctions or summary
suspensions by a self-regulatory organization.
[[Page 12]]
240.19d-3 Applications for review of final disciplinary sanctions,
denials of membership, participation or association, or
prohibitions or limitations of access to services imposed by
self-regulatory organizations.
240.19g2-1 Enforcement of compliance by national securities exchanges
and registered securities associations with the Act and rules
and regulations thereunder.
240.19h-1 Notice by a self-regulatory organization of proposed
admission to or continuance in membership or particiption or
association with a member of any person subject to a statutory
disqualification, and applications to the Commission for
relief therefrom.
Inspection and Publication of Information Filed Under the Act
240.24b-1 Documents to be kept public by exchanges.
240.24b-2 Nondisclosure of information filed with the Commission and
with any exchange.
240.24b-3 Information filed by issuers and others under sections 12,
13, 14, and 16.
240.24c-1 Access to nonpublic information.
240.31-1 Securities transactions exempt from transaction fees.
Subpart B--Rules and Regulations Under the Securities Investor
Protection Act of 1970 [Reserved]
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77eee, 77ggg,
77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-1, 78k, 78k-1, 78l,
78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w, 78x, 78ll(d), 79q, 79t, 80a-
20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, and 80b-11, unless otherwise
noted.
Sections 240.0-9, 240.0-11, 240.13e-1, 240.13e-100, 240.13e-101 and
240.14d-100 also issued under secs. 12, 13 and 14, 15 U.S.C. 78l, 78m
and 78n;
Section 240.3a4-1 also issued under secs. 3 and 15, 89 Stat. 97, as
amended, 89 Stat. 121 as amended;
Section 240.3a12-8 also issued under 15 U.S.C. 78a et seq.,
particularly secs. 3(a)(12), 15 U.S.C. 78c(a)(12), and 23(a), 15 U.S.C.
78w(a);
Section 240.3a12-10 also issued under 15 U.S.C. 78b and c;
Section 240.3a12-9 also issued under secs. 3(a)(12), 7(c), 11(d)(1),
15 U.S.C. 78c(a)(12), 78g(c), 78k(d)(1));
Sections 240.3a43-1 and 240.3a44-1 also issued under sec. 3; 15
U.S.C. 78c;
Section 240.3b-6 is also issued under 15 U.S.C. 77f, 77g, 77h, 77j,
77s(a).
Section 240.3b-9 also issued under secs. 2, 3 and 15, 89 Stat. 97,
as amended, 89 Stat. 121, as amended (15 U.S.C. 78b, 78c, 78o);
Section 240.9b-1 is also issued under sec. 2, 7, 10, 19(a), 48 Stat.
74, 78, 81, 85; secs. 201, 205, 209, 120, 48 Stat. 905, 906, 908; secs.
1-4, 8, 68 Stat. 683, 685; sec. 12(a), 73 Stat. 143; sec. 7(a), 74 Stat.
412; sec. 27(a), 84 Stat. 1433; sec. 308(a)(2), 90 Stat. 57; sec. 505,
94 Stat. 2292; secs. 9, 15, 23(a), 48 Stat. 889, 895, 901; sec. 230(a),
49 Stat. 704; secs. 3, 8, 49 Stat. 1377, 1379; sec. 2, 52 Stat. 1075;
secs. 6, 10, 78 Stat. 570-574, 580; sec. 11(d), 84 Stat. 121; sec. 18,
89 Stat. 155; sec. 204, 91 Stat. 1500; 15 U.S.C. 77b, 77g, 77j, 77s(a),
78i, 78o, 78w(a);
Section 240.10b-10 is also issued under secs. 2, 3, 9, 10, 11, 11A,
15, 17, 23, 48 Stat. 891, 89 Stat. 97, 121, 137, 156, (15 U.S.C. 78b,
78c, 78i, 78j, 78k, 78k-1, 78o, 78q).
Section 240.12a-7 also issued under 15 U.S.C. 78a et seq.,
particularly secs. 3(a)(12), 15 U.S.C. 78c(a)(12), 6, 15 U.S.C. 78(f),
11A, 15 U.S.C. 78k, 12, 15 U.S.C. 78(l), and 23(a)(1), 15 U.S.C.
78(w)(a)(1).
Sections 240.12b-1 to 240.12b-36 also issued under secs. 3, 12, 13,
15, 48 Stat. 892, as amended, 894, 895, as amended; 15 U.S.C. 78c, 78l,
78m, 78o;
Section 240.12g-3 is also issued under 15 U.S.C. 77f, 77g, 77h, 77j,
77s(a).
Section 240.12g3-2 is also issued under 15 U.S.C. 77f, 77g, 77h,
77j, 77s(a).
Sections 240.13e-4, 240.14d-7, 240.14d-10 and 240.14e-1 also issued
under secs. 3(b), 9(a)(6), 10(b), 13(e), 14(d) and 14(e), 15 U.S.C.
78c(b), 78i(a)(6), 78j(b), 78m(e), 78n(d) and 78n(e) and sec. 23(c) of
the Investment Company Act of 1940, 15 U.S.C 80a-23(c);
Sections 240.13e-4 to 240.13e-101 also issued under secs. 3(b),
9(a)(6), 10(b), 13(e), 14(e), 15(c)(1), 48 Stat. 882, 889, 891, 894,
895, 901, sec. 8, 49 Stat. 1379, sec. 5, 78 Stat. 569, 570, secs. 2, 3,
82 Stat. 454, 455, secs. 1, 2, 3-5, 84 Stat. 1497, secs. 3, 18, 89 Stat.
97, 155; 15 U.S.C. 78c(b), 78i(a)(6), 78j(b), 78m(e), 78n(e), 78o(c);
sec. 23(c) of the Investment Company Act of 1940; 54 Stat. 825; 15
U.S.C. 80a-23(c);
Section 240.13f-2(T) also issued under sec. 13(f)(1) (15 U.S.C.
78m(f)(1));
Sections 240.14a-1, 240.14a-3, 240.14a-13, 240.14b-1, 240.14b-2,
240.14c-1, and 240.14c-7 also issued under secs. 12, 15 U.S.C. 781, and
14, Pub. L. 99-222, 99 Stat. 1737, 15 U.S.C. 78n;
Sections 240.14a-3, 240.14a-13, 240.14b-1 and 240.14c-7 also issued
under secs. 12, 14 and 17, 15 U.S.C. 781, 78n and 78g;
Sections 240.14c-1 to 240.14c-101 also issued under sec. 14, 48
Stat. 895; 15 U.S.C. 78n;
Section 240.14d-1 is also issued under 15 U.S.C. 77g, 77j, 77s(a),
77ttt(a), 79t, 80a-37.
Section 240.14e-2 is also issued under 15 U.S.C. 77g, 77h, 77s(a),
77sss, 79t, 80a-37(a).
Section 240.14e-4 also issued under the Exchange Act, 15 U.S.C. 78a
et seq., and particularly sections 3(b), 10(a), 10(b), 14(e), 15(c), and
23(a) of the Exchange Act (15 U.S.C. 78c(b), 78j(a), 78j(b), 78n(e),
78o(c), and 78w(a)).
Section 240.15a-6, also issued under secs. 3, 10, 15, and 17, 15
U.S.C. 78c, 78j, 78o, and 78q;
[[Page 13]]
Section 240.15b1-3 also issued under sec. 15, 17; 15 U.S.C. 78o 78q;
Sections 240.15b1-3 and 240.15b2-1 also issued under 15 U.S.C. 78o,
78q;
Section 240.15b2-2 also issued under secs. 3, 15; 15 U.S.C. 78c,
78o;
Sections 240.15b10-1 to 240.15b10-9 also issued under secs. 15, 17,
48 Stat. 895, 897, sec. 203, 49 Stat. 704, secs. 4, 8, 49 Stat. 1379,
sec. 5, 52 Stat. 1076, sec. 6, 78 Stat. 570; 15 U.S.C. 78o, 78q, 12
U.S.C. 241 nt.;
Section 240.15c2-6, also issued under secs. 3, 10, and 15, 15 U.S.C.
78c, 78j, and 78o.
Section 240.15c2-11 also issued under 15 U.S.C. 78j(b), 78o(c),
78q(a), and 78w(a).
Section 240.15c2-12 also issued under 15 U.S.C. 78b, 78c, 78j, 78o,
78o-4 and 78q.
Section 240.15c3-1 is also issued under secs. 15(c)(3), 15 U.S.C.
78o(c)(3).
Section 240.15d-5 is also issued under 15 U.S.C. 77f, 77g, 77h, 77j,
77s(a).
Section 240.15d-10 is also issued under 15 U.S.C. 80a-20(a), 80a-
37(a).
Sections 240.15Ca1-1, 240.15Ca2-1, 240.15Ca2-2, 240.15Ca2-3,
240.15Ca2-4, 240.15Ca2-5, 240.15Cc1-1 also issued under secs. 3, 15C; 15
U.S.C. 78c, 78o-5;
Section 240.17a-3 also issued under secs. 2, 17, 23a, 48 Stat. 897,
as amended; 15 U.S.C. 78d-1, 78d-2, 78q; secs. 12, 14, 17, 23(a), 48
Stat. 892, 895, 897, 901; secs. 1, 4, 8, 49 Stat. 1375, 1379; sec.
203(a), 49 Stat. 704; sec. 5, 52 Stat. 1076; sec. 202, 68 Stat. 686;
secs. 3, 5, 10, 78 Stat. 565-568, 569, 570, 580; secs. 1, 3, 82 Stat.
454, 455; secs. 28(c), 3-5, 84 Stat. 1435, 1497; sec. 105(b), 88 Stat.
1503; secs. 8, 9, 14, 18, 89 Stat. 117, 118, 137, 155; 15 U.S.C. 78l,
78n, 78q, 78w(a);
Section 240.17a-23 also issued under 15 U.S.C. 78b, 78c, 78o, 78q,
and 78w(a).
Section 240.17f-1 is also authorized under sections 2, 17 and 17A,
48 Stat. 891, 89 Stat. 137, 141 (15 U.S.C. 78b, 78q, 78q-1);
Section 240.17h-1T also issued under 15 U.S.C. 78q.
Sections 240.17Ac2-1(c) and 240.17Ac2-2 also issued under secs. 17,
17A and 23(a); 48 Stat. 897, as amended, 89 Stat. 137, 141 and 48 Stat.
901 (15 U.S.C. 78q, 78q-1, 78w(a));
Section 240.17Ad-1 is also issued under secs. 2, 17, 17A and 23(a);
48 Stat. 841 as amended, 48 Stat. 897, as amended, 89 Stat. 137, 141,
and 48 Stat. 901 (15 U.S.C. 78b, 78q, 78q-1, 78w);
Sections 240.17Ad-5 and 240.17Ad-10 are also issued under secs. 3
and 17A; 48 Stat. 882, as amended, and 89 Stat. (15 U.S.C. 78c and 78q-
1);
Sections 240.19c-4 also issued under secs. 6, 11A, 14, 15A, 19 and
23 of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3, and 78s);
Section 240.19c-5 also issued under Sections 6, 11A, and 19 of the
Securities Exchange Act of 1934, 48 Stat. 885, as amended, 89 Stat. 111,
as amended, and 48 Stat. 898, as amended, 15 U.S.C. 78f, 78k-1, and 78s.
Section 240.31-1 is also issued under sec. 31, 48 Stat. 904, as
amended (15 U.S.C. 78ee).
Editorial Note: For nomenclature changes to this part see 57 FR
36501, Aug. 13, 1992, and 57 FR 47409, Oct. 16, 1992.
Note: In Secs. 240.0-1 to 240.24b-3, the numbers to the right of the
decimal point correspond with the respective rule numbers of the rules
and regulations under the Securities Exchange Act of 1934.
ATTENTION ELECTRONIC FILERS
THIS REGULATION SHOULD BE READ IN CONJUNCTION WITH REGULATION S-T (PART
232 OF THIS CHAPTER), WHICH GOVERNS THE PREPARATION AND SUBMISSION OF
DOCUMENTS IN ELECTRONIC FORMAT. MANY PROVISIONS RELATING TO THE
PREPARATION AND SUBMISSION OF DOCUMENTS IN PAPER FORMAT CONTAINED IN
THIS REGULATION ARE SUPERSEDED BY THE PROVISIONS OF REGULATION S-T FOR
DOCUMENTS REQUIRED TO BE FILED IN ELECTRONIC FORMAT.
Subpart A--Rules and Regulations Under the Securities Exchange Act of
1934
Rules of General Application
Sec. 240.0-1 Definitions.
(a) As used in the rules and regulations in this part, prescribed by
the Commission pursuant to Title I of the Securities Exchange Act of
1934 (48 Stat. 881-905; 15 U.S.C. chapter 2B), unless the context
otherwise specifically requires:
(1) The term Commission means the Securities and Exchange
Commission.
(2) The term act means Title I of the Securities Exchange Act of
1934.
(3) The term section refers to a section of the Securities Exchange
Act of 1934.1
---------------------------------------------------------------------------
1 The provisions of paragraph (a)(3) of 17 CFR 240.0-1 relate
to the terminology of rules and regulations as published by the
Securities and Exchange Commission and are inapplicable to the
terminology appearing in the Code of Federal Regulations.
---------------------------------------------------------------------------
(4) The term rules and regulations refers to all rules and
regulations adopted by the Commission pursuant to the act, including the
forms for registration and reports and the accompanying instructions
thereto.
[[Page 14]]
(5) The term electronic filer means a person or an entity that
submits filings electronically pursuant to Rules 101, 901, 902 or 903 of
Regulation S-T (Secs. 232.101, 232.901, 232.902 or 232.903 of this
chapter, respectively).
(6) The term electronic filing means a document under the federal
securities laws that is transmitted or delivered to the Commission in
electronic format.
(b) Unless otherwise specifically stated, the terms used in this
part shall have the meaning defined in the act.
(c) A rule or regulation which defines a term without express
reference to the act or to the rules and regulations, or to a portion
thereof, defines such term for all purposes as used both in the act and
in the rules and regulations, unless the context otherwise specifically
requires.
(d) Unless otherwise specified or the context otherwise requires,
the term prospectus means a prospectus meeting the requirements of
section 10(a) of the Securities Act of 1933 as amended.
[13 FR 8178, Dec. 22, 1948, as amended at 13 FR 9321, Dec. 31, 1948; 19
FR 6730, Oct. 20, 1954; 58 FR 14682, Mar. 18, 1993]
Cross References: For definition of ``listed'', see Sec. 240.3b-1;
``officer'', Sec. 240.3b-2; ``short sale'', Sec. 240.3b-3. For
additional definitions, see Sec. 240.15c1-1.
Sec. 240.0-2 Business hours of the Commission.
(a) The principal office of the Commission, at 450 Fifth Street,
NW., Washington, DC 20549, is open each day, except Saturdays, Sundays,
and federal holidays, from 9 a.m. to 5:30 p.m., Eastern Standard Time or
Eastern Daylight Saving Time, whichever currently is in effect in
Washington, DC, provided that hours for the filing of documents pursuant
to the Act or the rules and regulations thereunder are as set forth in
paragraphs (b) and (c) of this section.
(b) Submissions made in paper or on magnetic tape or diskette. Paper
documents filed with or otherwise furnished to the Commission, as well
as electronic filings and submissions on magnetic tape or diskette under
cover of Form ET (Secs. 239.62, 249.445, 259.601, 269.6 and 274.401 of
this chapter), may be submitted to the Commission each day, except
Saturdays, Sundays and federal holidays, from 8 a.m. to 5:30 p.m.,
Eastern Standard Time or Eastern Daylight Saving Time, whichever is
currently in effect.
(c) Electronic filings. Filings made by direct transmission may be
submitted to the Commission each day, except Saturdays, Sundays and
federal holidays, from 8 a.m. to 10 p.m., Eastern Standard Time or
Eastern Daylight Saving Time, whichever is currently in effect.
[58 FR 14682, Mar. 18, 1993]
Cross References: For registration and exemption of exchanges, see
Secs. 240.6a-1 to 240.6a-3. For forms for permanent registration of
securities, see Sec. 240.12b-1. For regulations relating to registration
of securities, see Secs. 240.12b-1 to 240.12b-36. For forms for
applications for registration of brokers and dealers, see
Secs. 240.15b1-1 to 240.15b9-1.
Sec. 240.0-3 Filing of material with the Commission.
(a) All papers required to be filed with the Commission pursuant to
the Act or the rules and regulations thereunder shall be filed at the
principal office in Washington, DC. Material may be filed by delivery to
the Commission, through the mails or otherwise. The date on which papers
are actually received by the Commission shall be the date of filing
thereof if all of the requirements with respect to the filing have been
complied with, except that if the last day on which papers can be
accepted as timely filed falls on a Saturday, Sunday or holiday, such
papers may be filed on the first business day following.
(b) The manually signed original (or in the case of duplicate
originals, one duplicate original) of all registrations, applications,
statements, reports, or other documents filed under the Securities
Exchange Act of 1934, as amended, shall be numbered sequentially (in
addition to any internal numbering which otherwise may be present) by
handwritten, typed, printed, or other legible form of notation from the
facing page of the document through the last page of that document and
any exhibits or attachments thereto. Further, the total number of pages
contained in a numbered original shall be set forth on the first page of
the document.
[[Page 15]]
(c) Each document filed shall contain an exhibit index, which should
immediately precede the exhibits filed with such document. The index
shall list each exhibit filed and identify by handwritten, typed,
printed, or other legible form of notation in the manually signed
original, the page number in the sequential numbering system described
in paragraph (b) of this section where such exhibit can be found or
where it is stated that the exhibit is incorporated by reference.
Further, the first page of the manually signed document shall list the
page in the filing where the exhibit index is located.
[44 FR 4666, Jan. 23, 1979, as amended at 45 FR 58828, Sept. 5, 1980]
Sec. 240.0-4 Nondisclosure of information obtained in examinations and investigations.
Information or documents obtained by officers or employees of the
Commission in the course of any examination or investigation pursuant to
section 17(a) (48 Stat. 897, section 4, 49 Stat. 1379; 15 U.S.C. 78q(a))
or 21(a) (48 Stat. 899; 15 U.S.C. 78u(a)) shall, unless made a matter of
public record, be deemed confidential. Except as provided by 17 CFR
203.2, officers and employees are hereby prohibited from making such
confidential information or documents or any other non-public records of
the Commission available to anyone other than a member, officer or
employee of the Commission, unless the Commission or the General
Counsel, pursuant to delegated authority, authorizes the disclosure of
such information or the production of such documents as not being
contrary to the public interest. Any officer or employee who is served
with a subpoena requiring the disclosure of such information or the
production of such documents shall appear in court and, unless the
authorization described in the preceding sentence shall have been given,
shall respectfully decline to disclose the information or produce the
documents called for, basing his or her refusal upon this section. Any
officer or employee who is served with such a subpoena shall promptly
advise the General Counsel of the service of such subpoena, the nature
of the information or documents sought, and any circumstances which may
bear upon the desirability of making available such information or
documents.
(Sec. 19, 48 Stat. 85; sec. 20, 48 Stat. 86; sec. 21, 48 Stat. 899; sec.
23, 48 Stat. 901; sec. 18, 49 Stat. 831; sec. 20, 49 Stat. 833; sec.
319, 53 Stat. 1173; sec. 321, 53 Stat. 1174; sec. 38, 54 Stat. 841; sec.
42, 54 Stat. 842; sec. 209, 54 Stat. 853; sec. 211, 54 Stat. 855; sec.
1, 76 Stat. 394. (15 U.S.C. 77s, 77t, 78u, 78w, 79r, 79t, 77sss, 77uuu,
80a-37, 80a-41, 80b-9, 80b-11, 78d-1))
[44 FR 50836, Aug. 30, 1979, as amended at 53 FR 17459, May 17, 1988]
Sec. 240.0-5 Reference to rule by obsolete designation.
Wherever in any rule, form, or instruction book specific reference
is made to a rule by number or other designation which is now obsolete,
such reference shall be deemed to be made to the corresponding rule or
rules in the existing general rules and regulations.
[13 FR 8179, Dec. 22, 1948]
Sec. 240.0-6 Disclosure detrimental to the national defense or foreign policy.
(a) Any requirement to the contrary notwithstanding, no registration
statement, report, proxy statement or other document filed with the
Commission or any securities exchange shall contain any document or
information which, pursuant to Executive order, has been classified by
an appropriate department or agency of the United States for protection
in the interests of national defense or foreign policy.
(b) Where a document or information is omitted pursuant to paragraph
(a) of this section, there shall be filed, in lieu of such document or
information, a statement from an appropriate department or agency of the
United States to the effect that such document or information has been
classified or that the status thereof is awaiting determination. Where a
document is omitted pursuant to paragraph (a) of this section, but
information relating to the subject matter of such document is
nevertheless included in material filed with the Commission pursuant to
a determination of an appropriate department or agency of the United
States that disclosure of such information would not be contrary to the
interests of national defense or foreign policy, a statement
[[Page 16]]
from such department or agency to that effect shall be submitted for the
information of the Commission. A registrant may rely upon any such
statement in filing or omitting any document or information to which the
statement relates.
(c) The Commission may protect any information in its possession
which may require classification in the interests of national defense or
foreign policy pending determination by an appropriate department or
agency as to whether such information should be classified.
(d) It shall be the duty of the registrant to submit the documents
or information referred to in paragraph (a) of this section to the
appropriate department or agency of the United States prior to filing
them with the Commission and to obtain and submit to the Commission, at
the time of filing such documents or information, or in lieu thereof, as
the case may be, the statements from such department or agency required
by paragraph (b) of this section. All such statements shall be in
writing.
[33 FR 7682, May 24, 1968]
Sec. 240.0-8 Application of rules to registered broker-dealers.
Any provision of any rule or regulation under the Act which
prohibits any act, practice, or course of business by any person if the
mails or any means or instrumentality of interstate commerce are used in
connection therewith, shall also prohibit any such act, practice, or
course of business by any broker or dealer registered pursuant to
section 15(b) of the Act, or any person acting on behalf of such a
broker or dealer, irrespective of any use of the mails or any means or
instrumentality of interstate commerce.
[29 FR 12555, Sept. 3, 1964]
Sec. 240.0-9 Payment of fees.
All payment of fees shall be made in cash, certified check or by
United States postal money order, bank cashier's check or bank money
order payable to the Securities and Exchange Commission, omitting the
name or title of any official of the Commission. Payment of fees
required by this section shall be made in accordance with the directions
set forth in Sec. 202.3a of this chapter.
[61 FR 49959, Sept. 24, 1996]
Sec. 240.0-10 Small entities for purposes of the Regulatory Flexibility Act.
For purposes of Commission rulemaking in accordance with the
provisions of Chapter Six of the Administrative Procedure Act (5 U.S.C.
601 et seq.), and unless otherwise defined for purposes of a particular
rulemaking proceeding, the term small business or small organization
shall:
(a) When used with reference to an ``issuer'' or a ``person,'' other
than an investment company, under section 12, 13, 14, 15(d) or 16(b) of
the Securities Exchange Act of 1934, mean an ``issuer'' or ``person''
that, on the last day of its most recent fiscal year, had total assets
of $5 million or less;
(b) When used with reference to an ``issuer'' or ``person'' that is
an investment company, mean an investment company with net assets of $50
million or less as of the end of its most recent fiscal year;
(c) When used with reference to a broker or dealer, mean a broker or
dealer that:
(1) Had total capital (net worth plus subordinated liabilities) of
less than $500,000 on the date in the prior fiscal year as of which its
audited financial statements were prepared pursuant to Sec. 240.17a-5(d)
or, if not required to file such statements, a broker or dealer that had
total capital (net worth plus subordinated liabilities) of less than
$500,000 on the last business day of the preceding fiscal year (or in
the time that it has been in business, if shorter); and
(2) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization as defined in this
section;
(d) When used with reference to a clearing agency, mean a clearing
agency that:
(1) Compared, cleared and settled less than $500 million in
securities transactions during the preceding fiscal year (or in the time
that it has been in business, if shorter);
(2) Had less than $200 million of funds and securities in its
custody or control
[[Page 17]]
at all times during the preceding fiscal year (or in the time that it
has been in business, if shorter); and
(3) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization as defined in this
section;
(e) When used with reference to an exchange, mean any exchange that
has been exempted from the reporting requirements of Sec. 240.11Aa3-1;
(f) When used with reference to a municipal securities dealer that
is a bank (including any separately identifiable department or division
of a bank), mean any such municipal securities dealer that:
(1) Had, or is a department of a bank that had, total assets of less
than $10 million at all times during the preceding fiscal year (or in
the time that it has been in business, if shorter);
(2) Had an average monthly volume of municipal securities
transactions in the preceding fiscal year (or in the time it has been
registered, if shorter) of less than $100,000; and
(3) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization as defined in this
section;
(g) When used with reference to a securities information processor,
mean a securities information processor that:
(1) Had gross revenues of less than $10 million during the preceding
fiscal year (or in the time it has been in business, if shorter);
(2) Serviced less than 100 interrogation devices or moving tickers
as those terms are defined in Sec. 240.11Aa-3-1 at all times during the
preceding fiscal year (or in the time that it has been in business, if
shorter); and
(3) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization as defined in this
section; and
(h) When used with reference to a transfer agent, mean a transfer
agent that:
(1) Received less than 500 items for transfer and less than 500
items for processing during the preceding six months (or in the time
that it has been in business, if shorter);
(2) Maintained master shareholder files that in the aggregate
contained less than 1,000 shareholder accounts or was the named transfer
agent for less than 1,000 shareholder accounts at all times during the
preceding fiscal year (or in the time that it has been in business, if
shorter); and
(3) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization under this section.
(i) For purposes of paragraphs (c) through (h) of this section, a
person is affiliated with another person if that person controls, is
controlled by, or is under common control with such other person; a
person shall be deemed to control another person if that person has the
right to vote 25% or more of the voting securities of such other person
or is entitled to receive 25% or more of the net profits of such other
person or is otherwise able to direct or cause the direction of the
management or policies of such other person.
[47 FR 5222, Feb. 4, 1982, as amended at 51 FR 25362, July 14, 1986]
Sec. 240.0-11 Filing fees for certain acquisitions, dispositions and similar transactions.
(a) General. (1) At the time of filing a disclosure document
described in paragraphs (b) through (d) of this section relating to
certain acquisitions, dispositions, business combinations,
consolidations or similar transactions, the person filing the specified
document shall pay a fee payable to the Commission to be calculated as
set forth in paragraphs (b) through (d) of this section.
(2) Only one fee per transaction is required to be paid. A required
fee shall be reduced in an amount equal to any fee paid with respect to
such transaction pursuant to either section 6(b) of the Securities Act
of 1933 or any applicable provision of this rule; the fee requirements
under section 6(b) shall be reduced in an amount equal to the fee paid
the Commission with respect to a transaction under this regulation. No
part of a filing fee is refundable.
(3) If at any time after the initial payment the aggregate
consideration offered is increased, an additional filing fee based upon
such increase shall be paid with the required amended filing.
[[Page 18]]
(4) When the fee is based upon the market value of securities, such
market value shall be established by either the average of the high and
low prices reported in the consolidated reporting system (for exchange
traded securities and last sale reported over-the-counter securities) or
the average of the bid and asked price (for other over-the-counter
securities) as of a specified date within 5 business days prior to the
date of the filing. If there is no market for the securities, the value
shall be based upon the book value of the securities computed as of the
latest practicable date prior to the date of the filing, unless the
issuer of the securities is in bankruptcy or receivership or has an
accumulated capital deficit, in which case one-third of the principal
amount, par value or stated value of the securities shall be used.
(5) The cover page of the filing shall set forth the calculation of
the fee in tabular format, as well as the amount offset by a previous
filing and the identification of such filing, if applicable.
(b) Section 13(e)(1) filings. At the time of filing such statement
as the Commission may require pursuant to section 13(e)(1) of the
Exchange Act, a fee of one-fiftieth of one percent of the value of the
securities proposed to be acquired by the acquiring person. The value of
the securities proposed to be acquired shall be determined as follows:
(1) The value of the securities to be acquired solely for cash shall
be the amount of cash to be paid for them:
(2) The value of the securities to be acquired with securities or
other non-cash consideration, whether or not in combination with a cash
payment for the same securities, shall be based upon the market value of
the securities to be received by the acquiring person as established in
accordance with paragraph (a)(4) of this section.
(c) Proxy and information statement filings. At the time of filing a
preliminary proxy statement pursuant to Rule 14a-6(a) or preliminary
information statement pursuant to Rule 14c-5(a) that concerns a merger,
consolidation, acquisition of a company, or proposed sale or other
disposition of substantially all the assets of the registrant (including
a liquidation), the following fee:
(1) For preliminary material involving a vote upon a merger,
consolidation or acquisition of a company, a fee of one-fiftieth of one
percent of the proposed cash payment or of the value of the securities
and other property to be transferred to security holders in the
transaction. The fee is payable whether the registrant is acquiring
another company or being acquired.
(i) The value of securities or other property to be transferred to
security holders, whether or not in combination with a cash payment for
the same securities, shall be based upon the market value of the
securities to be received by the acquiring person as established in
accordance with paragraph (a)(4) of this section.
(ii) Notwithstanding the above, where the acquisition, merger or
consolidation is for the sole purpose of changing the registrant's
domicile, no filing fee is required to be paid.
(2) For preliminary material involving a vote upon a proposed sale
or other disposition of substantially all the assets of the registrant,
a fee of one-fiftieth of one percent of the aggregate of the cash and
the value of the securities (other than its own) and other property to
be received by the registrant. In the case of a disposition in which the
registrant will not receive any property, such as at liquidation or
spin-off, the fee shall be one-fiftieth of one percent of the aggregate
of the cash and the value of the securities and other property to be
distributed to security holders.
(i) The value of the securities to be received (or distributed in
the case of a spin-off or liquidation) shall be based upon the market
value of such securities as established in accordance with paragraph
(a)(4) of this section.
(ii) The value of other property shall be a bona fide estimate of
the fair market value of such property.
(3) Where two or more companies are involved in the transaction,
each shall pay a proportionate share of such fee, determined by the
persons involved.
(4) Notwithstanding the above, the fee required by this paragraph
(c) shall not be payable for a proxy statement
[[Page 19]]
filed by a company registered under the Investment Company Act of 1940.
(d) Schedule 14D-1 filings. At the time of filing a Schedule 14D-1,
a fee of one-fiftieth of one percent of the aggregate of the cash or of
the value of the securities or other property offered by the bidder.
Where the bidder is offering securities or other non-cash consideration
for some or all of the securities to be acquired, whether or not in
combination with a cash payment for the same securities, the value of
the consideration to be offered for such securities shall be based upon
the market value of the securities to be received by the bidder as
established in accordance with paragraph (a)(4) of this section.
[51 FR 2476, Jan. 17, 1986, as amended at 58 FR 14682, Mar. 18, 1993; 61
FR 49959, Sept. 24, 1996]
Definition of ``Equity Security'' as Used in Sections 12(g) and 16
Sec. 240.3a4-1 Associated persons of an issuer deemed not to be brokers.
(a) An associated person of an issuer of securities shall not be
deemed to be a broker solely by reason of his participation in the sale
of the securities of such issuer if the associated person:
(1) Is not subject to a statutory disqualification, as that term is
defined in section 3(a)(39) of the Act, at the time of his
participation; and
(2) Is not compensated in connection with his participation by the
payment of commissions or other remuneration based either directly or
indirectly on transactions in securities; and
(3) Is not at the time of his participation an associated person of
a broker or dealer; and
(4) Meets the conditions of any one of paragraph (a)(4) (i), (ii),
or (iii) of this section.
(i) The associated person restricts his participation to
transactions involving offers and sales of securities:
(A) To a registered broker or dealer; a registered investment
company (or registered separate account); an insurance company; a bank;
a savings and loan association; a trust company or similar institution
supervised by a state or federal banking authority; or a trust for which
a bank, a savings and loan association, a trust company, or a registered
investment adviser either is the trustee or is authorized in writing to
make investment decisions; or
(B) That are exempted by reason of section 3(a)(7), 3(a)(9) or
3(a)(10) of the Securities Act of 1933 from the registration provisions
of that Act; or
(C) That are made pursuant to a plan or agreement submitted for the
vote or consent of the security holders who will receive securities of
the issuer in connection with a reclassification of securities of the
issuer, a merger or consolidation or a similar plan of acquisition
involving an exchange of securities, or a transfer of assets of any
other person to the issuer in exchange for securities of the issuer; or
(D) That are made pursuant to a bonus, profit-sharing, pension,
retirement, thrift, savings, incentive, stock purchase, stock ownership,
stock appreciation, stock option, dividend reinvestment or similar plan
for employees of an issuer or a subsidiary of the issuer;
(ii) The associated person meets all of the following conditions:
(A) The associated person primarily performs, or is intended
primarily to perform at the end of the offering, substantial duties for
or on behalf of the issuer otherwise than in connection with
transactions in securities; and
(B) The associated person was not a broker or dealer, or an
associated person of a broker or dealer, within the preceding 12 months;
and
(C) The associated person does not participate in selling an
offering of securities for any issuer more than once every 12 months
other than in reliance on paragraph (a)(4)(i) or (iii) of this section,
except that for securities issued pursuant to rule 415 under the
Securities Act of 1933, the 12 months shall begin with the last sale of
any security included within one rule 415 registration.
(iii) The associated person restricts his participation to any one
or more of the following activities:
(A) Preparing any written communication or delivering such
communication through the mails or other means that does not involve
oral solicitation by the associated person of a potential purchaser;
Provided, however,
[[Page 20]]
that the content of such communication is approved by a partner, officer
or director of the issuer;
(B) Responding to inquiries of a potential purchaser in a
communication initiated by the potential purchaser; Provided, however,
That the content of such responses are limited to information contained
in a registration statement filed under the Securities Act of 1933 or
other offering document; or
(C) Performing ministerial and clerical work involved in effecting
any transaction.
(b) No presumption shall arise that an associated person of an
issuer has violated section 15(a) of the Act solely by reason of his
participation in the sale of securities of the issuer if he does not
meet the conditions specified in paragraph (a) of this section.
(c) Definitions. When used in this section:
(1) The term associated person of an issuer means any natural person
who is a partner, officer, director, or employee of:
(i) The issuer;
(ii) A corporate general partner of a limited partnership that is
the issuer;
(iii) A company or partnership that controls, is controlled by, or
is under common control with, the issuer; or
(iv) An investment adviser registered under the Investment Advisers
Act of 1940 to an investment company registered under the Investment
Company Act of 1940 which is the issuer.
(2) The term associated person of a broker or dealer means any
partner, officer, director, or branch manager of such broker or dealer
(or any person occupying a similar status or performing similar
functions), any person directly or indirectly controlling, controlled
by, or under common control with such broker or dealer, or any employee
of such broker or dealer, except that any person associated with a
broker or dealer whose functions are solely clerical or ministerial and
any person who is required under the laws of any State to register as a
broker or dealer in that State solely because such person is an issuer
of securities or associated person of an issuer of securities shall not
be included in the meaning of such term for purposes of this section.
[50 FR 27946, July 9, 1985]
Sec. 240.3a11-1 Definition of the term ``equity security''.
The term equity security is hereby defined to include any stock or
similar security, certificate of interest or participation in any profit
sharing agreement, preorganization certificate or subscription,
transferable share, voting trust certificate or certificate of deposit
for an equity security, limited partnership interest, interest in a
joint venture, or certificate of interest in a business trust; or any
security convertible, with or without consideration into such a
security, or carrying any warrant or right to subscribe to or purchase
such a security; or any such warrant or right; or any put, call,
straddle, or other option or privilege of buying such a security from or
selling such a security to another without being bound to do so.
(Sec. 3, 48 Stat. 882, 15 U.S.C. 78)
[38 FR 11449, May 8, 1973]
Miscellaneous Exemptions
Sec. 240.3a12-1 Exemption of certain mortgages and interests in mortgages.
Mortgages, as defined in section 302(d) of the Emergency Home
Finance Act of 1970, which are or have been sold by the Federal Home
Loan Mortgage Corporation are hereby exempted from the operation of such
provisions of the Act as by their terms do not apply to an ``exempted
security'' or to ``exempted securities''.
(Sec. 3(a)(12), 48 Stat. 882, 15 U.S.C. 78(c))
[37 FR 25167, Nov. 28, 1972]
Sec. 240.3a12-2 [Reserved]
Sec. 240.3a12-3 Exemption from sections 14(a), 14(b), 14(c), 14(f) and 16 for securities of certain foreign issuers.
(a) Securities for which the filing of registration statements on
Form 18 [17 CFR 249.218] are authorized shall be exempt from the
operation of sections 14 and 16 of the Act.
(b) Securities registered by a foreign private issuer, as defined in
Rule 3b-4
[[Page 21]]
(Sec. 240.3b-4 of this chapter), shall be exempt from sections 14(a),
14(b), 14(c), 14(f) and 16 of the Act.
[44 FR 70137, Dec. 6, 1979, as amended at 47 FR 54780, Dec. 6, 1982; 56
FR 30067, July 1, 1991]
Sec. 240.3a12-4 Exemptions from sections 15(a) and 15(c)(3) for certain mortgage securities.
(a) When used in this Rule the following terms shall have the
meanings indicated:
(1) The term whole loan mortgage means an evidence of indebtedness
secured by mortgage, deed of trust, or other lien upon real estate or
upon leasehold interests therein where the entire mortgage, deed or
other lien is transferred with the entire evidence of indebtedness.
(2) The term aggregated whole loan mortgage means two or more whole
loan mortgages that are grouped together and sold to one person in one
transaction.
(3) The term participation interest means an undivided interest
representing one of only two such interests in a whole loan mortgage or
in an aggregated whole loan mortgage, provided that the other interest
is retained by the originator of such participation interest.
(4) The term commitment means a contract to purchase a whole loan
mortgage, an aggregated whole loan mortgage or a participation interest
which by its terms requires that the contract be fully executed within 2
years.
(5) The term mortgage security means a whole loan mortgage, an
aggregated whole loan mortgage, a participation interest, or a
commitment.
(b) A mortgage security shall be deemed an ``exempted security'' for
purposes of subsections (a) and (c)(3) of section 15 of the Act provided
that, in the case of and at the time of any sale of the mortgage
security by a broker or dealer, such mortgage security is not in default
and has an unpaid principal amount of at least $50,000.
[39 FR 19945, June 5, 1974]
Sec. 240.3a12-5 Exemption of certain investment contract securities from sections 7(c) and 11(d)(1).
(a) An investment contract security involving the direct ownership
of specified residential real property shall be exempted from the
provisions of sections 7(c) and 11(d)(1) of the Act with respect to any
transaction by a broker or dealer who, directly or indirectly, arranges
for the extension or maintenance of credit on the security to or from a
customer, if the credit:
(1) Is secured by a lien, mortgage, deed of trust, or any other
similar security interest related only to real property: Provided,
however, That this provision shall not prevent a lender from requiring
(i) a security interest in the common areas and recreational facilities
or furniture and fixtures incidental to the investment contract if the
purchase of such furniture and fixtures is required by, or subject to
the approval of, the issuer, as a condition of purchase; or (ii) an
assignment of future rentals in the event of default by the purchaser or
a co-signer or guarantor on the debt obligation other than the issuer,
its affiliates, or any broker or dealer offering such securities;
(2) Is to be repaid by periodic payments of principal and interest
pursuant to an amortization schedule established by the governing
instruments: Provided, however, That this provision shall not prevent
the extension of credit on terms which require the payment of interest
only, if extended in compliance with the other provisions of this rule;
and
(3) Is extended by a lender which is not, directly or indirectly
controlling, controlled by, or under common control with the broker or
dealer or the issuer of the securities or affiliates thereof.
(b) For purposes of this rule:
(1) Residential real property shall mean real property containing
living accommodations, whether used on a permanent or transient basis,
and may include furniture or fixtures if required as a condition of
purchase of the investment contract or if subject to the approval of the
issuer.
[[Page 22]]
(2) Direct ownership shall mean ownership of a fee or leasehold
estate or a beneficial interest in a trust the purchase of which, under
applicable local law, is financed and secured by a security interest
therein similar to a mortgage or deed of trust, but it shall not include
an interest in a real estate investment trust, an interest in a general
or limited partnership, or similar indirect interest in the ownership of
real property.
(Sec. 3(a)(12), 48 Stat. 882, as amended 84 Stat. 718, 1435, 1499 (15
U.S.C. 78c(12)); sec. 7(c), 48 Stat. 886, as amended 82 Stat. 452 (15
U.S.C. 78g(c)); sec. 11(d)(1), 48 Stat. 891 as amended 68 Stat. 636 (15
U.S.C. 78k(d)(1)); sec. 15(c), 48 Stat. 895, as amended 52 Stat. 1075,
84 Stat. 1653 (15 U.S.C. 78o(c)); sec. 23(a), 48 Stat. 901, as amended
49 Stat. 704, 1379 (15 U.S.C. 78w(a)))
[40 FR 6646, Feb. 13, 1975]
Sec. 240.3a12-6 Definition of ``common trust fund'' as used in section 3(a)(12) of the act.
The term common trust fund as used in section 3(a)(12) of the Act
(15 U.S.C. 78c(a)(12)) shall include a common trust fund which is
maintained by a bank which is a member of an affiliated group, as
defined in section 1504(a) of the Internal Revenue Code of 1954 (26
U.S.C. 1504(a)), and which is maintained exclusively for the collective
investment and reinvestment of monies contributed thereto by one or more
bank members of such affiliated group in the capacity of trustee,
executor, administrator, or guardian; Provided, That:
(a) The common trust fund is operated in compliance with the same
state and federal regulatory requirements as would apply if the bank
maintaining such fund and any other contributing banks were the same
entity; and
(b) The rights of persons for whose benefit a contributing bank acts
as trustee, executor, administrator, or guardian would not be diminished
by reason of the maintenance of such common trust fund by another bank
member of the affiliated group.
(15 U.S.C. 78c(b))
[43 FR 2392, Jan. 17, 1978]
Sec. 240.3a12-7 Exemption for certain derivative securities traded otherwise than on a national securities exchange.
Any put, call, straddle, option, or privilege traded exclusively
otherwise than on a national securities exchange and for which
quotations are not disseminated through an automated quotation system of
a registered securities association, which relates to any securities
which are direct obligations of, or obligations guaranteed as to
principal or interest by, the United States, or securities issued or
guaranteed by a corporation in which the United States has a direct or
indirect interest as shall be designated for exemption by the Secretary
of the Treasury pursuant to section 3(a)(12) of the Act, shall be exempt
from all provisions of the Act which by their terms do not apply to any
``exempted security'' or ``exempted securities,'' provided that the
securities underlying such put, call, straddle, option or privilege
represent an obligation equal to or exceeding $250,000 principal amount.
(15 U.S.C. 78a et seq., and particularly secs. 3(a)(12), 15(a)(2) and
23(a) (15 U.S.C. 78c(a)(12), 78o(a)(2) and 78w(a)))
[49 FR 5073, Feb. 10, 1984]
Sec. 240.3a12-8 Exemption for designated foreign government securities for purposes of futures trading.
(a) When used in this Rule, the following terms shall have the
meaning indicated:
(1) The term designated foreign government security shall mean a
security not registered under the Securities Act of 1933 nor the subject
of any American depositary receipt so registered, and representing a
debt obligation of the government of
(i) The United Kingdom of Great Britain and Northern Ireland;
(ii) Canada;
(iii) Japan;
(iv) the Commonwealth of Australia;
(v) the Republic of France;
(vi) New Zealand;
(vii) the Republic of Austria;
(viii) the Kingdom of Denmark;
(ix) the Republic of Finland;
(x) the Kingdom of the Netherlands;
(xi) Switzerland;
[[Page 23]]
(xii) the Federal Republic of Germany;
(xiii) the Republic of Ireland;
(xiv) the Republic of Italy;
(xv) the Kingdom of Spain;
(xvi) the United Mexican States;
(xvii) the Federative Republic of Brazil;
(xviii) the Republic of Argentina; or
(xix) the Republic of Venezuela.
(2) The term qualifying foreign futures contracts shall mean any
contracts for the purchase or sale of a designated foreign government
security for future delivery, as ``future delivery'' is defined in 7
U.S.C. 2, provided such contracts require delivery outside the United
States, any of its possessions or territories, and are traded on or
through a board of trade, as defined at 7 U.S.C. 2.
(b) Any designated foreign government security shall, for purposes
only of the offer, sale or confirmation of sale of qualifying foreign
futures contracts, be exempted from all provisions of the Act which by
their terms do not apply to an ``exempted security'' or ``exempted
securities.''
(15 U.S.C. 78a et seq., and particularly secs. 3(a)(12), and 23(a) 15
U.S.C. 78c(a)(12), and 78w(a))
[49 FR 8599, Mar. 8, 1984, as amended at 51 FR 25998, July 18, 1986; 52
FR 8877, Mar. 20, 1987; 52 FR 42279, Nov. 4, 1987; 53 FR 43863, Oct. 31,
1988; 57 FR 1378, Jan. 14, 1992; 59 FR 54815, Nov. 2, 1994; 60 FR 62326,
Dec. 6, 1995; 61 FR 10274, Mar. 13, 1996]
Sec. 240.3a12-9 Exemption of certain direct participation program securities from the arranging provisions of sections 7(c) and 11(d)(1).
(a) Direct participation program securities sold on a basis whereby
the purchase price is paid to the issuer in one or more mandatory
deferred payments shall be deemed to be exempted securities for purposes
of the arranging provisions of sections 7(c) and 11(d)(1) of the Act,
provided that:
(1) The securities are registered under the Securities Act of 1933
or are sold or offered exclusively on an intrastate basis in reliance
upon section 3(a)(11) of that Act;
(2) The mandatory deferred payments bear a reasonable relationship
to the capital needs and program objectives described in a business
development plan disclosed to investors in a registration statement
filed with the Commission under the Securities Act of 1933 or, where no
registration statement is required to be filed with the Commission, as
part of a statement filed with the relevant state securities
administrator;
(3) Not less than 50 percent of the purchase price of the direct
participation program security is paid by the investor at the time of
sale;
(4) The total purchase price of the direct participation program
security is due within three years in specified property programs or two
years in non-specified property programs. Such pay-in periods are to be
measured from the earlier of the completion of the offering or one year
following the effective date of the offering.
(b) For purposes of this rule:
(1) Direct participation program shall mean a program financed
through the sale of securities, other than securities that are listed on
an exchange, quoted on NASDAQ, or will otherwise be actively traded
during the pay-in period as a result of efforts by the issuer,
underwriter, or other participants in the initial distribution of such
securities, that provides for flow-through tax consequences to its
investors; Provided, however, That the term ``direct participation
program'' does not include real estate investment trusts, Subchapter S
corporate offerings, tax qualified pension and profit sharing plans
under sections 401 and 403(a) of the Internal Revenue Code (``Code''),
tax shelter annuities under section 403(b) of the Code, individual
retirement plans under section 408 of the Code, and any issuer,
including a separate account, that is registered under the Investment
Company Act of 1940.
(2) Business development plan shall mean a specific plan describing
the program's anticipated economic development and the amounts of future
capital contributions, in the form of mandatory deferred payments, to be
required at specified times or upon the occurrence of certain events.
(3) Specified property program shall mean a direct participation
program in which, at the date of effectiveness,
[[Page 24]]
more than 75 percent of the net proceeds from the sale of program
securities are committed to specific purchases or expenditures. Non-
specified property program shall mean any other direct participation
program.
[51 FR 8801, Mar. 14, 1986]
Sec. 240.3a12-10 Exemption of certain securities issued by the Resolution Funding Corporation.
Securities that are issued by the Resolution Funding Corporation
pursuant to section 21B(f) of the Federal Home Loan Bank Act (12 U.S.C.
1421 et seq.) are exempt from the operation of all provisions of the Act
that by their terms do not apply to any ``exempted security'' or to
``exempted securities.''
[54 FR 37789, Sept. 13, 1989]
Sec. 240.3a12-11 Exemption from sections 8(a), 14(a), 14(b), and 14(c) for debt securities listed on a national securities exchange.
(a) Debt securities that are listed for trading on a national
securities exchange shall be exempt from the restrictions on borrowing
of section 8(a) of the Act (15 U.S.C. 78h(a)).
(b) Debt securities registered pursuant to the provisions of section
12(b) of the Act (15 U.S.C. 78l(b)) shall be exempt from sections 14(a),
14(b), and 14(c) of the Act (15 U.S.C. 78n(a), (b), and (c)), except
that Secs. 240.14a-1, 240.14a-2(a), 240.14a-9, 240.14a-13, 240.14b-1,
240.14b-2, 240.14c-1, 240.14c-6 and 240.14c-7 shall continue to apply.
(c) For purposes of this section, debt securities is defined to mean
any securities that are not ``equity securities'' as defined in section
3(a)(11) of the Act (15 U.S.C. 78c(a)(11)) and Sec. 240.3a11-1
thereunder.
[59 FR 55347, Nov. 7, 1994]
Sec. 240.3a40-1 Designation of financial responsibility rules.
The term financial responsibility rules for purposes of the
Securities Investor Protection Act of 1970 shall include:
(a) Any rule adopted by the Commission pursuant to sections 8,
15(c)(3), 17(a) or 17(e)(1)(A) of the Securities Exchange Act of 1934;
(b) Any rule adopted by the Commission relating to hypothecation or
lending of customer securities;
(c) Any rule adopted by any self-regulatory organization relating to
capital, margin, recordkeeping, hypothecation or lending requirements;
and
(d) Any other rule adopted by the Commission or any self-regulatory
organization relating to the protection of funds or securities.
(Secs. 3, 15(c)(3), 17(a) and 23 (15 U.S.C. 78c, 78o, 78q(a) and 78u))
[44 FR 28318, May 15, 1979]
Sec. 240.3a43-1 Customer-related government securities activities incidental to the futures-related business of a futures commission merchant registered with
the Commodity Futures Trading Commission.
(a) A futures commission merchant registered with the Commodity
Futures Trading Commission (``CFTC'') is not a government securities
broker or government securities dealer solely because such futures
commission merchant effects transactions in government securities that
are defined in paragraph (b) of this section as incidental to such
person's futures-related business.
(b) Provided that the futures commission merchant maintains in a
regulated account all funds and securities associated with such
government securities transactions (except funds and securities
associated with transactions under paragraph (b)(1)(i) of this section
and does not advertise that it is in the business of effecting
transactions in government securities otherwise than in connection with
futures or options on futures trading or the investment of margin or
excess funds related to such trading or the trading of any other
instrument subject to CFTC jurisdiction, the following transactions in
government securities are incidental to the futures-related business of
such a futures commission merchant:
(1) Transactions as agent for a customer--
(i) To effect delivery pursuant to a futures contract; or
(ii) For risk reduction or arbitrage of existing or
contemporaneously created postions in futures or options on futures;
[[Page 25]]
(2) Transactions as agent for a customer for investment of margin
and excess funds related to futures or options on futures trading or the
trading of other instruments subject to CFTC jurisdiction, provided
further that,
(i) Such transactions involve Treasury securities with a maturity of
less than 93 days at the time of the transation.
(ii) Such transactions generate no monetary profit for the futures
commission merchant in excess of the costs of executing such
transactions, or
(iii) Such transactions are unsolicited, and commissions and other
income generated on transactions pursuant to this paragraph (b)(2)(iii)
(including transactional fees paid by the futures commission merchant
and charged to its customer) do not exceed 2% of such futures commission
merchant's total commission revenues;
(3) Exchange of futures for physicals transactions as agent for or
as principal with a customer; and
(4) Any transaction or transactions that the Commission exempts,
either unconditionally or on specified terms and conditions, as
incidental to the futures-related business of a specified futures
commission merchant, a specified category of futures commission
merchants, or futures commission merchants generally.
(c) Definitions. (1) Customer means any person for whom the futures
commission merchant effects or intends to effect transactions in
futures, options on futures, or any other instruments subject to CFTC
jurisdiction.
(2) Regulated account means a customer segregation account subject
to the regulations of the CFTC; provided, however, that, where such
regulations do not permit to be maintained in such an account or require
to be maintained in a separate regulated account funds or securities in
proprietary accounts or funds or securities used as margin for or excess
funds related to futures contracts, options on futures or any other
instruments subject to CFTC jurisdiction that trade outside the United
States, its territories, or possessions, the term regulated account
means such separate regulated account or any other account subject to
record-keeping regulations of the CFTC.
(3) Unsolicited transaction means a transaction that is not effected
in a discretionary account or recommended to a customer by the futures
commission merchant, an associated person of a futures commission
merchant, a business affiliate that is controlled by, controlling, or
under common control with the futures commission merchant, or an
introducing broker that is guaranteed by the futures commission
merchant.
(4) Futures and futures contracts mean contracts of sale of a
commodity for future delivery traded on or subject to the rules of a
contract market designated by the CFTC or traded on or subject to the
rules of any board of trade located outside the United States, its
territories, or possessions.
(5) Options on futures means puts or calls on a futures contract
traded on or subject to the rules of a contract market designated by the
CFTC or traded or subject to the rules of any board of trade located
outside the United States, its territories, or possessions.
[52 FR 27969, July 24, 1987]
Sec. 240.3a44-1 Proprietary government securities transactions incidental to the futures-related business of a CFTC-regulated person.
(a) A person registered with the Commodity Futures Trading
Commission (``CFTC''), a contract market designated by the CFTC, such a
contract market's affiliated clearing organization, or any floor trader
or such a contract market (hereinafter referred to collectively as a
``CFTC-regulated person'') is not a government securities dealer solely
because such person effects transactions for its own account in
government securities that are defined in paragraph (b) of this section
as incidental to such person's futures-related business.
(b) Provided that a CFTC-regulated person does not advertise or
otherwise hold itself out as a government securities dealer except as
permitted under rule 3a43-1 (Sec. 240.3a43-1) the following transactions
in government securities for its own account are incidental to the
futures-related business of such a CFTC-regulated person:
[[Page 26]]
(1) Transactions to effect delivery of a government security
pursuant to a futures contract;
(2) Exchange of futures for physicals transactions with (i) a
government securities broker or government securities dealer that has
registered with the Commission or filed notice pursuant to section
15C(a) of the Act or (ii) a CFTC-regulated person;
(3) Transactions (including repurchase agreements and reverse
repurchase agreements) involving segregated customer funds and
securities or funds and securities held by a clearing organization with
(i) a government securities broker or government securities dealer that
has registered with the Commission of filed notice pursuant to section
15C(a) of the Act or (ii) a bank;
(4) Transactions for risk reduction or arbitrage of existing or
contemporaneously created positions in futures or options on futures
with (i) a government securities broker or government securities dealer
that has registered with the Commission or filed notice pursuant to
section 15C(a) of the Act or (ii) a CFTC-regulated person;
(5) Repurchase and reverse repurchase agreement transactions between
a futures commission merchant acting in a proprietary capacity and
another CFTC-regulated person acting in a proprietary capacity and
contemporaneous offsetting transactions between such a futures
commission merchant and (i) a government securities broker or government
securities dealer that has registered with the Commission or filed
notice pursuant to section 15C(a) of the Act, (ii) a bank, or (iii) a
CFTC-regulated person acting in a proprietary capacity; and
(6) Any transaction or transactions that the Commission exempts,
either unconditionally or on specified terms and conditions, as
incidental to the futures related business of a specified CFTC-regulated
person, a specified category of CFTC-regulated persons, or CFTC-
regulated persons generally.
(c) Definitions. (1) Segregated customer funds means funds subject
to CFTC segregation requirements.
(2) Futures and futures contracts means contracts of sale of a
commodity for future delivery traded on or subject to the rules of a
contract market designated by the CFTC or traded on or subject to the
rules of any board of trade located outside the United States, its
territories, or possessions.
(3) Options on futures means puts or calls on a futures contract
traded on or subject to the rules of a contract market designated by the
CFTC or traded on or subject to the rules of any board of trade located
outside the United States, its territories, or possessions.
[52 FR 27970, July 24, 1987]
Sec. 240.3a51-1 Definition of ``penny stock''.
For purposes of section 3(a)(51) of the Act, the term ``penny
stock'' shall mean any equity security other than a security:
(a) That is a reported security, as defined in 17 CFR 240.11Aa3-1(a)
of this chapter;
except that a security that is registered on the American Stock
Exchange, Inc. pursuant to the listing criteria of the Emerging Company
Marketplace, but that does not otherwise satisfy the requirements of
paragraph (b), (c), or (d) of this section, shall be a penny stock for
purposes of section 15(b)(6) of the Act;
(b) That is issued by an investment company registered under the
Investment Company Act of 1940;
(c) That is a put or call option issued by the Options Clearing
Corporation;
(d) Except for purposes of section 7(b) of the Securities Act and
Rule 419 (17 CFR 230.419), that has a price of five dollars or more;
(1) For purposes of paragraph (d) of this section:
(i) A security has a price of five dollars or more for a particular
transaction if the security is purchased or sold in that transaction at
a price of five dollars or more, excluding any broker or dealer
commission, commission equivalent, mark-up, or mark-down; and
(ii) Other than in connection with a particular transaction, a
security has a price of five dollars or more at a given time if the
inside bid quotation is five dollars or more; provided, however, that if
there is no such inside bid quotation, a security has a price of five
dollars or more at a given time if the average of
[[Page 27]]
three or more interdealer bid quotations at specified prices displayed
at that time in an interdealer quotation system, as defined in 17 CFR
240.15c2-7(c)(1), by three or more market makers in the security, is
five dollars or more.
(iii) The term ``inside bid quotation'' shall mean the highest bid
quotation for the security displayed by a market maker in the security
on an automated interdealer quotation system that has the
characteristics set forth in section 17B(b)(2) of the Act, or such other
automated interdealer quotation system designated by the Commission for
purposes of this section, at any time in which at least two market
makers are contemporaneously displaying on such system bid and offer
quotations for the security at specified prices.
(2) If a security is a unit composed of one or more securities, the
unit price divided by the number of shares of the unit that are not
warrants, options, rights, or similar securities must be five dollars or
more, as determined in accordance with paragraph (d)(1) of this section,
and any share of the unit that is a warrant, option, right, or similar
security, or a convertible security, must have an exercise price or
conversion price of five dollars or more;
(e) That is registered, or approved for registration upon notice of
issuance, on a national securities exchange that makes transaction
reports available pursuant to 17 CFR 240.11Aa3-1 of this chapter,
provided that:
(1) Price and volume information with respect to transactions in
that security is required to be reported on a current and continuing
basis and is made available to vendors of market information pursuant to
the rules of the national securities exchange; and
(2) The security is purchased or sold in a transaction that is
effected on or through the facilities of the national securities
exchange, or that is part of a distribution of the security;
except that a security that satisfies the requirements of this
paragraph, but that does not otherwise satisfy the requirements of
paragraph (a), (b), (c), or (d) of this section, shall be a penny stock
for purposes of Section 15(b)(6) of the Act;
(f) That is authorized, or approved for authorization upon notice of
issuance, for quotation in the National Association of Securities
Dealers' Automated Quotation system (NASDAQ), provided that price and
volume information with respect to transactions in that security is
required to be reported on a current and continuing basis and is made
available to vendors of market information pursuant to the rules of the
National Association of Securities Dealers, Inc.;
except that a security that satisfies the requirements of this
paragraph, but that does not otherwise satisfy the requirements of
paragraphs (a), (b), (c), or (d) of this section, shall be a penny stock
for purposes of section 15(b)(6) of the Act; or
(g) Whose issuer has:
(1) Net tangible assets (i.e., total assets less intangible assets
and liabilities) in excess of $2,000,000, if the issuer has been in
continuous operation for at least three years, or $5,000,000, if the
issuer has been in continuous operation for less than three years; or
(2) Average revenue of at least $6,000,000 for the last three years.
(3) For purposes of paragraph (g) of this section, net tangible
assets or average revenues must be demonstrated by financial statements
dated less than fifteen months prior to the date of the transaction that
the broker or dealer has reviewed and has a reasonable basis for
believing are accurate in relation to the date of the transaction, and:
(i) If the issuer is other than a foreign private issuer, are the
most recent financial statements for the issuer that have been audited
and reported on by an independent public accountant in accordance with
the provisions of 17 CFR 210.2-02; or
(ii) If the issuer is a foreign private issuer, are the most recent
financial statements for the issuer that have been filed with the
Commission or furnished to the Commission pursuant to 17 CFR 240.12g3-
2(b); provided, however, that if financial statements for the issuer
dated less than fifteen months prior to the date of the transaction have
not been filed with or furnished to the Commission, financial statements
dated within fifteen months prior to
[[Page 28]]
the transaction shall be prepared in accordance with generally accepted
accounting principles in the country of incorporation, audited in
compliance with the requirements of that jurisdiction, and reported on
by an accountant duly registered and in good standing in accordance with
the regulations of that jurisdiction.
(4) The broker or dealer shall preserve, as part of its records,
copies of the financial statements required by paragraph (g)(3) of this
section for the period specified in 17 CFR 240.17a-4(b).
[57 FR 18032, Apr. 28, 1992, as amended at 58 FR 58101, Oct. 29, 1993]
Definitions
Sec. 240.3b-1 Definition of ``listed''.
The term listed means admitted to full trading privileges upon
application by the issuer or its fiscal agent or, in the case of the
securities of a foreign corporation, upon application by a banker
engaged in distributing them; and includes securities for which
authority to add to the list on official notice of issuance has been
granted.
(Sec. 3, 48 Stat. 884; 15 U.S.C. 78c)
[13 FR 8179, Dec. 22, 1948]
Sec. 240.3b-2 Definition of ``officer''.
The term officer means a president, vice president, secretary,
treasury or principal financial officer, comptroller or principal
accounting officer, and any person routinely performing corresponding
functions with respect to any organization whether incorporated or
unincorporated.
[47 FR 11464, Mar. 16, 1982; 47 FR 11819, Mar. 19, 1982]
Sec. 240.3b-3 Definition of ``short sale''.
The term short sale means any sale of a security which the seller
does not own or any sale which is consummated by the delivery of a
security borrowed by, or for the account of, the seller. A person shall
be deemed to own a security if (a) he or his agent has the title to it;
or (b) he has purchased, or has entered into an unconditional contract,
binding on both parties thereto, to purchase it but has not yet received
it; or (c) he owns a security convertible into or exchangeable for it
and has tendered such security for conversion or exchange; or (d) he has
an option to purchase or acquire it and has exercised such option; or
(e) he has rights or warrants to subscribe to it and has exercised such
rights or warrants: Provided, however, That a person shall be deemed to
own securities only to the extent that he has a net long position in
such securities.
[40 FR 25444, June 16, 1975]
Cross Reference: For regulations relating to ``short sale'', see
Secs. 240.10a-1, and 240.10a-2.
Sec. 240.3b-4 Definition of ``foreign government, foreign issuer'' and ``foreign private issuer.''
(a) The term foreign government means the government of any foreign
country or of any political subdivision of a foreign country.
(b) The term foreign issuer means any issuer which is a foreign
government, a national of any foreign country or a corporation or other
organization incorporated or organized under the laws of any foreign
country.
(c) Foreign private issuer: The term ``foreign private issuer''
means any foreign issuer other than a foreign government except an
issuer meeting the following conditions:
(1) More than 50 percent of the outstanding voting securities of
such issuer are held of record either directly or through voting trust
certificates or depositary receipts by residents of the United States;
and
(2) Any of the following:
(i) The majority of the executive officers or directors are United
States citizens or residents,
(ii) More than 50 percent of the assets of the issuer are located in
the United States, or
(iii) The business of the issuer is administered principally in the
United States. For the purpose of this paragraph, the term ``resident,''
as applied to security holders, shall mean any person whose address
appears on the
[[Page 29]]
records of the issuer, the voting trustee, or the depositary as being
located in the United States.
(Secs. 6, 7, 8, 10, 19(a), 48 Stat. 78, 79, 81, 85; secs. 205, 209, 48
Stat. 906, 908; sec. 301, 54 Stat. 857; sec. 8, 68 Stat. 685; sec. 1, 79
Stat. 1051; sec. 308(a)(2), 90 Stat. 57; secs. 12, 13, 15(d), 23(a), 48
Stat. 892, 894, 895, 901; secs. 1, 3, 8, 49 Stat. 1375, 1377, 1379; sec.
203(a), 49 Stat. 704; sec. 202, 68 Stat. 686; secs. 3, 4, 6, 78 Stat.
565-574; secs. 1, 2, 82 Stat. 454; sec. 28(c), 84 Stat. 1435; secs. 1,
2, 84 Stat. 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 18, 89
Stat. 117, 118, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 204,
91 Stat. 1494, 1498, 1500; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l,
78m, 78o(d), 78w(a))
[32 FR 7848, May 30, 1967, as amended at 48 FR 46739, Oct. 14, 1983]
Sec. 240.3b-5 Non-exempt securities issued under governmental obligations.
(a) Any part of an obligation evidenced by any bond, note,
debenture, or other evidence of indebtedness issued by any governmental
unit specified in section 3(a)(12) of the Act which is payable from
payments to be made in respect of property or money which is or will be
used, under a lease, sale, or loan arrangement, by or for industrial or
commercial enterprise, shall be deemed to be a separate ``security''
within the meaning of section 3(a)(10) of the Act, issued by the lessee
or obligor under the lease, sale or loan arrangement.
(b) An obligation shall not be deemed a separate ``security'' as
defined in paragraph (a) of this section if, (1) the obligation is
payable from the general revenues of a governmental unit, specified in
section 3(a)(12) of the Act, having other resources which may be used
for the payment of the obligation, or (2) the obligation relates to a
public project or facility owned and operated by or on behalf of and
under the control of a governmental unit specified in such section, or
(3) the obligation relates to a facility which is leased to and under
the control of an industrial or commercial enterprise but is a part of a
public project which, as a whole, is owned by and under the general
control of a governmental unit specified in such section, or an
instrumentality thereof.
(c) This rule shall apply to transactions of the character described
in paragraph (a) of this section only with respect to bonds, notes,
debentures or other evidences of indebtedness sold after December 31,
1968.
(Sec. 3, 48 Stat. 882; 15 U.S.C. 78c, 77s)
[33 FR 12648, Sept. 6, 1968, as amended at 35 FR 6000, Apr. 11, 1970]
Sec. 240.3b-6 Liability for certain statements by issuers.
(a) A statement within the coverage of paragraph (b) of this section
which is made by or on behalf of an issuer or by an outside reviewer
retained by the issuer shall be deemed not to be a fraudulent statement
(as defined in paragraph (d) of this section), unless it is shown that
such statement was made or reaffirmed without a reasonable basis or was
disclosed other than in good faith.
(b) This rule applies to the following statements:
(1) A forward-looking statement (as defined in paragraph (c) of this
section) made in a document filed with the Commission, in Part I of a
quarterly report on Form 10-Q and Form 10-QSB, Sec. 249.308a of this
chapter, or in an annual report to share-holders meeting the
requirements of Rules 14a-3(b) and (c) or 14c-3(a) and (b) under the
Securities Exchange Act of 1934, a statement reaffirming such forward-
looking statement subsequent to the date the document was filed or the
annual report was made publicly available, or a forward-looking
statement made prior to the date the document was filed or the date the
annual report was made publicly available if such statement is
reaffirmed in a filed document, in Part I of a quarterly report on Form
10-Q and Form 10-QSB, or in an annual report made publicly available
within a reasonable time after the making of such forward-looking
statement; Provided, That:
(i) At the time such statements are made or reaffirmed, either the
issuer is subject to the reporting requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934 and has complied with the
requirements of Rule 13a-1 or 15d-1 thereunder, if applicable, to file
its most recent annual report on Form 10-K and Form 10-KSB or Form
[[Page 30]]
20-F or Form 40-F; or if the issuer is not subject to the reporting
requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934, the statements are made in a registration statement filed under
the Securities Act of 1933 offering statement or solicitation of
interest written document or broadcast script under Regulation A or
pursuant to section 12 (b) or (g) of the Securities Exchange Act of
1934, and
(ii) The statements are not made by or on behalf of an issuer that
is an investment company registered under the Investment Company Act of
1940; and
(2) Information which is disclosed in a document filed with the
Commission in Part I of a quarterly report on Form 10-Q and Form 10-QSB
(Sec. 249.308a of this chapter) or in an annual report to shareholders
meeting the requirements of Rules 14a-3 (b) and (c) or 14c-3 (a) and (b)
under the Securities Exchange Act of 1934 (Secs. 240.14a-3 (b) and (c)
or 240.14c-3 (a) and (b) of this chapter) and which relates to (i) the
effects of changing prices on the business enterprise, presented
voluntarily or pursuant to Item 303 of Regulation S-K (Sec. 229.303 of
this chapter) or Regulation S-B (Sec. 228.303 of this chapter) or Item 9
of Form 20-F (Sec. 249.220f of this chapter), ``Management's discussion
and analysis of financial condition and results of operations,'' or Item
302 of Regulation S-K (Sec. 229.302 of this chapter), ``Supplementary
financial information,'' or Rule 3-20(c) of Regulation S-X (Sec. 210.3-
20(c)) of this chapter) or (ii) the value of proved oil and gas reserves
(such as a standardized measure of discounted future net cash flows
relating to proved oil and gas reserves as set forth in paragraphs 30-34
of Statement of Financial Accounting Standards No. 69) presented
voluntarily or pursuant to Item 302 of Regulation S-K (Sec. 229.302 of
this chapter).
(c) For the purpose of this rule, the term forward-looking statement
shall mean and shall be limited to:
(1) A statement containing a projection of revenues, income (loss),
earnings (loss) per share, capital expenditures, dividends, capital
structure or other financial items;
(2) A statement of management's plans and objectives for future
operations;
(3) A statement of future economic performance contained in
management's discussion and analysis of financial condition and results
of operations included pursuant to Item 303 of Regulation S-K
(Sec. 229.303 of this chapter) or Item 9 of Form 20-F or
(4) Disclosed statements of the assumptions underlying or relating
to any of the statements described in paragraphs (c) (1), (2), or (3) of
this section.
(d) For the purpose of this rule the term fraudulent statement shall
mean a statement which is an untrue statement of a material fact, a
statement false or misleading with respect to any material fact, an
omission to state a material fact necessary to make a statement not
misleading, or which constitutes the employment of a manipulative,
deceptive, or fraudulent device, contrivance, scheme, transaction, act,
practice, course of business, or an artifice to defraud, as those terms
are used in the Securities Exchange Act of 1934 or the rules or
regulations promulgated thereunder.
[46 FR 13990, Feb. 25, 1981, as amended at 46 FR 19457, Mar. 31, 1981;
47 FR 11464, Mar. 16, 1982; 47 FR 54780, Dec. 6, 1982; 47 FR 57915, Dec.
29, 1982; 48 FR 19876, May 3, 1983; 56 FR 30067, July 1, 1991; 57 FR
36494, Aug. 13, 1992]
Sec. 240.3b-7 Definition of ``executive officer''.
The term executive officer, when used with reference to a
registrant, means its president, any vice president of the registrant in
charge of a principal business unit, division or function (such as
sales, administration or finance), any other officer who performs a
policy making function or any other person who performs similar policy
making functions for the registrant. Executive officers of subsidiaries
may be deemed executive officers of the registrant if they perform such
policy making functions for the registrant.
[47 FR 11464, Mar. 16, 1982, as amended at 56 FR 7265, Feb. 21, 1991]
[[Page 31]]
Sec. 240.3b-8 Definitions of ``Qualified OTC Market Maker, Qualified Third Market Maker'' and ``Qualified Block Positioner''.
For the purposes of Regulation U under the Act (12 CFR part 221):
(a) The term Qualified OTC Market Maker in an over-the-counter
(``OTC'') margin security means a dealer in any ``OTC Margin Security''
(as that term is defined in section 2(j) of Regulation U (12 CFR
221.2(j)) who (1) is a broker or dealer registered pursuant to section
15 of the Act, (2) is subject to and is in compliance with Rule 15c3-1
(17 CFR 240.15c3-1), (3) has and maintains minimum net capital, as
defined in Rule 15c3-1, of the lesser of (i) $250,000 or (ii) $25,000
plus $5,000 for each security in excess of five with regard to which the
broker or dealer is, or is seeking to become a Qualified OTC Market
Maker, and (4) except when such activity is unlawful, meets all of the
following conditions with respect to such security: (i) He regularly
publishes bona fide, competitive bid and offer quotations in a
recognized inter-dealer quotation system, (ii) he furnishes bona fide,
competitive bid and offer quotations to other brokers and dealers on
request, (iii) he is ready, willing and able to effect transactions in
reasonable amounts, and at his quoted prices, with other brokers and
dealers, and (iv) he has a reasonable average rate of inventory turnover
in such security.
(b) The term Qualified Third Market Maker means a dealer in any
stock registered on a national securities exchange (``exchange'') who
(1) is a broker or dealer registered pursuant to section 15 of the Act,
(2) is subject to and is in compliance with Rule 15c3-1 (17 CFR
240.15c3-1), (3) has and maintains minimum net capital, as defined in
Rule 15c3-1, of the lesser of (i) $500,000 or (ii) $100,000 plus $20,000
for each security in excess of five with regard to which the broker or
dealer is, or is seeking to become, a Qualified Third Market Maker, and
(4) except when such activity is unlawful, meets all of the following
conditions with respect to such security: (i) He furnishes bona fide,
competitive bid and offer quotations at all times to other brokers and
dealers on request, (ii) he is ready, willing and able to effect
transactions for his own account in reasonable amounts, and at his
quoted prices with other brokers and dealers, and (iii) he has a
reasonable average rate of inventory turnover in such security.
(c) The term Qualified Block Positioner means a dealer who (1) is a
broker or dealer registered pursuant to section 15 of the Act, (2) is
subject to and in compliance with Rule 15c3-1 (17 CFR 240.15c3-1), (30
has and maintains minimum net capital, as defined in Rule 15c3-1 of
$1,000,000 and (4) except when such activity is unlawful, meets all of
the following conditions: (i) He engages in the activity of purchasing
long or selling short, from time to time, from or to a customer (other
than a partner or a joint venture or other entity in which a partner,
the dealer, or a person associated with such dealer, as defined in
section 3(a) (18) of the Act, participates) a block of stock with a
current market value of $200,000 or more in a single transaction, or in
several transactions at approximately the same time, from a single
source to facilitate a sale or purchase by such customer, (ii) he has
determined in the exercise of reasonable diligence that the block could
not be sold to or purchased from others on equivalent or better terms,
and (iii) he sells the shares comprising the block as rapidly as
possible commensurate with the circumstances.
(15 U.S.C. 78a et seq., as amended by Pub. L. 94-29 (June 4, 1975),
particularly secs. 2, 3, 11, 15, 17 and 23 thereof (15 U.S.C. 78b, 78c,
78k, 78o, 78q and 78w))
[48 FR 39606, Sept. 1, 1983]
Sec. 240.3b-9 Definition of ``bank'' for purposes of section 3(a) (4) and (5) of the Act.
(a) The term bank as used in the definition of broker and dealer in
section 3(a) (4) and (5) of the Act does not include a bank that:
(1) Publicly solicits brokerage business for which it receives
transaction-related compensation, unless the bank enters into a
contractual or other arrangement with a broker-dealer registered under
the Act pursuant to which the broker-dealer will offer brokerage
services on or off the premises of the bank, provided that:
[[Page 32]]
(i) Such broker-dealer is clearly identified as the person
performing the brokerage services;
(ii) Bank employees perform only clerical and ministerial functions
in connection with brokerage transactions unless such employees are
qualified as registered representatives pursuant to the requirements of
the self-regulatory organizations;
(iii) Bank employees do not receive, directly or indirectly,
compensation for any brokerage activities unless such employees are
qualified as registered representatives pursuant to the requirements of
the self-regulatory organizations; and
(iv) Such services are provided by the broker-dealer on a basis in
which all customers are fully disclosed.
(2) Directly or indirectly receives transaction-related compensation
for providing brokerage services for trust, managing agency or other
accounts to which the bank provides advice, provided, however, that this
subsection shall not apply if the bank executes transactions through a
registered broker-dealer and:
(i) Each account independently chooses the broker-dealer through
which execution is effected;
(ii) The bank's personnel do not receive, directly or indirectly,
transaction-related compensation or compensation based upon the number
of accounts choosing to use the registered broker-dealer; and
(iii) The brokerage services are provided by the broker-dealer on a
basis in which all customers are fully disclosed; or
(3) Deals in or underwrites securities.
(b) This rule shall not apply to any bank that engages in one or
more of the following activities only:
(1) Effects transactions in exempted or municipal securities as
defined in the Act or in commercial paper, bankers' acceptances or
commercial bills;
(2) Effects no more than 1,000 transactions each year in securities
other than exempted or municipal securities as defined in the Act or in
commercial paper, bankers' acceptances or commercial bills;
(3) Effects transactions for the investment portfolio of affiliated
companies;
(4) Effects transactions as part of a program for the investment or
reinvestment of bank deposit funds into any no-load open-end investment
company registered pursuant to the Investment Company Act of 1940 that
attempts to maintain a constant net asset value per share or has an
investment policy calling for investment of at least 80% of its assets
in debt securities maturing in thirteen months or less;
(5) Effects transactions as part of any bonus, profit-sharing,
pension, retirement, thrift, savings, incentive, stock purchase, stock
ownership, stock appreciation, stock option, dividend reinvestment or
similar plan for employees or shareholders of an issuer or its
subsidiaries;
(6) Effects transactions pursuant to sections 3(b), 4(2) and 4(6) of
the Securities Act of 1933 and the rules and regulations thereunder; or
(7) Is subject to section 15(e) of the Act.
(c) The Commission, upon written request, or upon its own motion,
may exempt a bank, either unconditionally or on specific terms and
conditions, where the Commisison determines that the bank's activities
are not within the intended meaning and purpose of this rule.
(d) For purposes of this section, the term transaction-related
compensation shall mean monetary profit to the bank in excess of cost
recovery for providing brokerage execution services.
[50 FR 28394, July 12, 1985]
Sec. 240.3b-10 [Reserved]
Sec. 240.3b-11 Definitions relating to limited partnership roll-up transactions for purposes of sections 6(b)(9), 14(h) and 15A(b)(12)-(13).
For purposes of sections 6(b)(9), 14(h) and 15A(b)(12)-(13) of the
Act (15 U.S.C. 78f(b)(9), 78n(h) and 78o-3(b)(12)-(13)):
(a) The term limited partnership roll-up transaction does not
include a transaction involving only entities that are not ``finite-
life'' as defined in Item 901(b)(2) of Regulation S-K
(Sec. 229.901(b)(2) of this chapter).
[[Page 33]]
(b) The term limited partnership roll-up transaction does not
include a transaction involving only entities registered under the
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or any Business
Development Company as defined in section 2(a)(48) of that Act (15
U.S.C. 80a-2(a)(48)).
(c) The term regularly traded shall be defined as in Item
901(c)(2)(v)(C) of Regulation S-K (Sec. 229.901(c)(2)(v)(C) of this
chapter).
[59 FR 63684, Dec. 8, 1994]
Registration and Exemption of Exchanges
Sec. 240.6a-1 Form of application and amendments.
(a) An application of an exchange for registration as a national
securities exchange, or for exemption from such registration, shall be
made in duplicate on Form 1 (Sec. 249.1 of this chapter), each of which
shall be accompanied by the statement and exhibits prescribed to be
filed in connection therewith.
(b) An amendment to such application shall be made in duplicate on
Form 1-A (Sec. 249.1a of this chapter), and each amendment shall be
dated and numbered in order of filing.
(c) Promptly after the discovery that any information in the
statement, any exhibit, or any amendment was inaccurate when filed, the
exchange shall file with the Commission an amendment correcting such
inaccuracy.
(d) Whenever the number of changes to be reported in an amendment,
or the number of amendments filed, are so great that the purpose of
clarity will be promoted by the filing of a new complete statement and
exhibits, an exchange may, at its election, or shall, upon request of
the Commission, file as an amendment a complete new statement together
with all exhibits which are prescribed to be filed in connection with
Form 1.
(Secs. 5, 6, 17, 48 Stat. 885, 897, as amended; 15 U.S.C. 78e, 78f, 78q)
[14 FR 7759, Dec. 29, 1949]
Sec. 240.6a-2 Periodic amendments to registration statements or exemption statements of exchanges.
(a) Unless exempted pursuant to paragraph (c) of this section, on or
before June 30 of each year, each exchange registered as a national
securities exchange or exempted from such registration shall file an
annual amendment setting forth:
(1) All changes, and the effective dates thereof, which have been
effected in any of the information contained or incorporated in the
statement, and which have not previously been reported in an annual
amendment. Such amendment shall bring the statement up to date as of the
latest practicable date within one month of the date on which the
amendment is filed. In the event that no changes have occurred in any of
this material during the period covered by the amendment, a statement to
that effect shall be set forth in the amendment.
(2) Complete Exhibits E and F as of the end of the latest fiscal
year of the exchange, or, in the case of the unconsolidated financial
statements of an affiliate or subsidiary required under Exhibit F, as of
the end of the latest fiscal year of such affiliate. In the event that
no change has occurred in the status of an affiliate or subsidiary
listed in a previous Exhibit F as one that is required by another
Commission rule to file annual financial statements equivalent to those
described in Exhibit F, a statement to that effect shall be included.
(3) Complete Exhibits G, H, J, L and M, which shall be up to date as
of the latest practicable date within 3 months of the date on which the
annual amendment is filed, except that:
(i) Exhibit J need only contain the name and principal place of
business of each member organization, and for each member organization
elected to membership after December 31, 1994, the date of election to
membership;
(ii) If a national securities exchange publishes or cooperates in
the publication of the information required in these exhibits on an
annual or more frequent basis, in lieu of filing such an exhibit a
national securities exchange may:
(A) Identify the publication in which such information is available,
the name, address, and telephone number of the person from whom such
publication may be obtained, and the price thereof; and
[[Page 34]]
(B) Certify to the accuracy of such information as of its date;
(iii) If a national securities exchange keeps the information
required in Exhibits L and M up to date and makes it available to the
Commission and the public on request, in lieu of filing such an exhibit,
a national securities exchange may certify that the information is kept
up to date and is available to the Commission and the public upon
request.
(b) Unless exempted pursuant to paragraph (c) of this section, on or
before June 30, 1983, and every three years thereafter each exchange
registered as a national securities exchange shall file complete
Exhibits A(1), A(2) and A(3) to its registration statement, which shall
be up to date as of the latest practicable date within 3 months of the
date on which these exhibits are filed, except that:
(1) If a national securities exchange publishes or cooperates in the
publication of the information required in these exhibits on an annual
or more frequent basis, in lieu of filing such an exhibit a national
securities exchange may:
(i) Identify the publication in which such information is available,
the name, address, and telephone number of the person from whom such
publication may be obtained, and the price thereof; and
(ii) Certify to the accuracy of such information as of its date;
(2) If a national securities exchange keeps the information required
in these exhibits up to date and makes it available to the Commission
and the public on request, in lieu of filing such an exhibit, a national
securities exchange may certify that the information is kept up to date
and is available to the Commission and the public upon request.
(c) The Commission may exempt a national securities exchange from
making the periodic amendments required by this rule for any affiliate
or subsidiary listed in response to Item 7 of the exchange's
registration statement, as amended, that either (1) is listed in
response to Item 7 of the registration statement, as amended, of one or
more other national securities exchanges; or (2) was an inactive
subsidiary throughout the subsidiary's latest fiscal year. The
Commission may grant such exemptions upon such terms and conditions as
it deems are necessary and appropriate for the protection of investors
and the public interest, provided, however, that at least one national
securities exchange shall be required to make the periodic amendments
required by this rule for an affiliate or subsidiary described in (c)(1)
of this section.
(15 U.S.C. 78a et seq., as amended by Pub. L. 94-29 (June 4, 1975), and
particularly secs. 3, 5, 6, 17, 19 and 23 thereof (15 U.S.C. 78, 78e,
78f, 78g, 78s and 78w))
[48 FR 24666, June 2, 1983, as amended at 59 FR 66700, Dec. 28, 1994]
Sec. 240.6a-3 Supplemental material.
Each exchange registered as a national securities exchange or
exempted from such registration shall furnish the following supplemental
material:
(a) Within 10 days after any action is taken which renders no longer
accurate any of the information contained or incorporated in the
statement or in any exhibit (except Exhibits E, F, L and M), or in any
amendment thereto, the exchange shall file with the Commission written
notification in triplicate setting forth the nature of such action and
the effective date thereof. Such notification may be filed either in the
form of a letter or in the form of a notice made generally available to
members of the exchange.
(b) Within 10 days after issuing or making generally available to
members of the exchange any material (including notices, circulars,
bulletins, lists, periodicals, etc.) the exchange shall file with the
Commission three copies of such material.
(c) Within 15 days after the end of each calendar month the exchange
shall file with the Commission a report concerning the securities sold
on such exchange during such calendar month, setting forth:
(1) The number of shares of stock sold and the aggregate dollar
amount thereof;
(2) The principal amount of bonds sold and the aggregate dollar
amount thereof; and
[[Page 35]]
(3) The number of units of rights and warrants sold and the
aggregate dollar amount thereof.
(Secs. 5, 6, 17, 48 Stat. 885, 897, as amended; 15 U.S.C. 78e, 78f, 78q)
[14 FR 7759, Dec. 29, 1949, as amended at 19 FR 4723, July 31, 1954]
Sec. 240.7c2-1 [Reserved]
Hypothecation of Customers' Securities
Sec. 240.8c-1 Hypothecation of customers' securities.
(a) General provisions. No member of a national securities exchange,
and no broker or dealer who transacts a business in securities through
the medium of any such member shall, directly or indirectly, hypothecate
or arrange for or permit the continued hypothecation of any securities
carried for the account of any customer under circumstances:
(1) That will permit the commingling of securities carried for the
account of any such customer with securities carried for the account of
any other customer, without first obtaining the written consent of each
such customer to such hypothecation;
(2) That will permit such securities to be commingled with
securities carried for the account of any person other than a bona fide
customer of such member, broker or dealer under a lien for a loan made
to such member, broker or dealer; or
(3) That will permit securities carried for the account of customers
to be hypothecated or subjected to any lien or liens or claim or claims
of the pledges or pledgees, for a sum which exceeds the aggregate
indebtedness of all customers in respect of securities carried for their
accounts; except that this clause shall not be deemed to be violated by
reason of an excess arising on any day through the reduction of the
aggregate indebtedness of customers on such day, provided that funds or
securities in an amount sufficient to eliminate such excess are paid or
placed in transfer to pledgees for the purpose of reducing the sum of
the liens or claims to which securities carried for the account of
customers are subjected as promptly as practicable after such reduction
occurs, but before the lapse of one-half hour after the commencement of
banking hours on the next banking day at the place where the largest
principal amount of loans of such member, broker or dealer are payable
and, in any event, before such member, broker or dealer on such day has
obtained or increased any bank loan collateralized by securities carried
for the account of customers.
(b) Definitions. For the purposes of this section:
(1) The term customer shall not be deemed to include any general or
special partner or any director or officer of such member, broker, or
dealer, or any participant, as such, in any joint group or syndicate
account with such member, broker, or dealer or with any partner, officer
or director thereof;
(2) The term securities carried for the account of any customer
shall be deemed to mean:
(i) Securities received by or on behalf of such member, broker or
dealer for the account of any customer;
(ii) Securities sold and appropriated by such member, broker or
dealer to a customer, except that if such securities were subject to a
lien when appropriated to a customer they shall not be deemed to be
``securities carried for the account of any customer'' pending their
release from such lien as promptly as practicable:
(iii) Securities sold, but not appropriated, by such member, broker
or dealer to a customer who has made any payment therefor, to the extent
that such member, broker or dealer owns and has received delivery of
securities of like kind, except that if such securities were subject to
a lien when such payment was made they shall not be deemed to be
``securities carried for the account of any customer'' pending their
release from such lien as promptly as practicable:
(3) ``Aggregate indebtedness'' shall not be deemed to be reduced by
reason of uncollected items. In computing aggregate indebtedness,
related guaranteed and guarantor accounts shall be treated as a single
account and considered on a consolidated basis, and balances in accounts
carrying both long and short positions shall be adjusted by
[[Page 36]]
treating the market value of the securities required to cover such short
positions as though such market value were a debit; and
(4) In computing the sum of the liens or claims to which securities
carried for the account of customers of a member, broker or dealer are
subject, any rehypothecation of such securities by another member,
broker or dealer who is subject to this section or to Sec. 240.15c2-1
shall be disregarded.
(c) Exemption for cash accounts. The provisions of paragraph (a)(1)
of this section shall not apply to any hypothecation of securities
carried for the account of a customer in a special cash account within
the meaning of 12 CFR 220.4(c): Provided, That at or before the
completion of the transaction of purchase of such securities for, or of
sale of such securities to, such customer, written notice is given or
sent to such customer disclosing that such securities are or may be
hypothecated under circumstances which will permit the commingling
thereof with securities carried for the account of other customers. The
term the completion of the transaction shall have the meaning given to
such term by Sec. 240.15c1-1(b).
(d) Exemption for clearinghouse liens. The provisions of paragraphs
(a)(2), (a)(3), and (f) of this section shall not apply to any lien or
claim of the clearing corporation, or similar department or association,
of a national securities exchange or a registered national securities
association for a loan made and to be repaid on the same calendar day,
which is incidental to the clearing of transactions in securities or
loans through such corporation, department, or association: Provided,
however, That for the purpose of paragraph (a)(3) of this section,
``aggregate indebtedness of all customers in respect of securities
carried for their accounts'' shall not include indebtedness in respect
of any securities subject to any lien or claim exempted by this
paragraph.
(e) Exemption for certain liens on securities of noncustomers. The
provisions of paragraph (a)(2) of this section shall not be deemed to
prevent such member, broker or dealer from permitting securities not
carried for the account of a customer to be subjected (1) to a lien for
a loan made against securities carried for the account of customers, or
(2) to a lien for a loan made and to be repaid on the same calendar day.
For the purpose of this exemption, a loan shall be deemed to be ``made
against securities carried for the account of customers'' if only
securities carried for the account of customers are used to obtain or to
increase such loan or as substitutes for other securities carried for
the account of customers.
(f) Notice and certification requirements. No person subject to this
section shall hypothecate any security carried for the account of a
customer unless at or prior to the time of each such hypothecation, he
gives written notice to the pledgee that the security pledged is carried
for the account of a customer and that such hypothecation does not
contravene any provision of this section, except that in the case of an
omnibus account the members, broker or dealer for whom such account is
carried may furnish a signed statement to the person carrying such
account that all securities carried therein by such member, broker or
dealer will be securities carried for the account of his customers and
that the hypothecation thereof by such member, broker or dealer will not
contravene any provision of this section. The provisions of this
paragraph shall not apply to any hypothecation of securities under any
lien or claim of a pledgee securing a loan made and to be repaid on the
same calendar day.
(g) The fact that securities carried for the accounts of customers
and securities carried for the accounts of others are represented by one
or more certificates in the custody of a clearing corporation or other
subsidiary organization of either a national securities exchange or of a
registered national securities association, or of a custodian bank, in
accordance with a system for the central handling of securities
established by a national securities exchange or a registered national
securities association, pursuant to which system the hypothecation of
such securities is effected by bookkeeping entries without physical
delivery of such securities, shall not, in and of itself, result in a
commingling of securities prohibited by paragraph (a)(1) or (a)(2) of
this section, whenever a participating
[[Page 37]]
member, broker or dealer hypothecates securities in accordance with such
system: Provided, however, That (1) any such custodian of any securities
held by or for such system shall agree that it will not for any reason,
including the assertion of any claim, right or lien of any kind, refuse
to refrain from promptly delivering any such securities (other than
securities then hypothecated in accordance with such system) to such
clearing corporation or other subsidiary organization or as directed by
it, except that nothing in such agreement shall be deemed to require the
custodian to deliver any securities in contravention of any notice of
levy, seizure or similar notice, or order or judgment, issued or
directed by a governmental agency or court, or officer thereof, having
jurisdiction over such custodian, which on its face affects such
securities; (2) such systems shall have safeguards in the handling,
transfer and delivery of securities and provisions for fidelity bond
coverage of the employees and agents of the clearing corporation or
other subsidiary organization and for periodic examinations by
independent public accountants; and (3) the provisions of this paragraph
shall not be effective with respect to any particular system unless the
agreement required by paragraph (g)(1) of this section and the
safeguards and provisions required by paragraph (g)(2) of this section
shall have been deemed adequate by the Commission for the protection of
investors, and unless any subsequent amendments to such agreement,
safeguards or provisions shall have been deemed adequate by the
Commission for the protection of investors.
(Secs. 3, 8, 15, 48 Stat. 882, 888, 895; 15 U.S.C. 78c, 78h, 78o)
[13 FR 8180, Dec. 22, 1948, as amended at 31 FR 7740, June 1, 1966; 37
FR 73, Jan. 5, 1973]
Cross Reference: For interpretative releases applicable to
Sec. 240.8c-1, see Nos. 2690 and 2822 in tabulation, part 241 of this
chapter.
Sec. 240.9b-1 Options disclosure document.
(a) Definitions. The following definitions shall apply for the
purpose of this rule.
(1) Options market means a national securities exchange, an
automated quotation system of a registered securities association or a
foreign securities exchange on which standardized options are traded.
(2) Options class means all options contracts covering the same
underlying instrument.
(3) Options disclosure document means a document prepared by one or
more options markets which contains the information required by this
rule with respect to the options classes covered by the document.
(4) Standardized options are options contracts trading on a national
securities exchange, an automated quotation system of a registered
securities association, or a foreign securities exchange which relate to
options classes the terms of which are limited to specific expiration
dates and exercise prices, or such other securities as the Commission
may, by order, designate.
(b)(1) Five preliminary copies of an options disclosure document
containing the information specified in paragraph (c) of this section
shall be filed with the Commission by an options market at least 60 days
prior to the date definitive copies are furnished to customers, unless
the commission determines otherwise having due regard to the adequacy of
the information disclosed and the public interest and protection of
investors. Five copies of the definitive options disclosure document
shall be filed with the Commission not later than the date the options
disclosure document is furnished to customers. Notwithstanding the
above, the use of an options disclosure document shall not be permitted
unless the options class to which such document relates is the subject
of an effective registration statement on Form S-20 under the Securities
Act.
(2)(i) If the information contained in the options disclosure
document becomes or will become materially inaccurate or incomplete or
there is or will be an omission of material information necessary to
make the disclosure document not misleading, the options market shall
amend its options disclosure document by filing five copies of an
amendment to such document with the Commission at least 30 days prior to
[[Page 38]]
the date definitive copies are furnished to customers, unless the
Commission determines otherwise having due regard to the adequacy of the
information disclosed and the public interest and protection of
investors. Five copies of the definitive options disclosure document, as
amended, shall be filed with the Commission not later than the date the
amended options disclosure document is furnished to customers.
(ii) Notwithstanding paragraph (b)(2)(i) of this section, an options
market may distribute such materials prior to such 30-day period if it
determines, in good faith, that such delivery is necessary to ensure
timely and accurate disclosure with respect to the subject standardized
options contracts. Five copies of any amendment distributed pursuant to
this paragraph shall be filed with the Commission at the time of
distribution. In that instance, if the Commission determines, having
given due regard to the adequacy of the information disclosed and the
public interest and the protection of investors, it may require refiling
of the amendment pursuant to paragraph (b)(2)(i) of this Rule.
(c) Information required in an options disclosure document. An
options disclosure document shall contain the following information,
unless otherwise provided by the Commission, with respect to the options
classes covered by the document:
(1) A glossary of terms;
(2) The mechanics of buying, writing and exercising the options,
including settlement procedures;
(3) The risks of trading the options;
(4) The market for the options;
(5) A brief reference to the transaction costs, margin requirements
and tax consequences of options trading;
(6) Identification of the issuer of the options;
(7) Identification of the instrument or instruments underlying the
options class; and
(8) The registration of the options on Form S-20 and the
availability of the prospectus and the information in Part II of the
registration statement; and
(9) Such other information as the Commission may specify.
(d) Broker-dealer obligations. (1) No broker or dealer shall accept
an order from a customer to purchase or sell an option contract relating
to an options class that is the subject of an options disclosure
document, or approve the customer's account for the trading of such
option, unless the broker or dealer furnishes or has furnished to the
customer the options disclosure document.
(2) If an options disclosure document is amended, each broker and
dealer shall promptly send the information contained in the definitive
amendment to each customer whose account is approved for trading the
options class(es) to which the options disclosure document relates.
(Sec. 2, 7, 10, 19(a), 48 Stat. 74, 78, 81, 85; secs. 201, 205, 209,
210, 48 Stat. 905, 906, 908; secs. 1-4, 8, 68 Stat. 683, 685; sec.
12(a), 73 Stat. 143; sec. 7(a), 74 Stat. 412; sec. 27(a), 84 Stat. 1433;
sec. 308(a)(2), 90 Stat. 57; sec. 505, 94 Stat. 2292; secs. 9, 15,
23(a), 48 Stat. 889, 895, 901; sec. 230(a), 49 Stat. 704; secs. 3, 8, 49
Stat. 1377, 1379; sec. 2, 52 Stat. 1075; secs. 6, 10, 78 Stat. 570-574,
580; sec. 11(d), 84 Stat. 121; sec. 18, 89 Stat. 155; sec. 204, 91 Stat.
1500; 15 U.S.C. 77b, 77g, 77j, 77s(a), 78i, 78o, 78w(a))
[47 FR 41956, Sept. 23, 1982, as amended at 51 FR 14982, Apr. 22, 1986]
Short Sales
Sec. 240.10a-1 Short sales.
(a)(1)(i) No person shall, for his own account or for the account of
any other person, effect a short sale of any security registered on, or
admitted to unlisted trading privileges on, a national securities
exchange, if trades in such security are reported pursuant to an
``effective transaction reporting plan'' as defined in Sec. 240.11Aa3-1
(Rule 11Aa3-1 under the Act), and information as to such trades is made
available in accordance with such plan on a real-time basis to vendors
of market transaction information, (A) below the price at which the last
sale thereof, regular way, was reported pursuant to an effective
transaction reporting plan; or (B) at such price unless such price is
above the next proceeding different price at which a sale of such
security, regular way, was reported pursuant to an effective transaction
reporting plan.
(ii) The provisions of paragraph (a)(1)(i) of this section hereof
shall not apply to transactions by any person in NASDAQ securities as
defined in
[[Page 39]]
Sec. 240.11Aa3-1 (Rule 11Aa3-1 under the Act) except for those NASDAQ
securities for which transaction reports are collected, processed, and
made available pursuant to the plan originally submitted to the
Commission pursuant to Rule 17a-15 (subsequently amended and
redesignated as Rule 11Aa3-1) under the Act, which plan was declared
effective as of May 17, 1974.
(2) Notwithstanding paragraph (a)(1) of this section, any exchange,
by rule, may require that no person shall, for his own account or the
account of any other person, effect a short sale of any such security on
that exchange (i) below the price at which the last sale thereof,
regular way, was effected on such exchange, or (ii) at such price unless
such price is above the next preceding different price at which a sale
of such securities, regular way, was effected on such exchange, if that
exchange determines that such action is necessary or appropriate in its
market in the public interest or for the protection of investors; and,
if an exchange adopts such a rule, no person shall, for his own account
or for the account of any other person, effect a short sale of any such
security on such exchange otherwise than in accordance with such rule,
and compliance with any such rule of an exchange shall constitute
compliance with this paragraph (a).
(3) In determining the price at which a short sale may be effected
after a security goes ex-dividend, ex-right, or ex-any other
distribution, all sale prices prior to the ``ex'' date may be reduced by
the value of such distribution.
(b) No person shall, for his own account or for the account of any
other person, effect on a national securities exchange a short sale of
any security not covered by paragraph (a) of this rule, (1) below the
price at which the last sale thereof, regular way, was effected on such
exchange, or (2) at such price unless such price is above the next
preceding different price at which a sale of such security, regular way,
was effected on such exchange. In determining the price at which a short
sale may be effected after a security goes ex-dividend, ex-right, or ex-
any other distribution, all sale prices prior to the ``ex'' date may be
reduced by the value of such distribution.
(c) No broker or dealer shall, by the use of any facility of a
national securities exchange, or any means or instrumentality of
interstate commerce, or of the mails, effect any sell order for a
security registered on, or admitted to unlisted trading privileges on, a
national securities exchange unless such order is marked either ``long''
or ``short.''
(d) No broker or dealer shall mark any order to sell a security
registered on, or admitted to unlisted trading privileges on, a national
securities exchange ``long'' unless (1) the security to be delivered
after sale is carried in the account for which the sale is to be
effected, or (2) such broker or dealer is informed that the seller owns
the security ordered to be sold and, as soon as is possible without
undue inconvenience or expense, will deliver the security owned to the
account for which the sale is to be effected.
(e) The provisions of paragraphs (a) and (b) of this section (and of
any exchange rule adopted in accordance with paragraph (a) of this
section) shall not apply to:
(1) Any sale by any person, for an account in which he has an
interest, if such person owns the security sold and intends to deliver
such security as soon as is possible without undue inconvenience or
expense;
(2) Any broker or dealer in respect of a sale, for an account in
which he has no interest, pursuant to an order to sell which is marked
``long'';
(3) Any sale by an odd-lot dealer or an exchange with which it is
registered for such security, or any over-the-counter sale by a third
market maker to offset odd-lot orders of customers;
(4) Any sale by an odd-lot dealer on an exchange with which it is
registered for such security, or any over-the-counter sale by a third
market maker to liquidate a long position which is less than a round
lot, provided such sale does not change the position of such odd-lot
dealer or such market maker by more than the unit of trading;
(5) Any sale of a security covered by paragraph (a) of this section
(except a sale to a stabilizing bid complying with Sec. 242.104 of this
chapter) by a registered
[[Page 40]]
specialist or registered exchange market maker for its own account on
any exchange with which it is registered for such security, or by a
third market maker for its own account over-the-counter,
(i) Effected at a price equal to or above the last sale, regular
way, reported for such security pursuant to an effective transaction
reporting plan; or
(ii) Effected at a price equal to the most recent offer communicated
for the security by such registered specialist, registered exchange
market maker or third market maker to an exchange or a national
securities association (``association'') pursuant to Sec. 240.11Ac1-1,
if such offer, when communicated, was equal to or above the last sale,
regular way, reported for such security pursuant to an effective
transaction reporting plan:
Provided, however, That any exchange, by rule, may prohibit its
registered specialist and registered exchange market makers from
availing themselves of the exemption afforded by this paragraph (e)(5)
if that exchange determines that such action is necessary or appropriate
in its market in the public interest or for the protection of investors;
(6) Any sale of a security covered by paragraph (b) of this section
on a national securities exchange (except a sale to a stabilizing bid
complying with Sec. 242.104 of this chapter) effected with the approval
of such exchange which is necessary to equalize the price of such
security thereon with the current price of such security on another
national securities exchange which is the principal exchange market for
such security;
(7) Any sale of a security for a special arbitrage acccount by a
person who then owns another security by virtue of which he is, or
presently will be, entitled to acquire an equivalent number of
securities of the same class as the securities sold; provided such sale,
or the purchase with such sale offsets, is effected for the bona fide
purpose of profitting from a current difference between the price of
security sold and the security owned and that such right of acquisition
was originally attached to or represented by another security or was
issued to all the holders of any such class of securities of the issuer.
(8) Any sale of a security registered on, or admitted to unlisted
trading privileges on, a national securities exchange effected for a
special international arbitrage account for the bona fide purpose of
profitting from a current difference between the price of such security
on a securities market not within or subject to the jurisdiction of the
United States and on a securities market subject to the jurisdiction of
the United States; provided the seller at the time of such sale knows
or, by virtue of information currently received, has reasonable grounds
to believe that an offer enabling him to cover such sale is then
available to him such foreign securities market and intends to accept
such offer immediately;
(9) [Reserved]
(10) Any sale by an underwriter, or any member of a syndicate or
group participating in the distribution of a security, in connection
with an over-allotment of securities, or any lay-off sale by such a
person in connection with a distribution of securities through rights or
a standby underwriting commitment; or
(11) Any sale of a security covered by paragraph (a) of this section
(except a sale to a stabilizing bid complying with Sec. 242.104 of this
chapter) by any broker or dealer, for his own account or for the account
of any other person, effected at a price to the most recent offer
communicated by such broker or dealer to an exchange or association
pursuant to Sec. 240.11Ac1-1 in an amount less than or equal to the
quotation size associated with such offer, if such offer, when
communicated, was (i) above the price at which the last sale, regular
way, for such security was reported pursuant to an effective transaction
reporting plan; or (ii) at such last sale price, if such last sale price
is above the next preceding different price at which a sale of such
security, regular way, was reported pursuant to an effective transaction
reporting plan.
(12) For the purposes of paragraph (e)(8) of this section, a
depositary receipt of a security shall be deemed to be the same security
as the security represented by such receipt. For the purposes of
paragraphs (e)(3), (4) and (5)
[[Page 41]]
of this section, the term ``third market maker'' shall mean any broker
or dealer who holds itself out as being willing to buy and sell a
reported security for its own account on a regular and continuous basis
otherwise than on an exchange in amounts of less than block size.
(13) A broker-dealer that has acquired a security while acting in
the capacity of a block positioner shall be deemed to own such security
for the purposes of Rule 3b-3 (Sec. 240.3b-3) and of this section not
withstanding that such broker-dealer may not have a net long position in
such security if and to the extent that such broker-dealer's short
position in such security is the subject of one or more offsetting
positions created in the course of bona fide arbitrage, risk arbitrage,
or bona fide hedge activities.
(f) This rule shall not prohibit any transaction or transactions
which the Commission, upon written request or upon its own motion,
exempts, either unconditionally or on specified terms and conditions.
(Secs. 2, 3, 6, 9, 10, 15, 17 and 23, Pub. L. 78-291, 48 Stat. 881, 882,
885, 889, 891, 895, 897 and 901, as amended by secs. 2, 3, 4, 11, 14 and
18, Pub. L. 94-29, 89 Stat. 97, 104, 121, 137 and 155 (15 U.S.C. 78b,
78c, 78f, 78i, 78j, 78o, 78q, and 78w); sec. 15A, as added by sec. 1,
Pub. L. 75-719, 52 Stat. 1070, as amended by sec. 12, Pub. L. 94-29, 89
Stat. 127 (15 U.S.C. 78o-3); sec. 11A, as added by sec. 7, Pub. L. 94-
29, 89 Stat. 111 (15 U.S.C. 78k-1); 15 U.S.C. 78a et seq., and
particularly secs. 2, 3, 10(a), 10(b), 15(c), and 23(a), 15 U.S.C. 78b,
78c, 78i(a)(6), 78j(a), 78j(b), 78o(c), and 78w(a))
[40 FR 25444, June 16, 1975, as amended at 45 FR 12390, Feb. 26, 1980;
45 FR 79021, Nov. 28, 1981; 46 FR 49114, Oct. 8, 1981; 49 FR 9415, Mar.
13, 1984; 51 FR 8804, Mar. 14, 1986; 52 FR 24152, June 29, 1987; 58 FR
18146, Apr. 8, 1993: 62 FR 543, Jan. 3, 1997]
Cross References: For interpretative release applicable to
Sec. 240.10a-1, see No. 1571 in tabulation, part 241 of this chapter;
for definition of ``short sale'', see Sec. 240.3b-3.
Sec. 240.10a-2 Requirements for covering purchases.
(a) No broker or dealer shall lend, or arrange for the loan of, any
security registered on, or admitted to unlisted trading privileges on, a
national securities exchange for delivery to the broker for the
purchaser after sale, or shall fail to deliver a security on the date
delivery is due, if such broker or dealer knows or has reasonable
grounds to believe that the sale was effected, or will be effected,
pursuant to an order marked ``long,'' unless such broker or dealer
knows, or has been informed by the seller (1) that the security sold has
been forwarded to the account for which the sale was effected, or (2)
that the seller owns the security sold, that it is then impracticable to
deliver to such account the security owned and that he will deliver such
security to such account as soon as it is possible without undue
inconvenience or expense.
(b) The provisions of paragraph (a) of this section shall not apply
(1) to the lending of a security registered on, or admitted to unlisted
trading privileges on, a national securities exchange by a broker or
dealer through the medium of a loan to another broker or dealer, or (2)
to any loan, or arrangement for the loan, of any such security, or to
any failure to deliver any such security if, prior to such loan,
arrangement or failure to deliver, a national securities exchange, in
the case of a sale effected thereon, or a national securities
association, in the case of a sale not effected on an exchange, finds
(i) that such sale resulted from a mistake made in good faith, (ii) that
due diligence was used to ascertain that the circumstances specified in
Sec. 240.10a-1(d)(1) existed or to obtain the information specified in
clause (2) thereof, and (iii) either that the condition of the market at
the time the mistake was discovered was such that undue hardship would
result from covering the transaction by a ``purchase for cash'' or that
the mistake was made by the seller's broker and the sale was at a price
permissible for a short sale under Sec. 240.10a-1 (a) or (b).
(Sec. 10, 48 Stat. 891, as amended, 64 Stat. 1265, 15 U.S.C. 78j(a);
sec. 23(a), 48 Stat. 901, as amended, 49 Stat. 704, as amended, 49 Stat.
1379, as amended, Pub. L. 94-29 Sec. 18 (June 4, 1975), 15 U.S.C.
78w(a))
[40 FR 25445, June 16, 1975]
Cross Reference: For interpretative release applicable to
Sec. 240.10a-2, see No. 1571 in tabulation, Part 241 of this chapter.
[[Page 42]]
Manipulative and Deceptive Devices and Contrivances
Sec. 240.10b-1 Prohibition of use of manipulative or deceptive devices or contrivances with respect to certain securities exempted from registration.
The term manipulative or deceptive device or contrivance, as used in
section 10(b) (48 Stat. 891; 15 U.S.C. 78j(b)), is hereby defined to
include any act or omission to act with respect to any security exempted
from the operation of section 12(a) (48 Stat. 892; 15 U.S.C. 78l(a))
pursuant to any section in this part which specifically provides that
this section shall be applicable to such security if such act or
omission to act would have been unlawful under section 9(a) (48 Stat.
889; 15 U.S.C. 78i(a)), or any rule or regulation heretofore or
hereafter prescribed thereunder, if done or omitted to be done with
respect to a security registered on a national securities exchange, and
the use of any means or instrumentality of interstate commerce or of the
mails or of any facility of any national securities exchange to use or
employ any such device or contrivance in connection with the purchase or
sale of any such security is hereby prohibited.
(Secs. 10, 12, 48 Stat. 891, 892; 15 U.S.C. 78j, 78l)
[13 FR 8183, Dec. 22, 1948]
Cross References: For applicability of this section, see
Secs. 240.12a-4 and 240.12a-5. For regulations relating to employment of
manipulative and deceptive devices, see Secs. 240.10b-3 and 240.10b-5.
Sec. 240.10b-2 [Reserved]
Sec. 240.10b-3 Employment of manipulative and deceptive devices by brokers or dealers.
(a) It shall be unlawful for any broker or dealer, directly or
indirectly, by the use of any means or instrumentality of interstate
commerce, or of the mails, or of any facility of any national securities
exchange, to use or employ, in connection with the purchase or sale of
any security otherwise than on a national securities exchange, any act,
practice, or course of business defined by the Commission to be included
within the term ``manipulative, deceptive, or other fraudulent device or
contrivance'', as such term is used in section 15(c)(1) of the act.
(b) It shall be unlawful for any municipal securities dealer
directly or indirectly, by the use of any means or instrumentality of
interstate commerce, or of the mails, or of any facility of any national
securities exchange, to use or employ, in connection with the purchase
or sale of any municipal security, any act, practice, or course of
business defined by the Commission to be included within the term
``manipulative, deceptive, or other fraudulent device or contrivance,''
as such term is used in section 15(c)(1) of the act.
(Secs. 10, 12, 48 Stat. 891, 892, as amended; 15 U.S.C. 78j, 78l)
[13 FR 8183, Dec. 22, 1948, as amended at 19 FR 8017, Dec. 4, 1954; 41
FR 22824, June 7, 1976]
Cross References: See also Sec. 240.10b-5. For regulation relating
to prohibition of manipulative or deceptive devices, see Sec. 240.10b-1.
For the term ``manipulative, deceptive, or other fraudulent device or
contrivance'', as used in section 15(c)(1) of the act, see
Secs. 240.15c1-2 to 240.15c1-9.
Sec. 240.10b-4 [Reserved]
Sec. 240.10b-5 Employment of manipulative and deceptive devices.
It shall be unlawful for any person, directly or indirectly, by the
use of any means or instrumentality of interstate commerce, or of the
mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to
state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not
misleading, or
(c) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any person,
in connection with the purchase or sale of any security.
(Sec. 10; 48 Stat. 891; 15 U.S.C. 78j)
[13 FR 8183, Dec. 22, 1948, as amended at 16 FR 7928, Aug. 11, 1951]
[[Page 43]]
Sec. 240.10b-6--8 [Reserved]
Sec. 240.10b-9 Prohibited representations in connection with certain offerings.
(a) It shall constitute a manipulative or deception device or
contrivance, as used in section 10(b) of the Act, for any person,
directly or indirectly, in connection with the offer or sale of any
security, to make any representation:
(1) To the effect that the security is being offered or sold on an
``all-or-none'' basis, unless the security is part of an offering or
distribution being made on the condition that all or a specified amount
of the consideration paid for such security will be promptly refunded to
the purchaser unless (i) all of the securities being offered are sold at
a specified price within a specified time, and (ii) the total amount due
to the seller is received by him by a specified date; or
(2) To the effect that the security is being offered or sold on any
other basis whereby all or part of the consideration paid for any such
security will be refunded to the purchaser if all or some of the
securities are not sold, unless the security is part of an offering or
distribution being made on the condition that all or a specified part of
the consideration paid for such security will be promptly refunded to
the purchaser unless (i) a specified number of units of the security are
sold at a specified price within a specified time, and (ii) the total
amount due to the seller is received by him by a specified date.
(b) This rule shall not apply to any offer or sale of securities as
to which the seller has a firm commitment from underwriters or others
(subject only to customary conditions precedent, including ``market
outs'') for the purchase of all the securities being offered.
(Sec. 10, 48 Stat. 891, as amended; 15 U.S.C. 78j)
[27 FR 9943, Oct. 10, 1962]
Sec. 240.10b-10 Confirmation of transactions.
Preliminary Note. This section requires broker-dealers to disclose
specified information in writing to customers at or before completion of
a transaction. The requirements under this section that particular
information be disclosed is not determinative of a broker-dealer's
obligation under the general antifraud provisions of the federal
securities laws to disclose additional information to a customer at the
time of the customer's investment decision.
(a) Disclosure requirement. It shall be unlawful for any broker or
dealer to effect for or with an account of a customer any transaction
in, or to induce the purchase or sale by such customer of, any security
(other than U.S. Savings Bonds or municipal securities) unless such
broker or dealer, at or before completion of such transaction, gives or
sends to such customer written notification disclosing:
(1) The date and time of the transaction (or the fact that the time
of the transaction will be furnished upon written request to such
customer) and the identity, price, and number of shares or units (or
principal amount) of such security purchased or sold by such customer;
and
(2) Whether the broker or dealer is acting as agent for such
customer, as agent for some other person, as agent for both such
customer and some other person, or as principal for its own account; and
if the broker or dealer is acting as principal, whether it is a market
maker in the security (other than by reason of acting as a block
positioner); and
(i) If the broker or dealer is acting as agent for such customer,
for some other person, or for both such customer and some other person:
(A) The name of the person from whom the security was purchased, or
to whom it was sold, for such customer or the fact that the information
will be furnished upon written request of such customer; and
(B) The amount of any remuneration received or to be received by the
broker from such customer in connection with the transaction unless
remuneration paid by such customer is determined pursuant to written
agreement with such customer, otherwise than on a transaction basis; and
(C) For a transaction in any subject security as defined in
Sec. 240.11Ac1-2 or a security authorized for quotation on an automated
interdealer quotation system that has the characteristics set forth in
section 17B of this Act (15
[[Page 44]]
U.S.C. 78q-2), a statement whether payment for order flow is received by
the broker or dealer for transactions in such securities and the fact
that the source and nature of the compensation received in connection
with the particular transaction will be furnished upon written request
of the customer; and
(D) The source and amount of any other remuneration received or to
be received by the broker in connection with the transaction: Provided,
however, that if, in the case of a purchase, the broker was not
participating in a distribution, or in the case of a sale, was not
participating in a tender offer, the written notification may state
whether any other remuneration has been or will be received and the fact
that the source and amount of such other remuneration will be furnished
upon written request of such customer; or
(ii) If the broker or dealer is acting as principal for its own
account:
(A) In the case where such broker or dealer is not a market maker in
an equity security and, if, after having received an order to buy from a
customer, the broker or dealer purchased the equity security from
another person to offset a contemporaneous sale to such customer or,
after having received an order to sell from a customer, the broker or
dealer sold the security to another person to offset a contemporaneous
purchase from such customer, the difference between the price to the
customer and the dealer's contemporaneous purchase (for customer
purchases) or sale price (for customer sales); or
(B) In the case of any other transaction in a reported security, or
an equity security that is quoted on NASDAQ or traded on a national
securities exchange and that is subject to last sale reporting, the
reported trade price, the price to the customer in the transaction, and
the difference, if any, between the reported trade price and the price
to the customer.
(3) Whether any odd-lot differential or equivalent fee has been paid
by such customer in connection with the execution of an order for an
odd-lot number of shares or units (or principal amount) of a security
and the fact that the amount of any such differential or fee will be
furnished upon oral or written request: Provided, however, that such
disclosure need not be made if the differential or fee is included in
the remuneration disclosure, or exempted from disclosure, pursuant to
paragraph (a)(2)(i)(B) of this section; and
(4) In the case of any transaction in a debt security subject to
redemption before maturity, a statement to the effect that such debt
security may be redeemed in whole or in part before maturity, that such
a redemption could affect the yield represented and the fact that
additional information is available upon request; and
(5) In the case of a transaction in a debt security effected
exclusively on the basis of a dollar price:
(i) The dollar price at which the transaction was effected, and
(ii) The yield to maturity calculated from the dollar price:
Provided, however, that this paragraph (a)(5)(ii) shall not apply to a
transaction in a debt security that either:
(A) Has a maturity date that may be extended by the issuer thereof,
with a variable interest payable thereon; or
(B) Is an asset-backed security, that represents an interest in or
is secured by a pool of receivables or other financial assets that are
subject continuously to prepayment; and
(6) In the case of a transaction in a debt security effected on the
basis of yield:
(i) The yield at which the transaction was effected, including the
percentage amount and its characterization (e.g., current yield, yield
to maturity, or yield to call) and if effected at yield to call, the
type of call, the call date and call price; and
(ii) The dollar price calculated from the yield at which the
transaction was effected; and
(iii) If effected on a basis other than yield to maturity and the
yield to maturity is lower than the represented yield, the yield to
maturity as well as the represented yield; Provided, however, that this
paragraph (a)(6)(iii) shall not apply to a transaction in a debt
security that either:
(A) Has a maturity date that may be extended by the issuer thereof,
with a
[[Page 45]]
variable interest rate payable thereon; or
(B) Is an asset-backed security, that represents an interest in or
is secured by a pool of receivables or other financial assets that are
subject continuously to prepayment; and
(7) In the case of a transaction in a debt security that is an
asset-backed security, which represents an interest in or is secured by
a pool of receivables or other financial assets that are subject
continuously to prepayment, a statement indicating that the actual yield
of such asset-backed security may vary according to the rate at which
the underlying receivables or other financial assets are prepaid and a
statement of the fact that information concerning the factors that
affect yield (including at a minimum estimated yield, weighted average
life, and the prepayment assumptions underlying yield) will be furnished
upon written request of such customer; and
(i)-(ii) [Reserved]
(iii) For a transaction in any subject security as defined in
Sec. 240.11Ac1-2 or a security authorized for quotation on an automated
interdealer quotation system that has the characteristics set forth in
Section 17B of the Act (15 U.S.C. 78q-2), a statement whether payment
for order flow is received by the broker or dealer for transactions in
such securities and that the source and nature of the compensation
received in connection with the particular transaction will be furnished
upon written request of the customer; and
(iv) The source and amount of any other remuneration received or to
be received by him in connection with the transaction: Provided,
however, That if, in the case of a purchase, the broker was not
participating in a distribution, or in the case of a sale, was not
participating in a tender offer, the written notification may state
whether any other remuneration has been or will be received and that the
source and amount of such other remuneration will be furnished upon
written request of such customer; and
(8) If he is acting as principal for his own account. (i)(A) If he
is not a market maker in that security and, if, after having received an
order to buy from such customer, he purchased the security from another
person to offset a contemporaneous sale to such customer or, after
having received an order to sell from such customer, he sold the
security to another person to offset a contemporaneous purchase from
such a customer, the amount of any mark-up, mark-down, or similar
remuneration received in an equity security; or
(B) In any other case of a transaction in a reported security, the
trade price reported in accordance with an effective transaction
reporting plan, the price to the customer in the transaction, and the
difference, if any, between the reported trade price and the price to
the customer.
(ii) In the case of a transaction in an equity security, whether he
is a market maker in the security (otherwise than by reason of his
acting as a block positioner in that security).
(9) That the broker or dealer is not a member of the Securities
Investor Protection Corporation (SIPC), or that the broker or dealer
clearing or carrying the customer account is not a member of SIPC, if
such is the case: Provided, however, that this paragraph (a)(9) shall
not apply in the case of a transaction in shares of a registered open-
end investment company or unit investment trust if:
(i) The customer sends funds or securities directly to, or receives
funds or securities directly from, the registered open-end investment
company or unit investment trust, its transfer agent, its custodian, or
other designated agent, and such person is not an associated person of
the broker or dealer required by paragraph (a) of this section to send
written notification to the customer; and
(ii) The written notification required by paragraph (a) of this
section is sent on behalf of the broker or dealer to the customer by a
person described in paragraph (a)(9)(i) of this section.
(b) Alternative periodic reporting. A broker or dealer may effect
transactions for or with the account of a customer without giving or
sending to such customer the written notification described in paragraph
(a) of this section if:
[[Page 46]]
(1) Such transactions are effected pursuant to a periodic plan or an
investment company plan, or effected in shares of any open-end
management investment company registered under the Investment Company
Act of 1940 that holds itself out as a money market fund and attempts to
maintain a stable net asset value per share: Provided, however, that no
sales load is deducted upon the purchase or redemption of shares in the
money market fund; and
(2) Such broker or dealer gives or sends to such customer within
five business days after the end of each quarterly period, for
transactions involving investment company and periodic plans, and after
the end of each monthly period, for other transactions described in
paragraph (c)(1) of this section, a written statement disclosing each
purchase or redemption, effected for or with, and each dividend or
distribution credited to or reinvested for, the account of such customer
during the month; the date of such transaction; the identity, number,
and price of any securities purchased or redeemed by such customer in
each such transaction; the total number of shares of such securities in
such customer's account; any remuneration received or to be received by
the broker or dealer in connection therewith; and that any other
information required by paragraph (a) of this section will be furnished
upon written request: Provided, however, that the written statement may
be delivered to some other person designated by the customer for
distribution to the customer; and
(3) Such customer is provided with prior notification in writing
disclosing the intention to send the written information referred to in
paragraph (c)(1) of this section in lieu of an immediate confirmation.
(c) A broker or dealer shall give or send to a customer information
requested pursuant to this rule within 5 business days of receipt of the
request: Provided, however, That in the case of information pertaining
to a transaction effected more than 30 days prior to receipt of the
request, the information shall be given or sent to the customer within
15 business days.
(d) Definitions. For the purposes of this section:
(1) Customer shall not include a broker or dealer;
(2) Completion of the transaction shall have the meaning provided in
rule 15c1-1 under the Act;
(3) Time of the transaction means the time of execution, to the
extent feasible, of the customer's order;
(4) Debt security as used in paragraphs (a)(3), (4), and (5) only,
means any security, such as a bond, debenture, note, or any other
similar instrument which evidences a liability of the issuer (including
any such security that is convertible into stock or a similar security)
and fractional or participation interests in one or more of any of the
foregoing: Provided, however, That securities issued by an investment
company registered under the Investment Company Act of 1940 shall not be
included in this definition;
(5) Periodic plan means any written authorization for a broker
acting as agent to purchase or sell for a customer a specific security
or securities (other than securities issued by an open end investment
company or unit investment trust registered under the Investment Company
Act of 1940), in specific amounts (calculated in security units or
dollars), at specific time intervals and setting forth the commissions
or charges to be paid by the customer in connection therewith (or the
manner of calculating them); and
(6) Investment company plan means any plan under which securities
issued by an open-end investment company or unit investment trust
registered under the Investment Company Act of 1940 are purchased by a
customer (the payments being made directly to, or made payable to, the
registered investment company, or the principal underwriter, custodian,
trustee, or other designated agent of the registered investment
company), or sold by a customer pursuant to:
(i) An individual retirement or individual pension plan qualified
under the Internal Revenue Code;
(ii) A contractual or systematic agreement under which the customer
purchases at the applicable public offering price, or redeems at the
applicable redemption price, such securities in
[[Page 47]]
specified amounts (calculated in security units or dollars) at specified
time intervals and setting forth the commissions or charges to be paid
by such customer in connection therewith (or the manner of calculating
them; or
(iii) Any other arrangement involving a group of two or more
customers and contemplating periodic purchases of such securities by
each customer through a person designated by the group: Provided, That
such arrangement requires the registered investment company or its
agent--
(A) To give or send to the designated person, at or before the
completion of the transaction for the purchase of such securities, a
written notification of the receipt of the total amount paid by the
group;
(B) To send to anyone in the group who was a customer in the prior
quarter and on whose behalf payment has not been received in the current
quarter a quarterly written statement reflecting that a payment was not
received on his behalf; and
(C) To advise each customer in the group if a payment is not
received from the designated person on behalf of the group within 10
days of a date certain specified in the arrangement for delivery of that
payment by the designated person and thereafter to send to each such
customer the written notification described in paragraph (a) of this
section for the next three succeeding payments.
(7) Reported security shall have the meaning provided in Rule 11Aa3-
1 under the Act.
(8) Effective transaction reporting plan shall have the meaning
provided in Rule 11Aa3-1 under the Act.
(9) Payment for order flow shall mean any monetary payment, service,
property, or other benefit that results in remuneration, compensation,
or consideration to a broker or dealer from any broker or dealer,
national securities exchange, registered securities association, or
exchange member in return for the routing of customer orders by such
broker or dealer to any broker or dealer, national securities exchange,
registered securities association, or exchange member for execution,
including but not limited to: research, clearance, custody, products or
services; reciprocal agreements for the provision of order flow;
adjustment of a broker or dealer's unfavorable trading errors; offers to
participate as underwriter in public offerings; stock loans or shared
interest accrued thereon; discounts, rebates, or any other reductions of
or credits against any fee to, or expense or other financial obligation
of, the broker or dealer routing a customer order that exceeds that fee,
expense or financial obligation.
(10) Asset-backed security means 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 security holders.
(e) The Commission may exempt any broker or dealer from the
requirements of paragraphs (a) and (b) of this section with regard to
specific transactions of specific classes of transactions for which the
broker or dealer will provide alternative procedures to effect the
purposes of this section; any such exemption may be granted subject to
compliance with such alternative procedures and upon such other stated
terms and conditions as the Commission may impose.
(Secs. 3, 9, 10, 11, 15, 17, 23, 48 Stat. 891, 89 Stat. 97, 121, 137,
156 (15 U.S.C. 78c, 78i, 78j, 78k, 78o, 78q, 78w))
[43 FR 47503, Oct. 16, 1978, as amended at 48 FR 17585, Apr. 25, 1983;
50 FR 37654, Sept. 17, 1985; 53 FR 40721, Oct. 18, 1988; 59 FR 55012,
Nov. 2, 1994; 59 FR 59620, Nov. 17, 1994; 59 FR 60555, Nov. 25, 1994]
Sec. 240.10b-13 Prohibiting other purchases during tender offer or exchange offer.
(a) No person who makes a cash tender offer or exchange offer for
any equity security shall, directly or indirectly, purchase, or make any
arrangement to purchase, any such security (or any other security which
is immediately convertible into or exchangeable for such security),
otherwise than pursuant to such tender offer or exchange offer, from the
time such tender offer or exchange offer is publicly announced or
otherwise made known by
[[Page 48]]
such person to holders of the security to be acquired until the
expiration of the period, including any extensions thereof, during which
securities tendered pursuant to such tender offer or exchange offer may
by the terms of such offer be accepted or rejected: Provided, however,
That if such person is the owner of another security which is
immediately convertible into or exchangeable for the security which is
the subject of the offer, his subsequent exercise of his right of
conversion or exchange with respect to such other security shall not be
prohibited by this section.
(b) The term exchange offer as used in this section shall include a
tender offer for, or request or invitation for tenders of, any security
in exchange for any consideration other than for all cash.
(c) The provisions of this section shall not apply to a purchase of
a security of the same class as that which is the subject of a cash
tender offer or exchange offer (or of any other security which is
immediately convertible into or exchangeable for such security) if such
purchase is made by the issuer, by participating employees of the issuer
or the employees of its subsidiaries, or by the trustee or other person
acquiring such security for the account of such employees, pursuant to
(1) a stock option plan involving only ``qualified stock options,'' or
qualifying as an ``employee stock purchase plan'' as those terms are
defined in sections 422 and 423 of the Internal Revenue Code of 1954, as
amended, or ``restricted stock options'' as defined in section 424(b) of
the Internal Revenue Code of 1954, as amended: Provided, however, That
for the purposes of this paragraph an option which meets all of the
conditions of that section other than the date of issuance shall be
deemed to be ``restricted stock options''; or (2) a savings, investment,
pension or other stock purchase plan providing for both (i) periodic
payments (or payroll deductions) for acquisition of securities by or on
behalf of participating employees and (ii) periodic purchases of the
securities by participating employees, or the person acquiring them for
the account of such employees.
(d) This section shall not prohibit any transaction or transactions
if the Commission, upon written request or upon its own motion, exempts
such transaction or transactions, either unconditionally or on specified
terms or conditions, as not constituting a manipulative or deceptive
device or contrivance or a fraudulent, or deceptive or manipulative act
or practice comprehended within the purpose of this section.
(15 U.S.C. 78j, 78m, 78n)
[34 FR 15839, Oct. 15, 1969]
Sec. 240.10b-16 Disclosure of credit terms in margin transactions.
(a) It shall be unlawful for any broker or dealer to extend credit,
directly or indirectly, to any customer in connection with any
securities transaction unless such broker or dealer has established
procedures to assure that each customer:
(1) Is given or sent at the time of opening the account, a written
statement or statements disclosing (i) the conditions under which an
interest charge will be imposed; (ii) the annual rate or rates of
interest that can be imposed; (iii) the method of computing interest;
(iv) if rates of interest are subject to change without prior notice,
the specific conditions under which they can be changed; (v) the method
of determining the debit balance or balances on which interest is to be
charged and whether credit is to be given for credit balances in cash
accounts; (vi) what other charges resulting from the extension of
credit, if any, will be made and under what conditions; and (vii) the
nature of any interest or lien retained by the broker or dealer in the
security or other property held as collateral and the conditions under
which additional collateral can be required: Provided, however, That the
requirements of this subparagraph will be met in any case where the
account is opened by telephone if the information required to be
disclosed is orally communicated to the customer at that time and the
required written statement or statements are sent to the customer
immediately thereafter: And provided, further, That in the case of
customers to whom credit is already being extended on the effective date
of this section, the written statement or statements required hereunder
must be
[[Page 49]]
given or sent to said customers within 90 days after the effective date
of this section; and
(2) Is given or sent a written statement or statements, at least
quarterly, for each account in which credit was extended, disclosing (i)
the balance at the beginning of the period; the date, amount and a brief
description of each debit and credit entered during such period; the
closing balance; and, if interest is charged for a period different from
the period covered by the statement, the balance as of the last day of
the interest period; (ii) the total interest charge for the period
during which interest is charged (or, if interest is charged separately
for separate accounts, the total interest charge for each such account),
itemized to show the dates on which the interest period began and ended;
the annual rate or rates of interest charged and the interest charge for
each such different annual rate of interest; and either each different
debit balance on which an interest calculation was based or the average
debit balance for the interest period, except that if an average debit
balance is used, a separate average debit balance must be disclosed for
each interest rate applied; and (iii) all other charges resulting from
the extension of credit in that account: Provided, however, That if the
interest charge disclosed on a statement is for a period different from
the period covered by the statement, there must be printed on the
statement appropriate language to the effect that it should be retained
for use in conjunction with the next statement containing the remainder
of the required information: And provided further, That in the case of
``equity funding programs'' registered under the Securities Act of 1933,
the requirements of this paragraph will be met if the broker or dealer
furnishes to the customer, within 1 month after each extension of
credit, a written statement or statements containing the information
required to be disclosed under this paragraph.
(b) It shall be unlawful for any broker or dealer to make any
changes in the terms and conditions under which credit charges will be
made (as described in the initial statement made under paragraph (a) of
this section), unless the customer shall have been given not less than
thirty (30) days written notice of such changes, except that no such
prior notice shall be necessary where such changes are required by law:
Provided, however, That if any change for which prior notice would
otherwise be required under this paragraph results in a lower interest
charge to the customer than would have been imposed before the change,
notice of such change may be given within a reasonable time after the
effective date of the change.
(15 U.S.C. 78j)
[34 FR 19718, Dec. 16, 1969]
Sec. 240.10b-17 Untimely announcements of record dates.
(a) It shall constitute a ``manipulative or deceptive device or
contrivance'' as used in section 10(b) of the Act for any issuer of a
class of securities publicly traded by the use of any means or
instrumentality of interstate commerce or of the mails or of any
facility of any national securities exchange to fail to give notice in
accordance with paragraph (b) of this section of the following actions
relating to such class of securities:
(1) A dividend or other distribution in cash or in kind, except an
ordinary interest payment on a debt security, but including a dividend
or distribution of any security of the same or another issuer;
(2) A stock split or reverse split; or
(3) A rights or other subscription offering.
(b) Notice shall be deemed to have been given in accordance with
this section only if:
(1) Given to the National Association of Securities Dealers, Inc.,
no later than 10 days prior to the record date involved or, in case of a
rights subscription or other offering if such 10 days advance notice is
not practical, on or before the record date and in no event later than
the effective date of the registration statement to which the offering
relates, and such notice includes:
(i) Title of the security to which the declaration relates;
(ii) Date of declaration;
(iii) Date of record for determining holders entitled to receive the
dividend
[[Page 50]]
or other distribution or to participate in the stock or reverse split;
(iv) Date of payment or distribution or, in the case of a stock or
reverse split or rights or other subscription offering, the date of
delivery;
(v) For a dividend or other distribution including a stock or
reverse split or rights or other subscription offering:
(a) In cash, the amount of cash to be paid or distributed per share,
except if exact per share cash distributions cannot be given because of
existing conversion rights which may be exercised during the notice
period and which may affect the per share cash distribution, then a
reasonable approximation of the per share distribution may be provided
so long as the actual per share distribution is subsequently provided on
the record date,
(b) In the same security, the amount of the security outstanding
immediately prior to and immediately following the dividend or
distribution and the rate of the dividend or distribution,
(c) In any other security of the same issuer, the amount to be paid
or distributed and the rate of the dividend or distribution,
(d) In any security of another issuer, the name of the issuer and
title of that security, the amount to be paid or distributed, and the
rate of the dividend or distribution and if that security is a right or
a warrant, the subscription price,
(e) In any other property (including securities not covered under
paragraphs (b)(1)(v) (b) through (d) of this section) the identity of
the property and its value and basis for assigning that value;
(vi) Method of settlement of fractional interests;
(vii) Details of any condition which must be satisfied or Government
approval which must be secured to enable payment of distribution; and in
(viii) The case of stock or reverse split in addition to the
aforementioned information;
(a) The name and address of the transfer or exchange agent; or
(2) The Commission, upon written request or upon its own motion,
exempts the issuer from compliance with paragraph (b)(1) of this section
either unconditionally or on specified terms or conditions, as not
constituting a manipulative or deceptive device or contrivance
comprehended within the purpose of this section; or
(3) Given in accordance with procedures of the national securities
exchange or exchanges upon which a security of such issuer is registered
pursuant to section 12 of the Act which contain requirements
substantially comparable to those set forth in paragraph (b)(1) of this
section.
(c) The provisions of this rule shall not apply, however, to
redeemable securities issued by open-end investment companies and unit
investment trusts registered with the Commission under the Investment
Company Act of 1940.
(Secs. 10(b), 23(a), 48 Stat. 891, as amended, 49 Stat. 1379, 15 U.S.C.
78j)
[36 FR 11514, June 15, 1971, as amended at 37 FR 4330, Mar. 2, 1972]
Sec. 240.10b-18 Purchases of certain equity securities by the issuer and others.
(a) Definitions. Unless the context otherwise requires, all terms
used in this section shall have the same meaning as in the Act. In
addition, unless the context otherwise requires, the following
definitions shall apply:
(1) The term affiliate means any person that directly or indirectly
controls, is controlled by, or is under common control with, the issuer;
(2) The term affiliated purchaser means:
(i) A person acting in concert with the issuer for the purpose of
acquiring the issuer's securities; or
(ii) An affiliate who, directly or indirectly, controls the issuer's
purchases of such securities, whose purchases are controlled by the
issuer or whose purchases are under common control with those of the
issuer;
Provided, however, That the term ``affiliated purchaser'' shall not
include a broker, dealer, or other person solely by reason of his making
Rule 10b-18 bids or effecting Rule 10b-18 purchases on behalf of the
issuer and for its account and shall not include an officer or director
of the issuer solely by reason of his participation in the decision to
authorize Rule 10b-18 bids or Rule 10b-18 purchases by or on behalf of
the issuer;
[[Page 51]]
(3) The term Rule 10b-18 purchase means a purchase of common stock
of an issuer by or for the issuer or any affiliated purchaser of the
issuer, but does not include any purchase of such stock
(i) Effected during the restricted period specified in Sec. 242.102
of this chapter, during a distribution (as defined in Sec. 242.100 of
this chapter) of such common stock or a distribution for which such
common stock is a reference security, by the issuer or any of its
affiliated purchasers;
(ii) Effected by or for an issuer plan by an agent independent of
the issuer;
(iii) If it is a fractional interest in a security, evidenced by a
script certificate, order form, or similar document;
(iv) Pursuant to a merger, acquisition, or similar transaction
involving a recapitalization;
(v) Which is subject to Rule 13e-1 under the Act [Sec. 240.13e-1];
(vi) Pursuant to a tender offer that is subject to Rule 13e-4 under
the Act [Sec. 240.13e-4] or specifically excepted therefrom;
(vii) Pursuant to a tender offer that is subject to section 14(d) of
the Act and the rules and regulations thereunder.
(4) The term Rule 10b-18 bid means (i) A bid for securities that, if
accepted, or (ii) A limit order to purchase securities that, if
executed, would result in a Rule 10b-18 purchase;
(5) The term plan has the meaning contained in Sec. 242.100 of this
chapter;
(6) The term agent independent of the issuer has the meaning
contained in Sec. 242.100 of this chapter;
(i) The agent is not an affiliate of the issuer; and
(ii) Neither the issuer nor any affiliate of the issuer exercises
any direct or indirect control or influence over the times when, or the
prices at which, the independent agent may purchase the issuer's common
stock for the issuer plan, the amounts of the security to be purchased,
the manner in which the security is to be purchased, or the selection of
a broker or dealer (other than the independent agent itself) through
which purchases may be executed;
Provided, however, That the issuer or its affiliate will not be deemed
to have such control or influence solely because it revises not more
than once in any three-month period the basis for determining the amount
of its contributions to the issuer plan or the basis for determining the
frequency of its allocations to the issuer plan, or any formula
specified in the plan that determines the amount of shares to be
purchased by the agent;
(7) The term consolidated system means the consolidated transaction
reporting system contemplated by Rule 11Aa3-1 [Sec. 240.11Aa3-1];
(8) The term reported security means any security as to which last
sale information is reported in the consolidated system;
(9) The term exchange traded security means any security, except a
reported security, that is listed, or admitted to unlisted trading
privileges, on a national securities exchange;
(10) The term NASDAQ security means any security, except a reported
security, as to which bid and offer quotations are reported in the
automated quotation system (``NASDAQ'') operated by the National
Association of Securities Dealers, Inc. (``NASD'');
(11) The term trading volume means:
(i) With respect to a reported security, the average daily trading
volume for the security reported in the consolidated system in the four
calendar weeks preceding the week in which the Rule 10b-18 purchase is
to be effected or the Rule 10b-18 bid is to be made;
(ii) With respect to an exchange traded security, the average of the
aggregate daily trading volume, including the daily trading volume
reported on all exchanges on which the security is traded and, if such
security is also a NASDAQ security, the daily trading volume for such
security made available by the NASD, for the four calendar weeks
preceding the week in which the Rule 10b-18 purchase is to be effected
or the Rule 10b-18 bid is to be made;
(iii) With respect to a NASDAQ security that is not an exchange
traded security, the average daily trading volume for such security made
available by the NASD for the four calendar weeks preceding the week in
which the Rule 10b-18 purchase is to be effected or the Rule 10b-18 bid
is to be made;
[[Page 52]]
Provided, however, That such trading volume under paragraphs (a)(11)
(i), (ii) and (iii) of this section shall not include any Rule 10b-18
purchase of a block by or for the issuer or any affiliated purchaser of
the issuer;
(12) The term purchase price means the price paid per share
(i) For a reported security, or an exchange traded security on a
national securities exchange, exclusive of any commission paid to a
broker acting as agent, or commission equivalent, mark-up, or
differential paid to a dealer;
(ii) For a NASDAQ security, or a security that is not a reported
security or a NASDAQ security, otherwise than on a national securities
exchange, inclusive of any commission equivalent, mark-up, or
differential paid to a dealer;
(13) The term round lot means 100 shares or other customary unit of
trading for a security;
(14) The term block means a quantity of stock that either
(i) Has a purchase price of $200,000 or more; or
(ii) Is at least 5,000 shares and has a purchase price of at least
$50,000; or
(iii) Is at least 20 round lots of the security and totals 150
percent or more of the trading volume for that security or, in the event
that trading volume data are unavailable, is at least 20 round lots of
the security and totals at least one-tenth of one percent (.001) of the
outstanding shares of the security, exclusive of any shares owned by any
affiliate;
Provided, however, That a block under paragraphs (a)(14) (i), (ii) and
(iii) of this section shall not include any amount that a broker or a
dealer, acting as principal, has accumulated for the purpose of sale or
resale to the issuer or to any affiliated purchaser of the issuer if the
issuer or such affiliated purchaser knows or has reason to know that
such amount was accumulated for such purpose, nor shall it include any
amount that a broker or dealer has sold short to the issuer if the
issuer or such affiliated purchaser knows or has reason to know that the
sale was a short sale.
(b) Conditions to be met. In connection with a Rule 10b-18 purchase,
or with a Rule 10b-18 bid that is made by the use of any means or
instrumentality of interstate commerce or of the mails, or of any
facility of any national securities exchange, an issuer, or an
affiliated purchaser of the issuer, shall not be deemed to have violated
section 9(a)(2) of the Act or Rule 10b-5 under the Act, solely by reason
of the time or price at which its Rule 10b-18 bids or Rule 10b-18
purchases are made of the amount of such bids or purchases or the number
of brokers or dealers used in connection with such bids or purchases if
the issuer or affiliated purchaser of the issuer:
(1) (One broker or dealer) Effects all Rule 10b-18 purchases from or
through only one broker on any single day, or, if a broker is not used,
with only one dealer on a single day, and makes or causes to be made all
Rule 10b-18 bids to or through only one broker on any single day, or, if
a broker is not used, to only one dealer on a single day; Provided,
however, That
(i) This paragraph (b)(1) shall not apply to Rule 10b-18 purchases
which are not solicited by or on behalf of the issuer or affiliated
purchaser; and
(ii) Where Rule 10b-18 purchases or Rule 10-b18 bids are made by or
on behalf of more than one affiliated purchaser of the issuer (or the
issuer and one or more of its affiliated purchasers) on a single day,
this paragraph (b)(1) shall apply to all such bids and purchases in the
aggregate; and
(2) (Time of purchases) Effects all Rule 10b-18 purchases from or
through a broker or dealer
(i) In a reported security, (A) such that the purchase would not
constitute the opening transaction in the security reported in the
consolidated system; and (B) if the principal market of such security is
an exchange, at a time other than during the one-half hour before the
scheduled close of trading on the principal market; and (C) if the
purchase is to be made on an exchange, at a time other than during the
one-half hour before the scheduled close of trading on the national
securities exchange on which the purchase is to be made; and (D) if the
purchase is to be made otherwise than on a national securities exchange,
at a time other than
[[Page 53]]
during the one-half hour before the termination of the period in which
last sale prices are reported in the consolidated system;
(ii) In any exchange traded security, on any national securities
exchange, (A) such that the Rule 10b-18 purchase would not constitute
the opening transaction in the security on such exchange; and (B) at a
time other than during the one-half hour before the scheduled close of
trading on the exchange;
(iii) In any NASDAQ security, othewise than on a national securities
exchange, if a current independent bid quotation for the security is
reported in Level 2 of NASDAQ; and
(3) (Price of purchase) Effects all Rule 10b-18 purchases from or
through a broker or dealer at a purchase price, or makes or causes to be
made all Rule 10b-18 bids to or through a broker or dealer at a price.
(i) For a reported security, that is not higher than the published
bid, as that term is defined in Rule 11Ac1-1(a)(9) under the Act, that
is the highest current independent published bid or the last independent
sale price reported in the consolidated system, whichever is higher;
(ii) On a national securities exchange, for an exchange traded
security, that is not higher than the current independent bid quotation
or the last independent sale price on that exchange, whichever is
higher;
(iii) Otherwise than on a national securities exchange for a NASDAQ
security, that is not higher than the lowest current independent offer
quotation reported in Level 2 of NASDAQ; or
(iv) Otherwise than on a national securities exchange, for a
security that is not a reported security or a NASDAQ security, that is
not higher than the lowest current independent offer quotation,
determined on the basis of reasonable inquiry; and
(4) (Volume of purchases) Effects from or through a broker or dealer
all Rule 10b-18 purchases other than block purchases
(i) Of a reported security, an exchange traded security or a NASDAQ
security, in an amount that, when added to the amounts of all other Rule
10b-18 purchases, other than block purchases, from or through a broker
or dealer effected by or for the issuer or any on that day, does not
exceed the higher of (A) one round lot or (B) the number of round lots
closet to 25 percent of the trading volume for the security;
(ii) Of any other security, in an amount that (A) when added to the
amounts of all other Rule 10b-18 purchases, other than block purchases,
from or through a broker or dealer effected by or for the issuer or any
affiliated purchaser of the issuer on that day, does not exceed one
round lot or (B) when added to the amounts of all other Rule 10b-18
purchases other than block purchases from or through a broker or dealer
effected by or for the issuer or any affiliated purchaser of the issuer
during that day and the preceding five business days, does not exceed 1/
20th of one percent (0.0005) of the outstanding shares of the security,
exclusive of shares known to be owned beneficially by affiliates.
(c) No presumption shall arise that an issuer or affiliated
purchaser of an issuer has violated section 9(a)(2) or 10(b) of the Act
or Rule 10b-5 under the Act if the Rule 10b-18 bids or Rule 10b-18
purchases of such issuer or affiliated purchaser do not meet the
conditions specified in paragraphs (b) (1) through (4) of this section.
[47 FR 53339, Nov. 26, 1982, as amended at 62 FR 543, Jan. 3, 1997; 62
FR 11323, Mar. 12, 1997]
Sec. 240.10b-21 [Reserved]
Reports Under Section 10A
Sec. 240.10A-1 Notice to the Commission Pursuant to Section 10A of the Act.
(a)(1) If any issuer with a reporting obligation under the Act
receives a report requiring a notice to the Commission in accordance
with section 10A(b)(3) of the Act, 15 U.S.C. 78j-1(b)(3), the issuer
shall submit such notice to the Commission's Office of the Chief
Accountant within the time period prescribed in that section. The notice
may be provided by facsimile, telegraph, personal delivery, or any other
means, provided it is received by the Office of the Chief Accountant
within the required time period.
[[Page 54]]
(2) The notice specified in paragraph (a)(1) of this section shall
be in writing and:
(i) Shall identify the issuer (including the issuer's name, address,
phone number, and file number assigned to the issuer's filings by the
Commission) and the independent accountant (including the independent
accountant's name and phone number, and the address of the independent
accountant's principal office);
(ii) Shall state the date that the issuer received from the
independent accountant the report specified in section 10A(b)(2) of the
Act, 15 U.S.C. 78j-1(b)(2);
(iii) Shall provide, at the election of the issuer, either:
(A) A summary of the independent accountant's report, including a
description of the act that the independent accountant has identified as
a likely illegal act and the possible effect of that act on all affected
financial statements of the issuer or those related to the most current
three-year period, whichever is shorter; or
(B) A copy of the independent accountant's report; and
(iv) May provide additional information regarding the issuer's views
of and response to the independent accountant's report.
(3) Reports of the independent accountant submitted by the issuer to
the Commission's Office of the Chief Accountant in accordance with
paragraph (a)(2)(iii)(B) of this section shall be deemed to have been
made pursuant to section 10A(b)(3) or section 10A(b)(4) of the Act, 15
U.S.C. 78j-1(b)(3) or 78j-1(b)(4), for purposes of the safe harbor
provided by section 10A(c) of the Act, 15 U.S.C. 78j-1(c).
(4) Submission of the notice in paragraphs (a)(1) and (a)(2) of this
section shall not relieve the issuer from its obligations to comply
fully with all other reporting requirements, including, without
limitation:
(i) The filing requirements of Form 8-K, Sec. 249.308 of this
chapter, and Form N-SAR, Sec. 274.101 of this chapter, regarding a
change in the issuer's certifying accountant and
(ii) The disclosure requirements of item 304 of Regulation S-B or
item 304 of Regulation S-K, Secs. 228.304 or 229.304 of this chapter.
(b)(1) Any independent accountant furnishing to the Commission a
copy of a report (or the documentation of any oral report) in accordance
with section 10A(b)(3) or section 10A(b)(4) of the Act, 15 U.S.C. 78j-
1(b)(3) or 78j-1(b)(4), shall submit that report (or documentation) to
the Commission's Office of the Chief Accountant within the time period
prescribed by the appropriate section of the Act. The report (or
documentation) may be submitted to the Commission's Office of the Chief
Accountant by facsimile, telegraph, personal delivery, or any other
means, provided it is received by the Office of the Chief Accountant
within the time period set forth in section 10A(b)(3) or 10A(b)(4) of
the Act, 15 U.S.C. 78j-1(b)(3) or 78j-(b)(4), whichever is applicable in
the circumstances.
(2) If the report (or documentation) submitted to the Office of the
Chief Accountant in accordance with paragraph (b)(1) of this section
does not clearly identify both the issuer (including the issuer's name,
address, phone number, and file number assigned to the issuer's filings
with the Commission) and the independent accountant (including the
independent accountant's name and phone number, and the address of the
independent accountant's principal office), then the independent
accountant shall place that information in a prominent attachment to the
report (or documentation) and shall submit that attachment to the Office
of the Chief Accountant at the same time and in the same manner as the
report (or documentation) is submitted to that Office.
(3) Submission of the report (or documentation) by the independent
accountant as described in paragraphs (b)(1) and (b)(2) of this section
shall not replace, or otherwise satisfy the need for, the newly engaged
and former accountants' letters under items 304(a)(2)(D) and 304(a)(3)
of Regulation S-K, Secs. 229.304(a)(2)(D) and 229.304(a)(3) of this
chapter, respectively, and under items 304(a)(2)(D) and 304(a)(3) of
Regulation S-B, Secs. 228.304(a)(2)(D) and 228.304(a)(3) of this
chapter, respectively, and shall not limit, reduce, or affect in any way
the independent accountant's obligations to comply fully
[[Page 55]]
with all other legal and professional responsibilities, including,
without limitation, those under generally accepted auditing standards
and the rules or interpretations of the Commission that modify or
supplement those auditing standards.
(c) A notice or report submitted to the Office of the Chief
Accountant in accordance with paragraphs (a) and (b) of this section
shall be deemed to be an investigative record and shall be non-public
and exempt from disclosure pursuant to the Freedom of Information Act to
the same extent and for the same periods of time that the Commission's
investigative records are non-public and exempt from disclosure under,
among other applicable provisions, 5 U.S.C. 552(b)(7) and
Sec. 200.80(b)(7) of this chapter. Nothing in this paragraph, however,
shall relieve, limit, delay, or affect in any way, the obligation of any
issuer or any independent accountant to make all public disclosures
required by law, by any Commission disclosure item, rule, report, or
form, or by any applicable accounting, auditing, or professional
standard.
Instruction to Paragraph (c)
Issuers and independent accountants may apply for additional bases
for confidential treatment for a notice, report, or part thereof, in
accordance with Sec. 200.83 of this chapter. That section indicates, in
part, that any person who, pursuant to any requirement of law, submits
any information or causes or permits any information to be submitted to
the Commission, may request that the Commission afford it confidential
treatment by reason of personal privacy or business confidentiality, or
for any other reason permitted by Federal law.
[62 FR 12749, Mar. 18, 1997]
Effective Date Note: At 62 FR 12749, Mar. 18, 1997, Sec. 240.10A-1,
was added, effective Apr. 17, 1997.
Adoption of Floor Trading Regulation (Rule 11a-1)
Sec. 240.11a-1 Regulation of floor trading.
(a) No member of a national securities exchange, while on the floor
of such exchange, shall initiate, directly or indirectly, any
transaction in any security admitted to trading on such exchange, for
any account in which such member has an interest, or for any such
account with respect to which such member has discretion as to the time
of execution, the choice of security to be bought or sold, the total
amount of any security to be bought or sold, or whether any such
transaction shall be one of purchase or sale.
(b) The provisions of paragraph (a) of this section shall not apply
to:
(1) Any transaction by a registered specialist in a security in
which he is so registered on such exchange;
(2) Any transaction for the account of an odd-lot dealer in a
security in which he is so registered on such exchange;
(3) Any stabilizing transaction effected in compliance with
Sec. 242.104 of this chapter to facilitate a distribution of such
security in which such member is participating;
(4) Any bona fide arbitrage transaction;
(5) Any transaction made with the prior approval of a floor official
of such exchange to permit such member to contribute to the maintenance
of a fair and orderly market in such security, or any purchase or sale
to reverse any such transaction;
(6) Any transaction to offset a transaction made in error; or
(7) Any transaction effected in conformity with a plan designed to
eliminate floor trading activities which are not beneficial to the
market and which plan has been adopted by an exchange and declared
effective by the Commission. For the purpose of this rule, a plan filed
with the Commission by a national securities exchange shall not become
effective unless the Commission, having due regard for the maintenance
of fair and orderly markets, for the public interest, and for the
protection of investors, declares the plan to be effective.
(c) For the purpose of this rule the term ``on the floor of such
exchange'' shall include the trading floor; the rooms, lobbies, and
other premises immediately adjacent thereto for use of members
generally; other rooms, lobbies and premises made available primarily
for use by members generally;
[[Page 56]]
and the telephone and other facilities in any such place.
(d) Any national securities exchange may apply for an exemption from
the provisions of this rule in compliance with the provisions of section
11(c) of the Act.
(Sec. 11, 48 Stat. 891; 15 U.S.C. 78k)
[29 FR 7381, June 6, 1964, as amended at 62 FR 544, Jan. 3, 1997]
Editorial Note 1: The Commission finding that the floor trading plan
of the New York Stock Exchange filed on May 25, 1964 is designed to
eliminate floor trading activities not beneficial to the market hereby
declares such plan effective August 3, 1964 subject to suspension or
termination on sixty days written notice from the Commission, 29 FR
7381, June 6, 1964.
Editorial Note 2: The text of the Commission's action declaring
effective the amendments to the Floor Trading Plan of the American Stock
Exchange is as follows, 33 FR 1073, Jan. 27, 1968:
The Securities and Exchange Commission acting pursuant to the
Securities Exchange Act of 1934, particularly sections 11(a) and 23(a)
thereof, and Rule 11a-1 (17 CFR 240.11a-1) under the Act, deeming it
necessary for the exercise of the functions vested in it, and having due
regard for the maintenance of fair and orderly markets, for the public
interest, and for the protection of investors, hereby declares the Floor
Trading Plan of the American Stock Exchange, as amended by amendments
filed on May 11, 1967, effective January 31, 1968. If at any time it
appears to the Commission to be necessary or appropriate in the public
interest, for the protection of investors, or for the maintenance of
fair and orderly markets, or that floor trading activities which are not
beneficial to the market have not been eliminated by the Floor Trading
Plan of the American Stock Exchange, the Commission may suspend or
terminate the effectiveness of the plan by sending at least 60 days
written notice to the American Stock Exchange. The American Stock
Exchange shall have the opportunity to submit any written data, facts,
arguments, or modifications in its plan within such 60-day period in
such form as the Commission deems appropriate under the circumstances.
The Commission has been informed that all persons subject to the Floor
Trading Plan of the American Stock Exchange, as amended, have had actual
notice thereof, and the Commission finds that notice and procedure
pursuant to section 4 of the Administrative Procedure Act (5 U.S.C.
section 553) are impracticable and unnecessary and that such Plan, as
amended, may be, and is hereby, declared effective on January 31, 1968.
Sec. 240.11a1-1(T) Transactions yielding priority, parity, and precedence.
(a) A transaction effected on a national securities exchange for the
account of a member which meets the requirements of section
11(a)(1)(G)(i) of the Act shall be deemed, in accordance with the
requirements of section 11(a)(1)(G)(ii), to be not inconsistent with the
maintenance of fair and orderly markets and to yield priority, parity,
and precedence in execution to orders for the account of persons who are
not members or associated with members of the exchange if such
transaction is effected in compliance with each of the following
requirements:
(1) A member shall disclose that a bid or offer for its account is
for its account to any member with whom such bid or offer is placed or
to whom it is communicated, and any such member through whom that bid or
offer is communicated shall disclose to others participating in
effecting the order that it is for the account of a member.
(2) Immediately before executing the order, a member (other than the
specialist in such security) presenting any order for the account of a
member on the exchange shall clearly announce or otherwise indicate to
the specialist and to other members then present for the trading in such
security on the exchange that he is presenting an order for the account
of a member.
(3) Notwithstanding rules of priority, parity, and precedence
otherwise applicable, any member presenting for execution a bid or offer
for its own account or for the account of another member shall grant
priority to any bid or offer at the same price for the account of a
person who is not, or is not associated with, a member, irrespective of
the size of any such bid or offer or the time when entered.
(b) A member shall be deemed to meet the requirements of section
11(a)(1)(G)(i) of the Act if during its preceding fiscal year more than
50 percent of its gross revenues was derived from one or more of the
sources specified in that section. In addition to any revenue which
independently meets the requirements of section 11(a)(1)(G)(i), revenue
derived from any transaction specified in paragraph (A), (B), or (D) of
section 11(a)(1) of the Act or specified
[[Page 57]]
in 17 CFR 240.11a1-4(T) shall be deemed to be revenue derived from one
or more of the sources specified in section 11(a)(1)(G)(i). A member may
rely on a list of members which are stated to meet the requirements of
section 11(a)(1)(G)(i) if such list is prepared, and updated at least
annually, by the exchange. In preparing any such list, an exchange may
rely on a report which sets forth a statement of gross revenues of a
member if covered by a report of independent accountants for such member
to the effect that such report has been prepared in accordance with
generally accepted accounting principles.
(Secs. 2, 3, 6, 11, 11A, and 23, 89 Stat. 97, 104, 110, 111, 156 (15
U.S.C. 78b, 78c, 78f, 78k, 78k-1, 78w); secs. 2, 3, 11, 23, 48 Stat.
881, 882, 885, 891, 901, as amended)
[43 FR 11553, Mar. 17, 1978, as amended at 43 FR 18562, May 1, 1978; 44
FR 6093, Jan. 31, 1979]
Sec. 240.11a1-2 Transactions for certain accounts of associated persons of members.
A transaction effected by a member of a national securities exchange
for the account of an associated person thereof shall be deemed to be of
a kind which is consistent with the purposes of section 11(a)(1) of the
Act, the protection of investors, and the maintenance of fair and
orderly markets if the transaction is effected:
(a) For the account of and for the benefit of an associated person,
if, assuming such transaction were for the account of a member, or
(b) For the account of an associated person but for the benefit of
an account carried by such associated person, if, assuming such account
were carried on the same basis by a member.
The member would have been permitted, under section 11(a) of the Act and
the other rules thereunder, to effect the transaction: Provided,
however, That a transaction may not be effected by a member for the
account of and for the benefit of an associated person under section
11(a)(1)(G) of the Act and Rule 11a1-1(T) thereunder unless the
associated person derived, during its preceding fiscal year, more than
50 percent of its gross revenues from one or more of the sources
specified in section 11(a)(1)(G)(i) of the Act.
(Secs. 2, 3, 4, 6, 7, 11, 18, 89 Stat. 97, 104, 110, 111, 121, 155 (15
U.S.C. 78b, 78c, 78f, 78k, 78k-1, 78o, 78w); secs. 2, 3, 10, 23, 48
Stat. 881, 882, 891, 901, as amended (15 U.S.C. 78j))
[43 FR 11553, Mar. 17, 1978; 43 FR 14451, Apr. 6, 1978]
Sec. 240.11a1-3(T) Bona fide hedge transactions in certain securities.
A bona fide hedge transaction effected on a national securities
exchange by a member for its own account or an account of an associated
person thereof and involving a long or short position in a security
entitling the holder to acquire or sell an equity security, and a long
or short position in one or more other securities entitling the holder
to acquire or sell such equity security, shall be deemed to be of a kind
which is consistent with the purposes of section 11(a)(1) of the Act,
the protection of investors, and the maintenance of fair and orderly
markets.
(Secs. 2, 3, 6, 11, 11A, and 23, 89 Stat. 97, 104, 110, 111, 156 (15
U.S.C. 78b, 78c, 78f, 78k, 78k-1, 78w); secs. 2, 3, 11, 23, 48 Stat.
881, 882, 885, 891, 901, as amended)
[44 FR 6093, Jan. 31, 1979]
Sec. 240.11a1-4(T) Bond transactions on national securities exchanges.
A transaction in a bond, note, debenture, or other form of
indebtedness effected on a national securities exchange by a member for
its own account or the account of an associated person thereof shall be
deemed to be of a kind which is consistent with the purposes of section
11(a)(1) of the Act, the protection of investors, and the maintenance of
fair and orderly markets.
(Secs. 2, 3, 6, 10, 11, 11A, 15 and 23 of the Securities Exchange Act of
1934 (15 U.S.C. 78b, 78c, 78f, 78j, 78k, 78k-1, 78o, and 78w))
[43 FR 18562, May 1, 1978]
Sec. 240.11a1-5 Transactions by registered competitive market makers and registered equity market makers.
Any transaction by a New York Stock Exchange registered competitive
market maker or an American Stock Exchange registered equity market
[[Page 58]]
maker effected in compliance with their respective governing rules shall
be deemed to be of a kind which is consistent with the purposes of
section 11(a)(1) of the Act, the protection of investors, and the
maintenance of fair and orderly markets.
[46 FR 14889, Mar. 3, 1981]
Sec. 240.11a2-2(T) Transactions effected by exchange members through other members.
(a) A member of a national securities exchange (the ``initiating
member'') may not effect a transaction on that exchange for its own
account, the account of an associated person, or an account with respect
to which it or an associated person thereof exercises investment
discretion unless:
(1) The transaction is of a kind described in paragraphs A through H
of section 11(a)(1) of the Act and is effected in accordance with
applicable rules and regulations thereunder; or
(2) The transaction is effected in compliance with each of the
following conditions:
(i) The transaction is executed on the floor, or through use of the
facilities, of the exchange by a member (the ``executing member'') which
is not an associated person of the initiating member;
(ii) The order for the transaction is transmitted from off the
exchange floor;
(iii) Neither the initiating member nor an associated person of the
initiating member participates in the execution of the transaction at
any time after the order for the transaction has been so transmitted;
and
(iv) In the case of a transaction effected for an account with
respect to which the initiating member or an associated person thereof
exercises investment discretion, neither the initiating member nor any
associated person thereof retains any compensation in connection with
effecting the transaction: Provided, however, That this condition shall
not apply to the extent that the person or persons authorized to
transact business for the account have expressly provided otherwise by
written contract referring to section 11(a) of the Act and this section
executed on or after March 15, 1978, by each of them and by such
exchange member or associated person exercising investment discretion.
(b) For purposes of this section, a member ``effects'' a securities
transaction when it performs any function in connection with the
processing of that transaction, including, but not limited to, (1)
transmission of an order for execution, (2) execution of the order, (3)
clearance and settlement of the transaction, and (4) arranging for the
performance of any such function.
(c) For purposes of this section, the term ``compensation in
connection with effecting the transaction'' refers to compensation
directly or indirectly received or calculated on a transaction-related
basis for the performance of any function involved in effecting a
securities transaction.
(d) A member, or an associated person of a member, authorized by
written contract to retain compensation in connection with effecting
transactions pursuant to paragraph (a)(2)(iv) of this section shall
furnish at least annually to the person or persons authorized to
transact business for the account a statement setting forth the total
amount of all compensation retained by the member or any associated
person thereof in connection with effecting transactions for that
account during the period covered by the statement, which amount shall
be exclusive of all amounts paid to others during that period for
services rendered in effecting such transactions.
(e) A transaction effected in compliance with the requirements of
this section shall be deemed to be of a kind which is consistent with
the purposes of section 11(a)(1) of the Act, the protection of
investors, and the maintenance of fair and orderly markets.
(f) The provisions of this section shall not apply to transactions
by exchange members to which, by operation of section 11(a)(3) of the
Act, section 11(a)(1) of the Act is not effective.
(Secs. 2, 3, 4, 6, 7, 11, 18, 89 Stat. 97, 104, 110, 111, 121, 155 (15
U.S.C. 78b, 78c, 78f, 78k, 78k-1, 78o, 78w); secs. 2, 3, 10, 23, 48
Stat. 881, 882, 891, 901, as amended (15 U.S.C. 78j))
[43 FR 11554, Mar. 17, 1978, as amended at 43 FR 18562, May 1, 1978]
[[Page 59]]
Adoption of Regulation on Conduct of Specialists
Sec. 240.11b-1 Regulation of specialists.
(a)(1) The rules of a national securities exchange may permit a
member of such exchange to register as a specialist and to act as a
dealer.
(2) The rules of a national securities exchange permitting a member
of such exchange to register as a specialist and to act as a dealer
shall include:
(i) Adequate minimum capital requirements in view of the markets for
securities on such exchange;
(ii) Requirements, as a condition of a specialist's registration,
that a specialist engage in a course of dealings for his own account to
assist in the maintenance, so far as practicable, of a fair and orderly
market, and that a finding by the exchange of any substantial or
continued failure by a specialist to engage in such a course of dealings
will result in the suspension or cancellation of such specialist's
registration in one or more of the securities in which such specialist
is registered;
(iii) Provisions restricting his dealings so far as practicable to
those reasonably necessary to permit him to maintain a fair and orderly
market or necessary to permit him to act as an odd-lot dealer;
(iv) Provisions stating the responsibilities of a specialist acting
as a broker in securities in which he is registered; and
(v) Procedures to provide for the effective and systematic
surveillance of the activities of specialists.
(b) If after appropriate notice and opportunity for hearing the
Commission finds that a member of a national securities exchange
registered with such exchange as a specialist in specified securities
has, for any account in which he, his member organization, or any
participant therein has any beneficial interest, direct or indirect,
effected transactions in such securities which were not part of a course
of dealings reasonably necessary to permit such specialist to maintain a
fair and orderly market, or to act as an odd-lot dealer, in the
securities in which he is registered and were not effected in a manner
consistent with the rules adopted by such exchange pursuant to paragraph
(a)(2)(iii) of this section, the Commission may by order direct such
exchange to cancel, or to suspend for such period as the Commission may
determine, such specialist's registration in one or more of the
securities in which such specialist is registered: Provided, however, If
such exchange has itself suspended or cancelled such specialist's
registration in one or more of the securities in which such specialist
is registered, no further sanction shall be imposed pursuant to this
paragraph (b) except in a case where the Commission finds substantial or
continued misconduct by a specialist: And provided, further, That the
provisions of this paragraph (b) shall not apply to a member of a
national securities exchange exempted pursuant to the provisions of
paragraph (d) of this section.
(c) For the purposes of this section, the term rules of an exchange
shall mean its constitution, articles of incorporation, by-laws, or
rules or instruments corresponding thereto, whatever the name, and its
stated policies.
(d) Any national securities exchange may apply for an exemption from
the provisions of this section in compliance with the provisions of
section 11(c) of the Act.
(Sec. 11, 48 Stat. 891, 892; 15 U.S.C. 78k)
[29 FR 15863, Nov. 26, 1964, as amended at 46 FR 15135, Mar. 4, 1981]
Exemption of Certain Securities From section 11(d)(1)
Sec. 240.11d1-1 Exemption of certain securities from section 11(d)(1).
A security shall be exempt from the provisions of section 11(d)(1)
with respect to any transaction by a broker and dealer who, directly or
indirectly extends or maintains or arranges for the extension or
maintenance of credit on the security to or for a customer if:
(a) The broker and dealer has not sold the security to the customer
or bought the security for the customer's account; or
(b) The security is acquired by the customer in exchange with the
issuer thereof for an outstanding security of the same issuer on which
credit was lawfully maintained for the customer at the time of the
exchange; or
[[Page 60]]
(c) The customer is a broker or dealer or bank; or
(d) The security is acquired by the customer through the exercise of
a right evidenced by a warrant or certificate expiring within 90 days
after issuance, provided such right was originally issued to the
customer as a stockholder of the corporation issuing the security upon
which credit is to be extended, or as a stockholder of a company
distributing such security in order to effectuate the provisions of
section 11 of the Public Utility Holding Company Act of 1935. The right
shall be deemed to be issued to the customer as a stockholder if he
actually owned the stock giving rise to the right when such right
accrued, even though such stock was not registered in his name; and in
determining such fact the broker and dealer may rely upon a signed
statement of the customer which the broker and dealer accepts in good
faith; or
(e) Such broker and dealer would otherwise be subject to the
prohibition of section 11(d)(1) with respect to 50 percent or less of
all the securities of the same class which are outstanding or currently
being distributed, and such broker and dealer sold the security to the
customer or bought the security for the customer's account on a day when
he was not participating in the distribution of any new issue of such
security. A brokerdealer shall be deemed to be participating in a
distribution of a new issue if (1) he owns, directly or indirectly, any
undistributed security of such issue, or (2) he is engaged in any
stabilizing activities to facilitate a distribution of such issue, or
(3) he is a party to any syndicate agreement under which such
stabilizing activities are being or may be undertaken, or (4) he is a
party to an executory agreement to purchase or distribute such issue.
(Secs. 3, 11, 48 Stat. 882, 891; 15 U.S.C. 78c, 78k)
[13 FR 8184, Dec. 22, 1948]
Sec. 240.11d1-2 Exemption from section 11(d)(1) for certain investment company securities held by broker-dealers as collateral in margin accounts.
Any securities issued by a registered open-end investment company or
unit investment trust as defined in the Investment Company Act of 1940
shall be exempted from the provisions of section 11(d)(1) with respect
to any transaction by a person who is a broker and a dealer who,
directly or indirectly, extends or maintains or arranges for the
extension or maintenance of credit on such security, provided such
security has been owned by the person to whom credit would be provided
for more than 30 days, or purchased by such person pursuant to a plan
for the automatic reinvestment of the dividends of such company or
trust.
(Secs. 2, 3, 11, and 23, Exchange Act, 15 U.S.C. 78b, 78c, 78k and 78w)
[49 FR 50174, Dec. 27, 1984]
Registration of Securities Information Processors
Sec. 240.11Aa2-1 Designation of national market system securities.
The term national market system security shall mean any reported
security as defined in Rule 11Aa3-1.
[52 FR 24153, June 29, 1987]
Sec. 240.11Aa3-1 Dissemination of transaction reports and last sale data with respect to transactions in reported securities.
(a) Definitions. For purposes of this section:
(1) The term transaction report shall mean a report containing the
price and volume associated with a transaction involving the purchase or
sale of one or more round lots of a security (``transaction'').
(2) The term transaction reporting plan shall mean any plan for
collecting, processing, making available or disseminating transaction
reports with
[[Page 61]]
respect to transactions in reported securities filed with the Commission
pursuant to, and meeting the requirements of, this section.
(3) The term effective transaction reporting plan shall mean any
transaction reporting plan approved by the Commission pursuant to this
section.
(4) The term reported security shall mean any security or class of
securities for which transaction reports are collected, processed and
made available pursuant to an effective transaction reporting plan.
(5) The term listed equity security shall mean any equity security
listed and registered, or admitted to unlisted trading privileges, on a
national securities exchange (``exchange'').
(6) The term NASDAQ security shall mean any registered equity
security for which quotation information is disseminated in the National
Association of Securities Dealers Automated Quotation system
(``NASDAQ'').
(7) The term transaction reporting association shall mean any person
authorized to implement or administer any transaction reporting plan on
behalf of persons acting jointly under paragraph (b) of this section.
(8) The term interrogation device shall mean any securities
information retrieval system capable of displaying transaction reports
or last sale data, upon inquiry, on a current basis on a terminal or
other device.
(9) The term moving ticker shall mean any continuous real-time
moving display of transaction reports or last sale data (other than a
market minder) provided on an interrogation or other display device.
(10) The term market minder shall mean any service provided by a
vendor on an interrogation device or other display which (i) permits
real-time monitoring, on a dynamic basis, of transaction reports or last
sale data with respect to a particular security, and (ii) displays the
most recent transaction report or last sale data with respect to that
security until such report or data has been superseded or supplemented
by the display of a new transaction report or last sale data reflecting
the next reported transaction in that security.
(11) The term vendor shall mean any securities information processor
engaged in the business of disseminating transaction reports or last
sale data with respect to transactions in reported securities to
brokers, dealers or investors on a real-time or other current and
continuing basis, whether through an electronic communications network,
moving ticker or interrogation device.
(12) The term last sale data shall mean any price or volume data
associated with a transaction.
(b)(1) Every exchange shall file a transaction reporting plan
regarding transactions in listed equity and NASDAQ security executed
through its facilities, and every association shall file a transaction
reporting plan regarding transactions in listed equity and NASDAQ
securities executed by its members otherwise than on an exchange.
(2) Any transaction reporting plan, or any amendment thereto, filed
pursuant to this section shall be filed with the Commission, and
considered for approval, in accordance with the procedures set forth in
paragraphs (b) and (c) of Sec. 240.11Aa3-2 governing national market
system plans. Any such plan, or amendment thereto, shall specify, at a
minimum:
(i) The listed equity and NASDAQ securities or classes of such
securities for which transaction reports shall be required by the plan;
(ii) Reporting requirements with repect to transactions in listed
equity securities and NASDAQ securities, for any broker or dealer
subject to the plan;
(iii) The manner of collecting, processing, sequencing, making
available and disseminating transaction reports and last sale data
reported pursuant to such plan;
(iv) The manner such transaction reports reported pursuant to such
plan are to be consolidated with transaction reports from exchanges and
associations reported pursuant to any other effective transaction
reporting plan;
(v) The applicable standards and methods which will be utilized to
ensure promptness of reporting, and accuracy and completeness of
transaction reports;
[[Page 62]]
(vi) Any rules or procedures which may be adopted to ensure that
transaction reports or last sale data will not be disseminated in a
fraudulent or manipulative manner;
(vii) Specific terms of access to transaction reports made available
or disseminated pursuant to the plan; and
(viii) That transaction reports or last sale data made available to
any vendor for display on an interrogation device identify the
marketplace where each transaction was executed.
(3) No transaction reporting plan filed pursuant to this section, or
any amendment to an effective transaction reporting plan, shall become
effective unless approved by the Commission or otherwise permitted in
accordance with the procedures set forth in Sec. 240.11Aa3-2 (Rule
11Aa3-2 under the Act) governing national market system plans.
(c) Prohibitions and reporting requirements. (1) No broker or dealer
may execute any transaction in, or induce or attempt to induce the
purchase or sale of, any reported security,
(i) On or through the facilities of an exchange unless there is an
effective transaction reporting plan with respect to transactions in
such security executed on or through such exchange facilities; or
(ii) Otherwise than on an exchange unless there is an effective
transaction reporting plan with respect to transactions in such security
executed otherwise than on an exchange by such broker or dealer.
(2) No exchange or member thereof shall make available or
disseminate, on a current and continuing basis, transaction reports or
last sale data with respect to transactions in any reported security
executed through the facilities of such exchange except pursuant to an
effective transaction reporting plan filed by such exchange (either
individually or jointly with other persons).
(3) No association or member thereof shall make available or
disseminate, on a current and continuing basis, transaction reports or
last sale data with respect to transactions in any reported security
executed by a member of such association otherwise than on an exchange
except pursuant to an effective transaction reporting plan filed by such
association (either individually or jointly with other persons).
(4) Every broker or dealer who is a member of an exchange or
association shall promptly transmit to the exchange or association of
which it is a member all information required by any effective
transaction reporting plan filed by such exchange or association (either
individually or jointly with other exchanges and/or associations).
(d) Retransmission of transaction reports or last sale data. On and
after July 5, 1980, notwithstanding any provision of any effective
transaction reporting plan, no exchange or association may, either
individually or jointly, by rule, stated policy or practice, transaction
reporting plan or otherwise, prohibit, condition or otherwise limit,
directly or indirectly, the ability of any vendor to retransmit, for
display in moving tickers, transaction reports or last sale data made
available pursuant to any effective transaction reporting plan:
Provided, however, That an exchange or association may, by means of an
effective transaction reporting plan, condition such retransmission upon
appropriate undertakings to ensure that any charges for the distribution
of transaction reports or last sale data in moving tickers permitted by
paragraph (e) of this section are collected.
(e) Charges. Nothing in this section shall preclude any exchange or
association, separately or jointly, pursuant to the terms of an
effective transaction reporting plan, from imposing reasonable, uniform
charges (irrespective of geographic location) for distribution of
transaction reports or last sale data.
(f) Appeals. The Commission may, in its discretion, entertain
appeals in connection with the implementation or operation of any
effective transaction reporting plan in accordance with the provisions
of paragraph (e) of Sec. 240.11Aa3-2.
(g) Exemptions. The Commission may exempt from the provisions of
this section, either unconditionally or on specified terms and
conditions, any exchange, association, broker, dealer or specified
security if the Commission determines that such exemption is consistent
with the public interest, the protection of investors and the removal
[[Page 63]]
of impediments to, and perfection of the mechanisms of, a national
market system.
(Secs. 2, 3, 6, 9, 10, 15, 17 and 23, Pub. L. 78-291, 48 Stat. 881, 882,
885, 889, 891, 895, 897 and 901, as amended by secs. 2, 3, 4, 11, 14 and
18, Pub. L. 94-29, 89 Stat. 97, 104, 121, 137 and 155 (15 U.S.C. 78b,
78c, 78f, 78i, 78j, 78o, 78q and 78w); sec. 15A, as added by sec. 1,
Pub. L. 75-719, 52 Stat. 1070, as amended by sec. 12, Pub. L. 94-29, 89
Stat. 127 (15 U.S.C. 78-3); sec. 11A, as added by sec. 7, Pub. L. 94-29,
89 Stat. 111 (15 U.S.C. 78k-1); 15 U.S.C. 78a et seq., as amended by
Pub. L. 84-29 (June 4, 1975) and by Pub. L. 98-38 (June 6, 1983),
particularly secs. 11A, 15, 19 and 23 thereof (15 U.S.C. 78k-1, 78o, 78s
and 78w))
[45 FR 12388, Feb. 26, 1980, as amended at 46 FR 14006, Feb. 25, 1981;
46 FR 15872, Mar. 10, 1981; 48 FR 53690, Nov. 29, 1983; 50 FR 38518,
Sept. 23, 1985; 52 FR 24153, June 29, 1987; 61 FR 48328, Sept. 12, 1996]
Sec. 240.11Aa3-2 Filing and amendment of national market system plans.
(a) Definitions. For purposes of this section, (1) The term national
market system plan shall mean any joint self-regulatory organization
plan in connection with
(i) The planning, development, operation or regulation of a national
market system (or a subsystem thereof) or one or more facilities
thereof, or
(ii) The development and implementation of procedures and/or
facilities designed to achieve compliance by self-regulatory
organizations and their members with any section of this subpart
promulgated pursuant to section 11A of the Act.
(2) The term effective national market system plan shall mean any
national market system plan approved by the Commission (either
temporarily or on a permanent basis) pursuant to this section.
(3) The term self-regulatory organization shall mean any national
securities exchange (``exchange'') or national securities association
(``association'').
(4) The term joint self-regulatory organization plan shall mean a
plan as to which two or more self-regulatory organizations, acting
jointly, are sponsors.
(5) The term sponsors, when used in connection with a national
market system plan, shall mean any self-regulatory organization which is
a signatory to such plan and has agreed to act in accordance with the
terms of the plan.
(6) The term participants, when used in connection with a national
market system plan, shall mean any self-regulatory organization which
has agreed to act in accordance with the terms of the plan but which is
not a signatory of such plan.
(7) The term plan processor shall mean any self-regulatory
organization or securities information processor acting as an exclusive
processor in connection with the development, implementation and/or
operation of any facility contemplated by an effective national market
system plan.
(8) The term vendor shall have the meaning provided in
Sec. 240.11Aa3-1 (Rule 11Aa3-1 under the Act).
(b) Filing of national market system plans and amendments thereto.
(1) Any two or more self-regulatory organizations, acting jointly, may
file a national market system plan or may propose an amendment to an
effective national market system plan (``proposed amendment'') by
submitting the text of the plan or amendment to the Secretary of the
Commission, together with a statement of the purpose of such plan or
amendment and, to the extent applicable, the documents and information
required by paragraphs (b)(4) and (5) of this section.
(2) The Commission may propose amendments to any effective national
market system plan by publishing the text thereof, together with a
statement of the purpose of such amendment, in accordance with the
provisions of paragraph (c) of this section.
(3) Self-regulatory organizations are authorized to act jointly in
(i) planning, developing, and operating any national market subsystem or
facility contemplated by a national market system plan, (ii) preparing
and filing a national market system plan or any amendment thereto, or
(iii) implementing or administering an effective national market system
plan.
(4) Every national market system plan filed pursuant to this
section, or any amendment thereto, shall be accompanied by (i) copies of
all governing or constituent documents relating
[[Page 64]]
to any person (other than a self-regulatory organization) authorized to
implement or administer such plan on behalf of its sponsors and (ii), to
the extent applicable,
(A) A detailed description of the manner in which the plan or
amendment, and any facility or procedure contemplated by the plan or
amendment, will be implemented;
(B) A listing of all significant phases of development and
implementation (including any pilot phase) contemplated by the plan or
amendment, together with the projected date of completion of each phase;
(C) An analysis of the impact on competition of implementation of
the plan or amendment or of any facility contemplated by the plan or
amendment;
(D) A description of any written understandings or agreements
between or among plan sponsors or particpants relating to
interpretations of the plan or conditions for becoming a sponsor or
participant in the plan; and
(E) In the case of a proposed amendment, a statement that such
amendment has been approved by the sponsors in accordance with the terms
of the plan.
(5) Every national market system plan, or any amendment thereto,
filed pursuant to this section shall include a description of the manner
in which any facility contemplated by the plan or amendment will be
operated. Such description shall include, to the extent applicable,
(i) The terms and conditions under which brokers, dealers, and/or
self-regulatory organizations will be granted or denied access
(including specific procedures and standards governing the granting or
denial of access);
(ii) The method by which any fees or charges collected on behalf of
all of the sponsors and/or participants in connection with access to, or
use of, any facility contemplated by the plan or amendment will be
determined and imposed (including any provision for distribution of any
net proceeds from such fees or charges to the sponsors and/or
participants) and the amount of such fees or charges;
(iii) The method by which, and the frequency with which, the
performance of any person acting as plan processor with respect to the
implementation and/or operation of the plan will be evaluated; and
(iv) The method by which disputes arising in connection with the
operation of the plan will be resolved.
(6) In connection with the selection of any person to act as plan
processor with respect to any facility contemplated by a national market
system plan (including renewal of any contract for any person to so
act), the sponsors shall file with the Commission a statement
identifying the person selected, describing the material terms under
which such person is to serve as plan processor, and indicating the
solicitation efforts, if any, for alternative plan processors, the
alternatives considered and the reasons for selection of such person.
(7) Any national market system plan (or any amendment thereto) which
is intended by the sponsors to satisfy a plan filing requirement
contained in any other section of this subpart shall, in addition to
compliance with this section, also comply with the requirements of such
other section.
(c) Effectiveness of national market system plans. (1) The
Commission shall publish notice of the filing of any national market
system plan, or any proposed amendment to any effective national market
system plan (including any amendment initiated by the Commission),
together with the terms of substance of the filing or a description of
the subjects and issues involved, and shall provide interested persons
an opportunity to submit written comments. No national market system
plan, or any amendment thereto, shall become effective unless approved
by the Commission or otherwise permitted in accordance with paragraph
(c)(3) of this section.
(2) Within 120 days of the date of publication of notice of filing
of a national market system plan or an amendment to an effective
national market system plan, or within such longer period as the
Commission may designate up to 180 days of such date if it finds such
longer period to be appropriate and publishes its reasons for so finding
or as to which the sponsors consent, the Commission shall approve such
plan or
[[Page 65]]
amendment, with such changes or subject to such conditions as the
Commission may deem necessary or appropriate, if it finds that such plan
or amendment is necessary or appropriate in the public interest, for the
protection of investors and the maintenance of fair and orderly markets,
to remove impediments to, and perfect the mechanisms of, a national
market system, or otherwise in furtherance of the purposes of the Act.
Approval of a national market system plan, or an amendment to an
effective national market system plan (other than an amendment initiated
by the Commission), shall be by order. Promulgation of an amendment to
an effective national market system plan initiated by the Commission
shall be by rule.
(3) A proposed amendment may be put into effect upon filing with the
Commission if designated by the sponsors as:
(i) Establishing or changing a fee or other charge collected on
behalf of all of the sponsors and/or participants in connection with
access to, or use of, any facility contemplated by the plan or amendment
(including changes in any provision with respect to distribution of any
net proceeds from such fees or other charges to the sponsors and/or
participants);
(ii) Concerned solely with the administration of the plan, or
involving the governing or constituent documents relating to any person
(other than a self-regulatory organization) authorized to implement or
administer such plan on behalf of its sponsors; or
(iii) Involving solely technical or ministerial matters. At any time
within 60 days of the filing of any such amendment, the Commission may
summarily abrogate the amendment and require that such amendment be
refiled in accordance with paragraph (b)(1) of this section and reviewed
in accordance with paragraph (c)(2) of this section, if it appears to
the Commission that such action is necessary or appropriate in the
public interest, for the protection of investors, or the maintenance of
fair and orderly markets, to remove impediments to, and perfect
mechanisms of, a national market system or otherwise in furtherance of
the purposes of the Act.
(4) Notwithstanding the provisions of paragraph (c)(1) of this
section, a proposed amendment may be put into effect summarily upon
publication of notice of such amendment, on a temporary basis not to
exceed 120 days, if the Commission finds that such action is necessary
or appropriate in the public interest, for the protection of investors
or the maintenance of fair and orderly markets, to remove impediments
to, and perfect mechanisms of, a national market system or otherwise in
furtherance of the purposes of the Act.
(5) Any plan (or amendment thereto) in connection with:
(i) The planning, development, operation or regulation of a national
market system (or a subsystem thereof) or one or more facilities
thereof; or
(ii) The development and implementation of procedures and/or
facilities designed to achieve compliance by self-regulatory
organizations and/or their members of any section of this subpart
promulguated pursuant to section 11A of the Act, approved by the
Commission pursuant to section 11A of the Act (or pursuant to any rule
or regulation thereunder) prior to the effective date of this section
(either temporarily or on a permanent basis) shall be deemed to have
been filed and approved pursuant to this section and no additional
filing need be made by the sponsors with respect to such plan or
amendment; Provided, however, That all terms and conditions associated
with any such approval (including time limitations) shall continue to be
applicable; and, Provided, further, That any amendment to such plan
filed with or approved by the Commission on or after the effective date
of this section shall be subject to the provisions of, and considered in
accordance with the procedures specified in, this section.
(d) Compliance with terms of national market system plans. Each
self-regulatory organization shall comply with the terms of any
effective national market system plan of which it is a sponsor or a
participant. Each self-regulatory organization also shall, absent
reasonable justification or excuse, enforce compliance with any such
plan by its members and persons associated with its members.
[[Page 66]]
(e) Appeals. The Commission may, in its discretion, entertain
appeals in connection with the implementation or operation of any
effective national market system plan as follows:
(1) Any action taken or failure to act by any person in connection
with an effective national market system plan (other than a prohibition
or limitation of access reviewable by the Commission pursuant to section
11A(b)(5) or section 19(d) of the Act) shall be subject to review by the
Commission, on its own motion or upon application by any person
aggrieved thereby (including, but not limited to, self-regulatory
organizations, brokers, dealers, issuers, and vendors), filed not later
than 30 days after notice of such action or failure to act or within
such longer period as the Commission may determine.
(2) Application to the Commission for review, or the institution of
review by the Commission on its own motion, shall not operate as a stay
of any such action unless the Commission determines otherwise, after
notice and opportunity for hearing on the question of a stay (which
hearing may consist only of affidavits or oral arguments).
(3) In any proceedings for review, if the Commission, after
appropriate notice and opportunity for hearing (which hearing may
consist solely of consideration of the record of any proceedings
conducted in connection with such action or failure to act and an
opportunity for the presentation of reasons supporting or opposing such
action or failure to act) and upon consideration of such other data,
views and arguments as it deems relevant, finds that the action or
failure to act is in accordance with the applicable provisions of such
plan and that the applicable provisions are, and were, applied in a
manner consistent with the public interest, the protection of investors,
the maintenance of fair and orderly markets and the removal of
impediments to, and perfection of the mechanisms of, a national market
system, the Commission, by order, shall dismiss the proceeding. If the
Commission does not make any such finding, or if it finds that such
action or failure to act imposes any burden on competition not necessary
or appropriate in furtherance of the purposes of the Act, the
Commission, by order, shall set aside such action and/or require such
action with respect to the matter reviewed as the Commission deems
necessary or appropriate in the public interest, for the protection of
investors, and the maintenance of fair and orderly markets, or to remove
impediments to, and perfect the mechanisms of, a national market system.
(f) Exemptions. The Commission may exempt from the provisions of
this section, either unconditionally or on specified terms and
conditions, any self-regulatory organization, member thereof, or
specified security, if the Commission determines that such exemption is
consistent with the public interest, the protection of investors, the
maintenance of fair and orderly markets and the removal of impediments
to, and perfection of the mechanisms of, a national market system.
(Secs. 2, 3, 6, 9, 10, 15, 17, and 23, Pub. L. 78-291, 48 Stat. 881,
882, 885, 889, 891, 895, 897, and 901, as amended by secs. 2, 3, 4, 11,
14, and 18, Pub. L. 94-29, 89 Stat. 97, 104, 121, 137, and 155 (15
U.S.C. 78b, 78c, 78f, 78i, 78j, 78o, 78q, and 78w); sec. 15A, as added
by sec. 1, Pub. L. 75-719, 52 Stat. 1070, as amended by sec. 12, Pub. L.
94-29, 89 Stat. 127 (15 U.S.C. 78-3); sec. 11A, as added by sec. 7, Pub.
L. 94-29, 89 Stat. 111 (15 U.S.C. 78k-l); 15 U.S.C. 78a et seq., as
amended by Pub. L. 84-29 (June 4, 1975) and by Pub. L. 98-38 (June 6,
1983), particularly secs. 11A, 15, 19 and 23 thereof (15 U.S.C. 78k-1,
78o, 78s and 78w))
[46 FR 15870, Mar. 10, 1981, as amended at 48 FR 53690, Nov. 29, 1983]
Sec. 240.11Ab2-1 Registration of securities information processors: Form of application and amendments.
(a) An application for the registration of a securities information
processor shall be filed on Form SIP in accordance with the instructions
contained therein.
(b) If any information reported in items 1-13 or item 21 of Form SIP
or in any amendment thereto is or becomes inaccurate for any reason,
whether before or after the registration has been granted, the
securities information processor shall promptly file an amendment on
Form SIP correcting such information.
(c) The Commission, upon its own motion or upon application by any
securities information processor, may
[[Page 67]]
conditionally or unconditionally exempt any securities information
processor from any provision of the rules or regulations adopted under
section 11A(b).
(d) Every amendment filed pursuant to this section shall constitute
a ``report'' within the meaning of sections 17(a), 18(a) and 32(a) of
the Act.
[40 FR 45424, Oct. 2, 1975]
Sec. 240.11Ac1-1 Dissemination of quotations.
(a) Definitions. For the purposes of this section:
(1) The term aggregate quotation size shall mean the sum of the
quotation sizes of all responsible brokers or dealers who have
communicated on any exchange bids or offers for a covered security at
the same price.
(2) The term association shall mean any association of brokers and
dealers registered pursuant to Section 15A of the Act (15 U.S.C. 78o-3).
(3) The terms best bid and best offer shall mean the highest priced
bid and the lowest priced offer.
(4) The terms bid and offer shall mean the bid price and the offer
price communicated by an exchange member or OTC market maker to any
broker or dealer, or to any customer, at which it is willing to buy or
sell one or more round lots of a covered security, as either principal
or agent, but shall not include indications of interest.
(5) The term consolidated system shall mean the consolidated
transaction reporting system.
(6) The term covered security shall mean any reported security and
any other security for which a transaction report, last sale data or
quotation information is disseminated through an automated quotation
system as described in Section 3(a)(51)(A)(ii) of the Act (15 U.S.C.
78c(a)(51)(A)(ii)).
(7) The term effective transaction reporting plan shall have the
meaning provided in Sec. 240.11Aa3-1(a)(3).
(8) The term electronic communications network, for the purposes of
Sec. 240.11Ac1-1(c)(5), shall mean any electronic system that widely
disseminates to third parties orders entered therein by an exchange
market maker or OTC market maker, and permits such orders to be executed
against in whole or in part; except that the term electronic
communications network shall not include:
(i) Any system that crosses multiple orders at one or more specified
times at a single price set by the ECN (by algorithm or by any
derivative pricing mechanism) and does not allow orders to be crossed or
executed against directly by participants outside of such times; or
(ii) Any system operated by, or on behalf of, an OTC market maker or
exchange market maker that executes customer orders primarily against
the account of such market maker as principal, other than riskless
principal.
(9) The term exchange market maker shall mean any member of a
national securities exchange (``exchange'') who is registered as a
specialist or market maker pursuant to the rules of such exchange.
(10) The term exchange-traded security shall mean any covered
security or class of covered securities listed and registered, or
admitted to unlisted trading privileges, on an exchange; provided,
however, That securities not listed on any exchange that are traded
pursuant to unlisted trading privileges are excluded.
(11) The term make available, when used with respect to bids,
offers, quotation sizes and aggregate quotation sizes supplied to
quotation vendors by an exchange or association, shall mean to provide
circuit connections at the premises of the exchange or association
supplying such data, or at a common location determined by mutual
agreement of the exchanges and associations, for the delivery of such
data to quotation vendors.
(12) The term odd-lot shall mean an order for the purchase or sale
of a covered security in an amount less than a round lot.
(13) The term OTC market maker shall mean any dealer who holds
itself out as being willing to buy from and sell to its customers, or
otherwise, a covered security for its own account on a regular or
continuous basis otherwise than on an exchange in amounts of less than
block size.
(14) The term plan processor shall have the meaning provided in
Sec. 240.11Aa3-2(a)(7).
[[Page 68]]
(15) The term published aggregate quotation size shall mean the
aggregate quotation size calculated by an exchange and displayed by a
quotation vendor on a terminal or other display device at the time an
order is presented for execution to a responsible broker or dealer.
(16) The terms published bid and published offer shall mean the bid
or offer of a responsible broker or dealer for a covered security
communicated by it to its exchange or association pursuant to this
section and displayed by a quotation vendor on a terminal or other
display device at the time an order is presented for execution to such
responsible broker or dealer.
(17) The term published quotation size shall mean the quotation size
of a responsible broker or dealer communicated by it to its exchange or
association pursuant to this section and displayed by a quotation vendor
on a terminal or other display device at the time an order is presented
for execution to such responsible broker or dealer.
(18) The term quotation size, when used with respect to a
responsible broker's or dealer's bid or offer for a covered security,
shall mean:
(i) The number of shares (or units of trading) of that covered
security which such responsible broker or dealer has specified, for
purposes of dissemination to quotation vendors, that it is willing to
buy at the bid price or sell at the offer price comprising its bid or
offer, as either principal or agent; or
(ii) In the event such responsible broker or dealer has not so
specified, a normal unit of trading for that covered security.
(19) The term quotation vendor shall mean any securities information
processor engaged in the business of disseminating to brokers, dealers
or investors on a real-time basis, bids and offers made available
pursuant to this section, whether distributed through an electronic
communications network or displayed on a terminal or other display
device.
(20) The term reported security shall mean any security or class of
securities for which transaction reports are collected, processed and
made available pursuant to an effective transaction reporting plan.
(21) The term responsible broker or dealer shall mean:
(i) When used with respect to bids or offers communicated on an
exchange, any member of such exchange who communicates to another member
on such exchange, at the location (or locations) designated by such
exchange for trading in a covered security, a bid or offer for such
covered security, as either principal or agent; provided, however, That,
in the event two or more members of an exchange have communicated on
such exchange bids or offers for a covered security at the same price,
each such member shall be considered a ``responsible broker or dealer''
for that bid or offer, subject to the rules of priority and precedence
then in effect on that exchange; and further provided, That for a bid or
offer which is transmitted from one member of an exchange to another
member who undertakes to represent such bid or offer on such exchange as
agent, only the last member who undertakes to represent such bid or
offer as agent shall be considered the ``responsible broker or dealer''
for that bid or offer; and
(ii) When used with respect to bids and offers communicated by a
member of an association to another broker or dealer or to a customer
otherwise than on an exchange, the member communicating the bid or offer
(regardless of whether such bid or offer is for its own account or on
behalf of another person).
(22) The term revised bid or offer shall mean a market maker's bid
or offer which supersedes its published bid or published offer.
(23) The term revised quotation size shall mean a market maker's
quotation size which supersedes its published quotation size.
(24) The term specified persons, when used in connection with any
notification required to be provided pursuant to paragraph (b)(3) of
this section and any election (or withdrawal thereof) permitted under
paragraph (b)(5) of this section, shall mean:
(i) Each quotation vendor;
(ii) Each plan processor; and
(iii) The processor for the Options Price Reporting Authority (in
the case
[[Page 69]]
of a notification for a subject security which is a class of securities
underlying options admitted to trading on any exchange).
(25) The term subject security shall mean:
(i) With respect to an exchange:
(A) Any exchange-traded security other than a security for which the
executed volume of such exchange, during the most recent calendar
quarter, comprised one percent or less of the aggregate trading volume
for such security as reported in the consolidated system; and
(B) Any other covered security for which such exchange has in effect
an election, pursuant to paragraph (b)(5)(i) of this section, to
collect, process, and make available to quotation vendors, bids, offers,
quotation sizes, and aggregate quotation sizes communicated on such
exchange; and
(ii) With respect to a member of an association:
(A) Any exchange-traded security for which such member acts in the
capacity of an OTC market maker unless the executed volume of such
member, during the most recent calendar quarter, comprised one percent
or less of the aggregate trading volume for such security as reported in
the consolidated system; and
(B) Any other covered security for which such member acts in the
capacity of an OTC market maker and has in effect an election, pursuant
to paragraph (b)(5)(ii) of this section, to communicate to its
association bids, offers and quotation sizes for the purpose of making
such bids, offers and quotation sizes available to quotation vendors.
(b) Dissemination requirements for exchanges and associations. (1)
Every exchange and association shall establish and maintain procedures
and mechanisms for collecting bids, offers, quotation sizes and
aggregate quotation sizes from responsible brokers or dealers who are
members of such exchange or association, processing such bids, offers
and sizes, and making such bids, offers and sizes available to quotation
vendors, as follows:
(i) Each exchange shall at all times such exchange is open for
trading, collect, process and make available to quotation vendors the
best bid, the best offer, and aggregate quotation sizes for each subject
security listed or admitted to unlisted trading privileges which is
communicated on any exchange by any responsible broker or dealer, but
shall not include:
(A) Any bid or offer executed immediately after communication and
any bid or offer communicated by a responsible broker or dealer other
than an exchange market maker which is cancelled or withdrawn if not
executed immediately after communication; and
(B) Any bid or offer communicated during a period when trading in
that security has been suspended or halted, or prior to the commencement
of trading in that security on any trading day, on that exchange.
(ii) Each association shall, at all times that last sale information
with respect to reported securities is reported pursuant to an effective
transaction reporting plan, collect, process and make available to
quotation vendors the best bid, best offer, and quotation sizes
communicated otherwise than on an exchange by each member of such
association acting in the capacity of an OTC market maker for each
subject security and the identity of that member (excluding any bid or
offer executed immediately after communication), except during any
period when over-the-counter trading in that security has been
suspended.
(2) Each exchange shall, with respect to each published bid and
published offer representing a bid or offer of a member for a subject
security, establish and maintain procedures for ascertaining and
disclosing to other members of that exchange, upon presentation of
orders sought to be executed by them in reliance upon paragraph (c)(2)
of this section, the identity of the responsible broker or dealer who
made such bid or offer and the quotation size associated with it.
(3)(i) If, at any time an exchange is open for trading, such
exchange determines, pursuant to rules approved by the Securities and
Exchange Commission pursuant to section 19(b)(2) of the Act (15 U.S.C.
78s(b)(2)), that the level of trading activities or the existence of
unusual market conditions is such that the exchange is incapable of
collecting,
[[Page 70]]
processing, and making available to quotation vendors the data for a
subject security required to be made available pursuant to paragraph
(b)(1) of this section in a manner that accurately reflects the current
state of the market on such exchange, such exchange shall immediately
notify all specified persons of that determination. Upon such
notification, responsible brokers or dealers that are members of that
exchange shall be relieved of their obligation under paragraph (c)(2) of
this section and such exchange shall be relieved of its obligations
under paragraphs (b) (1) and (2) of this section for that security:
provided, however, That such exchange will continue, to the maximum
extent practicable under the circumstances, to collect, process, and
make available to quotation vendors data for that security in accordance
with paragraph (b)(1) of this section.
(ii) During any period an exchange, or any responsible broker or
dealer that is a member of that exchange, is relieved of any obligation
imposed by this section for any subject security by virtue of a
notification made pursuant to paragraph (b)(3)(i) of this section, such
exchange shall monitor the activity or conditions which formed the basis
for such notification and shall immediately renotify all specified
persons when that exchange is once again capable of collecting,
processing, and making available to quotation vendors the data for that
security required to be made available pursuant to paragraph (b)(1) of
this section in a manner that accurately reflects the current state of
the market on such exchange. Upon such renotification, any exchange or
responsible broker or dealer which had been relieved of any obligation
imposed by this section as a consequence of the prior notification shall
again be subject to such obligation.
(4) Nothing in this section shall preclude any exchange or
association from making available to quotation vendors indications of
interest or bids and offers for a subject security at any time such
exchange or association is not required to do so pursuant to paragraph
(b)(1) of this section.
(5)(i) Any exchange may make an election for purposes of paragraph
(a)(25)(i)(B) of this section for any covered security, by collecting,
processing, and making available bids, offers, quotation sizes, and
aggregate quotation sizes in that security; except that for any covered
security previously listed or admitted to unlisted trading privileges on
only one exchange and not traded by any OTC market maker, such election
shall be made by notifying all specified persons, and shall be effective
at the opening of trading on the business day following notification.
(ii) Any member of an association acting in the capacity of an OTC
market maker may make an election for purposes of paragraph
(a)(25)(ii)(B) of this section for any covered security, by
communicating to its association bids, offers, and quotation sizes in
that security; except that for any other covered security listed or
admitted to unlisted trading privileges on only one exchange and not
traded by any other OTC market maker, such election shall be made by
notifying its association and all specified persons, and shall be
effective at the opening of trading on the business day following
notification.
(iii) The election of an exchange or member of an association for
any covered security pursuant to this paragraph (b)(5) shall cease to be
in effect if such exchange or member ceases to make available or
communicate bids, offers, and quotation sizes in such security.
(c) Obligations of responsible brokers and dealers. (1) Each
responsible broker or dealer shall promptly communicate to its exchange
or association, pursuant to the procedures established by that exchange
or association, its best bids, best offers, and quotation sizes for any
subject security.
(2) Subject to the provisions of paragraph (c)(3) of this section,
each responsible broker or dealer shall be obligated to execute any
order to buy or sell a subject security, other than an odd-lot order,
presented to it by another broker or dealer, or any other person
belonging to a category of persons with whom such responsible broker or
dealer customarily deals, at a price at least as favorable to such
[[Page 71]]
buyer or seller as the responsible broker's or dealer's published bid or
published offer (exclusive of any commission, commission equivalent or
differential customarily charged by such responsible broker or dealer in
connection with execution of any such order) in any amount up to its
published quotation size.
(3)(i) No responsible broker or dealer shall be obligated to execute
a transaction for any subject security as provided in paragraph (c)(2)
of this section to purchase or sell that subject security in an amount
greater than such revised quotation if:
(A) Prior to the presentation of an order for the purchase or sale
of a subject security, a responsible broker or dealer has communicated
to its exchange or association, pursuant to paragraph (c)(1) of this
section, a revised quotation size; or
(B) At the time an order for the purchase or sale of a subject
security is presented, a responsible broker or dealer is in the process
of effecting a transaction in such subject security, and immediately
after the completion of such transaction, it communicates to its
exchange or association a revised quotation size, such responsible
broker or dealer shall not be obligated by paragraph (c)(2) of this
section to purchase or sell that subject security in an amount greater
than such revised quotation size.
(ii) No responsible broker or dealer shall be obligated to execute a
transaction for any subject security as provided in paragraph (c)(2) of
this section if:
(A) Before the order sought to be executed is presented, such
responsible broker or dealer has communicated to its exchange or
association pursuant to paragraph (c)(1) of this section, a revised bid
or offer; or
(B) At the time the order sought to be executed is presented, such
responsible broker or dealer is in the process of effecting a
transaction in such subject security, and, immediately after the
completion of such transaction, such responsible broker or dealer
communicates to its exchange or association pursuant to paragraph (c)(1)
of this section, a revised bid or offer; provided, however, That such
responsible broker or dealer shall nonetheless be obligated to execute
any such order in such subject security as provided in paragraph (c)(2)
of this section at its revised bid or offer in any amount up to its
published quotation size or revised quotation size.
(4) Subject to the provisions of paragraph (b)(4) of this section:
(i) No exchange or OTC market maker may make available, disseminate
or otherwise communicate to any quotation vendor, directly or
indirectly, for display on a terminal or other display device any bid,
offer, quotation size, or aggregate quotation size for any covered
security which is not a subject security with respect to such exchange
or OTC market maker; and
(ii) No quotation vendor may disseminate or display on a terminal or
other display device any bid, offer, quotation size, or aggregate
quotation size from any exchange or OTC market maker for any covered
security which is not a subject security with respect to such exchange
or OTC market maker.
(5)(i) Entry of any priced order for a covered security by an
exchange market maker or OTC market maker in that security into an
electronic communications network that widely disseminates such order
shall be deemed to be:
(A) A bid or offer under this section, to be communicated to the
market maker's exchange or association pursuant to paragraph (c) of this
section for at least the minimum quotation size that is required by the
rules of the market maker's exchange or association if the priced order
is for the account of a market maker, or the actual size of the order up
to the minimum quotation size required if the priced order is for the
account of a customer; and
(B) A communication of a bid or offer to a quotation vendor for
display on a display device for purposes of paragraph (c)(4) of this
section.
(ii) An exchange market maker or OTC market maker that has entered a
priced order for a covered security into an electronic communications
network that widely disseminates such order shall be deemed to be in
compliance
[[Page 72]]
with paragraph (c)(5)(i)(A) of this section if the electronic
communications network:
(A) Provides to an exchange or association (or an exclusive
processor acting on behalf of one or more exchanges or associations) the
prices and sizes of the orders at the highest buy price and the lowest
sell price for such security entered in, and widely disseminated by, the
electronic communications network by exchange market makers and OTC
market makers for the covered security, and such prices and sizes are
included in the quotation data made available by the exchange,
association, or exclusive processor to quotation vendors pursuant to
this section; and
(B) Provides, to any broker or dealer, the ability to effect a
transaction with a priced order widely disseminated by the electronic
communications network entered therein by an exchange market maker or
OTC market maker that is:
(1) Equivalent to the ability of any broker or dealer to effect a
transaction with an exchange market maker or OTC market maker pursuant
to the rules of the exchange or association to which the electronic
communications network supplies such bids and offers; and
(2) At the price of the highest priced buy order or lowest priced
sell order, or better, for the lesser of the cumulative size of such
priced orders entered therein by exchange market makers or OTC market
makers at such price, or the size of the execution sought by the broker
or dealer, for the covered security.
(d) Exemptions. The Commission may exempt from the provisions of
this section, either unconditionally or on specified terms and
conditions, any responsible broker or dealer, electronic communications
network, exchange, or association if the Commission determines that such
exemption is consistent with the public interest, the protection of
investors and the removal of impediments to and perfection of the
mechanism of a national market system.
[61 FR 48328, Sept. 12, 1996]
Effective Date Note: At 62 FR 1280, Jan. 9, 1997, the effective date
of Sec. 240.11Ac1-1 paragraph (a)(25)(ii) was delayed until Apr. 10,
1997.
Sec. 240.11Ac1-2 Display of transaction reports, last sale data and quotation information.
(a) Definitions. For purposes of this section, (1) The terms
transaction report, effective transaction reporting plan, moving ticker,
last sale data, market minder and interrogation device shall have the
meaning provided in Sec. 240.11Aa3-1 (Rules 11Aa3-1 under the Act).
(2) The term vendor shall mean any securities information processor
engaged in the business of disseminating transaction reports, last sale
data or quotation information with respect to subject securities to
brokers, dealers or investors on a real-time or other current and
continuing basis, whether through an electronic communications network,
moving ticker or interrogation device.
(3) The term NASDAQ shall mean the electronic inter-dealer quotation
system owned and operated by NASDAQ, Inc., a subsidiary of the National
Association of Securities Dealers, Inc.
(4) The term subject security shall mean,
(i) Any reported security; and
(ii) Any other equity security as to which transaction reports, last
sale data or quotation information is disseminated through NASDAQ.
(5) The terms quotations and quotation information shall mean bids,
offers and, where applicable, quotation sizes and aggregate quotation
sizes.
(6) The terms bid and offer shall,
(i) In the case of a reported security, have the meaning provided in
Sec. 240.11Ac1-1 (Rule 11Ac1-1 under the Act); and
(ii) In the case of any subject security other than a reported
security, mean the most recent bid price or offer price of an over-the-
counter market maker disseminated through Level 2 or 3 of NASDAQ.
(7) The terms quotation size, aggregate quotation size, third market
maker and make available shall have the meaning provided in
Sec. 240.11Ac1-1 (Rule 11Ac1-1 under the Act).
(8) The term consolidated display shall mean, with respect to a
particular reported security,
[[Page 73]]
(i) Any display (other than a moving ticker or market minder) of
transaction reports for such security from all reporting market centers;
(ii) Any display (other than a moving ticker or market minder) of
last sale data for such security, or information derived therefrom,
based on transaction reports from all reporting market centers; or
(iii) Any display of quotation information for that security based
on quotations from all reporting market centers.
(9) The term consolidated price, when used with respect to a
particular reported security, shall mean the price of the most recent
transaction report for that security reported pursuant to any effective
transaction reporting plan.
(10) The term consolidated volume, when used with respect to a
particular reported security, shall mean the volume of the most recent
transaction report for that security reported pursuant to any effective
transaction reporting plan.
(11) The term cumulative consolidated volume, when used with respect
to a particular reported security, shall mean the cumulative volume of
all transaction reports for that security reported pursuant to any
effective transaction reporting plan during a particular trading day.
(12) The term individual market center display shall mean, with
respect to a particular reported security,
(i) Any display (other than a moving ticker or market minder) of
transaction reports for such security from a particular market center;
(ii) Any display (other than a moving ticker or market minder) of
last sale data for such security, or information derived therefrom,
based on transaction reports from a particular reporting market center;
or
(iii) Any display of quotation information for that security based
on quotations from a particular reporting market center.
(13) The term over-the-counter market maker shall mean, with respect
to any subject security other than a reported security, any broker or
dealer which holds itself out as being willing to buy and sell such
security on a regular and continuous basis otherwise than on an exchange
in amounts of less than block size.
(14) The term reporting market center shall mean, (i) with respect
to a reported security,
(A) Any national securities exchange (``exchange'') on which, or
through whose facilities, transactions in such security are executed and
which collects, processes and makes available transaction reports with
respect to transactions in such security on a current basis pursuant to
Sec. 240.11Aa3-1 (Rule 11Aa3-1 under the Act); and
(B) Any person acting in the capacity of a third market maker with
respect to such security which reports transactions in such security to
a national securities association on a current basis pursuant to
Sec. 240.11Aa3-1 (Rule 11Aa3-1 under the Act) and disseminates
quotations in such security pursuant to Sec. 240.11Ac1-1 (Rule 11Ac1-1
under the Act); and
(ii) With respect to a subject security other than a reported
security, any person acting in the capacity of an over-the-counter
market maker who is authorized to disseminate quotations in such
security, through NASDAQ, and who makes such quotations available
through that system on a regular and continuous basis.
(15) The terms best bid and best offer shall mean,
(i) With respect to quotations for a reported security, the highest
bid or lowest offer for that security made available by any reporting
market center pursuant to Sec. 240.11Ac1-1 (Rule 11Ac1-1 under the Act)
(excluding any bid or offer made available by an exchange during any
period such exchange is relieved of its obligations under paragraphs (b)
(1) and (2) of Sec. 240. 11Ac1-1 by virtue of paragraph (b)(3)(i)
thereof)); Provided, however, That in the event two or more reporting
market centers make available identical bids or offers for a reported
security, the best bid or best offer (as the case may be) shall be
computed by ranking all such identical bids or offers (as the case may
be) first by size (giving the highest ranking to the bid or offer
associated with the largest size), then by time (giving the highest
ranking to the bid or offer received first in time); and
[[Page 74]]
(ii) With respect to quotations for a subject security other than a
reported security, the highest bid or lowest offer (as the case may be)
for such security disseminated by an over-the-counter market maker in
Level 2 or 3 of NASDAQ.
(16) The term quotation montage shall mean, with respect to a
particular subject security, a display on an interrogation device which
disseminates simultaneously quotations in that security from all
reporting market centers.
(17) The term representative bid or offer shall mean any number
representing a bid price or an offer price (as the case may be) for a
particular subject security which is (i) the mean, median, mode or
weighted average of two or more bids or offers of reporting market
centers in such security, (ii) calculated with reference to or derived
from any such mean, median, mode or weighted average, or (iii)
calculated by adding to or subtracting from the bid or offer of any
reporting market center in such security any number representing a
commission, commission equivalent, mark-up or differential.
(18) The term market information, when used with respect to an
individual market center display or a consolidated display for a
particular reported security, shall mean (i) any transaction reports or
last sale data, or information derived therefrom, contained in any such
display, (ii) any quotation information contained in any such display,
and (iii) any other category of information contained in any such
display which relates to the particular reported security involved,
including, but not limited to, annual or periodic dividend, ex-dividend
date, time of most recent trade and news dissemination.
(19) The term market linkage system shall mean any communications
and data processing facility which permits orders for the purchase and
sale of a subject security to be transmitted from one reporting market
center to another such reporting market center.
(20) The term reported security shall mean any security or class of
securities for which transaction reports are collected, processed and
made available pursuant to an effective transaction reporting plan.
(b) Display requirements for transaction reports and last sale data.
(1) No vendor shall distribute, publish, display or otherwise provide to
brokers and dealers on a real-time or other current and continuing
basis, whether through an electronic communications network, moving
ticker or interrogation device, transaction reports, last sale data or
market information in contravention of the provisions of this section.
(2) On and after the effective date of this section, the following
requirements shall be applicable to the display of transaction reports,
last sale data or market information with respect to reported
securities:
(i) If transaction reports or last sale data with respect to a
particular reported security are provided by a vendor on an
interrogation device, such vendor shall provide on that device a
consolidated display of transaction reports or last sale data for such
security which shall include, at a minimum, (A) the consolidated price
for such security, (B) the consolidated volume or cumulative
consolidated volume for such security, and (C) an identifier indicating
the reporting market center associated with such consolidated price and
consolidated volume (the ``consolidated last sale display'').
(ii) The consolidated last sale display shall be accessed by means
of retrieval instructions involving a number of key strokes which is
fewer than the number of strokes required to access any individual
market center display of transaction reports or last sale data provided
on that device for such security; Provided, however, That,
notwithstanding the above requirement, a vendor may provide on that
device both the consolidated last sale display and any such individual
market center displays made available for such security by means of
retrieval instructions involving an equal number of key strokes if the
information request or transmit key for the consolidated last sale
display is the most prominent.
(iii) Subject to the provisions of paragraph (b)(2)(ii) of this
section, a vendor may provide on an interrogation device an individual
market center display of transaction reports or last sale data for a
particular reported
[[Page 75]]
security for any reporting market center in such security.
(iv) No moving ticker may include an identifier indicating the
reporting market center associated with a particular transaction report
with respect to a reported security unless such moving ticker includes
identifiers for all transaction reports for such security (or an
identifiable subset of all such transaction reports) from all reporting
market centers in that security in a non-discriminatory manner.
(v) No moving ticker or consolidated last sale display may exclude
any transaction report or last sale data based upon the market center in
which a transaction has been executed.
(vi) No vendor may provide any category of market information in an
individual market center display for a particular subject security
unless that category of market information is also provided, on a
consolidated basis, as part of the consolidated last sale display for
that security; Provided, however, That a vendor may delete from such
consolidated last sale display up to three categories of information if
such deletion is necessary to accommodate the display of any market
identifiers required by this section.
(vii) Transaction reports and last sale data from all reporting
market centers which are third market makers may be identified in a
consolidated last sale display or a moving ticker by a single identifier
without identification of the individual third market maker associated
with such transaction report or last sale data.
(c) Display requirements for quotation information. (1) No vendor
shall distribute, publish, display or otherwise provide to brokers and
dealers on a real-time or other current and continuing basis, whether
through an electronic communications network, moving ticker or
interrogation device, quotation information with respect to subject
securities in contravention of the provisions of this section.
(2) On and after the effective date of this section, the following
requirements shall be applicable to the display of quotation information
with respect to subject securities:
(i) If quotation information with respect to a particular subject
security is provided by a vendor on an interrogation device, such vendor
shall provide on that device a consolidated display of quotation
information for such security (the ``consolidated quotation display'')
which shall include, at a minimum,
(A) The best bid and best offer for such security and, in the case
of a reported security, (1) identifiers indicating the reporting market
center making available such best bid and the reporting market center
making available such best offer and (2) the quotation size or aggregate
quotation size associated with such best bid and the quotation size or
aggregate quotation size associated with such best offer, or
(B) A quotation montage for that security.
(ii) The consolidated quotation display shall be accessed by means
of retrieval instructions involving a number of key strokes which is
fewer than the number of strokes required to access any individual
market center quotation display provided on that device by such vendors
for such security: Provided, however, That, notwithstanding the above
requirement, a vendor may provide on that device both the consolidated
quotation display and any individual market center display of quotation
information provided for such security by means of retrieval
instructions involving an equal number of key strokes if the information
request or transmit key for the consolidated quotation display is the
most prominent.
(iii) Subject to the provisions of paragraph (c)(2)(ii) of this
section, a vendor may provide on an interrogation device
(A) An individual market center display of quotation information for
a particular subject security for any reporting market center in such
security; or
(B) Either separately or as the consolidated quotation display, a
quotation montage for that security.
(iv) No consolidated quotation display or separate quotation montage
provided on an interrogation device may exclude any quotation
information based upon the market center making available such
information:
[[Page 76]]
Provided, however, That for purposes of providing the consolidated
quotation display or a separate quotation montage for any reported
security, quotation information from all reporting market centers which
are third market makers may be consolidated to derive a best bid and
offer for all such market centers if such interrogation device is
capable of displaying, either separately or as part of the consolidated
quotation display or separate quotation montage, (A) identifiers
indicating the reporting market center making available such best bid
and the reporting market center making available such best offer, and
(B) the quotation size associated with both such best bid and best
offer.
(v) Each individual market center display of quotation information
or separate quotation montage for a particular reported security shall
include the quotation size or aggregate quotation size associated with
each bid or offer disseminated as part of such display or montage.
(vi) No vendor may provide on any interrogation device a
representative bid or offer with respect to any subject security.
(d) Joint display of transaction reports and quotation information.
Subject to the provisions of paragraphs (b)(2)(ii) and (c)(2)(ii) of
this section regarding the means of access to consolidated last sale
displays and consolidated quotation displays, a vendor may combine the
consolidated last sale display and the consolidated quotation display
for a particular subject security.
(e) Applicability to brokers and dealers. Subject to the provisions
of paragraph (f) of this section, no broker or dealer may operate or
maintain any display of transaction reports, last sale data, quotation
information or market information which would not be permitted to be
provided by a vendor under paragraph (b) or (c) of this section.
(f) Exchange or market linkage system displays. The provisions of
this section shall not apply to: (1) The dissemination or display of
transactions reports, last sale data, quotation information or market
information on the trading floor or through the facilities of an
exchange, (2) any display of transaction reports, last sale data,
quotation information or market information operated or maintained by a
self-regulatory organization for monitoring or surveillance purposes, or
(3) any display of transaction reports, last sale data or quotation
information in connection with the operation of a market linkage system
implemented in accordance with a plan approved by the Commission
pursuant to section 11A(a)(3)(B) of the Act.
(g) Exemptions. The Commission may exempt from the provisions of
this section, either unconditionally or on specified terms and
conditions, any securities information processor, self-regulatory
organization, broker, dealer or specified subject security if the
Commission determines that such exemption is consistent with the public
interest, the protection of investors and the removal of impediments to,
and perfection of the mechanisms of, a national market system.
(h) Effective date. The effective date of this section shall be
April 5, 1980, except for paragraph (c)(2)(vi), which shall become
effective on July 5, 1980, and paragraphs (b)(2)(ii), (vi) and
(c)(2)(i), (ii), (iv), (v) which shall become effective on October 1,
1981.
(Secs. 2, 3, 6, 9, 10, 15, 17 and 23, Pub. L. 78-291, 48 Stat. 881, 882,
885, 889, 891, 895, 897 and 901, as amended by secs. 2, 3, 4, 11, 14 and
18, Pub. L. 94-29, 89 Stat. 97, 104, 121, 137 and 155 (15 U.S.C. 78b,
78c, 78f, 78i, 78j, 78o, 78g and 78w); sec. 15A, as added by sec. 1,
Pub. L. 75-719, 52 Stat. 1070, as amended by sec. 12, Pub. L. 94-29, 89
Stat. 127 (15 U.S.C. 78-3); sec. 11A, as added by sec. 7, Pub. L. 94-29,
89 Stat. 111 (15 U.S.C. 78k-l); 15 U.S.C. 78a et seq., as amended by
Pub. L. 94-29 (June 4, 1975) and by Pub. L. 98-38 (June 6, 1983),
particularly secs. 11A, 15, 19 and 23 thereof (15 U.S.C. 78k-1, 78o, 78s
and 78w))
[45 FR 12405, Feb. 26, 1980, as amended at 46 FR 43962, Sept. 2, 1981;
48 FR 53691, Nov. 29, 1983]
Sec. 240.11Ac1-3 Customer account statements.
(a) No broker or dealer acting as agent for a customer may effect
any transaction in, induce or attempt to induce the purchase or sale of,
or direct orders for purchase or sale of, any subject security as
defined in Sec. 240.11Ac1-2 or a security authorized for quotation on an
automated inter-dealer
[[Page 77]]
quotation system that has the characteristics set forth in section 17B
of the Act (15 U.S.C. 78q-2), unless such broker or dealer informs such
customer, in writing, upon opening a new account and on an annual basis
thereafter, of the following:
(1) The broker's or dealer's policies regarding receipt of payment
for order flow as defined in Sec. 240.10b-10(e)(9), from any broker or
dealer, national securities exchange, registered securities association,
or exchange member to which it routes customers' orders for execution,
including a statement as to whether any payment for order flow is
received for routing customer orders and a detailed description of the
nature of the compensation received; and
(2) The broker's or dealer's policies for determining where to route
customer orders that are the subject of payment for order flow as
defined in Sec. 240.10b-10(e)(9) absent specific instructions from
customers, including a description of the extent to which orders can be
executed prices superior to the best bid or best offer as defined in
Sec. 240.11Ac1-2.
(b) Exemptions. The Commission, upon request or upon its own motion,
may exempt by rule or by order, any broker or dealer or any class of
brokers or dealers, security or class of securities from the
requirements of paragraph (a) of this section with respect to any
transaction or class of transactions, either unconditionally or on
specified terms and conditions, if the Commission determines that such
exemption is consistent with the pubic interest and the protection of
investors.
[59 FR 55012, Nov. 2, 1994]
Sec. 240.11Ac1-4 Display of customer limit orders.
(a) Definitions. For purposes of this section:
(1) The term association shall mean any association of brokers and
dealers registered pursuant to Section 15A of the Act (15 U.S.C. 78o-3).
(2) The terms best bid and best offer shall have the meaning
provided in Sec. 240.11Ac1-1(a)(3).
(3) The terms bid and offer shall have the meaning provided in
Sec. 240.11Ac1-1(a)(4).
(4) The term block size shall mean any order:
(i) Of at least 10,000 shares; or
(ii) For a quantity of stock having a market value of at least
$200,000.
(5) The term covered security shall mean any ``reported security''
and any other security for which a transaction report, last sale data or
quotation information is disseminated through an automated quotation
system as described in section 3(a)(51)(A)(ii) of the Act (15 U.S.C.
78c(a)(51)(A)(ii)).
(6) The term customer limit order shall mean an order to buy or sell
a covered security at a specified price that is not for the account of
either a broker or dealer; provided, however, That the term customer
limit order shall include an order transmitted by a broker or dealer on
behalf of a customer.
(7) The term electronic communications network shall have the
meaning provided in Sec. 240.11Ac1-1(a)(8).
(8) The term exchange-traded security shall have the meaning
provided in Sec. 240.11Ac1-1(a)(10).
(9) The term OTC market maker shall mean any dealer who holds itself
out as being willing to buy from and sell to its customers, or
otherwise, a covered security for its own account on a regular or
continuous basis otherwise than on a national securities exchange in
amounts of less than block size.
(10) The term reported security shall have the meaning provided in
Sec. 240.11Ac1-1(a)(20).
(b) Specialists and OTC market makers. For all covered securities:
(1) Each member of an exchange that is registered by that exchange
as a specialist, or is authorized by that exchange to perform functions
substantially similar to that of a specialist, shall publish immediately
a bid or offer that reflects:
(i) The price and the full size of each customer limit order held by
the specialist that is at a price that would improve the bid or offer of
such specialist in such security; and
(ii) The full size of each customer limit order held by the
specialist that:
(A) Is priced equal to the bid or offer of such specialist for such
security;
(B) Is priced equal to the national best bid or offer; and
[[Page 78]]
(C) Represents more than a de minimis change in relation to the size
associated with the specialist's bid or offer.
(2) Each registered broker or dealer that acts as an OTC market
maker shall publish immediately a bid or offer that reflects:
(i) The price and the full size of each customer limit order held by
the OTC market maker that is at a price that would improve the bid or
offer of such OTC market maker in such security; and
(ii) The full size of each customer limit order held by the OTC
market maker that:
(A) Is priced equal to the bid or offer of such OTC market maker for
such security;
(B) Is priced equal to the national best bid or offer; and
(C) Represents more than a de minimis change in relation to the size
associated with the OTC market maker's bid or offer.
(c) Exceptions. The requirements in paragraph (b) of this section
shall not apply to any customer limit order:
(1) That is executed upon receipt of the order.
(2) That is placed by a customer who expressly requests, either at
the time that the order is placed or prior thereto pursuant to an
individually negotiated agreement with respect to such customer's
orders, that the order not be displayed.
(3) That is an odd-lot order.
(4) That is a block size order, unless a customer placing such order
requests that the order be displayed.
(5) That is delivered immediately upon receipt to an exchange or
association-sponsored system, or an electronic communications network
that complies with the requirements of Sec. 240.11Ac1-1(c)(5)(ii) with
respect to that order.
(6) That is delivered immediately upon receipt to another exchange
member or OTC market maker that complies with the requirements of this
section with respect to that order.
(7) That is an ``all or none'' order.
(d) Exemptions. The Commission may exempt from the provisions of
this section, either unconditionally or on specified terms and
conditions, any responsible broker or dealer, electronic communications
network, exchange, or association if the Commission determines that such
exemption is consistent with the public interest, the protection of
investors and the removal of impediments to and perfection of the
mechanism of a national market system.
[61 FR 48331, Sept. 12, 1996]
Securities Exempted From Registration
Sec. 240.12a-4 Exemption of certain warrants from section 12(a).
(a) When used in this section, the following terms shall have the
meaning indicated unless the context otherwise requires:
(1) The term warrant means any warrant or certificate evidencing a
right to subscribe to or otherwise acquire another security, issued or
unissued.
(2) The term beneficiary security means a security to the holders of
which a warrant or right to subscribe to or otherwise acquire another
security is granted.
(3) The term subject security means a security which is the subject
of a warrant or right to subscribe to or otherwise acquire such
security.
(4) The term in the process of admission to dealing, in respect of a
specified security means that (i) an application has been filed pursuant
to section 12 (b) and (c) of the Act for the registration of such
security on a national securities exchange; or (ii) the Commission has
granted an application made pursuant to section 12(f) of the Act to
continue or extend unlisted trading privileges to such security on a
national securities exchange; or (iii) written notice has been filed
with the Commission by a national securities exchange to the effect that
such security has been approved for admission to dealing as a security
exempted from the operation of section 12(a) of the Act.
(b) Any issued or unissued warrant granted to the holders of a
security admitted to dealing on a national securities exchange, shall be
exempt from the operation of section 12(a) of the Act to the extent
necessary to render lawful the effecting of transactions therein on any
national securities exchange (i)
[[Page 79]]
on which the beneficiary security is admitted to dealing or (ii) on
which the subject security is admitted to dealing or is in the process
of admission to dealing, subject to the following terms and conditions:
(1) Such warrant by its terms expires within 90 days after the
issuance thereof;
(2) A registration statement under the Securities Act of 1933 is in
effect as to such warrant and as to each subject security, or the
applicable terms of any exemption from such registration have been met
in respect to such warrant and each subject security; and
(3) Within five days after the exchange has taken official action to
admit such warrant to dealing, it shall notify the Commission of such
action.
(c) Notwithstanding paragraph (b) of this section, no exemption
pursuant to this section shall be available for transactions in any such
warrant on any exchange on which the beneficiary security is admitted to
dealing unless:
(1) Each subject security is admitted to dealing or is in process of
admission to dealing on a national securities exchange; or
(2) There is available from a registration statement and periodic
reports or other data filed by the issuer of the subject security,
pursuant to any act administered by the Commission, information
substantially equivalent to that available with respect to a security
listed and registered on a national securities exchange.
(d) Notwithstanding the foregoing, an unissued warrant shall not be
exempt pursuant to this section unless:
(1) Formal or official announcement has been made by the issuer
specifying (i) the terms upon which such warrant and each subject
security is to be issued, (ii) the date, if any, as of which the
security holders entitled to receive such warrant will be determined,
(iii) the approximate date of the issuance of such warrant, and (iv) the
approximate date of the issuance of each subject security; and,
(2) The members of the exchange are subject to rules which provide
that the performance of the contract to purchase and sell an unissued
warrant shall be conditioned upon the issuance of such warrant.
(e) The Commission may by order deny or revoke the exemption of a
warrant under this section, if, after appropriate notice and opportunity
for hearing to the issuer of such warrant and to the exchange or
exchanges on which such warrant is admitted to dealing as an exempted
security, it finds that:
(1) Any of the terms or conditions of this section have not been met
with respect to such exemption, or
(2) At any time during the period of such exemption transactions
have been effected on any such exchanges in such warrant which (i)
create or induce a false, misleading or artificial appearance of
activity, (ii) unduly or improperly influence the market price, or (iii)
make a price which does not reflect the true state of the market; or
(3) Any other facts exist which make such denial or revocation
necessary or appropriate in the public interest or for the protection of
investors.
(f) If it appears necessary or appropriate in the public interest or
for the protection of investors, the Commission may summarily suspend
the exemption of such warrant pending the determination by the
Commission whether such exemption shall be denied or revoked.
(g) Section 240.10b-1 shall be applicable to any warrant exempted by
this section.
(Secs. 3, 12, 48 Stat. 882, as amended, 892; 15 U.S.C. 78c, 78l)
[15 FR 3450, June 2, 1950, as amended at 18 FR 128, Jan. 7, 1953]
Sec. 240.12a-5 Temporary exemption of substituted or additional securities.
(a)(1) Subject to the conditions of paragraph (a)(2) of this
section, whenever the holders of a security admitted to trading on a
national securities exchange (hereinafter called the original security)
obtain the right, by operation of law or otherwise, to acquire all or
any part of a class of another or substitute security of the same or
another issuer, or an additional amount of the original security, then:
(i) All or any part of the class of such other or substituted
security shall be temporarily exempted from the operation of section
12(a) to the extent necessary to render lawful transactions therein on
an issued or ``when-issued''
[[Page 80]]
basis on any national securities exchange on which the original, the
other or the substituted security is lawfully admitted to trading; and
(ii) The additional amount of the original security shall be
temporarily exempted from the operation of section 12(a) to the extent
necessary to render lawful transactions therein on a ``when-issued''
basis on any national securities exchange on which the original security
is lawfully admitted to trading.
(2) The exemptions provided by paragraph (a)(1) of this section
shall be available only if the following conditions are met:
(i) A registration statement is in effect under the Securities Act
of 1933 to the extent required as to the security which is the subject
of such exemption, or the terms of any applicable exemption from
registration under such act have been complied with, if required;
(ii) Any stockholder approval necessary to the issuance of the
security which is the subject of the exemption, has been obtained; and
(iii) All other necessary official action, other than the filing or
recording of charter amendments or other documents with the appropriate
State authorities, has been taken to authorize and assure the issuance
of the security which is the subject of such exemption.
(b) The exemption provided by this section shall terminate on the
earliest of the following dates:
(1) When registration of the exempt security on the exchange become
effective;
(2) When the exempt security is granted unlisted trading privileges
on the exchange;
(3) The close of business on the tenth day after (i) withdrawal of
an application for registration of the exempt security on the exchange;
(ii) withdrawal by the exchange of its certification of approval of the
exempt security for listing and registration; (iii) withdrawal of an
application for admission of the exempt security to unlisted trading
privileges on the exchange; or (iv) the sending to the exchange of
notice of the entry of an order by the Commission denying any
application for admission of the exempt security to unlisted trading
privileges on the exchange;
(4) The close of business on the one hundred and twentieth day after
the date on which the exempt security was admitted by action of the
exchange to trading thereon as a security exempted from the operation of
section 12 (a) by this section, unless prior thereto an application for
registration of the exempt security or for admission of the exempt
security to unlisted trading privileges on the exchange has been filed.
(c) Notwithstanding paragraph (b) of this section, the Commission,
having due regard for the public interest and the protection of
investors, may at any time extend the period of exemption of any
security by this rule or may sooner terminate the exemption upon notice
to the exchange and to the issuer of the extension or termination
thereof.
(d) The Exchange shall file with the Commission a notification on
Form 261 promptly after taking action to admit any security
to trading under this section: Provided, however, That no notification
need be filed under this section concerning the admission or proposed
admission to trading of additional amounts of a class of security
admitted to trading on such exchange.
---------------------------------------------------------------------------
1 Copy filed with the Federal Register Division.
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(e) Section 240.10b-1 shall be applicable to all securities exempted
from the operation of section 12(a) of the act by this section.
(Secs. 3, 12, 48 Stat. 882, 892; 15 U.S.C. 78c (12), 78l)
[13 FR 8185, Dec. 22, 1948, as amended at 19 FR 669, Feb. 5, 1954; 20 FR
2081, Apr. 2, 1955; 53 FR 41206, Oct. 20, 1988]
Sec. 240.12a-6 Exemption of securities underlying certain options from section 12(a).
(a) When used in this rule, the following terms shall have the
meanings indicated unless the context otherwise requires:
(1) The term option shall include any put, call, spread, straddle,
or other option or privilege of buying a security from or selling a
security to another without being bound to do so, but such term shall
not include any such option where the writer is: The issuer of the
[[Page 81]]
security which may be purchased or sold upon exercise of the option, or
is a person that directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common
control with such issuer;
(2) The term underlying security means a security which relates to
or is the subject of an option.
(b) Any underlying security shall be exempt from the operation of
section 12(a) of the Act if all of the following terms and conditions
are met:
(1) The related option is duly listed and registered on a national
securities exchange;
(2) The only transactions on such exchange with respect to such
underlying securities consist of the delivery of and payment for such
underlying securities pursuant to the terms of such options relating to
the exercise thereof; and
(3) Such underlying security is (i) duly listed and registered on
another national securities exchange at the time the option is issued;
or (ii) duly quoted on the National Association of Securities Dealers
Automated Quotation System (``NASDAQ'') at the time the option is
issued.
(Secs. 3(a)(12); 48 Stat. 882, 84 Stat. 718, 1435, 1499 (15 U.S.C.
78(c)))
[38 FR 11449, May 8, 1973, as amended at 50 FR 20203, May 15, 1985]
Sec. 240.12a-7 Exemption of stock contained in standardized market baskets from section 12(a) of the Act.
(a) Any component stock of a standardized market basket shall be
exempt from the registration requirement of section 12(a) of the Act,
solely for the purpose of inclusion in a standardized market basket,
provided that all of the following terms and conditions are met:
(1) The standardized market basket has been duly approved by the
Commission for listing on a national securities exchange pursuant to the
requirements of section 19(b) of the Act; and
(2) The stock is a National Market System security as defined in
rule 11Aa2-1 under the Act (17 CFR 240.11Aa2-1) and is either:
(i) Listed and registered for trading on a national securities
exchange by the issuer or
(ii) Quoted on the National Association of Securities Dealers
Automated Quotation System;
(b) When used in this rule, the term standardized market basket
means a group of at least 100 stocks purchased or sold in a single
execution and at a single trading location with physical delivery and
transfer of ownership of each component stock resulting from such
execution.
[56 FR 28322, June 20, 1991]
Regulation 12B: Registration and Reporting
Source: Sections 240.12b-1 to 240.12b-36 appear at 13 FR 9321, Dec.
31, 1948, unless otherwise noted.
ATTENTION ELECTRONIC FILERS
THIS REGULATION SHOULD BE READ IN CONJUNCTION WITH REGULATION S-T (PART
232 OF THIS CHAPTER), WHICH GOVERNS THE PREPARATION AND SUBMISSION OF
DOCUMENTS IN ELECTRONIC FORMAT. MANY PROVISIONS RELATING TO THE
PREPARATION AND SUBMISSION OF DOCUMENTS IN PAPER FORMAT CONTAINED IN
THIS REGULATION ARE SUPERSEDED BY THE PROVISIONS OF REGULATION S-T FOR
DOCUMENTS REQUIRED TO BE FILED IN ELECTRONIC FORMAT.
General
Sec. 240.12b-1 Scope of regulation.
The rules contained in this regulation shall govern all registration
statements pursuant to sections 12(b) and 12(g) of the Act and all
reports filed pursuant to sections 13 and 15(d) of the Act, including
all amendments to such statements and reports, except that any provision
in a form covering the same subject matter as any such rule shall be
controlling.
[47 FR 11464, Mar. 16, 1982]
Sec. 240.12b-2 Definitions.
Unless the context otherwise requires, the following terms, when
used in the rules contained in this regulation or in Regulation 13A or
15D or in the forms for statements and reports filed pursuant to
sections 12, 13 or 15(d) of the act, shall have the respective meanings
indicated in this rule:
[[Page 82]]
Affiliate. An ``affiliate'' of, or a person ``affiliated'' with, a
specified person, is a person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under
common control with, the person specified.
Amount. The term ``amount,'' when used in regard to securities,
means the principal amount if relating to evidences of indebtedness, the
number of shares if relating to shares, and the number of units if
relating to any other kind of security.
Associate. The term ``associate'' used to indicate a relationship
with any person, means (1) any corporation or organization (other than
the registrant or a majority-owned subsidiary of the registrant) of
which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of
equity securities, (2) any trust or other estate in which such person
has a substantial beneficial interest or as to which such person serves
as trustee or in a similar fiduciary capacity, and (3) any relative or
spouse of such person, or any relative of such spouse, who has the same
home as such person or who is a director or officer of the registrant or
any of its parents or subsidiaries.
Certified. The term ``certified,'' when used in regard to financial
statements, means examined and reported upon with an opinion expressed
by an independent public or certified public accountant.
Charter. The term ``charter'' includes articles of incorporation,
declarations of trust, articles of association or partnership, or any
similar instrument, as amended, effecting (either with or without filing
with any governmental agency) the organization or creation of an
incorporated or unincorporated person.
Common equity. The term ``common equity'' means any class of common
stock or an equivalent interest, including but not limited to a unit of
beneficial interest in a trust or a limited partnership interest.
Control. The term ``control'' (including the terms ``controlling,''
``controlled by'' and ``under common control with'') means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through
the ownership of voting securities, by contract, or otherwise.
Depositary share. The term ``depositary share'' means a security,
evidenced by an American Depositary Receipt, that represents a foreign
security or a multiple of or fraction thereof deposited with a
depositary.
Employee. The term ``employee'' does not include a director,
trustee, or officer.
Fiscal year. The term ``fiscal year'' means the annual accounting
period or, if no closing date has been adopted, the calendar year ending
on December 31.
Majority-owned subsidiary. The term ``majority-owned subsidiary''
means a subsidiary more than 50 percent of whose outstanding securities
representing the right, other than as affected by events of default, to
vote for the election of directors, is owned by the subsidiary's parent
and/or one or more of the parent's other majority-owned subsidiaries.
Managing underwriter. The term ``managing underwriter'' includes an
underwriter (or underwriters) who, by contract or otherwise, deals with
the registrant; organizes the selling effort; receives some benefit
directly or indirectly in which all other underwriters similarly
situated do not share in proportion to their respective interests in the
underwriting; or represents any other underwriters in such matters as
maintaining the records of the distribution, arranging the allotments of
securities offered or arranging for appropriate stabilization
activities, if any.
Material. The term ``material,'' when used to qualify a requirement
for the furnishing of information as to any subject, limits the
information required to those matters to which there is a substantial
likelihood that a reasonable investor would attach importance in
determining whether to buy or sell the securities registered.
Parent. A ``parent'' of a specified person is an affiliate
controlling such person directly, or indirectly through one or more
intermediaries.
Predecessor. The term ``predecessor'' means a person the major
portion of
[[Page 83]]
the business and assets of which another person acquired in a single
succession or in a series of related successions in each of which the
acquiring person acquired the major portion of the business and assets
of the acquired person.
Previously filed or reported. The terms ``previously filed'' and
``previously reported'' mean previously filed with, or reported in, a
statement under section 12, a report under section 13 or 15(d), a
definitive proxy statement or information statement under section 14 of
the act, or a registration statement under the Securities Act of 1933:
Provided, That information contained in any such document shall be
deemed to have been previously filed with, or reported to, an exchange
only if such document is filed with such exchange.
Principal underwriter. The term ``principal underwriter'' means an
underwriter in privity of contract with the issuer of the securities as
to which he is underwriter.
Promoter. (1) The term ``promoter'' includes:
(i) Any person who, acting alone or in conjunction with one or more
other persons, directly or indirectly takes initiative in founding and
organizing the business or enterprise of an issuer; or
(ii) Any person who, in connection with the founding and organizing
of the business or enterprise of an issuer, directly or indirectly
receives in consideration of services or property, or both services and
property, 10 percent or more of any class of securities of the issuer or
10 percent or more of the proceeds from the sale of any class of such
securities. However, a person who receives such securities or proceeds
either solely as underwriting commissions or solely in consideration of
property shall not be deemed a promoter within the meaning of this
paragraph if such person does not otherwise take part in founding and
organizing the enterprise.
(2) All persons coming within the definition of ``promoter'' in
paragraph (1) of this definition may be referred to as ``founders'' or
``organizers'' or by another term provided that such term is reasonably
descriptive of those persons' activities with respect to the issuer.
Prospectus. Unless otherwise specified or the context otherwise
requires, the term ``prospectus'' means a prospectus meeting the
requirements of section 10(a) of the Securities Act of 1933 as amended.
Registrant. The term ``registrant'' means an issuer of securities
with respect to which a registration statement or report is to be filed.
Registration statement. The term ``registration statement'' or
``statement'', when used with reference to registration pursuant to
section 12 of the act, includes both an application for registration of
securities on a national securities exchange pursuant to section 12(b)
of the act and a registration statement filed pursuant to section 12(g)
of the act.
Share. The term ``share'' means a share of stock in a corporation or
unit of interest in an unincorporated person.
Significant subsidiary. The term ``significant subsidiary'' means a
subsidiary, including its subsidiaries, which meets any of the following
conditions:
(1) The registrant's and its other subsidiaries' investments in and
advances to the subsidiary exceed 10 percent of the total assets of the
registrant and its subsidiaries consolidated as of the end of the most
recently completed fiscal year (for a proposed business combination to
be accounted for as a pooling of interests, this condition is also met
when the number of common shares exchanged or to be exchanged by the
registrant exceeds 10 percent of its total common shares outstanding at
the date the combination is initiated); or
(2) The registrant's and its other subsidiaries' proportionate share
of the total assets (after intercompany eliminations) of the subsidiary
exceeds 10 percent of the total assets of the registrants and its
subsidiaries consolidated as of the end of the most recently completed
fiscal year; or
(3) The registrant's and its other subsidiaries' equity in the
income from continuing operations before income taxes, extraordinary
items and cumulative effect of a change in accounting principle of the
subsidiary exceeds 10
[[Page 84]]
percent of such income of the registrant and its subsidiaries
consolidated for the most recently completed fiscal year.
Computational note: For purposes of making the prescribed income
test the following guidance should be applied:
1. When a loss has been incurred by either the parent and its
subsidiaries consolidated or the tested subsidiary, but not both, the
equity in the income or loss of the tested subsidiary should be excluded
from the income of the registrant and its subsidiaries consolidated for
purposes of the computation.
2. If income of the registrant and its subsidiaries consolidated for
the most recent fiscal year is at least 10 percent lower than the
average of the income for the last five fiscal years, such average
income should be substituted for purposes of the computation. Any loss
years should be omitted for purposes of computing average income.
Small Business Issuer. The term ``small business issuer'' means an
entity that meets the following criteria:
(1) has revenues of less than $25,000,000;
(2) is a U.S. or Canadian issuer;
(3) is not an investment company; and
(4) if a majority owned subsidiary, the parent corporation is also a
small business issuer.
Provided however, that an entity is not a small business issuer if
it has a public float (the aggregate market value of the issuer's
outstanding securities held by non-affiliates) of $25,000,000 or more.
Note: The public float of a reporting company shall be computed by
use of the price at which the stock was last sold, or the average of the
bid and asked prices of such stock, on a date within 60 days prior to
the end of its most recent fiscal year. The public float of a company
filing an initial registration statement under the Exchange Act shall be
determined as of a date within 60 days of the date the registration
statement is filed. In the case of an initial public offering of
securities, public float shall be computed on the basis of the number of
shares outstanding prior to the offering and the estimated public
offering price of the securities.
Subsidiary. A ``subsidiary'' of a specified person is an affiliate
controlled by such person directly, or indirectly through one or more
intermediaries. (See also ``majority-owned subsidiary,'' ``significant
subsidiary,'' and ``totally-held subsidiary.'')
Succession. The term ``succession'' means the direct acquisition of
the assets comprising a going business, whether by merger,
consolidation, purchase, or other direct transfer. The term does not
include the acquisition of control of a business unless followed by the
direct acquisition of its assets. The terms ``succeed'' and
``successor'' have meanings correlative to the foregoing.
Totally held subsidiary. The term ``totally held subsidiary'' means
a subsidiary (1) substantially all of whose outstanding securities are
owned by its parent and/or the parent's other totally held subsidiaries,
and (2) which is not indebted to any person other than its parent and/or
the parent's other totally held subsidiaries in an amount which is
material in relation to the particular subsidiary, excepting
indebtedness incurred in the ordinary course of business which is not
overdue and which matures within one year from the date of its creation,
whether evidenced by securities or not.
Voting securities. The term ``voting securities'' means securities
the holders of which are presently entitled to vote for the election of
directors.
Wholly-owned subsidiary. The term ``wholly-owned subsidiary'' means
a subsidiary substantially all of whose outstanding voting securities
are owned by its parent and/or the parent's other wholly-owned
subsidiaries.
[13 FR 9321, Dec. 31, 1948, as amended at 19 FR 6730, Oct. 30, 1954; 20
FR 8285, Nov. 4, 1955; 30 FR 2022, Feb. 13, 1965; 47 FR 11464, Mar. 16,
1982; 47 FR 29841, July 9, 1982; 47 FR 54780, Dec. 6, 1982; 48 FR 12350,
Mar. 24, 1983; 50 FR 25216, June 18, 1985; 57 FR 36494, Aug. 13, 1992]
Sec. 240.12b-3 Title of securities.
Wherever the title of securities is required to be stated there
shall be given such information as will indicate the type and general
character of the securities, including the following:
(a) In the case of shares, the par or stated value, if any; the rate
of dividends, if fixed, and whether cumulative or noncumulative; a brief
indication of the preference, if any; and if convertible, a statement to
that effect.
(b) In the case of funded debt, the rate of interest; the date of
maturity, or if the issue matures serially, a brief
[[Page 85]]
indication of the serial maturities, such as ``maturing serially from
1950 to 1960''; if the payment of principal or interest is contingent,
an appropriate indication of such contingency; a brief indication of the
priority of the issue; and if convertible, a statement to that effect.
(c) In the case of any other kind of security, appropriate
information of comparable character.
Sec. 240.12b-4 Supplemental information.
The Commission or its staff may, where it is deemed appropriate,
request supplemental information concerning the registrant, a
registration statement or a periodic or other report under the Act. This
information shall not be required to be filed with or deemed part of the
registration statement or report. The information shall be returned to
the registrant upon request, provided that:
(a) Such request is made at the time such information is furnished
to the staff;
(b) The return of such information is consistent with the protection
of investors; and
(c) The return of such information is consistent with the provisions
of the Freedom of Information Act (5 U.S.C. 552).
[47 FR 11465, Mar. 16, 1982]
Sec. 240.12b-5 Determination of affiliates of banks.
In determining whether a person is an ``affiliate'' or ``parent'' of
a bank or whether a bank is a ``subsidiary'' or ``majority-owner
subsidiary'' of a person within the meaning of those terms as defined in
Sec. 240.12b-2, voting securities of the bank held by a corporation all
of the stock of which is directly owned by the United States Government
shall not be taken into consideration.
Sec. 240.12b-6 When securities are deemed to be registered.
A class of securities with respect to which a registration statement
has been filed pursuant to section 12 of the act shall be deemed to be
registered for the purposes of sections 13, 14, 15(d) and 16 of the act
and the rules and regulations thereunder only when such statement has
become effective as provided in section 12, and securities of said class
shall not be subject to sections 13, 14 and 16 of the act until such
statement has become effective as provided in section 12.
(Secs. 3, 14, 16, 48 Stat. 882, 895, 896, sec. 3(d), 78 Stat. 568; 15
U.S.C. 78c, 78n, 78p, 78l)
[30 FR 482, Jan. 14, 1965]
Sec. 240.12b-7 [Reserved]
Formal Requirements
Sec. 240.12b-10 Requirements as to proper form.
Every statement or report shall be on the form prescribed therefor
by the Commission, as in effect on the date of filing. Any statement or
report shall be deemed to be filed on the proper form unless objection
to the form is made by the Commission within thirty days after the date
of filing.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[30 FR 2022, Feb. 13, 1965]
Sec. 240.12b-11 Number of copies; signatures; binding.
(a) Except as provided in a particular form, three complete copies
of each statement or report, including exhibits and all other papers and
documents filed as a part thereof, shall be filed with the Commission.
At least one complete copy of each statement shall be filed with each
exchange on which the securities covered thereby are to be registered.
At least one complete copy of each report under section 13 of the Act
shall be filed with each exchange on which the registrant has securities
registered.
(b) At least one copy of each statement or report filed with the
Commission and one copy thereof filed with each exchange shall be signed
in the manner prescribed by the appropriate form.
(c) Each copy of a statement or report filed with the Commission or
with an exchange shall be bound in one or more parts. Copies filed with
the Commission shall be bound without stiff covers. The statement or
report shall be bound on the left side in such a manner as to leave the
reading matter legible.
[[Page 86]]
(d) Signatures. Where the Act or the rules, forms, reports or
schedules thereunder, including paragraph (b) of this section, require a
document filed with or furnished to the Commission to be signed, such
document shall be manually signed, or signed using either typed
signatures or duplicated or facsimile versions of manual signatures.
Where typed, duplicated or facsimile signatures are used, each signatory
to the filing shall manually sign a signature page or other document
authenticating, acknowledging or otherwise adopting his or her signature
that appears in the filing. Such document shall be executed before or at
the time the filing is made and shall be retained by the filer for a
period of five years. Upon request, the filer shall furnish to the
Commission or its staff a copy of any or all documents retained pursuant
to this section.
[47 FR 11465, Mar. 16, 1982, as amended at 60 FR 26622, May 17, 1995; 61
FR 30403, June 14, 1996]
Sec. 240.12b-12 Requirements as to paper, printing and language.
(a) Statements and reports shall be filed on good quality, unglazed
white paper, no larger than 8\1/2\ x 11 inches in size, insofar as
practicable. To the extent that the reduction of larger documents would
render them illegible, such documents may be filed on paper larger than
8\1/2\ x 11 inches in size.
(b) The statement or report and, insofar as practicable, all papers
and documents filed as a part thereof, shall be printed, lithographed,
mimeographed, or typewritten. However, the statement or report or any
portion thereof may be prepared by any similar process which, in the
opinion of the Commission, produces copies suitable for a permanent
record and microfilming. Irrespective of the process used, all copies of
any such material shall be clear, easily readable and suitable for
repeated photocopying. Debits in credit categories and credits in debit
categories shall be designated so as to be clearly distinguishable as
such on photocopies.
(c) The body of all printed statements and reports and all notes to
financial statements and other tabular data included therein shall be in
roman type at least as large and as legible as 10-point modern type.
However, to the extent necessary for convenient presentation, financial
statements and other tabular data, including tabular data in notes, may
be in roman type at least as large and as legible as 8-point modern
type. All such type shall be leaded at least 2 points.
(d) Statements and reports shall be in the English language. If any
exhibit or other paper or document filed with a statement or report is
in a foreign language, it shall be accompanied by a summary, version or
translation in the English language.
(e) Where a statement or report is distributed to investors through
an electronic medium, issuers may satisfy legibility requirements
applicable to printed documents, such as paper size and type size and
font, by presenting all required information in a format readily
communicated to investors.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901 (15 U.S.C.
77d, 78p, 77s, 78x))
[47 FR 11466, Mar. 16, 1982, as amended at 47 FR 58238, Dec. 30, 1982;
61 FR 24656, May 15, 1996]
Sec. 240.12b-13 Preparation of statement or report.
The statement or report shall contain the numbers and captions of
all items of the appropriate form, but the text of the items may be
omitted provided the answers thereto are so prepared as to indicate to
the reader the coverage of the items without the necessity of his
referring to the text of the items or instructions thereto. However,
where any item requires information to be given in tabular form, it
shall be given in substantially the tabular form specified in the item.
All instructions, whether appearing under the items of the form or
elsewhere therein, are to be omitted. Unless expressly provided
otherwise, if any item is inapplicable or the answer thereto is in the
negative, an appropriate statement to that effect shall be made.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[30 FR 2023, Feb. 13, 1965]
[[Page 87]]
Sec. 240.12b-14 Riders, inserts.
Riders shall not be used. If the statement or report is typed on a
printed form, and the space provided for the answer to any given item is
insufficient, reference shall be made in such space to a full insert
page or pages on which the item number and caption and the complete
answer are given.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[30 FR 2023, Feb. 13, 1965]
Sec. 240.12b-15 Amendments.
All amendments shall be filed under cover of the form amended,
marked with the letter ``A'' to designate the document as an amendment,
e.g., ``10-K/A,'' and in compliance with pertinent requirements
applicable to statements and reports. Amendments filed pursuant to this
section shall set forth the complete text of each item as amended.
Amendments shall be numbered sequentially and be filed separately for
each statement or report amended. Amendments to a statement may be filed
either before or after registration becomes effective. Amendments shall
be signed on behalf of the registrant by a duly authorized
representative of the registrant. The requirements of the form being
amended shall govern the number of copies to be filed in connection with
a paper format amendment. Electronic filers satisfy the provisions
dictating the number of copies by filing one copy of the amendment in
electronic format. See Rule 309 of Regulation S-T (Sec. 232.309 of this
chapter).
[58 FR 14682, Mar. 18, 1993, as amended at 59 FR 67764, Dec. 30, 1994]
General Requirements as to Contents
Sec. 240.12b-20 Additional information.
In addition to the information expressly required to be included in
a statement or report, there shall be added such further material
information, if any, as may be necessary to make the required
statements, in the light of the circumstances under which they are made
not misleading.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[30 FR 2023, Feb. 13, 1965]
Sec. 240.12b-21 Information unknown or not available.
Information required need be given only insofar as it is known or
reasonably available to the registrant. If any required information is
unknown and not reasonably available to the registrant, either because
the obtaining thereof would involve unreasonable effort or expense, or
because it rests peculiarly within the knowledge of another person not
affiliated with the registrant, the information may be omitted, subject
to the following conditions.
(a) The registrant shall give such information on the subject as it
possesses or can acquire without unreasonable effort or expense,
together with the sources thereof.
(b) The registrant shall include a statement either showing that
unreasonable effort or expense would be involved or indicating the
absence of any affiliation with the person within whose knowledge the
information rests and stating the result of a request made to such
person for the information.
Sec. 240.12b-22 Disclaimer of control.
If the existence of control is open to reasonable doubt in any
instance, the registrant may disclaim the existence of control and any
admission thereof; in such case, however, the registrant shall state the
material facts pertinent to the possible existence of control.
Sec. 240.12b-23 Incorporation by reference.
(a) Except for information filed as an exhibit which is covered by
Rule 12b-32 (17 CFR 240.12b-32), information may be incorporated by
reference in answer, or partial answer, to any item of a registration
statement or report subject to the following provisions:
(1) Financial statements incorporated by reference shall satisfy the
requirements of the form or report in which they are incorporated.
Financial statements or other financial data required to be given in
comparative form for two or more fiscal years or periods shall not be
incorporated by reference unless the material incorporated by reference
includes the entire period for which the comparative data is given;
[[Page 88]]
(2) Information in any part of the registration statement or report
may be incorporated by reference in answer, or partial answer, to any
other item of the registration statement or report; and
(3) Copies of any information or financial statement incorporated
into a registration statement or report by reference, or copies of the
pertinent pages of the document containing such information or
statement, shall be filed as an exhibit to the statement or report,
except that:
(i) A proxy or information statement incorporated by reference in
response to Part III of Form 10-K and Form 10-KSB (Sec. 249.310 and
Sec. 249.310b); and
(ii) a form of prospectus filed pursuant to Sec. 230.424(b)
incorporated by reference in response to Item 1 of Form 8-A
(Sec. 249.208a) need not be filed as an exhibit.
(b) Any incorporation by reference of matter pursuant to this
section shall be subject to the provisions of Sec. 228.10(f) and
Sec. 229.10(d) of this chapter restricting incorporation by reference of
documents which incorporate by reference other information. Material
incorporated by reference shall be clearly identified in the reference
by page, paragraph, caption or otherwise. Where only certain pages of a
document are incorporated by reference and filed as an exhibit, the
document from which the material is taken shall be clearly identified in
the reference. An express statement that the specified matter is
incorporated by reference shall be made at the particular place in the
statement or report where the information is required. Matter shall not
be incorporated by reference in any case where such incorporation would
render the statement or report incomplete, unclear or confusing.
[47 FR 11466, Mar. 16, 1982, as amended at 57 FR 48977, Oct. 29, 1992;
60 FR 32825, June 23, 1995]
Sec. 240.12b-24 [Reserved]
Sec. 240.12b-25 Notification of inability to timely file all or any required portion of a Form 10-K, 10-KSB, 20-F, 11-K, N-SAR, Form 10-Q or Form 10-QSB.
(a) If all or any required portion of an annual or transition report
on Form 10-K, 10-KSB, 20-F or 11-K or a quarterly or transition report
on Form 10-Q or 10-QSB required to be filed pursuant to sections 13 or
15(d) of the Act and rules thereunder or if all or any portion of a
semi-annual, annual or transition report on Form N-SAR required to be
filed pursuant to section 30 of the Investment Company Act of 1940 and
the rules thereunder is not filed within the time period prescribed for
such report, the registrant, no later than one business day after the
due date for such report, shall file a Form 12b-25 (17 CFR 249.322) with
the Commission which shall contain disclosure of its inability to file
the report timely and the reasons therefor in reasonable detail.
(b) With respect to any report or portion of any report described in
paragraph (a) of this section which is not timely filed because the
registrant is unable to do so without unreasonable effort or expense,
such report shall be deemed to be filed on the prescribed due date for
such report if:
(1) The registrant files the Form 12b-25 in compliance with
paragraph (a) of this section and, when applicable, furnishes the
exhibit required by paragraph (c) of this section;
(2) The registrant represents in the Form 12b-25 that:
(i) The reason(s) causing the inability to file timely could not be
eliminated by the registrant without unreasonable effort or expense; and
(ii) Either the subject annual report, semi-annual report or
transition report on Form 10-K, 10-KSB, 20-F, 11-K or N-SAR, or portion
thereof, will be filed no later than the fifteenth calendar day
following the prescribed due date or the subject quarterly report or
transition report on Form 10-Q or 10-QSB, or portion thereof, will be
filed no later than the fifth calendar day following the prescribed due
date; and
(3) The report/portion thereof is actually filed within the period
specified by paragraph (b)(2)(ii) of this section.
(c) If paragraph (b) of this section is applicable and the reason
the subject report/portion thereof cannot be filed timely without
unreasonable effort or expense relates to the inability of any person,
other than the registrant, to furnish any required opinion, report or
[[Page 89]]
certification, the Form 12b-25 shall have attached as an exhibit a
statement signed by such person stating the specific reasons why such
person is unable to furnish the required opinion, report or
certification on or before the date such report must be filed.
(d) Notwithstanding paragraph (b) of this section, a registrant will
not be eligible to use any registration statement form under the
Securities Act of 1933 the use of which is predicated on timely filed
reports until the subject report is actually filed pursuant to paragraph
(b)(3) of this section.
(e) If a Form 12b-25 filed pursuant to paragraph (a) of this sectin
relates only to a portion of a subject report, the registrant shall:
(1) File the balance of such report and indicate on the cover page
thereof which disclosure items are omitted; and
(2) Include, on the upper right corner of the amendment to the
report which includes the previously omitted information, the following
statement:
The following items were the subject of a Form 12b-25 and are
included herein: (List Item Numbers)
(f) The provisions of this section shall not apply to financial
statements to be filed by amendment to a form 10-K as provided for by
paragraph (a) of Sec. 210.3-09 or schedules to be filed by amendment in
accordance with General Instruction A to form 10-K.
(g) Electronic filings. The provisions of this section shall not
apply to reports required to be filed in electronic format if the sole
reason the report is not filed within the time period prescribed is that
the filer is unable to file the report in electronic format. Filers
unable to submit a report in electronic format within the time period
prescribed solely due to difficulties with electronic filing should
comply with either Rule 201 or 202 of Regulation S-T (Sec. 232.201 and
Sec. 232.202 of this chapter), or apply for an adjustment of filing date
pursuant to Rule 13(b) of Regulation S-T (Sec. 232.13(c) of this
chapter).
[45 FR 23652, Apr. 8, 1980, as amended at 50 FR 1449, Jan. 11, 1985; 50
FR 2957, Jan. 23, 1985; 54 FR 10316, Mar. 13, 1989; 58 FR 14683, Mar.
18, 1993; 58 FR 21349, Apr. 21, 1993; 59 FR 67764, Dec. 30, 1994]
Exhibits
Sec. 240.12b-30 Additional exhibits.
The registrant may file such exhibits as it may desire, in addition
to those required by the appropriate form. Such exhibits shall be so
marked as to indicate clearly the subject matters to which they refer.
Sec. 240.12b-31 Omission of substantially identical documents.
In any case where two or more indentures, contracts, franchises, or
other documents required to be filed as exhibits are substantially
identical in all material respects except as to the parties thereto, the
dates of execution, or other details, the registrant need file a copy of
only one of such documents, with a schedule identifying the other
documents omitted and setting forth the material details in which such
documents differ from the document of which a copy is filed. The
Commission may at any time in its discretion require the filing of
copies of any documents so omitted.
Sec. 240.12b-32 Incorporation of exhibits by reference.
(a) Any document or part thereof filed with the Commission pursuant
to any act administered by the Commission may, subject to Sec. 228.10(f)
and Sec. 229.10(d) of this chapter be incorporated by reference as an
exhibit to any statement or report filed with the Commission by the same
or any other person. Any document or part thereof filed with an exchange
pursuant to the act may be incorporated by reference as an exhibit to
any statement or report filed with the exchange by the same or any other
person.
(b) If any modification has occurred in the text of any document
incorporated by reference since the filing thereof, the registrant shall
file with the reference a statement containing the text of any such
modification and the date thereof.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[13 FR 9321, Dec. 31, 1948, as amended at 30 FR 2023, Feb. 13, 1965; 60
FR 32825, June 23, 1995]
[[Page 90]]
Sec. 240.12b-33 Annual reports to other Federal agencies.
Notwithstanding any rule or other requirement to the contrary,
whenever copies of an annual report by a registrant to any other Federal
agency are required or permitted to be filed as an exhibit to an
application or report filed by such registrant with the Commission or
with a securities exchange, only one copy of such annual report need be
filed with the Commission and one copy thereof with each such exchange,
provided appropriate reference to such copy is made in each copy of the
application or report filed with the Commission or with such exchange.
[18 FR 1441, Mar. 13, 1953]
Special Provisions
Sec. 240.12b-35 [Reserved]
Sec. 240.12b-36 Use of financial statements filed under other acts.
Where copies of certified financial statements filed under other
acts administered by the Commission are filed with a statement or
report, the accountant's certificate shall be manually signed or
manually signed copies of the certificate shall be filed with the
financial statements. Where such financial statements are incorporated
by reference in a statement or report, the written consent of the
accountant to such incorporation by reference shall be filed with the
statement or report. Such consent shall be dated and signed manually.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[30 FR 2023, Feb. 13, 1965]
Certification by Exchanges
Source: Sections 240.12d1-1 to 240.12d-6 appear at 19 FR 670, Feb.
5, 1954, unless otherwise noted.
Sec. 240.12d1-1 Registration effective as to class or series.
(a) An application filed pursuant to section 12 (b) and (c) of the
act for registration of a security on a national securities exchange
shall be deemed to apply for registration of the entire class of such
security. Registration shall become effective, as provided in section
12(d) of the act, (1) as to the shares or amounts of such class then
issued, and (2), without further application for registration, upon
issuance as to additional shares or amounts of such class then or
thereafter authorized.
(b) This section shall apply to classes of securities of which a
specified number of shares or amounts was registered or registered upon
notice of issuance, and to applications for registration filed, prior to
the close of business on January 28, 1954, as well as to classes
registered, or applications filed, thereafter.
(c) This section shall not affect the right of a national securities
exchange to require the issuer of a registered security to file
documents with or pay fees to the exchange in connection with the
modification of such security or the issuance of additional shares or
amounts.
(d) If a class of security is issuable in two or more series with
different terms, each such series shall be deemed a separate class for
the purposes of this section.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
Sec. 240.12d1-2 Effectiveness of registration.
(a) A request for acceleration of the effective date of registration
pursuant to section 12(d) of the act and Sec. 240.12d1-1 shall be made
in writing by either the registrant, the exchange, or both and shall
briefly describe the reasons therefor.
(b) A registration statement on Form 8-A (17 CFR 249.208a) that only
pertains to the listing of a class or classes of debt securities, as
defined in Sec. 240.3a12-11(c), on a national securities exchange for
which certification has been received by the Commission shall become
effective upon filing with the Commission, in the case of a class of
debt securities not concurrently being registered under the Securities
Act of 1933 (15 U.S.C. 77a et seq.) (``Securities Act''); and otherwise,
upon the effectiveness
[[Page 91]]
of a concurrent Securities Act registration statement to which the debt
securities relate.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
[19 FR 670, Feb. 5, 1954, as amended at 59 FR 55347, Nov. 7, 1994]
Sec. 240.12d1-3 Requirements as to certification.
(a) Certification that a security has been approved by an exchange
for listing and registration pursuant to section 12(d) of the act and
Sec. 240.12d1-1 shall be made by the governing committee or other
corresponding authority of the exchange.
(b) The certification shall specify (1) the approval of the exchange
for listing and registration; (2) the title of the security so approved;
(3) the date of filing with the exchange of the application for
registration and of any amendments thereto; and (4) any conditions
imposed on such certification. The exchange shall promptly notify the
Commission of the partial or complete satisfaction of any such
conditions.
(c) The certification may be made by telegram but in such case shall
be confirmed in writing. All certifications in writing and all
amendments thereto shall be filed with the Commission in duplicate and
at least one copy shall be manually signed by the appropriate exchange
authority.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
Sec. 240.12d1-4 Date of receipt of certification by Commission.
The date of receipt by the Commission of the certification approving
a security for listing and registration shall be the date on which the
certification is actually received by the Commission or the date on
which the application for registration to which the certification
relates is actually received by the Commission, whichever date is later.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
Sec. 240.12d1-5 Operation of certification on subsequent amendments.
If an amendment to the application for registration of a security is
filed with the exchange and with the Commission after the receipt by the
Commission of the certification of the exchange approving the security
for listing and registration, the certification, unless withdrawn, shall
be deemed made with reference to the application as amended.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
Sec. 240.12d1-6 Withdrawal of certification.
An exchange may, by notice to the Commission, withdraw its
certification prior to the time that the registration to which it
relates first becomes effective pursuant to Sec. 240.12d1-1.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
Suspension of Trading, Withdrawal, and Striking From Listing and
Registration
Sec. 240.12d2-1 Suspension of trading.
(a) A national securities exchange may suspend from trading a
security listed and registered thereon in accordance with its rules.
Such exchange shall promptly notify the Commission of any such
suspension, the effective date thereof, and the reasons therefor.
(b) Any such suspension may be continued until such time as it shall
appear to the Commission that such suspension is designed to evade the
provisions of section 12(d) and the rules and regulations thereunder
relating to the withdrawal and striking of a security from listing and
registration. During the continuance of such suspension the exchange
shall notify the Commission promptly of any change in the reasons for
the suspension. Upon the restoration to trading of any security
suspended under this rule, the exchange shall notify the Commission
promptly of the effective date thereof.
(c) Suspension of trading shall not terminate the registration of
any security.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
[28 FR 1506, Feb. 16, 1963]
[[Page 92]]
Sec. 240.12d2-2 Removal from listing and registration.
(a) A national securities exchange shall file with the Commission an
application on Form 25 to strike a security from listing and
registration thereon within a reasonable time after the exchange is
reliably informed that any of the following conditions exist with
respect to such a security:
(1) The entire class of the security has been called for redemption,
maturity or retirement; appropriate notice thereof has been given; funds
sufficient for the payment of all such securities have been deposited
with an agency authorized to make such payments; and such funds have
been made available to security holders.
(2) The entire class of the security has been redeemed or paid at
maturity or retirement.
(3) The instruments representing the securities comprising the
entire class have come to evidence, by operation of law or otherwise,
other securities in substitution therefor and represent no other right,
except, if such be the fact, the right to receive an immediate cash
payment (the right of dissenters to receive the appraised or fair value
of their holdings shall not prevent the application of this provision).
(4) All rights pertaining to the entire class of the security have
been extinguished: Provided, however, That where such an event occurs as
the result of an order of a court or other governmental authority, the
order shall be final, all applicable appeal periods shall have expired,
and no appeals shall be pending.
Effective Date: Such an application shall be deemed to be granted
and shall become effective at the opening of business on such date as
the exchange shall specify in said application, but not less than 10
days following the date on which said application is filed with the
Commission; Provided, however, That in the event removal is being
effected under paragraph (a)(3) of this section and the exchange has
admitted or intends to admit a successor security to trading under the
temporary exemption provided for by Sec. 240.12a-5, such date shall not
be earlier than the date on which the successor security is removed from
its exempt status.
(b)(1) A national securities exchange may strike a security from
listing and registration thereon if (i) trading in such security has
been terminated pursuant to a rule of such exchange requiring such
termination whenever the security is admitted to trading on another
exchange; and (ii) listing and registration of such security has become
effective on such other exchange.
(2) A national securities exchange which has striken a security from
listing and registration under the provisions of this paragraph shall
send written notice of such action to the Commission within 3 days from
the date thereof.
(c) In cases not provided for in paragraph (a) or (b) of this
section, a national securities exchange may file an application to
strike a security from listing and registration, in accordance with its
rules, on a date specified in the application, which date shall be not
less than 10 days after it is filed with the Commission. The Commission
will enter an order granting such application on the date specified in
the application unless the Commission, by written notice to the
exchange, postpones the effective date for a period of not more than 60
days thereafter: Provided, however, That the Commission, by written
notice to the exchange on or before the effective date, may order a
hearing to determine whether the application to strike the security from
listing and registration has been made in accordance with the rules of
the exchange, or what terms should be imposed by the Commission for the
protection of investors.
(d) The issuer of a security listed and registered on a national
securities exchange may file an application to withdraw such security
from listing and registration on such exchange in accordance with the
rules of such exchange. Notice of the filing of such an application
shall be published by the Commission in the Federal Register, and such
notice shall provide that any interested person may, on or before a date
specified, submit to the Commission in writing, all facts bearing upon
whether the application to withdraw the security from listing and
registration has been made in accordance with the rules of the exchange
and what terms should be imposed by the Commission for the protection of
investors. An order disposing of the matter will be issued by the
Commission on the
[[Page 93]]
basis of the application and any other information furnished to the
Commission unless prior thereto the Commission orders a hearing on the
matter.
(e) An application by an issuer or by a national securities exchange
to withdraw or strike a security from listing and registration pursuant
to the provisions of paragraph (c) or (d) of this section shall comply
with the following requirements:
(1) The application shall be filed in triplicate, the original of
which shall be dated and signed by an authorized official of the
exchange, or of the issuer, as the case may be.
(2) If the applicant is the exchange it shall promptly deliver a
copy of the application to the issuer and if the applicant is the issuer
it shall promptly deliver a copy of the application to the exchange.
(3) The application shall set forth a description of the security
involved together with a statement of all material facts relating to the
reasons for filing such application for withdrawal or striking from
listing and registration.
(4) The application shall set forth the steps taken by the applicant
to comply with the rules of the exchange governing the delisting of
securities.
(f) If within 30 days after the publication of any rule or
regulation which substantially alters or adds to the obligations, or
detracts from the rights, of an issuer of a security registered pursuant
to application under section 12 (b) or (c), or of its officers,
directors, or security holders, or of persons soliciting or giving any
proxy or consent or authorization with respect to such security, the
issuer shall file with the Commission a request that such registration
shall expire and shall accompany such request with a written explanation
of the reasons why the publication of such rule or regulation leads the
issuer to make such request, such registration shall expire immediately
upon receipt of such request or immediately before such rule or
regulation becomes effective, whichever date is later. The absence of an
express reservation, in an application for registration, of the rights
herein granted shall not be deemed a waiver thereof.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
[28 FR 1506, Feb. 16, 1963]
Unlisted Trading
Sec. 240.12f-1 Applications for permission to reinstate unlisted trading privileges.
(a) An application to reinstate unlisted trading privileges may be
made to the Commission by any national securities exchange for the
extension of unlisted trading privileges to any security for which such
unlisted trading privileges have been suspended by the Commission,
pursuant to section 12(f)(2)(A) of the Act (15 U.S.C. 78l(2)(A)). One
copy of such application, executed by a duly authorized officer of the
exchange, shall be filed and shall set forth:
(1) Name of issuer;
(2) Title of security;
(3) The name of each national securities exchange, if any, on which
such security is listed or admitted to unlisted trading privileges; and
(4) Whether transaction information concerning such security is
reported in the consolidated transaction reporting system contemplated
by Rule 11Aa3-1 under the Act (Sec. 240.11Aa3-1);
(5) The date of the Commission's suspension of unlisted trading
privileges in the security on the exchange;
(6) Any other information which is deemed pertinent to the question
of whether the reinstatement of unlisted trading privileges in such
security is consistent with the maintenance of fair and orderly markets
and the protection of investors; and
(7) That a copy of the instant application has been mailed, or
otherwise personally provided, to the issuer of the securities for which
unlisted trading privileges are sought and to each
[[Page 94]]
exchange listed in item (3) of this section.
(Secs. 12 and 23, Pub. L. 78-291, 48 Stat 894 and 901, as amended by
secs. 8 and 18, Pub. L. 94-29, 89 Stat. 117 and 155 (15 U.S.C. 78l and
78w))
[44 FR 75134, Dec. 19, 1979, as amended at 45 FR 12390, Feb. 26, 1980;
45 FR 36076, May 29, 1980; 60 FR 20896, Apr. 28, 1995]
Sec. 240.12f-2 Extending unlisted trading privileges to a security that is the subject of an initial public offering.
(a) General Provision. A national securities exchange may extend
unlisted trading privileges to a subject security on or after such
national securities exchange opens for trading on the day that follows
the day on which the initial public offering of such subject security
commences.
(b) The extension of unlisted trading privileges pursuant to this
section shall be subject to all the provisions set forth in Section
12(f) of the Act (15 U.S.C. 78l(f)), as amended, and any rule or
regulation promulgated thereunder, or which may be promulgated
thereunder while the extension is in effect.
(c) Definitions. For the purposes of this section:
(1) The term subject security shall mean a security that is the
subject of an initial public offering, as that term is defined in
section 12(f)(1)(G)(i) of the Act (15 U.S.C. 78l(f)(1)(G)(i)), and
(2) An initial public offering commences at such time as is
described in section 12(f)(1)(G)(ii) of the Act (15 U.S.C.
78l(f)(1)(G)(ii)).
[60 FR 20896, Apr. 28, 1995]
Sec. 240.12f-3 Termination or suspension of unlisted trading privileges.
(a) The issuer of any security for which unlisted trading privileges
on any exchange have been continued or extended, or any broker or dealer
who makes or creates a market for such security, or any other person
having a bona fide interest in the question of termination or suspension
of such unlisted trading privileges, may make application to the
Commission for the termination or suspension of such unlisted trading
privileges. One duly executed copy of such application shall be filed,
and it shall contain the following information:
(1) Name and address of applicant;
(2) A brief statement of the applicant's interest in the question of
termination or suspension of such unlisted trading privileges;
(3) Title of security;
(4) Names of issuer;
(5) Amount of such security issued and outstanding (number of shares
of stock or principal amount of bonds), stating source of information;
(6) Annual volume of public trading in such security (number of
shares of stock or principal amount of bonds) on such exchange for each
of the three calendar years immediately preceding the date of such
application, and monthly volume of trading in such security for each of
the twelve calendar months immediately preceding the date of such
application;
(7) Price range on such exchange for each of the twelve calendar
months immediately preceding the date of such application; and
(8) A brief statement of the information in the applicant's
possession, and the source thereof, with respect to (i) the extent of
public trading in such security on such exchange, and (ii) the character
of trading in such security on such exchange; and
(9) A brief statement that a copy of the instant application has
been mailed, or otherwise personally provided, to the exchange from
which the suspension or termination of unlisted trading privileges is
sought, and to any other exchange on which such security is listed or
traded pursuant to unlisted trading privileges.
(b) Unlisted trading privileges in any security on any national
securities exchange may be suspended or terminated by such exchange in
accordance with its rules.
(Secs. 12(f) and 23, 15 U.S.C. 78l and 78w)
[20 FR 6702, Sept. 13, 1955, as amended at 44 FR 75135, Dec. 19, 1979;
45 FR 36076, May 29, 1980; 60 FR 20896, Apr. 28, 1995]
Sec. 240.12f-4 Exemption of securities admitted to unlisted trading privileges from sections 13, 14 and 16.
(a) Any security for which unlisted trading privileges on any
national securities exchange have been continued or extended pursuant to
section 12(f) of the Act shall be exempt from section 13
[[Page 95]]
of the Act unless (1) such security or another security of the same
issuer is listed and registered on a national securities exchange or
registered pursuant to section 12(g) of the Act, or (2) such issuer
would be required to file information, documents and reports pursuant to
section 15(d) of the Act but for the fact that securities of the issuer
are deemed to be ``registered on a national securities exchange'' within
the meaning of section 12(f)(6) of the Act.
(b) Any security for which unlisted trading privileges on any
national securities exchange have been continued or extended pursuant to
section 12(f) of the Act shall be exempt from section 14 of the Act
unless such security is also listed and registered on a national
securities exchange or registered pursuant to section 12(g) of the Act.
(c)(1) Any equity security for which unlisted trading privileges on
any national securities exchange have been continued or extended
pursuant to section 12(f) of the Act shall be exempt from section 16 of
the act unless such security or another equity security of the same
issuer is listed and registered on a national securities exchange or
registered pursuant to section 12(g) of the Act.
(2) Any equity security for which unlisted trading privileges on any
national securities exchange have been continued or extended pursuant to
section 12(f) of the Act and which is not listed and registered on any
other such exchange or registered pursuant to section 12(g) of the Act
shall be exempt from section 16 of the Act insofar as that section would
otherwise apply to any person who is directly or indirectly the
beneficial owner of more than 10 percent of such security, unless
another equity security of the issuer of such unlisted security is so
listed or registered and such beneficial owner is a director or officer
of such issuer or directly or indirectly the beneficial owner of more
than 10 percent of any such listed security.
(d) Any reference in this section to a security registered pursuant
to section 12(g) of the Act shall include, and any reference to a
security not so registered shall exclude, any security as to which a
registration statement pursuant to such section is at the time required
to be effective.
(Sec. 3, 78 Stat. 565, 15 U.S.C. 78l)
[30 FR 482, Jan. 14, 1965]
Sec. 240.12f-5 Exchange rules for securities to which unlisted trading privileges are extended.
A national securities exchange shall not extend unlisted trading
privileges to any security unless the national securities exchange has
in effect a rule or rules providing for transactions in the class or
type of security to which the exchange extends unlisted trading
privileges.
[60 FR 20896, Apr. 28, 1995]
Sec. 240.12f-6 [Reserved]
Extensions and Temporary Exemptions; Definitions
Sec. 240.12g-1 Exemption from section 12(g).
An issuer shall be exempt from the requirement to register any class
of equity securities pursuant to section 12(g)(1) if on the last day of
its most recent fiscal year the issuer had total assets not exceeding
$10 million and, with respect to a foreign private issuer, such
securities were not quoted in an automated inter-dealer quotation
system.
(Secs. 6, 7, 8, 10, 19(a), 48 Stat. 78, 79, 81, 85; secs. 205, 209, 48
Stat. 906, 908; sec. 301, 54 Stat. 857; sec. 8, 68 Stat. 685; sec. 1, 79
Stat. 1051; sec. 308(a)(2), 90 Stat. 57; secs. 12, 13, 15(d), 23(a), 48
Stat. 892, 894, 895, 901; secs. 1, 3, 8, 49 Stat. 1375, 1377, 1379; sec.
203(a), 49 Stat. 704; sec. 202, 68 Stat. 686; secs. 3, 4, 6, 78 Stat.
565-574; secs. 1, 2, 82 Stat. 454; sec. 28(c), 84 Stat. 1435; secs. 1,
2, 84 Stat. 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 18, 89
Stat. 117, 118, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 204,
91 Stat. 1494, 1498, 1500; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l,
78m, 78o(d), 78w(a))
[48 FR 46739, Oct. 14, 1983, as amended at 51 FR 25362, July 14, 1986;
61 FR 21356, May 9, 1996]
Sec. 240.12g-2 Securities deemed to be registered pursuant to section 12(g)(1) upon termination of exemption pursuant to section 12(g)(2) (A) or (B).
Any class of securities which would have been required to be
registered pursuant to section 12(g)(1) of the Act
[[Page 96]]
except for the fact that it was exempt from such registration by section
12(g)(2)(A) because it was listed and registered on a national
securities exchange, or by section 12(g)(2)(B) because it was issued by
an investment company registered pursuant to section 8 of the Investment
Company Act of 1940, shall upon the termination of the listing and
registration of such class or the termination of the registration of
such company and without the filing of an additional registration
statement be deemed to be registered pursuant to said section 12(g)(1)
if at the time of such termination (a) the issuer of such class of
securities has elected to be regulated as a business development company
pursuant to sections 55 through 65 of the Investment Company Act of 1940
and such election has not been withdrawn, or (b) securities of the class
are not exempt from such registration pursuant to section 12 or rules
thereunder delete ``or'' and all securities of such class are held of
record by 300 or more persons.
[47 FR 17052, Apr. 21, 1982]
Sec. 240.12g-3 Registration of securities of successor issuers.
(a) Where in connection with a succession by merger, consolidation,
exchange of securities or acquisition of assets, equity securities of an
issuer, not previously registered pursuant to section 12 of the Act, are
issued to the holders of any class of equity securities of another
issuer which is registered pursuant to section 12 of the Act, the class
of securities so issued shall be deemed to be registered under section
12 of the Act unless upon consummation of the succession such class is
exempt from such registration other than by Rule 12g3-2 (Sec. 240.12g3-2
of this chapter) or all securities of such class are held of record by
less than 300 persons or the securities issued in connection with the
succession were registered on Form F-8 or Form F-80 (Sec. 239.38 or
Sec. 239.41 of this chapter) and following the succession the successor
would not be required to register such class of securities under section
12 but for this section.
(b) Where in connection with a succession by merger, consolidation,
exchange of securities or acquisition of assets, equity securities of an
issuer, which are not registered pursuant to section 12 of the Act, are
issued to the holders of any class of equity securities of another
issuer which is required to file a registration statement pursuant to
section 12 but has not yet done so, the duty to file such statement
shall be deemed to have been assumed by the issuer of the class of
securities so issued and such issuer shall file a registration statement
pursuant to section 12 of the Act with respect to such class within the
period of time the predecessor issuer would have been required to file
such a statement unless upon consummation of the succession such class
is exempt from such registration other than by Rule 12g3-2 or all
securities of such class are held of record by less than 300 persons or
the securities issued in connection with the succession were registered
on Form F-8 or Form F-80 and following the succession the successor
would not be required to register such class of securities under section
12 but for this section.
(c) An issuer that is deemed to have a class of securities
registered pursuant to section 12 according to either paragraph (a) or
(b) of this section shall file reports on the same forms and such class
of securities shall be subject to the provisions of sections 14 and 16
to the same extent as the predecessor issuer, except as follows:
(1) An issuer that is not a foreign issuer shall not be eligible to
file on Form 20-F (Sec. 249.220f of this chapter) or to use the
exemption in Rule 3a12-3 (Sec. 240.3a12-3 of this chapter).
(2) A foreign private issuer shall be eligible to file on Form 20-F
and to use the exemption in Rule 3a12-3.
[48 FR 46739, Oct. 14, 1983, as amended at 56 FR 30068, July 1, 1991]
Sec. 240.12g3-2 Exemptions for American depositary receipts and certain foreign securities.
(a) Securities of any class issued by any foreign private issuer
shall be exempt from section 12(g) of the Act if the class has fewer
than 300 holders resident in the United States. This exemption shall
continue until the next fiscal year end at which the issuer has a class
of equity securities held by 300 or more persons resident in the United
[[Page 97]]
States. For the purpose of determining whether a security is exempt
pursuant to this paragraph, securities held of record by persons
resident in the United States shall be determined as provided in Rule
12g5-1 (Sec. 240.12g5-1 of this chapter) except that securities held of
record by a broker, dealer, bank or nominee for any of them for the
accounts of customers resident in the United States shall be counted as
held in the United States by the number of separate accounts for which
the securities are held. The issuer may rely in good faith on
information as to the number of such separate accounts supplied by all
owners of the class of its securities which are brokers, dealers, or
banks or a nominee for any of them.
(b)(1) Securities of any foreign private issuer shall be exempt from
section 12(g) of the Act if the issuer, or a government official or
agency of the country of the issuer's domicile or in which it is
incorporated or organized:
(i) Shall furnish to the Commission whatever information in each of
the following categories the issuer since the beginning of its last
fiscal year (A) has made or is required to make public pursuant to the
law of the country of its domicile or in which it is incorporated or
organized, (B) has filed or is required to file with a stock exchange on
which its securities are traded and which was made public by such
exchange, or (C) has distributed or is required to distribute to its
security holders;
(ii) Shall furnish to the Commission a list identifying the
information referred to in paragraph (b)(1)(i) of this section and
stating when and by whom it is required to be made public, filed with
any such exchange, or distributed to security holders;
(iii) Shall furnish to the Commission, during each subsequent fiscal
year, whatever information is made public as described in paragraphs
(b)(1)(i) (A), (B) or (C) of this section promptly after such
information is made or required to be made public as described therein;
(iv) Shall, promptly after the end of any fiscal year in which any
changes occur in the kind of information required to be published as
referred to in the list furnished under paragraph (b)(1)(ii) of this
section or any subsequent list, furnish to the Commission a revised list
reflecting such changes; and
(v) Shall furnish to the Commission in connection with the initial
submission the following information to the extent known or which can be
obtained without unreasonable effort or expense: the number of holders
of each class of equity securities resident in the United States, the
amount and percentage of each class of outstanding equity securities
held by residents in the United States, the circumstances in which such
securities were acquired, and the date and circumstances of the most
recent public distribution of securities by the issuer or an affiliate
thereof.
(2) The information required to be furnished under paragraphs
(b)(1)(i) and (ii) of this section shall be furnished on or before the
date on which a registration statement under section 12(g) of the Act
would otherwise be required to be filed. Any issuer furnishing
information under paragraph (b)(1)(i) of this section shall notify the
Commission that it is furnished under that paragraph.
(3) The information required to be furnished under this paragraph
(b) is information material to an investment decision such as: the
financial condition or results of operations; changes in business;
acquisitions or dispositions of assets; issuance, redemption or
acquisitions of their securities; changes in management or control; the
granting of options or the payment of other remuneration to directors or
officers; and transactions with directors, officers or principal
security holders.
(4) Only one complete copy of any information or document need be
furnished under paragraph (b)(1) of this section. Such information and
documents need not be under cover of any prescribed form and shall not
be deemed to be ``filed'' with the Commission or otherwise subject to
the liabilities of section 18 of the Act. Press releases and all other
communications or materials distributed directly to securityholders of
each class of securities to which the exemption relates shall be in
English. English versions or adequate summaries in English may be
furnished in lieu of original English translations. No other documents
need
[[Page 98]]
be furnished unless the issuer has prepared or caused to be prepared,
English translations, versions, or summaries of them. If no English
translations, versions, or summaries have been prepared, a brief
description in English of any such documents shall be furnished.
Information or documents in a language other than English are not
required to be furnished. If practicable, the Commission file number
shall appear on the information furnished or in an accompanying letter.
Any information or document previously sent to the Commission under
cover of Form 40-F or Form 6-K need not be furnished under paragraph
(b)(1) of this section.
(5) The furnishing of any information or document under paragraph
(b) of this rule shall not constitute an admission for any purpose that
the issuer is subject to the Act.
(c) Depositary Shares registered on Form F-6 (Sec. 239.36 of this
chapter), but not the underlying deposited securities, are exempt from
section 12(g) of the Act under this paragraph (c).
(d) The exemption provided by paragraph (b) of this rule shall not
be available for the following securities:
(1) Securities of a foreign private issuer that has or has had
during the prior eighteen months any securities registered under section
12 of the Act or a reporting obligation (suspended or active) under
section 15(d) of the Act (other than arising solely by virtue of the use
of Form F-7, F-8, F-9, F-10 or F-80) ;
(2) Securities of a foreign private issuer issued in a transaction
(other than a transaction registered on Form F-8, F-9, F-10 or F-80) to
acquire by merger, consolidation, exchange of securities or acquisition
of assets, another issuer that had securities registered under section
12 of the Act or a reporting obligation (suspended or active) under
section 15(d) of the Act; and
(3) Securities quoted in an ``automated inter-dealer quotation
system'' or securities represented by American Depositary Receipts so
quoted unless all the following conditions are met:
(i) Such securities were so quoted on October 5, 1983 and have been
continuously traded since;
(ii) The issuer is in compliance with the exemption in paragraph (b)
of this section on October 5, 1983 and has continuously maintained the
exemption since; and
(iii) After January 2, 1986, the issuer is organized under the laws
of any country except Canada or a political subdivision thereof.
[48 FR 46739, Oct. 14, 1983, as amended at 49 FR 12689, Mar. 30, 1984;
56 FR 30068, July 1, 1991]
Sec. 240.12g-4 Certifications of termination of registration under section 12(g).
(a) Termination of registration of a class of securities shall take
effect 90 days, or such shorter period as the Commission may determine,
after the issuer certifies to the Commission on Form 15 that:
(1) Such class of securities is held of record by:
(i) Less than 300 persons; or
(ii) By less than 500 persons, where the total assets of the issuer
have not exceeded $10 million on the last day of each of the issuer's
most recent three fiscal years; or
(2) Such class of securities of a foreign private issuer, as defined
in Rule 3b-4 (Sec. 240.3b-4), is held of record by:
(i) Less than 300 persons resident in the United States or
(ii) Less than 500 persons resident in the United States where the
total assets of the issuer have not exceeded $10 million on the last day
of each of the issuer's most recent three fiscal years.
For purposes of this paragraph, the number of persons resident in the
United States shall be determined in accordance with the provisions of
Rule 12g3-2(a) (Sec. 240.12g3-2(a)).
(b) The issuer's duty to file any reports required under section
13(a) shall be suspended immediately upon filing a certification on Form
15; Provided, however, That if the certification on Form 15 is
subsequently withdrawn or denied, the issuer shall, within 60 days after
the date of such withdrawal or denial, file with the Commission all
reports which would have been required had the certification on Form 15
not been filed. If the suspension resulted from the issuer's merger
into, or consolidation with, another issuer or issuers, the
[[Page 99]]
certification shall be filed by the successor issuer.
(Secs. 12(g)(4), 12(h), 13(a), 15(d), 23(a), 48 Stat. 892, 894, 895,
901; sec. 203(a), 49 Stat. 704; secs. 3, 8, 49 Stat. 1377, 1379; secs.
3, 4, 6, 78 Stat. 565-568, 569, 570-574; sec. 18, 89 Stat. 155; sec.
204, 91 Stat. 1500; 15 U.S.C. 78l(g)(4), 78l(h), 78m(a), 78o(d), 78w(a))
[49 FR 12689, Mar. 30, 1984, as amended at 51 FR 25362, July 14, 1986;
61 FR 21356, May 9, 1996]
Sec. 240.12g5-1 Definition of securities ``held of record''.
(a) For the purpose of determining whether an issuer is subject to
the provisions of sections 12(g) and 15(d) of the Act, securities shall
be deemed to be ``held of record'' by each person who is identified as
the owner of such securities on records of security holders maintained
by or on behalf of the issuer, subject to the following:
(1) In any case where the records of security holders have not been
maintained in accordance with accepted practice, any additional person
who would be identified as such an owner on such records if they had
been maintained in accordance with accepted practice shall be included
as a holder of record.
(2) Securities identified as held of record by a corporation, a
partnership, a trust whether or not the trustees are named, or other
organization shall be included as so held by one person.
(3) Securities identified as held of record by one or more persons
as trustees, executors, guardians, custodians or in other fiduciary
capacities with respect to a single trust, estate or account shall be
included as held of record by one person.
(4) Securities held by two or more persons as coowners shall be
included as held by one person.
(5) Each outstanding unregistered or bearer certificate shall be
included as held of record by a separate person, except to the extent
that the issuer can establish that, if such securities were registered,
they would be held of record, under the provisions of this rule, by a
lesser number of persons.
(6) Securities registered in substantially similar names where the
issuer has reason to believe because of the address or other indications
that such names represent the same person, may be included as held of
record by one person.
(b) Notwithstanding paragraph (a) of this section:
(1) Securities held, to the knowledge of the issuer, subject to a
voting trust, deposit agreement or similar arrangement shall be included
as held of record by the record holders of the voting trust
certificates, certificates of deposit, receipts or similar evidences of
interest in such securities: Provided, however, That the issuer may rely
in good faith on such information as is received in response to its
request from a non-affiliated issuer of the certificates or evidences of
interest.
(2) Whole or fractional securities issued by a savings and loan
association, building and loan association, cooperative bank, homestead
association, or similar institution for the sole purpose of qualifying a
borrower for membership in the issuer, and which are to be redeemed or
repurchased by the issuer when the borrower's loan is terminated, shall
not be included as held of record by any person.
(3) If the issuer knows or has reason to know that the form of
holding securities of record is used primarily to circumvent the
provisions of section 12(g) or 15(d) of the Act, the beneficial owners
of such securities shall be deemed to be the record owners thereof.
(Sec. 3, 48 Stat. 882, as amended, sec. 3, 78 Stat. 566; 15 U.S.C. 78c,
78l)
[30 FR 484, Jan. 14, 1965]
Sec. 240.12g5-2 Definition of total assets.
For the purpose of section 12(g)(1) of the Act, the term total
assets shall mean the total assets as shown on the issuer's balance
sheet or the balance sheet of the issuer and its subsidiaries
consolidated, whichever is larger, as required to be filed on the form
prescribed for registration under this section and prepared in
accordance with the pertinent provisions of Regulation S-X (17 CFR Part
210). Where the security is a certificate of deposit, voting trust
certificate, or certificate or other evidence of interest in a similar
trust or agreement, the ``total assets'' of the issuer of the security
held under the trust or agreement shall be deemed to
[[Page 100]]
be the ``total assets'' of the issuer of such certificate or evidence of
interest.
(Sec. 3, 48 Stat. 882, as amended, sec. 3, 78 Stat. 566; 15 U.S.C. 78c,
78l)
[30 FR 484, Jan. 14, 1965]
Sec. 240.12h-1 Exemptions from registration under section 12(g) of the Act.
Issuers shall be exempt from the provisions of section 12(g) of the
Act with respect to the following securities:
(a) Any interest or participation in an employee stock bonus, stock
purchase, profit sharing, pension, retirement, incentive, thrift,
savings or similar plan which is not transferable by the holder except
in the event of death or mental incompetency, or any security issued
solely to fund such plans;
(b) Any interest or participation in any common trust fund or
similar fund maintained by a bank exclusively for the collective
investment and reinvestment of monies contributed thereto by the bank in
its capacity as a trustee, executor, administrator, or guardian. For
purposes of this paragraph (b), the term ``common trust fund'' shall
include a common trust fund which is maintained by a bank which is a
member of an affiliated group, as defined in section 1504(a) of the
Internal Revenue Code of 1954 (26 U.S.C. 1504(a)), and which is
maintained exclusively for the investment and reinvestment of monies
contributed thereto by one or more bank members of such affilated group
in the capacity of trustee, executor, administrator, or guardian;
Provided, That:
(1) The common trust fund is operated in compliance with the same
state and Federal regulatory requirements as would apply if the bank
maintaining such fund as any other contributing banks were the same
entity; and
(2) The rights of persons for whose benefit a contributiong bank
acts as trustee, executor, administrator or guardian would not be
diminished by reason of the maintenance of such common trust fund by
another bank member of the affiliated group; and
(c) Any class of equity security which would not be outstanding 60
days after a registration statement would be required to be filed with
respect thereto.
(Sec. 3, 48 Stat. 882, as amended, sec. 3, 78 Stat. 566, 15 U.S.C. 78c
78l)
[30 FR 6114, Apr. 30, 1965, as amended at 43 FR 2392, Jan. 17, 1978.
Redesignated at 47 FR 17052, Apr. 21, 1982]
Sec. 240.12h-2 [Reserved]
Sec. 240.12h-3 Suspension of duty to file reports under section 15(d).
(a) Subject to paragraphs (c) and (d) of this section, the duty
under section 15(d) to file reports required by section 13(a) of the Act
with respect to a class of securities specified in paragraph (b) of this
section shall be suspended for such class of securities immediately upon
filing with the Commission a certification on Form 15 (17 CFR 249.323)
if the issuer of such class has filed all reports required by section
13(a), without regard to Rule 12b-25 (17 CFR 249.322), for the shorter
of its most recent three fiscal years and the portion of the current
year preceding the date of filing Form 15, or the period since the
issuer became subject to such reporting obligation. If the certification
on Form 15 is subsequently withdrawn or denied, the issuer shall, within
60 days, file with the Commission all reports which would have been
required if such certification had not been filed.
(b) The classes of securities eligible for the suspension provided
in paragraph (a) of this section are:
(1) Any class of securites held of record by:
(i) Less than 300 persons; or
(ii) By less then 500 persons, where the total assets of the issuer
have not exceeded $10 million on the last day of each of the issuer's
three most recent fiscal years;
(2) Any class of securities of a foreign private issuer, as defined
in Rule 3b-4 (Sec. 240.3b-4), held of record by:
(i) Less than 300 persons resident in the United States or
(ii) Less than 500 persons resident in the United States where the
total assets of the issuer have not exceeded $10 million on the last day
of each of the issuer's three most recent fiscal years.
[[Page 101]]
For purposes of this paragraph, the number of persons resident in the
United States shall be determined in accordance with the provisions of
Rule 12g3-2(a) (Sec. 240.12g3-2(a)); and
(3) Any class or securities deregistered pursuant to section 12(d)
of the Act if such class would not thereupon be deemed registered under
section 12(g) of the Act or the rules thereunder.
(c) This section shall not be available for any class of securities
for a fiscal year in which a registration statement relating to that
class becomes effective under the Securities Act of 1933, or is required
to be updated pursuant to section 10(a)(3) of the Act, and, in the case
of paragraphs (b)(1)(ii) and (2)(ii), the two succeeding fiscal years;
Provided, however, That this paragraph shall not apply to the duty to
file reports which arises solely from a registration statement filed by
an issuer with no significant assets, for the reorganization of a non-
reporting issuer into a one subsidiary holding company in which equity
security holders receive the same proportional interest in the holding
company as they held in the non-reporting issuer, except for changes
resulting from the exercise of dissenting shareholder rights under state
law.
(d) The suspension provided by this rule relates only to the
reporting obligation under section 15(d) with respect to a class of
securities, does not affect any other duties imposed on that class of
securities, and shall continue as long as criteria (i) and (ii) in
either paragraph (b)(1) or (2) is met on the first day of any subsequent
fiscal year; Provided, however, That such criteria need not be met if
the duty to file reports arises solely from a registration statement
filed by an issuer with no significant assets in a reorganization of a
non-reporting company into a one subsidiary holding company in which
equity security holders receive the same proportional interest in the
holding company as they held in the non-reporting issuer except for
changes resulting from the exercise of dissenting shareholder rights
under state law.
(e) If the suspension provided by this rule is discontinued because
a class of securities does not meet the eligibility criteria of
paragraph (b) on the first day of an issuer's fiscal year, then the
issuer shall resume periodic reporting pursuant to section 15(d) by
filing an annual report on Form 10-K and Form 10-KSB for its preceding
fiscal year, not later than 120 days after the end of such fiscal year.
(Secs. 12(g)(4), 12(h), 13(a), 15(d), 23(a), 48 Stat. 892, 894, 895,
901; sec. 203(a), 49 Stat. 704; secs. 3, 8, 49 Stat. 1377, 1379; secs.
3, 4, 6, 78 Stat. 565-568, 569, 570-574; sec. 18, 89 Stat. 155; sec.
204, 91 Stat. 1500; 15 U.S.C. 78l(g)(4), 78l(h), 78m(a), 78o(d), 78w(a))
[49 FR 12689, Mar. 30, 1984, as amended at 51 FR 25362, July 14, 1986;
61 FR 21356, May 9, 1996]
Sec. 240.12h-4 Exemption from duty to file reports under section 15(d).
An issuer shall be exempt from the duty under section 15(d) of the
Act to file reports required by section 13(a) of the Act with respect to
securities registered under the Securities Act of 1933 on Form F-7, Form
F-8 or Form F-80, provided that the issuer is exempt from the
obligations of Section 12(g) of the Act pursuant to Rule 12g3-2(b).
[56 FR 30068, July 1, 1991]
Regulation 13A: Reports of Issuers of Securities Registered Pursuant to
Section 12
Annual Reports
Sec. 240.13a-1 Requirements of annual reports.
Every issuer having securities registered pursuant to section 12 of
the Act shall file an annual report on the appropriate form authorized
or prescribed therefor for each fiscal year after the last full fiscal
year for which financial statements were filed in its registration
statement. Registrants on Form 8-B, Sec. 249.308b of this chapter, shall
file an annual report for each fiscal year beginning on or after the
date as of which the succession occurred. Annual reports shall be filed
within the period specified in the appropriate form.
(15 U.S.C. 78l, 78m, 78o)
[36 FR 1891, Feb. 3, 1971, as amended at 37 FR 1472, Jan. 29, 1972; 61
FR 49959, Sept. 24, 1996]
[[Page 102]]
Sec. 240.13a-2 Annual reports of predecessors.
Every issuer having securities registered pursuant to section 12 of
the Act on Form 8-B shall file an annual report pursuant to
Sec. 240.13a-1 for each of its predecessors which had securities
registered pursuant to section 12 covering the last full fiscal year of
the predecessor prior to the registrant's succession, unless such report
has been filed by the predecessor. Such annual report shall contain the
information that would be required if filed by the predecessor.
(Secs. 4, 12, 13, 15, 16, 19, 24, 48 Stat. 77, 892, 894, 895, 896, 85,
as amended, 901; 15 U.S.C. 77d, 78l, 78m, 78o, 78p, 77s, 78x)
[30 FR 2023, Feb. 13, 1965]
Sec. 240.13a-3 Reporting by Form 40-F registrant.
A registrant that is eligible to use Forms 40-F and 6-K and files
reports in accordance therewith shall be deemed to satisfy the
requirements of Regulation 13A (Secs. 240.13a-1 through 240.13a-17 of
this chapter).
[56 FR 30068, July 1, 1991]
Other Reports
Sec. 240.13a-10 Transition reports.
(a) Every issuer that changes its fiscal closing date shall file a
report covering the resulting transition period between the closing date
of its most recent fiscal year and the opening date of its new fiscal
year; Provided, however, that an issuer shall file an annual report for
any fiscal year that ended before the date on which the issuer
determined to change its fiscal year end. In no event shall the
transition report cover a period of 12 or more months.
(b) The report pursuant to this section shall be filed for the
transition period not more than 90 days after either the close of the
transition period or the date of the determination to change the fiscal
closing date, whichever is later. The report shall be filed on the form
appropriate for annual reports of the issuer, shall cover the period
from the close of the last fiscal year end and shall indicate clearly
the period covered. The financial statements for the transition period
filed therewith shall be audited. Financial statements, which may be
unaudited, shall be filed for the comparable period of the prior year,
or a footnote, which may be unaudited, shall state for the comparable
period of the prior year, revenues, gross profits, income taxes, income
or loss from continuing operations before extraordinary items and
cumulative effect of a change in accounting principles and net income or
loss. The effects of any discontinued operations and/or extraordinary
items as classified under the provisions of generally accepted
accounting principles also shall be shown, if applicable. Per share data
based upon such income or loss and net income or loss shall be presented
in conformity with applicable accounting standards. Where called for by
the time span to be covered, the comparable period financial statements
or footnote shall be included in subsequent filings.
(c) If the transition period covers a period of less than six
months, in lieu of the report required by paragraph (b) of this section,
a report may be filed for the transition period on Form 10-Q and Form
10-QSB (Sec. 249.308a of this chapter) not more than 45 days after
either the close of the transition period or the date of the
determination to change the fiscal closing date, whichever is later. The
report on Form 10-Q and Form 10-QSB shall cover the period from the
close of the last fiscal year end and shall indicate clearly the period
covered. The financial statements filed therewith need not be audited
but, if they are not audited, the issuer shall file with the first
annual report for the newly adopted fiscal year separate audited
statements of income and cash flows covering the transition period. The
notes to financial statements for the transition period included in such
first annual report may be integrated with the notes to financial
statements for the full fiscal period. A separate audited balance sheet
as of the end of the transition period shall be filed in the annual
report only if the audited balance sheet as of the end of the fiscal
year prior to the transition period is not filed. Schedules need not be
filed in transition reports on Form 10-Q and Form 10-QSB.
[[Page 103]]
(d) Notwithstanding the foregoing in paragraphs (a), (b), and (c) of
this section, if the transition period covers a period of one month or
less, the issuer need not file a separate transition report if either:
(1) The first report required to be filed by the issuer for the
newly adopted fiscal year after the date of the determination to change
the fiscal year end is an annual report, and that report covers the
transition period as well as the fiscal year; or
(2)(i) The issuer files with the first annual report for the newly
adopted fiscal year separate audited statements of income and cash flows
covering the transition period; and
(ii) The first report required to be filed by the issuer for the
newly adopted fiscal year after the date of the determination to change
the fiscal year end is a quarterly report on Form 10-Q and Form 10-QSB;
and
(iii) Information on the transition period is included in the
issuer's quarterly report on Form 10-Q and Form 10-QSB for the first
quarterly period (except the fourth quarter) of the newly adopted fiscal
year that ends after the date of the determination to change the fiscal
year. The information covering the transition period required by Part II
and Item 2 of Part I may be combined with the information regarding the
quarter. However, the financial statements required by Part I, which may
be unaudited, shall be furnished separately for the transition period.
(e) Every issuer required to file quarterly reports on Form 10-Q and
Form 10-QSB pursuant to Sec. 240.13a-13 of this chapter that changes its
fiscal year end shall:
(1) File a quarterly report on Form 10-Q and Form 10-QSB within the
time period specified in General Instruction A.1. to that form for any
quarterly period (except the fourth quarter) of the old fiscal year that
ends before the date on which the issuer determined to change its fiscal
year end, except that the issuer need not file such quarterly report if
the date on which the quarterly period ends also is the date on which
the transition period ends;
(2) File a quarterly report on Form 10-Q and Form 10-QSB within the
time specified in General Instruction A.1. to that form for each
quarterly period of the old fiscal year within the transition period. In
lieu of a quarterly report for any quarter of the old fiscal year within
the transition period, the issuer may file a quarterly report on Form
10-Q and Form 10-QSB for any period of three months within the
transition period that coincides with a quarter of the newly adopted
fiscal year if the quarterly report is filed within 45 days after the
end of such three month period, provided the issuer thereafter continues
filing quarterly reports on the basis of the quarters of the newly
adopted fiscal year;
(3) Commence filing quarterly reports for the quarters of the new
fiscal year no later than the quarterly report for the first quarter of
the new fiscal year that ends after the date on which the issuer
determined to change the fiscal year end; and
(4) Unless such information is or will be included in the transition
report, or the first annual report on Form 10-K and Form 10-KSB for the
newly adopted fiscal year, include in the initial quarterly report on
Form 10-Q and Form 10-QSB for the newly adopted fiscal year information
on any period beginning on the first day subsequent to the period
covered by the issuer's final quarterly report on Form 10-Q and Form 10-
QSB or annual report on Form 10-K and Form 10-KSB for the old fiscal
year. The information covering such period required by Part II and Item
2 of Part I may be combined with the information regarding the quarter.
However, the financial statements required by Part I, which may be
unaudited, shall be furnished separately for such period.
Note to paragraphs (c) and (e): If it is not practicable or cannot
be cost-justified to furnish in a transition report on Form 10-Q and
Form 10-QSB or a quarterly report for the newly adopted fiscal year
financial statements for corresponding periods of the prior year where
required, financial statements may be furnished for the quarters of the
preceding fiscal year that most nearly are comparable if the issuer
furnishes an adequate discussion of seasonal and other factors that
could affect the comparability of information or trends reflected, an
assessment of the comparability of the data, and a representation as to
the reason recasting has not been undertaken.
[[Page 104]]
(f) Every successor issuer with securities registered under Section
12 of this Act that has a different fiscal year from that of its
predecessor(s) shall file a transition report pursuant to this section,
containing the required information about each predecessor, for the
transition period, if any, between the close of the fiscal year covered
by the last annual report of each predecessor and the date of
succession. The report shall be filed for the transition period on the
form appropriate for annual reports of the issuer not more than 90 days
after the date of the succession, with financial statements in
conformity with the requirements set forth in paragraph (b) of this
section. If the transition period covers a period of less than six
months, in lieu of a transition report on the form appropriate for the
issuer's annual reports, the report may be filed for the transition
period on Form 10-Q and Form 10-QSB not more than 45 days after the date
of the succession, with financial statements in conformity with the
requirements set forth in paragraph (c) of this section. Notwithstanding
the foregoing, if the transition period covers a period of one month or
less, the successor issuer need not file a separate transition report if
the information is reported by the successor issuer in conformity with
the requirements set forth in paragraph (d) of this section.
(g)(1) Paragraphs (a) through (f) of this section shall not apply to
foreign private issuers.
(2) Every foreign private issuer that changes its fiscal closing
date shall file a report covering the resulting transition period
between the closing date of its most recent fiscal year and the opening
date of its new fiscal year. In no event shall a transition report cover
a period longer than 12 months.
(3) The report for the transition period shall be filed on Form 20-F
responding to all items to which such issuer is required to respond when
Form 20-F is used as an annual report. Such report shall be filed within
six months after either the close of the transition period or the date
on which the issuer made the determination to change the fiscal closing
date, whichever is later. The financial statements for the transition
period filed therewith shall be audited.
(4) If the transition period covers a period of six or fewer months,
in lieu of the report required by paragraph (g)(3) of this section, a
report for the transition period may be filed on Form 20-F responding to
Items 3, 9, 15, 16, and 17 or 18 within three months after either the
close of the transition period or the date on which the issuer made the
determination to change the fiscal closing date, whichever is later. The
financial statements required by either Item 17 or Item 18 shall be
furnished for the transition period. Such financial statements may be
unaudited and condensed as permitted in Article 10 of Regulation S-X
(Sec. 210.10-01 of this chapter), but if the financial statements are
unaudited and condensed, the issuer shall file with the first annual
report for the newly adopted fiscal year separate audited statements of
income and cash flows covering the transition period.
(5) Notwithstanding the foregoing in paragraphs (g)(2), (g)(3), and
(g)(4) of this section, if the transition period covers a period of one
month or less, a foreign private issuer need not file a separate
transition report if the first annual report for the newly adopted
fiscal year covers the transition period as well as the fiscal year.
(h) The provisions of this rule shall not apply to investment
companies required to file reports pursuant to Rule 30b1-1
(Sec. 270.30b1-1 of this chapter) under the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.).
(i) No filing fee shall be required for a transition report filed
pursuant to this section.
Note.--In addition to the report or reports to be filed pursuant to
this section, every issuer, except a foreign private issuer or an
investment company required to file reports pursuant to Rule 30b1-1
under the Investment Company Act of 1940, that changes its fiscal
closing date is required to file a report on Form 8-K responding to Item
8 thereof within the period specified in General Instruction B. 1. to
that form.
[54 FR 10316, Mar. 13, 1989, as amended at 56 FR 30068, July 1, 1991]
[[Page 105]]
Sec. 240.13a-11 Current reports on Form 8-K (Sec. 249.308 of this chapter).
(a) Except as provided in paragraph (b) of this section, every
registrant subject to Sec. 240.13a-1 shall file a current report on Form
8-K within the period specified in that form unless substantially the
same information as that required by Form 8-K has been previously
reported by the registrant.
(b) This section shall not apply to foreign governments, foreign
private issuers required to make reports on Form 6-K (17 CFR 249.306)
pursuant to Rule 13a-16 (17 CFR 240.13a-16), issuers of American
Depositary Receipts for securities of any foreign issuer, or investment
companies required to file reports pursuant to Rule 30b-1-1 (17 CFR
270.30b1-1) under the Investment Company Act of 1940.
(Secs. 12, 13, 15, 48 Stat. 892, 894, 895; sec. 5, 78 Stat. 569, 574;
sec. 2, 82 Stat. 454; secs. 1, 2, 84 Stat. 1497; secs. 10, 18, 89 Stat.
119, 155 (15 U.S.C. 78n(a)), secs. 20(a), 38(a), 54 Stat. 822, 841 (15
U.S.C. 80a-20(a), 80a-37(a)))
[42 FR 4428, Jan. 25, 1977, as amended at 50 FR 27939, July 9, 1985]
Sec. 240.13a-13 Quarterly reports on Form 10-Q and Form 10-QSB (Sec. 249.308a and Sec. 249.308b of this chapter).
(a) Except as provided in paragraphs (b) and (c) of this section,
every issuer that has securities registered pursuant to section 12 of
the Act and is required to file annual reports pursuant to section 13 of
the Act, and has filed or intends to file such reports on Form 10-K and
Form 10-KSB (Sec. 249.310 of this chapter) or U5S (Sec. 259.5s of this
chapter), shall file a quarterly report on Form 10-Q and Form 10-QSB
(Sec. 249.308a of this chapter) within the period specified in General
Instruction A.1. to that form for each of the first three quarters of
each fiscal year of the issuer, commencing with the first fiscal quarter
following the most recent fiscal year for which full financial
statements were included in the registration statement, or, if the
registration statement included financial statements for an interim
period subsequent to the most recent fiscal year end meeting the
requirements of Article 10 of Regulation S-X, for the first fiscal
quarter subsequent to the quarter reported upon in the registration
statement. The first quarterly report of the issuer shall be filed
either within 45 days after the effective date of the registration
statement or on or before the date on which such report would have been
required to be filed if the issuer has been required to file reports on
Form 10-Q and Form 10-QSB as of its last fiscal quarter, whichever is
later.
(b) The provisions of this rule shall not apply to the following
issuers:
(1) Investment companies required to file reports pursuant to
Sec. 270.30b1-1;
(2) Foreign private issuers required to file reports pursuant to
Sec. 240.13a-16.
(c) Part I of the quarterly reports on Form 10-Q or Form 10-QSB need
not be filed by:
(1) Mutual life insurance companies; or
(2) Mining companies not in the production stage but engaged
primarily in the exploration for the development of mineral deposits
other than oil, gas or coal, if all of the following conditions are met:
(i) The registrant has not been in production during the current
fiscal year or the two years immediately prior thereto; except that
being in production for an aggregate period of not more than eight
months over the three-year period shall not be a violation of this
condition.
(ii) Receipts from the sale of mineral products or from the
operations of mineral producing properties by the registrant and its
subsidiaries combined have not exceeded $500,000 in any of the most
recent six years and have not aggregated more than $1,500,000 in the
most recent six fiscal years.
(d) Notwithstanding the foregoing provisions of this section, the
financial information required by Part I of Form 10-Q and Form 10-QSB,
shall not be deemed to be ``filed'' for the purpose of section 18 of the
Act or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act.
(Sec. 12, 13, 15(d), 23(a), 48 Stat. 892, 894, 895, 901; sec 203(a), 49
Stat. 704; secs. 1, 3, 8, 49 Stat. 1375, 1377, 1379; sec. 202, 68 Stat.
686; secs. 3, 4, 6, 78 Stat. 565-568, 569, 570-574; secs. 1, 2, 82 Stat.
454; secs. 1, 2, 28(c), 84 Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503;
secs. 8, 9, 10, 18, 89 Stat. 117, 118, 119, 155; 15 U.S.C. 78l, 78m,
78o(d), 78w(a); secs. 6, 7, 8, 10, 19(a), 48 Stat.
[[Page 106]]
78, 79, 81, 85, secs. 205, 209, 48 Stat. 906, 908; sec. 301, 54 Stat.
857; sec. 8, 88 Stat. 685; sec. 1, 79 Stat. 1051; sec. 308(a)(2), 90
Stat. 57; secs. 12, 13, 14, 15(d), 23(a), 48 Stat. 892, 895, 901; secs.
1, 3, 8, 49 Stat. 1375, 1377, 1379; sec 203(a), 49 Stat. 704; sec. 202,
68 Stat. 686; secs. 3, 4, 5, 6, 78 Stat. 565-568, 569, 570-574; secs. 1,
2, 3, 82 Stat. 454, 455; secs. 28(c), ``1, 2, 3-5, 84 Sat. 1435, 1497;
sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 18, 89 Stat. 117, 118, 119,
155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 204, 81 Stat. 1494, 1498,
1499, 1500; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l, 78m, 78n, 78o(d),
78w(a))
[42 FR 24064, May 12, 1977, as amended at 48 FR 19877, May 3, 1983; 50
FR 27939, July 9, 1985; 54 FR 10317, Mar. 13, 1989; 57 FR 10615, Mar.
27, 1992; 61 FR 30403, June 14, 1996]
Sec. 240.13a-16 Reports of foreign private issuers on Form 6-K (17 CFR 249.306).
(a) Every foreign private issuer which is subject to Rule 13a-1 (17
CFR 240.13a-1) shall make reports on Form 6-K, except that this rule
shall not apply to:
(1) Investment companies required to file reports pursuant to Rule
30b1-1 (17 CFR 270.30b1-1);
(2) Issuers of American depositary receipts for securities of any
foreign issuer; or
(3) Issuers filing periodic reports on Forms 10-K and Form 10-KSB,
10-Q and Form 10-QSB and 8-K.
(b) Such reports shall be transmitted promptly after the information
required by Form 6-K is made public by the issuer, by the country of its
domicile or under the laws of which it was incorporated or organized, or
by a foreign securities exchange with which the issuer has filed the
information.
(c) Reports furnished pursuant to this rule shall not be deemed to
be ``filed'' for the purpose of section 18 of the Act or otherwise
subject to the liabilities of that section.
[32 FR 7849, May 30, 1967, as amended at 44 FR 70137, Dec. 6, 1979; 47
FR 54781, Dec. 6, 1982; 50 FR 27939, July 9, 1985; 57 FR 10615, Mar. 27,
1991]
Sec. 240.13a-17 [Reserved]
Regulation 13b-2: Maintenance of Records and Preparation of Required
Reports
Sec. 240.13b2-1 Falsification of accounting records.
No person shall directly or indirectly, falsify or cause to by
falsified, any book, record or account subject to section 13(b)(2)(A) of
the Securities Exchange Act.
(15 U.S.C. 78m(b)(2); 15 U.S.C. 78m(a), 78m(b)(1), 78o(d), 78j(b),
78n(a), 78t(b), 78t(c))
[44 FR 10970, Feb. 23, 1979]
Sec. 240.13b2-2 Issuer's representations in connection with the preparation of required reports and documents.
No director or officer of an issuer shall, directly or indirectly,
(a) Make or cause to be made a materially false or misleading
statement, or
(b) Omit to state, or cause another person to omit to state, any
material fact necessary in order to make statements made, in the light
of the circumstances under which such statements were made, not
misleading to an accountant in connection with (1) any audit or
examination of the financial statements of the issuer required to be
made pursuant to this subpart or (2) the preparation or filing of any
document or report required to be filed with the Commission pursuant to
this subpart or otherwise.
(15 U.S.C. 78m(b)(2); 15 U.S.C. 78m(a), 78m(b)(1), 78o(d), 78j(b),
78n(a), 78t(b), 78t(c))
[44 FR 10970, Feb. 23, 1979]
Regulation 13D
Source: Sections 240.13d-1 through 240.13f-1 appear at 43 FR 18495,
Apr. 28, 1978, unless otherwise noted.
[[Page 107]]
ATTENTION ELECTRONIC FILERS
THIS REGULATION SHOULD BE READ IN CONJUNCTION WITH REGULATION S-T (PART
232 OF THIS CHAPTER), WHICH GOVERNS THE PREPARATION AND SUBMISSION OF
DOCUMENTS IN ELECTRONIC FORMAT. MANY PROVISIONS RELATING TO THE
PREPARATION AND SUBMISSION OF DOCUMENTS IN PAPER FORMAT CONTAINED IN
THIS REGULATION ARE SUPERSEDED BY THE PROVISIONS OF REGULATION S-T FOR
DOCUMENTS REQUIRED TO BE FILED IN ELECTRONIC FORMAT.
Sec. 240.13d-1 Filing of Schedules 13D and 13G.
(a) Any person who, after acquiring directly or indirectly the
beneficial ownership of any equity security of a class which is
specified in paragraph (d) of this section, is directly or indirectly
the beneficial owner of more than 5 percent of such class shall, within
10 days after such acquisition, send to the issuer of the security at
its principal executive office, by registered or certified mail, and to
each exchange where the security is traded, and file with the
Commission, a statement containing the information required by Schedule
13D (Sec. 240.13d-101). Six copies of the statement, including all
exhibits, shall be filed with the Commission.
(b)(1) A person who would otherwise be obligated under paragraph (a)
of this section to file a statement on Schedule 13D may, in lieu
thereof, file with the Commission, within 45 days after the end of the
calendar year in which such person became so obligated, six copies,
including all exhibits, of a short form statement on Schedule 13G and
send one copy each of such schedule to the issuer of the security at its
principal executive office, by registered or certified mail, and to the
principal national securities exchange where the security is traded:
Provided, That it shall not be necessary to file a Schedule 13G unless
the percentage of the class of equity security specified in paragraph
(d) of this section beneficially owned as of the end of the calendar
year is more than 5 percent: And provided further, That:
(i) Such person has acquired such securities in the ordinary course
of his business and not with the purpose nor with the effect of changing
or influencing the control of the issuer, nor in connection with or as a
participant in any transaction having such purpose or effect, including
any transaction subject to Rule 13d-3(b) (Sec. 240.13d-3(b)); and
(ii) Such person is:
(A) A broker or dealer registered under section 15 of the Act;
(B) A bank as defined in section 3(a)(6) of the Act;
(C) An insurance company as defined in section 3(a)(19) of the Act;
(D) An investment company registered under section 8 of the
Investment Company Act of 1940;
(E) An investment adviser registered under section 203 of the
Investment Advisers Act of 1940;
(F) An employee benefit plan, or pension fund which is subject to
the provisions of the Employee Retirement Income Security Act of 1974
(``ERISA'') or an endowment fund;
(G) A parent holding company, provided the aggregate amount held
directly by the parent, and directly and indirectly by its subsidiaries
which are not persons specified in rule 13d-1(b)(ii) (A) through (F),
does not exceed one percent of the securities of the subject class;
(H) A group, provided that all the members are persons specified in
Rule 13d-1(b)(1)(ii) (A) through (G); and
(iii) Such person has promptly notified any other person (or group
within the meaning of section 13(d)(3) of the Act) on whose behalf it
holds, on a discretionary basis, securities exceeding five percent of
the class, of any acquisition or transaction on behalf of such other
person which might be reportable by that person under section 13(d) of
the Act. This paragraph only requires notice to the account owner of
information which the filing person reasonably should be expected to
know and which would advise the account owner of an obligation he may
have to file a statement pursuant to section 13(d) of the Act or an
amendment thereto.
(2) Any person relying on Rules 13d-1(b)(1) and 13d-2(b) shall, in
addition to filing any statements required thereunder, file a statement
on Schedule 13G, within ten days after the end of the first month in
which such person's direct or indirect beneficial ownership exceeds ten
percent of a class of equity
[[Page 108]]
securities specified in Rule 13d-1(c) computed as of the last day of the
month, and thereafter within ten days after the end of any month in
which such person's beneficial ownership of securities of such class,
computed as of the last day of the month, increases or decreases by more
than five percent of such class of equity securities. Six copies of such
statement, including all exhibits, shall be filed with the Commission
and one each sent, by registered or certified mail, to the issuer of the
security at its principal executive office and to the principal national
securities exchange where the security is traded. Once an amendment has
been filed reflecting beneficial ownership of five percent or less of
the class of securities, no additional filings are required by this
paragraph (b)(2) of this section unless the person thereafter becames
the beneficial owner of more than ten percent of the class and is
required to file pursuant to this provision.
(3)(i) Notwithstanding paragraphs (b) (1) and (2) of this section
and Rule 13d-2(b) (Sec. 240.13d-2(b)), a person shall immediately become
subject to Rules 13d-1(a) and 13d-2(a) and shall promptly, but not more
than 10 days later, file a statement on Schedule 13D if such person:
(A) Has reported that it is the beneficial owner of more than five
percent of a class of equity securities in a statement on Schedule 13G
pursuant to paragraph (b)(1) or (2) of this section, or is required to
report such acquisition but has not yet filed the schedule;
(B) Determines that it no longer has acquired or holds such
securities in the ordinary course of business or not with the purpose
nor with the effect of changing or influencing the control of the
issuer, nor in connection with or as a participant in any transaction
having such purpose or effect, including any transaction subject to Rule
13d-3(b) (Sec. 240.13d-3(b)); and
(C) Is at that time the beneficial owner of more than five percent
of a class of equity securities described in Rule 13d-1(c).
(ii) For the ten day period immediately following the date of the
filing of a Schedule 13D pursuant to this paragraph (b)(3), such person
shall not:
(A) Vote or direct the voting of the securities described in
paragraph (b)(3)(i)(A); nor,
(B) Acquire an additional beneficial ownership interest in any
equity securities of the issuer of such securities, nor of any person
controlling such issuer.
(4) Any person who has reported an acquisition of securities in a
statement on Schedule 13G pursuant to paragraph (b)(1) or (b)(2) of this
section and thereafter ceases to be a person specified in paragraph
(b)(1)(ii) of this section shall immediately become subject to Rules
13d-1(a) and 13d-2(a) and shall file, within ten days thereafter, a
statement on Schedule 13D, in the event such person is a beneficial
owner at that time of more than five percent of the class of equity
securities.
(c) Any person who, as of December 31, 1978, or as of the end of any
calendar year thereafter, is directly or indirectly the beneficial owner
of more than 5 percent of any equity security of a class specified in
paragraph (d) of this section and who is not required to file a
statement under paragraph (a) of this section by virtue of the exemption
provided by section 13(d)(6) (A) or (B) of the Act, or because such
beneficial ownership was acquired prior to December 22, 1970, or because
such person otherwise (except for the exemption provided by section
13(d)(6)(c) of the Act) is not required to file such statement, shall,
within 45 days after the end of the calendar year in which such person
became obligated to report under this paragraph, send to the issuer of
the security at its principal executive office, by registered or
certified mail, and file with the Commission a statement containing the
information required by Schedule 13G (Sec. 240.13d-102). Six copies of
the statement, including all exhibits, shall be filed with the
Commission.
(d) For the purpose of this regulation, the term ``equity security''
means any equity security of a class which is registered pursuant to
section 12 of that Act, or any equity security of any insurance company
which would have been required to be so registered except for the
exemption contained in section
[[Page 109]]
12(g)(2)(G) of the Act, or any equity security issued by a closed-end
investment company registered under the Investment Company Act of 1940;
Provided, Such term shall not include securities of a class of non-
voting securities.
(e) For the purpose of sections 13(d) and 13(g), any person, in
determining the amount of outstanding securities of a class of equity
securities, may rely upon information set forth in the issuer's most
recent quarterly or annual report, and any current report subsequent
thereto, filed with the Commission pursuant to this Act, unless he knows
or has reason to believe that the information contained therein is
inaccurate.
(f)(1) Whenever two or more persons are required to file a statement
containing the information required by Schedule 13D or Schedule 13G with
respect to the same securities, only one statement need be filed:
Provided, That:
(i) Each person on whose behalf the statement is filed is
individually eligible to use the Schedule on which the information is
filed;
(ii) Each person on whose behalf the statement is filed is
responsible for the timely filing of such statement and any amendments
thereto, and for the completeness and accuracy of the information
concerning such person contained therein; such person is not responsible
for the completeness or accuracy of the information concerning the other
persons making the filing, unless such person knows or has reason to
believe that such information is inaccurate; and
(iii) Such statement identifies all such persons, contains the
required information with regard to each such person, indicates that
such statement is filed on behalf of all such persons, and includes, as
an exhibit, their agreement in writing that such a statement is filed on
behalf of each of them.
(2) A group's filing obligation may be satisfied either by a single
joint filing or by each of the group's members making an individual
filing. If the group's members elect to make their own filings, each
such filing should identify all members of the group but the information
provided concerning the other persons making the filing need only
reflect information which the filing person knows or has reason to know.
(Secs. 3(b), 13(d)(1), 13(d)(2), 13(d)(5), 13(d)(6,) 13(g)(1), 13(g)(2),
13(g)(5), 23; 48 Stat. 882, 894, 901; sec. 203(a), 49 Stat. 704; sec. 8,
49 Stat. 1379; sec. 10, 78 Stat. 88a; sec. 2, 82 Stat. 454; secs. 1, 2,
84 Stat. 1497; secs. 3, 10, 18, 89 Stat. 97, 119, 155; secs. 202, 203,
91 Stat. 1494, 1498, 1499; (15 U.S.C. 78c(b), 78m(d)(1), 78m(d)(2),
78m(d)(5), 78m(d)(6), 78m(g)(1), 78m(g)(2), 78m(g)(5), 78w))
[43 FR 18495, Apr. 28, 1978, as amended at 43 FR 29768, July 11, 1978;
43 FR 55755, Nov. 29, 1978; 44 FR 10703, Feb. 23, 1979]
Sec. 240.13d-2 Filing of amendments to Schedules 13D or 13G.
(a) Schedule 13D--If any material change occurs in the facts set
forth in the statement required by Rule 13d-1(a) (Sec. 240.13d-1(a)),
including, but not limited to, any material increase or decrease in the
percentage of the class beneficially owned, the person or persons who
were required to file such statement shall promptly file or cause to be
filed with the Commission and send or cause to be sent to the issuer at
its principal executive office, by registered or certified mail, and to
each exchange on which the security is traded an amendment disclosing
such change. An acquisition or disposition of beneficial ownership of
securities in an amount equal to one percent or more of the class of
securities shall be deemed ``material'' for purposes of this rule;
acquisitions or dispositions of less than such amounts may be material,
depending upon the facts and circumstances. Six copies of each such
amendment shall be filed with the Commission.
(b) Schedule 13G--Notwithstanding paragraph (a) of this rule, and
provided that the person or persons filing a statement pursuant to Rule
13d-1(b) continues to meet the requirements set forth therein, any
person who has filed a short form statement on Schedule 13G shall amend
such statement within forty-five days after the end of each calendar
year if, as of the end of such calendar year, there are any changes in
the information reported in the previous filing on that Schedule;
Provided, however, That such amendment need not be filed with respect to
a change in
[[Page 110]]
the percent of class outstanding previously reported if such change
results solely from a change in the aggregate number of securities
outstanding. Six copies of such amendment, including all exhibits, shall
be filed with the Commission and one each sent, by registered or
certified mail, to the issuer of the security at its principal executive
office and to the principal national securities exchange where the
security is traded. Once an amendment has been filed reflecting
beneficial ownership of five percent or less of the class of securities,
no additional filings are required unless the person thereafter becomes
the beneficial owner of more than five percent of the class and is
required to file pursuant to Rule 13d-1 (Sec. 240.13d-1).
(c) The first electronic amendment to a paper format Schedule 13D
(Sec. 240.13d-101) or Schedule 13G (Sec. 240.13d-102) shall restate the
entire text of the Schedule 13D or Schedule 13G, but previously filed
paper exhibits to such Schedules are not required to be restated
electronically. See Rule 102 of Regulation S-T (Sec. 232.102 of this
chapter) regarding amendments to exhibits filed in electronic format.
Note to Sec. 240.13d-2: For persons filing a short form statement
pursuant to Rule 13d-1(b), See also Rule 13d-1(b) (2), (3), and (4).
(Secs. 3(b), 13(d)(1), 13(d)(2), 13(d)(5), 13(d)(6), 14(d)(1), 23; 48
Stat. 882, 894, 895, 901; sec. 203(a), 49 Stat. 704, sec. 8, 49 Stat.
1379; sec. 10, 78 Stat. 88a; secs. 2, 3, 82 Stat. 454, 455; secs. 1, 2,
3-5, 84 Stat. 1497; secs. 3, 18, 89 Stat. 97, 155 (15 U.S.C. 78c(b),
78m(d)(1), 89m(d)(2), 78m(d)(5), 78m(d)(6), 78n(d)(1), 78w); sec. 23, 48
Stat. 901; sec. 203(a), 49 Stat. 704; sec. 8, 49 Stat. 1379; sec. 10, 78
Stat. 580; sec. 18, 89 Stat. 155; secs. 102, 202, 203, 91 Stat. 1494,
1498, 1499; 15 U.S.C. 78m(g), 78w(a))
[43 FR 18495, Apr. 28, 1978, as amended at 45 FR 81558, Dec. 11, 1980;
47 FR 49964, Nov. 4, 1982; 58 FR 14683, Mar. 18, 1993; 59 FR 67764, Dec.
30, 1994]
Sec. 240.13d-3 Determination of beneficial owner.
(a) For the purposes of sections 13(d) and 13(g) of the Act a
beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares:
(1) Voting power which includes the power to vote, or to direct the
voting of, such security; and/or,
(2) Investment power which includes the power to dispose, or to
direct the disposition of, such security.
(b) Any person who, directly or indirectly, creates or uses a trust,
proxy, power of attorney, pooling arrangement or any other contract,
arrangement, or device with the purpose of effect of divesting such
person of beneficial ownership of a security or preventing the vesting
of such beneficial ownership as part of a plan or scheme to evade the
reporting requirements of section 13(d) or (g) of the Act shall be
deemed for purposes of such sections to be the beneficial owner of such
security.
(c) All securities of the same class beneficially owned by a person,
regardless of the form which such beneficial ownership takes, shall be
aggregated in calculating the number of shares beneficially owned by
such person.
(d) Notwithstanding the provisions of paragraphs (a) and (c) of this
rule:
(1)(i) A person shall be deemed to be the beneficial owner of a
security, subject to the provisions of paragraph (b) of this rule, if
that person has the right to acquire beneficial ownership of such
security, as defined in Rule 13d-3(a) (Sec. 240.13d-3(a)) within sixty
days, including but not limited to any right to acquire: (A) Through the
exercise of any option, warrant or right; (B) through the conversion of
a security; (C) pursuant to the power to revoke a trust, discretionary
account, or similar arrangement; or (D) pursuant to the automatic
termination of a trust, discretionary account or similar arrangement;
provided, however, any person who acquires a security or power specified
in paragraphs (d)(1)(i)(A), (B) or (C), of this section, with the
purpose or effect of changing or influencing the control of the issuer,
or in connection with or as a participant in any transaction having such
purpose or effect, immediately upon such acquisition shall be deemed to
be the beneficial owner of the securities which may be acquired through
the exercise or conversion of such security or power. Any securities not
outstanding which are subject to such options, warrants,
[[Page 111]]
rights or conversion privileges shall be deemed to be outstanding for
the purpose of computing the percentage of outstanding securities of the
class owned by such person but shall not be deemed to be outstanding for
the purpose of computing the percentage of the class by any other
person.
(ii) Paragraph (i) remains applicable for the purpose of determining
the obligation to file with respect to the underlying security even
though the option, warrant, right or convertible security is of a class
of equity security, as defined in Rule 13d-1(c), and may therefore give
rise to a separate obligation to file.
(2) A member of a national securities exchange shall not be deemed
to be a beneficial owner of securities held directly or indirectly by it
on behalf of another person solely because such member is the record
holder of such securities and, pursuant to the rules of such exchange,
may direct the vote of such securities, without instruction, on other
than contested matters or matters that may affect substantially the
rights or privileges of the holders of the securities to be voted, but
is otherwise precluded by the rules of such exchange from voting without
instruction.
(3) A person who in the ordinary course of his business is a pledgee
of securities under a written pledge agreement shall not be deemed to be
the beneficial owner of such pledged securities until the pledgee has
taken all formal steps necessary which are required to declare a default
and determines that the power to vote or to direct the vote or to
dispose or to direct the disposition of such pledged securities will be
exercised, provided, that:
(i) The pledgee agreement is bona fide and was not entered into with
the purpose nor with the effect of changing or influencing the control
of the issuer, nor in connection with any transaction having such
purpose or effect, including any transaction subject to Rule 13d-3(b);
(ii) The pledgee is a person specified in Rule 13d-1(b)(ii),
including persons meeting the conditions set forth in paragraph (G)
thereof; and
(iii) The pledgee agreement, prior to default, does not grant to the
pledgee;
(A) The power to vote or to direct the vote of the pledged
securities; or
(B) The power to dispose or direct the disposition of the pledged
securities, other than the grant of such power(s) pursuant to a pledge
agreement under which credit is extended subject to regulation T (12 CFR
220.1 to 220.8) and in which the pledgee is a broker or dealer
registered under section 15 of the act.
(4) A person engaged in business as an underwriter of securities who
acquires securities through his participation in good faith in a firm
commitment underwriting registered under the Securities Act of 1933
shall not be deemed to be the beneficial owner of such securities until
the expiration of forty days after the date of such acquisition.
(Secs. 3(b), 13(d)(1), 13(d)(2), 13(d)(5), 13(d)(6), 14(d)(1), 23; 48
Stat. 882, 894, 895, 901; sec. 203(a), 49 Stat. 704, sec. 8, 49 Stat.
1379; sec. 10, 78 Stat. 88a; secs. 2, 3, 82 Stat. 454, 455; secs. 1, 2,
3-5, 84 Stat. 1497; secs. 3, 18, 89 Stat. 97, 155 (15 U.S.C. 78c(b),
78m(d)(1), 89m(d)(2), 78m(d)(5), 78m(d)(6), 78n(d)(1), 78w)
[43 FR 18495, Apr. 28, 1978, as amended at 43 FR 29768, July 11, 1978]
Sec. 240.13d-4 Disclaimer of beneficial ownership.
Any person may expressly declare in any statement filed that the
filing of such statement shall not be construed as an admission that
such person is, for the purposes of sections 13(d) or 13(g) of the Act,
the beneficial owner of any securities covered by the statement.
(Secs. 3(b), 13(d)(1), 13(d)(2), 13(d)(5), 13(d)(6), 14(d)(1), 23; 48
Stat. 882, 894, 895, 901; sec. 203(a), 49 Stat. 704, sec. 8, 49 Stat.
1379; sec. 10, 78 Stat. 88a; secs. 2, 3, 82 Stat. 454, 455; secs. 1, 2,
3-5, 84 Stat. 1497; secs. 3, 18, 89 Stat. 97, 155 (15 U.S.C. 78c(b),
78m(d)(1), 89m(d)(2), 78m(d)(5), 78m(d)(6), 78n(d)(1), 78w)
Sec. 240.13d-5 Acquisition of securities.
(a) A person who becomes a beneficial owner of securities shall be
deemed to have acquired such securities for purposes of section 13(d)(1)
of the Act, whether such acquisition was through purchase or otherwise.
However, executors or administrators of a decedent's estate generally
will be presumed not to have acquired beneficial ownership of the
securities in the decedent's estate until such time as such
[[Page 112]]
executors or administrators are qualified under local law to perform
their duties.
(b)(1) When two or more persons agree to act together for the
purpose of acquiring, holding, voting or disposing of equity securities
of an issuer, the group formed thereby shall be deemed to have acquired
beneficial ownership, for purposes of sections 13(d) and (g) of the Act,
as of the date of such agreement, of all equity securities of that
issuer beneficially owned by any such persons.
(2) Notwithstanding the previous paragraph, a group shall be deemed
not to have acquired any equity securities beneficially owned by the
other members of the group solely by virtue of their concerted actions
relating to the purchase of equity securities directly from an issuer in
a transaction not involving a public offering: Provided, That:
(i) All the members of the group are persons specified in Rule 13d-
1(b)(1)(ii);
(ii) The purchase is in the ordinary course of each member's
business and not with the purpose nor with the effect of changing or
influencing control of the issuer, nor in connection with or as a
participant in any transaction having such purpose or effect, including
any transaction subject to Rule 13d-3(b);
(iii) There is no agreement among, or between any members of the
group to act together with respect to the issuer or its securities
except for the purpose of facilitating the specific purchase involved;
and
(iv) The only actions among or between any members of the group with
respect to the issuer or its securities subsequent to the closing date
of the non-public offering are those which are necessary to conclude
ministerial matters directly related to the completion of the offer or
sale of the securities.
(Secs. 3(b), 13(d)(1), 13(d)(2), 13(d)(5), 13(d)(6), 14(d)(1), 23; 48
Stat. 882, 894, 895, 901; sec. 203(a), 49 Stat. 704, sec. 8, 49 Stat.
1379; sec. 10, 78 Stat. 88a; secs. 2, 3, 82 Stat. 454, 455; secs. 1, 2,
3-5, 84 Stat. 1497; secs. 3, 18, 89 Stat. 97, 155 (15 U.S.C. 78c(b),
78m(d)(1), 89m(d)(2), 78m(d)(5), 78m(d)(6), 78n(d)(1), 78w))
Sec. 240.13d-6 Exemption of certain acquisitions.
The acquisition of securities of an issuer by a person who, prior to
such acquisition, was a beneficial owner of more than five percent of
the outstanding securities of the same class as those acquired shall be
exempt from section 13(d) of the Act: Provided, That:
(a) The acquisition is made pursuant to preemptive subscription
rights in an offering made to all holders of securities of the class to
which the preemptive subscription rights pertain;
(b) Such person does not acquire additional securities except
through the exercise of his pro rata share of the preemptive
subscription rights; and
(c) The acquisition is duly reported, if required, pursuant to
section 16(a) of the Act and the rules and regulations thereunder.
(Secs. 3(b), 13(d)(1), 13(d)(2), 13(d)(5), 13(d)(6), 14(d)(1), 23; 48
Stat. 882, 894, 895, 901; sec. 203(a), 49 Stat. 704, sec. 8, 49 Stat.
1379; sec. 10, 78 Stat. 88a; secs. 2, 3, 82 Stat. 454, 455; secs. 1, 2,
3-5, 84 Stat. 1497; secs. 3, 18, 89 Stat. 97, 155 (15 U.S.C. 78c(b),
78m(d)(1), 89m(d)(2), 78m(d)(5), 78m(d)(6), 78n(d)(1), 78w))
Sec. 240.13d-7 [Reserved]
Sec. 240.13d-101 Schedule 13D--Information to be included in statements filed pursuant to Sec. 240.13d-1(a) and amendments thereto filed pursuant to
Sec. 240.13d-2(a).
Securities and Exchange Commission, Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. ----)*
_______________________________________________________________________
(Name of Issuer)
_______________________________________________________________________
(Title of Class of Securities)
_______________________________________________________________________
(CUSIP Number)
_______________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
_______________________________________________________________________
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this Schedule 13D,
and is filing this schedule because of Rule 13d-1(b)(3) or (4), check
the following box. {time}
[[Page 113]]
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission. See Rule 13d-1(a) for other parties to
whom copies are to be sent.
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover
page.
The information required on the remainder of this cover page shall
not be deemed to be ``filed'' for the purpose of section 18 of the
Securities Exchange Act of 1934 (``Act'') or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
[[Page 114]]
CUSIP No. ----------
------------------------------------------------------------------------
(1) Names of
reporting
persons.
S.S. or
I.R.S.
Identificati
on Nos. of
above
persons.
------------------------------------------------------------------------
(2) Check the (a)
appropriate
box if a
member of a
group
-----------------------------------
(see (b)
instructions)
------------------------------------------------------------------------
(3) SEC use
only.
------------------------------------------------------------------------
(4) Source of
funds (see
instructions).
------------------------------------------------------------------------
(5) Check if
disclosure of
legal
proceedings is
required
pursuant to
Items 2(d) or
2(e).
------------------------------------------------------------------------
(6) Citizenship
or place of
organization.
------------------------------------------------------------------------
Number of
shares
beneficially
owned by each
reporting
person with:
(7) Sole
voting power.
-----------------------------------
(8) Shared
voting power.
-----------------------------------
(9) Sole
dispositive
power.
-----------------------------------
(10) Shared
dispositive
power.
------------------------------------------------------------------------
(11) Aggregate
amount
beneficially
owned by each
reporting
person.
------------------------------------------------------------------------
(12) Check if
the aggregate
amount in Row
(11) excludes
certain shares
(see
instructions).
------------------------------------------------------------------------
(13) Percent of
class
represented by
amount in Row
(11).
------------------------------------------------------------------------
(14) Type of
reporting
person (see
instructions).
------------------------------------------------------------------------
Page--of--Pages---------------------------------------------------------
[[Page 115]]
Instructions for Cover Page
(1) Names and Social Security Numbers of Reporting Persons--Furnish
the full legal name of each person for whom the report is filed--i.e.,
each person required to sign the schedule itself--including each member
of a group. Do not include the name of a person required to be
identified in the report but who is not a reporting person. Reporting
persons are also requested to furnish their Social Security or I.R.S.
identification numbers, although disclosure of such numbers is
voluntary, not mandatory (see ``SPECIAL INSTRUCTIONS FOR COMPLYING WITH
SCHEDULE 13-D'' below).
(2) If any of the shares beneficially owned by a reporting person
are held as a member of a group and such membership is expressly
affirmed, please check row 2(a). If the membership in a group is
disclaimed or the reporting person describes a relationship with other
persons but does not affirm the existence of a group, please check row
2(b) [unless a joint filing pursuant to Rule 13d-1(f)(1) in which case
it may not be necessary to check row 2(b)].
(3) The 3rd row is for SEC internal use; please leave blank.
(4) Classify the source of funds or other consideration used or to
be used in making the purchases as required to be disclosed pursuant to
Item 3 of Schedule 13D and insert the appropriate symbol (or symbols if
more than one is necessary) in row (4):
------------------------------------------------------------------------
Category of Source Symbol
------------------------------------------------------------------------
Subject Company (Company whose securities are SC
being acquired).
Bank......................................... BK
Affiliate (of reporting person).............. AF
Working Capital (of reporting person)........ WC
Personal Funds (of reporting person)......... PF
Other........................................ OO
------------------------------------------------------------------------
(5) If disclosure of legal proceedings or actions is required
pursuant to either Items 2(d) or 2(e) of Schedule 13D, row 5 should be
checked.
(6) Citizenship or Place of Organization--Furnish citizenship if the
named reporting person is a natural person. Otherwise, Furnish place of
organization. (See Item 2 of Schedule 13D).
(7)-(11) [Reserved]
(13) Aggregate Amount Beneficially Owned by Each Reporting Person,
Etc.--Rows (7) through (11), inclusive, and (13) are to be completed in
accordance with the provisions of Item 5 of Schedule 13D. All
percentages are to be rounded off to nearest tenth (one place after
decimal point).
(12) Check if the aggregate amount reported as beneficially owned in
row (11) does not include shares which the reporting person discloses in
the report but as to which beneficial ownership is disclaimed pursuant
to Rule 13d-4 [17 CFR 240.13d-4] under the Securities Exchange Act of
1934.
(14) Type of Reporting Person--Please classify each ``reporting
person'' according to the following breakdown and place the appropriate
symbol (or symbols, i.e., if more than one is applicable, insert all
applicable symbols) on the form:
------------------------------------------------------------------------
Category Symbol
------------------------------------------------------------------------
Broker Dealer................................ BD
Bank......................................... BK
Insurance Company............................ IC
Investment Company........................... IV
Investment Adviser........................... IA
Employee Benefit Plan, Pension Fund, or EP
Endowment Fund.
Parent Holding Company....................... HC
Corporation.................................. CO
Partnership.................................. PN
Individual................................... IN
Other........................................ OO
------------------------------------------------------------------------
Notes: Attach as many copies of the second part of the cover page as
are needed, one reporting person per page.
Filing persons may, in order to avoid unnecessary duplication,
answer items on the schedules (Schedule 13D, 13G, or 14D-1) by
appropriate cross references to an item or items on the cover page(s).
This approach may only be used where the cover page item or items
provide all the disclosure required by the schedule item. Moreover, such
a use of a cover page item will result in the item becoming a part of
the schedule and accordingly being considered as ``filed'' for purposes
of section 18 of the Securities Exchange Act or otherwise subject to the
liabilities of that section of the Act.
Reporting persons may comply with their cover page filing
requirements by filing either completed copies of the blank forms
available from the Commission, printed or typed facsimiles, or computer
printed facsimiles, provided the documents filed have identical formats
to the forms prescribed in the Commission's regulations and meet
existing Securities Exchange Act rules as to such matters as clarity and
size (Securities Exchange Act Rule 12b-12).
Special Instructions for Complying With Schedule 13D
Under sections 13(d) and 23 of the Securities Exchange Act of 1934
and the rules and regulations thereunder, the Commission is authorized
to solicit the information required to be supplied by this schedule by
certain security holders of certain issuers.
Disclosure of the information specified in this schedule is
mandatory, except for Social Security or I.R.S. identification numbers,
disclosure of which is voluntary. The information will be used for the
primary purpose of determining and disclosing the holdings of
[[Page 116]]
certain beneficial owners of certain equity securities. This statement
will be made a matter of public record. Therefore, any information given
will be available for inspection by any member of the public.
Because of the public nature of the information, the Commission can
utilize it for a variety of purposes, including referral to other
governmental authorities or securities self-regulatory organizations for
investigatory purposes or in connection with litigation involving the
Federal securities laws or other civil, criminal or regulatory
statements or provisions. Social Security or I.R.S. identification
numbers, if furnished, will assist the Commission in identifying
security holders and, therefore, in promptly processing statements of
beneficial ownership of securities.
Failure to disclose the information requested by this schedule,
except for Social Security or I.R.S. identification numbers, may resuly
in civil or criminal action against the persons involved for violation
of the Federal securities laws and rules promulgated thereunder.
Instructions. A. The item numbers and captions of the items shall be
included but the text of the items is to be omitted. The answers to the
items shall be so prepared as to indicate clearly the coverage of the
items without referring to the text of the items. Answer every item. If
an item is inapplicable or the answer is in the negative, so state.
B. Information contained in exhibits to the statement may be
incorporated by reference in answer or partial answer to any item or
sub-item of the statement unless it would render such answer misleading,
incomplete, unclear or confusing. Material incorporated by reference
shall be clearly identified in the reference by page, paragraph, caption
or otherwise. An express statement that the specified matter is
incorporated by reference shall be made at the particular place in the
statement where the information is required. A copy of any information
or a copy of the pertinent pages of a document containing such
information which is incorporated by reference shall be submitted with
this statement as an exhibit and shall be deemed to be filed with the
Commission for all purposes of the Act.
C. If the statement is filed by a general or limited partnership,
syndicate, or other group, the information called for by Items 2-6,
inclusive, shall be given with respect to (i) each partner of such
general partnership; (ii) each partner who is denominated as a general
partner or who functions as a general partner of such limited
partnership; (iii) each member of such syndicate or group; and (iv) each
person controlling such partner or member. If the statement is filed by
a corporation or if a person referred to in (i), (ii), (iii) or (iv) of
this Instruction is a corporation, the information called for by the
above mentioned items shall be given with respect to (a) each executive
officer and director of such corporation; (b) each person controlling
such corporation; and (c) each executive officer and director of any
corporation or other person ultimately in control of such corporation.
Item 1. Security and Issuer. State the title of the class of equity
securities to which this statement relates and the name and address of
the principal executive offices of the issuer of such securities.
Item 2. Identity and Background. If the person filing this statement
or any person enumerated in Instruction C of this statement is a
corporation, general partnership, limited partnership, syndicate or
other group of persons, state its name, the state or other place of its
organization, its principal business, the address of its principal
office and the information required by (d) and (e) of this Item. If the
person filing this statement or any person enumerated in Instruction C
is a natural person, provide the information specified in (a) through
(f) of this Item with respect to such person(s).
(a) Name;
(b) Residence or business address;
(c) Present principal occupation or employment and the name,
principal business and address of any corporation or other organization
in which such employment is conducted;
(d) Whether or not, during the last five years, such person has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) and, if so, give the dates, nature of conviction,
name and location of court, any penalty imposed, or other disposition of
the case;
(e) Whether or not, during the last five years, such person was a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws; and,
if so, identify and describe such proceedings and summarize the terms of
such judgment, decree or final order; and
(f) Citizenship.
Item 3. Source and Amount of Funds or Other Consideration. State the
source and the amount of funds or other consideration used or to be used
in making the purchases, and if any part of the purchase price is or
will be represented by funds or other consideration borrowed or
otherwise obtained for the purpose of acquiring, holding, trading or
voting the securities, a description of the transaction and the names of
the parties thereto. Where material, such information should
[[Page 117]]
also be provided with respect to prior acquisitions not previously
reported pursuant to this regulation. If the source of all or any part
of the funds is a loan made in the ordinary course of business by a
bank, as defined in section 3(a)(6) of the Act, the name of the bank
shall not be made available to the public if the person at the time of
filing the statement so requests in writing and files such request,
naming such bank, with the Secretary of the Commission. If the
securities were acquired other than by purchase, describe the method of
acquisition.
Item 4. Purpose of Transaction. State the purpose or purposes of the
acquisition of securities of the issuer. Describe any plans or proposals
which the reporting persons may have which relate to or would result in:
(a) The acquisition by any person of additional securities of the
issuer, or the disposition of securities of the issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the issuer
or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the issuer, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend
policy of the issuer;
(f) Any other material change in the issuer's business or corporate
structure, including but not limited to, if the issuer is a registered
closed-end investment company, any plans or proposals to make any
changes in its investment policy for which a vote is required by section
13 of the Investment Company Act of 1940;
(g) Changes in the issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition
of control of the issuer by any person;
(h) Causing a class of securities of the issuer to be delisted from
a national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of the issuer becoming eligible for
termination of registration pursuant to section 12(g)(4) of the Act; or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer. (a) State the
aggregate number and percentage of the class of securities identified
pursuant to Item 1 (which may be based on the number of securities
outstanding as contained in the most recently available filing with the
Commission by the issuer unless the filing person has reason to believe
such information is not current) beneficially owned (identifying those
shares which there is a right to acquire) by each person named in Item
2. The above mentioned information should also be furnished with respect
to persons who, together with any of the persons named in Item 2,
comprise a group within the meaning of section 13(d)(3) of the Act;
(b) For each person named in response to paragraph (a), indicate the
number of shares as to which there is sole power to vote or to direct
the vote, sole power to dispose or to direct the disposition, or shared
power to dispose or to direct the disposition. Provide the applicable
information required by Item 2 with respect to each person with whom the
power to vote or to direct the vote or to dispose or direct the
disposition is shared;
(c) Describe any transactions in the class of securities reported on
that were effected during the past sixty days or since the most recent
filing of Schedule 13D (Sec. 240.13d-101), whichever is less, by the
persons named in response to paragraph (a).
Instruction. The description of a transaction required by Item 5(c)
shall include, but not necessarily be limited to: (1) The identity of
the person covered by Item 5(c) who effected the transaction; (2) the
date of transaction; (3) the amount of securities involved; (4) the
price per share or unit; and (5) where and how the transaction was
effected.
(d) If any other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the
sale of, such securities, a statement to that effect should be included
in response to this item and, if such interest relates to more than five
percent of the class, such person should be identified. A listing of the
shareholders of an investment company registered under the Investment
Company Act of 1940 or the beneficiaries of an employee benefit plan,
pension fund or endowment fund is not required.
(e) If applicable, state the date on which the reporting person
ceased to be the beneficial owner of more than five percent of the class
of securities.
Instruction. For computations regarding securities which represent a
right to acquire an underlying security, see Rule 13d-3(d)(1) and the
note thereto.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer. Describe any contracts,
arrangements, understandings or relationships (legal or otherwise) among
the persons named in Item 2 and between such persons and any person with
respect to any securities of the issuer, including but not limited to
transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of
proxies, naming the
[[Page 118]]
persons with whom such contracts, arrangements, understandings or
relationships have been entered into. Include such information for any
of the securities that are pledged or otherwise subject to a contingency
the occurrence of which would give another person voting power or
investment power over such securities except that disclosure of standard
default and similar provisions contained in loan agreements need not be
included.
Item 7. Material to be Filed as Exhibits. The following shall be
filed as exhibits: Copies of written agreements relating to the filing
of joint acquisition statements as required by Rule 13d-1(f)
(Sec. 240.13d-1(f)) and copies of all written agreements, contracts,
arrangements, understanding, plans or proposals relating to: (1) The
borrowing of funds to finance the acquisition as disclosed in Item 3;
(2) the acquisition of issuer control, liquidation, sale of assets,
merger, or change in business or corporate structure, or any other
matter as disclosed in Item 4; and (3) the transfer or voting of the
securities, finder's fees, joint ventures, options, puts, calls,
guarantees of loans, guarantees against loss or of profit, or the giving
or withholding of any proxy as disclosed in Item 6.
Signature. After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement
is true, complete and correct.
Date....................................................................
Signature...............................................................
Name/Title..............................................................
The original statement shall be signed by each person on whose
behalf the statement is filed or his authorized representative. If the
statement is signed on behalf of a person by his authorized
representative (other than an executive officer or general partner of
the filing person), evidence of the representative's authority to sign
on behalf of such person shall be filed with the statement: Provided,
however, That a power of attorney for this purpose which is already on
file with the Commission may be incorporated by reference. The name and
any title of each person who signs the statement shall be typed or
printed beneath his signature.
Attention--Intentional misstatements or omissions of fact constitute
Federal criminal violations (See 18 U.S.C. 1001).
(Secs. 13(d), 13(g), 14(d), 23, 48 Stat. 894, 895, 901; sec. 8, 49 Stat.
1379; sec. 203(a), 49 Stat. 704; sec. 10, 78 Stat. 88a; secs. 2, 3, 82
Stat. 454, 455; secs. 1, 2, 3-5, 84 Stat. 1497; sec. 18, 89 Stat. 155;
secs. 202, 203, 91 Stat. 1494, 1498, 1499; 15 U.S.C. 78m(d), 78m(g),
78n(d), 78w)
[44 FR 2145, Jan. 9, 1979; 44 FR 11751, Mar. 2, 1979; 44 FR 70340, Dec.
6, 1979; 47 FR 11466, Mar. 16, 1982; 61 FR 49959, Sept. 24, 1996]
Sec. 240.13d-102 Schedule 13G--Information to be included in statements filed pursuant to Sec. 240.13d-1(b) and (c) and amendments thereto filed pursuant to
Sec. 240.13d-2(b).
Securities and Exchange Commission, Washington, D.C. 20549
Schedule 13G
Under the Securities Exchange Act of 1934
(Amendment No. ----)*
_______________________________________________________________________
(Name of Issuer)
_______________________________________________________________________
(Title of Class of Securities)
_______________________________________________________________________
(CUSIP Number)
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment containing
information which would alter the disclosures provided in a prior cover
page.
The information required in the remainder of this cover page shall
not be deemed to be ``filed'' for the purpose of Section 18 of the
Securities Exchange Act of 1934 (``Act'') or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
CUSIP No. ----------
------------------------------------------------------------------------
(1) Names of
reporting
persons.
S.S. or
I.R.S.
Identificati
on Nos. of
above
persons.
------------------------------------------------------------------------
(2) Check the (a)
appropriate
box if a
member of a
group
-----------------------------------
(see (b)
instructions)
------------------------------------------------------------------------
(3) SEC use
only.
------------------------------------------------------------------------
(4) Citizenship
or place of
organization.
------------------------------------------------------------------------
Number of
shares
beneficially
owned by each
reporting
person with:
(5) Sole
voting power.
-----------------------------------
(6) Shared
voting power.
-----------------------------------
[[Page 119]]
(7) Sole
dispositive
power.
-----------------------------------
(8) Shared
dispositive
power.
------------------------------------------------------------------------
(9) Aggregate
amount
beneficially
owned by each
reporting
person.
------------------------------------------------------------------------
(10) Check if
the aggregate
amount in Row
(9) excludes
certain shares
(see
instructions).
------------------------------------------------------------------------
(11) Percent of
class
represented by
amount in Row
(9).
------------------------------------------------------------------------
(12) Type of
reporting
person (see
instructions).
------------------------------------------------------------------------
Page--of--Pages---------------------------------------------------------
[[Page 120]]
Instructions for Cover Page
(1) Names and Social Security Numbers of Reporting Persons--Furnish
the full legal name of each person for whom the report is filed--i.e.,
each person required to sign the schedule itself--including each member
of a group. Do not include the name of a person required to be
identified in the report but who is not a reporting person. Reporting
persons are also requested to furnish their Social Security or I.R.S.
identification numbers, although disclosure of such numbers is
voluntary, not mandatory (see ``SPECIAL INSTRUCTIONS FOR COMPLYING WITH
SCHEDULE 13G'', below).
(2) If any of the shares beneficially owned by a reporting person
are held as a member of a group and such membership is expressly
affirmed, please check row 2(a). If the membership in a group is
disclaimed or the reporting person describes a relationship with other
persons but does not affirm the existence of a group, please check row
2(b) [unless a joint filing pursuant to Rule 13d-1(f)(1) in which case
it may not be necessary to check row 2(b)].
(3) The third row is for SEC internal use; please leave blank.
(4) Citizenship or Place of Organization--Furnish citizenship if the
named reporting person is a natural person. Otherwise, furnish place of
organization.
(5)-(9), (11) Aggregated Amount Beneficially Owned By Each Reporting
Person, etc.--Rows (5) through (9) inclusive, and (11) are to be
completed in accordance with the provisions of Item 4 of Schedule 13G.
All percentages are to be rounded off to the nearest tenth (one place
after decimal point).
(10) Check if the aggregate amount reported as beneficially owned in
row (9) does not include shares as to which beneficial ownership is
disclaimed pursuant to Rule 13d-4 [17 CFR 240.13d-4] under the
Securities Exchange Act of 1934.
(12) Type of Reporting Person--Please classify each ``reporting
person'' according to the following breakdown (see Item 3 of Schedule
13G) and place the appropriate symbol on the form:
------------------------------------------------------------------------
Category Symbol
------------------------------------------------------------------------
Broker Dealer................................ BD
Bank......................................... BK
Insurance Company............................ IC
Investment Company........................... IV
Investment Adviser........................... IA
Employee Benefit Plan, Pension Fund, or EP
Endowment Fund.
Parent Holding Company....................... HC
Corporation.................................. CO
Partnership.................................. PN
Individual................................... IN
Other........................................ OO
------------------------------------------------------------------------
Notes: Attach as many copies of the second part of the cover page as
are needed, one reporting person per page.
Filing persons may, in order to avoid unnecessary duplication,
answer items on the schedules (Schedule 13D, 13G, or 14D-1) by
appropriate cross references to an item or items on the cover page(s).
This approach may only be used where the cover page item or items
provide all the disclosure required by the schedule item. Moreover, such
a use of a cover page item will result in the item becoming a part of
the schedule and accordingly being considered as ``filed'' for purposes
of section 18 of the Securities Exchange Act or otherwise subject to the
liabilities of that section of the Act.
Reporting persons may comply with their cover page filing
requirements by filing either completed copies of the blank forms
available from the Commission, printed or typed facsimiles, or computer
printed facsimiles, provided the documents filed have identical formats
to the forms prescribed in the Commission's regulations and meet
existing Securities Exchange Act rules as to such matters as clarity and
size (Securities Exchange Act Rule 12b-12).
Instructions. A. Statements containing the information required by
this schedule shall be filed not later than February 14 following the
calendar year covered by the statement or within the time specified in
Rule 13d-1(b)(2), if applicable.
B. Information contained in a form which is required to be filed by
rules under section 13(f) (15 U.S.C. 78m(f)) for the same calendar year
as that covered by a statement on this schedule may be incorporated by
reference in response to any of the items of this schedule. If such
information is incorporated by reference in this schedule, copies of the
relevant pages of such form shall be filed as an exhibit to this
schedule.
C. The item numbers and captions of the items shall be included but
the text of the items is to be omitted. The answers to the items shall
be so prepared as to indicate clearly the coverage of the items without
referring to the text of the items. Answer every item. If an item is
inapplicable or the answer is in the negative, so state.
Item 1(a) Name of issuer:------------.
Item 1(b) Address of issuer's principal executive offices: --------
----.
2(a) Name of person filing:
_______________________________________________________________________
2(b) Address or principal business office or, if none, residence:
_______________________________________________________________________
2(c) Citizenship:
_______________________________________________________________________
2(d) Title of class of securities:
_______________________________________________________________________
2(e) CUSIP No.:
_______________________________________________________________________
[[Page 121]]
Item 3. If this statement is filed pursuant to Rules 13d-1(b), or
13d-2(b), check whether the person filing is a:
(a) [ ] Broker or dealer registered under section 15 of the Act.
(b) [ ] Bank as defined in section 3(a)(6) of the Act.
(c) [ ] Insurance company as defined in section 3(a)(19) of the Act.
(d) [ ] Investment company registered under section 8 of the
Investment Company Act.
(e) [ ] Investment adviser registered under section 203 of the
Investment Advisers Act of 1940.
(f) [ ] Employee benefit plan, pension fund which is subject to the
provisions of the Employee Retirement Income Security Act of 1974 or
endowment fund; see Sec. 240.13d-1(b)(1)(ii)(F).
(g) [ ] Parent holding company, in accordance with Sec. 240.13d-
1(b)(ii)(G).
Note: See item 7.
(h) [ ] Group, in accordance with Sec. 240.13d-1(b)(1)(ii)(H).
Item 4. Ownership. If the percent of the class owned, as of December
31 of the year covered by the statement, or as of the last day of any
month described in Rule 13d-1(b)(2), if applicable, exceeds 5 percent,
provide the following information as of that date and identify those
shares which there is a right to acquire.
(a) Amount beneficially owned: ----------.
(b) Percent of class: ------------.
(c) Number of shares as to which such person has:
(i) Sole power to vote or to direct the vote ------.
(ii) Shared power to vote or to direct the vote ------.
(iii) Sole power to dispose or to direct the disposition of ------.
(iv) Shared power to dispose or to direct the disposition of ------.
Instruction.--For computations regarding securities which represent
a right to acquire an underlying security see Rule 13d-3(d)(1).
Item 5. Ownership of 5 Percent or Less of a Class. If this statement
is being filed to report the fact that as of the date hereof the
reporting person has ceased to be the beneficial owner of more than 5
percent of the class of securities, check the following [ ].
Instruction. Dissolution of a group requires a response to this
item.
Item 6. Ownership of More than 5 Percent on Behalf of Another
Person. If any other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the
sale of, such securities, a statement to that effect should be included
in response to this item and, if such interest relates to more than 5
percent of the class, such person should be identified. A listing of the
shareholders of an investment company registered under the Investment
Company Act of 1940 or the beneficiaries of employee benefit plan,
pension fund or endowment fund is not required.
Item 7. Identification and Classification of the Subsidiary Which
Acquired the Security Being Reported on By the Parent Holding Company.
If a parent holding company has filed this schedule, pursuant to Rule
13d-1(b)(ii)(G), so indicate under Item 3(g) and attach an exhibit
stating the identity and the Item 3 classification of the relevant
subsidiary. If a parent holding company has filed this schedule pursuant
to Rule 13d-1(c), attach an exhibit stating the identification of the
relevant subsidiary.
Item 8. Identification and Classification of Members of the Group.
If a group has filed this schedule pursuant to Rule 13d-1(b)(ii)(H), so
indicate under Item 3(h) and attach an exhibit stating the identity and
Item 3 classification of each member of the group. If a group has filed
this schedule pursuant to Rule 13d-1(c), attach an exhibit stating the
identity of each member of the group.
Item 9. Notice of Dissolution of Group. Notice of dissolution of a
group may be furnished as an exhibit stating the date of the dissolution
and that all further filings with respect to transactions in the
security reported on will be filed, if required, by members of the
group, in their individual capacity. See Item 5.
Item 10. Certification. The following certification shall be
included if the statement is filed pursuant to Rule 13d-1(b):
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were acquired in the ordinary
course of business and were not acquired for the purpose of and do not
have the effect of changing or influencing the control of the issuer of
such securities and were not acquired in connection with or as a
participant in any transaction having such purposes or effect.
Signature. After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated:--------.
--------------.
Signature.
------------.
Name/Title.
The original statement shall be signed by each person on whose
behalf the statement is filed or his authorized representative. If the
statement is signed on behalf of a person by his authorized
representative other than an executive officer or general partner of the
filing person, evidence of the representative's authority to sign on
behalf of such person shall be filed with the statement, Provided,
however, That a power of attorney for this purpose which is already on
file with the
[[Page 122]]
Commission may be incorporated by reference. The name and any title of
each person who signs the statement shall be typed or printed beneath
his signature.
Note: Six copies of this statement, including all exhibits, should
be filed with the Commission.
Attention: Intentional misstatements or omissions of fact constitute
Federal criminal violations (see 18 U.S.C. 1001).
(Secs. 3(b), 13(d)(1), 13(d)(2), 13(d)(5), 13(d)(6), 13(g)(1), 13(g)(2),
13(g)(5), 23, 48 Stat. 882, 894, 901; sec. 203(a), 49 Stat. 704; sec. 8,
49 Stat. 1379; sec. 10, 78 Stat. 88a; sec. 2, 82 Stat. 454; secs. 1, 2,
84 Stat. 1497; secs. 3, 10, 18, 89 Stat. 97, 119, 155; secs. 202, 203,
91 Stat. 1494, 1498, 1499; (15 U.S.C. 78c(b), 78m(d)(1), 78m(d)(2),
78m(d)(5), 78m(d)(6), 78m(g)(1), 78m(g)(2), 78m(g)(5), 78w))
[43 FR 18499, Apr. 28, 1978, as amended at 43 FR 55756, Nov. 29, 1978;
44 FR 2148, Jan. 9, 1979; 44 FR 11751, Mar. 2, 1979; 61 FR 49959, Sept.
24, 1996]
Sec. 240.13e-1 Purchase of securities by issuer thereof.
When a person other than the issuer makes a tender offer for, or
request or invitation for tenders of, any class of equity securities of
an issuer subject to section 13(e) of the Act, and such person has filed
a statement with the Commission pursuant to Sec. 240.14d-1 and the
issuer has received notice thereof, such issuer shall not thereafter,
during the period such tender offer, request or invitation continues,
purchase any equity securities of which it is the issuer unless it has
complied with both of the following conditions:
(a) The issuer has filed with the Commission eight copies of a
statement containing the information specified below with respect to the
proposed purchases:
(1) The title and amount of securities to be purchased, the names of
the persons or classes of persons from whom, and the market in which,
the securities are to be purchased, including the name of any exchange
on which the purchase is to be made;
(2) The purpose for which the purchase is to be made and whether the
securities are to be retired, held in the treasury of the issuer or
otherwise disposed of, indicating such disposition; and
(3) The source and amount of funds or other consideration used or to
be used in making the purchases, and if any part of the purchase price
or proposed purchase price is represented by funds or other
consideration borrowed or otherwise obtained for the purpose of
acquiring, holding, or trading the securities, a description of the
transaction and the names of the parties thereto; and
(b) The initial statement shall be accompanied by a fee payable to
the Commission as required by Sec. 240.0-11.
(c) The issuer has at any time within the past 6 months sent or
given to its equity security holders the substance of the information
contained in the statement required by paragraph (a) of this section:
Provided, however, That any issuer making such purchases which commenced
prior to July 30, 1968 shall, if such purchases continue after such
date, comply with the provisions of this rule on or before August 12,
1968.
[33 FR 14110, Sept. 18, 1968, as amended at 34 FR 6101, Apr. 4, 1969; 51
FR 2476, Jan. 17, 1986]
Sec. 240.13e-2 [Reserved]
Sec. 240.13e-3 Going private transactions by certain issuers or their affiliates.
(a) Definitions. Unless indicated otherwise or the context otherwise
requires, all terms used in this section and in Schedule 13E-3
[Sec. 240.13e-100] shall have the same meaning as in the Act or
elsewhere in the General Rules and Regulations thereunder. In addition,
the following definitions apply:
(1) An affiliate of an issuer is a person that directly or
indirectly through one or more intermediaries controls, is controlled
by, or is under common control with such issuer. For the purposes of
this section only, a person who is not an affiliate of an issuer at the
commencement of such person's tender offer for a class of equity
securities of such issuer will not be deemed an affiliate of such issuer
prior to the stated termination of such tender offer and any extensions
thereof;
(2) The term purchase means any acquisition for value including, but
not limited to, (i) any acquisition pursuant to the dissolution of an
issuer subsequent to the sale or other disposition of substantially all
the assets of such
[[Page 123]]
issuer to its affiliate, (ii) any acquisition pursuant to a merger,
(iii) any acquisition of fractional interests in connection with a
reverse stock split, and (iv) any acquisition subject to the control of
an issuer or an affiliate of such issuer;
(3) A Rule 13e-3 transaction is any transaction or series of
transactions involving one or more of the transactions described in
paragraph (a)(3)(i) of this section which has either a reasonable
likelihood or a purpose of producing, either directly or indirectly, any
of the effects described in paragraph (a)(3)(ii) of this section;
(i) The transactions referred to in paragraph (a)(3) of this section
are:
(A) A purchase of any equity security by the issuer of such security
or by an affiliate of such issuer;
(B) A tender offer for or request or invitation for tenders of any
equity security made by the issuer of such class of securities or by an
affiliate of such issuer; or
(C) A solicitation subject to Regulation 14A [Secs. 240.14a-1 to
240.14b-1] of any proxy, consent or authorization of, or a distribution
subject to Regulation 14C [Secs. 240.14c-1 to 14c-101] of information
statements to, any equity security holder by the issuer of the class of
securities or by an affiliate of such issuer, in connection with: a
merger, consolidation, reclassification, recapitalization,
reorganization or similar corporate transaction of an issuer or between
an issuer (or its subsidiaries) and its affiliate; a sale of
substantially all the assets of an issuer to its affiliate or group of
affiliates; or a reverse stock split of any class of equity securities
of the issuer involving the purchase of fractional interests.
(ii) The effects referred to in paragraph (a)(3) of this section
are:
(A) Causing any class of equity securities of the issuer which is
subject to section 12(g) or section 15(d) of the Act to be held of
record by less than 300 persons; or
(B) Causing any class of equity securities of the issuer which is
either listed on a national securities exchange or authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association to be neither listed on any national securities
exchange nor authorized to be quoted on an inter-dealer quotation system
of any registered national securities association.
(4) An unaffiliated security holder is any security holder of an
equity security subject to a Rule 13e-3 transaction who is not an
affiliate of the issuer of such security.
(b) Application of section to an issuer (or an affiliate of such
issuer) subject to section 12 of the Act. (1) It shall be a fraudulent,
deceptive or manipulative act or practice, in connection with a Rule
13e-3 transaction, for an issuer which has a class of equity securities
registered pursuant to section 12 of the Act or which is a closed-end
investment company registered under the Investment Company Act of 1940,
or an affiliate of such issuer, directly or indirectly
(i) To employ any device, scheme or artifice to defraud any person;
(ii) To make any untrue statement of a material fact or to omit to
state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading;
or
(iii) To engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon any person.
(2) As a means reasonably designed to prevent fraudulent, deceptive
or manipulative acts or practices in connection with any Rule 13e-3
transaction, it shall be unlawful for an issuer which has a class of
equity securities registered pursuant to section 12 of the Act, or an
affiliate of such issuer, to engage, directly or indirectly, in a Rule
13e-3 transaction unless:
(i) Such issuer or affiliate complies with the requirements of
paragraphs (d), (e) and (f) of this section; and
(ii) The Rule 13e-3 transaction is not in violation of paragraph
(b)(1) of this section.
(c) Application of section to an issuer (or an affiliate of such
issuer) subject to section 15(d) of the Act. (1) It shall be unlawful as
a fraudulent, deceptive or manipulative act or practice for an issuer
which is required to file periodic reports pursuant to Section 15(d) of
the Act, or an affiliate of such issuer, to engage, directly or
indirectly, in a Rule
[[Page 124]]
13e-3 transaction unless such issuer or affiliate complies with the
requirements of paragraphs (d), (e) and (f) of this section.
(2) An issuer or affiliate which is subject to paragraph (c)(1) of
this section and which is soliciting proxies or distributing information
statements in connection with a transaction described in paragraph
(a)(3)(i)(A) of this section may elect to use the timing procedures for
conducting a solicitation subject to Regulation 14A (Secs. 240.14a-1 to
240.14b-1) or a distribution subject to Regulation 14C (Secs. 240.14c-1
to 240.14c-101) in complying with paragraphs (d), (e) and (f) of this
section, provided that if an election is made, such solicitation or
distribution is conducted in accordance with the requirements of the
respective regulations, including the filing of preliminary copies of
soliciting materials or an information statement at the time specified
in Regulation 14A or 14C, respectively.
(d) Material required to be filed. The issuer or affiliate engaging
in a Rule 13e-3 transaction shall, in accordance with the General
Instructions to the Rule 13e-3 Transaction Statement on Schedule 13E-3
[Sec. 240.13e-100]:
(1) File with the Commission eight copies of such schedule,
including all exhibits thereto;
(2) Report any material change in the information set forth in such
schedule by promptly filing with the Commission eight copies of an
amendment on such schedule; and
(3) Report the results of the Rule 13e-3 transaction by filing with
the Commission promptly but no later than ten days (ten business days if
Rule 13e-4 [Sec. 240.13e-4] is applicable) after the termination of such
transaction eight copies of a final amendment to such schedule.
(e) Disclosure of certain information. (1) The issuer or affiliate
engaging in the Rule 13e-3 transaction, in addition to any other
information required to be disclosed pursuant to any other applicable
rule or regulation under the federal securities laws, shall disclose to
security holders of the class of equity securities which is the subject
of the transaction, in the manner prescribed by paragraph (f) of this
section, the information required by Items 1, 2, 3, 4, 5, 6, 10, 11, 12,
13, 14, 15 and 16 of Schedule 13e-3 [Sec. 240.13e-100], or a fair and
adequate summary thereof, and Items 7, 8 and 9 and include in the
document which contains such information the exhibit required by Item
17(e) of such Schedule. If the Rule 13e-3 transaction involves (i) a
transaction subject to Regulation 14A [Secs. 240.14a-1 to 240.14b-1] or
14C [Secs. 240.14c-1 to 240.14c-101] of the Act, (ii) the registration
of securities pursuant to the Securities Act of 1933 and the General
Rules and Regulations promulgated thereunder, or (iii) a tender offer
subject to Regulation 14D [Secs. 240.14d-1 to 240.14d-101] or Rule 13e-4
[Sec. 240.13e-4], such information shall be included in the proxy
statement, the information statement, the registration statement or the
tender offer for or request or invitation for tenders of securities
published, sent or given to security holders, respectively.
(2) If any material change occurs in the information previously
disclosed to security holders of the class of equity securities which is
the subject of the transaction, the issuer or affiliate shall promptly
disclose such change to such security holders in the manner prescribed
by paragraph (f)(1)(iii) of this section.
(3) Any document transmitted to such security holders which contains
the information required by paragraph (e)(1) of this section shall:
(i) Set forth prominently the information required by Items 7, 8 and
9 of the Rule 13e-3 Transaction Statement on Schedule 13E-3
[Sec. 240.13e-100] in a Special Factors section to be included in the
forepart of such document; and
(ii) Set forth on the outside front cover page, in capital letters
printed in bold face roman type at least as large as ten point modern
type and at least two points leaded, the statement in paragraph
(e)(3)(ii)(A) of this section, if the Rule 13e-3 transaction does not
involve a prospectus, or the statement in paragraph (e)(3)(ii)(B) of
this section, if the Rule 13e-3 transaction involves a prospectus, and
in the latter case such statement shall be used in lieu of that required
by Item 501(c)(5) of Regulation S-K (Sec. 229.501 of this chapter).
(A) THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED
[[Page 125]]
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OF
ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
(B) NEITHER THIS TRANSACTION NOR THESE SECURITIES HAVE BEEN APPROVED
OR DISARPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION. THE
COMMISSION HAS NOT PASSED UPON THE FAIRNESS OR MERITS OF THIS
TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
Instructions to paragraph (e)(3). 1. Negative responses to any item
of Schedule 13E-3 [Sec. 240.13e-100] need not be included in the
information disseminated to security holders unless otherwise indicated.
2. Although the financial information necessary to present a fair
and adequate summary of Item 14 of Schedule 13E-3 [Sec. 240.13e-100] may
vary depending on the facts and circumstances involved, the following
historical and pro forma summary financial information normally will be
sufficient for purposes of paragraph (e) of this section:
(a) The following summary financial information for (i) the two most
recent fiscal years and (ii) the latest year-to-date interim period and
corresponding interim period of the preceding year:
Income Statement:
Net sales and operating revenues and other revenues
Income before extraordinary items
Net Income
Balance Sheet (at end of period);
Working capital
Total assets
Total assets less deferred research and development charges and excess
of cost of assets acquired over book value.
Shareholder's equity
Per Share:1
---------------------------------------------------------------------------
\1\ Average number of shares of common stock outstanding during each
period was------(as adjusted to give effect to stock dividends or stock
splits).
---------------------------------------------------------------------------
Income per common share before extraordinary items
Extraordinary items
Net income per common share (and common share equivalents, if
applicable)
Net income per share on a fully diluted basis
(b) Ratio of earnings to fixed charges for the same periods required
by 2(a) above;
(c) Book value per share as of the most recent fiscal year end and
as of the date of the latest interim balance sheet; and
(d) If material, pro forma data for the summarized financial
information described in 2(a), (b), and (c) above, disclosing the effect
of the transaction, should be provided for the most recent fiscal year
and latest year-to-date interim period.
If the information required by Item 14 is summarized, appropriate
instructions should be included stating how more complete financial
information can be obtained.
3. If the information delivered to security holders is distributed
through an electronic medium and the legend required by paragraph
(e)(3)(ii) is included, issuers may satisfy the legibility requirement
relating to type size and font by presenting the legend in any manner
reasonably calculated to draw security holder attention to it.
(f) Dissemination of disclosure. (1) If the Rule 13e-3 transaction
involves a purchase as described in paragraph (a)(3)(i)(A) of this
section or a vote, consent, authorization, or distribution of
information statements as described in paragraph (a)(3)(i)(C) of this
section, the issuer or affiliate engaging in the Rule 13e-3 transaction
shall:
(i) Provide the information required by paragraph (e) of this
section: (A) In accordance with the provisions of any applicable Federal
or State law, but in no event later than 20 days prior to: any such
purchase; any such vote, consent or authorization; or with respect to
the distribution of information statements, the meeting date, or if
corporate action is to be taken by means of the written authorization or
consent of security holders, the earliest date on which corporate action
may be taken: Provided, however, That if the purchase subject to this
section is pursuant to a tender offer excepted from Rule 13e-4 by
paragraph (g)(5) of Rule 13e-4, the information required by paragraph
(e) of this section shall be disseminated in accordance with paragraph
(e) of Rule 13e-4 no later than 10 business days prior to any purchase
pursuant to such tender offer, (B) to each person who is
[[Page 126]]
a record holder of a class of equity securities subject to the Rule 13e-
3 transaction as of a date not more than 20 days prior to the date of
dissemination of such information.
(ii) If the issuer or affiliate knows that securities of the class
of securities subject to the Rule 13e-3 transaction are held of record
by a broker, dealer, bank or voting trustee or their nominees, such
issuer or affiliate shall (unless Rule 14a-13(a) [Sec. 240.14a-13(a)] or
14c-7 [Sec. 240.14c-7] is applicable) furnish the number of copies of
the information required by paragraph (e) of this section that are
requested by such persons (pursuant to inquiries by or on behalf of the
issuer or affiliate), instruct such persons to forward such information
to the beneficial owners of such securities in a timely manner and
undertake to pay the reasonable expenses incurred by such persons in
forwarding such information; and
(iii) Promptly disseminate disclosure of material changes to the
information required by paragraph (d) of this section in a manner
reasonably calculated to inform security holders.
(2) If the Rule 13e-3 transaction is a tender offer or a request or
invitation for tenders of equity securities which is subject to
Regulation 14D [Secs. 240.14d-1 to 240.14d-101] or Rule 13e-4
[Sec. 240.13e-4], the tender offer containing the information required
by paragraph (e) of this section, and any material change with respect
thereto, shall be published, sent or given in accordance with Regulation
14D or Rule 13e-4, respectively, to security holders of the class of
securities being sought by the issuer or affiliate.
(g) Exceptions. This section shall not apply to:
(1) Any Rule 13e-3 transaction by or on behalf of a person which
occurs within one year of the date of termination of a tender offer in
which such person was the bidder and became an affiliate of the issuer
as a result of such tender offer: Provided, That the consideration
offered to unaffiliated security holders in such Rule 13e-3 transaction
is at least equal to the highest consideration offered during such
tender offer and Provided further, That:
(i) If such tender offer was made for any or all securities of a
class of the issuer;
(A) Such tender offer fully disclosed such person's intention to
engage in a Rule 13e-3 transaction, the form and effect of such
transaction and, to the extent known, the proposed terms thereof; and
(B) Such Rule 13e-3 transaction is substantially similar to that
described in such tender offer; or
(ii) If such tender offer was made for less than all the securities
of a class of the issuer:
(A) Such tender offer fully disclosed a plan of merger, a plan of
liquidation or a similar binding agreement between such person and the
issuer with respect to a Rule 13e-3 transaction; and
(B) Such Rule 13e-3 transaction occurs pursuant to the plan of
merger, plan of liquidation or similar binding agreement disclosed in
the bidder's tender offer.
(2) Any Rule 13e-3 transaction in which the security holders are
offered or receive only an equity security Provided, That:
(i) Such equity security has substantially the same rights as the
equity security which is the subject of the Rule 13e-3 transaction
including, but not limited to, voting, dividends, redemption and
liquidation rights except that this requirement shall be deemed to be
satisfied if unaffiliated security holders are offered common stock;
(ii) Such equity security is registered pursuant to section 12 of
the Act or reports are required to be filed by the issuer thereof
pursuant to section 15(d) of the Act; and
(iii) If the security which is the subject of the Rule 13e-3
transaction was either listed on a national securities exchange or
authorized to be quoted in an interdealer quotation system of a
registered national securities association, such equity security is
either listed on a national securities exchange or authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association.
(3) Transactions by a holding company registered under the Public
Utility Holding Company Act of 1935 in compliance with the provisions of
that Act;
[[Page 127]]
(4) Redemptions, calls or similar purchases of an equity security by
an issuer pursuant to specific provisions set forth in the instrument(s)
creating or governing that class of equity securities; or
(5) Any solicitation by an issuer with respect to a plan of
reorganization under Chapter X of the Bankruptcy Act, as amended, if
made after the entry of an order approving such plan pursuant to section
174 of that Act and after, or concurrently with, the transmittal of
information concerning such plan as required by section 175 of the Act.
(Sec. 17(a), 19(a), 48 Stat. 84, 85; secs. 3(b), 10(b), 13(e), 14(a),
14(d), 14(e), 23(a), 48 Stat. 882, 894, 895, 891, 901; sec. 209, 48
Stat. 908; sec. 203(a), 49 Stat. 704; sec. 8, 49 Stat. 1379; sec. 10, 68
Stat. 686; sec. 5, 78 Stat. 569, 570; secs. 2, 3, 82 Stat. 454, 455;
secs. 1, 2, 3-5, 84 Stat. 1497; secs. 3, 18, 89 Stat. 97, 155; 15 U.S.C.
77g(a), 77s(a), 78c(b), 78j(b), 78m(e), 78n(a), 78n(c), 78n(e), 78w(a);
secs. 6, 7, 8, 10, 19(a), 48 Stat. 78, 79, 81, 85, secs. 205, 209, 48
Stat. 906, 908; sec. 301, 54 Stat. 857; sec. 8, 88 Stat. 685; sec. 1, 79
Stat. 1051; sec. 308(a)(2), 90 Stat. 57; secs. 12, 13, 14, 15(d), 23(a),
48 Stat. 892, 895, 901; secs. 1, 3, 8, 49 Stat. 1375, 1377, 1379; sec
203(a), 49 Stat. 704; sec. 202, 68 Stat. 686; secs. 3, 4, 5, 6, 78 Stat.
565-568, 569, 570-574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1,
2, 3-5, 84 Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10,
18, 89 Stat. 117, 118, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202,
203, 204, 81 Stat. 1494, 1498, 1499, 1500; 15 U.S.C. 77f, 77g, 77h, 77j,
77s(a), 78l, 78m, 78n, 78o(d), 78w(a); secs. 3(b), 9(a)(6), 10(b),
13(e), 14(e) and 23(a) of the Act, 15 U.S.C. 78c(b), 78i(a), 78j(b),
78m(e), 78n(e) and 78w(a))
[44 FR 46741, Aug. 8, 1979, as amended at 47 FR 11466, Mar. 16, 1982; 48
FR 19877, May 3, 1983; 48 FR 34253, July 28, 1983; 51 FR 42059, Nov. 20,
1986; 61 FR 24656, May 15, 1996]
Sec. 240.13e-4 Tender offers by issuers.
(a) Definitions. Unless the context otherwise requires, all terms
used in this section and in Schedule 13E-4 [Sec. 240.13E-101] shall have
the same meaning as in the Act or elsewhere in the General Rules and
Regulations thereunder. In addition, the following definitions shall
apply:
(1) The term issuer means any issuer which has a class of equity
security registered pursuant to section 12 of the Act, or which is
required to file periodic reports pursuant to section 15(d) of the Act,
or which is a closed-end investment company registered under the
Investment Company Act of 1940.
(2) The term issuer tender offer refers to a tender offer for, or a
request or invitation for tenders of, any class of equity security, made
by the issuer of such class of equity security or by an affiliate of
such issuer.
(3) As used in this section and in Schedule 13E-4 [Sec. 240.13e-
101], the term business day means any day, other than Saturday, Sunday,
or a Federal holiday, and shall consist of the time period from 12:01
a.m. through 12:00 midnight Eastern Time. In computing any time period
under this Rule or Schedule 13E-4, the date of the event that begins the
running of such time period shall be included except that if such event
occurs on other than a business day such period shall begin to run on
and shall include the first business day thereafter.
(4) The term commencement means the date an issuer tender offer is
first published, sent or given to security holders.
(5) The term termination means the date after which securities may
not be tendered pursuant to an issuer tender offer.
(6) The term security holders means holders of record and beneficial
owners of securities of the class of equity security which is the
subject of an issuer tender offer.
(7) The term security position listing means, with respect to the
securities of any issuer held by a registered clearing agency in the
name of the clearing agency or its nominee, a list of those participants
in the clearing agency on whose behalf the clearing agency holds the
issuer's securities and of the participants' respective positions in
such securities as of a specified date.
(b)(1) It shall be a fraudulent, deceptive or manipulative act or
practice, in connection with an issuer tender offer, for an issuer or an
affiliate of such issuer, in connection with an issuer tender offer:
(i) To employ any device, scheme or artifice to defraud any person;
(ii) To make any untrue statement of a material fact or to omit to
state a material fact necessary in order to make the statements made, in
the
[[Page 128]]
light of the circumstances under which they were made, not misleading;
or
(iii) To engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon any person.
(2) As a means reasonably designed to prevent fraudulent, deceptive
or manipulative acts or practices in connection with any issuer tender
offer, it shall be unlawful for an issuer or an affiliate of such issuer
to make an issuer tender offer unless:
(i) Such issuer or affiliate complies with the requirements of
paragraphs (c), (d), (e) and (f) of this section; and
(ii) The issuer tender offer is not in violation of paragraph (b)(1)
of this section.
(c) Material required to be filed. The issuer or affiliate making
the issuer tender offer shall, in accordance with the General
Instructions to the Issuer Tender Offer Statement on Schedule 13E-4
[Sec. 240.13E-101]:
(1) File with the Commission ten copies of such schedule, including
all exhibits thereto, prior to or as soon as practicable on the date of
commencement of the issuer tender offer;
(2) Report any material change in the information set forth in such
schedule by promptly filing with the Commission ten copies of an
amendment on such schedule;
(3) Report the results of the issuer tender offer by filing with the
Commission no later than ten business days after the termination of the
issuer tender offer ten copies of a final amendment to such schedule.
(d) Disclosure of certain information. (1) The issuer or affiliate
making the issuer tender offer shall publish, send or give to security
holders in the manner prescribed in paragraph (e)(1) of this section a
statement containing the following information:
(i) The scheduled termination date of the issuer tender offer and
whether it may be extended;
(ii) The specified dates prior to which, and after which, persons
who tender securities pursuant to the issuer tender offer may withdraw
their securities pursuant to paragraph (f)(2) of this section;
(iii) If the issuer tender offer is for less than all the securities
of a class, the exact dates of the period during which securities will
be accepted on a pro rata basis pursuant to paragraph (f)(3) of this
section and the manner in which securities will be accepted for payment
and in which securities may be withdrawn; and
(iv) The information required by Items 1 through 8 of Schedule 13E-4
[Sec. 240.13e-101] or a fair and adequate summary thereof.
Provided, however, That if the issuer tender offer involves the
registration of securities pursuant to the Securities Act of 1933 and
the General Rules and Regulations promulgated thereunder, any prospectus
relating to such securities shall include all of the information, not
otherwise required to be included therein, required by this paragraph.
(2) If any material change occurs in the information previously
disclosed to security holders, the issuer or affiliate shall disclose
promptly such change in the manner prescribed by paragraph (e)(2) of
this section.
Instruction:
A. Negative responses to any item of Schedule 13E-4 need not be
included in the statement published, sent or given to security holders.
B. Although the financial information necessary to present a fair
and adequate summary of Item 7 of Schedule 13E-4 may vary depending on
the facts and circumstances involved, the following historical and pro
forma summary financial information normally will be sufficient for
purposes of paragraph (d)(1)(iv) of this section:
(1) The following summary financial information for (i) the two most
recent fiscal years and (ii) the latest year-to-date interim period and
corresponding interim period of the preceding year:
Income Statement:
Net sales and operating revenues and other revenues
Income before extraordinary items
Net income
Balance Sheet (at end of period):
Working capital
Total assets
Total assets less deferred research and development charges and
excess of cost of assets acquired over book value
Total indebtedness
Shareholders' equity
Per Share\1\
---------------------------------------------------------------------------
\1\Average number of shares of common stock outstanding during each
period was . . . . . . (as adjusted to given effect to stock dividends
or stock splits).
---------------------------------------------------------------------------
[[Page 129]]
Income per common share before extraordinary items
Extraordinary items
Net income per common share (and common share equivalents, if
applicable)
Net income per share on a fully diluted basis
(2) Ratio of earnings to fixed charges for the same periods required
by B(1) above;
(3) Book value per share as of the most recent fiscal year end and
as of the date of the latest interim balance sheet; and
(4) If material, pro forma data for the summarized financial
information described in B (1), (2) and (3) above, disclosing the effect
of the tender offer, should be provided for the most recent fiscal year
and latest year to date interim period. If the information required by
Item 7 is summarized, appropriate instructions should be included
stating how more complete financial information can be obtained. If the
financial statements are prepared according to a comprehensive body of
accounting principles other than those generally accepted in the United
States, the summary financial information shall be accompanied by a
reconciliation to generally accepted accounting principles of the United
States.
(3) If an issuer or an affiliate publishes, sends or gives the
issuer tender offer to security holders by means of a summary
publication in the manner prescribed in paragraph (e)(1)(iii) of this
section, the summary advertisement shall not contain a transmittal
letter pursuant to which securities which are sought in the issuer
tender offer may be tendered, and shall disclose only the following
information:
(i) The identity of the issuer or affiliate making the issuer tender
offer;
(ii) The amount and class of securities being sought and the price
being offered;
(iii) The information required by paragraphs (d)(1) (i) through
(iii) of this section;
(iv) A statement of the purpose of the issuer tender offer;
(v) Appropriate instructions for security holders regarding how to
obtain promptly, at the expense of the issuer or affiliate making the
issuer tender offer, the statement required by paragraph (d)(1) of this
section; and
(vi) A statement that the information contained in the statement
required by paragraph (d)(1) of this section is incorporated by
reference.
(e) Dissemination of tender offers. (1) The issuer or affiliate
making the issuer tender offer will be deemed to have published, sent or
given the issuer tender offer to security holders if such issuer or
affiliate complies fully with one or more of the following methods of
dissemination. Depending on the facts and circumstances involved, and
for purposes of paragraphs (e)(1)(i) and (iii) of this section, adequate
publication of the issuer tender offer may require publication in a
newspaper with a national circulation or may require only publication in
newspaper with metropolitan or regional circulation or may require
publication in a combination thereof.
(i) Dissemination of cash issuer tender offers by long-form
publication: By making adequate publication in a newspaper or
newspapers, on the date of commencement of the issuer tender offer, of
the statement required by paragraph (d)(1) of this section.
(ii) Dissemination of any issuer tender offer by use of shareholder
and other lists: (A) By mailing or otherwise furnishing promptly the
statement required by paragraph (d)(1) of this section to each security
holder whose name appears on the most recent shareholder list of the
issuer;
(B) By contacting each participant named on the most recent security
position listing of any clearing agency within the possession or access
of the issuer or affiliate making the tender offer, and making inquiry
of each such participant as to the approximate number of beneficial
owners of the securities for which the issuer tender offer is made which
are held by such participant;
(C) By furnishing to each such participant a sufficient number of
copies of the statement required by paragraph (d)(1) of this section for
transmittal to the beneficial owners; and
(D) By agreeing to reimburse promptly each such participant for
reasonable expenses incurred by it in forwarding such statement to the
beneficial owners.
(iii) Dissemination of certain cash issuer tender offers by summary
publication: (A) If the issuer tender offer is not
[[Page 130]]
subject to Rule 13e-3 (Sec. 240.13e-3), by making adequate publication
in a newspaper or newspapers, on the date of commencement of the issuer
tender offer, of a summary advertisement containing the information
required by paragraph (d)(3) of this section; and
(B) By mailing or otherwise furnishing promptly the statement
required by paragraph (d)(1) of this section and a transmittal letter to
any security holder who requests either a copy of such statement or a
transmittal letter.
(2) If a material change occurs in the information published, sent
or given to security holders, the issuer or affiliate shall disseminate
promptly disclosure of such change in a manner reasonably calculated to
inform security holder of such change.
(f) Manner of making tender offer. (1) The issuer tender offer,
unless withdrawn, shall remain open until the expiration of:
(i) At least twenty business days from its commencement; and
(ii) At least ten business days from the date that notice of an
increase or decrease in the percentage of the class of securities being
sought or the consideration offered or the dealer's soliciting fee to be
given is first published, sent or given to security holders.
Provided, however, That, for purposes of this paragraph, the acceptance
for payment by the issuer or affiliate of an additional amount of
securities not to exceed two percent of the class of securities that is
the subject of the tender offer shall not be deemed to be an increase.
For purposes of this paragraph, the percentage of a class of securities
shall be calculated in accordance with section 14(d)(3) of the Act.
(2) The issuer or affiliate making the issuer tender offer shall
permit securities tendered pursuant to the issuer tender offer to be
withdrawn:
(i) At any time during the period such issuer tender offer remains
open; and
(ii) If not yet accepted for payment, after the expiration of forty
business days from the commencement of the issuer tender offer.
(3) If the issuer or affiliate makes a tender offer for less than
all of the outstanding equity securities of a class, and if a greater
number of securities is tendered pursuant thereto than the issuer or
affiliate is bound or willing to take up and pay for, the securities
taken up and paid for shall be taken up and paid for as nearly as may be
pro rata, disregarding fractions, according to the number of securities
tendered by each security holder during the period such offer remains
open; Provided, however, That this provision shall not prohibit the
issuer or affiliate making the issuer tender offer from:
(i) Accepting all securities tendered by persons who own,
beneficially or of record, an aggregate of not more than a specified
number which is less than one hundred shares of such security and who
tender all their securities, before prorating securities tendered by
others; or
(ii) Accepting by lot securities tendered by security holders who
tender all securities held by them and who, when tendering their
securities, elect to have either all or none or at least a minimum
amount or none accepted, if the issuer or affiliate first accepts all
securities tendered by security holders who do not so elect;
(4) In the event the issuer or affiliate making the issuer tender
increases the consideration offered after the issuer tender offer has
commenced, such issuer or affiliate shall pay such increased
consideration to all security holders whose tendered securities are
accepted for payment by such issuer or affiliate.
(5) The issuer or affiliate making the tender offer shall either pay
the consideration offered, or return the tendered securities, promptly
after the termination or withdrawal of the tender offer.
(6) Until the expiration of at least ten business days after the
date of termination of the issuer tender offer, neither the issuer nor
any affiliate shall make any purchases, otherwise than pursuant to the
tender offer, of:
(i) Any security which is the subject of the issuer tender offer, or
any security of the same class and series, or any right to purchase any
such securities; and
(ii) In the case of an issuer tender offer which is an exchange
offer, any security being offered pursuant to such exchange offer, or
any security of the
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same class and series, or any right to purchase any such security.
(7) The time periods for the minimum offering periods pursuant to
this section shall be computed on a concurrent as opposed to a
consecutive basis.
(8) No issuer or affiliate shall make a tender offer unless:
(i) The tender offer is open to all security holders of the class of
securities subject to the tender offer; and
(ii) The consideration paid to any security holder pursuant to the
tender offer is the highest consideration paid to any other security
holder during such tender offer.
(9) Paragraph (f)(8)(i) of this section shall not:
(i) Affect dissemination under paragraph (e) of this section; or
(ii) Prohibit an issuer or affiliate from making a tender offer
excluding all security holders in a state where the issuer or affiliate
is prohibited from making the tender offer by administrative or judicial
action pursuant to a state statute after a good faith effort by the
issuer or affiliate to comply with such statute.
(10) Paragraph (f)(8)(ii) of this section shall not prohibit the
offer of more than one type of consideration in a tender offer, provided
that:
(i) Security holders are afforded equal right to elect among each of
the types of consideration offered; and
(ii) The highest consideration of each type paid to any security
holder is paid to any other security holder receiving that type of
consideration.
(11) If the offer and sale of securities constituting consideration
offered in an issuer tender offer is prohibited by the appropriate
authority of a state after a good faith effort by the issuer or
affiliate to register or qualify the offer and sale of such securities
in such state:
(i) The issuer or affiliate may offer security holders in such state
an alternative form of consideration; and
(ii) Paragraph (f)(10) of this section shall not operate to require
the issuer or affiliate to offer or pay the alternative form of
consideration to security holders in any other state.
(12) Electronic filings. If the issuer or affiliate is an electronic
filer, the minimum offering periods set forth in paragraph (f)(1) of
this section shall be tolled for any period during which it fails to
file in electronic format, absent a hardship exemption (Secs. 232.201
and 232.202 of this chapter), the Schedule 13E-4 Issuer Tender Offer
Statement (Sec. 240.13e-101), the tender offer material specified in
paragraph (a) of Item 9 of that Schedule, and any amendments thereto. If
such documents were filed in paper pursuant to a temporary hardship
exemption (see Sec. 232.201 of this chapter), the minimum offering
periods shall be tolled for any period during which a required
confirming electronic copy of such Schedule and tender offer material is
delinquent.
(g) The requirements of section 13(e) (1) of the Act and Rule 13e-4
and Schedule 13E-4 thereunder shall be deemed satisfied with respect to
any issuer tender offer, including any exchange offer, where the issuer
is incorporated or organized under the laws of Canada or any Canadian
province or territory, is a foreign private issuer, and is not an
investment company registered or required to be registered under the
Investment Company Act of 1940, if less than 40 percent of the class of
securities that is the subject of the tender offer is held by U. S.
holders, and the tender offer is subject to, and the issuer complies
with, the laws, regulations and policies of Canada and/or any of its
provinces or territories governing the conduct of the offer (unless the
issuer has received an exemption(s) from, and the issuer tender offer
does not comply with, requirements that otherwise would be prescribed by
this section), provided that:
(1) Where the consideration for an issuer tender offer subject to
this paragraph consists solely of cash, the entire disclosure document
or documents required to be furnished to holders of the class of
securities to be acquired shall be filed with the Commission on Schedule
13E-4F (Sec. 240.13e-102) and disseminated to shareholders residing in
the United States in accordance with such Canadian laws, regulations and
policies; or
(2) Where the consideration for an issuer tender offer subject to
this paragraph includes securities to be issued pursuant to the offer,
any registration statement and/or prospectus relating
[[Page 132]]
thereto shall be filed with the Commission along with the Schedule 13E-
4F referred to in paragraph (g)(1) of this section, and shall be
disseminated, together with the home jurisdiction document(s)
accompanying such Schedule, to shareholders of the issuer residing in
the United States in accordance with such Canadian laws, regulations and
policies.
Note: Notwithstanding the grant of an exemption from one or more of
the applicable Canadian regulatory provisions imposing requirements that
otherwise would be prescribed by this section, the issuer tender offer
will be eligible to proceed in accordance with the requirements of this
section if the Commission by order determines that the applicable
Canadian regulatory provisions are adequate to protect the interest of
investors.
(h) This section shall not apply to:
(1) Calls or redemptions of any security in accordance with the
terms and conditions of its governing instruments;
(2) Offers to purchase securities evidenced by a scrip certificate,
order form or similar document which represents a fractional interest in
a share of stock or similar security;
(3) Offers to purchase securities pursuant to a statutory procedure
for the purchase of dissenting security holders' securities;
(4) Any tender offer which is subject to section 14(d) of the Act;
(5) Offers to purchase from security holders who own an aggregate of
not more than a specified number of shares that is less than one
hundred: Provided, however, That:
(i) The offer complies with paragraph (f)(8)(i) of this section with
respect to security holders who own a number of shares equal to or less
than the specified number of shares, except that an issuer can elect to
exclude participants in a plan as that term is defined in Sec. 242.100
of this chapter, or to exclude security holders who do not own their
shares as of a specified date determined by the issuer; and
(ii) The offer complies with paragraph (f)(8)(ii) of this section or
the consideration paid pursuant to the offer is determined on the basis
of a uniformly applied formula based on the market price of the subject
security;
(6) An issuer tender offer made solely to effect a rescission offer:
Provided, however, That the offer is registered under the Securities Act
of 1933 (15 U.S.C. 77a et seq.), and the consideration is equal to the
price paid by each security holder, plus legal interest if the issuer
elects to or is required to pay legal interest;
(7) Offers by closed-end management investment companies to
repurchase equity securities pursuant to Sec. 270.23c-3 of this chapter;
or
(8) Any other transaction or transactions, if the Commission, upon
written request or upon its own motion, exempts such transaction or
transactions, either unconditionally, or on specified terms and
conditions, as not constituting a fraudulent, deceptive or manipulative
act or practice comprehended within the purpose of this section.
[44 FR 49410, Aug. 22, 1979, as amended at 47 FR 11467, Mar. 16, 1982;
47 FR 54780, Dec. 6, 1982; 48 FR 34253, July 28, 1983; 51 FR 3034, Jan.
23, 1986; 51 FR 25882, July 17, 1986; 51 FR 32630, Sept. 15, 1986; 56 FR
30069, July 1, 1991; 58 FR 14683, Mar. 18, 1993; 58 FR 19343, Apr. 14,
1993; 61 FR 24656, May 15, 1996; 61 FR 68589, Dec. 30, 1996; 62 FR 544,
Jan. 3, 1997; 62 FR 11323, Mar. 12, 1997]
Sec. 240.13e-100 Schedule 13E-3, Transaction statement pursuant to section 13(e) of the Securities Exchange Act of 1934 and rule 13e-3 (Sec. 240.13e-3)
thereunder.
Securities and Exchange Commission, Washington, DC 20549
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
[Amendment No.--------]
_______________________________________________________________________
(Name of the Issuer)
_______________________________________________________________________
(Name of Person(s) Filing Statement)
_______________________________________________________________________
(Title of Class of Securities)
_______________________________________________________________________
(CUSIP Number of Class of Securities)
_______________________________________________________________________
(Name, address and telephone number of person authorized to receive
notices and communications on behalf of persons(s) filing statement)
This statement is filed in connection with (check the appropriate
box):
a. {time} The filing of solicitation materials or an information
statement subject to Regulation 14A (17 CFR 240.14a-1 to 240.14b-1),
Regulation 14C (17 CFR 240.14c-1 to 240.14c-101) or Rule 13e-3(c)
(Sec. 240.13e-3(c)) under the Securities Exchange Act of 1934.
[[Page 133]]
b. {time} The filing of a registration statement under the
Securities Act of 1933.
c. {time} A tender offer.
d. {time} None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies:
{time}
Instruction: Eight copies of this statement, including all exhibits,
should be filed with the Commission.
Calculation of Filing Fee
------------------------------------------------------------------------
Transaction valuation* Amount of filing fee
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
Amount Previously Paid:_________________________________________________
Form or Registration No.:_______________________________________________
Filing Party:___________________________________________________________
Date Filed:_____________________________________________________________
General Instructions
A. Depending on the type of Rule 13e-3 transaction, this statement
shall be filed with the Commission:
1. Concurrently with the filing of preliminary or definitive
soliciting materials or an information statement pursuant to Regulations
14A or 14C under the Act;
2. Concurrently with the filing of a registration statement under
the Securities Act of 1933;
3. As soon as practicable on the date a tender offer is first
published, sent or given to security holders; or
4. At least 30 days prior to any purchase of any securities of the
class of securities subject to the Rule 13e-3 transaction, if the
transaction does not involve a solicitation, an information statement,
the registration of securities or a tender offer, as described in 1, 2
or 3 of this Instruction.
5. If the Rule 13e-3 transaction involves a series of transactions,
the issuer of affiliate shall file this statement at the time indicated
in 1-4 of this general instruction for the first transaction of such
series and shall promptly amend this schedule with respect to each
subsequent transaction in such series.
B. The item numbers and captions of the items shall be included but
the text of the items is to be omitted. The answers to the items shall
be so prepared as to indicate clearly the coverage of the items without
referring to the text of the items. Answer every item. If an item is
inapplicable or the answer is in the negative, so state.
C. If the statement is filed by a general or limited partnership,
syndicate or other group the information called for by Items 2, 3, 5, 6,
10, and 11 shall be given with respect to: (i) Each partner of such
general partnership; (ii) each partner who is denominated as a general
partner or who functions as a general partner of such limited
partnership; (iii) each member of such syndicate or group; and (iv) each
person controlling such partner of member. If the statement is filed by
a corporation or if a person referred to in (i), (ii), (iii) or (iv) of
this Instruction is a corporation, the information called for by the
above mentioned items shall be given with respect to: (a) Each executive
officer and director of such corporation; (b) each person controlling
such corporation; and (c) each executive officer and director of any
corporation ultimately in control of such corporation.
D. Information contained in exhibits to the statement or in a filing
by the issuer, other than filings the incorporation of which is governed
by Instruction F, may be incorporated by reference in answer or partial
answer to any item or sub-item of the statement, unless it would render
such answer incomplete, unclear or confusing. Matter incorporated by
reference pursuant to this Instruction shall be clearly identified in
the reference by page, paragraph, caption or otherwise. Any express
statement that the specified matter is incorporated by reference
pursuant to this Instruction shall be made at the particular place in
the statement where the information is required. A copy of any
information or a copy of the pertinent pages of a document containing
such information which is incorporated by reference shall be submitted
with this statement as an exhibit and shall be deemed to be filed with
the Commission for all purposes of the Act.
E. The information required by the items of this statement is
intended to be in addition to any disclosure requirements of any other
form or schedule which may be filed with the Commission in connection
with the Rule 13e-3 transaction. To the extent that the disclosure
requirements of this statement are inconsistent with the disclosure
requirements of any such forms or schedules, the requirements of this
statement are controlling.
F. If the Rule 13e-3 transaction involves a transaction subject to
Regulation 14A (Secs. 240.14a-1 to 240.14b-1) or 14C (Secs. 240.14c-1 to
240.14c-101) of the Act, the registration of securities pursuant to the
Securities Act of 1933 and the General Rules and Regulations promulgated
thereunder, or a tender offer subject to Regulation 14D (Secs. 240.14d-1
to 240.14d-101) or Rule 13e-4 (Sec. 240.13e-4), the information
contained in the proxy or information statement, the registration
statement, the Schedule 14D-1 (Sec. 240.14d-100), or the
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Schedule 13E-4, respectively, which is filed with the Commission shall
be incorporated by reference in answer to the items of this statement or
amendments thereto; this statement shall include an express statement to
that effect and a cross reference sheet showing the location in the
proxy or information statement, the registration statement, the Schedule
14D-1 or the Schedule 13E-4 of the information required to be included
in response to the items of this statement. If any such item is
inapplicable or the answer thereto is in the negative and is omitted
from the proxy or the information statement, the registration statement,
the Schedule 14D-1, or the Schedule 13E-4, a statement to that effect
shall be made in the cross reference sheet.
G. If the rule 13e-3 transaction involves a proxy or an information
statement subject to Regulation 14A (Secs. 240.14a-1 to 240.14b-1) or
Regulation 14C (Secs. 240.14c-1 to 14c-101), this Schedule 13E-3 shall
be available immediately upon filing such material with the Commission
in preliminary form.
H. Amendments disclosing a material change in the information set
forth in this statement may omit any information previously disclosed in
this statement.
Item 1. Issuer and Class of Security Subject to the Transaction. (a)
State the name of the issuer of the class of equity security which is
the subject of the Rule 13e-3 transaction and the address of its
principal executive offices.
(b) State the exact title, the amount of securities outstanding of
the class of security which is the subject of the Rule 13e-3 transaction
as of the most recent practicable date and the approximate number of
holders of record of such class as of the most recent practicable date.
(c) Identify the principal market in which such securities are being
traded and, if the principal market is an exchange, state the high and
low sales prices for such securities as reported in the consolidated
transaction reporting system or, if not so reported, on such principal
exchange for each quarterly period during the past two years. If the
principal market is not an exchange, state the range of high and low bid
quotations for each quarterly period during the past two years, the
source of such quotations and, if there is currently no established
trading market for such securities (excluding limited or sporadic
quotations), furnish a statement to that effect.
(d) State the frequency and amount of any dividends paid during the
past two years with respect to such class of securities and briefly
describe any restriction on the issuer's present or future ability to
pay such dividends.
Instruction: If the person filing this statement is an affiliate of
the issuer, the information required by Item 1(d) should be furnished to
the extent known by such affiliate after making reasonable inquiry.
(e) If the issuer and/or affiliate filing this statement has made an
underwritten public offering of such securities for cash during the past
three years which was registered under the Securities Act of 1933 or
exempt from registration thereunder pursuant to Regulation A, state the
date of such offering, the amount of securities offered, the offering
price per share (which should be appropriately adjusted for stock
splits, stock dividends, etc.) and the aggregate proceeds received by
such issuer and/or such affiliate.
(f) With respect to any purchases of such securities made by the
issuer or affiliate since the commencement of the issuer's second full
fiscal year preceding the date of this schedule, state the amount of
such securities purchased, the range of prices paid for such securities
and the average purchase price for each quarterly period of the issuer
during such period.
Instruction: The information required by Item 1(f) need not be given
with respect to purchases of such securities by a person prior to the
time such person became an affiliate.
Item 2. Identity and Background. If the person filing this statement
is the issuer of the class of equity securities which is the subject of
the Rule 13e-3 transaction, make a statement to that effect. If that
statement is being filed by an affiliate of the issuer which is other
than a natural person or if any person enumerated in Instruction C to
this statement is a corporation, general partnership, limited
partnership, syndicate or other group of persons, state its name, the
state or other place of its organization, its principal business, the
address of its principal executive offices and provide the information
required by (e) and (f) of this Item. If this statement is being filed
by an affiliate of the issuer who is a natural person or if any person
enumerated in Instruction C of this statement is a natural person,
provide the information required by (a) through (g) of this Item with
respect to such person(s).
(a) Name;
(b) Residence or business address;
(c) Present principal occupation or employment and the name,
principal business and address of any corporation or other organization
in which such employment or occupation is conducted;
(d) Material occupations, positions, offices or employments during
the last 5 years, giving the starting and ending dates of each and the
name, principal business and address of any business corporation or
other organization in which such occupation, position, office or
employment was carried on;
(e) Whether or not, during the last 5 years, such person has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) and, if so, give the
[[Page 135]]
dates, nature of conviction, name and location of court, and penalty
imposed or other disposition of the case;
(f) Whether or not, during the last 5 years, such person was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining further violations of, or
prohibiting activities subject to, federal or state securities laws or
finding any violation of such laws; and, if so, identify and describe
such proceeding and summarize the terms of such judgment, decree or
final order;
Instruction: While negative answers to Items 2(e) and 2(f) are
required in this schedule, they need not be furnished to security
holders.
(g) Citizenship(s).
Item 3. Past Contacts, Transactions or Negotiations. (a) If this
schedule is filed by an affiliate of the issuer of the class of
securities which is the subject of the Rule 13e-3 transaction:
(1) Briefly state the nature and approximate amount (in dollars) of
any transaction, other than those described in Item 3(b) of this
schedule, which has occurred since the commencement of the issuer's
second full fiscal year preceding the date of this schedule between such
affiliate (including subsidiaries of the affiliate and those persons
enumerated in Instruction C of this schedule) and the issuer: Provided,
however, That no disclosure need be made with respect to any transaction
if the aggregate amount involved in such transaction was less than one
percent of the issuer's consolidated revenues (which may be based upon
information contained in the most recently available filing with the
Commission by the issuer unless such affiliate has reason to believe
otherwise) (i) for the fiscal year in which such transaction occurred or
(ii) for the portion of the current fiscal year which has occurred, if
the transaction occurred in such year; and
(2) Describe any contacts, negotiations or transactions which have
been entered into or which have occurred since the commencement of the
issuer's second full fiscal year preceeding the date of this schedule
between such affiliate (including subsidiaries of the affiliate and
those persons enumerated in Instruction C of this schedule) and the
issuer concerning: a merger, consolidation or acquisition; a tender
offer for or other acquisition of securities of any class of the issuer;
an election of directors of the issuer; or a sale or other transfer of a
material amount of assets of the issuer or any of its subsidiaries.
(b) Describe any contacts or negotiations concerning the matters
referred to in Item 3(a)(2) which have been entered into or which have
occurred since the commencement of the issuer's second full fiscal year
precding the date of this schedule (i) between any affiliates of the
issuer of the class of securities which is the subject of the Rule 13e-3
transaction; or (ii) between such issuer or any of its affiliates and
any person who is not affiliated with the issuer and who would have a
direct interest in such matters. Identify the person who initiated such
contacts or negotiations. 3
Item 4. Terms of the Transaction. (a) State the material terms of
the Rule 13e-3 transaction.
(b) Describe any term or arrangement concerning the Rule 13e-3
transaction relating to any security holder of the issuer which is not
identical to that relating to other security holders of the same class
of securities of the issuer.
Item 5. Plans or Proposals of the Issuer or Affiliate. Describe any
plan or proposal of the issuer or affiliate regarding activities or
transactions which are to occur after the Rule 13e-3 transaction which
relate to or would result in: (a) An extraordinary corporate
transaction, such as a merger, reorganization or liquidation, involving
the issuer or any of its subsidiaries;
(b) A sale or transfer of a material amount of assets of the issuer
or any of its subsidiaries;
(c) Any change in the present board of directors or management of
the issuer including, but not limited to, any plan or proposal to change
the number or term of directors, to fill any existing vacancy on the
board or to change any material term of the employment contract of any
executive officer;
(d) Any material change in the present dividend rate or policy or
indebtedness or capitalization of the issuer;
(e) Any other material change in the issuer's corporate structure or
business;
(f) A class of equity securities of the issuer becoming eligible for
termination of registration pursuant to section 12(g)(4) of the Act; or
(g) The suspension of the issuer's obligation to file reports
pursuant to section 15(d) of the Act.
Item 6. Source and Amounts of Funds or Other Consideration. (a)
State the source and total amount of funds or other consideration to be
used in the Rule 13e-3 transaction.
(b) Furnish a reasonably itemized statement of all expenses incurred
or estimated to be incurred in connection with the Rule 13e-3
transaction including, but not limited to, filing fees, legal,
accounting and appraisal fees, solicitation expenses and printing costs
and state whether or not the issuer has paid or will be responsible for
paying any or all of such expenses.
(c) If all or any part of such funds or other consideration is, or
is expected to be, directly or indirectly borrowed for the purpose of
the Rule 13e-3 transaction,
[[Page 136]]
(1) Provide a summary of each such loan agreement containing the
indentity of the parties, the term, the collateral, the stated and
effective interest rates, and other material terms or conditions; and
(2) Briefly describe any plans or arrangements to finance or repay
such borrowings, or, if no such plans or arrangements have been made,
make a statement to that effect.
(d) If the source of all or any part of the funds to be used in the
Rule 13e-3 transaction is a loan made in the ordinary course of business
by a bank as defined by section 3(a)(6) of the Act and section 13(d) or
14(d) is applicable to such transaction, the name of such bank shall not
be made available to the public if the person filing the statement so
requests in writing and files such request, naming such bank, with the
Secretary of the Commission.
Item 7. Purpose(s), Alternatives, Reasons and Effects. (a) State the
purpose(s) for the Rule 13e-3 transaction.
(b) If the issuer or affiliate considered alternative means to
accomplish such purpose(s), briefly describe such alternative(s) and
state the reason(s) for their rejection.
(c) State the reasons for the structure of the Rule 13e-3
transaction and for undertaking such transaction at this time.
(d) Describe the effects of the Rule 13e-3 transaction on the
issuer, its affiliates and unaffiliated security holders, including the
federal tax consequences.
Instructions: (1) Conclusory statements will not be considered
sufficient disclosure in response to Item 7.
(2) The description required by Item 7(d) should include a
reasonably detailed discussion of the benefits and detriments of the
Rule 13e-3 transaction to the issuer, its affiliates and unaffiliated
security holders. The benefits and detriments of the Rule 13e-3
transaction should be quantified to the extent practicable.
(3) If this statement is filed by an affiliate of the issuer, the
description required by Item 7(d) should include but not be limited to,
the effect of the Rule 13e-3 transaction on the affiliate's interest in
the net book value and net earnings of the issuer in terms of both
dollar amounts and percentages.
Item 8. Fairness of the Transaction. (a) State whether the issuer or
affiliate filing this schedule reasonably believes that the Rule 13e-3
transaction is fair or unfair to unaffiliated security holders. If any
director dissented to or abstained from voting on the Rule 13e-3
transaction, identify each such director, and indicate, if known, after
making reasonable inquiry, the reasons for each dissent or abstention.
Instruction. A statement that the issuer or affiliate has no
reasonable belief as to the fairness of the Rule 13e-3 transaction to
unaffiliated security holders will not be considered sufficient
disclosure in response to Item 8(a).
(b) Discuss in reasonable detail the material factors upon which the
belief stated in Item 8(a) is based and, to the extent practicable, the
weight assigned to each such factor. Such discussion should include an
analysis of the extent, if any, to which such belief is based on the
factors set forth in instruction (1) to paragraph (b) of this Item,
paragraphs (c), (d), and (e) of this Item, and Item 9.
Instructions. (1) The factors which are important in determining the
fairness of a transaction to unaffiliated security holders and the
weight, if any, which should be given to them in a particular context
will vary. Normally such factors will include, among others, those
referred to in paragraphs (c), (d) and (e) of this Item and whether the
consideration offered to unaffiliated security holders constitutes fair
value in relation to:
(i) Current market prices,
(ii) Historical market prices,
(iii) Net book value,
(iv) Going concern value,
(v) Liquidation value,
(vi) The purchase price paid in previous purchases disclosed in Item
1(f) of Schedule 13e-3,
(vii) Any report, opinion, or appraisal described in Item 9 and
(viii) Firm offers of which the issuer or affiliate is aware made by
any unaffiliated person, other than the person filing this statement,
during the preceding eighteen months for:
(A) The merger or consolidation of the issuer into or with such
person or of such person into or with the issuer,
(B) The sale or other transfer of all or any substantial part of the
assets of the issuer or
(C) Securities of the issuer which would enable the holder thereof
to exercise control of the issuer.
(2) Conclusory statements, such as ``The Rule 13e-3 transaction is
fair to unaffiliated security holders in relation to net book value,
going concern value and future prospects of the issuer'' will not be
considered sufficient disclosure in response to Item 8(b).
(c) State whether the transaction is structured so that approval of
at least a majority of unaffiliated security holders is required.
(d) State whether a majority of directors who are not employees of
the issuer has retained an unaffiliated representative to act solely on
behalf of unaffiliated security holders for the purposes of negotiating
the terms of the Rule 13e-3 transaction and/or preparing a report
concerning the fairness of such transaction.
(e) State whether the Rule 13e-3 transaction was approved by a
majority of the directors of the issuer who are not employees of the
issuer.
[[Page 137]]
(f) If any offer of the type described in instruction (vii) to Item
8(b) has been received, describe such offer and state the reason(s) for
its rejection.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations. (a)
State whether or not the issuer or affiliate has received any report,
opinion (other than an opinion of counsel) or appraisal from an outside
party which is materially related to the Rule 13e-3 transaction
including, but not limited to, any such report, opinion or appraisal
relating to the consideration or the fairness of the consideration to be
offered to security holders of the class of securities which is the
subject of the Rule 13e-3 transaction or the fairness of such
transaction to the issuer or affiliate or to security holders who are
not affiliates.
(b) With respect to any report, opinion or appraisal described in
Item 9(a) or with respect to any negotiation or report described in Item
8(d) concerning the terms of the Rule 13e-3 transaction:
(1) Identify such outside party and/or unaffiliated representative;
(2) Briefly describe the qualifications of such outside party and/or
unaffiliated representative;
(3) Describe the method of selection of such outside party and/or
unaffiliated representative;
(4) Describe any material relationship between (i) the outside
party, its affiliates, and/or unaffiliated representative, and (ii) the
issuer or its affiliates, which existed during the past two years or is
mutually understood to be contemplated and any compensation received or
to be received as a result of such relationship;
(5) If such report, opinion or appraisal relates to the fairness of
the consideration, state whether the issuer or affiliate determined the
amount of consideration to be paid or whether the outside party
recommended the amount of consideration to be paid.
(6) Furnish a summary concerning such negotiation report, opinion or
appraisal which shall include, but not be limited to, the procedures
followed; the findings and recommendations; the bases for and methods of
arriving at such findings and recommendations; instructions received
from the issuer or affiliate; and any limitation imposed by the issuer
or affiliate on the scope of the investigation.
Instruction: The information called for by subitem 9(b)(1), (2) and
(3) should be given with respect to the firm which provides the report,
opinion or appraisal rather than the employees of such firm who prepared
it.
(c) Furnish a statement to the effect that such report, opinion or
appraisal shall be made available for inspection and copying at the
principal executive offices of the issuer or affiliate during its
regular business hours by any interested equity security holder of the
issuer or his representative who has been so designated in writing. This
statement may also provide that a copy of such report, opinion or
appraisal will be transmitted by the issuer or affiliate to any
interested equity security holder of the issuer or his representative
who has been so designated in writing upon written request and at the
expense of the requesting security holder.
Item 10. Interest in Securities of the Issuer. (a) With respect to
the class of equity security to which the Rule 13e-3 transaction
relates, state the aggregate amount and percentage of securities
beneficially owned (identifying those securities for which there is a
right to acquire) as of the most recent practicable date by the person
filing this statement (unless such person is the issuer), by any
pension, profit sharing or similar plan of the issuer or affiliate, by
each person enumerated in Instruction C of this Schedule or by any
associate or majority owned subsidiary of the issuer or affiliate giving
the name and address of any such associate or subsidiary.
Instructions: 1. For the purpose of this Item, beneficial ownership
shall be determined in accordance with Rule 13e-3 (17 CFR 240.13d-3)
under the Exchange Act.
2. The information required by this paragraph should be given with
respect to officers, directors and associates of the issuer to the
extent known after making reasonable inquiry.
(b) Describe any transaction in the class of equity securities of
the issuer which is the subject of a Rule 13e-3 transaction that was
effected during the past 60 days by the issuer of such class or by the
persons named in response to paragraph (a) of this Item.
Instructions: 1. The description of a transaction required by Item
10(b) shall include, but not necessarily be limited to: (i) the identity
of the person covered by Item 10(b) who effected the transaction; (ii)
the date of the transaction; (iii) the amount of securities involved;
(iv) the price per security; and (v) where and how the transaction was
effected.
2. If the information required by Item 10(b) is available to the
person filing this statement at the time this statement is initially
filed with the Commission, the information shall be included in the
initial filing. However, if the information is not available to such
person at the time of such initial filing, it shall be filed with the
Commission promptly but in no event later than seven days (or 2 business
days with respect to a tender subject to Regulation 14D (Secs. 240.14d-1
to 240.14d-101) or 10 business days with respect to a tender offer
subject to Rule 13e-4 (Sec. 240.13e-4)) after the date of such filing
and, if material, disclosed to security holders of the issuer pursuant
to Rule 13e-3(e) (Sec. 240.13e-3(e)), and disseminated to them in a
manner reasonably calculated to inform security holders.
[[Page 138]]
Item 11. Contracts, Arrangements or Understandings with Respect to
the Issuer's Securities. Describe any contract, arrangement,
understanding or relationship (whether or not legally enforceable) in
connection with the Rule 13e-3 transaction between the person filing
this statement (including any person enumerated in Instruction C of this
schedule) and any person with respect to any securities of the issuer
(including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any such of
such securities, joint ventures, loan or option arrangements, puts or
calls, quaranties of loans, guaranties against loss or the giving or
withholding proxies, consents or authorizations), naming the persons
with whom such contracts, arrangements, understandings or relationships
have been entered into and giving the material provisions thereof.
Include such information for any of such securities that are pledged or
otherwise subject to a contingency, the occurrence of which would give
another person the power to direct the voting or disposition of such
securities, except that disclosure of standard default and similar
provisions contained in loan agreements need not be included.
Item 12. Present Intention and Recommendation of Certain Persons
with Regard to the Transaction. (a) To the extent known by the person
filing this statement after making reasonable inquiry, furnish a
statement of present intention with regard to the Rule 13e-3 transaction
indicating whether or not any executive officer, director or affiliate
of the issuer or any person enumerated in Instruction C of this
statement will tender or sell securities of the issuer owned or held by
such person and/or how such securities, and securities with respect to
which such person holds proxies, will be voted and the reasons therefor.
Instruction: If the information required by Item 12(a) is available
to the person filing this statement at the time this statement is
initially filed with the Commission, the information shall be included
in the initial filing. However, if the information is not available to
such person at the time of such initial filing, it shall be filed with
the Commission promptly but in no event later than seven days (or two
business days with respect to a tender offer subject to Regulation 14D
(Sec. 240.14d-1 to 240.14d-101) or ten business days with respect to a
tender offer subject to Rule 13e-4 (Secs. 240.13e-4)) after the date of
such filing and, if material, disclosed to security holders of the
issuer pursuant to Rule 13e-3(e) (Sec. 240.13e-3(e)), and disseminated
to them in a manner reasonably calculated to inform security holders.
(b) To the extent known by the person filing this statement after
making reasonable inquiry, state whether any person named in paragraph
(a) of this item has made a recommendation in support of or opposed to
the Rule 13e-3 transaction and the reasons for such recommendation. If
no recommendation has been made by such persons, furnish a statement to
that effect.
Item 13. Other Provisions of the Transaction. (a) State whether or
not appraisal rights are provided under applicable state law or under
the issuer's articles of incorporation or will be voluntarily accorded
by the issuer or affiliate to security holders in connection with the
Rule 13e-3 transaction and, if so, summarize such appraisal rights. If
appraisal rights will not be available under the applicable state law,
to security holders who object to the transaction, briefly outline the
rights which may be available to such security holders under such law.
(b) If any provision has been made by the issuer or affiliate in
connection with the Rule 13e-3 transaction to allow unaffiliated
security holders to obtain access to the corporate files of the issuer
or affiliate or to obtain counsel or appraisal services at the expense
of the issuer or affiliate, describe such provision.
(c) If the Rule 13e-3 transaction involves the exchange of debt
securities of the issuer or affiliate for the equity securities held by
security holders of the issuer who are not affiliates, describe whether
or not the issuer or affiliate will take steps to provide or assure that
such securities are or will be eligible for trading on any national
securities exchange or an automated inter-dealer quotation system.
Item 14. Financial Information. (a) Furnish the following financial
data concerning the issuer: (1) Audited financial statements for the two
fiscal years required to be filed with the issuer's most recent annual
report under sections 13 and 15(d) of the Act;
(2) Unaudited balance sheets and comparative year-to-date income
statements and statements of cash flows and related earnings per share
amounts required to be included in the issuer's most recent quarterly
report filed pursuant to the Act;
(3) Ratio of earnings to fixed charges for the two most recent
fiscal years and the interim periods provided under Item 14(a)(2); and
(4) Book value per share as of the most recent fiscal year end and
as of the date of the latest interim balance sheet provided under Item
14(a)(2).
(b) If material, provide pro forma data disclosing the effect of the
Rule 13e-3 transaction on: (1) The issuer's balance sheet as of the most
recent fiscal year end and the latest interim balance sheet provided
under Item 14(a)(2);
(2) The issuer's statement of income, earnings per share amounts,
and ratio of earnings to fixed charges for the most recent fiscal year
and the latest interim period provided under Item 14(a)(2); and
[[Page 139]]
(3) The issuer's book value per share as of the most recent fiscal
year end and as of the latest interim balance sheet date provided under
Item 14(a)(2).
Item 15. Persons and Assets Employed, Retained or Utilized. (a)
Identify and describe the purpose for which any officer, employee, class
of employees or corporate asset of the issuer (excluding corporate
assets which are proposed to be used as consideration for purchases of
securities which are disclosed in Item 6 of this schedule) has been or
is proposed to be employed, availed of or utilized by the issuer or
affiliate in connection with the Rule 13e-3 transaction.
(b) Identify all persons and classes of persons (excluding officers,
employees and class of employees who have been identified in Item 15(a)
of this Schedule) employed, retained or to be compensated by the person
filing this statement, or by any person on behalf of the person filing
this statement, to make solicitations or recommendations in connection
with the Rule 13e-3 transaction and provide a summary of the material
terms of such employment, retainer or arrangement for compensation.
Item 16. Additional Information. Furnish such additional material
information, if any, as may be necessary to make the required
statements, in the light of the circumstances under which they are made,
not materially misleading.
Item 17. Material to be Filed as Exhibits. Furnish a copy of:
(a) Any loan agreement referred to in Item 6 of this Schedule;
Instruction: The identity of any bank which is a party to a loan
agreement need not be disclosed if the person filing the statement has
requested that the identity of such bank not be made available to the
public pursuant to Item 6 of this schedule.
(b) Any report, opinion or appraisal referred to in Items 8(d) or 9
of this schedule;
(c) Any document setting forth the terms of any contract,
arrangements or understandings or relationships referred to in Item 11
of this schedule; and
(d) Any disclosure materials furnished to security holders in
connection with the transaction pursuant to Rule 13e-3(d) (Sec. 240.13e-
3(d)).
(e) A detailed statement describing the appraisal rights and the
procedures for exercising such appraisal rights which are referred to in
Item 13(a) of this schedule.
(f) If any oral solicitation of or recommendations to security
holders referred to in Item 15(b) are to be made by or on behalf of the
person filing this statement, any written instruction, form or other
material which is furnished to the persons making the actual oral
solicitation or recommendation for their use, directly or indirectly, in
connection with the Rule 13e-3 transaction.
Signature
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
(Date)--------------------------------
(Signature)----------------------
(Name and Title)------------
The original statement shall be signed by each person on whose behalf
the statement is filed or his authorized representative. If the
statement is signed on behalf of a person by his authorized
representative (other than an executive officer or general partner of
the person filing this statement), evidence of the representative's
authority to sign on behalf of such person shall be filed with the
statement. The name and any title of each person who signs the statement
shall be typed or printed beneath his signature.
(Sec. 17(a), 19(a), 48 Stat. 84, 85; secs. 3(b), 10(b), 13(e), 14(a),
14(d), 14(e), 23(a), 48 Stat. 882, 894, 895, 891, 901; sec. 209, 48
Stat. 908; sec. 203(a), 49 Stat. 704; sec. 8, 49 Stat. 1379; sec. 10, 68
Stat. 686; sec. 5, 78 Stat. 569, 570; secs. 2, 3, 82 Stat. 454, 455;
secs. 1, 2, 3-5, 84 Stat. 1497; secs. 3, 18, 89 Stat. 97, 155; 15 U.S.C.
77g(a), 77s(a), 78c(b), 78j(b), 78m(e), 78n(a), 78n(c), 78n(e), 78w(a))
[44 FR 46743, Aug. 8, 1979, as amended at 51 FR 2477, Jan. 17, 1986; 51
FR 42059, Nov. 20, 1986; 57 FR 45294, Oct. 1, 1992; 57 FR 48290, Oct.
22, 1992]
Sec. 240.13e-101 Schedule 13E-4. Tender offer statement pursuant to section 13(e)(1) of the Securities Exchange Act of 1934 and Sec. 240.13e-4 thereunder.
Securities and Exchange Commission
Washington, DC
Issuer Tender Offer Statement
Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934
(Amendment No. ------------)
Name of Issuer__________________________________________________________
Name of person(s) filing statement______________________________________
Title of class of securities____________________________________________
CUSIP number of class of securities_____________________________________
Name, address and telephone number of person authorized to receive
notices and communications on behalf of the person(s) filing statement__
Date tender offer first published, sent or given to security holders____
Instruction. Ten copies of this statement, including all exhibits,
shall be filed with the Commission.
Calculation of Filing Fee
------------------------------------------------------------------------
Transaction valuation* Amount of filing fee
------------------------------------------------------------------------
[[Page 140]]
*Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Rule
0.11(a)(2) and identify the filing with which the offsetting
fee was previously paid. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
Amount Previously Paid:_________________________________________________
Form or Registration No.:_______________________________________________
Filing Party:___________________________________________________________
Date Filed:_____________________________________________________________
General Instructions
A. The item numbers and captions of the items shall be included but
the text of the items is to be omitted. The answers to the items shall
be so prepared as to indicate clearly the coverage of the items without
referring to the text of the items. Answer every item. If an item is
inapplicable or the answer is in the negative, so state.
B. Information contained in exhibits to the statement or in a filing
by the issuer may be incorporated by reference in answer or partial
answer to any item or subitem of the statement unless it would render
such answer incomplete, unclear or confusing. Matter incorporated by
reference shall be clearly identified in the reference by page,
paragraph, caption or otherwise. An express statement that the specified
matter is incorporated by reference shall be made at the particular
place in the statement where the information is required. A copy of any
information or a copy of the pertinent pages of a document containing
such information which is incorporated by reference shall be submitted
with this statement as an exhibit and shall be deemed to be filed with
the Commission for all purposes of the Act.
C. If the statement is filed by general or limited partnership,
syndicate or other group, the information called for by Items 2-5,
inclusive, shall be given with respect to (i) each partner of such
general partnership; (ii) each partner who is denominated as a general
partner or who functions as a general partner of such limited
partnership; (iii) each member of such syndicate or group; and (iv) each
person controlling such partner or member. If the statement is filed by
a corporation, or if a person referred to in (i), (ii), (iii) or (iv) of
this Instruction is a corporation, the information called for by Items
2-5, inclusive, shall be given with respect to (a) each executive
officer and director of such corporation; (b) each person controlling
such corporation; and (c) each executive officer and director of any
corporation ultimately in control of such corporation.
D. Upon termination of the tender offer, the person filing this
statement shall promptly, but in no event later than ten business days
after termination of the tender offer, file a final amendment to
Schedule 13E-4 (Sec. 240.13E-100) disclosing all material changes in the
information set forth in such statement and stating that the tender
offer has terminated, the date of such termination and the results of
such tender offer.
E. Amendments disclosing a material change in the information set
forth in this statement may omit information previously disclosed in
this statement.
Item 1. Security and Issuer. (a) State the name of the issuer and
the address of its principal executive office;
(b) State the exact title and the amount of securities outstanding
of the class of security being sought as of the most recent practicable
date; the exact amount of such securities being sought and the
consideration being offered therefor; whether any such securities are to
be purchased from any officer, director or affiliate of the issuer, and
the details of each such transaction; and
(c) Identify the principal market in which such securities are being
traded and, if the principal market is an exchange, state the high and
low sales prices for such securities as reported in the consolidated
transaction reporting system or, if not so reported, on such principal
exchange for each quarterly period during the past two years. If the
principal market is not an exchange, state the range of high and low bid
quotations for each quarterly period during the past two years, the
source of such quotations, and if there is currently no established
trading market for such securities (excluding limited or sporadic)
furnish a statement to that effect.
(d) State the name and address of the person filing this statement,
if other than the issuer, and the nature of the affiliation between such
person and the issuer.
Item 2. Source and Amount of Funds or Other Consideration. (a) State
the source and total amount of funds or other consideration for the
purchase of the maximum amount of securities for which the tender offer
is being made.
(b) If all or any part of such funds or other consideration is, or
is expected to be borrowed, directly or indirectly, for the purpose of
the tender offer:
(1) Provide a summary of each such loan agreement or arrangement
containing the identity of the parties, the term, the collateral, the
stated and effective interest rates, and other material terms or
conditions relative to such loan agreement; and
(2) Briefly describe any plans or arrangements to finance or repay
such borrowings, or if no such plans or arrangements have been made,
make a statement to that effect.
[[Page 141]]
Item 3. Purpose of the Tender Offer and Plans or Proposals of the
Issuer or Affiliate. State the purpose or purposes of the tender offer,
and whether the securities are to be retired, held in the treasury of
the issuer, or otherwise disposed of, indicating such disposition, and
any plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of the
issuer, or the disposition of securities of the issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the issuer
or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the issuer including, but not limited to, any plans or proposals to
change the number or the term of directors, to fill any existing vacancy
on the board or to change any material term of the employment contract
of any executive officer;
(e) Any material change in the present dividend rate or policy, or
indebtedness or capitalization of the issuer;
(f) Any other material change in the issuer's corporate structure or
business, including if the issuer is a registered closed-end investment
company, any plans or proposals to make any changes in its investment
policy for which a vote would be required by section 13 of the
Investment Company Act of 1940;
(g) Changes in the issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition
of control of the issuer by any person;
(h) Causing a class of equity security of the issuer to be delisted
from a national securities exchange or to cease to be authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association;
(i) A class of equity security of the issuer becoming eligible for
termination of registration pursuant to section 12(g)(4) of the Act; or
(j) The suspension of the issuer's obligation to file reports
pursuant to section 15(d) of the Act.
Item 4. Interest in Securities of the Issuer. Describe any
transaction in the class of subject security that was effected during
the past 40 business days by the issuer or the person filing this
statement, by any person referred to in Instruction C of this schedule
or by any associate or subsidiary of any such person, including any
executive officer or director of any such subsidiary.
Instructions. 1. The description of a transaction required by this
Item shall include, but not necessarily be limited to: (1) The identity
of the person covered by this Item who effected the transaction; (2) the
date of the transaction; (3) the amount of securities involved; (4) the
price per security; and (5) where and how the transaction was effected.
2. If the information required by this Item is available to the
person filing this statement at the time this statement is initially
filed with the Commission, the information should be included in the
initial filing. However, if the information is not available to such
person at the time of such initial filing, it shall be filed with the
Commission promptly but in no event later than ten business days after
such date of the filing and, if material, should be disclosed to
security holders of the issuer in a manner reasonably calculated to
inform security holders.
Item 5. Contracts, Arrangements, Understandings or Relationships
With Respect to the Issuer's Securities. Describe any contract,
arrangement, understanding or relationship relating, directly or
indirectly, to the tender offer (whether or not legally enforceable)
between the person filing this statement (including any person
enumerated in Instruction C of this schedule) and any person with
respect to any securities of the issuer (including, but not limited to,
any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any such securities, joint ventures, loan or
option arrangements, puts or calls, guaranties of loans, guaranties
against loss, or the giving or withholding of proxies, consents or
authorizations) naming the persons with whom such contracts,
arrangements, understandings or relationships have been entered into and
giving the material provisions thereof. Include such information for any
of such securities that are pledged or otherwise subject to a
contingency, the occurrence of which would give another person the power
to direct the voting or disposition of such securities, except that
disclosure of standard default and similar provisions contained in loan
agreements need not be included.
Item 6. Persons Retained, Employed or to be Compensated. Identify
all persons and classes of persons employed, retained or to be
compensated by the person filing this statement, or by any person on
behalf of the person filing this statement, to make solicitations or
recommendations in connection with the tender offer, and provide a
summary of the material terms of such employment, retainer or
arrangement for compensation.
Item 7. Financial Information. (a) If material, furnish the
following financial data of the issuer:
(1) Audited financial statements for the two fiscal years required
to be filed with the issuer's most recent annual report under Sections
13 and 15(d) of the Act;
(2) Unaudited balance sheets and comparative year-to-date income
statements and
[[Page 142]]
statements of cash flows and related earnings per share amounts required
to be included in the issuer's most recent quarterly report filed
pursuant to the Act;
(3) Ratio of earnings to fixed charges for the two most recent
fiscal years and the interim periods provided under Item 7(a)(2); and
(4) Book value per share as of the most recent fiscal year end and
as of the date of the latest interim balance sheet provided under Item
7(a)(2).
(b) If material, provide pro forma data disclosing the effect of the
tender offer on:
(1) The issuer's balance sheet as of the most recent fiscal year end
and the latest interim balance sheet provided under Item 7(a)(2);
(2) The issuer's statement of income, earnings per share amounts,
and ratio of earnings to fixed charges for the most recent fiscal year
and the latest interim period provided under Item 7(a)(2); and
(3) The issuer's book value per share as of the most recent fiscal
year end and as of the latest interim balance sheet date provided under
Item 7(a)(2).
Item 8. Additional information. If material to a decision by a
security holder whether to sell, tender or hold securities being sought
in the tender offer, furnish information including, but not limited to,
the following:
(a) Any present or proposed contracts, arrangements, understandings
or relationships between the issuer and its executive officers,
directors or affiliates (other than any contract, arrangement or
understanding required to be disclosed pursuant to Item 5 of this
schedule);
(b) Any applicable regulatory requirements which must be complied
with or approvals which must be obtained in connection with the tender
offer;
(c) The applicability of the margin requirements of section 7 of the
Act and the regulations promulgated thereunder;
(d) Any material pending legal proceedings relating to the tender
offer, including the name and location of the court or agency in which
the proceedings are pending, the date instituted, the principal parties
thereto and a brief summary of the proceedings and the relief sought;
and
Instruction. In connection with sub-item (d), a copy of any document
relating to a major development (such as pleadings, an answer,
complaint, temporary restraining order, injunction, opinion, judgment or
order) in a material pending legal proceeding should be furnished
promptly to the Commission on a supplemental basis.
(e) Such additional material information, if any, as may be
necessary to make the required statements, in light of the circumstances
under which they are made, not materially misleading.
Item 9. Material to be filed as exhibits. Furnish a copy of:
(a) Tender offer material which is published, sent or given to
security holders by or on behalf of the person filing this statement in
connection with the tender offer;
(b) Any loan agreement referred to in Item 2 of this schedule;
(c) Any document setting forth the terms of any contract,
arrangements, understandings or relationships referred to in Items 5 or
8(a) of this Schedule;
(d) Any written opinion prepared by legal counsel at the request of
the person filing this statement and communicated to such person
pertaining to the tax consequences of the tender offer;
(e) In the exchange offer where securities of the issuer have been
or are to be registered under the Securities Act of 1933, any prospectus
filed with the Commission in connection with the registration statement;
and
(f) If any oral solicitation of security holders is to be made by or
on behalf of the person filing this statement, any written instruction,
form or other material which is furnished to the persons making the
actual oral solicitation for their use, directly or indirectly, in
connection with the tender offer.
Signature
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
Date____________________________________________________________________
Signature_______________________________________________________________
Name and title__________________________________________________________
The original statement shall be signed by each person on whose
behalf the statement is filed or his authorized representative. If the
statement is signed on behalf of a person by his authorized
representative (other than an executive officer or general partner of
the person filing this statement) evidence of the representative's
authority to sign on behalf of such person shall be filed with the
statement. The name and any title of each person who signs the statement
shall be typed or printed beneath his signature.
(Secs. 3(b), 9(a)(6), 10(b), 13(e), 14(e), 15(c)(1), 23(a), 48 Stat.
882, 889, 891, 894, 895, 901, sec. 8, 49 Stat. 1379, sec. 5, 78 Stat.
569, 570, secs. 2, 3, 82 Stat. 454, 455, secs. 1, 2, 3-5, 84 Stat. 1497,
secs. 3, 18, 89 Stat. 97, 155 (15 U.S.C. 78c(b), 78i(a), 78j(b), 78m(e),
78n(e), 78o(c), 78w(a)))
[44 FR 49412, Aug. 22, 1979, as amended at 51 FR 2477, Jan. 17, 1986; 57
FR 45294, Oct. 1, 1992]
[[Page 143]]
Sec. 240.13e-102 Schedule 13E-4F. Tender offer statement pursuant to section 13(e) (1) of the Securities Exchange Act of 1934 and Sec. 240.13e-4 thereunder.
Securities and Exchange Commission
Washington, DC 20549
Schedule 13E-4F
Issuer Tender Offer Statement Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934
[Amendment No. ____]
_______________________________________________________________________
(Exact name of Issuer as specified in its charter)
_______________________________________________________________________
(Translation of Issuer's Name into English (if applicable) )
_______________________________________________________________________
(Jurisdiction of Issuer's Incorporation or Organization)
_______________________________________________________________________
(Name(s) of Person(s) Filing Statement)
_______________________________________________________________________
(Title of Class of Securities)
_______________________________________________________________________
(CUSIP Number of Class of Securities) (if applicable)
_______________________________________________________________________
(Name, address (including zip code) and telephone number (including
area code) of person authorized to receive notices and communications on
behalf of the person(s) filing statement)
_______________________________________________________________________
(Date tender offer first published, sent or given to
securityholders)
Calculation of Filing Fee *
Transaction Valuation
Amount of Filing Fee
* Set forth the amount on which the filing fee is calculated and
state how it was determined. See General Instruction II. C. for rules
governing the calculation of the filing fee.
[ ] Check box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
Amount Previously Paid: ________
Registration No.: ________
Filing Party:
_______________________________________________________________________
Form: ________Date Filed: ________
General Instructions
I. Eligibility Requirements for Use of Schedule 13E-4F
A. Schedule 13E-4F may be used by any foreign private issuer if: (1)
The issuer is incorporated or organized under the laws of Canada or any
Canadian province or territory; (2) the issuer is making a cash tender
or exchange offer for the issuer's own securities; and (3) less than 40
percent of the class of such issuer's securities outstanding that is the
subject of the tender offer is held by U.S. holders. The calculation of
securities held by U.S. holders shall be made as of the end of the
issuer's last quarter or, if such quarter terminated within 60 days of
the filing date, as of the end of the issuer's preceding quarter.
Instructions
1. For purposes of this Schedule, ``foreign private issuer'' shall
be construed in accordance with Rule 405 under the Securities Act.
2. For purposes of this Schedule, the term ``U.S. holder'' shall
mean any person whose address appears on the records of the issuer, any
voting trustee, any depositary, any share transfer agent or any person
acting in a similar capacity on behalf of the issuer as being located in
the United States.
3. If this Schedule is filed during the pendency of one or more
ongoing cash tender or exchange offers for securities of the class
subject to this offer that was commenced or was eligible to be commenced
on Schedule 14D-1F and/or Form F-8 or Form F-80, the date for
calculation of U.S. ownership for purposes of this Schedule shall be the
same as that date used by the initial bidder or issuer.
4. For purposes of this Schedule, the class of subject securities
shall not include any securities that may be converted into or are
exchangeable for the subject securities.
B. Any issuer using this Schedule must extend the cash tender or
exchange offer to U.S. holders of the class of securities subject to the
offer upon terms and conditions not less favorable than those extended
to any other holder of the same class of such securities, and must
comply with the requirements of any Canadian federal, provincial and/or
territorial law, regulation or policy relating to the terms and
conditions of the offer.
C. This Schedule shall not be used if the issuer is an investment
company registered or required to be registered under the Investment
Company Act of 1940.
II. Filing Instructions and Fees
A. Five copies of this Schedule and any amendment thereto (see part
I, Item 1.(b)), including all exhibits and any other paper or
[[Page 144]]
document filed as part of the Schedule, shall be filed with the
Commission at its principal office. Each copy shall be bound, stapled or
otherwise compiled in one or more parts, without stiff covers. The
binding shall be made on the side or stitching margin in such manner as
to leave the reading matter legible. Three additional copies of the
Schedule and any amendment thereto, similarly bound, also shall be
filed. No exhibits are required to accompany such additional copies.
B. The original and at least one copy of this Schedule and any
amendments thereto shall be signed manually by the persons specified
herein. Unsigned copies shall be conformed.
C. At the time of filing this Schedule with the Commission, the
issuer shall pay to the Commission in accordance with Rule 0-11 of the
Exchange Act, a fee in U.S. dollars in the amount prescribed by section
13(e)(3) of the Exchange Act. See also Rule 0-9 of the Exchange Act.
(1) The value of the securities to be acquired solely for cash shall
be the amount of cash to be paid for them, calculated into U.S. dollars.
(2) The value of the securities to be acquired with securities or
other non-cash consideration, whether or not in combination with a cash
payment for the same securities, shall be based on the market value of
the securities to be acquired by the issuer as established in accordance
with paragraph (3) of this section.
(3) When the fee is based upon the market value of the securities,
such market value shall be established by either the average of the high
and low prices reported on the consolidated reporting system (for
exchange-traded securities and last sale reported for over-the-counter
securities) or the average of the bid and asked price (for other over-
the-counter securities) as of a specified date within 5 business days
prior to the date of filing the Schedule. If there is no market for the
securities to be acquired by the issuer, the value shall be based upon
the book value of such securities computed as of the latest practicable
date prior to the date of filing of the Schedule, unless the issuer of
the securities is in bankruptcy or receivership or has an accumulated
capital deficit, in which case one-third of the principal amount, par
value or stated value of such securities shall be used.
D. If at any time after the initial payment of the fee the aggregate
consideration offered is increased, an additional filing fee based upon
such increase shall be paid with the required amended filing.
E. If any part of the document or documents to be sent to
shareholders is in a language other than English, it shall be
accompanied by a translation in English. If any other part of this
Schedule, or any exhibit or other paper or document filed as part of the
schedule, is in a foreign language, it shall be accompanied by a
substantive summary, version or translation in the English language.
F. The manually signed original of the Schedule or any amendment
thereto shall be numbered sequentially (in addition to any internal
numbering which otherwise may be present) by handwritten, typed, printed
or other legible form of notation from the first page of the document
through the last page of that document and any exhibits or attachments
thereto. Further, the total number of pages contained in a numbered
original shall be set forth on the first page of the document.
III. Compliance with the Exchange Act
A. Pursuant to Rule 13e-4(g) under the Exchange Act, the issuer
shall be deemed to comply with the requirements of section 13(e)(1) of
the Exchange Act and Rule 13e-4 and Schedule 13E-4 thereunder in
connection with a cash tender or exchange offer for securities that may
be made pursuant to this Schedule, provided that, if an exemption has
been granted from the requirements of Canadian federal, provincial and/
or territorial laws, regulations or policies, and the tender offer does
not comply with requirements that otherwise would be prescribed by Rule
13e-4, the issuer (absent an order from the Commission) shall comply
with the provisions of section 13(e)(1) and Rule 13e-4 and Schedule 13E-
4 thereunder.
B. Any cash tender or exchange offer made pursuant to this Schedule
is not exempt from the antifraud provisions of section 10(b) of the
Exchange Act and Rule 10b-5 thereunder, section 13(e)(1) of the Exchange
Act and Rule 13e-4(b)(1) thereunder, and section 14(e) of the Exchange
Act and Rule 14e-3 thereunder, and this Schedule shall be deemed
``filed'' for purposes of section 18 of the Exchange Act.
C. The issuer's attention is directed to Regulation M (Secs. 242.100
through 242.105 of this chapter), in the case of an issuer exchange
offer, and to Rule 10b-13 under the Exchange Act (Sec. 240.10b-13), in
the case of an issuer cash tender offer or issuer exchange offer. [See
Exchange Act Release No. 29355 (June 21, 1991) containing an exemption
from Rule 10b-13.]
Part I--Information Required To Be Sent to Shareholders
Item 1. Home Jurisdiction Documents
(a) This Schedule shall be accompanied by the entire disclosure
document or documents required to be delivered to holders of securities
to be acquired by the issuer in the proposed transaction pursuant to the
laws, regulations or policies of the Canadian jurisdiction in which the
issuer is incorporated or organized, and any other Canadian federal,
provincial and/or territorial law, regulation
[[Page 145]]
or policy relating to the terms and conditions of the offer. The
Schedule need not include any documents incorporated by reference into
such disclosure document(s) and not distributed to offerees pursuant to
any such law, regulation or policy.
(b) Any amendment made by the issuer to a home jurisdiction document
or documents shall be filed with the Commission under cover of this
Schedule, which must indicate on the cover page the number of the
amendment.
(c) In an exchange offer where securities of the issuer have been or
are to be offered or cancelled in the transaction, such securities shall
be registered on forms promulgated by the Commission under the
Securities Act of 1933 including, where available, the Commission's Form
F-8 or F-80 providing for inclusion in that registration statement of
the home jurisdiction prospectus.
Item 2. Informational Legends
The following legends, to the extent applicable, shall appear on the
outside front cover page of the home jurisdiction document(s) in bold-
face roman type at least as high as ten-point modern type and at least
two-points leaded:
``This tender offer is made by a foreign issuer for its own
securities, and while the offer is subject to disclosure requirements of
the country in which the issuer is incorporated or organized, investors
should be aware that these requirements are different from those of the
United States. Financial statements included herein, if any, have been
prepared in accordance with foreign generally accepted accounting
principles and thus may not be comparable to financial statements of
United States companies.
``The enforcement by investors of civil liabilities under the
federal securities laws may be affected adversely by the fact that the
issuer is located in a foreign country, and that some or all of its
officers and directors are residents of a foreign country.
``Investors should be aware that the issuer or its affiliates,
directly or indirectly, may bid for or make purchases of the securities
of the issuer subject to the offer, or of its related securities, during
the period of the issuer tender offer, as permitted by applicable
Canadian laws or provincial laws or regulations.''
Note to Item 2. If the home jurisdiction document(s) are delivered
through an electronic medium, the issuer may satisfy the legibility
requirements for the required legends relating to type size and fonts by
presenting the legend in any manner reasonably calculated to draw
security holder attention to it.
Part II--Information Not Required To Be Sent to Shareholders
The exhibits specified below shall be filed as part of the Schedule,
but are not required to be sent to shareholders unless so required
pursuant to the laws, regulations or policies of Canada and/or any of
its provinces or territories. Exhibits shall be lettered or numbered
appropriately for convenient reference.
(1) File any reports or information that, in accordance with the
requirements of the home jurisdiction(s), must be made publicly
available by the issuer in connection with the transaction, but need not
be disseminated to shareholders.
(2) File copies of any documents incorporated by reference into the
home jurisdiction document(s) .
(3) If any name is signed to the Schedule pursuant to power of
attorney, manually signed copies of any such power of attorney shall be
filed. If the name of any officer signing on behalf of the issuer is
signed pursuant to a power of attorney, certified copies of a resolution
of the issuer's board of directors authorizing such signature also shall
be filed.
Part III--Undertakings and Consent to Service of Process
1. Undertakings
The Schedule shall set forth the following undertakings of the
issuer:
(a) The issuer undertakes to make available, in person or by
telephone, representatives to respond to inquiries made by the
Commission staff, and to furnish promptly, when requested to do so by
the Commission staff, information relating to this Schedule or to
transactions in said securities.
(b) The issuer also undertakes to disclose in the United States, on
the same basis as it is required to make such disclosure pursuant to
applicable Canadian federal and/or provincial or territorial laws,
regulations or policies, or otherwise discloses, information regarding
purchases of the issuer's securities in connection with the cash tender
or exchange offer covered by this Schedule. Such information shall be
set forth in amendments to this Schedule.
2. Consent to Service of Process
(a) At the time of filing this Schedule, the issuer shall file with
the Commission a written irrevocable consent and power of attorney on
Form F-X.
(b) Any change to the name or address of a registrant's agent for
service shall be communicated promptly to the Commission by amendment to
Form F-X referencing the file number of the registrant.
[[Page 146]]
Part IV--Signatures
A. The Schedule shall be signed by each person on whose behalf the
Schedule is filed or its authorized representative. If the Schedule is
signed on behalf of a person by his authorized representative (other
than an executive officer or general partner of the company), evidence
of the representative's authority shall be filed with the Schedule.
B. The name of each person who signs the Schedule shall be typed or
printed beneath his signature.
C. By signing this Schedule, the person(s) filing the Schedule
consents without power of revocation that any administrative subpoena
may be served, or any administrative proceeding, civil suit or civil
action where the cause of action arises out of or relates to or concerns
any offering made or purported to be made in connection with the filing
on Schedule 13E-4F or any purchases or sales of any security in
connection therewith, may be commenced against it in any administrative
tribunal or in any appropriate court in any place subject to the
jurisdiction of any state or of the United States by service of said
subpoena or process upon the registrant's designated agent.
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
_______________________________________________________________________
(Signature)
_______________________________________________________________________
(Name and Title)
_______________________________________________________________________
(Date)
[56 FR 30069, July 1, 1991, as amended at 61 FR 24656, May 15, 1996; 62
FR 544, Jan. 3, 1997]
Sec. 240.13f-1 Reporting by institutional investment managers of information with respect to accounts over which they exercise investment discretion.
(a) Every institutional investment manager which exercises
investment discretion with respect to accounts holding section 13(f)
securities, as defined in paragraph (c) of this section, having an
aggregate fair market value on the last trading day of any month of any
calendar year of at least $100,000,000 shall file a report on Form 13F
(Sec. 249.325 of this chapter) with the Commission within 45 days after
the last day of such calendar year and within 45 days after the last day
of each of the first three calendar quarters of the subsequent calendar
year.
(b) For the purposes of this rule, ``investment descretion'' has the
meaning set forth in section 3(a)(35) of the Act (15 U.S.C. 78c(a)(35)).
An institutional investment manager shall also be deemed to exercise
``investment discretion'' with respect to all accounts over which any
person under its control exercises investment discretion.
(c) For purposes of this rule ``section 13(f) securities'' shall
mean equity securities of a class described in section 13(d)(1) of the
Act that are admitted to trading on a national securities exchange or
quoted on the automated quotation system of a registered securities
association. In determining what classes of securities are section 13(f)
securities, an institutional investment manager may rely on the most
recent list of such securities published by the Commission pursuant to
section 13(f)(3) of the Act (15 U.S.C. 78m(f)(3)). Only securities of a
class on such list shall be counted in determining whether an
institutional investment manager must file a report under this rule
(Sec. 240.13f-1(a)) and only those securities shall be reported in such
report. Where a person controls the issuer of a class of equity
securities which are ``section 13(f) securities'' as defined in this
rule, those securities shall not be deemed to be ``section 13(f)
securities'' with respect to the controlling person, provided that such
person does not otherwise exercise investment descretion with respect to
accounts with fair market value of at least $100,000,000 within the
meaning of paragraph (a) of this section.
(Secs. 3(b), 13(f) and 23 of the Exchange Act (15 U.S.C. 78c(b), 78m(f)
and 78w))
[43 FR 26705, June 22, 1978, as amended at 44 FR 3034, Jan. 15, 1979]
Sec. 240.13f-2 EDGAR Filing of Form 13F Reports by Institutional Money Managers.
(a) An institutional investment manager required by Section 13(f)(1)
(15 U.S.C. 78m(f)(1)) of, and rule 13f-1 (Sec. 240.13f-1 of this
chapter) under, the Exchange Act of 1934 to file a report on Form 13F
(Sec. 249.325 of this chapter) with the Commission may file that report
on magnetic tape in the format described in Form 13F-E (Sec. 249.326 of
this chapter).
(b) Unless otherwise specifically provided herein, the terms used in
this section have the same meaning as in
[[Page 147]]
the Exchange Act and in the rules and regulations prescribed under the
Exchange Act.
[58 FR 14859, Mar. 18, 1993]
Regulation 14A: Solicitation of Proxies
ATTENTION ELECTRONIC FILERS
THIS REGULATION SHOULD BE READ IN CONJUNCTION WITH REGULATION S-T (PART
232 OF THIS CHAPTER), WHICH GOVERNS THE PREPARATION AND SUBMISSION OF
DOCUMENTS IN ELECTRONIC FORMAT. MANY PROVISIONS RELATING TO THE
PREPARATION AND SUBMISSION OF DOCUMENTS IN PAPER FORMAT CONTAINED IN
THIS REGULATION ARE SUPERSEDED BY THE PROVISIONS OF REGULATION S-T FOR
DOCUMENTS REQUIRED TO BE FILED IN ELECTRONIC FORMAT.
Sec. 240.14a-1 Definitions.
Unless the context otherwise requires, all terms used in this
regulation have the same meanings as in the Act or elsewhere in the
general rules and regulations thereunder. In addition, the following
definitions apply unless the context otherwise requires:
(a) Associate. The term ``associate,'' used to indicate a
relationship with any person, means:
(1) Any corporation or organization (other than the registrant or a
majority owned subsidiary of the registrant) of which such person is an
officer or partner or is, directly or indirectly, the beneficial owner
of 10 percent or more of any class of equity securities;
(2) Any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a
similar fiduciary capacity; and
(3) Any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person or who is a director or
officer of the registrant or any of its parents or subsidiaries.
(b) Employee benefit plan. For purposes of Secs. 240.14a-13,
240.14b-1 and 240.14b-2, the term ``employee benefit plan'' means any
purchase, savings, option, bonus, appreciation, profit sharing, thrift,
incentive, pension or similar plan primarily for employees, directors,
trustees or officers.
(c) Entity that exercises fiduciary powers. The term ``entity that
exercises fiduciary powers'' means any entity that holds securities in
nominee name or otherwise on behalf of a beneficial owner but does not
include a clearing agency registered pursuant to section 17A of the Act
or a broker or a dealer.
(d) Exempt employee benefit plan securities. For purposes of
Secs. 240.14a-13, 240.14b-1 and 240.14b-2, the term ``exempt employee
benefit plan securities'' means:
(1) Securities of the registrant held by an employee benefit plan,
as defined in paragraph (b) of this section, where such plan is
established by the registrant; or
(2) If notice regarding the current solicitation has been given
pursuant to Sec. 240.14a-13(a)(1)(ii)(C) or if notice regarding the
current request for a list of names, addresses and securities positions
of beneficial owners has been given pursuant to Sec. 240.14a-13(b)(3),
securities of the registrant held by an employee benefit plan, as
defined in paragraph (b) of this section, where such plan is established
by an affiliate of the registrant.
(e) Last fiscal year. The term ``last fiscal year'' of the
registrant means the last fiscal year of the registrant ending prior to
the date of the meeting for which proxies are to be solicited or if the
solicitation involves written authorizations or consents in lieu of a
meeting, the earliest date they may be used to effect corporate action.
(f) Proxy. The term ``proxy'' includes every proxy, consent or
authorization within the meaning of section 14(a) of the Act. The
consent or authorization may take the form of failure to object or to
dissent.
(g) Proxy statement. The term ``proxy statement'' means the
statement required by Sec. 240.14a-3(a) whether or not contained in a
single document.
(h) Record date. The term ``record date'' means the date as of which
the record holders of securities entitled to vote at a meeting or by
written consent or authorization shall be determined.
(i) Record holder. For purposes of Secs. 240.14a-13, 240.14b-1 and
240.14b-2, the
[[Page 148]]
term ``record holder'' means any broker, dealer, voting trustee, bank,
association or other entity that exercises fiduciary powers which holds
securities of record in nominee name or otherwise or as a participant in
a clearing agency registered pursuant to section 17A of the Act.
(j) Registrant. The term ``registrant'' means the issuer of the
securities in respect of which proxies are to be solicited.
(k) Respondent bank. For purposes of Secs. 240.14a-13, 240.14b-1 and
240.14b-2, the term ``respondent bank'' means any bank, association or
other entity that exercises fiduciary powers which holds securities on
behalf of beneficial owners and deposits such securities for safekeeping
with another bank, association or other entity that exercises fiduciary
powers.
(l) Solicitation. (1) The terms ``solicit'' and ``solicitation''
include:
(i) Any request for a proxy whether or not accompanied by or
included in a form of proxy:
(ii) Any request to execute or not to execute, or to revoke, a
proxy; or
(iii) The furnishing of a form of proxy or other communication to
security holders under circumstances reasonably calculated to result in
the procurement, withholding or revocation of a proxy.
(2) The terms do not apply, however, to:
(i) The furnishing of a form of proxy to a security holder upon the
unsolicited request of such security holder;
(ii) The performance by the registrant of acts required by
Sec. 240.14a-7;
(iii) The performance by any person of ministerial acts on behalf of
a person soliciting a proxy; or
(iv) A communication by a security holder who does not otherwise
engage in a proxy solicitation (other than a solicitation exempt under
Sec. 240.14a-2) stating how the security holder intends to vote and the
reasons therefor, provided that the communication:
(A) Is made by means of speeches in public forums, press releases,
published or broadcast opinions, statements, or advertisements appearing
in a broadcast media, or newspaper, magazine or other bona fide
publication disseminated on a regular basis,
(B) Is directed to persons to whom the security holder owes a
fiduciary duty in connection with the voting of securities of a
registrant held by the security holder, or
(C) Is made in response to unsolicited requests for additional
information with respect to a prior communication by the security holder
made pursuant to this paragraph (l)(2)(iv).
[51 FR 44275, Dec. 9, 1986, as amended at 52 FR 23648, June 24, 1987; 53
FR 16405, May, 9, 1988; 57 FR 48290, Oct. 22, 1992]
Sec. 240.14a-2 Solicitations to which Sec. 240.14a-3 to Sec. 240.14a-15 apply.
Sections 240.14a-3 to 240.14a-15, except as specified, apply to
every solicitation of a proxy with respect to securities registered
pursuant to section 12 of the Act (15 U.S.C. 78l), whether or not
trading in such securities has been suspended. To the extent specified
below, certain of these sections also apply to roll-up transactions that
do not involve an entity with securities registered pursuant to section
12 of the Act.
(a) Sections 240.14a-3 to 240.14a-15 do not apply to the following:
(1) Any solicitation by a person in respect to securities carried in
his name or in the name of his nominee (otherwise than as voting
trustee) or held in his custody, if such person--
(i) Receives no commission or remuneration for such solicitation,
directly or indirectly, other than reimbursement of reasonable expenses,
(ii) Furnishes promptly to the person solicited a copy of all
soliciting material with respect to the same subject matter or meeting
received from all persons who shall furnish copies thereof for such
purpose and who shall, if requested, defray the reasonable expenses to
be incurred in forwarding such material, and
(iii) In addition, does no more than impartially instruct the person
solicited to forward a proxy to the person, if any, to whom the person
solicited desires to give a proxy, or impartially request from the
person solicited instructions as to the authority to be conferred by the
proxy and state that a proxy will be given if no instructions are
received by a certain date.
[[Page 149]]
(2) Any solicitation by a person in respect of securities of which
he is the beneficial owner;
(3) Any solicitation involved in the offer and sale of securities
registered under the Securities Act of 1933: Provided, That this
paragraph shall not apply to securities to be issued in any transaction
of the character specified in paragraph (a) of Rule 145 under that Act;
(4) Any solicitation with respect to a plan of reorganization under
Chapter 11 of the Bankruptcy Reform Act of 1978, as amended, if made
after the entry of an order approving the written disclosure statement
concerning a plan of reorganization pursuant to section 1125 of said Act
and after, or concurrently with, the transmittal of such disclosure
statement as required by section 1125 of said Act;
(5) Any solicitation which is subject to Rule 62 under the Public
Utility Holding Company Act of 1935; and
(6) Any solicitation through the medium of a newspaper advertisement
which informs security holders of a source from which they may obtain
copies of a proxy statement, form of proxy and any other soliciting
material and does no more than:
(i) Name the registrant,
(ii) State the reason for the advertisement, and
(iii) Identify the proposal or proposals to be acted upon by
security holders.
(b) Sections 240.14a-3 to 240.14a-6 (other than 14a-6(g)), 240.14a-
8, and 240.14a-10 to 240.14a-15 do not apply to the following:
(1) Any solicitation by or on behalf of any person who does not, at
any time during such solicitation, seek directly or indirectly, either
on its own or another's behalf, the power to act as proxy for a security
holder and does not furnish or otherwise request, or act on behalf of a
person who furnishes or requests, a form of revocation, abstention,
consent or authorization. Provided, however, That the exemption set
forth in this paragraph shall not apply to:
(i) The registrant or an affiliate or associate of the registrant
(other than an officer or director or any person serving in a similar
capacity);
(ii) An officer or director of the registrant or any person serving
in a similar capacity engaging in a solicitation financed directly or
indirectly by the registrant;
(iii) An officer, director, affiliate or associate of a person that
is ineligible to rely on the exemption set forth in this paragraph
(other than persons specified in paragraph (b)(1)(i) of this section),
or any person serving in a similar capacity;
(iv) Any nominee for whose election as a director proxies are
solicited;
(v) Any person soliciting in opposition to a merger,
recapitalization, reorganization, sale of assets or other extraordinary
transaction recommended or approved by the board of directors of the
registrant who is proposing or intends to propose an alternative
transaction to which such person or one of its affiliates is a party;
(vi) Any person who is required to report beneficial ownership of
the registrant's equity securities on a Schedule 13D (Sec. 240.13d-101),
unless such person has filed a Schedule 13D and has not disclosed
pursuant to Item 4 thereto an intent, or reserved the right, to engage
in a control transaction, or any contested solicitation for the election
of directors;
(vii) Any person who receives compensation from an ineligible person
directly related to the solicitation of proxies, other than pursuant to
Sec. 240.14a-13;
(viii) Where the registrant is an investment company registered
under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), an
``interested person'' of that investment company, as that term is
defined in section 2(a)(19) of the Investment Company Act (15 U.S.C.
80a-2);
(ix) Any person who, because of a substantial interest in the
subject matter of the solicitation, is likely to receive a benefit from
a successful solicitation that would not be shared pro rata by all other
holders of the same class of securities, other than a benefit arising
from the person's employment with the registrant; and
(x) Any person acting on behalf of any of the foregoing.
(2) Any solicitation made otherwise than on behalf of the registrant
where
[[Page 150]]
the total number of persons solicited is not more than ten;
(3) The furnishing of proxy voting advice by any person (the
``advisor'') to any other person with whom the advisor has a business
relationship, if:
(i) The advisor renders financial advice in the ordinary course of
his business;
(ii) The advisor discloses to the recipient of the advice any
significant relationship with the registrant or any of its affiliates,
or a security holder proponent of the matter on which advice is given,
as well as any material interests of the advisor in such matter.
(iii) The advisor receives no special commission or remuneration for
furnishing the proxy voting advice from any person other than a
recipient of the advice and other persons who receive similar advice
under this subsection; and
(iv) The proxy voting advice is not furnished on behalf of any
person soliciting proxies or on behalf of a participant in an election
subject to the provisions of Rule 14a-11; and
(4) Any solicitation in connection with a roll-up transaction as
defined in Item 901(c) of Regulation S-K (Sec. 229.901 of this chapter)
in which the holder of a security that is the subject of a proposed
roll-up transaction engages in preliminary communications with other
holders of securities that are the subject of the same limited
partnership roll-up transaction for the purpose of determining whether
to solicit proxies, consents, or authorizations in opposition to the
proposed limited partnership roll-up transaction; provided, however,
that:
(i) This exemption shall not apply to a security holder who is an
affiliate of the registrant or general partner or sponsor; and
(ii) This exemption shall not apply to a holder of five percent (5%)
or more of the outstanding securities of a class that is the subject of
the proposed roll-up transaction who engages in the business of buying
and selling limited partnership interests in the secondary market unless
that holder discloses to the persons to whom the communications are made
such ownership interest and any relations of the holder to the parties
of the transaction or to the transaction itself, as required by
Sec. 240.14a-6(n)(1) and specified in the Notice of Exempt Preliminary
Roll-up Communication (Sec. 240.14a-104). If the communication is oral,
this disclosure may be provided to the security holder orally. Whether
the communication is written or oral, the notice required by
Sec. 240.14a-6(n) and Sec. 240.14a-104 shall be furnished to the
Commission.
(Secs. 12, 13, 14, 15(d), 23(a), 48 Stat. 892, 894, 895, 901; secs. 1,
3, 8, 49 Stat. 1375, 1377, 1379; sec. 203(a), 49 Stat. 704; sec. 202, 68
Stat. 686; secs. 3, 4, 5, 6, 78, Stat. 565-568, 569, 570-574; secs. 1,
2, 3, 82 Stat. 454, 455, secs. 28(c), 1, 2, 3-5, 84 Stat. 1435, 1497;
secs. 10, 18, 89 Stat. 119, 155; sec. 308(b), 90 Stat. 57; sec. 204, 91
Stat. 1500; 15 U.S.C. 78l, 78m, 78n, 78o(d))
[44 FR 68769, Nov. 29, 1979, as amended at 51 FR 42059, Nov. 20, 1986;
52 FR 21936, June 10, 1987; 57 FR 48290, Oct. 22, 1992; 59 FR 63684,
Dec. 8, 1994]
Sec. 240.14a-3 Information to be furnished to security holders.
(a) No solicitation subject to this regulation shall be made unless
each person solicited is concurrently furnished or has previously been
furnished with a publicly-filed preliminary or definitive written proxy
statement containing the information specified in Schedule 14A
(Sec. 240.14a-101) or with a preliminary or definitive written proxy
statement included in a registration statement filed under the
Securities Act of 1933 on Form S-4 or F-4 (Sec. 239.25 or Sec. 239.34 of
this chapter) or Form N-14 (Sec. 239.23) and containing the information
specified in such Form.
(b) If the solicitation is made on behalf of the registrant, other
than an investment company registered under the Investment Company Act
of 1940, and relates to an annual (or special meeting in lieu of the
annual) meeting of security holders, or written consent in lieu of such
meeting, at which directors are to be elected, each proxy statement
furnished pursuant to paragraph (a) of this section shall be accompanied
or preceded by an annual report to security holders as follows:
Note to Small Business Issuers--A ``small business issuer,'' defined
under Rule 12b-2 of the Exchange Act (Sec. 240.12b-2), shall refer to
the disclosure items in Regulation S-B (Sec. 228.10--702 of this
chapter) rather than Regulation S-K (Sec. 229.10--702 of this chapter).
If there is no comparable disclosure item in
[[Page 151]]
Regulation S-B, a small business issuer need not provide the information
requested. A small business issuer shall provide the information in Item
310(a) of Regulation S-B in lieu of the financial information required
by Rule 14a-3(b)(1) (Sec. 240.14a-3(b)(1)). Small business issuers using
the transitional small business issuers disclosure format in the filing
of their most recent annual report on Form 10-KSB (Sec. 249.310b of this
chapter) need not provide the information specified below. Rather, those
small business issuers shall provide only the financial statements
required to be filed in their most recent Form 10-KSB. The inclusion of
additional information, including information required of non-
transitional small business issuers, in the annual report to security
holders will not cause the issuer to be ineligible for the transitional
disclosure forms.
(1) The report shall include, for the registrant and its
subsidiaries consolidated, audited balance sheets as of the end of each
of the two most recent fiscal years and audited statements of income and
cash flows for each of the three most recent fiscal years prepared in
accordance with Regulation S-X (part 210 of this chapter), except that
the provisions of Article 3 (other than Secs. 210.3-03(e), 210.3-04 and
210.3-20) and Article 11 shall not apply. Any financial statement
schedules or exhibits or separate financial statements which may
otherwise be required in filings with the Commission may be omitted. If
the financial statements of the registrant and its subsidiaries
consolidated in the annual report filed or to be filed with the
Commission are not required to be audited, the financial statements
required by this paragraph may be unaudited.
Note 1--If the financial statements for a period prior to the most
recently completed fiscal year have been examined by a predecessor
accountant, the separate report of the predecessor accountant may be
omitted in the report to security holders provided the registrant has
obtained from the predecessor accountant a reissued report covering the
prior period presented and the successor accountant clearly indicates in
the scope paragraph of his report (a) that the financial statements of
the prior period were examined by other accountants, (b) the date of
their report, (c) the type of opinion expressed by the predecessor
accountant and (d) the substantive reasons therefor, if it was other
than unqualified. It should be noted, however, that the separate report
of any predecessor accountant is required in filings with the
Commission. If, for instance, the financial statements in the annual
report to security holders are incorporated by reference in a Form 10-K
and Form 10-KSB, the separate report of a predecessor accountant shall
be filed in Part II or in Part IV as a financial statement schedule.
Note 2--For purposes of complying with Sec. 240.14a-3, if the
registrant has changed its fiscal closing date, financial statements
covering two years and one period of 9 to 12 months shall be deemed to
satisfy the requirements for statements of income and cash flows for the
three most recent fiscal years.
(2)(i) Financial statements and notes thereto shall be presented in
roman type at least as large and as legible as 10-point modern type. If
necessary for convenient presentation, the financial statements may be
in roman type as large and as legible as 8-point modern type. All type
shall be leaded at least 2 points.
(ii) Where the annual report to security holders is delivered
through an electronic medium, issuers may satisfy legibility
requirements applicable to printed documents, such as type size and
font, by presenting all required information in a format readily
communicated to investors.
(3) The report shall contain the supplementary financial information
required by item 302 of Regulation S-K (Sec. 229.302 of this chapter).
(4) The report shall contain information concerning changes in and
disagreements with accountants on accounting and financial disclosure
required by Item 304 of Regulation S-K (Sec. 229.304 of this chapter).
(5)(i) The report shall contain the selected financial data required
by Item 301 of Regulation S-K (Sec. 229.301 of this chapter).
(ii) The report shall contain management's discussion and analysis
of financial condition and results of operations required by Item 303 of
Regulation S-K (Sec. 229.303 of this chapter) or, if applicable, a plan
of operation required by Item 303(a) of Regulation S-B (Sec. 228.303(a)
of this chapter).
(iii) The report shall contain the quantitative and qualitative
disclosures about market risk required by Item 305 of Regulation S-K
(Sec. 229.305 of this chapter).
(6) The report shall contain a brief description of the business
done by the
[[Page 152]]
registrant and its subsidiaries during the most recent fiscal year which
will, in the opinion of management, indicate the general nature and
scope of the business of the registrant and its subsidiaries.
(7) The report shall contain information relating to the
registrant's industry segments, classes of similar products or services,
foreign and domestic operations and exports sales required by paragraphs
(b), (c)(1)(i) and (d) of Item 101 of Regulation S-K (Sec. 229.101 of
this chapter).
(8) The report shall identify each of the registrant's directors and
executive officers, and shall indicate the principal occupation or
employment of each such person and the name and principal business of
any organization by which such person is employed.
(9) The report shall contain the market price of and dividends on
the registrant's common equity and related security holder matters
required by Item 201 of Regulation S-K (Sec. 229.201 of this chapter).
(10) The registrant's proxy statement, or the report, shall contain
an undertaking in bold face or otherwise reasonably prominent type to
provide without charge to each person solicited upon the written request
of any such person, a copy of the registrant's annual report on Form 10-
K and Form 10-KSB, including the financial statements and the financial
statement schedules, required to be filed with the Commission pursuant
to Rule 13a-1 under the Act for the registrant's most recent fiscal
year, and shall indicate the name and address (including title or
department) of the person to whom such a written request is to be
directed. In the discretion of management, a registrant need not
undertake to furnish without charge copies of all exhibits to its Form
10-K and Form 10-KSB provided the that copy of the annual report on Form
10-K and Form 10-KSB furnished without charge to requesting security
holders is accompanied by a list briefly describing all the exhibits not
contained therein and indicating that the registrant will furnish any
exhibit upon the payment of a specified reasonable fee which fee shall
be limited to the registrant's reasonable expenses in furnishing such
exhibit. If the registrant's annual report to security holders complies
with all of the disclosure requirements of Form 10-K and Form 10-KSB and
is filed with the Commission in satisfaction of its Form 10-K and Form
10-KSB filing requirements, such registrant need not furnish a separate
Form 10-K and Form 10-KSB to security holders who receive a copy of such
annual report.
Note: Pursuant to the undertaking required by paragraph (b)(10) of
this section, a registrant shall furnish a copy of its annual report on
Form 10-K and Form 10-KSB (Sec. 249.310 of this chapter) to a beneficial
owner of its securities upon receipt of a written request from such
person. Each request must set forth a good faith representation that, as
of the record date for the solicitation requiring the furnishing of the
annual report to security holders pursuant to paragraph (b) of this
section, the person making the request was a beneficial owner of
securities entitled to vote.
(11) Subject to the foregoing requirements, the report may be in any
form deemed suitable by management and the information required by
paragraphs (b)(5) to (10) of this section may be presented in an
appendix or other separate section of the report, provided that the
attention of security holders is called to such presentation.
Note: Registrants are encouraged to utilize tables, schedules,
charts and graphic illustrations of present financial information in an
understandable manner. Any presentation of financial information must be
consistent with the data in the financial statements contained in the
report and, if appropriate, should refer to relevant portions of the
financial statements and notes thereto.
(12) [Reserved]
(13) Paragraph (b) of this section shall not apply, however, to
solicitations made on behalf of the registrant before the financial
statements are available if a solicitation is being made at the same
time in opposition to the registrant and if the registrant's proxy
statement includes an undertaking in bold face type to furnish such
annual report to all persons being solicited at least 20 calendar days
before the date of the meeting or, if the solicitation refers to a
written consent or authorization in lieu of a meeting, at least 20
calendar days prior to the earliest date on which it may be used to
effect corporate action.
[[Page 153]]
(c) Seven copies of the report sent to security holders pursuant to
this rule shall be mailed to the Commission, solely for its information,
not later than the date on which such report is first sent or given to
security holders or the date on which preliminary copies, or definitive
copies, if preliminary filing was not required, of solicitation material
are filed with the Commission pursuant to Rule 14a-6, whichever date is
later. The report is not deemed to be ``soliciting material'' or to be
``filed'' with the Commission or subject to this regulation otherwise
than as provided in this Rule, or to the liabilities of section 18 of
the Act, except to the extent that the registrant specifically requests
that it be treated as a part of the proxy soliciting material or
incorporates it in the proxy statement or other filed report by
reference.
(d) An annual report to security holders prepared on an integrated
basis pursuant to General Instruction H to Form 10-K and Form 10-KSB
(Sec. 249.310) may also be submitted in satisfaction of this rule. When
filed as the annual report on Form 10-K and Form 10-KSB, responses to
the Items of that form are subject to section 18 of the Act
notwithstanding paragraph (c) of this section.
(e) Notwithstanding paragraphs (a) and (b) of this section:
(1) A registrant is not required to send an annual report to a
security holder of record having the same address as another security
holder of record, provided that:
(i) Such security holders are not holding such registrant's
securities in nominee name,
(ii) At least one report is sent to a holder of record at that
address and
(iii) The holders of record to whom a report is not sent agree
thereto in writing; and
(2) Unless state law requires otherwise, a registrant is not
required to send an annual report or proxy statement to a security
holder if:
(i) An annual report and a proxy statement for two consecutive
annual meetings; or
(ii) All, and at least two, payments (if sent by first class mail)
of dividends or interest on securities, or dividend reinvestment
confirmations, during a twelve month period, have been mailed to such
security holder's address and have been returned as undeliverable. If
any such security holder delivers or causes to be delivered to the
registrant written notice setting forth his then current address for
security holder communications purposes, the registrant's obligation to
deliver an annual report or a proxy statement under this section is
reinstated.
(f) The provisions of paragraph (a) of this section shall not apply
to a communication made by means of speeches in public forums, press
releases, published or broadcast opinions, statements, or advertisements
appearing in a broadcast media, newspaper, magazine or other bona fide
publication disseminated on a regular basis, provided that:
(1) No form of proxy, consent or authorization or means to execute
the same is provided to a security holder in connection with the
communication; and
(2) At the time the communication is made, a definitive proxy
statement is on file with the Commission pursuant to Sec. 240.14a-6(b).
(Secs. 6, 7, 8, 10, 19(a), 48 Stat. 78, 79, 81, 85; secs. 12, 13, 14,
15(d), 17, 23(a), 48 Stat. 892, 894, 901; secs. 205, 209, 48 Stat. 906,
908; sec. 203(a), 49 Stat. 704; secs. 1, 3, 8, 49 Stat. 1375, 1377,
1379; sec. 301, 54 Stat. 857; secs. 8, 202, 68 Stat. 685, 686; secs. 3,
4, 5, 6, 78 Stat. 565-568, 569, 570-574; sec. 1, 79 Stat. 1051; secs. 1,
2, 3, 82 Stat. 454, 455; secs. 1, 2, 3-5, 28(c), 84 Stat. 1435, 1497;
sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 11, 18, 89 Stat. 117, 118,
119, 121, 155; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l, 78m, 78n,
78l(d), 78w(a))
[39 FR 40768, Nov. 20, 1974]
Editorial Note: For Federal Register citations affecting
Sec. 240.14a-3, see the List of CFR Sections Affected in the Finding
Aids section of this volume.
Effective Date Note: At 62 FR 6071, Feb. 10, 1997, Sec. 240.14a-3
was amended by adding paragraph (b)(5)(iii), effective Apr. 11, 1997.
Sec. 240.14a-4 Requirements as to proxy.
(a) The form of proxy (1) shall indicate in bold-face type whether
or not the proxy is solicited on behalf of the registrant's board of
directors or, if provided other than by a majority of the board of
directors, shall indicate in bold-face type on whose behalf the
solicitation is made;
[[Page 154]]
(2) Shall provide a specifically designated blank space for dating
the proxy card; and
(3) Shall identify clearly and impartially each separate matter
intended to be acted upon, whether or not related to or conditioned on
the approval of other matters, and whether proposed by the registrant or
by security holders. No reference need be made, however, to proposals as
to which discretionary authority is conferred pursuant to paragraph (c)
of this section.
Note to paragraph (a)(3) (Electronic filers): Electronic filers
shall satisfy the filing requirements of Rule 14a-6(a) or (b)
(Sec. 240.14a-6(a) or (b)) with respect to the form of proxy by filing
the form of proxy as an appendix at the end of the proxy statement.
Forms of proxy shall not be filed as exhibits or separate documents
within an electronic submission.
(b)(1) Means shall be provided in the form of proxy whereby the
person solicited is afforded an opportunity to specify by boxes a choice
between approval or disapproval of, or abstention with respect to each
separate matter referred to therein as intended to be acted upon, other
than elections to office. A proxy may confer discretionary authority
with respect to matters as to which a choice is not specified by the
security holder provided that the form of proxy states in bold-face type
how it is intended to vote the shares represented by the proxy in each
such case.
(2) A form of proxy which provides for the election of directors
shall set forth the names of persons nominated for election as
directors. Such form of proxy shall clearly provide any of the following
means for security holders to withhold authority to vote for each
nominee:
(i) A box opposite the name of each nominee which may be marked to
indicate that authority to vote for such nominee is withheld; or
(ii) An instruction in bold-face type which indicates that the
security holder may withhold authority to vote for any nominee by lining
through or otherwise striking out the name of any nominee; or
(iii) Designated blank spaces in which the security holder may enter
the names of nominees with respect to whom the security holder chooses
to withhold authority to vote; or
(iv) Any other similar means, provided that clear instructions are
furnished indicating how the security holder may withhold authority to
vote for any nominee.
Such form of proxy also may provide a means for the security holder to
grant authority to vote for the nominees set forth, as a group, provided
that there is a similar means for the security holder to withhold
authority to vote for such group of nominees. Any such form of proxy
which is executed by the security holder in such manner as not to
withhold authority to vote for the election of any nominee shall be
deemed to grant such authority, provided that the form of proxy so
states in bold-face type.
Instructions. 1. Paragraph (2) does not apply in the case of a
merger, consolidation or other plan if the election of directors is an
integral part of the plan.
2. If applicable state law gives legal effect to votes cast against
a nominee, then in lieu of, or in addition to, providing a means for
security holders to withhold authority to vote, the registrant should
provide a similar means for security holders to vote against each
nominee.
(c) A proxy may confer discretionary authority to vote with respect
to any of the following matters:
(1) Matters which the persons making the solicitation do not know, a
reasonable time before the solicitation, are to be presented at the
meeting, if a specific statement to that effect is made in the proxy
statement or form of proxy;
(2) Approval of the minutes of the prior meeting if such approval
does not amount to ratification of the action taken at that meeting;
(3) The election of any person to any office for which a bona fide
nominee is named in the proxy statement and such nominee is unable to
serve or for good cause will not serve.
(4) Any proposal omitted from the proxy statement and form of proxy
pursuant to Sec. 240.14a-8 or Sec. 240.14a-9 of this chapter.
(5) Matters incident to the conduct of the meeting.
(d) No proxy shall confer authority:
[[Page 155]]
(1) To vote for the election of any person to any office for which a
bona fide nominee is not named in the proxy statement,
(2) To vote at any annual meeting other than the next annual meeting
(or any adjournment thereof) to be held after the date on which the
proxy statement and form of proxy are first sent or given to security
holders,
(3) To vote with respect to more than one meeting (and any
adjournment thereof) or more than one consent solicitation or
(4) To consent to or authorize any action other than the action
proposed to be taken in the proxy statement, or matters referred to in
paragraph (c) of this rule. A person shall not be deemed to be a bona
fide nominee and he shall not be named as such unless he has consented
to being named in the proxy statement and to serve if elected. Provided,
however, That nothing in this section 240.14a-4 shall prevent any person
soliciting in support of nominees who, if elected, would constitute a
minority of the board of directors, from seeking authority to vote for
nominees named in the registrant's proxy statement, so long as the
soliciting party:
(i) Seeks authority to vote in the aggregate for the number of
director positions then subject to election;
(ii) Represents that it will vote for all the registrant nominees,
other than those registrant nominees specified by the soliciting party;
(iii) Provides the security holder an opportunity to withhold
authority with respect to any other registrant nominee by writing the
name of that nominee on the form of proxy; and
(iv) States on the form of proxy and in the proxy statement that
there is no assurance that the registrant's nominees will serve if
elected with any of the soliciting party's nominees.
(e) The proxy statement or form of proxy shall provide, subject to
reasonable specified conditions, that the shares represented by the
proxy will be voted and that where the person solicited specifies by
means of a ballot provided pursuant to paragraph (b) of this section a
choice with respect to any matter to be acted upon, the shares will be
voted in accordance with the specifications so made.
(f) No person conducting a solicitation subject to this regulation
shall deliver a form of proxy, consent or authorization to any security
holder unless the security holder concurrently receives, or has
previously received, a definitive proxy statement that has been filed
with, or mailed for filing to, the Commission pursuant to Sec. 240.14a-
6(b).
(Secs. 12, 13, 14, 15(d), 23(a), 48 Stat. 892, 894, 895, 901; secs. 1,
3, 8, 49 Stat. 1375, 1377, 1379; sec. 203(a), 49 Stat. 704; sec. 202, 68
Stat. 686; secs. 3, 4, 5, 6, 78, Stat. 565-568, 569, 570-574; secs. 1,
2, 3, 82 Stat. 454, 455, secs. 28(c), 1, 2, 3-5, 84 Stat. 1435, 1497;
secs. 10, 18, 89 Stat. 119, 155; sec. 308(b), 90 Stat. 57; sec. 204, 91
Stat. 1500; 15 U.S.C. 78l, 78m, 78n, 78o(d), 78w(a))
[17 FR 11432, Dec. 18, 1952, as amended at 31 FR 212, Jan. 7, 1966; 32
FR 20963, Dec. 29, 1967; 44 FR 68770, Nov. 29, 1979; 45 FR 76979, Nov.
21, 1980; 51 FR 42060, Nov. 20, 1986; 57 FR 48291, Oct. 22, 1992; 59 FR
67764, Dec. 30, 1994]
Sec. 240.14a-5 Presentation of information in proxy statement.
(a) The information included in the proxy statement shall be clearly
presented and the statements made shall be divided into groups according
to subject matter and the various groups of statements shall be preceded
by appropriate headings. The order of items and sub-items in the
schedule need not be followed. Where practicable and appropriate, the
information shall be presented in tabular form. All amounts shall be
stated in figures. Information required by more than one applicable item
need not be repeated. No statement need be made in response to any item
or sub-item which is inapplicable.
(b) Any information required to be included in the proxy statement
as to terms of securities or other subject matter which from a
standpoint of practical necessity must be determined in the future may
be stated in terms of present knowledge and intention. To the extent
practicable, the authority to be conferred concerning each such matter
shall be confined within limits reasonably related to the need for
discretionary authority. Subject to the foregoing, information which is
not known to the persons on whose behalf the solicitation is to be made
and which it is not reasonably within the power of such persons to
ascertain or
[[Page 156]]
procure may be omitted, if a brief statement of the circumstances
rendering such information unavailable is made.
(c) Any information contained in any other proxy soliciting material
which has been furnished to each person solicited in connection with the
same meeting or subject matter may be omitted from the proxy statement,
if a clear reference is made to the particular document containing such
information.
(d)(1) All printed proxy statements shall be in roman type at least
as large and as legible as 10-point modern type, except that to the
extent necessary for convenient presentation financial statements and
other tabular data, but not the notes thereto, may be in roman type at
least as large and as legible as 8-point modern type. All such type
shall be leaded at least 2 points.
(2) Where a proxy statement is delivered through an electronic
medium, issuers may satisfy legibility requirements applicable to
printed documents, such as type size and font, by presenting all
required information in a format readily communicated to investors.
(e) All proxy statements shall disclose, under an appropriate
caption, the date by which proposals of security holders intended to be
presented at the next annual meeting must be received by the registrant
for inclusion in the registrant's proxy statement and form of proxy
relating to that meeting, such date to be calculated in accordance with
the provisions of rule 14a-8(a)(3)(i). If the date of the next annual
meeting is subsequently advanced by more than 30 calendar days or
delayed by more than 90 calendar days from the date of the annual
meeting to which the proxy statement relates, the registrant shall, in a
timely manner, inform security holders of such change, and the date by
which proposals of security holders must be received, by any means
reasonably calculated to so inform them.
(Secs. 12, 13, 14, 15(d), 23(a), 48 Stat. 892, 894, 895, 901; secs. 1,
3, 8, 49 Stat. 1375, 1377, 1379; sec. 203(a), 49 Stat. 704; sec. 202, 68
Stat. 686; secs. 3, 4, 5, 6, 78, Stat. 565-568, 569, 570-574; secs. 1,
2, 3, 82 Stat. 454, 455, secs. 28(c), 1, 2, 3-5, 84 Stat. 1435, 1497;
secs. 10, 18, 89 Stat. 119, 155; sec. 308(b), 90 Stat. 57; sec. 204, 91
Stat. 1500; 15 U.S.C. 78l, 78m, 78n, 78o(d), 78w(a))
[17 FR 11432, Dec. 18, 1952, as amended at 36 FR 8935, May 15, 1971; 37
FR 23179, Oct. 31, 1972; 44 FR 68770, Nov. 29, 1979; 51 FR 42061, Nov.
20, 1986; 61 FR 24656, May 15, 1996]
Sec. 240.14a-6 Filing requirements.
(a) Preliminary proxy statement. Five preliminary copies of the
proxy statement and form of proxy shall be filed with the Commission at
least 10 calendar days prior to the date definitive copies of such
material are first sent or given to security holders, or such shorter
period prior to that date as the Commission may authorize upon a showing
of good cause thereunder. A registrant, however, shall not file with the
Commission a preliminary proxy statement, form of proxy or other
soliciting material to be furnished to security holders concurrently
therewith if the solicitation relates to an annual (or special meeting
in lieu of the annual) meeting, or for an investment company registered
under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or a
business development company, if the solicitation relates to any meeting
of security holders at which the only matters to be acted upon are:
(1) The election of directors;
(2) The election, approval or ratification of accountant(s);
(3) A security holder proposal included pursuant to Rule 14a-8
(Sec. 240.14a-8 of this chapter);
(4) The approval or ratification of a plan as defined in paragraph
(a)(7)(ii) of Item 402 of Regulation S-K (Sec. 229.402(a)(7)(ii) of this
chapter) or amendments to such a plan;
[[Page 157]]
(5) With respect to an investment company registered under the
Investment Company Act of 1940 or a business development company, a
proposal to continue, without change, any advisory or other contract or
agreement that previously has been the subject of a proxy solicitation
for which proxy material was filed with the Commission pursuant to this
section; and/or
(6) With respect to an open-end investment company registered under
the Investment Company Act of 1940, a proposal to increase the number of
shares authorized to be issued.
This exclusion from filing preliminary proxy material does not apply if
the registrant comments upon or refers to a solicitation in opposition
in connection with the meeting in its proxy material.
Note 1: The filing of revised material does not recommence the ten
day time period unless the revised material contains material revisions
or material new proposal(s) that constitute a fundamental change in the
proxy material.
Note 2: The official responsible for the preparation of the proxy
material should make every effort to verify the accuracy and
completeness of the information required by the applicable rules. The
preliminary material should be filed with the Commission at the earliest
practicable date.
Note 3: Solicitation in Opposition. For purposes of the exclusion
from filing preliminary proxy material, a ``solicitation in opposition''
includes: (a) Any solicitation opposing a proposal supported by the
registrant; and (b) any solicitation supporting a proposal that the
registrant does not expressly support, other than a security holder
proposal included in the registrant's proxy material pursuant to Rule
14a-8 (Sec. 240.14a-8 of this chapter). The inclusion of a security
holder proposal in the registrant's proxy material pursuant to Rule 14a-
8 does not constitute a ``solicitation in opposition,'' even if the
registrant opposes the proposal and/or includes a statement in
opposition to the proposal.
Note 4: A registrant that is filing proxy material in preliminary
form only because the registrant has commented on or referred to a
solicitation in opposition should indicate that fact in a transmittal
letter when filing the preliminary material with the Commission.
(b) Definitive proxy statement and other soliciting materials. Eight
definitive copies of the proxy statement, form of proxy and all other
soliciting material, in the form in which such material is furnished to
security holders, shall be filed with, or mailed for filing to, the
Commission not later than the date such material is first sent or given
to any security holders. Three copies of such material shall at the same
time be filed with, or mailed for filing to, each national securities
exchange upon which any class of securities of the registrant is listed
and registered.
Note: A registrant that is filing definitive proxy material without
payment of a fee should state in the first paragraph of the transmittal
letter that no fee is being paid because a fee was paid upon filing of
preliminary proxy material.
(c) Personal solicitation materials. If the solicitation is to be
made in whole or in part by personal solicitation, eight copies of all
written instructions or other material which discusses or reviews, or
comments upon the merits of, any matter to be acted upon and which is
furnished to the persons making the actual solicitation for their use
directly or indirectly in connection with the solicitation shall be
filed with, or mailed for filing to, the Commission by the person on
whose behalf the solicitation is made not later than the date any such
material is first sent or given to such individuals.
(d) Release dates. All preliminary proxy statements and forms of
proxy filed pursuant to paragraph (a) of this section shall be
accompanied by a statement of the date on which definitive copies
thereof filed pursuant to paragraph (b) of this section are intended to
be released to security holders. All definitive material filed pursuant
to paragraph (b) of this section shall be accompanied by a statement of
the date on which copies of such material were released to security
holders, or, if not released, the date on which copies thereof are
intended to be released. All material filed pursuant to paragraph (c) of
this section shall be accompanied by a statement of the date on which
copies thereof were released to the individual who will make the actual
solicitation or if not released, the date on which copies thereof are
intended to be released.
[[Page 158]]
(e)(1) Public availability of information. All copies of preliminary
proxy statements and forms of proxy filed pursuant to paragraph (a) of
this section shall be clearly marked ``Preliminary Copies,'' and shall
be deemed immediately available for public inspection unless
confidential treatment is obtained pursuant to paragraph (e)(2) of this
section.
(2) Confidential treatment. If action is to be taken with respect to
any matter specified in Item 14 of Schedule 14A (Sec. 240.14a-101), all
copies of the preliminary proxy statement and form of proxy filed
pursuant to paragraph (a) of this section shall be for the information
of the Commission only and shall not be deemed available for public
inspection until filed with the Commission in definitive form, provided
that:
(i) The proxy statement does not relate to a matter or proposal
subject to Sec. 240.13e-3 or a roll-up transaction as defined in Item
901(c) of Regulation S-K (Sec. 229.901(c) of this chapter); and
(ii) The filed material is marked ``Confidential, For Use of the
Commission Only.'' In any and all cases, such material may be disclosed
to any department or agency of the United States Government and to the
Congress, and the Commission may make such inquiries or investigation in
regard to the material as may be necessary for an adequate review
thereof by the Commission.
(f) Communications not required to be filed. Copies of replies to
inquiries from security holders requesting further information and
copies of communications which do no more than request that forms of
proxy theretofore solicited be signed and returned need not be filed
pursuant to this section.
(g) Solicitations subject to Sec. 240.14a-2(b)(1). (1) Any person
who:
(i) Engages in a solicitation pursuant to Sec. 240.14a-2(b)(1), and
(ii) At the commencement of that solicitation owns beneficially
securities of the class which is the subject of the solicitation with a
market value of over $5 million,
shall furnish or mail to the Commission, not later than three days after
the date the written solicitation is first sent or given to any security
holder, five copies of a statement containing the information specified
in the Notice of Exempt Solicitation (Sec. 240.14a-103) which statement
shall attach as an exhibit all written soliciting materials. Five copies
of an amendment to such statement shall be furnished or mailed to the
Commission, in connection with dissemination of any additional
communications, not later than three days after the date the additional
material is first sent or given to any security holder. Three copies of
the Notice of Exempt Solicitation and amendments thereto shall, at the
same time the materials are furnished or mailed to the Commission, be
furnished or mailed to each national securities exchange upon which any
class of securities of the registrant is listed and registered.
(2) Notwithstanding paragraph (g)(1) of this section, no such
submission need be made with respect to oral solicitations (other than
with respect to scripts used in connection with such oral
solicitations), speeches delivered in a public forum, press releases,
published or broadcast opinions, statements, and advertisements
appearing in a broadcast media, or a newspaper, magazine or other bona
fide publication disseminated on a regular basis.
(h) Revised material. Where any proxy statement, form of proxy or
other material filed pursuant to this section is amended or revised, two
of the copies of such amended or revised material filed pursuant to this
section (or in the case of investment companies registered under the
Investment Company Act of 1940, three of such copies) shall be marked to
indicate clearly and precisely the changes effected therein. If the
amendment or revision alters the text of the material the changes in
such text shall be indicated by means of underscoring or in some other
appropriate manner.
(i) Fees. At the time of filing the proxy solicitation material, the
persons upon whose behalf the solicitation is made, other than
investment companies registered under the Investment Company Act of
1940, shall pay to the Commission the following applicable fee:
(1) For preliminary proxy material involving acquisitions, mergers,
spinoffs, consolidations or proposed sales or
[[Page 159]]
other dispositions of substantially all the assets of the company, a fee
established in accordance with Rule 0-11 (Sec. 240.0-11 of this chapter)
shall be paid. No refund shall be given.
(2) For all other proxy submissions and submissions made pursuant to
Sec. 240.14a-6(g), no fee shall be required.
(j) Merger proxies. Notwithstanding the foregoing provisions of this
section, any proxy statement, form of proxy or other soliciting material
included in a registration statement filed under the Securities Act of
1933 on Form N-14, S-4 or F-4 (Sec. 239.23, Sec. 239.25 or Sec. 239.34
of this chapter) shall be deemed filed both for the purposes of that Act
and for the purposes of this section, but separate copies of such
material need not be furnished pursuant to this section nor shall any
fee be required under paragraph (i) of this section. However, any
additional soliciting material used after the effective date of the
registration statement on Form N-14, S-4 or F-4 shall be filed in
accordance with this section unless separate copies of such material are
required to be filed as an amendment of such registration statement.
(k) Computing time periods. In computing time periods beginning with
the filing date specified in Regulation 14A (Secs. 240.14a-1 to 240.14b-
1 of this chapter), the filing date shall be counted as the first day of
the time period and midnight of the last day shall constitute the end of
the specified time period.
(l) Roll-up transactions. If a transaction is a roll-up transaction
as defined in Item 901(c) of Regulation S-K (17 CFR 229.901(c)) and is
registered (or authorized to be registered) on Form S-4 (17 CFR 229.25)
or Form F-4 (17 CFR 229.34), the proxy statement of the sponsor or the
general partner as defined in Item 901(d) and Item 901(a), respectively,
of Regulation S-K (17 CFR 229.901) must be distributed to security
holders no later than the lesser of 60 calendar days prior to the date
on which the meeting of security holders is held or action is taken, or
the maximum number of days permitted for giving notice under applicable
state law.
(m) Cover page. Proxy materials filed with the Commission shall
include a cover page in the form set forth in Schedule 14A
(Sec. 240.14a-101 of this chapter). The cover page required by this
paragraph need not be distributed to security holders.
(n) Solicitations subject to Sec. 240.14a-2(b)(4). Any person who:
(1) Engages in a solicitation pursuant to Sec. 240.14a-2(b)(4); and
(2) At the commencement of that solicitation both owns five percent
(5%) or more of the outstanding securities of a class that is the
subject of the proposed roll-up transaction, and engages in the business
of buying and selling limited partnership interests in the secondary
market, shall furnish or mail to the Commission, not later than three
days after the date an oral or written solicitation by that person is
first made, sent or provided to any security holder, five copies of a
statement containing the information specified in the Notice of Exempt
Preliminary Roll-up Communication (Sec. 240.14a-104). Five copies of any
amendment to such statement shall be furnished or mailed to the
Commission not later than three days after a communication containing
revised material is first made, sent or provided to any security holder.
[17 FR 11432, Dec. 18, 1952]
Editorial Note: For Federal Register citations affecting
Sec. 240.14a-6, see the List of CFR Sections Affected in the Finding
Aids section of this volume.
Sec. 240.14a-7 Obligations of registrants to provide a list of, or mail soliciting material to, security holders.
(a) If the registrant has made or intends to make a proxy
solicitation in connection with a security holder meeting or action by
consent or authorization, upon the written request by any record or
beneficial holder of securities of the class entitled to vote at the
meeting or to execute a consent or authorization to provide a list of
security holders or to mail the requesting security holder's materials,
regardless of whether the request references this section, the
registrant shall:
(1) Deliver to the requesting security holder within five business
days after receipt of the request:
(i) Notification as to whether the registrant has elected to mail
the security holder's soliciting materials or provide a security holder
list if the election
[[Page 160]]
under paragraph (b) of this section is to be made by the registrant;
(ii) A statement of the approximate number of record holders and
beneficial holders, separated by type of holder and class, owning
securities in the same class or classes as holders which have been or
are to be solicited on management's behalf, or any more limited group of
such holders designated by the security holder if available or
retrievable under the registrant's or its transfer agent's security
holder data systems; and
(iii) The estimated cost of mailing a proxy statement, form of proxy
or other communication to such holders, including to the extent known or
reasonably available, the estimated costs of any bank, broker, and
similar person through whom the registrant has solicited or intends to
solicit beneficial owners in connection with the security holder meeting
or action;
(2) Perform the acts set forth in either paragraphs (a)(2)(i) or
(a)(2)(ii) of this section, at the registrant's or requesting security
holder's option, as specified in paragraph (b) of this section:
(i) Mail copies of any proxy statement, form of proxy or other
soliciting material furnished by the security holder to the record
holders, including banks, brokers, and similar entities, designated by
the security holder. A sufficient number of copies must be mailed to the
banks, brokers and similar entities for distribution to all beneficial
owners designated by the security holder. The registrant shall mail the
security holder material with reasonable promptness after tender of the
material to be mailed, envelopes or other containers therefor, postage
or payment for postage and other reasonable expenses of effecting such
mailing. The registrant shall not be responsible for the content of the
material; or
(ii) Deliver the following information to the requesting security
holder within five business days of receipt of the request: a reasonably
current list of the names, addresses and security positions of the
record holders, including banks, brokers and similar entities, holding
securities in the same class or classes as holders which have been or
are to be solicited on management's behalf, or any more limited group of
such holders designated by the security holder if available or
retrievable under the registrant's or its transfer agent's security
holder data systems; the most recent list of names, addresses and
security positions of beneficial owners as specified in Sec. 240.14a-
13(b), in the possession, or which subsequently comes into the
possession, of the registrant. All security holder list information
shall be in the form requested by the security holder to the extent that
such form is available to the registrant without undue burden or
expense. The registrant shall furnish the security holder with updated
record holder information on a daily basis or, if not available on a
daily basis, at the shortest reasonable intervals, provided, however,
the registrant need not provide beneficial or record holder information
more current than the record date for the meeting or action.
(b)(1) The requesting security holder shall have the options set
forth in paragraph (a)(2) of this section, and the registrant shall have
corresponding obligations, if the registrant or general partner or
sponsor is soliciting or intends to solicit with respect to:
(i) A proposal that is subject to Sec. 240.13e-3;
(ii) A roll-up transaction as defined in Item 901(c) of Regulation
S-K (Sec. 229.901(c) of this chapter) that involves an entity with
securities registered pursuant to Section 12 of the Act (15 U.S.C. 78l);
or
(iii) A roll-up transaction as defined in Item 901(c) of Regulation
S-K (Sec. 229.901(c) of this chapter) that involves a limited
partnership, unless the transaction involves only:
(A) Partnerships whose investors will receive new securities or
securities in another entity that are not reported under a transaction
reporting plan declared effective before December 17, 1993 by the
Commission under Section 11A of the Act (15 U.S.C. 78k-1); or
(B) Partnerships whose investors' securities are reported under a
transaction reporting plan declared effective before December 17, 1993
by the Commission under Section 11A of the Act (15 U.S.C. 78k-1).
(2) With respect to all other requests pursuant to this section, the
registrant
[[Page 161]]
shall have the option to either mail the security holder's material or
furnish the security holder list as set forth in this section.
(c) At the time of a list request, the security holder making the
request shall:
(1) If holding the registrant's securities through a nominee,
provide the registrant with a statement by the nominee or other
independent third party, or a copy of a current filing made with the
Commission and furnished to the registrant, confirming such holder's
beneficial ownership; and
(2) Provide the registrant with an affidavit, declaration,
affirmation or other similar document provided for under applicable
state law identifying the proposal or other corporate action that will
be the subject of the security holder's solicitation or communication
and attesting that:
(i) The security holder will not use the list information for any
purpose other than to solicit security holders with respect to the same
meeting or action by consent or authorization for which the registrant
is soliciting or intends to solicit or to communicate with security
holders with respect to a solicitation commenced by the registrant; and
(ii) The security holder will not disclose such information to any
person other than a beneficial owner for whom the request was made and
an employee or agent to the extent necessary to effectuate the
communication or solicitation.
(d) The security holder shall not use the information furnished by
the registrant pursuant to paragraph (a)(2)(ii) of this section for any
purpose other than to solicit security holders with respect to the same
meeting or action by consent or authorization for which the registrant
is soliciting or intends to solicit or to communicate with security
holders with respect to a solicitation commenced by the registrant; or
disclose such information to any person other than an employee, agent,
or beneficial owner for whom a request was made to the extent necessary
to effectuate the communication or solicitation. The security holder
shall return the information provided pursuant to paragraph (a)(2)(ii)
of this section and shall not retain any copies thereof or of any
information derived from such information after the termination of the
solicitation.
(e) The security holder shall reimburse the reasonable expenses
incurred by the registrant in performing the acts requested pursuant to
paragraph (a) of this section.
Note to Sec. 240.14a-7. Reasonably prompt methods of distribution to
security holders may be used instead of mailing. If an alternative
distribution method is chosen, the costs of that method should be
considered where necessary rather than the costs of mailing.
[57 FR 48292, Oct. 22, 1992, as amended at 59 FR 63684, Dec. 8, 1994; 61
FR 24657, May 15, 1996]
Sec. 240.14a-8 Proposals of security holders.
(a) If any security holder of a registrant notifies the registrant
of his intention to present a proposal for action at a forthcoming
meeting of the registrant's security holders, the registrant shall set
forth the proposal in its proxy statement and identify it in its form of
proxy and provide means by which security holders can make the
specification required by Rule 14a-4(b) (17 CFR 240.14a-4(b)).
Notwithstanding the foregoing, the registrant shall not be required to
include the proposal in its proxy statement or form of proxy unless the
security holder (hereinafter, the ``proponent'') has complied with the
requirements of this paragraph and paragraphs (b) and (c) of this
section:
(1) Eligibility. At the time he submits the proposal, the proponent
shall be a record or beneficial owner of at least 1% or $1000 in market
value of securities entitled to be voted on the proposal at the meeting
and have held such securities for at least one year, and he shall
continue to own such securities through the date on which the meeting is
held. If the registrant requests documentary support for a proponent's
claim that he is the beneficial owner of at least 1% or $1000 in market
value of such voting securities of the registrant or that he has been a
beneficial owner of the securities for one or more years, the registrant
shall make such request within 14 calendar days after receiving the
security holder proposal and the proponent shall furnish
[[Page 162]]
appropriate documentation within 21 calendar days after receiving the
request. Appropriate documentation of the proponent's claim of
beneficial ownership shall include:
(i) A written statement by a record owner or an independent third
party, accompanied by the proponent's written statement that the
proponent intends to continue ownership of such securities through the
date on which the meeting is held; or
(ii) A copy of a Schedule 13D (Sec. 240.13d-101 of this chapter),
Schedule 13G (Sec. 240.13d-102 of this chapter), Form 13F (Sec. 249.325
of this chapter), Form 3 (Sec. 249.103 of this chapter) and/or Form 4
(Sec. 249.104 of this chapter), or amendments thereto, filed with the
Commission and furnished to the registrant by the proponent, provided
that such filings indicate the proponent's beneficial ownership as of or
prior to the date on which the relevant one year period commences, and
are supported by
(A) A copy of all subsequent amendments reporting a change in
ownership level,
(B) The proponent's affidavit, declaration, affirmation or other
similar document provided for under applicable state law attesting that
the proponent continued to be the beneficial owner of at least 1% or
$1000 in market value of such voting securities of the registrant
throughout the required one year period and as of the date of the
affidavit, declaration, affirmation or other similar document provided
for under applicable state law, and
(C) The proponent's written statement that the proponent intends to
continue ownership of such securities through the date on which the
meeting is held. In the event the registrant includes the proponent's
proposal in its proxy soliciting material for the meeting and the
proponent fails to comply with the requirement that he continuously hold
such securities through the meeting date, the registrant shall not be
required to include any proposals submitted by the proponent in its
proxy material for any meeting held in the following two calendar years.
(2) Notice and attendance at the meeting. At the time he submits a
proposal, a proponent shall provide the registrant in writing with his
name, address, the number of the registrant's voting securities that he
holds of record or beneficially, the dates upon which he acquired such
securities, and documentary support for a claim of beneficial ownership.
A proposal may be presented at the meeting either by the proponent or
his representative who is qualified under state law to present the
proposal on the proponent's behalf at the meeting. In the event that the
proponent or his representative fails, without good cause, to present
the proposal for action at the meeting, the registrant shall not be
required to include any proposals submitted by the proponent in its
proxy soliciting material for any meeting held in the following two
calendar years.
(3) Timeliness. The proponent shall submit his proposal sufficiently
far in advance of the meeting so that it is received by the registrant
within the following time periods:
(i) Annual meetings. A proposal to be presented at an annual meeting
shall be received at the registrant's principal executive offices not
less than 120 calendar days in advance of the date of the registrant's
proxy statement released to security holders in connection with the
previous year's annual meeting of security holders except that if no
annual meeting was held in the previous year or the date of the annual
meeting has been changed by more than 30 calendar days from the date
contemplated at the time of the previous year's proxy statement, a
proposal shall be received by the registrant a reasonable time before
the solicitation is made.
(ii) Other meetings. A proposal to be presented at any meeting other
than an annual meeting specified in paragraph (a)(3)(i) of this section
shall be received a reasonable time before the solicitation is made.
Note: In order to curtail controversy as to the date on which a
proposal was received by the registrant, it is suggested that proponents
submit their proposals by Certified Mail-Return Receipt Requested.
(4) Number of proposals. The proponent may submit no more than one
proposal and an accompanying supporting statement for inclusion in the
registrant's proxy materials for a meeting of security holders. If the
proponent
[[Page 163]]
submits more than one proposal, or if he fails to comply with the 500
word limit mentioned in paragraph (b)(1) of this section, he shall be
provided the opportunity to reduce the items submitted by him to the
limits required by this rule, within 14 calendar days of notification of
such limitations by the registrant.
(b)(1) Supporting statement. The registrant, at the request of the
proponent, shall include in its proxy statement a statement of the
proponent in support of the proposal, which statement shall not include
the name and address of the proponent. A proposal and its supporting
statement in the aggregate shall not exceed 500 words. The supporting
statement shall be furnished to the registrant at the time that the
proposal is furnished, and the registrant shall not be responsible for
such statement and the proposal to which it relates.
(2) Identification of proponent. The proxy statement shall also
include either the name and address of the proponent and the number of
shares of the voting security held by the proponent or a statement that
such information will be furnished by the registrant to any person,
orally or in writing as requested, promptly upon the receipt of any oral
or written request therefor.
(c) The registrant may omit a proposal and any statement in support
thereof from its proxy statement and form of proxy under any of the
following circumstances:
(1) If the proposal is, under the laws of the registrant's domicile,
not a proper subject for action by security holders.
Note: Whether a proposal is a proper subject for action by security
holders will depend on the applicable state law. Under certain states'
laws, a proposal that mandates certain action by the registrant's board
of directors may not be a proper subject matter for shareholder action,
while a proposal recommending or requesting such action of the board may
be proper under such state laws.
(2) If the proposal, if implemented, would require the registrant to
violate any state law or Federal law of the United States, or any law of
any foreign jurisdiction to which the registrant is subject, except that
this provision shall not apply with respect to any foreign law
compliance with which would be violative of any state law or Federal law
of the United States.
(3) If the proposal or the supporting statement is contrary to any
of the Commission's proxy rules and regulations, including Rule 14a-9
(Sec. 240.14a-9 of this chapter), which prohibits false or misleading
statements in proxy soliciting materials;
(4) If the proposal relates to the redress of a personal claim or
grievance against the registrant or any other person, or if it is
designed to result in a benefit to the proponent or to further a
personal interest, which benefit or interest is not shared with the
other security holders at large;
(5) If the proposal relates to operations which account for less
than 5 percent of the registrant's total assets at the end of its most
recent fiscal year, and for less than 5 percent of its net earnings and
gross sales for its most recent fiscal year, and is not otherwise
significantly related to the registrant's business;
(6) If the proposal deals with a matter beyond the registrant's
power to effectuate;
(7) If the proposal deals with a matter relating to the conduct of
the ordinary business operations of the registrant;
(8) If the proposal relates to an election to office;
(9) If the proposal is counter to a proposal to be submitted by the
registrant at the meeting;
(10) If the proposal has been rendered moot;
(11) If the proposal is substantially duplicative of a proposal
previously submitted to the registrant by another proponent, which
proposal will be included in the registrant's proxy material for the
meeting;
(12) If the proposal deals with substantially the same subject
matter as a prior proposal submitted to security holders in the
registrant's proxy statement and form of proxy relating to any annual or
special meeting of security holders held within the preceding five
calendar years, it may be omitted from the registrant's proxy materials
relating to any meeting of security holders held within three calendar
years after
[[Page 164]]
the latest such previous submission: Provided, That--
(i) If the proposal was submitted at only one meeting during such
preceding period, it received less than three percent of the total
number of votes cast in regard thereto; or
(ii) If the proposal was submitted at only two meetings during such
preceding period, it received at the time of its second submission less
than six percent of the total number of votes cast in regard thereto; or
(iii) If the prior proposal was submitted at three or more meetings
during such preceding period, it received at the time of its latest
submission less than 10 percent of the total number of votes cast in
regard thereto; or
(13) If the proposal relates to specific amounts of cash or stock
dividends.
(d) Whenever the registrant asserts, for any reason, that a proposal
and any statement in support thereof received from a proponent may
properly be omitted from its proxy statement and form of proxy, it shall
file with the Commission, not later than 80 calendar days prior to the
date the definitive copies of the proxy statement and form of proxy are
filed pursuant to Rule 14a-6 (Sec. 240.14a-6 of this chapter), or such
shorter period prior to such date as the Commission or its staff may
permit, six copies of the following items:
(1) The proposal;
(2) Any statement in support thereof as received from the proponent;
(3) A statement of the reasons why the registrant deems such
omission to be proper in the particular case; and
(4) Where such reasons are based on matters of law, a supporting
opinion of counsel. The registrant shall at the same time, if it has not
already done so, notify the proponent of its intention to omit the
proposal from its proxy statement and form of proxy and shall forward to
him a copy of the statement of reasons why the registrant deems the
omission of the proposal to be proper and a copy of such supporting
opinion of counsel.
(e) If the registrant intends to include in the proxy statement a
statement in opposition to a proposal received from a proponent, it
shall, not later than 30 calendar days prior to the date the definitive
copies of the proxy statement and form of proxy are filed pursuant to
Rule 14a-6, or, in the event that the proposal must be revised to be
includable, not later than five calendar days after receipt by the
registrant of the revised proposal, promptly forward to the proponent a
copy of the statement in opposition to the proposal. In the event the
proponent believes that the statement in opposition contains materially
false or misleading statements within the meaning of Rule 14a-9 and the
proponent wishes to bring this matter to the attention of the
Commission, the proponent promptly should provide the staff with a
letter setting forth the reasons for this view and a copy of the
statement in opposition and at the same time promptly provide the
registrant with a copy of his letter.
(Secs. 14(a) and 23(a), 48 Stat. 895 and 901; sec. 12(e) and 20(a), 49
Stat. 823 and 833; sec. 20(a) and 38(a), 54 Stat. 822 and 841; 15 U.S.C.
78n(a); 78w(a), 79(e), 79t(a), 80a-20(a), 80a-37(a))
[48 FR 38222, Aug. 23, 1983, as amended at 50 FR 48181, Nov. 22, 1985;
51 FR 42062, Nov. 20, 1986; 52 FR 21936, June 10, 1987; 52 FR 48983,
Dec. 29, 1987]
Sec. 240.14a-9 False or misleading statements.
(a) No solicitation subject to this regulation shall be made by
means of any proxy statement, form of proxy, notice of meeting or other
communication, written or oral, containing any statement which, at the
time and in the light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or which omits to
state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in
any earlier communication with respect to the solicitation of a proxy
for the same meeting or subject matter which has become false or
misleading.
(b) The fact that a proxy statement, form of proxy or other
soliciting material has been filed with or examined by the Commission
shall not be deemed a finding by the Commission that such material is
accurate or complete or not false or misleading, or that the Commission
has passed upon the merits of or approved any statement contained
[[Page 165]]
therein or any matter to be acted upon by security holders. No
representation contrary to the foregoing shall be made.
Note: The following are some examples of what, depending upon
particular facts and circumstances, may be misleading within the meaning
of this section.
(a) Predictions as to specific future market values.
(b) Material which directly or indirectly impugns character,
integrity or personal reputation, or directly or indirectly makes
charges concerning improper, illegal or immoral conduct or associations,
without factual foundation.
(c) Failure to so identify a proxy statement, form of proxy and
other soliciting material as to clearly distinguish it from the
soliciting material of any other person or persons soliciting for the
same meeting or subject matter.
(d) Claims made prior to a meeting regarding the results of a
solicitation.
(Secs. 19(a), 3(b), 23(a)(1), 20, 319(a), 48 Stat. 85, 882, 901; sec.
209, 48 Stat. 908; 49 Stat. 833; sec. 203(a), 49 Stat. 704; sec. 8, 49
Stat. 1379; 53 Stat. 1173; secs. 3, 18, 89 Stat. 97, 155; sec.
308(a)(2), 90 Stat. 57; 15 U.S.C. 77s(a), 78c(b), 78w(a)(1), 79t,
77sss(a))
[31 FR 212, Jan. 7, 1966, as amended at 41 FR 19933, May 14, 1976; 44 FR
38815, July 2, 1979; 44 FR 68456, Nov. 29, 1979]
Sec. 240.14a-10 Prohibition of certain solicitations.
No person making a solicitation which is subject to Secs. 240.14a-1
to 240.14a-10 shall solicit:
(a) Any undated or postdated proxy; or
(b) Any proxy which provides that it shall be deemed to be dated as
of any date subsequent to the date on which it is signed by the security
holder.
[17 FR 11434, Dec. 18, 1952]
Sec. 240.14a-11 Special provisions applicable to election contests.
(a) Solicitations to which this section applies. This section
applies to any solicitation subject to Secs. 240.14a-1 to 240.14a-11 by
any person or group of persons for the purpose of opposing a
solicitation subject to Secs. 240.14a-1 to 240.14a-11 by any other
person or group of persons with respect to the election or removal of
directors at any annual or special meeting of security holders.
(b) Solicitations prior to furnishing required written proxy
statement. Notwithstanding the provisions of Rule 14a-3(a)
(Sec. 240.14a-3(a)), a solicitation subject to this section may be made
prior to furnishing security holders a written proxy statement
containing the information specified in Schedule 14A (Sec. 240.14a-101)
with respect to such solicitation: Provided, That--
(1) No form of proxy is furnished to security holders prior to the
time the written proxy statement required by Rule 14a-3(a)
(Sec. 240.14a-3(a)) is furnished to security holders: Provided, however,
That this paragraph (b)(1) shall not apply where a proxy statement then
meeting the requirements of Schedule 14A (Sec. 240.14a-101) has been
furnished to security holders by or on behalf of the person making the
solicitation.
(2) The identity of the participants in the solicitation (as defined
in Instruction 3 of Item 4 of Schedule 14A [Sec. 240.14a-101]) and a
description of their interests, direct or indirect, by security holdings
or otherwise, are set forth in each communication published, sent or
given to security holders in connection with the solicitation.
(3) A written proxy statement meeting the requirements of this
regulation is sent or given to security holders solicited pursuant to
this paragraph (b) at the earliest practicable date.
(c) Solicitation prior to furnishing required written proxy
statement; filing requirements. Eight copies of any soliciting material
published, sent or given to security holders prior to the furnishing of
the written proxy statement required by Sec. 240.14a-3(a) shall be filed
with, or mailed for filing to, the Commission no later than the date
such material is published, sent or given to any security holder. Three
copies of such material shall at the same time be filed with, or mailed
for filing to, each national securities exchange upon which any class of
securities of the registrant is listed and registered. Such soliciting
material filed with the Commission shall include a cover page in the
form set forth in Schedule 14A and the appropriate box on that cover
page shall be checked to indicate such filing.
(d)(1) Application of this section to annual report. Notwithstanding
the provisions of Sec. 240.14a-3 (b) and (c), three
[[Page 166]]
copies of any portion of the annual report referred to in Sec. 240.14a-
3(b) which comments upon or refers to any solicitation subject to this
section, or to any participant in any such solicitation, other than the
solicitation by the management, shall be filed with the Commission as
proxy material subject to Secs. 240.14a-1 to 240.14a-11.
(2) Electronic filers. Any portion of the annual report to security
holders required to be filed with the Commission pursuant to paragraph
(d)(1) of this section shall be filed with the Commission in electronic
format.
(e) Application of Sec. 240.14a-6. The provisions of paragraphs (b),
(c), (d), and (e) of Sec. 240.14a-6 shall apply, to the extent
pertinent, to soliciting material subject to paragraphs (c) and (d) of
this section.
(f) Use of reprints or reproductions. In any solicitation subject to
this section, soliciting material which includes, in whole or part, any
reprints or reproductions of any previously published material shall:
(1) State the name of the author and publication, the date of prior
publication, and identify any person who is quoted without being named
in the previously published material.
(2) Except in the case of a public official document or statement,
state whether or not the consent of the author and publication has been
obtained to the use of the previously published material as proxy
soliciting material.
(3) If any participant using the previously published material, or
anyone on his behalf, paid, directly or indirectly, for the preparation
or prior publication of the previously published material, or has made
or proposes to make any payments or give any other consideration in
connection with the publication or republication of such material, state
the circumstances.
[21 FR 579, Jan. 26, 1956, as amended at 31 FR 212, Jan. 7, 1966; 32 FR
20964, Dec. 29, 1967; 33 FR 2993, Feb. 15, 1968; 44 FR 68456, Nov. 29,
1979; 44 FR 71821, Dec. 12, 1979; 51 FR 42062, Nov. 20, 1986; 52 FR
21936, June 10, 1987; 57 FR 48293, Oct. 22, 1992; 58 FR 14683, Mar. 18,
1993]
Sec. 240.14a-12 Solicitation prior to furnishing required proxy statement.
(a) Notwithstanding the provisions of Rule 14a-3(a) (Sec. 240.14a-
3(a)), a solicitation (other than one subject to Rule 14a-11
(Sec. 240.14a-11) may be made prior to furnishing security holders a
written proxy statement meeting the requirements of Rule 14a-3(a) if--
(1) The solicitation is made in opposition to a prior solicitation
or an invitation for tenders or other publicized activity, which if
successful, could reasonably have the effect of defeating the action
proposed to be taken at the meeting;
(2) No form of proxy is furnished to security holders prior to the
time the written proxy statement required by Rule 14a-3(a)
(Sec. 240.14a-3(a)) is furnished to security holders: Provided, however,
That this subparagraph (2) shall not apply where a proxy statement then
meeting the requirements of Rule 14a-3(a) has been furnished to security
holders by or on behalf of the person making the solicitation.
(3) The identity of the participants in the solicitation (as defined
in Instruction 3 to Item 4 of Schedule 14A [Sec. 240.14a-101]) and a
description of their interests direct or indirect, by security holdings
or otherwise, are set forth in each communication published, sent or
given to security holders in connection with the solicitation; and
(4) A written proxy statement meeting the requirements of this
regulation is sent or given to security holders solicited pursuant to
this section at the earliest practicable date.
(b) Eight copies of any soliciting material published, sent or given
to security holders prior to the furnishing of a written proxy statement
required by Rule 14a-3(a) [Sec. 240.14a-3(a)] shall be filed with, or
mailed for filing to, the Commission no later than the date such
material is published, sent or given to any security holders. Three
copies of such material shall at the same time be filed with, or mailed
for filing to, each national securities exchange upon which any class of
securities of the registrant is listed and registered. Such soliciting
material shall include a cover page in the form set forth in Schedule
14A and the appropriate box on that cover page shall be checked to
indicate such filing.
[31 FR 213, Jan. 7, 1966, as amended at 45 FR 63659, Sept. 25, 1980; 57
FR 48293, 0ct. 22, 1992; 58 FR 14683, Mar. 18, 1993]
[[Page 167]]
Sec. 240.14a-13 Obligation of registrants in communicating with beneficial owners.
(a) If the registrant knows that securities of any class entitled to
vote at a meeting (or by written consents or authorizations if no
meeting is held) with respect to which the registrant intends to solicit
proxies, consents or authorizations are held of record by a broker,
dealer, voting trustee, bank, association, or other entity that
exercises fiduciary powers in nominee name or otherwise, the registrant
shall:
(1) By first class mail or other equally prompt means:
(i) Inquire of each such record holder:
(A) Whether other persons are the beneficial owners of such
securities and if so, the number of copies of the proxy and other
soliciting material necessary to supply such material to such beneficial
owners;
(B) In the case of an annual (or special meeting in lieu of the
annual) meeting, or written consents in lieu of such meeting, at which
directors are to be elected, the number of copies of the annual report
to security holders necessary to supply such report to beneficial owners
to whom such reports are to be distributed by such record holder or its
nominee and not by the registrant;
(C) If the record holder has an obligation under Sec. 240.14b-
1(b)(3) or Sec. 240.14b-2(b)(4)(ii) and (iii), whether an agent has been
designated to act on its behalf in fulfilling such obligation and, if
so, the name and address of such agent; and
(D) Whether it holds the registrant's securities on behalf of any
respondent bank and, if so, the name and address of each such respondent
bank; and
(ii) Indicate to each such record holder:
(A) Whether the registrant, pursuant to paragraph (c) of this
section, intends to distribute the annual report to security holders to
beneficial owners of its securities whose names, addresses and
securities positions are disclosed pursuant to Sec. 240.14b-1(b)(3) or
Sec. 240.14b-2(b)(4)(ii) and (iii);
(B) The record date; and
(C) At the option of the registrant, any employee benefit plan
established by an affiliate of the registrant that holds securities of
the registrant that the registrant elects to treat as exempt employee
benefit plan securities;
(2) Upon receipt of a record holder's or respondent bank's response
indicating, pursuant to Sec. 240.14b-2(b)(1)(i), the names and addresses
of its respondent banks, within one business day after the date such
response is received, make an inquiry of and give notification to each
such respondent bank in the same manner required by paragraph (a)(1) of
this section; Provided, however, the inquiry required by paragraphs
(a)(1) and (a)(2) of this section shall not cover beneficial owners of
exempt employee benefit plan securities;
(3) Make the inquiry required by paragraph (a)(1) of this section at
least 20 business days prior to the record date of the meeting of
security holders, or
(i) If such inquiry is impracticable 20 business days prior to the
record date of a special meeting, as many days before the record date of
such meeting as is practicable or,
(ii) If consents or authorizations are solicited, and such inquiry
is impracticable 20 business days before the earliest date on which they
may be used to effect corporate action, as many days before that date as
is practicable, or
(iii) At such later time as the rules of a national securities
exchange on which the class of securities in question is listed may
permit for good cause shown; Provided, however, That if a record holder
or respondent bank has informed the registrant that a designated
office(s) or department(s) is to receive such inquiries, the inquiry
shall be made to such designated office(s) or department(s); and
(4) Supply, in a timely manner, each record holder and respondent
bank of whom the inquiries required by paragraphs (a)(1) and (a)(2) of
this section are made with copies of the proxy, other proxy soliciting
material, and/or the annual report to security holders, in such
quantities, assembled in such form and at such place(s), as the record
holder or respondent bank may reasonably request in order to send such
material to each beneficial owner of securities who is to be furnished
with such
[[Page 168]]
material by the record holder or respondent bank; and
(5) Upon the request of any record holder or respondent bank that is
supplied with proxy soliciting material and/or annual reports to
security holders pursuant to paragraph (a)(4) of this section, pay its
reasonable expenses for completing the mailing of such material to
beneficial owners.
Note 1: If the registrant's list of security holders indicates that
some of its securities are registered in the name of a clearing agency
registered pursuant to Section 17A of the Act (e.g., ``Cede & Co.,''
nominee for the Depository Trust Company), the registrant shall make
appropriate inquiry of the clearing agency and thereafter of the
participants in such clearing agency who may hold on behalf of a
beneficial owner or respondent bank, and shall comply with the above
paragraph with respect to any such participant (see Sec. 240.14a-1(i)).
Note 2: The attention of registrants is called to the fact that each
broker, dealer, bank, association, and other entity that exercises
fiduciary powers has an obligation pursuant to Sec. 240.14b-1 and
Sec. 240.14b-2 (except as provided therein with respect to exempt
employee benefit plan securities held in nominee name) and, with respect
to brokers and dealers, applicable self-regulatory organization
requirements to obtain and forward, within the time periods prescribed
therein, (a) proxies (or in lieu thereof requests for voting
instructions) and proxy soliciting materials to beneficial owners on
whose behalf it holds securities, and (b) annual reports to security
holders to beneficial owners on whose behalf it holds securities, unless
the registrant has notified the record holder or respondent bank that it
has assumed responsibility to mail such material to beneficial owners
whose names, addresses, and securities positions are disclosed pursuant
to Sec. 240.14b-1(b)(3) and Sec. 240.14b-2(b)(4)(ii) and (iii).
Note 3: The attention of registrants is called to the fact that
registrants have an obligation, pursuant to paragraph (d) of this
section, to cause proxies (or in lieu thereof requests for voting
instructions), proxy soliciting material and annual reports to security
holders to be furnished, in a timely manner, to beneficial owners of
exempt employee benefit plan securities.
(b) Any registrant requesting pursuant to Sec. 240.14b-1(b)(3) or
Sec. 240.14b-2(b)(4)(ii) and (iii) a list of names, addresses and
securities positions of beneficial owners of its securities who either
have consented or have not objected to disclosure of such information
shall:
(1) By first class mail or other equally prompt means, inquire of
each record holder and each respondent bank identified to the registrant
pursuant to Sec. 240.14b-2(b)(4)(i) whether such record holder or
respondent bank holds the registrant's securities on behalf of any
respondent banks and, if so, the name and address of each such
respondent bank;
(2) Request such list to be compiled as of a date no earlier than
five business days after the date the registrant's request is received
by the record holder or respondent bank; Provided, however, That if the
record holder or respondent bank has informed the registrant that a
designated office(s) or department(s) is to receive such requests, the
request shall be made to such designated office(s) or department(s);
(3) Make such request to the following persons that hold the
registrant's securities on behalf of beneficial owners: all brokers,
dealers, banks, associations and other entities that exercises fiduciary
powers; Provided however, such request shall not cover beneficial owners
of exempt employee benefit plan securities as defined in Sec. 240.14a-
1(d)(1); and, at the option of the registrant, such request may give
notice of any employee benefit plan established by an affiliate of the
registrant that holds securities of the registrant that the registrant
elects to treat as exempt employee benefit plan securities;
(4) Use the information furnished in response to such request
exclusively for purposes of corporate communications; and
(5) Upon the request of any record holder or respondent bank to whom
such request is made, pay the reasonable expenses, both direct and
indirect, of providing beneficial owner information.
Note: A registrant will be deemed to have satisfied its obligations
under paragraph (b) of this section by requesting consenting and non-
objecting beneficial owner lists from a designated agent acting on
behalf of the record holder or respondent bank and paying to that
designated agent the reasonable expenses of providing the beneficial
owner information.
[[Page 169]]
(c) A registrant, at its option, may mail its annual report to
security holders to the beneficial owners whose identifying information
is provided by record holders and respondent banks, pursuant to
Sec. 240.14b-1(b)(3) or Sec. 240.14b-2(b)(4)(ii) and (iii), provided
that such registrant notifies the record holders and respondent banks,
at the time it makes the inquiry required by paragraph (a) of this
section, that the registrant will mail the annual report to security
holders to the beneficial owners so identified.
(d) If a registrant solicits proxies, consents or authorizations
from record holders and respondent banks who hold securities on behalf
of beneficial owners, the registrant shall cause proxies (or in lieu
thereof requests or voting instructions), proxy soliciting material and
annual reports to security holders to be furnished, in a timely manner,
to beneficial owners of exempt employee benefit plan securities.
[51 FR 44276, Dec. 9, 1986; 52 FR 2220, Jan. 21, 1987, as amended at 52
FR 23648, June 24, 1987; 53 FR 16405, May 9, 1988; 57 FR 1099, Jan. 10,
1992]
Sec. 240.14a-14 Modified or superseded documents.
(a) Any statement contained in a document incorporated or deemed to
be incorporated by reference shall be deemed to be modified or
superseded, for purposes of the proxy statement, to the extent that a
statement contained in the proxy statement or in any other subsequently
filed document that also is or is deemed to be incorporated by reference
modifies or replaces such statement.
(b) The modifying or superseding statement may, but need not, state
it has modified or superseded a prior statement or include any other
information set forth in the document that is not so modified or
superseded. The making of a modifying or superseding statement shall not
be deemed an admission that the modified or superseded statement, when
made, constituted an untrue statement of a material fact, an omission to
state a material fact necessary to make a statement not misleading, or
the employment of a manipulative, deceptive, or fraudulent device,
contrivance, scheme, transaction, act, practice, course of business or
artifice to defraud, as those terms are used in the Securities Act of
1933, the Securities Exchange Act of 1934 (``the Act''), the Public
Utility Holding Company Act of 1935, the Investment Company Act of 1940,
or the rules and regulations thereunder.
(c) Any statement so modified shall not be deemed in its unmodified
form to constitute part of the proxy statement for purposes of the Act.
Any statement so superseded shall not be deemed to constitute a part of
the proxy statement for purposes of the Act.
[52 FR 21936, June 10, 1987]
Sec. 240.14a-15 Differential and contingent compensation in connection with roll-up transactions.
(a) It shall be unlawful for any person to receive compensation for
soliciting proxies, consents, or authorizations directly from security
holders in connection with a roll-up transaction as provided in
paragraph (b) of this section, if the compensation is:
(1) Based on whether the solicited proxy, consent, or authorization
either approves or disapproves the proposed roll-up transaction; or
(2) Contingent on the approval, disapproval, or completion of the
roll-up transaction.
(b) This section is applicable to a roll-up transaction as defined
in Item 901(c) of Regulation S-K (Sec. 229.901(c) of this chapter),
except for a transaction involving only:
(1) Finite-life entities that are not limited partnerships;
(2) Partnerships whose investors will receive new securities or
securities in another entity that are not reported under a transaction
reporting plan declared effective before December 17, 1993 by the
Commission under section 11A of the Act (15 U.S.C. 78k-1); or
(3) Partnerships whose investors' securities are reported under a
transaction reporting plan declared effective before December 17, 1993
by the Commission under section 11A of the Act (15 U.S.C. 78k-1).
[59 FR 63684, Dec. 8, 1994]
[[Page 170]]
Sec. 240.14a-101 Schedule 14A. Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by the Registrant [ ]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
_______________________________________________________________________
(Name of Registrant as Specified In Its Charter)
_______________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
(1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
_______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
(5) Total fee paid:
_______________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
_______________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________
(3) Filing Party:
_______________________________________________________________________
(4) Date Filed:
_______________________________________________________________________
Notes
Notes: A. Where any item calls for information with respect to any
matter to be acted upon and such matter involves other matters with
respect to which information is called for by other items of this
schedule, the information called for by such other items also shall be
given. For example, where a solicitation of security holders is for the
purpose of approving the authorization of additional securities which
are to be used to acquire another specified company, and the
registrants' security holders will not have a separate opportunity to
vote upon the transaction, the solicitation to authorize the securities
is also a solicitation with respect to the acquisition. Under those
facts, information required by Items 11, 13 and 14 shall be furnished.
B. Where any item calls for information with respect to any matter
to be acted upon at the meeting, such item need be answered in the
registrant's soliciting material only with respect to proposals to be
made by or on behalf of the registrant.
C. Except as otherwise specifically provided, where any item calls
for information for a specified period with regard to directors,
executive officers, officers or other persons holding specified
positions or relationships, the information shall be given with regard
to any person who held any of the specified positions or relationships
at any time during the period. Information need not be included for any
portion of the period during which such person did not hold any such
position or relationship, provided a statement to that effect is made.
D. Information may be incorporated by reference only in the manner
and to the extent specifically permitted in the items of this schedule.
Where incorporation by reference is used, the following shall apply:
1. Any incorporation by reference of information pursuant to the
provisions of this schedule shall be subject to the provisions of
Sec. 228.10(f) and Sec. 229.10(d) of this chapter restricting
incorporation by reference of documents which incorporate by reference
other information. A registrant incorporating any documents, or portions
of documents, shall include a statement on the last page(s) of the proxy
statement as to which documents, or portions of documents, are
incorporated by reference. Information shall not be incorporated by
reference in any case where such incorporation would render the
statement incomplete, unclear or confusing.
2. If a document is incorporated by reference but not delivered to
security holders, include an undertaking to provide, without
[[Page 171]]
charge, to each person to whom a proxy statement is delivered, upon
written or oral request of such person and by first class mail or other
equally prompt means within one business day of receipt of such request,
a copy of any and all of the information that has been incorporated by
reference in the proxy statement (not including exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that the
proxy statement incorporates), and the address (including title or
department) and telephone numbers to which such a request is to be
directed. This includes information contained in documents filed
subsequent to the date on which definitive copies of the proxy statement
are sent or given to security holders, up to the date of responding to
the request.
3. If a document or portion of a document other than an annual
report sent to security holders pursuant to the requirements of Rule
14a-3 (Sec. 240.14a-3 of this chapter) with respect to the same meeting
or solicitation of consents or authorizations as that to which the proxy
statement relates is incorporated by reference in the manner permitted
by Item 13(b) or 14(b) of this schedule, the proxy statement must be
sent to security holders no later than 20 business days prior to the
date on which the meeting of such security holders is held or, if no
meeting is held, at least 20 business days prior to the date the votes,
consents or authorizations may be used to effect the corporate action.
4. Electronic filings. If any of the information required by Items
13 or 14 of this Schedule is incorporated by reference from an annual or
quarterly report to security holders, such report, or any portion
thereof incorporated by reference, shall be filed in electronic format
with the proxy statement.
E. In Items 13 and 14 of this Schedule, the reference to ``meets the
requirements of Form S-2'' shall refer to a registrant or to an ``other
person'' specified in Item 14(a) of this Schedule which meets the
requirements for use of Form S-2 (Sec. 239.12 of this chapter) and the
reference to ``meets the requirement of Form S-3'' shall refer to a
registrant or to an ``other person'' specified in Item 14(a) of this
Schedule which meets the following requirements:
(1) The registrant or other person meets the requirements of General
Instruction I.A. of Form S-3 (Sec. 239.13 of this chapter); and
(2) One of the following is met:
(i) The registrant or other person meets the aggregate market value
requirement of General Instruction I.B.1 of Form S-3; or
(ii) Action is to be taken as described in Items 11, 12 and 14 of
this schedule which concerns non-convertible debt or preferred
securities which are ``investment grade securities'' as defined in
General Instruction I.B.2 of Form S-3, except that the time by which the
rating must be assigned shall be the date on which definitive copies of
the proxy statement are first sent or given to security holders; or
(iii) The registrant or other person is a majority-owned subsidiary
and one of the conditions of General Instruction I.C. of Form S-3 is
met.
F. Note to Small Business Issuers--Registrants and acquirees that
meet the definition of ``small business issuer'' under Rule 12b-2 of the
Exchange Act (Sec. 240.12b-2) shall refer to the disclosure items in
Regulation S-B (Sec. 228.10 et seq. of this chapter) and not Regulation
S-K (Sec. 229.10 et seq. of this chapter). If there is no comparable
disclosure item in Regulation S-B, small business issuers need not
provide the information requested. Small business issuers shall provide
the financial information in Item 310 of Regulation S-B in lieu of the
financial statements required in Schedule 14A.
G. Special Note for Small Business Issuers
(1) Registrants and acquirees which meet the definition of ``small
business issuer'' in Rule 12b-2 of the Exchange Act and filed their
latest annual report in accordance with ``Information Required in Annual
Report of Transitional Small Business Issuers'' in Form 10-KSB shall
refer to this ``Special Note for Small Business Issuers'' with respect
to the specified items in this Schedule. If paragraph G(2) or G(3),
below, does not contain an alternative disclosure instruction, small
business issuers should comply with the disclosure item in this
schedule, as modified by Instruction F.
(2) Registrants and acquirees which relied upon Alternative 1 in
their most recent Form 10-KSB may provide the following information
(Questions numbers are in reference to Model A of Form 1-A): (a)
Questions 37 and 38 instead of Item 6(d); (b) Question 43 instead of
Item 7(a); (c) Questions 29-36 and 39 instead of Item 7(b); (d)
Questions 40-42 instead of Item 8; (e) Questions 40-42 instead of Item
10; (e) the information required in Part F/S of Form 10-SB instead of
the financial statement requirements of Items 13 or 14; (f) Questions 4,
11 and 47-50 instead of Item 13(a)(1)(3); (g) Question 3 instead of Item
14(b)(3)(i) (A) and (B); and (h) Questions 4, 11 and 47-50 instead of
Item 14(b)(3)(i)(H).
(3) Registrants and acquirees which relied upon Alternative 2 in
their most recent Form 10-KSB may provide the following information
(``Model B'' refers to Model B of Form 1-A): (a) Item 10 of Model B
instead of Item 6(d) of Schedule 14A; (b) Item 8(d) of Model B instead
of Item 7(a) of Schedule 14A; (c) Items 8(a)-8(c) and Item 11 of Model B
instead of Item 7(b) of Schedule 14A; (d) Item 9 of Model B instead of
Item 8 of Schedule 14A; (e) Item 9 of Model B instead of Item 10 of
Schedule 14A; (f) the information required
[[Page 172]]
in Part F/S of Form 10-SB instead of the financial statement
requirements of Items 13 or 14 of Schedule 14A; (g) Item 6(a)(3)(i) of
Model B instead of Item 13(a)(1)(3) of Schedule 14A; (h) Items 6 and 7
of Model B instead of Item 14(b)(3)(i)(A) and (B) of Schedule 14A; and
(i) Item 6(a)(3)(i) of Model B instead of Item 14(b)(3)(i)(H) of
Schedule 14A.
Item 1. Date, time and place information. (a) State the date, time
and place of the meeting of security holders, and the complete mailing
address, including ZIP Code, of the principal executive offices of the
registrant, unless such information is otherwise disclosed in material
furnished to security holders with or preceding the proxy statement. If
action is to be taken by written consent, state the date by which
consents are to be submitted if state law requires that such a date be
specified or if the person soliciting intends to set a date.
(b) On the first page of the proxy statement, as delivered to
security holders, state the approximate date on which the proxy
statement and form of proxy are first sent or given to security holders.
(c) Furnish the information required to be in the proxy statement by
Rule 14a-5(e) (Sec. 240.14a-5(e) of this chapter).
Item 2. Revocability of proxy. State whether or not the person
giving the proxy has the power to revoke it. If the right of revocation
before the proxy is exercised is limited or is subject to compliance
with any formal procedure, briefly describe such limitation or
procedure.
Item 3. Dissenters' right of appraisal. Outline briefly the rights
of appraisal or similar rights of dissenters with respect to any matter
to be acted upon and indicate any statutory procedure required to be
followed by dissenting security holders in order to perfect such rights.
Where such rights may be exercised only within a limited time after the
date of adoption of a proposal, the filing of a charter amendment or
other similar act, state whether the persons solicited will be notified
of such date.
Instructions. 1. Indicate whether a security holder's failure to
vote against a proposal will constitute a waiver of his appraisal or
similar rights and whether a vote against a proposal will be deemed to
satisfy any notice requirements under State law with respect to
appraisal rights. If the State law is unclear, state what position will
be taken in regard to these matters.
2. Open-end investment companies registered under the Investment
Company Act of 1940 are not required to respond to this item.
Item 4. Persons Making the Solicitation--(a) Solicitations not
subject to Rule 14a-11 (Sec. 240.14a-11 of this chapter.) (1) If the
solicitation is made by the registrant, so state. Give the name of any
director of the registrant who has informed the registrant in writing
that he intends to oppose any action intended to be taken by the
registrant and indicate the action which he intends to oppose.
(2) If the solicitation is made otherwise than by the registrant, so
state and give the names of the participants in the solicitation, as
defined in paragraphs (a) (iii), (iv), (v) and (vi) of Instruction 3 to
this Item.
(3) If the solicitation is to be made otherwise than by the use of
the mails, describe the methods to be employed. If the solicitation is
to be made by specially, engaged employees or paid solicitors, state (i)
the material features of any contract or arrangement for such
solicitation and identify the parties, and (ii) the cost or anticipated
cost thereof.
(4) State the names of the persons by whom the cost of solicitation
has been or will be borne, directly or indirectly.
(b) Solicitations subject to Rule 14a-11 (Sec. 240.14a-11 of this
chapter). (1) State by whom the solicitation is made and describe the
methods employed and to be employed to solicit security holders.
(2) If regular employees of the registrant or any other participant
in a solicitation have been or are to be employed to solicit security
holders, describe the class or classes of employees to be so employed,
and the manner and nature of their employment for such purpose.
(3) If specially engaged employees, representatives or other persons
have been or are to be employed to solicit security holders, state (i)
the material features of any contract or arrangement for such
solicitation and the identity of the parties, (ii) the cost or
anticipated cost thereof and (iii) the approximate number of such
employees of employees or any other person (naming such other person)
who will solicit security holders).
(4) State the total amount estimated to be spent and the total
expenditures to date for, in furtherance of, or in connection with the
solicitation of security holders.
(5) State by whom the cost of the solicitation will be borne. If
such cost is to be borne initially by any person other than the
registrant, state whether reimbursement will be sought from the
registrant, and, if so, whether the question of such reimbursement will
be submitted to a vote of security holders.
(6) If any such solicitation is terminated pursuant to a settlement
between the registrant and any other participant in such solicitation,
describe the terms of such settlement, including the cost or anticipated
cost thereof to the registrant.
Instructions. 1. With respect to solicitations subject to Rule 14a-
11 (Sec. 240.14a-11 of this chapter), costs and expenditures within the
meaning of this Item 4 shall include fees for attorneys, accountants,
public relations or financial advisers, solicitors, advertising,
[[Page 173]]
printing, transportation, litigation and other costs incidental to the
solicitation, except that the registrant may exclude the amount of such
costs represented by the amount normally expended for a solicitation for
an election of directors in the absence of a contest, and costs
represented by salaries and wages of regular employees and officers,
provided a statement to that effect is included in the proxy statement.
2. The information required pursuant to paragraph (b)(6) of this
Item should be included in any amended or revised proxy statement or
other soliciting materials relating to the same meeting or subject
matter furnished to security holders by the registrant subsequent to the
date of settlement.
3. For purposes of this Item 4 and Item 5 of this Schedule 14A:
(a) The terms ``participant'' and ``participant in a solicitation''
include the following:
(i) The registrant;
(ii) Any director of the registrant, and any nominee for whose
election as a director proxies are solicited;
(iii) Any committee or group which solicits proxies, any member of
such committee or group, and any person whether or not named as a member
who, acting alone or with one or more other persons, directly or
indirectly takes the initiative, or engages, in organizing, directing,
or arranging for the financing of any such committee or group;
(iv) Any person who finances or joins with another to finance the
solicitation of proxies, except persons who contribute not more than
$500 and who are not otherwise participants;
(v) Any person who lends money or furnishes credit or enters into
any other arrangements, pursuant to any contract or understanding with a
participant, for the purpose of financing or otherwise inducing the
purchase, sale, holding or voting of securities of the registrant by any
participant or other persons, in support of or in opposition to a
participant; except that such terms do not include a bank, broker or
dealer who, in the ordinary course of business, lends money or executes
orders for the purchase or sale of securities and who is not otherwise a
participant; and
(vi) Any person who solicits proxies.
(b) The terms ``participant'' and ``participant in a solicitation''
do not include:
(i) Any person or organization retained or employed by a participant
to solicit security holders and whose activities are limited to the
duties required to be performed in the course of such employment;
(ii) Any person who merely transmits proxy soliciting material or
performs other ministerial or clerical duties;
(iii) Any person employed by a participant in the capacity of
attorney, accountant, or advertising, public relations or financial
adviser, and whose activities are limited to the duties required to be
performed in the course of such employment;
(iv) Any person regularly employed as an officer or employee of the
registrant or any of its subsidiaries who is not otherwise a
participant; or
(v) Any officer or director of, or any person regularly employed by,
any other participant, if such officer, director or employee is not
otherwise a participant.
Item 5. Interest of certain Persons in Matters To Be Acted Upon--(a)
Solicitations not subject to Rule 14a-11 (Sec. 240.14a-11 of this
chapter). Describe briefly any substantial interest, direct or indirect,
by security holdings or otherwise, of each of the following persons in
any matter to be acted upon, other than elections to office:
(1) If the solicitation is made on behalf of the registrant, each
person who has been a director or executive officer of the registrant at
any time since the beginning of the last fiscal year.
(2) If the solicitation is made otherwise than on behalf of the
registrant, each participant in the solicitation, as defined in
paragraphs (a) (iii), (iv), (v), and (vi) of Instruction 3 to Item 4 of
this Schedule 14A.
(3) Each nominee for election as a director of the registrant.
(4) Each associate of any of the foregoing persons.
Instruction. Except in the case of a solicitation subject to this
regulation made in opposition to another solicitation subject to this
regulation, this sub-item (a) shall not apply to any interest arising
from the ownership of securities of the registrant where the security
holder receives no extra or special benefit not shared on a pro rata
basis by all other holders of the same class.
(b) Solicitation subject to Rule 14a-11 (Sec. 240.14a-11 of this
chapter). With respect to any solicitation subject to Rule 14a-11
(Sec. 240.14a-11):
(1) Describe briefly any substantial interest, direct or indirect,
by security holdings or otherwise, of each participant as defined in
paragraphs (a) (ii), (iii), (iv), (v) and (vi) of Instruction 3 to Item
4 of this Schedule 14A, in any matter to be acted upon at the meeting,
and include with respect to each participant the following information,
or a fair and accurate summary thereof:
(i) Name and business address of the participant.
(ii) The participant's present principal occupation or employment
and the name, principal business and address of any corporation or other
organization in which such employment is carried on.
(iii) State whether or not, during the past ten years, the
participant has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) and, if so, give dates,
nature of conviction, name and location of court, and penalty imposed
[[Page 174]]
or other disposition of the case. A negative answer need not be included
in the proxy statement or other soliciting material.
(iv) State the amount of each class of securities of the registrant
which the participant owns beneficially, directly or indirectly.
(v) State the amount of each class of securities of the registrant
which the participant owns of record but not beneficially.
(vi) State with respect to all securities of the registrant
purchased or sold within the past two years, the dates on which they
were purchased or sold and the amount purchased or sold on each such
date.
(vii) If any part of the purchase price or market value of any of
the shares specified in paragraph (b)(1)(vi) of this Item is represented
by funds borrowed or otherwise obtained for the purpose of acquiring or
holding such securities, so state and indicate the amount of the
indebtedness as of the latest practicable date. If such funds were
borrowed or obtained otherwise than pursuant to a margin account or bank
loan in the regular course of business of a bank, broker or dealer,
briefly describe the transaction, and state the names of the parties.
(viii) State whether or not the participant is, or was within the
past year, a party to any contract, arrangements or understandings with
any person with respect to any securities of the registrant, including,
but not limited to joint ventures, loan or option arrangements, puts or
calls, guarantees against loss or guarantees of profit, division of
losses or profits, or the giving or withholding of proxies. If so, name
the parties to such contracts, arrangements or understandings and give
the details thereof.
(ix) State the amount of securities of the registrant owned
beneficially, directly or indirectly, by each of the participant's
associates and the name and address of each such associate.
(x) State the amount of each class of securities of any parent or
subsidiary of the registrant which the participant owns beneficially,
directly or indirectly.
(xi) Furnish for the participant and associates of the participant
the information required by Item 404(a) of Regulation S-K
(Sec. 229.404(a) of this chapter).
(xii) State whether or not the participant or any associates of the
participant have any arrangement or understanding with any person--
(A) with respect to any future employment by the registrant or its
affiliates; or
(B) with respect to any future transactions to which the registrant
or any of its affiliates will or may be a party.
If so, describe such arrangement or understanding and state the names of
the parties thereto.
(2) With respect to any person, other than a director or executive
officer of the registrant acting solely in that capacity, who is a party
to an arrangement or understanding pursuant to which a nominee for
election as director is proposed to be elected, describe any substantial
interest, direct or indirect, by security holdings or otherwise, that
such person has in any matter to be acted upon at the meeting, and
furnish the information called for by paragraphs (b)(1) (xi) and (xii)
of this Item.
Instruction: For purposes of this Item 5, beneficial ownership shall
be determined in accordance with Rule 13d-3 under the Act (Section
240.13d-3 of this chapter).
Item 6. Voting securities and principal holders thereof, (a) As to
each class of voting securities of the registrant entitled to be voted
at the meeting (or by written consents or authorizations if no meeting
is held), state the number of shares outstanding and the number of votes
to which each class is entitled.
(b) State the record date, if any, with respect to this
solicitation. If the right to vote or give consent is not to be
determined, in whole or in part, by reference to a record date, indicate
the criteria for the determination of security holders entitled to vote
or give consent.
(c) If action is to be taken with respect to the election of
directors and if the persons solicited have cumulative voting rights:
(1) Make a statement that they have such rights, (2) briefly describe
such rights, (3) state briefly the conditions precedent to the exercise
thereof, and (4) if discretionary authority to cumulate votes is
solicited, so indicate.
(d) Furnish the information required by Item 403 of Regulation S-K
(Sec. 229.403 of this chapter) to the extent known by the persons on
whose behalf the solicitation is made.
(e) If, to the knowledge of the persons on whose behalf the
solicitation is made, a change in control of the registrant has occurred
since the beginning of its last fiscal year, state the name of the
person(s) who acquired such control, the amount and the source of the
consideration used by such person or persons; the basis of the control,
the date and a description of the transaction(s) which resulted in the
change of control and the percentage of voting securities of the
registrant now beneficially owned directly or indirectly by the
person(s) who acquired control; and the identity of the person(s) from
whom control was assumed. If the source of all or any part of the
consideration used is a loan made in the ordinary course of business by
a bank as defined by section 3(a)(6) of the Act, the identity of such
bank shall be omitted provided a request for confidentiality has been
made pursuant to section 13(d)(1)(B) of the Act by the person(s) who
acquired control. In lieu thereof, the material shall indicate that the
identity of the bank has been so omitted and filed separately with the
Commission.
[[Page 175]]
Instruction. 1. State the terms of any loans or pledges obtained by
the new control group for the purpose of acquiring control, and the
names of the lenders or pledgees.
2. Any arrangements or understandings among members of both the
former and new control groups and their associates with respect to
election of directors or other matters should be described.
Item 7. Directors and executive officers. If action is to be taken
with respect to the election of directors, furnish the following
information in tabular form to the extent practicable. If, however, the
solicitation is made on behalf of persons other than the registrant, the
information required need be furnished only as to nominees of the
persons making the solicitation.
(a) The information required by instruction 4 to Item 103 of
Regulation S-K (Sec. 229.103 of this chapter) with respect to directors
and executive officers.
(b) The information required by Items 401, 404 (a) and (c), and 405
of Regulation S-K (Sec. 229.401, Sec. 229.404 and Sec. 229.405 of this
chapter).
(c) The information required by Item 404(b) of Regulation S-K
(Sec. 229.404 of this chapter).
(d) In lieu of paragraphs (a) through (c) of this Item, investment
companies registered under the Investment Company Act of 1940 shall
furnish the information required by paragraphs (1) through (5) of Item
22(b) of this Schedule 14A.
(e)(1) State whether or not the registrant has standing audit,
nominating and compensation committees of the Board of Directors, or
committees performing similar functions. If the registrant has such
committees, however designated, identify each committee member, state
the number of committee meetings held by each such committee during the
last fiscal year and describe briefly the functions performed by such
committees. In the case of investment companies registered under the
Investment Company Act of 1940, indicate by an asterisk whether that
member is an ``interested person'' as defined in section 2(a)(19) of
that Act. Information concerning compensation committees is not required
of registered investment companies whose management functions are
performed by external managers.
(2) If the registrant has a nominating or similar committee, state
whether the committee will consider nominees recommended by security
holders and, if so, describe the procedures to be followed by security
holders in submitting such recommendations.
(f) State the total number of meetings of the board of directors
(including regularly scheduled and special meetings) which were held
during the last full fiscal year. Name each incumbent director who
during the last full fiscal year attended fewer than 75 percent of the
aggregate of (1) the total number of meetings of the board of directors
(held during the period for which he has been a director) and (2) the
total number of meetings held by all committees of the board on which he
served (during the periods that he served).
(g) If a director has resigned or declined to stand for re-election
to the board of directors since the date of the last annual meeting of
security holders because of a disagreement with the registrant on any
matter relating to the registrant's operations, policies or practices,
and if the director has furnished the registrant with a letter
describing such disagreement and requesting that the matter be
disclosed, the registrant shall state the date of resignation or
declination to stand for re-election and summarize the director's
description of the disagreement.
If the registrant believes that the description provided by the director
is incorrect or incomplete, it may include a brief statement presenting
its view of the disagreement.
Item 8. Compensation of directors and executive officers. Furnish
the information required by Item 402 (Sec. 229.402 of this chapter) of
Regulation S-K if action is to be taken with regard to:
(a) The election of directors;
(b) Any bonus, profit sharing or other compensation plan, contract
or arrangement in which any director, nominee for election as a
director, or executive officer of the registrant will participate;
(c) Any pension or retirement plan in which any such person will
participate; or
(d) The granting or extension to any such person of any options,
warrants or rights to purchase any securities, other than warrants or
rights issued to security holders as such, on a pro rata basis.
However, if the solicitation is made on behalf of persons other than
the registrant, the information required need be furnished only as to
nominees of the persons making the solicitation and associates of such
nominees. In the case of investment companies registered under the
Investment Company Act of 1940 and registrants that have elected to be
regulated as business development companies, furnish the information
required by Item 22(b)(6) of this Schedule.
Instruction.
If an otherwise reportable compensation plan became subject to such
requirements because of an acquisition or merger and, within one year of
the acquisition or merger, such plan was terminated for purposes of
prospective eligibility, the registrant may furnish a description of its
obligation to the designated individuals pursuant to the compensation
plan. Such description may be furnished in lieu of a description of the
compensation plan in the proxy statement.
[[Page 176]]
Item 9. Independent public accountants. If the solicitation is made
on behalf of the registrant and relates to: (1) The annual (or special
meeting in lieu of annual) meeting of security holders at which
directors are to be elected, or a solicitation of consents or
authorizations in lieu of such meeting or (2) the election, approval or
ratification of the registrant's accountant, furnish the following
information describing the registrant's relationship with its
independent public accountant:
(a) The name of the principal accountant selected or being
recommended to security holders for election, approval or ratification
for the current year. If no accountant has been selected or recommended,
so state and briefly describe the reasons therefor.
(b) The name of the principal accountant for the fiscal year most
recently completed if different from the accountant selected or
recommended for the current year or if no accountant has yet been
selected or recommended for the current year.
(c) The proxy statement shall indicate: (1) Whether or not
representatives of the principal accountant for the current year and for
the most recently completed fiscal year are expected to be present at
the security holders' meeting, (2) whether or not they will have the
opportunity to make a statement if they desire to do so, and (3) whether
or not such representatives are expected to be available to respond to
appropriate questions.
(d) If during the registrant's two most recent fiscal years or any
subsequent interim period, (1) an independent accountant who was
previously engaged as the principal accountant to audit the registrant's
financial statements, or an independent accountant on whom the principal
accountant expressed reliance in its report regarding a significant
subsidiary, has resigned (or indicated it has declined to stand for re-
election after the completion of the current audit) or was dismissed, or
(2) a new independent accountant has been engaged as either the
principal accountant to audit the registrant's financial statements or
as an independent accountant on whom the principal accountant has
expressed or is expected to express reliance in its report regarding a
significant subsidiary, then, notwithstanding any previous disclosure,
provide the information required by Item 304(a) of Regulation S-K
(Sec. 229.304 of this chapter).
Item 10. Compensation Plans. If action is to be taken with respect
to any plan pursuant to which cash or noncash compensation may be paid
or distributed, furnish the following information:
(a) Plans subject to security holder action. (1) Describe briefly
the material features of the plan being acted upon, identify each class
of persons who will be eligible to participate therein, indicate the
approximate number of persons in each such class, and state the basis of
such participation.
(2)(i) In the tabular format specified below, disclose the benefits
or amounts that will be received by or allocated to each of the
following under the plan being acted upon, if such benefits or amounts
are determinable:
New Plan Benefits
------------------------------------------------------------------------
Plan name
-------------------------------------------------------------------------
Name and position Dollar value ($) Number of units
------------------------------------------------------------------------
CEO................................
A..................................
B..................................
C..................................
D..................................
Executive Group....................
Non-Executive Director Group.......
Non-Executive Officer Employee
Group.
------------------------------------------------------------------------
(ii) The table required by paragraph (a)(2)(i) of this Item shall
provide information as to the following persons:
(A) Each person (stating name and position) specified in paragraph
(a)(3) of Item 402 of Regulation S-K (Sec. 229.402(a)(3) of this
chapter);
Instruction: In the case of investment companies registered under
the Investment Company Act of 1940, furnish the information for
Compensated Persons as defined in Item 22(b)(6) of this Schedule in lieu
of the persons specified in paragraph (a)(3) of Item 402 of Regulation
S-K (Sec. 229.402(a)(3) of this chapter).
(B) All current executive officers as a group;
(C) All current directors who are not executive officers as a group;
and
(D) All employees, including all current officers who are not
executive officers, as a group.
Instruction to New Plan Benefits Table
Additional columns should be added for each plan with respect to
which security holder action is to be taken.
(iii) If the benefits or amounts specified in paragraph (a)(2)(i) of
this item are not determinable, state the benefits or amounts which
would have been received by or allocated to each of the following for
the last completed fiscal year if the plan had been in effect, if such
benefits or amounts may be determined, in the table specified in
paragraph (a)(2)(i) of this Item:
(A) Each person (stating name and position) specified in paragraph
(a)(3) of Item 402 of Regulation S-K (Sec. 229.402(a)(3) of this
chapter);
(B) All current executive officers as a group;
(C) All current directors who are not executive officers as a group;
and
[[Page 177]]
(D) All employees, including all current officers who are not
executive officers, as a group.
(3) If the plan to be acted upon can be amended, otherwise than by a
vote of security holders, to increase the cost thereof to the registrant
or to alter the allocation of the benefits as between the persons and
groups specified in paragraph (a)(2) of this item, state the nature of
the amendments which can be so made.
(b)(1) Additional information regarding specified plans subject to
security holder action. With respect to any pension or retirement plan
submitted for security holder action, state:
(i) The approximate total amount necessary to fund the plan with
respect to past services, the period over which such amount is to be
paid and the estimated annual payments necessary to pay the total amount
over such period; and
(ii) The estimated annual payment to be made with respect to current
services. In the case of a pension or retirement plan, information
called for by paragraph (a)(2) of this Item may be furnished in the
format specified by paragraph (f)(1) of Item 402 of Regulation S-K
(Sec. 229.402(f)(1) of this chapter).
Instruction. In the case of investment companies registered under
the Investment Company Act of 1940, refer to instruction 4 in Item
22(b)(6)(ii) of this Schedule in lieu of paragraph (f)(1) of Item 402 of
Regulation S-K (Sec. 229.402(f)(1) of this chapter).
(2)(i) With respect to any specific grant of or any plan containing
options, warrants or rights submitted for security holder action, state:
(A) The title and amount of securities underlying such options,
warrants or rights;
(B) The prices, expiration dates and other material conditions upon
which the options, warrants or rights may be exercised;
(C) The consideration received or to be received by the registrant
or subsidiary for the granting or extension of the options, warrants or
rights;
(D) The market value of the securities underlying the options,
warrants, or rights as of the latest practicable date; and
(E) In the case of options, the federal income tax consequences of
the issuance and exercise of such options to the recipient and the
registrant; and
(ii) State separately the amount of such options received or to be
received by the following persons if such benefits or amounts are
determinable:
(A) Each person (stating name and position) specified in paragraph
(a)(3) of Item 402 of Regulation S-K (Sec. 229.402(a)(3) of this
chapter);
(B) All current executive officers as a group;
(C) All current directors who are not executive officers as a group;
(D) Each nominee for election as a director;
(E) Each associate of any of such directors, executive officers or
nominees;
(F) Each other person who received or is to receive 5 percent of
such options, warrants or rights; and
(G) All employees, including all current officers who are not
executive officers, as a group.
Instructions
1. The term ``plan'' as used in this Item means any plan as defined
in paragraph (a)(7)(ii) of Item 402 of Regulation S-K
(Sec. 229.402(a)(7)(ii) of this chapter).
2. If action is to be taken with respect to a material amendment or
modification of an existing plan, the item shall be answered with
respect to the plan as proposed to be amended or modified and shall
indicate any material differences from the existing plan.
3. If the plan to be acted upon is set forth in a written document,
three copies thereof shall be filed with the Commission at the time
copies of the proxy statement and form of proxy are first filed pursuant
to paragraph (a) or (b) of Sec. 240.14a-6. Electronic filers shall file
with the Commission a copy of such written plan document in electronic
format as an appendix to the proxy statement. It need not be provided to
security holders unless it is a part of the proxy statement.
4. Paragraph (b)(2)(ii) does not apply to warrants or rights to be
issued to security holders as such on a pro rata basis.
5. The Commission shall be informed, as supplemental information,
when the proxy statement is first filed, as to when the options,
warrants or rights and the shares called for thereby will be registered
under the Securities Act or, if such registration is not contemplated,
the section of the Securities Act or rule of the Commission under which
exemption from such registration is claimed and the facts relied upon to
make the exemption available.
Item 11. Authorization or issuance of securities otherwise than for
exchange. If action is to be taken with respect to the authorization or
issuance of any securities otherwise than for exchange for outstanding
securities of the registrant, furnish the following information:
(a) State the title and amount of securities to be authorized or
issued.
(b) Furnish the information required by Item 202 of Regulation S-K
(Sec. 229.202 of this chapter). If the terms of the securities cannot be
stated or estimated with respect to any or all of the securities to be
authorized, because no offering thereof is contemplated in the proximate
future, and if no further authorization by security holders for the
issuance thereof is to be obtained, it should be stated that the terms
of the securities to be authorized, including dividend or interest
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rates, conversion prices, voting rights, redemption prices, maturity
dates, and similar matters will be determined by the board of directors.
If the securities are additional shares of common stock of a class
outstanding, the description may be omitted except for a statement of
the preemptive rights, if any. Where the statutory provisions with
respect to preemptive rights are so indefinite or complex that they
cannot be stated in summarized form, it will suffice to make a statement
in the form of an opinion of counsel as to the existence and extent of
such rights.
(c) Describe briefly the transaction in which the securities are to
be issued including a statement as to (1) the nature and approximate
amount of consideration received or to be received by the registrant and
(2) the approximate amount devoted to each purpose so far as
determinable for which the net proceeds have been or are to be used. If
it is impracticable to describe the transaction in which the securities
are to be issued, state the reason, indicate the purpose of the
authorization of the securities, and state whether further authorization
for the issuance of the securities by a vote of security holders will be
solicited prior to such issuance.
(d) If the securities are to be issued otherwise than in a public
offering for cash, state the reasons for the proposed authorization or
issuance and the general effect thereof upon the rights of existing
security holders.
(e) Furnish the information required by Item 13(a) of this schedule.
Item 12. Modification or exchange of securities. If action is to be
taken with respect to the modification of any class of securities of the
registrant, or the issuance or authorization for issuance of securities
of the registrant in exchange for outstanding securities of the
registrant furnish the following information:
(a) If outstanding securities are to be modified, state the title
and amount thereof. If securities are to be issued in exchange for
outstanding securities, state the title and amount of securities to be
so issued, the title and amount of outstanding securities to be
exchanged therefor and the basis of the exchange.
(b) Describe any material differences between the outstanding
securities and the modified or new securities in respect of any of the
matters concerning which information would be required in the
description of the securities in Item 202 of Regulation S-K
(Sec. 229.202 of this chapter).
(c) State the reasons for the proposed modification or exchange and
the general effect thereof upon the rights of existing security holders.
(d) Furnish a brief statement as to arrears in dividends or as to
defaults in principal or interest in respect to the outstanding
securities which are to be modified or exchanged and such other
information as may be appropriate in the particular case to disclose
adequately the nature and effect of the proposed action.
(e) Outline briefly any other material features of the proposed
modification or exchange. If the plan of proposed action is set forth in
a written document, file copies thereof with the Commission in
accordance with Sec. 240.14a-6.
(f) Furnish the information required by Item 13(a) of this Schedule.
Instruction. If the existing security is presently listed and
registered on a national securities exchange, state whether the
registrant intends to apply for listing and registration of the new or
reclassified security on such exchange or any other exchange. If the
registrant does not intend to make such application, state the effect of
the termination of such listing and registration.
Item 13. Financial and other information. (See Notes D and E at the
beginning of this Schedule.)
(a) Information required. If action is to be taken with respect to
any matter specified in Item 11 or 12, furnish the following
information:
(1) Financial statements meeting the requirements of Regulation S-X,
including financial information required by Rule 3-05 and Article 11 of
Regulation S-X with respect to transactions other than that pursuant to
which action is to be taken as described in this proxy statement;
(2) Item 302 of Regulation S-K, supplementary financial information;
(3) Item 303 of Regulation S-K, management's discussion and analysis
of financial condition and results of operations;
(4) Item 304 of Regulation S-K, changes in and disagreements with
accountants on accounting and financial disclosure;
(5) Item 305 of Regulation S-K, quantitative and qualitative
disclosures about market risk; and
(6) A statement as to whether or not representatives of the
principal accountants for the current year and for the most recently
completed fiscal year:
(i) Are expected to be present at the security holders' meeting;
(ii) Will have the opportunity to make a statement if they desire to
do so; and
(iii) Are expected to be available to respond to appropriate
questions.
(b) Incorporation by reference. The information required pursuant to
paragraph (a) of this Item may be incorporated by reference into the
proxy statement as follows:
(1) S-3 registrants. If the registrant meets the requirements of
Form S-3( see Note E to this Schedule), it may incorporate by reference
to previously-filed documents any of the information required by
paragraph (a) of this Item, provided that the requirements of
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paragraph (c) are met. Where the registrant meets the requirements of
Form S-3 and has elected to furnish the required information by
incorporation by reference, the registrant may elect to update the
information so incorporated by reference to information in subsequently-
filed documents.
(2) All registrants. The registrant may incorporate by reference any
of the information required by paragraph (a) of this Item, provided that
the information is contained in an annual report to security holders or
a previously-filed statement or report, such report or statement is
delivered to security holders with the proxy statement and the
requirements of paragraph (c) are met.
(c) Certain conditions applicable to incorporation by reference.
Registrants eligible to incorporate by reference into the proxy
statement the information required by paragraph (a) of this Item in the
manner specified by paragraphs (b)(1) and (b)(2) may do so only if:
(1) The information is not required to be included in the proxy
statement pursuant to the requirement of another Item;
(2) The proxy statement identifies on the last page(s) the
information incorporated by reference; and
(3) The material incorporated by reference substantially meets the
requirements of this Item or the appropriate portions of this Item.
Instructions to Item 13.
1. Notwithstanding the provisions of this Item, any or all of the
information required by paragraph (a) of this Item not material for the
exercise of prudent judgment in regard to the matter to be acted upon
may be omitted. In the usual case the information is deemed material to
the exercise of prudent judgment where the matter to be acted upon is
the authorization or issuance of a material amount of senior securities,
but the information is not deemed material where the matter to be acted
upon is the authorization or issuance of common stock, otherwise than in
an exchange, merger, consolidation, acquisition or similar transaction,
the authorization of preferred stock without present intent to issue or
the authorization of preferred stock for issuance for cash in an amount
constituting fair value.
2. In order to facilitate compliance with Rule 2-02(a) of Regulation
S-X, one copy of the definitive proxy statement filed with the
Commission shall include a manually signed copy of the accountant's
report. If the financial statements are incorporated by reference, a
manually signed copy of the accountant's report shall be filed with the
definitive proxy statement.
3. Notwithstanding the provisions of Regulation S-X, no schedules
other than those prepared in accordance with Rules 12-15, 12-28 and 12-
29 (or, for management investment companies, Rules 12-12 through 12-14)
of that regulation need be furnished in the proxy statement.
4. Unless registered on a national securities exchange or otherwise
required to furnish such information, registered investment companies
need not furnish the information required by paragraph (a)(2) or (3) of
this Item.
5. If the registrant submits preliminary proxy material
incorporating by reference financial statements required by this Item,
the registrant should furnish a draft of the financial statements if the
document from which they are incorporated has not been filed with or
furnished to the Commission.
6. A registered investment company need not comply with items
(a)(2), (a)(3), and (a)(5) of this Item 13.
Item 14. Mergers, consolidations, acquisitions and similar matters.
(See Notes A, D and E at the beginning of this Schedule.)
If action is to be taken with respect to any transaction involving:
(i) The merger or consolidation of the registrant into or with any other
person or of any other person into or with the registrant, (ii) the
acquisition by the registrant or any of its security holders of
securities of another person, (iii) the acquisition by the registrant of
any other going business or of the assets thereof, (iv) the sale or
other transfer of all or any substantial part of the assets of the
registrant, or (v) the liquidation or dissolution of the registrant,
furnish the following information:
(a) Information about the transaction. Furnish the following
information concerning the registrant and (unless otherwise indicated)
each other person: Which is to be merged into the registrant or into or
with which the registrant is to be merged or consolidated; the business
or assets of which are to be acquired; which is the issuer of securities
to be acquired by the registrant in exchange for all or a substantial
part of the registrant's assets; or which is the issuer of securities to
be acquired by the registrant or its security holders:
(1) The name, complete mailing address (including the ZIP Code) and
telephone number (including the area code) of the principal executive
offices.
(2) A brief description of the general nature of the business
conducted by the other person.
(3) A summary of the material features of the proposed transaction.
If the transaction is set forth in a written document, file three copies
thereof with the Commission at the time preliminary copies of the proxy
statement and form of proxy are filed pursuant to Rule 14a-
6(a)(Sec. 240.14a-6(a) of this chapter). The summary shall include,
where applicable:
(i) A brief summary of the terms of the transaction agreement;
[[Page 180]]
(ii) The reasons for engaging in the transaction;
(iii) An explanation of any material differences in the rights of
security holders of the registrant as a result of this transaction;
(iv) A brief statement as to the accounting treatment of the
transaction; and
(v) The federal income tax consequences of the transaction.
(vi) The information required by Item 202 of Regulation S-K
(Sec. 229.202 of this chapter), description of registrant's securities,
for any securities that are exempt from registration and are being
issued in connection with the transaction if the security holders
entitled to vote or give an authorization or consent with regard to the
transaction will receive such securities, unless: (i) The issuer of the
securities would meet the requirements for use of Form S-3 and elects to
furnish information in accordance with the provisions of paragraph
(b)(1), (ii) capital stock is to be issued and (iii) securities of the
same class are registered under section 12 of the Exchange Act and
either (a) are listed for trading or admitted to unlisted trading
privileges on a national securities exchange; or (b) are securities for
which bid and offer quotations are reported in an automated quotations
system operated by a national securities association;
(4) A brief statement as to dividends in arrears or defaults in
principal or interest in respect of any securities of the registrant or
of such other person and as to the effect of the transaction thereon and
such other information as may be appropriate in the particular case to
disclose adequately the nature and effect of the proposed action.
(5) The information required by Item 301 of Regulation S-K
(Sec. 229.301 of this chapter), selected financial data, for the
registrant and the other person.
(6) If material, the information required by Item 301 of Regulation
S-K for the registrant or the other person on a pro forma basis, giving
effect to the transaction.
(7) In comparative columnar form, historical and pro forma per share
data of the registrant and historical and equivalent pro forma per share
data of the other person for the following items:
(i) Book value per share as of the date financial data is presented
pursuant to Item 301 of Regulation S-K(Sec. 229.301 of this chapter)
(selected financial data);
(ii) Cash dividends declared per share for the periods for which
financial data is presented pursuant to Item 301 of Regulation S-K
(Sec. 229.301 of this chapter) (selected financial data); and
(iii) Income (loss) per share from continuing operations for the
periods for which financial data is presented pursuant to Item 301 of
Regulation S-K(Sec. 229.301 of this chapter) (selected financial data).
Instructions to paragraphs (a)(6) and (a)(7).
For a business combination accounted for as a purchase, the
financial information required by paragraphs (a)(6) and (a)(7) shall be
presented only for the most recent fiscal year and interim period. For a
business combination accounted for as a pooling, the financial
information required by paragraphs (a)(6) and (a)(7) (except for
information with regard to book value) shall be presented for the most
recent three fiscal years and interim period. For a business combination
accounted for as a pooling, information with regard to book value shall
be presented as of the end of the most recent fiscal year and interim
period. Equivalent pro forma per share amounts shall be calculated by
multiplying the pro forma income (loss) per share before non-recurring
charges or credits directly attributable to the transaction, pro forma
book value per share, and the pro forma dividends per share of the
registrant by the exchange ratio so that the per share amounts are
equated to the respective values for one share of the other person.
(8) Financial information required by Article 11 of Regulation S-X
(Sec. 210.11-01 et seq. of this chapter) with respect to this
transaction.
Instructions to paragraph (a)(8).
1. Any other Article 11 information that is presented (rather than
incorporated by reference) pursuant to other Items of this schedule
shall be presented together with the information provided pursuant to
paragraph (a)(7), but the presentation shall clearly distinguish between
this transaction and any other.
2. If pro forma financial information with respect to all other
transactions is incorporated by reference pursuant to paragraph (b) of
this Item, only the pro forma results need be presented as part of the
pro forma financial information required by this Item.
(9) A statement as to whether any federal or state regulatory
requirements must be complied with or approval must be obtained in
connection with the transaction and if so the status of such compliance
or approval.
(10) If a report, opinion or appraisal materially relating to the
transaction has been received from an outside party, and such report,
opinion or appraisal is referred to in the proxy statement, furnish the
same information as would be required by Item 9(b)(1) through (6) of
Schedule 13E-3 (Sec. 240.13e-100 of this chapter).
(11) A description of any past, present or proposed material
contracts, arrangements, understandings, relationships, negotiations or
transactions during the periods for which financial statements are
presented or incorporated by reference pursuant to this Item between the
other person or its affiliates and the registrant or its affiliates such
as those concerning a merger, consolidation or acquisition; a tender
offer or other acquisition of securities; an election of directors; or a
sale
[[Page 181]]
or other transfer of a material amount of assets.
(12) As to each class of securities of the registrant or of the
other person which is admitted to trading on a national securities
exchange or with respect to which a market otherwise exists, and which
will be materially affected by the transaction, state the high and low
sale prices (or in the absence of trading in a particular period, the
range of the bid and asked prices) as of the date preceding public
announcement of the proposed transaction, or if no such public
announcement was made, as of the day preceding the day the agreement or
resolution with respect to the action was made.
(13) A statement as to whether or not representatives of the
principal accountants for the current year and for the most recently
completed fiscal year
(i) Are expected to be present at the security holders' meeting;
(ii) Will have the opportunity to make a statement if they desire to
do so; and
(iii) Are expected to be available to respond to appropriate
questions.
(b) Information about the registrant and the other person. Furnish
the information specified below for the registrant and for the other
person designated in paragraph(a) of this Item, if applicable
(hereinafter all references to the registrant should be read to include
a reference to such other person unless the context otherwise
indicates):
(1) Information with respect to S-3 registrants. If the registrant
meets the requirements of Form S-3 (See Note E to this Schedule) and
elects to furnish information in accordance with the provisions of this
paragraph, furnish information as required below.
(i) Describe any and all material changes in the registrant's
affairs that have occurred since the end of the latest fiscal year for
which audited financial statements were included in the latest annual
report to security holders and that have not been described in a report
on Form 10-Q and Form 10-QSB (Sec. 249.308(a) of this chapter) or Form
8-K(Sec. 249.308 of the chapter) filed under the Exchange Act;
(ii) Include in the proxy statement, if not incorporated by
reference from the reports filed under the Exchange Act specified in
paragraph (b)(1)(iii) of this Item, from a proxy or information
statement filed pursuant to section 14 of the Exchange Act, from a
prospectus previously filed pursuant to Rule 424 under the Securities
Act (Sec. 230.424 of this chapter) or, where no prospectus was required
to be filed pursuant to Rule 424(b), the prospectus included in the
registration statement at effectiveness, or from a Form 8-K filed
during either of the two preceding fiscal years:
(A) Financial information required by Rule 3-05(Sec. 210.3-05 of
this chapter) and Article 11 of Regulation S-X with respect to
transactions other than that pursuant to which action is to be taken as
described in this proxy statement.
(B) Restated financial statements prepared in accordance with
Regulation S-X (Part 210 of this chapter), if there has been a change in
accounting principles or a correction of an error where such change or
correction requires a material retroactive restatement of financial
statements;
(C) Restated financial statements prepared in accordance with
Regulation S-X where one or more business combinations accounted for by
the pooling of interest method of accounting have been consummated
subsequent to the most recent fiscal year and the acquired businesses,
considered in the aggregate, are significant pursuant to Rule 11-01(b)
of Regulation S-X (Sec. 210.11(b) of this chapter); or
(D) Any financial information required because of a material
disposition of assets outside the normal course of business.
(iii) Incorporate by reference into the proxy statement the
documents listed in paragraphs (A), (B) and, if applicable, (C) below:
(A) The registrant's latest annual report on Form 10-K and Form 10-
KSB (Sec. 249.310 of this chapter) filed pursuant to section 13(a) or
15(d) of the Exchange Act which contains financial statements for the
registrant's latest fiscal year for which a Form 10-K and Form 10-KSB
was required to be filed;
(B) All other reports filed pursuant to section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the annual
report referred to in paragraph(b)(1)(iii)(A) of this Item.
(C) If capital stock is to be issued to security holders entitled to
vote or give an authorization or consent and securities of the same
class are registered under section 12 of the Exchange Act and: (i) are
listed for trading or admitted to unlisted trading privileges on a
national securities exchange; or (ii) are securities for which bid and
offer quotations are reported on an automated quotations system operated
by a national securities association, the description of such class of
securities which is contained in a registration statement filed under
the Exchange Act, including any amendment or reports filed for the
purpose of updating such description.
(iv) The proxy statement also shall state on the last page(s) that
all documents subsequently filed by the registrant pursuant to sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to one of the
following dates, whichever is applicable, shall be deemed to be
incorporated by reference into the proxy statement:
(A) If a meeting of security holders is to be held, the date on
which such meeting is held;
(B) If a meeting of security holders is not to held, the date on
which the consents or
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authorizations are used to effect the proposed action.
(2) Information with respect to S-2 or S-3 registrants--(i)
Information required to be furnished. If the registrant meets the
requirements of Form S-2 or Form S-3 (See Note E of this Schedule) and
elects to comply with this paragraph, furnish the information required
by either paragraph (b)(2)(i) (A) or (B) of this section. However, the
registrant shall not provide information in the manner allowed by
paragraph (b)(2)(i)(A) of this section, if the financial statements in
the registrant's latest annual report to security holders do not
reflect: restated financial statements prepared in accordance with
Regulation S-X if there has been a change in accounting principles or a
correction of an error where such change or correction requires a
material retroactive restatement of financial statements; restated
financial statements prepared in accordance with Regulation S-X where
one or more business combinations accounted for by the pooling of
interest method of accounting have been consummated subsequent to the
most recent fiscal year and the acquired businesses, considered in the
aggregate, are signficant pursuant to Rule 11-01(b) of Regulation S-X;
or any financial information required because of a material disposition
of assets outside of the normal course of business.
(A) If the registrant elects to furnish information pursuant to this
paragraph (b)(2)(i)(A) and delivers the proxy statement together with a
copy of either its latest Form 10-K or Form 10-KSB filed pursuant to
sections 13(a) or 15(d) of the Exchange Act or its latest annual report
to security holders which, at the time of original preparation met the
requirements of either Rule 14a-3 (Sec. 240.14a-3 or 14c-3
(Sec. 240.14c-3):
(1) Indicate that the proxy statement is accompanied by either a
copy of the registrant's latest Form 10-K or Form 10-KSB or a copy of
its latest annual report to security holders.
(2) Provide financial and other information with respect to the
registrant in the form required by Part I of Form 10-Q and Form 10-QSB
as of the end of the most recent fiscal quarter which ended after the
end of the latest fiscal year for which audited financial statements
were included in the latest report to security holders and more than 45
days prior to the date the proxy statement is filed in definitive form
(or as of a more recent date) by one of the following means:
(i) Including such information in the proxy statement;
(ii) Providing without charge to each person to whom a proxy
statement is delivered a copy of the registrant's latest Form 10-Q and
Form 10-QSB; or
(iii) Providing without charge to each person to whom a proxy
statement is delivered a copy of the registrant's latest quarterly
report that was delivered to its security holders and that included the
required financial information.
(3) If not reflected in the registrant's latest annual report to
security holders, provide information required by Rule 3-05 and Article
11 of Regulation S-X with respect to transactions other than that as to
which action is to be taken as described in the proxy statement.
(4) Describe any and all material changes in the registrant's
affairs that have occurred between the end of the latest fiscal year for
which audited financial statements were included in the latest annual
report to security holders and the date the definitive proxy statement
is filed and that were not described in a Form 10-Q and Form 10-QSB or
quarterly report delivered with the proxy statement in accordance with
paragraph (b)(2)(i)(A)(2) (ii) or (iii).
(B) If the registrant does not elect to furnish information and
deliver its latest Form 10-K or Form 10-KSB or a copy of its latest
annual report to security holders pursuant to paragraph (b)(2)(i)(A):
(1) Furnish a brief description of the business done by the
registrant and its subsidiaries during the most recent fiscal year as
required by Rule 14a-3 (Sec. 240.14a-3 of this chapter) to be included
in an annual report to security holders. The description also should
take into account changes in the registrant's business that have
occurred between the end of the last fiscal year and the filing of
definitive proxy materials.
(2) Include financial statements and information as required by Rule
14a-3(b)(1) (Sec. 240.14a-3(b)(1) of this chapter) to be included in an
annual report to security holders. In addition, provide:
(i) The interim financial information required by Rule 10-01 of
Regulation S-X (Sec. 210.10-01 of this chapter) for a report on Form 10-
Q and Form 10-QSB;
(ii) Financial information required by Rule 3-05 and Article 11 of
Regulation S-X with respect to transactions other than that as to which
action is to be taken as described in this proxy statement;
(iii) Restated financial statements prepared in accordance with
Regulation S-X if there has been a change in accounting principles or a
correction of an error where such change or correction requires a
material retroactive restatement of financial statements;
(iv) Restated financial statements prepared in accordance with
Regulation S-X where one or more business combinations accounted for by
the pooling of interest method of accounting have been consummated
subsequent to the most recent fiscal year and the acquired businesses,
considered in the aggregate, are significant pursuant to Rule 11-01(b)
of Regulation S-X (Sec. 210.11-01 of this chapter); and
[[Page 183]]
(v) Any financial information required because of a material
disposition of assets outside of the normal course of business.
(3) Furnish the information required by the following:
(i) Item 101 (b), (c)(1)(i) and (d) of Regulation S-K (Sec. 229.101
of this chapter), industry segments, classes of similar products or
services, foreign and domestic operations and import sales;
(ii) Item 102 of Regulation S-K (Sec. 229.102 of this chapter) for
any property involved in the transaction, if such disclosure is material
to the security holder's understanding of the transaction;
(iii) Item 201 of Regulation S-K (Sec. 229.201 of this chapter),
market price of and dividends on the registrant's common equity and
related stockholder matters;
(iv) Item 301 of Regulation S-K (Sec. 229.301 of this chapter),
selected financial data;
(v) Item 302 of Regulation S-K (Sec. 229.302 of this chapter),
supplementary financial information;
(vi) Item 303 of Regulation S-K (Sec. 229.303 of this chapter),
management's discussion and analysis of financial condition and results
of operations;
(vii) Item 304 of Regulation S-K (Sec. 229.304 of this chapter),
changes in and disagreements with accountants on accounting and
financial disclosure; and
(viii) Item 305 of Regulation S-K (Sec. 229.305 of this chapter),
quantitative and qualitative disclosures about market risk.
(ii) Incorporation of certain information by reference. If the
registrant meets the requirements of Form S-2 or S-3 (See Note E of this
Schedule) and elects to furnish information in accordance with the
provisions of paragraph (b)(2)(i) of this Item:
(A) Incorporate by reference into the proxy statement the documents
listed in paragraphs (b)(2)(ii)(A) (1) and (2) below and, if applicable,
the portions of the documents listed in paragraphs (b)(2)(ii)(A) (3) and
(4) below.
(1) The registrant's latest annual report on Form 10-K and Form 10-
KSB filed pursuant to section 13(a) or 15(d) of the Exchange Act which
contains audited financial statements for the registrant's latest fiscal
year for which a Form 10-K and Form 10-KSB was required to be filed.
(2) All other reports filed pursuant to section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the annual
report referred to in paragraph (a)(2)(i)(A)(1).
(3) If the registrant elects to deliver its latest annual report to
security holders pursuant to paragraph(b)(2)(i)(A) of this Item, the
information furnished in accordance with the following:
(i) Item 101 (b), (c)(1)(i) and (d) of Regulation S-K, industry
segments, classes of similar products or services, foreign and domestic
operations and export sales;
(ii) Item 201 of Regulation S-K, market price of and dividends on
the registrant's common equity and related stockholder matters;
(iii) Item 301 of Regulation S-K, selected financial data;
(iv) Item 302 of Regulation S-K, supplementary financial
information;
(v) Item 303 of Regulation S-K, management's discussion and analysis
of financial condition and results of operations;
(vi) Item 304 of Regulation S-K, changes in and disagreements with
accountants on accounting and financial disclosure; and
(vii) Item 305 of Regulation S-K (Sec. 229.305 of this chapter),
quantitative and qualitative disclosures about market risk.
(4) If the registrant elects, pursuant to paragraph
(b)(2)(i)(A)(2)(iii) of this Item, to provide a copy of its latest
quarterly report which was delivered to security holders, financial
information equivalent to that required to be presented in Part I of
Form 10-Q and Form 10-QSB.
(B) The registrant also may state, if it so chooses, that
specifically described portions of its annual or quarterly report to
security holders, other than those portions required to be incorporated
by reference pursuant to paragraphs (b)(2)(ii)(A) (3) and (4) of this
Item, are not part of the proxy statement. In such case, the description
of portions that are not incorporated by reference or that are excluded
shall be made with clarity and in reasonable detail.
(3) Information with respect to registrants other than S-2 or S-3
registrants. (i) If the registrant does not meet the requirements of
Form S-2 or S-3 (See Note E of this Schedule), or elects to comply with
this paragraph (b)(3) in lieu of paragraph (b)(1) or (b)(2), furnish the
following information:
(A) Information required by Item 101 of Regulation S-K (Sec. 229.101
of this chapter), description of business.
(B) Information required by Item 102 of Regulation S-K (Sec. 229.102
of this chapter), description of property.
(C) Information required by Item 103 of Regulation S-K (Sec. 229.103
of this chapter), legal proceedings.
(D) Information required by Item 201 of Regulation S-K (Sec. 229.201
of this chapter), market price of and dividends on the registrants'
common equity and related stockholder matters.
(E) Financial statements meeting the requirements of Regulation S-X,
including financial information required by Rule 3-05 and Article 11 of
Regulation S-X with respect to transactions other than that as to which
action is to be taken as described in this proxy statement.
(F) Item 301 of Regulation S-K, selected financial data;
[[Page 184]]
(G) Item 302 of Regulation S-K, supplementary financial information;
(H) Item 303 of Regulation S-K, management's discussion and analysis
of financial condition and results of operations;
(I) Item 304 of Regulation S-K, changes in and disagreements with
accountants on accounting and financial disclosure; and
(J) Item 305 of Regulation S-K (Sec. 229.305 of this chapter),
quantitative and qualitative disclosures about market risk.
(ii) If the other person is not subject to the reporting
requirements of either section 13(a) or 15(d) of the Exchange Act; or,
because of section 12(i) of the Exchange Act, has not furnished an
annual report to security holders pursuant to Rule 14a-3 (Sec. 240.14a-3
of this chapter) or Rule 14c-3 (Sec. 240.14c-3 of this chapter) for its
latest fiscal year, furnish:
(A) the financial statements that would have been required to be
included in an annual report to security holders pursuant to Rules 14a-
3(b)(1) and (b)(2) had the company been required to furnish such a
report; Provided, however, That the balance sheet for the year preceding
the latest full fiscal year and the income statements for the two years
preceding the latest full fiscal Year need not be audited if they have
not previously been audited. In any case, such financial statements need
be audited only to the extent practicable.
(B) The quarterly financial and other information that would have
been required had the company been required to file Part I of Form 10-Q
and Form 10-QSB (Sec. 249.308a) for the most recent quarter for which
such a report would have been on file at the time the proxy statement is
mailed or for a period ending as of a more recent date.
(C) A brief description of the business done by the company which
indicates the general nature and scope of the business;
(D) The information required by paragraphs (b)(3)(i)(D) and (F)-(H)
of this Item and the information required by Item 304(b) of Regulation
S-K (Sec. 229.304 of this chapter).
(E) Schedules required by Rules 12-15, 28 and 29 of Regulation S-X.
(c) Additional method of incorporation by reference. In lieu of the
provision of information about the registrant and the other person
required in paragraph (b) of this Item, the registrant may incorporate
by reference into the proxy statement the information required by
paragraph (b)(3) of this Item if it is contained in an annual report
sent to security holders pursuant to the requirement of Rule 14a-3
(Sec. 240.14a-3 of this chapter) with respect to the same meeting or
solicitation of consents or authorizations as that to which the proxy
statement relates, provided such information substantially meets the
requirements of paragraph (b)(3) of this Item or the appropriate
portions of paragraph (b)(3) of this Item.
Instructions to Item 14.
1. In order to facilitate compliance with Rule 2-02(a) of Regulation
S-X, one copy of the definitive proxy statement filed with the
Commission shall include a manually signed copy of the accountant's
report. If the financial statements are incorporated by reference, a
manually signed copy of the accountant's report shall be filed with the
definitive proxy statement.
2. Notwithstanding the provisions of this Item, any or all of the
required financial statements and related information which are not
material for the exercise of prudent judgement in regard to the matter
to be acted upon may be omitted.
3. If the registrant or any of its securities or assets is to be
acquired by the other person, the information regarding the other person
that is required by this Item, other than information required by
paragraphs (a)(1) through (3) and (a)(9) through (11) of this Item, need
be provided only to the extent that:(1) The registrant or its security
holders who are entitled to vote or give an authorization or consent
with regard to the action will become or remain security holders of the
other person; or (2) such information is otherwise material to an
informed voting decision.
4. If the plan being voted on involves only the registrant and one
or more of its totally held subsidiaries and does not involve a
liquidation of the registrant or a spin-off, the information required by
this Item, other than information required by paragraphs (a)(1) through
(4) and (a)(9) through (12) of this Item, may be omitted.
5. Notwithstanding the provisions of Regulation S-X, no schedules
other than those prepared in accordance with Rules 12-15, 12-28 and 12-
29 (or, for management investment companies, Rules 12-12 through 12-14)
of that regulation need be furnished in the proxy statement.
6. Unless registered on a national securities exchange or otherwise
required to furnish such information, registered investment companies
need not furnish the information required by paragraph (a)(5), (a)(6),
(b)(3)(i) (F), (G) or (H) of this Item.
7. If the registrant submits preliminary proxy material
incorporating by reference financial statements required by this Item,
the registrant should furnish a draft of the financial statements if the
document from which they are incorporated has not been filed with or
furnished to the Commission.
8. A registered management investment company need not comply with
items (A), (D), (F), (G), (H), and (J) of paragraph (b)(3)(i) of this
Item 14.
Item 15. Acquisition or disposition of property. If action is to be
taken with respect to the acquisition or disposition of any property,
furnish the following information:
[[Page 185]]
(a) Describe briefly the general character and location of the
property.
(b) State the nature and amount of consideration to be paid or
received by the registrant or any subsidiary. To the extent practicable,
outline briefly the facts bearing upon the question of the fairness of
the consideration.
(c) State the name and address of the transferer or transferee, as
the case may be and the nature of any material relationship of such
person to the registrant or any affiliate of the registrant.
(d) Outline briefly any other material features of the contract or
transaction.
Item 16. Restatement of accounts. If action is to be taken with
respect to the restatement of any asset, capital, or surplus account of
the registrant furnish the following information:
(a) State the nature of the restatement and the date as of which it
is to be effective.
(b) Outline briefly the reasons for the restatement and for the
selection of the particular effective date.
(c) State the name and amount of each account (including any reserve
accounts) affected by the restatement and the effect of the restatement
thereon. Tabular presentation of the amounts shall be made when
appropriate, particularly in the case of recapitalizations.
(d) To the extent practicable, state whether and the extent, if any,
to which, the restatement will, as of the date thereof, alter the amount
available for distribution to the holders of equity securities.
Item 17. Action with respect to reports. If action is to be taken
with respect to any report of the registrant or of its directors,
officers or committees or any minutes of a meeting of its security
holders, furnish the following information:
(a) State whether or not such action is to constitute approval or
disapproval of any of the matters referred to in such reports or
minutes.
(b) Identify each of such matters which it is intended will be
approved or disapproved, and furnish the information required by the
appropriate item or items of this schedule with respect to each such
matter.
Item 18. Matters not required to be submitted. If action is to be
taken with respect to any matter which is not required to be submitted
to a vote of security holders, state the nature of such matter, the
reasons for submitting it to a vote of security holders and what action
is intended to be taken by the registrant in the event of a negative
vote on the matter by the security holders.
Item 19. Amendment of character, bylaws or other documents. If
action is to be taken with respect to any amendment of the registrant's
charter, bylaws or other documents as to which information is not
required above, state briefly the reasons for and the general effect of
such amendment.
Instructions. 1. Where the matter to be acted upon is the
classification of directors, state whether vacancies which occur during
the year may be filled by the board of directors to serve only until the
next annual meeting or may be so filled for the remainder of the full
term.
2. Attention is directed to the discussion of disclosure regarding
anti-takeover and similar proposals in Release No. 34-15230 (October 13,
1978).
Item 20. Other proposed action. If action is to be taken on any
matter not specifically referred to in this Schedule 14A, describe
briefly the substance of each such matter in substantially the same
degree of detail as is required by Items 5 to 19, inclusive, of this
Schedule, and, with respect to investment companies registered under the
Investment Company Act of 1940, Item 22 of this Schedule.
Item 21. Voting procedures. As to each matter which is to be
submitted to a vote of security holders, furnish the following
information:
(a) State the vote required for approval or election, other than for
the approval of auditors.
(b) Disclose the method by which votes will be counted, including
the treatment and effect of abstentions and broker non-votes under
applicable state law as well as registrant charter and by-law
provisions.
Item 22. Information required in investment company proxy statement.
(a) General.
(1) Definitions. Unless the context otherwise requires, terms used
in this Item that are defined in Sec. 240.14a-1 (with respect to proxy
soliciting material), in Sec. 240.14c-1 (with respect to information
statements), and in the Investment Company Act of 1940 shall have the
same meanings provided therein and the following terms shall also apply:
(i) Administrator. The term ``Administrator'' shall mean any person
or persons who provide significant administrative or business management
services to the Fund and shall include any person that has been or would
be identified in response to Item 5 of Form N-1A (Sec. 274.11A of this
chapter), Item 9 of Form N-2 (Sec. 274.11a-1 of this chapter), or Item 6
of Form N-3 (Sec. 274.11b of this chapter).
(ii) Affiliated broker. The term ``Affiliated Broker'' shall mean
any broker:
(A) That is an affiliated person of the Fund;
(B) That is an affiliated person of such person; or
(C) An affiliated person of which is an affiliated person of the
Fund, its investment adviser, principal underwriter, or Administrator.
[[Page 186]]
(iii) Distribution plan. The term ``Distribution Plan'' shall mean a
plan adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940 (Sec. 270.12b-1 of this chapter).
(iv) Fund. The term ``Fund'' shall mean a Registrant or, where the
Registrant is a series company, a separate portfolio of the Registrant.
(v) Fund complex. The term ``Fund Complex'' shall mean two or more
Funds that:
(A) Hold themselves out to investors as related companies for
purposes of investment and investor services; or
(B) Have a common investment adviser or have an investment adviser
that is an affiliated person of the investment adviser of any of the
other Funds.
(vi) Parent. The term ``Parent'' shall mean the affiliated person of
a specified person who controls the specified person directly or
indirectly through one or more intermediaries.
(vii) Registrant. The term ``Registrant'' shall mean an investment
company registered under the Investment Company Act of 1940.
(viii) Subsidiary. The term ``Subsidiary'' shall mean an affiliated
person of a specified person who is controlled by the specified person
directly, or indirectly through one or more intermediaries.
(2) [Reserved]
(3) General disclosure. Furnish the following information in the
proxy statement of a Fund or Funds:
(i) State the name and address of the Fund's investment adviser,
principal underwriter, and Administrator.
(ii) When a Fund proxy statement solicits a vote on proposals
affecting more than one Fund or class of securities of a Fund (unless
the proposal or proposals are the same and affect all Fund or class
shareholders), present a summary of all of the proposals in tabular form
on one of the first three pages of the proxy statement and indicate
which Fund or class shareholders are solicited with respect to each
proposal.
(iii) Unless the proxy statement is accompanied by a copy of the
Fund's most recent annual report, state prominently in the proxy
statement that the Fund will furnish, without charge, a copy of the
annual report and the most recent semi-annual report succeeding the
annual report, if any, to a shareholder upon request, providing the
name, address, and toll-free telephone number of the person to whom such
request shall be directed (or, if no toll-free telephone number is
provided, a self-addressed postage paid card for requesting the annual
report). The Fund should provide a copy of the annual report and the
most recent semi-annual report succeeding the annual report, if any, to
the requesting shareholder by first class mail, or other means designed
to assure prompt delivery, within three business days of the request.
(iv) If the action to be taken would, directly or indirectly,
establish a new fee or expense or increase any existing fee or expense
to be paid by the Fund or its shareholders, provide a table showing the
current and pro forma fees (with the required examples) using the format
prescribed in the appropriate registration statement form under the
Investment Company Act of 1940 (for open-end management investment
companies, Item 2 of Form N-1A (Sec. 239.15A); for closed-end management
investment companies, Item 3 of Form N-2 (Sec. 239.14); and for separate
accounts that offer variable annuity contracts, Item 3 of Form N-3
(Sec. 239.17a)).
Instructions. 1. Where approval is sought only for a change in asset
breakpoints for a pre-existing fee that would not have increased the fee
for the previous year (or have the effect of increasing fees or
expenses, but for any other reason would not be reflected in a pro forma
fee table), describe the likely effect of the change in lieu of
providing pro forma fee information.
2. An action would indirectly establish or increase a fee or expense
where, for example, the approval of a new investment advisory contract
would result in higher custodial or transfer agency fees.
3. The tables should be prepared in a manner designed to facilitate
understanding of the impact of any change in fees or expenses.
4. A Fund that offers its shares exclusively to one or more separate
accounts and thus is not required to include a fee table in its
prospectus (see Item 2(a)(ii) of Form N-1A (Sec. 239.15A)) should
nonetheless prepare a table showing current and pro forma expenses and
disclose that the table does not reflect separate account expenses,
including sales load.
(v) If action is to be taken with respect to the election of
directors or the approval of an advisory contract, describe any
purchases or sales of securities of the investment adviser or its
Parents, or Subsidiaries of either, since the beginning of the most
recently completed fiscal year by any director or any nominee for
election as a director of the Fund.
Instructions. 1. Identify the parties, state the consideration, the
terms of payment and describe any arrangement or understanding with
respect to the composition of the board of directors of the Fund or of
the investment adviser, or with respect to the selection of appointment
of any person to any office with either such company.
2. Transactions involving securities in an amount not exceeding one
percent of the outstanding securities of any class of the investment
adviser or any of its Parents or Subsidiaries may be omitted.
(4) Electronic filings. If action is to be taken with respect to any
transaction described in
[[Page 187]]
Item 11, 12, or 14 of this Schedule 14A and the Fund proxy or
information statement is filed electronically, a Financial Data Schedule
meeting the requirements of rule 483 of Regulation C (Sec. 230.483 of
this chapter) shall be included as an exhibit.
(b) Election of directors. If action is to be taken with respect to
the election of directors of the Fund and the solicitation is made by or
on behalf of the Fund or by or on behalf of an investment adviser,
furnish the following information in the proxy statement in addition to
the information (and in the format) required by paragraphs (e) through
(g) of Item 7 of Schedule 14A.
Instructions. 1. Furnish information with respect to a prospective
investment adviser to the extent applicable.
2. If the solicitation is made other than by or on behalf of the
Fund or by or on behalf of an investment adviser, provide only
information as to nominees of the person making the solicitation.
(1) Identify each director or nominee for election as director who
is, or was during the past five years, an officer, employee, director,
general partner, or shareholder of the investment adviser. As to any
director or nominee who is not a director or general partner of the
investment adviser and owns any securities or has, or had during the
past five years, any other material direct or indirect interest in the
investment adviser or any person controlling, controlled by, or under
common control with the investment adviser, describe the nature of such
interest.
(2) Identify each director or nominee who has or had during the past
five years any material direct or indirect interest in the Fund's
principal underwriter or Administrator and describe the nature of such
interest.
(3) Describe briefly, and where practicable, state the approximate
dollar amount, of any material interest, direct or indirect, of any
director or nominee for election as a director of the Fund in any
material transactions since the beginning of the most recently completed
fiscal year, or in any proposed material transactions, to which the
investment adviser, the principal underwriter, the Administrator, any
Parent or Subsidiary of such entities (other than another Fund), or any
Subsidiary of the Parent of such entities was or is to be a party.
Instructions. 1. Include the name of each person whose interest in
any transaction is described and the nature of the relationship by
reason of which such interest is required to be described. Where it is
not practicable to state the approximate dollar amount of the interest,
indicate the approximate dollar amount involved in the transaction.
2. As to any transaction involving the purchase or sale of assets by
or to the investment adviser, or the Administrator, state the cost of
the assets to the purchaser and the cost thereof to the seller if
acquired by the seller within two years prior to the transaction.
3. If the interest of any person arises from the position of the
person as a partner in a partnership, the proportionate interest of such
person in transactions to which the partnership is a party need not be
set forth, but state the amount involved in the transaction with the
partnership.
4. No information need be given in response to this paragraph with
respect to any transaction that is not related to the business or
operations of the Fund and to which neither the Fund nor any of its
Parents or Subsidiaries is a party.
(4) Provide in tabular form, to the extent practicable, the
information required by Items 401, 404 (a) and (c), and 405 of
Regulation S-K (Secs. 229.401, 229.404, and 229.405 of this chapter).
Instructions. 1. Indicate by an asterisk any nominee or director who
is or would be an ``interested person'' within the meaning of section
2(a)(19) of the Investment Company Act of 1940 and describe the
relationships, events, or transactions by reason of which such person is
deemed an ``interested person.''
2. Separate accounts registered as management investment companies
need not provide any information concerning the officers of the
sponsoring insurance company who are not directly or indirectly engaged
in activities related to the separate account in response to Item 401 of
Regulation S-K.
(5) Describe briefly any material pending legal proceedings, other
than ordinary routine litigation incidental to the Fund's business, to
which any director or nominee for director or affiliated person of such
director or nominee is a party adverse to the Fund or any of its
affiliated persons or has a material interest adverse to the Fund or any
of its affiliated persons. Include the name of the court where the case
is pending, the date instituted, the principal parties, a description of
the factual basis alleged to underlie the proceeding, and the relief
sought.
(6) For all directors, and for each of the three highest-paid
executive officers that have aggregate compensation from the Fund for
the most recently completed fiscal year in excess of $60,000
(``Compensated Persons''):
(i) Furnish the information required by the following table for the
last fiscal year:
[[Page 188]]
Compensation Table
------------------------------------------------------------------------
(3) Pension
or (4) (5) Total
(1) Name of (2) Aggregate retirement Estimated compensation
person, compensation benefits annual from fund and
position from fund accrued as benefits fund complex
part of fund upon paid to
expenses retirement directors
------------------------------------------------------------------------
Instructions. 1. For column (1), indicate, if necessary, the
capacity in which the remuneration is received. For Compensated Persons
that are directors of the Fund, compensation is amounts received for
service as a director.
2. If the Fund has not completed its first full year since its
organization, furnish the information for the current fiscal year,
estimating future payments that would be made pursuant to an existing
agreement or understanding. Disclose in a footnote to the Compensation
Table the period for which the information is furnished.
3. Include in column (2) amounts deferred at the election of the
Compensated Person, whether pursuant to a plan established under Section
401(k) of the Internal Revenue Code [26 U.S.C. 401(k)] or otherwise, for
the fiscal year in which earned. Disclose in a footnote to the
Compensation Table the total amount of deferred compensation (including
interest) payable to or accrued for any Compensated Person.
4. Include in columns (3) and (4) all pension or retirement benefits
proposed to be paid under any existing plan in the event of retirement
at normal retirement date, directly or indirectly, by the Fund or any of
its Subsidiaries, or by other companies in the Fund Complex. Omit column
(4) where retirement benefits are not determinable.
5. For any defined benefit or actuarial plan under which benefits
are determined primarily by final compensation (or average final
compensation) and years of service, provide the information required in
column (4) in a separate table showing estimated annual benefits payable
upon retirement (including amounts attributable to any defined benefit
supplementary or excess pension award plans) in specified compensation
and years of service classifications. Also provide the estimated
credited years of service for each Compensated Person.
6. Include in column (5) only aggregate compensation paid to a
director for service on the board and other boards of investment
companies in a Fund Complex specifying the number of such other
investment companies.
(ii) Describe briefly the material provisions of any pension,
retirement, or other plan or any arrangement other than fee arrangements
disclosed in paragraph (i) pursuant to which Compensated Persons are or
may be compensated for any services provided, including amounts paid, if
any, to the Compensated Person under any such arrangements during the
most recently completed fiscal year. Specifically include the criteria
used to determine amounts payable under any plan, the length of service
or vesting period required by the plan, the retirement age or other
event which gives rise to payments under the plan, and whether the
payment of benefits is secured or funded by the Fund.
(iii) With respect to each Compensated Person, business development
companies shall include the information required by Items 402(b)(2)(iv)
and 402(c) of Regulation S-K (Secs. 229.402(b)(2)(iv) and
229.402(c) of this chapter).
(c) Approval of investment advisory contract. If action is to be
taken with respect to an investment advisory contract, include the
following information in the proxy statement.
Instruction. Furnish information with respect to a prospective
investment adviser to the extent applicable (including the name and
address of the prospective investment adviser).
(1) With respect to the existing investment advisory contract:
(i) State the date of the contract and the date on which it was last
submitted to a vote of security holders of the Fund, including the
purpose of such submission;
(ii) Briefly describe the terms of the contract, including the rate
of compensation of the investment adviser;
(iii) State the aggregate amount of the investment adviser's fee and
the amount and purpose of any other material payments by the Fund to the
investment adviser, or any affiliated person of the investment adviser,
during the last fiscal year of the Fund;
(iv) If any person is acting as an investment adviser of the Fund
other than pursuant to a written contract that has been approved by the
security holders of the company, identify the person and describe the
nature of the services and arrangements;
(v) Describe any action taken with respect to the investment
advisory contract since the beginning of the Fund's last fiscal year by
the board of directors of the Fund (unless described in response to
paragraph (c)(1)(vi)) of this Item 22); and
(vi) If an investment advisory contract was terminated or not
renewed for any reason,
[[Page 189]]
state the date of such termination or non-renewal, identify the parties
involved, and describe the circumstances of such termination or non-
renewal.
(2) State the name, address and principal occupation of the
principal executive officer and each director or general partner of the
investment adviser.
Instruction. If the investment adviser is a partnership with more
than ten general partners, name:
(i) The general partners with the five largest economic interests in
the partnership, and, if different, those general partners comprising
the management or executive committee of the partnership or exercising
similar authority;
(ii) The general partners with significant management
responsibilities relating to the fund.
(3) State the names and addresses of all Parents of the investment
adviser and show the basis of control of the investment adviser and each
Parent by its immediate Parent.
Instructions. 1. If any person named is a corporation, include the
percentage of its voting securities owned by its immediate Parent.
2. If any person named is a partnership, name the general partners
having the three largest partnership interests (computed by whatever
method is appropriate in the particular case).
(4) If the investment adviser is a corporation and if, to the
knowledge of the persons making the solicitation or the persons on whose
behalf the solicitation is made, any person not named in answer to
paragraph (c)(3) of this Item 22 owns, of record or beneficially, ten
percent or more of the outstanding voting securities of the investment
adviser, indicate that fact and state the name and address of each such
person.
(5) Name each officer or director of the Fund who is an officer,
employee, director, general partner or shareholder of the investment
adviser. As to any officer or director who is not a director or general
partner of the investment adviser and who owns securities or has any
other material direct or indirect interest in the investment adviser or
any other person controlling, controlled by or under common control with
the investment adviser, describe the nature of such interest.
(6) Describe briefly and state the approximate amount of, where
practicable, any material interest, direct or indirect, of any director
of the Fund in any material transactions since the beginning of the most
recently completed fiscal year, or in any material proposed
transactions, to which the investment adviser of the Fund, any Parent or
Subsidiary of the investment adviser (other than another Fund), or any
Subsidiary of the Parent of such entities was or is to be a party.
Instructions. 1. Include the name of each person whose interest in
any transaction is described and the nature of the relationship by
reason of which such interest is required to be described. Where it is
not practicable to state the approximate amount of the interest,
indicate the approximate amount involved in the transaction.
2. As to any transaction involving the purchase or sale of assets by
or to the investment adviser, state the cost of the assets to the
purchaser and the cost thereof to the seller if acquired by the seller
within two years prior to the transaction.
3. If the interest of any person arises from the position of the
person as a partner in a partnership, the proportionate interest of such
person in transactions to which the partnership is a party need not be
set forth, but state the amount involved in the transaction with the
partnership.
4. No information need be given in response to this paragraph (c)(6)
of Item 22 with respect to any transaction that is not related to the
business or operations of the Fund and to which neither the Fund nor any
of its Parents or Subsidiaries is a party.
(7) Disclose any financial condition of the investment adviser that
is reasonably likely to impair the financial ability of the adviser to
fulfil its commitment to the fund under the proposed investment advisory
contract.
(8) Describe the nature of the action to be taken on the investment
advisory contract and the reasons therefor, the terms of the contract to
be acted upon, and, if the action is an amendment to, or a replacement
of, an investment advisory contract, the material differences between
the current and proposed contract.
(9) If a change in the investment advisory fee is sought, state:
(i) The aggregate amount of the investment adviser's fee during the
last year;
(ii) The amount that the adviser would have received had the
proposed fee been in effect; and
(iii) The difference between the aggregate amounts stated in
response to paragraphs (i) and (ii) of this item (c)(9) as a percentage
of the amount stated in response to paragraph (i) of this item (c)(9).
(10) If the investment adviser acts as such with respect to any
other Fund having a similar investment objective, identify and state the
size of such other Fund and the rate of the investment adviser's
compensation. Also indicate for any Fund identified whether the
investment adviser has waived, reduced, or otherwise agreed to reduce
its compensation under any applicable contract.
Instruction. Furnish the information in response to this paragraph
(c)(10) of Item 22 in tabular form.
[[Page 190]]
(11) Discuss in reasonable detail the material factors and the
conclusions with respect thereto which form the basis for the
recommendation of the board of directors that the shareholders approve
an investment advisory contract. If applicable, include a discussion of
any benefits derived or to be derived by the investment adviser from the
relationship with the Fund such as soft dollar arrangements by which
brokers provide research to the Fund or its investment adviser in return
for allocating fund brokerage.
Instruction. Conclusory statements or a list of factors will not be
considered sufficient disclosure. The discussion should relate the
factors to the specific circumstances of the fund and the investment
advisory contract for which approval is sought.
(12) Describe any arrangement or understanding made in connection
with the proposed investment advisory contract with respect to the
composition of the board of directors of the Fund or the investment
adviser or with respect to the selection or appointment of any person to
any office with either such company.
(13) For the most recently completed fiscal year, state:
(i) The aggregate amount of commissions paid to any Affiliated
Broker; and
(ii) The percentage of the Fund's aggregate brokerage commissions
paid to any such Affiliated Broker.
Instruction. Identify each Affiliated Broker and the relationships
that cause the broker to be an Affiliated Broker.
(14) Disclose the amount of any fees paid by the Fund to the
investment adviser, its affiliated persons or any affiliated person of
such person during the most recent fiscal year for services provided to
the Fund (other than under the investment advisory contract or for
brokerage commissions). State whether these services will continue to be
provided after the investment advisory contract is approved.
(d) Approval of distribution plan. If action is to be taken with
respect to a Distribution Plan, include the following information in the
proxy statement.
Instruction. Furnish information on a prospective basis to the
extent applicable.
(1) Describe the nature of the action to be taken on the
Distribution Plan and the reason therefor, the terms of the Distribution
Plan to be acted upon, and, if the action is an amendment to, or a
replacement of, a Distribution Plan, the material differences between
the current and proposed Distribution Plan.
(2) If the Fund has a Distribution Plan in effect:
(i) Provide the date that the Distribution Plan was adopted and the
date of the last amendment, if any;
(ii) Disclose the persons to whom payments may be made under the
Distribution Plan, the rate of the distribution fee and the purposes for
which such fee may be used;
(iii) Disclose the amount of distribution fees paid by the Fund
pursuant to the plan during its most recent fiscal year, both in the
aggregate and as a percentage of the Fund's average net assets during
the period;
(iv) Disclose the name of, and the amount of any payments made under
the Distribution Plan by the Fund during its most recent fiscal year to,
any person who is an affiliated person of the Fund, its investment
adviser, principal underwriter, or Administrator, an affiliated person
of such person, or a person that during the most recent fiscal year
received 10% or more of the aggregate amount paid under the Distribution
Plan by the Fund;
(v) Describe any action taken with respect to the Distribution Plan
since the beginning of the Fund's most recent fiscal year by the board
of directors of the Fund; and
(vi) If a Distribution Plan was or is to be terminated or not
renewed for any reason, state the date or prospective date of such
termination or non-renewal, identify the parties involved, and describe
the circumstances of such termination or non-renewal.
(3) Describe briefly and state the approximate amount of, where
practicable, any material interest, direct or indirect, of any director
or nominee for election as a director of the Fund in any material
transactions since the beginning of the most recently completed fiscal
year, or in any material proposed transactions, to which any person
identified in response to Item 22(d)(2)(iv) was or is to be a party.
Instructions. 1. Include the name of each person whose interest in
any transaction is described and the nature of the relationship by
reason of which such interest is required to be described. Where it is
not practicable to state the approximate amount of the interest,
indicate the approximate amount involved in the transaction.
2. As to any transaction involving the purchase or sale of assets,
state the cost of the assets to the purchaser and the cost thereof to
the seller if acquired by the seller within two years prior to the
transaction.
3. If the interest of any person arises from the position of the
person as a partner in a partnership, the proportionate interest of such
person in transactions to which the partnership is a party need not be
set forth but state the amount involved in the transaction with the
partnership.
4. No information need be given in response to this paragraph (d)(3)
of Item 22 with respect to any transaction that is not related to the
business or operations of the Fund and to which neither the Fund nor any
of its Parents or Subsidiaries is a party.
(4) Discuss in reasonable detail the material factors and the
conclusions with respect
[[Page 191]]
thereto which form the basis for the conclusion of the board of
directors that there is a reasonable likelihood that the proposed
Distribution Plan (or amendment thereto) will benefit the Fund and its
shareholders.
Instruction. Conclusory statements or a list of factors will not be
considered sufficient disclosure.
[51 FR 42063, Nov. 20, 1986; 51 FR 45576, Dec. 19, 1986]
Editorial Note: For Federal Register citations affecting
Sec. 240.14a-101, see the List of CFR Sections Affected in the Finding
Aids section of this volume.
Effective Date Note: At 62 FR 6071, Feb. 10, 1997, Sec. 240.14a-101
was amended by removing the word ``and'' at the end of Item 13(a)(4),
redesignating Item 13(a)(5) as Item 13(a)(6), adding Item 13(a)(5),
adding Instruction 6 to Item 13, removing ``and'' at the end of Item
14(b)(2)(i)(B)(3)(vi) and the period at the end of Item
14(b)(2)(i)(B)(3)(vii) and in its place adding ``; and'', adding
paragraph (viii) to Item 14(b)(2)(i)(B)(3), removing ``and'' at the end
of Item 14(b)(2)(ii)(A)(3)(v) and the period at the end of Item
14(b)(2)(ii)(A)(3)(vi) and in its place adding ``; and'', adding
paragraph (vii) to Item 14(b)(2)(ii)(A)(3), removing ``and'' at the end
of Item 14(b)(3)(i)(H) and the period at the end of Item 14(b)(3)(i)(I)
and in its place adding ``; and'', adding paragraph (J) to Item
14(b)(3)(i), and adding Instruction 8 to Item 14, effective Apr. 11,
1997.
Sec. 240.14a-102 [Reserved]
Sec. 240.14a-103 Notice of Exempt Solicitation. Information to be included in statements submitted by or on behalf of a person pursuant to Sec. 240.14a-6(g)
U.S. Securities and Exchange Commission Washington, DC 20549
Notice of Exempt Solicitation
1. Name of the Registrant:
_______________________________________________________________________
2. Name of person relying on exemption:
_______________________________________________________________________
3. Address of person relying on exemption:
_______________________________________________________________________
4. Written materials. Attach written material required to be submitted
pursuant to Rule 14a-6(g)(1) [Sec. 240.14a-6(g)(1)].
[57 FR 48294, Oct. 22, 1992]
Sec. 240.14a-104 Notice of Exempt Preliminary Roll-up Communication. Information regarding ownership interests and any potential conflicts of interest to be
included in statements submitted by or on behalf of a person
pursuant to Sec. 240.14a-2(b)(4) and Sec. 240.14a-6(n).
United States Securities and Exchange Commission Washington, D.C. 20549
Notice of Exempt Preliminary Roll-Up Communication
1. Name of registrant appearing on Securities Act of 1933 registration
statement for the roll-up transaction (or, if registration
statement has not been filed, name of entity into which
partnerships are to be rolled up):
_______________________________________________________________________
2. Name of partnership that is the subject of the proposed roll-up
transaction:
_______________________________________________________________________
3. Name of person relying on exemption:
_______________________________________________________________________
4. Address of person relying on exemption:
_______________________________________________________________________
5. Ownership interest of security holder in partnership that is the
subject of the proposed roll-up transaction:
_______________________________________________________________________
_______________________________________________________________________
Note: To the extent that the holder owns securities in any other
entities involved in this roll-up transaction, disclosure of these
interests also should be made.
6. Describe any and all relations of the holder to the parties to the
transaction or to the transaction itself:
a. The holder is engaged in the business of buying and selling limited
partnership interests in the secondary market would be
adversely affected if the roll-up transaction were completed.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
b. The holder would suffer direct (or indirect) material financial
injury if the roll-up transaction were completed since it is a
service provider to an affected limited partnership.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
c. The holder is engaged in another transaction that may be competitive
with the pending roll-up transaction.
[[Page 192]]
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
d. Any other relations to the parties involved in the transaction or to
the transaction itself, or any benefits enjoyed by the holder
not shared on a pro rata basis by all other holders of the
same class of securities of the partnership that is the
subject of the proposed roll-up transaction.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
[59 FR 63685, Dec. 8, 1994]
Sec. 240.14b-1 Obligation of registered brokers and dealers in connection with the prompt forwarding of certain communications to beneficial owners.
(a) Definitions. Unless the context otherwise requires, all terms
used in this section shall have the same meanings as in the Act and,
with respect to proxy soliciting material, as in Sec. 240.14a-1
thereunder and, with respect to information statements, as in
Sec. 240.14c-1 thereunder. In addition, as used in this section, the
term ``registrant'' means:
(1) The issuer of a class of securities registered pursuant to
section 12 of the Act; or
(2) An investment company registered under the Investment Company
Act of 1940.
(b) Dissemination and beneficial owner information requirements. A
broker or dealer registered under Section 15 of the Act shall comply
with the following requirements for disseminating certain communications
to beneficial owners and providing beneficial owner information to
registrants.
(1) The broker or dealer shall respond, by first class mail or other
equally prompt means, directly to the registrant no later than seven
business days after the date it receives an inquiry made in accordance
with Sec. 240.14a-13(a) or Sec. 240.14c-7(a) by indicting, by means of a
search card or otherwise:
(i) The approximate number of customers of the broker or dealer who
are beneficial owners of the registrant's securities that are held of
record by the broker, dealer, or its nominee;
(ii) The number of customers of the broker or dealer who are
beneficial owners of the registrant's securities who have objected to
disclosure of their names, addresses,and securities positions if the
registrant has indicated, pursuant to Sec. 240.14a-13(a)(1)(ii)(A) or
Sec. 240.14c-7(a)(1)(ii)(A), that it will distribute the annual report
to security holders to beneficial owners of its securities whose names,
addresses and securities positions are disclosed pursuant to paragraph
(b)(3) of this section; and
(iii) The identity of the designated agent of the broker or dealer,
if any, acting on its behalf in fulfilling its obligations under
paragraph (b)(3) of this section; Provided, however, that if the broker
or dealer has informed the registrant that a designated office(s) or
department(s) is to receive such inquiries, receipt for purposes of
paragraph (b)(1) of this section shall mean receipt by such designated
office(s) or department(s).
(2) The broker or dealer shall, upon receipt of the proxy, other
proxy soliciting material, information statement, and/or annual reports
to security holders, forward such materials to its customers who are
beneficial owners of the registrant's securities no later than five
business days after receipt of the proxy material, information statement
or annual reports.
(3) The broker or dealer shall, through its agent or directly:
(i) Provide the registrant, upon the registrant's request, with the
names, addresses, and securities positions, compiled as of a date
specified in the registrant's request which is no earlier than five
business days after the date the registrant's request is received, of
its customers who are beneficial owners of the registrant's securities
and who have not objected to disclosure of such information; Provided ,
however, that if the broker or dealer has informed the registrant that a
designated office(s) or department(s) is to receive such requests,
receipt shall mean receipt by such designated office(s) or
department(s); and
(ii) Transmit the data specified in paragraph (b)(3)(i) of this
section to the registrant no later than five business
[[Page 193]]
days after the record date or other date specified by the registrant.
Note 1: Where a broker or dealer employs a designated agent to act
on its behalf in performing the obligations imposed on the broker or
dealer by paragraph (b)(3) of this section, the five business day time
period for determining the date as of which the beneficial owner
information is to be compiled is calculated from the date the designated
agent receives the registrant's request. In complying with the
registrant's request for beneficial owner information under paragraph
(b)(3) of this section, a broker or dealer need only supply the
registrant with the names, addresses, and securities positions of non-
objecting beneficial owners.
Note 2: If a broker or dealer receives a registrant's request less
than five business days before the requested compilation date, it must
provide a list compiled as of a date that is no more than five business
days after receipt and transmit the list within five business days after
the compilation date.
(c) Exceptions to dissemination and beneficial owner information
requirements. A broker or dealer registered under section 15 of the Act
shall be subject to the following with respect to its dissemination and
beneficial owner information requirements.
(1) With regard to beneficial owners of exempt employee benefit plan
securities, the broker or dealer shall:
(i) Not include information in its response pursuant to paragraph
(b)(1) of this section or forward proxies (or in lieu thereof requests
for voting instructions), proxy soliciting material, information
statements, or annual reports to security holders pursuant to paragraph
(b)(2) of this section to such beneficial owners; and
(ii) Not include in its response, pursuant to paragraph (b)(3) of
this section, data concerning such beneficial owners.
(2) A broker or dealer need not satisfy:
(i) Its obligations under paragraphs (b)(2) and (b)(3) of this
section if a registrant does not provide assurance of reimbursement of
the broker's or dealer's reasonable expenses, both direct and indirect,
incurred in connection with performing the obligations imposed by
paragraphs (b)(2) and (b)(3) of this section; or
(ii) Its obligation under paragraph (b)(2) of this section to
forward annual reports to non-objecting beneficial owners identified by
the broker or dealer, through its agent or directly, pursuant to
paragraph (b)(3) of this section if the registrant notifies the broker
or dealer pursuant to Sec. 240.14a-13(c) or Sec. 240.14c-7(c) that the
registrant will mail the annual report to such non-objecting beneficial
owners identified by the broker or dealer and delivered in a list to the
registrant pursuant to paragraph (b)(3) of this section.
[57 FR 1099, Jan. 10, 1992]
Sec. 240.14b-2 Obligation of banks, associations and other entities that exercise fiduciary powers in connection with the prompt forwarding of certain
communications to beneficial owners.
(a) Definitions. Unless the context otherwise requires, all terms
used in this section shall have the same meanings as in the Act and,
with respect to proxy soliciting material, as in Sec. 240.14a-1
thereunder and, with respect to information statements, as in
Sec. 240.14c-1 thereunder. In addition, as used in this section, the
following terms shall apply:
(1) The term bank means a bank, association, or other entity that
exercises fiduciary powers.
(2) The term beneficial owner includes any person who has or shares,
pursuant to an instrument, agreement, or otherwise, the power to vote,
or to direct the voting of a security.
Note 1: If more than one person shares voting power, the provisions
of the instrument creating that voting power shall govern with respect
to whether consent to disclosure of beneficial owner information has
been given.
Note 2: If more than one person shares voting power or if the
instrument creating that voting power provides that such power shall be
exercised by different persons depending on the nature of the corporate
action involved, all persons entitled to exercise such power shall be
deemed beneficial owners; Provided, however, that only one such
beneficial owner need be designated among the beneficial owners to
receive proxies or requests for voting instructions, other proxy
soliciting material, information statements, and/or annual reports to
security holders, if the person so designated assumes the obligation to
disseminate, in a timely manner, such materials to the other beneficial
owners.
[[Page 194]]
(3) The term registrant means:
(i) The issuer of a class of securities registered pursuant to
section 12 of the Act; or
(ii) An investment company registered under the Investment Company
Act of 1940.
(b) Dissemination and beneficial owner information requirements. A
bank shall comply with the following requirements for disseminating
certain communications to beneficial owners and providing beneficial
owner information to registrants.
(1) The bank shall:
(i) Respond, by first class mail or other equally prompt means,
directly to the registrant, no later than one business day after the
date it receives an inquiry made in accordance with Sec. 240.14a-13(a)
or Sec. 240.14c-7(a) by indicating the name and address of each of its
respondent banks that holds the registrant's securities on behalf of
beneficial owners, if any; and
(ii) Respond, by first class mail or other equally prompt means,
directly to the registrant no later than seven business days after the
date it receives an inquiry made in accordance with Sec. 240.14a-13(a)
or Sec. 240.14c-7(a) by indicating, by means of a search card or
otherwise:
(A) The approximate number of customers of the bank who are
beneficial owners of the registrant's securities that are held of record
by the bank or its nominee;
(B) If the registrant has indicated, pursuant to Sec. 240.14a-
13(a)(1)(ii)(A) or Sec. 240.14c-7(a)(1)(ii)(A), that it will distribute
the annual report to security holders to beneficial owners of its
securities whose names, addresses, and securities positions are
disclosed pursuant to paragraphs (b)(4) (ii) and (iii) of this section:
(1) With respect to customer accounts opened on or before December
28, 1986, the number of beneficial owners of the registrant's securities
who have affirmatively consented to disclosure of their names,
addresses, and securities positions; and
(2) With respect to customer accounts opened after December 28,
1986, the number of beneficial owners of the registrant's securities who
have not objected to disclosure of their names, addresses, and
securities positions; and
(C) The identity of its designated agent, if any, acting on its
behalf in fulfilling its obligations under paragraphs (b)(4) (ii) and
(iii) of this section;
Provided, however, that, if the bank or respondent bank has informed the
registrant that a designated office(s) or department(s) is to receive
such inquiries, receipt for purposes of paragraphs (b)(1) (i) and (ii)
of this section shall mean receipt by such designated office(s) or
department(s).
(2) Where proxies are solicited, the bank shall, within five
business days after the record date:
(i) Execute an omnibus proxy, including a power of substitution, in
favor of its respondent banks and forward such proxy to the registrant;
and
(ii) Furnish a notice to each respondent bank in whose favor an
omnibus proxy has been executed that it has executed such a proxy,
including a power of substitution, in its favor pursuant to paragraph
(b)(2)(i) of this section.
(3) Upon receipt of the proxy, other proxy soliciting material,
information statement, and/or annual reports to security holders, the
bank shall forward such materials to each beneficial owner on whose
behalf it holds securities, no later than five business days after the
date it receives such material and, where a proxy is solicited, the bank
shall forward, with the other proxy soliciting material and/or the
annual report, either:
(i) A properly executed proxy:
(A) Indicating the number of securities held for such beneficial
owner;
(B) Bearing the beneficial owner's account number or other form of
identification, together with instructions as to the procedures to vote
the securities;
(C) Briefly stating which other proxies, if any, are required to
permit securities to be voted under the terms of the instrument creating
that voting power or applicable state law; and
(D) Being accompanied by an envelope addressed to the registrant or
its agent, if not provided by the registrant; or
(ii) A request for voting instructions (for which registrant's form
of proxy
[[Page 195]]
may be used and which shall be voted by the record holder bank or
respondent bank in accordance with the instructions received), together
with an envelope addressed to the record holder bank or respondent bank.
(4) The bank shall:
(i) Respond, by first class mail or other equally prompt means,
directly to the registrant no later than one business day after the date
it receives an inquiry made in accordance with Sec. 240.14a-13(b)(1) or
Sec. 240.14c-7(b)(1) by indicating the name and address of each of its
respondent banks that holds the registrant's securities on behalf of
beneficial owners, if any;
(ii) Through its agent or directly, provide the registrant, upon the
registrant's request, and within the time specified in paragraph
(b)(4)(iii) of this section, with the names, addresses, and securities
position, compiled as of a date specified in the registrant's request
which is no earlier than five business days after the date the
registrant's request is received, of:
(A) With respect to customer accounts opened on or before December
28, 1986, beneficial owners of the registrant's securities on whose
behalf it holds securities who have consented affirmatively to
disclosure of such information, subject to paragraph (b)(5) of this
section; and
(B) With respect to customer accounts opened after December 28,
1986, beneficial owners of the registrant's securities on whose behalf
it holds securities who have not objected to disclosure of such
information;
Provided, however, that if the record holder bank or respondent bank has
informed the registrant that a designated office(s) or department(s) is
to receive such requests, receipt for purposes of paragraphs (b)(4) (i)
and (ii) of this section shall mean receipt by such designated office(s)
or department(s); and
(iii) Through its agent or directly, transmit the data specified in
paragraph (b)(4)(ii) of this section to the registrant no later than
five business days after the date specified by the registrant.
Note 1: Where a record holder bank or respondent bank employs a
designated agent to act on its behalf in performing the obligations
imposed on it by paragraphs (b)(4) (ii) and (iii) of this section, the
five business day time period for determining the date as of which the
beneficial owner information is to be compiled is calculated from the
date the designated agent receives the registrant's request. In
complying with the registrant's request for beneficial owner information
under paragraphs (b)(4) (ii) and (iii) of this section, a record holder
bank or respondent bank need only supply the registrant with the names,
addresses and securities positions of affirmatively consenting and non-
objecting beneficial owners.
Note 2: If a record holder bank or respondent bank receives a
registrant's request less than five business days before the requested
compilation date, it must provide a list compiled as of a date that is
no more than five business days after receipt and transmit the list
within five business days after the compilation date.
(5) For customer accounts opened on or before December 28, 1986,
unless the bank has made a good faith effort to obtain affirmative
consent to disclosure of beneficial owner information pursuant to
paragraph (b)(4)(ii) of this section, the bank shall provide such
information as to beneficial owners who do not object to disclosure of
such information. A good faith effort to obtain affirmative consent to
disclosure of beneficial owner information shall include, but shall not
be limited to, making an inquiry:
(i) Phrased in neutral language, explaining the purpose of the
disclosure and the limitations on the registrant's use thereof;
(ii) Either in at least one mailing separate from other account
mailings or in repeated mailings; and
(iii) In a mailing that includes a return card, postage paid
enclosure.
(c) Exceptions to dissemination and beneficial owner information
requirements. The bank shall be subject to the following respect to its
dissemination and beneficial owner requirements.
(1) With regard to beneficial owners of exempt employee benefit plan
securities, the bank shall not:
(i) Include information in its response pursuant to paragraph (b)(1)
of this section; or forward proxies (or in lieu thereof requests for
voting instructions), proxy soliciting material, information statements,
or annual reports to security holders pursuant to paragraph (b)(3) of
this section to such beneficial owners; or
[[Page 196]]
(ii) Include in its response pursuant to paragraphs (b)(4) and
(b)(5) of this section data concerning such beneficial owners.
(2) The bank need not satisfy:
(i) Its obligations under paragraphs (b)(2), (b)(3), and (b)(4) of
this section if a registrant does not provide assurance of reimbursement
of its reasonable expenses, both direct and indirect, incurred in
connection with performing the obligations imposed by paragraphs (b)(2),
(b)(3), and (b)(4) of this section; or
(ii) Its obligation under paragraph (b)(3) of this section to
forward annual reports to consenting and non-objecting beneficial owners
identified pursuant to paragraphs (b)(4) (ii) and (iii) of this section
if the registrant notifies the record holder bank or respondent bank,
pursuant to Sec. 240.14a-13(c) or Sec. 240.14c-7(c), that the registrant
will mail the annual report to beneficial owners whose names addresses
and securities positions are disclosed pursuant to paragraphs (b)(4)
(ii) and (iii) of this section.
(3) For the purposes of determining the fees which may be charged to
registrants pursuant to Sec. 240.14a-13(b)(5), Sec. 240.14c-7(a)(5), and
paragraph (c)(2) of this section for performing obligations under
paragraphs (b)(2), (b)(3), and (b)(4) of this section, an amount no
greater than that permitted to be charged by brokers or dealers for
reimbursement of their reasonable expenses, both direct and indirect,
incurred in connection with performing the obligations imposed by
paragraphs (b)(2) and (b)(3) of Sec. 240.14b-1, shall be deemed to be
reasonable.
[57 FR 1100, Jan. 10, 1992]
Regulation 14C: Distribution of Information Pursuant to Section 14(c)
ATTENTION ELECTRONIC FILERS
THIS REGULATION SHOULD BE READ IN CONJUNCTION WITH REGULATION S-T (PART
232 OF THIS CHAPTER), WHICH GOVERNS THE PREPARATION AND SUBMISSION OF
DOCUMENTS IN ELECTRONIC FORMAT. MANY PROVISIONS RELATING TO THE
PREPARATION AND SUBMISSION OF DOCUMENTS IN PAPER FORMAT CONTAINED IN
THIS REGULATION ARE SUPERSEDED BY THE PROVISIONS OF REGULATION S-T FOR
DOCUMENTS REQUIRED TO BE FILED IN ELECTRONIC FORMAT.
Sec. 240.14c-1 Definitions.
Unless the context otherwise requires, all terms used in this
regulation have the same meanings as in the Act or elsewhere in the
general rules and regulations thereunder. In addition, the following
definitions apply unless the context otherwise requires:
(a) Associate. The term ``associate,'' used to indicate a
relationship with any person, means:
(1) Any corporation or organization (other than the registrant or a
majority owned subsidiary of the registrant) of which such person is an
officer or partner or is, directly or indirectly, the beneficial owner
of 10 percent or more of any class of equity securities;
(2) Any trust or other estate in which such person has a substantial
beneficial interest or as to which such person serves as trustee or in a
similar fidiciary capacity; and
(3) Any relative or spouse of such person, or any relative of such
spouse, who has the same home as such person or who is a director or
officer of the registrant or any of its parents or subsidiaries.
(b) Employee benefit plan. For purposes of Sec. 240.14c-7, the term
``employee benefit plan'' means any purchase, savings, option, bonus,
appreciation, profit sharing, thrift, incentive, pension or
[[Page 197]]
similar plan primarily for employees, directors, trustees or officers.
(c) Entity that exercises fiduciary powers. The term ``entity that
exercises fiduciary powers'' means any entity that holds securities in
nominee name or otherwise on behalf of a beneficial owner but does not
include a clearing agency registered pursuant to section 17A of the Act,
or a broker or a dealer.
(d) Exempt employee benefit plan securities. For purposes of
Sec. 240.14c-7, the term ``exempt employee benefit plan securities''
means:
(1) Securities of the registrant held by an employee benefit plan,
as defined in paragraph (b) of this section, where such plan is
established by the registrant; or
(2) If notice regarding the current distribution of information
statements has been given pursuant to Sec. 240.14c-7(a)(1)(ii)(C) or if
notice regarding the current request for a list of names, addresses and
securities positions of beneficial owners has been given pursuant to
Sec. 240.14c-7(b)(3), securities of the registrant held by an employee
benefit plan, as defined in paragraph (b) of this section, where such
plan is established by an affiliate of the registrant.
(e) Information statement. The term ``information statement'' means
the statement required by Sec. 240.14c-2, whether or not contained in a
single document.
(f) Last fiscal year. The term ``last fiscal year'' of the
registrant means the last fiscal year of the registrant ending prior to
the date of the meeting with respect to which an information statement
is required to be distributed, or if the information statement involves
consents or authorizations in lieu of a meeting, the earliest date on
which they may be used to effect corporate action.
(g) Proxy. The term ``proxy'' includes every proxy, consent or
authorization within the meaning of section 14(a) of the Act. The
consent or authorization may take the form of failure to object or to
dissent.
(h) Record date. The term ``record date'' means the date as of which
the record holders of securities entitled to vote at a meeting or by
written consent or authorization shall be determined.
(i) Record holder. For purposes of Sec. 240.14c-7, the term ``record
holder'' means any broker, dealer, voting trustee, bank, association or
other entity that exercises fiduciary powers which holds securities of
record in nominee name or otherwise or as a participant in a clearing
agency registered pursuant to section 17A of the Act.
(j) Registrant. The term ``registrant'' means:
(1) The issuer of a class of securities registered pursuant to
section 12 of the Act; or
(2) An investment company registered under the Investment Company
Act of 1940 that has made a public offering of its securities.
(k) Respondent bank. For purposes of Sec. 240.14c-7, the term
``respondent bank'' means any bank, association or other entity that
exercises fiduciary powers which holds securities on behalf of
beneficial owners and deposits such securities for safekeeping with
another bank, association or other entity that exercises fiduciary
powers.
[51 FR 44279, Dec. 9, 1986, as amended at 52 FR 23649, June 24, 1987; 53
FR 16406, May 9, 1988; 57 FR 1101, Jan. 10, 1992]
Sec. 240.14c-2 Distribution of information statement.
(a) In connection with every annual or other meeting of the holders
of the class of securities registered pursuant to section 12 of the Act
or of a class of securities issued by an investment company registered
under the Investment Company Act of 1940 that has made a public offering
of securities, including the taking of corporate action by the written
authorization or consent of security holders, the registrant shall
transmit a written information statement containing the information
specified in Schedule 14C (Sec. 240.14c-101) or written information
statements included in registration statements filed under the
Securities Act of 1933 on Form S-4 or F-4 (Sec. 239.25 or Sec. 239.34 of
this chapter) or Form N-14 (Sec. 239.23 of this chapter), and containing
the information specified in such form, to every security holder of the
class that is entitled to vote or give an authorization or consent in
regard to any matter to be acted upon and from whom proxy
[[Page 198]]
authorization or consent is not solicited on behalf of the registrant
pursuant to Section 14(a) of the Act, Provided however, That:
(1) In the case of a class of securities in unregistered or bearer
form, such statements need be transmitted only to those security holders
whose names are known to the registrant, and
(2) No such statements need to be transmitted to a security holder
if a registrant would be excused from delivery of an annual report or a
proxy statement under Rule 14a-3(e)(2) (Sec. 240.14a-3(e)(2)) if such
section were applicable.
(b) The information statement shall be sent or given at least 20
calendar days prior to the meeting date or, in the case of corporate
action taken pursuant to the consents or authorizations of security
holders, at least 20 calendar days prior to the earliest date on which
the corporate action may be taken.
(c) If a transaction is a roll-up transaction as defined in Item
901(c) of Regulation S-K (17 CFR 229.901(c)) and is registered (or
authorized to be registered) on Form S-4 (17 CFR 229.25) or Form F-4 (17
CFR 229.34), the information statement must be distributed to security
holders no later than the lesser of 60 calendar days prior to the date
on which the meeting of security holders is held or action is taken, or
the maximum number of days permitted for giving notice under applicable
state law.
[51 FR 42070, Nov. 20, 1986, as amended at 56 FR 57254, Nov. 8, 1991; 57
FR 1102, Jan. 10, 1992; 57 FR 48295, Oct. 22, 1992]
Sec. 240.14c-3 Annual report to be furnished security holders.
(a) If the information statement relates to an annual (or special
meeting in lieu of the annual) meeting, or written consent in lieu of
such meeting, of security holders at which directors of the registrant,
other than an investment company registered under the Investment Company
Act of 1940, are to be elected, it shall be accompanied or preceded by
an annual report to security holders:
(1) The annual report shall contain the information specified in
paragraphs (b)(1) through (b)(11) of Rule 14a-3 (Sec. 240.14a-3 of this
chapter.)
(2) [Reserved]
Note to Small Business Issuers--In responding to the disclosure
items under paragraph (b) of Rule 14a-3, (Sec. 240.14a-3 of this
chapter) a ``small business issuer,'' defined under Rule 12b-2 of the
Exchange Act (Sec. 240.12b-2), shall refer to the disclosure items in
Regulation S-B (Sec. 228.10--702 of this chapter) rather than Regulation
S-K (Sec. 229.10--702 of this chapter). If there is no comparable
disclosure item in Regulation S-B, a small business issuer need not
provide the information requested. A small business issuer shall provide
the information in Item 310(a) of Regulation S-B in lieu of the
financial information required by Rule 14a-3(b)(1) (Sec. 240.14a-
3(b)(1)). Small business issuers using the transitional small business
issuers disclosure format in the filing of their most recent annual
report on Form 10-KSB (Sec. 249.310b of this chapter) need not provide
the information required by paragraph (b) of Rule 14a-3. Rather, those
small business issuers shall provide only the financial statements
required to be filed in their most recent Form 10-KSB. The inclusion of
additional information, including information required of non-
transitional small business issuers, in the annual report to security
holders will not cause the issuer to be ineligible for the transitional
disclosure forms.
(b) Seven copies of the report sent to security holders pursuant to
this rule shall be mailed to the Commission, solely for its information,
not later than the date on which such report is first sent or given to
security holders or the date on which preliminary copies, or definitive
copies, if preliminary filing was not required, of the information
statement are filed with the Commission pursuant to Rule 14c-5,
whichever date is later. The report is not deemed to be ``filed'' with
the Commission or subject to this regulation otherwise than as provided
in this rule, or to the liabilities of section 18 of the Act, except to
the extent that the registrant specifically requests that it be treated
as a part of the information
[[Page 199]]
statement or incorporates it in the information statement or other filed
report by reference.
(Secs. 6, 7, 8, 10, 19(a), 48 Stat. 78, 79, 81, 85; secs. 12, 13, 14,
15(d), 23(a), 48 Stat. 892, 894, 901; secs. 205, 209, 48 Stat. 906, 908;
sec. 203(a), 49 Stat. 704; secs. 1, 3, 8, 49 Stat. 1375, 1377, 1379;
sec. 301, 54 Stat. 857; secs. 8, 202, 68 Stat. 685, 686; secs. 3, 4, 5,
6, 78 Stat. 565-568, 569, 570-574; sec. 1, 79 Stat. 1051; secs. 1, 2, 3,
82 Stat. 454, 455; secs. 1, 2, 3-5, 28(c), 84 Stat. 1435, 1497; sec.
105(b), 88 Stat. 1503; secs. 8, 9, 10, 11, 18, 89 Stat. 117, 118, 119,
121, 155; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l, 78m, 78n, 78l(d),
78w(a))
[39 FR 40770, Nov. 20, 1974, as amended at 45 FR 63647, Sept. 25, 1980;
51 FR 42071, Nov. 20, 1986; 52 FR 48984, Dec. 29, 1987; 58 FR 26519, May
4, 1993; 59 FR 52700, Oct. 19, 1994; 59 FR 67765, Dec. 30, 1994]
Sec. 240.14c-4 Presentation of information in information statement.
(a) The information included in the information statement shall be
clearly presented and the statements made shall be divided into groups
according to subject matter and the various groups of statements shall
be preceded by appropriate headings. The order of items and sub-items in
the schedule need not be followed. Where practicable and appropriate,
the information shall be presented in tabular form. All amounts shall be
stated in figures. Information required by more than one applicable item
need not be repeated. No statement need be made in response to any item
or sub-item which is inapplicable.
(b) Any information required to be included in the information
statement as to terms of securities or other subject matters which from
a standpoint of practical necessity must be determined in the future may
be stated in terms of present knowledge and intention. Subject to the
foregoing, information which is not known to the registrant and which it
is not reasonably within the power of the registrant to ascertain or
procure may be omitted, if a brief statement of the circumstances
rendering such information unavailable is made.
(c) All printed information statements shall be in roman type at
least as large and as legible as 10-point modern type except that to the
extent necessary for convenient presentation, financial statements and
other tabular data, but not the notes thereto, may be in roman type at
least as large and as legible as 8-point modern type. All such type
shall be leaded at least 2 points.
(d) Where an information statement is delivered through an
electronic medium, issuers may satisfy legibility requirements
applicable to printed documents, such as type size and font, by
presenting all required information in a format readily communicated to
investors.
[31 FR 262, Jan. 8, 1966, as amended at 36 FR 8935, May 15, 1971; 51 FR
42071, Nov. 20, 1986; 61 FR 24657, May 15, 1996]
Sec. 240.14c-5 Filing requirements.
(a) Preliminary information statement. Five preliminary copies of
the information statement shall be filed with the Commission at least 10
calendar days prior to the date definitive copies of such statement are
first sent or given to security holders, or such shorter period prior to
that date as the Commission may authorize upon a showing of good cause
therefor. In computing the 10-day period, the filing date of the
preliminary copies is to be counted as the first day and the 11th day is
the date on which definitive copies of the information statement may be
mailed to security holders. A registrant, however, shall not file with
the Commission a preliminary information statement if it relates to an
annual (or special meeting in lieu of the annual) meeting, of security
holders at which the only matters to be acted upon are:
(1) The election of directors;
(2) The election, approval or ratification of accountant(s);
(3) A security holder proposal identified in the registrant's
information statement pursuant to Item 4 of Schedule 14C (Sec. 240.14c-
101); and/or
(4) The approval or ratification of a plan as defined in paragraph
(a)(7)(ii) of Item 402 of Regulation S-K (Sec. 229.402(a)(7)(ii) of this
chapter) or amendments to such a plan.
This exclusion from filing a preliminary information statement does not
apply if the registrant comments upon or refers to a solicitation in
opposition in connection with the meeting in its information statement.
[[Page 200]]
Note 1: The filing of revised material does not recommence the ten
day time period unless the revised material contains material revisions
or material new proposal(s) that constitute a fundamental change in the
information statement.
Note 2: The officials responsible for the preparation of the
information statement should make every effort to verify the accuracy
and completeness of the information required by the applicable rules.
The preliminary statement should be filed with the Commission at the
earliest practicable date.
Note 3: Solicitation in Opposition--For purposes of the exclusion
from filing a preliminary information statement, a ``solicitation in
opposition'' includes: (a) Any solicitation opposing a proposal
supported by the registrant; and (b) any solicitation supporting a
proposal that the registrant does not expressly support, other than a
security holder proposal identified in the registrant's information
statement pursuant to Item 4 of Schedule 14C (Sec. 240.14c-101 of this
chapter). The identification of a security holder proposal in the
registrant's information statement does not constitute a ``solicitation
in opposition,'' even if the registrant opposes the proposal and/or
includes a statement in opposition to the proposal.
Note 4: A registrant that is filing an information statement in
preliminary form only because the registrant has commented on or
referred to an opposing solicitation should indicate that fact in a
transmittal letter when filing the preliminary material with the
Commission.
(b) Definitive information statement. Eight definitive copies of the
information statement, in the form in which it is furnished to security
holders, shall be filed with, or mailed for filing to, the Commission
not later than the date it is first sent or given to any security
holders. Three copies thereof shall at the same time be filed with, or
mailed for filing to, each national securities exchange upon which any
security of the registrant is listed and registered.
Note: A registrant that is filing a definitive information statement
without payment of a fee should state in the first paragraph of the
transmittal letter that no fee is being paid because a fee was paid upon
filing of the preliminary information statement.
(c) Release dates. All preliminary material filed pursuant to
paragraph (a) of this section shall be accompanied by a statement of the
date on which copies thereof filed pursuant to paragraph (b) of this
section are intended to be released to security holders. All definitive
material filed pursuant to paragraph (b) of this section shall be
accompanied by a statement of the date on which copies of such material
have been released to security holders or, if not released, the date on
which copies thereof are intended to be released.
(d)(1) Public availability of information. All copies of material
filed pursuant to paragraph (a) of this section shall be clearly marked
``Preliminary Copies,'' and shall be deemed immediately available for
public inspection unless confidential treatment is obtained pursuant to
paragraph (d)(2) of this section.
(2) Confidential treatment. If action is to be taken with respect to
any matter specified in Item 14 of Schedule 14A (Sec. 240.14a-101), all
copies of the preliminary information statement filed pursuant to this
section shall be for the information of the Commission only and shall
not be deemed available for public inspection until definitive material
has been filed with the Commission provided that:
(i) The information statement does not relate to a matter or
proposal subject to Sec. 240.13e-3 or a roll-up transaction as defined
in Item 901(c) of Regulation S-K (Sec. 229.901(c) of this chapter); and
(ii) The filed material is marked ``Confidential, For Use of the
Commission Only.'' In any and all cases, such material may be disclosed
to any department or agency of the United States Government and to the
Congress, and the Commission may make such inquiries or investigation in
regard to the material as may be necessary for an adequate review
thereof by the Commission.
(e) Revised information statements. Where any information statement
filed pursuant to this section is amended or revised, two of the copies
of such amended or revised material filed pursuant to this section shall
be marked to indicate clearly and precisely the changes effected
therein. If the amendment or revision alters the text of the material,
the changes in such text shall be indicated by means of underscoring or
in some other appropriate manner.
(f) Merger material. Notwithstanding the foregoing provisions of
this section, any information statement or other material included in a
registration
[[Page 201]]
statement filed under the Securities Act of 1933 on Form N-14, S-4, or
F-4 (Sec. 239.23, Sec. 239.25 or Sec. 239.34 of this chapter) shall be
deemed filed both for the purposes of that Act and for the purposes of
this section, but separate copies of such material need not be furnished
pursuant to this section, nor shall any fee be required under paragraph
(a) of this section. However, any additional material used after the
effective date of the registration statement on Form N-14, S-4, or F-4
shall be filed in accordance with this section, unless separate copies
of such material are required to be filed as an amendment of such
registration statement.
(g) Fees. At the time of filing a preliminary information statement
regarding an acquisition, merger, spinoff, consolidation or proposed
sale or other disposition of substantially all the assets of the
company, the registrant shall pay the Commission a fee, no part of which
shall be refunded, established in accordance with Sec. 240.0-11.
(h) Cover page. Each information statement filed with the Commission
shall include a cover page in the form set forth in Schedule 14C
(Sec. 240.14c-101). The cover page required by this paragraph need not
be distributed to security holders.
[51 FR 42071, Nov. 20, 1986, as amended at 52 FR 48984, Dec. 29, 1987;
57 FR 48295, Oct. 22, 1992; 58 FR 14684, Mar. 18, 1993; 58 FR 69226,
Dec. 30, 1993; 59 FR 67765, Dec. 30, 1994; 61 FR 49960, Sept. 24, 1996]
Sec. 240.14c-6 False or misleading statements.
(a) No information statement shall contain any statement which, at
the time and in the light of the circumstances under which it is made,
is false or misleading with respect to any material fact, or which omits
to state any material fact necessary in order to make the statements
therein not false or misleading or necessary to correct any statement in
any earlier communication with respect to the same meeting or subject
matter which has become false or misleading.
(b) The fact that an information statement has been filed with or
examined by the Commission shall not be deemed a finding by the
Commission that such material is accurate or complete or not false or
misleading, or that the Commission has passed upon the merits of or
approved any statement contained therein or any matter to be acted upon
by security holders. No representation contrary to the foregoing shall
be made.
[31 FR 262, Jan. 8, 1966]
Sec. 240.14c-7 Providing copies of material for certain beneficial owners.
(a) If the registrant knows that securities of any class entitled to
vote at a meeting, or by written authorizations or consents if no
meeting is held, are held of record by a broker, dealer, voting trustee,
or bank, association, or other entity that exercises fiduciary powers in
nominee name or otherwise, the registrant shall:
(1) By first class mail or other equally prompt means:
(i) Inquire of each such record holder:
(A) Whether other persons are the beneficial owners of such
securities and, if so, the number of copies of the information statement
necessary to supply such material to such beneficial owners;
(B) In the case of an annual (or special meeting in lieu of the
annual) meeting, or written consents in lieu of such meeting, at which
directors are to be elected, the number of copies of the annual report
to security holders, necessary to supply such report to such beneficial
owners for whom proxy material has not been and is not to be made
available and to whom such reports are to be distributed by such record
holder or its nominee and not by the registrant;
(C) If the record holder or respondent bank has an obligation under
Sec. 240.14b-1(b)(3) or Sec. 240.14b-2(b)(4) (ii) and (iii), whether an
agent has been designated to act on its behalf in fulfilling such
obligation, and, if so, the name and address of such agent; and
(D) Whether it holds the registrant's securities on behalf of any
respondent bank and, if so, the name and address of each such respondent
bank; and
(ii) Indicate to each such record holder:
(A) Whether the registrant pursuant to paragraph (c) of this
section, intends to distribute the annual report to security holders to
beneficial owners of its
[[Page 202]]
securities whose names, addresses and securities positions are disclosed
pursuant to Sec. 240.14b-1(b)(3) and Sec. 240.14b-2(b)(4) (ii) and
(iii);
(B) The record date; and
(C) At the option of the registrant, any employee benefit plan
established by an affiliate of the registrant that holds securities of
the registrant that the registrant elects to treat as exempt employee
benefit plan securities;
(2) Upon receipt of a record holder's or respondent bank's response
indicating, pursuant to Sec. 240.14b-2(a)(1), the names and addresses of
its respondent banks, within one business day after the date such
response is received, make an inquiry of and give notification to each
such respondent bank in the same manner required by paragraph (a)(1) of
this section; Provided, however, the inquiry required by paragraphs
(a)(1) and (a)(2) of this section shall not cover beneficial owners of
exempt employee benefit plan securities;
(3) Make the inquiry required by paragraph (a)(1) of this section on
the earlier of:
(i) At least 20 business days prior to the record date of the
meeting of security holders or the record date of written consents in
lieu of a meeting; or
(ii) At least 20 business days prior to the date the information
statement is required to be sent or given pursuant to Sec. 240.14c-2(b);
Provided, however, That, if a record holder or respondent bank has
informed the registrant that a designated office(s) or department(s) is
to receive such inquiries, the inquiry shall be made to such designated
office(s) or department(s);
(4) Supply, in a timely manner, each record holder and respondent
bank of whom the inquiries required by paragraphs (a)(1) and (a)(2) of
this section are made with copies of the information statement and/or
the annual report to security holders, in such quantities, assembled in
such form and at such place(s), as the record holder or respondent bank
may reasonably request in order to send such material to each beneficial
owner of securities who is to be furnished with such material by the
record holder or respondent bank; and
(5) Upon the request of any record holder or respondent bank that is
supplied with information statements and/or annual reports to security
holders pursuant to paragraph (a)(3) of this section, pay its reasonable
expenses for completing the mailing of such material to beneficial
owners.
Note 1: If the registrant's list of security holders indicates that
some of its securities are registered in the name of a clearing agency
registered pursuant to section 17A of the Act (e.g., ``Cede & Co.,''
nominee for the Depository Trust Company), the registrant shall make
appropriate inquiry of the clearing agency and thereafter of the
participants in such clearing agency who may hold on behalf of a
beneficial owner or respondent bank, and shall comply with the above
paragraph with respect to any such participant (see Sec. 240.14c-1 (h)).
Note 2: The requirement for sending an annual report to security
holders of record having the same address will be satisfied by sending
at least one report to a holder of record at that address provided that
those holders of record to whom a report is not sent agree thereto in
writing. This procedure is not available to registrants, however, where
banks, associations, other entities that exercise fiduciary powers,
brokers, dealers and other persons hold securities in nominee accounts
or ``street names'' on behalf of beneficial owners, and such persons are
not relieved of any obligation to obtain or send such annual report to
the beneficial owners.
Note 3: The attention of registrants is called to the fact that each
broker, dealer, bank, association, and other entity that exercises
fiduciary powers has an obligation pursuant to Sec. 240.14b-1 and
Sec. 240.14b-2 (except as provided therein with respect to exempt
employee benefit plan securities held in nominee name) and, with respect
to brokers and dealers, applicable self-regulatory organization
requirements to obtain and forward, within the time periods prescribed
therein, (a) information statements to beneficial owners on whose behalf
it holds securities, and (b) annual reports to security holders to
beneficial owners on whose behalf it holds securities, unless the
registrant has notified the record holder or respondent bank that it has
assumed responsibility to mail such material to beneficial owners whose
names, addresses, and securities positions are disclosed pursuant to
Sec. 240.14b-1(b)(3) and Sec. 240.14b-2(b)(4) (ii) and (iii).
Note 4: The attention of registrants is called to the fact that
registrants have an obligation, pursuant to paragraph (d) of this
section, to cause information statements and
[[Page 203]]
annual reports to security holders to be furnished, in accordance with
Sec. 240.14c-2, to beneficial owners of exempt employee benefit plan
securities.
(b) Any registrant requesting pursuant to Sec. 240.14b-1(b)(3) and
Sec. 240.14b-2(b)(4) (ii) and (iii) a list of names, addresses and
securities positions of beneficial owners of its securities who either
have consented or have not objected to disclosure of such information
shall:
(1) By first class mail or other equally prompt means, inquire of
each record holder and each respondent bank identified to the registrant
pursuant to Sec. 240.14b-2(e)(1) whether such record holder or
respondent bank holds the registrant's securities on behalf of any
respondent banks and, if so, the name and address of each such
respondent bank;
(2) Request such list be compiled as of a date no earlier than five
business days after the date the registant's request is received by the
record holder or respondent bank; Provided, however, That if the record
holder or respondent bank has informed the registrant that a designated
office(s) or department(s) is to receive such requests, the request
shall be made to such designated office(s) or department(s);
(3) Make such request to the following persons that hold the
registrant's securities on behalf of beneficial owners: all brokers,
dealers, banks, associations and other entities that exercise fiduciary
powers; Provided, however, such request shall not cover beneficial
owners of exempt employee benefit plan securities as defined in
Sec. 240.14a-1(d)(1); and, at the option of the registrant, such request
may give notice of any employee benefit plan established by an affiliate
of the registrant that holds securities of the registrant that the
registrant elects to treat as exempt employee benefit plan securities;
(4) Use the information furnished in response to such request
exclusively for purposes of corporate communications; and
(5) Upon the request of any record holder or respondent bank to whom
such request is made, pay the reasonable expenses, both direct and
indirect, of providing beneficial owner information.
Note: A registrant will be deemed to have satisfied its obligations
under paragraph (b) of this section by requesting consenting and non-
objecting beneficial owner lists from a designated agent acting on
behalf of the record holder or respondent bank and paying to that
designated agent the reasonable expenses of providing the beneficial
owner information.
(c) A registrant, at its option, may send by mail or other equally
prompt means, its annual report to security holders to the beneficial
owners whose identifying information is provided by record holders and
respondent banks, pursuant to Sec. 240.14b-1(b)(3) and Sec. 240.14b-
2(b)(4) (ii) and (iii), provided that such registrant notifies the
record holders and respondent banks at the time it makes the inquiry
required by paragraph (a) of this section that the registrant will send
the annual report to security holders to the beneficial owners so
identified.
(d) If a registrant furnishes information statements to record
holders and respondent banks who hold securities on behalf of beneficial
owners, the registrant shall cause information statements and annual
reports to security holders to be furnished, in accordance with
Sec. 240.14c-2, to beneficial owners of exempt employee benefit plan
securities.
[51 FR 44280, Dec. 9, 1986, as amended at 52 FR 23649, June 24, 1987; 53
FR 16406, May 9, 1988; 57 FR 1102, Jan. 10, 1992; 61 FR 24657, May 15,
1996]
Sec. 240.14c-101 Schedule 14C. Information required in information statement.
Schedule 14C Information
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
(Amendment No. )
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[ ] Definitive Information Statement
_______________________________________________________________________
(Name of Registrant As Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[[Page 204]]
[ ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-
11
(1) Title of each class of securities to which transaction applies:
_______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
_______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
(5) Total fee paid:
_______________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
_______________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_______________________________________________________________________
(3) Filing Party:
_______________________________________________________________________
(4) Date Filed:
_______________________________________________________________________
Note
Note: Where any item, other than Item 4, calls for information with
respect to any matter to be acted upon at the meeting or, if no meeting
is being held, by written authorization or consent, such item need be
answered only with respect to proposals to be made by the registrant.
Registrants and acquirees that meet the definition of ``small business
issuer'' under Rule 12b-2 of the Exchange Act (Sec. 240.12b-2) shall
refer to the disclosure items in Regulation S-B (Sec. 228.10 et seq. of
this chapter) and not Regulation S-K (Sec. 229.10 et seq. of this
chapter). If there is no comparable disclosure item in Regulation S-B,
small business issuers need not provide the information requested. Small
business issuers shall provide the financial information in Item 310 of
Regulation S-B in lieu of any financial statements required by Item 1 of
Sec. 240.14c-101.
Item 1. Information required by Items of Schedule 14A (17 CFR
240.14a-101). Furnish the information called for by all of the items of
Schedule 14A of Regulation 14A (17 CFR 240.14a-101) (other than Items
1(c). 2, 4 and 5 thereof) which would be applicable to any matter to be
acted upon at the meeting if proxies were to be solicited in connection
with the meeting. Notes A, C, D, and E to Schedule 14A are also
applicable to Schedule 14C.
Item 2. Statement that proxies are not solicited. The following
statement shall be set forth on the first page of the information
statement in bold-face type:
We Are Not Asking You for a Proxy and You are Requested Not To Send Us a
Proxy
Item 3. Interest of certain persons in or opposition to matters to
be acted upon. (a) Describe briefly any substantial interest, direct or
indirect, by security holdings or otherwise, of each of the following
persons in any matter to be acted upon, other than elections to office:
(1) Each person who has been a director or officer of the registrant
at any time since the beginning of the last fiscal year;
(2) Each nominee for election as a director of the registrant;
(3) Each associate of any of the foregoing persons.
(b) Give the name of any director of the registrant who has informed
the registrant in writing that he intends to oppose any action to be
taken by the registrant at the meeting and indicate the action which he
intends to oppose.
Item 4. Proposals by security holders. If any security holder
entitled to vote at the meeting or by written authorization or consent
has submitted to the registrant a reasonable time before the information
statement is to be transmitted to security holders a proposal, other
than elections to office, which is accompanied by notice of his
intention to present the proposal for action at the meeting the
registrant shall, if a meeting is held, make a statement to that effect,
identify the proposal and indicate the disposition proposed to be made
of the proposal by the registrant at the meeting.
Instructions. 1. This item need not be answered as to any proposal
submitted with respect to an annual meeting if such proposal is
submitted less than 60 days in advance of a day corresponding to the
date of mailing a proxy statement or information statement in connection
with the last annual meeting of security holders.
2. If the registrant intends to rule a proposal out of order, the
Commission shall be so advised 20 calendar days prior to the date the
definitive copies of the information statement are filed with the
Commission, together with a statement of the reasons why
[[Page 205]]
the proposal is not deemed to be a proper subject for action by security
holders.
[51 FR 42072, Nov. 20, 1986, as amended at 52 FR 48984, Dec. 29, 1987;
57 FR 36495, Aug. 13, 1992; 58 FR 14684, Mar. 18, 1993; 59 FR 67765,
Dec. 30, 1994; 61 FR 49960, Sept. 24, 1996]
Regulation 14D
ATTENTION ELECTRONIC FILERS
THIS REGULATION SHOULD BE READ IN CONJUNCTION WITH REGULATION S-T (PART
232 OF THIS CHAPTER), WHICH GOVERNS THE PREPARATION AND SUBMISSION OF
DOCUMENTS IN ELECTRONIC FORMAT. MANY PROVISIONS RELATING TO THE
PREPARATION AND SUBMISSION OF DOCUMENTS IN PAPER FORMAT CONTAINED IN
THIS REGULATION ARE SUPERSEDED BY THE PROVISIONS OF REGULATION S-T FOR
DOCUMENTS REQUIRED TO BE FILED IN ELECTRONIC FORMAT.
Sec. 240.14d-1 Scope of and definitions applicable to Regulations 14D and 14E.
(a) Scope. Regulation 14D (Secs. 240.14d-1 through 240.14d-101)
shall apply to any tender offer which is subject to section 14(d)(1) of
the Act, including, but not limited to, any tender offer for securities
of a class described in that section which is made by an affiliate of
the issuer of such class. Regulation 14E (Secs. 240.14e-1 and 240.14e-2)
shall apply to any tender offer for securities (other than exempted
securities) unless otherwise noted therein.
(b) The requirements imposed by sections 14(d)(1) through 14(d)(7)
of the Act, Regulation 14D and Schedules 14D-1 and 14D-9 thereunder, and
Rule 14e-1 of Regulation 14E under the Act, shall be deemed satisfied
with respect to any tender offer, including any exchange offer, for the
securities of an issuer incorporated or organized under the laws of
Canada or any Canadian province or territory, if such issuer is a
foreign private issuer and is not an investment company registered or
required to be registered under the Investment Company Act of 1940, if
less than 40 percent of the class of securities outstanding that is the
subject of the tender offer is held by U.S. holders, and the tender
offer is subject to, and the bidder complies with, the laws, regulations
and policies of Canada and/or any of its provinces or territories
governing the conduct of the offer (unless the bidder has received an
exemption(s) from, and the tender offer does not comply with,
requirements that otherwise would be prescribed by Regulation 14D or
14E), provided that:
(1) In the case of tender offers subject to section 14(d)(1) of the
Act, where the consideration for a tender offer subject to this section
consists solely of cash, the entire disclosure document or documents
required to be furnished to holders of the class of securities to be
acquired shall be filed with the Commission on Schedule 14D-1F
(Sec. 240.14d-102) and disseminated to shareholders of the subject
company residing in the United States in accordance with such Canadian
laws, regulations and policies; or
(2) Where the consideration for a tender offer subject to this
section includes securities of the bidder to be issued pursuant to the
offer, any registration statement and/or prospectus relating thereto
shall be filed with the Commission along with the Schedule 14D-1F
referred to in paragraph (b)(1) of this section, and shall be
disseminated, together with the home jurisdiction document(s)
accompanying such Schedule, to shareholders of the subject company
residing in the United States in accordance with such Canadian laws,
regulations and policies.
Notes: 1. For purposes of any tender offer, including any exchange
offer, otherwise eligible to proceed in accordance with Rule 14d-1(b)
under the Act, the issuer of the subject securities will be presumed to
be a foreign private issuer and U.S. holders will be presumed to hold
less than 40 percent of such outstanding securities, unless (a) the
aggregate trading volume of that class on national securities exchanges
in the United States and on NASDAQ exceeded its aggregate trading volume
on securities exchanges in Canada and on the Canadian Dealing Network,
Inc. (``CDN'') over the 12 calendar month period prior to commencement
of this offer, or if commenced in response to a prior offer, over the 12
calendar month period prior to the commencement of the initial offer
(based on volume figures published by such exchanges and NASDAQ and
CDN); (b) the most recent annual report or annual information form filed
or submitted by the issuer with securities regulators of Ontario,
Quebec, British Columbia or Alberta (or, if the issuer of the subject
securities is not a reporting issuer in any of such provinces, with any
other
[[Page 206]]
Canadian securities regulator) or with the Commission indicates that
U.S. holders hold 40 percent or more of the outstanding subject class of
securities; or (c) the offeror has actual knowledge that the level of
U.S. ownership equals or exceeds 40 percent of such securities.
2. Notwithstanding the grant of an exemption from one or more of the
applicable Canadian regulatory provisions imposing requirements that
otherwise would be prescribed by Regulation 14D or 14E, the tender offer
will be eligible to proceed in accordance with the requirements of this
section if the Commission by order determines that the applicable
Canadian regulatory provisions are adequate to protect the interest of
investors.
(c) Definitions. Unless the context otherwise requires, all terms
used in Regulation 14D and Regulation 14E have the same meaning as in
the Act and in Rule 12b-2 (Sec. 240.12b-2) promulgated thereunder. In
addition, for purposes of sections 14(d) and 14(e) of the Act and
Regulations 14D and 14E, the following definitions apply:
(1) The term bidder means any person who makes a tender offer or on
whose behalf a tender offer is made: Provided, however, That the term
does not include an issuer which makes a tender offer for securities of
any class of which it is the issuer;
(2) The term subject company means any issuer of securities which
are sought by a bidder pursuant to a tender offer;
(3) The term security holders means holders of record and beneficial
owners of securities which are the subject of a tender offer;
(4) The term beneficial owner shall have the same meaning as that
set forth in Rule 13d-3: Provided, however, That, except with respect to
Rule 14d-3, Rule 14d-9(d) and Item 6 of Schedule 14D-1, the term shall
not include a person who does not have or share investment power or who
is deemed to be a beneficial owner by virtue of Rule 13d-3(d)(1)
(Sec. 240.13d-3(d)(1));
(5) The term tender offer material means:
(i) The bidder's formal offer, including all the material terms and
conditions of the tender offer and all amendments thereto;
(ii) The related transmittal letter (whereby securities of the
subject company which are sought in the tender offer may be transmitted
to the bidder or its depositary) and all amendments thereto; and
(iii) Press releases, advertisements, letters and other documents
published by the bidder or sent or given by the bidder to security
holders which, directly or indirectly, solicit, invite or request
tenders of the securities being sought in the tender offer;
(6) The term business day means any day, other than Saturday, Sunday
or a federal holiday, and shall consist of the time period from 12:01
a.m. through 12:00 midnight Eastern time. In computing any time period
under section 14(d)(5) or section 14(d)(6) of the Act or under
Regulation 14D or Regulation 14E, the date of the event which begins the
running of such time period shall be included except that if such event
occurs on other than a business day such period shall begin to run on
and shall include the first business day thereafter; and
(7) The term security position listing means, with respect to
securities of any issuer held by a registered clearing agency in the
name of the clearing agency or its nominee, a list of those participants
in the clearing agency on whose behalf the clearing agency holds the
issuer's securities and of the participants' respective positions in
such securities as of a specified date.
(d) Signatures. Where the Act or the rules, forms, reports or
schedules thereunder require a document filed with or furnished to the
Commission to be signed, such document shall be manually signed, or
signed using either typed signatures or duplicated or facsimile versions
of manual signatures. Where typed, duplicated or facsimile signatures
are used, each signatory to the filing shall manually sign a signature
page or other document authenticating, acknowledging or otherwise
adopting his or her signature that appears in the filing. Such document
shall be executed before or at the time the filing is made and shall be
retained by the filer for a period of five years. Upon request, the
filer shall furnish to the Commission or its staff a copy of
[[Page 207]]
any or all documents retained pursuant to this section.
[44 FR 70340, Dec. 6, 1979, as amended at 47 FR 11470, Mar. 16, 1982; 56
FR 30071, July 1, 1991; 60 FR 26622, May 17, 1995; 61 FR 30403, June 14,
1996]
Sec. 240.14d-2 Date of commencement of a tender offer.
(a) Commencement. A tender offer shall commence for the purposes of
section 14(d) of the Act and the rules promulgated thereunder at 12:01
a.m. on the date when the first of the following events occurs:
(1) The long form publication of the tender offer is first published
by the bidder pursuant to Rule 14d-4 (a)(1) (Sec. 240.14d-4(a)(1));
(2) The summary advertisement of the tender offer is first published
by the bidder pursuant to Rule 14d-4 (a)(2) (Sec. 240.14d-4(a)(2));
(3) The summary advertisement or the long form publication of the
tender offer is first published by the bidder pursuant to Rule 14d-
4(a)(3) (Sec. 240.14d-4(a)(3));
(4) Definitive copies of a tender offer, in which the consideration
offered by the bidder consists of securities registered pursuant to the
Securities Act of 1933, are first published or sent or given by the
bidder to security holders; or
(5) The tender offer is first published or sent or given to security
holders by the bidder by any means not otherwise referred to in
paragraphs (a)(1) through (4) of this section.
(b) Public announcement. A public announcement by a bidder through a
press release, newspaper advertisement or public statement which
includes the information in paragraph (c) of this section with respect
to a tender offer in which the consideration consists solely of cash
and/or securities exempt from registration under section 3 of the
Securities Act of 1933 shall be deemed to constitute the commencement of
a tender offer under paragraph (a)(5) of this section Except, That such
tender offer shall not be deemed to be first published or sent or given
to security holders by the bidder under paragraph (a)(5) of this section
on the date of such public announcement if within five business days of
such public announcement, the bidder either:
(1) Makes a subsequent public announcement stating that the bidder
has determined not to continue with such tender offer, in which event
paragraph (a)(5) of this section shall not apply to the initial public
announcement; or
(2) Complies with Rule 14d-3(a) (Sec. 240.14d-3(a)) and
contemporaneously disseminates the disclosure required by Rule 14d-6
(Sec. 240.14d-6) to security holders pursuant to Rule 14d-4
(Sec. 240.14d-4) or otherwise in which event:
(i) The date of commencement of such tender offer under paragraph
(a) of this section will be determined by the date the information
required by Rule 14d-6 is first published or sent or given to security
holders pursuant to Rule 14d-4 or otherwise; and
(ii) Notwithstanding paragraph (b)(2)(i) of this section, section
14(d)(7) of the Act shall be deemed to apply to such tender offer from
the date of such public announcement.
(c) Information. The information referred to in paragraph (b) of
this section is as follows:
(1) The identity of the bidder;
(2) The identity of the subject company; and
(3) The amount and class of securities being sought and the price or
range of prices being offered therefor.
(d) Announcements not resulting in commencement. A public
announcement by a bidder through a press release, newspaper
advertisement or public statement which only discloses the information
in paragraphs (d)(1) through (3) of this section concerning a tender
offer in which the consideration consists solely of cash and/or
securities exempt from registration under section 3 of the Securities
Act of 1933 shall not be deemed to constitute the commencement of a
tender offer under paragraph (a)(5) of this section.
(1) The identity of the bidder;
(2) The identity of the subject company; and
(3) A statement that the bidder intends to make a tender offer in
the future for a class of equity securities of the subject company which
statement
[[Page 208]]
does not specify the amount of securities of such class to be sought or
the consideration to be offered therefor.
(e) Announcement made pursuant to Rule 135. A public announcement by
a bidder through a press release, newspaper advertisement or public
statement which discloses only the information in Rule 135(a)(4)
(Sec. 230.135(a)(4)) concerning a tender offer in which the
consideration consists solely or in part of securities to be registered
under the Securities Act of 1933 shall not be deemed to constitute the
commencement of a tender offer under paragraph (a)(5) of this section:
Provided, That such bidder files a registration statement with respect
to such securities promptly after such public announcement.
(Secs. 7, 10, 19(a), 48 Stat. 78, 81, 85; secs. 205, 209, 48 Stat. 906,
908; sec. 8, 68 Stat. 685; sec. 308(a)(2), 90 Stat. 57, secs. 3(b),
10(b), 13, 14, 23(a), 48 Stat. 882, 891, 894, 895, 901; sec. 203(a), 49
Stat. 704; sec. 8, 49 Stat. 1379; secs. 4, 5, 78 Stat. 569, 570; secs.
2, 3, 82 Stat. 454, 455; secs. 1, 2, 3-5, 84 Stat. 1497; secs. 3, 10,
18, 89 Stat. 97, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 91
Stat. 1494, 1498, 1499; sec. 20, 49 Stat. 833; sec. 319(a), 53 Stat.
1173; sec. 38(a), 54 Stat. 841; 15 U.S.C. 77g, 77j, 77s(a), 78c(b),
78j(b), 78m, 78n, 78w(a), 79t, 77ttt(a), 80a-37(a))
[44 FR 70340, Dec. 6, 1979]
Sec. 240.14d-3 Filing and transmission of tender offer statement.
(a) Filing and transmittal. No bidder shall make a tender offer if,
after consummation thereof, such bidder would be the beneficial owner of
more than 5 percent of the class of the subject company's securities for
which the tender offer is made, unless as soon as practicable on the
date of the commencement of the tender offer such bidder:
(1) Files with the Commission ten copies of a Tender Offer Statement
on Schedule 14D-1 (Sec. 240.14d-100), including all exhibits thereto;
(2) Hand delivers a copy of such Schedule 14D-1, including all
exhibits thereto:
(i) To the subject company at its principal executive office; and
(ii) To any other bidder, which has filed a Schedule 14D-1 with the
Commission relating to a tender offer which has not yet terminated for
the same class of securities of the subject company, at such bidder's
principal executive office or at the address of the person authorized to
receive notices and communications (which is disclosed on the cover
sheet of such other bidder's Schedule 14D-1);
(3) Gives telephonic notice of the information required by Rule 14d-
6(e)(2) (i) and (ii) (Sec. 240.14d-6(e)(2) (i) and (ii)) and mails by
means of first class mail a copy of such Schedule 14D-1, including all
exhibits thereto:
(i) To each national securities exchange where such class of the
subject company's securities is registered and listed for trading (which
may be based upon information contained in the subject company's most
recent Annual Report on Form 10-K and Form 10-KSB (Sec. 249.310) filed
with the Commission unless the bidder has reason to believe that such
information is not current) which telephonic notice shall be made when
practicable prior to the opening of each such exchange; and
(ii) To the National Association of Securities Dealers, Inc.
(``NASD'') if such class of the subject company's securities is
authorized for quotation in the NASDAQ interdealer quotation system.
(b) Additional materials. The bidder shall file with the Commission
ten copies of any additional tender offer materials as an exhibit to the
Schedule 14D-1 required by this section, and if a material change occurs
in the information set forth in such Schedule 14D-1, ten copies of an
amendment to Schedule 14D-1 (each of which shall include all exhibits
other than those required by Item 11(a) of Schedule 14D-1) disclosing
such change and shall send a copy of such additional tender offer
material or such amendment to the subject company and to any exchange
and/or the NASD, as required by paragraph (a) of this section, promptly
but not later than the date such additional tender offer material or
such change is first published or sent or given to security holders.
(c) Certain announcements. Notwithstanding the provisions of
paragraph (b) of this section, if the additional tender offer material
or an amendment to Schedule 14d-1 discloses only the number of shares
deposited to date, and/or announces an extension of the time
[[Page 209]]
during which shares may be tendered, then the bidder may file such
tender offer material or amendment and send a copy of such tender offer
material or amendment to the subject company, any exchange and/or the
NASD, as required by paragraph (a) of this section, promptly after the
date such tender offer material is first published or sent or given to
security holders.
(Secs. 7, 10, 19(a), 48 Stat. 78, 81, 85; secs. 205, 209, 48 Stat. 906,
908; sec. 8, 68 Stat. 685; sec. 308(a)(2), 90 Stat. 57, secs. 3(b),
10(b), 13, 14, 23(a), 48 Stat. 882, 891, 894, 895, 901; sec. 203(a), 49
Stat. 704; sec. 8, 49 Stat. 1379; secs. 4, 5, 78 Stat. 569, 570; secs.
2, 3, 82 Stat. 454, 455; secs. 1, 2, 3-5, 84 Stat. 1497; secs. 3, 10,
18, 89 Stat. 97, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 91
Stat. 1494, 1498, 1499; sec. 20, 49 Stat. 833; sec. 319(a), 53 Stat.
1173; sec. 38(a), 54 Stat. 841; 15 U.S.C. 77g, 77j, 77s(a), 78c(b),
78j(b), 78m, 78n, 78w(a), 79t, 77ttt(a), 80a-37(a))
[44 FR 70341, Dec. 6, 1979]
Sec. 240.14d-4 Dissemination of certain tender offers.
(a) Materials deemed published or sent or given. A tender offer in
which the consideration consists solely of cash and/or securities exempt
from registration under section 3 of the Securities Act of 1933 shall be
deemed ``published or sent or given to security holders'' within the
meaning of section 14(d)(1) of the Act if the bidder complies with all
of the requirements of any one of the following sub-paragraphs:
Provided, however, That any such tender offers may be published or sent
or given to security holders by other methods, but with respect to
summary publication, and the use of stockholder lists and security
position listings pursuant to Rule 14d-5, paragraphs (a)(2) and (3) of
this section are exclusive.
(1) Long-form publication. The bidder makes adequate publication in
a newspaper or newspapers of long-form publication of the tender offer.
(2) Summary publication. (i) If the tender offer is not subject to
Rule 13e-3 (Sec. 240.13e-3), the bidder makes adequate publication in a
newspaper or newspapers of a summary advertisement of the tender offer;
and
(ii) Mails by first class mail or otherwise furnishes with
reasonable promptness the bidder's tender offer materials to any
security holder who requests such tender offer materials pursuant to the
summary advertisement or otherwise.
(3) Use of stockholder lists and security position listings. Any
bidder using stockholder lists and security position listings pursuant
to Rule 14d-5 shall comply with paragraph (a)(1) or (2) of this section
on or prior to the date of the bidder's request for such lists or
listing pursuant to Rule 14d-5(a).
(b) Adequate publication. Depending on the facts and circumstances
involved, adequate publication of a tender offer pursuant to this
section may require publication in a newspaper with a national
circulation or may only require publication in a newspaper with
metropolitan or regional circulation or may require publication in a
combination thereof: Provided, however, That publication in all editions
of a daily newspaper with a national circulation shall be deemed to
constitute adequate publication.
(c) Publication of changes. If a tender offer has been published or
sent or given to security holders by one or more of the methods
enumerated in paragraph (a) of this section, a material change in the
information published or sent or given to security holders shall be
promptly disseminated to security holders in a manner reasonably
designed to inform security holders of such change; Provided, however,
That if the bidder has elected pursuant to rule 14d-5 (f)(1) of this
section to require the subject company to disseminate amendments
disclosing material changes to the tender offer materials pursuant to
Rule 14d-5, the bidder shall disseminate material changes in the
information published or sent or given to security holders at least
pursuant to Rule 14d-5.
(Secs. 7, 10, 19(a), 48 Stat. 78, 81, 85; secs. 205, 209, 48 Stat. 906,
908; sec. 8, 68 Stat. 685; sec. 308(a)(2), 90 Stat. 57, secs. 3(b),
10(b), 13, 14, 23(a), 48 Stat. 882, 891, 894, 895, 901; sec. 203(a), 49
Stat. 704; sec. 8, 49 Stat. 1379; secs. 4, 5, 78 Stat. 569, 570; secs.
2, 3, 82 Stat. 454, 455; secs. 1, 2, 3-5, 84 Stat. 1497; secs. 3, 10,
18, 89 Stat. 97, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 91
Stat. 1494, 1498, 1499; sec. 20, 49 Stat. 833; sec. 319(a), 53 Stat.
1173; sec. 38(a), 54 Stat. 841; 15 U.S.C. 77g, 77j, 77s(a), 78c(b),
78j(b), 78m, 78n, 78w(a), 79t, 77ttt(a), 80a-37(a))
[44 FR 70341, Dec. 6, 1979]
[[Page 210]]
Sec. 240.14d-5 Dissemination of certain tender offers by the use of stockholder lists and security position listings.
(a) Obligations of the subject company. Upon receipt by a subject
company at its principal executive offices of a bidder's written
request, meeting the requirements of paragraph (e) of this section, the
subject company shall comply with the following sub-paragraphs.
(1) The subject company shall notify promptly transfer agents and
any other person who will assist the subject company in complying with
the requirements of this section of the receipt by the subject company
of a request by a bidder pursuant to this section.
(2) The subject company shall promptly ascertain whether the most
recently prepared stockholder list, written or otherwise, within the
access of the subject company was prepared as of a date earlier than ten
business days before the date of the bidder's request and, if so, the
subject company shall promptly prepare or cause to be prepared a
stockholder list as of the most recent practicable date which shall not
be more than ten business days before the date of the bidder's request.
(3) The subject company shall make an election to comply and shall
comply with all of the provisions of either paragraph (b) or paragraph
(c) of this section. The subject company's election once made shall not
be modified or revoked during the bidder's tender offer and extensions
thereof.
(4) No later than the second business day after the date of the
bidder's request, the subject company shall orally notify the bidder,
which notification shall be confirmed in writing, of the subject
company's election made pursuant to paragraph (a)(3) of this section.
Such notification shall indicate (i) the approximate number of security
holders of the class of securities being sought by the bidder and, (ii)
if the subject company elects to comply with paragraph (b) of this
section, appropriate information concerning the location for delivery of
the bidder's tender offer materials and the approximate direct costs
incidental to the mailing to security holders of the bidder's tender
offer materials computed in accordance with paragraph (g)(2) of this
section.
(b) Mailing of tender offer materials by the subject company. A
subject company which elects pursuant to paragraph (a)(3) of this
section to comply with the provisions of this paragraph shall perform
the acts prescribed by the following paragraphs.
(1) The subject company shall promptly contact each participant
named on the most recent security position listing of any clearing
agency within the access of the subject company and make inquiry of each
such participant as to the approximate number of beneficial owners of
the subject company securities being sought in the tender offer held by
each such participant.
(2) No later than the third business day after delivery of the
bidder's tender offer materials pursuant to paragraph (g)(1) of this
section, the subject company shall begin to mail or cause to be mailed
by means of first class mail a copy of the bidder's tender offer
materials to each person whose name appears as a record holder of the
class of securities for which the offer is made on the most recent
stockholder list referred to in paragraph (a)(2) of this section. The
subject company shall use its best efforts to complete the mailing in a
timely manner but in no event shall such mailing be completed in a
substantially greater period of time than the subject company would
complete a mailing to security holders of its own materials relating to
the tender offer.
(3) No later than the third business day after the delivery of the
bidder's tender offer materials pursuant to paragraph (g)(1) of this
section, the subject company shall begin to transmit or cause to be
transmitted a sufficient number of sets of the bidder's tender offer
materials to the participants named on the security position listings
described in paragraph (b)(1) of this section. The subject company shall
use its best efforts to complete the transmittal in a timely manner but
in no event shall such transmittal be completed in a substantially
greater period of time than the subject company would complete a
transmittal to such participants pursuant to security position listings
of clearing agencies of
[[Page 211]]
its own material relating to the tender offer.
(4) The subject company shall promptly give oral notification to the
bidder, which notification shall be confirmed in writing, of the
commencement of the mailing pursuant to paragraph (b)(2) of this section
and of the transmittal pursuant to paragraph (b)(3) of this section.
(5) During the tender offer and any extension thereof the subject
company shall use reasonable efforts to update the stockholder list and
shall mail or cause to be mailed promptly following each update a copy
of the bidder's tender offer materials (to the extent sufficient sets of
such materials have been furnished by the bidder) to each person who has
become a record holder since the later of (i) the date of preparation of
the most recent stockholder list referred to in paragraph (a)(2) of this
section or (ii) the last preceding update.
(6) If the bidder has elected pursuant to paragraph (f)(1) of this
section to require the subject company to disseminate amendments
disclosing material changes to the tender offer materials pursuant to
this section, the subject company, promptly following delivery of each
such amendment, shall mail or cause to be mailed a copy of each such
amendment to each record holder whose name appears on the shareholder
list described in paragraphs (a)(2) and (b)(5) of this section and shall
transmit or cause to be transmitted sufficient copies of such amendment
to each participant named on security position listings who received
sets of the bidder's tender offer materials pursuant to paragraph (b)(3)
of this section.
(7) The subject company shall not include any communication other
than the bidder's tender offer materials or amendments thereto in the
envelopes or other containers furnished by the bidder.
(8) Promptly following the termination of the tender offer, the
subject company shall reimburse the bidder the excess, if any, of the
amounts advanced pursuant to paragraph (f)(3)(iii) over the direct costs
incidental to compliance by the subject company and its agents in
performing the acts required by this section computed in accordance with
paragraph (g)(2) of this section.
(c) Delivery of stockholder lists and security position listings. A
subject company which elects pursuant to paragraph (a)(3) of this
section to comply with the provisions of this paragraph shall perform
the acts prescribed by the following paragraphs.
(1) No later than the third business day after the date of the
bidder's request, the subject company shall furnish to the bidder at the
subject company's principal executive office a copy of the names and
addresses of the record holders on the most recent stockholder list
referred to in paragraph (a)(2) of this section and a copy of the names
and addresses of participants identified on the most recent security
position listing of any clearing agency which is within the access of
the subject company.
(2) If the bidder has elected pursuant to paragraph (f)(1) of this
section to require the subject company to disseminate amendments
disclosing material changes to the tender offer materials, the subject
company shall update the stockholder list by furnishing the bidder with
the name and address of each record holder named on the stockholder
list, and not previously furnished to the bidder, promptly after such
information becomes available to the subject company during the tender
offer and any extensions thereof.
(d) Liability of subject company and others. Neither the subject
company nor any affiliate or agent of the subject company nor any
clearing agency shall be:
(1) Deemed to have made a solicitation or recommendation respecting
the tender offer within the meaning of section 14(d)(4) based solely
upon the compliance or noncompliance by the subject company or any
affiliate or agent of the subject company with one or more requirements
of this section;
(2) Liable under any provision of the Federal securities laws to the
bidder or to any security holder based solely upon the inaccuracy of the
current names or addresses on the stockholder list or security position
listing, unless such inaccuracy results from a lack of reasonable care
on the part of the subject company or any affiliate or agent of the
subject company;
[[Page 212]]
(3) Deemed to be an ``underwriter'' within the meaning of section
(2)(11) of the Securities Act of 1933 for any purpose of that Act or any
rule or regulation promulgated thereunder based solely upon the
compliance or noncompliance by the subject company or any affiliate or
agent of the subject company with one or more of the requirements of
this section;
(4) Liable under any provision of the Federal securities laws for
the disclosure in the bidder's tender offer materials, including any
amendment thereto, based solely upon the compliance or noncompliance by
the subject company or any affiliate or agent of the subject company
with one or more of the requirements of this section.
(e) Content of the bidder's request. The bidder's written request
referred to in paragraph (a) of this section shall include the
following:
(1) The identity of the bidder;
(2) The title of the class of securities which is the subject of the
bidder's tender offer;
(3) A statement that the bidder is making a request to the subject
company pursuant to paragraph (a) of this section for the use of the
stockholder list and security position listings for the purpose of
disseminating a tender offer to security holders;
(4) A statement that the bidder is aware of and will comply with the
provisions of paragraph (f) of this section;
(5) A statement as to whether or not it has elected pursuant to
paragraph (f)(1) of this section to disseminate amendments disclosing
material changes to the tender offer materials pursuant to this section;
and
(6) The name, address and telephone number of the person whom the
subject company shall contact pursuant to paragraph (a)(4) of this
section.
(f) Obligations of the bidder. Any bidder who requests that a
subject company comply with the provisions of paragraph (a) of this
section shall comply with the following paragraphs.
(1) The bidder shall make an election whether or not to require the
subject company to disseminate amendments disclosing material changes to
the tender offer materials pursuant to this section, which election
shall be included in the request referred to in paragraph (a) of this
section and shall not be revocable by the bidder during the tender offer
and extensions thereof.
(2) With respect to a tender offer subject to section 14(d)(1) of
the Act in which the consideration consists solely of cash and/or
securities exempt from registration under section 3 of the Securities
Act of 1933, the bidder shall comply with the requirements of Rule 14d-
4(a)(3).
(3) If the subject company elects to comply with paragraph (b) of
this section,
(i) The bidder shall promptly deliver the tender offer materials
after receipt of the notification from the subject company as provided
in paragraph (a)(4) of this section;
(ii) The bidder shall promptly notify the subject company of any
amendment to the bidder's tender offer materials requiring compliance by
the subject company with paragraph (b)(6) of this section and shall
promptly deliver such amendment to the subject company pursuant to
paragraph (g)(1) of this section;
(iii) The bidder shall advance to the subject company an amount
equal to the approximate cost of conducting mailings to security holders
computed in accordance with paragraph (g)(2) of this section;
(iv) The bidder shall promptly reimburse the subject company for the
direct costs incidental to compliance by the subject company and its
agents in performing the acts required by this section computed in
accordance with paragraph (g)(2) of this section which are in excess of
the amount advanced pursuant to paragraph (f)(2)(iii) of this section;
and
(v) The bidder shall mail be means of first class mail or otherwise
furnish with reasonable promptness the tender offer materials to any
security holder who requests such materials.
(4) If the subject company elects to comply with paragraph (c) of
this section,
(i) The bidder shall use the stockholder list and security position
listings furnished to the bidder pursuant to paragraph (c) of this
section exclusively in the dissemination of tender offer materials to
security holders in
[[Page 213]]
connection with the bidder's tender offer and extensions thereof;
(ii) The bidder shall return the stockholder lists and security
position listings furnished to the bidder pursuant to paragraph (c) of
this section promptly after the termination of the bidder's tender
offer;
(iii) The bidder shall accept, handle and return the stockholder
lists and security position listings furnished to the bidder pursuant to
paragraph (c) of this section to the subject company on a confidential
basis;
(iv) The bidder shall not retain any stockholder list or security
position listing furnished by the subject company pursuant to paragraph
(c) of this section, or any copy thereof, nor retain any information
derived from any such list or listing or copy thereof after the
termination of the bidder's tender offer;
(v) The bidder shall mail by means of first class mail, at its own
expense, a copy of its tender offer materials to each person whose
identity appears on the stockholder list as furnished and updated by the
subject company pursuant to paragraphs (c)(1) and (2) of this section;
(vi) The bidder shall contact the participants named on the security
position listing of any clearing agency, make inquiry of each
participant as to the approximate number of sets of tender offer
materials required by each such participant, and furnish, at its own
expense, sufficient sets of tender offer materials and any amendment
thereto to each such participant for subsequent transmission to the
beneficial owners of the securities being sought by the bidder;
(vii) The bidder shall mail by means of first class mail or
otherwise furnish with reasonable promptness the tender offer materials
to any security holder who requests such materials; and
(viii) The bidder shall promptly reimburse the subject company for
direct costs incidental to compliance by the subject company and its
agents in performing the acts required by this section computed in
accordance with paragraph (g)(2) of this section.
(g) Delivery of materials, computation of direct costs. (1) Whenever
the bidder is required to deliver tender offer materials or amendments
to tender offer materials, the bidder shall deliver to the subject
company at the location specified by the subject company in its notice
given pursuant to paragraph (a)(4) of this section a number of sets of
the materials or of the amendment, as the case may be, at least equal to
the approximate number of security holders specified by the subject
company in such notice, together with appropriate envelopes or other
containers therefor: Provided, however, That such delivery shall be
deemed not to have been made unless the bidder has complied with
paragraph (f)(3)(iii) of this section at the time the materials or
amendments, as the case may be, are delivered.
(2) The approximate direct cost of mailing the bidder's tender offer
materials shall be computed by adding (i) the direct cost incidental to
the mailing of the subject company's last annual report to shareholders
(excluding employee time), less the costs of preparation and printing of
the report, and postage, plus (ii) the amount of first class postage
required to mail the bidder's tender offer materials. The approximate
direct costs incidental to the mailing of the amendments to the bidder's
tender offer materials shall be computed by adding (iii) the estimated
direct costs of preparing mailing labels, of updating shareholder lists
and of third party handling charges plus (iv) the amount of first class
postage required to mail the bidder's amendment. Direct costs incidental
to the mailing of the bidder's tender offer materials and amendments
thereto when finally computed may include all reasonable charges paid by
the subject company to third parties for supplies or services, including
costs attendant to preparing shareholder lists, mailing labels, handling
the bidder's materials, contacting participants named on security
position listings and for postage, but shall exclude indirect costs,
such as employee time which is devoted to either contesting or
supporting the tender offer on behalf of the subject company. The final
billing for direct costs shall be accompanied by an appropriate
accounting in reasonable detail.
Note to Sec. 240.14d-5. Reasonably prompt methods of distribution to
security holders
[[Page 214]]
may be used instead of mailing. If alternative methods are chosen, the
approximate direct costs of distribution shall be computed by adding the
estimated direct costs of preparing the document for distribution
through the chosen medium (including updating of shareholder lists) plus
the estimated reasonable cost of distribution through that medium.
Direct costs incidental to the distribution of tender offer materials
and amendments thereto may include all reasonable charges paid by the
subject company to third parties for supplies or services, including
costs attendant to preparing shareholder lists, handling the bidder's
materials, and contacting participants named on security position
listings, but shall not include indirect costs, such as employee time
which is devoted to either contesting or supporting the tender offer on
behalf of the subject company.
[44 FR 70342, Dec. 6, 1979, as amended at 61 FR 24657, May 15, 1996]
Sec. 240.14d-6 Disclosure requirements with respect to tender offers.
(a) Information required on date of commencement--(1) Long-form
publication. If a tender offer is published or sent or given to security
holders on the date of commencement by means of long-form publication
pursuant to Rule 14d-4(a)(1) (Sec. 240.14d-4(a)(1)), such long-form
publication shall include the information required by paragraph (e)(1)
of this section.
(2) Summary publication. If a tender offer is published or sent or
given to security holders on the date of commencement by means of
summary publication pursuant to Rule 14d-4(a)(2) (Sec. 240.14d-4(a)(2)),
(i) The summary advertisement shall contain and shall be limited to,
the information required by paragraph (e)(2) of this section; and
(ii) The tender offer materials furnished by the bidder upon the
request of any security holder shall include the information required by
paragraph (e)(1) of this section.
(3) Use of stockholder lists and security position listings. If a
tender offer is published or sent or given to security holders on the
date of commencement by the use of stockholders lists and security
position listings pursuant to Rule 14d-4(a)(3) (Sec. 240.14d-4(a)(3)),
(i) Either (A) the summary advertisement shall contain, and shall be
limited to the information required by paragraph (e)(2) of this section,
or (B) if long form publication of the tender offer is made, such long
form publication shall include the information required by paragraph
(e)(1) of this section; and
(ii) The tender offer materials transmitted to security holders
pursuant to such lists and security position listings and furnished by
the bidder upon the request of any security holder shall include the
information required by paragraph (e)(1) of this section.
(4) Other tender offers. If a tender offer is published or sent or
given to security holders other than pursuant to Rule 14d-4(a)
(Sec. 240.14d-4(a)), the tender offer materials which are published or
sent or given to security holders on the date of commencement of such
offer shall include the information required by paragraph (e)(1) of this
section.
(b) Information required in summary advertisement made after
commencement. A summary advertisement published subsequent to the date
of commencement of the tender offer shall include at least the
information specified in paragraphs (e)(1)(i) through (iv) and
(e)(2)(iv) of this section.
(c) Information required in other tender offer materials published
after commencement. Except for summary advertisements described in
paragraph (b) of this section and tender offer materials described in
paragraphs (a)(2)(ii) and (3)(ii) of this section, additional tender
offer materials published, sent or given to security holders subsequent
to the date of commencement shall include the information required by
paragraphs (e)(1) and may omit any of the information required by
paragraphs (e)(1)(v) through (viii) of this section which has been
previously furnished by the bidder in connection with the tender offer.
(d) Material changes. A material change in the information published
or sent or given to security holders shall be promptly disclosed to
security holders in additional tender offer materials.
(e) Information to be included--(1) Long-form publication and tender
offer materials. The information required to be disclosed by paragraphs
(a)(1), (2)(ii), (3)(i)(B) and (4) of this section shall include the
following:
(i) The identity of the bidder;
[[Page 215]]
(ii) The identity of the subject company;
(iii) The amount and class of securities being sought and the type
and amount of consideration being offered therefor;
(iv) The scheduled expiration date of the tender offer, whether the
tender offer may be extended and, if so, the procedures for extension of
the tender offer;
(v) The exact dates prior to which, and after which, security
holders who deposit their securities will have the right to withdraw
their securities pursuant to section 14(d)(5) of the Act and Rule 14d-7
(Sec. 240.14d-7) and the manner in which shares will be accepted for
payment and in which withdrawal may be effected;
(vi) If the tender offer is for less than all the outstanding
securities of a class of equity securities and the bidder is not
obligated to purchase all of the securities tendered, the period or
periods, and in the case of the period from the commencement of the
offer, the date of the expiration of such period during which the
securities will be taken up pro rata pursuant to section 14(d)(6) of the
Act or Rule 14d-8 (Sec. 240.14d-8), and the present intention or plan of
the bidder with respect to the tender offer in the event of an
oversubscription by security holders;
(vii) The disclosure required by Items 1(c); 2 (with respect to
persons other than the bidder, excluding sub-items (b) and (d)); 3; 4;
5; 6; 7; 8; and 10 of Schedule 14D-1 (Sec. 240.14d-100) or a fair and
adequate summary thereof; Provided, however, That negative responses to
any such item or sub-item or Schedule 14D-1 (Sec. 240.14d-100) need not
be included; and
(viii) The disclosure required by Item 9 of Schedule 14D-1 or a fair
and adequate summary thereof. (Under normal circumstances, the following
summary financial information for the period covered by the financial
information furnished in response to Item 9 will be a sufficient
summary. If the information required by Item 9 is summarized,
appropriate instructions shall be included stating how complete
financial information can be obtained).
Income Statement:
Net sales and operating revenues and other revenues
Income before extraordinary Items
Net income
Balance sheet (at end of period):
Work capital
Total assets
Total assets less deferred research and development charges and
excess cost of assets acquired over book value
Total indebtedness
Shareholders' equity
Per Share 1
---------------------------------------------------------------------------
1 Average number of share of common stock outstanding during
each period was . . . (as adjusted to given effect to stock dividends or
stock splits).
---------------------------------------------------------------------------
Income per common share before extraordinary items
Extraordinary items
Net income per common share (and common share equivalents, if
applicable)
Net income per share on a fully diluted basis
(ix) If the financial statements are prepared according to a
comprehensive body of accounting principles other than those generally
accepted in the United States, the summary financial information shall
be accompanied by a reconciliation to generally accepted accounting
principles of the United States.
(2) Summary publication. The information required to be disclosed by
paragraphs (a)(2)(i) and (3)(i)(A) of this section in a summary
advertisement is as follows:
(i) The information required by paragraphs (e)(1)(i) through (vi) of
this section;
(ii) If the tender offer is for less than all the outstanding
securities of a class of equity securities, a statement as to whether
the purpose or one of the purposes of the tender offer is to acquire or
influence control of the business of the subject company;
(iii) A statement that the information required by paragraph
(e)(1)(vii) of this section is incorporated by reference into the
summary advertisement;
(iv) Appropriate instructions as to how security holders may obtain
promptly, at the bidder's expense, the bidder's tender offer materials;
and
(v) In a tender offer published or sent or given to security holders
by the use of stockholder lists and security position listings pursuant
to Rule 14d-
[[Page 216]]
4(a)(3) (Sec. 240.14d-4(a)(3)), a statement that a request is being made
for such lists and listings and that tender offer materials will be
mailed to record holders and will be furnished to brokers, banks and
similar persons whose name appears or whose nominee appears on the list
of stockholders or, if applicable, who are listed as participants in a
clearing agency's security position listing for subsequent transmittal
to beneficial owners of such securities.
(3) No transmittal letter. Neither the initial summary advertisement
nor any subsequent summary advertisement shall include a transmittal
letter (whereby securities of the subject company which are sought in
the tender offer may be transmitted to the bidder or its depository) or
any amendment thereto.
(Secs. 7, 10, 19(a), 48 Stat. 78, 81, 85; secs. 205, 209, 48 Stat. 906,
908; sec. 8, 68 Stat. 685; sec. 308(a)(2), 90 Stat. 57; secs. 3(b),
10(b), 13, 14, 23(a), 48 Stat. 882, 891, 894, 895, 901; sec. 203(a), 49
Stat. 704; sec. 8, 49 Stat. 1379; secs. 4, 5, 78 Stat. 569, 570; secs.
2, 3, 82 Stat. 454, 455; secs. 1, 2, 3-5, 84 Stat. 1497; secs. 3, 10,
18, 89 Stat. 97, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 91
Stat. 1494, 1498, 1499; sec. 20, 49 Stat. 833; sec. 319(a), 53 Stat.
1173; sec. 38(a), 54 Stat. 841; 15 U.S.C. 77g, 77j, 77s(a), 78c(b),
78j(b), 78m, 78n, 78w(a), 79t, 77ttt(a), 80a-37(a))
[44 FR 70344, Dec. 6, 1979, as amended at 47 FR 11470, Mar. 16, 1982; 47
FR 54781, Dec. 6, 1982]
Sec. 240.14d-7 Additional withdrawal rights.
(a) Rights. In addition to the provisions of section 14(d)(5) of the
Act, any person who has deposited securities pursuant to a tender offer
has the right to withdraw any such securities during the period such
offer request or invitation remains open.
(b) Notice of withdrawal. Notice of withdrawal pursuant to this
section shall be deemed to be timely upon the receipt by the bidder's
depositary of a written notice of withdrawal specifying the name(s) of
the tendering stockholder(s), the number or amount of the securities to
be withdrawn and the name(s) in which the certificate(s) is (are)
registered, if different from that of the tendering security holder(s).
A bidder may impose other reasonable requirements, including certificate
numbers and a signed request for withdrawal accompained by a signature
guarantee, as conditions precedent to the physical release of withdrawn
securities.
(Secs. 7, 10, 19(a), 48 Stat. 78, 81, 85; secs. 205, 209, 48 Stat. 906,
908; sec. 8, 68 Stat. 685; sec. 308(a)(2), 90 Stat. 57; secs. 3(b),
10(b), 13, 14, 23(a), 48 Stat. 882, 891, 894, 895, 901; sec. 203(a), 49
Stat. 704; sec. 8, 49 Stat. 1379; secs. 4, 5, 78 Stat. 569, 570; secs.
2, 3, 82 Stat. 454, 455; secs. 1, 2, 3-5, 84 Stat. 1497; secs. 3, 10,
18, 89 Stat. 97, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 91
Stat. 1494, 1498, 1499; sec. 20, 49 Stat. 833; sec. 319(a), 53 Stat.
1173; sec. 38(a), 54 Stat. 841; 15 U.S.C. 77g, 77j, 77s(a), 78c(b),
78j(b), 78m, 78n, 78w(a), 79t, 77ttt(a), 80a-37(a))
[44 FR 70345, Dec. 6, 1979, as amended at 51 FR 25882, July 17, 1986; 51
FR 32630, Sept. 15, 1986]
Sec. 240.14d-8 Exemption from statutory pro rata requirements.
Notwithstanding the pro rata provisions of section 14(d)(6) of the
Act, if any person makes a tender offer or request or invitation for
tenders, for less than all of the outstanding equity securities of a
class, and if a greater number of securities are deposited pursuant
thereto than such person is bound or willing to take up and pay for, the
securities taken up and paid for shall be taken up and paid for as
nearly as may be pro rata, disregarding fractions, according to the
number of securities deposited by each depositor during the period such
offer, request or invitation remains open.
(Sec. 23, 48 Stat. 901; sec. 203(a), 49 Stat. 704; sec. 8, 49 Stat.
1379; sec. 10, 78 Stat. 580; sec. 3, 82 Stat. 455; secs. 3-5, 84 Stat.
1497; sec. 18, 89 Stat. 155; 15 U.S.C. 78n(e), 78w(a))
[47 FR 57680, Dec. 28, 1982]
Sec. 240.14d-9 Solicitation/recommendation statements with respect to certain tender offers.
(a) Filing and transmittal of recommendation statement. No
solicitation or recommendation to security holders shall be made by any
person described in paragraph (d) of this section with respect to a
tender offer for such securities unless as soon as practicable on the
date such solicitation or recommendation is first published or sent
[[Page 217]]
or given to security holders such person complies with the following
subparagraphs.
(1) Such person shall file with the Commission eight copies of a
Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9
(Sec. 240.14d-101), including all exhibits thereto; and
(2) If such person is either the subject company or an affiliate of
the subject company,
(i) Such person shall hand deliver a copy of the Schedule 14D-9 to
the bidder at its principal office or at the address of the person
authorized to receive notices and communications (which is set forth on
the cover sheet of the bidder's Schedule 14D-1 (Sec. 240.14d-100) filed
with the Commission; and
(ii) Such person shall give telephonic notice (which notice to the
extent possible shall be given prior to the opening of the market) of
the information required by Items 2 and 4(a) of Schedule 14D-9 and shall
mail a copy of the Schedule to each national securities exchange where
the class of securities is registered and listed for trading and, if the
class is authorized for quotation in the NASDAQ interdealer quotation
system, to the National Association of Securities Dealers, Inc.
(``NASD'').
(3) If such person is neither the subject company nor an affiliate
of the subject company,
(i) Such person shall mail a copy of the schedule to the bidder at
its principal office or at the address of the person authorized to
receive notices and communications (which is set forth on the cover
sheet of the bidder's Schedule 14D-1 (Sec. 240.14d-100) filed with the
Commission); and
(ii) Such person shall mail a copy of the Schedule to the subject
company at its principal office.
(b) Amendments. If any material change occurs in the informaion set
forth in the Schedule 14D-9 (Sec. 240.14d-101) required by this section,
the person who filed such Schedule 14D-9 shall:
(1) File with the Commission eight copies of an amendment on
Schedule 14D-9 (Sec. 240.14d-101) disclosing such change promptly, but
not later than the date such material is first published, sent or given
to security holders; and
(2) Promptly deliver copies and give notice of the amendment in the
same manner as that specified in paragraph (a)(2) or (3) of this
section, whichever is applicable; and
(3) Promptly disclose and disseminate such change in a manner
reasonably designed to inform security holders of such change.
(c) Information required in solicitation or recommendation. Any
solicitation or recommendation to holders of a class of securities
referred to in section 14(d)(1) of the Act with respect to a tender
offer for such securities shall include the name of the person making
such solicitation or recommendation and the information required by
Items 1, 2, 3(b), 4, 6, 7 and 8 of Schedule 14D-9 (Sec. 240.14d-101) or
a fair and adequate summary thereof: Provided, however, That such
solicitation or recommendation may omit any of such information
previously furnished to security holders of such class of securities by
such person with respect to such tender offer.
(d) Applicability. (1) Except as is provided in paragraphs (d)(2)
and (e) of this section, this section shall only apply to the following
persons:
(i) The subject company, any director, officer, employee, affiliate
or subsidiary of the subject company;
(ii) Any record holder or beneficial owner of any security issued by
the subject company, by the bidder, or by any affiliate of either the
subject company or the bidder; and
(iii) Any person who makes a solicitation or recommendation to
security holders on behalf of any of the foregoing or on behalf of the
bidder other than by means of a solicitation or recommendation to
security holders which has been filed with the Commission pursuant to
this section or Rule 14d-3 (Sec. 240.14d-3).
(2) Notwithstanding paragraph (d)(1) of this section, shall not
apply to the following persons:
(i) A bidder who has filed a Schedule 14D-1 (Sec. 240.14d-101)
pursuant to Rule 14d-3 (Sec. 240.14d-3);
(ii) Attorneys, banks, brokers, fiduciaries or investment advisers
who are not participating in a tender offer in more than a ministerial
capacity and who furnish information and/or advice
[[Page 218]]
regarding such tender offer to their customers or clients on the
unsolicited request of such customers or clients or solely pursuant to a
contract or a relationship providing for advice to the customer or
client to whom the information and/or advice is given.
(e) Stop-look-and-listen communication. This section shall not apply
to the subject company with respect to a communication by the subject
company to its security holders which only:
(1) Identifies the tender offer by the bidder;
(2) States that such tender offer is under consideration by the
subject company's board of directors and/or management;
(3) States that on or before a specified date (which shall be no
later than 10 business days from the date of commencement of such tender
offer) the subject company will advise such security holders of (i)
whether the subject company recommends acceptance or rejection of such
tender offer; expresses no opinion and remains neutral toward such
tender offer; or is unable to take a position with respect to such
tender offer and (ii) the reason(s) for the position taken by the
subject company with respect to the tender offer (including the
inability to take a position); and
(4) Requests such security holders to defer making a determination
whether to accept or reject such tender offer until they have been
advised of the subject company's position with respect thereto pursuant
to paragraph (e)(3) of this section.
(f) Statement of management's position. A statement by the subject
company's of its position with respect to a tender offer which is
required to be published or sent or given to security holders pursuant
to Rule 14e-2 shall be deemed to constitute a solicitation or
recommendation within the meaning of this section and section 14(d)(4)
of the Act.
(Secs. 7, 10, 19(a), 48 Stat. 78, 81, 85; secs. 205, 209, 48 Stat. 906,
908; sec. 8, 68 Stat. 685; sec. 308(a)(2), 90 Stat. 57; secs. 3(b),
10(b), 13, 14, 23(a), 48 Stat. 882, 891, 894, 895, 901; sec. 203(a), 49
Stat. 704; sec. 8, 49 Stat. 1379; secs. 4, 5, 78 Stat. 569, 570; secs.
2, 3, 82 Stat. 454, 455; secs. 1, 2, 3-5, 84 Stat. 1497; secs. 3, 10,
18, 89 Stat. 97, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 91
Stat. 1494, 1498, 1499; sec. 20, 49 Stat. 833; sec. 319(a), 53 Stat.
1173; sec. 38(a), 54 Stat. 841; 15 U.S.C. 77g, 77j, 77s(a), 78c(b),
78j(b), 78m, 78n, 78w(a), 79t, 77ttt(a), 80a-37(a))
[44 FR 70345, Dec. 6, 1979]
Sec. 240.14d-10 Equal treatment of security holders.
(a) No bidder shall make a tender offer unless:
(1) The tender offer is open to all security holders of the class of
securities subject to the tender offer; and
(2) The consideration paid to any security holder pursuant to the
tender offer is the highest consideration paid to any other security
holder during such tender offer.
(b) Paragraph (a)(1) of this section shall not:
(1) Affect dissemination under Rule 14d-4 (Sec. 240.14d-4); or
(2) Prohibit a bidder from making a tender offer excluding all
security holders in a state where the bidder is prohibited from making
the tender offer by administrative or judicial action pursuant to a
state statute after a good faith effort by the bidder to comply with
such statute.
(c) Paragraph (a)(2) of this section shall not prohibit the offer of
more than one type of consideration in a tender offer, Provided, That:
(1) Security holders are afforded equal right to elect among each of
the types of consideration offered; and
(2) The highest consideration of each type paid to any security
holder is paid to any other security holder receiving that type of
consideration.
(d) If the offer and sale of securities constituting consideration
offered in a
[[Page 219]]
tender offer is prohibited by the appropriate authority of a state after
a good faith effort by the bidder to register or qualify the offer and
sale of such securities in such state:
(1) The bidder may offer security holders in such state an
alternative form of consideration; and
(2) Paragraph (c) of this section shall not operate to require the
bidder to offer or pay the alternative form of consideration to security
holders in any other state.
(e) This section shall not apply to any tender offer with respect to
which the Commission, upon written request or upon its own motion,
either unconditionally or on specified terms and conditions, determines
that compliance with this section is not necessary or appropriate in the
public interest or for the protection of investors.
[51 FR 25882, July 17, 1986]
Sec. 240.14d-100 Schedule 14D-1. Tender offer statement pursuant to section 14(d)(1) of the Securities Exchange Act of 1934.
Securities and Exchange Commission, Washington, DC 20549
Schedule 14D-1
Tender Offer Statement Pursuant to Section 14(d)(1) of the Securities
Exchange Act of 1934
(Amendment No. ----)*
_______________________________________________________________________
(Name of Subject Company [Issuer]
_______________________________________________________________________
(Bidder)
_______________________________________________________________________
(Title of Class of Securities)
_______________________________________________________________________
(CUSIP Number of Class of Securities)
(Name, Address, and Telephone Numbers of Person Authorized to Receive
Notices and Communications on Behalf of Bidder)
Calculation of Filing Fee
------------------------------------------------------------------------
Transaction valuation* Amount of filing fee
------------------------------------------------------------------------
*Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Check box if any part of the fee is offset as provided by Rule 0-
11(a)(2) and identify the filing with which the offsetting fee
was previously paid. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
Amount Previously Paid:_________________________________________________
Form or Registration No.:_______________________________________________
Filing Party:___________________________________________________________
Date Filed:_____________________________________________________________
Note: The remainder of this cover page is only to be completed if
this Schedule 14D-1 (or amendment thereto) is being filed, inter alia,
to satisfy the reporting requirements of section 13(d) of the Securities
Exchange Act of 1934. See General Instructions D, E and F to Schedule
14D-1.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment containing
information which would alter the disclosure provided in a prior cover
page.
The information required in the remainder of this cover page shall
not be deemed to be ``filed'' for the purpose of Section 18 of the
Securities Exchange Act of 1934 (``Act'') or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
CUSIP No. ----------
------------------------------------------------------------------------
(1) Names of
reporting
persons.
S.S. or
I.R.S.
Identificati
on Nos. of
above
persons.
------------------------------------------------------------------------
(2) Check the (a)
appropriate
box if a
member of a
group
-----------------------------------
(see (b)
instructions)
------------------------------------------------------------------------
(3) SEC use
only.
------------------------------------------------------------------------
(4) Source of
funds (see
instructions).
------------------------------------------------------------------------
(5) Check if
disclosure of
legal
proceedings is
required
pursuant to
Items 2(e) or
2(f).
------------------------------------------------------------------------
(6) Citizenship
or place of
organization.
------------------------------------------------------------------------
(7) Aggregate
amount
beneficially
owned by each
reporting
person.
------------------------------------------------------------------------
[[Page 220]]
(8) Check if
the aggregate
amount in Row
(7) excludes
certain shares
(see
instructions).
------------------------------------------------------------------------
(9) Percent of
class
represented by
amount in Row
(7).
------------------------------------------------------------------------
(10) Type of
reporting
person (see
instructions).
------------------------------------------------------------------------
Page--of--Pages---------------------------------------------------------
Instructions for Cover Page
(1) Names and Social Security Numbers of Reporting Persons--Furnish
the full legal name of each person for whom the report is filed--i.e.,
each person required to sign the schedule itself--including each member
of a group. Do not include the name of a person required to be
identified in the report but who is not a reporting person. Reporting
persons are also requested to furnish their Social Security or I.R.S.
identification numbers, although disclosure of such numbers is
voluntary, not mandatory (see ``SPECIAL INSTRUCTIONS FOR COMPLYING WITH
SCHEDULE 14D-1'', below).
(2) If any of the shares beneficially owned by a reporting person
are held as a member of a group and such membership is expressly
affirmed, please check row 2(a). If the membership in a group is
disclaimed or the reporting person describes a relationship with other
persons but does not affirm the existence of a group, please check row
2(b) [unless a joint filing pursuant to Rule 13d-1(f)(1) in which case
it may not be necessary to check row 2(b)].
(3) The third row is for SEC internal use, please leave blank.
(4) Source of Funds--Classify the source of funds or other
consideration to be used in making purchases as required to be disclosed
pursuant to Item 4 of the schedule and insert the appropriate symbol (or
symbols if more than one is necessary) In row (4):
------------------------------------------------------------------------
Category of Source Symbol
------------------------------------------------------------------------
Subject Company (company whose securities are SC
being acquired).
Bank......................................... BK
Affiliate (of reporting person).............. AF
Working Capital (of reporting person)........ WC
Personal Funds (of reporting person)......... PF
Other........................................ OO
------------------------------------------------------------------------
(5) If disclosure of legal proceedings or actions is required
pursuant to either Items 2(e) or 2(f) of Schedule 14d-1, row 5 should be
checked.
(6) Citizenship or Place of Organization--Furnish citizenship if the
named reporting person is a natural person. Otherwise, furnish the place
of organization. (See Item 2 of Schedule 14D-1.)
(7), (9) Aggregate Amount Beneficially Owned by Each Reporting
Person, etc.--Rows (7) and (9) are to be completed in accordance with
the Instructions to Item 6 of Schedule 14D-1. All percentages are to be
rounded off to nearest tenth (one place after decimal point).
(8) Check if the aggregate amount reported as beneficially owned in
row (7) does not include shares as to which beneficial ownership is
disclaimed.
(10) Type of Reporting Person--Please classify each ``reporting
person'' according to the following breakdown and place the appropriate
symbol (or symbols, i.e., if more than one is applicable, insert all
applicable symbols) on the form:
------------------------------------------------------------------------
Category Symbol
------------------------------------------------------------------------
Broker Dealer................................ BD
Bank......................................... BK
Insurance Company............................ IC
Investment Company........................... IV
Investment Adviser........................... IA
Employee Benefit Plan, Pension Fund, or EP
Endowment Fund.
Parent Holding Company....................... HC
Group Member................................. GM
Corporation.................................. CO
Partnership.................................. PN
Individual................................... IN
Other........................................ OO
------------------------------------------------------------------------
Notes: Attach as many copies of the second part of the cover page as
are needed, one reporting person per page.
Filing persons may, in order to avoid unnecessary duplication,
answer items on the schedules (Schedule 13D, 13G or 14D-1) by
appropriate cross references to an item or items on the cover page(s).
This approach may be used only where the cover page item or items
provide all the disclosure required by the schedule item. Moreover, such
a use of a cover page item will result in the item becoming a part of
the schedule and accordingly being considered as ``filed'' for purposes
of Section 18 of the Securities Exchange Act or otherwise subject to the
liabilities of that section of the Act.
Reporting persons may comply with their cover page filing
requirements by filing either completed copies of the blank forms
available from the Commission, printed or typed facsimiles, or computer
printed facsimiles, provided the documents filed have identical formats
to the forms prescribed in the Commission's regulations and meet
existing Securities Exchange Act rules as to such matters as clarity and
size (Securities Exchange Act Rule 12b-12).
[[Page 221]]
Special Instructions for Complying With Schedule 14D-1
Under section 14(d) and 23 of the Securities Exchange Act of 1934
and the rules and regulations thereunder, the Commission is authorized
to solicit the information required to be supplied by this schedule by
certain security holders of certain issuers.
Disclosure of the information specified in this schedule is
mandatory, except for Social Security or I.R.S. identification numbers,
disclosure of which is voluntary. The information will be used for the
primary purpose of determining and disclosing the holdings of certain
beneficial owners of certain equity securities. This statement will be
made a matter of public record. Therefore, any information given will be
available for inspection by any member of the public.
Because of the public nature of the information, the Commission can
utilize it for a variety of purposes, including referral to other
governmental authorities or securities self-regulatory organizations for
investigatory purposes or in connection with litigation involving the
Federal securities laws or other civil, criminal or regulatory statutes
or provisions. Social Security or I.R.S. identification numbers, if
furnished, will assist the Commission in identifying security holders
and, therefore, in promptly processing statements of beneficial
ownership of securities.
Failure to disclose the information requested by this schedule,
except for Social Security or I.R.S. identification numbers, may result
in civil or criminal action against the persons involved for violation
of the Federal securities laws and rules promulgated thereunder.
Instructions. 1. Eight copies of this statement, including all
exhibits, and two additional copies of this statement, including only
the exhibits described in Item 11(a) of this statement, should be filed
with the Commission.
2. This statement shall be accompanied by a fee payable to the
Commission as required by Sec. 240.0-11.
General Instruction. A. The item numbers and captions of the items
shall be included but the text of the items is to be omitted. The
answers to the items shall be so prepared as to indicate clearly the
coverage of the items without referring to the text of the items. Answer
every item. If an item is inapplicable or the answer is in the negative,
so state.
B. Information contained in exhibits to the statement may be
incorporated by reference in answer or partial answer to any item or
sub-item of the statement unless it would render such answer misleading,
incomplete, unclear or confusing. Material incorporated by reference
shall be clearly identified in the reference by page, paragraph, caption
or otherwise. An express statement that the specified matter is
incorporated by reference shall be made at the particular place in the
statement where the information is required. A copy of any information
or a copy of the pertinent pages of a document containing such
information which is incorporated by reference shall be submitted with
this statement as an exhibit and shall be deemed to be filed with the
Commission for all purposes of the Act.
C. If the statement is filed by a partnership, limited partnership,
syndicate or other group, the information called for by Items 2-7,
inclusive, shall be given with respect to: (i) Each partner of such
partnership; (ii) each partner who is denominated as a general partner
or who functions as a general partner of such limited partnership; (iii)
each member of such syndicate or group; and (iv) each person controlling
such partner or member. If the statement is filed by a corporation, or
if a person referred to in (i), (ii), (iii), or (iv) of this Instruction
is a corporation, the information called for by the above mentioned
items shall be given with respect to: (a) Each executive officer and
director of such corporation; (b) each person controlling such
corporation; and (c) each executive officer and director of any
corporation ultimately in control of such corporation. A response to an
item in the statement is required with respect to the bidder and to all
other persons referred to in this instruction unless such item specifies
to the contrary.
D. Upon termination of the tender offer, the bidder shall promptly
file a final amendment to Schedule 14D-1 [Sec. 240.14d-100] disclosing
all material changes in the items of that Schedule and stating that the
tender offer has terminated, the date of such termination and the
results of such tender offer.
E. If the bidder, before filing this statement, has filed a Schedule
13D [Sec. 240.13d-101] with respect to the acquisition of securities of
the same class referred to in Item 1(a) of this statement, the bidder
shall amend such Schedule 13D [Sec. 240.13d-101] and may do so by means
of this statement and amendments thereto, including the final amendment
required to be filed by Instruction D: Provided, That the bidder
indicates on the cover sheet of this statement that it is amending its
Schedule 13D [Sec. 240.13d-101] by means of this statement.
[[Page 222]]
F. The final amendment required to be filed by Instruction D shall
be deemed to satisfy the reporting requirements of section 13(d) of the
Act with respect to all securities acquired by the bidder pursuant to
the tender offer as reported in such final amendment.
G. For purposes of this statement, the following definitions shall
apply:
(i) The term bidder means any person on whose behalf a tender offer
is made; and
(ii) The term subject company means any issuer whose securities are
sought by a bidder pursuant to a tender offer.
Item 1. Security and subject company. (a) State the name of the
subject company and the address of its principal executive offices;
(b) State the exact title and the number of shares outstanding of
the class of equity securities being sought (which may be based upon
information contained in the most recently available filing with the
Commission by the subject company unless the bidder has reason to
believe such information is not current), the exact amount of such
securities being sought and the consideration being offered therefor;
and
(c) Identify the principal market in which such securities are
traded and state the high and low sales prices for such securities in
such principal market (or, in the absence thereof, the range of high and
low bid quotations) for each quarterly period during the past two years.
Item 2. Identity and background. If the person filing this statement
or any person enumerated in Instruction C of this statement is a
corporation, partnership, limited partnership, syndicate or other group
of persons, state its name, the state or other place of its
organization, its principal business, the address of its principal
office and the information required by (e) and (f) of this Item. If the
person filing this statement or any person enumerated in Instruction C
is a natural person, provide the information specified in (a) through
(g) of this Item with respect to such person(s).
(a) Name;
(b) Residence or business address;
(c) Present principal occupation or employment and the name,
principal business and address of any corporation or other organization
in which such employment or occupation is conducted;
(d) Material occupations, positions, offices or employments during
the last 5 years, giving the starting and ending dates of each and the
name, principal business and address of any business corporation or
other organization in which such occupation, position, office or
employment was carried on.
Instruction. If a person has held various positions with the same
organization, or if a person holds comparable positions with multiple
related organizations, each and every position need not be specifically
disclosed.
(e) Whether or not, during the last 5 years, such person has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) and, if so, give the dates, nature of conviction,
name and location of court, and penalty imposed or other disposition of
the case.
Instruction. While a negative answer to this sub-item is required in
this schedule, it need not be furnished to security holders.
(f) Whether or not, during the last 5 years, such person was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting activities subject to, Federal or state securities laws or
finding any violation of such laws; and, if so, identify and describe
such proceeding and summarize the terms of such judgment, decree or
final order.
Instruction. While a negative answer to this sub-item is required in
this schedule, it need not be furnished to security holders.
(g) Citizenship(s).
Item 3. Past contacts, transactions or negotiations with the subject
company. (a) Briefly state the nature and approximate amount (in
dollars) of any transaction, other than those described in Item 3(b) of
this schedule, which has occurred since the commencement of the subject
company's third full fiscal year preceding the date of this schedule,
between the person filing this schedule (including those persons
enumerated in Instruction C of this schedule) and;
(1) The subject company or any of its affiliates which are
corporations: Provided, however, That no disclosure need be made with
respect to any transaction if the aggregate amount involved in such
transaction was less than one percent of the subject company's
consolidated revenues (which may be based upon information contained in
the most recently available filing with the Commission by the subject
company, unless the bidder has reason to believe otherwise) (i) for the
fiscal year in which such transaction occurred or, (ii) for the portion
of the current fiscal year which has occurred, if the transaction
occurred in such year; and
(2) The executive officers, directors or affiliates of the subject
company which are not corporations if the aggregate amount involved in
such transaction or in a series of similar transactions, including all
periodic installments in the case of any lease or other agreement
providing for periodic payments or installments, exceeds $40,000.
(b) Describe any contacts, negotions or transactions which have
occurred since the commencement of the subject company's third full
fiscal year preceding the date of this schedule between the bidder or
its subsidiaries (including those persons enumerated in Instruction C of
this schedule) and
[[Page 223]]
the subject company or its affiliates concerning: A merger,
consolidation or acquisition; a tender offer or other acquisition of
securities; an election of directors; or a sale or other transfer of a
material amount of assets.
Item 4. Source and amount of funds or other consideration. (a) State
the source and the total amount of funds or other consideration for the
purchase of the maximum number of securities for which the tender offer
is being made.
(b) If all or any part of such funds or other consideration are or
are expected to be directly or indirectly, borrowed for the purpose of
the tender offer:
(1) Provide a summary of each loan agreement or arrangement
containing the identity of the parties, the term, the collateral, the
stated and effective interest rates, and other material terms or
conditions relative to such loan agreement; and
(2) Briefly describe any plans or arrangements to finance or repay
such borrowings, or if no such plans or arrangements have been made,
make a statement to that effect.
(c) If the source of all or any part of the funds to be used in the
tender offer is a loan made in the ordinary course of business by a bank
as defined by section 3(a)(6) of the Act, the name of such bank shall
not be made available to the public if the person filing the statement
so requests in writing and files such request, naming such bank, with
the Secretary of the Commission.
Item 5. Purpose of the tender offer and plans or proposals of the
bidder. State the purpose or purposes of the tender offer for the
subject company's securities. Describe any plans or proposals which
relate to or would result in:
(a) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the subject company or any of
its subsidiaries;
(b) A sale or transfer of a material amount of assets of the subject
company or any of its subsidiaries;
(c) Any change in the present board of directors or management of
the subject company including, but not limited to, any plans or
proposals to change the number or the term of directors or to fill any
existing vacancies on the board;
(d) Any material change in the present capitalization or dividend
policy of the subject company;
(e) Any of the material change in the subject company's corporate
structure or business, including, if the subject company is a registered
closed-end investment company, any plans or proposals to make any
changes in its investment policy for which a vote would be required by
section 13 of the Investment Company Act of 1940;
(f) Causing a class of securities of the subject company to be
delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a
registered national securities association; or
(g) A class of equity securities of the subject company becoming
eligible for termination of registration pursuant to section 12(g)(4) of
the Act.
Item 6. Interest in securities of the subject company. (a) State the
aggregate number and percentage of the class represented by such shares
(which may be based on the number of shares outstanding as contained in
the most recently available filing with the Commission by the subject
company unless the bidder has reason to believe such information is not
current), beneficially owned (identifying those shares for which there
is a right to acquire) by each person named in Item 2 of this schedule
and by each associate and majority-owned subsidiary of such person
giving the name and address of any such associate or subsidiary.
(b) Describe any transaction in the class of securities reported on
that was effected during the past 60 days by the persons named in
response to paragraph (a) of this item or by any executive officer,
director or subsidiary of such person.
Instructions. 1. The description of a transaction required by Item
6(b) shall include, but not necessarily by limited to: (i) The identity
of the person covered by Item 6(b) who effected the transaction; (ii)
the date of the transaction; (iii) the amount of securities involved;
(iv) the price per share; and (v) where and how the transaction was
effected.
2. If the information required by Item 6(b) of this schedule is
available to the bidder at the time this statement is initially filed
with the Commission pursuant to Rule 14d-3(a)(1) [Sec. 240.14d-3(a)(1)],
such information should be included in such initial filing. However, if
such information is not available to the bidder at the time of such
initial filing, it shall be filed with the Commission promptly but in no
event later than two business days after the date of such filing and, if
material, shall be disclosed in a manner reasonably designed to inform
security holders. The procedure specified by this instruction is
provided for the purpose of maintaining the confidentiality of the
tender offer in order to avoid possible misuse of inside information.
Item 7. Contracts, Arrangements, Understandings or Relationships
with Respect to the Subject Company's Securities. Describe any contract,
arrangement, understanding or relationship (whether or not legally
enforceable) between the bidder (including those persons enumerated in
Instruction C to this schedule) and any person with respect to any
securities of the subject company (including, but not limited to, any
contract, arrangement, understanding or relationship concerning the
[[Page 224]]
transfer or the voting of any of such securities, joint ventures, loan
or option arrangements, puts or calls, guarantees of loans, guarantees
against loss, or the giving or withhold of proxies), naming the persons
with whom such contracts, arrangements, understandings or relationships
have been entered into and giving the material provisions thereof.
Include such information for any of such securities that are pledged or
otherwise subject to a contingency, the occurrence of which would give
another person the power to direct the voting or disposition of such
securities, except that disclosure of standard default and similar
provisions contained in loan agreements need not be included.
Item 8. Persons Retained, Employed or to be Compensated. Identify
all persons and classes of persons employed, retained or to be
compensated by the bidder, or by any person on the bidder's behalf, to
make solicitations or recommendations in connection with the tender
offer and describe briefly the terms of such employment, retainer or
arrangement for compensation.
Item 9. Financial Statements of Certain Bidders. Where the bidder is
other than a natural person and the bidder's financial conditon is
material to a decision by a security holder of the subject company
whether to sell, tender or hold securities being sought in the tender
offer, furnish current, adequate financial information concerning the
bidder; Provided, That if the bidder is controlled by another entity
which is not a natural person and has been formed for the purpose of
making the tender offer, furnish current, adequate financial information
concerning such parent.
Instructions. 1. The facts and circumstances concerning the tender
offer, particularly the terms of the tender offer, may influence a
determination as to whether disclosure of financial information is
material. However, once the materiality requirement is applicable, the
adequacy of the financial information will depend primarily on the
nature of the bidder.
In order to provide guidance in making this determination, the
following types of financial information will be deemed adequate for
purposes of this item for the type of bidder specified: (a) Financial
statements prepared in compliance with form 10 as amended (Sec. 249.210
of this chapter) for a domestic bidder which is otherwise eligible to
use such form; and (b) financial statements prepared in accordance with
Item 17 of Form 20-F [Sec. 249.200f of this chapter] for a foreign
bidder that is otherwise eligible to use such form.
2. If the bidder is subject to the periodic reporting requirements
of sections 13(a) or 15(d) of the Act, financial statements contained in
any document filed with the Commission may be incorporated by reference
in this schedule solely for the purpose of this schedule: Provided, That
such financial statements substantially meet the requirements of this
item; an express statement is made that such financial statements are
incorporated by reference; the matter incorporated by reference is
clearly identified by page, paragraph, caption or otherwise; and an
indication is made where such information may be inspected and copies
obtained. Financial statements which are required to be presented in
comparative form for two or more fiscal years or periods shall not be
incorporated by reference unless the material incorporated by reference
includes the entire period for which the comparative data is required to
be given.
3. If the bidder is not subject to the periodic reporting
requirements of the Act, the financial statements required by this item
need not be audited if such audited financial statements are not
available or obtainable without unreasonable cost or expense and a
statement is made to that effect disclosing the reasons therefor.
Item 10. Additional information. If material to a decision by a
security holder whether to sell, tender or hold securities being sought
in the tender offer, furnish information as to the following:
(a) Any present or proposed material contracts, arrangements,
understandings or relationships between the bidder or any of its
executive officers, directors, controlling persons or subsidiaries and
the subject company or any of its executive officers, directors,
controlling persons or subsidiaries (other than any contract,
arrangement or understanding required to be disclosed pursuant to Items
3 or 7 of this schedule);
(b) To the extent known by the bidder after reasonable
investigation, the applicable regulatory requirements which must be
complied with or approvals which must be obtained in connection with the
tender offer;
(c) The applicability of anti-trust laws;
(d) The applicability of the margin requirements of section 7 of the
Act and the regulations promulgated thereunder;
(e) Any material pending legal proceedings relating to the tender
offer including the name and location of the court or agency in which
the proceedings are pending, the date instituted, the principal parties
thereto and a brief summary of the proceedings; and
Instruction. In connection with this sub-item, a copy of any
document relating to a major development (such as pleadings, an answer,
complaint, temporary restraining order, injunction, opinion, judgment or
order) in a material pending legal proceeding should be promptly
furnished to the Commission on a supplemental basis.
(f) Such additional material information, if any, as may be
necessary to make the required statements, in light of the circumstances
under which they are made, not materially misleading.
[[Page 225]]
Item 11. Material to be filed as exhibits. Furnish a copy of: (a)
Tender offer material which is published, sent or given to security
holders by or on behalf of the bidder in connection with the tender
offer;
(b) Any loan agreement referred to in Item 4 of this schedule.
Instruction. The identity of any bank which is a party to a loan
agreement need not be disclosed if the person filing the statement has
requested that the identity of such bank not be made available to the
public pursuant to Item 4 of this schedule;
(c) Any document setting forth the terms of any contracts,
arrangements, understandings or relationships referred to in Item 7 or
10(a) of this schedule;
(d) Any written opinion prepared by legal counsel at the bidder's
request and communicated to the bidder pertaining to the tax
consequences of the tender offer;
(e) In a exchange offer where securities of the bidder have been or
are to be registered under the Securities Act of 1933, the prospectus
containing the information to be included therein by Rule 432
(Sec. 230.432 of this chapter) of that Act;
(f) If any oral solicitation of security holders is to be made by or
on behalf of the bidder, any written instruction, form or other material
which is furnished to the persons making the actual oral solicitation
for their use, directly or indirectly, in connection with the tender
offer.
Signature. After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
_______________________________________________________________________
(Signature)
_______________________________________________________________________
(Name and title)
_______________________________________________________________________
(Date)
The original statement shall be signed by each person on whose
behalf the statement is filed or his authorized representative. If the
statement is signed on behalf of a person by his authorized
representative (other than an executive officer or general partner of
the bidder), evidence of the representative's authority to sign on
behalf of such person shall be filed with the statement. The name and
any title of each person who signs the statement shall be typed or
printed beneath his signature.
(Secs. 13(d), 14(d), 14(e), 23, 48 Stat. 894, 895, 901; sec. 203(a), 49
Stat. 704; sec. 8, 49 Stat. 1379; sec. 10, 78 Stat. 580; secs. 2, 3, 82
Stat. 454, 455; secs. 1, 2, 3-5, 84 Stat. 1497; sec. 18, 89 Stat. 155;
15 U.S.C. 78m(d), 78n(d), 78n(e), 78w)
[42 FR 38348, July 28, 1977, as amended at 44 FR 2150, Jan. 9, 1979; 44
FR 11751, Mar. 2, 1979; 44 FR 70346, Dec. 6, 1979; 45 FR 76981, Nov. 21,
1980; 47 FR 11470, Mar. 16, 1982; 47 FR 54781, Dec. 6, 1982; 51 FR 2477,
Jan. 17, 1986]
Sec. 240.14d-101 Schedule 14D-9.
Securities and Exchange Commission
Washington, DC 20549
Schedule 14D-9
Solicitation/Recommendation Statement Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
(Amendment No. --)
_______________________________________________________________________
(Name of Subject Company)
_______________________________________________________________________
(Name of Person(s) Filing Statement)
_______________________________________________________________________
(Title of Class of Securities)
_______________________________________________________________________
(CUSIP Number of Class of Securities)
_______________________________________________________________________
(Name, address and telephone number of person authorized to receive
notice and communications on behalf of the person(s) filing statement)
Instructions: Eight copies of this statement, including all exhibits,
should be filed with the Commission.
General Instructions: A. The item numbers and captions of the items
shall be included but the text of the items is to be omitted. The
answers to the items shall be so prepared as to indicate clearly the
coverage of the items without referring to the text of the items. Answer
every item. If an item is inapplicable or the answer is in the negative
so state.
B. Information contained in exhibits to the statement may be
incorporated by reference in answer or partial answer to any item or
sub-item of the statement unless it would render such answer misleading,
incomplete, unclear or confusing. Material incorporated by reference
shall be clearly identified in the reference by page, paragraph, caption
or otherwise. An express statement that the specified matter is
incorporated by reference
[[Page 226]]
shall be made at the particular place in the statement where the
information is required. A copy of any information or a copy of the
pertinent pages of a document containing such information which is
incorporated by reference shall be submitted with this statement as an
exhibit and shall be deemed to be filed with the Commission for all
purposes of the Act.
Item 1. Security and Subject Company. State the title of the class
of equity securities to which this statement relates and the name and
the address of the principal executive offices of the subject company.
Item 2. Tender Offer of the Bidder. Identify the tender offer to
which this statement relates, the name of the bidder and the address of
its principal executive offices or, if the bidder is a natural person,
the bidder's residence or business address (which may be based on the
bidder's Schedule 14D-1 [Sec. 240.14d-100] filed with the Commission).
Item 3. Identity and Background. (a) State the name and business
address of the person filing this statement.
(b) If material, describe any contract, agreement, arrangement or
understanding and any actual or potential conflict of interest between
the person filing this statement or its affiliates and: (1) the subject
company, its executive officers, directors or affiliates; or (2) the
bidder, its executive officers, directors or affiliates.
Instruction: If the person filing this statement is the subject
company and if the materiality requirement of Item 3(b) is applicable to
any contract, agreement, arrangement or understanding between the
subject company or any affiliate of the subject company and any
executive officer or director of the subject company, it shall not be
necessary to include a description thereof in this statement, or in any
solicitation or recommendation published or sent or given to security
holders if such information, or information which does not differ
materially from such information, has been disclosed in any proxy
statement, report or other communication sent within one year of the
filing date of this statement by the subject company to the then holders
of the securities and has been filed with the Commission: Provided, That
this statement and the solicitation or recommendation published or sent
or given to security holders shall contain specific reference to such
proxy statement, report or other communication and that a copy of the
pertinent portion(s) thereof is filed as an exhibit to this statement.
Item 4. The Solicitation or Recommendation. (a) State the nature of
the solicitation or the recommendation. If this statement relates to a
recommendation, state whether the person filing this statement is
advising security holders of the securities being sought by the bidder
to accept or reject the tender offer or to take other action with
respect to the tender offer and, if so, furnish a description of such
other action being recommended. If the person filing this statement is
the subject company and a recommendation is not being made, state
whether the subject company is either expressing no opinion and is
remaining neutral toward the tender offer or is unable to take a
position with respect to the tender offer.
(b) State the reason(s) for the position (including the inability to
take a position) stated in (a) of this Item.
Instruction: Conclusory statements such as ``The tender offer is in
the best interest of shareholders,'' will not be considered sufficient
disclosure in response to Item 4(b).
Item 5. Persons Retained, Employed or To Be Compensated. Identify
any person or class of persons employed, retained or to be compensated
by the person filing this statement or by any person on its behalf, to
make solicitations or recommendations to security holders and describe
briefly the terms of such employment, retainer or arrangement for
compensation.
Item 6. Recent Transactions and Intent With Respect to Securities.
(a) Describe any transaction in the securities referred to in Item 1
which was effected during the past 60 days by the person(s) named in
response to Item 3(a) and by any executive officer, director, affiliate
or subsidiary of such person(s).
(b) To the extent known by the person filing this statement, state
whether the persons referred to in Item 6(a) presently intend to tender
to the bidder, sell or hold securities of the class of securities being
sought by the bidder which are held of record or beneficially owned by
such persons.
Item 7. Certain Negotiations and Transactions by the Subject
Company. (a) If the person filing this statement is the subject company,
state whether or not any negotiation is being undertaken or is underway
by the subject company in response to the tender offer which relates to
or would result in:
(1) An extraordinary transaction such as a merger or reorganization,
involving the subject company or any subsidiary of the subject company;
(2) A purchase, sale or transfer of a material amount of assets by
the subject company or any subsidiary of the subject company;
(3) A tender offer for or other acquisition of securities by or of
the subject company; or
(4) Any material change in the present capitalization or dividend
policy of the subject company.
Instruction: If no agreement in principle has yet been reached, the
possible terms of any transaction or the parties thereto need not be
disclosed if in the opinion of the Board of Directors of the subject
company such disclosure would jeopardize continuation of such
negotiations. In such event,
[[Page 227]]
disclosure that negotiations are being undertaken or are underway and
are in the preliminary stages will be sufficient.
(b) Describe any transaction, board resolution, agreement in
principle, or a signed contract in response to the tender offer, other
than one described pursuant to Item 3(b) of this statement, which
relates to or would result in one or more of the matters referred to in
Item 7(a)(1), (2), (3) or (4).
Item 8. Additional Information To Be Furnished. Furnish such
additional information, if any, as may be necessary to make the required
statements, in light of the circumstances under which they are made, not
materially misleading.
Item 9. Material To Be Filed as Exhibits. Furnish a copy of:
(a) Any written solicitation or recommendation which is published or
sent or given to security holders in connection with the solicitation or
recommendation referred to in Item 4.
(b) If any oral solicitation or recommendation to security holders
is to be made by or on behalf of the person filing this statement, any
written instruction, or other material which is furnished to the persons
making the actual oral soliciation or recommendation for their use,
directly or indirectly, in connection with the solicitation or
recommendation.
(c) Any contract, agreement, arrangement or understanding described
in Item 3(b) or the pertinent portions(s) of any proxy statement, report
or other communication referred to in Item 3(b).
Signature. After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement
is true, complete and correct.
_______________________________________________________________________
(Date)
_______________________________________________________________________
(Signature)
_______________________________________________________________________
(Name and Title)
Instruction. The original statement shall be signed by each person
on whose behalf the statement is filed or his authorized representative.
If the statement is signed on behalf of a person by his authorized
representative (other than an executive officer of a corporation or a
general partner of a partnership), evidence of the representative's
authority to sign on behalf of such person shall be filed with the
statement. The name and any title of each person who signs the statement
shall be typed or printed beneath his signature.
(Secs. 7, 10, 19(a), 48 Stat. 78, 81, 85; secs. 205, 209, 48 Stat. 906,
908; sec. 8, 68 Stat. 685; sec. 308(a)(2), 90 Stat. 57; secs. 3(b),
10(b), 13, 14, 23(a), 48 Stat. 882, 891, 894, 895, 901; sec. 203(a), 49
Stat. 704; sec. 8, 49 Stat. 1379; secs. 4, 5, 78 Stat. 569, 570; secs.
2, 3, 82 Stat. 454, 455; secs. 1, 2, 3-5, 84 Stat. 1497; secs. 3, 10,
18, 89 Stat. 97, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 91
Stat. 1494, 1498, 1499; sec. 20, 49 Stat. 833; sec. 319(a), 53 Stat.
1173; sec. 38(a), 54 Stat. 841; 15 U.S.C. 77g, 77j, 77s(a), 78c(b),
78j(b), 78m, 78n, 78w(a), 79t, 77ttt(a), 80a-37(a))
[44 FR 70347, Dec. 6, 1979]
Sec. 240.14d-102 Schedule 14D-1F. Tender offer statement pursuant to rule 14d-1(b) under the Securities Exchange Act of 1934.
Securities and Exchange Commission
Washington, DC
Schedule 14D-1F
Tender Offer Statement Pursuant to Rule 14d-1(b) Under the Securities
Exchange Act of 1934
[Amendment No. ________]
_______________________________________________________________________
(Name of Subject Company [Issuer])
_______________________________________________________________________
(Translation of Subject Company's [Issuer's] name into English (if
applicable))
_______________________________________________________________________
(Jurisdiction of Subject Company's [Issuer's] Incorporation or
Organization)
_______________________________________________________________________
(Bidder)
_______________________________________________________________________
(Title of Class of Securities)
_______________________________________________________________________
(CUSIP Number of Class of Securities (if applicable))
_______________________________________________________________________
(Name, address (including zip code) and telephone number (including area
code) of person(s) authorized to receive notices and communications on
behalf of bidder)
_______________________________________________________________________
(Date tender offer first published, sent or given to securityholders)
Calculation of Filing Fee*
Transaction Valuation
Amount of Filing Fee
* Set forth the amount on which the filing fee is calculated and
state how it was determined. See General Instruction II. C. for rules
governing the calculation of the filing fee.
[ ] Check box if any part of the fee is offset as provided by Rule 0-
11(a) (2) and identify the filing with which the offsetting
fee was previously paid. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
Amount Previously Paid:_________________________________________________
Registration No.:_______________________________________________________
[[Page 228]]
________________________________________________________________________
Filing Party:___________________________________________________________
Form:___________________________________________________________________
Date Filed:_____________________________________________________________
General Instructions
I. Eligibility Requirements for Use of Schedule 14D-1F
A. Schedule 14D-1F may be used by any person making a cash tender or
exchange offer (the ``bidder'') for securities of any issuer
incorporated or organized under the laws of Canada or any Canadian
province or territory that is a foreign private issuer, where less than
40 percent of the outstanding class of such issuer's securities that is
the subject of the offer is held by U.S. holders. The calculation of
U.S. holders shall be made as of the end of the subject issuer's last
quarter or, if such quarter terminated within 60 days of the filing
date, as of the end of such issuer's preceding quarter.
Instructions
1. For purposes of this Schedule, ``foreign private issuer'' shall
be construed in accordance with Rule 405 under the Securities Act.
2. For purposes of this Schedule, the term ``U. S. holder'' shall
mean any person whose address appears on the records of the issuer, any
voting trustee, any depositary, any share transfer agent or any person
acting in a similar capacity on behalf of the issuer as being located in
the United States.
3. With respect to any tender offer, including any exchange offer,
otherwise eligible to proceed in accordance with Rule 14d-1(b) under the
Securities Exchange Act of 1934 (the ``Exchange Act''), the issuer of
the subject securities will be presumed to be a foreign private issuer
and U. S. holders will be presumed to hold less than 40 percent of such
outstanding securities, unless (a) the aggregate trading volume of that
class on national securities exchanges in the United States and on
NASDAQ exceeded its aggregate trading volume on securities exchanges in
Canada and on the Canadian Dealing Network, Inc. (``CDN'') over the 12
calendar month period prior to commencement of this offer, or if
commenced in response to a prior offer, over the 12 calendar month
period prior to commencement of the initial offer (based on volume
figures published by such exchanges and NASDAQ and CDN) ; (b) the most
recent annual report or annual information form filed or submitted by
the issuer with securities regulators of Ontario, Quebec, British
Columbia or Alberta (or, if the issuer of the subject securities is not
a reporting issuer in any of such provinces, with any other Canadian
securities regulator) or with the Commission indicates that U. S.
holders hold 40 percent or more of the subject class of securities; or
(c) the offeror has actual knowledge that the level of U. S. ownership
equals or exceeds 40 percent of such securities.
4. If this Schedule is filed during the pendency of one or more
ongoing cash tender or exchange offers for securities of the class
subject to this offer that was commenced or was eligible to be commenced
on Schedule 13E-4F, Schedule 14D-1F and/or Form F-8 or Form F-80, the
date for calculation of U. S. ownership for purposes of this Schedule
shall be the same as that date used by the initial bidder or issuer.
5. For purposes of this Schedule, the class of subject securities
shall not include any securities that may be converted into or are
exchangeable for the subject securities.
B. Any bidder using this Schedule must extend the cash tender or
exchange offer to U. S. holders of securities of the subject company
upon terms and conditions not less favorable than those extended to any
other holder of such securities, and must comply with the requirements
of any Canadian federal, provincial and/or territorial law, regulation
or policy relating to the terms and conditions of the offer.
C. This Schedule shall not be used if the subject company is an
investment company registered or required to be registered under the
Investment Company Act of 1940.
D. This Schedule shall not be used to comply with the reporting
requirements of section 13(d) of the Exchange Act. Persons using this
Schedule are reminded of their obligation to file or update a Schedule
13D where required by section 13(d)(1) of the Exchange Act and the
Commission's rules and regulations thereunder.
II. Filing Instructions and Fee
A. Five copies of this Schedule and any amendment thereto (see part
I, item 1(b)), including all exhibits and any other paper or document
filed as part of the Schedule, shall be filed with the Commission at its
principal office. Each copy shall be bound, stapled or otherwise
compiled in one or more parts, without stiff covers. The binding shall
be made on the side or stitching margin in such manner as to leave the
reading matter legible. Three additional copies of the Schedule and any
amendment thereto, similarly bound, also shall be filed. No exhibits are
required to accompany such additional copies.
B. The original and at least one copy of this Schedule and any
amendments thereto shall be signed manually by the persons specified
herein. Unsigned copies shall be conformed.
C. At the time of filing this Schedule with the Commission, the
bidder shall pay to the Commission in accordance with Rule 0-11 of the
Exchange Act, a fee in U. S. dollars in the amount prescribed by section
14(g)(3) of the Exchange Act. See also Rule 0-9 under the Exchange Act.
[[Page 229]]
(1) Where the bidder is offering securities or other non-cash
consideration for some or all of the securities to be acquired, whether
or not in combination with a cash payment for the same securities, the
value of the consideration shall be based on the market value of the
securities to be received by the bidder as established by paragraph 3 of
this section.
(2) If there is no market for the securities to be acquired by the
bidder, the book value of such securities computed as of the latest
practicable date prior to the date of filing the Schedule shall be used,
unless the issuer of such securities is in bankruptcy or receivership or
has an accumulated capital deficit, in which case one-third of the
principal amount, par value or stated value of such securities shall be
used.
(3) When the fee is based upon the market value of the securities,
such market value shall be calculated upon the basis of either the
average of the high and low prices reported in the consolidated
reporting system (for exchange traded securities and last sale reported
for over-the-counter securities) or the average of the bid and asked
price (for other over-the-counter securities) as of a specified date
within five business days prior to the date of filing the Schedule.
D. If at any time after the initial payment of the fee the aggregate
consideration offered is increased, an additional filing fee based upon
such increase shall be paid with the required amended filing.
E. If any part of the document or documents to be sent to
shareholders is in a foreign language, it shall be accompanied by a
translation in English. If any other part of this Schedule, or any
exhibit or other paper or document filed as part of the Schedule, is in
a language other than English, it shall be accompanied by a substantive
summary, version or translation in the English language.
F. The manually signed original of the Schedule or any amendment
thereto shall be numbered sequentially (in addition to any internal
numbering which otherwise may be present) by handwritten, typed, printed
or other legible form of notation from the first page of the document
through the last page of that document and any exhibits or attachments
thereto. Further, the total number of pages contained in a numbered
original shall be set forth on the first page of the document.
III. Compliance With the Exchange Act
A. Pursuant to Rule 14d-1(b) under the Exchange Act, the bidder
shall be deemed to comply with the requirements of sections 14(d)(1)
through 14(d)(7) of the Exchange Act, Regulation 14D under the Exchange
Act and Schedule 14D-1 thereunder, and Rule 14e-1 under Regulation 14E
of the Exchange Act, in connection with a cash tender or exchange offer
for securities that may be made pursuant to this Schedule; provided
that, if an exemption has been granted from requirements of Canadian
federal, provincial, and/or territorial laws, regulations or policies,
and the tender offer does not comply with requirements that otherwise
would be prescribed by Regulation 14D or 14E, the bidder (absent an
order from the Commission) shall comply with the provisions of sections
14(d)(1) through 14(d)(7), Regulation 14D and Schedule 14D-1 thereunder,
and Rule 14e-1 under Regulation 14E.
B. Any cash tender or exchange offer made pursuant to this Schedule
is not exempt from the antifraud provisions of section 10(b) of the
Exchange Act and Rule 10b-5 thereunder, and section 14(e) of the
Exchange Act and Rule 14e-3 thereunder, and this Schedule shall be
deemed ``filed'' for purposes of section 18 of the Exchange Act.
C. The bidder's attention is directed to Regulation M (Secs. 242.100
through 242.105 of this chapter) in the case of an exchange offer, and
to Rule 10b-13 under the Exchange Act (Sec. 240.10b-13) for any exchange
or cash tender offer. [See Exchange Act Release No. 29355 (June 21,
1991) containing an exemption from Rule 10b-13.]
PART I--INFORMATION REQUIRED TO BE SENT TO SHAREHOLDERS
Item 1. Home Jurisdiction Documents
(a) This Schedule shall be accompanied by the entire disclosure
document or documents required to be delivered to holders of securities
to be acquired in the proposed transaction by the bidder pursuant to the
laws, regulations or policies of Canada and/or any of its provinces or
territories governing the conduct of the tender offer. It shall not
include any documents incorporated by reference into such disclosure
document(s) and not distributed to offerees pursuant to any such law,
regulation or policy.
(b) Any amendment made by the bidder to a home jurisdiction document
or documents shall be filed with the Commission under cover of this
Schedule, which must indicate on the cover page the number of the
amendment.
(c) In an exchange offer where securities of the bidder have been or
are to be offered or cancelled in the transaction, such securities shall
be registered on forms promulgated by the Commission under the
Securities Act of 1933 including, where available, the Commission's Form
F-8 or F-80 providing for inclusion in that registration statement of
the home jurisdiction prospectus.
Item 2. Informational Legends
The following legends, to the extent applicable, shall appear on the
outside front cover page of the home-jurisdiction document(s) in bold-
face roman type at least as high as ten-
[[Page 230]]
point modern type and at least two points leaded:
``This tender offer is made for the securities of a foreign issuer
and while the offer is subject to disclosure requirements of the country
in which the subject company is incorporated or organized, investors
should be aware that these requirements are different from those of the
United States. Financial statements included herein, if any, have been
prepared in accordance with foreign generally accepted accounting
principles and thus may not be comparable to financial statements of
United States companies.
``The enforcement by investors of civil liabilities under the
federal securities laws may be affected adversely by the fact that the
subject company is located in a foreign country, and that some or all of
its officers and directors are residents of a foreign country.
``Investors should be aware that the bidder or its affiliates,
directly or indirectly, may bid for or make purchases of the issuer's
securities subject to the offer, or of the issuer's related securities,
during the period of the tender offer, as permitted by applicable
Canadian laws or provincial laws or regulations. ''
In the case of an exchange offer:
``Investors should be aware that the bidder or its affiliates,
directly or indirectly, may bid for or make purchases of the issuer's
securities subject to the offer or of the issuer's related securities,
or of the bidder's securities to be distributed or of the bidder's
related securities, during the period of the tender offer, as permitted
by applicable Canadian laws or provincial laws or regulations. ''
Note to Item 2. If the home-jurisdiction document(s) are delivered
through an electronic medium, the issuer may satisfy the legibility
requirements for the required legends relating to type size and font by
presenting the legend in any manner reasonably calculated to draw
security holder attention to it.
PART II--INFORMATION NOT REQUIRED TO BE SENT TO SHAREHOLDERS
The exhibits specified below shall be filed as part of the Schedule,
but are not required to be sent to shareholders unless so required
pursuant to the laws, regulations or policies of Canada and/or any of
its provinces or territories. Exhibits shall be appropriately lettered
or numbered for convenient reference.
(1) File any reports or information that, in accordance with the
requirements of the home jurisdiction(s), must be made publicly
available by the bidder in connection with the transaction but need not
be disseminated to shareholders.
(2) File copies of any documents incorporated by reference into the
home jurisdiction document(s).
(3) If any name is signed to this Schedule pursuant to power of
attorney, manually signed copies of any such power of attorney shall be
filed. If the name of any officer signing on behalf of the bidder is
signed pursuant to a power of attorney, certified copies of the bidder's
board of directors authorizing such signature also shall be filed.
PART III--UNDERTAKINGS AND CONSENT TO SERVICE OF PROCESS
1. Undertakings
The Schedule shall set forth the following undertakings of the
bidder:
a. The bidder undertakes to make available, in person or by
telephone, representatives to respond to inquiries made by the
Commission staff, and to furnish promptly, when requested to do so by
the Commission staff, information relating to this Schedule or to
transactions in said securities.
b. The bidder undertakes to disclose in the United States, on the
same basis as it is required to make such disclosure pursuant to
applicable Canadian federal and/or provincial or territorial laws,
regulations or policies, or otherwise discloses, information regarding
purchases of the issuer's securities in connection with the cash tender
or exchange offer covered by this Schedule. Such information shall be
set forth in amendments to this Schedule.
c. In the case of an exchange offer:
The bidder undertakes to disclose in the United States, on the same
basis as it is required to make such disclosure pursuant to any
applicable Canadian federal and/or provincial or territorial law,
regulation or policy, or otherwise discloses, information regarding
purchases of the issuer's or bidder's securities in connection with the
offer.
2. Consent to Service of Process
(a) At the time of filing this Schedule, the bidder (if a non-U. S.
person) shall file with the Commission a written irrevocable consent and
power of attorney on Form F-X.
(b) Any change to the name or address of a registrant's agent for
service shall be communicated promptly to the Commission by amendment to
Form F-X referencing the file number of the registrant.
PART IV--SIGNATURES
A. The Schedule shall be signed by each person on whose behalf the
Schedule is filed or its authorized representative. If the Schedule is
signed on behalf of a person by his authorized representative (other
than an executive officer or general partner of the bidder), evidence of
the representative's authority shall be filed with the Schedule.
B. The name and any title of each person who signs the Schedule
shall be typed or printed beneath his signature.
C. By signing this Schedule, the bidder consents without power of
revocation that
[[Page 231]]
any administrative subpoena may be served, or any administrative
proceeding, civil suit or civil action where the cause of action arises
out of or relates to or concerns any offering made or purported to be
made in connection with the filing on Schedule 14D-1F or any purchases
or sales of any security in connection therewith, may be commenced
against it in any administrative tribunal or in any appropriate court in
any place subject to the jurisdiction of any state or of the United
States by service of said subpoena or process upon the registrant's
designated agent.
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
_______________________________________________________________________
(Signature)
_______________________________________________________________________
(Name and Title)
_______________________________________________________________________
(Date)
[56 FR 30071, July 1, 1991; 57 FR 10615, Mar. 27, 1992, as amended at 61
FR 24657, May 15, 1996; 62 FR 544, Jan. 3, 1997]
Sec. 240.14d-103 Schedule 14D-9F. Solicitation/recommendation statement pursuant to section 14(d)(4) of the Securities Exchange Act of 1934 and rules 14d-1(b)
and 14e-2(c) thereunder.
Securities and Exchange Commission Washington, DC 20549
Schedule 14D-9F
Solicitation/Recommendation Statement Pursuant to Section 14(d)(4) of
the Securities Exchange Act of 1934 and Rules 14d-1(b) and 14e-2(c)
Thereunder
[Amendment No. ____]
_______________________________________________________________________
(Name of Subject Company [Issuer])
_______________________________________________________________________
(Translation of Subject Company's [Issuer's] Name into English (if
applicable))
_______________________________________________________________________
(Jurisdiction of Subject Company's [Issuer's] Incorporation or
Organization)
_______________________________________________________________________
(Name(s) of Person(s) Filing Statement)
_______________________________________________________________________
(Title of Class of Securities)
_______________________________________________________________________
(CUSIP Number of Class of Securities (if applicable) )
_______________________________________________________________________
(Name, address (including zip code) and telephone number (including
area code) of person(s) authorized to receive notices and communications
on behalf of the person(s) filing statement)
General Instructions
I. Eligibility Requirements for Use of Schedule 14D-9F
A. Schedule 14D-9F is used by any issuer incorporated or organized
under the laws of Canada or any Canadian province or territory that is a
foreign private issuer (the ``subject company'') , or by any director or
officer of such issuer, where the issuer is the subject of a cash tender
or exchange offer for a class of its securities filed on Schedule 14D-
1F.
For purposes of this Schedule, ``foreign private issuer'' shall be
construed in accordance with Rule 405 under the Securities Act.
B. Any person(s) using this Schedule must comply with the
requirements of any Canadian federal, provincial and/or territorial law,
regulation or policy relating to a recommendation by the subject
issuer's board of directors, or any director or officer thereof, with
respect to the offer.
II. Filing Instructions
A. Five copies of this Schedule and any amendment thereto (see part
I, Item 1.(b)) , including all exhibits and any other paper or document
filed as part of the Schedule, shall be filed with the Commission at its
principal office. Each copy shall be bound, stapled or otherwise
compiled in one or more parts, without stiff covers. The binding shall
be made on the side or stitching margin in such manner as to leave the
reading matter legible. Three additional copies of the Schedule and any
amendment thereto, similarly bound, also shall be filed. No exhibits are
required to accompany such additional copies.
B. The original and at least one copy of this Schedule and any
amendments thereto shall be signed manually by the persons specified
herein. Unsigned copies shall be conformed.
C. If any part of the document or documents to be sent to
shareholders is in a language other than English, it shall be
accompanied by a translation in English. If any other part of this
Schedule, or any exhibit or other paper or document filed as part of
this Schedule, is in a language other than English, it shall be
accompanied by a substantive summary, version or translation in the
English language.
D. The manually signed original of the Schedule or any amendment
thereto shall be numbered sequentially (in addition to any internal
numbering which otherwise may be present) by handwritten, typed, printed
or other legible form of notation from the first page of the document
through the last page of that document and any exhibits or attachments
thereto. Further, the total number of pages contained in a numbered
original shall be set forth on the first page of the document.
[[Page 232]]
III. Compliance with the Exchange Act
A. Pursuant to Rule 14e-2(c) under the Securities Exchange Act of
1934 (the ``Exchange Act''), this Schedule shall be filed by an issuer,
a class of the securities of which is the subject of a cash tender or
exchange offer filed on Schedule 14D-1F, and may be filed by any
director or officer of such issuer.
B. Any recommendation with respect to a cash tender or exchange
offer for a class of securities of the subject company made pursuant to
this Schedule is not exempt from the antifraud provisions of section
10(b) of the Exchange Act and Rule 10b-5 thereunder and section 14(e) of
the Exchange Act and Rule 14e-3 thereunder, and this Schedule shall be
deemed ``filed'' with the Commission for purposes of section 18 of the
Exchange Act.
Part I--Information Required To Be Sent to Shareholders
Item 1. Home Jurisdiction Documents
(a) This Schedule shall be accompanied by the entire disclosure
document or documents required to be delivered to holders of securities
to be acquired in the proposed transaction pursuant to the laws,
regulations or policies of Canada and/or any of its provinces or
territories governing the conduct of the offer. It shall not include any
documents incorporated by reference into such disclosure document(s) and
not distributed to offerees pursuant to any such law, regulation or
policy.
(b) Any amendment made to a home jurisdiction document or documents
shall be filed with the Commission under cover of this Schedule, which
must indicate on the cover page the number of the amendment.
Item 2. Informational Legends
The following legends, to the extent applicable, shall appear on the
outside front cover page of the home jurisdiction document(s) in bold-
face roman type at least as high as ten-point modern type and at least
two points leaded:
``This tender offer is made for the securities of a foreign issuer
and while the offer is subject to disclosure requirements of the country
in which the subject issuer is incorporated or organized, investors
should be aware that these requirements are different from those of the
United States. Financial statements included herein, if any, have been
prepared in accordance with foreign generally accepted accounting
principles and thus may not be comparable to financial statements of
United States companies.
``The enforcement by investors of civil liabilities under the
federal securities laws may be affected adversely by the fact that the
issuer is located in a foreign country, and that some or all of its
officers and directors are residents of a foreign country.''
Note to Item 2. If the home jurisdiction document(s) are delivered
through an electronic medium, the issuer may satisfy the legibility
requirements for the required legends relating to type size and font by
presenting the legend in any manner reasonably calculated to draw
security holder attention to it.
Part II--Information Not Required To Be Sent to Shareholders
The exhibits specified below shall be filed as part of the Schedule,
but are not required to be sent to shareholders unless so required
pursuant to the laws, or regulations or policies of Canada and/or any of
its provinces or territories. Exhibits shall be appropriately lettered
or numbered for convenient reference.
(1) File any reports or information that, in accordance with the
requirements of the home jurisdiction(s), must be made publicly
available by the person(s) filing this Schedule in connection with the
transaction, but need not be disseminated to shareholders.
(2) File copies of any documents incorporated by reference into the
home jurisdiction document(s) .
(3) If any name is signed to the Schedule pursuant to power of
attorney, manually signed copies of any such power of attorney shall be
filed. If the name of any officer signing on behalf of the issuer is
signed pursuant to a power of attorney, certified copies of a resolution
of the issuer's board of directors authorizing such signature also shall
be filed.
Part III--Undertaking and Consent to Service of Process
1. Undertaking
The Schedule shall set forth the following undertaking of the person
filing it:
The person(s) filing this Schedule undertakes to make available, in
person or by telephone, representatives to respond to inquiries made by
the Commission staff, and to furnish promptly, when requested to do so
by the Commission staff, information relating to this Schedule or to
transactions in said securities.
2. Consent to Service of Process.
(a) At the time of filing this Schedule, the person(s) (if a non-U.
S. person) so filing shall file with the Commission a written
irrevocable consent and power of attorney on Form F-X.
(b) Any change to the name or address of a registrant's agent for
service shall be communicated promptly to the Commission by amendment to
Form F-X referencing the file number of the registrant.
[[Page 233]]
Part IV--Signatures
A. The Schedule shall be signed by each person on whose behalf the
Schedule is filed or its authorized representative. If the Schedule is
signed on behalf of a person by his authorized representative (other
than an executive officer or general partner of the subject company),
evidence of the representative's authority shall be filed with the
Schedule.
B. The name and any title of each person who signs the Schedule
shall be typed or printed beneath his signature.
C. By signing this Schedule, the persons signing consent without
power of revocation that any administrative subpoena may be served, or
any administrative proceeding, civil suit or civil action where the
cause of action arises out of or relates to or concerns any offering
made or purported to be made in connection with filing on this Schedule
14D-9F or any purchases or sales of any security in connection
therewith, may be commenced against them in any administrative tribunal
or in any appropriate court in any place subject to the jurisdiction of
any state or of the United States by service of said subpoena or process
upon the registrant's designated agent.
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
_______________________________________________________________________
(Signature)
_______________________________________________________________________
(Name and Title)
_______________________________________________________________________
(Date)
[56 FR 30073, July 1, 1991, as amended at 61 FR 24657, May 15, 1996]
Regulation 14E
Sec. 240.14e-1 Unlawful tender offer practices.
As a means reasonably designed to prevent fraudulent, deceptive or
manipulative acts or practices within the meaning of section 14(e) of
the Act, no person who makes a tender offer shall:
(a) Hold such tender offer open for less than twenty business days
from the date such tender offer is first published or sent to security
holders; provided, however, that if the tender offer involves a roll-up
transaction as defined in Item 901(c) of Regulation S-K (17 CFR
229.901(c)) and the securities being offered are registered (or
authorized to be registered) on Form S-4 (17 CFR 229.25) or Form F-4 (17
CFR 229.34), the offer shall not be open for less than sixty calendar
days from the date the tender offer is first published or sent to
security holders;
(b) Increase or decrease the percentage of the class of securities
being sought or the consideration offered or the dealer's soliciting fee
to be given in a tender offer unless such tender offer remains open for
at least ten business days from the date that notice of such increase or
decrease is first published or sent or given to security holders.
Provided, however, That, for purposes of this paragraph, the acceptance
for payment of an additional amount of securities not to exceed two
percent of the class of securities that is the subject of the tender
offer shall not be deemed to be an increase. For purposes of this
paragraph, the percentage of a class of securities shall be calculated
in accordance with section 14(d)(3) of the Act.
(c) Fail to pay the consideration offered or return the securities
deposited by or on behalf of security holders promptly after the
termination or withdrawal of a tender offer;
(d) Extend the length of a tender offer without issuing a notice of
such extension by press release or other public announcement, which
notice shall include disclosure of the approximate number of securities
deposited to date and shall be issued no later than the earlier of: (i)
9:00 a.m. Eastern time, on the next business day after the scheduled
expiration date of the offer or (ii), if the class of securities which
is the subject of the tender offer is registered on one or more national
securities exchanges, the first opening of any one of such exchanges on
the next business day after the scheduled expiration date of the offer.
(e) Electronic filings. If a bidder is required (or elects to file
its tender offer documents in electronic format as provided by Rule
901(c)(1) of Regulation S-T (Sec. 232.901(c)(1) of this chapter)), the
periods of time required by paragraphs (a) and (b) of this section shall
be tolled for any period during which it has failed to file in
electronic format, absent a hardship exemption (Secs. 232.201 and
232.202 of this chapter), the Schedule 14D-1 Tender Offer Statement
(Sec. 240.14d-100 of this chapter), any tender offer material specified
in paragraph (a) of Item 11 of that Schedule,
[[Page 234]]
and any amendments thereto. If such documents were filed in paper
pursuant to a temporary hardship exemption (see Sec. 232.201 of this
chapter), the minimum offering periods shall be tolled for any period
during which a required confirming electronic copy of such Schedule and
tender offer material is delinquent.
[44 FR 70348, Dec. 6, 1979, as amended at 51 FR 3035, Jan. 23, 1986; 51
FR 25883, July 17, 1986; 51 FR 32630, Sept. 15, 1986; 56 FR 57255, Nov.
8, 1991; 58 FR 14682, 14685, Mar. 18, 1993; 59 FR 67765, Dec. 30, 1994]
Sec. 240.14e-2 Position of subject company with respect to a tender offer.
(a) Position of subject company. As a means reasonably designed to
prevent fraudulent, deceptive or manipulative acts or practices withing
the meaning of section 14(e) of the Act, the subject company, no later
than 10 business days from the date the tender offer is first published
or sent or given, shall publish, send or give to security holders a
statement disclosing that the subject company:
(1) Recommends acceptance or rejection of the bidder's tender offer;
(2) Expresses no opinion and is remaining neutral toward the
bidder's tender offer; or
(3) Is unable to take a position with respect to the bidder's tender
offer. Such statement shall also include the reason(s) for the position
(including the inability to take a position) disclosed therein.
(b) Material change. If any material change occurs in the disclosure
required by paragraph (a) of this section, the subject company shall
promptly publish or send or give a statement disclosing such material
change to security holders.
(c) Any issuer, a class of the securities of which is the subject of
a tender offer filed with the Commission on Schedule 14D-1F and
conducted in reliance upon and in conformity with Rule 14d-1(b) under
the Act, and any director or officer of such issuer where so required by
the laws, regulations and policies of Canada and/or any of its provinces
or territories, in lieu of the statements called for by paragraph (a) of
this section and Rule 14d-9 under the Act, shall file with the
Commission on Schedule 14D-9F the entire disclosure document(s) required
to be furnished to holders of securities of the subject issuer by the
laws, regulations and policies of Canada and/or any of its provinces or
territories governing the conduct of the tender offer, and shall
disseminate such document(s) in the United States in accordance with
such laws, regulations and policies.
[44 FR 70348, Dec. 6, 1979, as amended at 56 FR 30075, July 1, 1991]
Sec. 240.14e-3 Transactions in securities on the basis of material, nonpublic information in the context of tender offers.
(a) If any person has taken a substantial step or steps to commence,
or has commenced, a tender offer (the ``offering person''), it shall
constitute a fraudulent, deceptive or manipulative act or practice
within the meaning of section 14(e) of the Act for any other person who
is in possession of material information relating to such tender offer
which information he knows or has reason to know is nonpublic and which
he knows or has reason to know has been acquired directly or indirectly
from:
(1) The offering person,
(2) The issuer of the securities sought or to be sought by such
tender offer, or
(3) Any officer, director, partner or employee or any other person
acting on behalf of the offering person or such issuer, to purchase or
sell or cause to be purchased or sold any of such securities or any
securities convertible into or exchangeable for any such securities or
any option or right to obtain or to dispose of any of the foregoing
securities, unless within a reasonable time prior to any purchase or
sale such information and its source are publicly disclosed by press
release or otherwise.
(b) A person other than a natural person shall not violate paragraph
(a) of this section if such person shows that:
(1) The individual(s) making the investment decision on behalf of
such person to purchase or sell any security described in paragraph (a)
of this section or to cause any such security to be purchased or sold by
or on behalf of others did not know the material, nonpublic information;
and
[[Page 235]]
(2) Such person had implemented one or a combination of policies and
procedures, reasonable under the circumstances, taking into
consideration the nature of the person's business, to ensure that
individual(s) making investment decision(s) would not violate paragraph
(a) of this section, which policies and procedures may include, but are
not limited to, (i) those which restrict any purchase, sale and causing
any purchase and sale of any such security or (ii) those which prevent
such individual(s) from knowing such information.
(c) Notwithstanding anything in paragraph (a) of this section to
contrary, the following transactions shall not be violations of
paragraph (a) of this section:
(1) Purchase(s) of any security described in paragraph (a) of this
section by a broker or by another agent on behalf of an offering person;
or
(2) Sale(s) by any person of any security described in paragraph (a)
of this section to the offering person.
(d)(1) As a means reasonably designed to prevent fraudulent,
deceptive or manipulative acts or practices within the meaning of
section 14(e) of the Act, it shall be unlawful for any person described
in paragraph (d)(2) of this section to communicate material, nonpublic
information relating to a tender offer to any other person under
circumstances in which it is reasonably foreseeable that such
communication is likely to result in a violation of this section except
that this paragraph shall not apply to a communication made in good
faith,
(i) To the officers, directors, partners or employees of the
offering person, to its advisors or to other persons, involved in the
planning, financing, preparation or execution of such tender offer;
(ii) To the issuer whose securities are sought or to be sought by
such tender offer, to its officers, directors, partners, employees or
advisors or to other persons, involved in the planning, financing,
preparation or execution of the activities of the issuer with respect to
such tender offer; or
(iii) To any person pursuant to a requirement of any statute or rule
or regulation promulgated thereunder.
(2) The persons referred to in paragraph (d)(1) of this section are:
(i) The offering person or its officers, directors, partners,
employees or advisors;
(ii) The issuer of the securities sought or to be sought by such
tender offer or its officers, directors, partners, employees or
advisors;
(iii) Anyone acting on behalf of the persons in paragraph (d)(2)(i)
of this section or the issuer or persons in paragraph (d)(2)(ii) of this
section; and
(iv) Any person in possession of material information relating to a
tender offer which information he knows or has reason to know is
nonpublic and which he knows or has reason to know has been acquired
directly or indirectly from any of the above.
[45 FR 60418, Sept. 12, 1980]
Sec. 240.14e-4 Prohibited transactions in connection with partial tender offers.
(a) Definitions. For purposes of this section:
(1) The amount of a person's ``net long position'' in a subject
security shall equal the excess, if any, of such person's ``long
position'' over such person's ``short position.'' For the purposes of
determining the net long position as of the end of the proration period
and for tendering concurrently to two or more partial tender offers,
securities that have been tendered in accordance with the rule and not
withdrawn are deemed to be part of the person's long position.
(i) Such person's long position is the amount of subject securities
that such person:
(A) Or his agent has title to or would have title to but for having
lent such securities; or
(B) Has purchased, or has entered into an unconditional contract,
binding on both parties thereto, to purchase but has not yet received;
or
(C) Has exercised a standardized call option for; or
(D) Has converted, exchanged, or exercised an equivalent security
for; or
(E) Is entitled to receive upon conversion, exchange, or exercise of
an equivalent security.
(ii) Such person's short position, is the amount of subject
securities or subject
[[Page 236]]
securities underlying equivalent securities that such person:
(A) Has sold, or has entered into an unconditional contract, binding
on both parties thereto, to sell; or
(B) Has borrowed; or
(C) Has written a non-standardized call option, or granted any other
right pursuant to which his shares may be tendered by another person; or
(D) Is obligated to deliver upon exercise of a standardized call
option sold on or after the date that a tender offer is first publicly
announced or otherwise made known by the bidder to holders of the
security to be acquired, if the exercise price of such option is lower
than the highest tender offer price or stated amount of the
consideration offered for the subject security. For the purpose of this
paragraph, if one or more tender offers for the same security are
ongoing on such date, the announcement date shall be that of the first
announced offer.
(2) The term equivalent security means:
(i) Any security (including any option, warrant, or other right to
purchase the subject security), issued by the person whose securities
are the subject of the offer, that is immediately convertible into, or
exchangeable or exercisable for, a subject security, or
(ii) Any other right or option (other than a standardized call
option) that entitles the holder thereof to acquire a subject security,
but only if the holder thereof reasonably believes that the maker or
writer of the right or option has title to and possession of the subject
security and upon exercise will promptly deliver the subject security.
(3) The term subject security means a security that is the subject
of any tender offer or request or invitation for tenders.
(4) For purposes of this rule, a person shall be deemed to
``tender'' a security if he:
(i) Delivers a subject security pursuant to an offer,
(ii) Causes such delivery to be made,
(iii) Guarantees delivery of a subject security pursuant to a tender
offer,
(iv) Causes a guarantee of such delivery to be given by another
person, or
(v) Uses any other method by which acceptance of a tender offer may
be made.
(5) The term partial tender offer means a tender offer or request or
invitation for tenders for less than all of the outstanding securities
subject to the offer in which tenders are accepted either by lot or on a
pro rata basis for a specified period, or a tender offer for all of the
outstanding shares that offers a choice of consideration in which
tenders for different forms of consideration may be accepted either by
lot or on a pro rata basis for a specified period.
(6) The term standardized call option means any call option that is
traded on an exchange, or for which quotation information is
disseminated in an electronic interdealer quotation system of a
registered national securities association.
(b) It shall be unlawful for any person acting alone or in concert
with others, directly or indirectly, to tender any subject security in a
partial tender offer:
(1) For his own account unless at the time of tender, and at the end
of the proration period or period during which securities are accepted
by lot (including any extensions thereof), he has a net long position
equal to or greater than the amount tendered in:
(i) The subject security and will deliver or cause to be delivered
such security for the purpose of tender to the person making the offer
within the period specified in the offer; or
(ii) An equivalent security and, upon the acceptance of his tender
will acquire the subject security by conversion, exchange, or exercise
of such equivalent security to the extent required by the terms of the
offer, and will deliver or cause to be delivered the subject security so
acquired for the purpose of tender to the person making the offer within
the period specified in the offer; or
(2) For the account of another person unless the person making the
tender:
(i) Possesses the subject security or an equivalent security, or
(ii) Has a reasonable belief that, upon information furnished by the
person on whose behalf the tender is made, such person owns the subject
security or an equivalent security and will promptly
[[Page 237]]
deliver the subject security or such equivalent security for the purpose
of tender to the person making the tender.
(c) This rule shall not prohibit any transaction or transactions
which the Commission, upon written request or upon its own motion,
exempts, either unconditionally or on specified terms and conditions.
[49 FR 13870, Apr. 9, 1984, as amended at 50 FR 8102, Feb. 28, 1985.
Redesignated and amended at 55 FR 50320, Dec. 6, 1990]
Sec. 240.14e-6 Repurchase offers by certain closed-end registered investment companies.
Sections 240.14e-1 and 240.14e-2 shall not apply to any offer by a
closed-end management investment company to repurchase equity securities
of which it is the issuer pursuant to Sec. 270.23c-3 of this chapter.
[58 FR 19343, Apr. 14, 1993]
Sec. 240.14e-7 Unlawful tender offer practices in connection with roll-ups.
In order to implement section 14(h) of the Act (15 U.S.C. 78n(h)):
(a)(1) It shall be unlawful for any person to receive compensation
for soliciting tenders directly from security holders in connection with
a roll-up transaction as provided in paragraph (a)(2) of this section,
if the compensation is:
(i) Based on whether the solicited person participates in the tender
offer; or
(ii) Contingent on the success of the tender offer.
(2) Paragraph (a)(1) of this section is applicable to a roll-up
transaction as defined in Item 901(c) of Regulation S-K (Sec. 229.901(c)
of this chapter), structured as a tender offer, except for a transaction
involving only:
(i) Finite-life entities that are not limited partnerships;
(ii) Partnerships whose investors will receive new securities or
securities in another entity that are not reported under a transaction
reporting plan declared effective before December 17, 1993 by the
Commission under section 11A of the Act (15 U.S.C. 78k-1); or
(iii) Partnerships whose investors' securities are reported under a
transaction reporting plan declared effective before December 17, 1993
by the Commission under section 11A of the Act (15 U.S.C. 78k-1).
(b)(1) It shall be unlawful for any finite-life entity that is the
subject of a roll-up transaction as provided in paragraph (b)(2) of this
section to fail to provide a security holder list or mail communications
related to a tender offer that is in furtherance of the roll-up
transaction, at the option of a requesting security holder, pursuant to
the procedures set forth in Sec. 240.14a-7.
(2) Paragraph (b)(1) of this section is applicable to a roll-up
transaction as defined in Item 901(c) of Regulation S-K (Sec. 229.901(c)
of this chapter), structured as a tender offer, that involves:
(i) An entity with securities registered pursuant to section 12 of
the Act (15 U.S.C. 78l); or
(ii) A limited partnership, unless the transaction involves only:
(A) Partnerships whose investors will receive new securities or
securities in another entity that are not reported under a transaction
reporting plan declared effective before December 17, 1993 by the
Commission under section 11A of the Act (15 U.S.C. 78k-1); or
(B) Partnerships whose investors' securities are reported under a
transaction reporting plan declared effective before December 17, 1993
by the Commission under section 11A of the Act (15 U.S.C. 78k-1).
[59 FR 63685, Dec. 8, 1994]
Sec. 240.14f-1 Change in majority of directors.
If, pursuant to any arrangement or understanding with the person or
persons acquiring securities in a transaction subject to section 13(d)
or 14(d) of the Act, any persons are to be elected or designated as
directors of the issuer, otherwise than at a meeting of security
holders, and the persons so elected or designated will constitute a
majority of the directors of the issuer, then, not less than 10 days
prior to the date any such person take office as a director, or such
shorter period prior to that date as the Commission may authorize upon a
showing of good cause therefor, the issuer shall file with the
Commission and transmit to all holders of record of securities of the
issuer who would be entitled to vote at a
[[Page 238]]
meeting for election of directors, information substantially equivalent
to the information which would be required by Items 6 (a), (d) and (e),
7 and 8 of Schedule 14A of Regulation 14A (Sec. 240.14a-101 of this
chapter) to be transmitted if such person or persons were nominees for
election as directors at a meeting of such security holders. Eight
copies of such information shall be filed with the Commission.
[33 FR 11017, Aug. 2, 1968, as amended at 34 FR 6101, Apr. 4, 1969; 51
FR 42072, Nov. 20, 1986]
Exemption of Certain Securities From Section 15(a)
Sec. 240.15a-2 Exemption of certain securities of cooperative apartment houses from section 15(a).
Shares of a corporation which represent ownership, or entitle the
holders thereof to possession and occupancy, of specific apartment units
in property owned by such corporations and organized and operated on a
cooperative basis are hereby exempted from the operation of section
15(a) of the Securities Exchange Act of 1934, when such shares are sold
by or through a real estate broker licensed under the laws of the
political subdivision in which the property is located.
(Secs. 3, 48 Stat. 882, as amended, 895, as amended; 15 U.S.C. 78c, 78o)
[13 FR 8204, Dec. 22, 1948]
Sec. 240.15a-3 [Reserved]
Sec. 240.15a-4 Forty-five day exemption from registration for certain members of national securities exchanges.
(a) A natural person who is a member of a national securities
exchange shall, upon termination of his association with a registered
broker-dealer, be exempt, for a period of forty-five days after such
termination, from the registration requirement of section 15(a) of the
Act solely for the purpose of continuing to effect transactions on the
floor of such exchange if (1) such person has filed with the Commission
an application for registration as a broker-dealer and such person
complies in all material respects with rules of the Commission
applicable to registered brokers and dealers and (2) such exchange has
filed with the Commission a statement that it has reviewed such
application and that there do not appear to be grounds for its denial.
(b) The exemption from registration provided by this rule shall not
be available to any person while there is pending before the Commission
any proceeding involving any such person pursuant to section 15(b)(1)(B)
of the Act.
[41 FR 18290, May 3, 1976]
Sec. 240.15a-5 Exemption of certain nonbank lenders.
A lender approved under the rules and regulations of the Small
Business Administration shall be exempt from the registration
requirement of section 15(a) (1) of the Act if it does not engage in the
business of effecting transactions in securities or of buying and
selling securities for its own account except in respect of receiving
notes evidencing loans to small business concerns and selling the
portion of such notes guaranteed by the Small Business Administration
through or to a registered broker or dealer or to a bank, a savings
institution, an insurance company, or an account over which an
investment adviser registered pursuant to the Investment Advisers Act of
1940 exercises investment discretion.
[41 FR 50645, Nov. 17, 1976]
Registration of Brokers and Dealers
Sec. 240.15a-6 Exemption of certain foreign brokers or dealers.
(a) A foreign broker or dealer shall be exempt from the registration
requirements of sections 15(a)(1) or 15B(a)(1) of the Act to the extent
that the foreign broker or dealer:
(1) Effects transactions in securities with or for persons that have
not been solicited by the foreign broker or dealer; or
(2) Furnishes research reports to major U.S. institutional
investors, and effects transactions in the securities discussed in the
research reports with or for those major U.S. institutional investors,
provided that:
(i) The research reports do not recommend the use of the foreign
broker
[[Page 239]]
or dealer to effect trades in any security;
(ii) The foreign broker or dealer does not initiate contact with
those major U.S. institutional investors to follow up on the research
reports, and does not otherwise induce or attempt to induce the purchase
or sale of any security by those major U.S. institutional investors;
(iii) If the foreign broker or dealer has a relationship with a
registered broker or dealer that satisfies the requirements of paragraph
(a)(3) of this section, any transactions with the foreign broker or
dealer in securities discussed in the research reports are effected only
through that registered broker or dealer, pursuant to the provisions of
paragraph (a)(3) of this section; and
(iv) The foreign broker or dealer does not provide research to U.S.
persons pursuant to any express or implied understanding that those U.S.
persons will direct commission income to the foreign broker or dealer;
or
(3) Induces or attempts to induce the purchase or sale of any
security by a U.S. institutional investor or a major U.S. institutional
investor, provided that:
(i) The foreign broker or dealer:
(A) Effects any resulting transactions with or for the U.S.
institutional investor or the major U.S. institutional investor through
a registered broker or dealer in the manner described by paragraph
(a)(3)(iii) of this section; and
(B) Provides the Commission (upon request or pursuant to agreements
reached between any foreign securities authority, including any foreign
government, as specified in section 3(a)(50) of the Act, and the
Commission or the U.S. Government) with any information or documents
within the possession, custody, or control of the foreign broker or
dealer, any testimony of foreign associated persons, and any assistance
in taking the evidence of other persons, wherever located, that the
Commission requests and that relates to transactions under paragraph
(a)(3) of this section, except that if, after the foreign broker or
dealer has exercised its best efforts to provide the information,
documents, testimony, or assistance, including requesting the
appropriate governmental body and, if legally necessary, its customers
(with respect to customer information) to permit the foreign broker or
dealer to provide the information, documents, testimony, or assistance
to the Commission, the foreign broker or dealer is prohibited from
providing this information, documents, testimony, or assistance by
applicable foreign law or regulations, then this paragraph (a)(3)(i)(B)
shall not apply and the foreign broker or dealer will be subject to
paragraph (c) of this section;
(ii) The foreign associated person of the foreign broker or dealer
effecting transactions with the U.S. institutional investor or the major
U.S. institutional investor:
(A) Conducts all securities activities from outside the U.S., except
that the foreign associated persons may conduct visits to U.S.
institutional investors and major U.S. institutional investors within
the United States, provided that:
(1) The foreign associated person is accompanied on these visits by
an associated person of a registered broker or dealer that accepts
responsibility for the foreign associated person's communications with
the U.S. institutional investor or the major U.S institutional investor;
and
(2) Transactions in any securities discussed during the visit by the
foreign associated person are effected only through the registered
broker or dealer, pursuant to paragraph (a)(3) of this section; and
(B) Is determined by the registered broker or dealer to:
(1) Not be subject to a statutory disqualification specified in
section 3(a)(39) of the Act, or any substantially equivalent foreign
(i) Expulsion or suspension from membership,
(ii) Bar or suspension from association,
(iii) Denial of trading privileges,
(iv) Order denying, suspending, or revoking registration or barring
or suspending association, or
(v) Finding with respect to causing any such effective foreign
suspension, expulsion, or order;
[[Page 240]]
(2) Not to have been convicted of any foreign offense, enjoined from
any foreign act, conduct, or practice, or found to have committed any
foreign act substantially equivalent to any of those listed in sections
15(b)(4) (B), (C), (D), or (E) of the Act; and
(3) Not to have been found to have made or caused to be made any
false foreign statement or omission substantially equivalent to any of
those listed in section 3(a)(39)(E) of the Act; and
(iii) The registered broker or dealer through which the transaction
with the U.S. institutional investor or the major U.S. institutional
investor is effected:
(A) Is responsible for:
(1) Effecting the transactions conducted under paragraph (a)(3) of
this section, other than negotiating their terms;
(2) Issuing all required confirmations and statements to the U.S.
institutional investor or the major U.S. institutional investor;
(3) As between the foreign broker or dealer and the registered
broker or dealer, extending or arranging for the extension of any credit
to the U.S. institutional investor or the major U.S. institutional
investor in connection with the transactions;
(4) Maintaining required books and records relating to the
transactions, including those required by Rules 17a-3 and 17a-4 under
the Act (17 CFR 2410.17a-3 and l7a-4);
(5) Complying with Rule 15c3-1 under the Act (17 CFR 240.15c3-1)
with respect to the transactions; and
(6) Receiving, delivering, and safeguarding funds and securities in
connection with the transactions on behalf of the U.S. institutional
investor or the major U.S. institutional investor in compliance with
Rule 15c3-3 under the Act (17 CFR 240.15c3-3);
(B) Participates through an associated person in all oral
communications between the foreign associated person and the U.S.
institutional investor, other than a major U.S. institutional investor;
(C) Has obtained from the foreign broker or dealer, with respect to
each foreign associated person, the types of information specified in
Rule l7a-3(a)(12) under the Act (17 CFR 240.17a-3(a)(12)), provided that
the information required by paragraph (a)(12)(d) of that Rule shall
include sanctions imposed by foreign securities authorities, exchanges,
or associations, including without limitation those described in
paragraph (a)(3)(ii)(B) of this section;
(D) Has obtained from the foreign broker or dealer and each foreign
associated person written consent to service of process for any civil
action brought by or proceeding before the Commission or a self-
regulatory organization (as defined in section 3(a)(26) of the Act),
providing that process may be served on them by service on the
registered broker or dealer in the manner set forth on the registered
broker's or dealer's current Form BD; and
(E) Maintains a written record of the information and consents
required by paragraphs (a)(3)(iii) (C) and (D) of this section, and all
records in connection with trading activities of the U.S. institutional
investor or the major U.S. institutional investor involving the foreign
broker or dealer conducted under paragraph (a)(3) of this section, in an
office of the registered broker or dealer located in the United States
(with respect to nonresident registered brokers or dealers, pursuant to
Rule 17a-7(a) under the Act (17 CFR 240.17a-7(a))), and makes these
records available to the Commission upon request; or
(4) Effects transactions in securities with or for, or induces or
attempts to induce the purchase or sale of any security by:
(i) A registered broker or dealer, whether the registered broker or
dealer is acting as principal for its own account or as agent for
others, or a bank acting in a broker or dealer capacity as permitted by
U.S. law;
(ii) The African Development Bank, the Asian Development Bank, the
Inter-American Development Bank, the International Bank for
Reconstruction and Development, the International Monetary Fund, the
United Nations, and their agencies, affiliates, and pension funds;
(iii) A foreign person temporarily present in the United States,
with whom the foreign broker or dealer had a bona fide, pre-existing
relationship
[[Page 241]]
before the foreign person entered the United States;
(iv) Any agency or branch of a U.S. person permanently located
outside the United States, provided that the transactions occur outside
the United States; or
(v) U.S. citizens resident outside the United States, provided that
the transactions occur outside the United States, and that the foreign
broker or dealer does not direct its selling efforts toward identifiable
groups of U.S. citizens resident abroad.
(b) When used in this rule,
(1) The term family of investment companies shall mean:
(i) Except for insurance company separate accounts, any two or more
separately registered investment companies under the Investment Company
Act of 1940 that share the same investment adviser or principal
underwriter and hold themselves out to investors as related companies
for purposes of investment and investor services; and
(ii) With respect to insurance company separate accounts, any two or
more separately registered separate accounts under the Investment
Company Act of 1940 that share the same investment adviser or principal
underwriter and function under operational or accounting or control
systems that are substantially similar.
(2) The term foreign associated person shall mean any natural person
domiciled outside the United States who is an associated person, as
defined in section 3(a)(18) of the Act, of the foreign broker or dealer,
and who participates in the solicitation of a U.S. institutional
investor or a major U.S. institutional investor under paragraph (a)(3)
of this section.
(3) The term foreign broker or dealer shall mean any non-U.S.
resident person (including any U.S. person engaged in business as a
broker or dealer entirely outside the United States, except as otherwise
permitted by this rule) that is not an office or branch of, or a natural
person associated with, a registered broker or dealer, whose securities
activities, if conducted in the United States, would be described by the
definition of ``broker'' or ``dealer'' in sections 3(a)(4) or 3(a)(5) of
the Act.
(4) The term major U.S. institutional investor shall mean a person
that is:
(i) A U.S. institutional investor that has, or has under management,
total assets in excess of $100 million; provided, however, that for
purposes of determining the total assets of an investment company under
this rule, the investment company may include the assets of any family
of investment companies of which it is a part; or
(ii) An investment adviser registered with the Commission under
section 203 of the Investment Advisers Act of 1940 that has total assets
under management in excess of $100 million.
(5) The term registered broker or dealer shall mean a person that is
registered with the Commission under sections 15(b), 15B(a)(2), or
15C(a)(2) of the Act.
(6) The term United States shall mean the United States of America,
including the States and any territories and other areas subject to its
jurisdiction.
(7) The term U.S. institutional investor shall mean a person that
is:
(i) An investment company registered with the Commission under
section 8 of the Investment Company Act of 1940; or
(ii) A bank, savings and loan association, insurance company,
business development company, small business investment company, or
employee benefit plan defined in Rule 501(a)(1) of Regulation D under
the Securities Act of 1933 (17 CFR 230.501(a)(1)); a private business
development company defined in Rule 501(a)(2) (17 CFR 230.501(a)(2)); an
organization described in section 501(c)(3) of the Internal Revenue
Code, as defined in Rule 501(a)(3) (17 CFR 230.501(a)(3)); or a trust
defined in Rule 501(a)(7) (17 CFR 230.501(a)(7)).
(c) The Commission, by order after notice and opportunity for
hearing, may withdraw the exemption provided in paragraph (a)(3) of this
section with respect to the subsequent activities of a foreign broker or
dealer or class of foreign brokers or dealers conducted from a foreign
country, if the Commission finds that the laws or regulations of that
foreign country have prohibited the foreign broker or dealer, or one of
a class of foreign brokers or dealers,
[[Page 242]]
from providing, in response to a request from the Commission,
information or documents within its possession, custody, or control,
testimony of foreign associated persons, or assistance in taking the
evidence of other persons, wherever located, related to activities
exempted by paragraph (a)(3) of this section.
[54 FR 30031, July 18, 1989]
Sec. 240.15b1-1 Application for registration of brokers or dealers.
(a) An application for registration of a broker or dealer filed
pursuant to section 15(b) shall be filed on Form BD (Sec. 249.501 of
this chapter) in accordance with the instructions contained therein.
(b) Every application for registration of a broker or dealer that is
filed on or after January 25, 1993, shall be filed with the Central
Registration Depository operated by the National Association of
Securities Dealers, Inc.
(c) An application for registration that is filed with the Central
Registration Depository pursuant to this section shall be considered
filed with the Commission for purposes of Section 15(b) of the Act.
(Secs. 15, 17, 48 Stat. 895, as amended, 897, as amended; 15 U.S.C. 78o,
78q)
[19 FR 1041, Feb. 24, 1954. Redesignated at 30 FR 11851, Sept. 16, 1965,
and amended at 58 FR 14, Jan. 4, 1993]
Sec. 240.15b1-2 [Reserved]
Sec. 240.15b1-3 Registration of successor to registered broker or dealer.
(a) In the event that a broker or dealer succeeds to and continues
the business of a broker or dealer registered pursuant to section 15(b)
of the Act, the registration of the predecessor shall be deemed to
remain effective as the registration of the successor if the successor,
within 30 days after such succession, files an application for
registration on Form BD, and the predecessor files a notice of
withdrawal from registration on Form BDW; Provided, however, That the
registration of the predecessor broker or dealer will cease to be
effective as the registration of the successor broker or dealer 45 days
after the application for registration on Form BD is filed by such
successor.
(b) Notwithstanding paragraph (a) of this section, if a broker or
dealer succeeds to and continues the business of a registered
predecessor broker or dealer, and the succession is based solely on a
change in the predecessor's date or state of incorporation, form of
organization, or composition of a partnership, the successor may, within
30 days after the succession, amend the registration of the predecessor
broker or dealer on Form BD to reflect these changes. This amendment
shall be deemed an application for registration filed by the predecessor
and adopted by the successor.
[58 FR 10, Jan. 4, 1993]
Sec. 240.15b1-4 Registration of fiduciaries.
The registration of a broker or dealer shall be deemed to be the
registration of any executor, administrator, guardian, conservator,
assignee for the benefit of creditors, receiver, trustee in insolvency
or bankruptcy, or other fiduciary, appointed or qualified by order,
judgment, or decree of a court of competent jurisdiction to continue the
business of such registered broker or dealer; Provided, That such
fiduciary files with the Commission, within 30 days after entering upon
the performance of his duties, a statement setting forth as to such
fiduciary substantially the information required by Form BD.
(Secs. 15, 17, 48 Stat. 895, as amended, 897 as amended; 15 U.S.C. 78o,
78q)
[19 FR 1041, Feb. 24, 1954. Redesignated at 30 FR 11851, Sept. 16, 1965]
Sec. 240.15b1-5 Consent to service of process to be furnished by nonresident brokers or dealers and by nonresident general partners or managing agents of
brokers or dealers.
(a) Each nonresident broker or dealer registered or applying for
registration pursuant to section 15(b) of the Securities Exchange Act of
1934, each nonresident general partner of a broker or dealer partnership
which is registered or applying for registration, and each nonresident
managing agent of any other unincorporated broker or dealer
[[Page 243]]
which is registered or applying for registration, shall furnish to the
Commission, in a form prescribed by or acceptable to it, a written
irrevocable consent and power of attorney which (1) designates the
Securities and Exchange Commission as an agent upon whom may be served
any process, pleadings, or other papers in any civil suit or action
brought in any appropriate court in any place subject to the
jurisdiction of the United States, with respect to any cause of action
(i) which accrues during the period beginning when such broker or dealer
becomes registered pursuant to section 15 of the Securities Exchange Act
of 1934 and the rules and regulations thereunder and ending either when
such registration is cancelled or revoked, or when the Commission
receives from such broker or dealer a notice to withdraw from such
registration, whichever is earlier, (ii) which arises out of any
activity, in any place subject to the jurisdiction of the United States,
occurring in connection with the conduct of business of a broker or
dealer, and (iii) which is founded directly or indirectly, upon the
provisions of the Securities Act of 1933, the Securities Exchange Act of
1934, the Trust Indenture Act of 1939, the Investment Company Act of
1940, the Investment Advisers Act of 1940, or any rule or regulation
under any of said Acts; and (2) stipulates and agrees that any such
civil suit or action may be commended by the service of process upon the
Commission and the forwarding of a copy thereof as provided in paragraph
(c) of this section, and that the service as aforesaid of any such
process, pleadings, or other papers upon the Commission shall be taken
and held in all courts to be as valid and binding as if due personal
service thereof had been made.
(b) The required consent and power of attorney shall be furnished to
the Commission within the following period of time:
(1) Each nonresident broker or dealer registered at the time this
section becomes effective, and each nonresident general partner or
managing agent of an unincorporated broker or dealer registered at the
time this section becomes effective, shall furnish such consent and
power of attorney within 60 days after such date;
(2) Each broker or dealer applying for registration after the
effective date of this section shall furnish, at the time of filing such
application, all the consents and powers of attorney required to be
furnished by such broker or dealer and by each general partner or
managing agent thereof; Provided, however, That where an application for
registration of a broker or dealer is pending at the time this section
becomes effective such consents and powers of attorney shall be
furnished within 30 days after this section becomes effective.
(3) Each broker or dealer registered or applying for registration
who or which becomes a nonresident broker or dealer after the effective
date of this section, and each general partner or managing agent, of an
unincorporated broker or dealer registered or applying for registration,
who becomes a nonresident after the effective date of this section,
shall furnish such consent and power of attorney within 30 days
thereafter.
(c) Service of any process, pleadings or other papers on the
Commission under this part shall be made by delivering the requisite
number of copies thereof to the Secretary of the Commission or to such
other person as the Commission may authorize to act in its behalf.
Whenever any process, pleadings or other papers as aforesaid are served
upon the Commission, it shall promptly forward a copy thereof by
registered or certified mail to the appropriate defendants at their last
address of record filed with the Commission. The Commission shall be
furnished a sufficient number of copies for such purpose, and one copy
for its file.
(d) For purposes of this section the following definitions shall
apply:
(1) The term broker shall have the meaning set out in section
3(a)(4) of the Securities Exchange Act of 1934.
(2) The term dealer shall have the meaning set out in section
3(a)(5) of the Securities Exchange Act of 1934.
(3) The term managing agent shall mean any person, including a
trustee, who directs or manages or who participated in the directing or
managing of
[[Page 244]]
the affairs of any unincoprorated organization or association which is
not a partnership.
(4) The term nonresident broker or dealer shall mean (i) in the case
of an individual, one who resides in or has his principal place of
business in any place not subject to the jurisdiction of the United
States; (ii) in the case of a corporation, one incorporated in or having
its principal place of business in any place not subject to the
jurisdiction of the United States; (iii) in the case of a partnership or
other unincoporated organization or association, one having its
principal place of business in any place not subject to the jurisdiction
of the United States.
(5) A general partner or managing agent of a broker or dealer shall
be deemed to be a nonresident if he resides in any place not subject to
the jurisdiction of the United States.
(Sec. 319, 53 Stat. 1173, secs. 38, 211, 54 Stat. 641, 855; 15 U.S.C.
77sss, 80a-37, 80b-11)
[18 FR 2578, May 2, 1953, as amended at 23 FR 9691, Dec. 16, 1958; 29 FR
16982, Dec. 11, 1964. Redesignated at 30 FR 11851, Sept. 16, 1965]
Sec. 240.15b2-2 Inspection of newly registered brokers and dealers.
(a) Definition. For the purpose of this section the term applicable
financial responsibility rules shall include:
(1) Any rule adopted by the Commission pursuant to sections 8,
15(c)(3), 17(a), or 17(e)(1)(A) of the Act;
(2) Any rule adopted by the Commission relating to hypothecation or
lending of customer securities;
(3) Any other rule adopted by the Commission relating to the
protection of funds or securities; and
(4) Any rule adopted by the Secretary of the Treasury pursuant to
section 15C(b)(1) of the Act.
(b) Each self-regulatory organization that has responsibility for
examining a broker or dealer member (including members that are
government securities brokers or government securities dealers
registered pursuant to section 15C(a)(1)(A) of the Act) for compliance
with applicable financial responsibility rules is authorized and
directed to conduct an inspection of the member, within six months of
the member's registration with the Commission, to determine whether the
member is operating in conformity with applicable financial
responsibility rules.
(c) The examining self-regulatory organization is further authorized
and directed to conduct an inspection of the member no later than twelve
months from the member's registration with the Commission, to determine
whether the member is operating in conformity with all other applicable
provisions of the Act and rules thereunder.
(d) In each case where the examining self-regulatory organization
determines that a broker or dealer member has not commenced actual
operations within six months of the member's registration with the
Commission, it shall delay the inspection pursuant to this section until
the second six month period from the member's registration with the
Commission.
(e) No inspection need be conducted as provided for in paragraphs
(b) and (c) of this section if: (1) The member was registered with the
Commission prior to April 26, 1982; (2) an inspection of the member has
already been conducted by another self-regulatory organization pursuant
to this section; or (3) an inspection of the member has already been
conducted by the Commission pursuant to section 15(b)(2)(C) of the Act.
[47 FR 11269, Mar. 16, 1982, as amended at 52 FR 16838, May 6, 1987; 53
FR 4121, Feb. 12, 1988]
Sec. 240.15b3-1 Amendments to application.
(a) If the information contained in any application for registration
as a broker or dealer, or in any amendment thereto, is or becomes
inaccurate for any reason, the broker or dealer shall promptly file with
the Central Registration Depository (operated by the National
Association of Securities Dealers, Inc.) an amendment on Form BD
correcting such information.
(b) Temporary filing instructions. (1) Every registered broker or
dealer who is not a member of the National Association of Securities
Dealers, Inc. shall file as an amendment to its application a complete
Form BD (as revised November 16, 1992, and as amended), and any
subsequent amendments thereto
[[Page 245]]
pursuant to paragraph (a) of this section, with the Central Registration
Depository during:
(i) The week of January 25, 1993, in the case of a broker-dealer
whose Designated Examining Authority (DEA) is the Boston Stock Exchange,
the Cincinnati Stock Exchange, the Midwest Stock Exchange, or the
Philadelphia Stock Exchange;
(ii) The week of February 1, 1993, in the case of a broker-dealer
whose DEA is the Pacific Stock Exchange;
(iii) The week of May 3, 1993, in the case of a broker-dealer whose
DEA is the New York Stock Exchange;
(iv) The week of June 1, 1993, in the case of a broker-dealer whose
DEA is the American Stock Exchange;
(v) The week of July 6, 1993, in the case of a broker-dealer whose
DEA is the Chicago Board Options Exchange and whose SEC registration
number is between 8-18117 and 8-34181;
(vi) The week of August 2, 1993, in the case of a broker-dealer
whose DEA is the Chicago Board Options Exchange and whose SEC
registration number is 8-34182 or above; and
(vii) The week of September 7, 1993, in the case of all other
broker-dealers.
(2) Notwithstanding paragraph (b)(1) of this section, if the
information contained in any application for registration as a broker or
dealer filed by a broker or dealer who is not a member of the National
Association of Securities Dealers, Inc. is or becomes inaccurate for any
reason prior to the applicable date set forth in paragraph (b)(1) of
this section, the broker or dealer shall promptly file as an amendment
to its application a complete Form BD (as revised November 16, 1992, and
as amended) with the Central Registration Depository.
(c) Every amendment filed pursuant to this section shall constitute
a ``report'' filed with the Commission within the meaning of sections
15(b), 17, 18, 32(a), and other applicable provisions of the Act.
[58 FR 14, Jan. 4, 1993]
Sec. 240.15b5-1 Extension of registration for purposes of the Securities Investor Protection Act of 1970 after cancellation or revocation.
Commission revocation or cancellation of the registration of a
broker or dealer pursuant to section 15(b) of the Act: (i) shall be
effective for all purposes, except as hereinafter provided, on the date
of the order of revocation or cancellation or, if such order is stayed,
on the date the stay is terminated; and (ii) shall be effective six
months after the date of the order of revocation or cancellation (or, if
such order is stayed, the date the stay is terminated) with respect to a
broker's or dealer's registration status as a member within the meaning
of Section 3(a)(2) of the Securities Investor Protection Act of 1970 for
purposes of the application of sections 5, 6, and 7 thereof to customer
claims arising prior to the date of the order of revocation or
cancellation (or, if such order is stayed, the date the stay is
terminated).
[39 FR 37485, Oct. 22, 1974]
Sec. 240.15b6-1 Withdrawal from registration.
(a) Notice of withdrawal from registration as a broker or dealer
pursuant to section 15(b) shall be filed on Form BDW [17 CFR 249.501a]
in accordance with the instructions contained therein.
(b) Every notice of withdrawal from registration as a broker or
dealer that is filed on or after January 25, 1993, by a broker or dealer
who has previously filed an application for registration with the
Central Registration Depository (operated by the National Association of
Securities Dealers, Inc.) shall be filed with the Central Registration
Depository. Every other notice of withdrawal from registration as a
broker or dealer shall be filed with the Commission; except that such
notice shall be filed with the Central Registration Depository beginning
on September 30, 1993.
(c) Except as hereinafter provided, a notice to withdraw from
registration filed by a broker or dealer pursuant to
[[Page 246]]
section 15(b) shall become effective for all matters (except as provided
in paragraph (c) of this section) on the 60th day after the filing
thereof with the Commission or within such shorter period of time as the
Commission may determine. If a notice to withdraw from registration is
filed with the Commission at any time subsequent to the date of the
issuance of a Commission order instituting proceedings pursuant to
section 15(b) to censure, suspend or revoke the registration of such
broker or dealer, or if, prior to the effective date of the notice of
withdrawal pursuant to this paragraph (b), the Commission institutes
such a proceeding or a proceeding to impose terms or conditions upon
such withdrawal, the notice of withdrawal shall not become effective
pursuant to this paragraph (b) except as such time and upon such terms
and conditions as the Commission deems necessary or appropriate in the
public interest or for the protection of investors.
(d) With respect to a broker's or dealer's registration status as a
member within the meaning of section 3(a)(2) of the Securities Investor
Protection Act of 1970 for purposes of the application of sections 5, 6
and 7 thereof to customer claims arising prior to the effective date of
withdrawal pursuant to paragraph (b) of this section, the effective date
of a broker's or dealer's withdrawal from registration pursuant to this
paragraph (c) shall be six months after the effective date of withdrawal
pursuant to paragraph (b) of this section or such shorter period of time
as the Commission may determine.
(e) Every notice of withdrawal filed pursuant to this section shall
constitute a ``report'' filed with the Commission within the meaning of
sections 15(b), 17(a), and other applicable provisions of the Act.
[39 FR 37485, Oct. 22, 1974, as amended at 58 FR 14, Jan. 4, 1993]
Sec. 240.15b7-1 Compliance with qualification requirements of self-regulatory organizations.
No registered broker or dealer shall effect any transaction in, or
induce the purchase or sale of, any security unless any natural person
associated with such broker or dealer who effects or is involved in
effecting such transaction is registered or approved in accordance with
the standards of training, experience, competence, and other
qualification standards (including but not limited to submitting and
maintaining all required forms, paying all required fees, and passing
any required examinations) established by the rules of any national
securities exchange or national securities association of which such
broker or dealer is a member or under the rules of the Municipal
Securities Rulemaking Board (if it is subject to the rules of that
organization).
[58 FR 27658, May 11, 1993]
Sec. 240.15b9-1 Exemption for certain exchange members.
(a) Any broker or dealer required by section 15(b)(8) of the Act to
become a member of a registered national securities association shall be
exempt from such requirement if it: (1) Is a member of a national
securities exchange, (2) carries no customer accounts, and (3) has
annual gross income derived from purchases and sales of securities
otherwise than on a national securities exchange of which it is a member
in an amount no greater than $1,000.
(b) The gross income limitation contained in paragraph (a) of this
section, shall not apply to income derived from transactions (1) for the
dealer's own account with or through another registered broker or dealer
or (2) through the Intermarket Trading System.
(c) For purposes of this section, the term Intermarket Trading
System shall mean the intermarket communications linkage operated
jointly by certain self-regulatory organizations pursuant to a plan
filed with, and approved by, the Commission pursuant to Sec. 240.11Aa3-2
(Rule 11Aa3-2 under the Act).
(15 U.S.C. 78a et seq., as amended by Pub. L. 84-29 (June 4, 1975) and
by Pub. L. 98-38 (June 6, 1983), particularly secs. 11A, 15, 19 and 23
thereof (15 U.S.C. 78k-1, 78o, 78s and 78w))
[48 FR 53691, Nov. 29, 1983]
Rules Relating to Over-the-Counter Markets
Sec. 240.15c1-1 Definitions.
As used in any rule adopted pursuant to section 15(c)(1) of the Act:
[[Page 247]]
(a) The term customer shall not include a broker or dealer or a
municipal securities dealer; provided, however, that the term
``customer'' shall include a municipal securities dealer (other than a
broker or dealer) with respect to transactions in securities other than
municipal securities.
(b) The term the completion of the transaction means:
(1) In the case of a customer who purchases a security through or
from a broker, dealer or municipal securities dealer, except as provided
in paragraph (b)(2) of this section, the time when such customer pays
the broker, dealer or municipal securities dealer any part of the
purchase price, or, if payment is effected by a bookkeeping entry, the
time when such bookkeeping entry is made by the broker, dealer or
municipal securities dealer for any part of the purchase price;
(2) In the case of a customer who purchases a security through or
from a broker, dealer or municipal securities dealer and who makes
payment therefor prior to the time when payment is requested or
notification is given that payment is due, the time when such broker,
dealer or municipal securities dealer delivers the security to or into
the account of such customer;
(3) In the case of a customer who sells a security through or to a
broker, dealer or municipal securities dealer except as provided in
paragraph (b)(4) of this section, if the security is not in the custody
of the broker, dealer or municipal securities dealer at the time of
sale, the time when the security is delivered to the broker, dealer or
municipal securities dealer, and if the security is in the custody of
the broker, dealer or municipal securities dealer at the time of sale,
the time when the broker, dealer or municipal securities dealer
transfers the security from the account of such customer;
(4) In the case of a customer who sells a security through or to a
broker, dealer or municipal securities dealer and who delivers such
security to such broker, dealer or municipal securities dealer prior to
the time when delivery is requested or notification is given that
delivery is due, the time when such broker, dealer or municipal
securities dealer makes payment to or into the account of such customer.
[41 FR 22825, June 7, 1976]
Sec. 240.15c1-2 Fraud and misrepresentation.
(a) The term manipulative, deceptive, or other fraudulent device or
contrivance, as used in section 15(c)(1) of the Act (section 2, 52 Stat.
1075; 15 U.S.C. 78o(c)(1), is hereby defined to include any act,
practice, or course of business which operates or would operate as a
fraud or deceit upon any person.
(b) The term manipulative, deceptive, or other fraudulent device or
contrivance, as used in section 15(c)(1) of the Act, is hereby defined
to include any untrue statement of a material fact and any omission to
state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they are made, not
misleading, which statement or omission is made with knowledge or
reasonable grounds to believe that it is untrue or misleading.
(c) The scope of this section shall not be limited by any specific
definitions of the term ``manipulative, deceptive, or other fraudulent
device or contrivance'' contained in other rules adopted pursuant to
section 15(c)(1) of the act.
(Sec. 2, 52 Stat. 1075; 15 U.S.C. 78o)
[13 FR 8205, Dec. 22, 1948]
Cross Reference: For regulation prohibiting employment of
manipulative and deceptive devices as such term is used in section 15 of
the Act, by any broker or dealer, see Sec. 240.10b-3.
Sec. 240.15c1-3 Misrepresentation by brokers, dealers and municipal securities dealers as to registration.
The term manipulative, deceptive, or other fraudulent device or
contrivance, as used in section 15(c)(1) of the Act, is hereby defined
to include any representation by a broker, dealer or municipal
securities dealer that the registration of a broker or dealer, pursuant
to section 15(b) of the Act, or the registration of a municipal
securities dealer pursuant to section 15B(a) of the Act, or the failure
of the Commission to deny or revoke such registration, indicates in any
way that the Commission
[[Page 248]]
has passed upon or approved the financial standing, business, or conduct
of such registered broker, dealer or municipal securities dealer or the
merits of any security or any transaction or transactions therein.
[41 FR 22825, June 7, 1976]
Sec. 240.15c1-4 [Reserved]
Sec. 240.15c1-5 Disclosure of control.
The term manipulative, deceptive, or other fraudulent device or
contrivance, as used in section 15(c)(1) of the Act, is hereby defined
to include any act of any broker, dealer or municipal securities dealer
controlled by, controlling, or under common control with, the issuer of
any security, designed to effect with or for the account of a customer
any transaction in, or to induce the purchase or sale by such customer
of, such security unless such broker, dealer or municipal securities
dealer, before entering into any contract with or for such customer for
the purchase or sale of such security, discloses to such customer the
existence of such control, and unless such disclosure, if not made in
writing, is supplemented by the giving or sending of written disclosure
at or before the completion of the transaction.
[41 FR 22825, June 7, 1976]
Sec. 240.15c1-6 Disclosure of interest in distribution.
The term manipulative, deceptive, or other fraudulent device or
contrivance, as used in section 15(c)(1) of the Act, is hereby defined
to include any act of any broker who is acting for a customer or for
both such customer and some other person, or of any dealer or municipal
securities dealer who receives or has promise of receiving a fee from a
customer for advising such customer with respect to securities, designed
to effect with or for the account of such customer any transaction in,
or to induce the purchase or sale by such customer of, any security in
the primary or secondary distribution of which such broker, dealer or
municipal securities dealer is participating or is otherwise financially
interested unless such broker, dealer or municipal securities dealer, at
or before the completion of each such transaction gives or sends to such
customer written notification of the existence of such participation or
interest.
[41 FR 22826, June 7, 1976]
Sec. 240.15c1-7 Discretionary accounts.
(a) The term manipulative, deceptive, or other fraudulent device or
contrivance, as used in section 15(c) of the Act, is hereby defined to
include any act of any broker, dealer or municipal securities dealer
designed to effect with or for any customer's account in respect to
which such broker, dealer or municipal securities dealer or his agent or
employee is vested with any discretionary power any transactions or
purchase or sale which are excessive in size or frequency in view of the
financial resources and character of such account.
(b) The term manipulative, deceptive, or other fraudulent device or
contrivance, as used in section 15(c)(1) of the Act, is hereby defined
to include any act of any broker, dealer or municipal securities dealer
designed to effect with or for any customer's account in respect to
which such broker, dealer or municipal securities dealer or his agent or
employee is vested with any discretionary power any transaction of
purchase or sale unless immediately after effecting such transaction
such broker, dealer or municipal securities dealer makes a record of
such transaction which record includes the name of such customer, the
name, amount and price of the security, and the date and time when such
transaction took place.
[41 FR 22826, June 7, 1976]
Sec. 240.15c1-8 Sales at the market.
The term manipulative, deceptive, or other fraudulent device or
contrivance, as used in section 15(c)(1) of the Act, is hereby defined
to include any representation made to a customer by a broker, dealer or
municipal securities dealer who is participating or otherwise
financially interested in the primary or secondary distribution of any
security which is not admitted to trading on a national securities
exchange that such security is being offered to such customer ``at the
market'' or at a price related to the market price unless such
[[Page 249]]
broker, dealer or municipal securities dealer knows or has reasonable
grounds to believe that a market for such security exists other than
that made, created, or controlled by him, or by any person for whom he
is acting or with whom he is associated in such distribution, or by any
person controlled by, controlling or under common control with him.
[41 FR 22826, June 7, 1976]
Sec. 240.15c1-9 Use of pro forma balance sheets.
The term manipulative, deceptive, or other fraudulent device or
contrivance, as used in section 15(c)(1) of the Act, is hereby defined
to include the use of financial statements purporting to give effect to
the receipt and application of any part of the proceeds from the sale or
exchange of securities, unless the assumptions upon which each such
financial statement is based are clearly set forth as part of the
caption to each such statement in type at least as large as that used
generally in the body of the statement.
(Sec. 2, 52 Stat. 1075; 15 U.S.C. 78o)
[13 FR 8205, Dec. 22, 1948]
Sec. 240.15c2-1 Hypothecation of customers' securities.
(a) General provisions. The term fraudulent, deceptive, or
manipulative act or practice, as used in section 15(c) (2) of the Act,
is hereby defined to include the direct or indirect hypothecation by a
broker or dealer, or his arranging for or permitting, directly or
indirectly, the continued hypothecation of any securities carried for
the account of any customer under circumstances:
(1) That will permit the commingling of securities carried for the
account of any such customer with securities carried for the account of
any other customer, without first obtaining the written consent of each
such customer to such hypothecation;
(2) That will permit such securities to be commingled with
securities carried for the account of any person other than a bona fide
customer of such broker or dealer under a lien for a loan made to such
broker or dealer; or
(3) That will permit securities carried for the account of customers
to be hypothecated, or subjected to any lien or liens or claims or
claims of the pledgee or pledgees, for a sum which exceeds the aggregate
indebtedness of all customers in respect of securities carried for their
accounts; except that this clause shall not be deemed to be violated by
reason of an excess arising on any day through the reduction of the
aggregate indebtedness of customers on such day, provided that funds or
securities in an amount sufficient to eliminate such excess are paid or
placed in transfer to pledgees for the purpose of reducing the sum of
the liens or claims to which securities carried for the account of
customers are subject as promptly as practicable after such reduction
occurs, but before the lapse of one half hour after the commencement of
banking hours on the next banking day at the place where the largest
principal amount of loans of such broker or dealer are payable and, in
any event, before such broker or dealer on such day has obtained or
increased any bank loan collateralized by securities carried for the
account of customers.
(b) Definitions. For the purposes of this section:
(1) The term customer shall not be deemed to include any general or
special partner or any director or officer of such broker or dealer, or
any participant, as such, in any joint, group or syndicate account with
such broker or dealer or with any partner, officer or director thereof;
(2) The term securities carried for the account of any customer
shall be deemed to mean:
(i) Securities received by or on behalf of such broker or dealer for
the account of any customer;
(ii) Securities sold and appropriated by such broker or dealer to a
customer, except that if such securities were subject to a lien when
appropriated to a customer they shall not be deemed to be ``securities
carried for the account of any customer'' pending their release from
such lien as promptly as practicable;
(iii) Securities sold, but not appropriated, by such broker or
dealer to a customer who has made any payment therefor, to the extent
that such broker or dealer owns and has received
[[Page 250]]
delivery of securities of like kind, except that if such securities were
subject to a lien when such payment was made they shall not be deemed to
be ``securities carried for the account of any customer'' pending their
release from such lien as promptly as practicable;
(3) Aggregate indebtedness shall not be deemed to be reduced by
reason of uncollected items. In computing aggregate indebtedness,
related guaranteed and guarantor accounts shall be treated as a single
account and considered on a consolidated basis, and balances in accounts
carrying both long and short positions shall be adjusted by treating the
market value of the securities required to cover such short positions as
though such market value were a debit; and
(4) In computing the sum of the liens or claims to which securities
carried for the account of customers of a broker or dealer are subject,
any rehypothecation of such securities by another broker or dealer who
is subject to this section or to Sec. 240.8c-1 shall be disregarded.
(c) Exemption for cash accounts. The provisions of paragraph (a)(1)
of this section shall not apply to any hypothecation of securities
carried for the account of a customer in a special cash account within
the meaning of 12 CFR 220.4(c): Provided, That at or before the
completion of the transaction of purchase of such securities for, or of
sale of such securities to, such customer, written notice is given or
sent to such customer disclosing that such securities are or may be
hypothecated under circumstances which will permit the commingling
thereof with securities carried for the account of other customers. The
term the completion of the transaction shall have the meaning given to
such term by Sec. 240.15c1-1(b).
(d) Exemption for clearing house liens. The provisions of paragraphs
(a)(2), (a)(3), and (f) of this section shall not apply to any lien or
claim of the clearing corporation, or similar department or association,
of a national securities exchange or a registered national securities
association, for a loan made and to be repaid on the same calendar day,
which is incidental to the clearing of transactions in securities or
loans through such corporation, department, or association: Provided,
however, That for the purpose of paragraph (a)(3) of this section,
``aggregate indebtedness of all customers in respect of securities
carried for their accounts'' shall not include indebtedness in respect
of any securities subject to any lien or claim exempted by this
paragraph.
(e) Exemption for certain liens on securities of noncustomers. The
provisions of paragraph (a)(2) of this section shall not be deemed to
prevent such broker or dealer from permitting securities not carried for
the account of a customer to be subjected (1) to a lien for a loan made
against securities carried for the account of customers, or (2) to a
lien for a loan made and to be repaid on the same calendar day. For the
purpose of this exemption, a loan shall be deemed to be ``made against
securities carried for the account of customers'' if only securities
carried for the account of customers are used to obtain or to increase
such loan or as substitutes for other securities carried for the account
of customers.
(f) Notice and certification requirements. No person subject to this
section shall hypothecate any security carried for the account of a
customer unless, at or prior to the time of each such hypothecation, he
gives written notice to the pledgee that the security pledged is carried
for the account of a customer and that such hypothecation does not
contravene any provision of this section, except that in the case of an
omnibus account the broker or dealer for whom such account is carried
may furnish a signed statement to the person carrying such account that
all securities carried therein by such broker or dealer will be
securities carried for the account of his customers and that the
hypothecation thereof by such broker or dealer will not contravene any
provision of this section. The provisions of this paragraph shall not
apply to any hypothecation of securities under any lien or claim of a
pledgee securing a loan made and to be repaid on the same calendar day.
(g) The fact that securities carried for the accounts of customers
and securities carried for the accounts of others
[[Page 251]]
are represented by one or more certificates in the custody of a clearing
corporation or other subsidiary organization of either a national
securities exchange or of a registered national securities association,
or of a custodian bank, in accordance with a system for the central
handling of securities established by a national securities exchange or
a registered national securities association, pursuant to which system
the hypothecation of such securities is effected by bookkeeping entries
without physical delivery of such securities, shall not, in and of
itself, result in a commingling of securities prohibited by paragraph
(a)(1) or (a)(2) of this section, whenever a participating member,
broker or dealer hypothecates securities in accordance with such system:
Provided, however, That (1) any such custodian of any securities held by
or for such system shall agree that it will not for any reason,
including the assertion of any claim, right or lien of any kind, refuse
or refrain from promptly delivering any such securities (other than
securities then hypothecated in accordance with such system) to such
clearing corporation or other subsidiary organization or as directed by
it, except that nothing in such agreement shall be deemed to require the
custodian to deliver any securities in contravention of any notice of
levy, seizure or similar notice, or order or judgment, issued or
directed by a governmental agency or court, or officer thereof, having
jurisdiction over such custodian, which on its face affects such
securities; (2) such systems shall have safeguards in the handling,
transfer and delivery of securities and provisions for fidelity bond
coverage of the employees and agents of the clearing corporation or
other subsidiary organization and for periodic examinations by
independent public accountants; and (3) the provisions of this paragraph
(g) shall not be effective with respect to any particular system unless
the agreement required by paragraph (g)(1) of this section and the
safeguards and provisions required by paragraph (g)(2) of this section
shall have been deemed adequate by the Commission for the protection of
investors, and unless any subsequent amendments to such agreement,
safeguards or provisions shall have been deemed adequate by the
Commission for the protection of investors.
(Secs. 8, 15, 48 Stat. 888, 895, sec. 2, 52 Stat. 1075; 15 U.S.C. 78b.
78o)
[13 FR 8205, Dec. 22, 1948, as amended at 31 FR 7741, June 1, 1966; 37
FR 73, Jan. 5, 1972]
Cross Reference: For interpretative releases applicable to
Sec. 240.15c2-1, see Nos. 2690 and 2822 in tabulation, part 241 of this
chapter.
Sec. 240.15c2-3 [Reserved]
Sec. 240.15c2-4 Transmission or maintenance of payments received in connection with underwritings.
It shall constitute a ``fraudulent, deceptive, or manipulative act
or practice'' as used in section 15(c)(2) of the Act, for any broker,
dealer or municipal securities dealer participating in any distribution
of securities, other than a firm-commitment underwriting, to accept any
part of the sale price of any security being distributed unless:
(a) The money or other consideration received is promptly
transmitted to the persons entitled thereto; or
(b) If the distribution is being made on an ``all-or-none'' basis,
or on any other basis which contemplates that payment is not to be made
to the person on whose behalf the distribution is being made until some
further event or contingency occurs, (1) the money or other
consideration received is promptly deposited in a separate bank account,
as agent or trustee for the persons who have the beneficial interests
therein, until the appropriate event or contingency has occurred, and
then the funds are promptly transmitted or returned to the persons
entitled thereto, or (2) all such funds are promptly transmitted to a
bank which has agreed in writing to hold all such funds in escrow for
the persons who have the beneficial interests therein and to transmit or
return such funds directly to the persons entitled thereto when the
appropriate event or contingency has occurred.
[41 FR 22826, June 7, 1976]
[[Page 252]]
Sec. 240.15c2-5 Disclosure and other requirements when extending or arranging credit in certain transactions.
(a) It shall constitute a ``fraudulent, deceptive, or manipulative
act or practice'' as used in section 15(c)(2) of the Act for any broker
or dealer to offer or sell any security to, or to attempt to induce the
purchase of any security by, any person, in connection with which such
broker or dealer directly or indirectly offers to extend any credit to
or to arrange any loan for such person, or extends to or participates in
arranging any loan for such person, unless such broker or dealer, before
any purchase, loan or other related element of the transaction is
entered into:
(1) Delivers to such person a written statement setting forth the
exact nature and extent of (i) such person's obligations under the
particular loan arrangement, including among other things, the specific
charges which such person will incur under such loan in each period
during which the loan may continue or be extended, (ii) the risks and
disadvantages which such person will incur in the entire transaction,
including the loan arrangement, (iii) all commissions, discounts, and
other remuneration received and to be received in connection with the
entire transaction including the loan arrangment, by the broker or
dealer, by any person controlling, controlled by, or under common
control with the broker or dealer, and by any other person participating
in the transaction; Provided, however, That the broker or dealer shall
be deemed to be in compliance with this paragraph if the customer,
before any purchase, loan, or other related element of the transaction
is entered into in a manner legally binding upon the customer, receives
a statement from the lender, or receives a prospectus or offering
circular from the broker or dealer, which statement, prospectus or
offering circular contains the information required by this paragraph;
and
(2) Obtains from such person information concerning his financial
situation and needs, reasonably determines that the entire transaction,
including the loan arrangement, is suitable for such person, and retains
in his files a written statement setting forth the basis upon which the
broker or dealer made such determination; Provided, however, That the
written statement referred to in this paragraph must be made available
to the customer on request.
(b) This section shall not apply to any credit extended or any loan
arranged by any broker or dealer subject to the provisions of Regulation
T (12 CFR part 220) if such credit is extended or such loan is arranged,
in compliance with the requirements of such regulation, only for the
purpose of purchasing or carrying the security offered or sold:
Provided, however, That notwithstanding this paragraph, the provisions
of paragraph (a) shall apply in full force with respect to any
transaction involving the extension of or arrangement for credit by a
broker or dealer (i) in a special insurance premium funding account
within the meaning of section 4(k) of Regulation T (12 CFR 220.4(k)) or
(ii) in compliance with the terms of Sec. 240.3a12-5 of this chapter.
(c) This section shall not apply to any offer to extend credit or
arrange any loan, or to any credit extended or loan arranged, in
connection with any offer or sale, or attempt to induce the purchase, of
any municipal security.
(Sec. 3(a)(12), 48 Stat. 882, as amended, 84 Stat. 718, 1435, 1499 (15
U.S.C. 78c(12)); sec. 7(c), 48 Stat. 886, as amended, 82 Stat. 452 (15
U.S.C. 78g(c)); sec. 11(d)(1), 48 Stat. 891 as amended, 68 Stat. 686 (15
U.S.C. 78k(d)(1)); sec. 15(c), 48 Stat. 895, as amended, 52 Stat. 1075,
84 Stat. 1653 (15 U.S.C. 78o(c)); sec. 23(a), 48 Stat. 901, as amended,
49 Stat. 704, 1379 (15 U.S.C. 78w(a))
[40 FR 6646, Feb. 13, 1975, as amended at 41 FR 22826, June 7, 1976]
Sec. 240.15c2-6 [Reserved]
Sec. 240.15c2-7 Identification of quotations.
(a) It shall constitute an attempt to induce the purchase or sale of
a security by making a ``fictitious quotation'' within the meaning of
section 15(c)(2) of the Act, for any broker or dealer to furnish or
submit, directly or indirectly, any quotation for a security (other than
a municipal security) to an inter-dealer quotation system unless:
(1) The inter-dealer-quotation-system is informed, if such is the
case, that
[[Page 253]]
the quotation is furnished or submitted;
(i) By a correspondent broker or dealer for the account or in behalf
of another broker or dealer, and if so, the identity of such other
broker or dealer; and/or
(ii) In furtherance of one or more other arrangements (including a
joint account, guarantee of profit, guarantee against loss, commission,
markup, markdown, indication of interest and accommodation arrangement)
between or among brokers or dealers, and if so, the identity of each
broker or dealer participating in any such arrangement or arrangements:
Provided, however, That the provisions of this subparagraph shall not
apply if only one of the brokers or dealers participating in any such
arrangment or arrangements furnishes or submits a quotation with respect
to the security to an inter-dealer-quotation-system.
(2) The inter-dealer-quotation-system to which the quotation is
furnished or submitted makes it a general practice to disclose with each
published quotation, by appropriate symbol or otherwise, the category or
categories (paragraph (a)(1)(i) and/or (ii) of this section) in
furtherance of which the quotation is submitted, and the identities of
all other brokers and dealers referred to in paragraph (a)(1) of this
section where such information is supplied to the inter-dealer-
quotation-system under the provisions of paragraph (a)(1) of this
section.
(b) It shall constitute an attempt to induce the purchase or sale of
a security by making a ``fictitious quotation,'' within the meaning of
section 15(c)(2) of the Act, for a broker or dealer to enter into any
correspondent or other arrangement (including a joint account, guarantee
of profit, guarantee against loss, commission, markup, markdown,
indication of interest and accommodation arrangement) in furtherance of
which two or more brokers or dealers furnish or submit quotations with
respect to a particular security unless such broker or dealer informs
all brokers or dealers furnishing or submitting such quotations of the
existence of such correspondent and other arrangments, and the identity
of the parties thereto.
(c) For purposes of this section:
(1) The term inter-dealer-quotation-system shall mean any system of
general circulation to brokers and dealers which regularly disseminates
quotations of identified brokers or dealers but shall not include a
quotation sheet prepared and distributed by a broker or dealer in the
regular course of his business and containing only quotations of such
broker or dealer.
(2) The term quotation shall mean any bid or offer, or any
indication of interest (such as OW or BW) in any bid or offer.
(3) The term correspondent shall mean a broker or dealer who has a
direct line of communication to another broker or dealer located in a
different city or geographic area.
(Sec. 15, 48 Stat. 895, as amended; 15 U.S.C. 78o)
[29 FR 11530, Aug. 12, 1964, as amended at 41 FR 22826, June 7, 1976]
Sec. 240.15c2-8 Delivery of prospectus.
(a) It shall constitute a deceptive act or practice, as those terms
are used in section 15(c)(2) of the Act, for a broker or dealer to
participate in a distribution of securities with respect to which a
registration statement has been filed under the Securities Act of 1933
unless he complies with the requirements set forth in paragraphs (b)
through (g) of this section. For the purposes of this section, a broker
or dealer participating in the distribution shall mean any underwriter
and any member or proposed member of the selling group.
(b) In connection with an issue of securities, the issuer of which
has not previously been required to file reports pursuant to sections
13(a) or 15(d) of the Securities Exchange Act of 1934, unless such
issuer has been exempted from the requirement to file reports thereunder
pursuant to section 12(h) of the Act, such broker or dealer shall
deliver a copy of the preliminary prospectus to any person who is
expected to receive a confirmation of sale at least 48 hours prior to
the sending of such confirmation.
(c) Such broker or dealer shall take reasonable steps to furnish to
any person who makes written request for a
[[Page 254]]
preliminary prospectus between the filing date and a reasonable time
prior to the effective date of the registration statement to which such
prospectus relates, a copy of the latest preliminary prospectus on file
with the Commission. Reasonable steps shall include receiving an
undertaking by the managing underwriter or underwriters to send such
copy to the address given in the requests.
(d) Such broker or dealer shall take reasonable steps to comply
promptly with the written request of any person for a copy of the final
prospectus relating to such securities during the period between the
effective date of the registration statement and the later of either the
termination of such distribution, or the expiration of the applicable
40- or 90-day period under section 4(3) of the Securities Act of 1933.
Reasonable steps shall include receiving an undertaking by the managing
underwriter or underwriters to send such copy to the address given in
the requests. (The 40-day and 90-day periods referred to above shall be
deemed to apply for purposes of this rule irrespective of the provisions
of paragraphs (b) and (d) of Sec. 230.174 of this chapter).
(e) Such broker or dealer shall take reasonable steps (1) to make
available a copy of the preliminary prospectus relating to such
securities to each of his associated persons who is expected, prior to
the effective date, to solicit customers' order for such securities
before the making of any such solicitation by such associated persons
and (2) to make available to each such associated person a copy of any
amended preliminary prospectus promptly after the filing thereof.
(f) Such broker or dealer shall take reasonable steps to make
available a copy of the final prospectus relating to such securities to
each of his associated persons who is expected, after the effective
date, to solicit customers orders for such securities prior to the
making of any such solicitation by such associated persons, unless a
preliminary prospectus which is substantially the same as the final
prospectus except for matters relating to the price of the stocks, has
been so made available.
(g) If the broker or dealer is a managing underwriter of such
distribution, he shall take reasonable steps to see to it that all other
brokers or dealers participating in such distribution are promptly
furnished with sufficient copies, as requested by them, of each
preliminary prospectus, each amended preliminary prospectus and the
final prospectus to enable them to comply with paragraphs (b), (c), (d),
and (e) of this section.
(h) If the broker or dealer is a managing underwriter of such
distribution, he shall take reasonable steps to see that any broker or
dealer participating in the distribution or trading in the registered
security is furnished reasonable quantities of the final prospectus
relating to such securities, as requested by him, in order to enable him
to comply with the prospectus delivery requirements of section 5(b) (1)
and (2) of the Securities Act of 1933.
(i) This section shall not require the furnishing of prospectuses in
any state where such furnishing would be unlawful under the laws of such
state: Provided, however, That this provision is not to be construed to
relieve a broker or dealer from complying with the requirements of
section 5(b)(1) and (2) of the Securities Act of 1933.
(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(a), and the term final prospectus shall include the term
Section 10(a) prospectus as used in 17 CFR 230.434(a).
[35 FR 18457, Dec. 4, 1970, as amended at 47 FR 11470, Mar. 16, 1982; 53
FR 11845, Apr. 11, 1988; 60 FR 26622, May 17, 1995]
Sec. 240.15c2-11 Initiation or resumption of quotations without specific information.
Preliminary Note:
Brokers and dealers may wish to refer to Securities Exchange Act
Release No. 29094 (April 17, 1991), for a discussion of procedures for
gathering and reviewing the information required by this rule and the
requirement that a broker or dealer have a reasonable basis for
believing that the information is accurate and obtained from reliable
sources.
(a) As a means reasonably designed to prevent fraudulent, deceptive,
or manipulative acts or practices, it shall
[[Page 255]]
be unlawful for a broker or dealer to publish any quotation for a
security or, directly or indirectly, to submit any such quotation for
publication, in any quotation medium (as defined in this section) unless
such broker or dealer has in its records the documents and information
required by this paragraph (for purposes of this section, ``paragraph
(a) information''), and, based upon a review of the paragraph (a)
information together with any other documents and information required
by paragraph (b) of this section, has a reasonable basis under the
circumstances for believing that the paragraph (a) information is
accurate in all material respects, and that the sources of the paragraph
(a) information are reliable. The information required pursuant to this
paragraph is:
(1) A copy of the prospectus specified by section 10(a) of the
Securities Act of 1933 for an issuer that has filed a registration
statement under the Securities Act of 1933, other than a registration
statement on Form F-6, which became effective less than 90 calendar days
prior to the day on which such broker or dealer publishes or submits the
quotation to the quotation medium, Provided That such registration
statement has not thereafter been the subject of a stop order which is
still in effect when the quotation is published or submitted; or
(2) A copy of the offering circular provided for under Regulation A
under the Securities Act of 1933 for an issuer that has filed a
notification under Regulation A and was authorized to commence the
offering less than 40 calendar days prior to the day on which such
broker or dealer publishes or submits the quotation to the quotation
medium, Provided That the offering circular provided for under
Regulation A has not thereafter become the subject of a suspension order
which is still in effect when the quotation is published or submitted;
or
(3) A copy of the issuer's most recent annual report filed pursuant
to section 13 or 15(d) of the Act or a copy of the annual statement
referred to in section 12(g)(2)(G)(i) of the Act, in the case of an
issuer required to file reports pursuant to section 13 or 15(d) of the
Act or an issuer of a security covered by section 12(g)(2)(B) or (G) of
the Act, together with any quarterly and current reports that have been
filed under the provisions of the Act by the issuer after such annual
report or annual statement; Provided, however, That until such issuer
has filed its first annual report pursuant to section 13 or 15(d) of the
Act or annual statement referred to in section 12(g)(2)(G)(i) of the
Act, the broker or dealer has in its records a copy of the prospectus
specified by section 10(a) of the Securities Act of 1933 included in a
registration statement filed by the issuer under the Securities Act of
1933, other than a registration statement on Form F-6, that became
effective within the prior 16 months, or a copy of any registration
statement filed by the issuer under section 12 of the Act that became
effective within the prior 16 months, together with any quarterly and
current reports filed thereafter under section 13 or 15(d) of the Act;
and Provided further, That the broker or dealer has a reasonable basis
under the circumstances for believing that the issuer is current in
filing annual, quarterly, and current reports filed pursuant to section
13 or 15(d) of the Act, or, in the case of an insurance company exempted
from section 12(g) of the Act by reason of section 12(g)(2)(G) thereof,
the annual statement referred to in section 12(g)(2)(G)(i) of the Act;
or
(4) The information furnished to the Commission pursuant to
Sec. 240.12g3-2(b) since the beginning of the issuer's last fiscal year,
in the case of an issuer exempt from section 12(g) of the Act by reason
of compliance with the provisions of Sec. 240.12g3-2(b), which
information the broker or dealer shall make reasonably available upon
request to any person expressing an interest in a proposed transaction
in the security with such broker or dealer; or
(5) The following information, which shall be reasonably current in
relation to the day the quotation is submitted and which the broker or
dealer shall make reasonably available upon request to any person
expressing an interest in a proposed transaction in the security with
such broker or dealer:
(i) The exact name of the issuer and its predecessor (if any);
[[Page 256]]
(ii) the address of its principal executive offices;
(iii) the state of incorporation, if it is a corporation;
(iv) the exact title and class of the security;
(v) the par or stated value of the security;
(vi) the number of shares or total amount of the securities
outstanding as of the end of the issuer's most recent fiscal year;
(vii) the name and address of the transfer agent;
(viii) the nature of the issuer's business;
(ix) the nature of products or services offered;
(x) the nature and extent of the issuer's facilities;
(xi) the name of the chief executive officer and members of the
board of directors;
(xii) the issuer's most recent balance sheet and profit and loss and
retained earnings statements;
(xiii) similar financial information for such part of the 2
preceding fiscal years as the issuer or its predecessor has been in
existence;
(xiv) whether the broker or dealer or any associated person is
affiliated, directly or indirectly with the issuer;
(xv) whether the quotation is being published or submitted on behalf
of any other broker or dealer, and, if so, the name of such broker or
dealer; and
(xvi) whether the quotation is being submitted or published directly
or indirectly on behalf of the issuer, or any director, officer or any
person, directly or indirectly the beneficial owner of more than 10
percent of the outstanding units or shares of any equity security of the
issuer, and, if so, the name of such person, and the basis for any
exemption under the federal securities laws for any sales of such
securities on behalf of such person.
If such information is made available to others upon request pursuant to
this paragraph, such delivery, unless otherwise represented, shall not
constitute a representation by such broker or dealer that such
information is accurate, but shall constitute a representation by such
broker or dealer that the information is reasonably current in relation
to the day the quotation is submitted, that the broker or dealer has a
reasonable basis under the circumstances for believing the information
is accurate in all material respects, and that the information was
obtained from sources which the broker or dealer has a reasonable basis
for believing are reliable. This paragraph (a)(5) shall not apply to any
security of an issuer included in paragraph (a)(3) of this section
unless a report or statement of such issuer described in paragraph
(a)(3) of this section is not reasonably available to the broker or
dealer. A report or statement of an issuer described in paragraph (a)(3)
of this section shall be ``reasonably available'' when such report or
statement is filed with the Commission.
(b) With respect to any security the quotation of which is within
the provisions of this section, the broker or dealer submitting or
publishing such quotation shall have in its records the following
documents and information:
(1) A record of the circumstances involved in the submission of
publication of such quotation, including the identity of the person or
persons for whom the quotation is being submitted or published and any
information regarding the transactions provided to the broker or dealer
by such person or persons;
(2) A copy of any trading suspension order issued by the Commission
pursuant to section 12(k) of the Act respecting any securities of the
issuer or its predecessor (if any) during the 12 months preceding the
date of the publication or submission of the quotation, or a copy of the
public release issued by the Commission announcing such trading
suspension order; and
(3) A copy or a written record of any other material information
(including adverse information) regarding the issuer which comes to the
broker's or dealer's knowledge or possession before the publication or
submission of the quotation.
(c) The broker or dealer shall preserve the documents and
information required under paragraphs (a) and (b) of this section for a
period of not less than three years, the first two years in an easily
accessible place.
[[Page 257]]
(d)(1) For any security of an issuer included in paragraph (a)(5) of
this section, the broker or dealer submitting the quotation shall
furnish to the interdealer quotation system (as defined in paragraph
(e)(2) of this section), in such form as such system shall prescribe, at
least 3 business days before the quotation is published or submitted,
the information regarding the security and the issuer which such broker
or dealer is required to maintain pursuant to said paragraph (a)(5) of
this section.
(2) For any security of an issuer included in paragraph (a)(3) of
this section,
(i) a broker-dealer shall be in compliance with the requirement to
obtain current reports filed by the issuer if the broker-dealer obtains
all current reports filed with the Commission by the issuer as of a date
up to five business days in advance of the earlier of the date of
submission of the quotation to the quotation medium and the date of
submission of the paragraph (a) information pursuant to Schedule H of
the By-Laws of the National Association of Securities Dealers, Inc.; and
(ii) a broker-dealer shall be in compliance with the requirement to
obtain the annual, quarterly, and current reports filed by the issuer,
if the broker-dealer has made arrangements to receive all such reports
when filed by the issuer and it has regularly received reports from the
issuer on a timely basis, unless the broker-dealer has a reasonable
basis under the circumstances for believing that the issuer has failed
to file a required report or has filed a report but has not sent it to
the broker-dealer.
(e) For purposes of this section:
(1) Quotation medium shall mean any ``interdealer quotation system''
or any publication or electronic communications network or other device
which is used by brokers or dealers to make known to others their
interest in transactions in any security, including offers to buy or
sell at a stated price or otherwise, or invitations of offers to buy or
sell.
(2) Interdealer quotation system shall mean any system of general
circulation to brokers or dealers which regularly disseminates
quotations of identified brokers or dealers.
(3) Except as otherwise specified in this rule, quotation shall mean
any bid or offer at a specified price with respect to a security, or any
indication of interest by a broker or dealer in receiving bids or offers
from others for a security, or any indication by a broker or dealer that
he wishes to advertise his general interest in buying or selling a
particular security.
(4) Issuer, in the case of quotations for American Depositary
Receipts, shall mean the issuer of the deposited shares represented by
such American Depositary Receipts.
(f) The provisions of this section shall not apply to:
(1) The publication or submission of a quotation respecting a
security admitted to trading on a national securities exchange and which
is traded on such an exchange on the same day as, or on the business day
next preceding, the day the quotation is published or submitted.
(2) The publication or submission by a broker or dealer, solely on
behalf of a customer (other than a person acting as or for a dealer), of
a quotation that represents the customer's indication of interest and
does not involve the solicitation of the customer's interest; Provided,
however, That this paragraph (f)(2) shall not apply to a quotation
consisting of both a bid and an offer, each of which is at a specified
price, unless the quotation medium specifically identifies the quotation
as representing such an unsolicited customer interest.
(3)(i) The publication or submission, in an interdealer quotation
system that specifically identifies as such unsolicited customer
indications of interest of the kind described in paragraph (f)(2) of
this section, of a quotation respecting a security which has been the
subject of quotations (exclusive of any identified customer interests)
in such a system on each of at least 12 days within the previous 30
calendar days, with no more than 4 business days in succession without a
quotation; or
(ii) The publication or submission, in an interdealer quotation
system that does not so identify any such unsolicited customer
indications of interest,
[[Page 258]]
of a quotation respecting a security which has been the subject of both
bid and ask quotations in an interdealer quotation system at specified
prices on each of at least 12 days within the previous 30 calendar days,
with no more than 4 business days in succession without such a two-way
quotation;
(iii) A dealer acting in the capacity of market maker, as defined in
section 3(a)(38) of the Act, that has published or submitted a quotation
respecting a security in an interdealer quotation system and such
quotation has qualified for an exception provided in this paragraph
(f)(3), may continue to publish or submit quotations for such security
in the interdealer quotation system without compliance with this section
unless and until such dealer ceases to submit or publish a quotation or
ceases to act in the capacity of market maker respecting such security.
(4) The publication or submission of a quotation respecting a
municipal security.
(5) The publication or submission of a quotation respecting a
security that is authorized for quotation in the NASDAQ system (as
defined in Sec. 240.11Ac1-2(a)(3) of this chapter), and such
authorization is not suspended, terminated, or prohibited.
(g) The requirement in paragraph (a)(5) of this section that the
information with respect to the issuer be ``reasonably current'' will be
presumed to be satisfied, unless the broker or dealer has information to
the contrary, if:
(1) The balance sheet is as of a date less than 16 months before the
publication or submission of the quotation, the statements of profit and
loss and retained earnings are for the 12 months preceding the date of
such balance sheet, and if such balance sheet is not as of a date less
than 6 months before the publication or submission of the quotation, it
shall be accompanied by additional statements of profit and loss and
retained earnings for the period from the date of such balance sheet to
a date less than 6 months before the publication or submission of the
quotation.
(2) Other information regarding the issuer specified in paragraph
(a)(5) of this section is as of a date within 12 months prior to the
publication or submission of the quotation.
(h) This section shall not prohibit any publication or submission of
any quotation if the Commission, upon written request or upon its own
motion, exempts such quotation either unconditionally or on specified
terms and conditions, as not constituting a fraudulent, manipulative or
deceptive practice comprehended within the purpose of this section.
[36 FR 18641, Sept. 18, 1971, as amended at 41 FR 22826, June 7, 1976;
49 FR 45123, Nov. 15, 1984; 56 FR 19156, Apr. 25, 1991]
Sec. 240.15c2-12 Municipal securities disclosure.
Preliminary Note: For a discussion of disclosure obligations
relating to municipal securities, issuers, brokers, dealers, and
municipal securities dealers should refer to Securities Act Release No.
7049, Securities Exchange Act Release No. 33741, FR-42 (March 9, 1994).
For a discussion of the obligations of underwriters to have a reasonable
basis for recommending municipal securities, brokers, dealers, and
municipal securities dealers should refer to Securities Exchange Act
Release No. 26100 (Sept. 22, 1988) and Securities Exchange Act Release
No. 26985 (June 28, 1989).
(a) General. As a means reasonably designed to prevent fraudulent,
deceptive, or manipulative acts or practices, it shall be unlawful for
any broker, dealer, or municipal securities dealer (a ``Participating
Underwriter'' when used in connection with an Offering) to act as an
underwriter in a primary offering of municipal securities with an
aggregate principal amount of $1,000,000 or more (an ``Offering'')
unless the Participating Underwriter complies with the requirements of
this section or is exempted from the provisions of this section.
(b) Requirements. (1) Prior to the time the Participating
Underwriter bids for, purchases, offers, or sells municipal securities
in an Offering, the Participating Underwriter shall obtain and review an
official statement that an issuer of such securities deems final as of
its date, except for the omission of no more than the following
information: The offering price(s), interest rate(s), selling
compensation, aggregate principal amount, principal amount per maturity,
delivery dates, any other
[[Page 259]]
terms or provisions required by an issuer of such securities to be
specified in a competitive bid, ratings, other terms of the securities
depending on such matters, and the identity of the underwriter(s).
(2) Except in competitively bid offerings, from the time the
Participating Underwriter has reached an understanding with an issuer of
municipal securities that it will become a Participating Underwriter in
an Offering until a final official statement is available, the
Participating Underwriter shall send no later than the next business
day, by first-class mail or other equally prompt means, to any potential
customer, on request, a single copy of the most recent preliminary
official statement, if any.
(3) The Participating Underwriter shall contract with an issuer of
municipal securities or its designated agent to receive, within seven
business days after any final agreement to purchase, offer, or sell the
municipal securities in an Offering and in sufficient time to accompany
any confirmation that requests payment from any customer, copies of a
final official statement in sufficient quantity to comply with paragraph
(b)(4) of this rule and the rules of the Municipal Securities Rulemaking
Board.
(4) From the time the final official statement becomes available
until the earlier of--
(i) Ninety days from the end of the underwriting period or
(ii) The time when the official statement is available to any person
from a nationally recognized municipal securities information
repository, but in no case less than twenty-five days following the end
of the underwriting period, the Participating Underwriter in an Offering
shall send no later than the next business day, by first-class mail or
other equally prompt means, to any potential customer, on request, a
single copy of the final official statement.
(5)(i) A Participating Underwriter shall not purchase or sell
municipal securities in connection with an Offering unless the
Participating Underwriter has reasonably determined that an issuer of
municipal securities, or an obligated person for whom financial or
operating data is presented in the final official statement has
undertaken, either individually or in combination with other issuers of
such municipal securities or obligated persons, in a written agreement
or contract for the benefit of holders of such securities, to provide,
either directly or indirectly through an indenture trustee or a
designated agent:
(A) To each nationally recognized municipal securities information
repository and to the appropriate state information depository, if any,
annual financial information for each obligated person for whom
financial information or operating data is presented in the final
official statement, or, for each obligated person meeting the objective
criteria specified in the undertaking and used to select the obligated
persons for whom financial information or operating data is presented in
the final official statement, except that, in the case of pooled
obligations, the undertaking shall specify such objective criteria;
(B) If not submitted as part of the annual financial information,
then when and if available, to each nationally recognized municipal
securities information repository and to the appropriate state
information depository, audited financial statements for each obligated
person covered by paragraph (b)(5)(i)(A) of this section;
(C) In a timely manner, to each nationally recognized municipal
securities information repository or to the Municipal Securities
Rulemaking Board, and to the appropriate state information depository,
if any, notice of any of the following events with respect to the
securities being offered in the Offering, if material:
(1) Principal and interest payment delinquencies;
(2) Non-payment related defaults;
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties;
(5) Substitution of credit or liquidity providers, or their failure
to perform;
(6) Adverse tax opinions or events affecting the tax-exempt status
of the security;
[[Page 260]]
(7) Modifications to rights of security holders;
(8) Bond calls;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment
of the securities;
(11) Rating changes; and
(D) In a timely manner, to each nationally recognized municipal
securities information repository or to the Municipal Securities
Rulemaking Board, and to the appropriate state information depository,
if any, notice of a failure of any person specified in paragraph
(b)(5)(i)(A) of this section to provide required annual financial
information, on or before the date specified in the written agreement or
contract.
(ii) The written agreement or contract for the benefit of holders of
such securities also shall identify each person for whom annual
financial information and notices of material events will be provided,
either by name or by the objective criteria used to select such persons,
and, for each such person shall:
(A) Specify, in reasonable detail, the type of financial information
and operating data to be provided as part of annual financial
information;
(B) Specify, in reasonable detail, the accounting principles
pursuant to which financial statements will be prepared, and whether the
financial statements will be audited; and
(C) Specify the date on which the annual financial information for
the preceding fiscal year will be provided, and to whom it will be
provided.
(iii) Such written agreement or contract for the benefit of holders
of such securities also may provide that the continuing obligation to
provide annual financial information and notices of events may be
terminated with respect to any obligated person, if and when such
obligated person no longer remains an obligated person with respect to
such municipal securities.
(c) Recommendations. As a means reasonably designed to prevent
fraudulent, deceptive, or manipulative acts or practices, it shall be
unlawful for any broker, dealer, or municipal securities dealer to
recommend the purchase or sale of a municipal security unless such
broker, dealer, or municipal securities dealer has procedures in place
that provide reasonable assurance that it will receive prompt notice of
any event disclosed pursuant to paragraph (b)(5)(i)(C), paragraph
(b)(5)(i)(D), and paragraph (d)(2)(ii)(B) of this section with respect
to that security.
(d) Exemptions. (1) This section shall not apply to a primary
offering of municipal securities in authorized denominations of $100,000
or more, if such securities:
(i) Are sold to no more than thirty-five persons each of whom the
Participating Underwriter reasonably believes:
(A) Has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the
prospective investment; and
(B) Is not purchasing for more than one account or with a view to
distributing the securities; or
(ii) Have a maturity of nine months or less; or
(iii) At the option of the holder thereof may be tendered to an
issuer of such securities or its designated agent for redemption or
purchase at par value or more at least as frequently as every nine
months until maturity, earlier redemption, or purchase by an issuer or
its designated agent.
(2) Paragraph (b)(5) of this section shall not apply to an Offering
of municipal securities if, at such time as an issuer of such municipal
securities delivers the securities to the Participating Underwriters:
(i) No obligated person will be an obligated person with respect to
more than $10,000,000 in aggregate amount of outstanding municipal
securities, including the offered securities and excluding municipal
securities that were offered in a transaction exempt from this section
pursuant to paragraph (d)(1) of this section;
(ii) An issuer of municipal securities or obligated person has
undertaken, either individually or in combination with other issuers of
municipal securities or obligated persons, in a written agreement or
contract for the benefit of holders of such municipal securities, to
provide:
(A) Upon request to any person or at least annually to the
appropriate state
[[Page 261]]
information depository, if any, financial information or operating data
regarding each obligated person for which financial information or
operating data is presented in the final official statement, as
specified in the undertaking, which financial information and operating
data shall include, at a minimum, that financial information and
operating data which is customarily prepared by such obligated person
and is publicly available; and
(B) In a timely manner, to each nationally recognized municipal
securities information repository or to the Municipal Securities
Rulemaking Board, and to the appropriate state information depository,
if any, notice of events specified in paragraph (b)(5)(i)(C) of this
section with respect to the securities that are the subject of the
Offering, if material; and
(iii) the final official statement identifies by name, address, and
telephone number the persons from which the foregoing information, data,
and notices can be obtained.
(3) The provisions of paragraph (b)(5) of this section, other than
paragraph (b)(5)(i)(C) of this section, shall not apply to an Offering
of municipal securities, if such municipal securities have a stated
maturity of 18 months or less.
(4) The provisions of paragraph (c) of this section shall not apply
to municipal securities:
(i) Sold in an Offering to which paragraph (b)(5) of this section
did not apply, other than Offerings exempt under paragraph (d)(2)(ii) of
this section; or
(ii) Sold in an Offering exempt from this section under paragraph
(d)(1) of this section.
(e) Exemptive authority. The Commission, upon written request, or
upon its own motion, may exempt any broker, dealer, or municipal
securities dealer, whether acting in the capacity of a Participating
Underwriter or otherwise, that is a participant in a transaction or
class of transactions from any requirement of this section, either
unconditionally or on specified terms and conditions, if the Commission
determines that such an exemption is consistent with the public interest
and the protection of investors.
(f) Definitions. For the purposes of this rule--(1) The term
authorized denominations of $100,000 or more means municipal securities
with a principal amount of $100,000 or more and with restrictions that
prevent the sale or transfer of such securities in principal amounts of
less than $100,000 other than through a primary offering; except that,
for municipal securities with an original issue discount of 10 percent
or more, the term means municipal securities with a minimum purchase
price of $100,000 or more and with restrictions that prevent the sale or
transfer of such securities, in principal amounts that are less than the
original principal amount at the time of the primary offering, other
than through a primary offering.
(2) The term end of the underwriting period means the later of such
time as
(i) the issuer of municipal securities delivers the securities to
the Participating Underwriters or
(ii) the Participating Underwriter does not retain, directly or as a
member or an underwriting syndicate, an unsold balance of the securities
for sale to the public.
(3) The term final official statement means a document or set of
documents prepared by an issuer of municipal securities or its
representatives that is complete as of the date delivered to the
Participating Underwriter(s) and that sets forth information concerning
the terms of the proposed issue of securities; information, including
financial information or operating data, concerning such issuers of
municipal securities and those other entities, enterprises, funds,
accounts, and other persons material to an evaluation of the Offering;
and a description of the undertakings to be provided pursuant to
paragraph (b)(5)(i), paragraph (d)(2)(ii), and paragraph (d)(2)(iii) of
this section, if applicable, and of any instances in the previous five
years in which each person specified pursuant to paragraph (b)(5)(ii) of
this section failed to comply, in all material respects, with any
previous undertakings in a written contract or agreement specified in
paragraph (b)(5)(i) of this section. Financial information or operating
data may be set forth in the document or set of documents, or may be
included
[[Page 262]]
by specific reference to documents previously provided to each
nationally recognized municipal securities information repository, and
to a state information depository, if any, or filed with the Commission.
If the document is a final official statement, it must be available from
the Municipal Securities Rulemaking Board.
(4) The term issuer of municipal securities means the governmental
issuer specified in section 3(a)(29) of the Act and the issuer of any
separate security, including a sepatate security as defined in rule 3b-
5(a) under the Act.
(5) The term potential customer means (i) Any person contacted by
the Participating Underwriter concerning the purchase of municipal
securities that are intended to be offered or have been sold in an
offering, (ii) Any person who has expressed an interest to the
Participating Underwriter in possibly purchasing such municipal
securities, and (iii) Any person who has a customer account with the
Participating Underwriter.
(6) The term preliminary official statement means an official
statement prepared by or for an issuer of municipal securities for
dissemination to potential customers prior to the availability of the
final official statement.
(7) The term primary offering means an offering of municipal
securities directly or indirectly by or on behalf of an issuer of such
securities, including any remarketing of municipal securities.
(i) That is accompanied by a change in the authorized denomination
of such securities from $100,000 or more to less than $100,000, or
(ii) That is accompanied by a change in the period during which such
securities may be tendered to an issuer of such securities or its
designated agent for redemption or purchase from a period of nine months
or less to a period of more than nine months.
(8) The term underwriter means any person who has purchased from an
issuer of municipal securities with a view to, or offers or sells for an
issuer of municipal securities in connection with, the offering of any
municipal security, or participates or has a direct or indirect
participation in any such undertaking, or participates or has a
participation in the direct or indirect underwriting of any such
undertaking; except, that such term shall not include a person whose
interest is limited to a commission, concession, or allowance from an
underwriter, broker, dealer, or municipal securities dealer not in
excess of the usual and customary distributors' or sellers' commission,
concession, or allowance.
(9) The term annual financial information means financial
information or operating data, provided at least annually, of the type
included in the final official statement with respect to an obligated
person, or in the case where no financial information or operating data
was provided in the final official statement with respect to such
obligated person, of the type included in the final official statement
with respect to those obligated persons that meet the objective criteria
applied to select the persons for which financial information or
operating data will be provided on an annual basis. Financial
information or operating data may be set forth in the document or set of
documents, or may be included by specific reference to documents
previously provided to each nationally recognized municipal securities
information repository, and to a state information depository, if any,
or filed with the Commission. If the document is a final official
statement, it must be available from the Municipal Securities Rulemaking
Board.
(10) The term obligated person means any person, including an issuer
of municipal securities, who is either generally or through an
enterprise, fund, or account of such person committed by contract or
other arrangement to support payment of all, or part of the obligations
on the municipal securities to be sold in the Offering (other than
providers of municipal bond insurance, letters of credit, or other
liquidity facilities).
(g) Transitional provision. If on July 28, 1989, a Participating
Underwriter was contractually committed to act as underwriter in an
Offering of municipal securities originally issued before July 29, 1989,
the requirements of paragraphs (b)(3) and (b)(4) shall not apply to the
Participating Underwriter in connection with such an Offering. Paragraph
[[Page 263]]
(b)(5) of this section shall not apply to a Participating Underwriter
that has contractually committed to act as an underwriter in an Offering
of municipal securities before July 3, 1995; except that paragraph
(b)(5)(i)(A) and paragraph (b)(5)(i)(B) shall not apply with respect to
fiscal years ending prior to January 1, 1996. Paragraph (c) shall become
effective on January 1, 1996. Paragraph (d)(2)(ii) and paragraph
(d)(2)(iii) of this section shall not apply to an Offering of municipal
securities commencing prior to January 1, 1996.
[54 FR 28813, July 10, 1989, as amended at 59 FR 59609, Nov. 17, 1994]
Sec. 240.15c3-1 Net capital requirements for brokers or dealers.
(a) Every broker or dealer shall at all times have and maintain net
capital no less than the greater of the highest minimum requirement
applicable to its ratio requirement under paragraph (a)(1) of this
section, or to any of its activities under paragraph (a)(2) of this
section. Each broker or dealer also shall comply with the supplemental
requirements of paragraphs (a)(4) and (a)(9) of this section, to the
extent either paragraph is applicable to its activities. In addition, a
broker or dealer shall maintain net capital of not less than its own net
capital requirement plus the sum of each broker's or dealer's subsidiary
or affiliate minimum net capital requirements, which is consolidated
pursuant to Appendix C, Sec. 240.15c3-1c.
Ratio Requirements
Aggregate Indebtedness Standard
(1)(i) No broker or dealer, other than one that elects the
provisions of paragraph (a)(1)(ii) of this section, shall permit its
aggregate indebtedness to all other persons to exceed 1500 percent of
its net capital (or 800 percent of its net capital for 12 months after
commencing business as a broker or dealer).
Alternative Standard
(ii) A broker or dealer may elect not to be subject to the Aggregate
Indebtedness Standard of paragraph (a)(1)(i) of this section. That
broker or dealer shall not permit its net capital to be less than the
greater of $250,000 or 2 percent of aggregate debit items computed in
accordance with the Formula for Determination of Reserve Requirements
for Brokers and Dealers (Exhibit A to Rule 15c3-3, Sec. 240.15c3-3a).
Such broker or dealer shall notify its Examining Authority, in writing,
of its election to operate under this paragraph (a)(1)(ii). Once a
broker or dealer has notified its Examining Authority, it shall continue
to operate under this paragraph unless a change is approved upon
application to the Commission. A broker or dealer that elects this
standard and is not exempt from Rule 15c3-3 shall:
(A) Make the computation required by Sec. 240.15c3-3(e) and set
forth in Exhibit A, Sec. 240.15c3-3a, on a weekly basis and, in lieu of
the 1 percent reduction of certain debit items required by Note E (3) in
the computation of its Exhibit A requirement, reduce aggregate debit
items in such computation by 3 percent;
(B) Include in Items 7 and 8 of Exhibit A, Sec. 240.15c3-3a, the
market value of items specified therein more than 7 business days old;
(C) Exclude credit balances in accounts representing amounts payable
for securities not yet received from the issuer or its agent which
securities are specified in paragraphs (c)(2)(vi) (A) and (E) of this
section and any related debit items from the Exhibit A requirement for 3
business days; and
(D) Deduct from net worth in computing net capital 1 percent of the
contract value of all failed to deliver contracts or securities borrowed
that were allocated to failed to receive contracts of the same issue and
which thereby were excluded from Items 11 or 12 of Exhibit A,
Sec. 240.15c3-3a.
Futures Commission Merchants
(iii) No broker or dealer registered as a futures commission
merchant shall permit its net capital to be less than the greater of its
requirement under paragraph (a)(1) (i) or (ii) of this section, or 4
percent of the funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder (less the market value
[[Page 264]]
of commodity options purchased by option customers on or subject to the
rules of a contract market, each such deduction not to exceed the amount
of funds in the customer's account).
Minimum Requirements
See Appendix E (Sec. 240.15c3-1E) for temporary minimum
requirements.
Brokers or Dealers That Carry Customer Accounts
(2)(i) A broker or dealer (other than one described in paragraphs
(a)(2)(ii) or (a)(8) of this section) shall maintain net capital of not
less than $250,000 if it carries customer or broker or dealer accounts
and receives or holds funds or securities for those persons. A broker or
dealer shall be deemed to receive funds, or to carry customer or broker
or dealer accounts and to receive funds from those persons if, in
connection with its activities as a broker or dealer, it receives
checks, drafts, or other evidences of indebtedness made payable to
itself or persons other than the requisite registered broker or dealer
carrying the account of a customer, escrow agent, issuer, underwriter,
sponsor, or other distributor of securities. A broker or dealer shall be
deemed to hold securities for, or to carry customer or broker or dealer
accounts, and hold securities of, those persons if it does not promptly
forward or promptly deliver all of the securities of customers or of
other brokers or dealers received by the firm in connection with its
activities as a broker or dealer. A broker or dealer, without complying
with this paragraph (a)(2)(i), may receive securities only if its
activities conform with the provisions of paragraphs (a)(2) (iv) or (v)
of this section, and may receive funds only in connection with the
activities described in paragraph (a)(2)(v) of this section.
(ii) A broker or dealer that is exempt from the provisions of
Sec. 240.15c3-3 pursuant to paragraph (k)(2)(i) thereof shall maintain
net capital of not less than $100,000.
Dealers
(iii) A dealer shall maintain net capital of not less than $100,000.
For the purposes of this section, the term ``dealer'' includes:
(A) Any broker or dealer that endorses or writes options otherwise
than on a registered national securities exchange or a facility of a
registered national securities association; and
(B) Any broker or dealer that effects more than ten transactions in
any one calendar year for its own investment account. This section shall
not apply to those persons engaging in activities described in
paragraphs (a)(2)(v), (a)(2)(vi) or (a)(8) of this section, or to those
persons whose underwriting activities are limited solely to acting as
underwriters in best efforts or all or none underwritings in conformity
with paragraph (b)(2) of Sec. 240.15c2-4, so long as those persons
engage in no other dealer activities.
Brokers or Dealers That Introduce Customer Accounts And Receive
Securities
(iv) A broker or dealer shall maintain net capital of not less than
$50,000 if it introduces transactions and accounts of customers or other
brokers or dealers to another registered broker or dealer that carries
such accounts on a fully disclosed basis, and if the broker or dealer
receives but does not hold customer or other broker or dealer
securities. A broker or dealer operating under this paragraph (a)(2)(iv)
of this section may participate in a firm commitment underwriting
without being subject to the provisions of paragraph (a)(2)(iii) of this
section, but may not enter into a commitment for the purchase of shares
related to that underwriting.
Brokers or Dealers Engaged in the Sale of Redeemable Shares of
Registered Investment Companies and Certain Other Share Accounts
(v) A broker or dealer shall maintain net capital of not less than
$25,000 if it acts as a broker or dealer with respect to the purchase,
sale and redemption of redeemable shares of registered investment
companies or of interests or participations in an insurance company
separate account directly from or to the issuer on other than a
subscription way basis. A broker or dealer operating under this section
may sell securities for the account of a customer to obtain
[[Page 265]]
funds for the immediate reinvestment in redeemable securities of
registered investment companies. A broker or dealer operating under this
paragraph (a)(2)(v) must promptly transmit all funds and promptly
deliver all securities received in connection with its activities as a
broker or dealer, and may not otherwise hold funds or securities for, or
owe money or securities to, customers.
Other Brokers or Dealers
(vi) A broker or dealer that does not receive, directly or
indirectly, or hold funds or securities for, or owe funds or securities
to, customers and does not carry accounts of, or for, customers and does
not engage in any of the activities described in paragraphs (a)(2) (i)
through (v) of this section shall maintain net capital of not less than
$5,000. A broker or dealer operating under this paragraph may engage in
the following dealer activities without being subject to the
requirements of paragraph (a)(2)(iii) of this section:
(A) In the case of a buy order, prior to executing such customer's
order, it purchases as principal the same number of shares or purchases
shares to accumulate the number of shares necessary to complete the
order, which shall be cleared through another registered broker or
dealer or
(B) In the case of a sell order, prior to executing such customer's
order, it sells as principal the same number of shares or a portion
thereof, which shall be cleared through another registered broker or
dealer.
(3) [Reserved]
Capital Requirements for Market Makers
(4) A broker or dealer engaged in activities as a market maker as
defined in paragraph (c)(8) of this section shall maintain net capital
in an amount not less than $2,500 for each security in which it makes a
market (unless a security in which it makes a market has a market value
of $5 or less, in which event the amount of net capital shall be not
less than $1,000 for each such security) based on the average number of
such markets made by such broker or dealer during the 30 days
immediately preceding the computation date. Under no circumstances shall
it have net capital less than that required by the provisions of
paragraph (a) of this section, or be required to maintain net capital of
more than $1,000,000 unless required by paragraph (a) of this section.
(5) [Reserved]
Market Makers, Specialists and Certain Other Dealers
(6)(i) A dealer who meets the conditions of paragraph (a)(6)(ii) of
this section may elect to operate under this paragraph (a)(6) and
thereby not apply, except to the extent required by this paragraph
(a)(6), the provisions of paragraphs (c)(2)(vi) or Appendix A
(Sec. 240.15c3-1a) of this section to market maker and specialist
transactions and, in lieu thereof, apply thereto the provisions of
paragraph (a)(6)(iii) of this section.
(ii) This paragraph (a)(6) shall be available to a dealer who does
not effect transactions with other than brokers or dealers, who does not
carry customer accounts, who does not effect transactions in options not
listed on a registered national securities exchange or facility of a
registered national securities association, and whose market maker or
specialist transactions are effected through and carried in a market
maker or specialist account cleared by another broker or dealer as
provided in paragraph (a)(6)(iv) of this section.
(iii) A dealer who elects to operate pursuant to this paragraph
(a)(6) shall at all times maintain a liquidating equity in respect of
securities positions in his market maker or specialist account at least
equal to:
(A) An amount equal to 25 percent (5 percent in the case of exempted
securities) of the market value of the long positions and 30 percent of
the market value of the short positions; provided, however, in the case
of long or short positions in options and long or short positions in
securities other than options which relate to a bona fide hedged
position as defined in paragraph (c)(2)(x)(C) of this section, such
amount shall equal the deductions in respect of such positions specified
by paragraph (c)(2)(x)(A) (1) through (9) of this section.
(B) Such lesser requirement as may be approved by the Commission
under specified terms and conditions upon
[[Page 266]]
written application of the dealer and the carrying broker or dealer.
(C) For purposes of this paragraph (a)(6)(iii), equity in such
specialist or market maker account shall be computed by (1) marking all
securities positions long or short in the account to their respective
current market values, (2) adding (deducting in the case of a debit
balance) the credit balance carried in such specialist or market maker
account, and (3) adding (deducting in the case of short positions) the
market value of positions long in such account.
(iv) The dealer shall obtain from the broker or dealer carrying the
market maker or specialist account a written undertaking which shall be
designated ``Notice Pursuant to Sec. 240.15c3-1(a)(6) of Intention to
Carry Specialist or Market Maker Account.'' Said undertaking shall
contain the representations required by paragraph (a)(6) of this section
and shall be filed with the Commission's Washington, DC, Office, the
regional or district office of the Commission for the region or district
in which the broker or dealer has its principal place of business and
the Designated Examining Authorities of both firms prior to effecting
any transactions in said account. The broker or dealer carrying such
account:
(A) Shall mark the account to the market not less than daily and
shall issue appropriate calls for additional equity which shall be met
by noon of the following business day;
(B) Shall notify by telegraph the Commission and the Designated
Examining Authorities pursuant to 17 CFR 240.17a-11, if the market maker
or specialist fails to deposit any required equity within the time
prescribed in paragraph (a)(6)(iv)(A) of this section; said telegraphic
notice shall be received by the Commission and the Designated Examining
Authorities not later than the close of business on the day said call is
not met;
(C) Shall not extend further credit in the account if the equity in
the account falls below that prescribed in paragraph (a)(6)(iii) of this
section, and
(D) Shall take steps to liquidate promptly existing positions in the
account in the event of a failure to meet a call for equity.
(v) No such carrying broker or dealer shall permit the sum of (A)
the deductions required by paragraph (c)(2)(x)(A) of this section in
respect of all transactions in market maker accounts guaranteed,
indorsed or carried by such broker or dealer pursuant to paragraph
(c)(2)(x) of this section and (B) the equity required by paragraph (iii)
of this paragraph (a)(6) in respect of all transactions in the accounts
of specialists of market makers in options carried by such broker or
dealer pursuant to this paragraph (a)(6) to exceed 1,000 percent of such
broker's or dealer's net capital as defined in paragraph (c)(2) of this
section for any period exceeding five business days; Provided, That
solely for purposes of this paragraph (a)(6)(v), deductions or equity
required in a specialist or market maker account in respect of positions
in fully paid securities (other than options), which do not underlie
options listed on the national securities exchange or facility of a
national securities association of which the specialist or market marker
is a member, need not be recognized. Provided further, That if at any
time such sum exceeds 1,000 percent of such broker's or dealer's net
capital, then the broker or dealer shall immediately transmit
telegraphic notice of such event to the principal office of the
Commission in Washington, DC, the regional or district office of the
Commission for the region or district in which the broker or dealer
maintains its principal place of business, and such broker's or dealer's
Designated Examining Authority. Provided further, That if at any time
such sum exceeds 1,000 percent of such broker's or dealer's net capital,
then such broker or dealer shall be subject to the prohibitions against
withdrawal of equity capital set forth in paragraph (e) of this section,
and to the prohibitions against reduction, prepayment and repayment of
subordination agreements set forth in paragraph (b)(11) of
Sec. 240.15c3-1d, as if such broker or dealer's net capital were below
the minimum standards specified by each of the aforementioned
paragraphs.
Self-Clearing Options Specialists
(7) [Reserved]
[[Page 267]]
(8) Municipal securities brokers' brokers. (i) A municipal
securities brokers' brokers, as defined in subsection (ii) of this
paragraph (a)(8), may elect not to be subject to the limitations of
paragraph (c)(2)(ix) of this section provided that such brokers' broker
complies with the requirements set out in paragraphs (a)(8) (iii), (iv)
and (v) of this section.
(ii) The term municipal securities brokers' broker shall mean a
municipal securities broker or dealer who acts exclusively as an
undisclosed agent in the purchase or sale of municipal securities for a
registered broker or dealer or registered municipal securities dealer,
who has no ``customers'' as defined in this rule and who does not have
or maintain any municipal securities in its proprietary or other
accounts.
(iii) In order to qualify to operate under this paragraph (a)(8), a
brokers' broker shall at all times have and maintain net capital of not
less than $150,000.
(iv) For purposes of this paragraph (a)(8), a brokers' broker shall
deduct from net worth 1% of the contract value of each municipal failed
to deliver contract which is outstanding 21 business days or longer.
Such deduction shall be increased by any excess of the contract price of
the fail to deliver over the market value of the underlying security.
(v) For purposes of this paragraph (a)(8), a brokers' broker may
exclude from its aggregate indebtedness computation indebtedness
adequately collateralized by municipal securities outstanding for not
more than one business day and offset by municipal securities failed to
deliver of the same issue and quantity. In no event may a brokers'
broker exclude any overnight bank loan attributable to the same
municipal securities failed to deliver contract for more than one
business day. A brokers' broker need not deduct from net worth the
amount by which the market value of securities failed to receive
outstanding longer than thirty (30) calendar days exceeds the contract
value of those failed to receive as required by Rule 15c3-
1(c)(2)(iv)(E).
Certain Additional Capital Requirements for Brokers or Dealers Engaging
in Reverse Repurchase Agreements
(9) A broker or dealer shall maintain net capital in addition to the
amounts required under paragraph (a) of this section in an amount equal
to 10 percent of:
(i) The excess of the market value of United States Treasury Bills,
Bonds and Notes subject to reverse repurchase agreements with any one
party over 105 percent of the contract prices (including accrued
interest) for reverse repurchase agreements with that party;
(ii) The excess of the market value of securities issued or
guaranteed as to principal or interest by an agency of the United States
or mortgage related securities as defined in section 3(a)(41) of the Act
subject to reverse repurchase agreements with any one party over 110
percent of the contract prices (including accrued interest) for reverse
repurchase agreements with that party; and
(iii) The excess of the market value of other securities subject to
reverse repurchase agreements with any one party over 120 percent of the
contract prices (including accrued interest) for reverse repurchase
agreements with that party.
(b) Exemptions:
(1) The provisions of this section shall not apply to any
specialist:
(i) Whose securities business, except for an occasional non-
specialist related securities transaction for its own account, is
limited to that of acting as an options market maker on a national
securities exchange;
(ii) That is a member in good standing and subject to the capital
requirements of a national securities exchange;
(iii) That does not transact a business in securities with other
than a broker or dealer registered with the Commission under section 15
or section 15C of the Act or a member of a national securities exchange;
and
(iv) That is not a clearing member of The Options Clearing
Corporation and whose securities transactions are effected through and
carried in an account cleared by another broker or
[[Page 268]]
dealer registered with the Commission under section 15 of the Act.
(2) A member in good standing of a national securities exchange who
acts as a floor broker (and whose activities do not require compliance
with other provisions of this rule), may elect to comply, in lieu of the
other provisions of this section, with the following financial
responsibility standard: The value of the exchange membership of the
member (based on the lesser of the most recent sale price or current bid
price for an exchange membership) is not less than $15,000, or an amount
equal to the excess of $15,000 over the value of the exchange membership
is held by an independent agent in escrow: Provided, That the rules of
such exchange require that the proceeds from the sale of the exchange
membership of the member and the amount held in escrow pursuant to this
paragraph shall be subject to the prior claims of the exchange and its
clearing corporation and those arising directly from the closing out of
contracts entered into on the floor of such exchanges.
(3) The Commission may, upon written application, exempt from the
provisions of this section, either unconditionally or on specified terms
and conditions, any broker or dealer who satisfies the Commission that,
because of the special nature of its business, its financial position,
and the safeguards it has established for the protection of customers'
funds and securities, it is not necessary in the public interest or for
the protection of investors to subject the particular broker or dealer
to the provisions of this section.
(c) Definitions. For the purpose of this section:
Aggregate Indebtedness
(1) The term aggregate indebtedness shall be deemed to mean the
total money liabilities of a broker or dealer arising in connection with
any transaction whatsoever and includes, among other things, money
borrowed, money payable against securities loaned and securities
``failed to receive,'' the market value of securities borrowed to the
extent to which no equivalent value is paid or credited (other than the
market value of margin securities borrowed from customers in accordance
with the provisions of 17 CFR 240.15c3-3 and margin securities borrowed
from non-customers), customers' and non-customers' free credit balances,
credit balances in customers' and non-customers' accounts having short
positions in securities, equities in customers' and non-customers'
future commodities accounts and credit balances in customers' and non-
customers' commodities accounts, but excluding:
exclusions From Aggregate Indebtedness
(i) Indebtedness adequately collateralized by securities which are
carried long by the broker or dealer and which have not been sold or by
securities which collateralize a secured demand note pursuant to
Appendix (D) to this section 17 CFR 240.15c3-1d; indebtedness adequately
collateralized by spot commodities which are carried long by the broker
or dealer and which have not been sold; or, until October 1, 1976,
indebtedness adequately collateralized by municipal securities
outstanding for not more than one business day and offset by municipal
securities failed to deliver of the same issue and quantity, where such
indebtedness is incurred by a broker or dealer effecting transactions
solely in municipal securities who is either registered with the
Commission or temporarily exempt from such registration pursuant to 17
CFR 240.15a-1(T) or 17 CFR 240.15Ba2-3(T);
(ii) Amounts payable against securities loaned, which securities are
carried long by the broker or dealer and which have not been sold or
which securities collateralize a secured demand note pursuant to
Appendix (D) (17 CFR 240.15c)
(iii) Amounts payable against securities failed to receive which
securities are carried long by the broker or dealer and which have not
been sold or which securities collateralize a secured demand note
pursuant to Appendix (D) (17 CFR 240.15c3-1d) or amounts payable against
securities failed to receive for which the broker or dealer also has a
receivable related to securities of the same issue and quantity thereof
which
[[Page 269]]
are either fails to deliver or securities borrowed by the broker or
dealer;
(iv) Credit balances in accounts representing amounts payable for
securities or money market instruments not yet received from the issuer
or its agent which securities are specified in paragraph (c)(2)(vi)(E)
and which amounts are outstanding in such accounts not more than three
(3) business days;
(v) Equities in customers' and non-customers' accounts segregated in
accordance with the provisions of the Commodity Exchange Act and the
rules and regulations thereunder;
(vi) Liability reserves established and maintained for refunds of
charges required by section 27(d) of the Investment Company Act of 1940,
but only to the extent of amounts on deposit in a segregated trust
account in accordance with 17 CFR 270.27d-1 under the Investment Company
Act of 1940;
(vii) Amounts payable to the extent funds and qualified securities
are required to be on deposit and are deposited in a ``Special Reserve
Bank Account for the Exclusive Benefit of Customers'' pursuant to 17 CFR
240.15c3-3 under the Securities Exchange Act of 1934;
(viii) Fixed liabilities adequately secured by assets acquired for
use in the ordinary course of the trade or business of a broker or
dealer but no other fixed liabilities secured by assets of the broker or
dealer shall be so excluded unless the sole recourse of the creditor for
nonpayment of such liability is to such asset;
(ix) Liabilities on open contractual commitments;
(x) Indebtedness subordinated to the claims of creditors pursuant to
a satisfactory subordination agreement, as defined in Appendix (D) (17
CFR 240.15c3-1d);
(xi) Liabilities which are effectively subordinated to the claims of
creditors (but which are not subject to a satisfactory subordination
agreement as defined in Appendix (D) (17 CFR 240.15c3-1d)) by non-
customers of the broker or dealer prior to such subordination, except
such subordinations by customers as may be approved by the Examining
Authority for such broker or dealer;
(xii) Credit balances in accounts of general partners;
(xiii) Deferred tax liabilities;
(xiv) Eighty-five percent of amounts payable to a registered
investment company related to fail to deliver receivables of the same
quantity arising out of purchases of shares of those registered
investment companies; and
(xv) Eighty-five percent of amounts payable against securities
loaned for which the broker or dealer has receivables related to
securities of the same class and issue and quantity that are securities
borrowed by the broker or dealer.
Net Capital
(2) The term net capital shall be deemed to mean the net worth of a
broker or dealer, adjusted by:
(i) Adjustments to net worth related to unrealized profit or loss
and deferred tax provisions. (A) Adding unrealized profits (or deducting
unrealized losses) in the accounts of the broker or dealer;
(B)(1) In determining net worth, all long and all short positions in
listed options shall be marked to their market value and all long and
all short securities and commodities positions shall be marked to their
market value.
(2) In determining net worth, the value attributed to any unlisted
option shall be the difference between the option's exercise value and
the market value of the underlying security. In the case of an unlisted
call, if the market value of the underlying security is less than the
exercise value of such call it shall be given no value and in the case
of an unlisted put if the market value of the underlying security is
more than the exercise value of the unlisted put it shall be given no
value.
(C) Adding to net worth the lesser of any deferred income tax
liability related to the items in (1), (2), and (3) below, or the sum of
(1), (2) and (3) below;
(1) The aggregate amount resulting from applying to the amount of
the deductions computed in accordance with paragraph (c)(2)(vi) of this
section and Appendices A and B, Sec. 240.15c3-1a and 240.15c3-1b, the
appropriate Federal and State tax rate(s) applicable to any unrealized
gain on the asset on which the deduction was computed;
[[Page 270]]
(2) Any deferred tax liability related to income accrued which is
directly related to an asset otherwise deducted pursuant to this
section;
(3) Any deferred tax liability related to unrealized appreciation in
value of any asset(s) which has been otherwise deducted from net worth
in accordance with the provisions of this section; and,
(D) Adding, in the case of future income tax benefits arising as a
result of unrealized losses, the amount of such benefits not to exceed
the amount of income tax liabilities accrued on the books and records of
the broker or dealer, but only to the extent such benefits could have
been applied to reduce accrued tax liabilities on the date of the
capital computation, had the related unrealized losses been realized on
that date.
(E) Adding to net worth any actual tax liability related to income
accrued which is directly related to an asset otherwise deducted
pursuant to this section.
(ii) Subordinated Liabilities. Excluding liabilities of the broker
or dealer which are subordinated to the claims of creditors pursuant to
a satisfactory subordination agreement, as defined in Appendix (D) (17
CFR 240.15c3-1d).
(iii) Sole Proprietors. Deducting, in the case of a broker or dealer
who is a sole proprietor, the excess of liabilities which have not been
incurred in the course of business as a broker or dealer over assets not
used in the business.
(iv) Assets Not Readily Convertible Into Cash. Deducting fixed
assets and assets which cannot be readily converted into cash (less any
indebtedness excluded in accordance with subdivision (c)(1)(viii) of
this section) including, among other things:
(A) Fixed Assets and Prepaid Items. Real estate; furniture and
fixtures; exchange memberships; prepaid rent, insurance and other
expenses; goodwill, organization expenses;
Certain Unsecured and Partly Secured Receivables
(B) All unsecured advances and loans; deficits in customers' and
non-customers' unsecured and partly secured notes; deficits in special
omnibus accounts maintained in compliance with the requirements of 12
CFR 220.10 of Regulation T under the Securities Exchange Act of 1934, or
similar accounts carried on behalf of another broker or dealer, after
application of calls for margin, marks to the market or other required
deposits that are outstanding 5 business days or less; deficits in
customers' and non-customers' unsecured and partly secured accounts
after application of calls for margin, marks to the market or other
required deposits that are outstanding 5 business days or less, except
deficits in cash accounts as defined in 12 CFR 220.8 of Regulation T
under the Securities Exchange Act of 1934 for which not more than one
extension respecting a specified securities transaction has been
requested and granted, and deducting for securities carried in any of
such accounts the percentages specified in paragraph (c)(2)(vi) of this
section or Appendix A (Sec. 240.15c3-1a); the market value of stock
loaned in excess of the value of any collateral received therefor;
receivables arising out of free shipments of securities (other than
mutual fund redemptions) in excess of $5,000 per shipment and all free
shipments (other than mutual fund redemptions) outstanding more than 7
business days, and mutual fund redemptions outstanding more than 16
business days; any collateral deficiencies in secured demand notes as
defined in Appendix D (Sec. 240.15c3-1d);
(C) Interest receivable, floor brokerage receivable, commissions
receivable from other brokers or dealers (other than syndicate profits
which shall be treated as required in paragraph (c)(2)(iv)(E) of this
section), mutual fund concessions receivable and management fees
receivable from registered investment companies, all of which
receivables are outstanding longer than thirty (30) days from the date
they arise; dividends receivable outstanding longer than thirty (30)
days from the payable date; good faith deposits arising in connection
with a non-municipal securities underwriting, outstanding longer than
eleven (11) business days from the settlement of the underwriting with
the issuer; receivables due from participation in municipal securities
underwriting syndicates and municipal securities joint
[[Page 271]]
underwriting accounts which are outstanding longer than sixty (60) days
from settlement of the underwriting with the issuer and good faith
deposits arising in connection with an underwriting of municipal
securities, outstanding longer than sixty (60) days from settlement of
the underwriting with the issuer; and receivables due from participation
in municipal securities secondary trading joint accounts, which are
outstanding longer than sixty (60) days from the date all securities
have been delivered by the account manager to the account members;
(D) Insurance Claims. Insurance claims which, after seven (7)
business days from the date the loss giving rise to the claim is
discovered, are not covered by an opinion of outside counsel that the
claim is valid and is covered by insurance policies presently in effect;
insurance claims which after twenty (20) business days from the date the
loss giving rise to the claim is discovered and which are accompanied by
an opinion of outside counsel described above, have not been
acknowledged in writing by the insurance carrier as due and payable; and
insurance claims acknowledged in writing by the carrier as due and
payable outstanding longer than twenty (20) business days from the date
they are so acknowledged by the carrier; and,
(E) Other Deductions. All other unsecured receivables; all assets
doubtful of collection less any reserves established therefor; the
amount by which the market value of securities failed to receive
outstanding longer than thirty (30) calendar days exceeds the contract
value of such fails to receive, and the funds on deposit in a
``segregated trust account'' in accordance with 17 CFR 270.27d-1 under
the Investment Company Act of 1940, but only to the extent that the
amount on deposit in such segregated trust account exceeds the amount of
liability reserves established and maintained for refunds of charges
required by sections 27(d) and 27(f) of the Investment Company Act of
1940; Provided, That any amount deposited in the ``Special Reserve Bank
Account for the Exclusive Benefit of Customers'' established pursuant to
17 CFR 240.15c3-3 and clearing deposits shall not be so deducted.
(F)(1) For purposes of this paragraph:
(i) The term reverse repurchase agreement deficit shall mean the
difference between the contract price for resale of the securities under
a reverse repurchase agreement and the market value of those securities
(if less than the contract price).
(ii) The term repurchase agreement deficit shall mean the difference
between the market value of securities subject to the repurchase
agreement and the contract price for repurchase of the securities (if
less than the market value of the securities).
(iii) As used in paragraph (c)(2)(iv)(F)(1) of this section, the
term contract price shall include accrued interest.
(iv) Reverse repurchase agreement deficits and the repurchase
agreement deficits where the counterparty is the Federal Reserve Bank of
New York shall be disregarded.
(2)(i) In the case of a reverse repurchase agreement, the deduction
shall be equal to the reverse repurchase agreement deficit.
(ii) In determining the required deductions under paragraph
(c)(2)(iv)(F)(2)(i) of this section, the broker or dealer may reduce the
reverse repurchase agreement deficit by:
(A) Any margin or other deposits held by the broker or dealer on
account of the reverse repurchase agreement;
(B) Any excess market value of the securities over the contract
price for resale of those securities under any other reverse repurchase
agreement with the same party;
(C) The difference between the contract price for resale and the
market value of securities subject to repurchase agreements with the
same party (if the market value of those securities is less than the
contract price); and
(D) Calls for margin, marks to the market, or other required
deposits which are outstanding one business day or less.
(3) (i) In the case of repurchase agreements, the deduction shall
be:
(A) The excess of the repurchase agreement deficit over 5 percent of
the contract price for resale of United States Treasury Bills, Notes and
Bonds, 10 percent of the contract price for the resale of securities
issued or
[[Page 272]]
guaranteed as to principal or interest by an agency of the United States
or mortgage related securities as defined in section 3(a)(41) of the Act
and 20 percent of the contract price for the resale of other securities
and;
(B) The excess of the aggregate repurchase agreement deficits with
any one party over 25 percent of the broker or dealer's net capital
before the application of paragraph (c)(2)(vi) of this section (less any
deduction taken with respect to repurchase agreements with that party
under paragraph (c)(2)(iv)(F)(3)(i)(A) of this section) or, if greater;
(C) The excess of the aggregate repurchase agreement deficits over
300 percent of the broker's or dealer's net capital before the
application of paragraph (c)(2)(vi) of this section.
(ii) In determining the required deduction under paragraph
(c)(2)(iv)(F)(3)(i) of this section, the broker or dealer may reduce a
repurchase agreement deficit by:
(A) Any margin or other deposits held by the broker or dealer on
account of a reverse repurchase agreement with the same party to the
extent not otherwise used to reduce a reverse repurchase deficit;
(B) The difference between the contract price and the market value
of securities subject to other repurchase agreements with the same party
(if the market value of those securities is less than the contract
price) not otherwise used to reduce a reverse repurchase agreement
deficit; and
(C) Calls for margin, marks to the market, or other required
deposits which are outstanding one business day or less to the extent
not otherwise used to reduce a reverse repurchase agreement deficit.
(G) Securities borrowed. 1 percent of the market value of securities
borrowed collateralized by an irrevocable letter of credit.
(H) Any receivable from an affiliate of the broker or dealer (not
otherwise deducted from net worth) and the market value of any
collateral given to an affiliate (not otherwise deducted from net worth)
to secure a liability over the amount of the liability of the broker or
dealer unless the books and records of the affiliate are made available
for examination when requested by the representatives of the Commission
or the Examining Authority for the broker or dealer in order to
demonstrate the validity of the receivable or payable. The provisions of
this subsection shall not apply where the affiliate is a registered
broker or dealer, registered government securities broker or dealer or
bank as defined in section 3(a)(6) of the Act or insurance company as
defined in section 3(a)(19) of the Act or investment company registered
under the Investment Company Act of 1940 or federally insured savings
and loan association or futures commission merchant registered pursuant
to the Commodity Exchange Act.
(v)(A) Deducting the market value of all short securities
differences (which shall include securities positions reflected on the
securities record which are not susceptible to either count or
confirmation) unresolved after discovery in accordance with the
following schedule:
------------------------------------------------------------------------
Numbers of
business
Differences \1\ days after
discovery
------------------------------------------------------------------------
25 percent.................................................. 7
50 percent.................................................. 14
75 percent.................................................. 21
100 percent................................................. 28
------------------------------------------------------------------------
\1\Percentage of market value of short securities differences.
(B) Deducting the market value of any long securities differences,
where such securities have been sold by the broker or dealer before they
are adequately resolved, less any reserves established therefor;
(C) The designated examining authority for a broker or dealer may
extend the periods in (v)(A) of this section for up to 10 business days
if it finds that exceptional circumstances warrant an extension.
Securities Haircuts
(vi) Deducting the percentages specified in paragraphs (c)(2)(vi)
(A) through (M) of this section (or the deductions prescribed for
securities positions set forth in Appendix A (Sec. 240.15c3-1a) of the
market value of all securities, money market instruments or options in
the proprietary or other accounts of the broker or dealer.
[[Page 273]]
(A)(1) In the case of a security issued or guaranteed as to
principal or interest by the United States or any agency thereof, the
applicable percentages of the market value of the net long or short
position in each of the categories specified below are:
Category 1
(i) Less than 3 months to maturity--0 percent.
(ii) 3 months but less than 6 months to maturity--\1/2\ of 1
percent.
(iii) 6 months but less than 9 months to maturity--\3/4\ of 1
percent.
(iv) 9 months but less than 12 months to maturity--1 percent.
Category 2
(i) 1 year but less than 2 years to maturity--1\1/2\ percent.
(ii) 2 years but less than 3 years to maturity--2 percent.
Category 3
(i) 3 years but less than 5 years to maturity--3%.
(ii) 5 years but less than 10 years to maturity--4%.
Category 4
(i) 10 years but less than 15 years to maturity--4\1/2\%.
(ii) 15 years but less than 20 years to maturity--5%.
(iii) 20 years but less than 25 years to maturity--5\1/2\%.
(iv) 25 years or more to maturity--6%.
Brokers or dealers shall compute a deduction for each category above as
follows: Compute the deductions for the net long or short positions in
each subcategory above. The deduction for the category shall be the net
of the aggregate deductions on the long positions and the aggregate
deductions on the short positions in each category plus 50% of the
lesser of the aggregate deductions on the long or short positions.
(2) A broker or dealer may elect to deduct, in lieu of the
computation required under paragraph (c)(2)(vi)(A)(1) of this section,
the applicable percentages of the market value of the net long or short
positions in each of the subcategories specified in paragraph
(c)(2)(vi)(A)(1) of this section.
(3) In computing deductions under paragraph (c)(2)(vi)(A)(1) of this
section, a broker or dealer may elect to exclude the market value of a
long or short security from one category and a security from another
category, Provided, That:
(i) Such securities have maturity dates:
(A) Between 9 months and 15 months and within 3 months of one
another.
(B) Between 2 years and 4 years and within 1 year of one another; or
(C) Between 8 years and 12 years and within 2 years of one another.
(ii) The net market value of the two excluded securities shall
remain in the category of the security with the higher market value.
(4) In computing deductions under paragraph (c)(2)(vi)(A)(1) of this
section, a broker or dealer may include in the categories specified in
paragraph (c)(2)(vi)(A)(1) of this section, long or short positions in
securities issued by the United States or any agency thereof that are
deliverable against long or short positions in futures contracts
relating to Government securities, traded on a recognized contract
market approved by the Commodity Futures Trading Commission, which are
held in the proprietary or other accounts of the broker or dealer. The
value of the long or short positions included in the categories shall be
determined by the contract value of the futures contract held in the
account. The provisions of Appendix B to Rule 15c3-1 (17 CFR 240.15c3-
1b) will in any event apply to the positions in futures contracts.
(5) In the case of a Government securities dealer that reports to
the Federal Reserve System, that transacts business directly with the
Federal Reserve System, and that maintains at all times a minimum net
capital of at least $50,000,000, before application of the deductions
provided for in paragraph (c)(2)(vi) of this section, the deduction for
a security issued or guaranteed as to principal or interest by the
United States or any agency thereof shall be 75 percent of the deduction
otherwise computed under paragraph (c)(2)(vi)(A) of this section.
(B)(1) In the case of any municipal security which has a scheduled
maturity at date of issue of 731 days or less and which is issued at par
value and pays interest at maturity, or which is issued at a discount,
and which is not traded
[[Page 274]]
flat or in default as to principal or interest, the applicable
percentages of the market value on the greater of the long or short
position in each of the categories specified below are:
(i) Less than 30 days to maturity--0%.
(ii) 30 days but less than 91 days to maturity--\1/8\ of 1%.
(iii) 91 days but less than 181 days to maturity--\1/4\ of 1%.
(iv) 181 days but less than 271 days to maturity--\3/8\ of 1%.
(v) 271 days but less than 366 days to maturity--\1/2\ of 1%.
(vi) 366 days but less than 456 days to maturity--\3/4\ of 1%.
(vii) 456 days but less than 732 days to maturity--1%.
(2) In the case of any municipal security, other than those
specified in paragraph (c)(2)(vi)(B)(1), which is not traded flat or in
default as to principal or interest, the applicable percentages of the
market value of the greater of the long or short position in each of the
categories specified below are:
(i) Less than 1 year to maturity--1%.
(ii) 1 year but less than 2 years to maturity--2%.
(iii) 2 years but less than 3\1/2\ years to maturity--3%.
(iv) 3\1/2\ years but less than 5 years to maturity--4%.
(v) 5 years but less than 7 years to maturity--5%.
(vi) 7 years but less than 10 years to maturity--5\1/2\%.
(vii) 10 years but less than 15 years to maturity--6%.
(viii) 15 years but less than 20 years to maturity--6\1/2\%.
(ix) 20 years or more to maturity--7%.
(C) Canadian Debt Obligations. In the case of any security issued or
unconditionally guaranteed as to principal and interest by the
Government of Canada, the percentages of market value to be deducted
shall be the same as in paragraph (A) of this section.
(D)(1) In the case of redeemable securities of an investment company
registered under the Investment Company Act of 1940, which assets
consist of cash or money market instruments and which is generally known
as a ``money market fund,'' the deduction shall be 2% of the market
value of the greater of the long or short position.
(2) In the case of redeemable securities of an investment company
registered under the Investment Company Act of 1940, which assets are in
the form of cash or securities or money market instruments of any
maturity which are described in paragraph (c)(2)(vi) (A) through (C) or
(E) of this section, the deduction shall be 7% of the market value of
the greater of the long or short positions.
(3) In the case of redeemable securities of an investment company
registered under the Investment Company Act of 1940, which assets are in
the form of cash or securities or money market instruments which are
described in paragraphs (c)(2)(vi) (A) through (C) or (E) and (F) of
this section, the deduction shall be 9% of the market value of the long
or short position.
(E) Commercial paper, bankers acceptances and certificates of
deposit. In the case of any short term promissory note or evidence of
indebtedness which has a fixed rate of interest or is sold at a
discount, and which has a maturity date at date of issuance not
exceeding nine months exclusive of days of grace, or any renewal
thereof, the maturity of which is likewise limited and is rated in one
of the three highest categories by at least two of the nationally
recognized statistical rating organizations (Provided, That effective
January 1, 1977, and until September 1, 1977, this paragraph shall be
deemed to require only one such rating), or in the case of any
negotiable certificates of deposit or bankers acceptance or similar type
of instrument issued or guaranteed by any bank as defined in section
3(a)(6) of the Securities Exchange Act of 1934, the applicable
percentage of the market value of the greater of the long or short
position in each of the categories specified below are:
(1) Less than 30 days to maturity--0 percent.
(2) 30 days but less than 91 days to maturity \1/8\ of 1 percent.
(3) 91 days but less than 181 days to maturity \1/4\ of 1 percent.
(4) 181 days but less than 271 days to maturity \3/8\ of 1 percent.
[[Page 275]]
(5) 271 days but less than 1 year to maturity \1/2\ of 1 percent;
and
(6) With respect to any negotiable certificate of deposit or bankers
acceptance or similar type of instrument issued or guaranteed by any
bank, as defined above, having 1 year or more to maturity, the deduction
shall be on the greater of the long or short position and shall be the
same percentage as that prescribed in paragraph (c)(2)(vi)(A) of this
section.
(F) (1) Nonconvertible debt securities. In the case of
nonconvertible debt securities having a fixed interest rate and a fixed
maturity date and which are not traded flat or in default as to
principal or interest and which are rated in one of the four highest
rating categories by at least two of the nationally recognized
statistical rating organizations, the applicable percentages of the
market value of the greater of the long or short position in each of the
categories specified below are:
(i) Less than 1 year to maturity--2%
(ii) 1 year but less than 2 years to maturity--3%
(iii) 2 years but less than 3 years to maturity--5%
(iv) 3 years but less than 5 years to maturity--6%
(v) 5 years but less than 10 years to maturity--7%
(vi) 10 years but less than 15 years to maturity--7\1/2\%
(vii) 15 years but less than 20 years to maturity--8%
(viii) 20 years but less than 25 years to maturity--8\1/2\%
(ix) 25 years or more to maturity--9%
(2) A broker or dealer may elect to exclude from the above
categories long or short positions that are hedged with short or long
positions in securities issued by the United States or any agency
thereof or nonconvertible debt securities having a fixed interest rate
and a fixed maturity date and which are not traded flat or in default as
to principal or interest and which are rated in one of the four highest
rating categories by at least two of the nationally recognized
statistical rating organizations if such securities have maturity dates:
(i) Less than five years and within 6 months of each other;
(ii) Between 5 years and 10 years and within 9 months of each other;
(iii) Between 10 years and 15 years and within 2 years of each other; or
(iv) 15 years or more and within 10 years of each other.
The broker-dealer shall deduct the amounts specified in paragraphs
(c)(2)(vi)(F) (3) and (4) of this section.
(3) With respect to those positions described in paragraph
(c)(2)(vi)(F)(2) of this section that include a long or short position
in securities issued by the United States or any agency thereof, the
broker or dealer shall exclude the hedging short or long United States
or agency securities position from the applicable haircut category under
paragraph (c)(2)(vi)(A) of this section. The broker or dealer shall
deduct the percentage of the market value of the hedged long or short
position in nonconvertible debt securities as specified in each of the
categories below:
(i) Less than 5 years to maturity--1\1/2\%
(ii) 5 years but less than 10 years to maturity--2\1/2\%
(iii) 10 years but less than 15 years to maturity-- 2\3/4\%
(iv) 15 years or more to maturity--3%
(4) With respect to those positions described in paragraph
(c)(2)(vi)(F)(2) of this section that include offsetting long and short
positions in nonconvertible debt securities, the broker or dealer shall
deduct a percentage of the market value of the hedged long or short
position in nonconvertible debt securities as specified in each of the
categories below:
(i) Less than 5 years to maturity--1\3/4\%
(ii) 5 years but less than 10 years to maturity--3%
(iii) 10 years but less than 15 years to maturity--3\1/4\%
(iv) 15 years or more to maturity--3\1/2\%
(5) In computing deductions under paragraph (c)(2)(vi)(F)(3) of this
section, a broker or dealer may include in the categories specified in
paragraph (c)(2)(vi)(F)(3) of this section, long or short positions in
securities issued by the United States or any agency thereof that are
deliverable against long or short positions in futures contracts
relating to Government securities, traded on a recognized contract
market approved by the Commodity Futures Trading Commission, which are
held in
[[Page 276]]
the proprietary or other accounts of the broker or dealer. The value of
the long or short positions included in the categories shall be
determined by the contract value of the futures contract held in the
account.
(6) The provisions of Appendix B to Rule 15c3-1 (17 CFR 240.15c3-1b)
will in any event apply to the positions in futures contracts.
(G) Convertible Debt Securities. In the case of a debt security not
in default which has a fixed rate of interest and a fixed maturity date
and which is convertible into an equity security, the deductions shall
be as follows: If the market value is 100 percent or more of the
principal amount, the deduction shall be determined as specified in
paragraph (c)(2)(vi)(J) of this section; if the market value is less
than the principal amount, the deduction shall be determined as
specified in paragraph (F) of this section; if such securities are rated
as required of paragraph (F) of this section;
(H) In the case of cumulative, nonconvertible preferred stock
ranking prior to all other classes of stock of the same issuer, which is
rated in one of the four highest rating categories by at least two of
the nationally recognized statistical rating organizations and which are
not in arrears as to dividends, the deduction shall be 10% of the market
value of the greater of the long or short position.
(I) [Reserved]
All Other Securities
(J) In the case of all securities or evidences of indebtedness,
except those described in Appendix A, Sec. 240.15c3-1a, which are not
included in any of the percentage categories enumerated in paragraphs
(c)(2)(vi) (A) through (H) of this section or paragraph
(c)(2)(vi)(K)(ii) of this section, the deduction shall be 15 percent of
the market value of the greater of the long or short positions and to
the extent the market value of the lesser of the long or short positions
exceeds 25 percent of the market value of the greater of the long or
short positions, the percentage deduction on such excess shall be 15
percent of the market value of such excess. No deduction need be made in
the case of:
(1) A security that is convertible into or exchangeable for another
security within a period of 90 days, subject to no conditions other than
the payment of money, and the other securities into which such security
is convertible or for which it is exchangeable, are short in the
accounts of such broker or dealer; or
(2) A security that has been called for redemption and that is
redeemable within 90 days.
(K) Securities with a Limited Market. In the case of securities
(other than exempted securities, nonconvertible debt securities, and
cumulative nonconvertible preferred stock) which are not: (1) Traded on
a national securities exchange; (2) designated as ``OTC Margin Stock''
pursuant to Regulation T under the Securities Exchange Act of 1934; (3)
quoted on ``NASDAQ''; or (4) redeemable shares of investment companies
registered under the Investment Company Act of 1940, the deduction shall
be as follows:
(i) In the case where there are regular quotations in an inter-
dealer quotations system for the securities by three or more independent
market-makers (exclusive of the computing broker or dealer) and where
each such quotation represents a bona fide offer to brokers or dealers
to both buy and sell in reasonable quantities at stated prices, or where
a ready market as defined in paragraph (c)(11) (ii) is deemed to exist,
the deduction shall be determined in accordance with paragraph
(c)(2)(vi)(J) of this section;
(ii) In the case where there are regular quotations in an inter-
dealer quotations system for the securities by only one or two
independent market-makers (exclusive of the computing broker or dealer)
and where each such quotation represents a bona fide offer to brokers or
dealers both to buy and sell in reasonable quantities, at stated prices,
the deduction on both the long and short position shall be 40 percent.
(L) Where a broker or dealer demonstrates that there is sufficient
liquidity for any securities long or short in the proprietary or other
accounts of the broker or dealer which are subject to a deduction
required by paragraph
[[Page 277]]
(c)(2)(vi)(K) of this section, such deduction, upon a proper showing to
the Examining Authority for the broker or dealer, may be appropriately
decreased, but in no case shall such deduction be less than that
prescribed in paragraph (c)(2)(vi)(J) of this section.
Undue Concentration
(M)(1) In the case of money market instruments, or securities of a
single class or series of an issuer, including any option written,
endorsed or held to purchase or sell securities of such a single class
or series of an issuer (other than ``exempted securities'' and
redeemable securities of an investment company registered pursuant to
the Investment Company Act of 1940), and securities underwritten (in
which case the deduction provided for herein shall be applied after 11
business days), which are long or short in the proprietary or other
accounts of a broker or dealer, including securities that are collateral
to secured demand notes defined in Appendix D, Sec. 240.15c3-1d, and
that have a market value of more than 10 percent of the ``net capital''
of a broker or dealer before the application of paragraph (c)(2)(vi) of
this section or Appendix A, Sec. 240.15c3-1a, there shall be an
additional deduction from net worth and/or the Collateral Value for
securities collateralizing a secured demand note defined in Appendix D,
Sec. 240.15c3-1d, equal to 50 percent of the percentage deduction
otherwise provided by this paragraph (c)(2)(vi) of this section or
Appendix A, Sec. 240.15c3-1a, on that portion of the securities position
in excess of 10 percent of the ``net capital'' of the broker or dealer
before the application of paragraph (c)(2)(vi) of this section and
Appendix A, Sec. 240.15c3-1a. In the case of securities described in
paragraph (c)(2)(vi)(J), the additional deduction required by this
paragraph (c)(2)(vi)(M) shall be 15 percent.
(2) This paragraph (c)(2)(vi)(M) shall apply notwithstanding any
long or short position exemption provided for in paragraph (c)(2)(vi)(J)
of this section (except for long or short position exemptions arising
out of the first proviso to paragraph (c)(2)(vi)(J)) and the deduction
on any such exempted position shall be 15 percent of that portion of the
securities position in excess of 10 percent of the broker or dealer's
net capital before the application of paragraph (c)(2)(vi) of this
section and Appendix A, Sec. 240.15c3-1a.
(3) This paragraph (c)(2)(vi)(M) shall be applied to an issue of
equity securities only on the market value of such securities in excess
of $10,000 or the market value of 500 shares, whichever is greater, or
$25,000 in the case of a debt security.
(4) This paragraph (c)(2)(vi)(M) will be applied to an issue of
municipal securities having the same security provisions, date of issue,
interest rate, day, month and year of maturity only if such securities
have a market value in excess of $500,000 in bonds ($5,000,000 in notes)
or 10 percent of tentative net capital, whichever is greater, and are
held in position longer than 20 business days from the date the
securities are received by the syndicate manager from the issuer.
(5) Any specialist that is subject to a deduction required by this
paragraph (c)(2)(vi)(M), respecting its specialty stock, that can
demonstrate to the satisfaction of the Examining Authority for such
broker or dealer that there is sufficient liquidity for such
specialist's specialty stock and that such deduction need not be applied
in the public interest for the protection of investors, may upon a
proper showing to such Examining Authority have such undue concentration
deduction appropriately decreased, but in no case shall the deduction
prescribed in paragraph (c)(2)(vi)(J) of this section above be reduced.
Each such Examining Authority shall make and preserve for a period of
not less than 3 years a record of each application granted pursuant to
this paragraph (c)(2)(vi)(M)(5), which shall contain a summary of the
justification for the granting of the application.
(N) Any specialist that limits its securities business to that of a
specialist (except for an occasional non-specialist related securities
transaction for its own account), that does not transact a business in
securities with other than a broker or dealer registered with the
Commission under section 15 or 15C of the Act or a member of a national
securities exchange, and that is not a clearing member of The Options
Clearing Corporation need not deduct from
[[Page 278]]
net worth in computing net capital those deductions, as to its specialty
securities, set forth in paragraph (c)(2)(vi) of this section or
Appendix A to this section, except for paragraph (e) of this section
limiting withdrawals of equity capital and Appendix D to this section
relating to satisfactory subordination agreements. As to a specialist
that is solely an options specialist, in paragraph (e) the term ``net
capital'' shall be deemed to mean ``net capital before the application
of paragraph (c)(2)(vi) of this section or Appendix A to this section''
and ``excess net capital'' shall be deemed to be the amount of net
capital before the application of paragraph (c)(2)(vi) of this section
or Appendix A to this section in excess of the amount of net capital
required under paragraph (a) of this section. In reports filed pursuant
to Sec. 240.17a-5 and in making the record required by Sec. 240.17a-
3(a)(11) each specialists shall include the deductions that would
otherwise have been required by paragraph (c)(2)(vi) of this section or
Appendix A to this section in the absence of this paragraph
(c)(2)(vi)(N).
(vii) Non-Marketable Securities. Deducting 100 percent of the
carrying value in the case of securities or evidence of indebtedness in
the proprietary or other accounts of the broker or dealer, for which
there is no ready market, as defined in paragraph (c)(11) of this
section, and securities, in the proprietary or other accounts of the
broker or dealer, which cannot be publicly offered or sold because of
statutory, regulatory or contractual arrangements or other restrictions.
Open Contractual Commitments
(viii) Deducting, in the case of a broker or dealer that has open
contractual commitments (other than those option positions subject to
Appendix A, Sec. 240.15c3-1a), the respective deductions as specified in
paragraph (c)(2)(vi) of this section or Appendix B, Sec. 240.15c3-1b,
from the value (which shall be the market value whenever there is a
market) of each net long and each net short position contemplated by any
open contractual commitment in the proprietary or other accounts of the
broker or dealer.
(A) The deduction for contractual commitments in those securities
that are treated in paragraph (c)(2)(vi)(J) of this section shall be 30
percent unless the class and issue of the securities subject to the open
contractual commitment deduction are listed for trading on a national
securities exchange or are designated as NASDAQ National Market System
Securities.
(B) A broker or dealer that maintains in excess of $250,000 of net
capital may add back to net worth up to $150,000 of any deduction
computed under this paragraph (c)(2)(viii)(B).
(C) The deduction with respect to any single commitment shall be
reduced by the unrealized profit in such commitment, in an amount not
greater than the deduction provided for by this paragraph (or increased
by the unrealized loss), in such commitment, and in no event shall an
unrealized profit on any closed transactions operate to increase net
capital.
(ix) Deducting from the contract value of each failed to deliver
contract that is outstanding five business days or longer (21 business
days or longer in the case of municipal securities) the percentages of
the market value of the underlying security that would be required by
application of the deduction required by paragraph (c)(2)(vi) of this
section. Such deduction, however, shall be increased by any excess of
the contract price of the failed to deliver contract over the market
value of the underlying security or reduced by any excess of the market
value of the underlying security over the contract value of the failed
to deliver contract, but not to exceed the amount of such deduction. The
designated examining authority for the broker or dealer may, upon
application of the broker or dealer, extend for a period up to 5
business days, any period herein specified when it is satisfied that the
extension is warranted. The designated examining authority upon
expiration of the extension may extend for one additional period of up
to 5 business days, any period herein specified when it is satisfied
that the extension is warranted.
[[Page 279]]
Brokers or Dealers Carrying Accounts of Listed Options Specialists
(x)(A) With respect to any transaction of a specialist in listed
options, who is either not otherwise subject to the provisions of this
section or is described in paragraph (c)(2)(vi)(N) of this section, for
whose specialist account a broker or dealer acts as a guarantor,
endorser, or carrying broker or dealer, such broker or dealer shall
adjust its net worth by deducting as of noon of each business day the
amounts computed as of the prior business day pursuant to Sec. 240.15c3-
1a. The required deductions may be reduced by any liquidating equity
that exists in such specialist's market-maker account as of that time
and shall be increased to the extent of any liquidating deficit in such
account. Noon shall be determined according to the local time where the
broker or dealer is headquartered. In no event shall excess equity in
the specialist's market-maker account result in an increase of the net
capital of any such guarantor, endorser, or carrying broker or dealer.
(B) Definitions. (1) The term listed option shall mean any option
traded on a registered national securities exchange or automated
facility of a registered national securities association.
(2) For purposes of this section, the equity in an individual
specialist's market-maker account shall be computed by:
(i) Marking all securities positions long or short in the account to
their respective current market values;
(ii) Adding (deducting in the case of a debit balance) the credit
balance carried in such specialist's market-maker account; and
(iii) Adding (deducting in the case of short positions) the market
value of positions long in such account.
(C) No guarantor, endorser, or carrying broker or dealer shall
permit the sum of the deductions required pursuant to Sec. 240.15c3-1a
in respect of all transactions in specialists' market-maker accounts
guaranteed, endorsed, or carried by such broker or dealer to exceed
1,000 percent of such broker's or dealer's net capital as defined in
Sec. 240.15c3-1(c)(2) for any period exceeding three business days. If
at any time such sum exceeds 1,000 percent of such broker's or dealer's
net capital, then the broker or dealer shall:
(1) Immediately transmit telegraphic or facsimile notice of such
event to the Division of Market Regulation in the headquarters office of
the Commission in Washington, D.C., to the district or regional office
of the Commission for the district or region in which the broker or
dealer maintains its principal place of business, and to its examining
authority designated pursuant to section 17(d) of the Act (15 U.S.C.
78q(d)) (``Designated Examining Authority''); and
(2) Be subject to the prohibitions against withdrawal of equity
capital set forth in Sec. 240.15c3-1(e) and to the prohibitions against
reduction, prepayment, and repayment of subordination agreements set
forth in paragraph (b)(11) of Sec. 240.15c3-1d, as if such broker or
dealer's net capital were below the minimum standards specified by each
of those paragraphs.
(D) If at any time there is a liquidating deficit in a specialist's
market-maker account, then the broker or dealer guaranteeing, endorsing,
or carrying listed options transactions in such specialist's market-
maker account may not extend any further credit in that account, and
shall take steps to liquidate promptly existing positions in the
account. This paragraph shall not prevent the broker or dealer from,
upon approval by the broker's or dealer's Designated Examining
Authority, entering into hedging positions in the specialist's market-
maker account. The broker or dealer also shall transmit telegraphic or
facsimile notice of the deficit and its amount by the close of business
of the following business day to its Designated Examining Authority and
the Designated Examining Authority of the specialist, if different from
its own.
(E) Upon written application to the Commission by the specialist and
the broker or dealer guaranteeing, endorsing, or carrying options
transactions in such specialist's market-maker account, the Commission
may approve upon specified terms and conditions lesser adjustments to
net worth than those specified in Sec. 240.15c3-1a.
(xi) Brokers or Dealers Carrying Specialists or Market Makers
Accounts. With
[[Page 280]]
respect to a broker or dealer who carries a market maker or specialist
account, or with respect to any transaction in options listed on a
registered national securities exchange for which a broker or dealer
acts as a guarantor or endorser of options written by a specialist in a
specialist account, the broker or dealer shall deduct, for each account
carried or for each class or series of options guaranteed or endorsed,
any deficiency in collateral required by paragraph (a)(6) of this
section.
(xii) Deduction from net worth for certain undermargined accounts.
Deducting the amount of cash required in each customer's or non-
customer's account to meet the maintenance margin requirements of the
Examining Authority for the broker or dealer, after application of calls
for margin, marks to the market or other required deposits which are
outstanding 5 business days or less.
(xiii) Deduction from net worth for indebtedness collateralized by
exempted securities. Deducting, at the option of the broker or dealer,
in lieu of including such amounts in aggregate indebtedness, 4 percent
of the amount of any indebtedness secured by exempted securities or
municipal securities if such indebtedness would otherwise be includable
in aggregate indebtedness.
Exempted Securities
(3) The term exempted securities shall mean those securities deemed
exempted securities by section 3(a)(12) of the Securities Exchange Act
of 1934 and rules thereunder.
Contractual Commitments
(4) The term contractual commitments shall include underwriting,
when issued, when distributed and delayed delivery contracts, the
writing or endorsement of puts and calls and combinations thereof,
commitments in foreign currencies, and spot (cash) commodities
contracts, but shall not include uncleared regular way purchases and
sales of securities and contracts in commodities futures. A series of
contracts of purchase or sale of the same security conditioned, if at
all, only upon issuance may be treated as an individual commitment.
Adequately Secured
(5) Indebtedness shall be deemed to be adequately secured within the
meaning of this section when the excess of the market value of the
collateral over the amount of the indebtedness is sufficient to make the
loan acceptable as a fully secured loan to banks regularly making
secured loans to brokers or dealers.
Customer
(6) The term customer shall mean any person from whom, or on whose
behalf, a broker or dealer has received, acquired or holds funds or
securities for the account of such person, but shall not include a
broker or dealer or a registered municipal securities dealer, or a
general, special or limited partner or director or officer of the broker
or dealer, or any person to the extent that such person has a claim for
property or funds which by contract, agreement, or understanding, or by
operation of law, is part of the capital of the broker or dealer.
Provided, however, That the term ``customer'' shall also include a
broker or dealer, but only insofar as such broker or dealer maintains a
special omnibus account carried with another broker or dealer in
compliance with 12 CFR 220.4(b) of Regulation T under the Securities
Exchange Act of 1934.
Non-Customer
(7) The term non-customer means a broker or dealer, registered
municipal securities dealer, general partner, limited partner, officer,
director and persons to the extent their claims are subordinated to the
claims of creditors of the broker or dealer.
Market Maker
(8) The term market maker shall mean a dealer who, with respect to a
particular security, (i) regularly publishes bona fide, competitive bid
and offer quotations in a recognized interdealer quotation system; or
(ii) furnishes bona fide competitive bid and offer quotations on
request; and, (iii) is ready, willing and able to effect transactions in
reasonable quantities at his quoted prices with other brokers or
dealers.
[[Page 281]]
Promptly Transmit and Deliver
(9) A broker or dealer is deemed to ``promptly transmit'' all funds
and to ``promptly deliver'' all securities within the meaning of
paragraphs (a)(2)(i) and (a)(2)(v) of this section where such
transmission or delivery is made no later than noon of the next business
day after the receipt of such funds or securities; provided, however,
that such prompt transmission or delivery shall not be required to be
effected prior to the settlement date for such transaction.
Promptly Forward
(10) A broker or dealer is deemed to ``promptly forward'' funds or
securities within the meaning of paragraph (a)(2)(i) of this section
only when such forwarding occurs no later than noon of the next business
day following receipt of such funds or securities.
Ready Market
(11)(i) The term ready market shall include a recognized established
securities market in which there exists independent bona fide offers to
buy and sell so that a price reasonably related to the last sales price
or current bona fide competitive bid and offer quotations can be
determined for a particular security almost instantaneously and where
payment will be received in settlement of a sale at such price within a
relatively short time conforming to trade custom.
(ii) A ready market shall also be deemed to exist where securities
have been accepted as collateral for a loan by a bank as defined in
section 3(a)(6) of the Securities Exchange Act of 1934 and where the
broker or dealer demonstrates to its Examining Authority that such
securities adequately secure such loans as that term is defined in
paragraph (c)(5) of this section.
Examining Authority
(12) The term Examining Authority of a broker or dealer shall mean
for the purposes of 17 CFR 240.15c3-1 and 240.15c3-1a-d the national
securities exchange or national securities association of which the
broker or dealer is a member or, if the broker or dealer is a member of
more than one such self-regulatory organization, the organization
designated by the Commission as the Examining Authority for such broker
or dealer, or if the broker or dealer is not a member of any such self-
regulatory organization, the Regional or District Office of the
Commission where such broker or dealer has its principal place of
business.
Equity
(13) [Reserved]
(14) The term municipal securities shall mean those securities
included within the definition of ``municipal securities'' in section
3(a)(29) of the Securities Exchange Act of 1934.
(d) Debt-equity requirements. No broker or dealer shall permit the
total of outstanding principal amounts of its satisfactory subordination
agreements (other than such agreements which qualify under this
paragraph (d) as equity capital) to exceed 70 percent of its debt-equity
total, as hereinafter defined, for a period in excess of 90 days or for
such longer period which the Commission may, upon application of the
broker or dealer, grant in the public interest or for the protection of
investors. In the case of a corporation, the debt-equity total shall be
the sum of its outstanding principal amounts of satisfactory
subordination agreements, par or stated value of capital stock, paid in
capital in excess of par, retained earnings, unrealized profit and loss
or other capital accounts. In the case of a partnership, the debt-equity
total shall be the sum of its outstanding principal amounts of
satisfactory subordination agreements, capital accounts of partners
(exclusive of such partners' securities accounts) subject to the
provisions of paragraph (e) of this section, and unrealized profit and
loss. In the case of a sole proprietorship, the debt-equity total shall
include the sum of its outstanding principal amounts of satisfactory
subordination agreements, capital accounts of the sole proprietorship
and unrealized profit and loss. Provided, however, That a satisfactory
subordination agreement entered into by a partner or stockholder which
has an initial term of at least three years and has a remaining term of
not less than 12 months shall
[[Page 282]]
be considered equity for the purposes of this paragraph (d) if:
(1) It does not have any of the provisions for accelerated maturity
provided for by paragraphs (b)(9)(i), (10)(i) or (10)(ii) of Appendix
(D) (17 CFR 240.15c3-1d) and is maintained as capital subject to the
provisions restricting the withdrawal thereof required by paragraph (e)
of this section or
(2) The partnership agreement provides that capital contributed
pursuant to a satisfactory subordination agreement as defined in
Appendix (D) (17 CFR 240.15c3-1d) shall in all respects be partnership
capital subject to the provisions restricting the withdrawal thereof
required by paragraph (e) of this section.
(e)(1) Notice provisions relating to limitations on the withdrawal
of equity capital. No equity capital of the broker or dealer or a
subsidiary or affiliate consolidated pursuant to appendix C (17 CFR
240.15c3-1c) may be withdrawn by action of a stockholder or a partner or
by redemption or repurchase of shares of stock by any of the
consolidated entities or through the payment of dividends or any similar
distribution, nor may any unsecured advance or loan be made to a
stockholder, partner, sole proprietor, employee or affiliate without
written notice given in accordance with paragraph (e)(1)(iv) of this
section:
(i) Two business days prior to any withdrawals, advances or loans if
those withdrawals, advances or loans on a net basis exceed in the
aggregate in any 30 calendar day period, 30 percent of the broker or
dealer's excess net capital. A broker or dealer, in an emergency
situation, may make withdrawals, advances or loans that on a net basis
exceed 30 percent of the broker or dealer's excess net capital in any 30
calendar day period without giving the advance notice required by this
paragraph, with the prior approval of its Examining Authority. Where a
broker or dealer makes a withdrawal with the consent of its Examining
Authority, it shall in any event comply with paragraph (e)(1)(ii) of
this section; or
(ii) Two business days after any withdrawals, advances or loans if
those withdrawals, advances or loans on a net basis exceed in the
aggregate in any 30 calendar day period, 20 percent of the broker or
dealer's excess net capital.
(iii) This paragraph (e)(1) does not apply to:
(A) Securities or commodities transactions in the ordinary course of
business between a broker or dealer and an affiliate where the broker or
dealer makes payment to or on behalf of such affiliate for such
transaction and then receives payment from such affiliate for the
securities or commodities transaction within two business days from the
date of the transaction; or
(B) Withdrawals, advances or loans which in the aggregate in any
thirty calendar day period, on a net basis, equal $500,000 or less.
(iv) Each required notice shall be effective when received by the
Commission in Washington, DC, the regional or district office of the
Commission for the region or district in which the broker or dealer has
its principal place of business, the broker or dealer's Examining
Authority and the Commodity Futures Trading Commission if such broker or
dealer is registered with that Commission.
(2) Limitations on Withdrawal of equity capital. No equity capital
of the broker or dealer or a subsidiary or affiliate consolidated
pursuant to appendix C (17 CFR 240.15c3-1c) may be withdrawn by action
of a stockholder or a partner or by redemption or repurchase of shares
of stock by any of the consolidated entities or through the payment of
dividends or any similar distribution, nor may any unsecured advance or
loan be made to a stockholder, partner, sole proprietor, employee or
affiliate, if after giving effect thereto and to any other such
withdrawals, advances or loans and any Payments of Payment Obligations
(as defined in appendix D (17 CFR 240.15c3-1d)) under satisfactory
subordination agreements which are scheduled to occur within 180 days
following such withdrawal, advance or loan if:
(i) The broker or dealer's net capital would be less than 120
percent of the minimum dollar amount required by paragraph (a) of this
section;
(ii) The broker-dealer is registered as a futures commission
merchant, its net capital would be less than 7 percent of
[[Page 283]]
the funds required to be segregated pursuant to the Commodity Exchange
Act and the regulations thereunder (less the market value of commodity
options purchased by option customers on or subject to the rules of a
contract market, each such deduction not to exceed the amount of funds
in the option customer's account);
(iii) The broker-dealer's net capital would be less than 25 percent
of deductions from net worth in computing net capital required by
paragraphs (c)(2)(vi), (f) and appendix A, of this section, unless the
broker or dealer has the prior approval of the Commission to make such
withdrawal;
(iv) The total outstanding principal amounts of satisfactory
subordination agreements of the broker or dealer and any subsidiaries or
affiliates consolidated pursuant to appendix C (17 CFR 240.15c3-1c)
(other than such agreements which qualify as equity under paragraph (d)
of this section) would exceed 70% of the debt-equity total as defined in
paragraph (d) of this section;
(v) The broker or dealer is subject to the aggregate indebtedness
limitations of paragraph (a) of this section, the aggregate indebtedness
of any of the consolidated entities exceeds 1000 percent of its net
capital; or
(vi) The broker or dealer is subject to the alternative net capital
requirement of paragraph (f) of this section, its net capital would be
less than 5 percent of aggregate debit items computed in accordance with
17 CFR 240.15c3-3a.
(3)(i) Temporary Restrictions on Withdrawal of Net Capital. The
Commission may by order restrict, for a period up to twenty business
days, any withdrawal by the broker or dealer of equity capital or
unsecured loan or advance to a stockholder, partner, sole proprietor,
employee or affiliate if such withdrawal, advance or loan:
(A) When aggregated with all other withdrawals, advances or loans on
a net basis during a 30 calendar day period exceeds 30 percent of the
broker or dealer's excess net capital; and
(B) The Commission, based on the facts and information available,
concludes that the withdrawal, advance or loan may be detrimental to the
financial integrity of the broker or dealer, or may unduly jeopardize
the broker or dealer's ability to repay its customer claims or other
liabilities which may cause a significant impact on the markets or
expose the customers or creditors of the broker or dealer to loss
without taking into account the application of the Securities Investor
Protection Act.
(ii) An order temporarily prohibiting the withdrawal of capital
shall be rescinded if the Commission determines that the restriction on
capital withdrawal should not remain in effect. The hearing will be held
within two business days from the date of the request in writing by the
broker or dealer.
(4)(i) Miscellaneous provisions. Excess net capital is that amount
in excess of the amount required under paragraph (a) of this section.
For the purposes of paragraphs (e)(1) and (e)(2) of this section, a
broker or dealer may use the amount of excess net capital and deductions
required under paragraphs (c)(2)(vi), (f) and appendix A of this section
reported in its most recently required filed Form X-17A-5 for the
purposes of calculating the effect of a projected withdrawal, advance or
loan relative to excess net capital or deductions. The broker or dealer
must assure itself that the excess net capital or the deductions
reported on the most recently required filed Form X-17A-5 have not
materially changed since the time such report was filed.
(ii) The term equity capital includes capital contributions by
partners, par or stated value of capital stock, paid-in capital in
excess of par, retained earnings or other capital accounts. The term
equity capital does not include securities in the securities accounts of
partners and balances in limited partners' capital accounts in excess of
their stated capital contributions.
(iii) Paragraphs (e)(1) and (e)(2) of this section shall not
preclude a broker or dealer from making required tax payments or
preclude the payment to partners of reasonable compensation, and such
payments shall not be included in the calculation of withdrawals,
advances, or loans for purposes of paragraphs (e)(1) and (e)(2) of this
section.
[[Page 284]]
(iv) For the purpose of this paragraph (e) of this section, any
transaction between a broker or dealer and a stockholder, partner, sole
proprietor, employee or affiliate that results in a diminution of the
broker or dealer's net capital shall be deemed to be an advance or loan
of net capital.
(Secs. 15(c)(3), 17(a) and 23(a), 15 U.S.C. 78o(c)(3), 78q(a), and
78w(a))
[40 FR 29799, July 16, 1975]
Editorial Note: For Federal Register citations affecting
Sec. 240.15c3-1, see the List of CFR Sections Affected in the Finding
Aids section of this volume.
Effective Date Note: At 62 FR 6480, Feb. 12, 1997, Sec. 240.15c3-1
was amended by removing and reserving paragraph (a)(7). and by revising
paragraph (c)(2)(x), effective Sept. 1, 1997. For the convenience of the
user, the superseded text is set forth as follows:
Sec. 240.15c3-1 Net capital requirements for brokers or dealers.
(a) * * *
* * * * *
(7)(i) A dealer who meets the conditions of paragraph (a)(7)(ii) of
this section may elect to operate under this paragraph (a)(7) and
thereby not apply, except to the extent required by this paragraph
(a)(7), the provisions of paragraphs (c)(2)(vi), (c)(2)(x), and
(c)(2)(xi) of this section or Appendix A (Sec. 240.15c3-1a) to this
section and, in lieu thereof, apply the provisions of paragraph
(a)(7)(iii) of this section.
(ii) This paragraph (a)(7) shall be available to a broker or dealer
engaged solely in one or more of the following activities:
(A) His transactions as a dealer are limited to the business of
effecting (as sole proprietor or through one or more natural persons
associated with such dealer (``associated specialist'')) and clearing
specialist or market maker transactions in options listed on a national
securities exchange or a facility of a national securities association
(``listed options''), or in the securities which underlie such options
or which are exchangeable or convertible, without the payment of money,
into such underlying securities (``underlying securities''); Provided,
That such dealer may also guarantee, indorse or carry listed options and
underlying securities purchased or sold by a specalist or market maker
who is not associated with such dealer (an ``independent specialist'')
and who either is not subject to the provisions of this Sec. 240.15c3-1
or operates under paragraph (a)(6) of this section.
(B) His transactions as a broker are limited to (1) effecting
transactions in securities as agent for an idependent specialist whose
market maker account such broker carries pursuant to the provisions of
this section, and (2) effecting transactions on the floor of a national
securities exchange in options or securities other than options listed
on such an exchange as agent for another broker of dealer.
(iii) A dealer electing to operate pursuant to this paragraph (a)(7)
shall adjust its net worth by deducting, for positions in each class of
option contracts in which the dealer, as sole proprietor or through
associated specialists, is a market maker (``proprietary positions''),
or each such independent specialist is a market maker (and for positions
in other securities), an amount equal to:
(A) The deductions specified by paragraph (c)(2)(x)(A) of this
section; Provided, That for pusposes of computing such deductions,
proprietary positions, as well as positions in each such independent
specialist's market maker account, shall be allocated in accordance with
paragraph (c)(2)(x) (E) of this section; and, Provided further, That the
deductions computed for each such independent specialist's positions
pursuant to the foregoing shall be reduced by any liquidating equity, as
defined in paragraph (c)(2)(x)(B)(2) of this section, that exists in
such independent specialist's market maker account, and shall be
increased to the extent of any liquidating deficit in such account; and,
Provided further, That in no event shall the foregoing proviso be
construed to increase the net capital of any dealer electing to operate
under this paragraph (a)(7).
(B) Such lesser requirement as may be approved by the Commission
under specified terms and conditions upon the written application of
such dealer.
(iv) No dealer electing to operate under this paragraph (a)(7) shall
permit the sum of the deductions required by paragraph (iii) of this
paragraph (a)(7) in respect of all positions in the market maker
accounts of independent specialists guaranteed, endorsed or carried by
such dealer pursuant to this paragraph (a)(7), computed without regard
to any liquidating equity or liquidating deficit in any such independent
specialist's account, to exceed 1,000 percent of such dealer's net
capital as defined in paragraph (c)(2) of this section for any period
exceeding five business days; Provided, That solely for purposes of this
paragraph (a)(7)(iv), deductions required in the market maker account of
an independent specialist in respect of positions in fully paid
securities (other than options), which do not underlie options listed on
the national securities exchanges or facility of a national securities
association of which the independent specialist is a member, need not be
recognized; Provided further, That if at any time such sum exceeds 1,000
percent of such dealer's net capital, then the dealer
[[Page 285]]
shall immediately transmit telegraphic notice of such event to the
principal office of the Commission in Washington, DC, the regional or
district office of the Commission for the region or district in which
the dealer maintains its principal place of business, and such dealer's
Designated Examining Authority: Provided further, That if at any time
such sum exceeds 1,000 percent of such dealer's net capital, then the
dealer shall be subject to the prohibitions against withdrawal of equity
capital set forth in paragraph (e) of this section, and to the
prohibitions against reduction, prepayment and repayment of
subordination agreements set forth in paragraph (b)(11) of
Sec. 240.15c3-1d, as if such dealer's net capital were below the minimum
standards specified by each of the aforementioned paragraphs.
(v) A dealer electing to operate under this paragraph (a)(7) shall
comply in all respects with the requirements of paragraphs (c)(2)(x)(F)
and (c)(2)(x)(G) of this section (or paragraph (a)(6)(iv) of this
section) insofar as such dealer acts as the guarantor, endorser or
carrying dealer for options written or purchased by an independent
specialist not subject to the provisions of this section (or operating
pursuant to paragraph (a)(6) of this section).
* * * * *
(c) * * *
(2) * * *
(x) Brokers or Dealers Carrying Accounts of Options Specialists. (A)
With respect to any transaction in options listed on a registered
national securities exchange or a facility of a registered national
securities association for which a broker or dealer acts as a guarantor,
endorser or carrying broker or dealer for options purchased or written
by a specialist that is either not otherwise subject to the provisions
of this section or is described in paragraph (c)(2)(vi)(N) of this
section, such broker or dealer shall adjust its net worth by deducting,
for each class of option contracts in which each such specialist is a
market maker, an amount equal to 50 percent of the market value of each
option contract in a long position and 75 percent of the market value of
each contract in a short position; provided, however, that:
(1) For the purpose of the above deductions, each option contract in
a short position shall be deemed to have a market value of not less than
$100.
(2) In the case of a bona fide hedged position as defined in this
paragraph (c)(2)(x)(C) involving a long position in a security, other
than an option, and a short position in a call option, the deduction
shall be 15 percent (or such other percentage required by paragraphs
(c)(2)(vi) (A) through (K) of this section) of the market value of the
long position reduced by any excess of the market value of the long
position over the exercise value of the short option position. In no
event shall such reduction operate to increase net capital.
(3) In the case of a bona fide hedged position as defined in this
paragraph (c)(2)(x)(C) involving a short position in a security, other
than an option, and a long position in a call option, the deduction
shall be the lesser of 15 percent of the market value of the short
position or the amount by which the exercise value of the long option
position exceeds the market value of the short position; however, if the
exercise value of the long option position does not exceed the market
value of the short position, no deduction shall be applied.
(4) In the case of a bona fide hedged position as defined in this
paragraph (c)(2)(x)(C) involving a short position in a security other
than an option, and a short position in a put option, the deduction
shall be 15 percent (or such other percentage required by paragraphs
(c)(2)(vi) (A) through (K) of this section) of the market value of the
short security position reduced by any excess of the exercise value of
the short option position over the market value of the short security
position. No such reduction shall operate to increase net capital.
(5) In the case of a bona fide hedged position as defined in this
paragraph (c)(2)(x)(C) involving a long position in a security, other
than an option, and a long position in a put option, the deduction shall
be the lesser of 15 percent of the market value of such long security
position or the amount by which the market value of such long security
position exceeds the exercise value of the long option position. If the
market value of the long security position does not exceed the exercise
value of the long option position, no deduction shall be applied.
(6) In the case of a bona fide spread position as defined in this
paragraph (c)(2)(x) in which the market value of the long position
exceeds the market value of the short position, the deduction shall be
50 percent of the greater of the difference between the market values of
such long and short positions or $50 for each option contract included
in the long position as part of such spread position; Provided, That
such endorser, guarantor or carrying broker or dealer need not deduct
more in respect of any such spread position in a particular underlying
security and in respect of option contracts for the same underlying
security which are carried in a pure short position in such specialist's
market maker account than the greater of the deduction required by this
paragraph (6) in respect of the spread position or the deduction
required by paragraphs (A) and (A)(1) of this paragraph (c)(2)(x) in
respect of the pure short position.
(7) In the case of a bona fide spread position as defined in this
paragraph (c)(2)(x) in which the market value of the short position
[[Page 286]]
equals or exceeds the market value of the long position, the deduction
shall be 75 percent of the greater of the difference between the market
values of such short and long positons or $50 for each option contract
included in the long position as part of such spread position; provided,
that if the option contracts in the short position expire no later than
the option contracts in the long position, such deduction need not
exceed the greater of 75 percent of $50 per long contract, or the amount
by which the difference between the market values of the short and long
positions is less than the amount by which the exercise value of the
long position exceeds the exercise value of the short position; and
Provided further, That such endorser, guarantor or carrying broker or
dealer need not deduct more in respect of any such spread position in a
particular underlying security and in respect of option contracts for
the same underlying security which are carried in a pure long position
in such specialist's market maker account than the greater of the
deduction required by this paragraph (7) in respect of the spread
position or the deduction required by paragraph (A) of this paragraph
(c)(2)(x) in respect of the pure long position.
(8) In the case of a bona-fide straddle position as defined in this
paragraph (c)(2)(x), the deduction shall be the greater of the
deductions which this paragraph (c)(2)(x) would require in respect of
the call option position and the put option if both positions were pure
long (or short) positions.
(9) In the case of positions in securities which are not part of a
bona fide hedged spread or straddle position as defined in this
paragraph (c)(2)(x) and, in the case of options, which are not listed on
the national securities exchange of a national securities association of
which such specialist is a member, the deduction shall be that set forth
in paragraph (c)(2)(vi) of this section, or, if such securities are
options, the deduction shall be that set forth in Appendix A (17 CFR
240.15c3-1a) to this section.
(B) The deduction computed for each specialist's positions pursuant
to paragraph (A) of this paragraph (c)(2)(x) shall be reduced by any
liquidating equity, as defined in this paragraph (c)(2)(x), that exists
in such specialist's market maker account with the broker or dealer, and
shall be increased to the extent of any liquidating deficit in such
account. Provided, that in no event shall this provision result in
increasing the net capital of any such guarantor, endorser, or carrying
broker or dealer.
(1) No such guarantor, endorser or carrying broker or dealer shall
permit the sum of (i) the deductions required by paragraph (A) of this
paragraph (c)(2)(x) in respect of all transactions in specialists'
market maker accounts guaranteed, endorsed or carried by such broker or
dealer and (ii) the equity required by paragraph (a)(6)(iii) of this
section in respect of all transactions in the accounts of specialists or
market makers in options carried by such broker or dealer pursuant to
paragraph (a)(6) of this section to exceed 1000 percent of such broker's
or dealer's net capital as defined in paragraph (c)(2) of this section
for any period exceeding five business days; Provided, That solely for
purposes of this paragraph (c)(2)(x)(B)(1), the deductions or equity
required in a specialist's or market maker's account in respect of
positions in fully paid securities (other than options), which do not
underlie options listed on the national securities exchange or facility
of a national securities association of which such specialist or market
maker is a member, need not be recognized; Provided further, That if at
any time such sum exceeds 1000 percent of such broker's or dealer's net
capital, then the broker or dealer shall immediately transmit
telegraphic notice of such event to the principal office of the
Commission in Washington, DC, the regional or district office of the
Commission for the region or district in which the broker or dealer
maintains its principal place of business, and such broker's or dealer's
Designated Examining Authority; Provided further, That if at any time
such sum exceeds 1000 percent of such broker's or dealer's net capital,
then such broker or dealer shall be subject to the prohibitions against
withdrawal of equity capital set forth in paragraph (e) of this section,
and to the prohibitions against reduction, prepayment and repayment of
subordination agreements set forth in paragraph (b)(11) of this
Sec. 240.15c3-1d, as if such broker or dealer's net capital were below
the minimum standards specified by each of the aforementioned
paragraphs.
(2) For purposes of this paragraph (c)(2)(x), equity in each such
specialist's market marker account shall be computed by (i) marking all
securities positions long or short in the account to their respective
current market values, (ii) adding (deducting in the case of a debit
balance) the credit balance carried in such specialist's market maker
account, and (iii) adding (deducting in the case of short positions) the
market value of positions long in such account.
(C) For purposes of this paragraph (c)(2)(x), a bona fide hedged
position shall mean either (1) a long position in a security other than
an option (an ``underlying security''), or in a security which is
currently exchangeable for or convertible into the underlying security
if the conversion or exchange does not require the payment of money,
which is offset by a short call option position or a long put option
position for the same number of units of the same underlying security,
or (2) a short position in an underlying security which is offset by a
long call position or a short put position for the same number of units
of the same underlying security.
[[Page 287]]
(D)(1) For purposes of this paragraph (c)(2)(x), a bona fide spread
position shall mean long and short positions in the same type (that is,
put or call) of option contracts for the same number of units of the
same underlying security.
(2) For purposes of this paragraph (c)(2)(x), a bona-fide straddle
position shall mean long put and long call (or short put and short call)
positions for the same number of units of the same underlying security.
(E) For purposes of applying the deductions required by paragraph
(A) of this paragraph (c)(2)(x) in respect of positions in each such
specialist's market maker account, long and short positions in each such
account shall be allocated in the following sequence:
(1) Bona fide hedged positions as defined in paragraph (C) of this
paragraph (c)(2)(x) shall be constituted by first matching long or short
positions in securities, other than options, against offsetting long or
short call options positions taken in order of increasing exercise value
and any remaining long or short positions in securities, other than
options, against offsetting long or short put options positions taken in
order of decreasing exercise values; provided, that in the case of long
(or short) options of equal exercise value, the option possessing the
greatest time to expiration shall be matched first.
(2) Thereafter, bona fide spread positions as defined in paragraph
(D) of this paragraph (c)(2)(x) shall be constituted by matching long
options taken in order of increasing exercise values (decreasing
exercise values in the case of puts) against offsetting short options
taken in order of increasing exercise values (decreasing exercise values
in the case of puts); provided, that in the case of long (or short)
options of equal exercise value, the option possessing the greatest time
to expiration shall be matched first.
(3) Thereafter, bona-fide straddle positions as defined in paragraph
(D) of this paragraph (c)(2)(x) shall be constituted by matching long
(or short) call options taken in order of increasing exercise values
against offsetting long (or short) put options taken in order of
decreasing exercise values; provided, that in the case of long (or
short) call (or put) options of equal exercise value, the option
possessing the greatest time to expiration shall be matched first.
(4) Thereafter, long or short positions not allocated pursuant to
paragraphs (1), (2) or (3) of this section shall be treated in the
manner prescribed by paragraphs (A), (A)(1) or (A)(9) of this paragraph
(c)(2)(x).
(F) If at any time the deductions required in respect of any such
specialist's market maker account pursuant to paragraph (A) of this
paragraph (c)(2)(x) exceed the equity in the account computed pursuant
to paragraph (B)(2) of this paragraph (c)(2)(x), then the broker or
dealer guaranteeing, endorsing, or carrying options transactions in such
account:
(1) Shall not extend further credit in the account, and
(2) Shall issue a call for additional equity which shall be met by
noon of the following business day, and
(3) Shall notify by telegraph the principal office of the Commission
in Washington, DC, the regional or district office of the Commission for
the region or district in which the broker or dealer maintains its
principal place of business, and the Designated Examining Authorities of
the specialist and the broker or dealer if the specialist fails to
deposit any required equity within the time prescribed in (2) above;
said telegraphic notice shall be received by the Commission's
Washington, DC office, the Commission's regional or district office, and
the Designated Examining Authorities not later than the close of
business on the day said call is not met.
(G) If at any time a liquidating deficit exists in any such
specialist's market maker account, then the broker or dealer
guaranteeing, endorsing or carrying options transactions in such account
shall take steps to liquidate promptly existing positions in the
account.
(H) Upon written application to the Commission by the specialist and
the broker or dealer guaranteeing, endorsing, or carrying options
transactions in such specialist's market maker account, the Commission
may approve upon specified terms and conditions lesser adjustments to
net worth than those specified by paragraph (A) of this paragraph
(c)(2)(x).
* * * * *
Sec. 240.15c3-1a Options (Appendix A to 17 CFR 240.15c3-1).
(a) Definitions. (1) The term unlisted option shall mean any option
not included in the definition of listed option provided in paragraph
(c)(2)(x) of Sec. 240.15c3-1.
(2) The term option series refers to listed option contracts of the
same type (either a call or a put) and exercise style, covering the same
underlying security with the same exercise price, expiration date, and
number of underlying units.
(3) The term related instrument within an option class or product
group refers to futures contracts and options on futures contracts
covering the same underlying instrument. In relation to options on
foreign currencies a related instrument within an option class also
[[Page 288]]
shall include forward contracts on the same underlying currency.
(4) The term underlying instrument refers to long and short
positions, as appropriate, covering the same foreign currency, the same
security, or a security which is exchangeable for or convertible into
the underlying security within a period of 90 days. If the exchange or
conversion requires the payment of money or results in a loss upon
conversion at the time when the security is deemed an underlying
instrument for purposes of this Appendix A, the broker or dealer will
deduct from net worth the full amount of the conversion loss. The term
underlying instrument shall not be deemed to include securities options,
futures contracts, options on futures contracts, qualified stock
baskets, or unlisted instruments.
(5) The term options class refers to all options contracts covering
the same underlying instrument.
(6) The term product group refers to two or more option classes,
related instruments, underlying instruments, and qualified stock baskets
in the same portfolio type (see paragraph (b)(1)(ii) of this section)
for which it has been determined that a percentage of offsetting profits
may be applied to losses at the same valuation point.
(b) The deduction under this Appendix A to Sec. 240.15c3-1 shall
equal the sum of the deductions specified in paragraphs (b)(1)(v)(C) or
(b)(2) of this section.
Theoretical Pricing Charges
(1)(i) Definitions.
(A) The terms theoretical gains and losses shall mean the gain and
loss in the value of individual option series, the value of underlying
instruments, related instruments, and qualified stock baskets within
that option's class, at 10 equidistant intervals (valuation points)
ranging from an assumed movement (both up and down) in the current
market value of the underlying instrument equal to the percentage
corresponding to the deductions otherwise required under Sec. 240.15c3-1
for the underlying instrument (See paragraph (a)(1)(iii) of this
section). Theoretical gains and losses shall be calculated using a
theoretical options pricing model that satisfies the criteria set forth
in paragraph (a)(1)(i)(B) of this section.
(B) The term theoretical options pricing model shall mean any
mathematical model, other than a broker-dealer proprietary model,
approved by a Designated Examining Authority. Such Designated Examining
Authority shall submit the model to the Commission, together with a
description of its methods for approving models. Any such model shall
calculate theoretical gains and losses as described in paragraph
(a)(1)(i)(A) of this section for all series and issues of equity, index
and foreign currency options and related instruments, and shall be made
available equally and on the same terms to all registered brokers or
dealers. Its procedures shall include the arrangement of the vendor to
supply accurate and timely data to each broker-dealer with respect to
its services, and the fees for distribution of the services. The data
provided to brokers or dealers shall also contain the minimum
requirements set forth in paragraphs (b)(1)(v)(C) of this section and
the product group offsets set forth in paragraphs (b)(1)(v)(B) of this
section. At a minimum, the model shall consider the following factors in
pricing the option:
(1) The current spot price of the underlying asset;
(2) The exercise price of the option;
(3) The remaining time until the option's expiration;
(4) The volatility of the underlying asset;
(5) Any cash flows associated with ownership of the underlying asset
that can reasonably be expected to occur during the remaining life of
the option; and
(6) The current term structure of interest rates.
(C) The term major market foreign currency shall mean the currency
of a sovereign nation whose short-term debt is rated in one of the two
highest categories by at least two nationally recognized statistical
rating organizations and for which there is a substantial inter-bank
forward currency market. For purposes of this section, the European
Currency Unit (ECU) shall be deemed a major market foreign currency.
[[Page 289]]
(D) The term qualified stock basket shall mean a set or basket of
stock positions which represents no less than 50% of the capitalization
for a high-capitalization or non-high-capitalization diversified market
index, or, in the case of a narrow-based index, no less than 95% of the
capitalization for such narrow-based index.
(ii) With respect to positions involving listed options in a single
specialist's market-maker account, and, separately, with respect to
positions involving listed option positions in its proprietary or other
account, the broker or dealer shall group long and short positions into
the following portfolio types:
(A) Equity options on the same underlying instrument and positions
in that underlying instrument;
(B) Options on the same major market foreign currency, positions in
that major market foreign currency, and related instruments within those
options' classes;
(C) High-capitalization diversified market index options, related
instruments within the option's class, and qualified stock baskets in
the same index;
(D) Non-high-capitalization diversified index options, related
instruments within the index option's class, and qualified stock baskets
in the same index; and
(E) Narrow-based index options, related instruments within the index
option's class, and qualified stock baskets in the same index.
(iii) Before making the computation, each broker or dealer shall
obtain the theoretical gains and losses for each options series and for
the related and underlying instruments within those options' class in
each specialist's market-maker account guaranteed, endorsed, or carried
by a broker or dealer, or in the proprietary or other accounts of that
broker or dealer. For each option series, the theoretical options
pricing model shall calculate theoretical prices at 10 equidistant
valuation points within a range consisting of an increase or a decrease
of the following percentages of the daily market price of the underlying
instrument:
(A) +(-)15% for equity securities with a ready market, narrow-based
indexes, and non-high-capitalization diversified indexes;
(B) +(-)6% for major market foreign currencies;
(C) +(-) 20% for all other currencies; and
(D) +(-)10% for high-capitalization diversified indexes.
(iv)(A) As to non-clearing option specialists and market-makers, the
percentages of the daily market price of the underlying instrument shall
be:
(1) +(-) 4\1/2\% for major market foreign currencies; and
(2) +6(-)8% for high-capitalization diversified indexes.
(3) +(-) 10% for a non-clearing market-maker, or specialist in non-high
capitalization diversified index product group.
(B) The provisions of this paragraph (b)(1)(iv) shall expire two
years from September 1, 1997, unless otherwise extended by the
Commission.
(v)(A) The broker or dealer shall multiply the corresponding
theoretical gains and losses at each of the 10 equidistant valuation
points by the number of positions held in a particular options series,
the related instruments and qualified stock baskets within the option's
class, and the positions in the same underlying instrument.
(B) In determining the aggregate profit or loss for each portfolio
type, the broker or dealer will be allowed the following offsets in the
following order, provided, that in the case of qualified stock baskets,
the broker or dealer may elect to net individual stocks between
qualified stock baskets and take the appropriate deduction on the
remaining, if any, securities:
(1) First, a broker or dealer is allowed the following offsets
within an option's class:
(i) Between options on the same underlying instrument, positions
covering the same underlying instrument, and related instruments within
the option's class, 100% of a position's gain shall offset another
position's loss at the same valuation point;
(ii) Between index options, related instruments within the option's
class, and qualified stock baskets on the same index, 95%, or such other
amount as designated by the Commission, of
[[Page 290]]
gains shall offset losses at the same valuation point;
(2) Second, a broker-dealer is allowed the following offsets within
an index product group:
(i) Among positions involving different high-capitalization
diversified index option classes within the same product group, 90% of
the gain in a high-capitalization diversified market index option,
related instruments, and qualified stock baskets within that index
option's class shall offset the loss at the same valuation point in a
different high-capitalization diversified market index option, related
instruments, and qualified stock baskets within that index option's
class;
(ii) Among positions involving different non-high-capitalization
diversified index option classes within the same product group, 75% of
the gain in a non-high-capitalization diversified market index option,
related instruments, and qualified stock baskets within that index
option's class shall offset the loss at the same valuation point in
another non-high-capitalization diversified market index option, related
instruments, and qualified stock baskets within that index option's
class or product group;
(iii) Among positions involving different narrow-based index option
classes within the same product group, 90% of the gain in a narrow-based
market index option, related instruments, and qualified stock baskets
within that index option's class shall offset the loss at the same
valuation point in another narrow-based market index option, related
instruments, and qualified stock baskets within that index option's
class or product group;
(iv) No qualified stock basket should offset another qualified stock
basket; and
(3) Third, a broker-dealer is allowed the following offsets between
product groups: Among positions involving different diversified index
product groups within the same market group, 50% of the gain in a
diversified market index option, a related instrument, or a qualified
stock basket within that index option's product group shall offset the
loss at the same valuation point in another product group;
(C) For each portfolio type, the total deduction shall be the larger
of:
(1) The amount for any of the 10 equidistant valuation points
representing the largest theoretical loss after applying the offsets
provided in paragraph (b)(1)(v)(B) if this section; or
(2) A minimum charge equal to 25% times the multiplier for each
equity and index option contract and each related instrument within the
option's class or product group, or $25 for each option on a major
market foreign currency with the minimum charge for futures contracts
and options on futures contracts adjusted for contract size
differentials, not to exceed market value in the case of long positions
in options and options on futures contracts; plus
(3) In the case of portfolio types involving index options and
related instruments offset by a qualified stock basket, there will be a
minimum charge of 5% of the market value of the qualified stock basket
for high-capitalization diversified and narrow-based indexes; and
(4) In the case of portfolio types involving index options and
related instruments offset by a qualified stock basket, there will be a
minimum charge of 7\1/2\% of the market value of the qualified stock
basket for non-high-capitalization diversified indexes.
Alternative Strategy Based Method
(2) A broker or dealer may elect to apply the alternative strategy
based method in accordance with the provisions of this paragraph (b)(2).
(i) Definitions. (A) The term intrinsic value or in-the-money amount
shall mean the amount by which the exercise value, in the case of a
call, is less than the current market value of the underlying
instrument, and, in the case of a put, is greater than the current
market value of the underlying instrument.
(B) The term out-of-the-money amount shall mean the amount by which
the exercise value, in the case of a call, is greater than the current
market value of the underlying instrument, and, in the case of a put, is
less than the current market value of the underlying instrument.
(C) The term time value shall mean the current market value of an
option
[[Page 291]]
contract that is in excess of its intrinsic value.
(ii) Every broker or dealer electing to calculate adjustments to net
worth in accordance with the provisions of this paragraph (b)(2) must
make the following adjustments to net worth:
(A) Add the time value of a short position in a listed option; and
(B) Deduct the time value of a long position in a listed option,
which relates to a position in the same underlying instrument or in a
related instrument within the option class or product group as
recognized in the strategies enumerated in paragraph (b)(2)(iii)(D) of
this section; and
(C) Add the net short market value or deduct the long market value
of listed options as recognized in the strategies enumerated in
paragraphs (b)(2)(iii)(E)(1) and (2) of this section.
(iii) In computing net capital after the adjustments provided for in
paragraph (b)(2)(ii) of this section, every broker or dealer shall
deduct the percentages specified in this paragraph (b)(2)(iii) for all
listed option positions, positions covering the same underlying
instrument and related instruments within the options' class or product
group.
Uncovered Calls
(A) Where a broker or dealer is short a call, deducting the
percentage required by paragraphs (c)(2)(vi) (A) through (K) of
Sec. 240.15c3-1 of the current market value of the underlying instrument
for such option reduced by its out-of-the-money amount, to the extent
that such reduction does not operate to increase net capital. In no
event shall this deduction be less than the greater of $250 for each
short call option contract for 100 shares or 50% of the aforementioned
percentage.
Uncovered Puts
(B) Where a broker or dealer is short a put, deducting the
percentage required by paragraphs (c)(2)(vi) (A) through (K) of
Sec. 240.15c3-1 of the current market value of the underlying instrument
for such option reduced by its out-of-the-money amount, to the extent
that such reduction does not operate to increase net capital. In no
event shall the deduction provided by this paragraph be less than the
greater of $250 for each short put option contract for 100 shares or 50%
of the aforementioned percentage.
Long Positions
(C) Where a broker or dealer is long puts or calls, deducting 50
percent of the market value of the net long put and call positions in
the same options series.
Certain Security Positions With Offsetting Options
(D)(1) Where a broker or dealer is long a put for which it has an
offsetting long position in the same number of units of the same
underlying instrument, deducting the percentage required by paragraphs
(c)(2)(vi) (A) through (K) of Sec. 240.15c3-1 of the current market
value of the underlying instrument for the long offsetting position, not
to exceed the out-of-the-money amount of the option. In no event shall
the deduction provided by this paragraph be less than $25 for each
option contract for 100 shares, provided that the minimum charge need
not exceed the intrinsic value of the option.
(2) Where a broker or dealer is long a call for which it has an
offsetting short position in the same number of units of the same
underlying instrument, deducting the percentage required by paragraphs
(c)(2)(vi) (A) through (K) of Sec. 240.15c3-1 of the current market
value of the underlying instrument for the short offsetting position,
not to exceed the out-of-the-money amount of the option. In no event
shall the deduction provided by this paragraph be less than $25 for each
option contract for 100 shares, provided that the minimum charge need
not exceed the intrinsic value of the option.
(3) Where a broker or dealer is short a call for which it has an
offsetting long position in the same number of units of the same
underlying instrument, deducting the percentage required by paragraphs
(c)(2)(vi) (A) through (K) of Sec. 240.15c3-1 of the current market
value of the underlying instrument for the offsetting long position
reduced by the short call's intrinsic value. In no event shall the
deduction provided by this paragraph be less
[[Page 292]]
than $25 for each option contract for 100 shares.
Certain Spread Positions
(E)(1) Where a broker or dealer is short a listed call and is also
long a listed call in the same class of options contracts and the long
option expires on the same date as or subsequent to the short option,
the deduction, after adjustments required in paragraph (b) of this
section, shall be the amount by which the exercise value of the long
call exceeds the exercise value of the short call. If the exercise value
of the long call is less than or equal to the exercise value of the
short call, no deduction is required.
(2) Where a broker or dealer is short a listed put and is also long
a listed put in the same class of options contracts and the long option
expires on the same date as or subsequent to the short option, the
deduction, after the adjustments required in paragraph (b) of this
section, shall be the amount by which the exercise value of the short
put exceeds the exercise value of the long put. If the exercise value of
the long put is equal to or greater than the exercise value of the short
put, no deduction is required.
(c) With respect to transactions involving unlisted options, every
broker or dealer shall determine the value of unlisted option positions
in accordance with the provision of paragraph (c)(2)(i) of
Sec. 240.15c3-1, and shall deduct the percentages of all securities
positions or unlisted options in the proprietary or other accounts of
the broker or dealer specified in this paragraph (c). However, where
computing the deduction required for a security position as if the
security position had no related unlisted option position and positions
in unlisted options as if uncovered would result in a lesser deduction
from net worth, the broker or dealer may compute such deductions
separately.
Uncovered Calls
(1) Where a broker or dealer is short a call, deducting 15 percent
(or such other percentage required by paragraphs (c)(2)(vi) (A) through
(K) of Sec. 240.15c3-1) of the current market value of the security
underlying such option reduced by any excess of the exercise value of
the call over the current market value of the underlying security. In no
event shall the deduction provided by this paragraph be less than $250
for each option contract for 100 shares.
Uncovered Puts
(2) Where a broker or dealer is short a put, deducting 15 percent
(or such other percentage required by paragraphs (c)(2)(vi) (A) through
(K) of Sec. 240.15c3-1) of the current market value of the security
underlying the option reduced by any excess of the market value of the
underlying security over the exercise value of the put. In no event
shall the deduction provided by this paragraph be less than $250 for
each option contract for 100 shares.
Covered Calls
(3) Where a broker or dealer is short a call and long equivalent
units of the underlying security, deducting 15 percent (or such other
percentage required by paragraphs (c)(2)(vi) (A) through (K) of
Sec. 240.15c3-1) of the current market value of the underlying security
reduced by any excess of the current market value of the underlying
security over the exercise value of the call. No reduction under this
paragraph shall have the effect of increasing net capital.
Covered Puts
(4) Where a broker or dealer is short a put and short equivalent
units of the underlying security, deducting 15 percent (or such other
percentage required by paragraphs (c)(2)(vi) (A) through (K) of
Sec. 240.15c3-1) of the current market value of the underlying security
reduced by any excess of the exercise value of the put over the market
value of the underlying security. No such reduction shall have the
effect of increasing net capital.
Conversion Accounts
(5) Where a broker or dealer is long equivalent units of the
underlying security, long a put written or endorsed by a broker or
dealer and short a call in its proprietary or other accounts, deducting
5 percent (or 50 percent of
[[Page 293]]
such other percentage required by paragraphs (c)(2)(vi) (A) through (K)
of Sec. 240.15c3-1) of the current market value of the underlying
security.
(6) Where a broker or dealer is short equivalent units of the
underlying security, long a call written or endorsed by a broker or
dealer and short a put in his proprietary or other accounts, deducting 5
percent (or 50 percent of such other percentage required by paragraphs
(c)(2)(vi) (A) through (K) of Sec. 240.15c3-1) of the market value of
the underlying security.
Long Options
(7) Where a broker or dealer is long a put or call endorsed or
written by a broker or dealer, deducting 15 percent (or such other
percentage required by paragraphs (c)(2)(vi) (A) through (K) of
Sec. 240.15c3-1) of the market value of the underlying security, not to
exceed any value attributed to such option in paragraph (c)(2)(i) of
Sec. 240.15c3-1.
[62 FR 6481, Feb. 12, 1997]
Effective Date Note: At 62 FR 6481, Feb. 12, 1997, Sec. 240.15c3-1a
was revised, effective Sept. 1, 1997. For the convenience of the user,
the superseded text is set forth as follows:
Sec. 240.15c3-1a Options (Appendix A to 17 CFR 240.15c3-1).
(a) Certain definitions. (1) The term listed option shall mean any
option traded on a registered national securities exchange or facility
of a registered national securities association.
(2) The term unlisted option shall mean any option not traded on a
registered national securities exchange or facility of a registered
national securities association.
(b) Certain Adjustments to Net Worth For Listed Options Before
Computing the Deductions Specified in (c) Below. (1) The market value of
short positions in listed options shall be added to net worth and the
market value of any long positions in listed options, which relate to
long or short securities positions or short positions in listed options,
shall be deducted from net worth, and;
(2) The amount by which the market value of a short security
position, which is related to a long listed call, exceeds the exercise
value of such long call, or the amount by which the exercise value of a
long listed put, which is related to a long security position, exceeds
the market value of the long security, shall be added to net worth, and;
(3) The amount by which the market value of the underlying security
would exceed the exercise value of the short listed call, or the amount
by which the exercise value of a short listed put exceeds the market
value of the underlying security, shall be deducted from net worth.
(c) Deductions From Net Worth for Uncovered Options and Securities
Positions in Which the Broker or Dealer Has Offsetting Option Positions.
Every broker or dealer shall in computing net capital pursuant to 17 CFR
240.15c3-1 deduct from net worth the percentages of all securities
positions or options in the proprietary or other accounts of the broker
or dealer specified below. However, where computing the deduction
required for a security position as if the security position had no
related option position and positions in options as if uncovered would
result in a lesser deduction from net worth, the broker or dealer may
compute such deductions separately.
Uncovered Calls
(1) Where a broker or dealer is short a call, deducting, after the
adjustment provided for in paragraph (b) of this Appendix A, 15 percent
(or such other percentage required by paragraphs (c)(2)(vi) (A) through
(K) of Sec. 240.15c3-1) of the current market value of the security
underlying such option reduced by any excess of the exercise value of
the call over the current market value of the underlying security. In no
event shall the deduction provided by this paragraph be less than $250
for each option contract for 100 shares.
Uncovered Puts
(2) Where a broker or dealer is short a put, deducting, after the
adjustment provided for in paragraph (b) of this Appendix A, 15 percent
(or such other percentage required by paragraphs (c)(2)(vi) (A) through
(K) of Sec. 240.15c3-1) of the current market value of the security
underlying the option reduced by any excess of the market value of the
underlying security over the exercise value of the put. In no event
shall the deduction provided by this paragraph be less than $250 for
each option contract for 100 shares.
Covered Calls
(3) Where a broker or dealer is short a call and long equivalent
units of the underlying security, deducting, after the adjustments
provided for in paragraph (b) of this Appendix A, 15 percent (or such
other percentage required by paragraphs (c)(2)(vi) (A) through (K) of
Sec. 240.15c3-1) of the current market value of the underlying security
reduced by any excess of the current market value of the underlying
security over the exercise value of the call. No reduction under this
paragraph shall have the effect of increasing net capital.
[[Page 294]]
Covered Puts
(4) Where a broker or dealer is short a put and short equivalent
units of the underlying security, deducting, after the adjustment
provided for in paragraph (b) of this Appendix A, 15 percent (or such
other percentage required by paragraphs (c)(2)(vi) (A) through (K) of
Sec. 240.15c3-1) of the current market value of the underlying security
reduced by any excess of the exercise value of the put over the market
value of the underlying security. No such reduction shall have the
effect of increasing net capital.
Conversion Accounts
(5) Where a broker or dealer is long equivalent units of the
underlying security, long an unlisted put written or endorsed by a
broker or dealer and short an unlisted call in its proprietary or other
accounts, deducting 5 percent (or 50 percent of such other percentage
required by paragraphs (c)(2)(vi) (A) through (K) of Sec. 240.15c3-1) of
the current market value of the underlying security.
(6) Where a broker or dealer is short equivalent units of the
underlying security, long an unlisted call written or endorsed by a
broker or dealer and short an unlisted put in his proprietary or other
accounts, deducting 10 percent (or 50 percent of such other percentage
required by paragraphs (A) through (K) of paragraph (c)(2)(vi) of 17 CFR
240.15c3-1) of the market value of the underlying security.
Long Over-the-Counter Options
(7) Where a broker or dealer is long an unlisted put or call
endorsed or written by a broker or dealer, deducting 15 percent (or such
other percentage required by paragraphs (c)(2)(vi) (A) through (K) of
Sec. 240.15c3-1) of the market value of the underlying security, not to
exceed any value attributed to such option in paragraph (c)(2)(i) of
Sec. 240.15c3-1.
(8) Listed Options. Where a broker or dealer is long listed options
and there is no offsetting security position, deducting 50 percent of
the market value of any net long positions in options in the same
underlying security, with the same exercise price and the same
expiration date. Where a broker or dealer has a net short position in an
option in the same underlying security, with the same exercise price and
the same expiration date and for which the broker or dealer does not
have a related position in the underlying security or an option position
otherwise provided for in this Appendix (A), the deduction shall be
determined as provided in paragraph (c)(1) or (2) of this Appendix (A).
Certain Security Positions with Offsetting Options
(9) Where a broker or dealer is long a security for which it is also
long a listed put (such broker or dealer may in addition be short a
call), deducting, after the adjustments provided in paragraph (b) of
this Appendix A, 15 percent of the market value of the long security
position not to exceed the amount by which the market value of
equivalent units of the long security position exceeds the exercise
value of the put. If the exercise value of the put is equal to or
exceeds the market value of equivalent units of the long security
position, no percentage deduction shall be applied.
(10) Where a broker or dealer is short a security for which he is
also long a listed call (such broker or dealer may in addition be short
a put), deducting, after the adjustments provided in paragraph (b) of
this Appendix A, 15 percent of the market value of the short security
position not to exceed the amount by which the exercise value of the
long call exceeds the market value of equivalent units of the short
security position. If the exercise value of the call is less than or
equal to the market value of equivalent units of the short security
position no percentage deduction shall be applied.
(11) Certain Spread Positions. Where a broker or dealer is short a
listed call and is also long a listed call in the same class of option
contracts and the long option expires on the same date as or subsequent
to the short option, the deduction, after the adjustments required in
paragraph (b) of this Appendix (A), shall be the amount by which the
exercise value of the long call exceeds the exercise value of the short
call. Provided, That if the exercise value of the long call is less than
or equal to the exercise value of the short call, no deduction is
required.
(12) Where a broker or dealer is short a listed put and is also long
a listed put in the same class of option contracts and the long option
expires on the same date as or subsequent to the short option, the
deduction, after the adjustments required in paragraph (b) of this
Appendix (A), shall be the amount by which the exercise value of the
short put exceeds the exercise value of the long put. Provided, That if
the exercise value of the long put is equal to or greater than the
exercise value of the short put, no deduction is required.
(13) Certain Straddle Positions. Where a broker or dealer is long a
listed call and is also long a listed put for the same underlying
security, the deduction shall be the greater of (i) the deduction
resulting from application of paragraph (c)(8) of this Appendix A to the
long call; or (ii) the deduction resulting from application of the same
paragraph to the long put.
[[Page 295]]
(14) Where a broker or dealer is short a listed call and is also
short a listed put for the same underlying security, the deduction,
after application of the adjustments required by paragraph (a) of this
Appendix A, shall be the greater of (i) the deduction resulting from the
application of paragraph (c)(1) of this Appendix A to the short call, or
(ii) the deduction resulting from the application of paragraph (c)(2) of
this Appendix A to the short put.
[40 FR 29806, July 16, 1975, as amended at 42 FR 27224, May 27, 1977; 43
FR 10551, Mar. 14, 1978; 57 FR 56988, Dec. 2, 1992]
Sec. 240.15c3-1b Adjustments to net worth and aggregate indebtedness for certain commodities transactions (Appendix B to 17 CFR 240.15c3-1).
(a) Every broker or dealer in computing net capital pursuant to 17
CFR 240.15c3-1 shall comply with the following:
(1) Where a broker or dealer has an asset or liability which is
treated or defined in paragraph (c) of 17 CFR 240.15c3-1, the inclusion
or exclusion of all or part of such asset or liability for the
computation of aggregate indebtedness and net capital shall be in
accordance with paragraph (c) of 17 CFR 240.15c3-1, except as
specifically provided otherwise in this Appendix B. Where a commodity
related asset or liability is specifically treated or defined in 17 CFR
1.17 and is not generally or specifically treated or defined in 17 CFR
240.15c3-1 or this Appendix B, the inclusion or exclusion of all or part
of such asset or liability for the computation of aggregate indebtedness
and net capital shall be in accordance with 17 CFR 1.17.
Aggregate Indebtedness
(2) The term aggregate indebtedness as defined in paragraph (c)(1)
of this section shall exclude with respect to commodity-related
transactions:
(i) Indebtedness arising in connection with an advance to a non-
proprietary account when such indebtedness is adequately collateralized
by spot commodities eligible for delivery on a contract market and when
such spot commodities are covered.
(ii) Advances received by the broker or dealer against bills of
lading issued in connection with the shipment of commodities sold by the
broker or dealer; and
(iii) Equity balances in the accounts of general partners.
Net Capital
(3) In computing net capital as defined in paragraph (c)(2) of this
section, the net worth of a broker or dealer shall be adjusted as
follows with respect to commodity-related transactions:
(i) Unrealized profit or loss for certain commodities transactions.
(A) Unrealized profits shall be added and unrealized losses shall be
deducted in the commodities accounts of the broker or dealer, including
unrealized profits and losses on fixed price commitments and forward
contracts; and
(B) The value attributed to any commodity option which is not traded
on a contract market shall be the difference between the option's strike
price and the market value for the physical or futures contract which is
the subject of the option. In the case of a long call commodity option,
if the market value for the physical or futures contract which is the
subject of the option is less than the strike price of the option, it
shall be given no value. In the case of a long put commodity option, if
the market value for the physical commodity or futures contract which is
the subject of the option is more than the striking price of the option,
it shall be given no value.
(ii) Deduct any unsecured commodity futures or option account
containing a ledger balance and open trades, the combination of which
liquidates to a deficit or containing a debit ledger balance only:
Provided, however, Deficits or debit ledger balances in unsecured
customers', non-customers' and proprietary accounts, which are the
subject of calls for margin or other required deposits need not be
deducted until the close of business on the business day following the
date on which such deficit or debit ledger balance originated;
(iii) Deduct all unsecured receivables, advances and loans except
for:
(A) Management fees receivable from commodity pools outstanding no
longer than thirty (30) days from the date they are due;
[[Page 296]]
(B) Receivables from foreign clearing organizations;
(C) Receivables from registered futures commission merchants or
brokers, resulting from commodity futures or option transactions, except
those specifically excluded under paragraph (3)(ii) of this Appendix B.
In the case of an introducing broker or an applicant for registration as
an introducing broker, include 50 percent of the value of a guarantee or
security deposit with a futures commission merchant which carries or
intends to carry accounts for the customers of the introducing broker.
(iv) Deduct all inventories (including work in process, finished
goods, raw materials and inventories held for resale) except for readily
marketable spot commodities; or spot commodities which adequately
collateralize indebtedness under paragraph (c)(7) of 17 CFR 1.17;
(v) Guarantee deposits with commodities clearing organizations are
not required to be deducted from net worth;
(vi) Stock in commodities clearing organizations to the extent of
its margin value is not required to be deducted from net worth;
(vii) Deduct from net worth the amount by which any advances paid by
the broker or dealer on cash commodity contracts and used in computing
net capital exceeds 95 percent of the market value of the commodities
covered by such contracts.
(viii) Do not include equity in the commodity accounts of partners
in net worth.
(ix) In the case of all inventory, fixed price commitments and
forward contracts, except for inventory and forward contracts in the
inter-bank market in those foreign currencies which are purchased or
sold for further delivery on or subject to the rules of a contract
market and covered by an open futures contract for which there will be
no charge, deduct the applicable percentage of the net position
specified below:
(A) Inventory which is currently registered as deliverable on a
contract market and covered by an open futures contract or by a
commodity option on a physical--No charge.
(B) Inventory which is covered by an open futures contract or
commodity option--5% of the market value.
(C) Inventory which is not covered--20% of the market value.
(D) Fixed price commitments (open purchases and sales) and forward
contracts which are covered by an open futures contract or commodity
option--10% of the market value.
(E) Fixed price commitments (open purchases and sales) and forward
contracts which are not covered by an open futures contract or commodity
option--20% of the market value.
(x) Deduct 4% of the market value of commodity options granted
(sold) by option customers on or subject to the rules of a contract
market.
(xi) [Reserved]
(xii) Deduct for undermargined customer commodity futures accounts
the amount of funds required in each such account to meet maintenance
margin requirements of the applicable board of trade or, if there are no
such maintenance margin requirements, clearing organization margin
requirements applicable to such positions, after application of calls
for margin, or other required deposits which are outstanding three
business days or less. If there are no such maintenance margin
requirements or clearing organization margin requirements on such
accounts, then deduct the amount of funds required to provide margin
equal to the amount necessary after application of calls for margin, or
other required deposits outstanding three days or less to restore
original margin when the original margin has been depleted by 50 percent
or more. Provided, To the extent a deficit is deducted from net worth in
accordance with paragraph (a)(3)(ii) of this Appendix B, such amount
shall not also be deducted under this paragraph (a)(3)(xii). In the
event that an owner of a customer account has deposited an asset other
than cash to margin, guarantee or secure his account, the value
attributable to such asset for purposes of this paragraph shall be the
lesser of (A) the value attributable to such asset
[[Page 297]]
pursuant to the margin rules of the applicable board of trade, or (B)
the market value of such asset after application of the percentage
deductions specified in paragraph (a)(3)(ix) of this Appendix B or,
where appropriate, specified in paragraph (c)(2)(vi) or (c)(2)(vii) of
Sec. 240.15c3-1 this chapter;
(xiii) Deduct for undermargined non-customer and omnibus commodity
futures accounts the amount of funds required in each such account to
meet maintenance margin requirements of the applicable board of trade
or, if there are no such maintenance margin requirements, clearing
organization margin requirements applicable to such positions, after
application of calls for margin, or other required deposits which are
outstanding two business days or less. If there are no such maintenance
margin requirements or clearing organization margin requirements, then
deduct the amount of funds required to provide margin equal to the
amount necessary after application of calls for margin, or other
required deposits outstanding two days or less to restore original
margin when the original margin has been depleted by 50 percent or more.
Provided, To the extent a deficit is deducted from net worth in
accordance with paragraph (a)(3)(ii) of this Appendix B such amount
shall not also be deducted under this paragraph (a)(3)(xiii). In the
event that an owner of a non-customer or omnibus account has deposited
an asset other than cash to margin, guarantee or secure his account, the
value attributable to such asset for purposes of this paragraph shall be
the lesser of (A) the value attributable to such asset pursuant to the
margin rules of the applicable board of trade, or (B) the market value
of such asset after application of the percentage deductions specified
in paragraph (a)(3)(ix) of this Appendix B or, where appropriate,
specified in paragraph (c)(2)(vi) or (c)(2)(vii) of Sec. 240.15c3-1 of
this chapter;
(xiv) In the case of open futures contracts and granted (sold)
commodity options held in proprietary accounts carried by the broker or
dealer which are not covered by a position held by the broker or dealer
or which are not the result of a ``changer trade made in accordance with
the rules of a contract market, deduct:
(A) For a broker or dealer which is a clearing member of a contract
market for the positions on such contract market cleared by such member,
the applicable margin requirement of the applicable clearing
organization;
(B) For a broker or dealer which is a member of a self-regulatory
organization 150% of the applicable maintenance margin requirement of
the applicable board of trade or clearing organization, whichever is
greater; or
(C) For all other brokers or dealers, 200% of the applicable
maintenance margin requirement of the applicable board of trade or
clearing organization, whichever is greater; or
(D) For open contracts or granted (sold) commodity options for which
there are no applicable maintenance margin requirements, 200% of the
applicable initial margin requirement;
Provided, the equity in any such proprietary account shall reduce
the deduction required by this paragraph (a)(3)(xiv) if such equity is
not otherwise includable in net capital.
(xv) In the case of a broker or dealer which is a purchaser of a
commodity option which is traded on a contract market the deduction
shall be the same safety factor as if the broker or dealer were the
grantor of such option in accordance with paragraph (a)(3)(xiv), but in
no event shall the safety factor be greater than the market value
attributed to such option.
(xvi) In the case of a broker or dealer which is a purchaser of a
commodity option not traded on a contract market which has value and
such value is used to increase net capital, the deduction is ten percent
of the market value of the physical or futures contract which is the
subject of such option but in no event more than the value attributed to
such option.
(xvii) Deduction 5% of all unsecured receivables includable under
paragraph (a)(3)(iii)(C) of this Appendix B used by the broker or dealer
in computing ``net capital'' and which are not receivable from (A) a
futures commission merchant registered as such with the Commodity
Futures Trading Commission,
[[Page 298]]
or (B) a broker or dealer which is registered as such with the
Securities and Exchange Commission.
(xviii) A loan or advance or any other form of receivable shall not
be considered ``secured'' for the purposes of paragraph (a)(3) of this
Appendix B unless the following conditions exist:
(A) The receivable is secured by readily marketable collateral which
is otherwise unencumbered and which can be readily converted into cash:
Provided, however, That the receivable will be considered secured only
to the extent of the market value of such collateral after application
of the percentage deductions specified in paragraph (a)(3)(ix) of this
Appendix B; and
(B)(1) The readily marketable collateral is in the possession or
control of the broker or dealer; or
(2) The broker or dealer has a legally enforceable, written security
agreement, signed by the debtor, and has a perfected security interest
in the readily marketable collateral within the meaning of the laws of
the State in which the readily marketable collateral is located.
(xix) The term cover for purposes of this Appendix B shall mean
cover as defined in 17 CFR 1.17(j).
(xx) The term customer for purposes of this Appendix B shall mean
customer as defined in 17 CFR 1.17(b)(2). The term ``non-customer'' for
purposes of this Appendix B shall mean non-customer as defined in 17 CFR
1.17(b)(4).
(Secs. 15(c)(3), 17(a) and 23(a), 15 U.S.C. 78o(c)(3), 78q(a), and
78w(a))
[44 FR 34886, June 15, 1979, as amended at 46 FR 37041, July 17, 1981;
49 FR 31848, Aug. 9, 1984]
Sec. 240.15c3-1c Consolidated Computations of Net Capital and Aggregate Indebtedness for Certain Subsidiaries and Affiliates (Appendix C to 17 CFR 240.15c3-1).
(a) Flow Through Capital Benefits. Every broker or dealer in
computing its net capital and aggregate indebtedness pursuant to 17 CFR
240.15c3-1 shall, subject to the provisions of paragraphs (b) and (d) of
this Appendix, consolidate in a single computation assets and
liabilities of any subsidiary or affiliate for which it guarantees,
endorses or assumes directly or indirectly the obligations or
liabilities. The assets and liabilities of a subsidiary or affiliate
whose liabilities and obligations have not been guaranteed, endorsed, or
assumed directly or indirectly by the broker or dealer may also be so
consolidated if an opinion of counsel is obtained as provided for in
paragraph (b) of this section.
(b) Required Counsel Opinions.(1) If the consolidation, provided for
in paragraph (a) of this section, of any such subsidiary or affiliate
results in the increase of the broker's or dealers's net capital and/or
the decrease of the broker's or dealer's minimum net capital requirement
under paragraph (a) of Sec. 240.15c3-1 and an opinion of counsel
described in paragraph (b)(2) of this section has not been obtained,
such benefits shall not be recognized in the broker's or dealer's
computation required by this section.
(2) Except as provided for in paragraph (b)(1) of this section,
consolidation shall be permitted with respect to any subsidiaries or
affiliates which are majority owned and controlled by the broker or
dealer for which the broker or dealer can demonstrate to the
satisfaction of the Commission, through the Examining Authority, by an
opinion of counsel that the net asset values, or the portion thereof
related to the parent's ownership interest in the subsidiary or
affiliate may be caused by the broker or dealer or a trustee appointed
pursuant to the Securities Investor Protection Act of 1970 or otherwise,
to be distributed to the broker or dealer within 30 calendar days. Such
opinion shall also set forth the actions necessary to cause such a
distribution to be made, identify the parties having the authority to
take such actions, identify and describe the rights of other parties or
classes of parties, including but not limited to customers, general
creditors, subordinated lenders, minority shareholders, employees,
litigants and governmental or regulatory authorities, who may delay or
prevent such a distribution and such other assurances as the Commission
or the Examining Authority by rule or interpretation may require. Such
opinion shall be current and periodically renewed in connection with the
broker's or dealer's annual audit pursuant to 17 CFR
[[Page 299]]
240.17a-5 under the Securities Exchange Act of 1934 or upon any material
change in circumstances.
(c) Principles of Consolidation. In preparing a consolidated
computation of net capital and/or aggregate indebtedness pursuant to
this section, the following minimum and non-exclusive requirements shall
be observed:
(1) Consolidated net worth shall be reduced by the estimated amount
of any tax reasonably anticipated to be incurred upon distribution of
the assets of the subsidiary or affiliate.
(2) Liabilities of a consolidated subsidiary or affiliate which are
subordinated to the claims of present and future creditors pursuant to a
satisfactory subordination agreement shall not be added to consolidated
net worth unless such subordination extends also to the claims of
present or future creditors of the parent broker or dealer and all
consolidated subsidiaries.
(3) Subordinated liabilities of a consolidated subsidiary or
affiliate which are consolidated in accordance with paragraph (c)(2) of
this section may not be prepaid, repaid or accelerated if any of the
entities included in such consolidation would otherwise be unable to
comply with the provisions of Appendix (D), 17 CFR 240.15c3-1d.
(4) Each broker or dealer included within the consolidation shall at
all times be in compliance with the net capital requirement to which it
is subject.
(d) Certain Precluded Acts. No broker or dealer shall guarantee,
endorse or assume directly or indirectly any obligation or liability of
a subsidiary or affiliate unless the obligation or liability is
reflected in the computation of net capital and/or aggregate
indebtedness pursuant to 17 CFR 240.15c3-1 or this Appendix (C), except
as provided in paragraph (b)(1) of this section.
[40 FR 29808, July 16, 1975, as amended at 57 FR 56988, Dec. 2, 1992]
Sec. 240.15c3-1d Satisfactory Subordination Agreements (Appendix D to 17 CFR 240.15c3-1).
(a) Introduction. (1) This Appendix sets forth minimum and non-
exclusive requirements for satisfactory subordination agreements
(hereinafter ``subordination agreement''). The Examining Authority may
require or the broker or dealer may include such other provisions as
deemed necessary or appropriate to the extent such provisions do not
cause the subordination agreement to fail to meet the minimum
requirements of this Appendix (D).
(2) Certain Definitions. For purposes of 17 CFR 240.15c3-1 and this
Appendix (D):
(i) A subordination agreement may be either a subordinated loan
agreement or a secured demand note agreement.
(ii) The term subordinated loan agreement shall mean the agreement
or agreements evidencing or governing a subordinated borrowing of cash.
(iii) The term Collateral Value of any securities pledged to secure
a secured demand note shall mean the market value of such securities
after giving effect to the percentage deductions set forth in paragraph
(c)(2)(vi) of Sec. 240.15c3-1 except for paragraph (c)(2)(vi)(J). In
lieu of the deduction under (c)(2)(vi)(J), the broker or dealer shall
reduce the market value of the securities pledged to secure the secured
demand note by 30 percent.
(iv) The term Payment Obligation shall mean the obligation of a
broker or dealer in respect to any subordination agreement (A) to repay
cash loaned to the broker or dealer pursuant to a subordinated loan
agreement or (B) to return a secured demand note contributed to the
broker or dealer or reduce the unpaid principal amount thereof and to
return cash or securities pledged as collateral to secure the secured
demand note and (C) ``Payment'' shall mean the performance by a broker
or dealer of a Payment Obligation.
(v)(A) The term secured demand note agreement shall mean an
agreement (including the related secured demand note) evidencing or
governing the contribution of a secured demand note to a broker or
dealer and the pledge of securities and/or cash with the broker or
dealer as collateral to secure payment of such secured demand note. The
secured demand note agreement may provide that neither the lender, his
heirs, executors, administrators or assigns shall be personally liable
on such note and that in the event of default the
[[Page 300]]
broker or dealer shall look for payment of such note solely to the
collateral then pledged to secure the same.
(B) The secured demand note shall be a promissory note executed by
the lender and shall be payable on the demand of the broker or dealer to
which it is contributed; provided, however, that the making of such
demand may be conditioned upon the occurrence of any of certain events
which are acceptable to the Commission and to the Examining Authority
for such broker or dealer.
(C) If such note is not paid upon presentment and demand as provided
for therein, the broker or dealer shall have the right to liquidate all
or any part of the securities then pledged as collateral to secure
payment of the same and to apply the net proceeds of such liquidation,
together with any cash then included in the collateral, in payment of
such note. Subject to the prior rights of the broker or dealer as
pledgee, the lender, as defined herein, may retain ownership of the
collateral and have the benefit of any increases and bear the risks of
any decreases in the value of the collateral and may retain the right to
vote securities contained within the collateral and any right to income
therefrom or distributions thereon, except the broker or dealer shall
have the right to receive and hold as pledgee all dividends payable in
securities and all partial and complete liquidating dividends.
(D) Subject to the prior rights of the broker or dealer as pledgee,
the lender may have the right to direct the sale of any securities
included in the collateral, to direct the purchases of securities with
any cash included therein, to withdraw excess collateral or to
substitute cash or other securities as collateral, provided that the net
proceeds of any such sale and the cash so substituted and the securities
so purchased or substituted are held by the broker or dealer, as
pledgee, and are included within the collateral to secure payment of the
secured demand note, and provided further that no such transaction shall
be permitted if, after giving effect thereto, the sum of the amount of
any cash, plus the Collateral Value of the securities, then pledged as
collateral to secure the secured demand note would be less than the
unpaid principal amount of the secured demand note.
(E) Upon payment by the lender, as distinguished from a reduction by
the lender which is provided for in (b)(6)(iii) or reduction by the
broker or dealer as provided for in subparagraph (b)(7) of this Appendix
(D), of all or any part of the unpaid principal amount of the secured
demand note, a broker or dealer shall issue to the lender a subordinated
loan agreement in the amount of such payment (or in the case of a broker
or dealer that is a partnership credit a capital account of the lender)
or issue preferred or common stock of the broker or dealer in the amount
of such payment, or any combination of the foregoing, as provided for in
the secured demand note agreement.
(F) The term lender shall mean the person who lends cash to a broker
or dealer pursuant to a subordinated loan agreement and the person who
contributes a secured demand note to a broker or dealer pursuant to a
secured demand note agreement.
(b) Minimum Requirements for Subordination Agreements. (1) Subject
to paragraph (a) of this section, a subordination agreement shall mean a
written agreement between the broker or dealer and the lender, which (i)
has a minimum term of one year, except for temporary subordination
agreements provided for in paragraph (c)(5) of this Appendix (D), and
(ii) is a valid and binding obligation enforceable in accordance with
its terms (subject as to enforcement to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws) against
the broker or dealer and the lender and their respective heirs,
executors, administrators, successors and assigns.
(2) Specific Amount. All subordination agreements shall be for a
specific dollar amount which shall not be reduced for the duration of
the agreement except by installments as specifically provided for
therein and except as otherwise provided in this Appendix (D).
(3) Effective Subordination. The subordination agreement shall
effectively subordinate any right of the lender to receive any Payment
with respect thereto, together with accrued interest or compensation, to
the prior payment
[[Page 301]]
or provision for payment in full of all claims of all present and future
creditors of the broker or dealer arising out of any matter occurring
prior to the date on which the related Payment Obligation matures
consistent with the provisions of 17 CFR 240.15c3-1 and 240.15c3-1d,
except for claims which are the subject of subordination agreements
which rank on the same priority as or junior to the claim of the lender
under such subordination agreements.
(4) Proceeds of Subordinated Loan Agreements. The subordinated loan
agreement shall provide that the cash proceeds thereof shall be used and
dealt with by the broker or dealer as part of its capital and shall be
subject to the risks of the business.
(5) Certain Rights of the Broker or Dealer. The subordination
agreement shall provide that the broker or dealer shall have the right
to:
(i) Deposit any cash proceeds of a subordinated loan agreement and
any cash pledged as collateral to secure a secured demand note in an
account or accounts in its own name in any bank or trust company;
(ii) Pledge, repledge, hypothecate and rehypothecate, any or all of
the securities pledged as collateral to secure a secured demand note,
without notice, separately or in common with other securities or
property for the purpose of securing any indebtedness of the broker or
dealer; and
(iii) Lend to itself or others any or all of the securities and cash
pledged as collateral to secure a secured demand note.
(6) Collateral for Secured Demand Notes. Only cash and securities
which are fully paid for and which may be publicly offered or sold
without registration under the Securities Act of 1933, and the offer,
sale and transfer of which are not otherwise restricted, may be pledged
as collateral to secure a secured demand note. The secured demand note
agreement shall provide that if at any time the sum of the amount of any
cash, plus the Collateral Value of any securities, then pledged as
collateral to secure the secured demand note is less than the unpaid
principal amount of the secured demand note, the broker or dealer must
immediately transmit written notice to that effect to the lender and the
Examining Authority for such broker or dealer. The secured demand note
agreement shall also require that following such transmittal:
(i) The lender, prior to noon of the business day next succeeding
the transmittal of such notice, may pledge as collateral additional cash
or securities sufficient, after giving effect to such pledge, to bring
the sum of the amount of any cash plus the Collateral Value of any
securities, then pledged as collateral to secure the secured demand
note, up to an amount not less than the unpaid principal amount of the
secured demand note; and
(ii) Unless additional cash or securities are pledged by the lender
as provided in paragraph (b)(6)(i) of this section, the broker or dealer
at noon on the business day next succeeding the transmittal of notice to
the lender must commence sale, for the account of the lender, of such of
the securities then pledged as collateral to secure the secured demand
note and apply so much of the net proceeds thereof, together with such
of the cash then pledged as collateral to secure the secured demand note
as may be necessary to eliminate the unpaid principal amount of the
secured demand note; Provided, however, That the unpaid principal amount
of the secured demand note need not be reduced below the sum of the
amount of any remaining cash, plus the Collateral Value of the remaining
securities, then pledged as collateral to secure the secured demand
note. The broker or dealer may not purchase for its own account any
securities subject to such a sale.
(iii) The secured demand note agreement also may provide that, in
lieu of the procedures specified in the provisions required by paragraph
(b)(6)(ii) of this section, the lender with the prior written consent of
the broker or dealer and the Examining Authority for the broker or
dealer may reduce the unpaid principal amount of the secured demand
note. After giving effect to such reduction, the aggregate indebtedness
of the broker or dealer may not exceed 1000 percent of its net capital
or, in the case of a broker or dealer operating pursuant to paragraph
(a)(1)(ii) of Sec. 240.15c3-1, net capital may not be less
[[Page 302]]
than 5 percent of aggregate debit items computed in accordance with
Sec. 240.15c3-3a, or, if registered as a futures commission merchant, 7
percent of the funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder (less the market value of
commodity options purchased by option customers subject to the rules of
a contract market, each such deduction not to exceed the amount of funds
in the option customer's account), if greater. No single secured demand
note shall be permitted to be reduced by more than 15 percent of its
original principal amount and after such reduction no excess collateral
may be withdrawn. No Examining Authority shall consent to a reduction of
the principal amount of a secured demand note if, after giving effect to
such reduction, net capital would be less than 120 percent of the
minimum dollar amount required by Sec. 240.15c3-1.
Permissive Prepayments
(7) A broker or dealer at its option but not at the option of the
lender may, if the subordination agreement so provides, make a Payment
of all or any portion of the Payment Obligation thereunder prior to the
scheduled maturity date of such Payment Obligation (hereinafter referred
to as a ``Prepayment''), but in no event may any Prepayment be made
before the expiration of one year from the date such subordination
agreement became effective. This restriction shall not apply to
temporary subordination agreements that comply with the provisions of
paragraph (c)(5) of this Appendix D. No Prepayment shall be made, if,
after giving effect thereto (and to all Payments of Payment Obligations
under any other subordinated agreements then outstanding the maturity or
accelerated maturities of which are scheduled to fall due within six
months after the date such Prepayment is to occur pursuant to this
provision or on or prior to the date on which the Payment Obligation in
respect of such Prepayment is scheduled to mature disregarding this
provision, whichever date is earlier) without reference to any projected
profit or loss of the broker or dealer, either aggregate indebtedness of
the broker or dealer would exceed 1000 percent of its net capital or its
net capital would be less than 120 percent of the minimum dollar amount
required by Sec. 240.15c3-1 or, in the case of a broker or dealer
operating pursuant to paragraph (a)(1)(ii) of Sec. 240.15c3-1, its net
capital would be less than 5 percent of its aggregate debit items
computed in accordance with Sec. 240.15c3-3a, or if registered as a
futures commission merchant, 7 percent of the funds required to be
segregated pursuant to the Commodity Exchange Act and the regulations
thereunder (less the market value of commodity options purchased by
option customers subject to the rules of a contract market, each such
deduction not to exceed the amount of funds in the option customer's
account), if greater, or its net capital would be less than 120 percent
of the minimum dollar amount required by paragraph (a)(1)(ii) of
Sec. 240.15c3-1. Notwithstanding the above, no Prepayment shall occur
without the prior written approval of the Examining Authority for such
broker or dealer.
Suspended Repayment
(8)(i) The Payment Obligation of the broker or dealer in respect of
any subordination agreement shall be suspended and shall not mature if,
after giving effect to Payment of such Payment Obligation (and to all
Payments of Payment Obligations of such broker or dealer under any other
subordination agreement(s) then outstanding that are scheduled to mature
on or before such Payment Obligation) either (A) the aggregate
indebtedness of the broker or dealer would exceed 1200 percent of its
net capital, or in the case of a broker or dealer operating pursuant to
paragraph (a)(1)(ii) of Sec. 240.15c3-1, its net capital would be less
than 5 percent of aggregate debit items computed in accordance with
Sec. 240.15c3-3a or, if registered as a futures commission merchant, 6
percent of the funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder (less the market value of
commodity options purchased by option customers on or subject to the
rules of a contract market, each such deduction not to exceed the amount
of
[[Page 303]]
funds in the option customer's account), if greater, or (B) its net
capital would be less than 120 percent of the minimum dollar amount
required by Sec. 240.15c3-1 including paragraph (a)(1)(ii), if
applicable. The subordination agreement may provide that if the Payment
Obligation of the broker or dealer thereunder does not mature and is
suspended as a result of the requirement of this paragraph (b)(8) for a
period of not less than six months, the broker or dealer shall thereupon
commence the rapid and orderly liquidation of its business, but the
right of the lender to receive Payment, together with accrued interest
or compensation, shall remain subordinate as required by the provisions
of Sec. 240.15c3-1 and Sec. 240.15c3-1d.
(9) Accelerated Maturity-Obligation to Repay to Remain Subordinate.
(i) Subject to the provisions of paragraph (b)(8) of this appendix, a
subordination agreement may provide that the lender may, upon prior
written notice to the broker or dealer and the Examining Authority given
not earlier than six months after the effective date of such
subordination agreement, accelerate the date on which the Payment
Obligation of the broker or dealer, together with accrued interest or
compensation, is scheduled to mature to a date not earlier than six
months after the giving of such notice, but the right of the lender to
receive Payment, together with accrued interest or compensation, shall
remain subordinate as required by the provisions of 17 CFR 240.15c3-1
and 240.15c3-1d.
(ii) Notwithstanding the provisions of paragraph (b)(8) of this
appendix, the Payment Obligation of the broker or dealer with respect to
a subordination agreement, together with accrued interest and
compensation, shall mature in the event of any receivership, insolvency,
liquidation pursuant to the Securities Investor Protection Act of 1970
or otherwise, bankruptcy, assignment for the benefit of creditors,
reorganization whether or not pursuant to the bankruptcy laws, or any
other marshalling of the assets and liabilities of the broker or dealer
but the right of the lender to receive Payment, together with accrued
interest or compensation, shall remain subordinate as required by the
provisions of 17 CFR 240.15c3-1 and 240.15c3-1d.
(10)(i) Accelerated Maturity of Subordination Agreements on Event of
Default and Event of Acceleration--Obligation to Repay to Remain
Subordinate. A subordination agreement may provide that the lender may,
upon prior written notice to the broker or dealer and the Examining
Authority of the broker or dealer of the occurrence of any Event of
Acceleration (as hereinafter defined) given no sooner than six months
after the effective date of such subordination agreement, accelerate the
date on which the Payment Obligation of the broker or dealer, together
with accrued interest or compensation, is scheduled to mature, to the
last business day of a calendar month which is not less than six months
after notice of acceleration is received by the broker or dealer and the
Examining Authority for the broker or dealer. Any subordination
agreement containing such Events of Acceleration may also provide, that
if upon such accelerated maturity date the Payment Obligation of the
broker or dealer is suspended as required by paragraph (b)(8) of this
Appendix (D) and liquidation of the broker or dealer has not commenced
on or prior to such accelerated maturity date, then notwithstanding
paragraph (b)(8) of this appendix the Payment Obligation of the broker
or dealer with respect to such subordination agreement shall mature on
the day immediately following such accelerated maturity date and in any
such event the Payment Obligations of the broker or dealer with respect
to all other subordination agreements then outstanding shall also mature
at the same time but the rights of the respective lenders to receive
Payment, together with accrued interest or compensation, shall remain
subordinate as required by the provisions of this Appendix (D). Events
of Acceleration which may be included in a subordination agreement
complying with this paragraph (b)(10) shall be limited to:
(A) Failure to pay interest or any installment of principal on a
subordination agreement as scheduled;
(B) Failure to pay when due other money obligations of a specified
material amount;
[[Page 304]]
(C) Discovery that any material, specified representation or
warranty of the broker or dealer which is included in the subordination
agreement and on which the subordination agreement was based or
continued was inaccurate in a material respect at the time made;
(D) Any specified and clearly measurable event which is included in
the subordination agreement and which the lender and the broker or
dealer agree (1) is a significant indication that the financial position
of the broker or dealer has changed materially and adversely from agreed
upon specified norms or (2) could materially and adversely affect the
ability of the broker or dealer to conduct its business as conducted on
the date the subordination agreement was made; or (3) is a significant
change in the senior management of the broker or dealer or in the
general business conducted by the broker or dealer from that which
obtained on the date the subordination agreement became effective;
(E) Any continued failure to perform agreed covenants included in
the subordination agreement relating to the conduct of the business of
the broker or dealer or relating to the maintenance and reporting of its
financial position; and
(ii) Notwithstanding the provisions of paragraph (b)(8) of this
appendix, a subordination agreement may provide that, if liquidation of
the business of the broker or dealer has not already commenced, the
Payment Obligation of the broker or dealer shall mature, together with
accrued interest or compensation, upon the occurrence of an Event of
Default (as hereinafter defined). Such agreement may also provide that,
if liquidation of the business of the broker or dealer has not already
commenced, the rapid and orderly liquidation of the business of the
broker or dealer shall then commence upon the happening of an Event of
Default. Any subordination agreement which so provides for maturity of
the Payment Obligation upon the occurrence of an Event of Default shall
also provide that the date on which such Event of Default occurs shall,
if liquidation of the broker or dealer has not already commenced, be the
date on which the Payment Obligations of the broker or dealer with
respect to all other subordination agreements then outstanding shall
mature but the rights of the respective lenders to receive Payment,
together with accrued interest or compensation, shall remain subordinate
as required by the provisions of this Appendix (D). Events of Default
which may be included in a subordination agreement shall be limited to:
(A) The making of an application by the Securities Investor
Protection Corporation for a decree adjudicating that customers of the
broker or dealer are in need of protection under the Securities Investor
Protection Act of 1970 and the failure of the broker or dealer to obtain
the dismissal of such application within 30 days;
(B) The aggregate indebtedness of the broker or dealer exceeding
1500 percent of its net capital or, in the case of a broker or dealer
that has elected to operate under paragraph (a)(1)(ii) of Sec. 240.15c3-
1, its net capital computed in accordance therewith is less than 2
percent of its aggregate debit items computed in accordance with
Sec. 240.15c3-3a or, if registered as a futures commission merchant, 4
percent of the funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder (less the market value of
commodity options purchased by option customers on or subject to the
rules of a contract market, each such deduction not to exceed the amount
of funds in the option customer's account), if greater, throughout a
period of 15 consecutive business days, commencing on the day the broker
or dealer first determines and notifies the Examining Authority for the
broker or dealer, or the Examining Authority or the Commission first
determines and notifies the broker or dealer of such fact;
(C) The Commission shall revoke the registration of the broker or
dealer;
(D) The Examining Authority shall suspend (and not reinstate within
10 days) or revoke the broker's or dealer's status as a member thereof;
(E) Any receivership, insolvency, liquidation pursuant to the
Securities Investor Protection Act of 1970 or otherwise, bankruptcy,
assignment for the benefit of creditors, reorganization whether or not
pursuant to bankruptcy
[[Page 305]]
laws, or any other marshalling of the assets and liabilities of the
broker or dealer.
A subordination agreement which contains any of the provisions permitted
by this paragraph (b)(10) shall not contain the provision otherwise
permitted by clause (i) of paragraph (b)(9).
Brokers and Dealers Carrying the Accounts of Specialists and Market
Makers in Listed Options
(11) A subordination agreement which becomes effective on or after
August 1, 1977 in favor of a broker or dealer who guarantees, endorses,
carries or clears specialist or market maker transactions in options
listed on a national securities exchange or facility of a national
securities association shall provide that reduction, prepayment or
repayment of the unpaid principal amount thereof, pursuant to those
terms of the agreement required or permitted by paragraphs (b)(6)(iii),
(b)(7), or (b)(8)(i) of this section, shall not occur in contravention
of paragraphs (a)(6)(v), (a)(7)(iv), or (c)(2)(x)(B)(1) of
Sec. 240.15c3-1 insofar as they apply to such broker or dealer.
(c) Miscellaneous Provisions--(1) Prohibited Cancellation. The
subordination agreement shall not be subject to cancellation by either
party; no Payment shall be made with respect thereto and the agreement
shall not be terminated, rescinded or modified by mutual consent or
otherwise if the effect thereof would be inconsistent with the
requirements of 17 CFR 240.15c3-1 and 240.15c3-1d.
(2) Every broker or dealer shall immediately notify the Examining
Authority for such broker or dealer if, after giving effect to all
Payments of Payment Obligations under subordination agreements then
outstanding that are then due or mature within the following six months
without reference to any projected profit or loss of the broker or
dealer either the aggregate indebtedness of the broker or dealer would
exceed 1200 percent of its net capital or its net capital would be less
than 120 percent of the minimum dollar amount required by Sec. 240.15c3-
1, or, in the case of a broker or dealer operating pursuant to paragraph
(a)(1)(ii) of Sec. 240.15c3-1, its net capital would be less than 5
percent of aggregate debit items computed in accordance with
Sec. 240.15c3-3a, or, if registered as a futures commission merchant, 6
percent of the funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder (less the market value of
commodity options purchased by option customers on or subject to the
rules of a contract market, each such deduction not to exceed the amount
of funds in the option customer's account), if greater, or less than 120
percent of the minimum dollar amount required by paragraph (a)(1)(ii) of
Sec. 240.15c3-1.
(3) Certain Legends. If all the provisions of a satisfactory
subordination agreement do not appear in a single instrument, then the
debenture or other evidence of indebtedness shall bear on its face an
appropriate legend stating that it is issued subject to the provisions
of a satisfactory subordination agreement which shall be adequately
referred to and incorporated by reference.
(4) Legal Title to Securities. All securities pledged as collateral
to secure a secured demand note must be in bearer form, or registered in
the name of the broker or dealer or the name of its nominee or
custodian.
Temporary and Revolving Subordination Agreements
(5)(i) For the purpose of enabling a broker or dealer to participate
as an underwriter of securities or other extraordinary activities in
compliance with the net capital requirements of Sec. 240.15c3-1, a
broker or dealer shall be permitted, on no more than three occasions in
any 12 month period, to enter into a subordination agreement on a
temporary basis that has a stated term of no more than 45 days from the
date such subordination agreement became effective. This temporary
relief shall not apply to a broker or dealer if, within the preceding
thirty calendar days, it has given notice pursuant to Sec. 240.17a-11,
or if immediately prior to entering into such subordination agreement,
either:
(A) The aggregate indebtedness of the broker or dealer exceeds 1000
percent of its net capital or its net capital is less
[[Page 306]]
than 120 percent of the minimum dollar amount required by Sec. 240.15c3-
1, or
(B) In the case of a broker or dealer operating pursuant to
paragraph (a)(1)(ii) of Sec. 240.15c3-1, its net capital is less than 5
percent of aggregate debits computed in accordance with Sec. 240.15c3-1,
or, if registered as a futures commission merchant, less than 7 percent
of the funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder (less the market value of
commodity options purchased by option customers on or subject to the
rules of a contract market, each such deduction not to exceed the amount
of funds in the option customer's account), if greater, or less than 120
percent of the minimum dollar amount required by paragraph (a)(1)(ii) of
this section, or
(C) The amount of its then outstanding subordination agreements
exceeds the limits specified in paragraph (d) of Sec. 240.15c3-1. Such
temporary subordination agreement shall be subject to all other
provisions of this Appendix D.
(ii) A broker or dealer shall be permitted to enter into a revolving
subordinated loan agreement which provides for prepayment within less
than one year of all or any portion of the Payment Obligation thereunder
at the option of the broker or dealer upon the prior written approval of
the Examining Authority for the broker or dealer. The Examining
Authority, however, shall not approve any prepayment if:
(A) After giving effect thereto (and to all Payments of Payment
Obligations under any other subordinated agreements then outstanding,
the maturity or accelerated maturities of which are scheduled to fall
due within six months after the date such prepayment is to occur
pursuant to this provision or on or prior to the date on which the
Payment Obligation in respect of such prepayment is scheduled to mature
disregarding this provision, whichever date is earlier) without
reference to any projected profit or loss of the broker or dealer,
either aggregate indebtedness of the broker or dealer would exceed 900
percent of its net capital or its net capital would be less than 200
percent of the minimum dollar amount required by Sec. 240.15c3-1 or, in
the case of a broker or dealer operating pursuant to paragraph
(a)(1)(ii) of Sec. 240.15c3-1, its net capital would be less than 6
percent of aggregate debit items computed in accordance with
Sec. 240.15c3-3a, or, if registered as a futures commission merchant, 10
percent of the funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder (less the market value of
commodity options purchased by option customers on or subject to the
rules of a contract market, each such deduction not to exceed the amount
of funds in the option customer's account), if greater, or its net
capital would be less than 200 percent of the minimum dollar amount
required by paragraph (a)(1)(ii) of this section or
(B) Pre-tax losses during the latest three-month period equalled
more than 15% of current excess net capital.
Any subordination agreement entered into pursuant to this paragraph
(c)(5)(ii) shall be subject to all the other provisions of this Appendix
D. Any such subordination agreement shall not be considered equity for
purposes of subsection (d) of section 15c3-1, despite the length of the
initial term of the loan.
(6)(i) Filing. Two copies of any proposed subordination agreement
(including nonconforming subordination agreements) shall be filed at
least 10 days prior to the proposed execution date of the agreement with
the Commission's Regional or District Office for the region or district
in which the broker or dealer maintains its principal place of business
or at such other time as the Regional or District Office for good cause
shall accept such filing. Copies of the proposed agreement shall also be
filed with the Examining Authority in such quantities and at such time
as the Examining Authority may require. The broker or dealer shall also
file with said parties a statement setting forth the name and address of
the lender, the business relationship of the lender to the broker or
dealer, and whether the broker or dealer carried funds or securities for
the lender at or about the time the proposed agreement was so filed. All
agreements shall be
[[Page 307]]
examined by the Commission's Regional or District Office or the
Examining Authority with whom such agreement is required to be filed
prior to their becoming effective. No proposed agreement shall be a
satisfactory subordination agreement for the purposes of this section
unless and until the Examining Authority has found the agreement
acceptable and such agreement has become effective in the form found
acceptable.
(ii) The broker or dealer need not file with the Regional or
District Office for the region or district in which the broker or dealer
maintains its principal place of business (if a Regional or District
Office is not its Examining Authority) copies of any proposed
subordination agreement or the statement described above if the
Examining Authority for that broker or dealer has consented to file with
the Commission periodic reports (not less than monthly) summarizing for
the period, on a firm-by-firm basis, the subordination agreements it has
approved for that period. Such reports should include at the minimum,
the amount of the loan and its duration, the name of the lender and the
business relationship of the lender to the broker or dealer.
(7) Subordination Agreements in Effect Prior to Adoption. Any
subordination agreement which has been entered into prior to December
20, 1978 and which has been deemed to be satisfactorily subordinated
pursuant to 17 CFR 240.15c3-1 as in effect prior to December 20, 1978,
shall continue to be deemed a satisfactory subordination agreement until
the maturity of such agreement. Provided, That no renewal of an
agreement which provides for automatic or optional renewal by the broker
or dealer or lender shall be deemed to be a satisfactory subordination
agreement unless such renewed agreement meets the requirements of this
Appendix within 6 months from December 20, 1978. Provided, further, That
all subordination agreements must meet the requirements of this Appendix
within 5 years of December 20, 1978.
(Secs. 15(c)(3), 17(a) and 23(a), 15 U.S.C. 78o(c)(3), 78q(a), and
78w(a))
[40 FR 29808, July 16, 1975, as amended at 42 FR 31778, June 23, 1977;
44 FR 34887, June 15, 1979; 46 FR 35635, July 10, 1981; 47 FR 21775, May
20, 1982; 49 FR 31848, Aug. 9, 1984; 57 FR 56988, Dec. 2, 1992; 58 FR
37657, July 13, 1993; 59 FR 5945, Feb. 9, 1994]
Sec. 240.15c3-1e Temporary Minimum Requirements (Appendix E to 17 CFR 240.15c3-1e).
Brokers or Dealers That Carry Customer Accounts Aggregate Indebtedness
Standard
(a) A broker or dealer that falls within the provisions of paragraph
(a)(2)(i) of Sec. 240.15c3-1 and computes its required net capital under
Sec. 240.15c3-1(a)(1)(i) shall maintain net capital not less than the
greater of the amount computed under the paragraph (a)(1)(i) or:
(1) $25,000 until June 30, 1993;
(2) $100,000 on July 1, 1993, until December 31, 1993;
(3) $175,000 on January 1, 1994, until June 30, 1994; and
(4) $250,000 on July 1, 1994.
Brokers or Dealers That Elect the Alternative Standard
(b) A broker or dealer that elects the provisions of Sec. 240.15c3-
1(a)(1)(ii) shall maintain net capital of not less than the greater of
the amount computed under the paragraph (a)(1)(ii) or:
(1) $100,000 until June 30, 1993;
(2) $150,000 on July 1, 1993, until December 31, 1993;
(3) $200,000 on January 1, 1994, until June 30, 1994; and
(4) $250,000 on July 1, 1994.
Broker or Dealers That are Exempt From Securities Exchange Act Rule
15c3-3 Under Paragraph (k)(2)(i) and Dealers
(c) A broker or dealer that falls within the provisions of
Sec. 240.15c3-1(a)(2) (ii) or (iii) and computes its required net
capital under Sec. 240.15c3-1(a)(1)(i) shall maintain net capital not
less than the
[[Page 308]]
greater of the same computed under Sec. 240.15c3-1(a)(1)(i) or:
(1) $25,000 until June 30, 1993;
(2) $50,000 on July 1, 1993, until December 31, 1993;
(3) $75,000 on January 1, 1994, until June 30, 1994; and
(4) $100,000 on July 1, 1994.
Brokers or Dealers That Introduce Customer Accounts and Receive
Securities
(d) An introducing broker that falls within the provisions of
Sec. 240.15c3-1(a)(2)(iv) and computes its required net capital under
Sec. 240.15c3-1(a)(1)(i) shall maintain net capital of not less than the
greater of the amount computed under Sec. 240.15c3-1(a)(1)(i) or:
(1) $5,000 until June 30, 1993;
(2) $20,000 on July 1, 1993, until December 31, 1993;
(3) $35,000 on January 1, 1994, until June 30, 1994; and
(4) $50,000 on July 1, 1994.
Brokers or Dealers Engaged in the Sale of Redeemable Shares of
Registered Investment Companies and Certain Other Share Accounts
(e) A broker or dealer that falls within the provisions of
Sec. 240.15c3-1(a)(2)(v) and computes its required net capital under
Sec. 240.15c3-1(a)(1)(i) shall maintain net capital of not less than the
greater of the amount computed under Sec. 240.15c3-1(a)(1)(i) or:
(1) $2,500 until June 30, 1993;
(2) $10,000 on July 1, 1993, until December 31, 1993;
(3) $17,500 on January 1, 1994, until June 30, 1994; and
(4) $25,000 on July 1, 1994.
Other Brokers or Dealers
(f) A broker or dealer that falls within the provisions of
Sec. 240.15c3-1(a)(2)(vi), computes its required net capital under
Sec. 240.15c3-1(a)(1)(i) and is not otherwise subject to a $5,000
minimum net capital requirement shall maintain net capital of not less
than the greater of the amount computed under Sec. 240.15c3-1(a)(1)(i)
or:
(1) $2,500 until June 30, 1993;
(2) $3,300 on July 1, 1993, until December 31, 1993;
(3) $4,100 on January 1, 1994, until June 30, 1994; and
(4) $5,000 on July 1, 1994.
[57 FR 56990, Dec. 2, 1992]
Sec. 240.15c3-2 Customers' free credit balances.
No broker or dealer shall use any funds arising out of any free
credit balance carried for the account of any customer in connection
with the operation of the business of such broker or dealer unless such
broker or dealer has established adequate procedures pursuant to which
each customer for whom a free credit balance is carried will be given or
sent, together with or as a part of the customer's statement of account,
whenever sent but not less frequently than once every three months, a
written statement informing such customer of the amount due to the
customer by such broker or dealer on the date of such statement, and
containing a written notice that (a) such funds are not segregated and
may be used in the operation of the business of such broker or dealer,
and (b) such funds are payable on the demand of the customer: Provided,
however, That this section shall not apply to a broker or dealer which
is also a banking institution supervised and examined by State or
Federal authority having supervision over banks. For the purpose of this
section the term customer shall mean every person other than a broker or
dealer.
(Sec. 15, 48 Stat. 895; 15 U.S.C. 78o)
[29 FR 7240, June 3, 1964]
Sec. 240.15c3-3 Customer protection--reserves and custody of securities.
(a) Definitions. For the purpose of this section:
(1) The term customer shall mean any person from whom or on whose
behalf a broker or dealer has received or acquired or holds funds or
securities for the account of that person. The term shall not include a
broker or dealer or a registered municipal securities dealer. The term
shall not include general partners or directors or principal officers of
the broker or dealer or any other person to the extent that that person
has a claim for property or funds which by contract, agreement or
understanding, or by operation of law, is part of the capital of the
broker or
[[Page 309]]
dealer or is subordinated to the claims of creditors of the broker or
dealer. The term customer shall, however, include another broker or
dealer to the extent that that broker or dealer maintains an omnibus
account for the account of customers with the broker or dealer in
compliance with Regulation T under the Securities Exchange Act of 1934.
(2) The term securities carried for the account of a customer
(hereinafter also ``customer securities'') shall mean:
(i) Securities received by or on behalf of a broker or dealer for
the account of any customer and securities carried long by a broker or
dealer for the account of any customer; and
(ii) Securities sold to, or bought for, a customer by a broker or
dealer.
(3) The term fully paid securities shall include all securities
carried for the account of a customer in a special cash account as
defined in Regulation T promulgated by the Board of Governors of the
Federal Reserve System, as well as margin equity securities within the
meaning of Regulation T which are carried for the account of a customer
in a general account or any special account under Regulation T during
any period when section 8 of Regulation T (12 CFR 220.8) specifies that
margin equity securities shall have no loan value in a general account
or special convertible debt security account, and all such margin equity
securities in such account if they are fully paid: Provided, however,
That the term ``fully paid securities'' shall not apply to any
securities which are purchased in transactions for which the customer
has not made full payment.
(4) The term margin securities shall mean those securities carried
for the account of a customer in a general account as defined in
Regulation T, as well as securities carried in any special account (such
general or special accounts hereinafter referred to as ``margin
accounts'') other than the securities referred to in paragraph (a)(3) of
this section.
(5) The term excess margin securities shall mean those securities
referred to in paragraph (a)(4) of this section carried for the account
of a customer having a market value in excess of 140 percent of the
total of the debit balances in the customer's account or accounts
encompassed by paragraph (a)(4) of this section which the broker or
dealer identifies as not constituting margin securities.
(6) The term qualified security shall mean a security issued by the
United States or a security in respect of which the principal and
interest are guaranteed by the United States.
(7) The term bank shall mean a bank as defined in section 3(a)(6) of
the Act and shall also mean any building and loan, savings and loan or
similar banking institution subject to supervision by a Federal banking
authority. With respect to a broker or dealer who maintains his
principal place of business in the Dominion of Canada, the term ``bank''
shall also mean a Canadian bank subject to supervision by an authority
of the Dominion of Canada.
(8) The term free credit balances shall mean liabilities of a broker
or dealer to customers which are subject to immediate cash payment to
customers on demand, whether resulting from sales of securities,
dividends, interest, deposits or otherwise, excluding, however, funds in
commodity accounts which are segregated in accordance with the Commodity
Exchange Act or in a similar manner.
(9) The term other credit balances shall mean cash liabilities of a
broker or dealer to customers other than free credit balances and funds
in commodities accounts segregated as aforesaid.
(10) The term funds carried for the account of any customer
(hereinafter also ``customer funds'') shall mean all free credit and
other credit balances carried for the account of the customer.
(11) The term principal officer shall mean the president, executive
vice president, treasurer, secretary or any other person performing a
similar function with the broker or dealer.
(12) The term household members and other persons related to
principals includes husbands or wives, children, sons-in-law or
daughters-in-law and any household relative to whose support a principal
contributes directly or indirectly. For purposes of this paragraph
(a)(12), a principal shall be deemed to be a director, general partner,
or principal officer of the broker or dealer.
[[Page 310]]
(13) The term affiliated person includes any person who directly or
indirectly controls a broker or dealer or any person who is directly or
indirectly controlled by or under common control with the broker or
dealer. Ownership of 10% or more of the common stock of the relevant
entity will be deemed prima facie control of that entity for purposes of
this paragraph.
(b) Physical possession or control of securities. (1) A broker or
dealer shall promptly obtain and shall thereafter maintain the physical
possession or control of all fully-paid securities and excess margin
securities carried by a broker or dealer for the account of customers.
(2) A broker or dealer shall not be deemed to be in violation of the
provisions of paragraph (b)(1) of this section regarding physical
possession or control of customers' securities if, solely as the result
of normal business operations, temporary lags occur between the time
when a security is required to be in the possession or control of the
broker or dealer and the time that it is placed in his physical
possession or under his control, provided that the broker or dealer
takes timely steps in good faith to establish prompt physical possession
or control. The burden of proof shall be on the broker or dealer to
establish that the failure to obtain physical possession or control of
securities carried for the account of customers as required by paragraph
(b)(1) of this section is merely temporary and solely the result of
normal business operations including same day receipt and redelivery
(turnaround), and to establish that he has taken timely steps in good
faith to place them in his physical possession or control.
(3) A broker or dealer shall not be deemed to be in violation of the
provisions of paragraph (b)(1) of this section regarding physical
possession or control of fully-paid or excess margin securities borrowed
from any person, provided that the broker or dealer and the lender, at
or before the time of the loan, enter into a written agreement that, at
a minimum;
(i) Sets forth in a separate schedule or schedules the basis of
compensation for any loan and generally the rights and liabilities of
the parties as to the borrowed securities;
(ii) Provides that the lender will be given a schedule of the
securities actually borrowed at the time of the borrowing of the
securities;
(iii) Specifies that the broker or dealer (A) must provide to the
lender, upon the execution of the agreement or by the close of the
business day of the loan if the loan occurs subsequent to the execution
of the agreement, collateral, consisting exclusively of cash or United
States Treasury bills and Treasury notes or an irrevocable letter of
credit issued by a bank as defined in section 3(a)(6) (A) through (C) of
the Securities Exchange Act which fully secures the loan of securities,
and (B) must mark the loan to the market not less than daily and, in the
event that the market value of all the outstanding securities loaned at
the close of trading at the end of the business day exceeds 100 percent
of the collateral then held by the lender, the borrowing broker or
dealer must provide additional collateral of the type described in
proviso (iii) (A) to the lender by the close of the next business day as
necessary to equal, together with the collateral then held by the
lender, not less than 100 percent of the market value of the securities
loaned; and
(iv) Contains a prominent notice that the provisions of the
Securities Investor Protection Act of 1970 may not protect the lender
with respect to the securities loan transaction and that, therefore, the
collateral delivered to the lender may constitute the only source of
satisfaction of the broker's or dealer's obligation in the event the
broker or dealer fails to return the securities.
(4)(i) Notwithstanding paragraph (k)(2)(i) of this section, a broker
or dealer that retains custody of securities that are the subject of a
repurchase agreement between the broker or dealer and a counterparty
shall:
(A) Obtain the repurchase agreement in writing;
(B) Confirm in writing the specific securities that are the subject
of a repurchase transaction pursuant to such agreement at the end of the
trading day on which the transaction is intitiated and at the end of any
other
[[Page 311]]
day during which other securities are substituted if the substitution
results in a change to issuer, maturity date, par amount or coupon rate
as specified in the previous confirmation;
(C) Advise the counterparty in the repurchase agreement that the
Securities Investor Protection Corporation has taken the position that
the provisions of the Securities Investor Protection Act of 1970 do not
protect the counterparty with respect to the repurchase agreement;
(D) Maintain possession or control of securities that are the
subject of the agreement.
(ii) For purpose of this paragraph (b)(4), securities are in the
broker's or dealer's control only if they are in the control of the
broker or dealer within the meaning of Sec. 240.15c3-3 (c)(1), (c)(3),
(c)(5) or (c)(6) of this title.
(iii) A broker or dealer shall not be in violation of the
requirement to maintain possession or control pursuant to paragraph
(b)(4)(i)(D) during the trading day if:
(A) In the written repurchase agreement, the counterparty grants the
broker or dealer the right to substitute other securities for those
subject to the agreement; and
(B) The provision in the written repurchase agreement governing the
right, if any, to substitute is immediately preceded by the following
disclosure statement, which must be prominently displayed:
Required Disclosure
The [seller] is not permitted to substitute other securities for
those subject to this agreement and therefore must keep the [buyer's]
securities segregated at all times, unless in this agreement the [buyer]
grants the [seller] the right to substitute other securities. If the
[buyer] grants the right to substitute, this means that the [buyer's]
securities will likely be commingled with the [seller's] own securities
during the trading day. The [buyer] is advised that, during any trading
day that the [buyer's] securities are commingled with the [seller's]
securities, they will be subject to liens granted by the [seller] to its
clearing bank and may be used by the [seller] for deliveries on other
securities transactions. Whenever the securities are commingled, the
[seller's] ability to resegregate substitute securities for the [buyer]
will be subject to the [seller's] ability to satisfy the clearing lien
or to obtain substitute securities.
(iv) A confirmation issued in accordance with paragraph (b)(4)(i)(B)
of this section shall specify the issuer, maturity date, coupon rate,
par amount and market value of the security and shall further identify a
CUSIP or mortgage-backed security pool number, as appropriate, except
that a CUSIP or a pool number is not required on the confirmation if it
is identified in internal records of the broker or dealer that designate
the specific security of the counterparty. For purposes of this
paragraph (b)(4)(iv), the market value of any security that is the
subject of the repurchase transaction shall be the most recently
available bid price plus accrued interest, obtained by any reasonable
and consistent methodology.
(v) This paragraph (b)(4) shall not apply to a repurchase agreement
between the broker or dealer and another broker or dealer (including a
government securities broker or dealer), a registered municipal
securities dealer, or a general partner or director or principal officer
of the broker or dealer or any person to the extent that his claim is
explicitly subordinated to the claims of creditors of the broker or
dealer.
(c) Control of securities. Securities under the control of a broker
or dealer shall be deemed to be securities which:
(1) Are represented by one or more certificates in the custody or
control of a clearing corporation or other subsidiary organization of
either national securities exchanges or of a registered national
securities association, or of a custodian bank in accordance with a
system for the central handling of securities complying with the
provisions of Secs. 240.8c-1(g) and 240.15c2-1(g) the delivery of which
certificates to the broker or dealer does not require the payment of
money or value, and if the books or records of the broker or dealer
identify the customers entitled to receive specified quantities or units
of the securities so held for such customers collectively; or
(2) Are carried for the account of any customer by a broker or
dealer and are carried in a special omnibus account in the name of such
broker or dealer with another broker or dealer in compliance with the
requirements of section 4(b) of Regulation T under the Act (12 CFR
220.4(b)), such securities being deemed
[[Page 312]]
to be under the control of such broker or dealer to the extent that he
has instructed such carrying broker or dealer to maintain physical
possession or control of them free of any charge, lien, or claim of any
kind in favor of such carrying broker or dealer or any persons claiming
through such carrying broker or dealer; or
(3) Are the subject of bona fide items of transfer; provided that
securities shall be deemed not to be the subject of bona fide items of
transfer if, within 40 calendar days after they have been transmitted
for transfer by the broker or dealer to the issuer or its transfer
agent, new certificates conforming to the instructions of the broker or
dealer have not been received by him, he has not received a written
statement by the issuer or its transfer agent acknowledging the transfer
instructions and the possession of the securities or he has not obtained
a revalidation of a window ticket from a transfer agent with respect to
the certificate delivered for transfer; or
(4) Are in the custody of a foreign depository, foreign clearing
agency or foreign custodian bank which the Commission upon application
from a broker or dealer, a registered national securities exchange or a
registered national securities association, or upon its own motion shall
designate as a satisfactory control location for securities; or
(5) Are in the custody or control of a bank as defined in section
3(a)(6) of the Act, the delivery of which securities to the broker or
dealer does not require the payment of money or value and the bank
having acknowledged in writing that the securities in its custody or
control are not subject to any right, charge, security interest, lien or
claim of any kind in favor of a bank or any person claiming through the
bank; or
(6)(i) Are held in or are in transit between offices of the broker
or dealer; or (ii) are held by a corporate subsidiary if the broker or
dealer owns and exercises a majority of the voting rights of all of the
voting securities of such subsidiary, assumes or guarantees all of the
subsidiary's obligations and liabilities, operates the subsidiary as a
branch office of the broker or dealer, and assumes full responsibility
for compliance by the subsidiary and all of its associated persons with
the provisions of the Federal securities laws as well as for all of the
other acts of the subsidiary and such associated persons; or
(7) Are held in such other locations as the Commission shall upon
application from a broker or dealer find and designate to be adequate
for the protection of customer securities.
(d) Requirement to reduce securities to possession or control. Not
later than the next business day, a broker or dealer, as of the close of
the preceding business day, shall determine from his books or records
the quantity of fully paid securities and excess margin securities in
his possession or control and the quantity of fully paid securities and
excess margin securities not in his possession or control. In making
this daily determination inactive margin accounts (accounts having no
activity by reason of purchase or sale of securities, receipt or
delivery of cash or securities or similar type events) may be computed
not less than once weekly. If such books or records indicate, as of such
close of the business day, that such broker or dealer has not obtained
physical possession or control of all fully paid and excess margin
securities as required by this section and there are securities of the
same issue and class in any of the following noncontrol locations:
(1) Securities subject to a lien securing moneys borrowed by the
broker or dealer or securities loaned to another broker or dealer or a
clearing corporation, then the broker or dealer shall, not later than
the business day following the day on which such determination is made,
issue instructions for the release of such securities from the lien or
return of such loaned securities and shall obtain physical possession or
control of such securities within two business days following the date
of issuance of the instructions in the case of securities subject to
lien securing borrowed moneys and within five business days following
the date of issuance of instructions in the case of securities loaned;
or
(2) Securities included on his books or records as failed to receive
more than 30 calendar days, then the broker
[[Page 313]]
or dealer shall, not later than the business day following the day on
which such determination is made, take prompt steps to obtain physical
possession or control of securities so failed to receive through a buy-
in procedure or otherwise; or
(3) Securities receivable by the broker or dealer as a security
dividend receivable, stock split or similar distribution for more than
45 calendar days, then the broker or dealer shall, not later than the
business day following the day on which such determination is made, take
prompt steps to obtain physical possession or control of securities so
receivable through a buy-in procedure or otherwise.
(4) A broker or dealer which is subject to the requirements of
Sec. 240.15c3-3 with respect to physical possession or control of fully
paid and excess margin securities shall prepare and maintain a current
and detailed description of the procedures which it utilizes to comply
with the possession or control requirements set forth in this section.
The records required herein shall be made available upon request to the
Commission and to the designated examining authority for such broker or
dealer.
(e) Special reserve bank account for the exclusive benefit of
customers. (1) Every broker or dealer shall maintain with a bank or
banks at all times when deposits are required or hereinafter specified a
``Special Reserve Bank Account for the Exclusive Benefit of Customers''
(hereinafter referred to as the ``Reserve Bank Account''), and it shall
be separate from any other bank account of the broker or dealer. Such
broker or dealer shall at all times maintain in such Reserve Bank
Account, through deposits made therein, cash and/or qualified securities
in an amount not less than the amount computed in accordance with the
formula set forth in Sec. 240.15c3-3a.
(2) It shall be unlawful for any broker or dealer to accept or use
any of the amounts under items comprising Total Credits under the
formula referred to in paragraph (e)(1) of this section except for the
specified purposes indicated under items comprising Total Debits under
the formula, and, to the extent Total Credits exceed Total Debits, at
least the net amount thereof shall be maintained in the Reserve Bank
Account pursuant to paragraph (e)(1) of this section.
(3) Computations necessary to determine the amount required to be
deposited as specified in paragraph (e)(1) of this section shall be made
weekly, as of the close of the last business day of the week, and the
deposit so computed shall be made no later than 1 hour after the opening
of banking business on the second following business day; provided,
however, a broker or dealer which has aggregate indebtedness not
exceeding 800 percent of net capital (as defined in Sec. 240.15c3-1 or
in the capital rules of a national securities exchange of which it is a
member and exempt from Sec. 240.15c3-1 by paragraph (b)(2) thereof) and
which carries aggregate customer funds (as defined in paragraph (a)(10)
of this section), as computed at the last required computation pursuant
to this section, not exceeding $1 million, may in the alternative make
the computation monthly, as of the close of the last business day of the
month, and, in such event, shall deposit not less than 105 percent of
the amount so computed no later than 1 hour after the opening of banking
business on the second following business day. If a broker or dealer,
computing on a monthly basis, has, at the time of any required
computation, aggregate indebtedness in excess of 800 percent of net
capital, such broker or dealer shall thereafter compute weekly as
aforesaid until four successive weekly computations are made, none of
which were made at a time when his aggregate indebtedness exceeded 800
percent of his net capital. Computations in addition to the computations
required in this paragraph (3), may be made as of the close of any other
business day, and the deposits so computed shall be made no later than 1
hour after the opening of banking business on the second following
business day. The broker or dealer shall make and maintain a record of
each such computation made pursuant to this paragraph (3) or otherwise
and preserve each such record in accordance with Sec. 240.17a-4.
(f) Notification of banks. A broker or dealer required to maintain
the reserve
[[Page 314]]
bank account prescribed by this section or who maintains a special
account referred to in paragraph (k) of this section shall obtain and
preserve in accordance with Sec. 240.17a-4 written notification from
each bank in which he has his reserve bank account or special account
that the bank was informed that all cash and/or qualified securities
deposited therein are being held by the bank for the exclusive benefit
of customers of the broker or dealer in accordance with the regulations
of the Commission, and are being kept separate from any other accounts
maintained by the broker or dealer with the bank, and the broker or
dealer shall have a written contract with the bank which provides that
the cash and/or qualified securities shall at no time be used directly
or indirectly as security for a loan to the broker or dealer by the bank
and, shall be subject to no right, charge, security interest, lien, or
claim of any kind in favor of the bank or any person claiming through
the bank.
(g) Withdrawals from the reserve bank account. A broker or dealer
may make withdrawals from his reserve bank account if and to the extent
that at the time of the withdrawal the amount remaining in the reserve
bank account is not less than the amount then required by paragraph (e)
of this section. A bank may presume that any request for withdrawal from
a reserve bank account is in conformity and compliance with this
paragraph (g). On any business day on which a withdrawal is made, the
broker or dealer shall make a record of the computation on the basis of
which he makes such withdrawal, and he shall preserve such computation
in accordance with Sec. 240.17a-4.
(h) Buy-in of short security differences. A broker or dealer shall
within 45 calendar days after the date of the examination, count,
verification and comparison of securities pursuant to Sec. 240.17a-13 or
otherwise or to the annual report of financial condition in accordance
with Sec. 240.17a-5, buy-in all short security differences which are not
resolved during the 45-day period.
(i) Notification in the event of failure to make a required deposit.
If a broker or dealer shall fail to make in his reserve bank account or
special account a deposit, as required by this section, the broker or
dealer shall by telegram immediately notify the Commission and the
regulatory authority for the broker or dealer, which examines such
broker or dealer as to financial responsibility and shall promptly
thereafter confirm such notification in writing.
(j) [Reserved]
(k) Exemptions. (1) The provisions of this section shall not be
applicable to a broker or dealer meeting all of the following
conditions:
(i) His dealer transactions (as principal for his own account) are
limited to the purchase, sale, and redemption of redeemable securities
of registered investment companies or of interests or participations in
an insurance company separate account, whether or not registered as an
investment company; except that a broker or dealer transacting business
as a sole proprietor may also effect occasional transactions in other
securities for his own account with or through another registered broker
or dealer;
(ii) His transactions as broker (agent) are limited to: (a) The sale
and redemption of redeemable securities of registered investment
companies or of interests or participations in an insurance company
separate account, whether or not registered as an investment company;
(b) the solicitation of share accounts for savings and loan associations
insured by an instrumentality of the United States; and (c) the sale of
securities for the account of a customer to obtain funds for immediate
reinvestment in redeemable securities of registered investment
companies; and
(iii) He promptly transmits all funds and delivers all securities
received in connection with his activities as a broker or dealer, and
does not otherwise hold funds or securities for, or owe money or
securities to, customers.
(iv) Notwithstanding the foregoing, this section shall not apply to
any insurance company which is a registered broker-dealer, and which
otherwise meets all of the conditions in paragraphs (k)(1) (i), (ii),
and (iii) of this section, solely by reason of its participation in
transactions that are a part of the business of insurance, including the
purchasing, selling, or holding of
[[Page 315]]
securities for or on behalf of such company's general and separate
accounts.
(2) The provisions of this section shall not be applicable to a
broker or dealer:
(i) Who carries no margin accounts, promptly transmits all customer
funds and delivers all securities received in connection with his
activities as a broker or dealer, does not otherwise hold funds or
securities for, or owe money or securities to, customers and effectuates
all financial transactions between the broker or dealer and his
customers through one or more bank accounts, each to be designated as
``Special Account for the Exclusive Benefit of Customers of (name of the
broker or dealer)''; or
(ii) Who, as an introducing broker or dealer, clears all
transactions with and for customers on a fully disclosed basis with a
clearing broker or dealer, and who promptly transmits all customer funds
and securities to the clearing broker or dealer which carries all of the
accounts of such customers and maintains and preserves such books and
records pertaining thereto pursuant to the requirements of
Secs. 240.17a-3 and 240.17a-4 of this chapter, as are customarily made
and kept by a clearing broker or dealer.
(3) Upon written application by a broker or dealer, the Commission
may exempt such broker or dealer from the provisions of this section,
either unconditionally or on specified terms and conditions, if the
Commission finds that the broker or dealer has established safeguards
for the protection of funds and securities of customers comparable with
those provided for by this section and that it is not necessary in the
public interest or for the protection of investors to subject the
particular broker or dealer to the provisions of this section.
(l) Delivery of securities. Nothing stated in this section shall be
construed as affecting the absolute right of a customer of a broker or
dealer to receive in the course of normal business operations following
demand made on the broker or dealer, the physical delivery of
certificates for:
(1) Fully-paid securities to which he is entitled, and,
(2) Margin securities upon full payment by such customer to the
broker or dealer of his indebtedness to the broker or dealer; and,
subject to the right of the broker or dealer under Sec. 220.7(b) of
Regulation T [12 CFR 220.7(b)] to retain collateral for his own
protection beyond the requirements of Regulation T, excess margin
securities not reasonably required to collateralize such customer's
indebtedness to the broker or dealer.
(m) Completion of sell orders on behalf of customers. If a broker or
dealer executes a sell order of a customer (other than an order to
execute a sale of securities which the seller does not own) and if for
any reason whatever the broker or dealer has not obtained possession of
the securities from the customer within 10 business days after the
settlement date, the broker or dealer shall immediately thereafter close
the transaction with the customer by purchasing securities of like kind
and quantity: Provided, however, The term customer for the purpose of
this paragraph (m) shall not include a broker or dealer who maintains a
special omnibus account with another broker or dealer in compliance with
section 4(b) of Regulation T [12 CFR 220.4(b)].
Note: See 38 FR 12103, May 9, 1973 for an order suspending
indefinitely the operation of paragraph (m) as to sell orders for
exempted securities (e.g., U.S. Government and municipal obligations).
(n) Extensions of time. If a registered national securities exchange
or a registered national securities association is satisfied that a
broker or dealer is acting in good faith in making the application and
that exceptional circumstances warrant such action, such exchange or
association, on application of the broker or dealer, may extend any
period specified in paragraphs (d) (2) and (3), (h) and (m) of this
section, relating to the requirement that such broker or dealer take
action within a designated period of time to buy-in a security, for one
or more limited periods commensurate with the circumstances. Each such
exchange or association shall make and preserve for a period of not less
than 3 years a record of each extension granted pursuant to paragraph
(n) of this section which
[[Page 316]]
shall contain a summary of the justification for the granting of the
extension.
(Secs. 15(c)(2), 15(c)(3), 17(a), 23(a), 48 Stat. 895, 897, 901, secs.
3, 4, 8, 49 Stat. 1377, 1379, secs. 2, 5, 52 Stat. 1075, 1076, sec.
7(d), 84 Stat. 1653; 15 U.S.C. 78o(c), 78q(a), 78w(a); sec. 6(c), 84
Stat. 1652; 15 U.S.C. 78fff)
[37 FR 25226, Nov. 29, 1972; 38 FR 6277, Mar. 8, 1973, as amended at 42
FR 23790, May 10, 1977; 44 FR 1975, Jan. 9, 1979; 45 FR 37688, June 4,
1980; 47 FR 21775, May 20, 1982; 47 FR 23920, June 2, 1982; 50 FR 41340,
Oct. 10, 1985; 52 FR 30333, Aug. 14, 1987]
Sec. 240.15c3-3a Exhibit A--formula for determination reserve requirement of brokers and dealers under Sec. 240.15c3-3.
------------------------------------------------------------------------
Credits Debits
------------------------------------------------------------------------
1. Free credit balances and other credit balances in
customers' security accounts. (See Note A)......... $XXX ........
2. Monies borrowed collateralized by securities
carried for the accounts of customers (See Note B.) XXX ........
3. Monies payable against customers' securities
loaned (See Note C.)............................... XXX ........
4. Customers' securities failed to receive (See Note
D.)................................................ XXX ........
5. Credit balances in firm accounts which are
attributable to principal sales to customers....... XXX ........
6. Market value of stock dividends, stock splits and
similar distributions receivable outstanding over
30 calendar days................................... XXX ........
7. Market value of short security count differences
over 30 calendar days old.......................... XXX ........
8. Market value of short securities and credits (not
to be offset by longs or by debits) in all suspense
accounts over 30 calendar days..................... XXX ........
9. Market value of securities which are in transfer
in excess of 40 calendar days and have not been
confirmed to be in transfer by the transfer agent
or the issuer during the 40 days................... ........ XXX
10. Debit balances in customers' cash and margin
accounts excluding unsecured accounts and accounts
doubtful of collection. (See Note E.).............. ........ XXX
11. Securities borrowed to effectuate short sales by
customers and securities borrowed to make delivery
on customers' securities failed to deliver......... ........ XXX
12. Failed to deliver of customers' securities not
older than 30 calendar days........................ ........ XXX
13. Margin required and on deposit with the Options
Clearing Corp. for all option contracts written or
purchased in customer accounts. (See Note F.)...... ........ XXX
-------------------
Total credits..................................... ........ ........
Total debits...................................... ........ ........
===================
14. Excess of total credits (sum of items 1-9) over
total debits (sum of items 10-13) required to be on
deposit in the ``Reserve Bank Account'' (Sec.
240.15c3-3(e)). If the computation is made monthly
as permitted by this section, the deposit shall be
not less than 105 percent of the excess of total
credits over total debits.......................... ........ XXX
------------------------------------------------------------------------
Note A. Item 1 shall include all outstanding drafts payable to customers
which have been applied against free credit balances or other credit
balances and shall also include checks drawn in excess of bank
balances per the records of the broker or dealer.
Note B. Item 2 shall include the amount of Letters of Credit obtained by
a member of Options Clearing Corporation which are collateralized by
customers' securities, to the extent of the member's margin
requirement at Options Clearing Corp.
Note C. Item 3 shall include in addition to monies payable against
customer's securities loaned the amount by which the market value of
securities loaned exceeds the collateral value received from the
lending of such securities.
Note D. Item 4 shall include in addition to customers' securities failed
to receive the amount by which the market value of securities failed
to receive and outstanding more than thirty (30) calendar days exceeds
their contract value.
Note E. (1) Debit balances in margin accounts shall be reduced by the
amount by which a specific security (other than an exempted security)
which is collateral for margin accounts exceeds in aggregate value 15
percent of the aggregate value of all securities which collateralize
all margin accounts receivable; provided, however, the required
reduction shall not be in excess of the amount of the debit balance
required to be excluded because of this concentration rule. A
specified security is deemed to be collateral for a margin account
only to the extent it represents in value not more than 140 percent of
the customer debit balance in a margin account.
(2) Debit balances in special omnibus accounts, maintained in compliance
with the requirements of section 4(b) of Regulation T under the Act
(12 CFR 220.4(b) or similar accounts carried on behalf of another
broker or dealer, shall be reduced by any deficits in such accounts
(or if a credit, such credit shall be increased) less any calls for
margin, marks to the market, or other required deposits which are
outstanding 5 business days or less.
(3) Debit balances in customers' cash and margin accounts included in
the formula under item 10 shall be reduced by an amount equal to 1
percent of their aggregate value.
(4) Debit balances in cash and margin accounts of household members and
other persons related to principals of a broker or dealer and debit
balances in cash and margin accounts of affiliated persons of a broker
or dealer shall be excluded from the Reserve Formula, unless the
broker or dealer can demonstrate that such debit balances are directly
related to credit items in the formula.
(5) Debit balances in margin accounts (other than omnibus accounts)
shall be reduced by the amount by which any single customer's debit
balance exceeds 25% (to the extent such amount is greater than
$50,000) of the broker-dealer's tentative net capital (i.e., net
capital prior to securities haircuts) unless the broker or dealer can
demonstrate that the debit balance is directly related to credit items
in the Reserve Formula. Related accounts (e.g., the separate accounts
of an individual, accounts under common control or subject to cross
guarantees) shall be deemed to be a single customer's accounts for
purposes of this provision.
If the registered national securities exchange or the registered
national securities association having responsibility for examining
the broker or dealer (``designated examining authority'') is
satisfied, after taking into account the circumstances of the
concentrated account including the quality, diversity, and
marketability of the collateral securing the debit balances or margin
accounts subject to this provision, that the concentration of debit
balances is appropriate, then such designated examining authority may
grant a partial or plenary exception from this provision.
The debit balance may be included in the reserve formula computation for
five business days from the day the request is made.
[[Page 317]]
(6) Debit balances of joint accounts, custodian accounts, participations
in hedge funds or limited partnerships or similar type accounts or
arrangements of a person who would be excluded from the definition of
customer (``non-customer'') which persons includible in the definition
of customer shall be included in the Reserve Formula in the following
manner: if the percentage ownership of the non-customer is less than 5
percent then the entire debit balance shall be included in the
formula; if such percentage ownership is between 5 percent and 50
percent then the portion of the debit balance attributable to the non-
customer shall be excluded from the formula unless the broker or
dealer can demonstrate that the debit balance is directly related to
credit items in the formula; if such percentage ownership is greater
than 50 percent, then the entire debit balance shall be excluded from
the formula unless the broker or dealer can demonstrate that the debit
balance is directly related to credit items in the formula.
Note F. Item 13 shall include the amount of margin required and on
deposit with Options Clearing Corporation to the extent such margin is
represented by cash, proprietary qualified securities, and letters of
credit collateralized by customers' securities.
[42 FR 27224, May 27, 1977, as amended at 50 FR 41340, Oct. 10, 1985; 52
FR 30334, Aug. 14, 1987]
Sec. 240.15c6-1 Settlement cycle.
(a) Except as provided in paragraphs (b), (c), and (d) of this
section, a broker or dealer shall not effect or enter into a contract
for the purchase or sale of a security (other than an exempted security,
government security, municipal security, commercial paper, bankers'
acceptances, or commercial bills) that provides for payment of funds and
delivery of securities later than the third business day after the date
of the contract unless otherwise expressly agreed to by the parties at
the time of the transaction.
(b) Paragraphs (a) and (c) of this section shall not apply to
contracts:
(1) For the purchase or sale of limited partnership interests that
are not listed on an exchange or for which quotations are not
disseminated through an automated quotation system of a registered
securities association;
(2) For the purchase or sale of securities that the Commission may
from time to time, taking into account then existing market practices,
exempt by order from the requirements of paragraph (a) of this section,
either unconditionally or on specified terms and conditions, if the
Commission determines that such exemption is consistent with the public
interest and the protection of investors.
(c) Paragraph (a) of this section shall not apply to contracts for
the sale for cash of securities that are priced after 4:30 p.m. Eastern
time on the date such securities are priced and that are sold by an
issuer to an underwriter pursuant to a firm commitment underwritten
offering registered under the Securities Act of 1933 or sold to an
initial purchaser by a broker-dealer participating in such offering
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.
(d) For purposes of paragraphs (a) and (c) 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 if the managing
underwriter and the issuer have agreed to such date for all securities
sold pursuant to such offering and 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.
[58 FR 52903, Oct. 13, 1993, as amended at 60 FR 26622, May 17, 1995]
Regulation 15D: Reports of Registrants Under the Securities Act of 1933
Annual Reports
Sec. 240.15d-1 Requirement of annual reports.
Every registrant under the Securities Act of 1933 shall file an
annual report, on the appropriate form authorized or prescribed
therefor, for the fiscal year in which the registration statement under
the Securities Act of 1933 became effective and for each fiscal year
thereafter, unless the registrant is exempt from such filing by section
15(d) of the Act or rules thereunder. Annual reports shall be filed
within the period specified in the appropriate report form.
[47 FR 17052, Apr. 21, 1982, as amended at 61 FR 49960, Sept. 24, 1996]
[[Page 318]]
Sec. 240.15d-2 Special financial report.
(a) If the registration statement under the Securities Act of 1933
did not contain certified financial statements for the registrant's last
full fiscal year (or for the life of the registrant if less than a full
fiscal year) preceding the fiscal year in which the registration
statement became effective, the registrant shall, within 90 days after
the effective date of the registration statement, file a special report
furnishing certified financial statements for such last full fiscal year
or other period, as the case may be, meeting the requirements of the
form appropriate for annual reports of the registrant. If the registrant
is a foreign private issuer as defined in Sec. 230.405 of this chapter,
then the special financial report shall be filed on the appropriate form
for annual reports of the registrant and shall be filed by the later of
90 days after the date on which the registration statement became
effective, or six months following the end of the registrant's latest
full fiscal year.
(b) The report shall be filed under cover of the facing sheet of the
form appropriate for annual reports of the registrant, shall indicate on
the facing sheet that it contains only financial statements for the
fiscal year in question, and shall be signed in accordance with the
requirements of the annual report form.
(15 U.S.C. 78l, 78m, 78o)
[13 FR 9326, Dec. 31, 1948, as amended at 36 FR 1891, Feb. 3, 1971; 58
FR 60306, Nov. 15, 1993]
Sec. 240.15d-3 Reports for depositary shares registered on Form F-6.
Annual and other reports are not required with respect to Depositary
Shares registered on Form F-6 (Sec. 230.36 of this chapter) if the
depositary furnishes the information required by Item 4(a) of that Form.
The exemption in this rule does not apply to any deposited securities
registered on any other form under the Securities Act of 1933.
[48 FR 12350, Mar. 24, 1983]
Sec. 240.15d-4 Reporting by Form 40-F registrants.
A registrant that is eligible to use Forms 40-F and 6-K and files
reports in accordance therewith shall be deemed to satisfy the
requirements of Regulation 15D (Secs. 240.15d-1 through 240.15d-21 of
this chapter).
[56 FR 30075, July 1, 1991]
Sec. 240.15d-5 Reporting by successor issuers.
(a) Where in connection with a succession by merger, consolidation,
exchange of securities or acquisition of assets, equity securities of an
issuer, which is not required to file reports pursuant to section 15(d)
of the Act, are issued to the holders of any class of equity securities
of another issuer which is required to file such reports, the duty to
file reports pursuant to such section shall be deemed to have been
assumed by the issuer of the class of securities so issued and such
issuer shall after the consummation of the succession file reports in
accordance with such section, and the rules and regulations thereunder
unless such issuer is exempt from filing such reports or the duty to
file such reports is suspended under said section.
(b) An issuer that is deemed to be a successor issuer according to
paragraph (a) of this section shall file reports on the same forms as
the predecessor issuer except as follows:
(1) An issuer that is not a foreign issuer shall not be eligible to
file on Form 20-F (Sec. 240.220f of this chapter).
(2) A foreign private issuer shall be eligible to file on Form 20-F.
(c) The provisions of paragraph (a) of this section shall not apply
to an issuer of securities in connection with a succession that was
registered on Form F-8 (Sec. 239.38 of this chapter), Form F-10 and Form
10-SB (Sec. 239.40 of this chapter) or Form F-80 (Sec. 239.41 of this
chapter).
[36 FR 3805, Feb. 27, 1971, as amended at 48 FR 46740, Oct. 14, 1983; 56
FR 30075, July 1, 1991]
Sec. 240.15d-6 Suspension of duty to file reports.
If the duty of an issuer to file reports pursuant to section 15(d)
of the Act as
[[Page 319]]
to any fiscal year is suspended as provided in section 15(d) of the Act,
such issuer shall, within 30 days after the beginning of the first
fiscal year, file a notice on Form 15 informing the Commission of such
suspension unless Form 15 has already been filed pursuant to Rule 12h-3.
If the suspension resulted from the issuer's merger into, or
consolidation with, another issuer or issuers, the notice shall be filed
by the successor issuer.
(Secs. 12(g)(4), 12(h), 13(a), 15(d), 23(a), 48 Stat. 892, 894, 895,
901; sec. 203(a), 49 Stat. 704; secs. 3, 8, 49 Stat. 1377, 1379; secs.
3, 4, 6, 78 Stat. 565-568, 569, 570-574; sec. 18, 89 Stat. 155; sec.
204, 91 Stat. 1500; 15 U.S.C. 78l(g)(4), 78l(h), 78m(a), 78o(d), 78w(a))
[49 FR 12690, Mar. 30, 1984]
Other Reports